People wear protective face masks outside Walgreens pharmacy in Union Square as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on September 24, 2020 in New York City.
Noam Galai | Getty Images
Walgreens Boots Alliance reported Thursday fiscal first-quarter earnings that exceeded Wall Street’s expectations, helped by stronger-than-expected pharmacy sales.
Walgreens shares were up about 3% in premarket trading.
Here’s what Walgreens reported compared with what analysts were expecting for the first quarter ended Nov. 30, based on Refinitiv data:
- Earnings per share: $1.22 cents, adjusted vs. $1.03 expected
- Revenue: $36.31 billion vs. $34.95 billion expected
In the first quarter, Walgreens posted net loss of $308 million, or 36 cents per share, compared with a net income of $845 million, or 95 cents per share, a year earlier.
Excluding a charge from its AmerisourceBergen investment, it earned $1.22 per share, higher than the $1.03 expected by analysts surveyed by Refinitiv.
Sales rose to $36.31 billion from $34.34 billion a year earlier, outpacing the $34.95 billion that analysts expected.
Walgreens said its pharmacy sales picked up in the U.S. as it filled more prescriptions. Comparable pharmacy sales rose 5% compared with a year earlier. The higher sales came despite less foot traffic, lower sales of cough, cold and flu medications and fewer new prescriptions as people skipped the doctor’s office and socially distanced during the pandemic.
In the United Kingdom, Walgreen’s comparable pharmacy sales rose 2.5% percent compared with a year ago, largely due to a reimbursement from the National Health System. Boots UK stores have been particularly hard-hit by restrictions during the pandemic. The NHS payment helped offset a drop in prescription volume.
Walgreens reiterated its outlook for low single-digit growth in adjusted earnings per share this year. Yet the company cautioned it will face headwinds as the U.K. has another lockdown and customers continue to limit trips to the store.
The company has sought growth opportunities as the drugstore industry faces disruption and the pandemic changes shopping patterns. It’s responded by adding more health-care services and expanding its digital offerings. It unveiled a new mobile app and added curbside pickup at its U.S. stores, which can have online purchases ready for customers in as little as 30 minutes.
It announced plans in July to open hundreds of primary care clinics at its stores staffed and operated by VillageMD. It said Wednesday it would accelerate the timetable for that and expects to have 600 to 700 clinics open within the next four years.
On Wednesday, it also said it would divest its drug distribution business in Europe by selling it to U.S. drug wholesaler AmerisourceBergen for $6.5 billion. The sale will allow Walgreens to focus on its pharmacy and retail businesses.
Walgreens started administering Covid vaccines in mid-December to staff and residents at nursing homes and other long-term care facilities. It plans to offer the shots to the general public at its drugstores, once they’re available.
Walgreens shares have fallen about 28% over the past one year, bring its market value to $37.2 billion.
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