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 industry pressures.

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

• U.S. Healthcare posted a second consecutive quarter of positive adjusted EBITDA, while International remained solid with Boots UK gaining market share.

• Strategic and operational reviews are underway, including a U.S. Retail Pharmacy action plan, store closures, and portfolio simplification to reposition the business for long-term growth.

• Cost savings initiatives are on track, with $1 billion projected for FY24 and a focus on optimizing the store footprint and prioritizing profitable growth.

Financial highlights

• Q3 sales were $36.4 billion, up 2.6% year-over-year; adjusted operating income was $613 million, down 36.1%; adjusted EPS was $0.63, down 36.6%.

• Year-to-date sales reached $110.1 billion, up 6.2%; adjusted net earnings were $2.2 billion, down 24.9%; adjusted EPS was $2.49, down 24.9%.

• GAAP net loss was $5.6 billion for the first nine months, including a $12.4 billion goodwill impairment for VillageMD.

• Q3 operating income was $111 million, compared to a $477 million loss last year, mainly due to lapping a prior-year impairment.

• Free cash flow for Q3 was $334 million, up $778 million year-over-year; nine-month free cash flow 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 persistent retail and pharmacy margin pressures and a weaker U.S. consumer environment.

• Retail comp sales expected to be down ~3% for fiscal 2024; pharmacy margin headwinds to continue.

• No fiscal 2025 guidance provided yet; headwinds expected to persist, with updated guidance in October.

• Q4 free cash flow expected to be positive, including a $150 million opioid-related payment.

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