Walgreens Boots Alliance reports Q1 growth in sales

Walgreens Boots Alliance's first quarter results reflect its efforts to stabilize the retail pharmacy by optimizing its footprint, controlling operating costs, improving cash flow and continuing to address reimbursement models. So said Tim Wentworth, CEO of Walgreens Boots Alliance in sharing the company's first quarter results.

“While our turnaround will take time, our early progress reinforces our belief in a sustainable, retail pharmacy-led operating model," Wentworth added.

The Deerfield, Ill.-based company's first quarter sales increased 7.5% from the year-ago quarter to $39.5 billion, an increase of 6.9% on a constant currency basis, reflecting sales growth across all business segments. 

Adjusted earnings per share was 51 cents versus adjusted earnings per share of 66 cents in the year-ago quarter driven by lower U.S. retail sales and prior year sale-leaseback gains, partly offset by cost savings and growth in U.S. healthcare, the company said.

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The retailer's first quarter operating loss was $245 million compared to an operating loss of $39 million in the year-ago quarter. Adjusted operating income was $593 million compared to adjusted operating income of $687 million in the year-ago quarter. The increase in operating loss reflects higher costs related to the Footprint Optimization Program in the U.S. retail pharmacy segment, and both operating loss and adjusted operating income reflect lower U.S. retail sales and lapping prior year sale-leaseback gains, partly offset by cost savings initiatives and growth in the U.S. healthcare segment, the company said.

The company reported that its net loss in the first quarter was $265 million compared to a net loss of $67 million in the year-ago quarter, primarily driven by higher operating loss. Adjusted net earnings decreased 23% to $440 million, down 23.2% on a constant currency basis, reflecting lower adjusted operating income.

U.S. retail pharmacy segment:

The U.S. retail pharmacy segment had first quarter sales of $30.9 billion, an increase of 6.6% from the year-ago quarter. Comparable sales increased 8.5% from the year-ago quarter.

Pharmacy sales increased 10.4% and comparable pharmacy sales increased 12.7% in the quarter, each benefiting from higher branded drug inflation and prescription volume. Comparable prescriptions filled in the first quarter increased 2.3% from the year-ago quarter while comparable prescriptions excluding immunizations increased 3.5%. Total prescriptions filled in the quarter, including immunizations, adjusted to 30-day equivalents increased 1.5% to 316.3 million.

Retail sales decreased 6.2% and comparable retail sales decreased 4.6% compared with the year-ago quarter, reflecting a weaker cough cold flu season and lower sales in discretionary categories.

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Adjusted operating income decreased 36.4% to $441 million compared to $694 million in the year-ago quarter, driven primarily by lower retail sales and lapping prior year sale-leaseback gains, partially offset by cost savings.

International:

The international segment had first quarter sales of $6.4 billion, an increase of 10.2% from the year-ago quarter, including a favorable currency impact of 3.6%. Sales increased 6.5% on a constant currency basis, with the Germany wholesale business growing 11.3% and Boots UK sales growing 4.5%.

Boots UK comparable pharmacy sales increased 10.9% compared with the year-ago quarter. Boots UK comparable retail sales increased 8.1% compared to the year-ago quarter with growth across all categories. Boots.com sales grew 30%, or 23% on a constant currency basis, aided by strong Black Friday performance and representing 22% of Boots total retail sales.

Adjusted operating income increased 17.9% to $168 million, an increase of 16.1% on a constant currency basis compared with the year-ago quarter, led by strong retail performance in Boots UK and growth in Germany, partly offset by cost inflation and technology investments.

U.S. healthcare segment:

The U.S. healthcare segment had first quarter sales of $2.2 billion with growth in all businesses compared to the year-ago quarter. VillageMD sales increased 9%, CareCentrix increased 16% and Shields increased 30%.

Operating loss was $325 million compared to $436 million in the prior year period reflecting improved performance at VillageMD and Shields. Adjusted operating income, which excludes certain costs related to stock compensation expense and amortization of acquired intangible assets, was $25 million compared to a loss of $96 million in the year-ago quarter. Adjusted EBITDA of $70 million improved by $109 million versus the prior year quarter reflecting higher contribution from VillageMD risk-based and fee-for-service business and growth at Shields.

Fiscal 2025 guidance: 

The company said it is maintaining its fiscal 2025 adjusted EPS guidance of $1.40 to $1.80, with growth in U.S. healthcare and International more than offset by a decline in U.S. retail pharmacy, a higher adjusted effective tax rate and lower contributions from sale-leaseback and Cencora earnings.