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U.S. pharmacy chain Walgreens Boots Alliance on Thursday cut its dividend by almost half in a bid to save more money, even as the company reported a better-than-expected quarterly profit thanks to cost-cutting measures.
Rising drug prices also boosted the company's pharmacy business, which has been struggling with fierce competition, as sales from coronavirus vaccines and tests fell sharply, and discretionary spending by inflation-weary consumers also declined.
In a difficult environment, the company was forced to close unprofitable stores and reduce staff in order to cut costs.
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walgreens' CEO Tim Wentworth said the first quarter results reflected “disciplined execution in a challenging consumer environment.”
Wentworth said the company is evaluating all strategic options and is focused on “quick action to right costs and increase cash flow.”
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| W.B.A. | Walgreens Boots Alliance, Inc. | 25.57 | -1.08 | -4.05% |
The healthcare industry veteran was appointed in October to take over the reins of the company, which is looking to emerge from its troubles and expand into healthcare services.
Shares of the Deerfield, Illinois-based company rose more than 2% in premarket trading Thursday after Walgreens cut its quarterly dividend by 48% to 25 cents a share.
Evercore analyst Elizabeth Anderson said the dividend cut could “strengthen” Walgreens' balance sheet and save it about $800 million a year.
Walgreens, which is shifting its focus from pharmacy to healthcare services, reiterated its 2024 earnings forecast of $3.20 to $3.50 per share.
Exterior of a Walgreens store in Mill Valley, California, on January 6, 2022. (Justin Sullivan/Getty Images/Getty Images)
Evercore's Anderson called this an “upside surprise” for investors.
However, the Healthcare Services segment missed first-quarter earnings expectations. Revenue was reported at $1.93 billion, compared to expectations of $2.03 billion, according to LSEG data.
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Walgreens' U.S. retail pharmacy division had sales of $28.94 billion, beating expectations of $27.26 billion. U.S. pharmacy same-store sales increased 13.1% year over year.
On an adjusted basis, the company earned 66 cents per share, compared to expectations of 61 cents.
