Walgreens Boots Alliance, Inc. reported its financial performance for the first quarter of fiscal 2025, ending November 30, 2024. The company experienced a notable increase in sales, with a 7.5% rise year-over-year, reaching $39.5 billion.
The U.S. Healthcare and International segments primarily drove this growth despite challenges in the U.S. Retail Pharmacy segment. The adjusted earnings per share (EPS) stood at $0.51, decreasing from $0.66 in the same quarter last year. This decline was primarily attributed to lower U.S. retail sales and the absence of prior-year sale-leaseback gains, partially offset by cost-saving measures and growth in the healthcare segment.
Walgreens Boots Alliance Reports Better than Expected First Quarter FY’25
The company’s operating loss widened to $245 million, compared to $39 million in the prior year. This was influenced by higher costs related to the Footprint Optimization Program in the U.S. Retail Pharmacy segment. Adjusted operating income decreased, reaching $593 million from $687 million year-over-year. Despite these challenges, the U.S. Healthcare segment showed promising growth, with sales increasing to $2.2 billion, driven by strong performances from VillageMD, CareCentrix, and Shields.
When comparing the actual performance to expectations, Walgreens Boots Alliance surpassed revenue projections but fell short on EPS. Analysts had anticipated an EPS of $0.3898, and the company exceeded this with an adjusted EPS of $0.51.
However, this still represented a decline from the previous year’s figures. Revenue expectations were set at $37.35 billion, and the company outperformed this with actual sales of $39.5 billion, reflecting strong sales growth across all business segments.
The U.S. Retail Pharmacy segment reported a 6.6% increase in sales to $30.9 billion, with comparable sales rising 8.5%. Despite this growth, the segment faced pressure from declining retail sales due to a weaker cough, cold, and flu season, as well as lower discretionary spending. The International segment saw a robust performance with a 10.2% increase in sales to $6.4 billion, bolstered by favorable currency impacts and strong growth in Germany and the UK.
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WBA Maintains Adjusted EPS Guidance of $1.40 to $1.80
Looking ahead, Walgreens Boots Alliance maintained its fiscal 2025 adjusted EPS guidance of $1.40 to $1.80. The company expects growth in the U.S. Healthcare and International segments to more than offset the anticipated decline in the U.S. Retail Pharmacy segment. However, challenges such as a higher adjusted effective tax rate and lower contributions from sale-leaseback transactions and Cencora earnings are expected to persist.
CEO Tim Wentworth emphasized the company’s focus on stabilizing the retail pharmacy by optimizing its footprint and controlling operating costs. He highlighted the importance of improving cash flow and addressing reimbursement models as part of the company’s strategic priorities. Despite the ongoing turnaround efforts, Wentworth expressed confidence in the company’s sustainable, pharmacy-led operating model.
Walgreens Boots Alliance continues to prioritize its strategic initiatives, including the Footprint Optimization Program, which aims to streamline operations and enhance efficiency. The company is also investing in its U.S. Healthcare segment, with significant growth observed in VillageMD and Shields. These efforts are part of a broader strategy to position Walgreens Boots Alliance as a leader in the healthcare and retail pharmacy sectors.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
