Walgreens Profits Tumbled To $118 Million on Slumped Demand for Covid-19 Vaccines And Tests

Walgreens shares tumbled 7% premarket today after the company missed earnings estimates and slashed its full-year outlook, citing “challenging consumer and macroeconomic conditions.” Walgreens Boots Alliance’s Q3 non-GAAP EPS of $1.00 missed expectations by $0.07. Revenue was $35.42 billion (up 8.7% YoY), an increase of $1.3 billion. In fact, Walgreens quarterly profit tumbled to $118 million – less than half of what it was a year ago.

In terms of guidance, the Q4 is expected to be negatively impacted by higher effective tax rates, changes in U.S. consumer spending due to heightened macroeconomic pressures, and the impact of a weaker respiratory season in the U.S. pharmacy and U.S. healthcare sectors. The Walgreens Boots Alliance now expects fiscal 2023 adjusted EPS of $4.00 to $4.05 (previously $4.45 to $4.65 versus a consensus of $0.45), due to “…difficult consumer and macroeconomic conditions, and fewer Covid-19 vaccines and tests”. To maintain growth and improve operations, Walgreens said it is taking “immediate actions” that include another $600 million in cost-cutting.

For Walgreens, the loss of Covid-related revenue contributed to profits that fell to $118 million, or 14 cents a share, in the fiscal third quarter ended May 31, from $289 million, or 33 cents a share in the year ago period. “0.8 million COVID-19 vaccinations were administered in the quarter, compared to 4.7 million in the year-ago quarter,” Walgreens said in its fiscal third quarter earnings report. Meanwhile, Walgreens U.S. Healthcare segment reported $2 billion in Q3 sales,“ posting an increase of $1.4 billion compared to the year-ago quarter.

Preliminary guidance for adjusted operating income growth in fiscal 2024 is low-to-mid-single digits, expected to be driven by U.S. healthcare and U.S. retail pharmacy frayed; adjusted operating income growth expected to outpace adjusted EPS.