Walgreen Stages a Comeback

Walgreen Co. (NYSE: WAG) reported fiscal fourth-quarter 2012 earnings per share (EPS) of $0.63 on revenue of $17.07 billion. In the same period a year ago, the country’s largest drug store chain reported EPS of $0.66 on revenue of $17.97 billion. Fourth-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.56 and $17.14 billion in revenue.

For the full 2012 fiscal year, Walgreens reported adjusted EPS of $2.42 compared with 2011 EPS of $2.97. Full-year revenues totaled $71.63 billion, compared with $72.18 billion a year ago. The consensus estimate called for full-year EPS of $2.59 on revenue of $71.68 billion.

And how much impact did the company’s spat over pharmacy benefits with Express Scripts Inc. (NASDAQ: ESRX) have on Walgreen:

Compared with the prior year periods, the negative impact of not being part of the Express Scripts, Inc. pharmacy provider network, net of associated cost reductions, was 6 cents per diluted share in this year’s fourth quarter and 21 cents per diluted share for the entire fiscal year, which matched the company’s previously stated estimate.

Walgreen president CEO said:

This was a challenging, but very important year for Walgreens, and we finished with a tough quarter. While we controlled costs and generated strong cash flow in the fourth quarter, our performance also reflected a strategic shift in promotional spending, a continued economically challenged consumer, and the impact from Express Scripts. Entering the new fiscal year, we believe we are positioned for growth as we benefit from the launch of our Balance Rewards loyalty program, our re-entry into the Express Scripts pharmacy provider network and our execution of the Alliance Boots strategic partnership.

The company did not offer guidance in its earnings release. The consensus estimate for the first fiscal quarter of 2013 calls for EPS of $0.67 on revenues of $17.76 billion. For the full 2013 fiscal year, the EPS estimate is $3.09 on revenues of $73.81 billion.

Given the negative impact of the Express Scripts loss, it seems fair to say that now that the two companies are working together again the forward estimates might see a revision.

Walgreen’s shares are inactive in premarket trading, having closed last night at $36.60. The 52-week range is $28.53 to $36.85. Thomson Reuters had a consensus analyst price target of $38.78 before today’s report.

Paul Ausick