Walgreens Boots Alliance (WBA) quarterly earnings for the year 2023

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Walgreens Boots Alliance on Thursday reported fiscal first-quarter earnings that beat Wall Street estimates after an early flu season boosted demand for cough and cold medicine.

The company said it also raised its full-year revenue outlook due in part to the US healthcare sector’s recent acquisition of Summit Health. For the last quarter, however, the department’s income came in lower than expected.

The company’s shares fell more than 6% on Thursday to close the day at $35.19.

Here’s how Walgreens did in its first fiscal quarter compared to Wall Street expectations, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.16, adjusted, vs. Expect $1.14
  • Revenue: $33.38 billion vs $32.84 billion expected

Despite the strong sales, Walgreens swung to an unadjusted loss of $3.7 billion, or $4.31 per share, for the three months ended Nov. 30, compared with net income of $3.58 billion, or $4.13 per share, a year earlier.

The loss was driven by a $5.2 billion settlement Walgreens was ordered to pay for opioid-related lawsuits after several states alleged the company mishandled prescriptions and they should have realized that they were prescribing the ultra-addictive drug too often.

Thanks to an early flu season and strong demand for over-the-counter cough and cold remedies, sales jumped to $33.38 billion, down slightly from $33.9 billion a year earlier. The company also saw an increase in beauty and personal care sales, which helped offset losses from a drop in demand for Covid vaccines and home testing kits, which boosted profits in previous quarters.

For the past five quarters, Walgreens has beaten Wall Street expectations as the ubiquitous drugstore chain continues to transform from a pharmacy-led retailer. to a wider healthcare company.

While the company has made significant investments to bring that vision to life, sales from its US healthcare division fell short of expectations at $989 million but grew significantly from the prior year. . The company expects full-year sales of $6.5 billion to $7.3 billion for the segment.

Walgreens is currently acquiring CareCentrix, which coordinates home care for patients after they are discharged from the hospital, and Shields Health Solutions, a specialty pharmacy company.

That’s in addition to the $5.2 billion deal it already struck with primary care provider VillageMD, which has opened a total of 393 clinics, including 200 located next to Walgreens stores.

Since the end of last quarter, 59 additional VillageMD clinics have been opened and the program will continue to expand after the industry announced plans to acquire urgent care provider Summit Health-CityMD for approximately $8.9 billion. The deal closed on Tuesday.

As a result of the acquisition, in addition to the better-than-expected sales, Walgreens increased its full-year sales guidance by $3 billion to $3.5 billion, bringing it to $133.5 billion to $137.5 billion. It also raised its retail and pharmacy sales guidance by $500 million.

Following the news of the Summit Health acquisition in November, Walgreens raised its targets for its healthcare division to $14.5 billion to $16 billion for fiscal 2025, up from its previous target of $11 billion to $12 billion.

The company is also maintaining its full-year earnings per share guidance of $4.45 to $4.65, compared to estimates of $4.50.

Walgreens Chief Financial Officer James Kehoe told investors the company expects second-quarter revenue to be “adversely impacted” by ongoing Covid headaches, continued investments into the pre- their health care system, labor costs for hiring pharmacists and higher tax rates.

Read more: Walgreens says decline has become steady

By the latter half of the year, the company expects these headwinds to come down significantly and earnings per share to grow by around 30%.

Internationally, the company’s UK-based drugstore chain Boots saw strong Christmas sales with revenue up 4.6% for the quarter and store traffic up 8%. Kehoe expects the company’s overall international division to continue to see strong performance and with lower headlines taken into account, Walgreens raised sales guidance from $21.2 billion to $21.7 billion, up $800 million from previous year range.

The earnings release comes after Walgreens confirmed it would be among the pharmacy chains to offer the contraceptive pill mifepristone after the Food and Drug Administration ruled it can be sold at drugstores.

“We plan to become a certified pharmacy under the program,” the company told CNBC late Wednesday.

“We are working through registration, required training of our pharmacists, as well as evaluating our pharmacy network as to where we typically dispense products that have additional FDA requirements and provide these in accordance with federal and state laws.”

Read the company’s earnings release here.

CNBC’s Bertha Coombs contributed to this report.

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