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
The company reported a net loss of $265 million for the three months ended November 30, 2024, compared to a net loss of $67 million for the same period last year. This increase in net loss is attributed to a higher operating loss and non-cash charges related to the Footprint Optimization Program and fair value adjustments on variable prepaid forward derivatives.
The company's operating loss increased from $39 million to $245 million YoY. This increase is due to higher non-cash costs related to the Footprint Optimization Program, lower U.S. retail sales, and the absence of sale-leaseback gains that occurred in the previous year.
Adjusted net earnings decreased from $571 million to $440 million, reflecting lower adjusted operating income. This decrease is primarily due to lower U.S. retail sales and the absence of sale-leaseback gains from the previous year, partially offset by cost discipline and growth in U.S. Healthcare and International segments.
The Company is currently evaluating a variety of options with respect to VillageMD, including a sale of all or part of the VillageMD businesses, possible restructuring options and other strategic opportunities. VillageMD has initiated a sale process for Village Medical, which excludes WP CityMD TopCo (“Summit”).
The Company is continuing to monetize non-core assets and manage liquidity, such as through the sale of the Company's investment in BrightSpring Health Services (“BrightSpring”). During the three months ended November 30, 2024, the Company sold shares of BrightSpring common stock for total consideration of approximately $129 million.
On October 14, 2024, the Company's Board of Directors approved a plan to optimize its footprint and close underperforming stores, primarily within the Company's U.S. Retail Pharmacy segment. The Footprint Optimization Program includes plans to close approximately 900 to 1,000 stores primarily across the U.S. by the end of fiscal 2027.
The company is advancing efforts to control costs by closing stores under the Footprint Optimization Program, expanding centralized service capacity, using improved labor models, and optimizing productivity of micro-fulfillment centers.
The Company is working to stabilize pharmacy margins by contracting with partners that incorporate levers intended to lessen reimbursement risk. The Company remains engaged in procurement contract discussions and is pursuing other discussions with our partners to be compensated for services beyond pharmaceutical dispensing.
The Company has launched initial inventory management efforts, including the addition of new owned brand products, and plans to continue to increase owned brand item penetration, with merchandising planned to ramp up in the second half of the fiscal year. Certain of the Company's other retail initiatives have not generated the expected benefits and require further refinement.
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include: the impact of opioid-related claims and litigation settlements.
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include: the impact of adverse global macroeconomic conditions caused by factors including, among others, inflation, high interest rates, labor shortages, supply chain disruptions and pandemics like COVID-19 on our operations and financial results.
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include: changes in laws and regulations, including the tax law changes in the U.S. and the United Kingdom ("UK"); changes in recoverability of deferred tax assets.
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include: increased competition in retail-pharmacy.
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include: shifts in consumer behavior and buying preferences.
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include: adjustments to Centers for Medicare and Medicaid Services, Medicare Advantage and Medicare rates.
The Company continues to focus on strategic prioritization and reduction of capital expenditure. The decrease in capital expenditure represents project prioritization, including lower spend on property and pharmacy projects in U.S. Retail Pharmacy and more focused capital allocation in VillageMD.
Selling, general and administrative expenses as a percentage of sales were 16.9 percent for the three months ended November 30, 2024 and 17.9 percent for the three months ended November 30, 2023. The decrease was primarily driven by cost savings, partially offset by sale-leaseback gains in the year-ago period. This cost improvement was largely driven by initiatives to modernize demand forecasting and labor deployment tools.
The Company is now focused on managing and reducing its outstanding lease obligations through initiatives such as the Footprint Optimization Program. During the three months ended November 30, 2024, the Company reduced its outstanding lease liability by $652 million.
In fiscal 2024, the Company initiated a strategic and operational review of its business and strategy. In connection with the strategic review, the Company expects to focus on areas that build its core retail and specialty pharmacy business.
In fiscal 2024, the Company initiated a strategic and operational review of its business and strategy. In connection with the strategic review, the Company expects to leverage its current assets through capital-efficient businesses.
In fiscal 2024, the Company initiated a strategic and operational review of its business and strategy. In connection with the strategic review, the Company expects to expand its relationships with business partners.
During the three months ended November 30, 2024, the Company repaid in full the $1.2 billion of principal and interest on the 3.800% unsecured notes due 2024 which matured on November 18, 2024.
During the three months ended November 30, 2024, the Company also repaid $290 million of principal and interest on the final tranche of a $5.0 billion senior unsecured multi-tranche delayed draw term loan credit facility that matured on November 24, 2024.
The Company may continue to repurchase stock to offset anticipated dilution from equity incentive plans. The Company determines the timing and amount of repurchases, including repurchases to offset anticipated dilution from equity incentive plans, based on its assessment of various factors, including prevailing market conditions, alternate uses of capital, liquidity and the economic environment.
The Company is committed to reducing its environmental impact by managing and reducing its outstanding lease obligations through initiatives such as the Footprint Optimization Program.
The Company is committed to improving its governance practices by maintaining a strong balance sheet and financial flexibility.
The Company is committed to improving its social responsibility by reinvesting in its core strategies, including sustainable growth initiatives in the pharmacy and healthcare businesses.
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include: the impact of adverse global macroeconomic conditions caused by factors including, among others, inflation, high interest rates, labor shortages, supply chain disruptions and pandemics like COVID-19 on our operations and financial results.
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include: changes in trade tariffs, including trade relations between the U.S. and China, and international relations, including the UK's withdrawal from the European Union and its impact on our operations and prospects, and those of our customers and counterparties.
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include: the timing and severity of the cough, cold and flu season.