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DEERFIELD, IL – Walgreens Boots Alliance, Inc. (NASDAQ:WBA), the $9.76 billion market cap healthcare giant with annual revenues of $150.41 billion, has reached a settlement agreement with Everly Health Solutions, formerly known as PWNHealth LLC, resolving a commercial arbitration dispute for $595 million. The settlement, payable within two business days, concludes a legal battle that began with Everly/PWN initiating an arbitration on June 10, 2022. According to InvestingPro data, this settlement comes as the company maintains a weak financial health score, reflecting ongoing operational challenges.
The dispute centered around an agreement that Everly/PWN claimed was exclusive and breached by Walgreens when it began in-sourcing certain services related to COVID-19 testing. Everly/PWN sought damages for alleged fraudulent inducement, misappropriation, and improper use of its mark, resulting in an arbitrator awarding Everly/PWN $988 million on March 19, 2024. Walgreens contested the award, citing a contractual cap on damages of $79 million.
Despite Walgreens’ efforts to vacate the award, a federal court in Delaware confirmed the arbitrator’s decision on February 10, 2025. Opting to avoid further interest accrual and litigation costs, Walgreens agreed to the $595 million settlement without admitting any wrongdoing or liability. With total debt of $31.7 billion and a concerning current ratio of 0.64, this settlement adds to the company’s financial pressures. Get deeper insights into Walgreens’ financial position with a comprehensive InvestingPro Research Report, which includes detailed analysis of the company’s debt structure and liquidity metrics.
This settlement aims to mitigate the financial impact and uncertainty for Walgreens, as stated in their press release. The company and Everly/PWN will file a joint stipulation to dismiss all claims, including any to enforce the original arbitration award.
Investors and stakeholders should note that forward-looking statements regarding the company’s views and expectations of the arbitration’s outcome are subject to risks and uncertainties. Walgreens has expressed that it does not intend to update any forward-looking statements following this release, as per the cautionary note included in the press release statement.
In other recent news, Walgreens Boots Alliance has been ordered by a Delaware federal court to pay a $988 million arbitration award to Everly Health Solutions. This ruling stems from a dispute over an exclusivity agreement related to Covid testing services. Walgreens is considering an appeal, which could extend the legal process for over two years. Meanwhile, the company’s first-quarter fiscal year 2025 earnings exceeded expectations, with revenue reaching $39.5 billion, surpassing the $36.9 billion estimate from Truist Securities and the consensus of $37.4 billion. The adjusted earnings per share (EPS) were reported at $0.51, higher than Truist’s estimate of $0.39 and the consensus of $0.38. RBC Capital Markets has raised its price target for Walgreens to $12, citing progress in the company’s turnaround efforts and strategic updates from VillageMD. Jefferies also adjusted its price target to $11, acknowledging strong retail prescription revenue growth despite challenges in other segments. Additionally, Mizuho (NYSE:MFG) Securities maintained its Neutral rating with a $10 price target, noting that Walgreens’ first-quarter results exceeded expectations and improved its cash flow situation.
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