Walgreens Boots Alliance Inc (NASDAQ:WBA) reported that it would acquire Rite Aid Corporation (NYSE:RAD) in a transaction valued at $9.4 billion. The company also reported its financial results for the fourth quarter.
The Rite Aid deal will combine two leading drugstore owners in the country, forming a drugstore giant. However, the deal might face hurdles from antitrust regulators.
Walgreens Boots said pharmacy sales at stores open at least a year in the U.S. jumped 10 percent, while prescriptions filled surged 5.1 percent on the same basis versus last year.
On overall basis, the company reported earnings of $26 million, or 2 cents per share for the latest quarter, as compared to a loss of $221 million, or 23 cents per share. On adjusted basis, the company earned 88 cents per share, topping 81 cents per share estimated by analysts surveyed by Thomson Reuters.
Revenue for the quarter came in at $28.52 billion, up 50 percent from the same period last year, and helped by its Alliance Boots acquisition. Analysts had predicted revenue of $28.45 billion.
Walgreens reported that it has now accomplished more than half of the anticipated savings from cost-cutting program of $1.5 billion that included shutting 75 retail pharmacy stores in the U.S. during the quarter.
The company is now anticipating earnings in between $4.25 per share to $4.55 per share for its newly-started fiscal year. The outlook doesn’t include the Rite Aid transaction that is anticipated to end in the second half of the next year. Analysts surveyed by Thomson Reuters were looking for earnings of $4.54 per share.
The Rite Aid (RAD) acquisition will also help Walgreens to step into the business of handling drug benefits for employers and insurers, a space where competitor CVS is a leader. RAD entered that area by taking over Envision Pharmaceutical Services this year, in a transaction valued at roughly $2 billion.
