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01/12/2021

Walgreens Boots Alliance’s Q1 results beat expectations

David Salazar
Managing Editor
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With 5.7% revenue growth and solid growth in its American retail pharmacy operations, Walgreens Boots Alliance beat Wall Street expectations with its first-quarter earnings. 

Despite the growth, the company, which posted sales of $36.3 billion for the quarter, swung to a net loss of $308 million — which it said was entirely the result of a $1.5 billion charge from its equity earnings in AmerisourceBergen. Loss per share came out to 36 cents, compared with 95 cents per share in earnings in the prior-year period. 

Stefano Pessina, WBA’s executive vice chairman and CEO, touted the company beating expectations and the recent progress the company has made in its strategic priorities with the sale of Alliance Health to AmerisourceBergen and the expansion of the investment in VillageMD to support the opening of 600 to 700 Village Medical at Walgreens primary care clinics in the United States. 

“Our first-quarter results exceeded expectations as we continue to deliver on our strategic priorities,” Pessina said. “As announced yesterday we have taken a major step forward in our transformation; we are divesting our pharmaceutical wholesale business with plans to use the proceeds to accelerate our investments in healthcare.”

WBA’s retail pharmacy USA segment had Q1 sales of $27.2 billion, up 3.9% from the prior-year period. Comparable-store sales were up 3% over Q1 2020, comprised of a 5% increase in comparable-store pharmacy sales and 0.4% growth in comparable retail sales. The company noted that the COVID-19 pandemic contributed such adverse effects as lower in-store foot traffic, soft cough-cold and flu sales, lower seasonal flu scripts and reduced new-to-therapy prescriptions. On a comparable-store basis, the company filled 2.7% more scripts than the prior-year period, including a 210-basis-point impact due to COVID-19. Total script count was up 1.1% year over year, totaling 297.3 million, including immunizations and adjusted to 30-day equivalents. Pharmacy sales comprised 76.8% of the business’ sales — up 5.9% year over year — and pharmacy comps grew 5% over the prior-year period. 

The division also saw its retail prescription market share decrease by 15 basis points on a 30-day adjusted basis to 20.7%, according to IQVIA. The company noted that this marked an improvement over its fourth-quarter 2020 decline in share. Retail sales saw a year-over-year decrease of 2.7% and retail comps increased by 0.4% over Q1 2020. Within its front-end sales, a 13.1% year-over-year decrease in beauty sales and a 1.3% dip in personal care sales were offset by a 4.1% increase in health-and-wellness category sales. 

WBA’s retail pharmacy international division saw $2.6 billion in sales, a 6.2% year-over-year decrease, including a 1.9% favorable currency impact. Boots UK saw pharmacy comps grow by 2.5% over prior-year period, which WBA attributed to favorable timing of National Health System reimbursement, which offset lower script volume and reduced demand for pharmacy services during the pandemic. Boot UK also saw retail comps decrease by 9.1%, which WBA said was due largely to the impact of COVID-19 on footfall, particularly in major high street, train station and airport locations. Despite this, Boots.com saw a 106% year-over-year increase in sales, partially offsetting reduced foot traffic. The chain’s market share was lower in every category except for beauty, which WBA said was due to the pandemic driving a shift to one-stop grocery shopping. 

WBA’s pharmaceutical wholesale division had Q1 sales of $7.1 billion, an increase of 18.6% over the prior-year period. Operating loss was $1.3 billion, due to a loss of $1.4 billion related to WBA’s equity investment in AmerisourceBergen. 

Looking forward, WBA is maintaining its fiscal 2021 guidance of low single-digit growth in adjusted earnings per share. 

“While the business environment remains challenging, we are rising to the occasion with agility and discipline and we are confident in our outlook for adjusted EPS for the fiscal year,” Pessina said. “Our role in the healthcare system has never been more important, as the communities we serve continue to turn to our trusted brands and expert pharmacists. I am so proud of our teams and the historic and critical role they are playing to help the world emerge from the pandemic, administering COVID-19 vaccinations to frontline healthcare workers and vulnerable members of our society." 

The company noted that Walgreens has administered more than 2.8 million COVID-19 tests since the pandemic began, and is currently working toward vaccinating residents and staff at more than 35,000 long-term care facilities against COVID-19.