WBA Earnings: Walgreens Rakes in Revenue But Leaves Shareholders Hungry

Walgreens' cash registers sang—but investors got handed an empty shopping bag.

Top-line triumph, bottom-line blues

The pharmacy giant posted solid revenue numbers that'd make any retailer jealous. Problem? That cash flow somehow forgot to trickle down to shareholder returns.

The profit paradox

When a company stuffs its coffers while starving its investors, Wall Street starts asking uncomfortable questions—like 'Where's our cut?' or 'Is this just creative accounting theater?'

Another quarter proving that in corporate America, revenue is vanity—but earnings are sanity.

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Let’s get straight to it: adjusted EPS came in at $0.38, down from $0.63 last year, and well short of Wall Street’s consensus. According to the company, the drop was largely driven by “a higher adjusted effective tax rate, higher incentive accruals, lower U.S. retail sales and lower equity earnings in Cencora.” And for context, that’s the adjusted number—GAAP EPS was actually a loss of $0.20 per share, compared to a profit of $0.40 this time last year.

Walgreens’ Sales Rise on Pharmacy Strength

Despite the EPS miss, there were bright spots—particularly in sales. The $39.0 billion revenue figure beat analysts’ expectations and was fueled mostly by a strong performance in the U.S. Retail Pharmacy segment, which saw sales climb 7.8% to $30.7 billion. Comparable pharmacy sales rose 14.6%, largely thanks to higher branded drug inflation and prescription volume.

Still, not everything was sunny. Front-end retail sales slipped 5.3%, with comparable retail sales down 2.4%, weighed by weaker performance in categories like grocery, beauty, and wellness.

CEO Tim Wentworth put it candidly: “We continued to see weakness in our U.S. front-end sales,” adding that Walgreens remains focused on a “turnaround plan” that will require “disciplined focus and a balanced approach.”

WBA’s EPS Falls Short of Consensus

As mentioned earlier, the adjusted EPS of $0.38 missed analyst expectations and was a steep decline from the $0.63 recorded a year ago. That’s a nearly 40% drop, driven by higher tax costs and lackluster performance in key areas.

To make matters trickier, Walgreens isn’t offering much visibility for the rest of the year. The company pulled its 2025 guidance earlier due to its pending buyout by Sycamore Partners, so investors are flying a bit blind from here on out.

WBA Share Repurchases on Hold during Takeover

If you were hoping for a buyback boost, don’t hold your breath. With the Sycamore acquisition looming, Walgreens is keeping things quiet on the capital return front. The company didn’t announce any new share repurchase activity this quarter. This was unsurprising, given the pending MOVE to go private.

International and Healthcare Segments Show Some Muscle

Beyond U.S. pharmacies, the International segment held its own. Sales rose 7.8% to $6.2 billion, helped by strong growth in Boots UK and Germany. Adjusted operating income here jumped 22% to $214 million, boosted by strong online sales—Boots.com, for instance, saw sales soar nearly 19%.

Meanwhile, the U.S. Healthcare segment, long a headache for WBA, is starting to look a bit healthier. Adjusted operating income came in at $54 million, compared to a loss of $22 million last year. Shields and CareCentrix both saw double-digit growth, and even VillageMD, though still struggling, showed signs of stabilization.

Legal Costs and Cash Flow Add More Complexity

Legal settlements, mostly tied to opioid-related issues, continue to eat into Walgreens’ cash. Operating cash FLOW for the quarter was $584 million, down $20 million year-over-year, thanks to $252 million in legal payouts. Still, free cash flow improved slightly to $336 million.

With the company poised to go private later this year, don’t expect much in the way of forward-looking statements or investor calls. As Wentworth summed it up, “Our turnaround will require time.”

Time, indeed—and maybe a bit of patience.

Is WBA a Good Stock to Buy?

Based on the most recent analyst coverage, Walgreens Boots Alliance holds a “Hold” rating from both Wall Street analysts tracked over the past three months. Neither issued a “Buy” nor a “Sell,” indicating a clear pause in conviction. That’s not exactly a vote of confidence, but it’s also not a total write-off.

The average 12-month WBA price target sits at $11.50, which represents a slim 1.68% upside from the current trading price of $11.31.