Opioid Settlement Drags Walgreens Profits

Walgreens Boots Alliance reported quarterly profits well below the year-ago period thanks largely to costs to settle with the state of Florida claims its pharmacies contributed to the opioid epidemic.

Walgreens Thursday reported $289 million in net income, or 33 cents a share, for its fiscal third quarter ended May 31. That was well off the year-ago period when Walgreens earned a net profit of more than $1.1 billion, or $1.38 per share.

“Third quarter operating loss from continuing operations was $320 million compared to operating income of $1.1 billion in the year-ago quarter,” Walgreens said Thursday in its fiscal third quarter earnings report. “Operating loss in the quarter reflects a $683 million charge related to the opioid settlement with the State of Florida and higher costs related to the Transformational Cost Management Program.”

The $683 million settlement includes $620 million that Walgreens in May said will be paid “out to the State of Florida over 18 years, as well as a one-time payment of $63 million for attorneys’ fees.” The U.S. Centers for Disease Control and Prevention estimates the nationwide opioid crisis has led to more than a half million deaths from overdose in the last 20 years. Walgreens in May said the settlement includes “no admission of wrongdoing or liability by Walgreens.”

Walgreens reported third quarter revenue of $32.6 billion, which was down 4% compared to $34 billion in the year ago period in part due to a drop in sales at its U.S. drugstores. Though Walgreens continued to administer millions of vaccines against Covid-19 and administer tests for the virus, such services and products weren’t as in demand as they were earlier in the pandemic.

In the third quarter, Walgreens administered 4.7 million vaccines and 3.9 million tests. By comparison, the drugstore chain administered 11.8 million vaccinations and 6.6 million tests in the second quarter, the company said.