The benefit manager part of the business may be the only revenue positive part of the business. If the retail isnt selling enough at a profit to offset shrinkage in the complex urban environment, the only profit is the rent on the Rx in the back.
Property taxes must eat very well. The only retail that isnt already gone in some zip codes is these convience stores anchored by a Rx rental space.
A Stroad corner, with 2 gas stations and 2 drug stores. The gas stations are gross sales over 6 million a year, the drug stores may do 2.5 gross per year before the Rx. Medicare/Medicade Rx is done at very slim margins, but is gross sales to that taxing authority. The local taxing authority is going to slap taxes on Walgreens and CVS as if they were doing 6M in sales. With prepay, gas theft is the same percentage as CC fraud, CC chargebacks may be 3% at worse. CVS retail shrink might be 10% of gross, add 3% in CC chargebacks, add another big ticket for being the target of slip and fall lawsuits from the broken hip crowd collecting their medicals.
You got to sell a lot of orange pops at $2 to make the profits to support property tax of a 12 wide isle store. The dollar stores pack everything tighter and dont build or stay open where inventory shrinkage is going to happen.
After working the distributions center of a walgreens before the barcode sort era, the issues in legacy distribution are insane. The amount of time spent breaking down and shipping back out first isle facepaints was beyond $1 per vial. Makeup suppliers should direct ship and inventory control that fiasco of a isle. Like Cola and Bread, it is not for the retailer to deal with on a daily basis with the losses they experience.
According to the latest conference call, they are projecting operating income of around $6.1 billion from health insurance plans, mostly Medicare Advantage and Medicaid, about $7.1 billion from pharmacy benefit management, and about $5.6 billion from retail. That looks pretty solid to me. GAAP earnings guidance is $8.60 a share for 2023.