A person rides past a Walgreens truck, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York City, U.S., November 26, 2021.
Andrew Kelly | Reuters
The results come as Walgreens’ new CEO, Tim Wentworth, works to slash costs and steer the company out of a rough spot. Shares of Walgreens fell 30% last year as the company faced weakening demand for Covid products, low pharmacy reimbursement rates, an unsteady push into health care and a challenging macroeconomic environment.
In a release on Thursday, the company said it is confident it will meet its goal of saving $1 billion during fiscal 2024 through its ongoing cost-cutting program. Walgreens has laid off employees, closed unprofitable stores and used artificial intelligence to make its supply chain more efficient, among other efforts.
Here’s what Walgreens reported for the quarter:
- Earnings per share: $1.20 adjusted, it was not immediately clear if it compared to the 82 cents expected by Wall Street, based on a survey of analysts by LSEG
- Revenue: $37.05 billion vs. $35.86 billion expected
Walgreens narrowed its fiscal 2024 adjusted earnings guidance to $3.20 to $3.35 per share. That compares to the company’s previous outlook of $3.20 to $3.50 per share. Analysts surveyed by LSEG expect full-year adjusted earnings of $3.24 per share.
Walgreens said the new guidance reflects the hurdles facing retailers in the U.S. and an early wind-down of sales-leaseback programs. It also takes into account lower earnings due to Walgreens’ forward sale of shares of drug distributor Cencora, formerly known as AmerisourceBergen.
The company said a stronger performance in its pharmacy services segment and a lower adjusted effective tax rate helped to offset the factors dragging on its earnings.
The company did not give a new revenue forecast for the fiscal year. Walgreens has not provided that guidance since October, when it said it sees $141 billion to $145 billion in sales.
The company reported a net loss of $5.91 billion, or $6.85 per share, for the quarter. That compares with a net income of $703 million, or 81 cents per share, for the same period a year ago. Excluding certain items, adjusted earnings per share were $1.20 for the quarter.
Walgreens said its fiscal second-quarter results include a $5.8 billion non-cash goodwill impairment charge related to VillageMD.
The company booked sales of $37.05 billion in the quarter, a roughly 6% jump from the same period a year ago.
The company said that increase reflects sales growth across its three business segments. But Walgreens’ U.S. health-care division stood out as sales jumped about 33% in the fiscal second quarter compared to the same period a year ago.
Revenue for the segment came in at $2.18 billion.
The company said the higher sales reflect VillageMD’s acquisition of multi-specialty care provider Summit Health and growth across all businesses in the segment on a pro-forma basis.
VillageMD sales grew 20% due to same-clinic growth, among other factors. Sales from the segment’s specialty pharmacy company, Shields Health Solutions, grew 13%, due to new contracts and expansions of current partnerships.
Specialty pharmacies are designed to deliver medications with unique handling, storage and distribution requirements, often for patients with complex conditions such as cancer and rheumatoid arthritis.
Walgreens and VillageMD
Source: Walgreens
Meanwhile, Walgreens’ U.S. retail pharmacy segment generated $28.86 billion in sales in the fiscal second quarter, an increase of almost 5% from the same period last year.
That segment operates more than 8,000 drugstores across the U.S., which sell prescription and nonprescription drugs as well as health and wellness, beauty, personal care, and food products.
Walgreens said pharmacy sales for the quarter rose 8.2% compared with the year-ago quarter, as comparable sales climbed 8.7% due to price inflation in brand medications and “strong execution” in pharmacy services.
Total prescriptions filled in the quarter including immunizations totaled 305.7 million, a more than 2% increase from the same period a year ago.
Retail sales for the quarter fell 4.5% from the prior-year quarter, and comparable retail sales declined 4.3%. The company pointed to a challenging retail environment and a weaker respiratory season, among other factors.
Walgreens’ international segment, which operates more than 3,000 retail stores abroad, posted $6.02 billion in sales in the fiscal second quarter. That’s an increase of more than 6% from the year-ago period.
The company said sales from its U.K. subsidiary, Boots, grew 3%.