On November 26, 2021, in Manhattan, New York City, the United States, a person rode past a Walgreens truck, which is part of Walgreens Boots Alliance, Inc.
Andrew Kelly | Reuters
walgreens Thursday Reports fiscal second quarter Sales beat Wall Street forecasts but lowered full-year adjusted cap Profit prospects Partly due to a ‘challenging’ U.S. retail environment
The company also posted a huge net loss for the quarter as goodwill impairment charges related to its primary care providers hit nearly $6 billion Doctor of Rural Medicine.Walgreens has closure Dozens of VillageMD clinics are facing financial troubles and view the business as critical to its continued push to transform from a large pharmacy chain into a major health care company.
Walgreens’ new CEO, Tim Wentworth, is working to cut costs and lead the company out of trouble, and has achieved this result. Walgreens shares have fallen 30% in the past year as the company faces weak demand for its coronavirus products, low pharmacy reimbursement rates, an unstable health care business and a challenging macroeconomic environment.
The company said in a press release on Thursday that it is confident that it will achieve its goal of saving $1 billion in fiscal 2024 through continued cost reduction plans. Walgreens has taken measures such as laying off employees, closing unprofitable stores, and using artificial intelligence to improve supply chain efficiency.
Here’s what Walgreens reported this season:
- Earnings per share: The adjusted price was $1.20, according to an LSEG poll of analysts, and it’s unclear whether the price compared with the 82 cents Wall Street expected.
- income: US$37.05 billion, expected US$35.86 billion
Walgreens narrowed its fiscal 2024 adjusted profit guidance to $3.20 to $3.35 per share. That compares with the company’s previous forecast of $3.20 to $3.50 per share. Analysts polled by LSEG expected full-year adjusted earnings per share of $3.24.
Walgreens said the new guidance reflects the obstacles faced by U.S. retailers and the early end of its sale-leaseback program. It also takes into account lower earnings due to Walgreens’ forward sale of stock in drug distributor Cencora (formerly AmerisourceBergen).
The company said strong performance from its pharmacy services segment and a lower adjusted effective tax rate helped offset the drag on its earnings.
The company did not give a revenue forecast for the new fiscal year. Walgreens has not provided this guidance since October, when the company said it expected sales of $141 billion to $145 billion.
The company reported a net loss of $5.91 billion, or $6.85 per share, for the quarter. This compares with net income of $703 million, or 81 cents per share, in the same period last year. Excluding certain items, adjusted earnings per share for the quarter were $1.20.
Walgreens said its fiscal second-quarter results included a $5.8 billion non-cash goodwill impairment charge related to VillageMD.
The company’s sales for the quarter were $37.05 billion, an increase of about 6% over the same period last year.
Walgreens sees growth across all divisions
The company said the growth reflected sales growth across its three business units. But Walgreens’ U.S. health care unit performed well, with second-quarter sales growing about 33% compared with the same period last year.
The segment’s revenue was $2.18 billion.
The company said the sales growth reflected VillageMD’s acquisition of multi-specialty care provider Summit Health, as well as expected growth across all businesses in the space.
VillageMD’s sales increased by 20% due to factors such as the growth of the same clinic. Sales at Shields Health Solutions, the segment’s specialty pharmaceutical company, increased 13% due to new contracts and expansion of existing partnerships.
Specialty pharmacies are designed to deliver medications with unique handling, storage and dispensing requirements, often for patients with complex diseases such as cancer and rheumatoid arthritis.
Walgreens and VillageMD
Source: Walgreens
Meanwhile, Walgreens’ U.S. Retail Pharmacy Sector Sales in the second fiscal quarter reached US$28.86 billion, an increase of nearly 5% compared with the same period last year.
The segment operates more than 8,000 pharmacies in the United States, selling prescription and over-the-counter drugs as well as health and wellness, beauty, personal care and food products.
Walgreens said pharmacy sales increased 8.2% in the quarter compared with the same period last year and comparable sales increased 8.7% due to higher brand-name drug prices and “strong execution” of pharmacy services.
The total number of prescription drugs filled this quarter, including immunizations, totaled 305.7 million, an increase of more than 2% from the same period last year.
Retail sales this quarter fell 4.5% from the same period last year and 4.3% from retail sales. The company cited a challenging retail environment and a weak respiratory season, among other factors.
walgreens international sectionThe company operates more than 3,000 retail stores overseas and posted fiscal second-quarter sales of $6.02 billion. This is an increase of more than 6% from the same period last year.
The company said sales at its British subsidiary Boots rose 3%.
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