Walgreens Boots Alliance Inc reported a better-than-expected quarterly profit on Thursday, as higher UK retail sales and strength in its newly launched consumer health business helped offset waning COVID vaccination demand.
Shares of Walgreens, one of the largest U.S. pharmacies, rose nearly 7% in premarket trading after the company also forecast a higher full-year profit.
While overall pharmacy sales declined in the fourth quarter due to waning COVID vaccination demand and lower prescription volumes, retail sales in the United Kingdom jumped 15.2% on the back of demand for over-the-counter health and wellness products.
Analysts had raised concerns about Walgreens' near-term performance and lowered their expectations, especially after rival Rite Aid cut its full-year forecast in September and flagged concerns of sustained pressure on consumer spending and supply chain challenges.
Evercore ISI analyst Elizabeth Anderson said though the results were mixed, the full-year forecast was "much better than feared".
The company also benefited from its Walgreens Health segment, which was launched last year as part of Walgreens' efforts to diversify its business.
The unit provides pharmacy and primary care services in stores, at home or a doctor's office and via mobile app. It brought in sales of $622 million in the fourth quarter.
For 2023, Walgreens said its expects strong growth in its core business to offset waning demand for COVID related products and services.
"Fiscal 2023 will be a year of accelerating core growth and rapidly scaling our U.S. Healthcare business," Chief Executive Officer Rosalind Brewer said in a statement.
The company expects full-year profit in the range of $4.45 to $4.65 per share, the top end of which came above analysts' expectations of $4.53.
Excluding items, the company earned $0.80 per share in the quarter, compared with Refinitiv IBES estimates of $0.77.
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