Despite a nearly 4% increase in sales and solid U.S. retail pharmacy performance, Walgreens Boots Alliance posted a decrease in net earnings and earnings per share for the quarter ended Feb. 29. The company posted sales of $35.8 billion, up 3.7% from the prior-year period, and earnings per share of $1.07, down 14% from a year ago. Net earnings were down 18.2% to $946 million — which WBA executive vice chairman and CEO Stefano Pessina said surpassed estimates.
“We are pleased to report second-quarter results exceeding our expectations, with sequential improvement in comparable U.S. prescription volume and retail sales,” Pessina said. “During these unprecedented times of global uncertainty, Walgreens Boots Alliance is on the front lines of combating the COVID-19 pandemic. Our number one priority is to continue to provide essential services, products and information at this critical moment of need, demonstrating our unwavering commitment to our customers and patients, and to our people.”
WBA’s retail pharmacy USA segment saw solid gains in the quarter, with sales up 3.8% from the prior year to $27.2 billion and a 2.7% increase in same-store sales, excluding the favorable impact of the 2020 leap day. Pharmacy sales increased even more, growing by 5.3% from Q2 2019, which the company said was the result of higher brand inflation and prescription volume, as well as 17.7% growth in its specialty offering. Comparable pharmacy sales were up 3.7% and in the quarter, the segment filled 296.8 million prescriptions, including immunizations, on a 30-day equivalent basis. Comparable-store script fills were up 4.9% from the previous period. Even with the growth, the WBA said that according to IQVIA, Walgreens’ retail prescription market share for the quarter decreased by 30 basis points to 21%.
The strong pharmacy performance was accompanied by a 0.3% decrease in retail sales, and comps up 0.6%, which the company attributed to growth in health and wellness, including a favorable cough-cold and flu season. Excluding tobacco and e-cigarettes, comps grew by 1.9%. The division’s operating income decreased by 21.5% from the previous year’s Q2, totaling $963 million. The company noted that this was largely due to costs related to Rite Aid store acquisitions and its cost-management program.
WBA’s retail pharmacy international division saw Q2 sales of $3.1 billion, a decrease of 0.8% from the prior-year period. On a constant-currency basis, sales decreased by 1.7%, which the company said was due to sales declines in Boots UK and in Thailand and Chile. Comparable pharmacy sales for Boots UK were up 1.8% on a constant-currency basis — a combination of increased reimbursement and lower script volume. Boots’ comparable retail sales decreased by 4.6% on a constant-currency basis, but held its market share in a declining market. The division’s operating income decreased by 31.4% from a year ago, totaling $132 million.
On the pharmaceutical wholesale side, WBA reported sales of $6.1 billion for the quarter, up 5.7% from the prior year. This includes an adverse currency impact of 2.3%, the company noted. The division’s operating income was $136 million, including $28 million from WBA’s equity earnings in AmerisourceBergen. In the prior-year Q2, equity earnings were $83 million and total operating income was $100 million.
Looking forward, the company said that despite being on track to maintain its full-year guidance before the COVID-19 pandemic, it currently is not in a position to accurately forecast the future impacts of the outbreak. WBA said it would be closely assessing and managing the situation, with plans to share updates in the next earnings report when the effects of the pandemic are known in more detail.
WBA touted some milestones that occurred in the quarter in line with its transformational cost management program, as well as its goals of accelerating digitization, transforming and restructuring its retail offering, and creating neighborhood health destinations. More than 1 million people used Walgreens express to speed up their prescription experience, and its Save A Trip refill program saw enrollment increase by 4%. Additionally, Find Care visits were up 40%, totaling 2 million against a year ago. It also touted strong Boots.com growth, with a 23% increase in sales compared with a year ago.
Among its efforts support customers and its associates, WBA noted that it has ensured locations stay open while expanding the use of its drive-through offering for health, cleaning and grocery items. It also has offered free home delivery of prescriptions and products, as well as for online purchases in the United States, among other efforts that include working closely with governments to provide medication access and testing.