Walgreens is launching a new business segment focused on health care.
Walgreens Boots Alliance Inc. reported fourth-quarter earnings and sales beat expectations amid a surge in COVID-16 vaccinations that saw it administer 13.5 million vaccines, nearly double what it expected.
The drug store giant also said it is making a $5.2 billion investment in VillageMd, giving it a majority ownership stake that will help it accelerate plans to open VillageMD primary care clinics co-located at existing Walgreens stores. It also is making a $330 million investment to purchase a majority investment in CareCentrix, which provides care coordination and outsourced benefit management services in the post-acute and home care sector,
In related moves, Walgreens announced a new “consumer-centric” health care strategy to drive long-term profitable growth. The plan features the launch of Walgreens Health, a new business segment enabled by the company’s investments in VillageMD and CareCentrix. Walgreens described the segment as a “technology-enabled care model powered by a nationally scaled, locally delivered healthcare platform.”
“Consumers are embracing retail pharmacy to manage their healthcare more than ever,” Rox Brewer, who took the reins at Walgreens earlier this year, said at Walgreens’ investor meeting. “We have established a tech-enabled care model powered by a healthcare platform that is omnichannel and personalized for the consumers we serve.”
Also at the meeting, Walgreens president John Standley said the company is preparing to diversify its store portfolio as its moves toward the development of “multiple customer propositions,” including the expansion of co-located Walgreens-VillageMD locations and smaller-format stores.
Walgreens’ net income totaled $627 million, or $0.72 per share, for the period ended Aug. 31, up from $373 million, or $0.43 per share, in the year-ago period. Adjusted earnings per share of $1.17 topped analysts’ estimates of $1.02.
Sales rose to $34.26 billion from $30.37 billion, topping estimates of $33.03 billion. U.S. comparable pharmacy sales rose 8.1%; U.S. comparable retail sales increased 8.9%.
Walgreens said it reached its goal of cutting $2 billion in annual costs from its business a year ahead of schedule. The company said it would raise its cost-savings goal to $3.3 billion by fiscal year 2024.
Walgreens provided 13.5 million COVID-19 vaccinations in the quarter, and 34.6 million for the entire fiscal year.
Walgreens has a presence in more than nine countries, employs more than 315,000 people and has more than 13,000 stores in the U.S., Europe and Latin America.