Walgreens (WBA) earnings Q2 2024

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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 Avenue’s expectations, however lowered the excessive finish of its full-year adjusted earnings outlook partly as a consequence of a “difficult” retail setting 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. 

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 yr 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 stated it’s assured it would meet its purpose of saving $1 billion throughout fiscal 2024 via 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 Avenue, 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 steering 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 count on full-year adjusted earnings of $3.24 per share.

Walgreens stated the brand new steering displays the hurdles going through retailers within the U.S. and an early wind-down of sales-leaseback packages. It additionally takes into consideration decrease earnings as a consequence of Walgreens’ ahead sale of shares of drug distributor Cencora, previously generally known as AmerisourceBergen.

The corporate stated a stronger efficiency in its pharmacy providers phase 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 yr. Walgreens has not supplied that steering since October, when it stated 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 earnings of $703 million, or 81 cents per share, for a similar interval a yr in the past. Excluding sure gadgets, adjusted earnings per share have been $1.20 for the quarter. 

Walgreens stated 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% soar from the identical interval a yr in the past. 

Walgreens sees development throughout all divisions

The corporate stated that improve displays gross sales development 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 yr in the past. 

Income for the phase got here in at $2.18 billion. The division is essential to the corporate’s ongoing push to rework from a significant drugstore chain to a big health-care firm. 

The corporate stated the upper gross sales replicate VillageMD’s acquisition of multi-specialty care supplier Summit Well being and development throughout all companies within the phase on a pro-forma foundation.

VillageMD gross sales grew 20% as a consequence of same-clinic development, amongst different elements. Gross sales from the phase’s specialty pharmacy firm, Shields Well being Options, grew 13%, as a consequence of new contracts and expansions of present partnerships.

Specialty pharmacies are designed to ship drugs with distinctive dealing with, storage and distribution necessities, typically for sufferers with advanced circumstances akin to most cancers and rheumatoid arthritis.

In the meantime, Walgreens’ U.S. retail pharmacy phase generated $28.86 billion in gross sales within the fiscal second quarter, a rise of just about 5% from the identical interval final yr.

That phase 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 stated pharmacy gross sales for the quarter rose 8.2% in contrast with the year-ago quarter, as comparable gross sales climbed 8.7% as a consequence of value inflation in model drugs and “robust execution” in pharmacy providers. 

Whole prescriptions crammed within the quarter together with immunizations totaled 305.7 million, a greater than 2% improve from the identical interval a yr 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’ worldwide phase, 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 stated gross sales from its U.Okay. subsidiary, Boots, grew 3%.

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