Walgreens (WBA) results for the 2nd quarter

Walgreens Boots Alliance said on Tuesday that its quarterly profit fell by more than 20%, driven by sharply lower Covid vaccine volume and test sales compared with last winter, as the increase in the Covid Omicron variant drove strong demand.

However, revenue came in higher than Wall Street’s expectations, rising 3.3% year over year.

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

• Earnings per share: $1.16, adjusted, vs. $1.10 expected
• Income: 34.86 billion dollars, against the expected 33.53 billion dollars

The pharmacy chain and healthcare company reported net income of $703 million, or 81 cents per share, compared with $883 million, or $1.02 per share, in the same quarter a year ago. 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 pretax charge for opioid litigation claims, higher investment in pharmacy salaries and costs associated with the $3.5 billion investment in the acquisition of Summit Health.

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

Healthcare revenue topped $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 closing of VillageMD’s acquisition of Summit Health, WBA is now one of the largest players in primary care,” Brewer said in the company’s earnings release. “WBA exited a solid second quarter with Acceleration in February, which added to the confidence to drive strong growth in the second half.”

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

Walgreens’ U.S. retail pharmacy segment had revenue of $27.6 billion in the quarter, down 0.3% from a year earlier. However, comparable pharmacy prescription sales rose 4.9%, driven by higher prices for brand-name drugs.

The pharmacy’s prescription volume was 3.5%, excluding vaccines. Walgreens said it made progress in easing pharmacy staffing shortages, helping the company return 500 stores to normal pharmacy hours, about 1,900 stores remain under reduced hours of operation.

Comparable front-of-store sales were down 1% from a year ago, driven by much lower sales of over-the-counter Covid tests.

International segment sales rose more 1.5% year-over-year to $5.7 billion, despite currency headwinds. Boots UK like-for-like retail sales rose 16% from a year ago, marking the eighth consecutive quarter of market share gains.