Default SEO Title Walgreens' Second-Quarter Profit Beats Ahead of Sycamore Partners Deal Close

Key Takeaways:

Walgreens Boots Alliance reported a second-quarter net loss of $2.85 billion but beat Wall Street’s expectations for adjusted earnings and revenue.
The company’s results were boosted by its turnaround efforts, including closing underperforming stores and cost management.
Walgreens withdrew its fiscal 2025 guidance amid the pending $10 billion deal to be taken private by Sycamore Partners.

Introduction

Walgreens Boots Alliance Inc. (NASDAQ:WBA), a leading pharmacy retailer in the United States, reported better-than-expected second-quarter earnings on Tuesday, April 8, 2025. The company’s results were bolstered by its ongoing turnaround plan, which includes closing underperforming stores and disciplined cost management. Here are the key highlights:

Second-quarter sales reached $38.6 billion, up 4.1% year-over-year, driven by growth in the U.S. retail pharmacy and international businesses.
Adjusted earnings per share (EPS) came in at $0.63, surpassing analysts’ consensus estimate of $0.53.
The company reported a net loss of $2.85 billion, primarily due to impairment charges related to its investment in primary care business VillageMD and goodwill impairment charges.

Detailed Analysis

Walgreens’ second-quarter results reflect the early stages of its turnaround plan, as the company navigates a challenging retail and pharmacy landscape. CEO Tim Wentworth acknowledged that while the results show improvement in the U.S. Healthcare segment, weaker front-end sales in the U.S. Retail Pharmacy business offset some of the gains.

The company’s U.S. retail pharmacy segment reported sales of $30.4 billion, up 5.3% from the year-ago quarter. Pharmacy sales grew 8.9%, benefiting from higher branded drug inflation and prescription volume. However, retail sales dropped 5.5% year-over-year, driven by lower sales in discretionary categories such as beauty, seasonal, and general merchandise.

Walgreens’ U.S. healthcare segment, which includes VillageMD, Summit Health, and CityMD, reported revenue of $2.2 billion, a decrease of $23 million from the prior year. The segment’s operating loss was $3.3 billion, reflecting the non-cash impairment charge related to VillageMD goodwill and other long-lived assets.

“We remain in the early stages of our turnaround plan, and continue to expect that meaningful value creation will take time, enhanced focus and balancing future cash needs with necessary investments to navigate a changing pharmacy and retail landscape,” Wentworth said in a statement.

Walgreens’ results come amid the pending $10 billion deal to be taken private by Sycamore Partners, a private equity firm specializing in retail and consumer investments. The deal, announced in early March, is expected to close in the fourth quarter of 2025. With the transaction looming, Walgreens withdrew its fiscal 2025 guidance.

The company’s shares rose 2.1% to $10.94 in pre-market trading on Tuesday, reflecting investors’ optimism about the company’s progress and the impending deal with Sycamore Partners.

Conclusion

Walgreens’ second-quarter earnings beat demonstrates the company’s efforts to turn around its business and position itself for future growth. While challenges remain, the company’s focus on cost management, store optimization, and strategic investments in its healthcare segment are starting to yield results.

As Walgreens navigates the pending $10 billion deal with Sycamore Partners, investors will closely watch the company’s execution of its turnaround plan and the potential impact of going private on its long-term prospects. The retail pharmacy industry continues to evolve rapidly, and Walgreens’ ability to adapt and capitalize on emerging opportunities will be crucial for its future success.