Despite Declining Demand For Covid Tests And Vaccines, Walgreens' Revenue Rises

Compared to last winter, when the Covid Omicron variant surge drove strong demand for vaccines, Walgreens Boots Alliance reported a decline in profit by more than 20%.

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As a result, revenue rose 3.3% compared to last year, beating Wall Street's expectations.

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As compared with Refinitiv's analyst estimates, Walgreens' results for the quarter that ended Feb. 28 are:

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Earnings per share: $1.16, adjusted, versus $1.10 expected

Revenue: $34.86 billion, compared with a forecast of $33.53 billion

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In the same quarter a year ago, the healthcare and drugstore chain earned $883 million, or $1.02 a share, compared to $703 million this quarter. According to the earnings per share for the period, excluding certain items, it was $1.16 per share.

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With a $306 million pretax charge for opioid litigation claims and higher investments in pharmacy wages, operating income declined from more than $1.2 billion a year earlier. The company also incurred $3.5 billion in Summit Health acquisition costs, which decreased operating income to nearly $200 million.

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The company's health unit, now in its second year under CEO Rosalind Brewer, has emphasized in-home care and primary care for its customers.  A total of $3.5 billion was invested by Walgreens in VillageMD's acquisition of Summit Health during the quarter.

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In the quarter, VilliageMD, Summit Health, and CareCentrix's healthcare divisions generated $1.6 billion in revenue, with VillageMD's primary care growing 30% and CareCentrix's home care rising 25%.

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In the company's quarterly earnings release, Brewer noted that WBA had become a major player in primary care as a result of VillageMD's acquisition of Summit Health. “As a result of Acceleration's performance in February, WBA has confidence that it will drive strong growth in the second half of the year."

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For the full year, Walgreens expects adjusted earnings to increase by up to 20% over the next two quarters, with a guidance of $4.45 to $4.65 per share.

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U.S. stores increase hours of operation

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Revenues at Walmart's U.S. retail pharmacy segment fell 0.3% to $27.6 billion in the third quarter, down from $27.7 billion in the same quarter last year.  The increase was attributed to higher prices on brand-name drugs, with comparable pharmacy prescription sales up 4.9%.

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Prescriptions at pharmacies, excluding vaccines, accounted for 3.5% of all prescriptions. While Walgreens has made progress on easing pharmacy staff shortages, approximately 1900 pharmacies have shortened operating hours due to shortages.

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Over-the-counter Covid test sales were down much more than 1% from one year ago, affecting comparable sales.

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Despite currency headwinds, Boots UK's comparable retail sales increased 16% year over year to $5.7 billion. This marks Boots' eighth straight quarter of market share gains.