Walgreens Boots Alliance (WBA) is the best-performing stock in the Dow as the largest U.S. pharmacy chain posted better-than-expected quarterly results, even as demand for COVID-19-related products declined.
Walgreens reported fiscal 2023 second quarter earnings per share (EPS) of $1.16, with revenue rising 3.3% to $34.68 billion. Both exceeded analysts’ estimates.
The company indicated pharmacy sales were up 0.3%, and comparable pharmacy sales jumped 4.9%, boosted by higher prices for brand-name drugs. Retail pharmacy sales dropped 0.3% as fewer people got COVID-19 vaccines and tests. Still, comparable sales gained 3.1%. Retail sales dipped 1.8% as purchases of tobacco products and over-the-counter COVID-19 test kits were down. Walgreens added that it benefited from improved staffing, which allowed 500 of its 2,400 stores to return to normal hours of operation. Revenues in the U.S. healthcare division were up $1.1 billion to $1.6 billion.
Operating income tumbled by a billion dollars from the year before, reflecting a $306 million charge related to opioid claims and litigation, costs relating to its VillageMD unit’s purchase of physician practice group, Summit Health, and higher wages. CEO Rosalind Brewer explained that the acquisition of Summit Health makes Walgreens "one of the largest players in primary care."
Walgreens noted it was maintaining its 2023 EPS guidance of $4.45 to $4.65 as "strong core business growth is more than offset by lapping peak COVID-19 demand." It added that it sees EPS growth in the second half of the year in the mid-20% range.
Shares of Walgreens Boots Alliance are up nearly 4% as of 1 pm E.T., although they’re down 8% this year.