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Walgreens Delivers Better-Than-Expected Q4, FY22 Results

Company continues transformational push toward health care
Emily Crowe, Progressive Grocer
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Walgreens Boots Alliance is raising EPS and sales targets for the coming fiscal year.

As it works to rapidly scale its consumer-centric health care model, Walgreens Boots Alliance, Inc. (WBA) is reporting financial results for the fiscal year and fourth quarter ending Aug. 31.

While the company’s financials are being compared to a year that saw a major boost thanks to COVID-19 vaccinations, EVP and Global CFO James Kehoe asserted that Walgreens had a good finish to the year and saw Q4 results that were slightly ahead of its own expectations.

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“Solid gross profit performance in U.S. retail and the continued rebound in international were offset by the lapping of peak COVID-19 vaccinations in the year ago quarter and planned growth investments in U.S. health care,” Kehoe explained in this week’s earning call. According to Kehoe, full year sales increased 1.2% on a constant currency basis, but when excluding a negative impact from AllianceRx and positive contributions from U.S. health care merger and acquisition activity, core sales growth was 6%.

Fourth quarter sales from continuing operations were down 5.3% from the same period last year to $32.4 billion, a decrease of 3.2% on a constant currency basis. Adjusted operating income was $744 million, representing a 38.2% decrease that can be tied to lower U.S. pharmacy operating results caused by last year’s COVID-19 vaccination drive.

Income from continuing operations in FY 2022 decreased 40.8% to $1.4 billion, and earnings were $4.3 billion, compared with $2 billion in the year-ago period. EPS from continuing operations increased to $5.01, compared to $2.30 last year.

"WBA has delivered ahead of expectations in the first year of our transformation to a consumer-centric health care company. Our resilient business achieved growth while navigating macroeconomic headwinds,” said CEO Rosalind Brewer.

The company expects a FY 2023 adjusted EPS of $4.45 to $4.65 as strong core business growth returns, and is raising its U.S. health care FY 2025 sales target to $11 billion to $12 billion. That segment is expected to achieve positive adjusted EBITDA by FY 2024.

According to Brewer, Walgreens’ health care strategy is actively coming to life through the implementation of tech-enabled health care solutions that improve outcomes and lower cost for patients, providers and payers.

“We are confident in the road ahead with the right team leading us through hard decisions today,” Brewer said in the earnings call. “We exceeded expectations in fiscal year 2022, successfully managing our resilient core business.”

Deerfield, Ill.-based Walgreens, which operates nearly 9,000 retail locations across the United States, Puerto Rico and the U.S. Virgin Islands, is No. 5 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.

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