Shares of Walgreens Boots Alliance, which is in deal to be taken private by Sycamore Partners, were gaining around 3 percent in the pre-market activity on the Nasdaq, after the company reported Tuesday sharply narrower net loss in its second quarter with higher net sales. Adjusted earnings and top line beat market estimates.
Chief Executive Officer Tim Wentworth said, "Second quarter results reflect disciplined cost management and improvement in U.S. Healthcare, which were partially offset by weaker front-end results in U.S. Retail Pharmacy, while significant legal settlements resulted in continued negative free cash flow. We remain in the early stages of our turnaround plan, and continue to expect that meaningful value creation will take time...."
Due to the pending up to $23.7 billion deal, Walgreens said it will not host a conference call and webcast or provide financial guidance for fiscal year 2025, and that the previously issued full-year guidance should no longer be relied upon.
It was on March 6 that Walgreens entered into a definitive agreement to be acquired by entities affiliated with private equity firm Sycamore Partners. The merger is expected to close in the fourth quarter of calendar year 2025, pending shareholder and regulatory approvals and other conditions. Following the deal closure, Walgreens stock will no longer be listed on the Nasdaq Stock Market, and it will become a private company.
In the second quarter, the drugstore chain's net loss attributable to shareholders was $2.85 billion, compared to prior year's net loss of $5.91 billion. Loss per share was $3.30, compared to loss per share of $6.85 in the year-ago quarter.
The latest results mainly reflected non-cash impairment charges of $5.34 billion, compared to prior year's charges of $13.09 billion. These were partly offset by $1.0 billion of after-tax gains on early settlement of variable prepaid forward derivatives related to the monetization of Cencora shares and gains on investments in BrightSpring.
Adjusted net earnings were $543 million, compared to prior year's $1.04 billion. Adjusted earnings per share were $0.63, compared to $1.20 in the year-ago quarter.
The Wall Street analysts on average expected the company to report earnings of $0.52 per share. Analysts' estimates typically exclude special items.
Walgreens' second-quarter sales increased 4.1 percent to $38.59 billion from $37.05 billion a year ago. The Street was looking for sales of $37.9 billion for the quarter.
Sales grew 4.7 percent on a constant currency basis, reflecting sales growth in the U.S. Retail Pharmacy and International segments.
In pre-market activity on the Nasdaq, Walgreens shares were gaining around 3 percent to trade at $11.03.
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