Strong
prescription sales help Walgreen top profit estimates
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[December 23, 2014]
(Reuters) - U.S. drugstore chain
operator Walgreen Co <WAG.N> reported a better-than-expected quarterly
profit, helped by a record number of prescriptions filled, sending its
shares up 3.6 percent.
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Cost savings resulting from its acquisition of the remaining stake
in Alliance Boots Holdings Ltd [ABN.UL], Europe's biggest pharmacy
chain, also boosted first-quarter results.
The largest U.S. drug retailer also said it was on track to reach
its target of $650 million in savings from the Alliance Boots deal
in the fiscal year ending August 2015.
The company's margins, however, continue to remain under pressure
due to lower insurer payments for prescriptions amid increased
competition and a rise in generic drug prices.
Gross margins decreased 1 percentage point to 27.1 percent in the
first quarter ended Nov. 30, marking the fifth straight quarter of
decline.
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The combined cost savings for Walgreen and Alliance Boots in the
quarter were about $140 million.
The company said in August it would acquire the 55 percent it did
not already own in Alliance Boots in a deal valued at $15 billion.
The company said it filled a record 222 million prescriptions in the
quarter ended Nov. 30, up 4.3 percent from a year ago.
Smaller rival Rite Aid Corp <RAD.N> also reported higher quarterly
sales and profit and lifted its full-year earnings forecast last
week, helped by strong prescription sales.
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Net income attributable to Walgreen rose 16 percent to $809 million,
or 85 cents per share. Excluding items, earnings were 81 cents per
share in the first quarter.
Net sales rose 6.7 percent to $19.55 billion, with same-store sales
rising 5.7 percent.
Analysts on average had expected a profit of 75 cents per share on
sales of $19.5 billion, according to Thomson Reuters I/B/E/S.
Walgreen's shares were trading at $76.90 before the bell on Tuesday.
(Reporting by Sruthi Ramakrishnan in Bengaluru and Nandita Bose in
Chicago; Editing by Ted Kerr and Saumyadeb Chakrabarty)
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