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May 31, 2023
Walgreens Q3 2023 Earnings Report
Walgreens reported adjusted EPS growth despite facing challenges from lower COVID-19 demand and consumer spending uncertainty. The company revised its full-year guidance and initiated actions to improve profitability, including raising the cost savings program target.
Key Takeaways
Walgreens Boots Alliance (WBA) reported an 8.6% increase in sales to $35.4 billion for the third quarter of fiscal year 2023. Adjusted EPS increased by 3.3% to $1.00. However, the company revised its full-year adjusted EPS guidance to $4.00 - $4.05 due to consumer market trends and lower COVID-19 demand. WBA is taking immediate actions to improve profitability, including raising its Transformational Cost Management Program target to $4.1 billion.
Third quarter sales increased 8.6 percent year-over-year to $35.4 billion, and up 8.9 percent on a constant currency basis.
Adjusted EPS increased 3.3 percent to $1.00, up 3.6 percent on a constant currency basis reflecting a 19.5 percent headwind from significantly lower COVID-19 vaccine and testing volumes.
Revised full-year adjusted EPS guidance to $4.00 to $4.05 from $4.45 to $4.65, to reflect consumer and category conditions, lower COVID-19 contribution, and a more cautious macroeconomic forward view.
Raising Transformational Cost Management Program target from $3.5 billion to $4.1 billion in total savings.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Walgreens Boots Alliance expects adjusted EPS of $4.00 to $4.05 for the full fiscal year 2023, reflecting challenging consumer and macroeconomic conditions, and lower COVID-19 vaccine and testing volumes. Preliminary expectations for fiscal year 2024 include low- to mid-single digit adjusted operating income growth.
Positive Outlook
- Adjusted operating income growth is expected to accelerate in the fourth quarter from 0.6 percent in the third quarter.
- U.S. Healthcare and U.S. Retail Pharmacy performance more than offsetting headwinds from lower sale and leaseback program benefits.
- U.S. Healthcare and U.S. Retail Pharmacy performance more than offsetting headwinds from lower COVID-19 contribution.
- U.S. Healthcare and U.S. Retail Pharmacy performance more than offsetting headwinds from the sale of holdings in AmerisourceBergen.
- Raising the Transformational Cost Management Program target from $3.5 billion to $4.1 billion in cumulative savings by fiscal 2024; expecting cost savings of $800 million in fiscal 2024
Challenges Ahead
- Challenging consumer and macroeconomic conditions.
- Lower COVID-19 vaccine and testing volumes.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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