Walgreens Posts Higher Quarterly Profit, Raises Guidance

The company said it provided 6.5 million Covid-19 tests in its latest quarter, including over-the-counter at-home tests, which have been plagued by shortages amid a recent surge in demand around the holidays driven by the fast-spreading Omicron variant.

Demand for at-home Covid-19 tests helped drive a 24.7% increase in health and wellness sales. Overall comparable retail sales increased 10.6% compared with the year-ago period, the biggest increase in over 20 years, Walgreens said. Prescriptions filled rose by 6.2% in the latest quarter on a comparable basis.

Overall, Walgreens posted sales of $33.90 billion for the fiscal first quarter, up from $31.44 billion in the same period last year. Analysts surveyed by FactSet expected sales of $32.88 billion.

Walgreens also said it is increasing its full-year adjusted earnings guidance from flat to low-single digit growth, reflecting its first-quarter performance.

Shares climbed 2.5% in premarket trading Thursday. The stock rose about 31% last year.

The company noted that its full-year earnings will be affected by incremental investments in its employees. Frontline workers, especially pharmacy technicians, at Walgreens and its rivals have been rocked by the demands of keeping up with the Covid-19 vaccination campaign. The company has said it is working to improve conditions by adding scheduled breaks, hiring more staff and raising pay.

The company posted net income of $3.6 billion for the quarter, compared with a loss of $308 million in the year-ago quarter. That includes a $2.5 billion after-tax gain in the most recent quarter due to the valuation of the company’s previously held equity and debt investments in VillageMD and Shields, as well as a $1.2 billion charge from the company’s equity earnings in

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in the year-ago period.

On an adjusted basis, the company reported earnings of $1.68 a share, compared with expectations of $1.37 a share, according to analysts polled by FactSet.