Walgreens Boots Alliance Inc (WBA, Financial) released its 8-K filing on June 27, 2024, detailing its financial results for the third quarter of fiscal 2024, which ended on May 31, 2024. The company, a leading retail pharmacy chain in the U.S. with over 8,500 locations, reported mixed results amid a challenging operating environment.
Performance Overview
Walgreens Boots Alliance Inc (WBA, Financial) reported third-quarter sales of $36.4 billion, a 2.6% increase from the same period last year. This growth was driven by sales increases across all segments. However, the company faced significant headwinds, including pressures on U.S. consumer spending and eroding pharmacy margins.
Operating income for the quarter was $111 million, a substantial improvement from an operating loss of $477 million in the year-ago quarter. This increase reflects the absence of a $431 million non-cash impairment of pharmacy license intangible assets in Boots UK from the previous year. Adjusted operating income, however, decreased by 36.3% to $613 million, primarily due to lower sale-leaseback gains and weaker U.S. retail and pharmacy performance.
Key Financial Metrics
Net earnings for the third quarter were $344 million, up from $118 million in the same quarter last year. This increase was driven by higher operating income. Adjusted net earnings were $545 million, a decrease of 36.5% on a constant currency basis. Earnings per share (EPS) for the quarter were $0.40, compared to $0.14 in the year-ago quarter. Adjusted EPS was $0.63, down 36.6% from the previous year.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Sales | $36.4 billion | $35.4 billion | +2.6% |
| Operating Income | $111 million | $(477) million | +588 million |
| Net Earnings | $344 million | $118 million | +225 million |
| EPS | $0.40 | $0.14 | +0.26 |
| Adjusted EPS | $0.63 | $0.99 | -0.36 |
Segment Performance
The U.S. Retail Pharmacy segment reported sales of $28.5 billion, a 2.3% increase from the previous year, driven by higher pharmacy sales. However, retail sales declined by 4.0%, reflecting a challenging retail environment. Adjusted operating income for this segment decreased by 47.9% to $501 million.
The International segment saw sales increase by 2.8% to $5.7 billion, with Boots UK showing strong performance in both pharmacy and retail sales. Adjusted operating income for this segment decreased by 15.8% to $175 million.
The U.S. Healthcare segment reported sales of $2.1 billion, a 7.6% increase from the previous year, driven by growth in VillageMD and Shields. The segment's operating loss improved to $220 million from $522 million in the prior year, with adjusted EBITDA turning positive for the second consecutive quarter.
Strategic Focus and Outlook
CEO Tim Wentworth commented on the results, stating,
“We continue to face a difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins. Our results and outlook reflect these headwinds, despite solid performance in both our International and U.S. Healthcare segments.”
Walgreens Boots Alliance Inc (WBA, Financial) has lowered its fiscal 2024 guidance, reflecting the ongoing challenges. The company remains focused on improving its core retail pharmacy business and unlocking growth opportunities through strategic initiatives.
For more detailed financial information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Walgreens Boots Alliance Inc for further details.
