Walgreens Boots posts better-than-expected Q2 earnings
By Josh White
Date: Tuesday 08 Apr 2025
(Sharecast News) - Walgreens Boots Alliance posted a narrower quarterly loss and stronger-than-expected adjusted earnings on Tuesday, buoyed by cost savings and modest growth in its US healthcare segment, even as it continued to scale back its struggling VillageMD business.
The company, which owns the US-based Walgreens and UK-based Boots pharmacy chains, reported a net loss of $2.9bn for its second quarter, down from a $5.9bn loss a year earlier.
It said the loss was driven largely by $4.2bn in non-cash impairment charges, including $3bn related to VillageMD and $2.3bn tied to the US retail pharmacy segment.
The charges reflected the continued financial fallout from Walgreens' multi-billion dollar investment in its in-store clinic strategy, which had since been reversed.
Despite the headline loss, adjusted earnings per share came in at 63 cents, surpassing the 53-cent consensus estimate from analysts.
Revenue rose 4.1% year-on-year to $38.6bn, slightly ahead of expectations, supported by sales growth in the US retail pharmacy and international segments.
The firm said the US healthcare division posted $2.2bn in sales, down slightly from the prior year.
VillageMD sales declined 6.2% amid ongoing clinic closures, while Shields and CareCentrix, other components of the segment, grew 29.7% and 6.5%, respectively.
Free cash flow remained negative at -$418m, though that marked an improvement from the prior year, aided by better working capital management and lower capital expenditures.
Legal payments - primarily related to opioid settlements and the Everly litigation - continued to weigh on cash flow, totaling nearly $1bn in the quarter.
Adjusted operating income fell to $785m from $900m a year ago, largely due to weaker US front-end retail sales and the absence of one-time gains from prior sale-leaseback transactions.
The results arrived as Walgreens prepared to go private in a $10bn acquisition by private equity firm Sycamore Partners, announced in March.
Given the pending deal, Walgreens withdrew its full-year guidance and did not host an earnings call.
The buyout, which was expected to close later this year, valued Walgreens at $11.45 per share, with an additional right to receive up to $3 per share tied to future proceeds from the monetisation of VillageMD.
"Second quarter results reflect disciplined cost management and improvement in US healthcare, which were partially offset by weaker front-end results in US retail pharmacy, while significant legal settlements resulted in continued negative free cash flow," said chief executive officer Tim Wentworth.
"We remain in the early stages of our turnaround plan, and continue to expect that meaningful value creation will take time, enhanced focus and balancing future cash needs with necessary investments to navigate a changing pharmacy and retail landscape."
At 0802 EDT (1302 BST), shares in Walgreens Boots Alliance were up 2.43% in premarket trading in New York, at $10.97.
Reporting by Josh White for Sharecast.com.
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