After a terrible 2024 that saw its shares lose more than 60% of their value, 2025 is starting out as a better year for the company. Walgreens Shoe Alliance (Nasdaq: WBA)with the stock rising significantly after the pharmacy operator reported better-than-expected financial results for the first quarter of 2025 for the period ending in November 2024.
Let’s take a look at Walgreens’ most recent quarterly report and its ongoing turnaround efforts to see if it’s too late to buy the stock.
While Walgreens still saw earnings decline during the quarter, results easily beat analysts’ expectations.
Revenue jumped 7.5% year over year to $39.5 billion, after adjustment Earnings per share (EPS) fell 29% to $0.51. That was ahead of analyst consensus of adjusted EPS of $0.37 on revenue of $37.4 billion.
In fact, revenues rose across all sectors. US retail pharmacy sales rose 6.6% year over year Same store sales Jump 8.5%. Comparable pharmacy sales rose 12.7%, with prescription volume up 2.3%. However, comparable retail sales fell 4.6%, dragged down by a slowing cold and flu season and continued weakness in discretionary items.
Once again, Walgreen’s U.S. pharmacy business saw its operating income decline due to pharmacy reimbursement pressures. Adjusted operating income fell 36.4% year over year to $441 million. US retail pharmacy gross margins fell from 18.8% from 17%.
It closed 67 locations this quarter, and the company plans to close about 450 more stores by the end of 2025. Walgreens said its reimbursement contracts are in effect for 2025 and that most have features to reduce reimbursement risk. On the front end, the operation has begun with its initial efforts in inventory management and merchandising, and is expected to ramp up the strategy in the second half. However, management admitted that this had a negative impact on retail sales in the quarter.
International sales rose 6.5% year-on-year, with Boots UK sales up 4.6%. Same store sales at Boots pharmacies rose 10.9%, while retail same store sales increased 8.1%. International adjusted operating income jumped 16.1% year-on-year to $168 million.
US healthcare segment revenues rose 12% year over year to $2.17 billion. The segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $70 million, a $109 million improvement over last year. This includes revenue from Walgreens clinic partner VillageMD, which increased revenue 9% year-over-year to $1.6 billion, revenue at specialty pharmacy Shields rose 30% to $200 million, and revenue at home care provider CareCentrix rose 16% to $400 million dollar.
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