Walgreens Boots Alliance on Thursday reported fiscal first-quarter earnings that beat Wall Street’s estimates after an early flu season boosted demand for cough and cold medicine.
The corporate said it also raised its full-year revenue outlook due partly to its U.S. health-care segment’s just-sealed acquisition of Summit Health. For probably the most recent quarter, nevertheless, the segment’s revenue got here in below expectations.
Shares of the corporate fell greater than 6% Thursday to shut the day at $35.19.
Here’s how Walgreens did in its first fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.16, adjusted, vs. $1.14 expected
- Revenue: $33.38 billion vs. $32.84 billion expected
Despite the strong sales, Walgreens swung to an unadjusted lack of $3.7 billion, or $4.31 per share, for the three-month period that ended Nov. 30, compared with net income of $3.58 billion, or $4.13 per share, a yr earlier.
The loss was driven by a $5.2 billion settlement Walgreens was ordered to pay for opioid-related litigation after various states alleged the corporate mishandled prescriptions and may’ve realized they were prescribing the ultra-addictive drug too often.
Due to an early flu season and strong demand for over-the-counter cough and cold medicine, sales jumped to $33.38 billion, down barely from $33.9 billion a yr earlier. The corporate also saw a lift in beauty and personal-care sales, which helped offset losses from a dip in demand for Covid vaccines and residential test kits, which drove profits in previous quarters.
For the last five quarters, Walgreens has beat Wall Street’s expectations as the ever-present drugstore chain continues to remodel itself from a pharmacy-led retailer to a broader health-care company.
While the corporate has made significant investments to bring that vision to life, sales from its U.S. health-care segment fell in need of expectations at $989 million but still grew significantly from the prior-year period. The corporate expects full yr sales of $6.5 billion to $7.3 billion for the segment.
Walgreens is within the means of acquiring CareCentrix, which coordinates home look after patients after they’re discharged from the hospital, and Shields Health Solutions, a specialty pharmacy company.
That is on top of the $5.2 billion deal it already struck with primary-care provider VillageMD, which has opened 393 total clinics clinics, including 200 which can be adjoining to Walgreens stores.
For the reason that end of the last quarter, an extra 59 VillageMD clinics were opened and this system will proceed to expand after the business announced plans to accumulate urgent-care provider Summit Health-CityMD for about $8.9 billion. The deal closed Tuesday.
The acquisition, plus the better-than-expected sales, led Walgreens to extend 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 health-care segment to $14.5 billion to $16 billion for fiscal 2025, up from the previous goal of $11 billion to $12 billion.
The corporate can be maintaining its full-year earnings per share guidance of $4.45 to $4.65, compared with estimates of $4.50.
Walgreens Chief Financial Officer James Kehoe told investors the corporate expects second quarter earnings to be “adversely impacted” by ongoing Covid headwinds, continued investments into their health-care strategy, labor costs for hiring pharmacists and better tax rates.
Read more: Walgreens says shrinkage has stabilized
By the latter half of the yr, the corporate expects those headwinds to subside significantly and earnings per share to grow around 30%.
Internationally, the corporate’s U.K.-based drugstore chain Boots saw strong Christmas sales with revenue up 4.6% for the quarter and store traffic up 8%. Kehoe expects the corporate’s overall international segment will proceed to see strong performance and with lower currency headwinds taken under consideration, Walgreens raised sales guidance from $21.2 billion to $21.7 billion, up $800 million from the prior yr range.
The earnings release comes after Walgreens confirmed it will be among the many pharmacy chains to supply abortion pill mifepristone after the Food and Drug Administration ruled it may well be sold at drug stores.
“We intend to develop into a licensed pharmacy under this system,” the corporate told CNBC late Wednesday.
“We’re working through the registration, crucial training of our pharmacists, in addition to evaluating our pharmacy network by way of where we normally dispense products which have extra FDA requirements and can dispense these consistent with federal and state laws.”
Read the corporate’s earnings release here.
— CNBC’s Bertha Coombs contributed to this report.