Walgreens Boots 2025 Q3 Earnings Misses Targets as Net Income Plummets 185.2%

Walgreens Boots Alliance reported a revenue increase of 7.2% year-over-year in its fiscal 2025 third quarter, reaching $38.99 billion. However, the company fell short of expectations with a net loss of $175 million, compared to a net income of $344 million in the same quarter last year. Furthermore, the company has withdrawn its fiscal 2025 guidance due to its pending acquisition by Sycamore Partners.

Revenue
Walgreens Boots Alliance experienced a 7.2% rise in total revenue for the third quarter, reaching $38.99 billion. The pharmacy segment contributed significantly with $25.29 billion, followed by retail sales at $8.31 billion. The wholesale segment added $3.28 billion, while U.S. healthcare brought in $2.10 billion. The corporate and other segment reported a slight deficit of $4 million.

Earnings/Net Income
Walgreens Boots Alliance reported a loss of $0.20 per share this quarter, a significant decline from the $0.40 per share profit in the previous year. This reflects a troubling 150.0% negative change. The company also reported a net loss of $175 million, a stark contrast to the $344 million net earnings from the same period last year. The drop in EPS and net income signals concerning financial performance.

Post Earnings Price Action Review
The strategy of purchasing Walgreens Boots Alliance shares when its revenue exceeds expectations and holding for 30 days proved ineffective. This tactic resulted in a return of -67.14%, dramatically underperforming the benchmark return of 68.06%. The strategy experienced an excess return of -135.20% and a compound annual growth rate (CAGR) of -20.72%, indicating significant financial loss over the tested period. Additionally, it incurred a maximum drawdown of -84.00%, reflecting high volatility. The Sharpe ratio stood at -0.56, suggesting unfavorable risk-adjusted returns. Overall, the strategy faced substantial challenges, demonstrating the volatility and risk associated with this approach.

CEO Commentary
Tim Wentworth, Chief Executive Officer, highlighted ongoing improvements in the U.S. Healthcare segment and benefits from cost-saving initiatives. Despite these advances, he acknowledged persistent weaknesses in U.S. front-end sales. Wentworth emphasized a dedication to the company's turnaround plan, requiring time, disciplined focus, and a balanced approach to managing future cash needs while investing to adapt to the evolving pharmacy and retail landscape.

Guidance
Due to the pending acquisition by entities affiliated with Sycamore Partners, Walgreens Boots Alliance has withdrawn its fiscal 2025 guidance, indicating a lack of specific future expectations at this time.

Additional News
In March 2025, Walgreens Boots Alliance announced a definitive agreement to be acquired by Sycamore Partners for $10 billion, transitioning the company from a public to a private entity. This acquisition marks the end of Walgreens' 98-year presence on the U.S. stock market. The transaction is expected to close in late 2025, pending regulatory approvals and other conditions. Additionally, in early 2024, Walgreens was removed from the Dow Jones Industrial Average, highlighting its rapid decline in relevance. The company also suspended its quarterly dividend in January 2024, ending a 91-year streak to conserve cash amidst financial struggles.