Post Earnings Coverage as Walgreens Boots Alliance Sales up 1.1%, Adjusted Earnings Gained 8.2%

Upcoming AWS Coverage on GNC Holdings

LONDON, UK / ACCESSWIRE / January 9, 2017 / Active Wall St. announces its post-earnings coverage on Walgreens Boots Alliance, Inc. (NASDAQ: WBA). The Company posted its first quarter fiscal 2017 financial results on January 04, 2017. The largest US drugstore chains earnings numbers outperformed market expectations. The Company also raised the lower end of its FY17 outlook. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Walgreens Boots Alliance’s competitors within the Drug Stores space, GNC Holdings, Inc. (NYSE: GNC), is estimated to report earnings on February 09, 2017. AWS will be initiating a research report on GNC Holdings following the release of its next earnings results.

Today, AWS is promoting its earnings coverage on WBA; touching on GNC. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=WBA

http://www.activewallst.com/registration-3/?symbol=GNC

Earnings Reviewed

For the three months ended November 30, 2016, Walgreens Boots Alliance’s sales totaled $28.5 billion, down 1.8% versus the comparable quarter last year. On a constant currency basis, however, sales were up 1.1%. The Company’s revenue numbers came in below analysts’ forecasts of $29.37 billion.

For Q1 FY17, GAAP operating income was $1.4 billion, a decrease of 1.4%. GAAP net earnings attributed to Walgreens Boots Alliance were $1.1 billion, and diluted EPS was $0.97. Adjusted operating income was $1.7 billion, up 0.4%, and in constant currency, was up 2.8%.

During Q1 FY17, adjusted net earnings attributed to Walgreens Boots Alliance were $1.2 billion, up 6.1%, and in constant currency, up 8.2%. The Company’s adjusted diluted net earnings per share were $1.10, up 6.8%, and in constant currency, up 9.7%. The results surpassed Wall Street’s expectations for earnings of $1.09 per share.

Divisional Performance

During Q1 FY17, Walgreens Boots Alliance’s Retail pharmacy USA sales were $20.7 billion, up 1.4% over Q1 FY16, with comparable store sales increasing by 1.1%. During the reported quarter, the segments adjusted gross profit was $5.5 billion, up 0.1% over the year earlier same quarter, reflecting an increase in retail, which is partially offset by a decline in pharmacy. Adjusted operating margin was 6.2%, up 0.1%, resulting in adjusted operating income of $1.3 billion, up 3.7%.

During Q1 FY17, US pharmacy total sales were up 2.5%, driven by increased script volumes and higher specialty sales. The Company filled 237.6 million prescriptions on a 30-day adjusted basis including immunizations, an increase of 3.0%.

During Q1 FY17, sales for retail pharmacy international division were $3.0 billion, up 0.5% in constant currency. Comparable pharmacy sales were down 0.5% on a constant currency basis, due to a decline in the UK, which was partially offset by growth in other international markets. Boots UK comparable pharmacy sales were down 0.8%, due to the expected reduction in pharmacy funding, partially offset by a strong performance in pharmacy services.

Comparable retail sales for the division increased 0.2%, due to growth in all countries, other than Chile and Mexico. Within the UK, Boots’ performance was flat versus the year-earlier quarter. Adjusted gross profit for the division was down 2.7% in constant currency to $1.2 billion in the reported quarter, primarily due to lower margins in the UK, in what is really a new environment for retailers.

During Q1 FY17, sales from Walgreens Boots Alliance’s Pharmaceutical wholesale division were $5.4 billion, up 0.6% versus the same quarter last year on a constant currency basis. Comparable sales increased by 4.7% on a constant currency basis. The segment’s adjusted operating income was $224 million, up 45.2% in constant currency. Operating cash flow in the quarter was $525 million.

Balance Sheet

During Q1 FY17, Walgreens Boots Alliance’s working capital outflow was $1.2 billion. The Company’s cash capital expenditures for the reported quarter were $378 million. Overall, this resulted in free cash flow for the quarter of $147 million.

During Q1 FY17, Walgreens Boots Alliance purchased 5.6 million shares, at a cost of $457 million; this substantially completes the company’s anti-dilutive share buyback program for FY17. At the quarter end, this resulted in approximately 1.079 billion common shares outstanding.

Rite Aid Acquisition

Walgreens Boots Alliance announced that it is actively engaged in discussions with the Federal Trade Commission (FTC) regarding its pending acquisition of Rite Aid Corporation, which was announced October 27, 2015. The Company expects to complete the acquisition in the early part of 2017. On December 20, 2016, Walgreens Boots Alliance and Rite Aid entered into an agreement to sell 865 Rite Aid stores and certain assets related to store operations to Fred’s, Inc. for $950 million in an all-cash transaction.

Taking into account the expected divestitures, Walgreens Boots Alliance expects the acquisition to be accretive to its adjusted diluted net earnings per share in the first full year after closing of the transaction. The Company also expects that it will realize synergies from the acquisition in excess of $1 billion, to be fully realized within three to four years of closing of the merger.

Outlook

Walgreens Boots Alliance raised the lower end of guidance for FY17 by $0.05, and now expects adjusted diluted net earnings per share to be in the range of $4.90 to $5.20. The guidance assumes accretion of $0.05 to $0.12 from Rite Aid and is based on the above disclosure regarding expected store divestitures and timing of closing.

Stock Performance

Last Friday, the stock closed the trading session at $83.10, marginally up 0.08% from its previous closing price of $83.03. A total volume of 3.95 million shares have exchanged hands. Walgreens Boots Alliance’s stock price advanced 3.96% in the last three months, 2.52% in the past six months, and 4.28% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 0.41%. The stock is trading at a PE ratio of 21.73 and has a dividend yield of 1.81%.

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