Walgreens Boots Alliance, Inc. (NASDAQ: WBA), a market leader in health and wellness services, is preparing to report second-quarter results, with market watchers forecasting a mixed outcome. As part of its efforts to become a more agile and focused organization, the company is undergoing a major transformation which includes a deal to transition out of the public market.
New Model
Walgreens’ stock has been on a losing streak for a long time. The value has nearly halved over the past 12 months, consistently underperforming the broader market. The stock’s last closing price is almost in line with its 52-week average value. Meanwhile, the company is gearing up to go private, upon completion of the planned acquisition by Sycamore. Shareholders are expected to receive $11.45 per share, which represents a premium over the current trading price. Against this backdrop, the stock is unlikely to go much higher from where it is now.
Analysts’ consensus estimate for Q2 adjusted earnings is $0.52 per share, on revenues of $37.9 billion. That compares to earnings of $1.2 per share and revenues of $37.05 billion reported in the prior-year quarter. The report is scheduled for release on Tuesday, April 8, at 7:00 am ET.
Q1 Results Beat
Excluding special items, the retail pharmacy giant’s first-quarter earnings decreased to $0.51 per share from $0.66 per share in the corresponding period of 2024, but they exceeded analysts’ forecasts. On an unadjusted basis, it was a net loss of $265 million or $0.31 per share in Q1, compared to a loss of $67 million or $0.08 per share in the prior year period. Net sales increased 7.5% year-over-year to $39.5 billion in the November quarter, beating estimates.
From Walgreens’ Q1 2025 earnings call:
“We’re currently exceeding historical script retention rates and have retained the majority of store and pharmacy team members. We expect to significantly ramp the pace of our store closures from the first quarter level. As a reminder, we have a lot of experience with store closures, having closed about 2,000 locations over the past decade. That said, to handle the stepped-up pace for the next three years, we’ve assembled a dedicated team to focus exclusively on the end-to-end process to improve upon our historical results.”
Outlook
Recently, the management reaffirmed its fiscal 2025 adjusted earnings guidance in the range of $1.40 per share to $1.80 per share. Of late, Walgreens’ retail pharmacy business has been under pressure from a general shift in consumer behavior amid continuing strain on family budgets. Besides boosting sales, a key priority for the management is to reduce debt and strengthen the balance sheet.
Earlier this month, the company said it has entered into a definitive agreement to be acquired by an entity affiliated with Sycamore Partners, for $23.7 billion. Sycamore is a private equity firm focused on retail, consumer, and distribution-related investments. Upon completion of the takeover, Walgreens will become a private company.
After trading flat for over two weeks, Walgreens’ stock opened at $11.10 on Thursday. The shares have gained around 20% so far in 2025.
