Walgreens stock sinks on full-year outlook, retail hurdles

Walgreens (WBA) shares plunge by as much as 20% in pre-market trading after the pharmacy chain slashed its full-year 2024 profit guidance on top of an adjusted earnings miss in the third quarter.

Yahoo Finance Health Reporter Anjalee Khemlani breaks down WBA's latest figures and CEO Tim Wentworth's comments on the pressure the pharmacy side of the business is facing.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Luke Carberry Mogan.

Video transcript

Walgreens shares plunging after slashing its full year profit outlook, citing a quote continued challenging environment.

Yahoo Finance's Angeli Kamlani has the details here.

Angel Lee.

This is a a massive sinking that we're seeing here pre market for shares of WB A Yeah, Walgreens, really facing some pressure from the from investors right now, basically on that guidance of a second decline in its outlook for the year, Profitt for the year hasn't done any sort of Reconfirmation or provided any kind of guidance on revenues for the year.

So that's also a reason why investors are really watching this one.

I was just listening to the call in which CEO Tim Wentworth was talking a lot about what the plan is, what the strategy is that he is now unfolding for the company.

We know that he's new to the job and has really restructured what Walgreens is looking at, pulling away from Village MD and the providing of health care services.

So pulling back on that just a little bit on the guidance that we just told you about just to give you the number specifically looking at 2.8 to 2.95 on the higher end there, and that's a drop from $3.20 to 335 previously, and that was narrowing last quarter.

So it's really been a lot of shifting to the downside for them.

Meanwhile, like I mentioned, the village MD pull back.

That is also that is, actually helped their their revenues for the quarter, bringing in a little bit more as they've sort of balanced out where the demand is.

For that.

They've also talked about the back and now we know that pharmacies broadly are under pressure in the country, facing a lot of pressure from PB MS, which we know set the rates for them.

And so that is something that a big chain like Walgreens is also facing on the call CEO Tim or saying specifically that quote.

We're at the point where current pharmacy model is not sustainable and the challenges in our operating environment require approaching the market differently.

And they are in active discussions with PB, MS and other payers to align incentives and ensure they are paid fairly.

So the complaints we hear from independent pharmacies as well of underpaying they've talked openly.

Walgreens did openly talk about being underpaid for some brands.

And they've also faced struggles with more brand uh uh, medicines being filled and then, on the flip side, generic medicines not being as widely available because of production problems.

So more money out the door there as well, since, uh, brand medications have a lower margin.

So all of this I like there's so many minutia to why this is happening today.

But that is essentially the story is they're now in a sort of re shifting focus of strategy for the company, and all of this is coming together at the same time.

And that's why we're seeing this problem.

What does that entail for Boots right now?

This is a part of the business they were trying to sell off previously.

They are going to keep it.

It looks like that those discussions of selling it were off the table because they are looking at the profitability that it has opportunity it has.

It has supported, um, the revenues largely so that that's something that they're keeping their eye on right now.

And that's also in the middle of the store closures they're looking at here.

So it's all balancing out.

They said something along the lines of closing a portion of 25% of the stores that are under performing so lots of moves.