Walgreens (WBA) Q2 earnings

Walgreens Boots Alliance said on Tuesday that quarterly profits fell more than 20%, due to sharply lower Covid vaccine volumes and test sales compared to last winter, when the surge in the Covid Omicron variant drove strong demand.

Earnings, however, beat Wall Street expectations, rising 3.3% year over year.

Here are Walgreens’ results for the quarter ended Feb. 28, compared to analyst estimates polled by Refinitiv:

• Profit per share: $1.16, adjusted, versus $1.10 expected
• Gain: $34.86 billion, versus $33.53 billion expected

The drugstore chain and healthcare company reported net income of $703 million, or 81 cents per share, compared to $883 million, or $1.02 per share, in the year-ago quarter. Excluding certain items, earnings per share were $1.16 for the period.

Operating income fell to nearly $200 million from more than $1.2 billion a year earlier, reflecting a $306 million pre-tax charge for opioid lawsuits, higher investments in pharmacist wages and costs associated with the $3 investment .5 billion in the acquisition of Summit Health.

Under CEO Rosalind Brewer, now in her second year, Walgreens has focused on growing the company’s primary health care and home care businesses. During the quarter, Walgreens invested $3.5 billion in VillageMD’s acquisition of primary care provider Summit Health.

Care unit revenues exceeded $1.6 billion in the quarter, with primary care services growing 30% at VilliageMD, including Summit Health, while home care at CareCentrix grew 25%.

“With the completion of VillageMD’s acquisition of Summit Health, WBA is now one of the largest players in primary care,” Brewer said in the company’s press release. “WBA exited a solid second quarter with Acceleration in February, adding to confidence in strong growth in the second half of the year.”

Walgreens reaffirmed its full-year earnings outlook of $4.45 to $4.65 per share, and expects adjusted earnings growth of mid-20% over the next two quarters.

Walgreens’ U.S. retail pharmacy segment had revenues of $27.6 billion in the quarter, down 0.3% from a year ago. However, comparable pharmacy prescription sales increased 4.9%, driven by higher prices for branded drugs.

Pharmacy prescription volume was 3.5%, excluding vaccines. Walgreens said it was making progress in reducing pharmacy staff shortages, leading the company to return 500 stores to normal pharmacy hours, about 1,900 stores remain under reduced hours.

Front-of-store comparable sales were 1% lower than a year ago, reflecting much lower sales of over-the-counter Covid tests.

International segment revenue increased more than 1.5% year over year to $5.7 billion, despite currency headwinds. Boots UK comparable retail sales were up 16% year-on-year, marking its eighth consecutive quarter of market share gains.