Walgreens Reports Strong Q3 Sales Growth Amid Pending Private Takeover

Walgreens Boots Alliance, the retail pharmacy giant, has reported a significant 7% increase in sales for its fiscal third quarter, reaching $39 billion. This growth comes as the company prepares for a $10 billion private takeover by Sycamore Partners, expected to close later this year.

Robust Pharmacy Performance Drives Revenue Surge

The company's U.S. retail pharmacy segment demonstrated impressive growth, with sales climbing 8% to $31 billion. Pharmacy sales alone saw a 12% increase, while comparable pharmacy sales rose by 15%. This strong performance was attributed to higher branded drug inflation and favorable mix impacts.

Prescription volume also showed positive trends, with comparable 30-day equivalent prescriptions filled increasing by 2.7% compared to the same quarter last year. Total prescriptions filled, including immunizations, reached 308 million, a modest 0.4% increase year-over-year.

Healthcare Segment Shows Signs of Improvement

Despite an overall sales decrease of $23 million in the healthcare segment, Walgreens reported significant progress in reducing operating losses. The segment's operating loss narrowed to $64 million, compared to $220 million in the previous year's quarter. This improvement was largely due to lower acquisition-related amortization and higher contributions from VillageMD's risk-based business.

Notably, CareCentrix and Shields Health Solutions, part of Walgreens' healthcare portfolio, saw sales increases of 11.6% and 24.8%, respectively. The company's adjusted EBITDA for the healthcare segment improved by $63 million, reaching $86 million.

Challenges in Retail and Future Outlook

While pharmacy sales thrived, Walgreens faced headwinds in its retail business. Comparable retail sales decreased by 2.4% year-over-year, with weakness observed across various categories including grocery, household items, health and wellness, and beauty products.

As part of its ongoing turnaround strategy, Walgreens continues to implement cost-cutting measures, including the closure of underperforming stores. The company plans to shutter approximately 450 locations throughout 2025 to improve cash flow.

With the pending take-private deal with Sycamore Partners, Walgreens has withdrawn its 2025 guidance. The company remains focused on its turnaround plan, which CEO Tim Wentworth acknowledges will "require time, disciplined focus, and a balanced approach to manage future cash needs with investments necessary to navigate an evolving pharmacy and retail environment."