Walgreens Boots Alliance Inc. raised its yearly sales forecast as currency exchange rates eased and the drugstore chain’s first-quarter revenue beat expectations. The shares fell as its profit view for fiscal 2023 remained unchanged.
(Bloomberg) — Walgreens Boots Alliance Inc. raised its yearly sales forecast as currency exchange rates eased and the drugstore chain’s first-quarter revenue beat expectations. The shares fell as its profit view for fiscal 2023 remained unchanged.
Sales for the year will be $133.5 billion to $137.5 billion, Walgreens said Thursday in a statement, up from a previous estimate of $130.5 to $134 billion. Adjusted earnings will be $4.45 to $4.65 a share, the company said. The shares fell as much as 7.4%, the most intraday since June.
The company is confronting a variety of headwinds, among them a settlement of cases related to the nationwide opioid crisis that will cost the drugstore chain $6.5 billion overall. Walgreens is looking to the acquisition of specialty and urgent care provider Summit Health-City MD to help drive scale and profit in its US health-care segment. VillageMD, controlled by Walgreens, made the $8.9 billion purchase in November.
Major acquisitions are not a priority for the company in the short term, Chief Financial Officer James Kehoe said on a conference call with investors. Money spent on purchasing health-tech companies, he said, is likely to be in the hundreds of millions, not billions, of dollars.
The company would be most interested in acquiring “smaller companies with specific capabilities that we need to advance our organic business,” he said.
No Surprises
There were no surprises in the quarterly results, according to Bloomberg Intelligence analyst Jonathan Palmer. Adjusted earnings for the quarter that ended Nov. 30 were $1.16 a share, beating Wall Street analysts’ average estimate of $1.14. Revenue was $33.4 billion, ahead of expectations by $1 billion.
“The company is executing against its transformation plan amid a slight EPS beat and with guidance maintained,” Palmer said.
The international segment saw sales of $5.2 billion, down 11% from the year-ago quarter and just ahead of analysts’ expectation of $5.17 billion. Investors will likely be paying close attention to this unit after the company abandoned plans for a $6 billion-plus sale of its UK-based Boots pharmacy chain in June after failing to get the desired value.
Walgreens’ newly formed health-care unit missed estimates with revenue of $989 million. The chain has been going deeper into health care, adding primary-care centers to US locations and partnering with health insurers.
Abortion Pills
Walgreens has also been investing in pharmacy automation technology, after facing labor shortages that started during the pandemic. The chain opened a ninth micro-fulfillment center for nationwide prescription service, Chief Executive Officer Roz Brewer said. The centers allows pharmacists to dedicate more time to clinical services and patient consultations rather than counting pills.
“They give pharmacists more time for services and outreach that drive adherence and improve patient health,” she said on the investor call.
On Wednesday, Walgreens became the first major pharmacy chain to announce that it plans to seek US certification to dispense the abortion pill, after the US Food and Drug Administration issued a ruling broadening access.
“We are working through the registration, necessary training of our pharmacists, as well as evaluating our pharmacy network in terms of where we normally dispense products that have extra FDA requirements and will dispense these consistent with federal and state laws,” a spokesperson said in a statement.
–With assistance from Vildana Hajric.
(Updates with shares and management comments from second paragraph on.)
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