DEERFIELD, Ill. — Walgreens Boots Alliance (WBA) has raised its outlook for the year and laid out its strategy to drive growth, after a stronger-than-expected fiscal third quarter.
WBA’s adjusted earnings per share of $1.51 far surpassed analysts’ expectation of $1.17. Sales for the period ended May 31 rose 12.1% to $34.03 billion, topping the projected $33.76 billion. The gain reflects strong growth in the International segment, aided by the formation of the company’s joint venture in Germany during the fiscal year, and solid growth in the U.S. segment.
The company posted a net profit of $1.2 billion, or $1.38 per share, compared to a net loss of $1.71 billion, or $1.95 per share, last year.
“This quarter’s results demonstrate continued momentum, and while challenges lie ahead, we are in a strong position to grow and innovate our core retail and pharmacy businesses for the future,” said chief executive officer Rosalind Brewer. “We are accelerating our investments to advance our operational excellence, including technology innovations that support mass personalization, pharmacy of the future and the next phase of growth in tech-enabled health care. These investments are fueled by our Alliance Healthcare divestiture. I remain proud of our team members and the essential role they are playing to help end the pandemic as the communities we serve continue to turn to our trusted brands and expert pharmacists.”
The company now foresees growth of about 10% in adjusted EPS for the fiscal year, thanks to a resurgence of sales and increased business from COVID-19 vaccinations. It had earlier projected growth in the mid-to-high single digits. Walgreens has given over 25 million COVID-19 shots.
WBA completed the divestiture of the Alliance Healthcare businesses to AmerisourceBergen for a total consideration of $6.5 billion, made up of $6.275 billion in cash (subject to a customary net cash and working capital adjustment, which will result in an additional net cash inflow of approximately $300 million) and 2 million shares of AmerisourceBergen common stock. The company has used a portion of the proceeds to eliminate $3.3 billion in debt from its balance sheet and will deploy the remainder to accelerate growth of its core retail pharmacy and health care businesses.
Operating income was $1.1 billion in the third quarter, compared with a loss of $1.7 billion a year ago, primarily due to $2 billion noncash impairment charges last year related to goodwill and intangible assets in Boots UK. Adjusted operating income from continuing operations increased 82.9% on a reported currency basis to $1.5 billion, an increase of 82.4% on a constant currency basis. The increases reflect strong adjusted gross profit growth across both pharmacy and retail in the U.S. and a rebound in International segment sales and profitability due to less severe COVID-19 restrictions in the U.K.