The Walgreens store at Dearborn and Division streets in Chicago, on Nov. 28, 2024.
Terrence Antonio James | Tribune News Service | Getty Images
Walgreens on Tuesday reported fiscal second-quarter earnings and revenue that topped expectations, because the retail drugstore giant advantages from cost cuts and prepares to go private.
The corporate is within the strategy of being taken private by Sycamore Partners in a roughly $10 billion deal that is anticipated to shut within the fourth quarter of this yr. Walgreens withdrew its fiscal 2025 guidance given the pending transaction. In January, it said it expects a full-year adjusted profit of $1.40 to $1.80 per share.
The historic take care of Sycamore ends Walgreens’ tumultuous run as a public company, which began in 1927. The corporate is shuttering stores and cutting other costs because it gets squeezed by pharmacy reimbursement headwinds, softer consumer spending, and competition from its predominant rival CVS, grocery and retail chains, and Amazon. It is also grappling with a troubled push into health care.
Shares of Walgreens rose nearly 2% in premarket trading on Tuesday.
Here’s what Walgreens reported for the three-month period ended Feb. 28 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 63 cents adjusted vs. 53 cents expected
- Revenue: $38.59 billion vs. $38 billion expected
“Second quarter results reflect disciplined cost management and improvement in U.S. Healthcare, which were partially offset by weaker front-end ends in U.S. Retail Pharmacy, while significant legal settlements resulted in continued negative free money flow,” Walgreens CEO Tim Wentworth said in a release.
“We remain within the early stages of our turnaround plan, and proceed to expect that meaningful value creation will take time, enhanced focus and balancing future money needs with needed investments to navigate a changing pharmacy and retail landscape,” he added.
Through the fiscal second quarter, Walgreens booked sales of $38.59 billion, up 4.1% from the identical period a yr ago, as sales grew in its U.S. retail pharmacy business and international segments.
The corporate reported a net lack of $2.85 billion, or $3.30 per share, for the fiscal second quarter. It compares with a net lack of $5.91 billion, or $6.85 per share, within the year-earlier period.
Excluding certain items, adjusted earnings were 63 cents per share for the quarter.
The outcomes include a $4.2 billion charge related to a loss in value of its U.S. retail pharmacy and investment in primary-care clinic chain VillageMD.
But Walgreens made $1 billion in profit by cashing out early on a few of its shares of Cencora, a pharmaceutical solutions organization, and benefiting from gains from its investment in BrightSpring, a provider of comprehensive home and community-based health services. Those are two of Walgreens’ top health-care investments.
The corporate’s operating money flow within the second quarter was hit by $969 million in legal payments for opioid-related settlements and a dispute with virtual-care company Everly Health Solutions, which alleged that Walgreens broke the terms of a business contract throughout the Covid-19 pandemic.
