Walgreens Q3 Earnings: EPS Declines Despite Increase In Revenues

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Walgreens Boots Alliance

Walgreens Boots Alliance (NASDAQ:WBA) announced its fiscal Q3 earnings Wednesday, July 6th. The company’s revenue grew marginally by 2.4% year-on-year (y-o-y) to $29.5 billion for the quarter. The rise in revenue was primarily driven by the strong performance of the PBM business and Retail Pharmacy USA segment. The company’s operating profits declined by 16.2% y-o-y to $1.56 billion, driven by a 93% fall in Other Income.

The company’s adjusted earnings increased 15.7% over the prior year quarter to $1.18 per share. Taking into consideration the results of this quarter, Walgreens increased the lower end of its EPS guidance for full year 2016 by $0.10 to $4.45 to $4.55.

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Revenue Growth

The growth in revenue was primarily driven by an increase in revenues from its Retail Pharmacy USA and Pharmaceutical Wholesale segments, offset by the revenues from the Retail Pharmacy International segment. The number of prescriptions filed increased to 235 million for the quarter. This led to an increase in its retail prescription market share by 30 basis points to 19.6%. The strong performance of the PBMs also aided the increase in revenues. The company also reported synergies of $1 billion from the merger of Walgreens and Boots Alliance. The decline in revenues of the Retail Pharmacy segment was primarily attributed to the negative impact of currency exchange. On a constant currency basis, the revenue for the division increased 3.4% y-o-y.

Free Cash Flow

The company’s free cash flow increased by 16.1% y-o-y to $1.9 billion, primarily driven by increase in net cash from operations and decrease in capital expenditures.

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