Walgreens maintains full-year profit growth forecast; shares rise

FILE PHOTO: A sign rests on a counter at a Walgreens pharmacy store in Austin, TX, U.S., March 26, 2018. Picture taken on March 26, 2018. REUTERS/Mohammad Khursheed

(Reuters) – Drugstore chain Walgreens Boots Alliance Inc stuck to its full-year forecast for earnings growth on Thursday, despite anticipating a hit to its current-quarter earnings from the COVID-19 pandemic, sending its shares up nearly 3%.

The company has taken a number of steps to bolster profit after the health crisis hammered sales and forced it to cut jobs, shut some UK-based Boots stores and sell its distribution unit to AmerisourceBergen Corp for $6.5 billion.

The drugstore chain expects to see some benefit from COVID-19 vaccinations in the second half of fiscal year 2021, company executives said on a conference call, although that could be offset by the hit to its retail sales from the pandemic.

Walgreens and rival CVS Health Corp have an agreement with the federal government to vaccinate nursing home residents across the country through a voluntary program.

“The administration of vaccinations to care homes is not a particularly profitable business. It’s extremely labor-intensive, and the costs are incremental,” Chief Executive Officer Stephano Pessina said.

Walgreens maintained fiscal 2021 forecast of low single-digit growth in adjusted EPS, after it beat analysts’ estimates for adjusted first-quarter profit, driven by higher sales at its retail pharmacy stores and robust prescription volumes.

Same-store sales at its U.S. pharmacies rose 3.7% in the quarter as it filled 297.3 million prescriptions. Boots UK pharmacies recorded a 2.5% rise in sales.

Excluding items, the company earned $1.22 per share, while analysts were expecting a profit of $1.03 per share, according to Refinitiv IBES.

Revenue rose to $36.31 billion from $34.34 billion.

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