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Buoyed by new pharmacy partnerships to drive prescriptions through its stores,
On Thursday, Walgreens, the U.S.'s largest drugstore chain, said fiscal 2018 first-quarter net earnings were down 22%, to $821 million, or 81 cents a share, largely because of an “impairment” charge related to its investment in Chinese wholesaler Guangzhou Pharmaceuticals. Adjusted fiscal-first-quarter profits rose 7.8%, to $1.3 billion.
But the bright spot on Walgreens' balance sheet showed sales that jumped nearly 7.9%, to $30.7 billion. In particular, Walgreens' U.S. retail pharmacy sales rose nearly 9%, to $22.5 billion, and sales in comparable stores increased nearly 5%.
“As you can see, it’s been a strong start to the year,” Walgreens CEO Stefano Pessina said during a conference call Thursday with analysts.
Walgreens credited the improving pharmacy sales to its ability to drive more customers through new partnerships such as AllianceRx Walgreens Prime. The partnership puts Walgreens stores as the preferred pharmacy network of Prime Therapeutics, a pharmacy benefit manager (PBM) owned by 18 Blue Cross and Blue Shield plans with more than 20 million health plan members across the country.
As part of the Prime-Walgreens relationship, these Blue Cross members are in effect directed away from CVS Health drugstores to Walgreens pharmacies as part of Prime’s national preferred pharmacy network. The preferred pharmacy network began Jan. 1, 2017.
Walgreens expanded its relationship with Prime in 2017, forming a combined specialty and mail services company that launched in April.
CVS’s response to improve U.S. pharmacy sales is in part its proposed acquisition of
In the meantime, however, CVS is forecasting low-single-digit revenue growth in 2018. On Thursday, CVS said it “expects to deliver consolidated net revenue growth of 0.75% to 2.5% and adjusted consolidated operating profit growth of 1% to 4%.”
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“Adjusted operating profit in its Retail/LTC segment is expected to grow in the low-single digits, and adjusted operating profit in its Pharmacy Services segment is expected to grow in the low- to mid-single digits,” CVS said on Thursday.
Walgreens has yet to benefit from its acquisition of
Walgreens is buying the Rite Aids in phases and had acquired 357 stores as of the end of December. “Walgreens Boots Alliance continues to expect ownership of the remaining stores to be transferred in phases, with the goal being to complete the store transfers in spring 2018,” Walgreens said in a statement Thursday accompanying its fiscal-first-quarter earnings report.