Walgreens beats fiscal 4Q forecasts, absorbs UK business hit

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By TOM MURPHY | AP Health Writer

Walgreens Boots Alliance topped earnings forecasts in the final quarter of fiscal 2022, and the drugstore chain’s early look at 2023 also fell mostly above expectations.

A drop in COVID-19 vaccinations and a big charge tied to the company’s United Kingdom stores weighed on results, but shares edged up Thursday after Walgreens detailed its performance.

Overall, the company booked a $415 million loss in the quarter that ended Aug. 31, as sales slid 5% to $32.45 billion. Earnings adjusted for one-time items totaled 80 cents per share.

Analysts expect, on average, earnings of 77 cents per share on $32.1 billion in revenue in Walgreens’ fiscal fourth quarter, according to FactSet.

The company faced a tough comparison with last year's quarter, when its stores saw a surge in sales of vaccines and other products tied to the pandemic, Edward Jones analyst John Boylan said in a research note. He added that investor expectations were low heading into the quarter.

Walgreens Boots Alliance Inc. runs a network of around 13,000 drugstores globally, with most of its locations in the United States. But it also has been providing more care as it competes with rivals to devise ways to keep customers healthy, on their prescriptions and out of expensive hospitals.

That’s a growing point of emphasis with bill payers like insurers and employers.

The company is opening primary care practices next to some of its stores with the idea that drugstores and doctor offices work together to help keep patients healthy.

Walgreens also is developing centers across the United States that use automated technology to fill prescriptions and deliver them to pharmacies. That will give pharmacists more time to work with customers.

CEO Rosalind Brewer said in a statement Thursday announcing quarterly results that 2022 was the first year of Walgreens’ “transformation to a consumer-centric health care company.”

In the year’s final quarter, Walgreens recorded a $783 million non-cash impairment charge from its Boots UK business, which it tried to sell earlier this year. The company also saw the number of COVID-19 vaccines administered at company stores slide to 2.9 million from 13.5 million in last year’s quarter.

Sales also fell in the quarter due to a drop from its AllianceRx Walgreens business, which is a specialty and home delivery pharmacy for patients with rare, chronic and complex conditions.

For fiscal 2023, Walgreens said Thursday that it expects adjusted earnings per share to range between $4.45 and $4.65.

Analysts forecast, on average, earnings of $4.51 per share.

Shares of Deerfield, Illinois-based Walgreens climbed more than 2% to $32.77 in Thursday morning trading while the Dow Jones Industrial Average fell over 1%.

The stock had dropped nearly 40% so far this year, as of Wednesday’s close. That is about twice as deep as the drop by the Dow, of which Walgreens is a component.

Follow Tom Murphy on Twitter: @thpmurphy

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