Class Action Lawsuits: Implications for Walgreens and CVS

Types of Class Action Lawsuits Filed

The class action lawsuits filed against CVS primarily involve allegations of securities fraud, claiming that investors suffered damages when the company revised its earnings-per-share guidance. Key deadlines for lead plaintiff motions are set for September 10, 2024, emphasizing the urgency for affected investors to participate.

"A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than September 10, 2024." --- (CVS, press release, 2024/08/23)

"A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than September 10, 2024." --- (CVS, press release, 2024/08/09)

"Lead plaintiff motions for the CVS class action lawsuit must be filed with the court no later than September 10, 2024." --- (CVS, press release, 2024/07/18)

"When the true details entered the market, the lawsuit claims that investors suffered damages. To join the CVS class action, go to https://rosenlegal.com/submit-form/?case_id=24975 or call Phillip Kim, Esq." --- (CVS, press release, 2024/08/07)

"The CVS class action lawsuit further alleges that on August 2, 2023, CVS revealed that it was revising its diluted earnings-per-share ("EPS") guidance range to $6.53 to $6.75 from $6.90 to." --- (CVS, press release, 2024/09/06)

Financial and Operational Implications for Walgreens and CVS

Walgreens is restructuring to enhance operational efficiency and service delivery, crucial amid potential class action impacts. Conversely, CVS faces significant financial strain, revising EPS guidance and reporting a 30.7% drop in operating income, highlighting the lawsuits' adverse effects on both companies' financial health.

"in both our headquarters and our retail operations. We are restructuring our organization around these conclusions to streamline and ensure efficient development and deployment of services to go to market as one Walgreens with more impact for our industry partners and to help close critical gaps in delivery of healthcare." --- (WBA, earning call, 2024/Q1)

"The CVS class action lawsuit further alleges that on August 2, 2023, CVS revealed that it was revising its diluted earnings-per-share ("EPS") guidance range to $6.53 to $6.75 from $6.90 to $7.12 and that operating income "decreased $1.4 billion, or 30.7%, in the three months ended June 30, 2023 compared to the prior year primarily due to declines in the Health Care Benefits segment."" --- (CVS, press release, 2024/07/15)

"Fourth, while it may take time, and there's a great deal of work underway, I am confident we are executing on the conclusions from our strategic review thoughtfully and urgently to deliver the Walgreens that our country needs. With that, let's begin Q&A. Operator?" --- (WBA, earning call, 2024/Q1)

"The CVS class action lawsuit further alleges that on August 2, 2023, CVS revealed that it was revising its diluted earnings-per-share ("EPS") guidance range to $6.53 to $6.75 from $6.90 to $7.12 and that operating income "decreased $1.4 billion, or 30.7%, in the three months ended June 30, 2023 compared to the prior year primarily due to declines in the Health Care Benefits segment."" --- (CVS, press release, 2024/09/06)

"WBA Q3 2024 Form 10-Q WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS Selling, general and administrative expenses in the quarter decreased 26.9 percent from the year-ago quarter to $1.1 billion, reflecting an adverse currency impact of 1.6 percent." --- (WBA, sec filing, 2024/Q3)

Reputational Risks and Customer Sentiment Changes

Both Walgreens and CVS are actively addressing reputational risks through customer engagement and satisfaction initiatives. Walgreens emphasizes minimizing disruptions during store closures and improving customer experience, while CVS focuses on evolving value propositions to enhance retention and satisfaction, crucial for maintaining positive customer sentiment amid potential class action lawsuits.

"While it is not an easy decision to close a store, we will work to minimize customer disruptions and importantly, as we have done in the past, we intend to redeploy the vast majority of the workforce in those stores that we close." --- (WBA, earning call, 2024/Q2)

"If you demonstrate the fact that we are evolving and continuing to create value for our customers, which results in a high retention rate and a high growth rate, then our customers will ultimately begin to create the voice for making sure that they’re protecting and actually continuing to--you know, what I think is reinvest in the things like the PBM tools and the programs that we’ve delivered in the past." --- (CVS, earning call, 2024/Q2)

"And so again, how we engage with our most valuable consumers as well as everything from home delivery, omnichannel and freeing up our store managers to really have flexibility in their framework, changing their compensation program dramatically in order to incent outcomes in their individual stores and have them act as owners." --- (WBA, earning call, 2024/Q1)

"The impact is a bit noticeable. It's really it's a great help for both the pharmacist, but I think it's also driving some of our customer satisfaction." --- (CVS, conference, 2024/05/29)

"We've significantly decreased the average wait time per customer in the highest volume stores, and this is a result of several initiatives underway to improve the patient experience and increase retention." --- (WBA, earning call, 2024/Q1)

Broader Industry Implications of Lawsuits

Class action lawsuits are prompting CVS and Walgreens to adapt their strategies, with CVS focusing on pricing transparency and market transitions. Both companies anticipate broader industry impacts, including fluctuations in drug acquisition costs and potential lag in market outlook, influencing consumer behavior and membership dynamics.

"Obviously we have our own unique elements that we need to address as well. So I think that calibration as well as what happens to the broader industry will really dictate where membership goes next year." --- (CVS, earning call, 2024/Q1)

"And I'd say this is one of the reason the fluctuations we've seen on NADAC is one of the reason why we have the broader range as we put out the fiscal year guidance at this point. Lisa Gill: Great. Thank you." --- (WBA, earning call, 2024/Q3)

"Our expectation is that we will move the commercial market over to this. We will still have a dual market, right, because the Medicare and Medicaid contracts still exist on another platform, and as we’ve said prior, we’re going to move the commercial marketplace over on 1/1/25 and follow that with the Medicare and Medicaid markets at some time in the future." --- (CVS, earning call, 2024/Q2)

"And so as we think about what we've seen in the broader market, we made a provision that perhaps some of – there could be some lag there in our forward outlook." --- (CVS, earning call, 2024/Q1)

"The fact is that we’re hitting what I believe are the issues head on by trying to drive a new price model that both serves our customers in eliminating the price variability, and creating more simplicity and transparency at the member or the consumer level." --- (CVS, earning call, 2024/Q2)