Walgreens Earnings Up 32%, but Revenues Lag Estimates

Walgreens Boots Alliance Inc. (NASDAQ: WBA) reported first-quarter fiscal 2016 results before markets opened Thursday morning. The drugstore chain reported adjusted diluted earnings per share (EPS) of $1.03 on revenues of $29.03 billion. In the same period a year ago, Walgreen reported EPS of $0.78 on revenue of $19.55 billion. First-quarter results also compare to the consensus estimates for EPS of $0.96 and $29.24 billion in revenue.

On a GAAP basis, the company posted net income of $1.12 billion in the first quarter ($1.01 per share).

Walgreens Boots said it is increasing the low end of its fiscal year adjusted EPS guidance by five cents to a new range of $4.30 to $4.55. Guidance assumes no material help from the proposed acquisition of Rite Aid.

Consensus estimates for 2016 adjusted earnings called for EPS of $4.40. Analysts also have tabbed full-year revenues at $120.15 billion. For the company’s second quarter, consensus estimates call for EPS of $1.27 on revenues of $30.81 billion.
[nativounit]
CEO Stefano Pessina said:

The year has started with a comparatively strong first quarter, as we expected. Our ongoing work to control costs across Walgreens Boots Alliance and improve adjusted operating income margins is growing earnings overall. Although it is early in the year, we are on track to deliver against our expectations. … Our ability to deploy tools and strategies that address these dynamics, generating continued growth across Walgreens Boots Alliance, and the commitment I see from our team give me confidence that we will deliver what we have signaled for 2016 and beyond.

Regarding the Rite Aid acquisition, the company said that it continues to expect the transaction to close in the second half of 2016. Walgreens also noted that in connection with the acquisition, the company last month completed the placement of $5 billion term loan facilities and the syndication of a new $7.8 billion bridge facility. These new facilities replaced the company’s previously reported $12.8 billion bridge facility commitment and may be drawn on closing of the acquisition.

Shares traded down about 0.2% in premarket trading Thursday, at $79.48 in a 52-week range of $73.00 to $97.30. Thomson Reuters had a consensus analyst price target of $95.55 before the results were announced.