Shares of Walgreens Boots Alliance (WBA -3.57%) plunged 22.1% in August, according to data from S&P Global Market Intelligence.

The beleaguered drug store chain didn’t even report earnings last month and was already out of favor heading into August. But Walgreens saw incremental headwinds, especially the news that more drug companies would be introducing direct-to-consumer offerings.

Is Walgreens getting disrupted by DTC?

Walgreens has been under fire all year, and the stock was down slightly through August, even as the broader markets recovered from recession fears. Notable early-month events included a $1.1 billion share sale, or 2% stake, in pharmaceutical distributor Cencora (COR -0.13%). While Walgreens still owns about 10% of Cencora shares, the August sales included all of Walgreens’ shares that were “unencumbered.”

Walgreens is selling off noncore assets because the company is attempting to turn itself around while paying down debt. Speaking of its debt, Walgreens also reported a refinancing during the month, but at a significantly higher interest rate. On Aug. 8, the company sold $750 million in unsecured bonds at an 8.125% interest rate. What’s distressing about that is that the new notes will go toward paying off existing notes due this year which had a 3.8% interest rate. That’s a reflection not only of the higher-rate environment we’re in, but also the perceived increased risk for Walgreens’ business by the debt-holding community.

So, management will have to pay significantly higher interest expenses even as it seeks to turn the business around. But that also appeared to get more difficult on Aug. 27. On that day, Eli Lilly (LLY -1.07%) announced it would be selling its GLP-1 weight loss drug Zepbound for a 50% discount when ordered from Lilly’s direct-to-consumer pharmacy Lilly Direct. Also on Aug. 27, Pfizer (PFE 0.32%) announced Pfizerforall, a direct-to-consumer telehealth platform.

While Walgreens could be a partner to Pfizerforall in some ways, it may also lose retail pharmacy drug sales and nondrug retail sales due to the loss of traffic. Of note, the retail pharmacy makes up the majority of Walgreens’ current revenue.

This turnaround appears to be getting harder

Walgreens’ stock is down 64% on the year, so some might think the stock is cheap now. But take caution; while investors can make a huge amount of money when a turnaround works, most turnarounds don’t pan out.

Therefore, investors should likely wait until after Walgreens’ next earnings report to see if new CEO Tim Wentworth’s plans are taking hold in any positive way. He was just brought on in October 2023, so it may take much longer than a year for his new initiatives to bear fruit, if they ever do.