Walgreens Narrows Loss in Q2; Turnaround Still in ‘Early Stages’
Walgreens Boots Alliance reported second-quarter revenue and adjusted earnings that topped estimates as it prepares to be taken private.
In March, the 120-year-old retail pharmacy giant said that it had agreed to be acquired by Sycamore Partners in a roughly $10 billion deal. The deal, which could could lead to a restructuring of Walgreens that potentially involves the breakup of the company’s various divisions, is expected to close in the fourth quarter of the year.
Walgreens reported a loss of $2.853 billion, or a loss of $3.30 a share, for the quarter ended Feb. 28, compared to a loss of $5.908 billion, or a loss of $6.85 a share, in the year-ago period. Adjusted earnings came to $0.63 a share, topping analysts' estimates of $0.53 a share.
The results include a $4.2 billion write-down that was primarily related to the company’s U.S. retail pharmacy business and its VillageMD unit. Revenue rose 4.1% to $38.588 billion, topping estimates of $37.971 billion.
Sales in Walgreens’ U.S. retail pharmacy segment rose 5.3% to $30.4 billion. Comparable sales increased 8.2%. Pharmacy sales increased 8.9% and comparable pharmacy sales increased 12.2%, each benefiting from higher branded drug inflation and prescription volume.
Retail sales fell 5.5% and comparable retail sales decreased 2.8%, driven by lower sales in discretionary categories including beauty, seasonal and general merchandise.
The U.S. Healthcare segment has sales of $2.2 billion, a decrease of $23 million, reflecting lower fee-for-service and risk-based revenue at VillageMD, including the impact of clinic closures, partially offset by growth in Shields and CareCentrix. VillageMD sales fell 6.2%, CareCentrix sales rose 6.5%, and Shields sales increased 29.7%.
“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,” stated Walgreens CEO Tim Wentworth. “We remain in the early stages of our turnaround plan, and continue to expect that meaningful value creation will take time, enhanced focus and balancing future cash needs with necessary investments to navigate a changing pharmacy and retail landscape.”
Walgreens withdrew its 2025 guidance given its pending deal with Sycamore Partners.
This article was originally covered by sister publication Chain Store Age.
