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March 30, 2023: Walgreens Boots Alliance, the drugstore chain and healthcare company, reported a decline of more than 20% in quarterly profits due to significantly lower sales of Covid-19 vaccines and tests compared to last winter. However, the company’s revenue for the quarter that ended February 28 was higher than Wall Street’s expectations, increasing by 3.3% YoY to $34.86 billion. The company’s adjusted earnings per share for the period were $1.16, beating the $1.10 expected by analysts polled by Refinitiv.
Walgreens’ net profit for the quarter was $703 million, or 81 cents a share, compared to $883 million, or $1.02 a share, during the same period the previous year. The company’s operating income also fell, dropping to nearly $200 million from over $1.2 billion a year earlier due to a $306 million pre-tax charge for opioid litigation claims, higher investments in pharmacy wages, and costs associated with the company’s $3.5 billion investment in the acquisition of Summit Health.
Under CEO Rosalind Brewer, who is now in her second year, Walgreens has focused on expanding its health unit’s primary care and in-home services. During the quarter, Walgreens invested $3.5 billion towards VillageMD’s acquisition of primary care provider Summit Health. Healthcare unit revenues surpassed $1.6 billion in the quarter, with primary care services growing 30% at VilliageMD, including Summit Health, while home care at CareCentrix increased by 25%.
Walgreens reaffirmed its full-year earnings guidance of $4.45 to $4.65 per share, projecting adjusted earnings growth of mid-20% over the next two quarters. The company’s U.S. retail pharmacy segment generated revenues of $27.6 billion in the quarter, down 0.3% from the previous year. However, comparable pharmacy prescription sales increased by 4.9%, driven by higher prices on brand-name drugs. Comparable sales in the front of the store were down 1% YoY, driven by significantly lower sales of over-the-counter Covid tests.
The international segment’s sales rose more than 1.5% YoY to $5.7 billion, despite currency headwinds. Boots UK’s comparable retail sales rose 16% YoY, marking the eighth consecutive quarter of market share gains. CEO Rosalind Brewer expressed confidence in driving strong growth in the second half of the year after exiting a solid second quarter with acceleration in February.
