Walgreens Reports Strong Pharmacy Sales, but Front End Drags
July 06 2016 - 8:20AM
Dow Jones News
Walgreens Boots Alliance said sales edged up in its latest
quarter as it filled more prescriptions, though revenue fell short
of expectations as shoppers bought less outside of the
pharmacy.
Shares in the company, down 2% this year through Tuesday's
close, slipped 0.6% in premarket trading.
The largest U.S. drugstore chain, formed when Walgreen and
Alliance Boots merged at the end of 2014, has been working to
reshape itself amid lower reimbursement rates and as the
fast-changing U.S. health-care marketplace prompts consolidation.
It is in the midst of completing its $9.4 billion acquisition of
Rite Aid Corp., which Walgreens said Wednesday is on track to close
in the second half of this year.
Earlier this year it teamed up with United Healthcare Inc.'s
pharmacy-benefit manager OptumRx, and last month Walgreens shook up
its senior management ranks to lead what it says is the next phase
of its evolutions. Also last month, the company pulled the plug on
its three-year partnership with embattled blood-testing firm
Theranos as regulators weigh sanctions against the firm for voiding
certain test results.
In its latest quarter, the Deerfield, Ill., company said overall
sales at stores open at least a year grew 3.9%, better than the
3.7% analysts expected and up from the 2.2% pace—the lowest in
three years—logged in the second quarter.
Sales in Walgreens' pharmacy business jumped 6% on a comparable
basis, nearly double the prior quarter's rate, as it filled 4.5%
more prescriptions thanks to rising Medicare Part D volume. At the
front end, where the company sells items from snacks to greeting
cards to beauty products, sales inched up 0.1% after declining 0.3%
a quarter earlier. Walgreens reiterated Wednesday that it is trying
to beef up retail sales through new beauty offerings that it will
continue to roll out this year.
Over all for the period, Walgreens reported a profit of $1.10
billion, or $1.01 a share, down from $1.30 billion, or $1.18 a
share, a year earlier. Excluding merger-related items and a change
in the fair value of warrants exercised to buy a stake in
AmerisourceBergen, among other things, per-share profit rose to
$1.18 from $1.02.
Revenue edged 2.4% higher to $29.50 billion. Analysts projected
$1.04 in adjusted earnings per share on $29.71 billion in sales,
according to Thomson Reuters.
The company lifted the low end of its profit forecast for the
year by a dime, now expecting to report $4.45 to $4.55 in adjusted
earnings per share. Walgreens said the guidance assumes no impact
from the pending Rite Aid deal.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
July 06, 2016 08:05 ET (12:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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