Walgreens Boots Alliance Shares Surge 24% After Strong Q1 FY25 Earnings and Optimistic Full-Year Forecast
January 10, 2025 – Walgreens Boots Alliance Inc. (NASDAQ: WBA, ETR: W8A) saw a remarkable 24% surge in its stock price on Friday morning after the company reported stronger-than-expected first-quarter earnings for fiscal year 2025 and maintained an optimistic outlook for the full year.
Q1 FY25 Earnings Report
- Adjusted Earnings Per Share (EPS) came in at $0.51, surpassing analysts’ revised consensus estimate of $0.37.
- Revenue rose by 7.5% year-over-year to $39.46 billion, exceeding the $37.28 billion consensus estimate.
- Despite the positive revenue and earnings surprises, the company reported a net loss of $(265) million, compared to a loss of $(67) million in the same period last year.
Challenges in the U.S. Retail Pharmacy Segment
While U.S. Retail Pharmacy sales showed growth, Walgreens faced challenges in the quarter. The segment experienced:
- Weaker discretionary sales,
- Reduced gains from sale-leaseback transactions.
However, these setbacks were largely offset by strength in U.S. Healthcare and international operations.
Growth in U.S. Healthcare and International Markets
- U.S. Healthcare saw robust growth, with increased contributions from key businesses like VillageMD and CareCentrix.
- International operations, particularly in Boots UK and Germany, also provided significant support to the overall performance.
Adjusted Operating Income and Gross Margin
- Adjusted operating income dropped by 13.7% to $593 million.
- The company’s gross margin fell to 17.18% during the quarter, contributing to the overall decline in profitability.
FY25 Full-Year Guidance
Despite the mixed results, Walgreens Boots Alliance maintained its full-year fiscal 2025 adjusted EPS guidance in the range of $1.40 to $1.80. The company continues to expect growth in U.S. Healthcare and international operations, which is expected to help offset challenges in its U.S. Retail Pharmacy business.