We appreciate the candor... First, Walgreens became the worst-performing stock among the 30-company Dow Jones index. Then, its CEO called last quarter the "most difficult we have seen" as profits fell 14%. He even downgraded expectations for the full year — he expects zero profit growth now.
The CEO said, "no excuses"... But there were reasons. And he was happy to blame them for Walgreens' struggles.
- "A weak cough, cold and flu season": Lack of fevers was good for society, but bad for sales of medicine, tissues, and bed-side ice cream.
- "Continued de-emphasis of select products such as tobacco": Under pressure to follow CVS's leadership (the rival quit tobacco in all its stores), Walgreens tested out tobacco-less stores. Turns out it hurt sales, so Walgreens won't expand the pilot.
- FYI: It hopes that adding CBD products to 1,500 locations can help ease some of that pain.
Insurance companies. They can be bullies... When Walgreens sells prescription anything, it's paid by customers (a small co-pay) and insurance (the rest). And insurance companies keep growing through mergers. Now they're flexing their pricing power by paying Walgreens less for drugs you buy.
- Customers of monopolies suffer.
- And the health insurance market keeps getting more monopoly-ish.
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