Pharmacy chain Walgreens posts a loss in Q3; adjusted earnings and sales surpass market expectations
Walgreens Heads Toward Going Private in Q3 or Q4 of 2025
Walgreens Boots Alliance Inc. (WBA), on the brink of being acquired by private equity firm Sycamore Partners, announced a net loss for its third quarter, despite an uptick in net sales. The $23.7 billion deal is moving forward, but the company has withdrawn its annual guidance and won't be hosting a conference call.
In the third quarter, WBA suffered a net loss of $175 million, contrasting with net earnings of $344 million in Q3 2021. Loss per share was $0.20 compared to earnings per share of $0.40 last year. On a brighter note, adjusted net earnings were $334 million, higher than last year's $545 million. Adjusted earnings per share were $0.38 compared to $0.63 in the previous year, falling short of analysts' average estimate of $0.34 per share.
However, quarterly sales increased by 7.2% to $39.0 billion, up from $36.35 billion in Q3 2021. The sales increase was 6.9% on a constant currency basis. This growth can be credited to the U.S. Retail Pharmacy and International segments.
CEO Tim Wentworth stated, "Our third-quarter results show progress in our U.S. Healthcare segment and the benefits of our cost savings initiatives, but continue to display weakness in our U.S. front-end sales. We remain committed to our turnaround plan."
The acquisition deal, originally announced in March 2025, is pending shareholder and regulatory approvals as well as other customary closing conditions. If successful, the deal is slated to close in either the third or fourth quarter of 2025. Upon completion, WBA's common stock will be delisted from the Nasdaq Stock Market, and the company will become a private entity.
Plans for the newly private WBA include strategic adjustments, aims to revamp retail pharmacy operations, modernize stores, and boost staff morale, goals that synthesize in the company's turnaround agenda. These measures gain necessity due to years of underperformance, failed healthcare expansion attempts, an excessive store count, and a heavy debt burden.
The deal also entails divestiture of certain healthcare assets, such as the primary care unit VillageMD, to bolster financial performance. While segments like CareCentrix and specialty pharmacy Shields are performing well, sales in VillageMD have been on the decline. Various strategic options, including divestiture, are being explored to address VillageMD's decline in sales.
Post-deal, Sycamore's ownership will center on financial and operational improvements to restore profitability. Walgreens' recent reports indicate advancements such as cost savings, improved adjusted EBITDA, and reduced operating losses in some healthcare segments. However, challenges in the U.S. retail pharmacy remain.
A key upcoming step is the special shareholder meeting scheduled for July 11, 2025. This meeting will involve voting on the transaction, which the Walgreens Board unanimously recommends in favor. Following regulatory clearance, the deal is scheduled to close later in 2025, marking a significant transition in WBA's journey as a private company.
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Following the acquisition, the 98-year journey as a publicly traded company will come to an end.
Plans for the newly private Walgreens include strategic adjustments, revised retail pharmacy operations, and staff morale boosts, targets which form part of the company-wide turnaround agenda.
The initial purchase price valuing Walgreens at up to $23.7 billion is contingent upon shareholder and regulatory approvals, with the deal set to close by the end of 2025.
In the aftermath of the acquisition, Walgreens will transition from being a publicly traded company to a private one, ending its 98-year journey in the stock market. As a privately held entity, Walgreens plans to focus on strategic adjustments, revamp retail pharmacy operations, and boost staff morale as part of its company-wide turnaround agenda.
