S&PGR Downgrades Walgreens Boots Alliance to Speculative-Grade BB

By Stephen Nakrosis

S&P Global Ratings said it cut its rating on Walgreens Boots Alliance to a speculative-grade BB from the lowest investment-grade rating, BBB-.

S&P said Friday it sees material strategic changes, limited cash flow generation, and large maturities in coming years as key risks to the business.

The pharmaceutical retailer continues to see margin decline from intensified reimbursement pressures in its U.S. pharmacies, along with diminished retail volumes and elevated shrink levels, S&P said.

The company has $1.4 billion of maturities in November, and $2.8 billion coming due in fiscal 2026 and $1.8 billion due in fiscal 2027. S&P said it will monitor how the company's management addresses the debt load amid persistently weak performance and higher interest rates.

Last month, Walgreens Boots Alliance said it was planning to close a significant number of its U.S. stores. The company also plans to reduce its stake in primary-care provider Village MD.

For the latest quarter, it reported earnings per share of 40 cents on sales of $36.4 billion.

The company also said it was lowering its fiscal year 2024 guidance for adjusted earnings per share to a range of $2.80 to $2.95, from previous guidance of $3.20 to $3.35. It cited challenging trends in the pharmacy industry and a worse-than-expected U.S. consumer alliance for the cut in guidance.

The company's stock was down 2.5% at $11.07 on Friday. Year to date, shares are down by more than 57%.

Write to Stephen Nakrosis at stephen.nakrosis@wsj.com

(END) Dow Jones Newswires

July 19, 2024 14:13 ET (18:13 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.