Walgreens Boots Alliance: Navigating Challenges and Opportunities in Q1 2025

Walgreens Boots Alliance (WBA) reported its first quarter fiscal 2025 earnings on January 10, 2025, providing insights into the company's performance and strategic initiatives. Despite a challenging backdrop for consumers, Walgreens maintained its script market share and showed progress in its turnaround efforts. Here's a closer look at the key takeaways from the earnings call and the company's strategic priorities.



Stabilizing the U.S. Retail Pharmacy Business

Walgreens' cornerstone for long-term success is stabilizing its U.S. retail pharmacy business. The company has initiated a footprint optimization program, which involves closing underperforming stores and retaining stronger ones. Early results indicate that Walgreens is exceeding historical script retention rates and has retained the majority of store and pharmacy team members. The company expects to significantly ramp up the pace of store closures and has already sequenced the next approximately 450 store closures. This optimization program is expected to support stronger performance in the retained store fleet, with comparable front-end sales outperforming those stores slated to close this year by approximately 250 basis points and comparable pharmacy scripts by approximately 390 basis points.

Growth in U.S. Healthcare Segment

Walgreens' U.S. Healthcare segment contributed somewhat above expectations in the first quarter, driven by a combination of revenue growth and cost control. This growth is partly offsetting the decline in U.S. Retail Pharmacy sales and lower contributions from sale-leaseback and Cencora earnings. The U.S. Retail Pharmacy segment experienced an increase in prescription volume, with pharmacy sales increasing 10.4% and comparable pharmacy sales increasing 12.7% in the quarter. Comparable prescriptions filled in the first quarter increased 2.3% from the year-ago quarter, while comparable prescriptions excluding immunizations increased 3.5%. Total prescriptions filled in the quarter, including immunizations, adjusted to 30-day equivalents increased 1.5% to 316.3 million.



Addressing Reimbursement Models

Walgreens is focusing on controlling operating costs, improving cash flow, and continuing to address reimbursement models to create a sustainable, retail pharmacy-led operating model. By optimizing its store footprint, implementing cost-saving initiatives, and growing its U.S. Healthcare segment, Walgreens aims to improve its competitive position and long-term profitability.



In conclusion, Walgreens Boots Alliance is navigating challenges and opportunities in the first quarter of fiscal 2025. The company is making progress in stabilizing its U.S. retail pharmacy business through its footprint optimization program and growing its U.S. Healthcare segment. By addressing reimbursement models and focusing on cost control, Walgreens is positioning itself for long-term success in a competitive market. As the company continues to execute its strategic priorities, investors should monitor its progress and consider the potential benefits and risks associated with its turnaround efforts.