Walgreens Boots Alliance Inc's quarterly profit beat analysts' expectations on Thursday, helped by an increase in branded drug prices and a rise in the number of prescriptions the drugstore chain filled in the United States.
Shares of Walgreens, which also maintained its full-year adjusted profit forecast, were up 1.2% before the opening bell.
Investors have been concerned after the company in April slashed its adjusted earnings growth forecast for the year from a range of 7% to 12% to roughly flat, in the face of stubbornly weak generic drug prices and low reimbursement for filling prescriptions.
Walgreens, which replaced General Electric Co on the blue-chip Dow Jones Industrial Average Index last year, is the worst performing stock on the index, with year-to-date losses of 23.4%.
"Following a difficult second quarter, we made progress in the third quarter against the strategic goals we set," Stefano Pessina, chief executive officer said in a statement.
Cost Cuts
In April, Walgreens said it would speed up cost cuts, which include shutting stores and consolidating warehouses, to stem some of the losses from the challenging market conditions. The company had estimated more than $1.5 billion in annual savings by 2022.
Same-store sales at its U.S. pharmacies rose 6% in the third quarter as it filled 290.7 million prescriptions. Three analysts polled by Refinitiv had expected a 2.9% rise in same-store sales.
"One quarter post what may have been Walgreens's worst quarter ever (at least under Stefano), we have seen a notable sequential step up in results," Evercore ISI analyst Ross Muken said in a note.
However, gross profit at the company's U.S. retail pharmacy unit, which houses both its pharmacies and its retail stores where it sells over-the-counter drugs, fell 3.6% due to reimbursement pressure and lower retail sales.
Net income attributable to Walgreens fell to $1.03 billion, or $1.13 per share, in the quarter ended 31 May, from $1.34 billion, or $1.35 per share, a year earlier.
Excluding items, the company earned $1.47 per share, beating analysts' expectations of $1.43 per share, according to IBES data from Refinitiv.
Revenue rose nearly 1% to $34.59 billion. Analysts had expected revenue of $34.46 billion.
News by Reuters, edited by Donna Ahern Checkout. Click subscribe to sign up for the Checkout print edition.
