Boosted Sales but Tangled Finances
Walgreens Boots Alliance Inc’s (NASDAQ: WBA) second-quarter fiscal year 2024 sales rose by 6.3% year-over-year to $37.1 billion, marking a 5.7% increase on a constant currency basis, surpassing the market expectation of $35.86 billion.
The adjusted operating income witnessed a dip to $900 million, a 26.5% decrease on a constant currency footing. This was attributed to lower sale-leaseback gains and a subdued U.S. retail performance, countered somewhat by enhanced profitability in the U.S. Healthcare sector.
Not all was bleak, with adjusted EPS climbing by 3.4% to $1.20, translating to a 2.8% gain on a constant currency basis. A decreased adjusted effective tax rate and improved U.S. Healthcare sector profitability contributed to this increase, topping the consensus of $0.82, as per data from Benzinga Pro.
Trouble in the Village: A $5.8B Impairment Charge
During the reported quarter, Walgreens incurred a notable $5.8 billion impairment charge linked to its VillageMD venture. Last year, the pharmaceutical giant decided to up its stake in VillageMD from 30% to 63% by injecting $5.2 billion into the business.
In the U.S. Retail Pharmacy sector, second-quarter sales reached $28.9 billion, posting a 4.7% uptick from the corresponding quarter last year. Comparable sales also saw a healthy 4.8% rise year-over-year.
Pharmacy sales recorded an 8.2% annual gain, with comparable pharmacy sales rising by 8.7%. This growth was fueled by heightened branded drug inflation rates and adept execution in pharmacy services.
Adjusted Guidance and Market Reaction
Walgreens Boots Alliance updated its fiscal year 2024 adjusted EPS guidance to $3.20-$3.35, a narrower range compared to the previous forecast of $3.20-$3.50 and the consensus of $3.24.
The company has held steady on its U.S. Healthcare adjusted EBITDA projection to be around breakeven within the guidance range of ($50) to $50 million.
Price Action: WBA shares witnessed a 2.69% decline to $20.46 during the premarket session on the latest check on Thursday.
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