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.
The earnings were released ahead of a virtual investor day where Walgreens’ CEO Roz Brewer, who joined the company earlier this year, laid out her strategy for refreshing the company’s brand and driving growth.
Shares were trading up about 4% Thursday, as investors processed the drugstore chain’s ambitious plans to transform into a health-care focused company. A key component of this strategy was the announcement Thursday of an investment of $5.2 billion in VillageMD, a primary care company that’s opening clinics inside of Walgreens stores.
The majority stake in VillageMD will help Walgreens not only fill prescriptions, but also have doctors who can write them.
During the fourth quarter, Walgreens administered 13.5 million vaccines — nearly double the approximately 7 million it had expected in the three-month period. 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.
Walgreens also said it reached its goal of shaving $2 billion in annual costs from its business a year ahead of schedule. Chief Financial Officer James Kehoe said it would raise its cost savings goal to $3.3 billion by fiscal year 2024.
He said the company expects to have flat growth in adjusted earnings per share in fiscal 2022 at constant currency rates.
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