Shares of Walgreens plunged greater than 20% on Thursday after the corporate reported fiscal third-quarter earnings that fell wanting expectations and slashed its full-year adjusted revenue outlook, citing a “difficult” setting for pharmacies and U.S. customers.The retail pharmacy big now expects fiscal 2024 adjusted earnings of $2.80 to $2.95 per share. That compares with the corporate’s earlier outlook of between $3.20 and $3.35 per share.”‘We assumed … within the second half that the buyer would get considerably stronger” however “that isn’t the case,” Walgreens CEO Tim Wentworth informed CNBC. He added that “the buyer is totally surprised by absolutely the costs of issues, and the truth that a few of them is probably not inflating does not really change their resistance to the present pricing. So we have needed to get actually eager, significantly in discretionary issues.” Nonetheless, Walgreens topped income estimates for the quarter on sturdy efficiency in its health-care section. The corporate views that enterprise division as vital to its ongoing push to rework from a significant drugstore chain into a big health-care firm. The outcomes come as Walgreens works to slash prices after a rocky final 12 months marked by low pharmacy reimbursement charges, weakening demand for Covid merchandise and a difficult macroeconomic setting. The corporate on Friday stated it’s simplifying its U.S. health-care portfolio and finalizing plans to shut underperforming U.S. shops over a number of years, amongst different ongoing cost-cutting efforts. “Seventy-five p.c of our shops drive 100% of our profitability right now,” Wentworth stated. “What which means is the others we take a tough take a look at, we’re going to finalize a quantity that we are going to shut.”This is what Walgreens reported for the three-month interval ended Might 31 in contrast with what Wall Road was anticipating, primarily based on a survey of analysts by LSEG:Earnings per share: 63 cents adjusted vs. 68 cents expectedRevenue: $36.4 billion vs. $35.94 billion expectedWalgreens booked gross sales of $36.4 billion for the quarter, up 2.6% from the identical interval a 12 months in the past. The corporate reported web earnings of $344 million, or 40 cents per share, for the quarter. That compares with web earnings of $118 million, or 14 cents per share, for a similar interval a 12 months in the past.Excluding sure gadgets, adjusted earnings have been 63 cents per share for the quarter. Walgreens didn’t present a brand new income forecast for the fiscal 12 months. The corporate has not supplied that steerage since October, when it stated it anticipated $141 billion to $145 billion in gross sales. Robust efficiency in health-care division Walgreens reported development throughout its three enterprise divisions within the fiscal third quarter. However the firm’s U.S. health-care unit stood out, as gross sales jumped 7.6% in contrast with the identical interval a 12 months in the past. Income for the section got here in at $2.13 billion. Analysts had anticipated gross sales of $2.08 billion, in accordance with estimates compiled by FactSet. The corporate stated the upper gross sales replicate major care supplier VillageMD and specialty pharmacy firm, Shields Well being Options. Shields noticed gross sales bounce 24% through the interval, pushed by development inside present partnerships.Specialty pharmacies are designed to ship medicines with distinctive dealing with, storage and distribution necessities, typically for sufferers with complicated circumstances similar to most cancers and rheumatoid arthritis.Walgreens and VillageMDSource: WalgreensThose outcomes come one quarter after Walgreens posted a steep web loss because it recorded a hefty almost $6 billion cost associated to the decline in worth of its funding in VillageMD. The corporate now plans to shutter 160 VillageMD clinics, executives introduced through the firm’s fiscal second-quarter earnings name in March. “We’re working with their administration staff to finally nonetheless be an investor, however meaningfully cut back our funding in addition to acquire some liquidity in order that we will make investments again within the retail pharmacy enterprise that represents our future,” Wentworth informed CNBC of the corporate’s funding in VillageMD.Walgreens’ U.S. retail pharmacy section generated $28.5 billion in gross sales within the fiscal third quarter, a rise of two.3% from the identical interval final 12 months. Analysts had anticipated gross sales of $28.34 billion, in accordance with estimates compiled by FactSet. That section operates greater than 8,000 drugstores throughout the U.S., which promote prescription and nonprescription medication in addition to well being and wellness, magnificence, private care, and meals merchandise. The corporate stated that gross sales development got here solely from comparable pharmacy gross sales and was partially offset by a decline in retail income.Walgreens stated pharmacy gross sales for the quarter rose 4.4% and comparable pharmacy gross sales elevated 5.7% in contrast with the year-earlier interval resulting from value inflation in model medicines and prescription development. Complete prescriptions crammed within the quarter together with vaccines totaled 306.4 million, a 0.5% improve from the identical interval a 12 months in the past. Extra CNBC well being coverageRetail gross sales for the quarter fell 4% from the prior-year quarter, and comparable retail gross sales declined 2.3%. The corporate pointed to a “difficult” retail setting, amongst different components. Walgreens’ worldwide section, which operates greater than 3,000 retail shops overseas, posted $5.73 billion in gross sales within the fiscal third quarter. That is a rise of two.8% from the year-ago interval.The corporate stated gross sales from its U.Okay.-based drugstore chain, Boots, grew 1.6%.Walgreens reportedly scrapped plans for a possible preliminary public providing of the subsidiary and is in casual talks with potential consumers, together with personal fairness companies, Bloomberg Information reported earlier this month.However Wentworth stated Walgreens has no plans to promote the chain.”Proper now, there is not any query Boots is a significant contributor to us,” he informed CNBC.— CNBC’s Bertha Coombs contributed to this report.Don’t miss these insights from CNBC PRO