Opioid legal charge pushes Walgreens to $3.7B fiscal 1Q loss
A huge opioid settlement dragged Walgreens to a $3.7 billion loss for the first quarter, but the drugstore chain still beat Wall Street forecasts.
The company also reaffirmed its earnings forecast for the new year.
Walgreens said Thursday that it recorded a $5.2 billion, after-tax charge in the quarter that ended Nov. 30 for opioid-related litigation.
Walgreens and rival CVS Health Corp. finalized last month a settlement with state and local governments to resolve lawsuits related to opioid abuse. Opioids have been linked to more than 500,000 deaths in the U.S. in the past two decades.
Drugstores were subject to claims that they should have realized they were filling too many opioid prescriptions.
Not counting that charge, Walgreens adjusted earnings totaled $1.16 per share in the quarter. Sales slipped less than 2% to $33.4 billion.
Analysts expect earnings of $1.14 per share on $32.89 billion in sales, according to FactSet.
Walgreens remains “firmly in the black” when not counting the legal charge, noted Neil Saunders, managing director of GlobalData.
But overall, the company started the new fiscal year “with a relatively soft set of numbers,” Saunders added. He noted that much of it was expected.
Walgreens Boots Alliance Inc. runs a network of around 13,000 drugstores globally. Most of its locations are in the United States. It’s stores also have become a growing source for care.
The company is working with VillageMD to open primary care practices next to some locations with the idea that drugstores and doctor offices work together to help keep patients healthy. But drugstores are still its main business.
Sales from Walgreens’ U.S. pharmacies slid 3% to $27.2 billion compared to the previous year’s quarter. A rush of COVID-19 vaccinations and testing helped results in late 2021. Currency exchange rates hurt in the recent quarter.
Strong sales of cough, cold and flu products also helped in the most recent quarter, the company said.
Walgreens’ developing U.S. health care business brought in first-quarter sales of $989 million after totaling $51 million a year ago.
Walgreens also said Thursday it still expects adjusted earnings to range between $4.45 and $4.65 per share in its new fiscal year. That’s the same forecast the company laid out in October.
FactSet says analysts expect $4.51 per share.
Shares of Deerfield, Illinois-based Walgreens tumbled nearly 6% to $35.31 in late-morning trading Thursday. Broader indexes were down nearly 1%.
The price of Walgreens’ stock tumbled about 28% last year. That tripled the nearly 9% decline of the Dow Jones Industrial Average, of which Walgreens is a component.