Walgreens (WBA) Q1 2021 earnings beat
The Walgreens Boots Alliance on Thursday reported a profit for the first quarter that exceeded Wall Street’s expectations, aided by stronger-than-expected pharmacy sales.
Walgreens stock was up more than 5% on Thursday afternoon.
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 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, a year earlier.
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 increased as there were more prescriptions filled and flu shots. The comparable pharmacy turnover increased by 5% compared to the previous year. The higher sales came despite less foot 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 Covid pandemic.
In the UK, Walgreen’s like-for-like pharmacy sales increased 2.5% year over year, largely driven by a reimbursement from the National Health Service. Boots UK’s businesses were particularly hard hit by restrictions during the pandemic. The NHS payment helped offset a drop in prescription volumes.
Walgreens reiterated its outlook for low single digit growth in adjusted earnings per share for the year. However, the company cautioned against headwinds in the second quarter as the UK is again locked and customers continue to restrict trips to the store.
“We are now much better at managing through lockdown, which is good, but it is also a cloud in the future,” said CFO James Kehoe on a profit call on Thursday. “Second, you see the large number of incidents in the US that are leading to fewer doctor visits pretty quickly.”
For the company, this means fewer prescriptions to fill out and fewer visits to the branches.
However, Kehoe said Walgreens continues to focus on long-term opportunities rather than short-term pandemic-related challenges. He said that The company has cut costs and is investing in areas of growth as the drugstore industry faces disruption and the pandemic changes shopping patterns. It adds more Health services and expansion of the digital offer. The company has unveiled a new mobile app and is now offering roadside pick-up in its US stores, which enables 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 said on Wednesday it would speed up the schedule for this and expect 600 to 700 clinics to open over the next four years.
The company also announced on Wednesday that it would divest its European drug distribution business by selling it to US drug wholesaler AmerisourceBergen for $ 6.5 billion. The sale allows Walgreens to focus on the pharmacy and retail business.
The company has almost completed its planned store closings. Kehoe said it closed 232 of the 250 Walgreens stores that are slated to close and 158 of the 200 Boots UK stores. He said it is on track to achieve more than $ 2 billion in annual cost savings by fiscal 2022.
In the past year, more than 4,000 jobs were cut in the Boots UK and Boots Opticians business units, representing a 7% reduction in the workforce in these units.
Stefano Pessina, CEO of the Walgreens Boots Alliance, is stepping down after five years in the role, but his successor has not yet been named. Its rival CVS Health is also getting a new CEO. Karen Lynch will succeed longtime CVS CEO Larry Merlo in February.
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.
Read the company’s full press release here.