Walgreens raises 2021 earnings growth forecast on COVID-19 vaccine opportunity

(Reuters) – Pharmacy chain Walgreens Boots Alliance Inc said it expects benefits from COVID-19 vaccinations to offset the impact of a weak flu season on retail sales and noted its earnings growth forecast for 2021, pushing its shares up almost 6%.

As the pandemic affected prescription volumes and a weak flu season hampered sales of over-the-counter health and wellness products in recent quarters, pharmacy chains Walgreens and CVS Health Corp are expected to benefit from the distribution of COVID-19 vaccines and tests.

“We remain confident of delivering strong growth in the second half of the fiscal year as the flu season eases and COVID-19 vaccinations ramp up,” Walgreens Chief Financial Officer James CFO said Wednesday. Kehoe, during a conference call.

Shares of the company rose to $55.93 in early trading.

Walgreens said its lofty forecast is based on administering 26 to 34 million doses in 2021 and includes the benefits of new vaccination rates.

Earlier this month, the US government increased Medicare reimbursement rates for COVID-19 vaccines to $40 per single shot from $28 and $80 for the two-dose vaccine from around $45.

Walgreens raised its 2021 guidance to mid-to-high single-digit growth in adjusted constant-currency earnings per share from low-single-digit adjusted EPS growth.

For the second quarter, the company beat earnings estimates due to higher sales at its pharmacies in the United States and United Kingdom.

Same-store sales at its US pharmacies increased 4.5% in the quarter as it filled 288.5 million prescriptions, while sales at Boots UK pharmacies increased 3.2%.

Excluding items, Walgreens earned $1.40 per share, versus Refinitiv IBES estimates of $1.11 per share.

Revenue rose 4.8% to $32.8 billion, but missed analysts’ average estimate of $35.53 billion.

Reporting by Mrinalika Roy and Amruta Khandekar in Bengaluru; Editing by Shinjini Ganguli