Shares of Walgreens Boots Alliance (WBA -12.50%) pulled back today after the company again ran into trouble with regulators.
On Friday, the Department of Justice (DOJ) filed a lawsuit against Walgreens, alleging that it dispensed “millions of unlawful prescriptions.”
As of 10:26 a.m. ET, the stock was down 12.7% on the news.
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Walgreens gets another red flag
Walgreens already made a multibillion-dollar settlement over opioid prescriptions two years ago. It agreed to pay $5.7 billion over 15 years, and now it could be facing another fine.
Now the DOJ is alleging that since 2012, Walgreens has been filling prescriptions that don’t have a valid medical purpose.
The complaint said, “Walgreens pharmacists filled millions of controlled substance prescriptions with clear red flags that indicated the prescriptions were highly likely to be unlawful.” It added that Walgreens pressured its pharmacists to fill prescriptions.
It’s unclear how much the DOJ is suing Walgreens for, but it said the company is in violation of the Controlled Substances Act and the False Claims Act.
What it means for Walgreens
Walgreens is trying to recover from a dismal 2024, wherein the stock fell from 64% as it cut its dividend, took a multibillion-dollar write-down for its acquisition of VillageMD, and reported a sharp decline in profits.
The drugstore chain’s first-quarter earnings report drove a rebound in the stock earlier this month, as its performance seemed to be stabilizing, but another multibillion-dollar lawsuit could deal a significant setback to Walgreens as it tries to get back on its feet.
The DOJ has changed hands now that Trump is president, but there’s no indication that that will affect the status of this lawsuit. Investors should keep an eye on the DOJ complaint as they monitor Walgreens’ recovery. In particular, the healthcare stock must protect its high dividend yield.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
