Walgreens Q1 sales, earnings top Street; maintains full-year profit forecast

Walgreens Boots Alliance Inc. reported fiscal first-quarter adjusted earnings and sales that beat the Street, fueled in part by better-than-expected pharmacy sales.

The pharmacy retailer reported a net loss of $308.0 million, or $0.36 per share, compared to net income of $845.0 million, or $0.95 per share in the year-ago period. Adjusted EPS fell 11.2% to $1.22, but was above analysts’ estimates for $1.03. Adjusted EPS included a COVID-19 impact of 26 cents to 30 cents per share.

Sales rose to $36.3 billion from $34.3 billion a year ago, topping estimates $34.9 billion. 

Retail U.S. pharmacy sales rose 3.9% to $27.2 billion. Same-store sales rose 3.7%, with a 5% increase in comparable pharmacy sales and 0.4% growth in comparable retail sales. The higher sales came in the face of less foot traffic in stores, weak sales of cough, cold and flu medications and fewer prescriptions as people continue to socially distance amid the pandemic.

Walgreens announced its first-quarter results on the heels of the news that it had entered into a $6.5 billion deal to sell the majority of its pharmacy wholesale operation to AmerisourceBergen Corp., a move that it said would allow it to focus on its core retail pharmacy business.

"Our first-quarter results exceeded expectations as we continue to deliver on our strategic priorities,” stated executive vice chairman and CEO Stefano Pessina. “As announced yesterday we have taken a major step forward in our transformation; we are divesting our pharmaceutical wholesale business with plans to use the proceeds to accelerate our investments in healthcare. While the business environment remains challenging, we are rising to the occasion with agility and discipline and we are confident in our outlook for adjusted EPS for the fiscal year. Our role in the healthcare system has never been more important, as the communities we serve continue to turn to our trusted brands and expert pharmacists.”

As previously reported, Walgreens and CVS Health have an agreement with the federal government to vaccinate nursing home residents across the country. The companies also plan to eventually offer vaccinations to the general public. 

“I am so proud of our teams and the historic and critical role they are playing to help the world emerge from the pandemic, administering COVID-19 vaccinations to frontline healthcare workers and vulnerable members of our society,” said Pessina.

Walgreens maintained its fiscal 2021 guidance for adjusted EPS to grow in the low-single digits. However, it warned that the first half of the year will be negatively impacted by the ongoing pandemic as shoppers, particularly in the locked-down U.K., continue to limit trips to stores.