Walgreens settles Covid test suit for $595MWalgreens settles Covid test suit for $595M

Walgreens this week said it had agreed to settle an arbitration dispute with Everly Health Solutions for $595 million. The settlement came after an arbitrator had previously issued an award of $988 million, which Walgreens had disputed.

In addition, reports surfaced again this week that Sycamore Partners, a private equity firm, was again in discussions to take Walgreens private in partnership with other investors. Both Walgreens and Sycamore declined to comment on those reports.

No admission of guilt

In a filing with the Securities and Exchange Commission, Walgreens said it entered the settlement agreement with Everly Health Systems to avoid the continued accrual of interest on the arbitration award and the cost of possible ongoing litigation. Walgreens said the settlement does not include any admission of wrongdoing or liability on its part.

As previously reported, Walgreens initially said it planned to appeal the arbitration award, which stemmed from a contract that Everly had related to the ordering and oversight of Covid testing services. Everly claimed it had an exclusive contract to provide the services and that Walgreens violated the terms of the contract when it took some services in-house. Walgreens, meanwhile, said the contract stipulated that damages could not exceed $79 million.

Related:Walgreens to appeal $988M ruling in Covid test dispute

A spokesperson for Everly Health Solutions could not be reached for comment.

Sycamore Partners buyout talks resurface

Meanwhile, Octus, a credit information provider formerly known as Reorg, said in a social media post that Sycamore Partners is working on securing $10 billion in financing from Morgan Stanley, UBS, and private lenders to support a potential buyout of Walgreens. As of Wednesday, Walgreens had a market capitalization of about $9.63 billion.

The report injected new credibility into previous reports that Sycamore Partners had been seeking financing for the buyout. According to the Octus report, the buyout could be split into several tranches, and “nothing was locked in yet.”

Walgreens has also reportedly been working with Perella Weinberg Partners and AlixPartners to help it restructure its operations and improve its balance sheet, according to reports.

Reports that Sycamore Partners could be interested in acquiring Walgreens first surfaced in December, and followed years of speculation that the company could be taken private.

The latest buyout reports follow the company’s announcement last year that it was closing 1,200 stores in the next three years and that it was seeking to sell its stake in Village Medical, the clinic operator.

Other recent setbacks for Walgreens have included a civil suit filed by the U.S. Department of Justice against the company alleging the illegal dispensing of opioids and other medications and the company’s cancellation of its stock dividend in January after 90-plus years to focus on debt refinancing and litigation.

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