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Walgreens (WBA) to Report Q2 Earnings: What's in the Cards?

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Walgreens Boots Alliance, Inc. (WBA - Free Report) is slated to release second-quarter fiscal 2023 results on Mar 28, before market open.

In the fiscal first quarter, the company delivered an earnings surprise of 0.9%. WBA’s earnings outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 4.72%.

Let’s look at how things have shaped up prior to this announcement.

Factors at Play   

Walgreens is likely to have gained from continued strategic executions on both the United States and the international front. The quarter’s top line is likely to have benefited from the opening of its ninth automated micro fulfillment center, now supporting about 3,000 total stores, which is expected to offer pharmacists more time for services and outreach that drive adherence and improve patient health. The top line is likely to have benefited from the Walgreens Health business, which brings equitable, personalized, whole-person healthcare to local communities across America.

The addition of Summit Health is renhancing Walgreens’ portfolio of leading assets across the care continuum, boosting synergy opportunities and accelerating profitability. We believe this to have likely benefited the company’s top line in the to-be-reported quarter.

Walgreens Boots Alliance, Inc. Price and EPS Surprise



Walgreens sold 19.2 million shares of AmerisourceBergen common stock in November and December 2022, with total after-tax cash proceeds of $3 billion. The company also sold stakes of Guangzhou Pharmaceuticals in December for nearly $150 million. The proceeds will be used primarily for debt paydown and the funding of the company’s strategic priorities. This strategic selloffs are likely to have reduced revenues in the company’s fiscal second-quarter while improving its debt position.

United States

Walgreens is likely to have registered growth in U.S. retail pharmacy business as the COVID headwind lessens and initiatives to drive script volume gain traction through the months of the fiscal second quarter. During the fiscal first quarter, the company’s flu vaccinations were up from the prior year’s levels due to higher flu incidences. Season to date, the company administered over 9 million flu shots. This, too, should have contributed to the top line in the fiscal second quarter.

In the United States, Walgreens’ retail business continued to witness impressive momentum through digital and omnichannel growth from the myWalgreens loyalty program, owned brand innovation and other profit streams. During the fiscal first quarter, the company expanded U.S. retail margins while managing supply chain costs, maintaining price positioning compared to competitors, and stabilizing shrink levels. These developments are likely to have contributed to Walgreens’ fiscal second-quarter revenues.


In the last reported quarter, the international business registered an ongoing rebound and strong execution across its retail portfolio, particularly in Boots U.K. and growth in the German wholesale business. The company is expected to have registered strong growth in the fiscal second quarter, banking on a strong Christmas season with robust comp sales growth.

In the fiscal fourth quarter, sales increased 4.6% year over year, reflecting growth across all international markets, with Boots UK advancing 4% and Germany wholesale growing 4.2%. Walgreens noted that the integration of the wholesale business in Germany remained on track, with operational synergy gains coming ahead of schedule. This development is expected to have accelerated international businesses in the to-be-reported quarter.
Walgreens Health

The Walgreens Health segment is likely to have gained from its majority investments in Shields Health and VillageMD. In the fiscal first quarter, VillageMD delivered 49% on a pro forma basis, with growth driven by existing clinic growth and expansion of the clinic footprint. Shields delivered pro forma sales growth of 44%, driven by recent contract wins, further expansion of existing partnerships and strong executio focus. VillageMD and Shields are expected to have driven pro-forma sales growth in the to-be-reported quarter, driven by recent contract wins and by expanding their value proposition with existing health system partners.


For second-quarter 2023, the Zacks Consensus Estimate for total revenues of $33.67 billion indicates a 3.3% dip from the prior-year comparable quarter’s reported figure. The consensus mark for earnings is pegged at $1.12, suggesting a 16.67% growth year on year.

What Our Model Suggests

Our proven model predicts an earnings beat for Walgreens this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Walgreens has an Earnings ESP of +0.12%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3 (Hold).

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Lantheus Holdings, Inc. (LNTH - Free Report) has an Earnings ESP of +4.03% and a Zacks Rank of #1. The company will release first-quarter 2023 results on May 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lantheus has a 2023 expected earnings growth rate of 13.5%. LNTH’s earnings yield of 6.15% compares favorably with the industry’s 0.00%.

Surface Oncology, Inc. (SURF - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank of #2. Surface Oncology is scheduled to release first-quarter fiscal 2023 results on May 8.

Surface Oncology’s current ratio of 7.94 compares favorably with the industry’s 13.65. SURF has a debt/equity ratio of 0.27 compared with the industry’s 0.11.

ICON plc (ICLR - Free Report) currently has an Earnings ESP of +0.94% and a Zacks Rank of #1. ICON is expected to release first-quarter 2023 results on Apr 26.

ICON’s long-term historical earnings growth rate is estimated at 14.9%. ICLR’s earnings yield of 6.07% compares favorably with the industry’s (0.15%).

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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