People wear protective face masks outside the Walgreens pharmacy in Union Square as the city resumes Phase 4 reopening after restrictions were imposed in New York City on September 24, 2020 to slow the spread of the coronavirus.
Noam Galai | Getty Images
The Walgreens Boots Alliance on Thursday reported first-quarter earnings that exceeded Wall Street’s expectations, aided by stronger-than-expected pharmacy sales.
The Walgreens share gained around 3% in premarket trading.
Walgreens reported, versus analyst expectations for the first quarter ended November 30th: based on refinitive data:
- Earnings per share: $ 1.22, adjusted versus expected $ 1.03
- Revenue: Expected to be $ 36.31 billion versus $ 34.95 billion
For the first quarter, Walgreens posted a net loss of $ 308 million, or 36 cents per share, compared to net income of $ 845 million, or 95 cents per share, last year.
Excluding a charge from investing in AmerisourceBergen, the company earned $ 1.22 per share, above the $ 1.03 analysts surveyed by Refinitiv expected.
Revenue rose to $ 36.31 billion from $ 34.34 billion a year ago, surpassing analysts’ $ 34.95 billion.
Walgreens said its US pharmacy sales picked up as it filled more prescriptions. The comparable pharmacy turnover increased by 5% compared to the previous year. The higher sales came despite less pedestrian traffic, lower sales of cough, cold and flu medication, and fewer new prescriptions as people skipped the doctor’s office and socially distanced themselves during the pandemic.
In the UK, Walgreen’s like-for-like pharmacy sales increased 2.5% year over year, mainly driven by reimbursement from the national healthcare system. Boots UK’s businesses were particularly hard hit by restrictions during the pandemic. The NHS payment helped offset a drop in prescription volumes.
Walgreens on Thursday reiterated its outlook for low single-digit growth in adjusted earnings per share for the coming year. However, the company cautioned against headwinds as the UK is locked again and customers continue to restrict trips to the store.
The company has been looking for growth opportunities as the drugstore industry is disrupted by e-commerce and increased competition from other companies like Amazon, which recently entered the pharmacy business.
The pandemic has also changed consumer patterns as they make fewer trips to the store, opting for contactless options like roadside pickups, and skipping doctor’s appointments that can lead to new prescriptions.
Walgreens responded by adding more healthcare services to its branches and expanding its digital offering. The company unveiled a new mobile app and added a roadside pickup in its U.S. stores that allows customers to prepare online purchases in just 30 minutes.
In July, the company announced plans to open hundreds of primary care clinics in its VillageMD-owned and operated branches. It was said on Wednesday that it would accelerate the schedule for this and that it is now planning to open 600 to 700 clinics within the next four years.
The company also announced on Wednesday that it would sell its drug distribution business in Europe to US drug wholesaler AmerisourceBergen for $ 6.5 billion. The sale allows Walgreens to focus on the pharmacy and retail businesses, both of which took a hit during the pandemic.
Walgreens began giving Covid vaccines to employees and residents of nursing homes and other long-term care facilities in mid-December. There are plans to offer the recordings to the public in drug stores as soon as they become available.
Walgreens shares are down 28% over the past year, taking their market value to $ 37.2 billion.