Walgreens to invest $300M in digital health

After reporting a dip in net earnings for the first quarter, Walgreens plans to invest $300 million in digital health to make up for the losses, according to Digital Commerce 360.

The drugstore’s net earnings dropped to $1.156 billion from $1.349 billion in the same quarter of 2018. Walgreens CEO Stefano Pessina told analysts that to make up for its worst quarterly results since 2014, it plans to cut annual expenses by $1.5 billion to make room for digital health.

“We will be putting $300 million to boost the partnerships and boost our capabilities on digitalization of the company," Walgreens CFO James Keho told analysts.

Walgreens teamed up with Microsoft in January to design “digital health corners” for its stores.

“The partnership with Microsoft is a clear acceleration of the digitalization of our company, along with recruiting internally a lot of [people] particularly a chief digital officer,” Walgreens COO Alex Goulary said.

In the next several years, Walgreens will invest over $1 billion to grow its retail business anchored in digital health.

“We have the right investments, $300 million a year, which –– it adds up to $1 billion of investments behind partnerships and digital,” Mr. Kehoe said. “We’re investing to make sure especially that the U.S. business has the ammunition required to create that omnichannel experience in both pharmacy and in retail.”

Walgreen is not the only drugstore to make a push into digital health. In February, CVS said it would spend $325 million to $350 million on digital health.

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