{"id":19227,"date":"2015-10-28T17:08:05","date_gmt":"2015-10-28T22:08:05","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=19227"},"modified":"2015-10-28T17:08:05","modified_gmt":"2015-10-28T22:08:05","slug":"walgreens-boots-shares-dive-after-rite-aid-announcement","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/walgreens-boots-shares-dive-after-rite-aid-announcement\/","title":{"rendered":"Walgreens Boots shares dive after Rite Aid announcement"},"content":{"rendered":"

By Antea Gatalica<\/p>\n

Shares of Walgreens Boots Alliance Inc. plummeted nearly 11 percent Wednesday following the company\u2019s announcement it will buy smaller rival Rite Aid Corp. for $9.42 billion in cash.<\/p>\n

The decline came even as the Deerfield-based company reported quarterly earnings that beat analysts\u2019 expectations.<\/p>\n

<\/p>\n

As a result of store closings and streamlining operations, the company took $382 million in charges and other one-time costs in the quarter ended Aug. 30.<\/p>\n

Excluding these costs, Walgreens reported earnings of 88 cents per diluted share, beating the analysts\u2019 consensus estimate of 81 cents per diluted share.<\/p>\n

\u201cWalgreens is still struggling and the combination of recent management turnover and continuing profit pressure reflects this fact,\u201d Morningstar analyst Vishnu Lekraj said.<\/p>\n

The company has appointed a new CEO, chief information officer, and chief accounting officer just in the past six months.<\/p>\n

Additionally, Lekarj said Rite Aid has not invested in its 4,600 stores in recent years and Walgreens Boots Alliance will likely have to make costly store improvements if the acquisition is completed.<\/p>\n

Rite Aid faced securities fraud charges in 2002, which resulted in an 8-year prison stint for former CEO Martin Grass.<\/p>\n

While management remained quiet on an exact integration plan for Rite Aid, Lekraj said the move is still \u201cmoderately positive\u201d for Walgreens, helping to expand the company\u2019s geographic reach and increasing its drug purchasing power.<\/p>\n

\"Walgreens<\/a>
Walgreens shares plummet nearly 11 percent after Rite Aid announcement. (Antea Gatalica\/Medill)<\/figcaption><\/figure>\n

On a conference call with analysts Wednesday, CEO Stefano Pessina said the company was overall pleased with the progress and performance shown in the latest quarter, the first fiscal year as Walgreens Boots Alliance, which formed in 2014.<\/p>\n

\u201cWe believe we can shape the future of health care around the world through our ability to bring global solutions to local communities,\u201d Pessina said.<\/p>\n

Net sales in the quarter rose 50 percent to $28.5 billion from $19.1 billion in the year-ago period.<\/p>\n

Walgreens Boots Alliance swung to a profit of $26 million, or 2 cents per diluted share, compared with a net loss of $221 million, or 23 cents per diluted share, in the year-ago period.<\/p>\n

Company shares closed at $84.95 on Wednesday, down $10.21 from Tuesday’s market close.<\/p>\n

Photo at top: Walgreens shares plummeted nearly 11 percent following the company\u2019s announcement it will buy rival Rite Aid for $9.42 billion in cash. (Antea Gatalica\/Medill)<\/div>\n","protected":false},"excerpt":{"rendered":"

By Antea Gatalica Shares of Walgreens Boots Alliance Inc. plummeted nearly 11 percent Wednesday following the company\u2019s announcement it will buy smaller rival Rite Aid Corp. for $9.42 billion in cash. The decline came even as the Deerfield-based company reported quarterly earnings that beat analysts\u2019 expectations.<\/p>\n","protected":false},"author":166,"featured_media":19239,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27,509],"tags":[],"class_list":["post-19227","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-fall-2015"],"yoast_head":"\nWalgreens Boots shares dive after Rite Aid announcement - Medill Reports Chicago<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/news.medill.northwestern.edu\/chicago\/walgreens-boots-shares-dive-after-rite-aid-announcement\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Walgreens Boots shares dive after Rite Aid announcement - Medill Reports Chicago\" \/>\n<meta property=\"og:description\" content=\"By Antea Gatalica Shares of Walgreens Boots Alliance Inc. plummeted nearly 11 percent Wednesday following the company\u2019s announcement it will buy smaller rival Rite Aid Corp. for $9.42 billion in cash. 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