Walgreens Boots Alliance generates $30.1 billion in Q3 sales, up 2.1%

DEERFIELD, Ill. — Walgreens Boots Alliance on Thursday generated fiscal 2017 third quarter net earnings of $1.2 billion, up 5.3%, for the period ended May 31. Sales in the third quarter were $30.1 billion, an increase of 2.1% from the year-ago quarter, and an increase of 5% on a constant currency basis.



“Our results this quarter continued to meet our expectations as strategic partnerships brought more patients to our U.S. pharmacies," stated Stefano Pessina, executive vice chairman and CEO Walgreens Boots Alliance. "This led to our highest reported quarterly retail prescription market share in the U.S. Our ongoing cost transformation program continues to bear fruit and we remain confident in the long term growth of our company.”



Adjusted fiscal 2017 third quarter net earnings attributable to Walgreens Boots Alliance increased 11.9% to $1.4 billion, up 13.6% on a constant currency basis, compared with the same quarter a year ago. Adjusted diluted net earnings per share for the quarter increased 12.7% to $1.33, up 14.4% on a constant currency basis, compared with the same quarter a year ago.



Retail Pharmacy USA had third quarter sales of $22.5 billion, an increase of 6.3% over the year-ago quarter. Sales in comparable stores increased 3.7% compared with the same quarter a year ago.



Pharmacy sales, which accounted for 69.9% of the division’s sales in the quarter, increased 10.3% compared with the year-ago quarter. This was primarily due to higher prescription volumes including mail and central specialty following the formation of AllianceRx Walgreens Prime. Comparable pharmacy sales increased 5.8%, primarily due to higher volume.



Reimbursement pressure and generics had a negative impact on comparable pharmacy sales growth, which was partially offset by brand inflation. The division filled 255.2 million prescriptions (including immunizations) adjusted to 30-day equivalents in the quarter, an increase of 8.5% over the year-ago quarter. Prescriptions filled in comparable stores increased 8.3% compared with the same quarter a year ago, primarily due to Medicare Part D growth and volume growth from previously announced strategic pharmacy partnerships. The division’s retail prescription market share on a 30-day adjusted basis in the third quarter increased approximately 110 basis points over the year-ago quarter to 20.5%, as reported by IMS Health. This was the division's highest reported quarterly retail prescription market share in the U.S.



Retail sales decreased 1.8% in the third quarter compared with the year-ago period, which includes the impact of the previously announced closure of certain e-commerce operations. Comparable retail sales were down 0.4% in the quarter, with declines in the consumables and general merchandise category and in the personal care category partially offset by growth in the health and wellness category and in the beauty category.



Walgreens Boots Alliance also announced today a new definitive agreement with Rite Aid under which Walgreens Boots Alliance will purchase 2,186 stores, three distribution centers and related inventory from Rite Aid in exchange for $5.175 billion in cash, the assumption by Walgreens Boots Alliance of the related real estate leases and the grant of an option to Rite Aid, exercisable through May 2019 and subject to certain conditions, to become a member of Walgreens Boots Alliance’s group purchasing organization. Walgreens Boots Alliance will also assume certain limited store-related liabilities as part of the new transaction.



Retail Pharmacy International had third quarter sales of $2.8 billion, a decrease of 10.3% from the year-ago quarter mainly due to currency translation. Sales decreased 0.2% on a constant currency basis.



On a constant currency basis, comparable store sales increased 0.2% compared with the year-ago quarter. Comparable pharmacy sales decreased 0.1% on a constant currency basis, primarily due to the negative impact of pharmacy funding in the U.K. Comparable retail sales increased 0.4% on a constant currency basis, reflecting growth in the U.K.



Pharmaceutical Wholesale had third quarter sales of $5.3 billion, a decrease of 7.9% from the year-ago quarter, mainly due to currency translation. On a constant currency basis, comparable sales increased 3.7%, which was ahead of the company’s estimate of market growth, weighted on the basis of country wholesale sales, with growth in emerging markets and the U.K. partially offset by challenging market conditions in continental Europe.