Walgreens stock drops 12% as investors digest Friday’s DOJ lawsuit

The worst-performing stock in the S&P 500 Index last year got off to a better start in 2025, with America’s second-largest pharmacy chain reporting better-than-expected Q4 numbers on January 10. But the reprieve has been short-lived, with Walgreens’ stock once again deep in the red this morning as investors digest Friday’s lawsuit from the Department of Justice.

“The government’s complaint alleges that, from approximately August 2012 through the present, Walgreens knowingly filled millions of prescriptions for controlled substances that lacked a legitimate medical purpose, were not valid, and/or were not issued in the usual course of professional practice.”

Furthermore, the complaint asserts that (emphasis ours):

“Among the millions of unlawful prescriptions that Walgreens allegedly filled were prescriptions for dangerous and excessive quantities of opioids, prescriptions for early refills of opioids and prescriptions for the especially dangerous and abused combination of drugs known as the ‘trinity,’ which is made up of an opioid, a benzodiazepine and a muscle relaxant.”

Moreover, the DOJ’s lawsuit alleges that Walgreens “pressured” its pharmacists, allowing “millions of opioid pills and other controlled substances to flow illegally out of Walgreens stores” despite “clear red flags.”

According to a JP Morgan analyst, the suit seeks up to $80,850 in civil penalties per invalid prescription, which, if you multiply that by the “millions” of offenses the DOJ asserts has happened, could equal a more than $80 billion fine.

Walgreens, which has over 8,000 pharmacies across the United States, was reportedly in talks with private-equity firm Sycamore Partners at the end of last year about a potential deal to take the company private.

Last week, Bloomberg reported that an initiative to replace fridge doors with smart screens had become a $200 million disaster for the company.