Following the drugstore chain’s better-than-expected second-quarter revenue and adjusted earnings, which were supported by an improvement in the company’s healthcare sector, Walgreens Boots Alliance Inc. shares are up 1.2% in premarket transactions.
The stock is poised for its largest daily percentage gain since a 7.5% increase on March 7.
In a difficult environment, the Deerfield, Illinois-based corporation (WBA), which just announced a private-equity deal worth around $10 billion that will take the company private, is still working on a turnaround. The pharmacy-reimbursement rates for prescription pharmaceuticals are under pressure, and the drugstore industry is up against competitors like Amazon.com Inc. (AMZN).
For the quarter ending February 28, Walgreens reported a loss of $2.853 billion, or $3.30 per share, which was less than the $5.908 billion, or $6.85 per share, loss during the same period the previous year. Walgreens outperformed the FactSet consensus estimate of 53 cents per share with adjusted earnings of 63 cents per share.
Among the outcomes is a $4.2 billion write-down, mostly associated with the company’s VillageMD division and retail pharmacy operations in the United States.
Sales exceeded the FactSet forecast of $37.971 billion, rising to $38.588 billion from $37.052 billion in the previous year’s quarter.
“Second quarter results reflect disciplined cost management and improvement in U.S. Healthcare, which were partially offset by weaker front-end results in U.S. Retail Pharmacy, while significant legal settlements resulted in continued negative free cash flow,” Tim Wentworth, CEO, said in a statement. He went on to say that the company’s turnaround plan is still in its early phases.
The business ascribed the decline in healthcare-segment sales to VillageMD’s decreased fee-for-service and risk-based revenue, including the effect of clinic closures, which caused the segment’s sales to drop from $2.176 billion to $2.152 billion during the same period last year. Growth in the Shields pharmacy and home health service CareCentrix, however, somewhat countered this. According to the company, VillageMD’s sales fell 6.2%, CareCentrix’s sales rose 6.5%, and Shields’ sales rose 29.7%. According to a FactSet survey, analysts anticipated $2.235 billion in sales from the healthcare sector.
The operating loss for the healthcare division decreased to $3.304 billion from $13.059 billion in the same period last year.
The pharmacy giant removed its fiscal 2025 guidance, citing the purchase agreement that will see Walgreens go private after almost a century as a publicly traded firm.
