By Sharon Terlep and Anne Steele
Walgreens Boots Alliance Inc. has no backup plan should U.S. antitrust regulators reject a $9.4 billion tie-up with Rite Aid Corp. that has been held up amid scrutiny from the Federal Trade Commission, the drugstore giant's chief executive said Thursday.
"We don't want even to think the deal could not be approved after so many months, after we have given so much information and have had a good relationship with the people of the FTC," Walgreens CEO Stefano Pessina said during a call with analysts.
To appease antitrust regulators, Walgreens and Rite Aid last month agreed to sell 865 Rite Aid locations to Fred's Inc., a regional chain. The Walgreens-Rite Aid merger, announced in October 2015, would combine two of the U.S.'s three largest retail pharmacy chains, creating a combined company with more than 13,000 stores including those being sold to Fred's.
On Thursday Mr. Pessina said the FTC is still requesting information on the deal and the companies continue to work toward closing the merger early this year.
He added that he is optimistic that the lengthy FTC review is a sign regulators are interested in understanding and ultimately approving the deal. "If we had a big surprise, we would have to sit down and decide what to do, because there are many possible reactions. I can assure you we will not have a hysterical reaction," Mr. Pessina said.
The Deerville, Ill.-based company on Thursday raised the low end of its yearly guidance as it expects a boost from a string of new agreements with health-care companies.
Those include a partnership with Prime Therapeutics, a pharmacy-benefits manager owned by Blue Cross and Blue Shield health plans, which makes Walgreens a preferred pharmacy where patients pay less to fill prescriptions. It also replaced CVS Health Corp. as in-network pharmacy for Tricare, a health-care program for military personnel and their families.
Meanwhile, Walgreens has been trying to win more pharmacy customers, improve margins in its U.S. stores and cut costs.
In its largest division, the U.S. pharmacy business, Walgreens posted a 1.1% increase in sales at existing stores for the quarter ended Nov. 30. The company filled 3% more prescriptions versus a year ago as it continues to get more volume from Medicare patients.
Walgreens said retail sales at stores openat least a year fell 0.5% during the quarter, due to lower sales of consumables and general merchandise that were partially offset by upticks in sales in the health, wellness and beauty categories.
In all, the company posted a profit for the quarter of $1.05 billion, or 97 cents a share, down 5% from $1.11 billion, or $1.01 a share, a year earlier.
Revenue slipped 1.8% to $28.5 billion. Walgreens said it now expects $4.90 to $5.20 in adjusted earnings per share for its new fiscal year, compared with its previous guidance for $4.85 to $5.20 a share.
Walgreens shares fell 0.1% to $82.90 in morning trading.
Write to Sharon Terlep at email@example.com and Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
January 05, 2017 12:18 ET (17:18 GMT)
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