Walgreens Q2 sales rise, profit falls but beats Street

Walgreens Boots reported second-quarter earnings and sales that beat estimates even amid a sharp volume decline in COVID vaccines and testing, and sales of COVID tests.

The company also emerged from the quarter as a strong player in primary care on the heels of several recent deals.

Walgreens reported a net profit of $703 million, or $0.81 a share, in the quarter ended Feb. 28, compared to $883 million, or $1.02 a share, in the year-ago quarter. Adjusted earnings came to $1.16 a share, topping analysts’ forecasts of $1.10 a share. (The company had a $306 million pretax charge in the second-quarter for opioid litigation claims, higher pharmacy wages some other expenses.)

Sales rose 3.3% to $34.86 billion, easily topping estimates $33.53 billion, boosted by an “acceleration” in February. 

U.S. retail pharmacy sales inched down 0.3% to $27.6 billion, beating estimates of $26.5 billion. Comparable pharmacy prescription sales increased 4.9%, driven by higher prices on brand name drugs.

Comparable retail sales at Boots UK increased 16% from the previous year marking the eighth consecutive quarter of gains.

U.S. health care unit revenue jumped to approximately $1.6 billion from $500 billion, with primary care services growing 30% at VillageMD (majority owned by Walgreens), including Summit Health.(Walgreens invested $3.5 billion to support VillageMD’s acquisition of Summit Health, which closed January 3, 2023.)  

Home care at CareCentrix was up 25%.

“With the closing of VillageMD's acquisition of Summit Health, WBA is now one of the largest players in primary care, with best-in-class assets across the care continuum,” stated CEO Rosalind Brewler. “Both Walgreens and Boots are performing well by delivering compelling value to consumers, playing a critical role as community health destinations, and successfully navigating a challenging environment. We will continue to take bold actions to create sustainable long-term shareholder value."

Walgreens ended the quarter operating 210 co-located VillageMD clinics, part of approximately 730 total locations inclusive of Summit Health, and 117 in-store Health Corners in Walgreens locations.

The company reaffirmed its full-year earnings guidance of $4.45 to $4.65 per share, projecting adjusted earnings growth of mid-20% over the next two quarters.

Walgreens operates approximately 13,000 drug stores globally.