Walgreens Boots Profit Slips--Update

By Anne Steele 

Walgreens Boots Alliance Inc. said revenue and profit fell in the latest quarter, but the company raised the low end of its yearly guidance as it expects recent partnerships to help earnings.

"We continue to anticipate that growth in the second half of fiscal 2017 will reflect the new strategic pharmacy partnerships we announced last year," said Chief Executive Stefano Pessina.

Walgreens is hoping to win more patients to its pharmacies with a string of new agreements with health-care companies that encourage patients to use Walgreens pharmacies. Those include a partnership with Prime Therapeutics, a pharmacy-benefits manager owned by Blue Cross and Blue Shield health plans, which makes Walgreens a preferred pharmacy where patients pay less to fill prescriptions. It also replaced CVS Health as in-network pharmacy for Tricare, a health-care program for military personnel and their families.

Last month, Walgreens and Rite-Aid Corp., under pressure from antitrust regulators, moved a step closer to consummating their $9.4 billion tie-up by agreeing to sell 865 Rite-Aid locations to Fred's Inc.

On Thursday Mr. Pessina said the companies continue to work toward closing the merger early this year.

Meanwhile, Walgreens has been trying to win more pharmacy customers, improve margins in its U.S. stores and cut costs throughout its enterprise.

In its largest division, the U.S. retail pharmacy business, Walgreens posted a 1.1% increase in sales at existing stores, as stronger pharmacy sales offset a small decline in front-end sales. The company filled 3% more prescriptions versus a year ago as it continues to get more volume from Medicare patients.

Walgreens said retail sales at stores open at least a year fell 0.5% during the quarter, due to lower sales of consumables, general merchandise and beauty categories, partially offset by sales in the health, wellness and beauty categories.

In all, the company posted a profit of $1.05 billion, or 97 cents a share, down from $1.11 billion, or $1.01 a share, a year earlier. Excluding certain items, adjusted per-share profit rose to $1.10 from $1.03.

Revenue slipped 1.8% to $28.5 billion. Analysts had projected $1.09 in adjusted per-share earnings on $29.2 billion in sales, according to Thomson Reuters.

Walgreens said it now expects $4.90 to $5.20 in adjusted earnings per share for its new fiscal year, compared with its previous guidance for $4.85 to $5.20 a share.

Walgreens shares, inactive premarket, have risen 3.1% over the past three months.

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

January 05, 2017 08:07 ET (13:07 GMT)

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