Walgreens Boots Alliance (WBA) Q1 2025 earnings summary

Executive summary

• First quarter sales rose 7.5% year-over-year to $39.5 billion, with growth across all segments, but net loss widened to $265 million due to higher operating losses, restructuring costs, and non-cash charges from the Footprint Optimization Program and Cencora derivatives.

• Adjusted EPS was $0.51, down from $0.66 in the prior year, reflecting lower U.S. retail sales, lapping prior year sale-leaseback gains, and lower Cencora equity income.

• U.S. pharmacy and healthcare segments delivered strong growth, while U.S. retail underperformed due to weak cough, cold, and flu season and soft consumer spending.

• Progress reported on cost savings, footprint optimization, store closures, and non-core asset sales, including VillageMD.

• International segment, especially Boots UK, showed strong retail and online performance.

Financial highlights

• Adjusted operating income was $593 million, down from $687 million year-over-year; adjusted net earnings were $440 million, down 23% year-over-year.

• U.S. Retail Pharmacy sales rose 6.6% to $30.9 billion, with pharmacy sales up 10.4% and retail sales down 6.2%; comparable pharmacy sales grew 12.7%.

• International sales increased 10.2% to $6.4 billion (6.5% constant currency), with Boots UK comp retail sales up 8.1% and Boots.com sales up 23%.

• U.S. Healthcare sales grew 12% to $2.2 billion, with Shields up 30% and VillageMD up 9% year-over-year; adjusted EBITDA improved by $109 million to $70 million.

• Net cash used for operating activities improved to $140 million from $281 million, mainly due to lower legal payments and higher adjusted operating income after non-cash adjustments.

Outlook and guidance

• Adjusted EPS guidance for fiscal 2025 reaffirmed at $1.40–$1.80, with U.S. Healthcare and International growth expected to offset U.S. Retail Pharmacy pressure.

• Footprint Optimization Program on track for $100 million in-year AOI benefit in fiscal 2025, with store closures and cost reductions anticipated to improve cash flow.

• Retail comp sales for fiscal 2025 now expected to decline 4–5%, versus prior outlook of down 2–3%, due to continued weak consumer spending and a soft cough, cold, and flu season.

• NADAC changes expected to have less than $50 million negative impact on pharmacy margin for the remainder of the year.