Walgreens swings to Q4 loss amid acquisition charge

Deerfield, Ill. – Walgreen Co. met Wall Street expectations for the fourth quarter of fiscal 2014 despite swinging to a loss. Walgreens posted a net loss of $239 million, largely driven by an accounting charge from its Alliance-Boots acquisition, compared to net earnings of $657 million in the same period a year earlier.



Walgreens recorded a non-cash loss of $866 million in the quarter that ended Aug. 31 because it decided to exercise early its option to buy the remaining stake of Alliance-Boots that it did not already own.



Net sales rose 6% to $19.06 billion, from $17.94 billion. Same-store sales increased 1.3%.



“Our fourth quarter performance was in line with our expectation, recognizing we have much more to do,” said Greg Wasson, president and CEO of Walgreens. “We closed the fiscal year by exercising the option for the second step of our strategic transaction with Alliance Boots, completing the transition of our pharmaceutical distribution to AmerisourceBergen and driving continued improvement in our daily living business that resulted in our largest year-over-year quarterly and fiscal-year sales increases in three years. We maintained solid expense control in the fourth quarter and are moving forward with the implementation of our previously announced cost-reduction initiative to achieve $1 billion in savings by the end of fiscal 2017.”



For the full fiscal year, net earnings dropped 24% to $1.9 billion from $2.5 billion, while net sales grew 6% to $76.39 billion from $72.22 billion. The combined synergies for Walgreens and its strategic partner, Alliance Boots, in fiscal 2014 were $491 million. The joint synergy program is estimated to deliver fiscal 2015 combined synergies of approximately $650 million



As of Aug. 31, Walgreens operated 8,309 locations with a presence in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. The company has 8,207 drug stores nationwide, a net gain of 91 compared with a year ago. Walgreens also operates infusion and respiratory services facilities, specialty pharmacies and mail service facilities, and manages more than 400 Healthcare Clinic and provider practice locations around the country.