What drove WBA's consistent EPS surprises in 2024?

Walgreens Boots Alliance (WBA) experienced a notable EPS surprise in its 2024 Q2 earnings report, with an EPS of $0.63, surpassing the Zacks Consensus Estimate of $0.53 and representing an 18.87% surprise. This positive surprise was consistent across multiple quarters, as WBA's adjusted EPS for Q2 2024-25 was $0.63, compared to $1.20 in the same period last year, despite a 4.1% increase in revenue to $38.6 billion. The primary drivers of WBA's consistent EPS surprises in 2024 include: 1. **Cost Management and Operational Efficiency**: WBA's focus on disciplined cost management and improvement in its U.S. Healthcare segment helped offset the impact of weaker front-end results in its U.S. Retail Pharmacy business. This strategic focus likely led to better profitability and, consequently, a higher EPS. 2. **Growth in Healthcare Segment**: The U.S. Healthcare segment achieved profitability with a $117 million adjusted operating income, up from a loss in the prior year. This growth in a key segment contributed to the overall financial performance and higher EPS. 3. **Digital Sales Surge**: Walgreens Boots reported a 19.5% surge in digital sales at Boots UK, which is a positive indicator of changing consumer behavior and the company's ability to adapt to online retail trends. This shift in sales channel likely improved margins and contributed to the EPS surprise. 4. **Legal Settlements**: Although WBA faced significant legal settlements, which resulted in continued negative free cash flow, the company was able to offset some of these losses through asset monetization activities, which may have had a positive impact on its financial results and EPS. In summary, Walgreens Boots Alliance's consistent EPS surprises in 2024 can be attributed to a combination of cost management, growth in its healthcare segment, digital sales surge, and strategic initiatives to offset legal settlements. These factors collectively contributed to the company's better-than-expected financial performance.