The pandemic may have grounded several airlines over the holiday, but it’s still giving Walgreens wings.
The pharmacy said Thursday that a surge in demand for at-home Covid tests pushed sales to $34 billion in its latest quarter, topping Wall Street projections by a full billion. Those sales are trickling out into secondary sales, where a burgeoning market for tests has them reselling for almost triple the retail cost.
A Story in Three Parts
The tale of retail pharmacies in the last two years breaks down pretty neatly into three parts. First, in early 2020, the likes of Walgreens and CVS were struggling with dwindling share prices as their old fashioned business models were losing ground to emerging online competitors. Then, the pandemic made things worse: revenue cratered while people stayed home and skipped non-essential medical care during the first wave of the pandemic.
But finally, the pandemic did a 180 — at least as far as executives are concerned — and turned into a moneymaker. Walgreens and CVS both spent hundreds of millions to turn their brick-and-mortar locations into Covid vaccination and testing hubs, and it paid off. On Thursday, Walgreens said it made $3.6 billion in profit compared to a $308 million loss a year-ago quarter, and Covid was the driver:
- Demand for at-home Covid-19 tests was the core driver of 24.7% growth in health and wellness sales, and overall retail sales grew 10.6% or the most in 20 years.
- Walgreens now says it expects adjusted earnings to show low-single digit growth this year, after previously forecasting a flat 2022 — shares rose 2.5% Thursday, after rising 31% in 2021.
Secondary Profit: Demand for Covid tests has sent two-pack prices up to $70 on digital marketplaces, where the price gouging has reached Playstation 5 levels without the fun of a Playstation 5. They’re normally priced between $14 and $25 according to the New York Attorney General’s office.