Core Insights - Walgreens Boots Alliance, Inc. (WBA) reported adjusted earnings per share (EPS) of 38 cents for Q3 fiscal 2025, a decline of 39.7% year-over-year, but exceeded the Zacks Consensus Estimate by 11.76% [1] - Total sales for Q3 reached $38.99 billion, reflecting a year-over-year increase of 7.2% and surpassing the Zacks Consensus Estimate by 6.5% [2][9] - The company has withdrawn its fiscal 2025 guidance due to a pending acquisition deal with Sycamore Partners, expected to close in late 2025 [12][13] Financial Performance - The gross profit for Q3 was $6.51 billion, up 0.75% year-over-year, despite an 8.7% increase in the cost of sales, leading to a gross margin contraction of 108 basis points to 16.7% [8][9] - Selling, general and administrative (SG&A) expenses rose 1.6% year-over-year to $6.49 billion, with an adjusted operating profit of $13 million compared to $66 million in the previous year [10] Segment Performance - U.S. Retail Pharmacy segment sales increased by 7.8% year-over-year to $30.7 billion, with comparable sales up 10.3% [4] - International revenues grew by 7.8% year-over-year to $6.2 billion, with notable increases in Germany and Boots UK [6] - U.S. Healthcare reported revenues of $2.1 billion, with mixed performance across its sub-segments [7] Market Reaction - Following the earnings announcement, Walgreens shares rose by 0.9% in pre-market trading [2]

Core Insights - Walgreens Boots Alliance (WBA) reported quarterly earnings of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, but down from $0.63 per share a year ago, indicating an earnings surprise of +11.76% [1] - The company achieved revenues of $38.99 billion for the quarter ended May 2025, surpassing the Zacks Consensus Estimate by 6.49% and up from $36.35 billion year-over-year [2] - Walgreens shares have increased by approximately 21.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 3.6% [3] Earnings Outlook - The future performance of Walgreens stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $36.98 billion, and for the current fiscal year, it is $1.69 on revenues of $151.46 billion [7] Industry Context - The Retail - Pharmacies and Drug Stores industry, to which Walgreens belongs, is currently ranked in the top 2% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Group 1 - Walgreens reported Q3 profits exceeding Wall Street expectations, with revenue of $39 billion and adjusted EPS of $0.38, surpassing analyst forecasts of $36.8 billion and $0.31 respectively [1] - Walgreens is preparing to transition into a private company through a $10 billion acquisition by Sycamore Partners, expected to be completed by the end of the year [1] - The company has been facing challenges due to retail competition and reduced prescription drug payments from insurers, leading to a significant drop in market value [1] Group 2 - Walgreens withdrew its fiscal 2025 guidance and did not provide new guidance in its recent earnings report, marking a lack of communication with analysts since the acquisition announcement in March [2] - The company is divesting its medical clinic business, VillageMD, which is expected to yield up to $3 per share for shareholders upon sale [2] - Walgreens stock has seen a year-to-date increase of 21% as of the latest report [3]

Core Viewpoint - Walgreens Boots Alliance reported a narrower-than-expected loss of $175 million in its third quarter, as the company approaches the end of its tenure as a publicly traded entity [2][3]. Financial Performance - For the fiscal third quarter ending May 31, Walgreens experienced a 7% increase in sales, reaching $39 billion, despite a loss of $175 million, which is a decrease of $519 million compared to net earnings of $344 million in the same period last year [3]. - The U.S. Retail Pharmacy segment sales rose nearly 8% to $39.7 billion compared to the previous year, although retail sales within that segment decreased by 5%, leading to a 30% drop in adjusted operating income to $350 million from $501 million [5]. Strategic Developments - Walgreens is in the process of completing a sale to Sycamore Partners for over $10 billion, with a special shareholder meeting scheduled for July 11 to vote on the deal [3][4]. - The Sycamore deal includes a payment of $11.45 per share, which is 29% above the stock price from December [4]. - The total value of the Sycamore deal exceeds $23 billion when including debt and other items [7]. Operational Challenges - The company has faced significant challenges, including a disastrous rollout of in-store clinics, leading to numerous pharmacy closures and a decline in stock value [4][9]. - Walgreens has lost more than $3.2 billion, or $3.81 per share, for the nine-month period ending May 31, compared to a loss of $5.6 billion, or $6.53 per share, in the previous year [10]. Future Outlook - The CEO emphasized the need for a turnaround plan that requires time and a balanced approach to manage future cash needs while making necessary investments [6].

Sales Performance - Sales for the three months ended May 31, 2025 increased 7.8% to $6.2 billion, with a favorable impact of currency translation of 1.9 percentage points [274]. - For the nine months ended May 31, 2025, sales increased 6.1% to $18.7 billion, with a constant currency increase of 5.5% [285]. - Pharmacy sales increased 4.6% in the same period, with comparable pharmacy sales in constant currency rising 5.8% [275]. - Retail sales grew 7.4%, driven by strong performance in Boots UK, with Boots.com sales increasing 18.7% [276]. - Pharmacy sales decreased 1.3% for the nine months, but comparable pharmacy sales in constant currency increased 5.8% [286]. - Retail sales for the nine months increased 5.8%, with Boots.com sales growing 23.1% [287]. - The U.S. Healthcare segment reported sales of $2.1 billion for the three months ended May 31, 2025, with an adjusted operating income of $54 million [297]. - Sales for the three months ended May 31, 2025, decreased by $23 million to $2.1 billion, a decline of 1.1% year-over-year, primarily due to lower revenue at VillageMD [298]. - Sales for the nine months ended May 31, 2025, increased by $195 million to $6.4 billion, with CareCentrix sales up 11.3% and Shields sales up 28.1% [304]. Operating Income and Profitability - Operating income for the three months ended May 31, 2025 increased 31.1% to $188 million, favorably impacted by currency translation [282]. - Adjusted operating income for the same period rose 22.0% to $214 million, reflecting strong retail performance and market growth [283]. - Gross profit for the three months ended May 31, 2025, was $256 million, an increase of $75 million compared to the same quarter last year, reflecting higher contributions from VillageMD and Shields [299]. - Adjusted operating income for the nine months ended May 31, 2025, improved by $346 million to $196 million, supported by contributions from VillageMD and Shields [308]. - Adjusted EBITDA for the three months ended May 31, 2025, was $86 million, an increase of $63 million compared to the prior year, reflecting improvements at VillageMD and Shields [303]. - Adjusted EBITDA for the nine months ended May 31, 2025, was $314 million, an increase of $313 million compared to the previous year, indicating significant growth at VillageMD and Shields [309]. - The operating loss for the three months ended May 31, 2025, was $64 million, a decrease of $156 million from the prior year, reflecting lower acquisition-related amortization [301]. - The operating loss for the nine months ended May 31, 2025, was $3.7 billion, a decrease of $10.0 billion compared to the previous year, due to higher contributions from VillageMD and Shields [307]. Net Earnings and Losses - For the three months ended May 31, 2025, Walgreens Boots Alliance reported a net loss of $175 million compared to a net earnings of $344 million in the same period of 2024 [322]. - Adjusted net earnings attributable to Walgreens Boots Alliance for the three months ended May 31, 2025, were $334 million, down from $545 million in the same period of 2024, representing a decrease of approximately 38.6% [324]. - The diluted net loss per common share for the three months ended May 31, 2025, was $(0.20), compared to diluted net earnings per share of $0.40 in the same period of 2024 [324]. Cash Flow and Debt Management - The Company reported net cash provided by operating activities of $245 million for the nine months ended May 31, 2025, compared to a net cash used of $314 million for the same period in 2024, indicating a significant improvement [350]. - As of May 31, 2025, the Company had outstanding total debt of $7.4 billion, with $429 million classified as current, and approximately $1.8 billion and $846 million of this debt due in fiscal 2026 and 2027, respectively [341]. - The Company suspended its quarterly cash dividends to strengthen its balance sheet and improve free cash flow, focusing on debt reduction and capital allocation [332]. - The Company executed a sale of 1.3 million shares of Cencora for approximately $315 million, with proceeds used to pay down debt and for general corporate purposes [339]. - The Company entered into an accounts receivable securitization facility with an initial borrowing capacity of $2.5 billion to repay outstanding borrowings [342]. - The Company recorded pre-tax gains of $10 million and $135 million related to the change in classification of its previously held equity method investment in BrightSpring during the three and nine months ended May 31, 2025 [330]. - The Company continues to explore strategic monetization of non-core assets to provide additional liquidity, including VPF derivative contracts related to Cencora common stock [336]. - Net cash used for financing activities for the nine months ended May 31, 2025 was $2.8 billion, compared to $912 million in the prior year, with $25.0 billion in proceeds from debt [356]. - Total debt payments for the nine months ended May 31, 2025 amounted to $27.2 billion, an increase from $23.1 billion in the previous year, including significant repayments on various credit facilities [357]. Strategic Initiatives and Future Outlook - The Company continues to focus on strategic capital allocation and improving free cash flow amid ongoing financial challenges [359]. - The Company has accrued a total liability of $6.2 billion associated with the Multistate Settlement Agreement and other opioid-related claims, with $650 million and $5.5 billion classified in accrued expenses and other liabilities, respectively [345]. - The Company expects to make remaining contributions of approximately $450 million related to the Bulk Purchase Annuity Agreement by the end of fiscal 2026 [347]. - The Company recorded professional services and other transaction-related expenses of $15 million related to the merger agreement with Blazing Star Parent, LLC, during the three months ended May 31, 2025 [327]. - As of May 31, 2025, the Company's long-term credit ratings were Ba3 from Moody's and BB- from Standard & Poor's, with a negative outlook from S&P [364]. - The Company has repurchased $8.0 billion of its common stock under a program authorized for up to $10.0 billion, although repurchases were suspended in July 2020 [360]. - The Company received cash proceeds of $103 million from settling VPF derivative contracts through the delivery of 2.2 million shares of Cencora common stock in the nine months ended May 31, 2025 [358].

Financial Performance - Third quarter sales increased 7.2% year-over-year to $39.0 billion, with a 6.9% increase on a constant currency basis[6] - Third quarter loss per share was $0.20, compared to earnings per share of $0.40 in the year-ago quarter, reflecting a decline of 150%[7][11] - Adjusted earnings per share decreased to $0.38 from $0.63 in the year-ago quarter, a decline of 39.6% on a constant currency basis[7][11] - Net loss for the third quarter was $175 million, a decrease of $519 million compared to net earnings of $344 million in the year-ago quarter[9] - Adjusted operating income for the third quarter was $558 million, down from $613 million in the year-ago quarter, reflecting lower U.S. retail sales[8] - The company has withdrawn fiscal 2025 guidance due to the pending acquisition by entities affiliated with Sycamore Partners[4][31] - For the nine months ended May 31, 2025, the net loss was $4,836 million, a significant improvement from a net loss of $12,370 million in the same period of 2024, representing a reduction of approximately 61.0%[50] - Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. for the nine months ended May 31, 2025, were $1,317 million, down from $2,152 million in 2024, a decrease of approximately 38.8%[62] Sales and Revenue - U.S. Retail Pharmacy segment sales were $30.7 billion, up 7.8% year-over-year, with comparable sales increasing 10.3%[20] - International segment sales reached $6.2 billion, a 7.8% increase from the year-ago quarter, with a 5.9% increase on a constant currency basis[24] - U.S. Healthcare segment sales were $2.1 billion, a decrease of $23 million, primarily due to a 6.5% decline in VillageMD sales[27] - Sales for the three months ended May 31, 2025, were $38,986 million, an increase from $36,351 million in the same period of 2024, representing a growth of 4.5%[46] - Total sales for the three months ended May 31, 2025, were $30,715 million, compared to $28,503 million for the same period in 2024, representing a growth of approximately 7.6%[67] - The U.S. Retail Pharmacy segment's sales for the nine months ended May 31, 2025, were $91,961 million, compared to $86,308 million for the same period in 2024, showing an increase of about 6.1%[67] Cash Flow and Liquidity - Net cash provided by operating activities was $584 million, a $20 million decrease compared to the year-ago quarter[12] - Cash flows from operating activities provided $245 million, compared to a cash outflow of $314 million in the prior year, indicating a positive turnaround[50] - The company reported a net cash provided by investing activities of $260 million, down from $1,106 million in the previous year, reflecting a decrease of approximately 76.5%[50] - The net cash used for financing activities was $2,785 million, compared to $912 million in the prior year, indicating a significant increase in cash outflow[50] - The cash, cash equivalents, and restricted cash at the end of the period were $939 million, an increase from $740 million at the end of the previous year[50] - The company experienced a net decrease in cash, cash equivalents, and restricted cash of $2,280 million for the nine months ended May 31, 2025, compared to a decrease of $117 million in the prior year[50] Assets and Liabilities - Total assets decreased to $69,406 million as of May 31, 2025, down from $81,037 million as of August 31, 2024, reflecting a decline of 14.3%[47] - Current liabilities were $25,958 million as of May 31, 2025, compared to $26,953 million as of August 31, 2024, showing a decrease of 3.7%[47] - The company’s cash and cash equivalents decreased to $766 million as of May 31, 2025, from $1,319 million as of August 31, 2024, a decline of 42%[47] - The company’s long-term debt decreased to $6,937 million as of May 31, 2025, from $8,044 million as of August 31, 2024, a reduction of 13.8%[47] Impairments and Adjustments - The company reported an operating loss of $5,759 million for the nine months ended May 31, 2025, an improvement from a loss of $13,099 million in the same period of 2024[46] - The company recognized impairment of goodwill and intangibles amounting to $89 million for the three months ended May 31, 2025[68] - The company reported a total impairment of goodwill, intangibles, and long-lived assets of $5,432 million for the nine months ended May 31, 2025[68] - The company’s impairment of goodwill, intangibles, and long-lived assets for the nine months ended May 31, 2025, was $6,195 million, down from $13,091 million in 2024, indicating a reduction of approximately 52.7%[62] - The Company recorded professional services and other transaction-related expenses of $15 million and $50 million for the three and nine months ended May 31, 2025, related to the merger agreement with Blazing Star Parent, LLC[65] Employment and Operations - Walgreens Boots Alliance employs approximately 312,000 people across eight countries, maintaining a significant presence in the healthcare ecosystem[41]

Group 1 - Walgreens Boots Alliance, Inc. is set to release its third-quarter earnings results on June 26, with analysts expecting earnings of 34 cents per share, a decrease from 63 cents per share in the same period last year [1] - The company is projected to report quarterly revenue of $36.72 billion, slightly up from $36.35 billion a year earlier [1] - On April 21, Walgreens announced a $300 million settlement to resolve federal allegations regarding the filling of invalid prescriptions for opioids and other controlled substances [2] Group 2 - Deutsche Bank analyst downgraded Walgreens stock from Hold to Sell, reducing the price target from $11 to $9 [5] - Truist Securities maintained a Hold rating but lowered the price target from $13 to $12 [5] - UBS analyst maintained a Neutral rating and raised the price target from $9 to $10 [5] - Morgan Stanley maintained an Underweight rating and cut the price target from $9 to $7 [5]

Core Insights - Walgreens Boots Alliance (WBA) is expected to report quarterly earnings of $0.34 per share, a decline of 46% year-over-year, with revenues forecasted at $36.66 billion, reflecting a 0.9% increase compared to the previous year [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating analysts have reevaluated their initial projections [1][2] Revenue Estimates - Analysts predict 'Revenues- U.S. Retail Pharmacy' to be $28.76 billion, showing a year-over-year change of +0.9% [4] - 'Revenues- U.S. Healthcare' is expected to reach $2.17 billion, indicating a +2.3% change year-over-year [4] - 'Revenues- International' is forecasted at $5.74 billion, suggesting a +0.2% change year-over-year [4] Operating Income Estimates - 'Adjusted operating income (loss)- U.S. Retail Pharmacy' is anticipated to be $113.67 million, down from $501 million year-over-year [5] - 'Adjusted operating income (loss)- International' is expected to be $196.39 million, compared to $175 million from the previous year [5] Stock Performance - Shares of Walgreens have increased by +1.3% over the past month, outperforming the +0.5% move of the Zacks S&P 500 composite [5] - With a Zacks Rank 2 (Buy), WBA is projected to outperform the overall market in the near future [5]

Core Insights - Rite Aid is undergoing bankruptcy proceedings, with various companies, including Walgreens and brand management firms, evaluating its remaining assets [1][4][9] - Kourtney Kardashian has shown interest in acquiring Rite Aid's Thrifty ice cream brand, which has a history dating back to 1940 [3][7] Group 1: Bankruptcy and Asset Evaluation - Rite Aid operates approximately 1,200 stores and serves around 8 million customers, having filed for bankruptcy for the second time in two years [4][8] - The bankruptcy judge has approved store closures and the sale of customer prescription files to 13 buyers, including CVS Health and Walgreens [4][10] - Brand management companies such as Authentic Brands Group, WHP Global, and Marquee Brands are assessing Rite Aid's intellectual property and loyalty program [1][2] Group 2: Interest in Thrifty Ice Cream Brand - Kourtney Kardashian, co-founder of Lemme and owner of Poosh, is interested in Rite Aid's Thrifty ice cream brand, which is sold at various retailers [3][5][6] - Thrifty ice cream has a notable history and has attracted interest from consumer-focused private equity firms as well [7]

Core Insights - Amazon Pharmacy is launching new features aimed at attracting seniors covered by Medicare's drug benefit, a market currently dominated by CVS Health and Walgreens [2][4] - The new "caregiver support feature" allows customers to have someone else manage their medications, enhancing convenience for those caring for elderly family members [3][8] - Customers with Medicare Part D can access PillPack, which simplifies medication management through pre-sorted and labeled packets delivered to their homes [4][6] Market Context - The U.S. prescription market is largely controlled by CVS and Walgreens, which together hold a 40% market share, while Amazon's share is less than 1% [6] - CVS filled 435 million prescriptions in Q1, a 4.3% increase year-over-year, while Walgreens filled over 309 million prescriptions, up 3.4% [5] - Combined, CVS and Walgreens generated over $370 billion in prescription revenues last year [5] Demographic Trends - The Medicare prescription market is expanding, with over 11,000 Americans turning 65 every day, indicating a growing customer base for Amazon Pharmacy [6] - More than 50 million Americans are currently caring for an aging family member, presenting a significant opportunity for Amazon to cater to this demographic [7]