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Walgreens (WBA) Q4 2022 earnings

Walgreens beats Q4 earnings expectations amid US health expansion

Walgreens Boots Alliance on Thursday exceeded fiscal fourth quarter sales and earnings expectations, as the drugstore chain turns itself into a more health-care focused company.

The company said it anticipates full-year adjusted earnings per share of $ 4.45 to $ 4.65 in the coming fiscal year, which is about in line with what Wall Street expected. Yet Walgreens said its business growth will face tough comparisons as it laps strong demand for Covid vaccines and gets hits by the strength of the dollar.

Shares were up about 7% in premarket trading.

Here’s what the company reported compared with what analysts were expecting for the fiscal fourth quarter ended Aug. 31, based on Refinitiv data:

  • Earnings per share: 80 cents, adjusted, vs. 77 cents expected
  • Revenue: $ 32.45 billion vs. $ 32.09 billion expected

Sales declined from the previous year’s quarter. Including certain costs, Walgreens swung to a loss in the three-month period. Its net loss was $ 415 million, or 48 cents per share, compared with a net income of $ 627 million, or 72 cents per share, a year earlier.

The company said its profits took a hit from a non-cash impairment charge in its Boots UK business and from its long-term cost management program. A year ago, Walgreens laid out a cost savings goal of $ 3.3 billion by 2024.

Walgreens has made significant investments to transform from a major drugstore chain to a large health-care company. It is opening hundreds of doctor offices with VillageMD. It invested $ 5.2 billion to become majority owner of the primary-care company. It recently announced plans to accelerate acquisitions of two other companies: CareCentrix, which coordinates care and benefits for at-home care, and Shields Health Solutions, a specialty pharmacy company.

Walgreens CEO Roz Brewer said in a news release that the coming fiscal year “will be a year of accelerating core growth and rapidly scaling our US Healthcare business.”

At the end of the quarter, Walgreens had a total of 334 doctor offices with VillageMD. The clinics, called Village Medical, are located next to its drugstores. It also has 70 stores with Health Corners, a designated space where a registered nurse or pharmacist can schedule a mammogram, screen a patient for high blood pressure or diabetes or help with other health-care needs.

Covid vaccines, which boosted Walgreens’ sales and foot traffic, have fallen off significantly. In the fourth quarter, the drugstore chain administered 2.9 million vaccinations. That’s a decline from 4.7 million vaccines in its fiscal third quarter, and a sharp drop from the 15.6 million vaccines in the first quarter and the 11.8 million in the second quarter.

Sales in Walgreens’ retail and pharmacy division in the US decreased by 7.2% to $ 26.7 billion in the fourth quarter compared with the year-ago period. Comparable sales rose 1.6%, however.

Its international business took a big hit from currency headwinds. It had fourth quarter sales of $ 5.1 billion, a drop of 6.6% from the year-ago period. That included a 13.3% adverse currency impact.

As customers come back to stores, Walgreens also said it is investing in its workforce to return to normal operating hours. However, it has continued to see some changes in shopping habits. Its US digital sales growth grew 14% in the fourth quarter, on top of an 82% increase in the year-ago period.

On Thursday, the company raised its outlook for the health care division. It said it now anticipates a sales target of $ 12 billion, rather than $ 11 billion, for fiscal 2025.

As of Wednesday’s close, Walgreens shares are down nearly 39% so far this year. That trails behind the S&P 500, which is down about 25%. Shares of Walgreens closed Wednesday at $ 31.94, down about 2%.

Read the company’s earnings release here.

This story is developing. Please check back for updates.

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