Walgreens Boots Alliance is showing signs of recovery that could well continue through the current fiscal year.
It comes after a rough 2020 fiscal year, with data from Finaria showing that the company was one of the three worst-performing stocks on the Dow Jones Index for the entire year. In December, it was down 26%, while the index as a whole showed a 5% increase over the same period.
By the end of the year its stock was down almost 30% from its January 2020 price. Still, it was valued at $48.50 per share as of February 3, 2021, which is more than a 21% increase year-over-year, contributing to an overall market value of $42.28 billion.
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When comparing the numbers from February to February, the share price is still down more than 8.5%. But in the previous three months it had gone up 33.46%.
In FY 2020, Walgreen sales grew by a mere 2%, while its earnings per share (EPS) fell by 20.8% year-over-year and operating income declined by 24.9%.
But based on FY 2021 Q1 earnings report figures, prospects for the coming year seem much better.
WHAT'S THE IMPACT?
During the first quarter of the fiscal year, Walgreens reported having low foot traffic, fewer new prescriptions and lower sales of cold, flu and cough medication. In spite of that, there was an increase in U.S. pharmacy sales driving stronger-than-expected performance.
It posted sales of $36.3 billion, up from $34.34 billion in the prior year against an expected $34.95 billion. The figure was up 5.7% year over year and 5.2% on a constant currency basis.
The company posted a $308 million net loss, translating to 36 cents per share. Comparatively, it had posted an $845 million net profit during a similar period in fiscal 2020.
The U.S. retail pharmacy segment was once again Walgreens' top moneymaker, generating $27.2 billion worth of sales during the first quarter, a 3.9% year over year increase. Comparable pharmacy sales in the U.S. rose by 5% during that time.
The pharmaceutical wholesale business posted the best performance. The unit had an increase of 18.6% year-over-year, reaching $7.1 billion. On the other hand, retail pharmacy international was the worst performer. Sales in the unit sank by 6.2% year over year to $2.6 billion.
THE LARGER TREND
As with many healthcare-centric organizations, the journey for Walgreens has been up and down. As of December 1, Aetna dropped Walgreens from its Illinois Medicaid plan, affecting about 400,000 residents in the state – many of whom are poor, unemployed and disproportionately suffering from COVID-19. Aetna said at the time that the removal of the pharmacy chain from the network has not contributed to network access issues.
Days later, Walgreens said it was selling off the majority of its wholesale pharmacy company, Alliance Healthcare, to AmerisourceBergen in a deal worth about $6.5 billion. In addition to the transaction, the companies are extending their U.S. distribution agreement until 2029, and Alliance Healthcare UK will remain the distribution partner of Boots until 2031.
Last week, Walgreens announced that it had been selected by the Centers for Disease Control and Prevention and U.S. Department of Health and Human Services to provide a limited number of COVID-19 vaccinations across 15 states and jurisdictions as part of the Federal Retail Pharmacy Program.
Vaccinations will begin in stores February 12 to eligible individuals based on state and jurisdiction guidelines, and may include healthcare workers, people ages 65 and older, and individuals with pre-existing conditions.