MW Walgreens turnaround still in its early stages, says CEO, as buyout looms

By James Rogers

Walgreens Boots Alliance is still in the early stages of its turnaround plan, according to CEO Tim Wentworth

Walgreens Boots Alliance Inc. shares are up 1.2% in premarket trades after the drugstore chain reported better-than-expected second-quarter revenue and adjusted earnings, boosted by an improvement in the company's healthcare business.

The stock is on pace for its biggest daily percentage gain since March 7, when it rose 7.5%.

The Deerfield, Ill.-based company $(WBA)$, which recently announced a roughly $10 billion private-equity deal that will take the company private, continues to work on a turnaround in a challenging landscape. The drugstore industry is facing competition from the likes of Amazon.com Inc. $(AMZN)$ and pressure on pharmacy-reimbursement rates for prescription drugs.

Walgreens had a loss of $2.853 billion, or $3.30 a share, for the quarter to Feb. 28, narrower than the loss of $5.908 billion, or $6.85 a share, in the same period last year. On an adjusted basis, Walgreens had earnings of 63 cents a share, above the FactSet consensus estimate of 53 cents a share.

Related: Here's when Walgreens will go private after its $10 billion private-equity buyout

The results include a $4.2 billion write-down, primarily related to the company's U.S. retail pharmacy business and its VillageMD unit.

Sales rose to $38.588 billion, from $37.052 billion in the prior year's quarter, above the $37.971 billion FactSet consensus.

"Second quarter results reflect disciplined cost management and improvement in U.S. Healthcare, which were partially offset by weaker front-end results in U.S. Retail Pharmacy, while significant legal settlements resulted in continued negative free cash flow," Chief Executive Tim Wentworth said in a statement." The company, he added, is still in the early stages of its turnaround plan.

Healthcare-segment sales were $2.152 billion, down from $2.176 billion in the same period last year, which the company attributed to lower fee-for-service and risk-based revenue at VillageMD, including the impact of clinic closures. This, however, was partially offset by growth in the Shields pharmacy business and home-health service CareCentrix. VillageMD sales decreased 6.2%, while CareCentrix sales increased 6.5% and Shields sales increased 29.7%, the company said. Analysts surveyed by FactSet were looking for healthcare-segment sales of $2.235 billion.

Related: The drugstore industry is struggling. Here's what could be in its future.

The healthcare segment's operating loss was $3.304 billion, down from $13.059 billion in the prior year's quarter.

Citing the buyout deal that will see Walgreens go private after nearly 100 years as a publicly traded company, the drugstore chain withdrew its fiscal 2025 guidance.

-James Rogers

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April 08, 2025 08:56 ET (12:56 GMT)

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