Walgreens Boots Alliance (NASDAQ:WBA) saw its shares soar more than 11% Tuesday after the company reported better-than-expected results for the fiscal Q4 2024 and issued annual guidance that bracketed consensus estimates.
The retailer delivered fourth-quarter earnings per share (EPS) of $0.39, topping the analyst estimate of $0.36. Revenue stood at $37.55 billion, also above the consensus estimate of $35.75 billion.
The company’s international sales reached $5.97 billion, a 3.2% year-over-year increase, exceeding the projection of $5.84 billion.
U.S. Retail Pharmacy sales came in at $29.47 billion, up 6.5% year-over-year, beating the $27.48 billion estimate. Meanwhile, U.S. Healthcare sales totaled $2.11 billion, a 7.2% year-over-year rise, but slightly below the estimate of $2.15 billion.
The adjusted gross margin for the quarter was 16.9%, down from 18.6% the previous year, and below the estimated 17.6%.
Going forward, Walgreens Boots Alliance expects EPS for the fiscal 2025 to be in the range of $1.40 to $1.80, compared to the consensus estimate of $1.75. Revenue is anticipated to range between $147 billion and $151 billion, while analysts were looking for $145.6 billion.
The company projects adjusted operating income between $1.6 billion and $2.0 billion, in line with the estimate of $1.89 billion.
The guidance for fiscal year 2025 assumes that growth in US Healthcare and International operations will be more than offset by a decline in the U.S. Retail Pharmacy segment, a higher tax rate, lower contributions from strategic partnerships, and reduced earnings from corporate operations.
Walgreens also said that it plans to close 1,200 stores over the next three years as new CEO Tim Wentworth works to steer the struggling pharmacy chain towards recovery. The company expects this plan will be immediately accretive to adjusted EPS and free cash flow (FCF).
“This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,” said Wentworth in a statement.
In a post-earnings note, TD Cowen analysts said they will look for more details on the earnings call, including those related to FCF guidance “and various other cash flow items, an update on reimbursement model transition efforts, more details on WBA’s announced store closure program, and an update on VMD sale process.”
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