Chicago, Illinois – Walgreens Boots Alliance stock experienced a drastic 22% decline in trading on Thursday, marking its most significant drop in over four decades and closing at $12.19 per share. The plummet occurred following the company’s decision to lower its profit forecast for the second time this year. Walgreens now projects earnings per share between $2.80 to $2.95, down from the last quarter’s guidance of $3.20 to $3.35.

Investors are closely monitoring CEO Tim Wentworth’s efforts to implement a new strategy aimed at revitalizing pharmacies and scaling back healthcare services, particularly with VillageMD, in which Walgreens no longer holds a significant stake. As the company restructures to eliminate unprofitable segments, such as announcing additional store closures, it faces challenges common among smaller pharmacies, including pricing pressures on prescription drugs.

During an earnings call on Thursday, Wentworth highlighted the need to adapt the current pharmacy model to address the evolving operating environment’s challenges. The company officials raised concerns about pharmacy benefits managers’ influence on prescription prices, which have significantly reduced profit margins on various drugs, particularly branded medications like Eli Lilly’s Mounjaro and Zepbound and Novo Nordisk’s Ozempic and Wegovy.

Walgreens acknowledged that all profits come from 75% of its stores, with plans to identify and potentially close stores within the remaining 25%. Going forward, the company aims to strategically allocate resources to initiatives like maintaining clinical trials and expanding specialty pharmacy to enhance profitability without compromising shareholder value. Additionally, Walgreens is addressing concerns related to store shrinkage, inflation impacting customer spending, and its product offerings.

As the company navigates these challenges, its focus remains on optimizing operational efficiencies and positioning itself for long-term sustainability in a rapidly evolving market. Despite the recent stock decline, Walgreens continues to actively explore opportunities to streamline its operations and adapt to shifting industry dynamics under Wentworth’s leadership.