Albertsons narrows full-year forecast as Medicare pricing changes take effect

Albertsons narrowed its fiscal-year adjusted earnings guidance and said Medicare drug price negotiation will reduce reported pharmacy sales, cutting fourth-quarter identical sales by an estimated 65 to 70 basis points.

Albertsons narrowed its full-year adjusted earnings guidance after reporting third-quarter results and discussing the effects of new Medicare drug price negotiations. The company said the Medicare pricing changes will lower reported pharmacy sales and estimated a measurable impact on fourth-quarter identical sales. Executives described the consumer environment as mixed, with pressure across income levels and a more promotional holiday period. Shares traded near a 52-week low on the news. Key details: - The company set fiscal-year adjusted earnings guidance to $2.08 to $2.16 per share, down from a prior range of $2.06 to $2.19 per share, and narrowed identical sales growth guidance to 2.2%–2.5% from 2.2%–2.75%. - Albertsons estimated the Medicare drug price negotiation program would reduce reported pharmacy sales and cut fourth-quarter identical sales by about 65 to 70 basis points, while characterizing the profit impact as near neutral. - Third-quarter results showed net income of $293.3 million (55 cents a share), adjusted earnings of 72 cents a share, and net sales and other revenue of $19.12 billion, supported by a 21% increase in digital sales. - Company officials said consumer behavior varied by income: lower-income shoppers trimmed basket sizes, middle-income households showed more price sensitivity, and higher-income customers remained relatively steady but more value-conscious. Summary: The narrowing of Albertsons' guidance reflects the company's view that Medicare pricing changes will reduce reported pharmacy revenue and that a mixed consumer backdrop and tougher promotional environment are pressuring results. Undetermined at this time.