Walgreens' shares experienced a significant decrease, plummeting by 64% in the year 2024.
Walgreens Boots Alliance (WBA) experienced a tumultuous year in 2024, with the company's shares taking a nosedive. The reasons for this downward spiral were numerous and varied, making for a bumpy ride for investors.
To begin with, Walgreens missed earnings estimates and slashed its dividend, sending shockwaves through the financial community. The company's dividend was slashed by 48% to $0.25 per quarter, and it maintained its adjusted earnings per share (EPS) guidance at $3.20-$3.50. This was just the beginning of the challenges facing the retail pharmacy giant.
In the second quarter, Walgreens took a $5.8 billion goodwill impairment on VillageMD, a primary care and urgent care business it had acquired. The acquisition, which was intended to diversify and vertically integrate, had turned out to be a costly mistake. The company had greatly overpaid for VillageMD and its growth strategy in the business did not pan out as expected.
The icing on the cake came in June with another disappointing earnings report, which led to a 22% drop in the company's stock price. Walgreens slashed its full-year EPS guidance to $2.80-$2.95 due to challenging trends in the pharmacy industry and a weak consumer environment.
But there were some glimmers of hope for Walgreens in the first quarter of 2025. Despite setting a low EPS guidance of just $1.40-$1.80 for the year, the business seemed to be stabilizing, and its top line was growing. For dividend investors, the high yield of 10.9% could make Walgreens an attractive prospect.
Enrichment data reveals that Walgreens' challenges were not limited to its financial performance. The company's market capitalization dropped to $9.8 billion, and its Altman Z-Score, a metric indicating the risk of bankruptcy, placed it in the "distress zone." Additionally, the potential buyout negotiations with private equity firm Sycamore Partners encountered major obstacles, leaving the deal "mostly dead."
The company's U.S. Retail Pharmacy segment also faced challenges, including lower retail sales and higher costs associated with the Footprint Optimization Program. Adding to the woes, Walgreens' profitability had been on a consistent decline, with gross margins decreasing annually at a rate of 4.5%.
In summary, Walgreens' struggles in 2024 were due to a combination of factors, including declining earnings, a failed acquisition, and challenging trends in the pharmacy industry. Despite these challenges, there were some signs of hope for the company in the first quarter of 2025, which could potentially make it an attractive prospect for dividend investors. However, the enrichment data reveals that the company's financial position remains precarious, and investors should proceed with caution.
Investors looking to dive into the world of finance might want to reconsider placing their money in Walgreens Boots Alliance, given its tumultuous 2024, marked by a significant drop in its share price. Despite some positive signs in the first quarter of 2025, Walgreens' financial position remains uncertain, making careful investing a necessity.
The financial setbacks experienced by Walgreens in 2024, such as the division's slashed dividend, costly acquisition mishap, and dismal earnings reports, highlight the importance of thorough research and careful investing in the realm of finance and investing money.
