Walgreens Raises Guidance After Earnings

April 5, 2016 by Paul Ausick

Walgreens Boots Alliance Inc. (NASDAQ: WBA) reported second-quarter fiscal 2016 results before markets opened Tuesday. The drugstore chain reported adjusted diluted earnings per share (EPS) of $1.31 on revenues of $30.2 billion. In the same period a year ago, Walgreen reported EPS of $1.18 on revenue of $26.6 billion. Second-quarter results also compare to the consensus estimates for EPS of $1.28 and $30.66 billion in revenue.

On a GAAP basis, the company posted net income of $900 million in the first quarter ($0.85 per share). Net sales in the second quarter were negatively affected by $750 million due to currency exchange effects.

Walgreens said it is increasing the low end of its fiscal year adjusted EPS guidance by five cents to a new range of $4.35 to $4.55. Guidance assumes no material help from the proposed acquisition of Rite Aid.

Consensus estimates for 2016 adjusted earnings called for $4.48 per share. Analysts have also tabbed full-year revenues at $119.56 billion. For the company’s third quarter, consensus estimates call for EPS of $1.17 on revenues of $329.99 billion.

CEO Stefano Pessina said:

[W]e continued to make good progress in the quarter in reducing costs and establishing more efficient working practices, which contributed to overall adjusted earnings growth. Looking ahead, we remain on track to achieve our expectations for this fiscal year, as we work to mitigate lower pharmacy reimbursement rates and challenging retail sales environments.

U.S. sales totaled $21.5 billion in the quarter, up 2.1% year over year. Same-store sales rose 2.2%. Pharmacy sales accounted for 65% of total sales, up 3.2%, and same-store pharmacy sales rose 3.7%.

Shares traded down about 1.4% in premarket trading Tuesday, at $85.10, in a 52-week range of $71.50 to $97.30. Thomson Reuters had a consensus analyst price target of $94.14 before the results were announced.