Walgreens Boots Alliance (NASDAQ: WBA) shares plummeted to their lowest point since 1997 on Thursday. The pharmacy giant and healthcare provider fell short of profit expectations, cut its guidance, and announced significant store closures due to sluggish consumer demand.
Walgreens reported its third-quarter results, revealing mixed performance amid a tough operating environment. The company posted an adjusted earnings per share (EPS) of $0.63, which fell short of analysts’ expectations. However, revenue showed a 2.6% year-over-year increase, reaching $36.4 billion, beating forecasts.
In the U.S. Retail Pharmacy segment, revenue rose by 2.3%. Pharmacy sales saw a 4.4% increase, driven by higher drug prices and an uptick in prescriptions. Despite this, Walgreens noted that brand mix impacts and reimbursement pressure negatively affected pharmacy margins.
On the retail side, sales declined by 4.0%. The company attributed this drop to a challenging retail environment, including a continued shift in consumer shopping habits, increased promotional activity, and higher levels of theft. Conversely, U.S. Healthcare sales experienced a 7.6% boost, and international sales climbed by 2.8%.
CEO Acknowledges Challenging Operating Conditions
CEO Tim Wentworth acknowledged the difficult operating environment for Walgreens, citing persistent pressures on the U.S. consumer and recent marketplace dynamics that have adversely affected pharmacy margins. As a result of these challenges and unfavorable trends in the pharmacy industry, the company has opted to revise its full-year adjusted EPS forecast to a range of $2.80 to $2.95, down from the previously estimated $3.20 to $3.35.
Walgreens also provided an update on its strategic review. The company noted that it is simplifying and focusing its U.S. Healthcare portfolio and plans to close certain underperforming U.S. stores. Wentworth told The Wall Street Journal that the company could close a “meaningful percent” of its unprofitable stores over the next few years.
Walgreens Boots Alliance (NASDAQ: WBA) Stock Price Action
On Thursday, WBA stock plunged 22.16%, closing at $12.19, marking a 23.19% decrease for the week. The trading volume was 132,813,024 shares, significantly higher than the average daily volume of 14.49 million.
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