Walgreens Boots Alliance beat Wall Street expectations for third-quarter earnings on Thursday, as aggressive cost-cutting measures and store closures helped lift results amid a broader turnaround effort.
The update comes as the pharmacy chain prepares to go private under a $10 billion buyout deal with Sycamore Partners, expected to close by year-end.
The US retail pharmacy unit posted $30.71 billion in sales for the quarter ended May 31, well ahead of analyst expectations of $29.01 billion, according to LSEG data. Same-store sales rose 10.3%, reflecting gains in pharmacy services.
Adjusted earnings per share came in at 38 cents, surpassing the 34-cent consensus estimate.
The stronger-than-expected quarter is a boost to CEO Tim Wentworth’s turnaround strategy, which includes a $1 billion cost-reduction plan, leadership reshuffling, and plans to close thousands of underperforming stores.
“We remain focused on our turnaround plan, which will require time, disciplined focus, and a balanced approach to manage future cash needs,” Wentworth said.
Walgreens’ financial struggles have stemmed in part from its narrower focus on pharmacy operations, while competitors like CVS Health and UnitedHealth diversified into insurance and pharmacy benefit management.
Additionally, low drug reimbursement rates and rising competition from Amazon and Walmart have put pressure on margins.
Its $5.8 billion impairment charge on VillageMD last year, following a miscalculated bet on in-store clinics, has further complicated the turnaround.
Walgreens said it is now exploring strategic options for VillageMD, including a potential sale.
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