An individual rides previous a Walgreens truck, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York Metropolis, U.S., November 26, 2021.
Andrew Kelly | Reuters
Walgreens on Thursday reported fiscal second-quarter gross sales that beat Wall Road’s expectations, however lowered the excessive finish of its full-year adjusted earnings outlook partially resulting from a “challenging” retail environment within the U.S.
The corporate additionally posted a steep internet loss for the quarter because it recorded a hefty goodwill impairment cost of practically $6 billion associated to its primary-care supplier VillageMD. Walgreens has been closing dozens of VillageMD clinics amid monetary woes and sees the enterprise as crucial to its ongoing push to remodel from a serious drugstore chain to a big health-care firm.
The outcomes come as Walgreens’ new CEO, Tim Wentworth, works to slash prices and steer the corporate out of a tough spot. Shares of Walgreens fell 30% final 12 months as the corporate confronted weakening demand for Covid merchandise, low pharmacy reimbursement charges, an unsteady push into well being care and a difficult macroeconomic setting.
In a launch on Thursday, the corporate mentioned it’s assured it can meet its aim of saving $1 billion throughout fiscal 2024 by its ongoing cost-cutting program. Walgreens has laid off staff, closed unprofitable shops and used synthetic intelligence to make its provide chain extra environment friendly, amongst different efforts.
This is what Walgreens reported for the quarter:
- Earnings per share: $1.20 adjusted, it was not instantly clear if it in comparison with the 82 cents anticipated by Wall Road, primarily based on a survey of analysts by LSEG
- Income: $37.05 billion vs. $35.86 billion anticipated
Walgreens narrowed its fiscal 2024 adjusted earnings steerage to $3.20 to $3.35 per share. That compares to the corporate’s earlier outlook of $3.20 to $3.50 per share. Analysts surveyed by LSEG anticipate full-year adjusted earnings of $3.24 per share.
Walgreens mentioned the brand new steerage displays the hurdles dealing with retailers within the U.S. and an early wind-down of sales-leaseback applications. It additionally takes under consideration decrease earnings resulting from Walgreens’ ahead sale of shares of drug distributor Cencora, previously often called AmerisourceBergen.
The corporate mentioned a stronger efficiency in its pharmacy companies section and a decrease adjusted efficient tax price helped to offset the elements dragging on its earnings.
The corporate didn’t give a brand new income forecast for the fiscal 12 months. Walgreens has not offered that steerage since October, when it mentioned it sees $141 billion to $145 billion in gross sales.
The corporate reported a internet lack of $5.91 billion, or $6.85 per share, for the quarter. That compares with a internet revenue of $703 million, or 81 cents per share, for a similar interval a 12 months in the past. Excluding sure objects, adjusted earnings per share had been $1.20 for the quarter.
Walgreens mentioned its fiscal second-quarter outcomes embody a $5.8 billion non-cash goodwill impairment cost associated to VillageMD.
The corporate booked gross sales of $37.05 billion within the quarter, a roughly 6% leap from the identical interval a 12 months in the past.
Walgreens sees progress throughout all divisions
The corporate mentioned that improve displays gross sales progress throughout its three enterprise segments. However Walgreens’ U.S. health-care division stood out as gross sales jumped about 33% within the fiscal second quarter in comparison with the identical interval a 12 months in the past.
Income for the section got here in at $2.18 billion.
The corporate mentioned the upper gross sales replicate VillageMD’s acquisition of multi-specialty care supplier Summit Well being and progress throughout all companies within the section on a pro-forma foundation.
VillageMD gross sales grew 20% resulting from same-clinic progress, amongst different elements. Gross sales from the section’s specialty pharmacy firm, Shields Well being Options, grew 13%, resulting from new contracts and expansions of present partnerships.
Specialty pharmacies are designed to ship medicines with distinctive dealing with, storage and distribution necessities, typically for sufferers with complicated circumstances similar to most cancers and rheumatoid arthritis.
Walgreens and VillageMD
Supply: Walgreens
In the meantime, Walgreens’ U.S. retail pharmacy segment generated $28.86 billion in gross sales within the fiscal second quarter, a rise of virtually 5% from the identical interval final 12 months.
That section operates greater than 8,000 drugstores throughout the U.S., which promote prescription and nonprescription medicine in addition to well being and wellness, magnificence, private care, and meals merchandise.
Walgreens mentioned pharmacy gross sales for the quarter rose 8.2% in contrast with the year-ago quarter, as comparable gross sales climbed 8.7% resulting from worth inflation in model medicines and “strong execution” in pharmacy companies.
Complete prescriptions stuffed within the quarter together with immunizations totaled 305.7 million, a greater than 2% improve from the identical interval a 12 months in the past.
Retail gross sales for the quarter fell 4.5% from the prior-year quarter, and comparable retail gross sales declined 4.3%. The corporate pointed to a difficult retail setting and a weaker respiratory season, amongst different elements.
Walgreens’ international segment, which operates greater than 3,000 retail shops overseas, posted $6.02 billion in gross sales within the fiscal second quarter. That is a rise of greater than 6% from the year-ago interval.
The corporate mentioned gross sales from its U.Okay. subsidiary, Boots, grew 3%.
