Pandemic propels Walgreens in 2Q, but impact expected to fade

A surge in demand for COVID-19 tests and vaccines helped Walgreens deliver a better second quarter than Wall Street expected.

But that boost from the ongoing pandemic isn’t expected to last, and the drugstore chain stuck to a 2022 outlook issued earlier. Company leaders also told analysts that Walgreens’ big shift into delivering more care was too recent to see measurable growth in prescriptions or customer store visits.

Company shares slid 6% at the opening bell, Thursday.

Sales climbed 3% in the quarter that ended, in February, as customers spent money on at-home COVID-19 tests as well as cold, flu and beauty products. The company also administered 11.8 million vaccines in the quarter, which boosted pharmacy sales as the Omicron surge of the virus peaked in the US.

Revenue from the company’s Boots stores in the United Kingdom also jumped as more customers returned to stores even though restrictions to fight Omicron were in place for much of the quarter.

Walgreens CEO Rosalind Brewer said, in January, that the company was exploring “strategic options” for Boots, which it acquired several years ago. She said, Thursday, that the review was progressing well.

Walgreens pulls in most of its revenue from retail pharmacies in the US, where it runs nearly 9,000 stores.

The company is expanding the care it provides at those locations. It has added more than 100 primary care clinics to its stores as part of a deal with VillageMD. Walgreens also expects to open a new clinic every three days as it moves toward 200 by the end of this year.