Healthcare
Pharmaceutical Retailers
$8.18B
331K
Walgreens Boots Alliance, Inc. operates as a healthcare, pharmacy, and retail company in the United States, Germany, the United Kingdom, and internationally. It operates through three segments: U.S. Retail Pharmacy, International, and U.S. Healthcare. The U.S. Retail Pharmacy segment engages in operation of the retail drugstores, health and wellness services, specialty, and home delivery pharmacy services, which offers health and wellness, beauty, personal care and consumables, and general merchandise. The International segment offers sale of prescription drugs and health and wellness, beauty, personal care, and other consumer products outside the United States; and operates pharmacy-led health and beauty retail businesses under the Boots brand stores in the United Kingdom, the Republic of Ireland, and Thailand, as well as the Benavides brand in Mexico and the Ahumada brand in Chile. The U.S. Healthcare segment provides VillageMD, a national provider of value-based care with primary, multi-specialty, and urgent care providers serving patients in traditional clinic settings, in patients’ homes and online appointments; Shields, a specialty pharmacy integrator and accelerator for hospitals; and CareCentrix, a participant in the post-acute and home care management sectors. Walgreens Boots Alliance, Inc. was founded in 1909 and is headquartered in Deerfield, Illinois.
Key insights and themes extracted from this filing
Q1 2024 sales reached $36.707 billion, a 10% increase compared to $33.382 billion in Q1 2023. However, gross profit decreased by 2.6% year-over-year, from $6.953 billion to $6.771 billion, indicating margin compression despite top-line growth.
The company reported a net loss of $67 million for Q1 2024, compared to a net loss of $3.721 billion for Q1 2023. The prior year's significant loss was largely due to a $6.5 billion pre-tax charge for opioid-related claims and litigation.
Adjusted net earnings decreased by 43.1% to $571 million, and adjusted diluted net earnings per share decreased by 43.1% to $0.66. This decrease primarily reflects softer U.S. retail market trends and a higher adjusted effective tax rate.
The U.S. Healthcare segment sales increased $942 million to $1.9 billion, reflecting the acquisition of Summit by VillageMD. VillageMD sales increased $889 million to $1.4 billion, reflecting same clinic growth, additional full-risk lives, and increased multi-specialty productivity.
The company is on track to achieve annual cost savings target from $3.5 billion to $4.5 billion by the end of fiscal 2024. The program includes divisional optimization initiatives, global smart spending, global smart organization and the transformation of the Company's information technology capabilities.
On October 31, 2023, the Company completed the sale of the Farmacias Ahumada business in Chile. This divestiture may allow the company to focus on core markets.
On October 10, 2023, Timothy C. Wentworth was appointed as Chief Executive Officer (CEO) and a member of the Board of Directors, effective October 23, 2023. This represents a significant change in leadership and a potential shift in strategic direction.
The company announced a 48 percent reduction in its quarterly dividend payment to 25 cents per share, starting with the quarterly dividend payable in March 2024. This action is intended to strengthen the Company's long-term balance sheet and cash position.
Through the Transformational Cost Management Program the Company plans to reduce its presence by up to 650 Boots stores in the UK and approximately 650 to 700 stores in the U.S. As of November 30, 2023, the Company has closed 364 and 563 stores in the UK and U.S., respectively.
The Company's senior unsecured debt ratings were lowered to BBB- with a negative outlook by Standard and Poor's in October 2023 and Ba2 (below investment grade) with a stable outlook by Moody's in December 2023. The downgrades may increase the cost of new financing.
The company has accrued a total of $6.9 billion liability associated with the Multistate Settlement Agreement and other opioid-related claims and litigation settlements. The outcome of these and other legal proceedings is uncertain and difficult to predict.
The Company is dependent on funding from its subsidiaries to pay dividends and meet its obligations. If the Company's subsidiaries' financial performance and earnings are not sufficient to make dividend payments to the Company while maintaining adequate capital levels, the Company may reduce or may not be able to make dividend payments to its stockholders.
Comparable pharmacy sales increased 13.1 percent for the three months ended November 30, 2023, benefiting from higher branded drug inflation and strong execution in pharmacy services. This indicates the company is maintaining pricing power in the pharmacy segment.
Comparable retail sales decreased 5.0 percent in the three months ended November 30, 2023, reflecting macroeconomic-driven consumer trends. This indicates the company is facing headwinds in the retail segment due to external economic factors.
Boots UK comparable retail sales in constant currency increased 9.8 percent and increased total retail market share for the 11th consecutive quarter, indicating a strong competitive position in the UK market.
Selling, general and administrative expenses as a percentage of sales were 17.9 percent for the three months ended November 30, 2023 and 43.0 percent for the three months ended November 30, 2022. The decrease was primarily driven by the $6.5 billion pre-tax charge for opioid-related claims and litigation in the year-ago quarter, and lower project and marketing related spend.
The Company is on track to achieve annual cost savings target from $3.5 billion to $4.5 billion by the end of fiscal 2024 through the Transformational Cost Management Program. This program is designed to improve cost efficiencies.
The Company plans to reduce its presence by up to 650 Boots stores in the UK and approximately 650 to 700 stores in the U.S. As of November 30, 2023, the Company has closed 364 and 563 stores in the UK and U.S., respectively. This consolidation is intended to improve operational efficiency.
The Transformational Cost Management Program includes the transformation of the Company's information technology capabilities. However, the specific details of R&D investments and technological capabilities are not discussed in detail.
Comparable sales are defined as sales from stores that have been open for at least twelve consecutive months as well as e-commerce sales, indicating the company is integrating digital sales into its overall sales strategy.
The filing does not provide any details on R&D spending, new innovative technologies, or digital transformation efforts. The focus is on cost management and strategic realignments rather than technological advancements.
The Company announced a 48 percent reduction in its quarterly dividend payment to 25 cents per share, starting with the quarterly dividend payable in March 2024. This action is intended to strengthen the Company's long-term balance sheet and cash position.
In July 2020, the Company suspended repurchases under the June 2018 stock repurchase program. The Company may continue to repurchase stock to offset anticipated dilution from equity incentive plans.
The Company sold shares of Cencora common stock for total consideration of approximately $250 million. The proceeds are likely being used to reduce debt and fund strategic investments.
The filing does not provide any details on environmental commitments or progress.
The filing does not provide any details on social responsibility initiatives.
The filing does not provide any details on governance practices.
Adjusted net earnings decline is partly attributed to softer U.S. retail market trends. This indicates the company is facing challenges in the current market environment.
The International segment operates in currencies other than the U.S. dollar, including the British pound sterling, euro, Chilean peso and Mexican peso and therefore the segment's results are impacted by movements in foreign currency exchange rates.
Comparable retail sales decreased 5.0 percent in the three months ended November 30, 2023, reflecting macroeconomic-driven consumer trends, a 1.6 percentage point impact from a weaker flu and respiratory season, lower seasonal sales and Thanksgiving holiday store closures.