Walgreens’ latest earnings are in — and the news was more or less favorable.
The firm reported profits on the rise to $1.11 billion, with a big assist the acquisition of the parts of Alliance Boots that it didn’t already own. Sales overall also saw a 48 percent boost to $29.03 billion. Those figures led the company to increase its earnings guidance for the year, to a range of $4.30 to $4.55 a share.
There was some mixed news in parts of the report. Retail sales at drugstores open for over a year were down 0.6 percent from the previous quarter, though that miss was more than offset by a pick-up in pharmacy sales of 5.8 percent.
And while Walgreen’s earnings picture was strong, Walgreens President Alex Gourlay spent much of his post-earnings announcement call with investors discussing the recent agreement with drugmaker Valeant Pharmaceuticals International Inc., a 20-year distribution agreement that will see Walgreens fill prescriptions for Valeant’s drugs for treating the skin, eye and other conditions. This will allow Walgreens to fix those prescriptions at a lower cost, but has raised concerns with analysts and pharmacy managers.
“Of course, when you introduce something new to the market and some new thoughts there’s always people who may think differently,” Gourlay said. “We’re trying to take costs out of the system.”
There were also questions about the potential RiteAid merger, which Chief Executive Stefano Pessina remains enthusiastic about.
“We are open to any merger; we are open to a merger where we could have the control, a merger where we cede the control, a merger of equals,” Pessina said. “I’m really convinced that vertical integration is a necessity for this market.”