Walgreens Boot Alliance Reuters reported fiscal first-quarter earnings on Thursday that beat Wall Street estimates after the early flu season boosted demand for the cough and cold drug.
The company said it also raised its full-year revenue outlook due to Summit Health’s recently closed acquisition of its US health-care segment. However, for the most recent quarter, segment revenue fell short of expectations.
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Shares of the company fell more than 7% on Thursday.
Here’s how Walgreens performed in its first fiscal quarter compared to what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.16, adjusted, versus $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 November 30, compared with net income of $3.58 billion, or $4.13 per share, a year earlier.
The loss was driven by the $5.2 billion settlement Walgreens was ordered to pay opioid-related litigation After several states alleged that the company improperly handled prescriptions and realized they should have been prescribing the over-the-counter drug too often.
thanks for the early flu season and Huge demand for over-the-counter cough and cold medicine, sales fell slightly to $33.38 billion from $33.9 billion a year earlier. The company also saw growth in sales of beauty and personal care, which helped offset the loss. Decline in demand for Covid vaccines and Home Test Kits, which posted profits in previous quarters.
For the past five quarters, Walgreens has beat Wall Street’s expectations as the ubiquitous drugstore chain continues to transform itself from a pharmacy-based retailer into a comprehensive health care company.
While the company has made significant investments to bring that vision to life, its US health-care segment sales fell short of expectations at $989 million, but still grew significantly from the prior-year period. The company expects full year sales of $6.5 billion to $7.3 billion for this segment.
is at walgreens Process to get CareCentrixwhich coordinates home care for patients after they are discharged from the hospital, and Shields Health Solutions, a specialty pharmacy company.
This is on top of the $5.2 billion deal it has already signed with primary care provider VillageMD, which has Opened 393 total clinics, including 200 located near Walgreens stores,
Since the end of last quarter, an additional 59 VillageMD clinics were opened and the program will continue to expand as the business announces plans. Acquire urgent-care provider Summit Health – CityMD For about $8.9 billion. The deal closed on Tuesday.
The acquisition, as well as better-than-expected sales, resulted in Walgreens raising its full-year sales guidance from $3 billion to $3.5 billion, to a range of $133.5 billion to $137.5 billion. It also increased its retail and pharmacy sales guidance by $500 million.
Following news of the Summit Health acquisition in November, Walgreens raised its health care segment target for fiscal 2025 to $14.5 billion to $16 billion, up from a 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 to estimates of $4.50.
Walgreens chief financial officer James Kehoe told investors that the company expects second-quarter earnings to be “adversely impacted” by ongoing COVID headwinds, will continue to invest in their healthcare strategy, and will continue to hire pharmacists. Labor cost and high tax rates.
Read more: Walgreens says shrinkage has stabilized
By the second half of the year, the company expects those headwinds to narrow significantly and earnings per share to grow by approximately 30%.
Internationally, the company’s UK-based drugstore chain Boots saw strong Christmas sales, with revenue up 4.6% for the quarter and store traffic up 8%. Kehoe expects continued strong performance in the company’s overall international segment and, taking into account lower currency headwinds, Walgreens raised sales guidance to $21.2 billion to $21.7 billion, up $800 million from last year’s range.
After the earnings release, Walgreens confirmed that it would be one of the pharmacy chains to offer the abortion pill mifepristone after the Food and Drug Administration ruled that it could be sold at drugstores.
“We intend to become a certified pharmacy under the program,” the company told CNBC late Wednesday.
“We are working through registration, required training of our pharmacists as well as evaluating our pharmacy network where we typically dispense products that have additional FDA requirements and are regulated by federal and state laws. Will distribute accordingly.”
Read the company’s earnings release here,
, CNBC’s Bertha Combs contributed to this report.