Walgreens profits slide, but not as bad as expected
Walgreens earnings fell 24% in its third quarter, but the drugstore chain beat Wall Street expectations and affirmed its forecast for 2019.
Company shares started climbing faster than the broader market Thursday after Walgreens executives outlined an improved performance over a disappointing second quarter.
Walgreens still expects earnings for fiscal 2019 to be roughly flat compared to a year ago, a forecast it also made in April. That would equate to earnings of around $6.02 per share.
Analysts forecast earnings of $5.99 per share, on average, according to FactSet.
In the third quarter, net income dropped to about $1.02 billion from $1.34 billion in last year's quarter. Earnings adjusted for one-time gains and costs totaled $1.47 per share.
Revenue rose slightly to $34.59 billion.
Analysts expected earnings of $1.42 per share on $34.53 billion in revenue, according to Zacks Investment Research.
Deerfield, Illinois-based Walgreens Boots Alliance Inc. runs more than 18,500 stores in 11 countries. Executive Vice Chairman and CEO Stefano Pessina told analysts during a Thursday morning conference call he was pleased to report a quarter that fit the company's expectations after a "very disappointing" second quarter.
Company leaders said in April that Walgreens was hit much sooner than they expected by challenges like reimbursement cuts and lower price increases for branded drugs. The chain also is working through a cost management program to cut expenses.
Pessina said in a statement Thursday that Walgreens was making progress on that program and seeing better results from its U.S. retail business.
Edward Jones analyst John Boylan Jr. said his expectations were low, but Walgreens turned in a good fiscal third quarter.
"While one quarter does not make a trend it was good to see pharmacy sales in the U.S. outperform our expectations, despite ongoing reimbursement challenges," he said.
Walgreens shares climbed 3.6% or $1.90 to $54.28 in morning trading while broader indexes were mixed.
The company's stock had dropped 23% since the beginning of the year.
_____
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on WBA at https://www.zacks.com/ap/WBA