Walgreens Boots Alliance (WBA) Q1 earnings 2023
Walgreens Boots Alliance on Thursday reported fiscal first-quarter earnings that beat Wall Street estimates as an early flu season boosted demand for cough and cold medicine.
The company said it also raised its full-year revenue outlook, in part due to the recently sealed acquisition of Summit Health from its US healthcare segment. For the most recent quarter, however, the segment’s revenue came in below expectations.
The company’s shares fell more than 4% before the bell.
Here’s how Walgreens did in its fiscal first quarter compared to what Wall Street was expecting, 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 strong sales, Walgreens posted an unadjusted loss of $3.7 billion, or $4.31 per share, for the three-month period ended Nov. 30, compared with net income of $3.58 billion, or $4.13 per share, a year ago.
The loss was caused by a $5.2 billion settlement Walgreens was ordered to pay for opioid-related lawsuits after a number of states claimed the company mishandled prescriptions and had to realize they were prescribing the ultra-addictive drug too often.
Thanks to an early flu season and strong demand for over-the-counter cough and cold medicines, sales jumped to $33.38 billion, down slightly from $33.9 billion a year earlier. The company also saw an uptick in beauty and personal care sales, which helped offset losses from falling demand for Covid vaccines and home testing kits, which turned a profit in previous quarters.
For the past five quarters, Walgreens has beaten Wall Street expectations as the ubiquitous drug chain continues to transform from a pharmacy-driven retailer to a broader health care company.
While the company has made significant investments to bring this vision to life, sales from its US healthcare segment fell short of expectations at $989 million, but were still up significantly from the year-ago period.
The company is in the process of acquiring CareCentrix, which coordinates home care for patients after they are discharged from the hospital, and Shields Health Solutions, a specialty pharmacy company.
That’s on top of the $5.2 billion deal they already reached with primary care provider VillageMD, which has opened a total of 393 clinics adjacent to Walgreens stores.
As of the end of last quarter, 59 additional VillageMD clinics opened, and the program will continue to expand after the provider announced plans to acquire urgent care provider Summit Health-CityMD for about $8.9 billion. The deal closed on Tuesday.
The acquisition led Walgreens to raise its full-year sales guidance to $133.5 billion to $137.5 billion.
Following news of the Summit Health acquisition in November, Walgreens raised its U.S. healthcare targets to $14.5 billion to $16 billion for fiscal 2025, from their previous target of $11 billion to $12 billion.
The company is also maintaining its full-year earnings per share guidance of $4.45 to $4.65, compared with estimates of $4.50.
The earnings release comes as Walgreens confirmed it would be among the pharmacy chains to offer the abortion pill mifepristone after the FDA ruled it can be sold in drugstores.
“We intend to become a certified pharmacy under the program,” the company told CNBC late Wednesday.
“We are working through the necessary registration, training of our pharmacists, as well as evaluating our pharmacy network as to where we typically dispense products that have additional FDA requirements and will dispense these in accordance with federal laws. and state.”
Read the company’s earnings release here.
— CNBC’s Bertha Coombs contributed to this report.