DEERFIELD, Ill. — Walgreen Co. started its 2015 fiscal year on a positive note by reporting adjusted earnings per share for the first quarter above the high range of analysts’ projections.
 |
Walgreens said Tuesday that for the first quarter ended Nov. 30, adjusted net earnings rose to $773 million, or 81 cents per diluted share, from $688 million, or 72 cents per diluted share, a year earlier.
The company noted that the quarter’s earnings adjustments had a net negative impact of $36 million, or 4 cents per diluted share.
Analysts, on average, had forecast adjusted EPS of 75 cents, with estimates ranging from a low of 71 cents to a high of 80 cents, according to Thomson Financial.
On a GAAP (generally accepted accounting principles) basis, net income for the first quarter totaled $809 million, or 85 cents per diluted share, compared with $695 million in the year-ago period.
Walgreens said Alliance Boots contributed 11 cents per diluted share to first-quarter 2015 adjusted EPS.
The combined synergies for Walgreens and Alliance Boots in the first quarter totaled about $140 million and remain on track to reach at least $650 million in fiscal 2015, the company said.
"This quarter we had solid performance across both our pharmacy and retail products businesses," Walgreens president and chief executive officer Greg Wasson said in a statement. "We truly appreciate that our 8,200-plus store teams exceeded the overall retail market in year-over-year sales growth heading into the holiday season, as we grew gross profit dollars faster than our costs during the quarter.
"We also completed our financing to close the Alliance Boots transaction as we move toward our shareholder vote on Dec. 29 to finalize the merger, ahead of our original goal," Wasson added. "This truly is an extraordinary time for Walgreens as we achieve our vision of becoming a pharmacy-led, global enterprise for health and well-being with Alliance Boots."
On the revenue side, first-quarter sales climbed 6.7% to a record $19.55 billion from $18.33 billion a year ago. Same-store sales rose 5.7% year over year.
In the front end, comparable-store sales edged up 1.5% in the quarter. Customer traffic in comparable stores declined 2.7%, but basket size grew 4.2%, Walgreens said.
Pharmacy sales, which represented 66.8% of sales in the quarter, advanced 9% versus a year ago. Comparable pharmacy sales were up 8.1%, as the company filled a record 222 million prescriptions in the quarter, a gain of 4.3% year over year, Walgreens noted.
Prescription count in comparable stores increased 4.1% in the quarter. Walgreens reported that, as of Nov. 30, its retail prescription market share on a 30-day adjusted basis reached 19%, according to IMS Health.
At the special meeting in New York next week, Walgreens shareholders will be asked to consider and vote on a reorganization to establish Walgreens Boots Alliance as the new public holding company for the combined enterprise and the issuance of Walgreens Boots Alliance shares.
Pending shareholder approval, Walgreens expects to close the second step of the Alliance Boots transaction on Dec. 31.
In early August, Walgreens announced that it exercised its option to complete the second part of its transaction with Alliance Boots and to form a U.S.-based public holding company, Walgreens Boots Alliance Inc.
Walgreens announced the two-part agreement to acquire Alliance Boots in June 2012 and completed the first step of the deal that August, buying a 45% equity stake in Alliance Boots for $4 billion in cash and 83.4 million shares of Walgreens common stock, or about $6.7 billion in total.
In the second step of the transaction, Walgreens is set to purchase the rest of Alliance Boots for £3.133 billion, or about $5 billion, in cash and more than 144.3 million shares, or about $10 billion, of Walgreens common stock.
Once the second step is completed, it’s expected that Walgreen Co. will immediately be reorganized into a holding company structure and become a subsidiary of Walgreens Boots Alliance.
Wasson announced on Dec. 10 that he will retire from Walgreens shortly after the merger with Alliance Boots is completed.
"Walgreens is about to achieve an extraordinary milestone in a strategic journey we launched six years ago, and subsequently refined, to transform the front end of Walgreens drug stores, advance the role that community pharmacy plays in health care and find the right partner to take Walgreens global," he stated. "In 2009, a global Walgreens was a bold vision. Today, we are about to make it a transformational reality, to the benefit of customers, patients and all to whom we bring value in America and the world over."
The largest U.S. drug chain, Walgreens operates 8,230 drug stores in 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Its digital business includes Walgreens.com, drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com. The company also manages more than 400 Healthcare Clinic and provider practice locations nationwide. Its pharmacy services includes retail, specialty, infusion, medical facility and mail service, along with online and mobile services.
