Walgreens Boots League It beat fourth-quarter sales and earnings estimates on Thursday as the pharmacy chain transformed itself into a more healthcare-focused company.
The company said it expects full-year adjusted earnings of $4.45 to $4.65 per share for the next fiscal year, roughly in line with Wall Street expectations. However, Walgreens said its business growth will face tough comparisons due to strong demand for a Covid vaccine and hit by a stronger dollar.
Shares were up about 7% in premarket trading.
Here’s how the company’s report compares to analysts’ expectations for the fiscal fourth quarter ending in August. 31, According to Refinitiv data:
- Earnings per share: 80 cents, adjusted, vs. 77 cents expected
- income: $32.45 billion Expected $32.09 billion
Sales were down from a year earlier. Including certain costs, Walgreens turned a profit within three months. Its net loss was $415 million, or 48 cents a share, compared with net income of $627 million, or 72 cents a share, a year ago.
The company said its profits were hit by non-cash impairment charges at the Boots UK business and its long-term cost management plan. A year ago, Walgreens set a cost savings goal of $3.3 billion by 2024.
Walgreens has invested heavily in its transformation from a large drugstore chain to a large health care company. It’s opening hundreds of doctors’ offices with VillageMD. It invested $5.2 billion to become the majority shareholder in the primary care company. It recently announced plans to accelerate the acquisition of two other companies: CareCentrix, which coordinates home care and benefits, and Shields Health Solutions, a specialty pharmacy company.
The next fiscal year “will be a year of accelerated core growth and rapid expansion of our U.S. healthcare business,” Walgreens CEO Roz Brewer said in a press release.
At the end of the quarter, Walgreens had 334 physician offices in VillageMD. These clinics called Village Medical are located next to the pharmacy. It also has 70 stores with Health Corners, designated spaces where registered nurses or pharmacists can perform mammograms, screen patients for high blood pressure or diabetes or help with other healthcare needs.
The Covid vaccine, which boosts Walgreens sales and foot traffic, has dropped significantly. The pharmacy chain delivered 2.9 million vaccinations in the fourth quarter. That’s down from 4.7 million vaccine doses in the fiscal third quarter, and down sharply from 15.6 million in the first quarter and 11.8 million in the second quarter.
Sales at Walgreens’ U.S. retail and pharmacy divisions fell 7.2 percent to $26.7 billion in the fourth quarter from a year earlier. However, comparable sales rose 1.6%.
Its international business was hit hard by currency headwinds. Its fourth-quarter sales were $5.1 billion, down 6.6% year over year. This included an unfavorable currency impact of 13.3%.
As customers return to stores, Walgreens also said it is investing in staff to return to normal operating hours. However, it continued to see some changes in shopping habits. Its digital sales in the U.S. rose 14% in the fourth quarter, on top of an 82% increase a year earlier.
On Thursday, the company raised its outlook for the healthcare segment. The company said it now expects to target $12 billion in sales for fiscal 2025, not $11 billion.
Shares of Walgreens have fallen nearly 39% so far this year as of Wednesday’s close. That lags the S&P 500, which is down about 25%. Walgreens shares closed at $31.94 on Wednesday, down about 2 percent.
Read the company’s earnings report here.
The story is developing. Please check for updates.