Walgreens Focuses on Pharmacy Sales as Store Count Rises
January 04 2018 - 11:00AM
Dow Jones News
By Allison Prang
Walgreens Boots Alliance Inc. said an increase in prescription
volumes helped lift U.S. pharmacy sales in its latest quarter as it
works to continue capturing a larger share of the prescription-drug
market.
Comparable-store sales at Walgreens's U.S. retail pharmacies
rose 4.7% from a year ago, as pharmacy sales grew 7.4%.
Comparable-retail sales, which includes general merchandise and
personal-care items, fell 0.9%.
Regulators recently approved Walgreens's $4.38 billion deal with
Rite Aid Corp. to buy 1,932 of Rite Aid's stores, but the deal was
smaller than originally anticipated because of regulatory concerns.
The company had initially offered $9.4 billion to buy Rite Aid,
which would have grown its store count by 4,600 stores.
Through last month, the largest U.S. pharmacy chain had acquired
357 Rite Aid stores. Walgreens has said it plans to spend $750
million to renovate the locations it is purchasing. Walgreens also
plans to close some stores if locations are too close together or
aren't performing well.
Walgreens said despite being hurt by reductions in reimbursement
rates and declines in generics, pharmacy sales were helped by
growth in its mail services and central specialty pharmacy now
called AllianceRx Walgreens Prime.
Walgreens closed a deal last year to form an alliance with
pharmacy-benefits manager Prime Therapeutics.
Shares fell 0.7% in premarket trading to $75.
In all the company's profit fell 22% to $821 million, or 81
cents a share, due to an impairment on the company's stake in a
China-based pharmaceutical wholesaling joint venture. Last month
the company said it was decreasing its stake in Guangzhou
Pharmaceuticals Corp. by 30% after it got an offer from the holding
company that is a partner in the joint venture. When the deal
closes, Walgreens said it will have a 20% stake.
On an adjusted basis, earnings rose 7.8% to $1.3 billion, or
$1.28 a share, compared with $1.2 billion, or $1.10 a share a year
ago. Revenue rose 7.9% to $30.74 billion.
Analysts polled by Thomson Reuters expected Walgreens to earn
$1.26 a share on $30.35 billion in revenue.
Walgreens also raised the low-end of its full-year adjusted
earnings guidance, forecasting per-share earnings between $5.45 and
$5.70.
Walgreens's pharmaceutical wholesale business posted a
comparable sales increase of 4.5% on a constant-currency basis, a
gain it said was lower than its market-growth estimate. Comparable
sales at its international retail pharmacies fell 0.7% on a
constant-currency basis, dragged down by a 1% drop in comparable
retail sales.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
January 04, 2018 10:45 ET (15:45 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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