Yahoo Finance

Shares of Walgreens sticking higher this morning after the company reported an earnings beat for the second quarter, as it prepares to go private. Walgreens was the worst performing stock in the S&P 500 in 2024, but has recovered some ground in 2025. Here with more on everything happening around Walgreens Boots Alliance, we've got Yahoo Finance's Anjalee Khemlani. Where do you want to start on, because we've got the earnings, we got the company going private, there's a lot swirling.

Yeah, I know. It's a lot. I'll start with the company going private because that actually shifts how we're gonna be covering earnings, of course, once they go private, but also for right now they've completely cut us off. No, I'm kidding. They don't have an earnings call today. So I don't have additional context for you other than what the numbers say, and that's something, um, that we're gonna have to deal with moving forward. They've also pulled 2025 guidance, and that has not seemed to impact the stock negatively, as you noted it is up today. But let's take a look at the numbers and what they said, beat on the revenue, expected 38, beat with 36 38.6 billion. And then not just did earnings per share at 63 cents rather than 53. Now, wanna look at some of the other numbers, cuz we know that they're still in a cost management mode. So while they have reduced the loss since the quarter last year, uh, CEO Tim Wentworth sent a statement that the strategy to reduce cost is still in play and will take some time and so that's what we're looking at. Uh, loss per share, uh, in total $3.30 versus Q2 of 2024, which was $6.85. So that's something to keep in mind. Meanwhile, um, looking at the decrease, um, in the revenue this year had a little bit to do with tax rate front-end slow stores, slow sales at front of store, but then also, uh, a hit through legal settlements. So 969 million of legal payments, and that is from an old case with Everlywell, a COVID testing company that they had, uh, some disagreements with on how they partnered. And then an and then opioid related settlements still weighing on the company. So that's something to keep an eye on as they continue their trajectory into privatization.

It's, I can't think of a better time to have the excuse of privatization to be able to cut your forward guidance that really works out for Walgreens in this moment. I I do wanna get your take on Julian and another story in your beat that we are monitoring, which is CVS making some leadership changes this morning. What can you tell us?

Yeah. So that's an interesting one, because, um, going from one company to the other, CVS the last one standing in this really large retail drug space, um, the last ryan and having to deal with its own moves. We know that they had to shift through their CEOs, they had a shake up there now, David Joyner is CEO. And so now they're bringing in Brian Newman as the new CFO replacing, uh, Tom Cowey. And so Brian has been at UPS and other retail companies. So that's an interesting fit there, even though we know CVS has done a lot more in the health delivery space. They have a CFO in the retail space there. And then a new executive vice president and Chief Medical Officer, Amy Compton Phillips. Uh, looks like she's gonna be taking over that role from uh, Sricharu who's also taking on who also has another role as, uh, president of healthcare delivery. So a little shift there. So interesting moves right now, as we know the company is, uh, you know, dealing with some of the same pressures that Walgreens was facing in terms of, you know, weakness in front of store sales and just all the changes that are coming down the pike with prescriptions, PBMs, etcetera. So should be interesting to see how this pans out.

You know, investors have heard us talk a lot about healthcare at the start of this year and and and here from fact set is perhaps one of the most important markers of why. Healthcare sector expected to report the highest year of year earnings growth rate of all 11 sectors at 35.8%. You think about the industry and the sector right now, US drug manufacturers, they're planning a lot of shifts right now too. How are they planning for shifts under President Trump's tariffs as well though that are moving for?

We saw this before the tariffs were even announced. We have major companies like Johnson and Johnson, Eli Lilly and Merck announcing multi-billion dollar projects for shifting manufacturing to the US. You can see on your screen the numbers there, Johnson and Johnson with that 55 billion. Eli Lilly, uh, talking about 27 billion for four manufacturing, uh, uh, buildouts in the in the coming years. All of this is a long-term process though. And so in the meantime, in the interim, while these tariffs start to take place, we know that the manufacturing of drugs wasn't heavily hit by tariffs, but there are going to be announcements of, uh, terrorists that do affect pharma and so that's what they're expecting. And so in that interim, these companies have sort of ahead of the curve, tried to make announcements and and curry favor with the administration. We do know that any additional manufacturing like, uh, that already exists here, any capacity that already exists here is really going to benefit getting, you know, that windfall from anyone scrambling to to get their, uh, manufacturing going. It's also interesting to note that, uh, it is very company specific, um, and also pharma subsector specific, because medical devices are still going to be impacted by those tariffs, and that's an a subsector that is trying to work with the administration to come out of impact as well.

Anjali, thank you so much. Really appreciate it. Thanks for joining us.