Rite Aid Deal Lifts Walgreens Pharmacy -- WSJ
October 12 2018 - 3:02AM
Dow Jones News
By Kimberly Chin
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 12, 2018).
Walgreens Boots Alliance Inc. said growth in prescription
volumes helped lift pharmacy sales in its latest quarter, as the
company's integration of Rite Aid stores expanded its foothold in
the U.S. prescription market.
Walgreens's share of the U.S. retail prescription market this
year has grown to a company record 21.7%, compared with 20.2% in
2017, Walgreens Chief Financial Officer James Kehoe said Thursday,
citing data from health-care research firm Iqvia.
For the fourth quarter, Walgreens said it had filled the largest
number of prescriptions in its 117-year history, largely because of
its retention of many Rite Aid prescription-drug customers after
taking over those stores. Walgreens closed a $4.4 billion deal
earlier this year to buy more than 1,900 pharmacies from Rite Aid
Corp.
Walgreens, based in Deerfield, Ill., said U.S. pharmacy sales
rose 17% from the year-earlier quarter while prescriptions filled
in comparable stores increased 1.3%. Overall sales rose 11% to
$33.44 billion, though analysts had expected Walgreens to report
$33.78 billion in sales based on a Refinitiv poll.
The drugstore chain has engaged in several deals and
partnerships with the aim of expanding its pharmacy business to
become a "health-care destination" for health, beauty and personal
care, said Chief Executive Stefano Pessina.
Walgreens reached a deal in September to buy customer files from
a group of stores that are part of the Fred's Inc. drugstore chain.
This month, Walgreens said it would work with clinical-lab operator
LabCorp, known formally as Laboratory Corp. of America Holdings, to
open at least 600 LabCorp patient centers at its stores over the
next four years. It also reached an agreement with Kroger Co., the
nation's largest supermarket chain, to work together to pilot a new
store format. The company has also looked to boost its beauty
aisles with high-end cosmetics after taking a minority stake in
beauty startup Birchbox Inc.
Growth in Walgreens's pharmacy business helped offset weakness
in sales of general merchandise and personal-care items. Comparable
retail sales in the fourth quarter fell 1.9% from a year earlier in
the U.S., and 0.9% in the company's international segment on a
constant-currency basis. The company has more than 18,500 stores
across 11 countries.
Shares in Walgreens were up 1.5% at $73.40 at midday
Thursday.
Net income for the company rose 89% to $1.51 billion, or $1.55 a
share. On an adjusted basis, earnings per share came in at $1.48,
above the $1.45 expected by analysts.
For the current fiscal year Walgreens forecast earnings growth
between 7% and 12% at constant currency rates, and adjusted
earnings per share in the range of $6.40 to $6.70. Analysts expect
adjusted earnings of $6.45 a share.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
October 12, 2018 02:47 ET (06:47 GMT)
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