Walgreens Boots Alliance(US:WBA)2025-06-26 11:18Sales 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].