Categories Analysis, Health Care

Walgreens Boots Alliance set to report earnings next week. Here’s what to expect

The market will be closely following the event, looking for updates on the company's turnaround program

Walgreens Boots Alliance, Inc. (NASDAQ: WBA), the drug store chain that is expanding into a diversified healthcare provider, is on a restructuring drive aimed at better aligning the business with the changing market conditions. The company will be reporting earnings for the second quarter on the morning of March 28.

Stock Dips

The retail pharmacy giant’s stock has been on a losing streak for quite some time – the value has more than halved since last year and WBA underperformed the market during that period. Among others, investor sentiment was hit by the board’s recent decision to slash dividends, in response to the company’s weakening financial profile and strain on the balance sheet.

Second-quarter results are slated for release on Thursday, March 28, before the opening bell. On average, analysts following the company forecast earnings of $0.82 per share for the February quarter — excluding one-off items — which represents a 29% decrease from the profit it generated in the year-ago quarter. The consensus revenue estimate is $35.9 billion, compared to $35 billion in Q2 2023.

“We have hard work ahead of us in our journey to simplify and strengthen WBA, but also good momentum with important early actions that we’ve taken. And there are a number of building blocks already in place for a sharper healthcare strategy, positioning us well for long-term profitable growth. Walgreens is a dependable, trusted, and convenient local healthcare destination for patients, and we have the ability and, frankly, the market mandate to be a valued, independent partner of choice in healthcare services,” Walgreen’s CEO Tim Wentworth said in a recent interaction with analysts.

Growth Strategy

Walgreens witnessed a sales boom during the pandemic when it played a key role in mobilizing vaccination and delivering COVID-19 care across the country. However, the momentum waned post-pandemic and the company is now focused on ramping up the healthcare services business, accelerating its transition from a drug retailer to a full-service healthcare company.

In the first three months of 2024, Walgreens’ sales increased 10% annually to $36.71 billion. All three operating segments registered growth. The top line also surpassed Wall Street’s expectations, marking the eleventh consecutive quarterly sales beat. While maintaining its cautious stance, the management reaffirmed the fiscal 2024 earnings guidance in the $3.20-$3.50 per share range.

Profit Drops

Adjusted profit, excluding special items, declined to $0.66 per share in Q1 from $1.16 per share in the corresponding period of the prior year but came in above analysts’ forecast, after missing in the previous two quarters. On an unadjusted basis, it was a net loss of $67 million or $0.08 per share in the November quarter, compared to a loss of $3.72 billion or $4.31 per share a year earlier.

Shares of Walgreens traded below their 52-week average so far this year, losing about 23% during that period. The stock traded lower on Friday afternoon.

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