Tags: Walgreen | Sales | Record | Prescription Drugs

Walgreen: Sales Reach Record as Prescription Drugs Grow

Tuesday, 30 September 2014 09:06 AM

Walgreen Co., the largest U.S. pharmacy chain by revenue, said fiscal year sales rose to a record $76.4 billion after the company’s prescription drug business grew, especially from the U.S. government.

Walgreen’s pharmacy business has expanded as more people join Medicare, the U.S. insurance program for the elderly and disabled, as the American population ages. Walgreen is taking a bigger share of those customers and filled a record 856 million prescriptions in fiscal 2014, the Deerfield, Illinois-based company said in a statement reporting fourth-quarter results.

Excluding one-time items, fourth-quarter earnings were 74 cents a share, matching an average of analysts’ estimates. Walgreen reported a net loss of $239 million, or 25 cents a share, compared with net income of $657 million, or 69 cents, a year earlier.

“Our fourth-quarter performance was in line with our expectation, recognizing we have much more to do,” said Walgreen Chief Executive Officer Greg Wasson.

The pharmacy chain is in the middle of its biggest deal ever, the purchase of the rest of European health beauty chain Alliance Boots GmbH for $15.3 billion after buying a stake in the company in 2012. The company said the deal will save the combined business $650 million next fiscal year, up from $491 million this fiscal year.

Investors have been disappointed by pharmacy companies this year, including Walgreen’s competitor Rite Aid Corp., as profits have been hurt by lower reimbursement rates for drugs and rising prices of generic medicines. Walgreen said the reductions were partially offset by more generics coming to market this quarter than a year ago.

Sales Grow

Fourth-quarter sales grew 6.2 percent to $19.1 billion, while same-store sales rose 5.4 percent. For the full fiscal year, sales grew 5.8 percent.

“Ultimately today’s result does little to change our thesis on shares,” said Ross Muken, an analyst with ISI Group LLC in New York, in a note to clients. “We would expect the stock to rally today given recent pressure.”

Walgreen shares increased 2.5 percent to $61.11 at 8:02 a.m. in New York. The stock has gained 3.8 percent this year, as of yesterday’s close.

As Walgreen completes its merger with the Bern, Switzerland-based Alliance Boots, about half of the top executive roles are being filled by Alliance Boot managers. Alliance Boots’ Chairman Stefano Pessina has become Walgreen’s biggest shareholder, with a board seat and a hand in strategy and deal-making.

Walgreen owns 45 percent of Alliance Boots and said last month it plans to buy all of the company and base the new business in Chicago.

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Walgreen Co., the largest U.S. pharmacy chain by revenue, said fiscal year sales rose to a record $76.4 billion after the company's
Walgreen, Sales, Record, Prescription Drugs
Tuesday, 30 September 2014 09:06 AM
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