US pharmacy chain Walgreens Boots Alliance Inc's quarterly profit beat Wall Street expectations on Tuesday, as higher prescription drug prices helped soften the blow from declining COVID-19 vaccinations.
Pharmacies in the United States had seen a steady rise in drug sales in the quarter as doctor visits for non-COVID illnesses rose, adding to a boost from high prices of prescription drugs.
Comparable prescriptions filled, excluding vaccinations, increased by 3.5%, while same-store pharmacy sales rose 4.9% over last year.
The company's US retail pharmacy, its core operation, recorded revenue of $27.6 billion in the second quarter, surpassing analysts' estimates of $26.8 billion.
Walgreens, one of the largest US pharmacies, has been looking to expand beyond its core business.
It spent $5.5 billion in 2021 to take a majority stakes in two smaller healthcare providers, VillageMD and CareCentrix, and also completed its $9 billion acquisition of urgent care provider Summit Health in January.
The health segment saw a sharp increase in revenue to $1.6 billion, driven by VillageMD and Summit Health.
Walgreens' investment in primary care and other health services 'looks like an attractive alternative to improve profitability' and reduce its reliance on the health insurers directing patients to the company, Third Bridge analyst Shoggi Ezeizat said in a note.
Walgreens said it had incurred a one-time opioid-related charge of $306 million in the quarter, and costs related to the acquisition of Summit Health.
Excluding one-off items, the company reported earnings of $1.16 per share for the quarter ended February, higher than the average analyst estimate of $1.10, according to Refinitiv IBES data.
The company's shares were up marginally at $33.20 before the opening bell.