Public Health

Walgreens Boots Alliance (WBA) profit exceeded in Q1 2022

A sign displays the types of COVID-19 vaccination doses available at a Walgreens mobile bus clinic in Los Angeles, California on June 25, 2021.

Mario Tama | Getty Images

Walgreens Boots Alliance on Thursday exceeded analysts’ expectations for its first quarter results and raised its forecast for the year as customers came to their stores for Covid booster vaccinations, home test kits and first-time vaccinations for children.

Still, stocks fell as the company spoke of rising labor costs. Executives said Walgreens needed to raise wages as pharmacy staff juggle prescription refills and vaccine delivery. Shares were down more than 2% on Thursday morning after rising up to 4% in pre-trading hours.

“Stress in the system”

Walgreens CFO James Kehoe said the company will spend about $ 120 million more on wages as the drugstore competes with other retailers in a tight job market and tries to keep up with demand. He said the company was investing more in labor after a staff shortage in the first quarter contributed to “slightly lower” prescription volumes.

“The system was under heavy load,” he said on the company’s conference call.

The drugstore chain has raised its forecast for the year and now expects adjusted earnings per share to grow in the low single-digit range instead of unchanged.

Here’s what Walgreens reported versus analyst expectations for the first quarter through November 30: based on refinitive data:

  • Earnings per share: adjusted $ 1.68 versus expected $ 1.33
  • Revenue: Expected to be $ 33.90 billion versus $ 32.74 billion

For the quarter, net income rose to $ 3.58 billion, or $ 4.13 per share. from a net loss of $ 308 million, or 36 cents per share, last year.

With no posts, the company made $ 1.68 per share the 1.33 US dollars expected by the analysts surveyed by Refinitiv.

Sales rose to $ 33.90 billion from $ 31.44 billion a year earlier and higher than the $ 32.74 billion analysts had expected.

More booster shots, online sales

Walgreens administered 15.6 million Covid vaccines in the first quarter – bringing the total to more than 56 million. The pace of vaccination accelerated from the previous quarter when there were 13.5 million vaccinations as adults came for booster vaccinations and children qualified for the primary vaccination. Covid vaccinations peaked at Walgreens in the third quarter of last year with 17 million vaccinations.

So far, the company has said it has given over 9 million booster vaccinations. There were 6.5 million Covid tests in the first quarter.

Pandemic-related items also boosted retail sales as shoppers bought home Covid tests along with cough, cold, and flu medications and beauty items. Retail sales in the same store, an industry metric that tracks sales online and in stores that have been open for at least a year, increased 10.6% year over year – the biggest jump in more than 20 years.

In the pharmacy department, sales in the same store were up 6.8% year over year – much of that was from Covid vaccines.

US digital sales grew 88% in the first quarter as customers placed 3.6 million pick-up orders on the same day in the three-month period. Those sales are typically higher, with an average value of $ 30 online versus $ 20 in stores, CEO Roz Brewer said on the conference call.

In the UK boat business, retail sales online and in stores that have been open for at least a year increased 16.3% year over year. Boots digital sales nearly doubled in the first quarter from the same pre-pandemic quarter – but pedestrian traffic remained below pre-pandemic levels, the company said.

Influenza vaccinations grew in popularity year over year as Boots administered 2 million flu vaccines in the first quarter – a 150% increase over the same period last year.

Walgreens has focused on health services to drive long-term growth. It opens medical practices with primary care company VillageMD called Village Medical in some of its stores. It turns part of some of the locations into a Walgreens Health Corner, an area occupied by nurses and pharmacists who can advise patients on chronic illness or other medical needs.

So far, the company says it has opened 81 Village Medical locations and 47 Walgreens Health Corners. Walgreens plans to have more than 160 primary care clinics and more than 100 health corners by the end of the calendar year.

Like several other retailers, Kehoe said Walgreens has seen higher levels of organized crime theft. He said it had also noticed rising inflation but should be able to pass most of that higher cost on to customers.

Walgreens shares closed at $ 54.00 on Wednesday, up nearly 1%. The company’s shares are up 31% in the past 12 months, reaching a market value of $ 46.74 billion.

Read the company’s press release here.

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