Walgreens Boots Alliance (WBA) Q3 2024 earnings summary

Executive summary

• Q3 sales rose 2.6% year-over-year to $36.4 billion, with growth across all segments, but adjusted EPS fell 36.6% to $0.63 due to U.S. retail pharmacy headwinds and a challenging consumer environment.

• Net earnings for Q3 were $344 million, up from $118 million a year ago, but the nine-month period saw a net loss of $5.6 billion, driven by a $12.4 billion non-cash goodwill impairment for VillageMD.

• U.S. Healthcare posted its second consecutive quarter of positive adjusted EBITDA, while International, especially Boots UK, showed resilience with strong retail and pharmacy sales growth.

• Strategic and operational reviews are underway, including a multiyear U.S. store footprint optimization program, significant store closures, and a retail pharmacy action plan.

• Cost savings initiatives are on track, with $1 billion projected for FY24.

Financial highlights

• Q3 sales were $36.4 billion, up 2.6% year-over-year; adjusted operating income was $613 million, down 36.1% year-over-year.

• Adjusted EPS for Q3 was $0.63, down 36.6% year-over-year; GAAP net loss for the first nine months was $5.6 billion, including a $12.4 billion VillageMD goodwill impairment.

• Comparable U.S. retail pharmacy sales grew 3.5% year-over-year, but comparable retail sales declined 2.3%.

• U.S. Healthcare segment delivered its second consecutive quarter of positive adjusted EBITDA, with sales up 7.6% year-over-year.

• Free cash flow for the nine months was negative $1.1 billion, impacted by legal payments and lower earnings.

Outlook and guidance

• Fiscal 2024 adjusted EPS guidance lowered to $2.80–$2.95, reflecting ongoing pharmacy margin pressures and a weaker U.S. consumer environment.

• Q4 adjusted EPS expected to be approximately $0.39 at the midpoint.

• No fiscal 2025 guidance provided yet; headwinds are expected to persist into next year.

• Dividend was reduced by 48% to $0.25 per share to strengthen the balance sheet and invest in growth initiatives.

• Management expects turnaround actions to take time but remains confident in the strategy and team.