An indication displays the sorts of COVID-19 vaccination doses available at a Walgreens mobile bus clinic on June 25, 2021 in Los Angeles, California.
Mario Tama | Getty Images
Walgreens on Thursday offered soft profit guidance and reported fiscal fourth-quarter earnings that fell wanting expectations, as demand for Covid vaccines and tests sinks within the U.S.
The retail pharmacy giant – squeezed by the transition out of the Covid pandemic, a leadership shake-up, its wobbly push into health-care and recent labor pressure from pharmacy staff – has now underperformed Wall Street’s adjusted earnings expectations for 2 straight quarters. The last time Walgreens posted a consecutive earnings miss was nearly a decade ago.
The corporate said it expects adjusted earnings per share of $3.20 to $3.50 in the approaching fiscal 12 months, which is lower than analysts’ estimate of $3.72. Walgreens expects lower Covid-related sales, together with a better tax rate and lower sale and leaseback contributions, to offset earnings growth.
Walgreens also sees revenue for the 12 months at $141 billion to $145 billion. Wall Street analysts estimated sales of greater than $144 billion.
Here’s what Walgreens reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly often known as Refinitiv:
- Earnings per share: 67 cents adjusted vs. 69 cents expected
- Revenue: $35.42 billion vs. $34.78 billion expected
The corporate reported a net lack of $180 million, or 21 cents per share, for the fiscal fourth quarter. That compares with a net lack of $415 million, or 48 cents per share, in the course of the same period a 12 months ago. Excluding certain items, adjusted earnings per share were 67 cents for the quarter.
Walgreens booked sales of $35.42 billion within the quarter, which is up roughly 9% from the identical period a 12 months ago resulting from growth in its U.S. retail pharmacy and international business segments.
Sales in the corporate’s U.S. health-care division also grew. Walgreens noted in a release that it’s “intently focused on accelerating” that segment’s profitability moving forward.
The quarterly results come two days after Walgreens named health-care industry veteran Tim Wentworth as its recent CEO following the abrupt departure of the corporate’s former top executive, Roz Brewer, last month. Wentworth, who will take over on Oct. 23, is tasked with steering the retail pharmacy giant out of a rough spot.
Walgreens has made significant investments to remodel from a significant drugstore chain to a big health-care company. However the pharmacy chain is facing plenty of challenges in that transition, including a profit squeeze resulting from softer consumer spending and declining demand for Covid products as patients emerge from the pandemic.
Walgreens can also be facing an open revolt amongst pharmacists and pharmacy technicians, several of whom staged a three-day walkout this week to protest chronic understaffing and other poor working conditions.
Shares of Walgreens have dropped greater than 39% for the 12 months, putting the corporate’s market value at $19.51 billion.
Three segments post sales growth
Walgreens’ U.S. retail pharmacy segment generated $27.66 billion in sales within the fiscal fourth quarter, a rise of three.7% from the identical period last 12 months. Comparable sales at individual locations rose 5.7%.
Pharmacy sales for the quarter increased 6.4% compared with the fiscal fourth quarter of 2022, with comparable sales up greater than 9% resulting from price inflation in brand medications and blend impacts.
Total prescriptions filled within the quarter, including immunizations, decreased by 0.5% to 297 million. Walgreens cited a weaker respiratory virus season this fall, which is blunting demand for medications and vaccines.
Retail sales for the quarter decreased 4.3% compared with the identical period a 12 months ago, and comparable retail sales fell 3.3%.
Meanwhile, the corporate’s international segment racked up $5.78 billion in sales within the fiscal fourth quarter, which is up greater than 12% from the identical period a 12 months ago.
Sales in Walgreens’ U.S. health-care segment got here in at $1.97 billion, up from $622 million for a similar period last 12 months. Its operating loss narrowed to $294 million from $338 million.
Primary-care provider VillageMD, which incorporates urgent-care provider Summit Health, saw revenue grow by 17%. Walgreens said that reflects “existing clinic growth and clinic footprint expansion” of VillageMD, which has a network of a whole lot of full-service doctors offices across the U.S.
Sales at CareCentrix, which coordinates home look after patients after they’re discharged from the hospital, increased 24% resulting from additional service offerings and expansion into additional markets.
The health-care segment took a lack of $30 million within the quarter before interest, tax, depreciation and amortization, in comparison with a lack of $133 million in the course of the same period a 12 months ago. Walgreens said that “improvement” was driven by growth at CareCentrix and Shields Health Solutions, a specialty pharmacy company included within the health care segment.
Walgreens will hold an earnings call with investors at 8:30 a.m. ET on Thursday.
– CNBC’s Robert Hum contributed to this text.
Correction: Walgreens’ total prescriptions filled within the quarter, including immunizations, decreased by 0.5% to 297 million. An earlier version misstated a figure.