Walgreens' Final Hurrah: Beating Revenue Expectations in Its Last Public Earnings Report

Walgreens Boots Alliance, Inc. (WBA) has long been a stalwart in the retail pharmacy sector, but its recent financial performance has been a rollercoaster ride. As the company prepares to go private in a deal valued up to $23.7 billion, its latest earnings report offers a glimpse into its final act as a publicly traded entity. The report, released on April 8, 2025, shows that Walgreens beat revenue expectations, but the underlying challenges remain stark.



Walgreens' second-quarter sales increased 4.1 percent year-over-year to $38.6 billion, reflecting growth in the U.S. Retail Pharmacy and International segments. This growth is a positive sign, but it comes against a backdrop of significant challenges. The company reported an operating loss of $5.6 billion, which includes non-cash impairment charges related to goodwill and other long-lived assets. These charges highlight the financial strain Walgreens has been under, particularly in its U.S. Retail Pharmacy segment.

The company's adjusted earnings per share (EPS) for the quarter was $0.63, down from $1.20 in the year-ago quarter. This decline is primarily due to lower U.S. retail sales and prior year sale-leaseback gains, partly offset by cost savings within U.S. Retail Pharmacy and growth in U.S. Healthcare. The net loss for the quarter was $2.9 billion, a decrease of 51.7 percent compared to the year-ago quarter. This loss includes non-cash impairment charges, but it also reflects the company's efforts to stabilize its financial position.

Walgreens' recent revenue performance shows a steady increase over the past few years, which is a positive sign for the company's future prospects. For instance, Walgreens' annual revenue for 2024 was $147.658 billion, a 6.17% increase from 2023. This trend of revenue growth is consistent with the company's performance over the past decade, with annual revenue increasing from $67.420 billion in 2010 to $147.658 billion in 2024. This steady growth in revenue indicates that Walgreens has been able to maintain its market position and continue to generate sales despite facing challenges such as increasing competition and evolving reimbursement models.

However, it is important to note that Walgreens' net income has been negative in recent years, with a net loss of $3,080 million in 2023 and $8,636 million in 2024. This indicates that while the company is generating revenue, it is also facing significant challenges in terms of profitability. As Walgreens transitions to a private entity, it will have the opportunity to focus on improving its profitability and operational efficiency without the pressure of quarterly earnings reports. This could allow the company to make strategic investments in areas such as healthcare services and digital innovation, which could drive long-term growth and value creation.

In addition, Walgreens' recent financial performance highlights the importance of its healthcare-focused investments, such as Cencora, Boots Hearingcare, BrightSpring Health Services, and VillageMD. These investments have the potential to drive future growth and profitability for the company, as they align with the growing demand for healthcare services and value-based care. As Walgreens transitions to a private entity, it will have the flexibility to pursue strategic acquisitions and partnerships in the healthcare sector, which could further enhance its competitive position and long-term prospects.

Walgreens' strategic initiatives, such as footprint optimization, focus on the U.S. Healthcare segment, and strategic acquisitions, have shown some effectiveness in driving revenue growth and mitigating challenges. However, the company continues to face significant financial and operational hurdles, as evidenced by its fiscal 2024 financial results. The effectiveness of these initiatives will likely be better assessed over the long term as the company continues to implement its turnaround strategy.

As Walgreens prepares to go private, the company's future remains uncertain. The acquisition by Sycamore Partners, a private equity firm known for its expertise in retail turnarounds, could provide the necessary capital and strategic direction to navigate the challenges ahead. However, the success of this transition will depend on Walgreens' ability to execute its turnaround plan and adapt to the evolving healthcare and retail landscapes. Only time will tell if this deal will be a lifeline or a letdown for Walgreens and its stakeholders.