Massive Opioid Charge Wipes Out Albertsons Profit

Albertsons Companies, Inc. (NYSE:ACI) reported Tuesday fourth-quarter fiscal 2025 results for the period ended Feb. 28, 2026, with adjusted earnings per share of 48 cents, beating the 43 cents analyst estimate.

The company’s shares traded lower following the release.

Revenue came in at $20.25 billion, missing analyst expectations of $20.47 billion.

The company posted a net loss of $480.8 million, or 94 cents per share, versus net income of $171.8 million, or 29 cents per share, in the prior year period.

Results for the quarter include a $773.8 million charge tied to the Opioid Settlement Framework recorded in the fourth quarter of fiscal 2025.

Sales increased from $18.8 billion a year earlier, including approximately $1.4 billion from an extra week in the quarter.

Identical sales rose 0.7%, driven primarily by pharmacy, which faced pricing headwinds tied to the Inflation Reduction Act and industry mix shifts. Digital sales increased 16%, and loyalty membership grew 12% to 51.2 million.

Profit Impacted by Opioid Charge, Margins Under Pressure

Adjusted net income was $251.7 million, or 48 cents per share, up from 46 cents per share a year earlier, including an estimated 3 cents per share benefit from the extra week.

Adjusted EBITDA rose to $903.4 million, including an estimated $68 million benefit from the additional week.

Gross margin declined to 27.2% from 27.4%, or 25 basis points excluding fuel and LIFO, primarily due to higher delivery and handling costs tied to digital growth.

Selling and administrative expenses were 29.6% of revenue, though down two basis points year over year, excluding fuel and the opioid-related charge.

Albertsons said it has reached a $774 million settlement framework to resolve substantially all opioid-related claims brought by state, local, and tribal government entities, adding that the agreement is not an admission of wrongdoing or liability and reflects a step toward resolving litigation.

Full-Year Cash Flow, Balance Sheet, and Capital Allocation

For fiscal 2025, revenue increased to $83.2 billion from $80.4 billion. Net income was $217.4 million, or 40 cents per share, while adjusted net income totaled $1.21 billion, or $2.18 per share.

Operating cash flow was $2.37 billion, with free cash flow of about $527 million after $1.84 billion in capital expenditures. Cash and cash equivalents were $198.6 million, and total debt was $8.95 billion.

“Fiscal 2025 was a year of disciplined execution and resilience, as we closed the year with a solid fourth quarter that delivered strong Adjusted EBITDA despite meaningful top-line pharmacy-related headwinds,” CEO Susan Morris said.

The company raised its quarterly dividend 13% to 17 cents per share and increased its remaining share repurchase authorization to $2.0 billion after repurchasing $1.49 billion of stock in fiscal 2025. It also issued $2.1 billion in senior notes to refinance existing debt.

Fiscal 2026 Outlook Reflects IRA Headwinds

For fiscal 2026, Albertsons expects adjusted earnings per share of $2.22 to $2.32, compared with an estimate of $2.28, alongside identical sales growth of 0% to 1% and adjusted EBITDA of $3.85 billion to $3.93 billion.

The outlook includes an estimated 150-basis-point headwind from the Inflation Reduction Act’s Medicare Drug Price Negotiation Program.

ACI Price Action: Albertsons Companies shares were down 3.26% at $16.30 at the time of publication on Tuesday, according to Benzinga Pro data.

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