Deerfield, Ill. Walgreen Co. reported Tuesday that profit for the quarter ended May 31 fell 11% to $463 million, compared with $522 million in the year-ago period.
The drugstore operator cited changes to the nation’s health care rules and a $623 million buyout of rival Duane Reade as reason for the profit plunge. Results missed analysts’ expectations.
The new federal health care law eliminated a Medicare Part D subsidy for retiree health benefits which, said Walgreens, reduced its net income. Its April acquisition of New York City-based Duane Reade added $457 million in debt.
Sales for the quarter jumped 6% to $17.2 billion, beating Wall Street expectations of $17.14 billion. Same-store sales inched up 1%.
Last week, Walgreens signed a multi-year agreement with CVS Caremark Corp. under which participants in the CVS pharmacy benefit management network can continue to fill prescriptions at Walgreen stores.