Pharmacy chain Walgreens Boots Alliance Inc (Nasdaq: WBA) reported a swing to a loss in the fiscal 2022 fourth quarter. However, the company reported better-than-anticipated non-GAAP earnings and revenues as the firm transforms into a company focused on health care. The integrated pharmacy and healthcare firm also issued an FY 2023 earnings outlook in line with Wall Street estimates. The stock of Walgreens closed Thursday’s trading at $33.65, an increase of 5.35% or $1.71 from its prior close.
Deerfield, Illinois-based Walgreens reported fourth-quarter revenues of $32.45 billion, a decrease from $34.26 billion in the comparable quarter last year.
For the quarter ended August 31, 2022, Walgreens posted a net loss from continuing operations of $415 million, or $0.48 per share, compared with a net profit of $358 million, or $0.41 a share, in the quarter ended August 31, 2021. The company did not have any discontinued operations in the latest quarter. In the prior-year period, Walgreens reported a net profit of $268 million, or $0.31 per share.
Walgreens’ Global CFO James Kehoe has pointed out that the company’s bottom line was severely affected by an impairment charge of $780 million related to trademarks and licenses of Boots UK business.
Excluding adjustments to equity earnings (loss) in AmerisourceBergen, acquisition-related amortization, transformational cost management, certain legal and regulatory accruals and settlements, acquisition-related costs, impairment of goodwill and intangible assets, and LIFO provision, among others, the adjusted 4Q22 earnings were $694 million, or $0.80 per share, down from $1.02 billion, or $1.17 a share, in 4Q21.
Analysts surveyed by Wall Street had anticipated the company to post earnings of $0.77 per share on revenues of $32.09 billion.
Commenting on the quarterly results, Walgreens CEO, Rosalind Brewer, stated: “WBA has delivered ahead of expectations in the first year of our transformation to a consumer-centric healthcare company. Our resilient business achieved growth while navigating macroeconomic headwinds.”
Walgreens’ retail and pharmacy division posted sales of $26.70 billion, a decrease of 7.20% on a year-over-year basis. Comparable sales grew by 1.60% in the recent quarter.
International business revenues fell by 6.60% y-o-y to $5.10 billion.
Notably, US digital sales recorded a growth of 14% in Q4 2022, following an 82% rise in the prior-year period.
However, revenues from COVID-19 vaccines declined considerably in the fourth quarter. The company administered only 2.90 million vaccines, compared with 4.70 million vaccines in 3Q 2022.
Looking ahead, Walgreens forecasts FY 2023 adjusted earnings to be between $4.45 and $4.65 per share. The company also lifted its US healthcare FY 2025 revenue target to a range of $11 billion to $12 billion from the prior outlook of between $9 billion and $10 billion. Furthermore, Walgreens also reaffirmed its forecasts to attain low-teens adjusted earnings growth in FY 2025.
The strong quarterly earnings beat and solid FY 2023 adjusted earnings estimates are expected to keep Walgreens’ stock slightly bullish in the days ahead.
Technically, the stock of Walgreens is rising after testing the support level of 32. The next resistance is anticipated only near 36. Additionally, the Chaikin Money flow indicator is showing a positive reading. Therefore, we anticipate the stock price of Walgreens to remain in an uptrend in the days ahead.
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