DEERFIELD, IL – Walgreens Boots Alliance (NASDAQ:) is exploring the sale of its specialty pharmacy business, Shields Health Solutions, in a deal that could exceed $4 billion. The healthcare giant, which predominantly acquired Shields three years ago, is now seeking to streamline operations and concentrate on its core pharmacy and healthcare segments.
The CEO of Walgreens highlighted the strong performance of Shields, noting a 27% increase in sales, which has been bolstered by expanded relationships and new contracts. This surge in revenue aligns with the company’s broader strategy to achieve sustainable growth and implement cost-saving measures. Specifically, Walgreens aims to cut costs by $1 billion in Fiscal 2024.
The potential divestiture of Shields comes at a time when Walgreens is facing financial headwinds, including a notable decline in adjusted earnings per share (EPS) and a downturn in its stock performance. Despite these challenges, the company is sharpening its focus on the burgeoning market of gene and cell therapies, which is anticipated to expand substantially in the years ahead.
Interest in Shields Health Solutions has been expressed by private equity firms, although specific details regarding the sale process have not been disclosed.
As Walgreens Boots Alliance (WBA) considers the sale of its specialty pharmacy business, Shields Health Solutions, for over $4 billion, it’s important to look at the company through a financial lens to understand its current market position. With a market capitalization of $19.47 billion and a high P/E ratio of 34.08, the company reflects a significant valuation. However, when adjusted for the last twelve months as of Q1 2024, the P/E ratio drops to an intriguing 0.24, suggesting a potential undervaluation relative to near-term earnings growth. The company also boasts a strong revenue growth of 7.73% over the last twelve months leading up to Q1 2024.
InvestingPro Tips highlight that Walgreens operates with a significant debt burden but also has a high shareholder yield. Notably, the company has raised its dividend for 48 consecutive years, underscoring a commitment to returning value to shareholders. Moreover, analysts predict the company will be profitable this year, which aligns with the CEO’s emphasis on sustainable growth and cost-saving measures.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available, providing a more comprehensive look at the financial health and future prospects of Walgreens. Subscribers to InvestingPro can access these insights, which could be particularly valuable given the company’s current strategic moves. The InvestingPro subscription is now on a special New Year sale with a discount of up to 50%. Use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription.
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