Walgreens booked a better-than-expected fiscal first quarter and gave Wall Street some positive vibes on the drugstore chain’s plan to revive its struggling business.

Company shares soared Friday after leaders told analysts they have made progress improving one of the biggest concerns facing the industry, shrinking prescription reimbursement, and said their store-closing plan was progressing better than expected.

Progress on Prescription Reimbursement

CEO Tim Wentworth told analysts the company has had success modifying contracts with commercial insurers as well as Medicare and Medicaid plans that pay for prescriptions, including adjusting for high-cost drugs.

He also said the company has done better than expected in shifting prescriptions from U.S. stores it is closing to other Walgreens locations that remain open. The company announced in October a plan to close around 1,200 mostly underperforming U.S. locations.

Walgreens closed 70 in its fiscal first quarter and plans shutter around 500 this year. The company runs about 8,500 locations in the U.S and Puerto Rico as well as a few thousand stores in Europe and Asia.

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Challenges and Financial Performance

Those stores still face problems. They include a consumer who is buying less due to inflation and persistent theft, which Wentworth referred to as “hand-to-hand combat.”

Overall, though, the company reported a good fiscal first quarter, according to Edward Jones analyst John Boylan.

“However, we think it is premature to say that Walgreens is on a stable path to growth,” he said, noting that prescription reimbursement changes will take time and their impact remains uncertain.

In the quarter, Walgreens recorded adjusted earnings per share of 51 cents. That excludes store closing costs, which contributed to an overall loss of $265 million. The company’s revenue grew 7.5% to $39.5 billion.

Analysts expected earnings of 38 cents per share on $37.4 billion in sales, according to FactSet.

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Future Outlook and Stock Performance

Walgreens also said Friday that it was reaffirming a forecast it made in October for fiscal 2025 adjusted earnings per share ranging between $1.40 and $1.80.

Analysts forecast earnings of $1.52 share.

Walgreens began 2024 by cutting the quarterly dividend it pays shareholders nearly in half in order to strengthen its balance sheet and free up cash. The company announced no dividend changes on Friday. But Chief Financial Officer Manmohan Mahajan told analysts Walgreens was still evaluating “the appropriateness and size of our dividend as part of our capital allocation policy.”

Walgreens shares plunged at the start of 2024 after its dividend announcement and never recovered. The stock shed around two-thirds of its value during the year while the Dow Jones Industrial Average climbed about 13%.

Shares of the Deerfield, Illinois, company have gotten off to a much better start so far in 2025. The stock was up more than 26% to $11.64 in Friday morning trading.