Walgreens Boots Alliance Stock Jumps On Better Than Expected Q1 Earnings, Sticks To Annual Profit Forecast

Walgreens Boots Alliance (NASDAQ: WBA) shares surged on Tuesday after the company reported better-than-expected first-quarter earnings, maintaining its full-year adjusted EPS guidance. The stock price climbed 5.5% to $8.95 in early trading, following the announcement.



The company's first quarter sales increased 7.5% year-over-year to $39.5 billion, up 6.9% on a constant currency basis, reflecting sales growth across all business segments. Adjusted EPS came in at $0.51, beating analyst estimates of $0.48.

Walgreens Boots Alliance CEO Tim Wentworth said, "Our first quarter results reflect our disciplined execution against our 2025 priorities: stabilizing the retail pharmacy by optimizing our footprint, controlling operating costs, improving cash flow, and continuing to address reimbursement models. While our turnaround will take time, our early progress reinforces our belief in a sustainable, retail pharmacy-led operating model."

The company maintained its fiscal 2025 adjusted EPS guidance of $1.40 to $1.80, with growth in U.S. Healthcare and International more than offset by a decline in U.S. Retail Pharmacy, a higher adjusted effective tax rate, and lower contributions from sale-leaseback and Cencora earnings.

Walgreens Boots Alliance's strong performance in the first quarter was driven by:

1. Sales growth across all business segments: The company's first quarter sales increased 7.5% year-over-year to $39.5 billion, reflecting sales growth across all business segments. This growth was up 6.9% on a constant currency basis.
2. U.S. Retail Pharmacy segment performance: The U.S. Retail Pharmacy segment had first quarter sales of $30.9 billion, an increase of 6.6% from the year-ago quarter. Comparable sales increased 8.5% from the year-ago quarter, driven by:
* Pharmacy sales increasing 10.4 percent and comparable pharmacy sales increasing 12.7 percent, benefiting from higher branded drug inflation and prescription volume.
* Comparable prescriptions filled in the first quarter increased 2.3 percent from the year-ago quarter, while comparable prescriptions excluding immunizations increased 3.5 percent.
3. International segment performance: The International segment also contributed to the revenue growth, with first quarter sales of $6.425 billion, an increase of 10.2 percent from the year-ago quarter. Adjusted operating income for this segment increased 11.1 percent to $168 million compared to the year-ago quarter.
4. Cost savings and growth in U.S. Healthcare segment: Despite lower U.S. retail sales and lapping prior year sale-leaseback gains, the company's adjusted operating income was partly offset by cost savings initiatives and growth in the U.S. Healthcare segment. This segment's adjusted EBITDA increased by $442 million in fiscal 2024, contributing to the overall revenue growth.

Walgreens Boots Alliance's strong first quarter results and maintained annual profit forecast indicate that the company is on track to achieve its strategic priorities. Investors should monitor the company's progress in stabilizing its retail pharmacy operations, controlling operating costs, improving cash flow, and addressing reimbursement models. As the company continues to execute on its 2025 priorities, it is well-positioned to deliver sustainable growth and create value for shareholders.