Walgreens CEO: We’ve Got More Work To Do In Tough Environment

By | June 27, 2019

Walgreens Thursday said fiscal third quarter profits tumbled nearly 24% to $ 1 billion compared to the year-ago period. Sales grew 0.7 percent to $ 34.6 billion amid ongoing prescription reimbursement pressures.

“Following a difficult second quarter, we made progress in the third quarter against the strategic goals we set, and are pleased to report an improvement in our U.S. comparable growth compared with the first half of the year,” Walgreens CEO Stefano Pessina said in a statement accompanying the earnings report.

To counter the headwinds in the pharmacy business, Walgreens is spending hundreds of millions of dollars on “updating” its systems and infrastructure and continues to convert Rite Aid stores it purchased in the last two years into Walgreens. That integration will continue through the end of fiscal 2020, executives said Tuesday.

Walgreens is also cutting costs and streamlining operations. Walgreens initially purchased 1,932 Rite Aid stores and planned to close up to 600 but that number is growing to 750, executives have said.

Pharmacy reimbursement pressures and competitive threats like online retailer Amazon’s push into pharmacy are forcing retailers to look at new ways to reinvent their brick-and-mortar drugstores, selling new products and adding more healthcare services.

Walgreens continues to evaluate tests and pilot projects it has going with LabCorp, Kroger grocery and primary care developers like VillageMD, which is opening clinics in the Houston market next to drugstores.

“We have a lot of work ahead to get the business growing again,” Walgreens CEO Stefano Pessina told analysts an hour-long call to discuss third quarter earnings.

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Amid a tough environment for retail pharmacies, Walgreens Boots Alliance profits continue to fall.

But Walgreens executives say financial performance is improving as their drugstores slowly benefit from new partnerships and alliances with grocers, retailers and a diagnostic lab partner.

Following what executives described as the worst quarter since Walgreens Boots Alliance was formed, Walgreens Thursday said fiscal third quarter profits tumbled nearly 24% to $ 1 billion compared to the year-ago period. Sales grew 0.7 percent to $ 34.6 billion amid ongoing prescription reimbursement pressures.

“Following a difficult second quarter, we made progress in the third quarter against the strategic goals we set, and are pleased to report an improvement in our U.S. comparable growth compared with the first half of the year,” Walgreens CEO Stefano Pessina said in a statement accompanying the earnings report.

To counter the headwinds in the pharmacy business, Walgreens is spending hundreds of millions of dollars on “updating” its systems and infrastructure and continues to convert Rite Aid stores it purchased in the last two years into Walgreens. That integration will continue through the end of fiscal 2020, executives said Tuesday.

Walgreens is also cutting costs and streamlining operations. Walgreens initially purchased 1,932 Rite Aid stores and planned to close up to 600 but that number is growing to 750, executives have said.

Pharmacy reimbursement pressures and competitive threats like online retailer Amazon’s push into pharmacy are forcing retailers to look at new ways to reinvent their brick-and-mortar drugstores, selling new products and adding more healthcare services.

Walgreens continues to evaluate tests and pilot projects it has going with LabCorp, Kroger grocery and primary care developers like VillageMD, which is opening clinics in the Houston market next to drugstores.

“We have a lot of work ahead to get the business growing again,” Walgreens CEO Stefano Pessina told analysts an hour-long call to discuss third quarter earnings.

Forbes – Healthcare