Executive Summary

• Walgreens reported fiscal 4Q16 adjusted EPS of $1.07, ahead of the $0.99 consensus estimate. Reported revenues were $28.64 billion, up 0.4% year over year and below the consensus estimate of $29.11 billion.
• Management now expects Walgreens’ pending acquisition of Rite Aid to close in early 2017, versus the previously stated end of 2016, and it continues to expect that the Federal Trade Commission will require the parties to divest 500–1,000 stores.
• For fiscal year 2017, the company expects adjusted EPS of $4.85–$5.20, in line with the consensus estimate of $5.03. This guidance assumes accretion of $0.05–$0.12 from Rite Aid, based on the expected store divestitures and timing of the closing.