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

(Reuters) - Drugstore 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 raised its 2021 profit growth forecast, sending its shares up nearly 6%.

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While the pandemic affected prescription volumes and a weak flu season hampered over-the-counter sales of health and wellness products in recent quarters, pharmacy chains Walgreens and CVS Health Corp are likely to benefit from 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 subsides, and COVID-19 vaccinations accelerate,” Walgreens Chief Financial Officer James Kehoe said during a post earnings call on Wednesday.

Shares of the company were up at $55.93 in early trading.

Walgreens said its raised forecast rests on administering 26-34 million doses in 2021 and includes benefit from the new vaccination rates.

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

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

For the second quarter, the company beat profit estimates due to higher sales at its pharmacy stores in the U.S. and the UK.

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

Excluding items, Walgreens earned $1.40 per share, compared with 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