Challenges in the US and UK
Walgreens Boots Alliance’s (WBA) second-quarter sales of $34.5 billion increased 4.6% on a YoY basis. However, sales fell marginally short of analysts’ estimate, reflecting currency volatility and lower comparable store sales in the US and weakness in the UK. However, incremental sales from the acquisition of Rite Aid stores supported top-line growth.
In comparison, CVS Health (CVS) posted double-digit sales growth during the last reported quarter led by the Aetna deal and increased pharmacy network claims coupled with higher prescription volumes. However, CVS’s top line also missed analysts’ estimate owing to price compression and reimbursement pressure.
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Sales by segment
Walgreens’s Retail Pharmacy USA segment’s net sales increased by 7.3% to $26.3 billion, reflecting benefits from the Rite Aid acquisition. Organic sales increased by 1.6% during the reported quarter. Pharmacy sales, which contributed about 72% to the segment’s top line, rose 9.8% driven by growth in prescription volumes owing to the acquisition of Rite Aid stores. Meanwhile, an increase in the comparable pharmacy sales and growth in central specialty further supported the top line. Retail sales within Retail Pharmacy USA rose 1.3%. However, comparable retail sales fell 3.8%, reflecting a weak cough, cold and flu season and the de-emphasis of tobacco products.
The Retail Pharmacy International segment’s sales decreased by 7.1% to $3.1 billion as unfavorable currency rates and persisting challenges in the UK took a toll on it. Comparable pharmacy sales in the UK decreased by 1.5%. Meanwhile, comparable retail sales fell by 2.3%.
The Pharmaceutical Wholesale segment’s sales inched down 0.3% to $5.7 billion as growth in the emerging markets and the UK were more than offset by currency volatility.