Walgreens Boots Alliance: CEO's Revamp Efforts Pay Off with Profit Surprise

Well, well, well, look who's making headlines! Walgreens Boots Alliance (WBA) has just topped profit estimates, and it's all thanks to their new CEO, Tim Wentworth, and his revamp efforts. Let's dive into the nitty-gritty and see what's been cooking at Walgreens.



First things first, Walgreens' fiscal 2024 results were a mixed bag. Sales increased by 6.2% to $147.7 billion, but net income took a nosedive, plunging 180.4% to a loss of $10.01 per share. Ouch! However, when we look at adjusted earnings per share (EPS), we see a different story. Adjusted EPS decreased by 27.9% to $2.88, which, while not fantastic, is a far cry from the net income loss.

Now, let's talk about the elephant in the room: the U.S. Retail Pharmacy segment. It's been a tough nut to crack, with net reimbursement pressure and lower sale-leaseback gains taking a toll. But here's where Wentworth's magic comes in. He's focusing on stabilizing the retail pharmacy by optimizing the footprint, controlling operating costs, and improving cash flow. And guess what? It's working! Walgreens expects fiscal 2025 adjusted EPS to be between $1.40 and $1.80, with growth in U.S. Healthcare and International more than offsetting the decline in U.S. Retail Pharmacy.



Wentworth isn't afraid to make big moves, either. He's announced a footprint optimization program targeting approximately 1,200 closures over the next three years, including around 500 closures in fiscal 2025. This move is expected to be immediately accretive to adjusted EPS and free cash flow. Additionally, Walgreens is considering selling its pharmacy business Shields Health and dumping its investment in VillageMD. These moves might seem drastic, but they could help simplify operations and improve profitability in the long run.

So, what's the takeaway here? Walgreens Boots Alliance is far from perfect, but with a new CEO at the helm, things are starting to look up. Wentworth's strategic plan is paying off, and while there's still work to be done, the future looks a little brighter for this pharmacy giant. Keep an eye on Walgreens, folks – they might just surprise you again!