Walgreens (WBA) Q4 2022 earnings

Walgreens Boot Alliance Thursday beat expectations for fiscal fourth-quarter sales and earnings as the drugstore chain transitions into a more healthcare-focused business.

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

The shares rose about 7% in premarket trading.

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

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

Sales were down from the prior year quarter. Including certain costs, Walgreens recorded a loss during the three-month period. Its net loss was $415 million, or 48 cents per share, compared with net income of $627 million, or 72 cents per share, a year earlier.

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

Walgreens has made significant investments to grow from a large drugstore chain to a large healthcare company. He opens hundreds of medical practices with VillageMD. He invested $5.2 billion become a majority shareholder of the primary care business. It recently announced plans to accelerate acquisitions of two other companies: CareCentrix, which coordinates care and benefits for home care, and Shields Health Solutions, a specialty pharmaceutical company.

Walgreens CEO Roz Brewer said in a press release that the coming fiscal year “will be a year of accelerating core growth and rapidly expanding our U.S. healthcare business.”

At the end of the quarter, Walgreens had a total of 334 physician practices with VillageMD. The clinics, called Village Medical, are located next to its pharmacies. It also has 70 stores with Health Corners, a designated space where a registered nurse or pharmacist can schedule a mammogram, screen a patient for high blood pressure or diabetes, or help with other health care needs.

Covid vaccines, which boosted sales and foot traffic at Walgreens, have dropped 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 in the second quarter.

Sales in Walgreens’ U.S. retail and pharmacy division fell 7.2% to $26.7 billion in the fourth quarter from the same period a year earlier. Comparable sales, however, increased by 1.6%.

Its international business has been hit hard by currency headwinds. Its fourth-quarter revenue was $5.1 billion, down 6.6% from a year earlier. This included an unfavorable currency effect of 13.3%.

As customers return to stores, Walgreens also said it is investing in its workforce to return to normal operating hours. However, he continued to see some changes in buying habits. Its U.S. digital sales growth increased 14% in the fourth quarter, on top of an 82% increase a year ago.

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

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

Read the company’s earnings release here.

This story is developing. Please check for updates.

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