Walgreens Boots Alliance, Inc. WBA delivered adjusted earnings per share (EPS) of 51 cents in the first quarter of fiscal 2025, down 22.7% from the year-ago quarter’s figure (down 23.4% at constant exchange rate or CER). However, the figure topped the Zacks Consensus Estimate by 37.8%.

GAAP loss per share for the first quarter was 31 cents, wider than the year-ago quarter’s 8 cents loss.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Following the earnings announcement, WBA stock was up more than 10% in pre-market trading today.

WBA’s Revenues in Q1 and Fiscal 2025

Walgreens Boots recorded total sales of $39.46 billion in the fiscal first quarter, up 7.5% year over year and 6.1% at CER. The top line also surpassed the Zacks Consensus Estimate by 6.4%.

Segmental Insights of WBA’s Q1 Revenues

The company currently operates its business through three reportable segments: U.S. Retail Pharmacy, International and U.S. Healthcare.

U.S. Retail Pharmacy

The segment’s sales increased 6.6% year over year to $30.9 billion in the fiscal first quarter. Comparable sales jumped 8.5% from the year-ago quarter’s levels.

Pharmacy sales were up 10.4% from the year-ago quarter’s figures, and comparable pharmacy sales increased 12.7%, each benefiting from higher brand inflation and prescription volume.

Retail sales fell 6.2%, and comparable retail sales were down 4.6% year over year, reflecting a weaker cough, cold and flu season, and lower sales in discretionary categories.

International

Revenues in the International division rose 10.2% on a year-over-year basis and increased 6.5% at CER to $6.4 billion in the fiscal first quarter.

In Germany, wholesale business sales increased 11.3% in the fiscal first quarter.

Boots UK sales rose 4.5% year over year. Boots UK’s comparable retail sales advanced 8.1%. Further, Boots UK’s comparable pharmacy sales rose 10.9% year over year.

U.S. Healthcare

U.S. Healthcare reported fiscal first-quarter revenues of $2.2 billion. Within the segment, VillageMD sales increased 9%, CareCentrix increased 16% and Shields increased 30%.

Walgreens Boots Alliance, Inc. Price, Consensus and EPS Surprise

Walgreens Boots Alliance, Inc. price-consensus-eps-surprise-chart | Walgreens Boots Alliance, Inc. Quote

WBA’s Q1 Margin Performance

The gross profit in the reported quarter edged up 0.1% year over year to $6.78 billion despite a 9.2% rise in the cost of sales. However, the gross margin contracted 126 basis points to 17.2%.

Selling, general and administrative expenses increased 2.4% year over year to $7.02 billion.

The company reported an adjusted operating loss of $236 million for the quarter compared with the year-ago period’s loss of $81 million.

WBA’s Liquidity & Cash Flow Position

Walgreens Boots exited the first quarter of fiscal 2025 with cash and cash equivalents of $859 million compared with $1.32 billion recorded in the fiscal 2024 end.

The total debt was $8.06 billion compared with $9.55 billion at the end of fiscal 2024.

The cumulative cash used by operating activities at the end of the first quarter of fiscal 2025 was $140 million compared with the year-ago period’s outflow of $281 million.

WBA’s Fiscal 2025 Outlook

Walgreens Boots reiterated its adjusted EPS guidance for fiscal 2025, expected in the range of $1.40-$1.80. The company expects growth in the U.S. Healthcare and International segments to be more than offset by a decline in U.S. Retail Pharmacy, a higher adjusted effective tax rate and reduced contributions from sale-leaseback and Cencora earnings.

The Zacks Consensus Estimate for the company’s fiscal 2025 earnings currently stands at $1.52 per share.

Our Take on WBA Stock

Walgreens Boots exited the first quarter of fiscal 2025 with revenues and earnings beating estimates. Each of the business segments demonstrated sales growth, which bodes well. The results reflected disciplined execution of 2025 priorities, including stabilizing the retail pharmacy by optimizing the footprint, controlling operating costs, improving cash flow and continuing to address reimbursement models. Although the full turnaround will take time, Walgreens Boots is encouraged by the early progress toward a sustainable, retail pharmacy-led operating model.

However, the bottom line decreased on a year-over-year basis. The contraction of gross margin and a wider adjusted operating loss in the quarter raise concerns.

Meanwhile, over the past few weeks, rumors have been circulating that Walgreens Boots may be considering a potential sale to Sycamore Partners, a private equity firm based in New York. Per a Wall Street Journal report, a deal could be finalized early this year, with the firm possibly selling portions of Walgreens’ business or teaming up with partners.

WBA’s Zacks Rank & Key Picks

Walgreens Boots currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are Abbott ABT, Cardinal Health CAH and Haemonetics HAE.

Abbott, carrying a Zacks Rank #2 (Buy) at present, reported third-quarter 2024 adjusted EPS of $1.21, which topped the Zacks Consensus Estimate by 0.8%. Revenues of $10.64 billion beat the Zacks Consensus Estimate by 0.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ABT has an earnings yield of 4.5% compared to the industry’s 0.5%. The company’s earnings surpassed estimates in three of the trailing four quarters and broke even in one, the average surprise being 1.64%.

Cardinal Health, carrying a Zacks Rank #2, posted first-quarter fiscal 2025 adjusted EPS of $1.88, exceeding the Zacks Consensus Estimate by 9.8%. Revenues of $52.28 billion surpassed the Zacks Consensus Estimate by 2%.

CAH has an estimated long-term earnings growth rate of 10.5% compared to the industry’s 9.6%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 11.24%.

Haemonetics, carrying a Zacks Rank #2, reported a second-quarter fiscal 2025 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 2.8%. Revenues of $345.5 million topped the Zacks Consensus Estimate by 0.7%.

HAE has an estimated earnings growth rate of 15.9% for fiscal 2025 compared with the industry’s 12.2% growth. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.82%.

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