Walgreens Boots Alliance Q3 Profit Misses Estimates, Cuts FY24 Adj. EPS Guidance; Stock Falls 15%

(RTTNews) - Walgreens Boots Alliance (WBA) reported third quarter net earnings of $344 million compared to $118 million in the year-ago quarter. EPS in the third quarter was $0.40 compared to $0.14. The prior year quarter GAAP net earnings included charges of $323 million impairment related to pharmacy license intangible assets in Boots UK.

Third quarter adjusted operating income was $613 million, a decrease of 36.3 percent on a constant currency basis reflecting lower sale-leaseback gains and softer U.S. retail and pharmacy performance, partly offset by cost savings initiatives and improved profitability in the U.S. Healthcare segment. Adjusted net earnings were $545 million, down 36.5 percent on a constant currency basis, reflecting lower adjusted operating income. Adjusted EPS was $0.63, a decrease of 36.6 percent, on both a reported and constant currency basis. On average, 14 analysts polled by Thomson Reuters expected the company to report profit per share of $0.68, for the quarter. Analysts' estimates typically exclude special items.

Third quarter sales increased 2.6 percent year-over-year to $36.4 billion, an increase of 2.5 percent on a constant currency basis. Analysts on average had estimated $35.94 illion in revenue.

CEO Tim Wentworth said: "We continue to face a difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins. Our results and outlook reflect these headwinds, despite solid performance in both our International and U.S. Healthcare segments."

For fiscal 2024, the company lowered adjusted EPS guidance to $2.80 to $2.95 reflecting challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment. In March, the company projected 2024 adjusted EPS to be in a range of $3.20 to $3.35. Analysts expect the company to report profit per share of $3.20.

Walgreens Boots Alliance also noted that the recent headwinds are expected to persist into fiscal 2025. Also, issuing an update on strategic review, the company said it is finalizing significant multiyear footprint optimization program to close certain underperforming U.S. stores.

Shares of Walgreens Boots Alliance are down 15% in pre-market trade on Thursday.

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