Walgreens Boots Alliance Q1 2025 Earnings Call Summary

On January 10, 2025, Walgreens Boots Alliance (WBA) held its earnings call to discuss the results for the first quarter of fiscal year 2025, which ended on December 31, 2024.

The call commenced with the operator welcoming participants and introducing the speakers, including Eric Wasserstrom, Senior Vice President of Investor Relations; Tim Wentworth, Chief Executive Officer; and Manmohan Mahajan, Global Chief Financial Officer. Other executives also joined for the question-and-answer session.

Opening Remarks

Wasserstrom began by informing listeners that the call would include forward-looking statements based on current expectations. He emphasized that actual outcomes may differ due to various factors and encouraged participants to review the associated risks outlined in the company’s 10-K filing with the SEC.

CEO Update

Tim Wentworth then took the floor, stating that despite a challenging environment for consumers, the company made progress against its financial and strategic priorities. He noted that operational earnings were positively influenced by cost management and strong performance from U.S. pharmacy services, although the retail sector faced some challenges.

Wentworth reported maintenance of market share in the U.S. pharmacy segment and outlined four key areas of long-term focus identified at the end of the previous fiscal year. He highlighted progress made in stabilizing the retail pharmacy business, including the initiation of a footprint optimization program. Wentworth expressed confidence in achieving efficient store closures, predicting significant improvements as the process continues.

He discussed ongoing efforts to enhance employee scheduling and labor allocation in stores, which aim to improve the in-store experience for customers. Moreover, he mentioned advancements in pharmacy operations, particularly regarding micro-fulfillment centers (MFCs), which have resulted in increased shipping volumes and improved cost efficiency.

Financial Performance

Manmohan Mahajan provided detailed financial insights, reporting a 6.9% increase in overall sales on a constant currency basis. However, adjusted earnings per share (EPS) of $0.51 fell 23% year-on-year, primarily due to prior-year gains from sale-leasebacks and lower equity income from Cencora. He explained that the U.S. retail pharmacy segment saw comparable sales grow by 8.5% due to pharmacy sales, although retail sales saw a decline.

Retail Challenges and Opportunities

Following the financial review, Mahajan explained the continued struggles in the retail market attributed to changing consumer behaviors and macroeconomic factors. Despite these challenges, Mahajan noted that the company is optimistic about improving the retail experience through better inventory management, product assortment, and increased focus on health and wellness categories.

Future Outlook

In closing remarks, Wentworth reiterated that while there is still work to be done, the company is making strides towards its turnaround goals. He emphasized the importance of financial discipline and the company's commitment to enhancing cash flow generation and reducing net debt.

Question & Answer Segment

The call included a question-and-answer segment where analysts inquired about reimbursement changes and script retention rates. Wentworth confirmed that the negotiation process with PBMs has progressed positively, allowing for better alignment in the reimbursement structure, and expressed a commitment to safeguarding the company's market position.

Overall, the first quarter results signal a cautious but hopeful outlook as Walgreens Boots Alliance navigates its operational and financial challenges while aiming for long-term stability and growth.

Walgreens, Earnings, Pharmacy