A decline in COVID-19 vaccinations cut into Walgreens second-quarter earnings, but the drugstore chain still delivered better-than-expected results.
Walgreens said Tuesday the number of vaccines it administered in the quarter tumbled 80% to 2.4 million compared to last year’s quarter. COVID-19 testing also fell more than 90% and sales of at-home tests dropped as well.
Analysts expected those declines compared to last year, when the omicron variant of the coronavirus was surging.
Walgreens also booked in the recently completed second quarter a $306 million pretax charge for opioid claims and some expenses tied to cost cutting and an acquisition.
The chain also saw prescriptions grow more than 3%, excluding immunizations, in its biggest business segment, U.S. drugstores.
Rising drug prices and better staffing at the company’s drugstores helped pharmacy sales, Edward Jones analyst John Boylan said in a research note.
Quarterly net income tumbled 20% overall to $703 million. Adjusted earnings were $1.16 per share, which is 6 cents better than expected, according to a survey of analysts by FactSet.
Sales climbed 3% to $34.86 billion, which was also better than expected.
Walgreens Boots Alliance Inc. runs a network of around 13,000 drugstores globally, with most of its locations in the United States. Its stores also have become a growing source for care.
The company is opening primary care practices next to some locations with the goal of having drugstores and doctor offices work together to help keep patients healthy instead of just treating them when they become sick.
That’s an approach that is growing popular with bill payers like employers and insurers.
But the drugstore chain and its competitors are struggling to find enough employees to run its U.S. pharmacy counters. Walgreens has had to reduce pharmacy operating hours. The company said Tuesday that it returned about 500 stores to normal hours in the recently completed quarter. But around 1,900 still were affected.
Company leaders told analysts on Tuesday that some stores will still be operating with reduced hours by the end of the company’s fiscal year in August.
Walgreens also said that it was maintaining a full-year forecast it first laid out last fall for adjusted earnings ranging between $4.45 and $4.65 per share. FactSet says analysts expect $4.50 per share.
Mizuho Securities analyst Ann Hynes said in a recent note that the company’s forecast is back-end loaded, and she didn’t expect the company to change it this early in the fiscal year.
The Deerfield, Illinois, company’s shares climbed 3% to $33.97 Tuesday morning while broader indexes slipped.
The price of Walgreens shares tumbled about 28% last year, tripling the decline of the Dow Jones Industrial Average, of which Walgreens is a component. The stock has fallen another 12 percent so far this year.