The Walgreens Boots Alliance on Thursday reported fiscal gains for the first quarter that exceeded Wall Street expectations, helped by stronger-than-expected pharmacy sales.
Walgreens’ shares rose more than 5% on Thursday morning.
Here’s what Walgreens reported compared to what analysts had expected for the first quarter ended November 30, based on Refinitiv data:
- Earnings per share: $ 1.22 cents, adjusted against the expected $ 1.03
- Recipe: $ 36.31 billion versus expected $ 34.95 billion
In the first quarter, Walgreens recorded a net loss of $ 308 million, or 36 cents per share, compared to a net profit of $ 845 million, or 95 cents per share, a year earlier.
Excluding an expense from its investment in AmerisourceBergen, it earned $ 1.22 per share, more than the $ 1.03 expected by analysts polled by Refinitiv.
Sales increased to $ 36.31 billion from $ 34.34 billion a year earlier, exceeding the $ 34.95 billion that analysts had expected.
Walgreens said its pharmacy sales have increased in the United States, as it has started giving more prescriptions and giving flu vaccines. Comparable pharmacy sales increased by 5% compared to the previous year. The highest sales occurred despite less pedestrian traffic, lower sales of cough, cold and flu medications and fewer new prescriptions, as people missed the doctor’s office and distanced themselves socially during the pandemic.
In the UK, Walgreen’s comparable pharmacy sales increased 2.5% per cent compared to the previous year, largely due to a refund from the National Health System. Boots UK stores were particularly affected by restrictions during the pandemic. The NHS payment helped to offset a drop in revenue.
Walgreens reiterated its prospect of low single-digit growth in adjusted earnings per share this year. However, the company warned that it will face problems in the second quarter, as the UK has another block and customers continue to limit travel to the store.
“We are much better at managing through the block now, which is good, but it is still a cloud in the future,” said CFO James Kehoe in a earnings conference call on Thursday. “And, second, you see the large number of incidents in the United States, which quickly leads to a reduction in medical visits.”
For the company, this means less revenue to fill and less visits to stores.
Still, Kehoe said Walgreens remains focused on long-term opportunities, rather than short-term challenges related to the pandemic. He said the The company has cut costs and is investing in growth areas as the drugstore sector faces disruptions and the pandemic changes purchasing patterns. Is adding more health services and expanding their digital offerings. It unveiled a new mobile app and now offers sidewalk pickup at its stores across the United States, which can have online shopping ready for customers in just 30 minutes.
She announced plans in July to open hundreds of primary care clinics in its stores staffed and operated by VillageMD. He said on Wednesday that he would accelerate the schedule for this and expects to have 600 to 700 clinics open in the next four years.
On Wednesday, he also said he would dispose of his drug distribution business in Europe, selling it to American wholesaler AmerisourceBergen for $ 6.5 billion. The sale will allow Walgreens to focus on its pharmacy and retail businesses.
The company is almost completing the planned closure of its stores. Kehoe said he closed 232 of the 250 Walgreens stores scheduled to close and 158 of the 200 Boots stores in the UK. He said he is on track to deliver more than $ 2 billion in annual cost savings by fiscal year 2022.
Last year, it cut more than 4,000 jobs in the Boots UK and Boots Opticians businesses, a 7% reduction in the workforce at these units.
Walgreens Boots Alliance CEO Stefano Pessina is stepping down after five years on the job, but his successor has yet to be named. Its rival, CVS Health, is also hiring a new CEO. Karen Lynch will succeed former CVS chief executive Larry Merlo in February.
Walgreens began administering Covid vaccines in mid-December to employees and residents of nursing homes and other long-term care facilities. It intends to offer injections to the general public in its drugstores, as soon as they are available.
Walgreens’ shares fell about 28% in the last year, bringing its market value to $ 37.2 billion.
Read the company’s full press release here.