Profits of Walgreens Boots Alliance (WBA) 2nd quarter 2022

Shares of Walgreens Boots Alliance fell about 6% on Thursday as the pharmacy chain credited the omicron variant for strong second-quarter sales and warned it would take time for its health investments to pay off.

The pharmacy chain has attracted traffic and higher sales during the pandemic, especially when Covid cases are on the rise. Buyers are likely to call everyone who looks appropriate, if there are only a few.

As pandemic-related tailwinds appear to be weakening, however, some investors have expressed concern that Walgreens is losing momentum. The company did not raise its forecasts for the year, despite falling second-quarter profits. Walgreens President John Standley said on the company’s profit call that demand for the Covid test has slowed since January and February.

Vaccination rates have also slowed. The pharmacy chain said it delivered 11.8 million vaccines against Covid in the second quarter, up from 15.6 million in the first quarter. Walgreens has delivered a total of over 62.8 million Covid vaccines to date.

Stadley said there was still “a nice steady stream,” however, and said the drugstore chain began offering fourth vaccines to Covid on Wednesday.

The company is also in the early days of transforming into a more healthcare-oriented company – a costly endeavor that will include the opening of hundreds of clinics, major redesigns of stores and the hiring of more medical staff.

Chief Financial Officer James Kehoe reiterated the company’s prospect of low single-digit growth for adjusted earnings per share for the year. In a profit call, he said it usually takes a doctor’s office about two years to grow. Once Walgreens’s clinics mature, however, he said the company will see significant benefits – including higher prescription volumes and lower medical costs.

James Ransom, a stock research analyst for Raymond James, said Walgreens’ performance in the first half of the year combined with its guidance foreshadow a sharp decline in the following quarters and into 2023. In addition, he said, the pharmacy industry is facing a challenge from rising labor costs, compensation pressure from insurers and stale variety at the front of the stores.

“This new management team is trying – and I commend them for that – but the problem is that I can name five things that are not right with the core business and not very right,” he said.

See what Walgreens has to say compared to what analysts expected for the second quarter ending February 28, based on Refinitiv data:

  • Earnings per share: $ 1.59 adjusted against $ 1.40 expected
  • Income: $ 33.76 billion versus $ 33.4 billion expected

For the quarter, net income fell to $ 883 million, or $ 1.02 a share. from $ 1.03 billion, or $ 1.19 per share, in the previous period.

Excluding items, the company earned $ 1.59 per share, exceeding the $ 1.40 expected by analysts surveyed by Refinitiv.

Sales rose to $ 33.76 billion from $ 32.78 billion a year earlier, and exceeded the $ 33.4 billion expected by analysts.

Retail sales in the same stores in the US increased by 14.7% in the quarter compared to the same period last year, the highest profit in more than 20 years. The company said it has seen growth in all categories – especially health and wellness with Covid tests at home and products related to coughs, colds and flu, along with personal care and beauty items.

Sales of over-the-counter common ailments fell sharply at major pharmacies, including competitors CVS Health and Rite Aid, during previous pandemics as people wore masks and spent more time at home. This tendency seems to be reversed as people dine out, return to the office and reunite with other people.

In the UK-based Boots chain, retail sales in the same stores increased by 22% year-on-year, with earnings per share in all major categories.

Walgreens e-commerce sales in the US rose 38% in the second quarter, up from 78% last year. Much of the growth in the most recent quarter came from 3.9 million same-day orders, the company said.

Led by CEO Roz Brewer, the former CEO of Starbucks, the retailer has taken steps to become a healthcare company. It acquired the majority stake in VillageMD, the primary care company that opens hundreds of clinics in Walgreens stores. Walgreens is turning parts of some stores into Health Corners, where customers can go for medical advice to a pharmacist or nurse. The company is opening automated facilities where robots complete prescriptions, freeing up pharmacists time to provide more medical care.

Walgreens will also benefit from the Food and Drug Administration authorization this week for a fourth Covid for people 50 years of age or older or immunocompromised.

Kehoe said in a revenue call that Walgreens did not know how many vaccines could be in total and did not take them into account in its forecast. He said the company had managed to pass on rising costs to customers, despite inflation and high maritime fares.

Walgreens said it was still considering the future of the UK-based Boots pharmacy chain. Earlier this year, Brewer confirmed that Walgreens was exploring strategic options. for Boots, including a potential sale, as the company focuses on healthcare activities in the US.

Walgreens shares have fallen 9% since closing Wednesday this year. Shares closed at $ 47.46 on Wednesday, raising the company’s market capitalization to $ 40.97 billion.

Read the company press release here.

Profits of Walgreens Boots Alliance (WBA) 2nd quarter 2022

Source link Profits of Walgreens Boots Alliance (WBA) 2nd quarter 2022

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