Walgreens Boots beats first quarter expectations on sales, earnings

Transatlantic pharmacy giant Walgreens Boots Alliance reported a first quarter loss of $4.31 on Thursday, swinging from earnings of $4.13 per share year-on-year.

The Nasdaq-traded company said that reflected a $6.5bn pre-tax charge in connection with its previously-announced opioid litigation settlement, and other “opioid-related” matters.

It said adjusted earnings per share decreased 30.8% to $1.16, or by 29.9% on a constant currency basis, against “strong growth” of 53.1% in the year-ago quarter, reflecting higher Covid-19 vaccine volumes at the time.

That was, however, still better than the $1.14 adjusted earnings per share analysts had pencilled in.

First quarter sales decreased 1.55% year-on-year to $33.4bn, but was up 1.1% on a constant currency basis, and was well ahead of the $32.9bn markets were expecting.

Excluding the negative impact from AllianceRx Walgreens of 485 basis points, and the positive contributions from US healthcare mergers and acquisitions of 280 basis points, sales growth was 3.2% on a constant currency basis.

Walgreens Boots said it invested $3.5bn in debt and equity to support VillageMD's acquisition of Summit Health, which closed on 3 January, which would accelerate its US healthcare segment sales and its path to profitability.

It also sold 19.2 million shares of AmerisourceBergen common stock in November and December, making for after-tax cash proceeds of $3bn.

Looking ahead, Walgreens Boots maintained its full-year adjusted earnings per share guidance of between $4.45 and $4.65, as “strong” core business growth was more than offset by lapping fiscal year 2022 Covid-19 execution, and currency headwinds.

The company raised its full-year sales guidance to between $133.5bn and $137.5bn, which the board put down to the Summit Health acquisition, refreshed currency rates, and first quarter sales ahead of expectations.

US healthcare targets were raised with the Summit Health announcement on 7 November, including a 2025 financial year sales goal of $14.5bn to $16bn, up from $11bn to $12.0bn, and positive adjusted EBITDA expected for the segment by the end of the 2023 period.

The board said it had “increased clarity” into the company's long-term growth algorithm, building to “low-teens” adjusted earnings per share growth in 2025 and beyond.

“Walgreens Boots Alliance delivered a solid start to the fiscal year, as we continue to accelerate our transformation to a consumer-centric healthcare company,” said chief executive officer Rosalind Brewer.

“We're making significant progress in driving our US healthcare segment to scale and profit, including the recent VillageMD acquisition of Summit Health.”

Brewer said the company’s core retail pharmacy businesses in both the United States and the United Kingdom remained “resilient” in “challenging” operating environments.

“Execution across segments reinforces our confidence in achieving full-year guidance, and our strategic actions are creating long-term shareholder value.”

At 0749 EST (1249 GMT), shares in Walgreens Boots Alliance were down 2.24% in pre-market trading on Wall Street, at $36.65.

Reporting by Josh White for Sharecast.com.