Walgreens Boots Alliance, Inc. WBA delivered adjusted earnings per share (EPS) of 63 cents in the second quarter of fiscal 2025, down 47.5% from the year-ago quarter’s figure (down 47.3% at constant exchange rate or CER). However, the figure topped the Zacks Consensus Estimate by 18.9%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
GAAP loss per share for the second quarter was $3.30, narrower than the year-ago quarter’s $6.85 loss.
Walgreens Boots recorded total sales of $38.59 billion in the fiscal second quarter, up 4.1% year over year and 4.7% at CER. The top line also surpassed the Zacks Consensus Estimate by 1.8%.
After yesterday’s announcement, Walgreens shares declined 1.1%, finishing the session at $10.59.
Segmental Insights of WBA’s Q2 Revenues
The company currently operates its business through three reportable segments: U.S. Retail Pharmacy, International and U.S. Healthcare.
U.S. Retail Pharmacy
The segment’s sales increased 5.3% year over year to $30.4 billion in the fiscal second quarter. Comparable sales jumped 8.2% from the year-ago quarter’s levels.
Pharmacy sales were up 8.9% from the year-ago quarter’s figures, and comparable pharmacy sales increased 12.2%, each benefiting from higher branded drug inflation and prescription volume.
Walgreens Boots Alliance, Inc. Price, Consensus and EPS Surprise
Walgreens Boots Alliance, Inc. Price, Consensus and EPS Surprise
Walgreens Boots Alliance, Inc. price-consensus-eps-surprise-chart | Walgreens Boots Alliance, Inc. Quote
Retail sales fell 5.5%, and comparable retail sales were down 2.8% year over year due to lower sales in discretionary categories, including beauty, seasonal and general merchandise. The cough, cold and flu season adversely impacted retail sales by nearly 45 basis points compared to the year-ago quarter.
International
Revenues in the International division rose 0.6% on a year-over-year basis and increased 4.1% at CER to $6.1 billion in the fiscal second quarter.
In Germany, wholesale business sales increased 7.2% in the fiscal second quarter.
Boots UK sales rose 1.6% year over year. Its comparable retail sales advanced 5.1%. Further, Boots UK’s comparable pharmacy sales rose 5% year over year.
U.S. Healthcare
U.S. Healthcare reported fiscal second-quarter revenues of $2.2 billion. Within the segment, VillageMD sales decreased 6.2% year over year, while CareCentrix and Shields sales increased 6.5% and 29.7%, respectively.
WBA’s Q2 Margin Performance
The gross profit in the reported quarter decreased 1.5% year over year to $6.93 billion on a 5.5% rise in the cost of sales. The gross margin contracted 103 basis points to 17.9%.
Selling, general and administrative (SG&A) expenses increased 12.3% year over year to $8.89 billion.
The company reported an adjusted operating loss of $1.96 billion for the quarter compared with the year-ago period’s loss of $881 million.
WBA’s Liquidity & Cash Flow Position
Walgreens Boots exited the second quarter of fiscal 2025 with cash and cash equivalents of $702 million compared with $859 million at the first quarter-end.
The total debt was $8.02 billion compared with $8.39 billion at the end of the fiscal first quarter.
The cumulative cash used by operating activities at the end of the second quarter of fiscal 2025 was $339 million compared with the year-ago period’s outflow of $918 million.
Walgreens to Go Private, Withdraws 2025 Guidance
On March 6, 2025, WBA signed a definitive agreement to be acquired by entities affiliated with Sycamore Partners. The merger is expected to close in the fourth quarter of calendar year 2025, pending shareholder and regulatory approvals and other conditions to closing. Following the close of the transaction, WBA will become a private company, and its common stock will get delisted from the Nasdaq stock market. In light of the pending transaction, the company has withdrawn issuing fiscal 2025 guidance. Furthermore, Walgreens' previously issued guidance for the full year is no longer in effect.
Our Take on WBA Stock
Walgreens Boots exited the second quarter of fiscal 2025 with revenues and earnings beating estimates. The performance reflects prudent cost management and improvement in the U.S. Healthcare segment. The company is still in the early stages of its turnaround plan and expects that meaningful value creation will take time, enhanced focus and balancing future cash needs with necessary investments to navigate an evolving pharmacy and retail landscape.
Meanwhile, the bottom line decreased on a year-over-year basis, which is discouraging. Higher SG&A expenses and lower retail sales resulted in a wider operating loss in the quarter.
WBA’s Zacks Rank & Other Key Picks
Walgreens Boots currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are AngioDynamics ANGO, Veeva Systems VEEV and Masimo MASI.
AngioDynamics, currently sporting a Zacks Rank #1 (Strong Buy), reported third-quarter fiscal 2025 adjusted EPS of 3 cents, narrower than the Zacks Consensus Estimate of a 13-cent loss. Revenues of $72 million beat the Zacks Consensus Estimate by 2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
ANGO has an estimated fiscal 2026 earnings growth rate of 27.8% compared to the S&P 500 composite’s 10.5% growth. The company had surpassed earnings estimates in each of the trailing four quarters, the average surprise being 70.9%.
Veeva Systems, sporting a Zacks Rank #1 at present, posted fourth-quarter fiscal 2025 adjusted EPS of $1.75, exceeding the Zacks Consensus Estimate by 10.1%. Revenues of $720.9 million surpassed the Zacks Consensus Estimate by 3.2%.
VEEV has an estimated long-term earnings growth rate of 26.6% compared to the industry’s 20.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.9%.
Masimo, currently sporting a Zacks Rank #1, reported a fourth-quarter 2024 adjusted EPS of $1.80, which surpassed the Zacks Consensus Estimate by 20.8%. Revenues of $600.7 million topped the Zacks Consensus Estimate by 0.8%.
MASI has an estimated earnings yield of 3.5% for fiscal 2025 against the industry’s 3.6% yield. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.4%.
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