Walgreens (WBA) Q2 2024 Results

Thursday reported the second fiscal quarter sales exceeded Wall Street expectations but lowered the full-year adjusted top line profit prospects partially as a consequence of the “challenging” U.S. retail environment

The company also posted a big net loss within the quarter because it reported massive charges of nearly $6 billion related to a decline in the worth of its investment in the first care provider Village MD. Walgreens was close dozens of VillageMD clinics are facing financial problems and sees the business as critical to its ongoing efforts to remodel from a big drugstore chain into a serious health care company.

The results are on display as Walgreens’ latest CEO Tim Wentworth works to chop costs and steer the corporate out of trouble. Walgreens shares fell 30% last 12 months as the corporate faced weakening demand for Covid products, low pharmacy reimbursement rates, volatile health care pressures and a difficult macroeconomic environment.

In Thursday’s announcement, the corporate expressed confidence that due to its cost-cutting program, it’ll achieve its goal of saving $1 billion in fiscal 12 months 2024. Among other things, Walgreens has laid off employees, closed unprofitable stores and used artificial intelligence to enhance its supply chain.

Here’s Walgreens’ report for the quarter in comparison with Wall Street expectations, based on a survey of analysts by LSEG, formerly referred to as Refinitiv:

• Earnings per share: Adjusted $1.20 vs. expected 82 cents
• Income: $37.05 billion against the expected $35.86 billion

Walgreens narrowed its fiscal 2024 adjusted earnings forecast to between $3.20 and $3.35 per share. For comparison, the corporate’s previous forecast was for USD 3.20-3.50 per share. Analysts surveyed by LSEG expect full-year adjusted earnings of $3.24 per share.

Walgreens said the brand new guidance reflects the obstacles facing U.S. retailers and the early elimination of its sale and leaseback program. It also takes into consideration lower gains as a consequence of Walgreens selling shares of drug distributor Cencora, formerly referred to as AmerisourceBergen.

The company said improved performance in its pharmacy services segment and a lower adjusted effective tax rate helped offset aspects affecting its earnings.

The company didn’t provide a brand new revenue forecast for the financial 12 months. Walgreens hasn’t provided such guidance since October, when it said sales could be between $141 billion and $145 billion.

The company reported a net loss for the quarter of $5.91 billion, or $6.85 per share. That compares with net income of $703 million, or 81 cents per share, in the identical period a 12 months ago. AND

Excluding certain items, including $5.8 billion in non-cash charges related to VillageMD, adjusted earnings per share were $1.20 for the quarter.

For the quarter, the corporate saw sales of $37.05 billion, up about 6% from the identical period a 12 months ago.

The company said this increase reflected sales growth across its three business segments. However, Walgreens’ U.S. health care division stood out as sales rose about 33% within the fiscal second quarter in comparison with the identical period a 12 months ago.

Segment revenues were $2.18 billion.

The company said the upper sales reflect VillageMD’s acquisition of multi-specialty care provider Summit Health and the expansion of all businesses on this segment on a pro-forma basis.

VillageMD’s sales increased by 20%, thanks partially to the expansion of the identical clinic. Sales of the segment’s specialty pharmacy company, Shields Health Solutions, increased 13% due to latest contracts and expansion of existing partnerships.

Specialty pharmacies are designed to offer medications with unique handling, storage and distribution requirements, often for patients with complex conditions similar to cancer and rheumatoid arthritis.

Meanwhile, Walgreens US retail pharmacy segment generated sales of $28.86 billion in its fiscal second quarter, up nearly 5% from the identical period last 12 months.

This segment serves greater than 8,000 drugstores across the United States that sell prescription and over-the-counter drugs, in addition to health and wellness, beauty, personal care and food products.

Walgreens said pharmacy sales for the quarter increased 8.2% from the year-ago quarter, while comparable sales increased 8.7% as a consequence of price inflation for branded drugs and “strong execution” of pharmacy services.

The total variety of prescriptions filled within the quarter, including vaccines, was 305.7 million, a rise of greater than 2% in comparison with the identical period a 12 months ago.

Retail sales for the quarter were down 4.5% from the prior-year quarter, and comparable retail sales were down 4.3%. The company cited, amongst other things, a difficult retail environment and a weaker respiratory season.

Walgreens’ international segment, which operates greater than 3,000 retail stores abroad, reported sales of $6.02 billion in its fiscal second quarter. This is a rise of over 6% in comparison with the period a 12 months ago.

The company said sales at its UK subsidiary Boots were up 3%.