CINCINNATI - The Kroger Co . (NYSE: NYSE:KR) has finalized the sale of its specialty pharmacy business to Elevance Health, following the initial agreement made on March 18, 2024. The transaction, which was completed today, involved the transfer of Kroger's pharmacy unit that caters to patients with chronic illnesses requiring complex care.
Kroger's in-store retail pharmacy locations and The Little Clinics, however, are not part of this deal and will continue to operate as usual. The company has stated that the sale is not anticipated to affect its financial guidance for the year 2024.
Throughout the sale process, Kroger and Elevance Health prioritized minimizing disruptions for both patients and associates. RBC Capital Markets, LLC acted as the financial advisor, while Weil, Gotshal & Manges LLP and Arnold & Porter Kaye Scholer LLP provided legal counsel to Kroger during the transaction.
The Kroger Co., known for its commitment to creating #ZeroHungerZeroWaste communities, operates a seamless digital shopping experience and retail food stores under various banner names. Employing nearly 420,000 associates, Kroger serves over 11 million customers daily.
The information regarding the sale and its implications for Kroger's 2024 guidance is based on a press release statement. The company has not disclosed any further details about the financial terms of the deal. Investors and stakeholders are advised to refer to Kroger's reports and filings with the Securities and Exchange Commission for a more comprehensive understanding of the risks and uncertainties that may affect the company's future performance.
In other recent news, Kroger Co. has reported a modest increase in its second-quarter earnings for 2024. The company saw a 1.2% increase in identical sales excluding fuel, an 11% rise in digital sales, and a 17% growth in delivery solutions. Despite a 3% decrease, adjusted earnings per share (EPS) settled at $0.93, while the company's gross margin rate improved.
Further developments include the company's merger with Albertsons (NYSE:ACI), which is progressing with a $10.5 billion senior unsecured notes offering launched. Analysts from Roth/MKM and BMO Capital have expressed their views on Kroger's performance. Roth/MKM maintained a Neutral rating on Kroger shares, while BMO Capital reaffirmed an Outperform rating, highlighting the company's gross margin resilience and continued momentum in identical sales.
Lastly, Kroger Co. announced a quarterly dividend of 32 cents per share, indicating its expectation for the dividend to continue to increase over time. These are the recent developments in the company's operations and performance.
InvestingPro Insights
As Kroger finalizes the sale of its specialty pharmacy business, investors may be interested in the company's financial health and market position. According to InvestingPro data, Kroger's market capitalization stands at $40.49 billion, reflecting its significant presence in the consumer staples sector. The company's P/E ratio of 14.53 suggests a relatively modest valuation compared to earnings, which aligns with an InvestingPro Tip indicating that Kroger is trading at a low earnings multiple.
Kroger's revenue for the last twelve months reached $150.2 billion, with a slight growth of 1.46%. This modest growth, coupled with the company's statement that the specialty pharmacy sale is not expected to affect its 2024 financial guidance, suggests stability in Kroger's core operations.
An InvestingPro Tip highlights that Kroger has raised its dividend for 19 consecutive years, demonstrating a commitment to shareholder returns. This is further supported by the current dividend yield of 2.3% and a dividend growth rate of 10.34% over the last twelve months. Such consistent dividend performance may be particularly appealing to income-focused investors in the current market environment.
For those interested in a deeper analysis, InvestingPro offers additional tips and insights, with 10 more tips available for Kroger. These could provide valuable context for understanding the company's position following this strategic divestment.
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