Table of Contents
CHICAGO — Tim Barry, the cofounder and chief executive officer of VillageMD, has stepped down from his role at the value-based primary care chain. He left the company amid significant financial pressures for its majority owner, Walgreens. VillageMD confirmed that Barry has also relinquished his role as board chair, with chief operating officer Jim Murray stepping in as interim CEO. A seasoned insurance executive, Murray joined VillageMD in April after leadership stints at Centene, Magellan Health and Humana.
Founded in 2013, VillageMD was established as a network of providers focused on value-based care, assuming financial risk for patient outcomes. Its innovative approach quickly attracted investment and, by 2020, Walgreens committed $1 billion, followed by an additional $5.2 billion in 2021, acquiring a 63% stake in the company. At its peak, VillageMD operated hundreds of locations across the U.S., often co-located with Walgreens stores, and planned to open 1,000 clinics by 2027.
CDR
However, VillageMD faced significant headwinds. Challenges in scaling primary care, including low reimbursement rates and staffing shortages, slowed patient growth. These issues, coupled with operating losses, strained Walgreens’ finances. In its fiscal year 2024, Walgreens reported a $14.1 billion operating loss, including a $12.4 billion impairment charge tied to VillageMD. Despite clinic closures aimed at curbing losses, VillageMD remains unprofitable.
CDR
The strain has led Walgreens to reevaluate its investment in VillageMD. In June, the company announced plans to reduce its stake, and by August, it was exploring a full or partial sale. These moves are part of a broader shift under Walgreens’ CEO Tim Wentworth, who has refocused the company on its core pharmacy operations following the departure of his predecessor, Roz Brewer.
Beyond VillageMD, Walgreens faces additional pressures, including declining demand for COVID-19 services, outdated pharmacy reimbursement models and competition from online retailers like Amazon. Legal liabilities related to opioid epidemic settlements have further strained resources.
In response, Walgreens has sold health care assets, reduced its workforce and announced plans to shutter underperforming stores. Despite these efforts, its stock has fallen over 66% this year.
CDR
Under Murray’s leadership, VillageMD remains committed to providing accessible, high-quality health care. Walgreens expressed confidence in Murray’s ability to steer the company toward profitability, underscoring his role in VillageMD’s ongoing turnaround. Whether this effort will reverse VillageMD’s financial trajectory and ease Walgreens’ challenges remains uncertain.
