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DEERFIELD, Ill. — The morning after announcing its blockbuster deal to acquire Rite Aid Corp., Walgreens Boots Alliance Inc. reported earnings for its fiscal 2015 fourth quarter and full year that topped Wall Street’s forecast.
The company — closing its first full year following the combination of Walgreen Co. and Alliance Boots — also saw sales climb in both periods, including at its U.S. retail division that includes Walgreens and Duane Reade drug stores.
For the fourth quarter ended Aug. 31, the company said, adjusted net earnings attributable to Walgreens Boots Alliance rose to $969 million, or 88 cents per diluted share, from $745 million, or 77 cents per diluted share, a year earlier.
Analysts, on average, had projected adjusted EPS of 81 cents, with estimates ranging from a low of 76 cents to a high of 89 cents, according to Thomson Financial.
GAAP net earnings attributable to Walgreens Boots Alliance were $26 million, or 2 cents per diluted share, in the 2015 fourth quarter, compared with a loss of $221 million, or 23 cents per diluted share, in the same quarter a year ago.
Fourth-quarter net sales climbed 49.7% to $28.52 billion from $19.05 billion a year earlier, largely due to the inclusion of Alliance Boots consolidated results, the company said Wednesday.
For fiscal 2015, adjusted net earnings attributable to Walgreens Boots Alliance totaled $4.09 billion, or $3.88 per diluted share, compared with $3.17 billion, or $3.28 per diluted share, a year ago. Wall Street’s consensus forecast was for adjusted EPS of $3.80, with projections running from a low of $3.76 to $3.87, according to Thomson Financial.
GAAP net earnings attributable to Walgreens Boots Alliance for fiscal 2015 came in at $4.22 billion, or $4 per diluted share, versus $1.93 billion, or $2 per diluted share, a year earlier.
Walgreens Boots Alliance said fiscal 2015 net sales totaled $103.44 billion, up 35.4% from $76.39 billion in the prior-year period.
Combined net synergies for fiscal 2015 were $799 million, including $81 million in the fourth quarter related to activities starting in prior fiscal years, the company said, adding that it still expects to reach at least $1 billion in combined net synergies in fiscal 2016. That excludes synergy benefits related to the company’s long-term relationship with AmerisourceBergen and the benefits of refinancing the legacy Alliance Boots indebtedness at a lower cost.
The $17.2 billion deal to acquire Rite Aid Corp., announced late Tuesday, is expected to close in the second half of 2016. The transaction is expected to be accretive to Walgreens Boots Alliance’s adjusted earnings per share in its first full year after closing.
“We are pleased with our progress and performance in the fourth quarter and in our first fiscal year since launching Walgreens Boots Alliance,” executive vice chairman and chief executive officer Stefano Pessina said in a statement. “While we have much work to do and operate in some challenging markets, we are excited and energized by the outlook and opportunities ahead as we put in place our strategies for long-term, sustainable growth. We believe we can shape the future of health care around the world through our ability to bring global solutions to local communities, benefiting all participants, populations and stakeholders.”
In the Retail Pharmacy USA division, including Walgreens and Duane Reade, 2015 fourth-quarter sales rose 4.7% to $19.9 billion, with same-store sales up 6.5% year over year. Front-end same-stores sales edged up 0.4%, with an growth in basket size partially offset by lower customer traffic, according to the company.
Pharmacy sales, which accounted for 67.4 percent of the division’s total sales in the quarter, gained 6.6% overall and 10% on a comparable pharmacy basis. The division filled 222 million prescriptions (including immunizations), adjusted to 30-day equivalents in the quarter, an increase of 4.6% year over year. Prescriptions filled in comparable stores were up 5.1% in the quarter.
Walgreens Boots Alliance noted that in the quarter the Retail Pharmacy USA division’s retail prescription market share on a 30-day adjusted basis increased about 20 basis points over a year ago to 19.1%, as reported by IMS Health.
For fiscal 2015, the Retail Pharmacy USA division saw overall sales rise 6% to $81 billion. Same-store sales increased 6.4%, reflecting gains of 1.5% in the front end and 9.3% in the pharmacy.
Pharmacy sales, which were 66.1% of the division’s total sales in fiscal 2015, increased 8.2% overall. The division filled 894 million prescriptions (including immunizations) on a 30-day adjusted basis in the fiscal year, an increase of 4.4% over the previous year. Prescriptions filled in comparable stores increased 4.6%. For the year, the division’s retail prescription market share on a 30-day adjusted basis was up approximately 20 basis points to 19.1%, based on data from IMS Health.
As of Aug. 31, the division operated 8,173 drug stores across all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands, a net decrease of 34 stores since the end of the previous fiscal year.
Looking ahead, Walgreens Boots Alliance projected fiscal 2016 adjusted net EPS of $4.25 to $4.55 on a diluted basis. The company noted that the guidance assumes no material accretion from the Rite Aid acquisition but reflects an adverse impact on adjusted EPS due to the suspension of the balance of a $3 billion share buyback program to partly fund the transaction.
Analysts, on average, forecast Walgreens Boots Alliance’s fiscal 2016 adjusted EPS at $4.54, with estimates ranging from a low of $4.40 to a high of $4.80, according to Thomson Financial.
