Rite Aid Deal Lifts Walgreens Pharmacy -- WSJ

By Kimberly Chin 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 12, 2018).

Walgreens Boots Alliance Inc. said growth in prescription volumes helped lift pharmacy sales in its latest quarter, as the company's integration of Rite Aid stores expanded its foothold in the U.S. prescription market.

Walgreens's share of the U.S. retail prescription market this year has grown to a company record 21.7%, compared with 20.2% in 2017, Walgreens Chief Financial Officer James Kehoe said Thursday, citing data from health-care research firm Iqvia.

For the fourth quarter, Walgreens said it had filled the largest number of prescriptions in its 117-year history, largely because of its retention of many Rite Aid prescription-drug customers after taking over those stores. Walgreens closed a $4.4 billion deal earlier this year to buy more than 1,900 pharmacies from Rite Aid Corp.

Walgreens, based in Deerfield, Ill., said U.S. pharmacy sales rose 17% from the year-earlier quarter while prescriptions filled in comparable stores increased 1.3%. Overall sales rose 11% to $33.44 billion, though analysts had expected Walgreens to report $33.78 billion in sales based on a Refinitiv poll.

The drugstore chain has engaged in several deals and partnerships with the aim of expanding its pharmacy business to become a "health-care destination" for health, beauty and personal care, said Chief Executive Stefano Pessina.

Walgreens reached a deal in September to buy customer files from a group of stores that are part of the Fred's Inc. drugstore chain. This month, Walgreens said it would work with clinical-lab operator LabCorp, known formally as Laboratory Corp. of America Holdings, to open at least 600 LabCorp patient centers at its stores over the next four years. It also reached an agreement with Kroger Co., the nation's largest supermarket chain, to work together to pilot a new store format. The company has also looked to boost its beauty aisles with high-end cosmetics after taking a minority stake in beauty startup Birchbox Inc.

Growth in Walgreens's pharmacy business helped offset weakness in sales of general merchandise and personal-care items. Comparable retail sales in the fourth quarter fell 1.9% from a year earlier in the U.S., and 0.9% in the company's international segment on a constant-currency basis. The company has more than 18,500 stores across 11 countries.

Shares in Walgreens were up 1.5% at $73.40 at midday Thursday.

Net income for the company rose 89% to $1.51 billion, or $1.55 a share. On an adjusted basis, earnings per share came in at $1.48, above the $1.45 expected by analysts.

For the current fiscal year Walgreens forecast earnings growth between 7% and 12% at constant currency rates, and adjusted earnings per share in the range of $6.40 to $6.70. Analysts expect adjusted earnings of $6.45 a share.

Write to Kimberly Chin at [e-mail]

(END) Dow Jones Newswires

October 12, 2018 02:47 ET (06:47 GMT)

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