Walgreens ( WBA ) Q4 2022 Earnings

Walgreens Boots Alliance on Thursday beat expectations for sales and earnings for the fiscal fourth quarter as the drugstore chain transforms into a more healthcare-focused company.

The company said it expects full-year adjusted earnings per share of $4.45 to $4.65 next fiscal year, roughly in line with Wall Street expectations. Still, Walgreens said its business growth will face tough comparisons as it deals with strong demand for Covid vaccines and is hit by the strength of the dollar.

Shares rose about 7% in premarket trading.

Here’s what the company reported compared with what analysts expected for the fiscal fourth quarter ended Aug. 31. based on data from Refinitiv:

  • Earnings per share: 80 cents adjusted, versus 77 cents expected
  • Income: $32.45 billion vs. $32.09 billion expected

Sales were down compared to the prior year quarter. Including certain costs, Walgreens turned to a loss during the quarter. Its net loss was $415 million, or 48 cents a share, compared with net income of $627 million, or 72 cents a share, a year earlier.

The company said its profits were hurt by a non-cash impairment charge at its Boots UK business and its long-term cost management programme. A year ago, Walgreens set a goal of $3.3 billion in cost savings by 2024.

Walgreens has made significant investments to transform itself from a large drugstore chain into a large healthcare company. Discover hundreds of doctor’s offices with VillageMD. It invested $5.2 billion to become the majority owner of the primary care company. It recently announced plans to accelerate the acquisition of two other companies: CareCentrix, which coordinates care and home care benefits, and Shields Health Solutions, a specialty pharmacy company.

Walgreens CEO Roz Brewer said in a news release that the next fiscal year “will be a year of accelerating underlying growth and rapidly scaling our U.S. health business.”

At the end of the quarter, Walgreens had a total of 334 doctors’ offices with VillageMD. The clinics, called Village Medical, are located next to his drugstores. In addition, there are 70 stores with Health Corners, a designated location where a registered nurse or pharmacist can schedule a mammogram, screen a patient for high blood pressure or diabetes or help with other health needs.

The Covid vaccines that boosted Walgreens sales and traffic have declined significantly. In the fourth quarter, the pharmacy chain administered 2.9 million vaccinations. That’s down from 4.7 million shots in the fiscal third quarter and a sharp drop from 15.6 million shots in the first quarter and 11.8 million shots in the second quarter.

Sales at Walgreens’ U.S. retail and pharmacy division fell 7.2 percent to $26.7 billion in the fourth quarter compared with the year-ago period. However, comparable sales were up 1.6%.

Its international business took a big hit from the currency headwind. It had sales of $5.1 billion in the fourth quarter, down 6.6% from the prior period. This includes a 13.3% adverse currency impact.

As customers return to stores, Walgreens also said it is investing in its workforce to return to normal business hours. However, it continues to see some changes in shopping habits. Its US digital sales growth rose 14% in the fourth quarter, on top of an 82% year-over-year increase.

On Thursday, the company raised its outlook for the healthcare division. He said he now expects a sales target of $12 billion, instead of $11 billion, for fiscal 2025.

As of Wednesday’s close, Walgreens shares are down nearly 39% so far this year. That lags the S&P 500, which is down about 25%. Walgreens shares closed Wednesday at $31.94, down about 2%.

Read the company’s earnings release here.

This story is evolving. Please check back for updates.

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