Walgreens raises long-term guidance to reflect Summit Health acquisition
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With its Q1 FY23 financials on Thursday, Walgreens Boots Alliance (NASDAQ:WBA) raised the long-term guidance for its U.S. Healthcare segment targeting $14.5B â $16.0B in sales for FY25, up from $11.0B â $12.0B previously, to reflect the recent acquisition of health care provider Summit Health.
In November, VillageMD, majority-owned by the drug store chain, agreed to acquire Summit Health for ~$9.9B with investments from Evernorth, the PBM unit of Cigna (CI).
"We're making significant progress in driving our U.S. Healthcare segment to scale and profit, including the recent VillageMD acquisition of Summit Health," Walgreens' (WBA) Chief Executive Officer Rosalind Brewer noted.
The company has also raised the full-year sales guidance to $133.5B - $137.5B in line with the consensus to account for the Summit Health acquisition, currency impact, and better-than-expected first-quarter sales.
While reporting consensus-beating ~$33.4B total sales with ~2% YoY decline, Walgreens (WBA) posted $989M sales from its U.S. Healthcare segment in Q1 FY23, indicating ~38% YoY growth as VillageMD grew ~48% thanks to clinic growth.
"Our core retail pharmacy businesses in both the United States and United Kingdom remain resilient in challenging operating environments," Brewer added.
The company's U.S. Retail Pharmacy segment exceeded Street forecasts reporting $27.2B in sales despite a ~3% YoY decline as the year-ago quarter included a sizable contribution from COVID-19 vaccinations.
During the quarter, the company administered ~8.4M COVID-19 vaccines compared to ~15.6M in Q1 FY22, and Walgreens' (WBA) U.S. retail comps, excluding tobacco, climbed ~2% thanks to strong cough, cold, and flu sales.
The international segment failed to meet Street forecasts bringing $5.2B in sales with ~11% YoY decline amid adverse forex impact. Meanwhile, Boots UK comparable pharmacy sales dropped ~1% YoY due to lower demand for COVID services.
The company's adj. gross margin improved to ~22% from ~20% in the year-ago quarter. However, compared to $1.3B of operating income in the last year, Walgreens' (WBA) reported an operating loss of ~$6.2B in Q1 FY23 due to $6.5B of pre-tax charge from opioid-related claims and litigation.
On a constant currency basis, the company's adjusted earnings per share fell ~31% YoY to $1.16 as the year-ago quarter reflected higher COVID-19 vaccine volumes.