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Walgreens Boots Alliance (WBA) First Quarter 2023 Earnings

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Walgreens earnings beat estimates as start of flu season helps boost sales

Walgreens Boots Alliance on Thursday reported first-quarter fiscal earnings that beat Wall Street estimates, after an early flu season boosted demand for cough and cold remedies.

The company said it also raised its full-year revenue outlook due in part to the US healthcare acquisition of Summit Health. In the most recent quarter, however, the segment’s revenue was below expectations.

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Here’s how Walgreens fared in its fiscal first quarter compared to what Wall Street expected, based on a Refinitiv analyst survey:

  • Earnings per share: $1.16, adjusted, versus $1.14 expected
  • Revenue: $33.38 billion versus $32.84 billion expected

Despite strong sales, Walgreens posted an unadjusted loss of $3.7 billion, or $4.31 per share, for the three-month period ended Nov. 30, compared with net income of $3.58. billion, or $4.13 per share, a year earlier.

The loss was prompted by a $5.2 billion settlement that Walgreens was ordered to pay in opioid-related litigation after several states alleged the company mishandled prescriptions and should have realized it was prescribing the ultra-addictive drug too heavily. frequency.

Thanks to the start of flu season and strong demand for over-the-counter cough and cold remedies, sales jumped to $33.38 billion, down slightly from $33.9 billion a year earlier. The company also saw an increase in beauty and personal care sales, which helped offset losses caused by slumping demand for Covid vaccines and home testing kits, which boosted earnings in previous quarters.

Over the past five quarters, Walgreens has beaten Wall Street’s expectations as the ubiquitous drugstore chain continues to transform from a drugstore-led retailer to a broader healthcare company.

While the company has made significant investments to bring this vision to life, sales for its US healthcare segment fell short of expectations at $989 million, but still grew significantly from the prior year period.

The company is in the process of acquiring CareCentrix, which coordinates home care for patients after hospital discharge, and Shields Health Solutions, a specialty pharmaceutical company.

That’s on top of the $5.2 billion deal they’ve already struck with primary care provider VillageMD, which has opened a total of 393 clinics adjacent to Walgreens stores.

Since the end of last quarter, an additional 59 VillageMD clinics have opened and the program will continue to expand after the provider announced plans to acquire urgent care provider Summit Health-CityMD for approximately $8.9 billion. The deal closed on Tuesday.

The acquisition led Walgreens to increase its full-year sales guidance from $133.5 billion to $137.5 billion.

Following news of the Summit Health acquisition in November, Walgreens raised its U.S. healthcare targets to $14.5 billion to $16 billion for fiscal 2025, up from its previous target of $11 billion to $12 billion.

The company is also maintaining its full-year earnings-per-share guidance of $4.45 to $4.65, compared with estimates of $4.50.

The release of the results comes after Walgreens confirmed that it would be among the chains of pharmacies to offer the abortion pill mifepristone, after the FDA determined that it can be sold in pharmacies.

“We intend to become a program-certified pharmacy,” the company told CNBC late Wednesday.

“We are working on registration, necessary training of our pharmacists, as well as evaluating our pharmacy network in terms of where we typically dispense products that have additional FDA requirements and will dispense them in accordance with federal and state law.”

Read the company’s earnings release here.

Bertha Coombs of CNBC contributed to this report.