"Healthcare is a long-term industry. It's about long-term health. It's about maintaining people's health over decades. Private equity's business model just inherently is short-term based. They are looking to get a company, profit off of it, exit the company in whatever way that is, whether it be bankruptcy or IPO or selling it off to another private equity firm," said Matt Parr, communications director of the Private Equity Stakeholder Project, a nonprofit that has been tracking private equity moves."
"There's already been plenty of coverage on Walgreens' financial problems ... and now you're adding a lot more liability that Sycamore is putting onto that company that already has been struggling. It really could spell a lot of financial problems for Walgreens," Parr stated, noting that in the first quarter of the year, 70% of the largest bankruptcies in the country were private equity-backed."
"Under Sycamore, Walgreens will split into five independent companies: Walgreens (pharmacy), The Boots Group (health and beauty retail business), Shields Health Solutions (specialty pharmacy solutions), CareCentrix (home health) and VillageMD (primary care)."
Sycamore Partners completed a $10 billion acquisition of Walgreens and will split the business into five independent companies covering pharmacy, retail, specialty pharmacy solutions, home health, and primary care. The deal was financed with more than 70% debt, increasing the company's liabilities. Observers warn that private equity typically pursues short-term exits within five to seven years, which can prioritize profit over long-term healthcare needs. Concerns include added financial strain on an already struggling company and the risk to communities that rely on Walgreens as their sole pharmacy. Sycamore Partners and Walgreens declined to comment.
Read at MedCity News
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