Walgreens Earnings Could Be Key Barometer Of U.S. Coronavirus Response

Bruce Japsen Senior Contributor Apr 1, 2020,10:23am EDT

Walgreens reports its fiscal second quarter[+]

ASSOCIATED PRESS

This week’s report of Walgreens Boots Alliance quarterly earnings could be a key early barometer of how the U.S. healthcare system is holding up to the spread of the Coronavirus strain COVID-19.

The nation’s largest U.S. drugstore chain, which has ramped up hiring to staff up for an influx of customers, reports its fiscal second-quarter earnings on Thursday for the three-month period ended Feb. 29. Walgreens is one of the first major healthcare companies to report earnings since the U.S. has been hit hard with cases of Coronavirus expected to hurtle past 190,000, according to Wednesday’s latest tallies.

Retail drugstores have largely remained open across the U.S. and have been considered essential businesses across the country in states that have issued “shelter in place” orders. That is likely to benefit Walgreens, CVS Health, Walmart and Rite Aid as well as Target which houses CVS brand pharmacies.

But CVS warned earlier this week of “COVID-19’s adverse impact” on the drugstore chain’s businesses. CVS also owns the large pharmacy benefit manager Caremark and Aetna, the nation’s third largest health insurer with more than 20 million enrollees.

“We believe COVID-19’s adverse impact on our businesses, operating results, cash flows and/or financial condition primarily will be driven by the severity and duration of the pandemic, the pandemic’s impact on the U.S. and global economies and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic,” CVS said in a regulatory filing with the Securities and Exchange Commission. “Those primary drivers are beyond our knowledge and control, and as a result, at this time we cannot reasonably estimate the adverse impact COVID-19 will have on our businesses, operating results, cash flows and/or financial condition, but the adverse impact could be material.”

U.S. pharmacy chains are already seeing huge jumps in online sales and while customers are emptying drugstore shelves of personal care items, over-the-care medicines and products like toilet paper, hand sanitizer and disinfecting wipes. Rite Aid, for example, said last month its online sales have “peaked to 10 times normal demand levels” since the outbreak.

A wild card for Walgreens could be its global operation, which has a presence in more than 25 countries including the United Kingdom where the company’s Boots drugstores are popular.

Amid the pandemic, Walgreens has taken myriad steps to accommodate customers both online and in the store. Just this week, for example. Walgreens and Postmates said they expanded on-demand delivery nationwide. “With this expansion, consumers in cities across the country can get health and wellness items, including select over-the-counter medications, and other household essentials and convenience products they need delivered to them from more than 7,000 Walgreens stores,” the companies said.

The Postmates partnership comes following an array of alliances Walgreens has formed to tap deeper into healthcare services, making sure customers are getting care in the right place, in the right time and in the right amount. “During these challenging times, our customers need alternate options to get the essential products they need,” Walgreens President Richard Ashworth said.

https://www-forbes-com.cdn.ampproject.org/c/s/www.forbes.com/sites/brucejapsen/2020/04/01/walgreens-earnings-could-be-key-barometer-of-us-coronavirus-response/amp/