Walgreens Focuses on Pharmacy Sales as Store Count Rises

By Allison Prang 

Walgreens Boots Alliance Inc. said an increase in prescription volumes helped lift U.S. pharmacy sales in its latest quarter as it works to continue capturing a larger share of the prescription-drug market.

Comparable-store sales at Walgreens's U.S. retail pharmacies rose 4.7% from a year ago, as pharmacy sales grew 7.4%. Comparable-retail sales, which includes general merchandise and personal-care items, fell 0.9%.

Regulators recently approved Walgreens's $4.38 billion deal with Rite Aid Corp. to buy 1,932 of Rite Aid's stores, but the deal was smaller than originally anticipated because of regulatory concerns. The company had initially offered $9.4 billion to buy Rite Aid, which would have grown its store count by 4,600 stores.

Through last month, the largest U.S. pharmacy chain had acquired 357 Rite Aid stores. Walgreens has said it plans to spend $750 million to renovate the locations it is purchasing. Walgreens also plans to close some stores if locations are too close together or aren't performing well.

Walgreens said despite being hurt by reductions in reimbursement rates and declines in generics, pharmacy sales were helped by growth in its mail services and central specialty pharmacy now called AllianceRx Walgreens Prime.

Walgreens closed a deal last year to form an alliance with pharmacy-benefits manager Prime Therapeutics.

Shares fell 0.7% in premarket trading to $75.

In all the company's profit fell 22% to $821 million, or 81 cents a share, due to an impairment on the company's stake in a China-based pharmaceutical wholesaling joint venture. Last month the company said it was decreasing its stake in Guangzhou Pharmaceuticals Corp. by 30% after it got an offer from the holding company that is a partner in the joint venture. When the deal closes, Walgreens said it will have a 20% stake.

On an adjusted basis, earnings rose 7.8% to $1.3 billion, or $1.28 a share, compared with $1.2 billion, or $1.10 a share a year ago. Revenue rose 7.9% to $30.74 billion.

Analysts polled by Thomson Reuters expected Walgreens to earn $1.26 a share on $30.35 billion in revenue.

Walgreens also raised the low-end of its full-year adjusted earnings guidance, forecasting per-share earnings between $5.45 and $5.70.

Walgreens's pharmaceutical wholesale business posted a comparable sales increase of 4.5% on a constant-currency basis, a gain it said was lower than its market-growth estimate. Comparable sales at its international retail pharmacies fell 0.7% on a constant-currency basis, dragged down by a 1% drop in comparable retail sales.

Write to Allison Prang at [e-mail]

(END) Dow Jones Newswires

January 04, 2018 10:45 ET (15:45 GMT)

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