Walgreens keeps forecast as waning COVID vaccine demand weighs

By Mrinalika Roy and Leroy Leo

(Reuters) -Walgreens Boots Alliance Inc on Thursday maintained its full-year earnings forecast due to declining COVID vaccinations, even as the drugstore retailer beat quarterly estimates on the back of strength in its UK-based Boots business.

Shares of the second-biggest U.S. drugstore retailer by store count fell 4% to $39.14 amid broader market weakness.

The company said it still expects low single-digit growth in its adjusted earnings for the year and warned on costs related to investments in labor and in its new consumer health business.

“Given the uncertainty of the COVID environment, we are not surprised to see that management did not raise FY22 guidance despite the beat,” Evercore ISI analyst Elizabeth Anderson said.

Walgreens has benefited from gains from administering COVID-19 vaccines to cushion the impact of losses from low prescription volumes and over-the-counter sales of health and wellness products in recent quarters due to the pandemic.

The company had put its Boots business up for sale in January as it renewed its focus on domestic healthcare.

But on Tuesday, Walgreens said it would scrap the plan to sell the business as no buyer came up with an adequate offer for the 173-year old chain.

Walgreens will continue to look at alternatives for strategic divestments, Chief Executive Officer Rosalind Brewer said on Thursday.

Last year, the company launched Walgreens Health, a unit that provides pharmacy and primary care services in stores, at home or a doctor’s office and via mobile app.

The unit brought in sales of $596 million in the quarter.

“We will remain laser focused in building out our Walgreens Health business, which is expected to be a significant percentage of our earnings growth,” Brewer said.

The company reported an adjusted profit of 96 cents per share in the third quarter, above analysts’ estimate of 92 cents, as per Refinitiv.

(Reporting by Mrinalika Roy and Leroy leo in Bengaluru; Editing by Maju Samuel)

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