Walgreens Boots Alliance (WBA) has agreed to pay $595 million to settle a contract dispute with telemedicine provider Everly Health Solutions. The settlement, announced on February 25, 2025, ends a lengthy legal battle over COVID-19 testing. Walgreens will pay the amount within two business days, closing all claims without admitting any wrongdoing. Following the settlement announcement, WBA stock soared 5.18% on Tuesday, reflecting relief that the matter is resolved.
Walgreens is a major pharmacy chain that operates in eight countries, including the U.S. and the United Kingdom. The company sells health and beauty products, including prescription drugs, personal care goods, and cosmetics, among others.
What Led to the Legal Battle
The conflict began in 2020 when Walgreens partnered with Everly Health to expand COVID-19 testing. At the time, regulations required a physician’s involvement to order a COVID-19 test, so Walgreens used Everly’s network of doctors for this process through its website. However, tensions escalated when Walgreens switched to using its own pharmacists to place test orders without informing Everly. The company claimed this change violated their agreement.
By 2022, the dispute moved to arbitration. Everly accused Walgreens of breaching their contract and misusing its trademark. In March 2024, an arbitrator ruled in Everly’s favor, hitting Walgreens with a massive $988 million penalty. However, Walgreens argued that the fine should not top $79 million. But a Delaware judge upheld the ruling in February 2025, rejecting Walgreens’ claims of bias.
As a result, the company had to pay this huge amount to end this bitter fight over COVID-19 testing.
What It Means for Walgreens
The settlement adds to Walgreens’ financial burdens, as the company already holds $31.7 billion in debt. In addition, the company’s profit margins have been under pressure, with its gross profit margin falling from 20% in 2020 to 18% in 2024.
Despite these challenges, Walgreens is actively working to improve its bottom line. The company has been divesting underperforming assets and closing surplus stores to cut costs. Furthermore, it reduced capex by $223 million year-over-year during Fiscal Q1 2025.
Is WBA Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on WBA stock based on one Buy, seven Holds, and two Sells assigned in the past three months, as indicated by the graphic below. The average WBA price target of $11.63 per share implies 2.20% upside potential.
