Walgreens (WBA) Q1 2021 earnings hit

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 30: 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 made $ 1.22 per share, above the $ 1.03 analysts surveyed by Refinitiv expected.

Revenue rose to $ 36.31 billion from $ 34.34 billion last year, 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 reiterated its outlook for low single digit growth in adjusted earnings per share for the 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 looked for growth opportunities as the drug store industry faces disruption and the pandemic is changing shopping patterns. It responds by adding more Health services and expansion of the digital offer. The company unveiled a new mobile app and added a roadside pickup in its US stores that can prepare online purchases for customers 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.

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.

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