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What changed in Walgreens Boots Alliance's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Walgreens Boots Alliance's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+528 added−494 removedSource: 10-K (2024-10-15) vs 10-K (2023-10-12)

Top changes in Walgreens Boots Alliance's 2024 10-K

528 paragraphs added · 494 removed · 393 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

88 edited+18 added−24 removed63 unchanged
Biggest changeThe Company’s services help improve health outcomes for patients and manage costs for payors, including employers, managed care organizations, health systems, PBMs and the public sector. The Company utilizes its retail network as a channel to provide health and wellness services to its customers and patients, as illustrated by the Company’s ability to play a significant role in providing vaccinations.
Biggest changeSignificant investments have accelerated the Company’s customer-centric approach, with specific focus on transforming omni-channel capabilities and offerings across retail and healthcare. The Company’s services help improve health outcomes for patients and manage costs for payors, including employers, managed care organizations, health systems, PBMs and the public sector.
As an example, the Patient Protection and Affordable Care Act (the “ACA”) was enacted to help control federal healthcare spending, including for prescription drugs, in the U.S. These changes generally have been aimed at reducing Medicaid reimbursements in the U.S. State Medicaid programs are also expected to continue to seek reductions in reimbursements.
As an example, the Patient Protection and Affordable Care Act (the “ACA”) was enacted to help control federal healthcare spending, including for prescription drugs, in the U.S. These changes generally have been aimed at reducing Medicaid reimbursements in the U.S. and State Medicaid programs are also expected to continue to seek reductions in reimbursements.
Barra has served as a director of Cencora and from April 2013 to April 2019, served as a director of Assicurazioni Generali, the parent company of Generali Group, a global insurance group. Ms. Barra also serves as a director of a number of private companies, and, until February 2015, served as a director of Alliance Boots. Ms.
Barra has served as a director of Cencora and from April 2013 to April 2019, served as a director of Assicurazioni Generali, the parent company of Generali Group, a global insurance group. Ms. Barra also serves as a director of a number of private companies, and, until February 2015, served as a director of Alliance Boots.
In general, in the U.S., the specialty prescription business is also growing and generates higher sales dollars per prescription, but lower gross margin, as compared to generic prescription drugs. The Company expects that market demand, government regulation, third-party reimbursement policies, government contracting requirements and other pressures will continue to evolve across the industries in which the Company competes.
In the U.S., the specialty prescription business is also growing and generates higher sales dollars per prescription, but lower gross margin, as compared to generic prescription drugs. The Company expects that market demand, government regulation, third-party reimbursement policies, government contracting requirements and other pressures will continue to evolve across the industries in which the Company competes.
The Company provides customers with convenient, omni-channel access through its portfolio of retail and business brands, which includes retail drugstores Walgreens, Boots, Duane Reade, Benavides and Ahumada as well its product brands such as No7, Soap & Glory, Free & Pure, NICE!, Liz Earle, Botanics, Sleek MakeUP and YourGoodSkin.
The Company provides customers with convenient, omni-channel access through its portfolio of retail and business brands, which includes retail drugstores Walgreens, Boots, Duane Reade and Benavides as well its product brands such as No7, Soap & Glory, Free & Pure, NICE!, Liz Earle, Botanics, Sleek MakeUP and YourGoodSkin.
Previously, she served as the Chief Executive, Wholesale and Brands of Alliance Boots from September 2013 to December 2014 and Chief Executive of the Pharmaceutical Wholesale Division of Alliance Boots from January 2009 to September 2013, and before that, Wholesale & Commercial Affairs Director of Alliance Boots. Since January 2015, Ms.
Previously, she served as the Chief Executive Officer, Wholesale and Brands of Alliance Boots from September 2013 to December 2014 and Chief Executive Officer of the Pharmaceutical Wholesale Division of Alliance Boots from January 2009 to September 2013, and before that, Wholesale & Commercial Affairs Director of Alliance Boots. Since January 2015, Ms.
The Company is also subject to laws and regulations relating to licensing, tax, foreign trade, intellectual property, privacy and data protection, currency, political and other business restrictions.
The Company is also subject to laws and regulations relating to licensing, tax, foreign trade, intellectual property, privacy and data protection, cybersecurity, currency, political and other business restrictions.
In some cases, these possible adverse effects may be partially or entirely offset by controlling inventory costs and other expenses, dispensing more higher margin generics, finding new revenue streams through pharmacy services or other offerings and/or dispensing a greater volume of prescriptions. These industry dynamics and challenges have been ongoing and some have intensified in recent years.
In some cases, these possible adverse effects may be partially or entirely offset by controlling inventory costs and other expenses, dispensing a greater amount of higher margin generics, finding new revenue streams through pharmacy services or other offerings and/or dispensing a greater volume of prescriptions. These industry dynamics and challenges have been ongoing and some have intensified in recent years.
Additionally, payors who are looking to differentiate their benefit design and performance through enhanced network access, lower cost services and innovative programs that enhance clinical quality stand to benefit. See Note 17. Segment reporting to the Consolidated Financial Statements included in Part II, Item 8 herein for further information.
Additionally, payors who are looking to differentiate their benefit design and performance through enhanced network access, lower cost services and innovative programs that enhance clinical quality stand to benefit. See Note 16. Segment reporting to the Consolidated Financial Statements included in Part II, Item 8 herein for further information.
She served as Executive Vice President, President and Chief Executive of Global Wholesale and International Retail from December 2014 to June 2016.
She served as Executive Vice President, President and Chief Executive Officer of Global Wholesale and International Retail from December 2014 to June 2016.
It is estimated that nearly 90 percent of the U.S. population lives within five miles of a retail pharmacy. Prescription drugs play a significant role in healthcare and constitute a first line of treatment for many chronic and acute medical conditions.
It is estimated that approximately 90 percent of the U.S. population lives within five miles of a retail pharmacy. Prescription drugs play a significant role in healthcare and constitute a first line of treatment for many chronic and acute medical conditions.
Adjusted to 30-day equivalents, prescriptions filled were 1.2 billion in fiscal 2023. The Company fills prescriptions under Medicare, Medicaid and other publicly financed or sponsored health benefit and prescription drug plans and programs, including the federal 340B drug pricing program.
Adjusted to 30-day equivalents, prescriptions filled were 1.2 billion in fiscal 2024. The Company fills prescriptions under Medicare, Medicaid and other publicly financed or sponsored health benefit and prescription drug plans and programs, including the federal 340B drug pricing program.
The Company continuously evaluates its wellness offerings through competitive benchmarking and bi-annual employee surveys. Certain information related to retirement related benefit plans is included in Note 14. Retirement benefits, to the Consolidated Financial Statements included in Part II, Item 8 for further information.
The Company continuously evaluates its wellness offerings through competitive benchmarking and bi-annual employee surveys. Certain information related to retirement related benefit plans is included in Note 13. Retirement benefits, to the Consolidated Financial Statements included in Part II, Item 8 for further information.
International The International segment consists of pharmacy-led health and beauty retail businesses outside the U.S. and the pharmaceutical wholesaling and distribution business in Germany. Pharmacy-led health and beauty retail businesses include Boots branded stores in the United Kingdom (“UK”), the Republic of Ireland and Thailand, the Benavides brand in Mexico and the Ahumada brand in Chile.
International The International segment consists of pharmacy-led health and beauty retail businesses outside the U.S. and the pharmaceutical wholesaling and distribution business in Germany. Pharmacy-led health and beauty retail businesses include Boots branded stores in the United Kingdom (“UK”), the Republic of Ireland and Thailand and the Benavides brand in Mexico.
The program allows members to receive discounts, in addition to earning Walgreens Cash rewards on storewide purchases. The cash benefit is applied as the customer chooses, not just to future transactions at Walgreens but also in support of the customer's favorite charity or community cause.
The program allows members to receive discounts, in addition to earning Walgreens Cash rewards on storewide purchases. The cash benefit is applied as the customer chooses, not just to future transactions at Walgreens but also in support of the customer ’ s favorite charity or community cause.
Sales where reimbursement is received from managed care organizations, governmental agencies, PBMs and private insurance were approximately 97% of the segment’s fiscal 2023 Pharmacy sales.
Sales where reimbursement is received from managed care organizations, governmental agencies, PBMs and private insurance were approximately 97% of the segment’s fiscal 2024 Pharmacy sales.
The Company’s size, scale and expertise are instrumental in helping expand the supply of, and helping to address the rising cost of prescription drugs in the U.S. and worldwide. A trusted, global innovator in retail pharmacy with approximately 13,000 locations across the U.S., Europe and Latin America, Walgreens Boots Alliance plays a critical role in the healthcare ecosystem.
The Company’s size, scale and expertise are instrumental in helping expand the supply of, and helping to address the rising cost of prescription drugs in the U.S. and worldwide. A trusted, global innovator in retail pharmacy with approximately 12,500 locations across the U.S., Europe and Latin America, Walgreens Boots Alliance plays a critical role in the healthcare ecosystem.
The Company expects these pressures to continue. The Company has also worked to develop and expand its relationships with commercial third-party payors to enable new and/or improved market access via participation in pharmacy provider networks they offer. The prescription volume impact of new agreements and relationships typically is incremental over time.
The Company has also worked to develop and expand its relationships with commercial third-party payors to enable new and/or improved market access via participation in pharmacy provider networks they offer. The prescription volume impact of new agreements and relationships typically is incremental over time.
The number of myWalgreens members continues to grow and as of August 31, 2023, totaled approximately 113 million. The Walgreens Find Care platform also includes telehealth service providers, connecting patients and customers with options to access convenient and affordable care from their mobile devices.
The number of myWalgreens members continues to grow and as of August 31, 2024, totaled approximately 124 million. The Walgreens Find Care platform also includes telehealth service providers, connecting patients and customers with options to access convenient and affordable care from their mobile devices.
In the UK, through the boots.com website and integrated mobile application, the ‘click and collect’ service normally allows customers to order from a range of over 41,000 products online and collect the following day from approximately 75% of the UK’s retail stores.
In the UK, through the boots.com website and integrated mobile application, the ‘click and collect’ service normally allows customers to order from a range of over 43,000 products online and collect the following day from approximately 77% of the UK’s retail stores.
WBA Fiscal 2023 Form 10-K 7 Table of Contents Regulation In the countries in which the Company does business, the Company is subject to national, state and local laws, regulations and administrative practices concerning healthcare, retail and wholesale pharmacy operations, including regulations relating to the Company’s filling of prescriptions under Medicare, Medicaid and other publicly financed or sponsored health benefit plan and prescription drug plans and programs including the federal 340B drug pricing program; regulations prohibiting kickbacks, beneficiary inducement and the submission of false claims; the Stark Law; the Health Insurance Portability and Accountability Act (“HIPAA”); the ACA; the IRA; licensure and registration requirements concerning the operation of pharmacies and the practice of pharmacy; and regulations of the U.S.
Regulation In the countries in which the Company does business, the Company is subject to national, state and local laws, regulations and administrative practices concerning healthcare, retail and wholesale pharmacy operations, including regulations relating to the Company’s filling of prescriptions under Medicare, Medicaid and other publicly financed or sponsored health benefit plan and prescription drug plans and programs including the federal 340B drug pricing program; regulations prohibiting kickbacks, beneficiary inducement and the submission of false claims; the Stark Law; the Health Insurance Portability and Accountability Act (“HIPAA”); the ACA; the IRA; licensure and registration requirements concerning the operation of pharmacies and the practice of pharmacy; and regulations of the U.S.
Our principal executive offices are located at 108 Wilmot Road, Deerfield, Illinois 60015. Our common stock trades on the Nasdaq Stock Market under the symbol “WBA”. Walgreens Boots Alliance is one of the largest retail pharmacy, health and daily living destinations across the United States (“U.S.”) and Europe with sales of $139.1 billion in fiscal 2023.
Our principal executive offices are located at 108 Wilmot Road, Deerfield, Illinois 60015. Our common stock trades on the Nasdaq Stock Market under the symbol “WBA”. Walgreens Boots Alliance is one of the largest retail pharmacy, health and daily living destinations across the United States (“U.S.”) and Europe with sales of $147.7 billion in fiscal 2024.
The components of the segment’s fiscal year sales were as follows: Fiscal 2023 Fiscal 2022 Fiscal 2021 Pharmacy 17 % 17 % 19 % Retail 33 % 32 % 30 % Wholesale 51 % 51 % 51 % Total 100 % 100 % 100 % The segment’s Pharmacy sales, gross margin and gross profit dollars are impacted by governmental agencies and other third-party payors seeking to minimize increases in the costs of healthcare, including pharmaceutical drug reimbursement rates.
The components of the segment’s fiscal year sales were as follows: Fiscal 2024 Fiscal 2023 Fiscal 2022 Pharmacy 15 % 17 % 17 % Retail 34 % 33 % 32 % Wholesale 51 % 51 % 51 % Total 100 % 100 % 100 % The segment’s Pharmacy sales, gross margin and gross profit dollars are impacted by governmental agencies and other third-party payors seeking to minimize increases in the costs of healthcare, including pharmaceutical drug reimbursement rates.
The Company has been recognized as an industry leader in several areas, including being named Disability:IN’s Employer of the Year for 2023 and for its commitment to operating sustainably the Company was named to the Dow Jones Sustainability Indices (“DJSI”) North American Index in 2022, for the third consecutive year.
The Company has been recognized as an industry leader in several areas, including being named Disability:IN’s Employer of the Year for 2023 and, for its commitment to operating sustainably the Company was named to the Dow Jones Sustainability Indices (“DJSI”) North America Index in 2023, for the fourth consecutive year.
Recent Developments The information set forth in Part II, Item 7 of this Form 10-K under the caption “Recent Developments” is incorporated herein by reference. Segments The Company's operations are conducted through three reportable segments: • U.S. Retail Pharmacy, • International, and • U.S. Healthcare.
Recent Developments The information set forth in Part II, Item 7 of this Form 10-K under the caption “Recent Developments” is incorporated herein by reference. Segments The Company’s operations are conducted through three reportable segments: • U.S. Retail Pharmacy, • International, and • U.S. Healthcare. In fiscal 2024, our segment sales were: U.S.
Mahajan served as Vice President, Assistant Global Controller from October 2019 to July 2021 and as Vice President, Global Reporting and Technical Accounting from February 2016 to September 2019. Prior to joining the Company, Mr.
Mahajan served as Senior Vice President, Global Controller and Chief Accounting Officer from July 2021 to July 2023, and as Assistant Global Controller from October 2019 to July 2021 and as Vice President, Global Reporting and Technical Accounting from February 2016 to September 2019. Prior to joining the Company, Mr.
The Company fills prescriptions for many state and federal governmental health care programs, including Medicare Part D plans and Medicaid public assistance programs contributing to approximately 23% and 6%, respectively, of the segment’s fiscal 2023 sales. The Company's myWalgreens Credit Card program features the myWalgreens Mastercard and the myWalgreens Credit Card.
The Company fills prescriptions for many state and federal governmental health care programs, including Medicare Part D plans and Medicaid public assistance programs contributing to approximately 29% and 5%, respectively, of the segment’s fiscal 2024 sales. The Company’s myWalgreens Credit Card program features the myWalgreens Mastercard and the myWalgreens Credit Card.
Seasonal variations in business The Company’s business is affected by a number of factors including, among others, the severity of COVID-19 and the efficacy of current vaccines, its sales performance during holiday periods (including particularly the winter holiday season) and during the cough, cold and flu season (the timing and severity of which is difficult to predict), significant weather conditions, the timing of its own or competitor discount programs and pricing actions and the timing of changes in levels of reimbursement from governmental agencies and other third-party payors.
WBA Fiscal 2024 Form 10-K 6 Table of Co n tents Seasonal variations in business The Company’s business is affected by a number of factors including, among others, the severity of COVID-19 and the efficacy of current vaccines, its sales performance during holiday periods (including particularly the winter holiday season) and during the cough, cold and flu season (the timing and severity of which is difficult to predict), significant weather conditions, the timing of its own or competitor discount programs and pricing actions and the timing of changes in levels of reimbursement from governmental agencies and other third-party payors.
Further, in the U.S., some form of insurance coverage for individuals for prescription drugs is expanding, including for the “baby boomers”, who are becoming increasingly eligible for federally funded Medicare Part D prescription benefits. WBA Fiscal 2023 Form 10-K 1 Table of Contents The retail pharmacy industry across the globe relies significantly on private and governmental third-party payors.
Further, in the U.S., some form of insurance coverage for individuals for prescription drugs is expanding, including for the “baby boomers,” who are becoming increasingly eligible for federally funded Medicare Part D prescription benefits. WBA Fiscal 2024 Form 10-K 1 Table of Co n tents The retail pharmacy industry across the globe relies significantly on private and governmental third-party payors.
Employees As of August 31, 2023, the Company employed approximately 331,000 persons globally, of which approximately 125,000 were part-time employees working less than 30 hours per week. Employees based in the U.S. and the UK account for 261,000 and 51,000 of the Company’s total workforce, respectively. The foregoing does not include employees of equity method investments.
Employees As of August 31, 2024, the Company employed approximately 312,000 persons globally, of which approximately 119,000 were part-time employees working less than 30 hours per week. Employees based in the U.S. and the UK account for 245,000 and 51,000 of the Company’s total workforce, respectively. The foregoing does not include employees of equity method investments.
Segment reporting, to the Consolidated Financial Statements included in Part II, Item 8 for further information.
See Note 16. Segment reporting, to the Consolidated Financial Statements included in Part II, Item 8 for further information.
These cards are the first ever of their kind to reward more personalized wellbeing choices and offer industry-leading rewards at Walgreens locations, Walgreens.com, Duane Reade stores, via the Walgreens mobile app, and wherever Mastercard is accepted. WBA Fiscal 2023 Form 10-K 4 Table of Contents Cencora supplies and distributes substantially all generic and branded pharmaceutical products to the segment’s pharmacies.
These cards are the first ever of their kind to reward more personalized wellbeing choices and offer industry-leading rewards at Walgreens locations, Walgreens.com, Duane Reade stores, via the Walgreens mobile app, and wherever Mastercard is accepted. Cencora supplies and distributes substantially all generic and branded pharmaceutical products to the segment’s pharmacies.
Healthcare segment is a consumer-centric, technology enabled healthcare business that is powered by a nationally scaled, locally delivered healthcare platform, organically developed clinical programs and strategic collaboration with WBA's majority-owned businesses, including Village Practice Management Company, LLC (“VillageMD”), Shields Health Solutions Parent, LLC (“Shields”) and CCX Next, LLC (“CareCentrix”).
Healthcare segment is a healthcare business that is powered by a nationally scaled, locally delivered healthcare platform, organically developed clinical programs and strategic collaboration with WBA ’ s majority-owned businesses, including Village Practice Management Company, LLC (“VillageMD”), Shields Health Solutions Parent, LLC (“Shields”) and CCX Next, LLC (“CareCentrix”).
Previously, he served as Executive Chairman of Alliance Boots from July 2007 to December 2014. Prior to that, Mr. Pessina served as Executive Deputy Chairman of Alliance Boots. Prior to the merger of Alliance UniChem and Boots Group, Mr. Pessina was Executive Deputy Chairman of Alliance UniChem, previously having been its Chief Executive for three years through December 2004. Mr.
Pessina served as Executive Deputy Chairman of Alliance Boots. Prior to the merger of Alliance UniChem and Boots Group, Mr. Pessina was Executive Deputy Chairman of Alliance UniChem, previously having been its Chief Executive for three years through December 2004. Mr.
Walgreens Boots Alliance has a presence in 9 countries and employs more than 331,000 people. In addition, Walgreens Boots Alliance is also one of the world’s largest purchasers of prescription drugs and many other health and well-being products.
Walgreens Boots Alliance has a presence in 8 countries and employs approximately 312,000 people. In addition, Walgreens Boots Alliance is also one of the world’s largest purchasers of prescription drugs and many other health and well-being products.
WBA Fiscal 2023 Form 10-K 6 Table of Contents The components of the segment’s fiscal year sales were as follows: Fiscal 2023 Fiscal 2022 VillageMD 70 % 84 % Shields 7 % 16 % CareCentrix 23 % — % Total 100 % 100 % Intellectual property and licenses The Company markets products and services under various trademarks, trade dress and trade names and relies on a combination of patent, copyright, trademark, service mark and trade secret laws, as well as contractual restrictions to establish and protect its proprietary rights.
The components of the segment’s fiscal year sales were as follows: Fiscal 2024 Fiscal 2023 VillageMD 75 % 70 % Shields 7 % 7 % CareCentrix 17 % 23 % Total 100 % 100 % Intellectual property and licenses The Company markets products and services under various trademarks, trade dress and trade names and relies on a combination of patent, copyright, trademark, service mark and trade secret laws, as well as contractual restrictions to establish and protect its proprietary rights.
As a leader in the retail pharmacy industry and as a retailer of general merchandise, the Company competes with various local, regional, national and global retailers, including chain and independent pharmacies, mail order prescription providers, grocery stores, convenience stores, mass merchants, online and omni-channel pharmacies and retailers, warehouse clubs, dollar stores and other discount merchandisers.
WBA Fiscal 2024 Form 10-K 7 Table of Co n tents As a leader in the retail pharmacy industry and as a retailer of general merchandise, the Company competes with various local, regional, national and global retailers, including chain and independent pharmacies, mail order prescription providers, grocery stores, convenience stores, mass merchants, online and omni-channel pharmacies and retailers, warehouse clubs, dollar stores and other discount merchandisers.
In fiscal 2023, substantially all of our retail pharmacy and healthcare services sales were to customers covered by third-party payors (e.g., PBMs, insurance companies and governmental agencies) that agree to pay for all or a portion of a customer's eligible prescription purchases. Three third-party payors accounted for approximately 33% of the Company’s consolidated sales in fiscal 2023. See Note 17.
In fiscal 2024, substantially all of our retail pharmacy and healthcare services sales were to customers covered by third-party payors (e.g., PBMs, insurance companies and governmental agencies) that agree to pay for all or a portion of a customer ’ s eligible prescription purchases. Three third-party payors accounted for approximately 34% of the Company’s consolidated sales in fiscal 2024.
The Boots omni-channel offering is differentiated from that of competitors due to the product brands the Company owns, such as No7, Liz Earle, Soap & Glory, Botanics, Sleek MakeUp, Boots Pharmaceuticals and ‘only at Boots’ exclusive products, together with its long established reputation for trust and customer care.
The Boots omni-channel offering is differentiated from that of competitors due to the product brands the Company owns, such as No7, Liz Earle, Soap & Glory, Botanics, Sleek MakeUp and Boots own label of health, beauty and baby products, together with its long established reputation for trust and customer care.
Retail Pharmacy $110.3 billion, International $22.2 billion and U.S. Healthcare $6.6 billion. Additional information relating to our segments is included in Management’s discussion and analysis of financial condition and results of operations in Part II, Item 7, and in Note 17. Segment reporting and Note 18. Sales to the Consolidated Financial Statements included in Part II, Item 8. U.S.
Retail Pharmacy $115.8 billion, International $23.6 billion and U.S. Healthcare $8.3 billion. Additional information relating to our segments is included in Management’s discussion and analysis of financial condition and results of operations in Part II, Item 7, and in Note 16. Segment reporting to the Consolidated Financial Statements included in Part II, Item 8. U.S. Retail Pharmacy The Company’s U.S.
Pessina also serves on the Board of Directors of a number of private companies, and, from 2000 to 2017, served on the Board of Directors of Galenica AG, a publicly-traded Swiss healthcare group. Ms. Graham, has served as the Company’s Interim Chief Executive Officer since September 2023. Ms.
Pessina also serves on the Board of Directors of a number of private companies, and, from 2000 to 2017, served on the Board of Directors of Galenica AG, a publicly-traded Swiss healthcare group. Mr. Wentworth has served as Chief Executive Officer and as a member of the Board since October 2023.
Retail Pharmacy The Company's U.S. Retail Pharmacy segment includes the Walgreens business which is comprised of the operations of retail drugstores, health and wellness services, specialty and home delivery pharmacy services, and its equity method investment in Cencora, Inc. (“Cencora”), formerly known as AmerisourceBergen Corporation.
Retail Pharmacy segment includes the Walgreens business which is comprised of the operations of retail drugstores, health and wellness services, specialty and home delivery pharmacy services, and its equity method investment in Cencora, Inc. (“Cencora”).
The components of the segment’s fiscal year sales were as follows: Fiscal 2023 Fiscal 2022 Fiscal 2021 Pharmacy 74 % 74 % 76 % Retail 26 % 26 % 24 % Total 100 % 100 % 100 % The Company filled 801 million prescriptions (including vaccinations) in the segment in fiscal 2023.
The components of the segment’s fiscal year sales were as follows: Fiscal 2024 Fiscal 2023 Fiscal 2022 Pharmacy 77 % 74 % 74 % Retail 23 % 26 % 26 % Total 100 % 100 % 100 % The Company filled 796 million prescriptions (including vaccinations) in the segment in fiscal 2024.
Virgin Islands. The Company operated 8,701 retail stores in the segment as of August 31, 2023. The principal retail pharmacy brands in the segment are Walgreens and Duane Reade.
Virgin Islands. The Company operated 8,560 retail and healthcare locations in the segment as of August 31, 2024. The principal retail pharmacy brands in the segment are Walgreens and Duane Reade.
The segment provides customers with convenient, omni-channel access to consumer goods and services, including own branded general merchandise, such as NICE!, Free & Pure, No7, and Soap & Glory, as well as pharmacy and health and wellness services in communities across the U.S.
WBA Fiscal 2024 Form 10-K 3 Table of Co n tents The segment provides customers with convenient, omni-channel access to consumer goods and services, including own branded general merchandise, such as NICE!, Free & Pure, No7, and Soap & Glory, as well as pharmacy and health and wellness services in communities across the U.S.
Healthcare segment currently consists of a majority position in 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; CareCentrix, a participant in the post-acute and home care management sectors, and the Walgreens Health organic business that contracts with payors and providers to deliver clinical healthcare services to their members and members’ caregivers through both digital and physical channels.
Healthcare segment currently consists of a majority position in 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; as well as Shields, a specialty pharmacy integrator and accelerator for hospitals; and CareCentrix, a participant in the post-acute and home care management sectors, and the Walgreens Health organic business that contracts with different participants in the healthcare ecosystem to provide commercial and clinical healthcare services.
The Company is working to build a personalized, omni-channel experience across a world-class healthcare services organization, investing in primary care and the post-acute care management journey. The U.S. Healthcare segment endeavors to improve health outcomes and expand digital-forward services to make healthcare more accessible.
The Company is working to build a personalized, omni-channel experience across a world-class healthcare services organization across critical patient touch points such as the post-acute care management journey. The U.S. Healthcare segment endeavors to improve health outcomes and make healthcare more accessible.
The Company believes the long-term outlook for prescription drug utilization is strong due, in part, to a number of factors, including aging populations, higher prevalence of chronic disease, increases in availability of generic drugs, and the continued development of cost-effective innovative drug therapies.
The Company believes the long-term outlook for prescription drug utilization is strong due, in part, to a number of factors, including aging populations, higher prevalence of chronic disease, increases in availability of generic drugs, the continued development of cost-effective innovative drug therapies, and further brand innovation such as the rise and growth of Glucagon-Like Peptide-1s (also known as “GLP-1s”).
Healthcare segment, created at the beginning of fiscal 2022, is a consumer-centric, technology-enabled healthcare business that engages consumers through a personalized, omni-channel experience across the care journey. The U.S. Healthcare segment delivers improved health outcomes and lower costs for payors and providers by delivering care through owned and partnered assets. The U.S.
Healthcare segment engages consumers through a personalized, omni-channel experience across the care journey. The U.S. Healthcare segment delivers improved health outcomes and lower costs for payors and providers by delivering care through owned and partnered assets. The U.S.
The Company also provides racial, ethnic, and gender composition of its U.S. work force through the Equal Employment Opportunity 2022 Employer Information Report (EEO-1) available on the Company’s website and filed with the Equal Employment Opportunity Commission (EEOC).
The Company provides information on its DE&I and ESG initiatives, outcomes, and impacts through its annual ESG report. The Company also provides racial, ethnic, and gender composition of its U.S. work force through the Equal Employment Opportunity 2022 Employer Information Report (“EEO-1”) available on the Company’s website and filed with the Equal Employment Opportunity Commission (“EEOC”).
Agreements with these payors are regularly subject to expiration, termination or renegotiation. In addition, plan changes with rate adjustments often occur in January and the Company’s reimbursement arrangements may provide for rate adjustments at prescribed intervals during their term. The Company experienced lower reimbursement rates in fiscal 2023 as compared to the same period in the prior year.
In addition, plan changes with rate adjustments often occur in January and the Company’s reimbursement arrangements may provide for rate adjustments at prescribed intervals during their term. The Company experienced lower reimbursement rates in fiscal 2024 as compared to the prior year. The Company expects these pressures to continue.
The Company offers numerous resources and programs to attract, engage, develop, advance and retain colleagues. Training and development programs provide employees the support they need to perform in their current roles while planning and preparing for future opportunities.
Several levels of employees participate in the Company’s annual performance management process to create development plans that support their particular career objectives. The Company offers numerous resources and programs to attract, engage, develop, advance and retain colleagues. Training and development programs provide employees the support they need to perform in their current roles while planning and preparing for future opportunities.
The Company is a market leader in the U.S. and, as of August 31, 2023, approximately 78% of the population of the U.S. lived within five miles of a Walgreens or Duane Reade retail pharmacy.
The Company is a market leader in the U.S. and, as of August 31, 2024, approximately 78% of the population of the U.S. lived within five miles of a Walgreens or Duane Reade retail pharmacy. The Company is focused on creating a more modern pharmacy aligned to a wider range of healthcare services.
WBA Fiscal 2023 Form 10-K 2 Table of Contents The Company's U.S.
WBA Fiscal 2024 Form 10-K 2 Table of Co n tents The Company’s U.S.
Mahajan served in positions of increasing responsibility with GE Capital, a former subsidiary of General Electric Company, most recently serving as Controller at GE Capital Americas from March 2011 until January 2016. Mr. Gates has served as Senior Vice President and Chief Pharmacy Officer, Walgreens Co., since March 2023. Mr.
Mahajan served in positions of increasing responsibility with GE Capital, a former subsidiary of General Electric Company, most recently serving as Controller at GE Capital Americas from March 2011 until January 2016. Ms. Barra has served as Chief Operating Officer, International since April 2021. Ms. Barra served as Co-Chief Operating Officer from June 2016 to April 2021.
In addition, the Inflation Reduction Act of 2022 (“IRA”), which began to take effect in 2023, includes policies designed to have a direct impact on drug prices and reduce drug spending by the federal government. The IRA requires drug manufacturers to pay rebates to Medicare if they increase prices faster than the inflation rate for drugs prescribed for Medicare beneficiaries.
In addition, the Inflation Reduction Act of 2022 (the “IRA”), which began to take effect in 2023, includes policies designed to have a direct impact on drug prices and reduce drug spending by the federal government.
The Company uses various inventory management techniques, including demand forecasting and planning and various forms of replenishment management. Its working capital needs typically are greater in the months leading up to the winter holiday season. The Company generally finances its inventory and expansion needs with internally-generated funds and short-term debt.
Working capital practices Effective inventory management is important to the Company’s operations. The Company uses various inventory management techniques, including demand forecasting and planning and various forms of replenishment management. Its working capital needs typically are greater in the months leading up to the winter holiday season.
Further consolidation among generic manufacturers coupled with changes in the number of major brand name drugs anticipated to undergo a conversion from branded to generic status may also result in gross margin pressures within the industry. The Company continuously faces reimbursement pressure from PBMs, government, health maintenance organizations, managed care organizations and other commercial third-party payors.
Further consolidation among generic manufacturers coupled with changes in the number of major brand name drugs anticipated to undergo a conversion from branded to generic status may also result in gross margin pressures within the industry.
Pessina has served as Executive Chairman of the Board since March 2021. Mr. Pessina served as Chief Executive Officer from July 2015 to March 2021 and as Executive Vice Chairman from January 2015 to March 2021. He also served as Acting Chief Executive Officer from January 2015 to July 2015.
Pessina served as Chief Executive Officer from July 2015 to March 2021 and as Executive Vice Chairman from January 2015 to March 2021. He also served as Acting Chief Executive Officer from January 2015 to July 2015. Previously, he served as Executive Chairman of Alliance Boots from July 2007 to December 2014. Prior to that, Mr.
WBA Fiscal 2023 Form 10-K 8 Table of Contents Human Capital Management The Company’s purpose is to help people lead more joyful lives through better health.
Human Capital Management The Company’s purpose is to help people lead more joyful lives through better health.
Sales for these businesses are principally derived from the sale of prescription drugs and health and wellness, beauty, personal care and other consumer products. The Company operated 3,960 retail stores in the segment as of August 31, 2023 (see Item 2. Properties, for information regarding geographic coverage) and has grown its omni-channel platform, including its online presence, in recent years.
Sales for these businesses are principally derived from the sale of prescription drugs and health and wellness, beauty, personal care and other consumer products. The Company operated 3,688 retail stores and opticians locations in the segment as of August 31, 2024 (see Item 2.
The Company has a Health, Safety and Environmental Committee which works to continuously improve the management of health and safety. To create a safe and productive workplace, employees across the Company are offered avenues to report incidents including calling a toll-free, confidential hotline, submitting an online report, emailing the compliance officer and contacting human resources.
Monthly reports are provided to select WBA executives, offering insights into health and safety incidents across each operating segment. To create a safe and productive workplace, employees across the Company are offered avenues to report incidents including calling a toll-free, confidential hotline, submitting an online report, emailing the compliance officer and contacting human resources.
The Company employs more than 85,000 healthcare service providers, including pharmacists, pharmacy technicians, nurse practitioners and other health related professionals.
The Company also provides specialty pharmacy and mail services and offers certain other health and wellness services throughout the U.S. The Company employs more than 89,000 healthcare service providers, including pharmacists, pharmacy technicians, nurse practitioners and other health related professionals.
Further, the segment also has a wholesale business in Germany with 32 distribution centers which distribute prescription medicines to pharmacies and other similar healthcare facilities. The segment’s sales are subject to the influence of seasonality, with the second fiscal quarter typically the strongest as a result of the winter holiday period.
Further, the segment also has a wholesale business in Germany with 30 distribution centers which distribute prescription medicines to pharmacies and other similar healthcare facilities.
This includes building a differentiated value-based care delivery model that successfully integrates pharmacy and medical care for a value-based care market that is expected to increase significantly by 2027. The Company’s portfolio of assets is well suited to meet the demands of a healthcare market that is quickly moving from fee for service to value-based.
This includes building a differentiated value-based care delivery model that successfully integrates pharmacy and medical care for a value-based care market that is expected to increase significantly by 2027. The Company is positioned to leverage its core assets and competencies in pharmacy, retail and consumer engagement, along with a range of healthcare assets and portfolio investments.
Mahajan is the Senior Vice President and Interim Global Chief Financial Officer, as of July, 2023. He previously had served as Senior Vice President, Global Controller and Chief Accounting Officer since July 2021. Mr.
He previously had served as Senior Vice President and Interim Chief Financial Officer from July 2023 to March 2024. Mr.
The Company does not believe that the loss of any one supplier or group of suppliers under common control would have a material adverse effect on its business or that of any of its segments. Working capital practices Effective inventory management is important to the Company’s operations.
Sources and availability of raw materials Inventories are purchased from numerous domestic and foreign suppliers. The Company does not believe that the loss of any one supplier or group of suppliers under common control would have a material adverse effect on its business or that of any of its segments.
DE&I and ESG A diverse, equitable and inclusive organization is an essential part of the Company’s business strategy, as we believe it positively impacts Company performance, growth and employee engagement.
DE&I and ESG A diverse, equitable and inclusive organization is a part of the Company’s business strategy, as we believe it positively impacts Company performance, growth and employee engagement. The Company’s policies strictly prohibit any form of discrimination or racial profiling, and the Company has several training programs in place which help identify and eliminate unconscious bias.
The mechanics of the rebate calculation mimic those of the Medicaid rebate, but the expansion of inflation-based rebates may further complicate pricing strategies, particularly with the availability of our new medications.
The IRA requires drug manufacturers to pay rebates to Medicare if they increase prices faster than the inflation rate for drugs prescribed for Medicare beneficiaries. The mechanics of the rebate calculation mimic those of the Medicaid reimbursement, but the expansion of inflation-based rebates may further complicate pricing strategies, particularly with the availability of new medications.
Talent management and engagement The Company has a talent management process that is designed to identify and assess talent across the organization and provide equal and consistent opportunities for employees to develop their skills. Several levels of employees participate in the Company’s annual performance management process to create development plans that support their particular career objectives.
WBA Fiscal 2024 Form 10-K 8 Table of Co n tents Talent management and engagement The Company has a talent management process that is designed to identify and assess talent across the organization and provide equal and consistent opportunities for employees to develop their skills.
In addition, in many European countries, the government provides or subsidizes healthcare to consumers and regulates pharmaceutical prices, patient eligibility and reimbursement levels to help control costs for the government-sponsored healthcare system. Changes in law or regulation can also impact reimbursement rates and terms.
In addition, in many European countries, the government provides or subsidizes healthcare to consumers and regulates pharmaceutical prices, patient eligibility and reimbursement levels to help control costs for the government-sponsored healthcare system. Another notable development in Europe came in January 2024, when the National Health Service (“NHS”) announced the rollout of its Pharmacy First Service.
Gates serves as a current board member with the National Association of Chain Drug Stores (NACDS), iA Rx and Pharmacy Quality Alliance (PQA). Ms. Brown has served as Senior Vice President and President of Retail Products and Chief Customer Officer, Walgreen Co. since September 2022. Ms.
Gates serves as a current board member with the National Association of Chain Drug Stores (“NACDS”), Innovation Associates, Inc. and Pharmacy Quality Alliance (“PQA”). Ms. Leonard has served as Senior Vice President and Chief Corporate Affairs Officer since January 2024. Ms. Leonard served as Senior Vice President and Chief Communications Officer from June 2023 to January 2024.
For further information, see the liquidity and capital resources section in Management’s discussion and analysis of financial condition and results of operations in Part II, Item 7. Customers The Company sells to numerous retail and wholesale customers. The Company also provides healthcare services to healthcare payors’ eligible members, cash-pay patients, and health systems and provider groups.
The Company generally finances its inventory with internally-generated funds, short term debt and monetization of investments and other assets. For further information, see the liquidity and capital resources section in Management’s discussion and analysis of financial condition and results of operations in Part II, Item 7. Customers The Company sells to numerous retail and wholesale customers.
Additionally, through our key collaborations, we aim to develop new healthcare delivery models and to improve the speed, efficiency and safety of the prescription fulfillment process.
The Company utilizes its retail network as a channel to provide health and wellness services to its customers and patients, as illustrated by the Company’s ability to play a significant role in providing vaccinations. Additionally, through our key collaborations, we aim to develop new healthcare delivery models and to improve the speed, efficiency and safety of the prescription fulfillment process.
Brown has served as President of Retail Products and Chief Customer Officer, Walgreen Co. since November 2021. She was previously Chief Executive Officer of the American Diabetes Association (“ADA”) from June 2018 to November 2021. Prior to the ADA, Ms.
Prior to joining the Company, she was Chief Executive Officer of the American Diabetes Association (“ADA”), a nonprofit organization focused on education and research related to diabetes, from June 2018 to November 2021. Prior to the ADA, Ms.
No single customer accounted for more than 10% of the Company’s consolidated sales for any of the periods presented.
The Company also provides healthcare services to healthcare payors’ eligible members, cash-pay patients, and health systems and provider groups. No single customer accounted for more than 10% of the Company’s consolidated sales for any of the periods presented.
WBA Fiscal 2023 Form 10-K 5 Table of Contents The Boots Advantage Card loyalty program, where customers earn points on purchases for redemption at a later date, continues to be a key element of the Boots offering.
The Boots Advantage Card loyalty program, where customers earn points on purchases for redemption at a later date, continues to be a key element of the Boots offering. As of August 31, 2024, the number of active Boots Advantage Card members (members who have used their card in the last six months) totaled approximately 15 million.
Information about our executive officers The following table sets forth, for each person currently serving as an executive officer of the Company, the name, age (as of October 12, 2023) and office(s) held by such person: Name Age Office(s) held Stefano Pessina 82 Executive Chairman of the Board Ginger L.
WBA Fiscal 2024 Form 10-K 9 Table of Co n tents Information about our executive officers The following table sets forth, for each person currently serving as an executive officer of the Company, the name, age (as of October 15, 2024) and office(s) held by such person: Name Age Office(s) held Stefano Pessina 83 Executive Chairman of the Board Tim Wentworth 64 Chief Executive Officer Manmohan Mahajan 46 Executive Vice President and Global Chief Financial Officer Ornella Barra 70 Chief Operating Officer, International Mary Langowski 47 Executive Vice President and President, U.S.
Prior to that Mr. Heckman served as Vice President, Assistant Global Controller from July 2021 until July 2023 and Vice President, Controller Walgreen Co. from September 2016 until July 2021. Prior to joining the Company, Mr. Heckman held various roles with Exelon Corporation, Ernst & Young LLP and Grant Thornton LLP. WBA Fiscal 2023 Form 10-K 12 Table of Contents
Heckman served as Vice President, Interim Global Controller and Chief Accounting Officer from July 2023 until March 2024 and as Vice President, Assistant Global Controller from July 2021 until July 2023 and Vice President, Controller Walgreen Co. from September 2016 until July 2021. Prior to joining the Company, Mr.
Brown was Senior Vice President, Operations and Chief Experience Officer for Sam’s Club, a division of Walmart Inc., from 2014 to June 2018. Prior to that, she served in leadership roles with RAPP Dallas, a data-driven integrated marketing agency, Direct Impact, a direct marketing agency, and Advanced Micro Devices.
Brown was Senior Vice President, Operations and Chief Experience Officer for Sam’s Club, a division of Walmart Inc., from 2014 to June 2018 where she was responsible for creating meaningful member experiences, directing member strategy, marketing and branding, go-to-market execution, data and analytics and membership operations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeHealthcare segment include, but are not limited to, the following: • Ability to recruit, retain and grow our network of credentialed, high-quality physicians, physician assistants and nurse practitioners to provide clinical services in highly competitive markets for talent • Dependence on a concentrated number of key health plan customers; • Quality of the information received about plan members of such health plans for whom we will seek to provide in-home evaluations and other services, and the regulatory restrictions and requirements associated with directly contacting plan members; • Ability to perform and ensure the quality of health risk assessments; • Regulatory and business risks associated with participation in certain government healthcare programs; • Health reform initiatives and changes in the rules governing government healthcare programs, including rules related to the use of in-home health risk assessments; • Ability to attract new Medicare-eligible patients and credentialed, high-quality physicians and other providers for senior-focused primary care in a highly competitive market for such patients and providers; • Satisfying the enrollment requirements under government healthcare programs for physicians and other providers in a timely manner; • Dependence on revenue from Medicare or Medicare Advantage plans, which subjects our businesses to reductions in Medicare reimbursement rates or changes in the rules governing the Medicare program; • Submission of inaccurate, incomplete or erroneous data, including risk adjustment data, to health plans and government payors could result in inaccuracies in the revenue our businesses record or receipt of overpayments, which may subject our businesses to repayment obligations and penalties; WBA Fiscal 2023 Form 10-K 17 Table of Contents • Geographic concentration of our primary centers; and • Laws regulating the corporate practice of medicine and the associated agreements entered into with physician practice groups restrict the manner in which we are able to direct the operations and otherwise exercise control of our physician practice groups.
Biggest changeHealthcare segment include, but are not limited to, the following: • Ability to recruit, retain and grow our network of credentialed, high-quality physicians, physician assistants and nurse practitioners to provide clinical services in highly competitive markets, such as senior-focused care, for talent; • Dependence on a concentrated number of key health plan customers and ability to attract Medicare-eligible patients; • Quality of the information received about plan members of such health plans for whom we will seek to provide in-home evaluations and other services, and the regulatory restrictions and requirements associated with directly contacting plan members; • Ability to perform and ensure the quality of health risk assessments; • Health reform initiatives and changes in the rules governing government healthcare programs, including rules related to the use of in-home health risk assessments; • Satisfying the enrollment requirements under government healthcare programs for physicians and other providers in a timely manner; • Dependence on revenue from Medicare or Medicare Advantage plans, which subjects our businesses to reductions in Medicare reimbursement rates or changes in the rules governing the Medicare program.
Healthcare segment faces various risks related to the provision of healthcare services that could result in a material adverse effect on our business operations, results of operations and financial condition. The U.S.
Healthcare segment faces various risks related to the provision of healthcare services that could result in a material adverse effect on our business operations, results of operations and financial condition. The U.S.
We continue to develop our offerings to respond to market dynamics; however, if our customers are not receptive to these changes, if we are unable to expand successful programs in a timely manner, or we otherwise do not effectively respond to changes in market dynamics, our businesses and financial performance could be materially and adversely affected.
We continue to develop our offerings to respond to market dynamics; however, if our customers are not receptive to these changes, if we are unable to expand successful programs in a timely manner, or if we otherwise do not effectively respond to changes in market dynamics, our businesses and financial performance could be materially and adversely affected.
If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them for which insurance coverage may not be wholly sufficient, and may experience loss or corruption of critical data and interruptions or disruptions and delays in our ability to perform critical functions, which could materially and adversely affect our businesses and results of operations.
If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them for which insurance coverage may not be wholly sufficient, and may experience loss or corruption of critical data and interruptions or disruptions and delays in our ability to perform critical functions, which could materially and adversely affect our businesses, reputation and results of operations.
Any actual or anticipated downgrade of our credit ratings, including any announcement that our ratings are under review for a downgrade or have been assigned a negative outlook, could adversely affect our cost of funds, liquidity, financial covenants, competitive position and access to capital markets and increase the cost of existing facilities, which could materially and adversely affect our business operations, financial condition, and results of operations.
Any actual or anticipated downgrade of our credit ratings, including any announcement that our ratings are under review for a downgrade or have been assigned a negative outlook, has and could adversely affect our cost of funds, liquidity, financial covenants, competitive position and access to capital markets and increase the cost of existing facilities, which could materially and adversely affect our business operations, financial condition, and results of operations.
We operate or have equity method investments in several countries across the globe which expose us to currency exchange rate fluctuations and related risks, including transaction currency exposures relating to the import and export of goods in currencies other than a businesses’ functional currencies as well as currency translation exposures relating to profits and net assets denominated in currencies other than the U.S. dollar.
We operate and have equity method investments in several countries across the globe which expose us to currency exchange rate fluctuations and related risks, including transaction currency exposures relating to the import and export of goods in currencies other than a businesses’ functional currencies as well as currency translation exposures relating to profits and net assets denominated in currencies other than the U.S. dollar.
External factors that affect consumer confidence and over which we exercise no influence include unemployment rates, inflation, levels of personal disposable income, levels of taxes and interest and global, national, regional or local economic conditions, health epidemics or pandemics (such as COVID-19), as well as looting, vandalism, acts of war or terrorism.
External factors that affect consumer confidence and over which we exercise no influence include unemployment rates, rising interest rates, inflation, levels of personal disposable income, levels of taxes and interest and global, national, regional or local economic conditions, health epidemics or pandemics (such as COVID-19), as well as looting, vandalism, acts of war or terrorism.
Any failure to select suitable opportunities at fair prices, conduct appropriate due diligence, acquire and successfully integrate the acquired company, including particularly when acquired businesses operate in new geographic markets or areas of business, could materially and adversely impact our growth strategies, financial condition and results of operations.
Any failure to select suitable opportunities at fair prices, conduct appropriate due diligence, acquire and successfully integrate the acquired business, including particularly when acquired businesses operate in new geographic markets or areas of business, could materially and adversely impact our growth strategies, financial condition and results of operations.
Payors are also increasingly focused on controlling healthcare costs, and such efforts, including any revisions to reimbursement policies, which may further complicate and delay our reimbursement of claims. Delays and uncertainties in the reimbursement process may adversely affect our accounts receivable, increase the overall costs of collection and cause us to incur additional borrowing costs.
Payors are also increasingly focused on controlling healthcare costs, and such efforts, including any revisions to reimbursement policies, may further complicate and delay our reimbursement of claims. Delays and uncertainties in the reimbursement process may adversely affect our accounts receivable, increase the overall costs of collection and cause us to incur additional borrowing costs.
We evaluate this goodwill and other indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of a reporting unit or indefinite-lived intangible asset below its carrying value.
We evaluate this goodwill and other indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently when and if an event occurs or circumstances change that could more likely than not reduce the fair value of a reporting unit or indefinite-lived intangible asset below its carrying value.
Any failure to fully offset any such increased prices and costs or to modify our activities to mitigate the impact could have a material adverse effect on our results of operations. Also, any future changes in drug prices could be significantly different than our expectations.
Any failure to fully offset any such increased prices and costs or to modify our activities to mitigate the impact could have a material adverse effect on our results of operations. Also, changes in drug prices have been, and in the future could be, significantly different than our expectations.
Acquisitions, joint ventures and strategic investments also involve numerous other risks, including potential exposure to assumed litigation and unknown environmental and other liabilities, as well as undetected internal control, regulatory or other issues, or additional costs not anticipated at the time the transaction was completed.
Acquisitions, joint ventures and investments also involve numerous other risks, including potential exposure to assumed litigation and unknown environmental and other liabilities, as well as undetected internal control, regulatory or other issues, or additional costs not anticipated at the time the transaction was completed.
Estimated fair values could change if, for example, there are changes in the business climate, changes in the competitive environment, adverse legal or regulatory actions or developments, changes in capital structure, cost of debt and equity, capital expenditure levels, operating cash flows, or market capitalization.
Estimated fair values have and could change if, for example, there are changes in the business climate, changes in the competitive environment, adverse legal or regulatory actions or developments, changes in capital structure, cost of debt and equity, capital expenditure levels, operating cash flows, or market capitalization.
As of August 31, Stefano Pessina, our Executive Chairman (together with his affiliates, the “SP Investors”), had sole or shared voting power, directly or indirectly, over an aggregate of approximately 17% of our outstanding common stock.
As of August 31, 2024, Stefano Pessina, our Executive Chairman (together with his affiliates, the “SP Investors”), had sole or shared voting power, directly or indirectly, over an aggregate of approximately 17% of our outstanding common stock.
Our debt level and related debt service obligations could have negative consequences, including: • requiring us to dedicate significant cash flow from operations to amounts payable on our debt, which would reduce the funds we have available for other purposes; • making it more difficult or expensive for us to obtain any necessary future financing; • reducing our flexibility in planning for or reacting to changes in our industry and market conditions and making us more vulnerable in the event of a downturn in our business operations; • exposing us to interest rate risk given that a portion of our debt obligations and undrawn revolving credit facilities is at variable interest rates; • a potential downgrade of our credit ratings; and • our ability to pursue certain operational and strategic opportunities.
Our debt level and related debt service obligations has had, and could continue to have, negative consequences, including: • requiring us to dedicate significant cash flow from operations to amounts payable on our debt, which would reduce the funds we have available for other purposes; • making it more difficult or expensive for us to obtain any necessary future financing; • reducing our flexibility in planning for or reacting to changes in our industry and market conditions and making us more vulnerable in the event of a downturn in our business operations; • exposing us to interest rate risk given that a portion of our debt obligations and undrawn revolving credit facilities is at variable interest rates; • a potential downgrade of our credit ratings; and • our ability to pursue certain operational and strategic opportunities.
Future dividends will be determined based on earnings, capital requirements, financial condition, credit facilities and other debt obligations, fines and/or adverse rulings by courts or arbitrators in legal or regulatory matters, changes in federal, state or foreign income tax law, adverse global macroeconomic conditions, changes to the Company’s business model and other factors considered relevant by the Company's Board of Directors.
Future dividends will be determined based on earnings, capital requirements, financial condition, credit facilities and other debt obligations, fines and/or adverse rulings by courts or arbitrators in legal or regulatory matters, changes in federal, state or foreign income tax law, adverse global macroeconomic conditions, changes to the Company’s business model and other factors considered relevant by the Company’s Board.
Factors that may affect our ability to maintain existing contracts include, but are not limited to, the following: • the number of patients that are attributed to our providers; • our providers’ quality performance and metrics; • the cost of care we deliver to patients; • medical claims expense associated with third-party healthcare services; • performance and functionality of our services; • the availability, price, performance and functionality of competing services; • our ability to develop and provide complementary services to existing patients; • the stability, performance and security of our technology infrastructure and services; • changes in healthcare laws, regulations or trends; • any governmental investigations or inquiries into or challenges to our relationships with health network partners; and • the business environment of our payors.
Factors that may affect our ability to maintain existing contracts include the following: • the number of patients that are attributed to our providers; • our providers’ quality performance and metrics; • the cost of care we deliver to patients; • medical claims expense associated with third-party healthcare services; • performance and functionality of our services; • the availability, price, performance and functionality of competing services; • our ability to develop and provide complementary services to existing patients; • the stability, performance and security of our technology infrastructure and services; • changes in healthcare laws, regulations or trends; • any governmental investigations or inquiries into or challenges to our relationships with health network partners; and • the business environment of our payors.
The Company has incurred and expects to continue to incur significant expense in order to resolve those and other opioids-related matters, including through settlement agreements. From time to time, the Company is also involved in legal proceedings as a plaintiff involving antitrust, tax, contract, intellectual property and other matters. See Note 11.
The Company has incurred and expects to continue to incur significant expense in order to resolve those and other opioids-related matters, including through settlement agreements. From time to time, the Company is also involved in legal proceedings as a plaintiff involving antitrust, tax, contract, intellectual property and other matters. See Note 10.
Healthcare segment could experience losses or liabilities, including medical liability claims related to the delivery of healthcare services, such as medical malpractice by staff at our affiliates' facilities, or by healthcare practitioners who are employed by us, have contractual relationships with us, or serve as providers to our managed care networks, including as a result of a failure to adhere to applicable clinical, quality and/or patient safety standards, causing us to incur significant expenses and requiring us to pay significant damages if not covered by insurance.
Healthcare segment could experience losses or liabilities, including medical liability claims related to the delivery of healthcare services, such as medical malpractice by staff at our affiliates ’ facilities, or by healthcare practitioners who are employed by us, have contractual relationships with us, or serve as providers to our managed care networks, including as a result of a failure to adhere to applicable clinical, quality and/or patient safety standards, causing us to incur significant expenses and requiring us to pay significant damages if not covered by insurance.
With increased interest from certain shareholders, an inability to meet our goals could also have a negative impact on our stock price. These impacts could make it more difficult for us to operate efficiently and effectively and could have a negative effect on our business, operating results and financial conditions.
With increased interest from certain stockholders, an inability to meet our goals could also have a negative impact on our stock price. These impacts could make it more difficult for us to operate efficiently and effectively and could have a negative effect on our business, operating results and financial conditions.
In addition, security incidents may require that we expend substantial additional resources related to the security of information systems and disrupt our businesses. The risks associated with data security and cybersecurity incidents have increased during COVID-19 given the increased reliance on remote work arrangements.
In addition, cybersecurity incidents may require that we expend substantial additional resources related to the security of information systems and disrupt our businesses. The risks associated with data security and cybersecurity incidents have increased since COVID-19 given the increased reliance on remote work arrangements.
We are exposed to risks related to litigation and other legal proceedings. We operate in a highly regulated and litigious environment. We are involved in legal proceedings, including litigation, arbitration and other claims, and investigations, inspections, audits, claims, inquiries and similar actions by pharmacy, healthcare, tax and other governmental authorities, including those contained in Note 11.
We are exposed to risks related to litigation and other legal proceedings. We operate in a highly regulated and litigious environment. We are involved in legal proceedings, including litigation, arbitration and other claims, and investigations, inspections, audits, claims, inquiries and similar actions by pharmacy, healthcare, tax and other governmental authorities, including those contained in Note 10.
Our substantial international business operations subject us to a number of operating, economic, political, regulatory and other international business risks.
Our substantial international business operations subject us to a number of operating, economic, political, regulatory, cybersecurity and other international business risks.
Retail Pharmacy segment from prescription drug sales reimbursed by a limited number of pharmacy benefit management companies. • We could be adversely affected by a decrease in the introduction of new brand name and generic prescription drugs as well as increases in the cost to procure prescription drugs. • Consolidation and strategic alliances in the healthcare industry could adversely affect our business operations, competitive positioning, financial condition and results of operations. • The U.S.
Retail Pharmacy segment from prescription drug sales reimbursed by a limited number of pharmacy benefit management companies. • We could be adversely affected by a decrease in the introduction of new brand name and generic prescription drugs as well as increases in the cost to procure prescription drugs. • Consolidation and strategic alliances in the healthcare industry could result in pricing pressures and adversely affect our business operations, competitive positioning, financial condition and results of operations. • The U.S.
Further, future executives may view the business differently than current members of management, and over time may make changes to our strategic focus, operations, business plans or financial guidance and outlook, with corresponding changes in how we report our results of operations.
Further, future executives may view the business differently than current members of management, and over time have in the past and may in the future make changes to our strategic focus, operations, business plans or financial guidance and outlook, with corresponding changes in how we report our results of operations.
Our ability to integrate and retain qualified and experienced employees from acquired businesses at all levels, including in executive and other key strategic positions, is essential for us to meet our growth strategy and successfully complete acquisition, joint ventures and other strategic partnerships and alliances.
Our ability to integrate and retain qualified and experienced employees from acquired businesses at all levels, including in executive and other key strategic positions, is essential for us to meet our growth strategy and successfully complete acquisitions, joint ventures and other strategic partnerships and alliances.
Financial and Accounting Risks • We have significant outstanding debt; our debt and associated payment obligations could significantly increase in the future if we incur additional debt and do not retire existing debt. • As a holding company, we are dependent on funding from our operating subsidiaries to pay dividends and other distributions. • Our quarterly results may fluctuate significantly based on seasonality and other factors. • We have a substantial amount of goodwill and other intangible assets which could, in the future, become impaired and result in material non-cash charges to our results of operations. • We are exposed to risks associated with foreign currency exchange rate fluctuations. • We could be adversely impacted by changes in assumptions used in calculating pension assets and liabilities.
Financial and Accounting Risks • We have significant outstanding debt; our debt and associated payment obligations could significantly increase in the future if we incur additional debt and do not retire existing debt. • As a holding company, we are dependent on funding from our operating subsidiaries to pay dividends and other distributions. • We have a substantial amount of goodwill and other intangible assets that have become impaired and could, in the future, become further impaired, resulting in material non-cash charges to our results of operations. • Our quarterly results may fluctuate significantly based on seasonality and other factors. • We are exposed to risks associated with foreign currency exchange rate fluctuations. • We could be adversely impacted by changes in assumptions used in calculating pension assets and liabilities.
Reimbursement rates are generally higher for value-based arrangements than they are under traditional fee-for-service arrangements, and value-based arrangements provide us with an opportunity to capture additional surplus we create by investing in population health services to better manage a particular patient’s care, which, in turn, should reduce the total cost of care.
Reimbursement rates are generally higher for value-based arrangements than they are under traditional fee-for-service arrangements, and value-based arrangements provide us with an opportunity to capture additional surplus we create by investing in population health services to better manage a particular patient’s care, which we would expect, in turn, to reduce the total cost of care.
This valuation is particularly sensitive to material changes in the value of equity, bond and other investments held by the pension plans, changes in the corporate bond yields which are used in the measurement of the liabilities, changes in market expectations for long-term price inflation and other macroeconomic factors, and new evidence on projected longevity rates.
This valuation is particularly sensitive to material changes in the value of insurance contracts and other investments held by the pension plans, changes in the corporate bond yields which are used in the measurement of the liabilities, changes in market expectations for long-term price inflation and other macroeconomic factors, and new evidence on projected longevity rates.
We could suffer significant reputational damage and financial liability if we, or any affiliated entities or third-party healthcare providers that we do business with, experience any of the foregoing health and safety issues or incidents, which could have a material adverse effect on our business operations, financial condition and results of operations.
We could suffer significant reputational damage and financial liability if we, or any affiliated entities or third-party healthcare providers that we do business with, experience any of the foregoing health and safety issues or incidents, which could have a material adverse effect on our business operations, financial condition and results of operations, as well as our reputation.
These transactions may also cause us to significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition or investment, issue common stock that would dilute our current stockholders’ percentage ownership, or incur asset write-offs and restructuring costs and other related expenses that could have a material adverse impact on our operating results.
These transactions may also cause us to significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition or investment or dilute our current stockholders’ percentage ownership if we issue common stock to pay for an acquisition or investment or subsequent capital infusion, or incur asset write-offs and restructuring costs and other related expenses that could have a material adverse impact on our operating results.
If our participation in the pharmacy provider network for a prescription drug plan administered by one or more of the large PBMs is restricted or terminated, we expect that our sales would be adversely affected, at least in the short-term.
If our participation in the pharmacy provider network for a prescription drug plan administered by one or more of the large PBMs is restricted or terminated, we expect that our sales would be adversely affected, at least in the short-term, and potentially in the long-term.
Other factors that may affect our quarterly operating results, some of which are beyond the control of management, include, but are not limited to; the impact and duration of COVID-19 and other pandemics; the timing of the introduction of new generic and brand name prescription drugs; inflation, including with respect to generic drug procurement costs; the timing and severity of the cough, cold and flu season; changes or rates of change in payor reimbursement rates and terms; the timing and amount of periodic contractual reconciliation payments; fluctuations in inventory, energy, transportation, labor, healthcare and other costs; significant acquisitions, dispositions, joint ventures and other strategic initiatives; asset impairment charges, including the performance of and impairment charges related to our equity method investments; the relative magnitude of our LIFO provision in any particular quarter; foreign currency fluctuations; market conditions, widespread looting or vandalism; and many of the other risk factors discussed herein.
Other factors that may affect our quarterly operating results, some of which are beyond the control of management, include, but are not limited to; the impact and duration of pandemics; the timing of the introduction of new generic and brand name prescription drugs; inflation, including with respect to generic drug procurement costs; changes or rates of change in payor reimbursement rates and terms; the timing and amount of periodic contractual reconciliation payments; fluctuations in inventory, costs of energy, transportation, labor, healthcare among other costs; significant acquisitions, dispositions, joint ventures and other strategic initiatives; asset impairment charges, including the performance of and impairment charges related to our equity method investments; the relative magnitude of our LIFO provision in any particular quarter; foreign currency fluctuations; market conditions, widespread looting or vandalism; and many of the other risk factors discussed herein.
Risks Related to Our Operations • Disruption in our global supply chain could negatively impact our businesses. • We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs. • We use a single wholesaler of branded and generic pharmaceutical drugs as our primary source of such products. • Changes to management, including turnover of our top executives, could have an adverse effect on our business. • We may be unable to keep existing store locations or open new locations in desirable places on favorable terms, which could materially and adversely affect our results of operations. • Our failure to attract and retain qualified team members, increases in wage and benefit costs, changes in laws and other labor issues could materially adversely affect our financial performance. • Our business and operations are subject to risks related to climate change.
Risks Related to Our Operations • Disruption in our global supply chain could negatively impact our ability to provide products and services to our customers and could impact financial performance. • We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs. • We use a single wholesaler of branded and generic pharmaceutical drugs as our primary source of such products. • Changes to management, including turnover of our top executives, could have an adverse effect on our business. • We may be unable to keep existing store locations or open new locations in desirable places on favorable terms, which could materially and adversely affect our results of operations. • Our failure to attract and retain qualified team members, increases in wage and benefit costs, changes in laws and other labor issues could materially adversely affect our financial performance.
We are required to comply with increasingly complex and changing data security and privacy regulations in the jurisdictions in which we operate that regulate the collection, use and transfer of personal data, including the transfer of personal data between or among countries.
We are required to comply with increasingly complex and changing data security and privacy regulations and related reporting requirements in the jurisdictions in which we operate that regulate the collection, use and transfer of personal data, including the transfer of personal data between or among countries.
Financial and Accounting Risks We have significant outstanding debt; our debt and associated payment obligations could significantly increase in the future if we incur additional debt and do not retire existing debt. We have outstanding debt and other financial obligations. As of August 31, 2023, we had approximately $9.1 billion of outstanding indebtedness, including short-term debt.
Financial and Accounting Risks We have significant outstanding debt; our debt and associated payment obligations could significantly increase in the future if we incur additional debt and do not retire existing debt. We have significant outstanding debt and other financial obligations. As of August 31, 2024, we had approximately $9.5 billion of outstanding indebtedness, including short-term debt.
The loss or disruption of such supply arrangements for any reason, including from COVID-19 or other health epidemics or pandemics, labor disputes, loss or impairment of key manufacturing sites, inability to procure sufficient raw materials, quality control issues, ethical sourcing issues, a supplier’s financial distress, natural disasters, looting, vandalism or acts of war (such as the conflict in Ukraine) or terrorism, trade sanctions or other external factors over which we have no control, could interrupt product supply and, if not effectively managed and remedied, have a material adverse impact on our business operations, financial condition and results of operations.
The loss or disruption of such supply arrangements for any reason, including health epidemics or pandemics, labor disputes, loss or impairment of key manufacturing sites, inability to procure sufficient raw materials, quality control issues, ethical sourcing issues, a supplier’s financial distress, natural disasters, looting, vandalism or acts of war (such as the conflict in Ukraine or the conflict in the Middle East) and foreign conflict (such as the Red Sea crisis), or terrorism, trade sanctions or other external factors over which we have no control, could interrupt product supply and, if not effectively managed and remedied, have a material adverse impact on our business operations, financial condition and results of operations.
Healthcare segment may face risks related to payor contracts, including if existing payors modify or discontinue their contracts with us or there are changes in the payor mix of patients or reimbursement methodologies, which could have a negative impact on our business, financial condition and results of operations. • Our business results depend on our ability to successfully manage ongoing organizational change and business transformation and achieve cost savings and operating efficiency initiatives. • The industries in which we operate are highly competitive and constantly evolving and changes in market dynamics could adversely impact us. • If we do not continuously develop and maintain a relevant omni-channel experience for our customers, our businesses and results of operations could be adversely impacted. • If the merchandise and services that we offer fail to meet customer needs, our sales may be adversely affected. • Our substantial international business operations subject us to a number of operating, economic, political, regulatory and other international business risks. • Our business is subject to evolving global ESG regulatory requirements and expectations.
Healthcare segment may face risks related to payor contracts, including if existing payors modify or discontinue their contracts with us or there are changes in the payor mix of patients or reimbursement methodologies, which could have a negative impact on our business, financial condition and results of operations. • Our business results depend on our ability to successfully manage ongoing organizational change and business transformation and achieve cost savings and operating efficiency initiatives. • The industries in which we operate are highly competitive and constantly evolving and changes in market dynamics could adversely impact us. • If we do not continuously develop and maintain a relevant omni-channel experience for our customers, our businesses, reputation and results of operations could be adversely impacted. • If the merchandise and services that we offer fail to meet customer needs, our sales may be adversely affected. • Our substantial international business operations subject us to a number of operating, economic, political, regulatory, cybersecurity and other international business risks. • Our business is subject to existing and increasing interest in ESG-related values from current and future employees, customers and stockholders.
Retroactive adjustments may change amounts realized and recognized as revenue from payors. We may also be subject to audits by such payors, including governmental audits of our Medicare claims, and may be required to repay these payors if a finding is made that we were incorrectly reimbursed.
Retroactive adjustments may change amounts realized and recognized as revenue from payors. We are periodically subject to audits by such payors, including governmental audits of our Medicare claims, and from time-to-time are required to repay these payors if a finding is made that we were incorrectly reimbursed.
WBA Fiscal 2023 Form 10-K 15 Table of Contents A shift in pharmacy mix toward lower margin plans, products and programs could adversely affect our results of operations. Our U.S. Retail Pharmacy segment seeks to grow prescription volume while operating in a marketplace with continuous reimbursement pressure.
WBA Fiscal 2024 Form 10-K 15 Table of Co n tents A shift in pharmacy mix toward lower margin plans, products and programs could adversely affect our results of operations. Our U.S. Retail Pharmacy segment seeks to grow prescription volume while operating in a marketplace with continuous reimbursement pressure.
For example, if Cencora’s operations are seriously disrupted for any reason, whether due to a natural disaster, pandemic, labor disruption, regulatory action, computer or operational systems or otherwise, it could adversely affect our business and our results of operations.
For example, if Cencora’s operations are seriously disrupted for any reason, whether due to a natural disaster, pandemic, labor disruption, regulatory action, an acquisition or related strategic transaction, computer or operational systems or otherwise, it could adversely affect our business and our results of operations.
WBA Fiscal 2023 Form 10-K 31 Table of Contents Some of our businesses are also subject to federal and state laws and regulations that may impact our relationships with healthcare providers and customers, including laws on self-referrals, beneficiary inducements, false claims, fee-splitting, telemedicine, corporate practice of medicine, dispensing, packaging, fulfillment, and distribution of controlled substances, other pharmaceutical products and medical devices, medical malpractice, consumer protection, product liability, narrow networks, provider tiering programs, provider contracts, overpayments, reimbursement of out-of-network claims, and licensure.
Some of our businesses are also subject to federal and state laws and regulations that may impact our relationships with healthcare providers and customers, including laws on self-referrals, beneficiary inducements, false claims, fee-splitting, telemedicine, corporate practice of medicine, dispensing, packaging, fulfillment, and distribution of controlled substances, other pharmaceutical products and medical devices, medical malpractice, consumer protection, product liability, narrow networks, provider tiering programs, provider contracts, overpayments, reimbursement of out-of-network claims, and licensure.
WBA Fiscal 2023 Form 10-K 13 Table of Contents Risks Relating to Our Business Strategy • We may not be successful in executing elements of our business strategy, which may have a material adverse impact on our business and financial results. • Our growth strategy is partially dependent upon our ability to identify and successfully complete acquisitions, joint ventures and other strategic partnerships and alliances. • The anticipated strategic and financial benefits of our relationship with Cencora may not be realized. • From time to time, we may choose to divest certain assets or businesses as we execute our strategy and our ability to engage in such transactions will be subject to market conditions beyond our control which will affect our ability to transact on terms favorable to us or at all. • From time to time, we make investments in companies over which we do not have sole control and some of these companies may operate in sectors that differ from our current operations and have different risks.
Risks Relating to Our Business Strategy • We may not be successful in executing elements of our business strategy, which may have a material adverse impact on our business and financial results. • Our growth strategy is partially dependent upon our ability to identify and successfully complete and integrate acquisitions, joint ventures and other strategic partnerships and alliances. • The anticipated strategic and financial benefits of our relationship with Cencora may not be realized. • From time to time, we may choose to divest certain assets or businesses as we execute our strategy and our ability to engage in such transactions will be subject to market conditions beyond our control which will affect our ability to transact on terms favorable to us or at all. • From time to time, we make investments in companies over which we do not have sole control and some of these companies may operate in sectors that differ from our current operations and have different risks that we may be unable to anticipate or navigate.
WBA Fiscal 2023 Form 10-K 18 Table of Contents In addition, our revenue streams for our healthcare businesses depend on reimbursements by third-party payors, as well as payments by individuals, which could lead to delays and uncertainties in the reimbursement process.
WBA Fiscal 2024 Form 10-K 18 Table of Co n tents In addition, our revenue streams for our healthcare businesses depend on reimbursements by third-party payors, as well as payments by individuals, which could lead to delays and uncertainties in the reimbursement process.
The outcome of some of these legal proceedings and other contingencies could require us to take, or refrain from taking, actions which could negatively affect our operations. Additionally, defending against these lawsuits and proceedings may involve significant expense and diversion of management’s attention and resources.
The outcome of some of these legal proceedings and other contingencies could require us to take, or refrain from taking, actions which could negatively affect our operations. Additionally, defending against these lawsuits and proceedings may involve significant expense and diversion of management’s attention and resources, and have caused, and may again cause, reputational harm.
A significant element of our growth strategy is to identify, pursue and successfully complete and integrate acquisitions, joint ventures and other strategic partnerships and alliances that either expand or complement our existing operations. For example, in fiscal 2022, the Company acquired controlling equity interests in VillageMD, Shields and CareCentrix.
A significant element of our growth strategy is to identify, pursue and successfully complete and integrate acquisitions, joint ventures and other strategic partnerships and alliances that either expand or complement our existing operations. For example, in fiscal 2023 and 2022, the Company directly and indirectly acquired controlling equity interests in VillageMD, WP CityMD TopCo (“Summit”), Shields and CareCentrix.
Acquisitions and other strategic transactions involve numerous risks and challenges, including but not limited to difficulties in successfully integrating the operations and personnel, navigating the necessary regulatory approval requirements, distraction of management from overseeing, and disruption of, our existing operations, difficulties in entering markets or lines of business in which we have no or limited direct prior experience, the possible loss of key employees and difficulties in retaining relationships with existing or new customers and suppliers, and difficulties in achieving the synergies we anticipated.
Acquisitions and other strategic transactions involve numerous risks and challenges, including but not limited to difficulties in successfully integrating the operations and personnel, navigating the necessary regulatory approval requirements, distraction of management from overseeing, and disruption of, our existing operations, difficulties in entering markets or lines of business in which we have no or limited direct prior experience, the need to infuse additional capital into acquired businesses, joint ventures and other investments, the possible loss of key employees and difficulties in retaining relationships with existing or new customers and suppliers, and difficulties in achieving the synergies we anticipated.
The Company accounts for its investment in Cencora using the equity method of accounting, subject to a two-month reporting lag, with the net earnings attributable to the investment classified within the operating income of the Company’s U.S. Retail Pharmacy segment.
The Company accounts for its investment in Cencora using the equity method of accounting, subject to a two-month reporting lag, with the net earnings attributable to the investment classified within the operating income of the Company’s U.S. Retail Pharmacy segment. The financial performance of Cencora, will impact the Company’s results of operations.
As a large corporation with operations in the U.S. and numerous other jurisdictions, from time to time, changes in tax laws or regulations may be proposed or enacted that could adversely affect our overall tax liability.
We could be subject to adverse changes in tax laws, regulations and interpretations or challenges to our tax positions. As a large corporation with operations in the U.S. and numerous other jurisdictions, from time to time, changes in tax laws or regulations may be proposed or enacted that could adversely affect our overall tax liability.
However, there can be no assurance we would be able to engage alternative supply sources or implement self-distribution processes on a timely basis or on terms favorable to us, or effectively manage these transitions, any of which could adversely affect our business operations, financial condition and results of operations.
However, we may not be able to engage alternative supply sources or implement self-distribution processes on a timely basis or on terms favorable to us, or effectively manage these transitions, any of which could adversely affect our business operations, financial condition and results of operations.
For example, potential conflicts of interest could arise if a dispute were to arise between the Company and other parties to the shareholders agreement (the “Company Shareholders Agreement”) with certain SP Investors. Mr. Pessina, our Executive Chairman, indirectly controls Alliance Santé Participations S.A.
For example, potential conflicts of interest could arise if a dispute were to arise between the Company and other parties to the shareholders agreement, dated as of August 2, 2012 (the “Company Shareholders Agreement,”) with certain SP Investors. Mr. Pessina, our Executive Chairman, indirectly controls Alliance Santé Participations S.A.
If such expiration or termination occurred, we believe that alternative sources of supply for most generic and brand-name pharmaceuticals are readily available and that we could obtain and qualify alternative sources, which may include self-distribution in some cases, for substantially all of the prescription drugs we sell on an acceptable basis, such that the impact of any such expiration or termination would be temporary.
If such expiration or termination occurred, we expect that alternative sources of supply for most generic and brand-name pharmaceuticals would be available and that we could obtain alternative sources, which may include self-distribution in some cases, for substantially all of the prescription drugs we sell on an acceptable basis.
Healthcare segment may be compounded, or heightened by, many of the other risks described in this Annual Report, including the risks associated with global macroeconomic uncertainty mentioned above. The U.S.
Healthcare segment may be compounded, or heightened by, many of the other risks described in this Form 10-K, including the risks associated with global macroeconomic uncertainty mentioned above. The U.S.
WBA Fiscal 2023 Form 10-K 33 Table of Contents Our certificate of incorporation and bylaws, Delaware law or our agreements with certain stockholders may impede the ability of our stockholders to make changes to our Board or impede a takeover.
WBA Fiscal 2024 Form 10-K 33 Table of Co n tents Our certificate of incorporation and bylaws, Delaware law or our agreements with certain stockholders may impede the ability of our stockholders to make changes to our Board or impede a takeover.
As previously disclosed, we have reached settlement agreements in some proceedings, including for example Multistate Opioid Settlement Frameworks (the “Settlement Frameworks”). The Company has now resolved its litigation with all states, territories, tribes and 99.5% of litigating subdivisions within participating states and political subdivisions included in the Multistate Settlement Agreement or in separate agreements.
As previously disclosed, we have reached settlement agreements in some proceedings, including for example the Multistate Settlement Agreement (the “Multistate Agreement”). The Company has now resolved its litigation with all states, territories, tribes and 99.7% of litigating subdivisions within participating states and political subdivisions included in the Multistate Agreement or in separate agreements.
WBA Fiscal 2023 Form 10-K 23 Table of Contents Our growth strategy is partially dependent upon our ability to identify and successfully complete and integrate acquisitions, joint ventures and other strategic partnerships and alliances.
WBA Fiscal 2024 Form 10-K 23 Table of Co n tents Our growth strategy is partially dependent upon our ability to identify and successfully complete and integrate acquisitions, joint ventures and other strategic partnerships and alliances.
WBA Fiscal 2023 Form 10-K 19 Table of Contents If we do not continuously develop and maintain a relevant omni-channel experience for our customers, our businesses and results of operations could be adversely impacted.
WBA Fiscal 2024 Form 10-K 19 Table of Co n tents If we do not continuously develop and maintain a relevant omni-channel experience for our customers, our businesses, reputation and results of operations could be adversely impacted.
Changes in pricing and other terms of our contracts with PBMs can significantly impact our results of operations. There can be no assurance that we will continue to participate in any particular PBMs pharmacy provider network in any particular future time period or on terms reasonably acceptable to us.
Changes in pricing and other terms of our contracts with PBMs can significantly impact our results of operations. We may not be able to continue to participate in any particular PBMs pharmacy provider network in any particular future time period or on terms reasonably acceptable to us.
The protection of customer, employee and Company data is critical to our businesses. Cybersecurity and other information technology security risks, such as a significant breach or theft of customer, employee, or company data, could create significant workflow disruption, attract media attention, damage our customer relationships, reputation and brand, and result in lost sales, fines or lawsuits.
Cybersecurity and other information technology security risks, such as a significant breach or theft of customer, employee, or company data, could create significant workflow disruption, attract media attention, adversely impact the experience of our customers, damage our customer relationships, reputation and brand, and result in lost sales, fines or lawsuits.
In order to retain and attract talent we know that it is critical that we clearly communicate our ESG strategy, and a delay or inability to meet our goals on time could impact our reputation as a desirable place to work.
In order to retain and attract talent we know that it is critical that we clearly communicate our ESG strategy, and a delay or inability to meet our goals on time could impact our reputation as a desirable place to work, which would have an adverse effect on our human capital.
Our business and operations are subject to risks related to climate change. The long-term effects of global climate change present both physical risks (such as extreme weather conditions or rising sea levels) and transition risks (such as regulatory or technology changes), which are expected to be widespread and unpredictable.
Our business and operations are subject to risks related to climate change, such as the impact of extreme weather on the continuity of our global operations. The long-term effects of global climate change present both physical risks (such as extreme weather conditions or rising sea levels) and transition risks (such as regulatory or technology changes).
These changes could over time affect, for example, the availability and cost of products, commodities and energy (including utilities), which in turn may impact our ability to procure goods or services required for the operation of our business at the quantities and levels we require.
These risks are expected to be widespread and unpredictable. Over time these changes may affect, for example, the availability and cost of products, commodities and energy, which in turn may impact our ability to procure goods or services required for the operation of our business at the quantities and levels we require.
WBA Fiscal 2023 Form 10-K 25 Table of Contents Privacy and data protection laws increase our compliance burden and any failure to comply could harm us. The regulatory environment surrounding data security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements across businesses and geographic areas.
Privacy and data protection laws increase our compliance burden and any failure to comply could harm us. The regulatory environment surrounding data security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements across businesses and geographic areas.
If we exit a pharmacy provider network and later resume participation, there can be no assurance that we will achieve any particular level of business on any particular pace, or that all clients of the PBMs will choose to include us again in the pharmacy network for their plans, initially or at all.
If we exit a pharmacy provider network and later resume participation, we may not be able to achieve any particular level of business on any particular pace, and it is possible that not all clients of the PBMs will choose to include us again in the pharmacy network for their plans, initially or at all.
Any of the aforementioned risks associated with our healthcare businesses, if they materialize, could adversely affect our business, financial condition and results of operations, including our ability to timely and effectively integrate our healthcare businesses in our operations and the timing and extent of realization of synergies and other benefits that we expected in connection with these investments.
WBA Fiscal 2024 Form 10-K 17 Table of Co n tents Any of the aforementioned risks associated with our healthcare businesses, if they materialize, could adversely affect our business, financial condition and results of operations, including our ability to timely and effectively integrate our healthcare businesses in our operations and the timing and extent of realization of synergies and other benefits that we expected in connection with these investments.
Our distribution agreement with Cencora is subject to early termination in certain circumstances and, upon the expiration or termination of the agreement, there can be no assurance that we or Cencora will be willing to renew the agreement or enter into a new agreement, on terms favorable to us or at all.
Our distribution agreement with Cencora is subject to early termination in certain circumstances and, upon the expiration or termination of the agreement, we or Cencora may not be willing or able to renew the agreement or enter into a new agreement, on terms favorable to us or at all.
These factors can also adversely affect our payors, vendors and customers in international markets, which in turn can negatively impact our businesses. We cannot assure you that one or more of these factors will not have a material adverse effect on our business operations, results of operation and financial condition.
These factors can also adversely affect our delivery routes, payors, vendors and customers in international markets, which in turn can negatively impact our businesses. One or more of these factors may have a material adverse effect on our business operations, results of operation and financial condition.
The ability of the new Chief Executive Officer to quickly adapt to and understand our business, operations, and strategic plans will be critical to the Company and our management’s ability to make informed decisions about our near term strategic direction and operations.
The ability of the Chief Executive Officer and other new members of our senior management team to further adapt to and better understand our business, operations, and strategic plans will be critical to the Company and our management’s ability to make informed decisions about our near term strategic direction and operations.
Compromises of our data security systems or of those of businesses with which we interact that result in confidential information being accessed, obtained, damaged or used by unauthorized or improper persons, have in the past and could in the future adversely impact us.
WBA Fiscal 2024 Form 10-K 26 Table of Co n tents Compromises of our data security systems or of those of businesses with which we interact that result in confidential information being accessed, obtained, damaged or used by unauthorized or improper persons, have in the past and could in the future adversely impact us.
Risks Related to Our Structure and Organization • Certain stockholders may have significant voting influence over matters requiring stockholder approval. • Conflicts of interest, or the appearance of conflicts of interest, may arise because certain of our directors and officers are also owners or directors of companies we may have dealings with. • Our certificate of incorporation and bylaws, Delaware law or our agreements with certain stockholders may impede the ability of our stockholders to make changes to our Board or impede a takeover. • We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term stockholder value.
Risks Related to Our Structure and Organization • Certain stockholders may have significant voting influence over matters requiring stockholder approval. • Conflicts of interest, or the appearance of conflicts of interest, may arise because certain of our directors and officers are also owners or directors of companies we may have dealings with. • Our certificate of incorporation and bylaws, Delaware law or our agreements with certain stockholders may impede the ability of our stockholders to make changes to our Board or impede a takeover.
WBA Fiscal 2023 Form 10-K 14 Table of Contents Risks Relating to Our Business Changes in economic conditions could adversely affect consumer buying practices. Our performance has been, and may continue to be, adversely impacted by changes in global, national, regional or local economic conditions and consumer confidence. These conditions can also adversely affect our key vendors and customers.
WBA Fiscal 2024 Form 10-K 14 Table of Co n tents Risks Relating to Our Business Changes in economic conditions could adversely affect consumer buying practices. Our performance has been, and may continue to be, adversely impacted by changes in global, national, regional or local economic conditions and consumer confidence.
Failure to meet our goals could negatively impact public perception of our company with interested stakeholders. ESG matters are also increasingly important to current and potential employees.
Failure to meet our goals could negatively impact public perception of our company with interested stakeholders which would have an adverse effect on our reputation. ESG matters are also increasingly important to current and potential employees.
We cannot predict with certainty the outcomes of these legal proceedings and other contingencies, and the costs incurred in litigation can be substantial, regardless of the outcome. Substantial unanticipated verdicts, fines and rulings do sometimes occur.
We cannot predict with certainty the outcomes of active and future legal proceedings and other contingencies, and the costs incurred in litigation can be substantial, regardless of the outcome. Substantial unanticipated verdicts, awards, fines and rulings have occurred and may occur in the future.
Accordingly, it is important that we and our affiliates compete effectively in this evolving and highly competitive market, or our business operations, financial condition and results of operations could be materially and adversely affected. To better serve this evolving market, the Company wholly owns and operates AllianceRx Walgreens.
Accordingly, it is important that we and our affiliates compete effectively in this evolving and highly competitive market, or our business operations, financial condition and results of operations could be materially and adversely affected.
WBA Fiscal 2023 Form 10-K 27 Table of Contents Our long-term debt obligations include covenants that may adversely affect our ability, and the ability of certain of our subsidiaries, to incur secured indebtedness or engage in certain types of transactions.
Our long-term debt obligations include covenants that may adversely affect our ability, and the ability of certain of our subsidiaries, to incur secured indebtedness or engage in certain types of transactions.
WBA Fiscal 2023 Form 10-K 26 Table of Contents We are subject to payment-related and other financial services risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and potentially disrupt our business operations.
We are subject to payment-related and other financial services risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and potentially disrupt our business operations.
A shift in the mix of pharmacy prescription volume towards programs offering lower reimbursement rates could adversely affect our results of operations. For example, our U.S.
A shift in the mix of pharmacy prescription volume towards programs offering lower reimbursement rates has adversely affected, and may adversely affect, our results of operations by reducing our gross profit. For example, our U.S.
Leadership transitions can be inherently difficult to manage, and an inadequate transition may cause disruption to our business due to, among other things, diverting management’s attention away from the Company’s financial and operational goals or causing a deterioration in morale .
Leadership transitions can be inherently difficult to manage, particularly when there is more than one transition occurring within the senior management team within a fiscal year, and an inadequate transition may cause disruption to our business due to, among other things, diverting management’s attention away from the Company’s financial and operational goals or causing a deterioration in morale .
These changing rules and regulations are likely to result in, increased compliance costs driven by developing and acting on initiatives for proposed or adopted ESG rules and regulations, and collecting, measuring and reporting ESG-related information. Risks Related to Our Operations Disruption in our global supply chain could negatively impact our businesses.
These changing rules and regulations are likely to result in, increased compliance costs driven by developing and acting on initiatives for proposed or adopted ESG rules and regulations, and collecting, measuring and reporting ESG-related information.
Like other companies in the retail pharmacy, healthcare services and pharmaceutical wholesale industries, the Company is subject to extensive regulation by national, state and local government agencies in the U.S. and other countries in which it operates.
WBA Fiscal 2024 Form 10-K 30 Table of Co n tents Like other companies in the retail pharmacy, healthcare services and pharmaceutical wholesale industries, the Company is subject to extensive regulation by national, state and local government agencies in the U.S. and other countries in which it operates.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties The following information regarding the Company’s properties is provided as of August 31, 2023 and does not include properties of unconsolidated, partially-owned entities.
Biggest changeItem 2. Properties The following information regarding the Company’s properties is provided as of August 31, 2024 and does not include properties of unconsolidated, partially-owned entities. The Company ’ s properties are suitable and adequate for its current business operations.
The Company owned approximately 5% and 4% of these U.S. Retail Pharmacy and International segment locations, respectively. The remaining locations, including all U.S. Healthcare locations were leased or licensed. See Note 5. Leases, to the Consolidated Financial Statements included in Part II, Item 8 for further information.
The Company owned approximately 3% and 4% of these U.S. Retail Pharmacy and International segment locations, respectively. The remaining locations, including all U.S. Healthcare locations were leased or licensed. See Note 4. Leases, to the Consolidated Financial Statements included in Part II, Item 8 for further information.
In addition, the Company used public warehouses and third-party distributors to handle certain retail distribution needs. The Company’s U.S. Retail Pharmacy segment operated 10 micro-fulfillment centers, 1 prescription mail service facility and 1 manufacturing facility, covering approximately 789 thousand, 110 thousand, and 77 thousand square feet, respectively.
In addition, the Company used public warehouses and third-party distributors to handle certain retail distribution needs. The Company’s U.S. Retail Pharmacy segment operated 11 prescription micro-fulfillment centers, 1 prescription mail service facility and 1 manufacturing facility, covering approximately 858 thousand, 110 thousand, and 115 thousand square feet, respectively.
Distribution centers and other facilities The Company operated 21 retail distribution centers covering approximately 13 million square feet of space, of which 11 locations were owned. Geographically, 16 of these retail distribution centers were located in the U.S. and 5 were located outside of the U.S.
Distribution centers and other facilities The Company operated 19 retail distribution centers covering approximately 11 million square feet of space, of which 2 locations were owned. Geographically, 15 of these retail distribution centers were located in the U.S. and 4 were located outside of the U.S.
The Company's International segment operated 32 pharmaceutical distribution centers in Germany, of which 8 were owned. The pharmaceutical distribution centers in Germany covered approximately 3 million square feet. Office facilities The Company operated 50 principal office facilities, covering approximately 1.8 million square feet, of which 5 were owned.
The Company’s International segment operated 30 pharmaceutical distribution centers in Germany, of which 7 were owned. The pharmaceutical distribution centers in Germany covered approximately 3 million square feet. Office facilities The Company operated 45 principal office facilities, covering approximately 2.1 million square feet, of which 3 were owned.
WBA Fiscal 2023 Form 10-K 34 Table of Contents Retail stores and healthcare locations The following is a breakdown of the Company’s domestic and international retail stores and healthcare locations by segment: Number of retail stores and healthcare locations U.S. Retail Pharmacy: United States 1 8,600 Puerto Rico 105 U.S.
Retail stores and healthcare locations The following is a breakdown of the Company’s domestic and international retail stores and healthcare locations by segment: Number of retail stores and healthcare locations U.S. Retail Pharmacy: United States 1 8,454 Puerto Rico 105 U.S.
Virgin Islands 1 8,706 International: United Kingdom 2 2,514 Mexico 1,151 Chile 295 Thailand 243 The Republic of Ireland 94 4,297 U.S. Healthcare - healthcare locations 529 Walgreens Boots Alliance total 13,532 1. Includes co-located VillageMD clinics 2. Includes standalone Boots Opticians locations The Company’s domestic and international retail stores and healthcare locations covered approximately 145 million square feet.
Virgin Islands 1 8,560 International: United Kingdom 2 2,164 Mexico 1,183 Thailand 246 The Republic of Ireland 95 3,688 U.S. Healthcare - healthcare locations 464 Walgreens Boots Alliance total 12,712 1. Includes co-located VillageMD clinics 2. Includes standalone Boots Opticians locations The Company’s domestic and international retail stores and healthcare locations covered approximately 140 million square feet.
Geographically, 36 of these principal office facilities were located in the U.S. and 14 were located outside of the U.S.
Geographically, 30 of these principal office facilities were located in the U.S. and 15 were located outside of the U.S. WBA Fiscal 2024 Form 10-K 37 Table of Co n tents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed2 unchanged
Biggest changeIssuer purchases of equity securities Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced repurchase programs 1 Approximate dollar value of shares that may yet be purchased under the plans or programs 1 6/1/23 - 6/30/23 — $ — — $ 2,003,419,960 7/1/23 - 7/31/23 — — — 2,003,419,960 8/1/23 - 8/31/23 — — — 2,003,419,960 — — 1 In June 2018, Walgreens Boots Alliance authorized a stock repurchase program, which authorized the repurchase of up to $10.0 billion of Walgreens Boots Alliance common stock.
Biggest changeIssuer purchases of equity securities Period Total number of shares purchased by month Average price paid per share Total number of shares purchased by month as part of publicly announced plans or programs 1 Approximate dollar value of shares that may yet be purchased under the plans or programs 1 6/1/24 - 6/30/24 — $ — — $ 2,003,419,960 7/1/24 - 7/31/24 — — — 2,003,419,960 8/1/24 - 8/31/24 — — — 2,003,419,960 — — 1 On June 28, 2018, Walgreens Boots Alliance announced a stock repurchase program, which authorized the repurchase of up to $10.0 billion of Walgreens Boots Alliance common stock.
Future dividends will be determined based on earnings, capital requirements, financial condition, and other debt obligations, fines and/or adverse rulings by courts or arbitrators in legal or regulatory matters, changes in federal, state or foreign income tax law, adverse global macroeconomic conditions, changes to the Company’s business model and other factors considered relevant by the Company's Board of Directors.
Future dividends will be determined based on earnings, capital requirements, financial condition, and other debt obligations, fines and/or adverse rulings by courts or arbitrators in legal or regulatory matters, changes in federal, state or foreign income tax law, changes in adverse global macroeconomic conditions, changes to the Company’s business model and other factors considered relevant by the Company’s Board of Directors.
The following table provides information about purchases made by the Company during the quarter ended August 31, 2023 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act.
The following table provides information about purchases made by the Company during the quarter ended August 31, 2024 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act.
Item 5. Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities Walgreens Boots Alliance’s common stock is listed on the Nasdaq Stock Market under the symbol WBA. As of August 31, 2023, there were approximately 43,816 holders of record of Walgreens Boots Alliance common stock. The Company has paid cash dividends every quarter since 1933.
Item 5. Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities Walgreens Boots Alliance’s common stock is listed on the Nasdaq Stock Market under the symbol WBA. As of October 8, 2024, there were approximately 41,140 holders of record of Walgreens Boots Alliance common stock. The Company has paid cash dividends every quarter since 1933.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWBA Fiscal 2023 Form 10-K 41 Table of Contents EXECUTIVE SUMMARY The following table presents certain key financial statistics for the Company for fiscal 2023, 2022 and 2021: (in millions, except per share amounts) 2023 2022 2021 Sales $ 139,081 $ 132,703 $ 132,509 Gross profit 27,072 28,265 28,067 Selling, general and administrative expenses 34,205 27,295 24,586 Equity earnings (loss) in Cencora 252 418 (1,139) Operating (loss) income (6,882) 1,387 2,342 Adjusted operating income (Non-GAAP measure) 1 3,871 5,133 5,117 (Loss) earnings before interest and income tax (benefit) provision (4,839) 4,385 2,900 Net (loss) earnings attributable to Walgreens Boots Alliance, Inc. - continuing operations (GAAP) (3,080) 4,337 1,994 Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. - continuing operations (Non-GAAP measure) 1 3,439 4,360 4,256 Diluted net (loss) earnings per common share - continuing operations (GAAP) (3.57) 5.01 2.30 Adjusted diluted net earnings per common share - continuing operations (Non-GAAP measure) 1 3.98 5.04 4.91 Percentage increases (decreases) 2023 2022 2021 Sales 4.8 0.1 8.6 Gross profit (4.2) 0.7 7.6 Selling, general and administrative expenses 25.3 11.0 (3.3) Operating (loss) income NM (40.8) 138.4 Adjusted operating income (Non-GAAP measure)- 1 (24.6) 0.3 8.2 (Loss) earnings before interest and income tax provision NM 51.2 173.7 Net (loss) earnings attributable to Walgreens Boots Alliance, Inc. - continuing operations (GAAP) NM 117.5 NM Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. - continuing operations (Non-GAAP measure) 1 (21.1) 2.5 12.8 Diluted net (loss) earnings per common share - continuing operations (GAAP) NM 117.6 NM Adjusted diluted net earnings per common share - continuing operations (Non-GAAP measure) 1 (20.9) 2.5 14.6 Percent to sales 2023 2022 2021 Gross margin 19.5 21.3 21.2 Selling, general and administrative expenses 24.6 20.6 18.6 1 See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures.
Biggest changeWBA Fiscal 2024 Form 10-K 45 Table of Co n tents EXECUTIVE SUMMARY The following table presents certain key financial statistics for the Company for fiscal 2024, 2023 and 2022: (in millions, except per share amounts) 2024 2023 2022 Sales $ 147,658 $ 139,081 $ 132,703 Gross profit 26,524 27,072 28,265 Selling, general and administrative expenses 28,113 34,205 27,295 Impairment of goodwill 12,701 — — Equity earnings in Cencora 213 252 418 Operating (loss) income (GAAP) (14,076) (6,882) 1,387 Adjusted operating income (Non-GAAP measure) 1 2,624 3,871 5,133 (Loss) earnings before interest and income tax provision (benefit) (13,736) (4,839) 4,385 Net (loss) earnings attributable to Walgreens Boots Alliance, Inc.
The U.S. Healthcare segment delivers improved health outcomes and lower costs for payors and providers by delivering care through owned and partnered assets. The U.S.
Healthcare segment delivers improved health outcomes and lower costs for payors and providers by delivering care through owned and partnered assets. The U.S.
Retail Pharmacy International U.S. Healthcare Corporate and Other Walgreens Boots Alliance, Inc.
Retail Pharmacy International U.S. Healthcare Corporate and Other Walgreens Boots Alliance, Inc.
Retail Pharmacy International U.S. Healthcare Corporate and Other Walgreens Boots Alliance, Inc.
Retail Pharmacy International U.S. Healthcare Corporate and Other Walgreens Boots Alliance, Inc.
The Company has real estate leases which require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs and hence are not included in the lease payments used to calculate lease liability.
The Company has real estate leases that require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs and hence are not included in the lease payments used to calculate lease liability.
The Company has repurchased, and may from time to time in the future repurchase, shares on the open market through Rule 10b5-1 plans, which enable the Company to repurchase shares at times when we otherwise might be precluded from doing so under federal securities laws. Debt covenants Each of the Company’s credit facilities described in Note 8.
The Company has repurchased, and may from time to time in the future repurchase, shares on the open market through Rule 10b5-1 plans, which enable the Company to repurchase shares at times when we otherwise might be precluded from doing so under federal securities laws. Debt covenants Each of the Company’s credit facilities described in Note 7.
These factors include: the impact of opioid litigation settlements, 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 financial performance of our equity method investees, including Cencora, Inc.
These factors include: the impact of opioid-related claims and litigation settlements; 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 financial performance of our equity method investees, including Cencora, Inc.
In fiscal 2022, the Company recorded charges related to a settlement agreement with the State of Florida to resolve all claims related to the distribution and dispensing of prescription opioid medications across the Company’s pharmacies in the State of Florida. 2 Transformational Cost Management Program charges are costs associated with a formal restructuring plan.
In fiscal 2022, the Company recorded charges related to a settlement agreement with the State of Florida to resolve all claims related to the distribution and dispensing of prescription opioid medications across the Company’s pharmacies in the State of Florida. 3 Transformational Cost Management Program charges are costs associated with a formal restructuring plan.
Pharmacy-led health and beauty retail businesses include Boots branded stores in the UK, the Republic of Ireland and Thailand, the Benavides brand in Mexico and the Ahumada brand in Chile. Sales for these businesses are principally derived from the sale of prescription drugs and health and wellness, beauty, personal care and other consumer products.
Pharmacy-led health and beauty retail businesses include Boots branded stores in the UK, the Republic of Ireland and Thailand, and the Benavides brand in Mexico. Sales for these businesses are principally derived from the sale of prescription drugs and health and wellness, beauty, personal care and other consumer products.
Healthcare segment to Operating loss as the closest GAAP measure for the segment profitability. The Company does not measure Net earnings attributable to Walgreens Boots Alliance, Inc. for its segments. 20 Includes GAAP stock-based compensation expense excluding expenses related to acquisition-related amortization and acquisition-related costs.
Healthcare segment to Operating loss as the closest GAAP measure for the segment profitability. The Company does not measure Net earnings attributable to Walgreens Boots Alliance, Inc. for its segments. 21 Includes GAAP stock-based compensation expense excluding expenses related to acquisition-related amortization and acquisition-related costs.
These include, without limitation, any statements regarding the Company's future operations, financial or operating results, capital allocation, anticipated debt levels and ratios, future earnings, planned activities, anticipated growth, market opportunities, strategies, competition, and other expectations and targets for future periods.
These include, without limitation, any statements regarding the Company’s future operations, financial or operating results, capital allocation, anticipated debt levels and ratios, future earnings, planned activities, anticipated growth, goodwill impairment, market opportunities, strategies, competition, and other expectations and targets for future periods.
See notes to the “ Net (loss) earnings to Adjusted net earnings & Diluted net (loss) earnings per share to Adjusted diluted net earnings per share” and “Operating loss to Adjusted EBITDA for U.S. Healthcare segment” reconciliation tables for definitions of non-GAAP financial measures and related adjustments presented below.
See notes to the “Net (loss) earnings to Adjusted net earnings & Diluted net (loss) earnings per share to Adjusted diluted net earnings per share” and “Operating loss to Adjusted EBITDA for the U.S. Healthcare segment” reconciliation tables for definitions of non-GAAP financial measures and related adjustments presented below.
Management’s assessment of current litigation and other legal proceedings, including the corresponding accruals, could change because of the discovery of facts with respect to legal actions or other proceedings pending against the Company which are not presently known.
Management’s assessment of current litigation and other legal proceedings, including the corresponding accruals, could change because of the discovery of facts with respect to legal actions or other proceedings pending against the Company that are not presently known.
These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented herein. These measures, which are described in more detail in this Annual Report on Form 10-K, may not be comparable to similarly-titled performance indicators used by other companies.
These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented herein. These measures, which are described in more detail in this Form 10-K, may not be comparable to similarly-titled performance indicators used by other companies.
The Company expects to fund its working capital needs, capital expenditures, expansion, acquisitions, dividend payments, stock repurchases and debt service obligations from liquidity sources including cash flow from operations, availability under existing credit facilities, commercial paper programs, working capital financing arrangements, debt offerings, sale of marketable securities, current cash, and monetization of investments and other assets.
The Company expects to fund its working capital needs, capital expenditures, expansion, acquisitions, dividend payments, stock repurchases and debt service obligations from liquidity sources including cash flow from operations, availability under existing credit facilities, working capital financing arrangements, debt offerings, sale of marketable securities, current cash, and monetization of investments and other assets.
The cost of the settlements is reflected in the Consolidated Statement of Earnings within Selling, general and administrative expenses as part of the U.S. Retail Pharmacy segment. See Note 11. Commitments and contingencies, to the Consolidated Financial Statements included in Part II, Item 8 for further information.
The cost of the settlements is reflected in the Consolidated Statements of Earnings within Selling, general and administrative expenses as part of the U.S. Retail Pharmacy segment. See Note 10. Commitments and contingencies, to the Consolidated Financial Statements included in Part II, Item 8 for further information.
The Company excludes these charges when evaluating operating performance because it does not incur such charges on a predictable basis and exclusion of such charges enables more consistent evaluation of the Company’s operating performance. These charges are recorded within Selling, general and administrative expenses within the Consolidated Statement of Earnings.
The Company excludes these charges when evaluating operating performance because it does not incur such charges on a predictable basis and exclusion of such charges enables more consistent evaluation of the Company’s operating performance. These charges are recorded in Selling, general and administrative expenses within the Consolidated Statements of Earnings.
Fair value of the asset group is generally determined using the income approach based on cash flows expected from the use and eventual disposal of the asset group. The determination of the fair value of the asset group requires management to estimate a number of factors including anticipated future cash flows and discount rates.
Fair value of the asset group is generally determined using a market or an income approach based on cash flows expected from the use and eventual disposal of the asset group. The determination of the fair value of the asset group requires management to estimate a number of factors including anticipated future cash flows and discount rates.
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.
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 timely, if at all, to its stockholders.
Amortization expense, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired, or the estimated useful life of an intangible asset is revised. These charges are primarily recorded within Selling, general and administrative expenses.
Amortization expense, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired, or the estimated useful life of an intangible asset is revised. These charges are primarily recorded in Selling, general and administrative expenses within the Consolidated Statements of Earnings.
Stock repurchase program In June 2018, the Company's Board of Director's approved a stock repurchase program (the “June 2018 stock repurchase program”), which authorized the repurchase of up to $10.0 billion of the Company's common stock of which the Company had repurchased $8.0 billion as of August 31, 2023. The June 2018 stock repurchase program has no specified expiration date.
Stock repurchase program In June 2018, the Company’s Board of Directors approved a stock repurchase program (the “June 2018 stock repurchase program”), which authorized the repurchase of up to $10.0 billion of the Company’s common stock of which the Company had repurchased $8.0 billion as of August 31, 2024. The June 2018 stock repurchase program has no specified expiration date.
The Company does not believe this volatility related to the mark-to-market adjustments on the underlying derivative instruments reflects the Company’s operational performance. 12 Includes significant gains resulting from the change in classification of investments as well as fair value adjustments recorded on investments in equity securities to Other income, net.
The Company does not believe this volatility related to the non-cash mark-to-market adjustments on the underlying derivative instruments reflects the Company’s operational performance. 12 Includes significant gains resulting from the change in classification of investments as well as the fair value adjustments recorded on investments in equity securities to Other income, net, in the Consolidated Statements of Earnings.
Operating (loss) income (GAAP) $ (5,307) $ 379 $ (1,725) $ (228) $ (6,882) Certain legal and regulatory accruals and settlements 7,466 — — — 7,466 Transformational cost management 830 222 115 14 1,181 Acquisition-related amortization 322 60 743 — 1,126 Acquisition-related costs 19 (25) 301 27 323 Impairment of intangible assets — 299 — — 299 Adjustments to equity earnings in Cencora 211 — — — 211 LIFO provision 187 — — — 187 Store damage and inventory loss insurance recovery (40) — — — (40) Adjusted operating income (loss) (Non-GAAP measure) $ 3,689 $ 935 $ (566) $ (187) $ 3,871 Fiscal 2022 U.S.
Operating (loss) income (GAAP) $ (5,307) $ 379 $ (1,725) $ (228) $ (6,882) Certain legal and regulatory accruals and settlements 7,466 — — — 7,466 Transformational cost management 830 222 115 14 1,181 Acquisition-related amortization 322 60 743 — 1,126 Acquisition-related costs 19 (25) 301 27 323 Impairment of intangible assets — 299 — — 299 Adjustments to equity earnings in Cencora 211 — — — 211 LIFO provision 187 — — — 187 Store damage and inventory loss insurance recovery (40) — — — (40) Adjusted operating income (loss) (Non-GAAP measure) $ 3,689 $ 935 $ (566) $ (187) $ 3,871 WBA Fiscal 2024 Form 10-K 54 Table of Co n tents Fiscal 2022 U.S.
WBA Fiscal 2023 Form 10-K 46 Table of Contents 2 Comparable sales in constant currency are defined as sales from stores that have been open for at least twelve consecutive months without closure for seven or more consecutive days, including due to looting or store damage, and without a major remodel or being subject to a natural disaster, in the past twelve months as well as e-commerce sales.
WBA Fiscal 2024 Form 10-K 50 Table of Co n tents 2 Comparable sales in constant currency are defined as sales from stores that have been open for at least twelve consecutive months without closure for seven or more consecutive days, including due to looting or store damage, and without a major remodel or being subject to a natural disaster, in the past twelve months as well as e-commerce sales.
These charges are primarily recorded within Selling, general and administrative expenses within the Consolidated Statement of Earnings. These costs do not reflect current operating performance and are impacted by the timing of restructuring activity. 3 Acquisition-related amortization includes amortization of acquisition-related intangible assets, inventory valuation adjustments and stock-based compensation fair valuation adjustments.
These charges are primarily recorded in Selling, general and administrative expenses within the Consolidated Statements of Earnings. These costs do not reflect current operating performance and are impacted by the timing of restructuring activity. 4 Acquisition-related amortization includes amortization of acquisition-related intangible assets and stock-based compensation fair valuation adjustments.
WBA Fiscal 2023 Form 10-K 44 Table of Contents 4 Comparable sales are defined as sales from stores that have been open for at least twelve consecutive months without closure for seven or more consecutive days, including due to looting or store damage, and without a major remodel or being subject to a natural disaster, in the past twelve months as well as e-commerce sales.
WBA Fiscal 2024 Form 10-K 48 Table of Co n tents 4 Comparable sales are defined as sales from stores that have been open for at least twelve consecutive months without closure for seven or more consecutive days, including due to looting or store damage, and without a major remodel or being subject to a natural disaster, in the past twelve months as well as e-commerce sales.
See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures. WBA Fiscal 2023 Form 10-K 45 Table of Contents International The Company's International segment consists of pharmacy-led health and beauty retail businesses outside the U.S. and the Company's pharmaceutical wholesale and distribution business in Germany.
See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures. WBA Fiscal 2024 Form 10-K 49 Table of Co n tents International The Company’s International segment consists of pharmacy-led health and beauty retail businesses outside the U.S. and the Company’s pharmaceutical wholesale and distribution business in Germany.
Cash, cash equivalents, marketable securities and restricted cash were $856 million (including $144 million in non-U.S. jurisdictions) and $2.6 billion (including $188 million in non-U.S. jurisdictions) as of August 31, 2023 and August 31, 2022, respectively. Short-term investment objectives are primarily to minimize risk and maintain liquidity.
Cash, cash equivalents, marketable securities and restricted cash were $3.2 billion (including $289 million in non-U.S. jurisdictions) and $856 million (including $144 million in non-U.S. jurisdictions) as of August 31, 2024 and August 31, 2023, respectively. Short-term investment objectives are primarily to minimize risk and maintain liquidity.
WBA Fiscal 2023 Form 10-K 55 Table of Contents LIQUIDITY AND CAPITAL RESOURCES The Company's long-term capital policy is to: maintain a strong balance sheet and financial flexibility; reinvest in its core strategies; invest in strategic opportunities that reinforce its core strategies and meet return requirements; and return surplus cash flow to stockholders in the form of dividends and share repurchases over the long term.
WBA Fiscal 2024 Form 10-K 59 Table of Co n tents LIQUIDITY AND CAPITAL RESOURCES The Company’s long-term capital policy is to: maintain a strong balance sheet and financial flexibility; reinvest in its core strategies; invest in strategic opportunities that reinforce its core strategies and meet return requirements; and return surplus cash flow to stockholders in the form of dividends and share repurchases over the long term.
The Company considers certain metrics presented in this Annual Report on Form 10-K, such as comparable sales (in constant currency), comparable pharmacy sales (in constant currency), comparable retail sales (in constant currency), comparable number of prescriptions and comparable 30-day equivalent prescriptions to be key performance indicators because the Company’s management has evaluated its results of operations using these metrics and believes that these key performance indicators presented provide additional perspective and insights when analyzing the core operating performance of the Company from period to period and trends in its historical operating results.
WBA Fiscal 2024 Form 10-K 58 Table of Co n tents KEY PERFORMANCE INDICATORS The Company considers certain metrics presented in this Form 10-K, such as comparable sales (in constant currency), comparable pharmacy sales (in constant currency), comparable retail sales (in constant currency), comparable number of prescriptions and comparable 30-day equivalent prescriptions to be key performance indicators because the Company’s management has evaluated its results of operations using these metrics and believes that these key performance indicators presented provide additional perspective and insights when analyzing the core operating performance of the Company from period to period and trends in its historical operating results.
As of August 31, 2023, the Company has recorded a $7.0 billion liability to resolve a substantial majority of opioid-related claims and litigation settlements and is expected to make payments for remediation and legal fees over the next 15 years. See Note 11.
As of August 31, 2024, the Company has recorded a $6.6 billion liability to resolve a substantial majority of opioid-related claims and litigation settlements and is expected to make payments for remediation and legal fees over the next 15 years. See Note 10.
Cash flows from investing activities Net cash (used for) provided by investing activities was $(3.1) billion, $(1.1) billion and $4.1 billion in fiscal 2023, 2022 and 2021, respectively.
Cash flows from investing activities Net cash provided by (used for) investing activities was $1.9 billion, $(3.1) billion and $(1.1) billion in fiscal 2024, 2023 and 2022, respectively.
WBA Fiscal 2023 Form 10-K 56 Table of Contents Net cash used for investing activities in fiscal 2023 includes cash outflows for the acquisition of Summit Health, net of cash acquired of $6.7 billion, offset by cash proceeds of $4.2 billion related to the Company's sale of Cencora and Option Care Health common stock and cash proceeds of $1.8 billion from sale-leaseback transactions.
Net cash used for investing activities in fiscal 2023 includes cash outflows for the acquisition by VillageMD of Summit Health, net of cash acquired of $6.7 billion, offset by cash proceeds of $4.2 billion related to the Company’s sale of Cencora and Option Care Health common stock and cash proceeds of $1.8 billion from sale-leaseback transactions.
The Company uses the following methods to determine its estimates: WBA Fiscal 2023 Form 10-K 58 Table of Contents Business combinations – The Company accounts for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed, including amounts attributable to non-controlling interests, be recorded at their respective fair values at the date of acquisition.
The Company uses the following methods to determine its estimates: Business combinations – The Company accounts for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed, including amounts attributable to non-controlling interests, be recorded at their respective fair values at the date of acquisition.
NM - Not meaningful. Percentage increases above 200% or when one period includes income and other period includes loss are considered not meaningful. WBA Fiscal 2023 Form 10-K 42 Table of Contents WALGREENS BOOTS ALLIANCE RESULTS OF OPERATIONS The following information summarizes our results of operations for fiscal 2023 compared to fiscal 2022.
NM - Not meaningful. Percentage increases above 200% or when one period includes income and other period includes loss are considered not meaningful. WBA Fiscal 2024 Form 10-K 46 Table of Co n tents WALGREENS BOOTS ALLIANCE RESULTS OF OPERATIONS The following information summarizes our results of operations for fiscal 2024 compared to fiscal 2023.
For discussion related to the results of operations by segment for fiscal 2022 compared to fiscal 2021, refer to Part II, Item 7. Management's discussion and analysis of financial condition and results of operations in our fiscal 2022 Form 10-K, as amended by Form 10-K/A which was filed with the United States Securities and Exchange Commission on November 23, 2022.
For discussion related to our results of operations for fiscal 2023 compared to fiscal 2022, refer to Part II, Item 7. Management ’ s discussion and analysis of financial condition and results of operations in our fiscal 2023 Form 10-K, as amended by Form 10-K/A which was filed with the United States Securities and Exchange Commission on November 22, 2023.
Cash flows from financing activities Net cash used for financing activities was $887 million, $1.5 billion and $9.0 billion in fiscal 2023, 2022 and 2021, respectively. In fiscal 2023, 2022 and 2021, proceeds from debt, primarily from revolving credit facilities, commercial paper and the issuance of notes, were $6.3 billion, $11.9 billion and $12.7 billion, respectively.
Cash flows from financing activities Net cash used for financing activities was $538 million, $887 million and $1.5 billion in fiscal 2024, 2023 and 2022, respectively. In fiscal 2024, 2023 and 2022, proceeds from debt, primarily from revolving credit facilities, issuance of commercial paper and notes, were $31.4 billion, $6.3 billion and $11.9 billion, respectively.
To date, the Company has taken actions across all aspects of the Transformational Cost Management Program which focus primarily on the U.S. Retail Pharmacy and International reportable segments along with the Company's global functions. Divisional optimization within the Company’s segments includes activities such as optimization of stores.
The Company took actions across all aspects of the Transformational Cost Management Program, which focused primarily on the U.S. Retail Pharmacy and International reportable segments along with the Company’s global functions. Divisional optimization within the Company’s segments included activities such as optimization of stores.
Equity method investments and Note 9. Financial instruments, to the Consolidated Financial Statements included in Part II, Item 8 for further information. The Company purchased treasury shares to support the needs of the employee stock plans totaling $150 million, $187 million and $110 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.
Financial instruments, to the Consolidated Financial Statements included in Part II, Item 8 for further information. The Company purchased treasury shares to support the needs of the employee stock plans totaling $69 million, $150 million and $187 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively.
FINANCIAL PERFORMANCE (in millions, except location amounts) 2023 2022 2021 Sales $ 110,314 $ 109,078 $ 112,005 Gross profit 22,115 23,669 23,736 Selling, general and administrative expenses 27,674 21,180 20,042 Equity earnings (loss) in Cencora 252 418 (1,139) Operating (loss) income (GAAP) (5,307) 2,907 2,554 Adjusted operating income 1 3,689 5,029 5,019 Number of prescriptions 2 800.8 819.6 827.5 30-day equivalent prescriptions 2,3 1,211.6 1,216.4 1,210.6 Number of locations at period end 8,720 8,901 8,973 Percentage increases (decreases) 2023 2022 2021 Sales 1.1 (2.6) 4.0 Gross profit (6.6) (0.3) 6.4 Selling, general and administrative expenses 30.7 5.7 3.7 Operating (loss) income NM 13.8 (22.9) Adjusted operating income 1 (26.6) 0.2 5.4 Comparable sales 4 4.9 5.1 5.1 Pharmacy sales 2.1 (5.3) 5.5 Comparable pharmacy sales 4 7.2 4.7 6.7 Retail sales (1.6) 5.6 (0.4) Comparable retail sales 4 (0.8) 6.1 1.2 Comparable number of prescriptions 2,4 (1.3) (1.0) 2.4 Comparable 30-day equivalent prescriptions 2,3,4 0.6 1.3 5.0 Percent to sales 2023 2022 2021 Gross margin 20.0 21.7 21.2 Selling, general and administrative expenses 25.1 19.4 17.9 1 See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures. 2 Includes vaccinations, including COVID-19. 3 Includes the adjustment to convert prescriptions greater than 84 days to the equivalent of three 30-day prescriptions.
FINANCIAL PERFORMANCE (in millions, except location amounts) 2024 2023 2022 Sales $ 115,778 $ 110,314 $ 109,078 Gross profit 20,736 22,115 23,669 Selling, general and administrative expenses 21,334 27,674 21,180 Equity earnings in Cencora 213 252 418 Operating (loss) income (385) (5,307) 2,907 Adjusted operating income 1 2,167 3,689 5,029 Number of prescriptions 2 796.4 800.8 819.6 30-day equivalent prescriptions 2,3 1,226.4 1,211.6 1,216.4 Number of locations at period end 5 8,572 8,720 8,901 Percentage increases (decreases) 2024 2023 2022 Sales 5.0 1.1 (2.6) Gross profit (6.2) (6.6) (0.3) Selling, general and administrative expenses (22.9) 30.7 5.7 Operating (loss) income (92.8) NM 13.8 Adjusted operating income 1 (41.3) (26.6) 0.2 Comparable sales 4 6.2 4.9 5.1 Pharmacy sales 8.2 2.1 (5.3) Comparable pharmacy sales 4 9.8 7.2 4.7 Retail sales (4.6) (1.6) 5.6 Comparable retail sales 4 (3.4) (0.8) 6.1 Comparable number of prescriptions 2,4 0.2 (1.3) (1.0) Comparable 30-day equivalent prescriptions 2,3,4 2.0 0.6 1.3 Percent to sales 2024 2023 2022 Gross margin 17.9 20.0 21.7 Selling, general and administrative expenses 18.4 25.1 19.4 1 See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures. 2 Includes vaccinations, including COVID-19.
The Company presents certain information related to operating results in “constant currency,” which is a non-GAAP financial measure. Comparable sales in constant currency, comparable pharmacy sales in constant currency and comparable retail sales in constant currency exclude the effects of fluctuations in foreign currency exchange rates.
Quantitative and qualitative disclosure about market risk, for further information on currency risk. The Company presents certain information related to operating results in “constant currency,” which is a non-GAAP financial measure. Comparable sales in constant currency, comparable pharmacy sales in constant currency and comparable retail sales in constant currency exclude the effects of fluctuations in foreign currency exchange rates.
See “--Non-GAAP Measures.” FINANCIAL PERFORMANCE (in millions, except location amounts) 2023 2022 2021 Sales $ 22,198 $ 21,830 $ 20,505 Gross profit 4,704 4,618 4,328 Selling, general and administrative expenses 4,326 4,964 4,101 Operating income (loss) 379 (346) 227 Adjusted operating income 1 935 726 466 Number of locations at period end 3,960 3,989 4,031 Percentage increases (decreases) 2023 2022 2021 Sales 1.7 6.5 43.6 Gross profit 1.9 6.7 14.7 Selling, general and administrative expenses (12.9) 21.0 (30.1) Operating income (loss) (GAAP) NM NM 110.9 Adjusted operating income 1 28.8 55.7 197.2 Comparable sales in constant currency 2 9.5 11.3 3.9 Pharmacy sales (1.7) (2.1) 8.7 Comparable pharmacy sales in constant currency 2 4.7 2.5 6.7 Retail sales 5.8 11.2 5.5 Comparable retail sales in constant currency 2 12.1 16.9 2.0 Percent to sales 2023 2022 2021 Gross margin 21.2 21.2 21.1 Selling, general and administrative expenses 19.5 22.7 20.0 1 See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures.
See “--Non-GAAP Measures.” FINANCIAL PERFORMANCE (in millions, except location amounts) 2024 2023 2022 Sales $ 23,552 $ 22,198 $ 21,830 Gross profit 5,025 4,704 4,618 Selling, general and administrative expenses 4,343 4,326 4,964 Operating income (loss) 682 379 (346) Adjusted operating income 1 793 935 726 Number of locations at period end 3 3,364 3,960 3,989 Percentage increases (decreases) 2024 2023 2022 Sales 6.1 1.7 6.5 Gross profit 6.8 1.9 6.7 Selling, general and administrative expenses 0.4 (12.9) 21.0 Operating income (loss) 80.1 NM NM Adjusted operating income 1 (15.2) 28.8 55.7 Comparable sales in constant currency 2 6.0 9.5 11.3 Pharmacy sales (1.8) (1.7) (2.1) Comparable pharmacy sales in constant currency 2 4.9 4.7 2.5 Retail sales 7.7 5.8 11.2 Comparable retail sales in constant currency 2 6.5 12.1 16.9 Percent to sales 2024 2023 2022 Gross margin 21.3 21.2 21.2 Selling, general and administrative expenses 18.4 19.5 22.7 1 See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures.
WBA Fiscal 2023 Form 10-K 49 Table of Contents NON-GAAP RECONCILIATIONS Operating (loss) income to Adjusted operating income by segments (in millions) The following are reconciliations of segment GAAP operating (loss) income to segment adjusted operating income (loss), as well as reconciliations of consolidated operating (loss) income (GAAP measure) to consolidated adjusted operating income (Non-GAAP measure): Fiscal 2023 U.S.
WBA Fiscal 2024 Form 10-K 53 Table of Co n tents NON-GAAP RECONCILIATIONS Operating (loss) income to Adjusted operating income (loss) by segments (in millions) The following are reconciliations of segment GAAP operating (loss) income to segment adjusted operating income (loss), as well as reconciliations of consolidated operating (loss) income (GAAP measure) to consolidated adjusted operating income (Non-GAAP measure): Fiscal 2024 U.S.
Operating loss for fiscal 2023 was $5.3 billion, including income of $252 million from the Company's share of equity earnings in Cencora. This compared to $2.9 billion of operating income in the year ago period, including, $418 million from Company's share of equity earnings in Cencora.
Operating loss for fiscal 2024 was $385 million, including income of $213 million from the Company’s share of equity earnings in Cencora. This result compared to $5.3 billion of operating loss in the year-ago period, including, $252 million from the Company’s share of equity earnings in Cencora.
Within comparable pharmacy sales, 30-day equivalent prescriptions filled in fiscal 2023 increased by 0.6 percent compared to the year ago period. Total prescriptions filled in fiscal 2023, including immunizations, adjusted to 30-day equivalents, decreased 0.4 percent to 1.2 billion, impacted by lower market growth.
Within comparable pharmacy sales, 30-day equivalent prescriptions filled in fiscal 2024 increased by 2.0 percent compared to the year-ago period. Total prescriptions filled in fiscal 2024, including immunizations, adjusted to 30-day equivalents, increased 1.2 percent to 1.2 billion.
Acquisitions and other investments to the Consolidated Financial Statements included in Part II, Item 8 herein for further information.
Commitments and contingencies to the Consolidated Financial Statements included in Part II, Item 8 herein for further information.
In fiscal 2023, the Company recorded charges related to the opioid litigation settlement frameworks and certain other legal matters.
In fiscal 2024 and 2023, the Company recorded charges related to the opioid litigation Multistate Agreement and certain other legal matters.
These adjustments would be made in future periods. Some of the more significant estimates include business combinations, leases, goodwill and indefinite-lived intangible asset impairment, long-lived assets impairment, cost of sales and inventory, equity method investments, pension and post-retirement benefits, contingencies and income taxes.
Some of the more significant estimates include business combinations, leases, goodwill and indefinite-lived intangible asset impairment, long-lived assets impairment, cost of sales and inventory, equity method investments, pension and post-retirement benefits, legal and other contingencies and income taxes.
WBA Fiscal 2023 Form 10-K 43 Table of Contents RESULTS OF OPERATIONS BY SEGMENT The following information summarizes our results of operations by segment for fiscal 2023 compared to fiscal 2022. U.S. Retail Pharmacy The Company's U.S.
WBA Fiscal 2024 Form 10-K 47 Table of Co n tents RESULTS OF OPERATIONS BY SEGMENT The following information summarizes our results of operations by segment for fiscal 2024 compared to fiscal 2023. U.S. Retail Pharmacy The Company’s U.S.
WBA Fiscal 2023 Form 10-K 60 Table of Contents Healthcare services For operations and activities related to the provision of healthcare, cost of services includes activities that are directly related to the provision of care, including medical claims expense, cost of care, clinic operating and support costs, and allocated depreciation and amortization.
Healthcare services For operations and activities related to the provision of healthcare, cost of services includes activities that are directly related to the provision of care, including medical claims expense, cost of care, clinic operating and support costs, and allocated depreciation and amortization.
In fiscal 2022, the Company recorded pre-tax gains of $2.2 billion and $402 million for VillageMD and Shields, respectively, related to the change in classification of previously held minority equity interests and debt securities to fair value on business combinations.
In fiscal 2022, the Company recorded pre-tax gains of $2.2 billion and $402 million for VillageMD and Shields, respectively, related to the change in classification of previously held minority equity interests and debt securities to fair value on business combinations. 13 Gains on the sale of equity method investments are recorded in Other income, net within the Consolidated Statements of Earnings.
FINANCIAL PERFORMANCE (in millions) 2023 2022 2021 Sales $ 6,570 $ 1,795 $ — Gross profit (loss) 252 (22) — Selling, general and administrative expenses 1,977 806 57 Operating loss (GAAP) (1,725) (829) (57) Adjusted operating loss 1 (566) (370) (57) Adjusted EBITDA (Non-GAAP measure) 1 (376) (312) (56) 1 See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures.
FINANCIAL PERFORMANCE (in millions) 2024 2023 2022 Sales $ 8,345 $ 6,570 $ 1,795 Gross profit (loss) 734 252 (22) Selling, general and administrative expenses 2,273 1,977 806 Impairment of goodwill 12,701 — — Operating loss (GAAP) (14,241) (1,725) (829) Adjusted operating loss 1 (134) (566) (370) Adjusted EBITDA (Non-GAAP measure) 1 66 (376) (312) 1 See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures.
NON-GAAP MEASURES The following information provides reconciliations of the supplemental non-GAAP financial measures, as defined under the SEC rules, presented herein to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States (GAAP).
WBA Fiscal 2024 Form 10-K 52 Table of Co n tents NON-GAAP MEASURES The following information provides reconciliations of the supplemental non-GAAP financial measures, as defined under the SEC rules, presented herein to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”).
Factors that might cause a difference include, but are not limited to, those discussed under “Cautionary note regarding forward-looking statements” below and in Risk factors in Part I, Item 1A of this Form 10-K.
This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in forward-looking statements that involve risks and uncertainties. Factors that might cause a difference include, but are not limited to, those discussed under “Cautionary note regarding forward-looking statements” below and in Part I, Item 1A, Risk factors, of this Form 10-K.
Retail Pharmacy $ 1,421 $ 1,207 $ 1,030 International 308 295 243 U.S.
Retail Pharmacy $ 1,041 $ 1,421 $ 1,207 International 247 308 295 U.S.
Post-acquisition compensation expense recognized in excess of the original grant date fair value of acquiree awards are excluded from the related non-GAAP measures as these arise from acquisition-related accounting requirements or agreements, and are not reflective of normal operating activities. 4 Acquisition-related costs are transaction and integration costs associated with certain merger, acquisition and divestitures related activities recorded in operating income within the Consolidated Statement of Earnings.
Post-acquisition compensation expense recognized in excess of the original grant date fair value of acquiree awards are excluded from the related non-GAAP measures as these arise from acquisition-related accounting requirements or agreements, and are not reflective of normal operating activities.
Examples of such costs include deal costs, severance, stock compensation and employee transaction success bonuses. These charges are primarily recorded within Selling, general and administrative expenses.
Examples of such costs include deal costs, severance, stock-based compensation, employee transaction success bonuses, and other integration related exit and disposal charges. These charges are primarily recorded within Selling, general and administrative expenses within the Consolidated Statements of Earnings.
Comparable sales in constant currency exclude wholesale sales in Germany. E-commerce sales include digitally initiated sales online or through mobile applications. Relocated stores are not included as comparable sales for the first twelve months after the relocation. Acquired stores are not included as comparable sales for the first twelve months after acquisition or conversion, when applicable, whichever is later.
Comparable sales in constant currency exclude wholesale sales in Germany and sales from dispositions in the current period. E-commerce sales include digitally initiated sales online or through mobile applications. Relocated stores are not included as comparable sales for the first twelve months after the relocation.
Healthcare segment currently consists of a majority position in 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; CareCentrix, a participant in the post-acute and home care management sectors, and the Walgreens Health organic business that contracts with payors and providers to deliver clinical healthcare services and care management programs to their members and members’ caregivers through both digital and physical channels.
Healthcare segment currently consists of a majority position in 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; as well as Shields Health Solutions Parent, LLC (“Shields”), a specialty pharmacy integrator and accelerator for hospitals; and CareCentrix, a participant in the post-acute and home care management sectors, and the Walgreens Health organic business that contracts with different participants in the healthcare ecosystem to provide commercial and clinical healthcare services.
Retail Pharmacy segment inventory is accounted for using the last-in-first-out (“LIFO”) method. This adjustment represents the impact on cost of sales as if the U.S. Retail Pharmacy segment inventory is accounted for using first-in first-out (“FIFO”) method.
Adjustments are recorded to equity earnings in Cencora within the Consolidated Statements of Earnings. 7 The Company’s U.S. Retail Pharmacy segment inventory is accounted for using the last-in-first-out (“LIFO”) method. This adjustment represents the impact on cost of sales as if the U.S. Retail Pharmacy segment inventory is accounted for using first-in first-out (“FIFO”) method.
Adjusted operating income was adversely impacted by 3.7 percentage points, or $27 million, as a result of currency translation.
Operating income was favorably impacted by 3.5 percentage points or $13 million, as a result of currency translation.
Healthcare segment; the influence of certain holidays; seasonality; foreign currency rates; changes in vendor, payor and customer relationships and terms and associated reimbursement pressure; strategic transactions and acquisitions, dispositions, joint ventures and other strategic collaborations; changes in laws, including the tax law changes in the United States (“U.S.”) and the United Kingdom (“UK”); 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 timing and magnitude of cost reduction initiatives, including under our Transformational Cost Management Program (as defined herein); the timing and severity of the cough, cold and flu season; fluctuations in variable costs; adjustments to Centers for Medicare and Medicaid Services, Medicare Advantage and Medicare rates; the impacts of looting, natural disasters, war, terrorism and other catastrophic events, and changes to management, including turnover of our top executives and our ability to retract and retain qualified associates in the markets in which the Company operates.
(“Cencora”); the financial performance of our consolidated subsidiaries in the United States (“U.S.”) Healthcare segment; the amount of goodwill impairment charges (which are based in part on estimates of future performance); the influence of certain holidays; seasonality; foreign currency rates; changes in National Average Drug Acquisition Cost (“NADAC”) benchmark pricing; changes in vendor, payor and customer relationships and terms and associated reimbursement pressure; strategic transactions and acquisitions, dispositions, joint ventures and other strategic collaborations; 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; 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 expected execution and effect of our business strategies, including the breadth, timing and impact of the actions related to our strategic review; the timing and magnitude of cost reduction initiatives, including under our Transformational Cost Management Program and Footprint Optimization Program (each, as defined below); the timing and severity of the cough, cold and flu season; fluctuations in variable costs; adjustments to Centers for Medicare and Medicaid Services, Medicare Advantage and Medicare rates; shifts in consumer behavior and buying preferences; the impacts of looting, natural disasters, war, terrorism and other catastrophic events, and changes to management, including turnover of our top executives and our ability to attract and retain qualified associates in the markets in which the Company operates.
Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “can,” “will,” “project,” “intend,” “plan,” “goal,” “guidance,” “target,” “aim,” “continue,” “transform,” “accelerate,” “model,” “long-term,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “possible,” “assume,” “potential,” “preliminary,” and variations of such words and similar expressions are intended to identify such forward-looking statements.
Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “can,” “will,” “project,” “intend,” “plan,” “goal,” “opportunity,” “guidance,” “projection,” “target,” “aim,” “continue,” “extend,” “transform,” “strive,” “enable,” “create,” “position,” “accelerate,” “model,” “long-term,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “possible,” “assume,” “potential,” “preliminary,” “trend,” “future,” “predict,” “assumption,” “commentary,” “focus on,” “ambition,” “vision,” “belief,” “hypothetical,” “aspire,” “confident,” “remains,” and variations of such words and similar expressions are intended to identify such forward-looking statements.
Specialty pharmacy Specialty pharmacy represents a significant and growing proportion of prescription drug spending in the U.S., a significant portion of which is dispensed outside of traditional retail pharmacies.
WBA Fiscal 2024 Form 10-K 41 Table of Co n tents Specialty pharmacy Specialty pharmacy represents a significant and growing proportion of prescription drug spending in the U.S., a significant portion of which is dispensed outside of traditional retail pharmacies.
The LIFO provision is affected by changes in inventory quantities, product mix, and manufacturer pricing practices, which may be impacted by market and other external influences.
The LIFO provision is affected by changes in inventory quantities, product mix, and manufacturer pricing practices, which may be impacted by market and other external influences. Therefore, the Company cannot control the amounts recognized or timing of these items.
The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.
WBA Fiscal 2024 Form 10-K 65 Table of Co n tents The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report and other documents that we file or furnish with the SEC contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Summary of major accounting policies, to the Consolidated Financial Statements included in Part II, Item 8 for information regarding recent accounting pronouncements. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report and other documents that we file or furnish with the SEC contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
The Company currently estimates that it will recognize aggregate pre-tax charges to its GAAP financial results related to the Transformational Cost Management Program as follows: Transformational Cost Program Activities Range of Charges Lease obligations and other real estate costs 1 $1.5 to $1.6 billion Asset impairments 2 $1.0 to $1.1 billion Employee severance and business transition costs $1.0 to $1.1 billion Information technology transformation and other exit costs $0.3 to $0.4 billion Total cumulative pre-tax exit and disposal charges $3.8 to $4.1 billion Other IT transformation costs $0.2 to $0.3 billion Total estimated pre-tax charges $4.1 to $4.4 billion 1.
The Company recognized aggregate pre-tax charges to its GAAP financial results related to the Transformational Cost Management Program as follows (in millions): Transformational Cost Program Activities Charges Lease obligations and other real estate costs 1 $ 1,654 Asset impairments 2 1,011 Employee severance and business transition costs 975 Information technology transformation and other exit costs 324 Total cumulative pre-tax exit and disposal charges $ 3,964 Other IT transformation costs 351 Total estimated pre-tax charges $ 4,316 1.
WBA Fiscal 2023 Form 10-K 54 Table of Contents 16 Adjustments to post-tax earnings from other equity method investments consist of the proportionate share of certain equity method investees’ non-cash items or unusual or infrequent items consistent with the Company’s non-GAAP adjustments. These charges are recorded within post-tax earnings from other equity method investments.
These charges are recorded within Income tax provision (benefit) within the Consolidated Statements of Earnings. 17 Adjustments to post-tax earnings from other equity method investments consist of the proportionate share of certain equity method investees’ non-cash items or unusual or infrequent items consistent with the Company’s non-GAAP adjustments.
WBA Fiscal 2023 Form 10-K 51 Table of Contents Net (loss) earnings to Adjusted net earnings & Diluted net (loss) earnings per share to Adjusted diluted net earnings per share (in millions) 2023 2022 2021 Net (loss) earnings attributable to Walgreens Boots Alliance, Inc. - continuing operations (GAAP) $ (3,080) $ 4,337 $ 1,994 Adjustments to operating (loss) income: Certain legal and regulatory accruals and settlements 1 7,466 768 75 Transformational cost management 2 1,181 763 417 Acquisition-related amortization 3 1,126 855 523 Acquisition-related costs 4 323 223 54 Impairment of intangible assets 5 299 783 49 Adjustments to equity earnings in Cencora 6 211 218 1,645 LIFO provision 7 187 135 13 Store damage and inventory loss insurance recovery 8 (40) — — Total adjustments to operating (loss) income 10,752 3,746 2,775 Adjustments to other income, net: Impairment of equity method investment and investments in debt and equity securities 9 — 190 — Loss on disposal of business 10 34 38 — (Gain) loss on certain non-hedging derivatives 11 (19) 1 8 Gain on investments, net 12 (109) (2,576) — Gain on sale of equity method investment 13 (1,855) (559) (290) Total adjustments to other income, net (1,949) (2,906) (281) Adjustments to interest expense, net: Early debt extinguishment 14 — 4 414 Total adjustments to interest expense, net — 4 414 Adjustments to income tax (benefit) provision: UK tax rate change 15 — — 378 Equity method non-cash tax 15 44 70 (161) Tax impact of adjustments 15 (2,187) (752) (283) Total adjustments to income tax (benefit) provision (2,143) (681) (65) Adjustments to post-tax earnings from other equity method investments: Adjustments to earnings in other equity method investments 16 40 58 (504) Total adjustments to post-tax earnings from other equity method investments 40 58 (504) Adjustments to net loss attributable to non-controlling interests - continuing operations: LIFO provision 7 — — (2) Transformational cost management 2 — (1) 1 Early debt extinguishment 14 — (1) — Loss on business disposition 10 (14) — — Acquisition-related costs 4 (80) (32) — Discrete tax items 15 108 — — Acquisition-related amortization 3 (196) (164) (75) Total adjustments to net loss attributable to non-controlling interests - continuing operations (182) (198) (77) Adjusted net earnings attributable to Walgreens Boots Alliance, Inc.
(GAAP) $ (8,636) $ (3,080) $ 4,337 Adjustments to operating (loss) income: Impairment of goodwill, intangibles and long-lived assets 1 13,422 299 783 Certain legal and regulatory accruals and settlements 2 561 7,466 768 Transformational cost management 3 891 1,181 763 Acquisition-related amortization 4 1,075 1,126 855 Acquisition-related costs 5 542 323 223 Adjustments to equity earnings in Cencora 6 162 211 218 LIFO provision 7 47 187 135 Store damage and inventory loss insurance recovery 8 — (40) — Total adjustments to operating (loss) income 16,701 10,752 3,746 Adjustments to other income, net: Impairment of equity method investment and investments in debt and equity securities 9 364 — 190 Loss on disposal of business 10 2 34 38 Loss (gain) on certain non-hedging derivatives 11 946 (19) 1 Gain on investments, net 12 — (109) (2,576) Gain on sale of equity method investment 13 (1,614) (1,855) (559) Total adjustments to other income, net (301) (1,949) (2,906) Adjustments to interest expense, net: Interest expense on debt 14 19 — — Early debt extinguishment 15 — — 4 Total adjustments to interest expense, net 19 — 4 Adjustments to income tax provision (benefit): Equity method non-cash tax 16 27 44 70 Discrete tax items and tax impact of adjustments 16 1,216 (2,187) (752) Total adjustments to income tax provision (benefit) 1,243 (2,143) (681) Adjustments to post-tax earnings from other equity method investments: Adjustments to earnings in other equity method investments 17 40 40 58 Total adjustments to post-tax earnings from other equity method investments 40 40 58 Adjustments to net loss attributable to non-controlling interests: Impairment of goodwill, intangibles and long-lived assets 1 (6,195) — — Transformational cost management 3 — — (1) Early debt extinguishment 15 — — (1) Loss on disposal of business 10 1 (14) — Acquisition-related costs 5 (217) (80) (32) Discrete tax items 16 37 108 — Acquisition-related amortization 4 (200) (196) (164) Total adjustments to net loss attributable to non-controlling interests (6,573) (182) (198) Adjusted net earnings attributable to Walgreens Boots Alliance, Inc.
U.S. federal, state, local and foreign tax authorities raise questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions.
Income taxes –The Company is subject to routine income tax audits that occur periodically in the normal course of business. U.S. federal, state, local and foreign tax authorities raise questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions.
Operating income (loss) (GAAP) $ 2,907 $ (346) $ (829) $ (345) $ 1,387 Acquisition-related amortization 398 66 392 — 855 Impairment of intangible assets — 783 — — 783 Certain legal and regulatory accruals and settlements 768 — — — 768 Transformational cost management 604 133 — 26 763 Acquisition-related costs (2) 89 67 69 223 Adjustments to equity earnings in Cencora 218 — — — 218 LIFO provision 135 — — — 135 Adjusted operating income (loss) (Non-GAAP measure) $ 5,029 $ 726 $ (370) $ (251) $ 5,133 WBA Fiscal 2023 Form 10-K 50 Table of Contents Fiscal 2021 U.S.
Operating income (loss) (GAAP) $ 2,907 $ (346) $ (829) $ (345) $ 1,387 Acquisition-related amortization 398 66 392 — 855 Impairment of intangible assets — 783 — — 783 Certain legal and regulatory accruals and settlements 768 — — — 768 Transformational cost management 604 133 — 26 763 Acquisition-related costs (2) 89 67 69 223 Adjustments to equity earnings in Cencora 218 — — — 218 LIFO provision 135 — — — 135 Adjusted operating income (loss) (Non-GAAP measure) $ 5,029 $ 726 $ (370) $ (251) $ 5,133 The Company uses adjusted operating income as its principal measure of segment performance as it enhances the Company’s ability to compare past financial performance with current performance and analyze underlying business performance and trends.
WBA Fiscal 2023 Form 10-K 47 Table of Contents See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures. U.S. Healthcare The Company’s U.S.
WBA Fiscal 2024 Form 10-K 51 Table of Co n tents See “--Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures. U.S. Healthcare The Company’s U.S. Healthcare segment engages consumers through a personalized, omni-channel experience across the care journey. The U.S.
These amounts were excluded as it is not reflective of normal operating activities. 11 Includes fair value gains or losses on the variable prepaid forward derivatives and certain derivative instruments used as economic hedges of the Company’s net investments in foreign subsidiaries. These charges are recorded within Other income, net.
These charges are recorded to Other income, net, in the Consolidated Statements of Earnings. 11 Includes fair value gains or losses on the VPF derivatives and certain derivative instruments used as economic hedges of the Company’s net investments in foreign subsidiaries. These charges are recorded within Other income, net, in the Consolidated Statements of Earnings.
Acquisitions and other investments to the Consolidated Financial Statement included in Part II, Item 8 for further information. In fiscal 2023, the Company also entered into VPF transactions with third-party financial institutions and received prepayments of $2.6 billion related to the forward sale of up to 17.3 million shares of Cencora common stock. See Note 6.
In fiscal 2024 and 2023, the Company also entered into VPF derivative contracts with third-party financial institutions and received prepayments of $424 million and $2.6 billion related to the forward sale of up to 2.7 million and 17.3 million shares of Cencora common stock, respectively. See Note 5. Equity method investments and Note 8.
The Transformational Cost Management Program, which is multi-faceted and includes divisional optimization initiatives, global smart spending, global smart organization and the transformation of the Company’s information technology (IT) capabilities, is designed to help the Company achieve increased cost efficiencies.
The Company does not expect to incur material exit and disposal charges related to the finalization of these initiatives. The Transformational Cost Management Program, which was multi-faceted and included divisional optimization initiatives, global smart spending, global smart organization and the transformation of the Company’s information technology (“IT”) capabilities, was designed to help the Company achieve increased cost efficiencies.
Comparable sales, comparable pharmacy sales, comparable retail sales, comparable number of prescriptions and comparable number of 30-day equivalent prescriptions refer to total sales, pharmacy sales, retail sales, number of prescriptions and number of 30-day equivalent prescriptions, respectively. Comparable retail sales for previous periods have been restated to include e-commerce sales.
Comparable sales, comparable pharmacy sales, comparable retail sales, comparable number of prescriptions and comparable number of 30-day equivalent prescriptions refer to total sales, pharmacy sales, retail sales, number of prescriptions and number of 30-day equivalent prescriptions, respectively.
The Company did not repurchase stock pursuant to the stock repurchase programs described below. Cash dividends paid were $1.7 billion, $1.7 billion and $1.6 billion in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.
The Company did not repurchase stock pursuant to the stock repurchase programs described below. Cash dividends paid were $1.3 billion, $1.7 billion and $1.7 billion in fiscal 2024, fiscal 2023 and fiscal 2022, respectively. Financing activities in fiscal 2024 and 2022 include early debt extinguishment of $318 million and $1.6 billion driven by the early redemption of debt.
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. See Item 7A. Quantitative and qualitative disclosure about market risk, for further information on currency risk.
In fiscal 2024, the Company completed the sale of the Farmacias Ahumada business in Chile. The International segment operates in currencies other than the U.S. dollar, including the British pound sterling, euro and Mexican peso and therefore the segment’s results are impacted by movements in foreign currency exchange rates. See Item 7A.
The decrease in net earnings and diluted net earnings per share reflects a $5.5 billion after-tax charge for opioid-related claims and litigation in the current year and a $2.5 billion after-tax gain on the Company's investments in VillageMD and Shields in the year ago period, partly offset by a $1.7 billion after-tax gain from the partial sale of the Company's investments in Cencora and the complete sale of the Company's investment in Option Care Health.
Prior year period net loss and net loss per share reflects a $5.5 billion after-tax charge for opioid-related claims and litigation, partially offset by a $1.7 billion after-tax gain on the sale of Cencora and Option Care Health shares.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+3 added−1 removed5 unchanged
Biggest changeEquity price risk Changes in Cencora common stock price may have a significant impact on the fair value of the equity investment in Cencora and the related variable prepaid forward derivative contracts described in Note 6. Equity method investments and Note 9. Financial instruments, to the Consolidated Financial Statements included in Part II, Item 8.
Biggest changeEquity price risk Changes in Cencora common stock price may have a significant impact on the fair value of the equity method investment in Cencora.
Generally, under these swaps, the Company agrees with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed upon notional principal amount. Information regarding the Company’s transactions and financial instruments are set forth in Note 9. Financial instruments, to the Consolidated Financial Statements included in Part II, Item 8.
Generally, under these swaps, the Company agrees with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed upon notional principal amount. Information regarding the Company’s transactions and financial instruments are set forth in Note 8. Financial instruments, to the Consolidated Financial Statements included in Part II, Item 8.
A hypothetical 1% change in foreign currency exchange rates versus the U.S. dollar would change the fair value of the foreign currency derivatives held as of August 31, 2023, by approximately $42 million. The foreign currency derivatives are intended to partially hedge anticipated transactions, foreign currency trade payables and receivables and net investments in foreign subsidiaries.
A hypothetical 1% change in foreign currency exchange rates versus the U.S. dollar would change the fair value of the foreign currency derivatives held as of August 31, 2024, by approximately $44 million. The foreign currency derivatives are intended to partially hedge anticipated transactions, foreign currency trade payables and receivables and net investments in foreign subsidiaries.
These financial instruments are sensitive to changes in interest rates. As of August 31, 2023, the Company had $1.3 billion of debt obligations at floating interest rates. A 100 basis point increase in prevailing short-term interest rates would increase annual interest expense on floating rate debt, by approximately $13 million.
These financial instruments are sensitive to changes in interest rates. As of August 31, 2024, the Company had $2.3 billion of debt obligations at floating interest rates. A hypothetical 100 basis points increase in prevailing interest rates would increase annual interest expense on floating rate debt by approximately $23 million.
Removed
WBA Fiscal 2023 Form 10-K 63 Table of Contents
Added
As of August 31, 2024, a hypothetical 10% increase or decrease in the market price of Cencora common stock would increase or decrease the fair value of the Cencora common stock held by the Company by $479 million. Changes in Cencora common stock price may have a significant impact on the fair value of the VPF derivative contracts.
Added
As of August 31, 2024, a hypothetical 10% increase or decrease in the market price of Cencora common stock would increase or decrease the fair value of the Company’s VPF derivative contract liabilities by $434 million and $395 million, respectively. See Note 5. Equity method investments and Note 8.
Added
Financial instruments, to the Consolidated Financial Statements included in Part II, Item 8 for further information. WBA Fiscal 2024 Form 10-K 68 Table of Co n tents

Other WBA 10-K year-over-year comparisons