Core Viewpoint - Walgreens Boots Alliance has shown signs of recovery in early 2025 after a significant decline in 2024, with better-than-expected fiscal Q1 2025 results indicating ongoing turnaround efforts [1] Financial Performance - Revenue increased by 7.5% year over year to $39.5 billion, surpassing analyst expectations, while adjusted EPS fell 29% to $0.51, exceeding the consensus of $0.37 [2] - U.S. retail pharmacy sales rose 6.6% year over year, with same-store sales up 8.5%, although comparable retail sales decreased by 4.6% due to a slower cold and flu season [3] - Adjusted operating income for the U.S. pharmacy business dropped 36.4% year over year to $441 million, with gross margins declining from 18.8% to 17% [4] Store Closures and Strategy - The company closed 67 locations in the quarter and plans to close approximately 450 more by the end of 2025, which is expected to improve profitability in the long run [5][9] - Initial inventory management and merchandising efforts have begun, although these have negatively impacted retail sales in the quarter [5] International Performance - International sales grew by 6.5% year over year, with Boots UK sales up 4.6%, and adjusted operating income increased by 16.1% to $168 million [6] Healthcare Segment - Revenue from the U.S. healthcare segment rose 12% year over year to $2.17 billion, with significant growth in partnerships such as VillageMD and specialty pharmacy Shields [7] Debt and Cash Flow - The company ended the quarter with $8.1 billion in debt and $1.2 billion in cash, generating negative free cash flow of $424 million due to seasonal inventory buildups [8] Future Outlook - Walgreens maintains its fiscal full-year guidance for adjusted EPS of $1.40 to $1.80, indicating confidence in its recovery strategy [8] - The company’s contracts for 2025 are expected to alleviate some reimbursement pressures, which is a critical area to monitor [10] Valuation - Walgreens trades at a forward P/E ratio of 7.7 and an enterprise value to EBITDA multiple of 5, suggesting the stock is undervalued [12] Competitive Landscape - The company faces competition from Walmart and Amazon, which are capitalizing on Walgreens' store closures by offering free same-day prescription deliveries [13]

Core Viewpoint - Walgreens Boots Alliance shares surged 27.5% on January 10, 2024, but this is insufficient to recover from a 64% decline in the previous year [1] Financial Performance - In the fiscal first quarter ending November 30, 2024, adjusted earnings were $0.51 per share, exceeding Wall Street's consensus estimate of $0.40 per share, although still less than half of previous earnings [4] - Walgreens provided a forward-looking guidance range of $1.40 to $1.80 per share for fiscal 2025, compared to the analyst expectation of $1.58 per share [5] - U.S. retail pharmacy sales increased by 6.6% year over year, but adjusted operating income from U.S. retail operations fell to 1.3% of sales, down from 4% two years ago [10] Analyst Insights - Evercore analyst raised the price target for Walgreens from $9 to $12 per share, reflecting a positive adjustment but still close to the stock's closing price of $11.75 [6] Industry Challenges - The retail pharmacy industry faces significant pressure from vertically integrated pharmacy benefits managers (PBMs) that control 79% of prescription drug claims, which Walgreens lacks [7][8] - The rise of low-cost providers like Mark Cuban's Cost Plus Drugs has made dispensing generic drugs a low-margin business, impacting Walgreens' profitability [9] Operational Losses - Walgreens' U.S. healthcare segment reported a loss of $325 million in the fiscal first quarter, contributing to an overall operating loss of $245 million for the period [11] - The high dividend yield of over 8% is attractive, but without profits, there is a risk of future dividend cuts [12]

Market Overview - Major U.S. equities indexes experienced a decline, with the S&P 500 dropping 1.5%, the Dow down 1.6%, and the Nasdaq also falling 1.6% as the market resumed trading after a day of mourning for former President Jimmy Carter [2][3] Employment Data Impact - The U.S. economy added 256,000 jobs in December, significantly surpassing economists' forecasts, which raised concerns about the Federal Reserve's ability to implement further interest rate cuts in 2025 [2] Company Performance - Constellation Brands (STZ) saw its shares plummet 17.1% after reporting lower-than-expected quarterly sales and reducing its annual forecast, citing inflationary pressures and changing consumer preferences [4] - PG&E (PCG) shares fell 10.8% due to ongoing wildfires in Southern California, with the company previously declaring Chapter 11 bankruptcy in 2019 related to fire damages [5] - ON Semiconductor (ON) shares decreased by 7.5% after Truist downgraded the stock from "buy" to "hold," expressing a cautious outlook despite management's belief in a revenue recovery [6] - Walgreens Boots Alliance (WBA) shares surged 27.6% following better-than-expected sales and adjusted profits for Q1 of fiscal 2025, indicating early progress in its turnaround plan [7] - Constellation Energy (CEG) shares increased by 25.2% after announcing the acquisition of Calpine, enhancing its presence in California and Texas and positioning it as the largest clean energy provider in the U.S. [8] - Delta Air Lines (DAL) shares rose 9% after the airline provided optimistic first-quarter profit guidance, anticipating strong travel demand [9]

The improving retail pharmacy business of Walgreens Boots Alliance and comments from the company’s ... [+] chief executive seem to be convincing Wall Street the drugstore chain is unlikely headed for a buyout from private equity. In this photo are customers shop at a Walgreens store on March 09, 2023 in El Cerrito, California. (Photo by Justin Sullivan/Getty Images)Getty ImagesThe improving retail pharmacy business of Walgreens Boots Alliance and comments from the company’s chief executive are convincing Wa ...

Sales Performance - Sales for the three months ended November 30, 2024 increased by 10.2% to $6.4 billion, with a favorable currency impact of 3.6 percentage points[189] - Pharmacy sales decreased by 1.5% in the three months ended November 30, 2024, but comparable pharmacy sales in constant currency increased by 8.3%[190] - Retail sales increased by 9.6% for the three months ended November 30, 2024, with a favorable currency impact of 5.1 percentage points[191] - Pharmaceutical wholesale sales increased by 14.2% for the three months ended November 30, 2024, with a favorable currency impact of 2.9 percentage points[192] - U.S. Healthcare segment sales increased by $241 million to $2.2 billion for the three months ended November 30, 2024, driven by growth in all businesses[203] Operating Income and EBITDA - Operating income for the three months ended November 30, 2024 increased by 21.4% to $141 million, with a favorable currency impact of 1.5 percentage points[195] - Adjusted operating income for the three months ended November 30, 2024 increased by 17.9% to $168 million, with a favorable currency impact of 1.8 percentage points[196] - Adjusted operating income for the U.S. Healthcare segment improved by $121 million to $25 million for the three months ended November 30, 2024[207] - Adjusted EBITDA for the U.S. Healthcare segment improved by $109 million to $70 million for the three months ended November 30, 2024[208] - U.S. Retail Pharmacy segment reported an operating income of $17 million for Q1 2025, compared to $297 million in Q1 2024[217] - Adjusted operating income for the U.S. Healthcare segment improved to $25 million in Q1 2025 from a loss of $96 million in Q1 2024[217] - Adjusted EBITDA for the U.S. Healthcare segment increased to $70 million in Q1 2025 from a loss of $39 million in Q1 2024[222] Financial Adjustments and Costs - Total adjustments to operating loss amounted to $838 million in Q1 2025, up from $726 million in Q1 2024[219] - Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. were $440 million in Q1 2025, down from $571 million in Q1 2024[219] - Adjusted diluted net earnings per common share were $0.51 in Q1 2025, compared to $0.66 in Q1 2024[221] - Footprint optimization costs were $333 million in Q1 2025, primarily related to restructuring activities[217][219] - Acquisition-related amortization costs were $269 million in Q1 2025, slightly down from $275 million in Q1 2024[217][219] - Acquisition and disposition-related costs were $104 million in Q1 2025, down from $163 million in Q1 2024[217][219] - Transformational cost management resulted in a net benefit of $15 million in Q1 2025, compared to a cost of $109 million in Q1 2024[217][219] - Total impairment charges for long-lived assets were $279 million in the three months ended November 30, 2024, compared to $162 million in the same period in 2023[8] Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash decreased to $1.3 billion as of November 30, 2024, from $3.2 billion as of August 31, 2024[231] - Net cash used for operating activities decreased to $140 million in Q1 2025 from $281 million in Q1 2024, driven by lower opioid legal payments and higher operating income[245] - Net cash used for investing activities was $76 million in Q1 2025, compared to net cash provided by investing activities of $85 million in Q1 2024[247] - Net cash used for financing activities was $1.7 billion in Q1 2025, compared to net cash provided by financing activities of $186 million in Q1 2024[250] - Proceeds from debt were $3.2 billion in Q1 2025, down from $4.0 billion in Q1 2024, primarily from revolving credit facilities[251] - Payments of debt totaled $4.7 billion in Q1 2025, including $1.2 billion for 3.800% unsecured notes and $290 million for a senior unsecured term loan[253] - Cash dividends paid decreased to $216 million in Q1 2025 from $415 million in Q1 2024[255] - The company has repurchased $8.0 billion of its common stock under the June 2018 stock repurchase program as of November 30, 2024[256] - The company expects to fund its liquidity needs through cash flow from operations, existing credit facilities, and monetization of investments and other assets[230] Debt and Credit Ratings - The company had outstanding total debt of $8.1 billion as of November 30, 2024, with $446 million classified as current[235] - The company reduced its outstanding lease liability by $652 million during the three months ended November 30, 2024[238] - The company has an aggregate borrowing capacity of $5.8 billion under committed revolving credit facilities, expiring in fiscal 2026 and 2027[236] - Credit ratings as of January 9, 2025: Moody's Ba3 (Stable outlook), S&P BB- (Stable outlook)[258] - Long-term credit ratings were downgraded to BB (S&P) and Ba3 (Moody's) in fiscal 2024, impacting borrowing costs and access to capital markets[260] - The company's credit ratings significantly reduce its ability to issue commercial paper and may increase the cost of new financing[260] Legal and Pension Liabilities - The company accrued a total liability of $6.6 billion related to opioid-related claims and litigation settlements as of November 30, 2024[239] - The company made approximately $435 million in contributions to the Boots Pension Plan and estimates remaining contributions of $410 million to $480 million by the end of fiscal 2026[240] Capital Expenditures - Capital expenditure decreased to $284 million in Q1 2025 from $506 million in Q1 2024, driven by reduced spending on U.S. Retail Pharmacy and VillageMD projects[249] Critical Accounting Estimates - Critical accounting estimates include business combinations, leases, goodwill impairment, and long-lived assets impairment[263]

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Core Viewpoint - Walgreens Boots Alliance is undergoing a long-term turnaround process, emphasizing the importance of sustainable, retail pharmacy-led operations and focusing on improving customer experience and financial stability [2][8]. Financial Performance - In Q1, Walgreens reported sales of $39.5 billion, a 7.5% increase year-over-year, but experienced a net loss of $265 million, up from a loss of $67 million the previous year due to higher operating losses [5]. - The U.S. retail pharmacy segment grew by 6.6%, driven by a 10.4% increase in pharmacy sales, while retail sales fell by 6.2% due to a weaker flu season and reduced discretionary spending [5]. - The international segment saw a growth of 10.2%, aided by a favorable currency impact of 3.6% [5]. Strategic Initiatives - The company is focusing on stabilizing its retail pharmacy, optimizing store footprint, and enhancing reimbursement models while elevating customer experience [2][6]. - Walgreens plans to close approximately 500 stores during fiscal year 2025, having already closed about 70 in Q1, with a goal of a healthier, smaller footprint [6]. - The company has introduced 60 owned brands in the first quarter as part of its strategy to become a trusted provider of private label merchandise [4]. Customer Experience Enhancements - Walgreens is implementing digital and virtual check-ins for pharmacy patients, set to launch in 100 stores, with virtual care currently available in 30 states [3]. - The company is revamping its analytics, omnichannel, and digital experiences to better meet customer needs and improve loyalty [3][7]. Long-term Focus - The company is committed to a multiyear process aimed at operational efficiency and customer loyalty, utilizing data and analytics to enhance decision-making and streamline operations [6][7]. - Walgreens acknowledges that while initial progress has been made, significant work remains to achieve its long-term turnaround goals [8].

Group 1 - Walgreens Boots Alliance, Inc. reported first quarter earnings of 51 cents per share, exceeding analysts' expectations of 37 cents [1] - Revenue for the quarter was $30.90 billion, surpassing the anticipated $29.10 billion [2] - The stock is experiencing upward momentum, leading to increased buying interest and potential for further price increases [1][2] Group 2 - The stock has encountered a resistance level at $11, where previous rallies have stalled in October and December [3] - When a stock reaches resistance, it can lead to a sell-off as sellers undercut each other to attract buyers [4] - A breakout occurs when buyers overpower sellers at the resistance level, potentially leading to a new uptrend for the stock [5]

Core Insights - Walgreens Boots Alliance (WBA) was one of the worst-performing stocks in 2024, dropping by 64% while the S&P 500 rose over 20% due to consumer spending challenges and poor performance in its primary care business [1] - The company reported better-than-expected results for fiscal 2025 Q1, leading to a 26% increase in stock price [2] - Revenue grew by 7.5% year-over-year across all business segments, with adjusted earnings of $0.51 per share, surpassing analyst expectations of $0.37 [3][4] Financial Performance - For the quarter ending November 30, Walgreens achieved 7.5% year-over-year revenue growth, with all segments (U.S. retail pharmacy, international, and U.S. healthcare) showing revenue increases [3] - Adjusted earnings per share were reported at $0.51, significantly higher than the expected $0.37 [3] Management Commentary - CEO Tim Wentworth highlighted disciplined execution of the company's 2025 priorities and controlling operating costs as key factors in the positive results [4] Future Outlook - Walgreens maintained its full-year adjusted earnings per share guidance of $1.40 to $1.80, indicating a valuation of approximately 7.2 times expected earnings at the midpoint [5]

Financial Data and Key Metrics - No specific financial data or key metrics changes mentioned in the provided content [1][2][3][4] Business Line Data and Key Metrics - No specific business line data or key metrics changes mentioned in the provided content [1][2][3][4] Market Data and Key Metrics - No specific market data or key metrics changes mentioned in the provided content [1][2][3][4] Company Strategy and Industry Competition - No specific company strategy or industry competition details mentioned in the provided content [1][2][3][4] Management Commentary on Operating Environment and Future Outlook - The company anticipates making projections and forward-looking statements based on current expectations, but actual results could differ materially due to various factors [4] Other Important Information - The conference call includes participation from key executives such as the CEO, Global CFO, and other senior leaders who will participate in the Q&A session [3] Q&A Session Summary - No specific questions or answers from the Q&A session are provided in the content [1][2][3][4]