Walgreens (WBA) Q3 2022 earnings


Walgreens Boots Alliance on Thursday mentioned its quarterly gross sales declined and income bought hit by waning Covid-19 vaccination demand, heavy investments in its health-care enterprise and an opioid settlement with Florida.

Shares closed the day at $37.90, down 7.27%.

The pharmacy chain stood by its full-year forecast, saying it expects adjusted earnings per share to develop by the low single digits. It pointed to rebounding retailer site visitors and extra on-line site visitors. And it mentioned investing in well being care, comparable to opening physician workplaces at shops, will repay sooner or later.

With inflation hitting shoppers’ wallets, CEO Roz Brewer mentioned Walgreens is working with suppliers to ensure it has decrease costs than opponents. She mentioned Walgreens has traditionally seen secure prescription traits in an financial downturn.

“There is a shift in calculus because of meals and gas inflation, however well being and wellness will at all times be a precedence,” she mentioned on a name with analysts.

Plus, the corporate’s drugstores’ areas — that are a brief stroll, bus journey or drive from many shoppers — give Walgreens an edge as fuel prices extra, she mentioned.

Here is what the corporate reported in contrast with what analysts have been anticipating for the three-month interval ended Might 31, primarily based on Refinitiv information:

  • Earnings per share: 96 cents adjusted vs. 92 cents anticipated
  • Income: $32.6 billion vs. $32.06 billion anticipated

Within the quarter, web revenue fell to $289 million, or 33 cents per share, from $1.2 billion, or $1.38 per share, a yr earlier. The sharp decline mirrored a $683 million cost associated to its opioid settlement with the state of Florida, a decline in U.S. pharmacy gross sales because it lapped a excessive quantity of Covid vaccinations a yr in the past and investments in its increasing health-care enterprise.

Excluding objects, the corporate earned 96 cents per share, exceeding the 92 cents anticipated by analysts surveyed by Refinitiv.

Gross sales decreased to $32.6 billion from $34.03 billion a yr earlier. Analysts have been anticipating $32.06 billion.

Walgreens has elevated gross sales through the pandemic as prospects turned to its shops for Covid vaccines and assessments. That demand is fading, pushing the corporate to drive progress in different methods.

The corporate administered 4.7 million vaccines in its fiscal third quarter, a pointy drop from the 15.6 million vaccines within the first quarter and the 11.8 million within the second quarter.

However International Chief Monetary Officer James Kehoe mentioned Walgreens now expects to manage 35 million Covid vaccinations this yr, in contrast with 31 million it beforehand anticipated.

That is barely greater than the 34.6 million vaccinations it administered final fiscal yr, when vaccines have been restricted as a result of they have been being delivered first to nursing houses and long-term care amenities.

Whilst Walgreens faces different challenges together with excessive inflation, Kehoe mentioned Covid stays the most important unknown that may form the pharmacy’s efficiency.

Health care has become a major push, with Walgreens striking a deal with VillageMD to open tons of of physician workplaces at its shops. Extra shops are additionally getting Well being Corners, areas staffed by nurses and pharmacists who can seek the advice of with sufferers and assist them handle continual circumstances.

Walgreens has expanded on-line choices, comparable to curbside pickup and supply, to attempt to maintain prospects from shopping for toothpaste, cleaning soap and different objects from on-line gamers like Amazon. The corporate mentioned its digital choices rose 25% from a yr in the past, on prime of 95% progress within the year-earlier interval. The expansion was fueled by 2.8 million same-day pickup orders, the corporate mentioned.

Within the U.S. and the U.Okay., gross sales in shops picked up as shoppers bought out and about once more. Identical-store gross sales for retail within the U.S., which incorporates front-of-store objects like shampoo, toothpaste and extra, rose 2.4%, excluding tobacco. That bought a carry from the sale of at-home Covid assessments and cough, chilly and flu drugs.

Within the pharmacy division, same-store gross sales within the U.S. elevated 2% in contrast with the year-earlier interval — however complete prescriptions dropped. That division consists of vaccinations.

Within the U.Okay, same-store gross sales for retail jumped 24% at Boots — largely reflecting the low gross sales and fewer retailer visits within the prior yr. Identical-store pharmacy gross sales have been roughly flat, dropping 0.4%.

Earlier this week, Walgreens mentioned it will halt plans to sell its U.K.-based Boots business. The corporate mentioned in January that it was looking into strategic options for that division, together with a attainable sale.

Brewer mentioned Thursday that the corporate spoke to a number of events within the potential sale of Boots. However she mentioned the corporate determined to carry on to the chain as international markets circumstances modified.

As of Wednesday, Walgreens shares have been down about 22% to this point this yr. Shares closed at $40.87, bringing the corporate’s market worth to $35.3 billion.

Read the company’s earnings release here.

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