COVID-19 vaccines and testing boosted Walgreens store sales growth to levels not seen in more than two decades, pushing the drugstore chain well above Wall Street expectations for the first quarter.
Walgreens doled out 15.6 million vaccines in the quarter that ended November 30, up 16% from the previous quarter, as more Americans sought booster shots. Also, federal regulators expanded eligibility for Pfizer's vaccine to children ages 5 to 12.
The company administered 6.5 million COVID-19 tests in the first quarter, which ended before the omicron variant of the virus sent case numbers soaring in the United States and stoked the need for testing even higher.
Sales from Walgreens' established U.S. stores shot up more than 10% compared to the previous year's fiscal quarter, which ended before mass vaccine distribution began. That was the highest level of growth in more than 20 years, according to the company based just outside of Chicago in Deerfield, Illinois.
Walgreens notched strong sales growth in the face of a number of challenges during the quarter including a spike in the theft of profitable beauty products, which company leaders attributed to organized crime rings.
A lot of the illegal activity is taking place in San Francisco, where Walgreens cited those crimes in the closure of five stores.
The drugstore chain, like its competitors, also dealt with worker shortages that forced some stores to reduce pharmacy hours.
Pharmacists in general have said that they are struggling to balance increased demands for COVID-19 vaccinations and testing with all their other responsibilities while also dealing with these staff shortages.
Walgreens has raised starting wages and is adding more workers.
Overall, Walgreens earned $3.58 billion in its fiscal first quarter.
Adjusted earnings totaled $1.68 per share, and revenue grew nearly 8% to $33.9 billion.
Analysts expected, on average, earnings of $1.36 per share on $32.88 billion in revenue, according to FactSet.
Walgreens Boots Alliance Inc. runs more than 13,000 stores mainly in the United States and the United Kingdom.
The company also booked 16% growth in sales from its established Boots stores in the United Kingdom but said customer visits to those stores still remained below pre-pandemic levels.
The pandemic initially crushed drugstore sales when it hit in early 2020, but it has since fed demand for vaccines and tests, driving more customers to the stores for help.
Sales gains from that rush will eventually recede, Edward Jones analyst John Boylan said in a research note. When that happens, he said that the company will have to rely more on its push into health care for longer-term growth.
Walgreens, like its main rival CVS Health, is providing more options for care as it tries to become a steady resource for customers who want to improve their health or keep chronic problems in check.
The company has spent billions on a partnership with VillageMD to open primary care practices that work with its drugstores.
It also is investing about $970 million investment in Shields Health Solutions, a 9-year-old company that helps health systems set up and run specialty pharmacies.
"We are creating an entity here that does much more than just dispense pharmaceuticals," CEO Rosalind Brewer told analysts during a Thursday morning conference call.
Company shares fell more than 2% to $52.63 in Thursday morning trading while the broader market slipped.
Follow Tom Murphy on Twitter at @thpmurphy.