Key Takeaways From Walgreens Q4 FY’18 Earnings

October 15th, 2018 by Trefis Team
+38.95%
Upside
17.59
Market
24.44
Trefis
WBA: Walgreens Boots Alliance logo
WBA
Walgreens Boots Alliance
Walgreens (NYSE:WBA) posted solid results in its recent fourth quarter earnings.  Net sales of the company rose to $33 billion, up 11.3% y-o-y, with adjusted earnings per share at $1.48. This was driven by bulk growth across the retail pharmacy segment and the acquisition of 1,932 Rite Aid stores that took place as part of a wave of health care consolidations. Early benefits of new pharmacy contracts, as well as an increase in volume owing to previously announced pharmacy partnerships, have been driving growth in this space over the past few quarters. Rising expenditures on prescription drugs and growing demand for specialty drugs have been further strengthening the retail pharmacy market for Walgreens.
On the other hand, Store only comparable sales saw a slight downturn by 1.9% at its international pharmacy division and domestically, as well as Amazon’s deal to buy medication delivery company PillPack for an undisclosed sum, sent the stock lower. As the retail landscape transforms, Walgreens has inked partnerships with Birchbox (creating millennial-friendly beauty shop-in-shops), Alibaba (bringing British beauty brands to online platform Tmall Global), and Kroger (offering a test grocery pickup service).
Based on the factors that affected the company’s comparable prescription growth and benefit from strength in retail prescriptions, for full year 2019 earnings, the company management has forecast its adjusted earnings per share to range from $6.40 to $6.70. Please refer to our dashboard on Walgreens’ Q4 Results.
 

Key trends from Walgreens’ fourth quarter earnings are outlined below:

Walgreens’ Business Receives A Major Boost From the recent Acquisition of  Rite Aid stores – The recent acquisition of stores from Rite Aid has provided a major boost to Walgreens’ business in Q4. The combination provides consumers with a more integrated experience, reduced costs, and improved access to health care experts in homes. This has combined Walgreens’ dense local presence through pharmacies and Rite Aid’s health care benefits and services.

Relevant Articles
  1. Should You Pick Walgreens Stock At $20?
  2. After A 4% Fall Last Year Is Target A Better Pick Over Walgreens Stock?
  3. Will Walgreens Stock Rebound To Its Pre-Inflation Shock Level of Over $50?
  4. What’s Next For Walgreens Stock After A 9% Fall Yesterday?
  5. Is Walgreens Stock Undervalued At $32?
  6. What To Expect From Walgreens’ Q2?

Retail  USA Pharmacy segments and Pharmaceutical Wholesale segments continue to perform well – For Retail USA and Retail International Pharmacy segment, the company had decent revenue growth of 14.7%, but it declined by 2.7% internationally. In this quarter this was primarily due to higher prescription volume including central specialty and mail following the acquisition of Rite Aid stores, but declined slightly Internationally due to unfavorable currency translation.  The growth for USA in this segment has continued to follow an upward trend driven by solid same store script growth as a result of partnerships established with Rite Aid. Increased participation as a pharmacy in Medicare Part D networks has also boosted results.

In its Pharmaceutical Wholesale Services segment, Walgreens grew 4.7% y-o-y in Q4. Certain factors that have aided growth in this segment include network claims, brand inflation, and growth in specialty pharmacy. This segment saw strong performance in emerging markets and the UK.

Growth in Online Sales – The company’s efforts to boost its digital capabilities have started paying off. In this regard, more than 22.5% of all 4Q retail refill scripts were initiated via the digital channel with the Walgreens mobile app, having been downloaded in excess of 50 million times since the launch.

Looking ahead, we believe that driven by the above trends, the company will drive growth, bringing more patients to its U.S. pharmacies through the recent acquisition of Rite Aid stores, and through other strategic partnerships, with steadier footing this coming year.

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Research

Like our charts? Explore example interactive dashboards and create your own.