Vaccinations, testing demand power Walgreens forecast raise

·2 min read
FILE PHOTO: A person rides past a Walgreens truck, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York City

By Manojna Maddipatla and Oishee Majumdar

(Reuters) - Walgreens Boots Alliance Inc raised its full-year adjusted profit growth forecast and said it expects to administer 5 million more COVID-19 vaccines as the fast-spreading Omicron variant rages across the United States.

The company administered 15.6 million vaccinations and 6.5 million tests in the first quarter, helping U.S. same-store retail sales notch their best performance in over two decades.

Executives on a post-earnings call on Thursday sounded confident in the supply of at-home tests after the spike in new cases forced the company, Walmart Inc and CVS Health Corp to limit sales of such kits.

"We see our stock availability levels going up significantly by mid-month. So, we're feeling in a pretty good place in the next three months," Chief Financial Officer James Kehoe said, without providing further details.

Walgreens now expects to administer 30 million vaccinations at its stores in fiscal 2022, adding the number could be higher based on the evolution of the Omicron variant and regulatory guidance.

While there could be a potential positive impact on earnings due to the new vaccination target for the year, management's comments suggest there could be potential challenges from labor investments, Cowen analyst Charles Rhyee said.

Walgreens, which has administered over 56 million vaccines so far, said it would invest about $120 million in employees, as it seeks to battle staffing shortages and temporary operating hour reductions.

In September, the company said it would give a one-time bonus of $1,250 to its full-time pharmacists and a $1,000 payment to part-time pharmacists.

For the first quarter, Walgreens posted an adjusted profit of $1.68 per share, easily beating estimates of $1.33.

The company, which reported sales of $51 million in its newly created Walgreens Health unit, also increased its full-year adjusted profit expectations to low-single digit growth from flat.

Shares of the company were down about 1% at $53.25.

(Reporting by Manojna Maddipatla and Oishee Majumdar in Bengaluru; Editing by Sriraj Kalluvila)

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