Walgreens earnings top estimates, as drugstore gives twice as many Covid vaccines as expected

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  • Walgreens Boots Alliance beat expectations on fourth-quarter earnings and revenue, as it got a lift from Covid-19 shots and tests and saw an uptick in demand for over-the-counter drugs.
  • The drugstore chain’s sales nearly doubled the number of COVID-19 vaccines it expected during the three-month period.
  • The company will hold an investor day on Thursday where it will lay out plans for the coming year.

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Walgreens Boots Alliance on Thursday exceeded Wall Street’s expectations for fiscal fourth-quarter earnings, as the company saw a surge in demand for COVID-19 vaccines amid a growing number of employer mandates.

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Shares were up more than 2% early Thursday in premarket trading.

The drugstore chain produced 13.5 million vaccines during the three-month period — nearly double the 7 million it expected over the three-month period. It prepares for another wave of vaccinations as people get booster shots and young children are expected to qualify for the shots soon.

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“Mandates are playing a role,” CEO Rose Brewer said in an interview with CNBC’s Bertha Combs. “There are many companies and organizations, cities and municipalities that are mandated and I think it is forcing people to say ‘I need to go to work. That’s why I have to get this vaccine.’ So it’s growing. And we’re seeing that in our stores.”

Also, she said, people are worried about getting COVID – especially with the delta version.

With the lift from vaccinations, Walgreens said it saw a jump in sales from at-home COVID tests and a rebound in demand for over-the-counter medicines for colds, coughs and flu.

It also said it reached its goal of cutting $2 billion in annual costs from its business a year ahead of schedule.

The drugstore chain will hold a virtual investor Thursday morning. The new CEO of Walgreens, Brewer, is expected to formulate his strategy to refresh the company’s brand and drive growth. It is also expected to share its outlook for the upcoming financial year.

Here’s what Walgreens reported compared to analysts’ expectations for the fourth quarter ended Aug. 31. Based on Refinitiv data:

  • Earnings Per Share: $1.17 Adjusted Vs. $1.02 Expected
  • Revenue: $34.26 billion versus $33.30 billion expected

In the quarter, net income increased to $627 million, or 72 cents per share, From $373 million a year earlier, or 43 cents per share. Walgreens earned $358 million, or 41 cents per share, from its continued operations during the latest quarter.

However, excluding commodities, the company earned $1.17 per share, higher than the $1.02 expected by analysts surveyed by Refinitiv.

Sales rise to $34.26 billion From $30.37 billion a year ago, that’s higher than analysts’ expectation of $33.30 billion.

Online sales and at Walgreens stores in the US rose 8.1% from at least the year-ago quarter, as consumers received COVID-19 vaccinations and filled more prescriptions. Sales of health and wellness products rose 14% year-on-year as consumers bought home COVID tests, vitamins and over-the-counter medicines for cough, cold and flu.

Brewer said COVID vaccines have had a “halo effect” with front-of-store sales. As people went to the pharmacy for a jab or waited 15 minutes after a shot, she said some bought other types of merchandise, from beauty items to allergy medicine. She said Walgreens wants to increase the number of other types of vaccines it administers, for hepatitis B and more.

Its international segment – which includes the United Kingdom-based chain, Boots – is resuming after the Covid-19 restrictions were lifted in July. Online sales and Boots UK store opens increased by 11.4% in pharmacy services and 15% in retail compared to at least the year-ago quarter.

The company said foot traffic at shoe stores on main roads, such as near offices and commuter hubs, is recovering, but is still below pre-pandemic levels.

The drugstore chain said it has administered over 40 million COVID vaccines so far. Its vaccination peaked in the third quarter, when it delivered 17 million shots.

At Wednesday’s close, shares of Walgreens Boots Alliance are up about 19% this year. The company has a market valuation of $40.88 billion. On Wednesday, the stock closed down less than 1% at $47.26.

Read the company’s press release here.

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