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WBA's Q4 and full-year net earnings beat Wall Street profit expectations


DEERFIELD, Ill. - Walgreens Boots Alliance on Thursday posted adjusted diluted net earnings per share for the quarter ended Aug. 31 of $1.07, representing an increase of 21.6% and eight cents higher than Wall Street analyst expectations. Walgreens Boots Alliance also beat analyst expectations of adjusted earnings of $4.51 per share by delivering adjusted earnings of $4.59 per share.

“We have continued to make good progress in putting in place the building blocks for the future growth of the business," stated Stefano Pessina, Walgreens Boots Alliance executive vice chairman and CEO. "The exercise of the AmerisourceBergen warrants in August provides an example of the opportunities open to us to deploy capital, and the agreements we reached with Prime Therapeutics and with Express Scripts during the quarter demonstrate our commitment to a more collaborative and partnership-oriented approach," he said. "We believe this can help provide growth for our own company and that of our strategic partners while delivering better, more efficient and more effective service to patients and payers alike.”

Retail Pharmacy USA had fourth quarter sales of $20.7 billion, an increase of 4% over the year-ago quarter. Sales in comparable stores increased 3.2% compared with the same quarter a year ago.

Pharmacy sales, which accounted for 69% of the division’s sales in the quarter, increased 6.2% compared with the year-ago quarter. Comparable pharmacy sales increased 5%.

The division filled 229.5 million prescriptions (including immunizations) adjusted to 30-day equivalents in the quarter, an increase of 3.7% over last year’s fourth quarter. Prescriptions filled in comparable stores increased 3.9% compared with the same quarter last year, primarily due to continued growth in Medicare Part D volume.

The division’s retail prescription market share on a 30-day adjusted basis in the fourth quarter increased approximately 40 basis points over the year-ago quarter to 19.3%, as reported by IMS Health.

Retail sales decreased 0.5% in the fourth quarter compared with the year-ago period. Comparable retail sales were down 0.3% in the quarter, primarily due to lower sales of certain consumables and seasonal items, partially offset by higher sales in the health and wellness and beauty categories.

By the end of the fiscal year the first phase of the new, differentiated beauty offering had reached more than 1,600 stores across the U.S. "This is the first phase of a multi-phase, multi-year strategy to diffrentiate Walgreens' beauty offering," commented George Fairweather, EVP and global CFO for Walgreens Boots Alliance, to analysts following the morning's announcements.

Fairweather shared three core elements associated with the first phase of Walgreens updated beauty offering in the U.S. "In this phase, we are highlighting two of our best-known brands - No7 and Soap & Glory -  alongside existing national brands already well-known to Walgreens customers," he said. "The second element is the store environment. The store's beauty areas are being transformed to provide a welcoming, colorful environment with increased signage and lighting and a product range chosen to suit all types of customers, regardless of age or background," Fairweather continued. "The third element of the Walgreens beauty offer is the customer experience. This involved training and deploying specialist beauty consultants to offer high-quality advice to our customers."

Across the entire company, adjusted fiscal 2016 fourth quarter net earnings attributable to Walgreens Boots Alliance increased 20.3% to $1.2 billion compared with the same quarter a year ago. Sales in the fourth quarter were $28.6 billion, an increase of 0.4% over the year-ago quarter, or 2.5% on a constant currency basis.

Adjusted net earnings attributable to Walgreens Boots Alliance in fiscal 2016 increased 22.6% to $5 billion compared with the prior year. And sales increased 13.4% to $117.4 billion in fiscal 2016 compared with the prior year, due to the inclusion of Alliance Boots consolidated results for the entire period and an increase at Retail Pharmacy USA.

The company also shared guidance of $4.85 to $5.20 for fiscal year 2017 adjusted diluted net earnings per share. This guidance assumes accretion of $0.05 to $0.12 from Rite Aid and is based on expected store divestitures and timing of closing. Additionally, this guidance assumes current exchange rates for the rest of the fiscal year and continuation of its normal anti-dilutive share buyback program.

Including Rite Aid in its fiscal 2017 guidance is a signal of how confident Walgreens is in completing the deal. Earlier Thursday morning, Walgreens Boots Alliance and Rite Aid jointly announced an extension of the deal close to Jan. 2017.

The deal is not in jeopardy, Pessina told analysts. "I know we read in the papers very different news," he told analysts. "No idea about the sources of these news [reports], but if we could talk [specifics], and of course you know that we cannot, our news would be different."

Rather, the delay represents "a long adminstrative process but we don't see substantial differences from what we were  expecting," Pessina said. ."As far as we can see today, we are absolutely confident that we can do the deal and create the value."


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