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Walgreens Boots Alliance, headquartered in Deerfield, has reached a $595 million settlement with the virtual care provider PWNHealth, now rebranded as Everly Health, effectively sidestepping a substantial $987 million arbitration award recently confirmed by a federal judge.
This settlement follows a tense legal period between Walgreens and Everly Health, dated back to a judge’s decision that upheld the arbitration award. Initially, Walgreens expressed intentions to contest the ruling, but the recent settlement indicates a shift in strategy to resolve the dispute without further litigation.
In its regulatory filing, Walgreens underscored that the settlement was a proactive measure to mitigate ongoing costs associated with the arbitration process and potential future litigation, emphasizing that it does not entail any admission of fault or liability on their part.
As of now, Everly Health has not publicly commented on the resolution of this matter.
The origins of this legal clash can be traced back to the early days of the COVID-19 pandemic when Walgreens partnered with PWNHealth to facilitate COVID-19 testing that necessitated medical oversight. Walgreens routed testing requests through PWNHealth’s network of clinicians for customers booking appointments via their website. However, in 2022, PWNHealth launched arbitration proceedings, alleging that Walgreens undermined their agreement by unilaterally shifting to its own pharmacists to fulfill testing requests, a move made possible by evolving regulatory standards, and did so without informing PWNHealth. Furthermore, PWNHealth asserted that Walgreens continued to use its branding during this contentious period.
The arbitrator ultimately ruled in favor of PWNHealth, leading Walgreens to appeal the decision in a Delaware federal court. Walgreens contested the damages initially, claiming they should be capped at $79 million as per their contract. However, the court upheld the arbitrator’s ruling.
Had Walgreens opted to pursue an appeal of the judge’s verdict, the process was anticipated to extend over two years, a duration that the company sought to avoid.
The settlement emerges amid various other financial strains for Walgreens, including challenges with reimbursement rates for medications, shifting consumer behavior, and complications surrounding its collaboration with the primary care service VillageMD. CEO Tim Wentworth has announced ambitious plans to steer the company back towards its core operations aligned with retail pharmacy functions.
Earlier this year, Walgreens made headlines by suspending shareholder dividends for the first time in 92 years. Additionally, the company disclosed plans to shutter 1,200 stores over the upcoming three years, affecting locations across the country, including in Chicago. In response to these challenging conditions, Walgreens has been streamlining operations through cost-cutting measures, which have included layoffs in Illinois and other areas.
Source
finance.yahoo.com