COVID-19 vaccines and testing have boosted Walgreens store sales to levels unseen in more than two decades, bringing the pharmacy chain to well above Wall Street’s first quarter expectations.
Walgreens distributed 15.6 million vaccines in the quarter ended November 30, up 16% from the previous quarter as more Americans pushed for booster vaccinations. In addition, federal regulators have expanded eligibility for the Pfizer vaccine for children aged 5 to 12.
The company ran 6.5 million tests for COVID-19 in the first quarter, which ended before the omicron variant of the virus spiked the number of cases in the United States and further increased the need for testing.
Sales at official Walgreens stores in the US are up more than 10% from the fiscal quarter of last year, which ended before the vaccine began to roll out. It was the highest growth rate in more than 20 years, according to the Chicago-based company in Deerfield, Illinois.
Walgreens posted strong sales growth despite a number of challenges throughout the quarter, including a spike in theft of lucrative beauty products that company executives attributed to organized crime groups.
Much of the illegal activity takes place in San Francisco, where Walgreens referred to these crimes in the closure of five stores.
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The pharmacy chain, like its competitors, also struggled with a shortage of workers, which caused some stores to reduce pharmacy opening hours.
Pharmacists in general say they are struggling to balance the increased needs for COVID-19 vaccination and testing with all of their other responsibilities, while grappling with staff shortages.
Walgreens has raised its start-up wages and is hiring new employees.
Overall, Walgreens earned $ 3.58 billion in the first quarter of its fiscal year.
Adjusted earnings were $ 1.68 a share and revenues rose nearly 8% to $ 33.9 billion.
According to FactSet, analysts were expecting an average earnings per share of $ 1.36 per share on revenue of $ 32.88 billion.
Walgreens Boots Alliance Inc. operates more than 13,000 stores, mainly in the US and UK.
The company also recorded a 16% increase in sales at its Boots stores in the United Kingdom, but said visits to those stores remained below pre-pandemic levels.
The pandemic initially drove pharmacy sales when it hit early 2020, but has since increased demand for vaccines and tests, forcing more shoppers to turn to stores for help.
The profits from this hype will eventually wane, Edward Jones analyst John Boylan said in a research note. When that happens, he said the company will have to rely more on its healthcare push for long-term growth.
Walgreens, like its main competitor CVS Health, is providing more care as it tries to become a permanent resource for clients looking to improve their health or keep chronic problems under control.
The company has spent billions partnering with VillageMD to open primary health care units that work with its pharmacies.
He is also investing approximately $ 970 million in Shields Health Solutions, a 9-year-old company that helps healthcare systems establish and operate specialty pharmacies.
“We’re setting up a business here that does much more than just dispensing pharmaceuticals,” CEO Rosalind Brewer told analysts during a Thursday morning conference call.
The company’s shares fell more than 2% to $ 52.63 in Thursday morning trading, while the market as a whole fell.