Walgreens stock jumps on Q4 beat, sees operating loss on Boots UK impairment charge
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Walgreens Boots Alliance (NASDAQ:WBA) is trading higher pre-market Oct. 13 after FQ4 results beat analysts' estimates and the company provided Fiscal 2023 guidance.
FQ4 sales from continuing operations fell ~5.3% Y/Y to $32.45B, but beat estimates.
The drug retailer said sales growth at Walgreens and in the International segment, and contributions from the U.S. Healthcare segment were more than offset by a 660 basis point impact from the decline in sales at AllianceRx Walgreens.
"WBA has delivered ahead of expectations in the first year of our transformation to a consumer-centric healthcare company. Our resilient business achieved growth while navigating macroeconomic headwinds," said CEO Rosalind Brewer.
Sales from U.S. Retail Pharmacy segment, which was previously known as "United States" segment, declined -7.2% Y/Y to $26.7B. The company said comparable sales increased 1.6% Y/Y and lapped strong comparable sales of 8.1% in the year-ago quarter, which included a significant contribution from COVID-19 vaccinations.
Walgreens noted that it administered 2.9M vaccinations and 3.4M PCR tests in Q4.
Meanwhile, sales from the Walgreens Health segment, which was previously known as "U.S. Healthcare", had Q4 sales of $622M. On a pro forma basis, this segment's businesses grew sales at a combined rate of 34% in the quarter, the company noted.
Q4 sales in the International segment were $5.1B, a decline of 6.6% Y/Y, including an adverse currency impact of 13.3%.
Adjusted EPS from continuing operations fell 31.8% to $0.80.
Operating loss from continuing operations was -$822M, compared to operating income of $910M in Q4 2021, reflecting a $783M non-cash impairment charge related to intangible assets in Boots UK, and higher costs linked to the Transformational Cost Management Program.
Outlook Fiscal 2023:
"Fiscal 2023 will be a year of accelerating core growth and rapidly scaling our U.S. Healthcare business," Brewer added.
For the full fiscal year 2023, Walgreens expects adjusted EPS of $4.45 to $4.65. Consensus EPS Estimate of $4.49.
The company expects healthy core business growth of 8% to 10% in constant currency which is expected to be more than offset by adverse currency movements of ~2% and by a headwind of 15% to 17% from lower COVID-19 vaccination volumes.
The company raised U.S. Healthcare fiscal year 2025 sales target to $11B to $12B, from $9B to $10B previously. The segment is expected to achieve positive adjusted EBITDA by fiscal year 2024.
Walgreens also reconfirmed its expectation to achieve low-teens adjusted EPS growth in fiscal year 2025.
WBA +6.73% to $34.09 premarket Oct. 13