Walgreens said chief finance officer James Kehoe will leave the drugstore giant and the company will conduct a search to fill his position with a CFO with “deep financial acumen” as well as healthcare experience.
The departure of Kehoe as executive vice president and global chief financial officer comes with Walgreens stock falling to around $30 a share in the third year under the leadership of chief executive Rosalind Brewer, who became CEO in March of 2021. Kehoe, who plans to leave the company in mid-August, is pursuing “an opportunity in the technology sector,” Walgreens said.
“James has been a valuable member of my executive leadership team and has made significant contributions over his five years with the company,” Brewer said in announcing Kehoe’s departure Thursday afternoon. “As we articulated the future vision of Walgreens Boots Alliance to become a leading healthcare company, James helped build a strong Finance organization.”
To be sure, Walgreens has been spending billions of dollars transforming the drugstore giant into a provider of healthcare services, investing in VillageMD, which is rolling out hundreds of doctor-staffed clinics attached to Walgreens drugstores.
But the transformation and related financial turnaround hasn’t been as successful as some investors would like to see so Walgreens has simultaneously escalated a cost-cutting initiative. To maintain growth and improve operations, Walgreens said a month ago it was taking “immediate actions” that include another $600 million in cost-cutting. Thus, Walgreens “transformational cost management program” target is now $4.1 billion by fiscal 2024 compared to an earlier goal of $3.5 billion.
Kehoe, who is 59 years old, will be replaced on an interim basis by Manmohan Mahajan, who is 43 years old and Walgreens current Senior Vice President, Global Controller, who will be “Interim Global Chief Financial Officer while the company conducts a search to fill the role with a leader who not only brings deep financial acumen to WBA, but also healthcare experience,” Walgreens announced Thursday.
Walgreens said Mahajan joined Walgreens in 2016 “where he has held several global senior roles in finance, including Vice President, Assistant Global Controller,” the company said. “Prior to WBA, Mr. Mahajan was with GE Capital, where he served in positions of increasing responsibility over 13 years, most recently serving as Controller at GE Capital Americas.”
Walgreens U.S. Healthcare segment last month reported $2 billion in third quarter sales, “an increase of $1.4 billion compared to the year-ago quarter” thanks to growth at VillageMD, which now includes Summit Health, as well as “existing clinic growth and clinic footprint expansion,” the company said.
Walgreens-backed VillageMD earlier this year purchased Summit Health-CityMD for $8.9 billion to expand doctor-staffed clinics across the country. That transaction also included investments from Walgreens, which owns more than 50% of VillageMD, and Cigna’s Evernorth Health Services.