Walgreens Boots Alliance Reports $265 Million Net Loss in Q1 Fiscal 2025

Walgreens Boots Alliance, Inc. reported a net loss of $265 million for the first quarter of fiscal 2025, a significant increase from the $67 million loss recorded in the same period last year. The company's revenue for the three months ended November 30, 2024, rose to $39.5 billion, up 7.5% from $36.7 billion in the prior year. The increase in sales was primarily driven by a 10.4% rise in pharmacy sales, which accounted for 80.1% of the U.S. Retail Pharmacy segment's total sales. However, the company faced challenges with retail sales, which decreased by 6.2% due to a weaker cough, cold, and flu season and lower discretionary spending.

The company's operating loss widened to $245 million from $39 million a year earlier, largely attributed to higher non-cash costs related to the Footprint Optimization Program, which aims to close underperforming stores. Walgreens plans to close approximately 900 to 1,000 stores by the end of fiscal 2027 as part of this initiative. The company has already closed 83 stores in the current quarter and expects to incur cumulative pre-tax charges of approximately $2.2 billion to $2.4 billion related to this program.

In terms of operational metrics, Walgreens reported a slight increase in the number of prescriptions filled, with a total of 316.3 million 30-day equivalent prescriptions, reflecting a 1.5% increase compared to the previous year. The U.S. Healthcare segment, which includes VillageMD, saw sales increase to $2.2 billion, driven by growth in risk-based and fee-for-service revenue. However, the segment still reported an operating loss of $325 million, although this was an improvement from the $436 million loss in the prior year.

Looking ahead, Walgreens Boots Alliance is focused on stabilizing pharmacy margins and optimizing its retail strategy. The company is also exploring strategic options for VillageMD, including potential sales or restructuring, as it continues to manage its liquidity and reduce capital expenditures. The company ended the quarter with cash, cash equivalents, and restricted cash totaling $1.3 billion, down from $3.2 billion at the end of the previous fiscal year. The outlook remains cautious as Walgreens navigates a challenging retail environment and ongoing legal liabilities related to opioid claims, with a total accrued liability of $6.6 billion as of November 30, 2024.