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Walgreens Stock Falls After Q3 Earnings Beat, VillageMD Stake Boost

Walgreens' U.S. same-store sales rose by a better-than-expected 8.1% over its fiscal fourth quarter, while earnings topped the Street consensus forecast.

Walgreens Boots Alliance  (WBA) - Get Walgreens Boots Alliance Inc Report posted stronger-than-expected fourth quarter earnings Thursday as pharmacy and retail sales gains boosted the Dow component's bottom line.

The stock traded sharply lower, however, after the group said it would make a $5.2 billion investment in VillageMD that increases its stake in the Chicag-based primary care group to 63%.

Walgreens said diluted non-GAAP earnings for the three months ending in August, the Dow component's fiscal fourth quarter, were pegged at $1.17 per share, well ahead of the Street consensus forecast of $1.02 per share and a 14.75% increase from last year. Group revenues, Walgreens said, rose 12.8% to $34.3 billion, again topping analysts' estimates of a $33.3 billion tally.

Comparable store sales in the U.S. were up 8.1%, Walgreens said. Prescription fillings were up 8.8% from last year, while pharmacy sales rose 6.7%. The group also added that it provided 13.5 million COVID vaccinations over the quarter, taking its fiscal 2021 total to 34.6 million. 

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 “Our fourth quarter and fiscal year results exceeded expectations, driven by strong performance in our core business," said CEO Roz Brewer. "Comparable U.S. pharmacy and retail sales both saw robust growth and recovery continued in our UK business as COVID-19 restrictions eased in the quarter."

"I remain extremely proud of our team members' unwavering commitment to meeting the needs of our patients, customers and communities," Brewer added. "The role of the pharmacist and local pharmacy is now more vital than ever.”  

Walgreens Boots shares were marked 3.8% lower in early trading following the earnings release to change hands at $45.50 each, a move that would extend the stocks' year-to-date gain to around 14.1%. 

“VillageMD is a leader within the fast-growing, value-based primary care segment with high rates of patient satisfaction and a talented management team who share our strategic vision of the central role that primary care can serve to improve patient outcomes and lower costs,” Brewer said in a separate statement.  

Last month, Walgreens was linked to a takeover of Evolent Health  (EVH) - Get Evolent Health Inc Class A Report following Bloomberg News report that it was targeting the healthcare IT firm following its $970 million investment to take a majority stake in Shields Health Solutions, a specialty pharmacy group.