Walgreens earnings top estimates, as drugstore gives twice as many Covid vaccines as expected

Walgreens Boots Alliance on Thursday exceeded Wall Street’s expectations for fiscal fourth-quarter earnings, as the company saw a surge in demand for Covid-19 vaccines amid a growing number of employer mandates.

Shares were up less than 1% early Thursday in premarket trading.

The drugstore chain administered 13.5 million vaccines during the three-month period — nearly double the approximately 7 million it had expected in the quarter. It is poised for another wave of vaccinations as people get booster doses and younger children are expected to soon qualify for the shots.

“Mandates are playing a role,” CEO Roz Brewer said in an interview with CNBC’s Bertha Coombs. “There are many companies and organizations, cities and municipalities that are mandating and I think it’s forcing people to say ‘I need to go to work. So I have to get this vaccine.’ So it is creating an increase. And we’re seeing that in our stores.”

Plus, she said, people are concerned about getting Covid — especially with the delta variant.

Along with the lift from vaccinations, Walgreens said it got a sales bump from at-home Covid tests and a rebound in demand for over-the-counter medications for colds, coughs and flu.

It also said it reached its goal of shaving $2 billion in annual costs from its business a year ahead of schedule.

The drugstore chain will hold a virtual investor day later Thursday morning. Brewer, Walgreens’ new CEO, is expected to lay out her strategy for refreshing the company’s brand and driving growth. It is also expected to share its outlook for the upcoming fiscal year.

Here’s what Walgreens reported compared with what analysts were expecting for the fourth quarter ended Aug. 31, based on Refinitiv data:

• Earnings per share: $1.17 adjusted vs. $1.02 expected
• Revenue: $34.26 billion vs. $33.30 billion expected

In the quarter, net income rose to $627 million, or 72 cents per share, from $373 million, or 43 cents per share, a year earlier. Walgreens earned $358 million, or 41 cents a shares, from its continuing operations during the latest quarter.

However, excluding items, the company earned $1.17 per share, exceeding the $1.02 expected by analysts surveyed by Refinitiv.

Sales rose to $34.26 billion from $30.37 billion a year earlier, higher than the $33.30 billion that analysts expected.

Sales online and at Walgreens stores in the U.S. open at least a year rose 8.1% from the year-ago quarter, as consumers got Covid-19 vaccinations and filled more prescriptions. Sales of health and wellness products jumped 14% year over year, as consumers bought more at-home Covid tests, vitamins and over-the-counter medications for coughs, colds and flu.

Brewer said Covid vaccines have had a “halo effect” with front-of-store sales. As people walked to the pharmacy for a jab or waited for 15 minutes after the shot, she said some bought other kinds of merchandise, from beauty items to allergy medication. She said Walgreens wants to increase the number of other types of vaccines that it administers, for Hepatis B and more.

Its international segment — which includes United Kingdom-based chain Boots — is rebounding after Covid-19 restrictions were lifted in July. Sales online and at Boots U.K. stores open at least a year increased 11.4% in pharmacy services and 15% in retail compared with the year-ago quarter.

Foot traffic at Boots stores on main streets, such as near offices and commuter hubs, is recovering but is still below pre-pandemic levels, the company said.

The drugstore chain said it has administered more than 40 million Covid vaccines to date. Its vaccinations peaked in the third quarter, when it administered 17 million shots.

As of Wednesday’s close, Walgreens Boots Alliance shares are up about 19% this year. The company’s market valuation is $40.88 billion. The shares closed Wednesday down less than 1% to $47.26.

Read the company’s press release here.