US Retail Pharma Giant Walgreens Boots Alliance Q3 Earnings And Annual Outlook Disappoints, Stock Sinks

On Thursday, Walgreens Boots Alliance Inc (NASDAQ: WBA) reported third-quarter fiscal year 2024 sales of $36.35 billion, up 2.6% year over year (+2.5% on constant currency), beating the consensus of $36 billion.

Adjusted operating income was $613 million, a decrease of 36.3% on a constant currency basis, reflecting lower sale-leaseback gains and softer U.S. retail and pharmacy performance, partly offset by cost savings initiatives and improved profitability in the U.S. Healthcare segment.

Adjusted EPS was $0.63, down 36.6% on both a reported and constant currency basis, missing the consensus of $0.71, according to data from Benzinga Pro.

The U.S. Retail Pharmacy segment had third-quarter sales of $28.5 billion, up 2.3%, driven entirely by comparable pharmacy sales, partly offset by a retail decline. Comparable sales increased 3.5% from the year-ago quarter.

Pharmacy sales increased 4.4% year over year, while comparable pharmacy sales increased 5.7%, benefiting from higher branded drug inflation and script growth.

Comparable prescriptions filled in the third quarter increased 1.6%, while comparable prescriptions excluding immunizations increased 1.7%. 

Total prescriptions filled in the quarter, including immunizations, was 306.4 million, up 0.5%.

Retail sales decreased by 4%, and comparable retail sales decreased by 2.3%, reflecting a challenging retail environment and continued channel shift. Increased promotional activity and higher shrink levels negatively affected retail margins.

The U.S. Healthcare segment’s third-quarter sales were $2.1 billion, an increase of 7.6% year over year, led by VillageMD and Shields.

The International segment sales reached $5.7 billion, up 2.8% Y/Y, including a favorable currency impact of 1.1%. Sales increased 1.6% on a constant currency basis, with the Germany wholesale business growing 4.9% and Boots UK sales growing 1.6%.

“We continue to face a difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins. Our results and outlook reflect these headwinds, despite solid performance in our International and U.S. Healthcare segments,” commented Chief Executive Officer Tim Wentworth.

Guidance: Walgreens Boots Alliance has cut its fiscal year 2024 adjusted EPS guidance to $2.80-$2.95 versus prior guidance of $3.20-$3.35 and consensus of $3.22.

The company says the guidance reflects challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment.

Read Next: Investor Optimism Dampens as Walgreens Boots Alliance Struggles With Market Turbulence.

Price Action: WBA shares are down 15.40% at $13.25 during the premarket session at the last check on Thursday.

Photo via Wikimedia Commons