Walgreens Boots Alliance Reports Q3 Earnings Surge

Walgreens Boots Alliance, Inc. (Nasdaq: WBA) has reported its financial results for the third quarter of fiscal 2024, which ended on May 31, 2024. The company's third-quarter earnings per share (EPS) was $0.40, a significant increase from the year-ago quarter's EPS of $0.14, which had included a non-cash impairment of pharmacy license intangible assets in Boots UK. Adjusted EPS was $0.63, down 36.6 percent on a constant currency basis compared to the year-ago quarter.

In terms of sales, the company saw a 2.6 percent year-over-year increase to $36.4 billion in the third quarter, up 2.5 percent on a constant currency basis. However, the company has lowered its fiscal 2024 adjusted EPS guidance to $2.80 to $2.95, reflecting challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment.

The U.S. retail pharmacy segment had third quarter sales of $28.5 billion, an increase of 2.3 percent from the year-ago quarter driven entirely by comparable pharmacy sales, partly offset by a retail decline. The international segment had third quarter sales of $5.7 billion, an increase of 2.8 percent from the year-ago quarter, including a favorable currency impact of 1.1 percent. Meanwhile, the U.S. healthcare segment had third quarter sales of $2.1 billion, an increase of 7.6 percent compared to the year-ago quarter.

The company's net cash provided by operating activities was $605 million in the third quarter, and free cash flow was $334 million, representing a $778 million increase compared with the year-ago quarter, driven primarily by phasing and optimization of working capital.

For the first nine months of fiscal 2024, sales increased 6.2 percent from the year-ago period to $110.1 billion, representing a 5.6 percent increase on a constant currency basis, reflecting growth across all segments. However, the company reported an operating loss of $13.1 billion in the first nine months of fiscal 2024, compared to an operating loss of $6.4 billion in the year-ago period, largely due to non-cash impairment charges related to Villagemd goodwill and certain long-lived assets in the U.S. retail pharmacy segment.

In addition, adjusted net earnings decreased 24.9 percent, or $712 million to $2.2 billion, down 25.3 percent on a constant currency basis, reflecting lower adjusted operating income.

The company is finalizing a significant multiyear footprint optimization program to close certain underperforming U.S. stores and is launching a U.S. retail pharmacy action plan to invest in and deliver an improved customer and patient experience across channels.

The CEO, Tim Wentworth, acknowledged the challenging operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics. He emphasized the company's focus on improving its core business, retail pharmacy, and expressed confidence in the team and strategy to lead a business turnaround for the benefit of customers and patients. Following these announcements, the company's shares moved -24.7%, and are now trading at a price of $11.79. If you want to know more, read the company's complete 8-K report here.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.