People walk by a Walgreens location in New York, on Nov. 26, 2021.ANDREW KELLY/Reuters
Walgreens Boots Alliance WBA-Q said on Thursday it will not strike new deals in the short term after a spate of acquisitions in recent years, as it focuses on ramping up sales at its newer health care business.
The company, one of the largest U.S. pharmacies, has been looking to gain a bigger foothold in the health care space at a time when sales at its traditional brick-and-mortar stores are hit by lower demand for COVID-19 vaccines and testing compared to last-year’s peak.
“We’re not considering any M&A type activity in the short term. We’re taking a pause. We need to focus on integration activities,” Chief Financial Officer James Kehoe said in a post-earnings conference call.
The company could still make targeted acquisitions, but those would likely be in the hundreds of millions of dollars range, Kehoe said.
Shares of the company fell over 6 per cent after same-store sales at its pharmacy business missed expectations in the first quarter, and as it reported a quarterly loss versus a year-ago profit due to a $6.5-billion opioid-related litigation charge.
Walgreens spent $5.5-billion in 2021 to take majority stakes in health care providers VillageMD and CareCentrix, and VillageMD later struck a $9-billion deal to buy urgent care provider Summit Health in November 2022.
Pharmacy sales during the quarter dropped about 4 per cent even amid high demand for cough and cold drugs during one of the worst U.S. flu seasons in a decade.
Walgreens said same-store pharmacy sales rose 4.8 per cent in the reported quarter from a year earlier, but below Evercore ISI’s estimates of 5 per cent growth.
Comparisons from last year when there was a COVID surge are “masking some positive changes we are seeing with Walgreens building its U.S. Healthcare business and improvements the company has made in its drugstores post-pandemic,” Edward Jones analyst John Boylan said.
Net loss attributable to Walgreens was $3.72-billion, for the quarter ended Nov. 30, compared with a profit of $3.58-billion, a year earlier.