Leading retail pharmacy chain, Walgreen (WAG) reported sales of $6.04 billion in June, up 6.8% from the year-ago period. Total front-end sales increased 6.4% while comparable store’s front-end sales increased 4.7%.
Prescriptions filled at comparable stores went up by 5%, which was impacted by 0.3 percentage points due to calendar day shifts.
Pharmacy sales that accounted for 65.6% of total sales increased 6.2% with 4.9% higher comparable pharmacy sales. Comparable pharmacy sales were negatively impacted by 2.1 percentage points due to generic drug introductions over the past 12 months. At the end of June, Walgreens operated 8,184 locations in all 50 states, the District of Columbia, Puerto Rico and Guam.
Tagging along with Core Performance, Walgreen’s Take Care Health Systems will offer Core Performance wellness services to its corporate clients. Take Care Health Systems manages employer health, pharmacy and fitness centers with nearly 400 locations throughout the US.
The company is working toward establishing itself as a leading provider of pharmacy, and health and wellness solutions. The company has made continuous efforts over the last few years to align its assets with core strategies. Further, generic introductions continue to boost the number of prescriptions filled.
Over the past few months, Walgreen has been adopting several steps to focus on its core business. Last month, the company launched ‘Chicago Hometown Investment Initiative,’ which is expected to offer approximately 600 new job opportunities in the city over the next couple of years. The initiative is also likely to increase the number of food oasis stores (from 11 to nearly 50) by four times.
We are encouraged by Walgreen’s progress with respect to the CCR rollout and achieving the targeted savings under the rewiring initiative. However, we remain concerned about the company’s recent decision of not renewing its contract with pharmacy benefit manager Express Scripts (ESRX).
Currently, we are Neutral on Walgreen, which also corresponds to the Zacks #3 Rank (Hold) in the short-term.
