Operationally, Walgreens is struggling with higher costs at a time when it's actually become a critical supplier. As it turns out, being on the front lines of a pandemic isn't necessarily good for the bottom line.
It may seem counterintuitive, but the pandemic has actually had a negative impact on Walgreens' business. The company's margins were down dramatically last year, and you can see below that net income dropped as a result. There's pressure on reimbursements, and mix was negative due to COVID-19, so there simply wasn't the same margin Walgreens usually expects.
To make matters worse, Amazon's (NASDAQ:AMZN) pharmacy launched late in the year and could take market share from traditional pharmacies. The pressure from online sales may not seem like a big deal now, but with locations across the country, real estate costs are high, and any loss in sales has a magnified effect on the bottom line.
I don't think a company like Walgreens is going anywhere anytime soon, given the critical services it supplies. But its bottom line may be under significant pressure as more people get their medical appointments and prescriptions online. This isn't a pharmacy stock I'm bullish on in 2021, despite the fact that shares are cheaper than they were a year ago.