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Walgreens slashes profit outlook as demand for COVID shots, tests wanes

Walgreens slashed its annual earnings guidance as it continues to face waning demand for COVID vaccines and testing, which is cutting into its profits.

Walgreens Boots Alliance cut its profit forecast for the year as the pharmacy chain continued to face "significantly lower" demand for COVID tests and vaccines.

During the three-month period ending in June, the company administered fewer than 1 million COVID shots, a huge drop-off from the 4.7 million that were administered the same time a year ago.

Meanwhile, Walgreens administered 2.4 million vaccines during the quarter, a decline from the 11.8 million vaccines administrated during the same period a year ago.

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The lower demand for COVID-related services coupled with "a more cautious and value-driven consumer, and a recently weaker respiratory season created margin pressures in the quarter," CEO Rosalind Brewer said in a statement.

Brewer said the company's revised guidance is an "appropriately cautious forward view in light of consumer spending uncertainty, while still demonstrating clear drivers of a return to operating growth next fiscal year." 

Shares of the pharmacy chain tumbled on the news. 

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During the third quarter, the company reported that sales in U.S. retail stores that were open for at least a year slipped 0.2%, which included a "headwind from lower levels of OTC [over the counter] test kits.

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Adjusted operating income decreased $4 million to $1 billion from the year-ago quarter, which reflected a 22% headwind from lower COVID-19 vaccination and testing volumes as well as continued reimbursement pressure and increased labor costs

Walgreens now expects fiscal 2023 earnings per share of $4.00 to $4.05, down from $4.45 to $4.65.

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