Walgreens Sales and Guidance Rise, but Top Line Misses Expectations--Update
April 05 2016 - 09:10AM
Dow Jones News
By Lisa Beilfuss
Walgreens Boots Alliance Inc. said sales increased 14% in its
latest quarter and the company bumped up its full-year guidance,
though revenue fell short of expectations amid a weak cold-and-flu
season and a foreign-exchange hit.
Shares declined 1.5% in premarket trading.
The Deerfield, Ill., company has been working to grow its
footprint in a competitive drug market, and in October struck a
$9.4 billion deal to buy America's third-biggest pharmacy chain
Rite Aid Corp. The acquisition, which would more than double its
store count, is under regulatory review by the Federal Trade
Commission. Walgreens said Tuesday that the deal is on track to
close in the second half of this year.
The move to snap up its rival is part of a broader consolidation
in the drugstore space, as pharmacies face lower reimbursement
rates from health insurers and the federal government in addition
to growing competition from the likes of Wal-Mart Stores Inc. CVS
Health Corp., meanwhile, bought Target Corp.'s pharmacies and
clinics business last year for $1.9 billion.
Walgreens, which also operates Duane Reade stores, said Tuesday
that profit in its most recent quarter fell to $930 million, or 85
cents a share, from year-earlier earnings of $2.04 billion, or
$1.93 a share-a tough comparison because of a gain of $814 million,
or 77 cents a share, related to its 2014 deal to buy the chunk of
Europe's Alliance Boots GmbH that it didn't already own.
Excluding the merger-related gain, among other items, per-share
profit rose to $1.31 from $1.18. Analysts anticipated $1.28 in
adjusted earnings per share.
Thanks in large part to the Boots acquisition, overall sales at
Walgreens jumped to $30.18 billion from $26.67 billion a year
earlier as sales at stores open at least a year rose 2.2%. The
increase fell short of analysts' expectation for $30.66 billion and
the rise in same-store sales marked the slowest in about three
years -- softness the company attributed to a weak cough, cold and
flu season in addition to adverse exchange rates. Flu cases across
the country declined roughly 16% and unfavorable currencies sliced
2.4% off the top line, Walgreens said.
Pharmacy sales, which represent about two-thirds of the top
line, rose 3.2% as the company filled 233 million prescriptions, up
3.9% from a year earlier. Comparable pharmacy sales edged 2.6%
higher, driven by growth in the U.K.
Chief Executive Stefano Pessina said Tuesday that Walgreens is
on pace to meet its expectations for the year as its works to
mitigate lower pharmacy reimbursement rates and a challenging
retail sales environment. For the fiscal year ending in August, the
company projects $4.35 to $4.55 in adjusted earnings per share.
Earlier, the low end of that range was $4.35. Analysts have
projected $4.48 a share.
In its latest bid to capture a bigger piece of the prescription
drug market, Walgreens last month agreed to a deal with
UnitedHealth Group Inc.'s OptumRx by which OptumRx will charge its
customers, including employers and insurers, less for certain drugs
if patients fill their prescriptions at Walgreens stores.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
April 05, 2016 08:55 ET (12:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Rite Aid (NYSE:RAD)
Historical Stock Chart
From Feb 2024 to Mar 2024
Rite Aid (NYSE:RAD)
Historical Stock Chart
From Mar 2023 to Mar 2024