Yahoo Finance Walgreens Boots (WBA) Q1 Earnings Top, Revenues View Up
Walgreens Boots Alliance, Inc. WBA reported adjusted earnings per share (EPS) of $1.16 for first-quarter fiscal 2023, down 30.9% year over year (down 29.9% at a constant exchange rate, or CER). The figure topped the Zacks Consensus Estimate by 0.87%.
GAAP loss for first-quarter fiscal 2023 was $4.31 compared with the year-ago quarter’s earnings of $4.13, reflecting a rise of 4.4%.
Total Sales
Walgreens Boots recorded total sales of $33.38 billion for the fiscal first quarter, down 1.5% year over year and up 1.1% at CER. The top line surpassed the Zacks Consensus Estimate by 1.3%.
Quarterly Details
The company divided its business into three reportable segments — the United States, International and Walgreens Health — at the start of the fiscal year. During the fiscal Q4 announcement, Walgreens Boots stated that it had changed the names of two reportable segments to better align with its business activities, structure, and strategy. The United States segment has changed to U.S. Retail Pharmacy and the Walgreens Health segment has been renamed to U.S. Healthcare.
U.S. Retail Pharmacy
The segment’s sales totaled $27.2 billion for the fiscal first quarter, representing a decline of 3% year over year.
Comparable sales increased 3.8% from the year-ago quarter’s levels.
Pharmacy sales were down 4.2% from the year-ago quarter, negatively impacted by a 7.8% point headwind from the AllianceRx Walgreens business.
Retail sales rose 0.8% and comparable retail sales were up 1.4% year over year. Comparable retail sales (excluding tobacco and e-cigarettes) also rose 2.1% from the prior-year quarter.
International
Revenues at the International division fell 10.8% on a year-over-year basis and rose 4.6% at CER to $5.2 billion for the fiscal first quarter.
Boots UK sales rose 4.3% year over year. Germany wholesale business sales increased 4.2% in the fiscal first quarter.
Walgreens Boots Alliance, Inc. Price, Consensus and EPS Surprise
Walgreens Boots Alliance, Inc. price-consensus-eps-surprise-chart | Walgreens Boots Alliance, Inc. Quote
Boots UK’s comparable retail sales increased 8.7%. However, Boots UK comparable pharmacy sales declined 0.9% year over year, primarily due to lower demand for COVID-19 services.
U.S. Healthcare
U.S. Healthcare reported fiscal first-quarter revenues of $989 million. This was up 38.4%on a pro forma basis versus the year-ago quarter’s combined result.
Within the segment, the Shields business rose 44.1%, driven by recent contract wins, further expansion of existing partnerships and strong execution. VillageMD increased 48.7% owing to existing clinic growth and footprint expansion. CareCentrix grew 22.3% as a result of additional service offerings with existing partners.
Margins
Gross profit for the reported quarter fell 8.2% year over year to $6.95 billion. Gross margin contracted 152 bps to 20.8%.
Selling, general and administrative expenses rose 105.9% year over year to $13.16 billion.
The company reported an adjusted operating loss of $6.2 billion for the quarter under review compared to $1.3 billion of operating profit in the year-ago period.
Financial Condition
Walgreens Boots exited first-quarter fiscal 2023 with cash and cash equivalents of $2.35 billion compared with $1.36 billion recorded in the fourth quarter of fiscal 2022. Total debt was $11.72 billion at the end of the fiscal first quarter, up from $11.67 billion at fourth-quarter fiscal 2022.
Net cash provided by operating activities at the end of first-quarter 2023 was $493 million, down from the year-ago period’s $1.09 billion.
The company has a five-year annualized dividend growth rate of 3.31%.
Fiscal 2023 Guidance
The company provided its full-year fiscal 2023 guidance
Adjusted EPS guidance is expected in the range of $4.45-$4.65. The current Zacks Consensus Estimate is pegged at $4.57.
The company now expects revenue to be $137.5 billion, up from the previously provided guidance of $133.5 billion.
Our Take
Walgreens Boots exited first-quarter fiscal 2023 with better-than-expected earnings and revenues. The company’s U.S. Healthcare business grew, led by key contract wins, continued partnership growth and a strong focus on execution. The company achieved the calendar year 2022 target for co-located VillageMD clinics of 200.
The company continues to play a leading role in COVID-19 vaccinations and testing, administering 8.4 million vaccinations in the reported quarter. Walgreens Boots raised U.S. Healthcare target with the Summit Health announcement on Nov 7, 2022, including the fiscal year 2025 sales goal to $14.5 billion to $16.0 billion, up from $11.0 billion to $12.0 billion previously. Moreover, the company has raised 2023 sales guidance, reflecting continued growth momentum.
However, Pharmacy sales decreased 4.2% compared to the year-ago quarter, negatively impacted by a 7.8% point headwind from AllianceRx Walgreens. The International segment declined year over year due to an adverse currency impact of 15.4%. Escalating costs and contraction of gross margin remain a concern.
Zacks Rank and Upcoming Releases
Walgreens currently carries a Zacks Rank #2 (Buy).
Here are some medical stocks that are due to report soon.
AMN Healthcare Services, Inc. AMN, carrying a Zacks Rank #2 at present, will release third-quarter 2022 results on Feb 16.
It has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific Corp. BSX, carrying a Zacks Rank #2 at present, will release fourth-quarter 2022 results on Feb 01.
It has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Medical Systems, Inc. MMSI, carrying a Zacks Rank #2 at present, will release fourth-quarter 2022 results on Feb 23.
It has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
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