Walgreens Boots Alliance (WBA) Q1 FY2025 Results: Earnings Beat, Revenue Growth, Stock Surge

Walgreens Boots Alliance, Inc. (WBA) reported its first-quarter fiscal 2025 results, delivering adjusted earnings per share (EPS) of 51 cents, which is a 22.7% decline year-over-year. However, this adjusted EPS figure topped the Zacks Consensus Estimate by 37.8%. Despite the decline in adjusted EPS, the company’s GAAP loss per share for the first quarter was 31 cents, worse than the 8 cents loss reported in the same period last year.

Q1 FY2025 Financial Overview:

  • Adjusted EPS: 51 cents (down 22.7% YoY; up 37.8% vs. consensus)
  • GAAP Loss per Share: 31 cents (wider than last year’s loss of 8 cents)
  • Total Revenue: $39.46 billion (up 7.5% YoY; 6.1% at constant exchange rate, CER)
    • Revenue surpassed the Zacks Consensus Estimate by 6.4%

Segment Performance:

  1. U.S. Retail Pharmacy:
    • Sales: $30.9 billion (up 6.6% YoY)
    • Comparable Sales Growth: 8.5% YoY
    • Pharmacy Sales: +10.4% YoY, driven by higher brand inflation and prescription volumes
    • Retail Sales: -6.2% YoY, affected by weaker cold/flu season and lower discretionary sales
  2. International:
    • Sales: $6.4 billion (up 10.2% YoY; 6.5% at CER)
    • Germany Wholesale: +11.3% YoY
    • Boots UK: +4.5% YoY in total sales; +8.1% in comparable retail sales, and +10.9% in comparable pharmacy sales
  3. U.S. Healthcare:
    • Revenues: $2.2 billion
    • Notable Segment Growth: VillageMD +9%, CareCentrix +16%, Shields +30%

Margin Performance:

  • Gross Profit: $6.78 billion (up 0.1% YoY), with gross margin contraction of 126 basis points to 17.2%
  • Operating Loss: Adjusted operating loss of $236 million (compared to the previous year’s loss of $81 million)
  • SG&A Expenses: Increased by 2.4% YoY to $7.02 billion

Cash Flow and Liquidity:

  • Cash and Cash Equivalents: $859 million (down from $1.32 billion at the end of fiscal 2024)
  • Total Debt: $8.06 billion (down from $9.55 billion at the end of fiscal 2024)
  • Cumulative Cash Used by Operations: $140 million (compared to $281 million in the previous year)

Fiscal 2025 Outlook:

  • Adjusted EPS Guidance: $1.40 – $1.80
  • Zacks Consensus Estimate for FY2025: $1.52 per share
  • Growth Drivers:
    • U.S. Healthcare and International segments expected to drive growth.
    • Decline in U.S. Retail Pharmacy, higher effective tax rate, and reduced contributions from sale-leaseback and Cencora earnings are expected to offset some gains.

Market Reaction:

  • Following the earnings announcement, Walgreens Boots Alliance stock surged more than 10% in pre-market trading, reflecting investor optimism despite the challenges faced by the company.

Key Takeaways:

  • WBA delivered a solid revenue beat, with growth across key international markets and its U.S. Healthcare segment.
  • The company continues to face margin pressures, particularly in the U.S. Retail Pharmacy segment, which has seen declines.
  • Stock Market Sentiment is upbeat, as evidenced by the pre-market price jump, despite ongoing challenges and a wider-than-expected GAAP loss.

This mixed performance, with strong revenue growth but margin and operating losses, reflects Walgreens’ ongoing efforts to navigate both retail pharmacy headwinds and its expanding role in healthcare services.

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