(Reuters) -Walgreens, which is in the process of being taken private by Sycamore Partners, beat Wall Street estimates for quarterly profit as the pharmacy chain operator benefited from a turnaround effort that included closing underperforming stores.
The company, whose shares rose 2.1% to $10.94 before the bell on Tuesday, also said it will withdraw its forecast for fiscal 2025, pending the deal close.
Walgreens in March agreed to be taken private by PE firm Sycamore Partners for $10 billion, closing out nearly a century of trading on public markets for the U.S. pharmacy giant. The company expects the transaction to close in the fourth quarter of this year.
The deal price was a fraction of the $100 billion the second-largest U.S. pharmacy chain was worth a decade ago. Walgreens’ market capitalization has dropped 90% since 2015 to $9.26 billion, as of last close.
Sycamore specializes in retail and consumer investments, and has a track record of acquiring distressed retailers for profit including brands such as Staples, Talbots and Nine West.
Walgreens’ retail business has struggled with inflation-driven weakness in consumer spending and its pharmacy operation has faced low reimbursement rates for filing prescriptions.
Its U.S. retail pharmacy unit reported sales of $30.38 billion for the quarter ended February 28, beating estimates of $29.67 billion, according to data compiled by LSEG.
“We remain in the early stages of our turnaround plan,” CEO Tim Wentworth said on Tuesday.
On an adjusted basis, Walgreens earned 63 cents per share in the second quarter, compared with the average analyst estimate of 53 cents.
The pharmacy retailer appointed healthcare industry veteran Wentworth as CEO in 2023 after former top boss Rosalind Brewer abruptly stepped down.
Since taking on the reins, Wentworth unveiled a series of changes including the removal of multiple mid-level executives, a $1 billion cost-cutting exercise and plans to close 1,200 stores.
(Reporting by Sneha S K and Christy Santhosh in Bengaluru; Editing by Shounak Dasgupta)
