2024
Annual
Report
2024
Board of Directors
As of August 31, 2024
From left to right, sitting then standing
Inderpal S. Bhandari
Former Global Chief Data Officer,
International Business Machines
Corporation
Ginger L. Graham
Lead Independent Director,
Walgreens Boots Alliance, Inc.
Former President and Chief Executive
Officer, Amylin Pharmaceuticals
Valerie B. Jarrett
Chief Executive Officer,
The Barack Obama Foundation
Thomas E. Polen
Chairman, President and Chief
Executive Officer, Becton, Dickinson and
Company (BD)
Janice M. Babiak
Former Managing Partner,
Ernst & Young LLP
Bryan C. Hanson
Chief Executive Officer,
Solventum Corporation
Robert L. Huffines
Former Global Chairman, Investment
Banking at J.P. Morgan Chase & Co.
Timothy C. Wentworth
Chief Executive Officer,
Walgreens Boots Alliance, Inc.
Stefano Pessina
Executive Chairman,
Walgreens Boots Alliance, Inc.
John A. Lederer
Senior Advisor, Sycamore Partners
William H. Shrank, M.D.
Venture Partner, Andreessen Horowitz,
Bio+Health Team
Nancy M. Schlichting
Former Chief Executive Officer,
Henry Ford Health System
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Í
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended August 31, 2024
‘
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition Period From
to
Commission file number 001-36759
WALGREENS BOOTS ALLIANCE, INC.
(Exact name of registrant as specified in its charter)
Delaware
47-1758322
(State of incorporation)
(I.R.S. Employer
Identification No.)
108 Wilmot Road, Deerfield, Illinois
60015
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (847) 315-3700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value
WBA
The Nasdaq Stock Market LLC
3.600% Walgreens Boots Alliance, Inc. notes due 2025
WBA25
The Nasdaq Stock Market LLC
2.125% Walgreens Boots Alliance, Inc. notes due 2026
WBA26
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
Í
No
‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
‘
No
Í
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes
Í
No
‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files).
Yes
Í
No
‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Í
Accelerated filer
‘
Non-accelerated filer
‘
Smaller reporting company
‘
Emerging growth company
‘
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by
the registered public accounting firm that prepared or issued its audit report.
Í
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
‘
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b).
‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
‘
No
Í
As of February 29, 2024, the aggregate market value of Walgreens Boots Alliance, Inc. common stock held by non-affiliates (based
on the closing transaction price on Thursday, February 29, 2024) was approximately $15.2 billion. As of October 8, 2024, there were
864,617,130 shares of Walgreens Boots Alliance, Inc. common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for our Annual Meeting of Stockholders, to be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year ended August 31, 2024 are incorporated by reference into Part III of this
Form 10-K as indicated herein.
WBA Fiscal 2024 Form 10-K
Walgreens Boots Alliance, Inc.
Annual Report on Form 10-K
Table of Contents
Part I
Page
Item 1.
Business
1
Information about our executive officers
12
Item 1A.
Risk factors
15
Item 1B.
Unresolved staff comments
40
Item 1C.
Cybersecurity
40
Item 2.
Properties
42
Item 3.
Legal proceedings
43
Item 4.
Mine safety disclosures
43
Part II
Item 5.
Market for registrant’s common equity, related stockholder matters and issuer purchases of
equity securities
44
Item 6.
Reserved
44
Item 7.
Management’s discussion and analysis of financial condition and results of operations
45
Item 7A.
Quantitative and qualitative disclosure about market risk
74
Item 8.
Financial statements and supplementary data
76
Item 9.
Changes in and disagreements with accountants on accounting and financial disclosure
143
Item 9A.
Controls and procedures
143
Item 9B.
Other information
144
Item 9C.
Disclosure regarding foreign jurisdictions that prevent inspections
144
Part III
Item 10.
Directors, executive officers and corporate governance
145
Item 11.
Executive compensation
145
Item 12.
Security ownership of certain beneficial owners and management and related stockholder
matters
145
Item 13.
Certain relationships and related transactions, and director independence
146
Item 14.
Principal accountant fees and services
146
Part IV
Item 15.
Exhibits and financial statement schedules
147
Item 16.
Form 10-K summary
159
Signatures
160
References in this Annual Report on Form 10-K (this “Form 10-K”) to the “Company,” “we,” “us” or “our” refer
to Walgreens Boots Alliance, Inc. and its subsidiaries and in each case do not include unconsolidated partially-
owned entities, except as otherwise indicated or the context otherwise requires. Our fiscal year ends on
August 31, and references herein to “fiscal 2024,” “fiscal 2023,” and “fiscal 2022” refer to our fiscal years ended
August 31, 2024, August 31, 2023, and August 31, 2022, respectively.
This Form 10-K includes forward-looking statements made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. See cautionary note regarding forward-looking statements in
Management’s discussion and analysis of financial condition and results of operations in Part II, Item 7.
All trademarks, trade names and service marks used herein are the property of their respective owners.
WBA Fiscal 2024 Form 10-K
PART I
Item 1. Business
Overview
Walgreens Boots Alliance, Inc., a Delaware corporation incorporated in 2014 (“Walgreens Boots Alliance” or the
“Company”), is an integrated healthcare, pharmacy and retail leader with a 170-year heritage of caring for
customers and patients. Walgreens Boots Alliance is the successor of Walgreen Co., an Illinois corporation,
which was formed in 1909. 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. 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.
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 is
reimagining local healthcare and well-being for all as part of its purpose – to create more joyful lives through
better health. By dispensing medicines, improving access to a wide range of health services, providing high
quality health and beauty products and offering anytime, anywhere convenience across its digital platforms, the
Company is shaping the future of healthcare in the thousands of communities it serves. Walgreens Boots
Alliance is going beyond pharmacy to coordinate with health plans and health systems, as well as with providers
to engage patients in underserved communities to help improve the quality of care and outcomes, while also
lowering overall costs. The Company offers a connected healthcare experience that can help drive better
outcomes within communities, as it continues to accelerate the shift to value-based care, which prioritizes quality
of patient care over quantity of services provided. The Company’s deepened focus on healthcare includes
expanding services across primary, multi-specialty and urgent care providers serving patients in traditional clinic
settings, in patients’ homes and virtual platforms.
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. The Company’s health and beauty product brands are enhanced by its in-house product research
and development capabilities.
As part of its commitment to Environmental, Social and Governance (“ESG”) progress, the Company is proud of
its health-centered sustainability strategy that focuses on healthy communities, a healthy planet, a healthy and
inclusive workplace and a sustainable marketplace. Walgreens Boots Alliance is a participant in the United
Nations Global Compact and adheres to its principles-based approach to responsible business. 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.
Industry overview
Retail pharmacy
The retail pharmacy industry is highly competitive and dynamic with approximately 40,000 retail locations
throughout the U.S. Pharmacists nationwide have been playing an increasingly important role in healthcare
WBA Fiscal 2024 Form 10-K
1
delivery over recent years and retail locations provide the much-needed access for a range of critical pharmacy
and healthcare services, such as vaccinations and testing services. 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. 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”).
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.
The retail pharmacy industry across the globe relies significantly on private and governmental third-party payors.
Many private organizations throughout the healthcare industry, including pharmacy benefit managers (“PBMs”)
and health insurance companies, have consolidated over recent years to create larger healthcare entities with
greater bargaining power. Third-party payors, including the Medicare Part D plans and state-sponsored Medicaid
and related managed care Medicaid agencies in the U.S., have the ability to change eligibility requirements and/
or reduce certain reimbursement rates. 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. Boots stores across England now offer access to advice and treatment, including some prescription-
only medicines, for seven common conditions under the NHS initiative. Changes in law or regulation can also
impact reimbursement rates and terms. 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. 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 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. When third-party payors or governmental authorities take actions that restrict eligibility or
reduce prices or reimbursement rates, sales and margins in the retail pharmacy industry could be reduced, which
would adversely affect industry profitability. 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. The
Company has always had a continuous focus on driving operational efficiencies and cost reduction. Generic
prescription drugs have continued to help lower overall costs for customers and third-party payors. The Company
expects the utilization of generic pharmaceuticals to continue to increase, and industry data shows that generic
drugs and biosimilars represent approximately 90% of all prescriptions filled. In general, in the U.S., generic
versions of drugs generate lower sales dollars per prescription, but higher gross profit dollars as compared with
patent-protected brand name drugs. The impact on retail pharmacy gross profit dollars can be significant in the
first several months after a generic version of a drug is first allowed to compete with the branded version, which
is generally referred to as a “generic conversion”. In any given year, the number of major brand name drugs that
undergo a conversion from branded to generic status can vary and the timing of generic conversions can be
difficult to predict, which can have a significant impact on retail pharmacy sales and gross profits. In the U.S.,
WBA Fiscal 2024 Form 10-K
2
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. Pharmacists are on the frontlines of the healthcare delivery system and playing a greater
role as part of patients’ care teams than ever before. The Company believes rising healthcare costs and the need
for greater care coordination with primary care and other providers present opportunities for pharmacists and
retail pharmacies to play an even greater role in driving positive outcomes for patients and payors through
expanded service offerings and access.
Healthcare services
Transformation in healthcare services has accelerated following the COVID-19 pandemic. One critical catalyst for
this change are the new ways that patients seek and access care and the increasing value they place on their overall
healthcare experience. Across the industry, many patients and caregivers are forced to navigate a fractured, complex
healthcare system, facing barriers to access and care coordination that can lead to higher costs and poorer health
outcomes. There is a growing demand for convenient, accessible and affordable care, while many provider groups
face staff shortages and a backlog of patients with unmet healthcare needs. Consequently, many patients feel
frustrated with long wait times to see healthcare providers and struggle to navigate the complex system. Others opt
to delay seeking care until necessary or critical, resulting in more severe health issues that can require more costly
interventions and services later. The ability to influence and impact patients early in the healthcare value chain
attracts providers and payors seeking new models to improve their clinical and financial performance.
The Company’s U.S. 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”). 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. 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. This represents a growth
opportunity to capitalize on by partnering with providers and health systems transitioning into value-based care
payment models, enabling improved care delivery and augmenting existing care teams with integrated pharmacy
and wrap-around services. 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.
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,
WBA Fiscal 2024 Form 10-K
3
•
International, and
•
U.S. Healthcare.
In fiscal 2024, our segment sales were: 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. 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”).
Sales for the segment are principally derived from the sale of prescription drugs and a wide assortment of retail
products, including health and wellness, beauty, personal care and consumables and general merchandise. The
U.S. Retail Pharmacy segment (excluding equity method investments) has pharmacy-led health and beauty retail
offerings in 50 states, the District of Columbia, Puerto Rico and the U.S. 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 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.
Significant 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. 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.
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.
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. Integrated with the Company’s
e-commerce platform, the Walgreens mobile application allows customers to refill prescriptions through scan
technology, receive notifications when a refill is due and choose their delivery option, which includes in-store
pick up, drive-through or delivery to their home.
The myWalgreens customer loyalty program provides an interface for customers to access the Company’s
enhanced and growing digital offering. 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
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. Additionally, the Company has
WBA Fiscal 2024 Form 10-K
4
expanded the retail functionality of its mobile application, such as extending drive-through service to include
retail products, curbside collection for online orders and same day offerings including pick up orders within 30
minutes. The segment is also implementing new approaches to promotions, product selection and other areas to
deliver greater value to its customers in its stores.
The components of the segment’s sales are Pharmacy (the sale of prescription drugs and provision of pharmacy-
related services) and Retail (the sale of healthcare and retail products including non-prescription drugs, health
and wellness, beauty and personal care, and consumables and general merchandise). The segment’s sales are
subject to the influence of seasonality, particularly the cough, cold and flu seasons and winter holiday. This
seasonality also can affect the segment’s proportion of sales between Retail and Pharmacy during certain periods.
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. 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. 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 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. 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. The Company purchases its non-pharmaceutical merchandise from numerous manufacturers and
wholesalers.
The segment’s sales, gross profit margin and gross profit are impacted by, among other things, both the
percentage of prescriptions filled that are generic and the rate at which new generic drugs are introduced to the
market. Because any number of factors outside of the Company’s control can affect timing for a generic
conversion, the Company faces substantial uncertainty in predicting when such conversions will occur and what
effect they will have on particular future periods.
The Company’s pharmacy business is subject to ongoing prescription reimbursement pressure, a shift in the
fulfillment of prescriptions every thirty days towards 90-day at retail, an increased volume of Medicare Part D
prescriptions and increased consumer use of prescription discount cards. 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. Agreements with these
WBA Fiscal 2024 Form 10-K
5
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 2024 as compared to the prior year. 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’s 90-day at retail prescription drug offering is typically at a lower margin than comparable 30-day
prescriptions, but provides the Company with the opportunity to increase business with patients with chronic
prescription needs while offering increased convenience, helping facilitate improved prescription adherence and
resulting in a lower cost to fill the 90-day prescription. Similarly, the specialty prescription business, which
generates higher sales dollars per prescription, may result in gross margin pressures within the industry, as
compared to generic prescription drugs. The segment’s performance is also impacted by the current environment,
including adverse global macroeconomic conditions caused by factors including, among others, inflation, high
interest rates, labor shortages, supply chain disruptions and pandemics like COVID-19. For more information,
see Risk factors in Item 1A.
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. 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. Properties, for information regarding geographic coverage) and has grown its omni-
channel platform, including its online presence, in recent years. In the UK, the Company is a market leader and
its retail stores are conveniently located with pharmacists well placed to provide a significant role in the
provision of healthcare services, working closely with other primary healthcare providers in the communities the
Company serves.
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. The
Company’s brands portfolio is enhanced by its in-house product research and development capabilities. The
Company has introduced new beauty brands and beauty halls in key locations. Certain of the product brands of
the Company are also sold by third-party retailers.
The Company’s retail store networks are typically complemented by online platforms. 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.
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.
In addition, Boots in the UK is one of the leaders in the optical market with 538 practices, of which 165 operated
on a franchise basis as of August 31, 2024. Approximately 35% of these optical practices are located in Boots
stores with the balance being standalone optical practices.
WBA Fiscal 2024 Form 10-K
6
The components of the segment’s sales are Pharmacy (typically the sale of prescription drugs and provision of
pharmacy-related services, subject to variation in particular jurisdictions depending upon regulatory and other
factors) and Retail (primarily the sale of health and beauty products including beauty, toiletries and lifestyle
merchandising, non-prescription drugs and, in the UK, the provision of optical services). 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.
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. This seasonality affects the segment’s proportion of sales
between Retail and Pharmacy during certain periods. 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. In the UK, which is the segment’s largest market for Pharmacy sales, the amount of
government funding available for pharmacy services is typically reviewed and agreed with the pharmacy industry
on an annual basis.
The segment’s Retail sales, gross profit margin and gross profit dollars are impacted by, among other things, the
highly competitive nature of the health and beauty category, specifically the Company and its competitors’
pricing actions, promotional offers and events, and the customer’s desire for value and convenience.
The segment’s Wholesale sales, gross profit margin and gross profit dollars are impacted by, among other things,
government actions, which typically seek to reduce the growth in prescription drug consumption, reduce
reimbursement rates and increase utilization of generic drugs. A greater proportion of generic drugs, whether as a
result of government actions, generic conversions or other factors, typically has an adverse effect on the
Company’s revenues.
In addition, performance as measured in U.S. dollars is impacted by the exchange rates used to translate these
amounts into U.S. dollars, the exchange rate of British pound sterling being the most significant.
The segment’s performance and relevant exchange rates are also impacted by the current environment, including
adverse global macroeconomic conditions caused by factors including, among others, inflation, high interest
rates, labor shortages, supply chain disruptions and pandemics like COVID-19. For more information relating to
these topics, see Risk factors in Item 1A.
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. 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 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
WBA Fiscal 2024 Form 10-K
7
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 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. The Company owns numerous domain names, holds
numerous patents, has registered numerous trademarks and has filed applications for the registration of a number
of other trademarks and service marks in various jurisdictions. The Company holds assorted business licenses
(such as pharmacy, occupational, liquor and cigarette) having various terms within multiple legal jurisdictions,
which are necessary for the normal operation of the business.
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.
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.
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. 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. The Company also provides healthcare services
to healthcare payors’ eligible members, cash-pay patients, and health systems and provider groups. No single
WBA Fiscal 2024 Form 10-K
8
customer accounted for more than 10% of the Company’s consolidated sales for any of the periods presented. 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.
See Note 16. Segment reporting, to the Consolidated Financial Statements included in Part II, Item 8 for further
information.
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. Food and Drug Administration, the U.S. Federal Trade Commission, the
U.S. Drug Enforcement Administration and the U.S. Consumer Product Safety Commission, as well as
regulations promulgated by comparable foreign, state and local governmental authorities concerning the
operation of the Company’s businesses. 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.
The Company is also governed by national, state and local laws of general applicability in the countries in which
it does business, including laws regulating matters of working conditions, health and safety and equal
employment opportunity. In connection with the operation of its businesses, the Company is subject to laws and
regulations relating to the protection of the environment and health and safety matters, including those governing
exposure to, and the management and disposal of, hazardous substances.
Competitive conditions
The industries in which the Company operates are highly competitive. The Company competes primarily on the
basis of service, convenience, variety and price. Its geographic dispersion helps mitigate the impact of temporary,
localized economic and competitive conditions in individual markets.
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.
The Company’s wholesale offerings and related investments compete with pharmaceutical wholesalers as well as
alternative supply sources such as importers and manufacturers who supply directly to pharmacies.
With growing emphasis and investment in the healthcare industry, the Company’s U.S. Healthcare segment faces
competition in broad healthcare domains, competing with retail healthcare services, urgent care services, value-
based primary care, vertically integrated providers, post-acute and home health service providers, and virtual care
companies.
See Item 2. Properties, for further information regarding the Company’s geographic dispersion.
WBA Fiscal 2024 Form 10-K
9
Human Capital Management
The Company’s purpose is to help people lead more joyful lives through better health. In order to best achieve
this purpose, the Company is committed to: attracting, developing and retaining employees to deliver the highest
levels of service to our customers and patients, supporting the personal health and well-being of employees,
investing in talent development and employee engagement, fostering a diverse and inclusive culture for all, and
implementing a robust approach to health and safety.
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.
Oversight and governance
The Company’s Board of Directors (the “Board”), through its Compensation and Leadership Performance
Committee (the “CLP Committee”), provides oversight of human capital matters, including the Company’s
diversity, equity and inclusion (“DE&I”) initiatives. The CLP Committee is also responsible for periodically
reviewing the Company’s compensation and benefits programs as well as management development and
succession planning practices and strategies. The reports and recommendations to the Board via the CLP
Committee underpin the broader framework that guides how the Company attracts, retains and develops its
workforce in line with Company values.
The Board, through its Nominating and Governance Committee (the “NG Committee”) has primary oversight
responsibility for the Company’s Environmental, Social and Corporate Governance (“ESG”) initiatives and risks,
reviewing at least annually the Company’s policies and activities regarding sustainability and environment. Such
oversight includes a review of the Company’s management of related risks, in consultation with the Audit
Committee as appropriate.
Compensation, benefits and well-being
The Company’s compensation and benefits are designed to care for employees as whole people, supporting the
financial, mental, and physical well-being of employees and their families. The Company offers a comprehensive
range of benefits to full- and part-time employees. In the U.S. the Company offers healthcare coverage, insurance
benefits, access to a digital well-being program and an employee assistance program. In addition, the Company
provides benefits such as paid time off, defined contribution plans, paid maternity and paternal leave, family
forming, and a stock purchase plan. 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.
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. 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. In the
U.S. the Company provides training, leadership development and career advancement programs to employees at
all levels via Walgreens University, a multi-channel platform that offers U.S. employees access to instructor-led
classroom training, online learning, personal and professional development tools. In the UK, an apprenticeship
WBA Fiscal 2024 Form 10-K
10
program focused on developing career aspirations and fundamental skills is offered to Boots UK employees.
Across the globe, the Company offers on-demand self-paced learning resources for all employees regardless of
role or location.
The Company believes engaged employees translate directly to business success. The Company conducts global
employee engagement surveys that provide colleagues with an opportunity to share their opinions and helps the
Company measure and improve 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 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”). In fiscal 2024, the Company
scored 100% on the Disability Equality Index for disability inclusion.
Workplace Health and Safety
The Company is committed to creating and upholding safe environments for employees, customers, contractors
and patients across all of its business operations. Each operating segment is responsible for continuously
demonstrating its management of health and safety. 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.
Available information
The Company makes available free of charge on or through its website at http://investor.walgreensbootsalliance.com
its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to
these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934, as amended (the
“Exchange Act”), as soon as reasonably practicable after the Company files or furnishes them to the SEC. The contents
of the website are not, however, a part of this Form 10-K or the Company’s other SEC filings.
WBA Fiscal 2024 Form 10-K
11
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. Healthcare
Lanesha Minnix
49
Executive Vice President and Global Chief Legal Officer
Elizabeth Burger
53
Executive Vice President and Global Chief Human Resources Officer
Neal Sample
50
Executive Vice President and Chief Information Officer
Tracey Brown
57
Executive Vice President and President, Retail and Chief Customer Officer
Rick Gates
53
Senior Vice President and Chief Pharmacy Officer
Beth Leonard
47
Senior Vice President and Chief Corporate Affairs Officer
Set forth below is information regarding the principal occupations and employment and business experience over
the past five years for each executive officer. Executive officers are elected by, and serve at the discretion of, the
Board of Directors. Unless otherwise stated, employment is by Walgreens Boots Alliance.
Mr. 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. 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 was appointed to the Alliance UniChem Board in 1997
when UniChem merged with Alliance Santé, the Franco-Italian pharmaceutical wholesale group which he
established in Italy in 1977. Mr. 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.
Previously and prior to his retirement in December 2021, he served in multiple positions with The Cigna Group,
a provider of healthcare insurance and related products and services, including as the founding CEO of Evernorth
Health Services from September 2020 to December 2021, President, Health Services from February 2020 to
December 2021 and President, Express Scripts and Cigna Services from December 2018 to February 2020. He
also previously served as CEO of Express Scripts, a pharmacy benefit manager, from May 2016 to December
2018 and served in various other management positions from April 2012 to May 2018.
Mr. Mahajan
has served as Executive Vice President and Global Chief Financial Officer since March 2024. He
previously had served as Senior Vice President and Interim Chief Financial Officer from July 2023 to March
2024. 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. 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. She served as Executive Vice President, President and Chief
WBA Fiscal 2024 Form 10-K
12
Executive Officer of Global Wholesale and International Retail from December 2014 to June 2016. 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. 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. Langowski
has served as Executive Vice President and President, U.S. Healthcare since March 2024.
Ms. Langowski previously served as Chief Executive Officer of Solera Health, a preventive care benefits
manager that connects patients, payers, and physicians with a new class of non-medical healthcare providers,
from July 2020 to March 2024 and as Interim Chief Executive Officer from November 2019 to July 2020. She
also served as chief executive officer of Rising Tide, LLC, a boutique consultancy working with leading health
care and retail companies driving change in the health care marketplace, from June 2016 to January 2024. Prior
to that, she served as Executive Vice President and Chief Strategy and Corporate Development Officer at CVS
Health from 2014 to 2016.
Ms. Minnix
has served as Executive Vice President and Global Chief Legal Officer since April 2024. Ms. Minnix
previously served as Executive Vice President, General Counsel and Corporate Secretary for Ecolab Inc., a
global leader in water, hygiene and infection prevention solutions, from June 2022 to April 2024. Prior to that,
she served as Senior Vice President, General Counsel and Corporate Secretary at Flowserve Corporation, a
global industrial manufacturer of engineered flow control systems, from 2018 to June 2022. Ms. Minnix joined
Flowserve from BMC Stock Holdings, Inc., a construction supply company, where she served as Senior Vice
President, General Counsel and Corporate Secretary from 2017 to 2018.
Ms. Burger
has served as Executive Vice President and Chief Human Resources Officer since March 2024.
Ms. Burger previously served as Senior Vice President, Chief Human Resources Officer at Flowserve
Corporation, a global industrial manufacturer of engineered flow control systems, from 2018 to March 2024. She
previously served as Chief Human Resources Officer of Hanesbrands Inc. from 2013 to 2017 and in various roles
of increasing responsibility at Monsanto Company from 1995 to 2013, including as Senior Vice President, Global
Business Operations from 2007 to 2013.
Mr. Sample
has served as Executive Vice President and Chief Information Officer since October 2023. Prior to
joining the Company, Mr. Sample was Chief Information Officer at Northwestern Mutual, a financial services
mutual organization, from August 2019 to May 2022. He also served as Chief Operating Officer of Express
Scripts, a pharmacy benefit manager, from January 2018 to March 2019 and as Chief Information Officer from
February 2016 to January 2018. He also held several roles within the Enterprise Growth Business at American
Express, a globally integrated payments company, from 2012 to 2016, including as Group President and
Executive Vice President, Enterprise Growth Chief Information Officer and Chief Marketing Technologist.
Mr. Sample previously held roles at eBay, Yahoo! Inc. and RightOrder, Inc.
Ms. Brown
has served as Executive Vice President since January 2024 and as President of Retail and Chief
Customer Officer since November 2021. She previously served as Senior Vice President from September 2022 to
January 2024. 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. 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. 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. Earlier in her career, she held leadership positions at American Express, Proctor &
Gamble and Exxon Mobil.
WBA Fiscal 2024 Form 10-K
13
Mr. Gates
has served as Senior Vice President and Chief Pharmacy Officer since March 2023. Mr. Gates
previously served as Senior Vice President, Pharmacy and Healthcare, from January 2018 to March 2023. Prior
to that, Mr. Gates served in roles of increasing responsibility since joining Walgreens in 1995 after graduation
from pharmacy school, including in store care delivery, field leadership, Duane Reade pharmacy integration lead
and pharmacy operations where he led the strategic development, alignment and delivery of pharmacy-led health
and wellness programs. Mr. 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. She was previously Senior Vice President and Chief Corporate Affairs for EmblemHealth, one of the
United States’ largest nonprofit health plans, from December 2020 to May 2023 and was Senior Vice President
and Chief Marketing and Communications Officer from May 2016 to December 2020. Prior to EmblemHealth,
Ms. Leonard served in various roles of increasing responsibility with America’s Health Insurance Plans, a
political advocacy and trade association of health insurance companies, from 2008 to 2016, including as
Executive Vice President of Public Affairs. Prior to that, she served in leadership roles holding key state
leadership roles in presidential campaigns in 2004 and 2008, and having managed the re-election campaign for
Boston Mayor Thomas Menino. She also served as the Chief of Staff at the City of Boston’s Redevelopment
Authority and Economic Development Agency.
Mr. Pessina and Ms. Barra are married. There are no other family relationships among any of our directors or
executive officers.
Other Officers
Todd Heckman
, 51, has served as Senior Vice President, Global Controller and Chief Accounting Officer since
March 2024. Prior to that Mr. 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. Heckman held various roles with Exelon Corporation, Ernst & Young LLP
and Grant Thornton LLP.
WBA Fiscal 2024 Form 10-K
14
Item 1A. Risk factors
In addition to the other information in this report and our other filings with the SEC, you should carefully
consider the risks described below, which could materially and adversely affect our business operations, financial
condition and results of operations. These risks are not the only risks that we face. Our business operations could
also be affected by additional factors that are not presently known to us or that we currently consider to be
immaterial.
Risk Factor Summary
The following summary is intended to enhance the readability and accessibility of our risk factor disclosures. We
encourage you to carefully review the full risk factors discussed below in their entirety for additional
information. Some of the factors that could materially and adversely affect our business, financial condition or
results of operations include:
Risks Relating to Our Business
•
Changes in economic conditions could adversely affect consumer buying practices.
•
Reductions in third-party reimbursement levels, from private or governmental agency plans, and
potential changes in industry pricing benchmarks for prescription drugs could materially and adversely
affect our results of operations.
•
A shift in pharmacy mix toward lower margin plans, products and programs could adversely affect our
results of operations.
•
We derive a significant portion of our sales in 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. 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 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.
WBA Fiscal 2024 Form 10-K
15
•
Our business is subject to existing and increasing interest in ESG-related values from current and
future employees, customers and stockholders. We may be unable to meet expectations or meet our
ESG goals.
•
Our business is subject to evolving ESG and climate-related regulatory requirements. We may be
unable to meet standards.
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.
•
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.
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.
Cybersecurity, Data Privacy and Information Security Risks
•
A significant disruption in our information technology and computer systems or those of businesses we
rely on could harm us.
•
Privacy and data protection laws increase our compliance burden and any failure to comply could harm
us.
•
We and businesses we interact with experience cybersecurity incidents and might experience
significant computer system compromises or data breaches.
•
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.
WBA Fiscal 2024 Form 10-K
16
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.
Risks from Changes in Public Policy and Other Legal and Regulatory Risks
•
Changes in the healthcare industry and regulatory environments may adversely affect our businesses.
•
We are exposed to risks related to litigation and other legal proceedings.
•
A significant change in, or noncompliance with, governmental regulations and other legal requirements
could have a material adverse effect on our reputation and profitability.
•
We could be adversely affected by violations of anti-bribery, anti-corruption and/or international trade
laws.
•
We could be adversely affected by product liability, product recall, personal injury or other health and
safety issues.
•
We could be subject to adverse changes in tax laws, regulations and interpretations or challenges to our
tax positions.
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.
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. 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. Changes in economic conditions and
consumer confidence could adversely affect consumer preferences, purchasing power and spending patterns,
which could lead to a decrease in overall consumer spending as well as in prescription drug and health services
WBA Fiscal 2024 Form 10-K
17
utilization and which could be exacerbated by the increasing prevalence of high-deductible health insurance
plans and related plan design changes. In addition to general levels of inflation that we have experienced, we are
also subject to risk of specific inflationary pressures on product prices related global supply chain disruptions,
and the uncertain economic and geopolitical environment. We are experiencing and may continue to experience
increases in the price of input costs, such as transportation and energy costs. We might also suffer from supply
disruptions from supplier exits as higher costs may become unaffordable for certain suppliers. In addition, central
banks may continue to increase interest rates or conduct other monetary policies to counter inflation, which could
negatively affect our borrowing costs and those of our customers and suppliers, as well as exchange rates and
other macroeconomic factors. If inflation continues to increase, we may not be able to adjust prices sufficiently
to offset the effect without negatively impacting consumer demand or our overall gross margin. For example,
inflation has impacted consumer demand in our U.S. Retail Pharmacy segment and has led to lower margins. In
addition, inflation may increase costs and cause changes in provider behavior in our U.S. Healthcare segment as
hospitals and other providers attempt to maintain revenue levels in an effort to adjust to their own economic
challenges. If we are unable to increase the prices of our products and services to our customers to offset
inflationary cost trends, or if we are unable to achieve cost savings to offset such cost increases, we could fail to
meet our cost expectations, and our profits and operating results could be adversely affected. Our ability to price
our products competitively to timely reflect higher input costs is critical to maintain and grow our sales.
Furthermore, reduced or flat consumer spending may drive us and our competitors to offer additional products at
promotional prices. Increased cost volatility trends may also impact the business and financial situation of our
customer or suppliers, which could in turn affect the demand or supply, respectively, by such parties. Future
inflationary and deflationary trends are beyond our control, and we may not be able to sufficiently mitigate any
impact on our business and financial situation. All of these factors could materially and adversely impact our
business operations, financial condition and results of operations.
Reductions in third-party reimbursement levels, from private or governmental agency plans, and potential
changes in industry pricing benchmarks for prescription drugs could materially and adversely affect our
results of operations.
The substantial majority of the prescriptions we fill are reimbursed by third-party payors, including private and
governmental agency payors. The continued efforts of health maintenance organizations, managed care
organizations, PBMs, governmental agencies, and other third-party payors to reduce prescription drug costs and
pharmacy reimbursement rates, as well as litigation and other legal proceedings relating to how drugs are priced,
may adversely impact our results of operations. We continuously attempt to manage reimbursement rates with
PBMs through contract negotiation, but the outcomes of this negotiation may vary in the level of success
achieved. In the U.S., plan changes with rate adjustments often occur in January and our reimbursement
arrangements may provide for rate adjustments at prescribed intervals during their term. In addition, the timing
and amount of periodic contractual reconciliations payments can vary significantly and have done so previously
and may not follow a predictable path. Further, in an environment where some PBMs clients utilize narrow or
restricted pharmacy provider networks, some of these entities may offer pricing terms that we may not be willing
to accept or otherwise restrict our participation in their networks of pharmacy providers.
In addition, many payors in the U.S. are increasingly considering new metrics as the basis for reimbursement
rates. Recent changes in National Average Drug Acquisition Cost (“NADAC”) pricing have driven increased
volatility in an already dynamic pricing environment. It is possible that the pharmaceutical industry or regulators
may evaluate and/or develop an alternative pricing reference to replace average wholesale price, which is the
pricing reference used for many of our contracts. In addition, many state Medicaid fee-for-service programs have
established pharmacy network payments on the basis of actual acquisition cost, which could have an impact on
reimbursement practices in other commercial and governmental arrangements. Future changes to the pricing
benchmarks used to establish pharmaceutical pricing, including changes in the basis for calculating
reimbursement by third-party payors, could adversely affect us.
WBA Fiscal 2024 Form 10-K
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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. 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. Retail Pharmacy segment has experienced a shift in pharmacy
mix towards 90-day at retail in recent years, and specialty pharmacy represents a significant and growing
proportion of prescription drug spending in the U.S. and a larger proportion of our revenues. Our 90-day at retail
offering for patients with chronic prescription needs typically is at a lower margin than comparable 30-day
prescriptions, and specialty pharmacy sales are generally also lower margin. Our U.S. Retail Pharmacy segment
also has experienced a shift in pharmacy mix towards Medicare Part D prescriptions in recent years, and that
trend may continue. Preferred Medicare Part D networks have increased in number in recent years; however, we
do not participate in all such networks. We have accepted market competitive reimbursement rates in order to
secure preferred relationships with Medicare Part D plans serving senior patients with significant pharmacy
needs. We also have worked to develop and expand our relationships with commercial third-party payors to
enable new and/or improved market access via participation in the pharmacy provider networks they offer. If we
are not able to generate additional prescription volume and other business from patients participating in these
programs that is sufficient to offset the impact of lower reimbursement, or if the degree or terms of our
participation in such preferred networks declines from current levels in future years, our results of operations
could be materially and adversely affected.
We derive a significant portion of our sales in the U.S. Retail Pharmacy segment from prescription drug
sales reimbursed by a limited number of pharmacy benefit management companies.
We derive a significant portion of our sales in the U.S. Retail Pharmacy segment from prescription drug sales
reimbursed through prescription drug plans administered by a limited number of PBMs. PBMs typically
administer multiple prescription drug plans that expire at various times and provide for varying reimbursement
rates, and often limit coverage to specific drug products on an approved list, known as a formulary, which might
not include all of the approved drugs for a particular indication. 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. 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. If we are unable to replace any
such lost sales, either through an increase in other sales or through a resumption of participation in those plans,
our operating results could be materially and adversely affected. 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. In addition, in such circumstances we may incur increased marketing and other
costs in connection with initiatives to regain former patients and attract new patients covered by such plans.
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.
The profitability of our pharmacy businesses depends upon the utilization of prescription drugs. Utilization
trends are affected by, among other factors, the introduction of new and successful prescription drugs as well as
lower-priced generic alternatives to existing brand name drugs. Inflation in the price of drugs also can adversely
affect utilization, particularly given the increased prevalence of high-deductible health insurance plans and
related plan design changes. New brand name drugs can result in increased drug utilization and associated sales,
while the introduction of lower priced generic alternatives typically results in relatively lower sales that are
somewhat offset by relatively higher gross profit margins. Accordingly, a decrease in the number or magnitude
WBA Fiscal 2024 Form 10-K
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of significant new brand name drugs or generics successfully introduced, delays in their introduction, or a
decrease in the utilization of previously introduced prescription drugs, could materially and adversely affect our
results of operations.
In addition, if we experience an increase in the amounts we pay to procure pharmaceutical drugs, including
generic drugs, our gross profit margins would be adversely affected to the extent we are not able to offset such
cost increases. 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.
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.
Many organizations in the healthcare industry, including PBMs, have consolidated in recent years to create larger
healthcare enterprises with greater bargaining power, which has resulted in greater pricing pressures. If this
consolidation trend continues, it could give the resulting enterprises even greater bargaining power, which may
lead to further pressure on the prices for our products and services. If these pressures result in reductions in our
prices, our businesses would become less profitable unless we are able to achieve corresponding reductions in
costs or develop profitable new revenue streams. In addition, if laws or regulations are promulgated that limit the
number of PBMs available to a particular business or geography, competition in those businesses and
geographies could be amplified and could adversely affect our financial condition and results of operations.
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. 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. We do not control the providers and other healthcare professionals in our U.S.
Healthcare segment with respect to the practice of medicine and the provision of healthcare services, and the risk
of liability, including through unexpected medical outcomes, is inherent to the healthcare industry. These
businesses have in the past been subject to medical liability claims in the ordinary course of business. If patients,
clients or partners assert liability claims against us, any ensuing litigation, regardless of outcome, could result in
a substantial cost to us, divert management’s attention from operations, decrease market acceptance of our
services and care delivery model and may significantly harm our business or reputation.
Successful medical malpractice liability claims could result in substantial damage awards that exceed the limits
of our insurance coverage. Professional liability insurance is expensive and insurance premiums may increase
significantly in the future, particularly as we expand our services. As a result, adequate professional liability
insurance may not be available to our providers or to us in the future at acceptable costs or at all. Any claims
made against us or our acquired businesses that are not fully covered by insurance could be costly to defend
against, result in substantial damage awards against us and divert the attention of our management and our
providers from our operations, which could harm our business.
Additional risks posed by the U.S. Healthcare 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;
WBA Fiscal 2024 Form 10-K
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•
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.
For example, certain recent changes in Medicare reimbursement models have negatively impacted our
U.S. Healthcare segment;
•
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;
•
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.
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 experience in managing the additional
risks associated with our healthcare businesses is more limited than our experience in managing the risks
associated with our historical businesses, and there is no assurance that we will be able to effectively manage or
mitigate such risks. Further, the additional risks faced by our healthcare business within 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. 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.
Continuation of our contracts with existing payors is critical to our future business, revenue growth and results of
operations. 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;
WBA Fiscal 2024 Form 10-K
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•
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 businesses within the U.S. Healthcare segment have also entered and intend to continue to enter into value-
based contracts with payors, pursuant to which they contract with payors to receive a fee for professional services
based on the number of patients assigned or attributed to U.S. Healthcare segment providers and assume the
financial responsibility for the healthcare expenses of such patients. The amounts we receive from our healthcare
businesses for services provided to patients are determined by a number of factors, including the payor mix of
our patients and the reimbursement methodologies and rates utilized by our patients’ plans. These contracts may
also include arrangements that contemplate sharing certain of the savings generated with respect to U.S.
Healthcare segment’s patients’ costs of care back with the payor. Under a fee-for-service arrangement, we collect
fees directly from the payor as services are provided. 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. To the extent
that patients require more care than is anticipated or the cost of care increases, aggregate compensation amounts
may be insufficient to cover the costs associated with treatment. If medical costs and expenses exceed estimates,
except in very limited circumstances, our healthcare businesses will not be able to increase the fee received under
these risk agreements during their then-current terms and could suffer losses with respect to such agreements,
which may adversely impact the growth, profitability and liquidity of our U.S. Healthcare segment.
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.
We may from time to time experience delays in receiving the associated reimbursement and, with respect to
value-based arrangements, ultimate payment of any shared savings, bonuses, withholds and similar payments is
received only after the close of the relevant measurement period, which may be a calendar year, and then only
after the payor has reconciled cost of care, fee-for-service reimbursement paid, if any, reported quality data, and
patient attribution resulting in significant delays between the provision of services and ultimate payment. In
addition, payors may disallow, in whole or in part, requests for reimbursement based on determinations that the
patient is not eligible for coverage, certain amounts are not reimbursable under plan coverage or were for
services provided that were not medically necessary, not adequately documented or after submitting additional
supporting documentation requested by the payor. 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. 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. Additionally, our
accounts receivable may be concentrated among a limited number of payors.
Our business results depend on our ability to successfully manage ongoing organizational change and
business transformation and achieve cost savings and operating efficiency initiatives.
Our Board approved a plan to implement the Footprint Optimization Program described in Management’s
discussion and analysis of financial condition and results of operations in Part II, Item 7 of this Form 10-K as
part of an initiative to reduce costs and increase operating efficiencies. In addition, our Board previously
WBA Fiscal 2024 Form 10-K
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approved the Transformational Cost Management Program described in Management’s discussion and analysis
of financial condition and results of operations in Part II, Item 7 of this Form 10-K, which was substantially
concluded at the end of fiscal 2024, as part of an initiative to reduce costs and increase operating efficiencies. We
may not realize, in full or in part, the anticipated benefits of these programs and these programs have resulted,
and may result, in significant cumulative pre-tax charges.
Our financial goals assume a level of productivity improvement, including those reflected in the Footprint
Optimization Program, the Transformational Cost Management Program and other business optimization initiatives.
If we are unable to implement the programs or deliver these expected productivity improvements, while continuing
to invest in business growth, or if the volume and nature of change overwhelms available resources, our business
operations, financial condition and results of operations could be materially and adversely impacted.
The industries in which we operate are highly competitive and constantly evolving and changes in market
dynamics could adversely impact us.
The level of competition in the retail pharmacy, healthcare services and pharmaceutical wholesale industries is
high. Changes in market dynamics or actions of competitors or manufacturers, including industry consolidation
and the emergence of new competitors and strategic alliances, could materially and adversely impact us.
Disruptive innovation, or the perception of potentially disruptive innovation, by existing or new competitors
could alter the competitive landscape in the future and require us to accurately identify and assess such changes
and if required make timely and effective changes to our strategies and business model to compete effectively.
All of our businesses face intense competition from multiple existing and new businesses, some of which are
aggressively expanding in markets we serve. 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.
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. Because our specialty pharmacy
business focuses on complex and high-cost medications, many of which are made available by manufacturers to a
limited number of pharmacies (so-called limited distribution drugs), that serve a relatively limited universe of
patients, the future growth of this business depends to a significant extent upon expanding our ability to access
key drugs and successfully penetrate key treatment categories. 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.
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.
The portion of total consumer expenditures with retailers occurring online and through mobile applications has
continued to increase and has accelerated significantly in the recent years following COVID-19. The pace of this
increase could further accelerate in the future. Our business has evolved from an in-store experience to
interaction with customers across numerous channels, including in-store, online, mobile and social media, among
others. Omni-channel and differentiated retail models are rapidly evolving, and we must keep pace with changing
customer expectations and new developments by our competitors. We must compete by offering a consistent and
convenient shopping experience for our customers regardless of the ultimate sales channel and by investing in,
providing and maintaining digital tools for our customers. If we are unable to improve or develop relevant
customer-facing technology in a timely manner that keeps pace with technological developments and dynamic
customer expectations, our ability to compete and our results of operations could be materially and adversely
affected. In addition, if our online activities or our other customer-facing technology systems do not function as
designed, we may experience a loss of customer confidence, data security breaches, lost sales, or be exposed to
fraudulent purchases, any of which could materially and adversely affect our business operations, reputation and
results of operations.
WBA Fiscal 2024 Form 10-K
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If the merchandise and services that we offer fail to meet customer needs, our sales may be adversely
affected.
The success of our retail pharmacy businesses depends on our ability to offer a superior shopping experience,
engaging customer service and a quality assortment of available merchandise that differentiates us from other
retailers, including enhanced health and beauty product offerings. We must identify, obtain supplies of, and offer
to our customers attractive, innovative and high-quality merchandise on a continuous basis. We periodically
reevaluate our merchandising strategy in order to offer a refreshed assortment of products. After such
reevaluation, we may revise our strategy; for example, recent initiatives include increasing selectiveness with
national brands and expanding our owned brands in select categories. Even with planned adjustments to our
merchandising approach, it is difficult to predict consistently and successfully the products and services our
customers will demand. It is also difficult to respond to value-seeking consumer behavior, which in turn has led
and may in the future lead to decreased margins. If we misjudge the demand for products and services we sell or
our customers’ purchasing habits, we may be faced with sales declines, excess product inventories and missed
opportunities for products and services we chose not to offer, which could materially and adversely impact our
results of operations.
Our substantial international business operations subject us to a number of operating, economic, political,
regulatory, cybersecurity and other international business risks.
Our substantial international business operations are subject to a number of risks, including, without limitation,
compliance with a wide variety of foreign laws and regulations; potential difficulties in managing foreign
operations, mitigating credit risks in foreign markets, enforcing agreements and collecting receivables through
foreign legal systems; varying regional and geopolitical business conditions and demands; tax and trade policies,
tariffs and other government regulations affecting trade between the U.S. and China, and other countries;
fluctuations in currency exchange rates; operating in jurisdictions which are subject to the General Data
Protection Regulation (like the U.K. and Germany) and other data privacy regulations, which differ from U.S.
data privacy policies, making it difficult to maintain uniform and efficient data privacy practices; the risks
associated with cross-border data transfers which we conduct daily due to the international segment of our
business; the impact of recessions and economic slowdowns in economies outside the U.S.; impact of war (such
as the conflict in Ukraine or the conflict in the Middle East) and foreign conflict, such as the Red Sea crisis, and
the instability of foreign economies, governments and currencies and unexpected regulatory, economic or
political changes in foreign markets.
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.
Our business is subject to existing and increasing interest in ESG-related values from current and future
employees, customers and stockholders. We may be unable to meet expectations or meet our ESG goals.
We recognize the importance of ESG matters among our team members, customers, and certain shareholders and
are committed to upholding a culture dedicated to corporate responsibility. We have certain goals that allow us to
better communicate and align to our ESG strategy. However, these goals are subject to risks and uncertainties,
which are outside of our control and might prohibit us from meeting such goals. Further, there is a risk that team
members, customers, or certain shareholders might not be satisfied with our goals or strategy and efforts to meet
the goals. In addition, we may face criticism as a result of “anti-ESG” sentiment among certain stakeholders,
including governmental authorities, regulators, stockholders and customers. Some of the risks that we are subject
to include, but are not limited to: our ability to execute our operational strategy within the timeframe or costs
projected; the availability or cost of renewable energy, materials, goods, and/or services required, and evolving
regulations or requirements that change or limit our ability to set standards or gather information from our
supplier partners or third party contractors. 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.
WBA Fiscal 2024 Form 10-K
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ESG matters are also increasingly important to current and potential employees. 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. 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.
Our business is subject to evolving ESG and climate-related regulatory requirements. We may be unable
to meet standards.
We are subject to evolving ESG rules and regulations, including the SEC’s recently adopted climate-related
reporting requirements, if such reporting requirements survive pending judicial review, and finalized regulations
established by other international regulatory bodies, such as the Corporate Sustainability Reporting Directive
(“CSRD”) in the European Union. 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. We use natural gas, diesel fuel,
gasoline and electricity in our operations, all of which could face increased regulation as a result of climate
change or other environmental concerns. Regulations limiting greenhouse gas emissions and energy inputs may
also increase in coming years, which may increase our costs associated with compliance and merchandise. These
events and their impacts could otherwise disrupt and adversely affect our operations and could materially
adversely affect our financial performance.
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.
The products we sell are sourced from a wide variety of domestic and international vendors, and any future
disruption in our supply chain or inability to find qualified vendors and access products that meet requisite
quality and safety standards in a timely and efficient manner could adversely impact our businesses. 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.
We outsource certain business processes to third-party vendors that subject us to risks, including
disruptions in business and increased costs.
We outsource certain business and administrative functions and rely on third parties to perform certain services
on our behalf. We rely on these third parties to meet our quality and performance requirements and to timely
perform as expected. If our continuing relationship with certain third-party providers is interrupted, or if such
third-party providers experience disruptions or do not perform as anticipated, or we experience problems with
any transition, we may experience operational difficulties, reputational harm, and increased costs that could
materially and adversely affect our business operations and results of operations.
We use a single wholesaler of branded and generic pharmaceutical drugs as our primary source of such
products.
The Company and Cencora are parties to various agreements and arrangements, including a pharmaceutical
distribution agreement between the Company and Cencora pursuant to which we source branded and generic
WBA Fiscal 2024 Form 10-K
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pharmaceutical products from Cencora in the U.S. and an agreement which provides Cencora the ability to access
generic pharmaceutical products through our global sourcing enterprise. As amended in June 2021, the U.S.
distribution agreement was extended through 2029 and the parties committed to pursue additional opportunities
in sourcing and distribution. The parties also agreed that Alliance Healthcare UK will remain the distribution
partner of Boots until 2031. As of the date of this report, Cencora distributes substantially all of our branded and
generic pharmaceutical products. Consequently, our business may be adversely affected by any operational,
financial or regulatory difficulties that Cencora experiences, including those resulting from supply chain
disruptions or global macroeconomic uncertainty. 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.
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. 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. 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.
Changes to management, including turnover of our top executives, could have an adverse effect on our
business.
Our success depends, to a large degree on the integration of our new Chief Executive Officer and new members
of our senior management team. 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. 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. In addition, we
may be unable to mitigate the risk through a robust management succession planning process, and we may be
unable to attract and retain qualified candidates in a timely manner. If we are unable to retain other key senior
executives, our ability to meet our financial and operational goals and strategic plans may be adversely impacted,
as well as our financial performance.
The loss of any member of our senior management could materially adversely affect our ability to execute our
business plan and strategy, and we may not be able to find an adequate replacement on a timely basis, or at all.
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. We can make no
assurances that we would be able to properly manage any shift in focus or that any changes to our business would
ultimately prove successful. Any of these factors could negatively affect our strategy and execution, and our
business, financial condition or results of operations may be adversely affected.
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.
We compete with other retailers and businesses for suitable locations for our stores. Local land use and zoning
regulations, environmental regulations and other regulatory requirements may impact our ability to find suitable
WBA Fiscal 2024 Form 10-K
26
locations and influence the cost of constructing, renovating and operating our stores. In addition, real estate,
zoning, construction and other delays may adversely affect store openings and renovations and increase our costs.
Further, changing local demographics at existing store locations may adversely affect revenue and profitability
levels at those stores. The terms of leases at existing store locations may adversely affect us if the renewal terms
of, or requested modifications to, those leases are unacceptable to us, and we are forced to close or relocate
stores. If we are unable to maintain our existing store locations or open new locations in desirable places and on
favorable terms, our results of operations could be materially and adversely affected.
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 ability to continue to conduct and expand our operations depends on our ability to attract and retain qualified
team members globally. Our ability to meet our labor needs, including our ability to find qualified personnel to
fill positions that become vacant at our existing stores, distribution centers and corporate offices, while
controlling our associate wage and related labor costs, is generally subject to numerous external factors,
including the availability of a sufficient number of qualified persons in the work force of the markets in which
we operate, unemployment levels within those markets, prevailing wage rates, changing demographics, health
and other insurance costs and adoption of new or revised employment and labor laws and regulations.
Additionally, our ability to successfully execute organizational changes, including our enterprise strategy and
management transitions within the Company’s senior leadership, and to effectively motivate and retain team
members are critical to our business success. We compete for talent with other retail and non-retail businesses,
including, for example, health and wellness businesses, and invest significant resources in training and
motivating our team members. Increased competition among potential employers at all levels, including senior
management and executive levels, could result in increased team member costs or make it more difficult to
recruit and retain team members. For example, we have experienced difficulties attracting and retaining qualified
pharmacists which has reduced the quality of service we provide to our customers in our U.S. Retail Pharmacy
segment and our financial performance has been adversely affected as a result. In addition, if our costs of labor or
related costs increase for other reasons or if new, revised, or novel interpretations of existing labor laws, rules or
regulations or healthcare laws are adopted or implemented that further increase our labor costs, our financial
performance could be materially adversely affected.
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 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. This includes utilities we use, like natural
gas, diesel fuel, gasoline and electricity in our operations, resources which are particularly vulnerable to climate
change effects. In addition, many of our operations and facilities around the world are in locations that may be
impacted by the physical risks of climate change, and we face the risk of losses incurred as a result of physical
damage to stores, distribution or fulfillment centers, loss or spoilage of inventory and business interruption
caused by such events. Current or future insurance arrangements may not provide protection for costs that may
arise from such events, particularly if such events are catastrophic in nature or occur in combination.
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.
We engage in strategic initiatives to, among other reasons, maximize long-term shareholder value, expand on our
consumer-centric approach, strengthen our partnerships with local healthcare providers and improve health
WBA Fiscal 2024 Form 10-K
27
outcomes. These strategic initiatives may not result in improvements in future financial performance. We may
not be able to successfully execute these strategic initiatives, or these initiatives may result in additional
unanticipated costs or changes in strategy. The failure to realize the benefits of any strategic initiatives or
successfully structure our business to meet market conditions could have a material adverse effect on our
business, financial condition, cash flows, or results of operations.
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.
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 integration of large, diverse and independent businesses is complex, costly and time-
consuming. 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. 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. 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.
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. 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. For example, our acquisition of a majority stake in VillageMD has
resulted in additional capital infusions and substantial ongoing and future cash requirements that were not
necessarily expected at the time of the transaction.
In addition, the full benefits of the transactions may not be realized, including, among others, the synergies, cost
savings or revenue growth that are expected. These benefits may not be achieved within the anticipated time
frame or at all. The failure to meet the challenges involved in integrating the businesses and to realize the
anticipated benefits of the transactions could result in a material adverse impact on our business and results of
operations.
The anticipated strategic and financial benefits of our relationship with Cencora may not be realized.
As of August 31, 2024, we beneficially owned approximately 10.2% of the outstanding Cencora common stock
and had designated one nominee for election to Cencora’s board of directors. All Cencora common stock owned
by the Company is pledged under variable prepaid forward (“VPF”) derivative contracts. 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
WBA Fiscal 2024 Form 10-K
28
operations. Additionally, a substantial and sustained decline in the price of Cencora’s common stock could
trigger an impairment evaluation of our investment. The VPF derivative contracts limit the Company’s economic
exposure to decreases and increases in the price of Cencora common stock. Further, our ability to transact in
Cencora securities is subject to certain restrictions set forth in our agreements with Cencora and arising under
applicable laws and regulations, which in some circumstances could adversely impact our ability to transact in
Cencora securities in amounts and at the times desired. These considerations may materially and adversely affect
the Company’s financial condition and results of operations.
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.
We have, from time to time, divested certain assets or businesses in order to redeploy capital into our core
strategies. The success of such transactions in the future will be subject to market conditions, availability of
financing and other circumstances beyond our control. We have recently divested of a portion of our interests in
Cencora and BrightSpring Health Services, and completed the sale of the Farmacias Ahumada business in Chile
and may choose to divest more of our investment interests in the future.
In addition, as previously announced on June 27, 2024, we initiated a strategic and operational review towards
simplifying and focusing our U.S. Healthcare portfolio, including the assessment of our investment in
VillageMD. We are currently evaluating a variety of options with respect to VillageMD in light of ongoing
investments in VillageMD’s businesses and VillageMD’s substantial ongoing and expected future cash
requirements. These options could include a sale of all or part of the VillageMD businesses, possible
restructuring options and other strategic opportunities.
In the second quarter of fiscal 2024, we recorded $12.4 billion of non-cash impairment charges related to
VillageMD goodwill. Further impairments may occur and may have a material impact on our financial condition
and results of operations. We will continue to monitor the fair values of the VillageMD reporting unit and related
intangible assets and the impacts of any strategic transaction to determine if there is any further impairment in
future periods.
In the future, we may launch a process for the sale of other businesses or contemplate other opportunities to
monetize our interest in these businesses. However, our ability to divest these or any of our other assets, will be
subject to global financial markets and market instability which may severely impact the ability to divest,
divestiture terms, financing availability and other considerations for potential buyers.
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.
From time to time, we make debt or equity investments in companies that we may not control or over which we
may not have sole control. Some of the businesses in which we have made non-controlling investments operate in
markets or industries that are different from our primary lines of business and/or operate in different geographic
markets than we do. Investments in these businesses, among other risks, subject us to the operating and financial
risks of the businesses we invest in and to the risk that we do not have sole control over the operations of these
businesses. We rely on the internal controls and financial reporting controls of these entities and their failure to
maintain effectiveness or comply with applicable standards may materially and adversely affect us. Ineffective
internal controls could cause investors to lose confidence in our reported financial information that could negatively
impact the trading price of our securities and our access to capital. Investments in entities over which we do not
have sole control, including joint ventures and strategic partnerships and alliances, present additional risks such as
having differing objectives from our partners or the entities in which we are invested, becoming involved in
disputes, or competing with those persons. In addition, any difficulties in assimilating business into our system of
financial controls could cause us to fail to meet our financial reporting obligations.
WBA Fiscal 2024 Form 10-K
29
Cybersecurity, Data Privacy and Information Security Risks
A significant disruption in our information technology and computer systems or those of businesses we
rely on could harm us.
We rely extensively on our computer systems to manage our ordering, pricing, point-of-sale, pharmacy
fulfillment, inventory replenishment, customer loyalty programs, finance and other processes. Our systems are
subject to damage or interruption from power outages, facility damage, computer and telecommunications
failures, computer viruses, security breaches including credit card or personally identifiable information
breaches, vandalism, theft, natural disasters, catastrophic events, human error and potential cyber threats,
including malicious codes, worms, phishing attacks, denial of service attacks, ransomware and other
sophisticated cyber-attacks, and our disaster recovery planning cannot account for all eventualities. 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.
In addition, we are currently making, and expect to continue to make, substantial investments in our information
technology systems and infrastructure, some of which are significant. Implementing new systems carries
significant potential risks, including failure to operate as designed, potential loss or corruption of data or
information, changes in security processes, cost overruns, implementation delays, disruption of operations, and
the potential inability to meet business and reporting requirements. There are also substantial risks associated
with our continued integration of artificial intelligence and machine learning within our technology systems. We
rely on strategic partners and other service providers to help us with certain significant information technology
projects and services. Information technology projects or services frequently are long-term in nature and may
take longer to complete and cost more than we expect and may not deliver the benefits we project once they are
complete. Any system implementation and transition difficulty may result in operational challenges, reputational
harm, and increased costs that could materially and adversely affect our business operations and results of
operations. We also could be adversely affected by any significant disruption in the systems of third parties we
interact with, including strategic and business partners, key payors and vendors.
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. 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. In the U.S., for example, HIPAA imposes extensive
privacy and security requirements governing the transmission, use and disclosure of health information by
covered entities in the healthcare industry, including healthcare providers such as pharmacies. In addition, the
California Consumer Privacy Act, which went into effect on January 1, 2020, imposes stringent requirements on
the use and treatment of “personal information” of California residents, and other jurisdictions have enacted, or
are proposing similar laws related to the protection of personal data. Outside the U.S., for example, the European
Union’s General Data Protection Regulation, which became effective in May 2018, greatly increased the
jurisdictional reach of European Union data protection laws and added a broad array of requirements for handling
personal data, including the public disclosure of significant data breaches, and provides for greater penalties for
noncompliance. Other countries have enacted or are considering enacting data localization laws that require
certain data to stay within their borders.
Compliance with changes in privacy and information security laws and standards may result in significant
expense due to increased investment in technology and the development of new operational processes. Failure to
comply with these laws may subject us to potential regulatory enforcement activity, fines, private litigation
WBA Fiscal 2024 Form 10-K
30
including class actions, and other costs. We also have contractual obligations that might be breached if we fail to
comply. A significant privacy breach or failure to comply with privacy and information security laws could have
a materially adverse impact on our reputation, business operations, financial position and results of operations.
We and businesses we interact with experience cybersecurity incidents and might experience significant
computer system compromises or data breaches.
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, adversely impact the experience of our
customers, damage our customer relationships, reputation and brand, and result in lost sales, fines or lawsuits.
Throughout our operations, we receive, retain and transmit certain personal information that our customers and
others provide to purchase products or services, fill prescriptions, enroll in promotional programs, participate in
our customer loyalty programs and banking and credit programs, register on our websites, or otherwise
communicate and interact with us. In addition, aspects of our operations depend upon the secure transmission of
confidential information over public networks. We also depend on and interact with the information technology
networks and systems of third-parties for many aspects of our business operations, including payors, strategic
partners and cloud service providers. These third parties may have access to information we maintain about our
company, operations, customers, employees and vendors, or operating systems that are critical to or can
significantly impact our business operations. Like other global companies, we and businesses we interact with
have experienced and expect to continue to experience threats to data and systems, including from vandalism or
theft of physical systems or media and from perpetrators of random or targeted malicious cyber-attacks,
computer viruses, worms, phishing attacks, bot attacks or other destructive or disruptive software and attempts to
misappropriate customer information, including credit card information, and cause system failures and
disruptions.
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. Any such compromise could harm our reputation and
expose us to regulatory actions, customer attrition, remediation expenses, and claims from customers, financial
institutions, payment card associations and other persons, any of which could materially and adversely affect our
reputation, business operations, financial condition and results of operations. 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 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 accept payments using a variety of methods, including cash, checks, credit and debit cards, gift cards and
mobile payment technologies such as Apple Pay
™
, and we may offer new payment options over time.
Acceptance of these payment options subjects us to rules, regulations, contractual obligations and compliance
requirements, including payment network rules and operating guidelines, data security standards and certification
requirements, and rules governing electronic funds transfers. These requirements and related interpretations may
change over time, which has made and could continue to make compliance more difficult or costly. For certain
payment methods, including credit and debit cards, we pay interchange and other fees, which could increase over
time and raise our operating costs. We rely on third parties to provide payment processing services, including the
processing of credit cards, debit cards, and other forms of electronic payment. If these companies become unable
to provide these services to us, or if their systems are compromised, it could disrupt our business. The payment
methods that we offer also subject us to potential fraud and theft by persons who seek to obtain unauthorized
access to or exploit any weaknesses that may exist in the payment systems. If we fail to comply with applicable
WBA Fiscal 2024 Form 10-K
31
rules or requirements, or if data is compromised due to a breach or misuse of data relating to our payment
systems, we may be liable for costs incurred by payment card issuing banks and other third parties or subject to
fines and higher transaction fees, or our ability to accept or facilitate certain types of payments could be
impaired. In addition, our reputation could suffer, and our customers could lose confidence in certain payment
types, which could result in higher costs and/or reduced sales and materially and adversely affect our results of
operations.
Additionally, we offer branded credit cards, money (wire) transfer services and sell prepaid debit, credit and gift
cards. These products and services require us to comply with global anti-money laundering laws and regulations.
Failure to comply with these laws and regulations could result in fines, sanctions, penalties and damage to our
reputation.
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. 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.
For example, in part as a result of dedicating significant cash flow to amounts payable on our debt, our Board
suspended our stock repurchase program in July 2020 and it may never resume or may not resume on a particular
timeline. If resumed, the repurchase program may be suspended or terminated at any time and, even if fully
implemented, may not enhance long-term stockholder value. We may incur or assume significantly more debt in
the future, including in connection with acquisitions, strategic investments or joint ventures. If we add new debt
and do not retire existing debt, the risks described above could increase.
Incurrence of additional debt by us and changes in our operating performance has, and could continue to,
adversely affect our credit ratings. 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 also could be adversely impacted by any
failure to renew or replace, on terms acceptable to us or at all, existing funding arrangements when they expire
and any failure to satisfy applicable covenants.
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. In addition, our
existing credit agreements require us to maintain as of the last day of each fiscal quarter a ratio of consolidated
debt to total capitalization not to exceed a certain level. Our ability to comply with these restrictions and
WBA Fiscal 2024 Form 10-K
32
covenants may be affected by events beyond our control. If we breach any of these restrictions or covenants and
do not obtain a waiver from the lenders, then, subject to applicable cure periods, our outstanding indebtedness
could be declared immediately due and payable. This could have a material adverse effect on our business
operations and financial condition.
As a holding company, we are dependent on funding from our operating subsidiaries to pay dividends and
other distributions.
We are a holding company with no business operations of our own. Our assets primarily consist of direct and
indirect ownership interests in, and our business is conducted through, subsidiaries which are separate legal
entities. As a result, we are dependent on funding from our subsidiaries, including Walgreens and international
subsidiaries, to pay dividends and meet our obligations. Our subsidiaries may be restricted in their ability to pay
cash dividends or to make other distributions to us, which may limit the payment of cash dividends or other
distributions to the holders of our common stock. Payments to us by our subsidiaries are also contingent upon our
subsidiaries’ earnings and business considerations. Future dividends to us 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, and changes to our business model.
The Company currently intends to continue to pay quarterly dividends to our stockholders, subject to capital
availability. However, its ability to pay dividends will depend on our ability to generate sufficient cash flows
from operations in the future. 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. Our Board may, at its discretion, decrease or entirely discontinue our quarterly dividend
payment at any time. In the second quarter of fiscal 2024, as part of an evaluation of strategic and operational
options, including those related to capital allocation, the Company announced a 48 percent reduction in its
quarterly dividend payment. Any further reduction in the amount of dividends we pay to stockholders could
negatively impact our reputation and investor confidence in us and may have an adverse effect on the trading
price of our common stock.
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.
As of August 31, 2024, we had $15.5 billion of goodwill and $13.0 billion of other intangible assets on our
Consolidated Balance Sheets. 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. As part of this impairment analysis, we determine fair value for each reporting unit
using both the income and market approaches. 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. In the second quarter of fiscal 2024, we recorded $12.4 billion of non-cash
impairment charges related to VillageMD goodwill. In the fourth quarter of fiscal 2024, we recorded
$332 million of non-cash impairment charges related to CareCentrix goodwill. Further impairments may occur
and may have a material impact on our financial condition and results of operations. We will continue to monitor
the fair value of our reporting units, investments and other intangible assets, as well as our market capitalization
and the impact of any economic downturn on our business, to determine if there is any further impairment in
future periods.
WBA Fiscal 2024 Form 10-K
33
Our quarterly results may fluctuate significantly based on seasonality and other factors.
Our operating results have historically varied on a quarterly basis and may continue to fluctuate significantly in
the future. For instance, our businesses are seasonal in nature, with the second fiscal quarter (December, January
and February), which falls during the holiday season, typically generating a higher proportion of retail sales and
earnings than other fiscal quarters. In addition, both prescription and non-prescription drug sales are affected by
the timing and severity of the cough, cold and flu season, which can vary considerably from year to year. 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.
We are exposed to risks associated with foreign currency exchange rate fluctuations.
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. We
present our financial statements in U.S. dollars and have a significant proportion of net assets and income in
non-U.S. dollar currencies, primarily the British pound sterling, as well as a range of other foreign currencies.
Our results of operations and capital ratios can therefore be sensitive to movements in foreign exchange rates.
Due to the constantly changing currency exposures to which we are subject and the volatility of currency
exchange rates, we cannot predict the effect of exchange rate fluctuations upon our future results of operations.
In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform
period-to-period comparisons of our reported results of operations. A depreciation of non-U.S. dollar currencies
relative to the U.S. dollar could have a significant adverse impact on our results of operations.
We may from time to time, in some instances, enter into foreign currency contracts or other derivative
instruments intended to hedge a portion of our foreign currency fluctuation risks, which subjects us to additional
risks, such as the risk that counterparties may fail to honor their obligations to us, that could materially and
adversely affect us. Additionally, we may (and currently do) use foreign currency debt to hedge some of our
foreign currency fluctuation risks. The periodic use of such hedging activities may not offset any or more than a
portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time
the hedges are in place. Fluctuations in foreign currency exchange rates may materially affect our consolidated
financial results.
We could be adversely impacted by changes in assumptions used in calculating pension assets and
liabilities.
We operate certain defined benefit pension plans in the UK, which were closed to new entrants in 2010, as well
as smaller plans in other jurisdictions. The valuation of the pension plans’ assets and liabilities depends in part on
assumptions, which are primarily based on the financial markets as well as longevity and employee retention
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. The impact on the statement of earnings relating to these pension
plans is also influenced by these factors.
WBA Fiscal 2024 Form 10-K
34
Risks from Changes in Public Policy and Other Legal and Regulatory Risks
Changes in the healthcare industry and regulatory environments may adversely affect our businesses.
Political, economic and regulatory influences are subjecting the healthcare industry to significant changes that
could adversely affect our results of operations. In recent years, the healthcare industry has undergone significant
changes in an effort to reduce costs and government spending. These changes include an increased reliance on
managed care; cuts in certain Medicare and Medicaid funding in the U.S. and the funding of governmental
payors in foreign jurisdictions; consolidation of competitors, suppliers and other market participants; and the
development of large, sophisticated purchasing groups. In addition, on August 16, 2022, President Biden signed
into law the IRA, which, among other things, includes policies that are designed to have a direct impact on drug
prices and reduce drug spending by the federal government. For example, the IRA requires drug manufacturers to
pay rebates to Medicare if they increase prices faster than inflation for drugs used by Medicare beneficiaries. The
mechanics of the rebate calculation would mimic those of the Medicaid rebate, but the expansion of inflation-
based rebates may further complicate pricing strategies, particularly as to the launch of our new products. The
IRA could have the effect of reducing the prices we can charge and reimbursement we receive for our products,
thereby reducing our profitability. Additionally, any changes to reimbursement policies in China, for example,
adjustments in reimbursement rates or coverage, could also have a material impact on the profitability of our
investment in the region, thereby reducing the value of our investment.
We expect the healthcare industry to continue to change significantly in the future. Some of these potential
changes, such as a reduction in governmental funding for certain healthcare services or adverse changes in
legislation or regulations governing prescription drug pricing, healthcare services or mandated benefits, may
cause customers to reduce the amount of our products and services they purchase or the price they are willing to
pay for our products and services. We expect continued governmental and private payor pressure to reduce
pharmaceutical pricing, and these pressures could be further exacerbated if payor deficits or shortfalls increase.
Changes in pharmaceutical manufacturers’ pricing or distribution policies and practices as well as applicable
government regulations, including, for example, in connection with the federal 340B drug pricing program, could
also significantly reduce our profitability.
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.
Commitments and contingencies, to the Consolidated Financial Statements included in Part II, Item 8 for further
information.
Legal proceedings, in general, and securities, derivative action and class action and multi-district litigation, in
particular, can be expensive and disruptive. Some of these suits may purport or may be determined to be class
actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary
damages, and may remain unresolved for several years. For example, we have been a defendant in numerous
litigation proceedings relating to opioid matters, including federal multidistrict litigation that consolidated
numerous cases filed against an array of defendants by various plaintiffs such as counties, cities, hospitals, Indian
tribes, and others, as well as numerous lawsuits brought in state courts. 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. The Company remains a defendant in multiple actions in federal courts
alleging claims generally concerning the impacts of widespread opioid abuse, which have been commenced by
various plaintiffs. Additionally, the Company has received from the Department of Justice and the Attorney
Generals of numerous states subpoenas, civil investigative demands and/or other requests concerning opioid
matters. The Company has incurred and expects to continue to incur significant expense in order to resolve those
WBA Fiscal 2024 Form 10-K
35
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. Commitments and contingencies, to the Consolidated Financial Statements included in Part
II, Item 8 for further information.
The Company’s financial results may also be adversely affected by the litigation and other legal proceedings of
companies in which it has an equity method investment. For example, Cencora is involved in litigation and legal
proceedings, including those relating to opioid matters. Any unfavorable outcome or settlement related to these
proceedings could have a material adverse effect on the Company’s financial results.
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. There continues to be a heightened level of review and/or audit by regulatory
authorities of, and increased litigation regarding business, compliance and reporting practices of the Company
and other industry participants. As a result, the Company regularly is the subject of government actions of the
types described above. In addition, under the qui tam or “whistleblower” provisions of the federal and various
state false claims acts, persons may bring lawsuits alleging that a violation of the federal anti-kickback statute or
similar laws has resulted in the submission of “false” claims to federal and/or state healthcare programs,
including Medicare and Medicaid. After a private party has filed a qui tam action, the government must
investigate the private party’s claim and determine whether to intervene in and take control over the litigation.
These actions may remain under seal while the government makes this determination.
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. As a result, we could from time to
time incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters,
and such developments could harm our reputation and have a material adverse effect on our results of operations
in the period in which the amounts are accrued and/or our cash flows in the period in which the amounts are paid.
In addition, as a result of governmental investigations or proceedings, the Company may be subject to damages,
civil or criminal fines or penalties, or other sanctions, including the possible suspension or loss of licensure and/
or suspension or exclusion from participation in government programs. 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 change in, or noncompliance with, governmental regulations and other legal requirements
could have a material adverse effect on our reputation and profitability.
We operate in complex, highly regulated environments around the world and could be materially and adversely
affected by changes to applicable legal requirements including the related interpretations and enforcement
practices, new legal requirements and/or any failure to comply with applicable regulations. Our retail pharmacy
and health and wellness services businesses are subject to numerous country, state and local regulations including
licensing, billing practices, utilization and other requirements for pharmacies and reimbursement arrangements.
The regulations to which we are subject include, but are not limited to: country and state registration and
regulation of pharmacies and drug discount card programs; dispensing and sale of controlled substances and
products containing pseudoephedrine; applicable governmental payor regulations including Medicare and
Medicaid; data privacy and security laws and regulations including HIPAA; the ACA or any successor thereto;
laws and regulations relating to the protection of the environment and health and safety matters, each of which
continues to evolve, including those governing exposure to, and the management and disposal of, hazardous
substances; regulations regarding food and drug safety including those of the U.S. Food and Drug Administration
(“FDA”) and Drug Enforcement Administration (“DEA”), trade regulations including those of the U.S. Federal
WBA Fiscal 2024 Form 10-K
36
Trade Commission, and consumer protection and safety regulations including those of the Consumer Product
Safety Commission, as well as state regulatory authorities, governing the availability, sale, advertisement and
promotion of products we sell as well as our loyalty and drug discount card programs; anti-kickback laws; false
claims laws; laws against the corporate practice of medicine; and foreign, national and state laws governing
healthcare fraud and abuse and the practice of the profession of pharmacy. For example, in the U.S., the DEA,
FDA and various other regulatory authorities regulate the distribution and dispensing of pharmaceuticals and
controlled substances. We are required to hold valid DEA and state-level licenses, meet various security and
operating standards and comply with the federal and various state controlled substance acts and related
regulations governing the sale, dispensing, disposal, holding and distribution of controlled substances. The DEA,
FDA and state regulatory authorities have broad enforcement powers, including the ability to seize or recall
products and impose significant criminal, civil and administrative sanctions for violations of these laws and
regulations. In addition, the IRA includes policies that are designed to have a direct impact on drug prices and
reduce drug spending by the federal government. We are also governed by foreign, national and state laws of
general applicability, including laws regulating matters of working conditions, health and safety and equal
employment opportunity and other labor and employment matters as well as employee benefit, competition and
antitrust matters.
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.
Changes in laws, regulations and policies and the related interpretations and enforcement practices may alter the
landscape in which we do business and may significantly affect our cost of doing business. The impact of new
laws, regulations and policies and the related interpretations and enforcement practices generally cannot be
predicted, and changes in applicable laws, regulations and policies and the related interpretations and
enforcement practices may require extensive system and operational changes, be difficult to implement, increase
our operating costs and require significant capital expenditures. Untimely compliance or noncompliance with
applicable laws and regulations could result in the imposition of civil and criminal penalties that could adversely
affect the continued operation of our businesses, including: suspension of payments from government programs;
loss of required government certifications; loss of authorizations to participate in or exclusion from government
programs, including the Medicare and Medicaid programs in the U.S. and the National Health Service in the UK;
loss of licenses; and significant fines or monetary penalties. Any failure to comply with applicable regulatory
requirements in the U.S. or in any of the countries in which we operate could result in significant legal and
financial exposure, damage to our reputation and brand, and have a material adverse effect on our business
operations, financial condition and results of operations.
We could be adversely affected by violations of anti-bribery, anti-corruption and/or international trade
laws.
We are subject to laws concerning our business operations and marketing activities in foreign countries where we
conduct business. For example, we are subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”), U.S.
export control, anti-money laundering and economic and trade sanction laws, and similar anti-corruption and
international trade laws in certain foreign countries, such as the UK Bribery Act, any violation of which could
create substantial liability for us and also harm our reputation. Violations of these laws and regulations or any
other anti-bribery, anti-corruption or international trade laws may subject us to penalties, sanctions, including
civil and criminal fines, disgorgement of profits, and suspension or debarment of our ability to contract with
governmental agencies or receive export licenses. From time to time, we may face audits or investigations by one
or more domestic or foreign governmental agencies relating to our international business activities, compliance
with which could be costly and time-consuming, and could divert our management and key personnel from our
WBA Fiscal 2024 Form 10-K
37
business operations. Further, investigations by regulatory agencies have been increasing and, therefore, it may
become increasingly costly and time consuming to maintain proper internal controls in the highly regulated
industries we operate. An adverse outcome under any such investigation or audit could damage our reputation
and subject us to fines or other penalties, which could materially and adversely affect our business operations,
financial condition, and results of operations.
We could be adversely affected by product liability, product recall, personal injury or other health and
safety issues.
We could be adversely impacted by the supply of defective or expired products, including the infiltration of
counterfeit products into the supply chain, errors in re-labeling of products, product tampering, product recall and
contamination or product mishandling issues. Through our pharmacies and specialist packaging sites, including
through services provided by third-party healthcare providers, we are also exposed to risks relating to the
products and services we offer. Errors in the dispensing and packaging of pharmaceuticals, including related
counseling, and in the provision of other healthcare services could lead to serious injury or death. Product
liability or personal injury claims may be asserted against us and mandatory or voluntary product recalls may
apply to us with respect to any of the retail products or pharmaceuticals we sell or services we provide,
particularly with regard to our private branded products that are not available from other retailers. For example,
from time to time, the FDA issues statements alerting patients that products in our supply chain may contain
impurities or harmful substances, and claims relating to the sale or distribution of such products may be asserted
against us or arise from these statements. Our healthcare clinics also increase our exposure to professional
liability claims related to medical care. 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.
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. There
can be no assurance that changes in tax laws or regulations, both within the U.S. and the other jurisdictions in
which we operate, such as the proposed 15% global minimum tax under the Organisation for Economic
Co-operation and Development (“OECD”) Pillar Two, Global Anti-Base Erosion Rules, will not materially and
adversely affect our effective tax rate, tax payments, financial condition and results of operations.
Tax laws and regulations are complex and subject to varying interpretations, and we are subject to regular review
and audit by both domestic and foreign tax authorities. Any adverse outcome of such a review or audit could
have a negative impact on our effective tax rate, tax payments, financial condition and results of operations. In
addition, the determination of our income tax provision and other tax liabilities requires significant judgment,
and there are many transactions and calculations where the ultimate tax determination is uncertain. There have
been instances where the IRS has not agreed with our determination of our income tax provision and other tax
liabilities which resulted in an ongoing investigation. The ultimate tax determination may differ from the
amounts recorded in our financial statements and may materially affect our results of operations in the period or
periods for which such determination is made. Additionally, the Company’s assessment of deferred tax assets
requires significant judgment to determine whether a deferred tax asset is recoverable, and additional negative
evidence available over time could result, and has resulted, in us recognizing valuation allowances against our
deferred tax assets, adversely affecting our financial condition. For example, in fiscal 2024, as a result of recent
cumulative losses in the U.S., the Company recognized an additional $2.3 billion of valuation allowance against
certain U.S. and state deferred tax assets primarily related to opioid settlements reached in fiscal 2023. There is
no certainty that sufficient positive evidence will become available to reverse any such valuation allowances in
the future. Any significant failure to comply with applicable tax laws and regulations in all relevant jurisdictions
WBA Fiscal 2024 Form 10-K
38
could give rise to substantial penalties and liabilities. Any changes in enacted tax laws, rules or regulatory or
judicial interpretations; or any change in the pronouncements relating to accounting for income taxes could
materially and adversely impact our effective tax rate, tax payments, financial condition and results of operations.
Risks Related to Our Structure and Organization
Certain stockholders may have significant voting influence over matters requiring stockholder approval.
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. The SP Investors have agreed to, for so long as they have the right to designate a
nominee for election to the Board, to vote all of their shares of common stock in accordance with the Board’s
recommendation on matters submitted to a vote of the Company’s stockholders (including with respect to the
election of directors). The SP Investors’ significant interest in our common stock potentially could determine the
outcome of matters submitted to a vote by our stockholders. The influence of the SP Investors could result in the
Company taking actions that other stockholders do not support or failing to take actions that other stockholders
support. In addition, issuances or sales of our common stock (or the exercise of related registration rights),
including sales of shares by our directors and officers or key investors, including the SP Investors and certain
other former Alliance Boots stockholders, are subject to restrictions in the case of shares held by persons deemed
to be our affiliates and to certain obligations pursuant to the Company Shareholders Agreement (as defined
herein). As a result, the market price of our common stock could be adversely affected.
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.
Conflicts of interest, or the appearance of conflicts of interest, could arise between our interests and the interests
of the other entities and business activities in which our directors or officers are involved. 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. (“ASP”), a
privately-held company which is a party to the Company Shareholders Agreement, and he and his spouse Ornella
Barra, our Chief Operating Officer, International serve as directors of ASP. There are other arrangements
between affiliates of Mr. Pessina and the Company, with required disclosures included in the Company’s annual
proxy statement, including with respect to Alliance Healthcare Italia SpA, which is an entity indirectly owned
and controlled by Mr. Pessina (and in which, until April 2022, the Company held an indirect 9% interest), which
operates Boots branded stores in Italy. Conflicts of interest, or the appearance of conflicts of interest, or similar
issues could arise in connection with these or other transactions in the future. While our contractual arrangements
place restrictions on the parties’ conduct in certain situations, and related party transactions are subject to
independent review and approval in accordance with our related party transactions approval procedures and
applicable law, the potential for a conflict of interest exists and such persons may have conflicts of interest, or the
appearance of conflicts of interest, with respect to matters involving or affecting both companies.
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.
Certain provisions of our certificate of incorporation and bylaws, as well as provisions of the Delaware General
Corporation Law (the “DGCL”), could make it difficult for stockholders to change the composition of the Board
or discourage, delay, or prevent a merger, consolidation, or acquisitions that stockholders may otherwise consider
favorable. These provisions include the authorization of the issuance of “blank check” preferred stock that could
be issued by the Board, limitations on the ability of stockholders to call special meetings, and advance notice
requirements for nomination for election to the Board or for proposing matters that can be acted upon by
stockholders at stockholder meetings. We are also subject to the provisions of Section 203 of the DGCL, which
prohibits us, except under specified circumstances, from engaging in any mergers, significant sales of stock or
WBA Fiscal 2024 Form 10-K
39
assets, or business combinations with any stockholder or group of stockholders who own 15% or more of our
common stock.
Under the Company Shareholders Agreement, the SP Investors are entitled to designate one nominee to the
Board (currently Stefano Pessina) for so long as the SP Investors continue to meet certain beneficial ownership
thresholds and subject to certain other conditions. Pursuant to the Company Shareholders Agreement, the SP
Investors have agreed that, for so long as they have the right to designate a nominee to the Board, they will vote
all of their shares of common stock in accordance with the Board’s recommendation on matters submitted to a
vote of our stockholders (including with respect to the election of directors).
While these provisions do not make us immune from takeovers or changes in the composition of the Board, and
are intended to protect our stockholders from, among other things, coercive or otherwise unfair tactics, these
provisions could have the effect of making it difficult for stockholders to change the composition of the Board or
discouraging, delaying, or preventing a merger, consolidation, or acquisitions that stockholders may otherwise
consider favorable.
Item 1B. Unresolved staff comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
The Company recognizes the critical importance of safeguarding sensitive information and responding
effectively to cybersecurity threats or incidents. As a part of the Company’s overall risk management strategy,
the Company implements a lines-of-defense model for protecting the enterprise against cybersecurity related
threats. The Chief Information Officer (“CIO”) has first line responsibility for the protection of the Company
against cybersecurity related threats, which includes evaluating potential threats and determining the appropriate
responses. The Chief Information Security Officer (“CISO”), who reports to the CIO, is the executive
accountable for the monitoring, continuous development and improvement of the Company’s Information
Security program. This program, which is aligned to the National Institute of Standards and Technology
Cybersecurity Framework, (i) provides strategic oversight with respect to cybersecurity controls for the
Company’s technology, (ii) identifies potential risks in the Company’s supplier ecosystem and (iii) outlines
threat intelligence and incident response coordination for current and emerging cybersecurity risks. Additionally,
the CISO and CIO continually evaluate and make updates to the Information Security program to align with
regulatory requirements and industry best practices to keep company-wide training initiatives related to
cybersecurity risks robust and up to date.
As part of the second line of defense, the Company maintains a Technology, Risk and Compliance (“TRC”)
function and a Company-wide Enterprise Risk Management (“ERM”) program for which the WBA Chief Ethics
and Compliance Officer provides oversight. The TRC function is responsible for reviewing and updating the
Company’s Information Security policy and manages compliance with critical security related regulatory
requirements, including those related to HIPAA and the Payment Card Industry—Data Security Standard. The
ERM program systematically identifies and reports enterprise-wide risks and the related risk mitigation
recommendations, including the consideration of cybersecurity risk relative to other top risks, to executive
management. The TRC and ERM teams work collaboratively with the Information Security team to support the
Company’s risk mitigation efforts.
The CISO partners closely with the Legal, Privacy and TRC teams, allowing for coordination with respect to
policy design and providing domain expertise for incident response, as well as setting strategy. The CISO’s
updates to the overall risk management strategy and policy incorporate real-time operating metrics from the
Company’s technology environment as well as industry knowledge from team members and consultants, internal
WBA Fiscal 2024 Form 10-K
40
and external auditors, participation in professional peer networks, membership in Information Sharing and
Analysis Centers, and commercial threat intelligence. Additionally, on a regular basis, the CISO briefs the CIO
and other executive management committee members on emerging threats.
The Company has established a comprehensive Data Security Event Plan (“DSEP”) which formalizes how the
Company and management identify, investigate, respond to and report incidents involving unauthorized access to
sensitive data. The DSEP is co-managed by the CISO, the Chief Privacy Officer and the Vice President of
Technology Risk. The DSEP assists with establishing a repeatable process for management to identify the
relative significance of incidents and defines internal and external reporting obligations. Response strategies are
tailored to the circumstances of each incident, considering technical, business, legal and regulatory factors.
Thorough documentation and data preservation are paramount throughout the investigation process. Once
incidents are properly identified and assessed under the DSEP, communications are coordinated internally and
escalated accordingly to the Audit Committee and the Board, as well as externally, to allow for timely
dissemination of accurate information while adhering to legal and regulatory requirements.
The Company engages outside experts as needed to supplement in-house expertise with industry-leading experts
for incident response and recovery, digital forensics, penetration testing, and outside counsel specializing in
cybersecurity matters. To mitigate cybersecurity risks and threats arising from the Company’s use of third-party
service providers, the Company conducts proactive diligence on certain service providers’ information security
programs to help meet the Company’s baseline cybersecurity standards as set by the CISO under the Information
Security program.
In evaluating cybersecurity incidents, management considers the potential impact to customer privacy as well
as results of operations, controls, and financial condition, as well as the potential impact, if any, to the
Company’s business strategy or reputation. As of the date hereof, we are not aware of any risks from
cybersecurity threats, including risks from any past cybersecurity threats, that have materially affected our
business or results of operations. However, future cybersecurity threats could materially affect us, including
our business strategy, results of operations, or financial condition. For more information on risks associated
with cybersecurity threats, see the risk factor titled “Cybersecurity, Data Privacy and Information Security
Risks” in Item 1A-Risk factors.
Governance
The Audit Committee, whose members include seasoned technologists and technology consultants, has been
delegated responsibility for overseeing the Company’s management of strategy with respect to data, privacy and
cybersecurity risks.
The Audit Committee receives briefings from the CISO related to ongoing cybersecurity-related initiatives and
cybersecurity risks, including emerging threats, at least quarterly. The Audit Committee then determines whether
any such matters need to be presented to the full Board. Additionally, the Audit Committee regularly reviews and
discusses with management, no less than annually, the Company’s enterprise risk assessment and key enterprise
risks in connection with the larger ERM program, which includes matters related to information security and
technology risks, including cybersecurity. The CISO also provides an update directly to the full Board no less
than annually regarding the overall health of the cybersecurity program.
The Company’s CIO and CISO have over 40 years of combined experience in technology leadership roles for
large, multinational corporations, including extensive experience in enterprise cybersecurity strategy, policy,
incident response and controls.
WBA Fiscal 2024 Form 10-K
41
Item 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.
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
8,560
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. 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.
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. 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.
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.
WBA Fiscal 2024 Form 10-K
42
Office facilities
The Company operated 45 principal office facilities, covering approximately 2.1 million square feet, of which 3
were owned. Geographically, 30 of these principal office facilities were located in the U.S. and 15 were located
outside of the U.S.
Item 3. Legal proceedings
The information in response to this item is included in Note 10. Commitments and contingencies, to the
Consolidated Financial Statements included in Part II, Item 8 for further information.
Item 4. Mine safety disclosures
Not applicable.
WBA Fiscal 2024 Form 10-K
43
PART II
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. 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, 2024 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange
Act. Subject to applicable law, share purchases may be made from time to time in open market transactions,
privately negotiated transactions including accelerated share repurchase agreements, or pursuant to instruments
and plans complying with Rule 10b5-1, among other types of transactions and arrangements.
Issuer 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. This program has no
specified expiration date. In July 2020, the Company announced that it had suspended activities under this
program.
Item 6. Reserved
Not applicable.
WBA Fiscal 2024 Form 10-K
44
Item 7. Management’s discussion and analysis of financial condition and results of operations
The following discussion and analysis of the Company’s financial condition and results of operations should be
read together with the financial statements and the related notes included elsewhere herein and the description
of the Company’s business and reportable segments in Part I, Item 1. 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. References herein to the “Company,” “we,” “us,” or “our”
refer to Walgreens Boots Alliance, Inc. and its subsidiaries, and in each case do not include unconsolidated
partially-owned entities, except as otherwise indicated or the context otherwise requires.
Certain amounts in the Consolidated Financial Statements and associated notes may not add due to rounding.
All percentages have been calculated using unrounded amounts for each of the periods presented.
INTRODUCTION AND SEGMENTS
Walgreens Boots Alliance, Inc. and its subsidiaries (
“
Walgreens Boots Alliance
”
or the
“
Company
”
) is an
integrated healthcare, pharmacy and retail leader with a 170-year heritage of caring for customers and patients.
Its operations are conducted through three reportable segments:
•
U.S. Retail Pharmacy,
•
International, and
•
U.S. Healthcare.
FACTORS, TRENDS AND UNCERTAINTIES AFFECTING OUR RESULTS AND COMPARABILITY
The Company has been, and we expect it to continue to be, affected by a number of factors that may cause actual
results to differ from our historical results or current expectations. These factors include: the impact of opioid-
related claims and litigation settlements; the 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. (“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.
WBA Fiscal 2024 Form 10-K
45
Strategic Initiatives
In fiscal 2024, the Company initiated a strategic and operational review of its business and strategy. In
connection with the strategic review, the Company expects to focus on areas that build its core retail and
specialty pharmacy business, leverage its current assets through capital-efficient businesses, and expand its
relationships with business partners. As such, the Company is analyzing opportunities that may impact the future
results of operations and cash flows, including the Company’s recently approved plan to implement a significant
multi-year U.S. Footprint Optimization Program to close certain underperforming stores, primarily in the U.S.;
launching a U.S. Retail Pharmacy action plan to invest in and deliver an improved customer and patient
experience across channels, including broadening and deepening our services by assessing provider status and
exploring other new payment arrangements, responding to an anticipated challenging retail environment by
adjusting pricing and promotional strategies; re-evaluating the U.S. Retail Pharmacy sales strategy, including the
merchandising strategy, in an effort to offer a refreshed assortment of products, with a planned focus of being
more selective with national brands and expanding owned brands in key categories; stabilizing pharmacy
margins by collaborating and negotiating with pharmacy benefit managers (“PBMs”) in an attempt to bring more
stability and predictability to retail pharmacy reimbursement models; aligning U.S. Pharmacy and Healthcare
organizations for enhanced go-to-market capabilities; re-evaluating capital allocation priorities, including an
assessment of our dividend policy; continuing to focus on monetizing non-core assets to generate cash flow and
harvesting gains from our portfolio of investments, such as Cencora and BrightSpring Health Services; and
simplifying and focusing the U.S. Healthcare portfolio. The Company continues to evaluate its overall portfolio
of assets and investments and may take action in line with the Company’s strategic direction.
The Company is currently evaluating a variety of options with respect to Village Practice Management
Company, LLC (“VillageMD”) in light of ongoing investments by the Company in VillageMD’s businesses and
VillageMD’s substantial ongoing and expected future cash requirements. These options could include a sale of
all or part of the VillageMD businesses, possible restructuring options and other strategic opportunities.
In fiscal 2023, we provided VillageMD senior secured credit facilities (the “VillageMD Secured Loan”) in the
aggregate amount of $2.25 billion, consisting of (i) a senior secured term loan in an aggregate principal amount
of $1.75 billion and (ii) a senior secured credit facility in an aggregate original committed amount of
$500 million. On August 2, 2024, the Company and VillageMD acknowledged the existence of defaults under
the VillageMD Secured Loan. On August 6, 2024, we entered into a forbearance agreement whereby the
Company has agreed not to exercise certain remedies available to it under the terms of the VillageMD Secured
Loan, subject to VillageMD’s compliance with the conditions set forth in the forbearance agreement. The
Company is actively engaged in discussions with VillageMD’s stakeholders and other third parties with respect
to the future of its investment in VillageMD.
These and other factors can affect the Company’s operations and net earnings for any period and may cause such
results not to be comparable to the same period in previous years. The results presented in this report are not
necessarily indicative of future operating results.
Opioid litigation settlements
On December 9, 2022, the Company entered into a Multistate Settlement Agreement (the “Multistate
Agreement”) which resolved a substantial majority of opioid-related lawsuits filed against the Company by the
attorneys general of participating states and political subdivisions (the “Settling States”) and litigation brought by
counsel for tribes. The Multistate Agreement, which became effective on August 7, 2023, included no admission
of wrongdoing or liability by the Company. As of August 31, 2024, the Company has accrued a total of
$6.6 billion liability associated with the Multistate Agreement and other opioid-related claims and litigation
settlements. 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.
WBA Fiscal 2024 Form 10-K
46
COVID-19
Since 2020, COVID-19 has impacted global economies, including the U.S., the UK, and other countries, causing
public health concerns, economic and supply chain disruptions and volatility in financial markets. The Company
has been pivotal in combating COVID-19 by collaborating with the Centers for Disease Control and Prevention,
the U.S. Department of Health and Human Services, and the U.S. government to administer vaccines. The federal
Public Health Emergency for COVID-19 expired on May 11, 2023. Fiscal 2022 results included significant
contributions from COVID-19 vaccinations and related sales, net of incremental labor and other costs related to
the vaccination program. In fiscal 2023 and 2024, the Company has seen significantly lower COVID-19 vaccine
and testing volume. The Company continues to monitor the potential impacts of COVID-19. The financial and
operational impacts of COVID-19 on the Company and its operating results, cash flows, and financial condition
are discussed throughout this Form 10-K. The Company’s current expectations are forward-looking statements
and actual results may differ due to various factors, as discussed under “Cautionary note regarding forward-
looking statements” below and in Item 1A, Risk factors.
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. To better serve the evolving
specialty pharmacy market, in March 2017, the Company and Prime Therapeutics LLC (“Prime”), a PBM, closed
a transaction to form a combined central specialty pharmacy and mail services company, AllianceRx Walgreens
Prime, using an innovative model that sought to align pharmacy, PBMs and health plans to coordinate patient
care, improve health outcomes and deliver cost of care opportunities. On December 31, 2021, the Company
purchased Prime’s portion of the joint venture and now wholly owns the joint venture, which was renamed
AllianceRx Walgreens. Certain clients of AllianceRx Walgreens are not obligated to contract through AllianceRx
Walgreens, and have in the past, and may in the future, enter into specialty pharmacy and other agreements
without involving AllianceRx Walgreens. Certain clients have chosen not to renew their contracts through
AllianceRx Walgreens which impacts gross sales. However, considering the relatively low margin nature of this
business, the Company does not anticipate this will have a material impact on operating income.
RECENT DEVELOPMENTS
Change of Executive Leadership
On October 10, 2023, the Company announced that its board of directors (the “Board of Directors”) appointed
Timothy C. Wentworth as Chief Executive Officer (“CEO”) of the Company and a member of the Board of
Directors, effective as of October 23, 2023. Mr. Wentworth has previously served as CEO of Evernorth Health
Services, a division of The Cigna Group (“Cigna”); as President, Health Services of Cigna; and as President and
CEO of Express Scripts.
On February 6, 2024, the Company announced that its Board of Directors appointed Manmohan Mahajan as
Executive Vice President and Global Chief Financial Officer (“CFO”), effective as of March 1, 2024.
Mr. Mahajan has previously served as the Company’s Interim Global CFO since July 2023. Prior to such interim
appointment, Mr. Mahajan served as the Company’s Senior Vice President, Global Controller and Chief
Accounting Officer from July 2021 to July 2023.
Boots Plan Annuitization
On November 23, 2023, with financial support from the Company, Boots Pensions Limited (“Trustee”), in its
capacity as trustee of the Boots Pension Plan (the “Boots Plan”), entered into a Bulk Purchase Annuity
Agreement (“BPA”) with Legal & General Assurance Society Limited (“Legal & General”) to insure the benefits
of all 53,000 of its members.
WBA Fiscal 2024 Form 10-K
47
See Note 13. Retirement benefits to the Consolidated Financial Statements included in Part II, Item 8 herein for
further information.
Sale of Farmacias Ahumada
On October 31, 2023, the Company completed the sale of the Farmacias Ahumada business in Chile.
Sale of Cencora common stock
On November 9, 2023, the Company entered into the variable prepaid forward (“VPF”) derivative contracts with
third-party financial institutions and received prepayments of $424 million related to the forward sale of up to
2.7 million shares of Cencora common stock.
In fiscal 2024, the Company sold shares of Cencora common stock for total consideration of approximately
$2.7 billion.
See Note 5. Equity method investments, to the Consolidated Financial Statements included in Part II, Item 8 for
further information.
Prescription files and pharmacy inventory acquisitions
On May 8, 2024, the Company executed an asset purchase agreement to acquire prescription files and related
pharmacy inventory. On August 26, 2024, the Company completed the acquisition for $293 million.
$750 million Note Issuance
On August 12, 2024, the Company issued, in an underwritten public offering, $750 million of 8.125% notes due
2029.
See Note 7. Debt, to the Consolidated Financial Statements included in Part II, Item 8 for further information
Footprint Optimization Program
On October 14, 2024, the Company’s Board of Directors approved a plan to optimize its footprint and close
approximately 900 to 1,000 additional underperforming stores primarily across the U.S. (the “Footprint
Optimization Program”). See “Footprint Optimization Program” below for further information.
The amounts and timing of all estimates are subject to change until finalized. The actual amounts and timing may
vary materially based on various factors. See Item 1A, Risk factors and “Cautionary note regarding forward-
looking statements.”
TRANSFORMATIONAL COST MANAGEMENT PROGRAM
On December 20, 2018, the Company announced a transformational cost management program that was
expected to deliver in excess of $2.0 billion of annual cost savings by fiscal 2022 (the “Transformational Cost
Management Program”). The Company achieved this goal at the end of fiscal 2021. The program was
subsequently expanded and extended, with the most recent update in fiscal 2023, when the Company increased
its annual cost savings target from $3.5 billion to $4.5 billion by the end of fiscal 2024. The Company achieved
this goal by the end of fiscal 2024, concluding the Transformational Cost Management Program with annual cost
savings of $4.5 billion. While most of the initiatives under the program were completed by the end of fiscal 2024,
certain initiatives are expected to extend into fiscal 2025. The Company does not expect to incur material exit
and disposal charges related to the finalization of these initiatives.
WBA Fiscal 2024 Form 10-K
48
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. 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. The Transformational Cost Management Program resulted in the approval to close
approximately 650 Boots stores in the United Kingdom (“UK”) and approximately 950 stores in the U.S. As of
August 31, 2024, the Company has closed 624 and 676 stores in the UK and U.S., respectively.
Cumulative pre-tax charges to the Company’s GAAP financial results for the Transformational Cost
Management Program were $4.3 billion, of which pre-tax charges for exit and disposal activities were
$4.0 billion.
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.
Includes impairments relating to operating lease right-of-use and finance lease assets.
2.
Primarily related to store closures and other asset impairments.
Approximately 75% of the cumulative pre-tax charges relating to the Transformational Cost Management
Program represented current or future cash expenditures, primarily related to employee severance and business
transition costs, IT transformation and lease and other real estate payments.
The total pre-tax charges under the Transformational Cost Management Program, which were primarily recorded
in Selling, general and administrative expenses were as follows (in millions):
Fiscal 2024
U.S. Retail
Pharmacy
International
U.S. Healthcare
Corporate and
Other
Walgreens Boots
Alliance, Inc.
Total exit and disposal charges
$
770
$
32
$
26
$
6
$
835
Other IT transformation costs
56
—
—
—
56
Total pre-tax charges
$
827
$
32
$
26
$
6
$
891
Fiscal 2023
U.S. Retail
Pharmacy
International
U.S. Healthcare
Corporate and
Other
Walgreens Boots
Alliance, Inc.
Total exit and disposal charges
$
816
$
213
$
115
$
14
$
1,158
Other IT transformation costs
14
9
—
—
23
Total pre-tax charges
$
830
$
222
$
115
$
14
$
1,181
WBA Fiscal 2024 Form 10-K
49
Fiscal 2022
U.S. Retail
Pharmacy
International
U.S.
Healthcare
Corporate and
Other
Walgreens Boots
Alliance, Inc.
Total exit and disposal charges
$
546
$
118
$
—
$
25
$
690
Other IT transformation costs
57
15
—
—
73
Total pre-tax charges
$
603
$
134
$
—
$
26
$
763
See Note 3. Exit and disposal activities to the Consolidated Financial Statements included in Part II, Item 8
herein for further information.
FOOTPRINT OPTIMIZATION PROGRAM
On October 14, 2024, the Company’s Board of Directors approved a plan to optimize its footprint and close
underperforming stores, primarily within the Company’s U.S. Retail Pharmacy segment (the “Footprint
Optimization Program”). Execution of this program realigns the Company’s footprint with evolving demographic
trends and enhances its capacity to respond more effectively to shifts in consumer behavior and buying
preferences. This increased agility in adapting to a changing environment is a key objective of the Company’s
strategic review, and a critical area in which the Company aims to close the competitive gap with peers that have
taken similar initiatives over the past years.
The Footprint Optimization Program includes plans to close approximately 900 to 1,000 stores primarily across
the U.S. by the end of fiscal 2027. The cadence of store closures prioritizes estimated cash flow benefits,
underperforming locations, and lease expirations. The program is expected to be accretive to adjusted operating
income and cash flows beginning in fiscal 2025. Considering the remaining approximately 300 stores approved,
but not yet closed under the Transformational Cost Management Program, the Company expects to close 1,200 to
1,300 stores over the next three years.
The Company currently estimates that it will recognize cumulative pre-tax charges to its GAAP financial results
of approximately $2.2 billion to $2.4 billion, including costs associated with lease obligations and other real
estate costs, asset impairments, and employee severance and other exit costs. The Company expects to incur
pre-tax charges of approximately $1.8 billion to $2.0 billion for lease obligations and other real estate costs
including runoff costs associated with location optimization under prior programs, approximately $300 million of
asset impairments, and approximately $100 million for employee severance and other exit costs. The Company
estimates that approximately 90% of these cumulative pre-tax charges will result in future cash expenditures.
The amounts and timing of all estimates are subject to change until finalized. The actual amounts and timing may
vary materially based on various factors. See Part I, Item 1A Risk factors and Item 7 “Cautionary note regarding
forward-looking statements” below.
WBA Fiscal 2024 Form 10-K
50
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.
(GAAP)
(8,636)
(3,080)
4,337
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc.
(Non-GAAP measure)
1
2,491
3,439
4,360
Diluted net (loss) earnings per common share (GAAP)
(10.01)
(3.57)
5.01
Adjusted diluted net earnings per common share (Non-GAAP
measure)
1
2.88
3.98
5.04
Percentage increases (decreases)
2024
2023
2022
Sales
6.2
4.8
0.1
Gross profit
(2.0)
(4.2)
0.7
Selling, general and administrative expenses
2
19.3
25.3
11.0
Impairment of goodwill
NM
—
—
Operating (loss) income (GAAP)
104.5
NM
(40.8)
Adjusted operating income (Non-GAAP measure)
1
(32.2)
(24.6)
0.3
(Loss) earnings before interest and income tax provision (benefit)
183.9
NM
51.2
Net (loss) earnings attributable to Walgreens Boots Alliance, Inc.
(GAAP)
180.4
NM
117.5
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc.
(Non-GAAP measure)
1
(27.6)
(21.1)
2.5
Diluted net (loss) earnings per common share (GAAP)
180.4
NM
117.6
Adjusted diluted net earnings per common share (Non-GAAP
measure)
1
(27.6)
(20.9)
2.5
Percent to sales
2024
2023
2022
Gross margin
18.0
19.5
21.3
Selling, general and administrative expenses
27.6
24.6
20.6
1
See “—Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure
calculated in accordance with GAAP and related disclosures.
2
Fiscal 2024 includes goodwill impairment of $12.7 billion.
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
51
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 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.
Net loss attributable to Walgreens Boots Alliance, Inc. (GAAP) fiscal 2024 compared to fiscal 2023
Net loss attributable to the Company in fiscal 2024 was $8.6 billion, an increase of 180.4 percent compared with
the year-ago period. Net loss per share was $10.01, an increase of 180.4 percent compared with the year-ago
period. Net loss and net loss per share in the current period reflects a higher operating loss, a $2.2 billion
non-cash charge related to a valuation allowance on certain deferred tax assets primarily related to opioid
liabilities recognized in prior periods, a $717 million after tax charge for fair value adjustments on VPF
derivatives related to the monetization of Cencora shares, and a non-cash impairment charge related to an equity
method investment in China. 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.
Operating loss was $14.1 billion in fiscal 2024 compared to operating loss of $6.9 billion for the year-ago period,
an increase in operating loss of 104.5 percent. Operating loss in the current period reflects a $12.4 billion
non-cash impairment charge related to VillageMD goodwill, which resulted in a $5.8 billion charge attributable
to WBA, net of tax and non-controlling interest and non-cash impairment charges related to certain long-lived
assets in the U.S. Retail Pharmacy segment and CCX Next, LLC (“CareCentrix”) goodwill, a challenging U.S.
retail environment, net reimbursement pressure, lower sale-leaseback gains and higher incentive accruals than in
the prior year, partially offset by cost savings and improved profitability in the U.S. Healthcare segment. Prior
year operating loss reflects a $6.8 billion pre-tax charge for opioid-related claims and litigation and a
$431 million non-cash impairment of pharmacy license intangible assets in Boots UK.
Other income, net was $340 million and $2.0 billion in fiscal 2024 and 2023, a decrease of $1.7 billion. The
decrease in Other income, net is mainly due to a $946 million charge for fair value adjustments on financial
derivatives related to the monetization of Cencora shares, a non-cash impairment charge related to an equity
investment in China, and lower gains from the partial sale of the Company’s equity method investment in
Cencora in the current period.
Interest expense, net was $482 million and $580 million in fiscal 2024 and 2023, respectively, a decrease of
$98 million. The decrease in interest expense was primarily the result of gains on early extinguishment of debt
and lower net borrowings in the current period, partly offset by higher interest rates in the current period.
The Company’s effective tax rate for fiscal 2024 and 2023 was an expense of 8.8% compared to a benefit of
34.3% in the year-ago period. Fiscal 2024 tax expense includes the impact of a non-cash expense to record a
valuation allowance on certain U.S. federal and state deferred tax assets primarily related to opioid liabilities
recognized in prior periods, VillageMD earnings not taxable to the Company, and goodwill impairment, which is
primarily not deductible for tax purposes.
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure) fiscal 2024 compared
to fiscal 2023
Adjusted net earnings attributable to the Company in fiscal 2024 was $2.5 billion, a decrease of 27.6 percent
compared with the year-ago period. Adjusted diluted net earnings per share in fiscal 2024 was $2.88, a decrease
of 27.6 percent to compared with the year-ago period.
WBA Fiscal 2024 Form 10-K
52
The decrease in adjusted net earnings primarily reflects lower adjusted operating income due to a challenging
U.S. retail environment, net reimbursement pressure, lower sale-leaseback gains, and higher incentive accruals in
the current period, partly offset by cost savings and improved profitability in the U.S. Healthcare segment, lower
interest expense, and a lower adjusted effective tax rate due to the recognition of deferred tax assets in foreign
jurisdictions in the second quarter of fiscal 2024.
See “—Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure
calculated in accordance with GAAP and related disclosures.
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. 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. Sales for the segment are principally derived from the sale of
prescription drugs and a wide assortment of retail products, including health and wellness, beauty, personal care
and consumables and general merchandise.
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
WBA Fiscal 2024 Form 10-K
53
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. Total prescriptions represents total prescription volume
dispensed at Walgreens’ retail drugstores, health and wellness services, and specialty and home delivery
pharmacy services.
3
Includes the adjustment to convert prescriptions greater than 84 days to the equivalent of three 30-day
prescriptions. This adjustment reflects that these prescriptions include approximately three times the amount
of product days supplied compared to a normal prescription.
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. 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, 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 method of calculating comparable sales varies across the retail industry and
our method of calculating comparable sales may not be the same as other retailers’ methods. Fiscal 2024
figures include an adjustment to remove February 29, 2024 results due to the leap year.
5
Locations include retail stores, specialty pharmacy facilities, prescription mailing facilities, and prescription
micro-fulfillment centers.
NM - Not meaningful. Percentage increases above 200% or when one period includes income and other period
includes loss are considered not meaningful.
Sales fiscal 2024 compared to fiscal 2023
Sales for fiscal 2024 increased by 5.0 percent to $115.8 billion, driven almost entirely by pharmacy sales.
Comparable sales increased by 6.2 percent in fiscal 2024.
Pharmacy sales increased by 8.2 percent in fiscal 2024, and were 76.8 percent of the segment’s sales. Pharmacy
sales benefited from higher branded drug inflation, mix impacts, and strong execution in pharmacy services.
Comparable pharmacy sales increased 9.8 percent in fiscal 2024, compared to an increase of 7.2 percent in the
year-ago period. 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.
Retail sales decreased by 4.6 percent in fiscal 2024 and were 23.2 percent of the segment’s sales reflecting a
challenging retail environment, channel shift, a weaker respiratory season, and lower seasonal sales. Comparable
retail sales decreased 3.4 percent in fiscal 2024 and decreased 0.8 percent in fiscal 2023.
Operating loss fiscal 2024 compared to fiscal 2023
Gross profit was $20.7 billion for fiscal 2024, compared to $22.1 billion in the year-ago period. Gross profit
decreased 6.2 percent, primarily driven by lower retail scan volume driven by softer US market trends, elevated
shrink levels, and continued net reimbursement pressure including brand inflation and mix impacts.
WBA Fiscal 2024 Form 10-K
54
Selling, general and administrative expenses as a percentage of sales were 18.4 percent in fiscal 2024 compared
to 25.1 percent in fiscal 2023. The decrease was almost entirely driven by the $6.8 billion charge for opioid-
related claims and litigation settlements in the year-ago period, partly offset by the $455 million non-cash
impairment charge related to certain long-lived assets, and lower sale-leaseback gains in the current period
coupled with impacts from reduced incentive accrual in the year-ago period.
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. The improvement in operating
loss was primarily driven by a $6.8 billion pre-tax charge for opioid-related claims and litigation settlements in
the year-ago period, partly offset by lower pharmacy and retail gross profit and a $455 million non-cash
impairment charge related to certain long-lived assets in the current period.
Adjusted operating income fiscal 2024 compared to fiscal 2023
Adjusted operating income for fiscal 2024 decreased 41.3 percent to $2.2 billion. The decrease reflects lower
pharmacy and retail gross profit due to a challenging retail environment and continued pharmacy reimbursement
pressure, lower sale-leaseback gains, lower Cencora equity income and lower incentive accruals in the prior year,
partially offset by cost savings initiatives.
See “—Non-GAAP Measures” below for a reconciliation to the most directly comparable financial measure
calculated in accordance with GAAP and related disclosures.
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. 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. 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. 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)
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
WBA Fiscal 2024 Form 10-K
55
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.
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. 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. 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,
comparable pharmacy sales in constant currency and comparable retail sales in constant currency refer to
total sales, pharmacy sales and retail sales, respectively. The method of calculating comparable sales in
constant currency varies across the retail industry and our method of calculating comparable sales in
constant currency may not be the same as other retailers’ methods. Fiscal 2024 figures include an
adjustment to remove February 29, 2024 results due to the leap year.
3
Includes only retail stores.
NM - Not meaningful. Percentage increases above 200% or when one period includes income and other
period includes loss are considered not meaningful.
Sales fiscal 2024 compared to fiscal 2023
Sales for fiscal 2024 increased 6.1 percent to $23.6 billion. The favorable impact of currency translation on sales
was 2.9 percentage points. Sales increased 3.2 percent on a constant currency basis, with the Germany wholesale
business growing 5.6 percent and Boots UK sales growing 3.2 percent.
Pharmacy sales decreased 1.8 percent in fiscal 2024 and were 15.3 percent of the segment’s sales. The favorable
impact of currency translation on pharmacy sales was 3.9 percentage points. Comparable pharmacy sales in
constant currency increased 4.9 percent compared to the year-ago period, reflecting an increase of 4.9 percent in
Boots UK comparable pharmacy sales in constant currency driven by stronger demand for pharmacy services.
Retail sales increased 7.7 percent for fiscal 2024 and were 33.5 percent of the segment’s sales, reflecting growth
across all categories in Boots UK, and increased total retail market share in the UK. The favorable impact of
WBA Fiscal 2024 Form 10-K
56
currency translation on retail sales was 3.7 percentage points. Comparable retail sales in constant currency
increased 6.5 percent driven by Boots UK comparable retail sales in constant currency increasing 6.9 percent
reflecting higher retail sales in the UK, including market share gains and increased store footfall.
Pharmaceutical wholesale sales increased 7.6 percent for fiscal 2024 and were 51.2 percent of the segment’s
sales. The favorable impact of currency translation on pharmaceutical wholesale sales was 2.1 percentage points.
Excluding the impact of currency translation, the increase in sales represents market growth in Germany.
Operating income fiscal 2024 compared to fiscal 2023
Gross profit increased 6.8 percent in fiscal 2024. Gross profit was favorably impacted by 3.4 percentage points,
or $162 million, as a result of currency translation. Excluding the impact of currency translation, the increase was
primarily due to higher retail sales in the UK, and market growth in the Germany wholesale business.
Selling, general and administrative expenses for fiscal 2024 increased 0.4 percent from the year-ago period to
$4.3 billion, reflecting an adverse currency impact of 3.4 percentage points, or $148 million. Excluding the
impact of currency translation, the decrease reflects the pharmacy license intangible assets impairment in the UK
in the year-ago period, partially offset by real estate gains in the year-ago period and higher inflation and
increased investment in information technology in the UK in the current period.
Operating income for fiscal 2024 increased 80.1 percent to $682 million. Operating income was favorably
impacted by 3.5 percentage points or $13 million, as a result of currency translation. Excluding the impact of
currency translation, the increase in operating income reflects pharmacy license intangible assets impairment in
the UK in the year-ago period, higher retail sales in the UK, and market growth in the Germany wholesales
business, partially offset by real estate gains in the year-ago period, and higher inflation and increased investment
in information technology in the UK in the current period.
Adjusted operating income fiscal 2024 compared to fiscal 2023
Adjusted operating income for fiscal 2024 decreased 15.2 percent to $793 million. Adjusted operating income
was favorably impacted by 1.8 percentage points, or $17 million, as a result of currency translation. Excluding
the impact of currency translation, the decrease in adjusted operating income reflects real estate gains in the
year-ago period, and higher inflation and increased investment in information technology in the UK, partially
offset by higher retail sales in the UK.
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. 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 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.
WBA Fiscal 2024 Form 10-K
57
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.
Sales fiscal 2024 compared to fiscal 2023
Sales for fiscal 2024 increased $1.8 billion to $8.3 billion, reflecting the acquisition of WP CityMD TopCo
(“Summit”) by VillageMD, and growth led by VillageMD and Shields compared to the year-ago period.
VillageMD sales, inclusive of Summit, increased $1.6 billion to $6.2 billion driven by growth in full-risk lives
and fee for service revenue, partly offset by the impact of clinic closures. Shields sales increased $106 million to
$573 million, driven by further growth within existing partnerships.
Operating loss fiscal 2024 compared to fiscal 2023
Gross profit for fiscal 2024 was $734 million compared to $252 million in fiscal 2023. The increase primarily
reflects the acquisition of Summit by VillageMD and growth led by VillageMD and Shields.
Selling, general and administrative expenses were $15.0 billion for fiscal 2024 compared to $2.0 billion in fiscal
2023. The increase was primarily driven by a $12.4 billion non-cash impairment charge related to VillageMD
goodwill and planned clinic closures, and a $332 million non-cash goodwill impairment charge related to
CareCentrix.
Operating loss for fiscal 2024 was $14.2 billion compared to a loss of $1.7 billion in fiscal 2023. The decrease
was primarily driven by the $12.4 billion non-cash impairment charge related to VillageMD goodwill and
planned clinic closures and the $332 million non-cash goodwill impairment charge related to CareCentrix.
Adjusted operatin
g
loss for fiscal 2024 compared to fiscal 2023
Adjusted operating loss was $134 million for fiscal 2024, compared to a loss of $566 million in fiscal 2023. The
improvement compared to the year-ago period was driven by growth from Shields and cost discipline at
VillageMD.
Adjusted EBITDA (Non-GAAP measure) for fiscal 2024 compared to fiscal 2023
Adjusted EBITDA was $66 million for fiscal 2024, compared to a loss of $376 million in fiscal 2023 driven by
cost discipline at VillageMD and growth from Shields.
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
58
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”). The
Company has provided the non-GAAP financial measures herein, which are not calculated or presented in
accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated
and presented in accordance with GAAP. 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.
These supplemental non-GAAP financial measures are presented because management has evaluated the
Company’s financial results both including and excluding the adjusted items or the effects of foreign currency
translation, as applicable, and believes that the supplemental non-GAAP financial measures presented provide
additional perspective and insights when analyzing the core operating performance of the Company from period
to period and trends in the Company’s historical operating results. We also use non-GAAP financial measures as
a basis for certain compensation programs sponsored by the Company. These supplemental non-GAAP financial
measures 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.
The Company also presents certain information related to current period operating results in “constant currency,”
which is a non-GAAP financial measure. These amounts are calculated by translating current period results at the
foreign currency exchange rates used in the comparable period in the prior year. The Company presents such
constant currency financial information because it has significant operations outside of the U.S. reporting in
currencies other than the U.S. dollar and such presentation provides a framework to assess how its business
performed excluding the impact of foreign currency exchange rate fluctuations.
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. Retail
Pharmacy
International
U.S. Healthcare
Corporate
and Other
Walgreens
Boots
Alliance, Inc.
Operating (loss) income (GAAP)
$
(385)
$
682
$
(14,241)
$
(133)
$
(14,076)
Impairment of goodwill,
intangibles and long-lived assets
477
—
12,911
34
13,422
Acquisition-related amortization
393
62
620
—
1,075
Transformational cost
management
827
32
26
6
891
Certain legal and regulatory
accruals and settlements
561
—
—
—
561
Acquisition-related costs
84
17
550
(109)
542
Adjustments to equity earnings in
Cencora
162
—
—
—
162
LIFO provision
47
—
—
—
47
Adjusted operating income (loss)
(Non-GAAP measure)
$
2,167
$
793
$
(134)
$
(202)
$
2,624
WBA Fiscal 2024 Form 10-K
59
Fiscal 2023
U.S. Retail
Pharmacy
International
U.S. Healthcare
Corporate
and Other
Walgreens
Boots
Alliance, Inc.
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. Retail
Pharmacy
International
U.S. Healthcare
Corporate
and Other
Walgreens
Boots
Alliance, Inc.
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. Non-GAAP financial measures the Company discloses, such as consolidated
adjusted operating income, should not be considered a substitute for, or superior to, financial measures
determined or calculated in accordance with GAAP.
WBA Fiscal 2024 Form 10-K
60
Net (loss) earnings to Adjusted net earnings & Diluted net (loss) earnings per share to Adjusted diluted net
earnings per share (in millions):
2024
2023
2022
Net (loss) 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. (Non-GAAP measure)
$
2,491
$
3,439
$
4,360
WBA Fiscal 2024 Form 10-K
61
2024
2023
2022
Diluted net (loss) earnings per common share (GAAP)
18
$
(10.01)
$
(3.57)
$
5.01
Adjustments to operating (loss) income
19.32
12.45
4.33
Adjustments to other income, net
(0.35)
(2.26)
(3.36)
Adjustments to interest expense, net
0.02
—
0.01
Adjustments to income tax provision (benefit)
1.44
(2.48)
(0.79)
Adjustments to post-tax earnings from other equity method
investments
0.05
0.05
0.07
Adjustments to net loss attributable to non-controlling interests
(7.61)
(0.21)
(0.23)
Adjusted diluted net earnings per common share (Non-GAAP
measure)
19
$
2.88
$
3.98
$
5.04
Weighted average common shares outstanding, diluted (in
millions)
19
864.3
864.0
865.9
Operating loss to Adjusted EBITDA for the U.S. Healthcare segment (in millions)
2024
2023
2022
Operating loss (GAAP)
20
$
(14,241)
$
(1,725)
$
(829)
Impairment of goodwill, intangibles and long-lived assets
1
12,911
—
—
Acquisition-related amortization
4
620
743
392
Acquisition-related costs
5
550
301
67
Transformational cost management
3
26
115
—
Adjusted operating loss
(134)
(566)
(370)
Depreciation expense
146
129
36
Stock-based compensation expense
21
53
61
22
Adjusted EBITDA (Non-GAAP measure)
$
66
$
(376)
$
(312)
1
In the second quarter of fiscal 2024, the Company recorded $12.4 billion of non-cash impairment charges
related to VillageMD goodwill. In the fourth quarter of fiscal 2024, the Company recorded $332 million of
non-cash impairment charges related to CareCentrix goodwill. These charges are recorded within Selling,
general and administrative expenses and Impairment of goodwill within the Consolidated Statements of
Earnings. In fiscal 2023, the Company recognized a $431 million impairment of pharmacy license
intangible assets in Boots UK of which $132 million was attributed to additional store closures recognized
as part of the Transformational Cost Management Program. In fiscal 2022, the Company recorded an
impairment loss of $783 million, related to indefinite-lived pharmacy license and trade name intangible
assets in the Boots reporting unit, part of the International segment. These charges are recorded within
Selling, general and administrative expenses within the Consolidated Statements 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.
2
Certain legal and regulatory accruals and settlements relate to significant charges associated with certain
legal proceedings, including legal defense costs. 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. In
fiscal 2024 and 2023, the Company recorded charges related to the opioid litigation Multistate Agreement
and certain other legal matters. 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.
WBA Fiscal 2024 Form 10-K
62
3
Transformational Cost Management Program charges are costs associated with a formal restructuring plan.
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. Amortization of acquisition-related intangible assets
includes amortization of intangible assets such as customer relationships, trade names, trademarks,
developed technology and contract intangibles. Intangible asset amortization excluded from the related
non-GAAP measure represents the entire amount recorded within the Company’s GAAP financial
statements. The revenue generated by the associated intangible assets has not been excluded from the related
non-GAAP measures. 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. The stock-based compensation fair valuation adjustment reflects
the difference between the fair value based remeasurement of awards under purchase accounting and the
grant date fair valuation. 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.
5
Acquisition-related costs are transaction and integration costs associated with certain merger, acquisition
and divestitures related activities recorded in Operating (loss) income within the Consolidated Statements of
Earnings. 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. These costs are significantly impacted by the timing and complexity of the underlying merger,
acquisition and divestitures related activities and do not reflect the Company’s current operating
performance.
6
Adjustments to equity earnings in Cencora consist of the Company’s proportionate share of non-GAAP
adjustments reported by Cencora consistent with the Company’s non-GAAP measures. 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. 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. These charges are recorded within Cost of sales within the Consolidated Statements
of Earnings.
8
Store damage and inventory loss insurance recovery for losses incurred in fiscal 2020 as a result of looting
in the U.S. These charges are primarily recorded within Selling, general and administrative expenses within
the Consolidated Statements of Earnings.
9
Impairment of equity method investment and investments in debt and equity securities includes impairment
of certain investments. The Company excludes these charges when evaluating operating performance
because these do not relate to the ordinary course of the Company’s business and it does not incur such
charges on a predictable basis. Exclusion of such charges enables more consistent evaluation of the
Company’s operating performance. These charges are recorded within Other income, net, in the
Consolidated Statements of Earnings.
10
Includes gains or losses related to the sale of businesses. 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. The Company does not believe this
WBA Fiscal 2024 Form 10-K
63
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. In fiscal 2023, the Company recorded pre-tax gains of $109 million related to the
change in classification of its previously held equity method investment in Option Care Health to an
investment in equity security held at fair value and subsequent related fair value adjustments. 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. The Company excludes these charges when evaluating operating performance
because these do not relate to the ordinary course of the Company’s business.
14
Includes interest expense on external debt to fund incremental contributions to the Boots Plan required to
complete the Trustee’s acquisition of a bulk annuity policy (the “Buy-In”) from Legal & General. The
payments and related incremental interest expense are not indicative of normal operating performance.
15
In fiscal 2022, the Company incurred a $4 million loss in connection with the early extinguishment of debt
related to the integration of Shields. The Company excludes these charges as related activities do not reflect
the Company’s ongoing financial performance.
16
In fiscal 2024, the Company recorded a $2.2 billion non-cash charge due to recognition of a valuation
allowance against certain U.S. and state deferred tax assets primarily related to opioid liabilities recognized
in prior periods. Adjustments to income tax provision (benefit) include adjustments to the GAAP basis tax
provision (benefit) commensurate with non-GAAP adjustments and certain discrete tax items including U.S.
and UK tax law changes and equity method non-cash tax. 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. These charges are recorded in Post-tax earnings from other equity
method investments within the Consolidated Statements of Earnings. Although the Company may have
shareholder rights and board representation commensurate with its ownership interests in these equity
method investees, adjustments relating to equity method investments are not intended to imply that the
Company has direct control over their operations and resulting revenue and expenses. Moreover, these
non-GAAP financial measures have limitations in that they do not reflect all revenue and expenses of these
equity method investees.
18
Due to the anti-dilutive effect resulting from periods where the Company reports a net loss, the impact of
potentially dilutive securities on the per share amounts has been omitted from the calculation of weighted-
average common shares outstanding for diluted net loss per common share.
19
Includes impact of potentially dilutive securities in the calculation of weighted-average common shares,
diluted for adjusted diluted net earnings per common share calculation purposes.
20
The Company reconciles Adjusted EBITDA for the U.S. 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.
WBA Fiscal 2024 Form 10-K
64
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. 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.
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 has paid cash dividends every quarter since 1933. In fiscal 2024 as part of an
evaluation of strategic and operational options, including those related to capital allocation, the Company
announced a 48 percent reduction in its quarterly dividend payment to 25 cents per share, to strengthen the
Company’s long-term balance sheet and cash position, starting with the quarterly dividend payable in March
2024. This action reinforces the Company’s goals of increasing cash flow, while freeing up capital to invest in
sustainable growth initiatives in the pharmacy and healthcare businesses, which the Company believes will
ultimately improve shareholder value. Further, the Company is dependent on funding from its subsidiaries to pay
dividends and meet its obligations. If the Company’s subsidiaries’ financial performance and earnings are not
sufficient to make dividend payments to the Company while maintaining adequate capital levels, the Company
may reduce or may not be able to make dividend payments timely, if at all, to its stockholders. 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 at its sole discretion. For further information
regarding the Company’s dependence on its subsidiaries to pay dividends and meet its obligations, please see
Part I, Item 1A, Risk factors.
The Company’s cash requirements are subject to change as business conditions warrant and opportunities arise.
The timing and size of any new business ventures or acquisitions that the Company may complete may also
impact its cash requirements. Additionally, the Company’s cash requirements, and its ability to generate cash
flow, have been and may continue to be adversely affected by adverse global macroeconomic conditions caused
by factors including, among others, inflation, high interest rates, labor shortages, supply chain disruptions, and
pandemics like COVID-19. For further information regarding the impact of adverse macroeconomic conditions
on the Company, including on its liquidity and capital resources, please see Part I, Item 1A, Risk factors.
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 Company
believes that these sources, and the ability to obtain other financing, will provide adequate cash funds to meet the
Company’s needs for at least the next 12 months. See Part II, Item 7A, Qualitative and quantitative disclosures
about market risk, below for a discussion of certain financing and market risks. See Note 4. Leases and Note 7.
Debt, to the Consolidated Financial Statements included in Part II, Item 8 for further information on the
Company’s debt instruments and its recent financing actions.
WBA Fiscal 2024 Form 10-K
65
In fiscal 2024, the Company reduced net debt by nearly $2.0 billion and lease obligations by over $1.0 billion.
The Company also met its goals by reducing capital expenditures by over $700 million and realizing over
$600 million in benefits from working capital initiatives. These factors contributed to the Company’s positive
cash flow for fiscal 2024. In fiscal 2025, the Company expects to focus on improving cash flow generation and
reducing net debt through a combination of operational actions and asset monetization activities. Operational
actions include initiatives to reduce capital expenditures and improve working capital.
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. To attain these objectives, investment limits are placed on the amount, type and issuer of securities.
Investments are principally in U.S. Treasury money market funds.
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. Commitments and contingencies to the Consolidated Financial Statements
included in Part II, Item 8 herein for further information.
On November 23, 2023, with financial support from the Company, Boots Pension Limited, in its capacity as
trustee of the Boots Pension Plan, entered into a Bulk Purchase Annuity Agreement with Legal & General
Assurance Society Limited to insure the benefits of all 53,000 of its members. The Company has committed to
contributing approximately $970 million to $1.0 billion to the Boots Plan (including the acceleration of
previously committed contributions) to fund the purchase of a bulk annuity policy. In fiscal 2024, the Company
paid $435 million of the commitment, with the remaining amount expected to be paid within the next two years.
See Note 13. Retirement benefits to the Consolidated Financial Statements included in Part II, Item 8 herein for
further information.
At August 31, 2024, the Company had no guarantees outstanding and the letters of credit issued were not
material. See Note 7. Debt to the Consolidated Financial Statements included in Part II, Item 8 herein for further
information on the Company’s debt instruments and its recent financing actions.
Cash flows from operating activities
Net cash provided by operating activities was $1.0 billion, $2.3 billion and $3.9 billion in fiscal 2024, 2023 and
2022, respectively. The decrease in cash provided by operating activities in fiscal 2024 compared to fiscal 2023
is primarily driven by higher payments related to legal matters, the Boots Plan Annuity premium payments,
changes in net working capital, and lower earnings. Changes in net working capital are primarily driven by
higher levels of inventory and receivables as compared to year-ago period.
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.
Net cash provided by investing activities in fiscal 2024 includes proceeds from sale-leaseback transactions of
$898 million and sale proceeds of $2.7 billion related to the Company’s sale of Cencora common stock offset by
additions to property, plant and equipment of $1.4 billion and asset acquisitions, primarily from the acquisition of
prescription files, of $402 million.
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.
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66
Net cash used for investing activities in fiscal 2022 includes cash outflows associated with business, investment
and asset acquisitions, net of cash acquired of VillageMD, Shields and CareCentrix for $0.8 billion, $0.9 billion
and $0.1 billion, respectively, offset by cash proceeds of $1.3 billion related to the Company’s sale of Cencora
and Option Care Health common stock and cash proceeds of $1.3 billion from sale-leaseback transactions. See
Note 2. Acquisitions and other investments and Note 5. Equity method investments to the Consolidated Financial
Statement included in Part II, Item 8 for further information.
Capital Expenditure
Capital expenditure includes information technology projects and other growth initiatives. Additions to property,
plant and equipment were as follows (in millions):
2024
2023
2022
U.S. Retail Pharmacy
$
1,041
$
1,421
$
1,207
International
247
308
295
U.S. Healthcare
91
375
218
Corporate and Other
2
13
15
Total additions to property, plant and equipment
$
1,381
$
2,117
$
1,734
The decrease in capital expenditure represents the reprioritization of growth initiatives, including the reduction in
VillageMD footprint expansion, the rollout of micro-fulfillment centers, and digital transformation initiatives.
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. In fiscal 2024, 2023
and 2022 payments of debt, primarily for revolving credit facilities and commercial paper, were $30.5 billion,
$9.0 billion and $8.4 billion, respectively.
On August 12, 2024, the Company issued, in an underwritten public offering, $750 million of 8.125% notes due
2029. The Company intends to use the net proceeds from this offering, together with cash on hand, for the
repayment and/or retirement of the Company’s 3.800% notes due 2024, of which the $1.2 billion aggregate
principal amount is currently outstanding, and to use remaining amounts for general corporate purposes. See
Note 7. Debt to the Consolidated Financial Statements included in Part II, Item 8 herein for further information.
In fiscal 2023, the Company acquired $1.3 billion of non-controlling interests related to the acquisition of the
remaining equity interest in Shields and CareCentrix. In fiscal 2022, the Company acquired $2.1 billion of
non-controlling interests primarily related to the acquisition of VillageMD. Financing activities in fiscal 2023
include $2.7 billion in proceeds from the issuance of preferred units in VillageMD to Cigna Health & Life
Insurance Company, as part of the Summit acquisition and subsequent exercise of tranche rights. See Note 2.
Acquisitions and other investments to the Consolidated Financial Statement included in Part II, Item 8 for further
information.
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. Financial instruments, to the Consolidated Financial Statements included in Part II,
Item 8 for further information.
WBA Fiscal 2024 Form 10-K
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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. 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 company did not extinguish debt in fiscal 2023. See Note 7. Debt, to
the Consolidated Financial Statements included in Part II, Item 8 for further information.
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. In July 2020, the Company suspended repurchases under this program.
The Company may continue to repurchase stock to offset anticipated dilution from equity incentive plans.
The Company determines the timing and amount of repurchases, including repurchases to offset anticipated
dilution from equity incentive plans, based on its assessment of various factors, including prevailing market
conditions, alternate uses of capital, liquidity and the economic environment. The Company 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. Debt, to the Consolidated Financial Statements
included in Part II, Item 8, contain a covenant to maintain, as of the last day of each fiscal quarter, a ratio of
consolidated debt to total capitalization not to exceed 0.60:1.00, subject to increase in certain circumstances set
forth in the applicable credit agreement. As of August 31, 2024, the Company was in compliance with all such
applicable financial covenants.
Credit ratings
As of October 14, 2024, the credit ratings of Walgreens Boots Alliance were:
Rating agency
Long-term rating
1
Commercial
paper rating
Outlook
Moody’s
Ba3
NP
Stable outlook
Standard & Poor’s
BB
B
Negative outlook
1.
This long-term credit rating refers to the Company’s Corporate Family Rating issued by Moody’s.
In assessing the Company’s credit strength, each rating agency considers various factors including the
Company’s business model, capital structure, financial policies and financial performance. There can be no
assurance that any particular rating will be assigned or maintained. The Company’s credit ratings impact its
borrowing costs, access to capital markets and operating lease costs. The rating agency ratings are not
recommendations to buy, sell or hold the Company’s debt securities or commercial paper. Each rating may be
subject to revision or withdrawal at any time by the assigning rating agency and should be evaluated
independently of any other rating.
WBA Fiscal 2024 Form 10-K
68
In fiscal 2024, the Company’s long-term ratings were downgraded below investment to BB with a negative
outlook by Standard and Poor’s and Ba3 with a stable outlook by Moody’s (with respect to the Company’s
Corporate Family Rating). The reduction in the Company’s credit ratings has limited impact to the cost of
interest on existing debt, but has minimally increased borrowing margins under certain credit facilities that are
tied to ratings grids or similar terms. The Company’s current credit ratings significantly reduce the Company’s
ability to issue commercial paper, has and may continue to increase the cost of new financing for the Company,
and may decrease access to credit and debt capital markets. As of August 31, 2024, the Company had an
aggregate borrowing capacity under committed revolving credit facilities of $5.8 billion, with no funds drawn
under these facilities.
COMMITMENTS AND CONTINGENCIES
The information set forth in Note 10. Commitments and contingencies to the Consolidated Financial Statements
included in Part II, Item 8 of this Form 10-K is incorporated herein by reference.
CRITICAL ACCOUNTING ESTIMATES
The Consolidated Financial Statements are prepared in accordance with GAAP and include amounts based on
management’s prudent judgments and estimates. Actual results may differ from these estimates. Management
believes that any reasonable deviation from those judgments and estimates would not have a material impact on
our consolidated financial position or results of operations. To the extent that the estimates used differ from
actual results, however, adjustments to the Consolidated Statements of Earnings and corresponding Consolidated
Balance Sheets accounts would be necessary. 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, legal and other contingencies and income taxes. 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. The determination of fair values of assets and liabilities acquired requires estimates and the use of
valuation techniques when market value is not readily available.
For intangible assets, the Company generally uses the income approach to determine fair value. The income
approach requires management to make significant estimates and assumptions. These estimates and assumptions
primarily include, but are not limited to: discount rates, terminal growth rates, royalty rates, forecasts of revenue,
operating income, depreciation, amortization and capital expenditures. The discount rates applied to the
projections reflect the risk factors associated with those projections.
Although the Company believes its estimates of fair value are reasonable, actual financial results could differ
from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions
concerning future financial results or other underlying assumptions could have a significant impact on the
determination of the fair value of the intangible assets acquired.
Judgment is also required in determining the intangible asset’s useful life.
Leases
– The Company determines if an arrangement contains a lease at the inception of a contract. The lease
classification is determined at the commencement date. Right-of-use assets represent the Company’s right to use
an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease
payments arising from the lease during the lease term. Right-of-use assets and lease liabilities are recognized at
the commencement date based on the present value of the remaining future minimum lease payments during the
WBA Fiscal 2024 Form 10-K
69
lease term. Lease commencement is the date the Company has the right to control the property. The Company
utilizes its incremental borrowing rate to discount the lease payments. The incremental borrowing rate is based
on the Company’s estimated rate of interest for a collateralized borrowing over a similar term as the lease term.
The operating lease right-of-use assets also include lease payments made before commencement, lease incentives
and are recorded net of impairment. Operating leases are expensed on a straight line basis over the lease term.
The lease term of real estate leases includes renewal options that are reasonably certain of being exercised.
Options to extend are considered reasonably certain of being exercised based on evaluation if there are
significant investments within the leased property which have useful lives greater than the non-cancelable lease
term, performance of the underlying store and the Company’s economic and strategic initiatives. Short-term
leases with an initial term of 12 months or less are not recorded on the balance sheets.
The Company accounts for lease components and non-lease components as a single lease component. Variable
lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease
payments based on changes in index rates or usage, are not included in the right-of-use assets or lease liabilities.
These are expensed as incurred. 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. Other real estate leases contain one fixed lease payment that includes real estate taxes, common
area maintenance and insurance. These fixed payments are considered part of the lease payment and included in
the right-of-use assets and lease liabilities. The Company does not separately account for the land portion of the
leases involving land and building.
Finance leases are recognized within property, plant and equipment and as a finance lease liability within accrued
expenses and other liabilities and other non-current liabilities.
Goodwill and indefinite-lived intangible asset impairment
– Goodwill and indefinite-lived intangible assets are
evaluated 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 intangible asset
below its carrying value. As part of the Company’s impairment analysis, fair value of a reporting unit is generally
determined using both the income and market approaches. The income approach requires management to
estimate a number of factors for each reporting unit, including projected future operating results, economic
projections, anticipated future cash flows and discount rates. The market approach estimates fair value using
comparable marketplace fair value data from within a comparable industry grouping, as well as recent guideline
transactions.
The determination of the fair value of the reporting units requires the Company to make significant estimates and
assumptions with respect to the business and financial performance of the Company’s reporting units. These
estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group
companies, control premiums appropriate for acquisitions in the industries in which we compete, discount rates,
terminal growth rates, forecasts of revenue, operating income, depreciation, amortization, working capital
requirements and capital expenditures. The Company also compares the sum of estimated fair values of reporting
units to the Company’s fair value as implied by the market value of its equity. This comparison provides an
indication that, in total, assumptions and estimates are reasonable. Future declines in the overall market value of
the Company’s equity securities may provide an indication that the fair value of one or more reporting units has
declined below its carrying value.
Indefinite-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to
its carrying value. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is
recognized and the asset is written down to its estimated fair value. Indefinite-lived intangible assets fair values
are estimated using the relief from royalty method and multi-period excess earnings method of the income
approach. The determination of the fair value of the indefinite-lived intangibles requires the Company to make
WBA Fiscal 2024 Form 10-K
70
significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to:
forecasts of revenue, the selection of appropriate royalty rate and discount rates.
Although the Company believes its estimates of fair value are reasonable, actual financial results could differ
from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions
concerning future financial results or other underlying assumptions, could have a significant impact on either the
fair value of the reporting units and indefinite-lived intangibles, the amount of any goodwill and indefinite-lived
intangible impairment charges, or both. These estimates can be affected by a number of factors including, but not
limited to, general economic conditions, availability of market information as well as the Company’s
profitability. The Company continues to monitor these potential impacts and economic, industry and market
trends, and the impact these may have on the reporting units.
Impairment of long lived assets
– The Company evaluates the recoverability of long-lived assets whenever
events or changes in circumstances indicate that the carrying value of such an asset may not be recoverable.
Long-lived assets related to the Company’s retail, pharmacy and healthcare operations include property, plant
and equipment, definite lived intangibles, and right of use assets. The evaluation of long-lived assets is
performed at the lowest level of identifiable cash flows, typically at the store level for retail pharmacy operations.
If the asset group fails the recoverability test, then an impairment charge is determined based on the difference
between the fair value of the asset group compared to its carrying value. 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. Although we believe these estimates are reasonable,
actual results could differ from those estimates due to the inherent uncertainty involved in making such
estimates.
Cost of sales and inventory
Retail, Pharmacy and Wholesale
Cost of sales includes the purchase price of goods and cost of services rendered, store and warehouse inventory
loss, inventory obsolescence, warehousing costs for retail operations, purchasing costs, freight costs, cash
discounts, vendor allowances and supplier rebates. Cost of sales is derived based upon point-of-sale scanning
information with an estimate for shrinkage and is adjusted based on periodic inventory counts.
The Company values inventories on a lower of cost and net realizable value or market basis. Inventories include
product costs, inbound freight, direct labor, warehousing costs for retail pharmacy operations, and distribution
costs of products, and are reduced by vendor allowances not classified as a reduction of advertising expense. The
Company’s U.S. Retail Pharmacy segment inventory is accounted for using the last-in-first-out (“LIFO”)
method. The Company’s International segment inventory is accounted for using average cost and the
first-in-first-out (“FIFO”) method.
Vendor allowances are principally received as a result of purchases, sales or promotion of vendors’ products.
Allowances are generally recorded as a reduction of inventory and are recognized as a reduction of cost of sales
when the related merchandise is sold. Allowances received for promoting vendors’ products, if received for a
specific, incremental, identifiable cost, are offset against advertising expense and result in a reduction of Selling,
general and administrative expenses to the extent of advertising costs incurred, with the excess treated as a
reduction of inventory costs. Rebates or refunds received by the Company from its suppliers, mostly in cash, are
considered as an adjustment of the prices of the supplier’s products purchased by the Company.
WBA Fiscal 2024 Form 10-K
71
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.
Medical claims expense represents medical claims expenses related to fee-for-service and value-based
arrangements and primarily includes costs for third-party healthcare service providers, including contracted
providers, that provide medical care to patients. Medical claims expense and the liability for unpaid claims
include estimates of the Company’s obligations for medical care services that have been rendered by third parties
for which the Company is contractually obligated to pay, but for which claims have either not yet been received,
processed or paid. The Company develops estimates for medical care services incurred but not reported
(“IBNR”) utilizing actuarial models when a sufficient amount of medical claims history is available from the
third-party healthcare service providers. In developing its unpaid claims liability estimates, the Company applies
different estimation methods depending on which incurred claims are being estimated.
Cost of care represents the cost of employed providers and certain affiliated providers, including base
compensation, quality incentive bonuses, provider benefits and share-based compensation. Clinic operating and
support costs include costs incurred to operate clinics, including clinical care support staff, patient support staff,
population health management employees, rent, utilities and supplies.
Equity method investments
– The Company uses the equity method of accounting for equity investments if the
investment provides the ability to exercise significant influence, but not control, over operating and financial
policies of the investee. The Company’s proportionate share of the net income or loss of these investees is
included in consolidated net earnings. Judgment regarding the level of influence over each equity method
investment includes considering key factors such as the Company’s ownership interest, legal form of the investee
(e.g. limited liability partnership), representation on the board of directors, participation in policy-making
decisions and material intra-entity transactions.
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. Factors considered by the
Company when reviewing an equity method investment for impairment include the length of time (duration) and
the extent (severity) to which the fair value of the equity method investment has been less than cost, the
investee’s financial condition and near-term prospects, and the intent and ability to hold the investment for a
period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is
recognized in the period identified.
Pension and post-retirement benefits
– The Company has various defined benefit pension plans that cover some
of its non-U.S. employees. The Company also has a post-retirement healthcare plan that covers qualifying U.S.
employees. Eligibility and the level of benefits for these plans vary depending on participants’ status, date of hire
and or length of service. Pension and post-retirement healthcare plan expenses and valuations are dependent on
assumptions used by third-party actuaries in calculating those amounts. These assumptions include discount
rates, healthcare cost trends, long-term return on plan assets, retirement rates, mortality rates and other factors.
The Company funds its pension plans in accordance with applicable regulations. The post-retirement healthcare
plan is not funded.
Contingencies
– The Company assesses its liabilities and contingencies for outstanding legal proceedings, and
reserves are established on a case-by-case basis for those legal claims for which management concludes that it is
probable that a loss will be incurred and that the amount of such loss can be reasonably estimated. Substantially
all of these contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a
loss and/or the measurement of any loss can be complex. With respect to litigation and other legal proceedings
where the Company has determined that a loss is reasonably possible, the Company may be unable to estimate
WBA Fiscal 2024 Form 10-K
72
the amount or range of reasonably possible loss due to the inherent difficulty of predicting the outcome of and
uncertainties regarding such litigation and legal proceedings. The Company’s assessments are based on estimates
and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or
inaccurate, and unanticipated events and circumstances may occur that might cause the Company to change those
estimates and assumptions. Therefore, it is possible that an unfavorable resolution of one or more pending
litigation or other contingencies could have a material adverse effect on the Company’s Consolidated Financial
Statements in a future fiscal period. 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. Adverse rulings or
determinations by judges, juries, governmental authorities or other parties could also result in changes to
management’s assessment of current liabilities and contingencies. Accordingly, the ultimate costs of resolving
these claims may be substantially higher or lower than the amounts reserved.
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. In evaluating the tax benefits associated with the various tax filing positions, the Company records
a tax benefit for uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be
realized. Adjustments are made to the liability for unrecognized tax benefits in the period in which the Company
determines the issue is effectively settled with the tax authorities, the statute of limitations expires for the return
containing the tax position or when more information becomes available. The liability for unrecognized tax
benefits, including accrued penalties and interest, is primarily included in other non-current liabilities and current
income taxes on the Company’s Consolidated Balance Sheets and in income tax provision in its Consolidated
Statements of Earnings.
In determining its provision for income taxes, the Company uses income, permanent differences between book
and tax income and enacted statutory income tax rates. The provision for income taxes rate also reflects its
assessment of the ultimate outcome of tax audits in addition to any foreign-based income deemed to be taxable in
the U.S. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which
they occur.
RECENT ACCOUNTING PRONOUNCEMENTS
See “New accounting pronouncements” within Note 1. 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. 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. 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.
WBA Fiscal 2024 Form 10-K
73
These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties
and assumptions, known or unknown, that could cause actual results to vary materially from those indicated or
anticipated. These risks, assumptions and uncertainties include those described in Item 1A, Risk factors which are
incorporated herein by reference, and in other documents that we file or furnish with the SEC. If one or more of
these risks or uncertainties materializes, or if underlying assumptions prove incorrect, actual results may vary
materially from those indicated or anticipated by such forward-looking statements. All forward-looking statements
we make or that are made on our behalf are qualified by these cautionary statements. Accordingly, you should not
place undue reliance on these forward-looking statements, which speak only as of the date they are made.
We do not undertake, and expressly disclaim, any duty or obligation to update publicly any forward-looking
statement after the date of this report, whether as a result of new information, future events, changes in
assumptions or otherwise.
Item 7A. Quantitative and qualitative disclosure about market risk
Interest rate risk
The Company is exposed to interest rate volatility with regard to existing variable-rate debt instruments and
future incurrences of fixed or variable-rate debt, which exposure primarily relates to movements in various
interest rates, such as U.S. treasury rates and commercial paper rates. From time to time, the Company uses
interest rate swaps and forward-starting interest rate swaps to hedge its exposure to the impact of interest rate
changes on existing debt and future debt issuances respectively, to reduce the volatility of financing costs and,
based on current and projected market conditions, achieve a desired proportion of fixed-rate versus floating-rate
debt. 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. 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.
Foreign currency exchange rate risk
The Company is exposed to fluctuations in foreign currency exchange rates, primarily with respect to the British
pound sterling and certain other foreign currencies, which may affect its net investment in foreign subsidiaries
and may cause fluctuations in cash flows related to foreign denominated transactions. The Company is also
exposed to the translation of foreign currency earnings to the U.S. dollar. The Company enters into foreign
currency forward contracts to hedge against the effect of exchange rate fluctuations on non-functional currency
cash flows. These transactions are almost exclusively less than 12 months in maturity. In addition, the Company
enters into foreign currency forward contracts that are not designated in hedging relationships to offset, in part,
the impacts of certain intercompany activities (primarily associated with intercompany financing transactions).
The Company’s foreign currency derivative instruments are sensitive to changes in exchange rates. 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.
Equity price risk
Changes in Cencora common stock price may have a significant impact on the fair value of the equity method
investment in Cencora. 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.
WBA Fiscal 2024 Form 10-K
74
Changes in Cencora common stock price may have a significant impact on the fair value of the VPF derivative
contracts. 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. Financial instruments, to the Consolidated Financial
Statements included in Part II, Item 8 for further information.
WBA Fiscal 2024 Form 10-K
75
Item 8. Financial statements and supplementary data
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
At August 31, 2024 and 2023
(in millions, except shares and per share amounts)
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
1,319
$
728
Marketable securities
1,790
11
Accounts receivable, net
5,851
5,381
Inventories
8,320
8,257
Other current assets
1,055
1,127
Total current assets
18,335
15,503
Non-current assets:
Property, plant and equipment, net
9,772
11,587
Operating lease right-of-use assets
20,335
21,667
Goodwill
15,506
28,187
Intangible assets, net
12,973
13,635
Equity method investments (see Note 5)
2,269
3,497
Other non-current assets
1,846
2,550
Total non-current assets
62,702
81,125
Total assets
$
81,037
$
96,628
Liabilities, redeemable non-controlling interests and equity
Current liabilities:
Short-term debt
$
1,505
$
917
Trade accounts payable (see Note 17)
14,082
12,635
Operating lease obligations
2,382
2,347
Accrued expenses and other liabilities
8,673
8,426
Income taxes
312
209
Total current liabilities
26,953
24,535
Non-current liabilities:
Long-term debt
8,044
8,145
Operating lease obligations
20,921
22,124
Deferred income taxes
1,195
1,318
Accrued litigation obligations
6,008
6,261
Other non-current liabilities
5,736
5,757
Total non-current liabilities
41,905
43,605
Commitments and contingencies (see Note 10)
Total liabilities
68,858
68,140
Redeemable non-controlling interests
174
167
Equity:
Preferred stock $.01 par value; authorized 32 million shares, none issued
—
—
Common stock $.01 par value; authorized 3.2 billion shares; issued 1,172,513,618 at
August 31, 2024 and August 31, 2023
12
12
Paid-in capital
10,645
10,661
Retained earnings
23,348
33,058
Accumulated other comprehensive loss
(2,897)
(2,993)
Treasury stock, at cost; 308,513,185 shares at August 31, 2024 and 308,839,832 shares at
August 31, 2023
(20,662)
(20,717)
Total Walgreens Boots Alliance, Inc. shareholders’ equity
10,445
20,020
Non-controlling interests
1,561
8,302
Total equity
12,005
28,322
Total liabilities, redeemable non-controlling interests and equity
$
81,037
$
96,628
The accompanying notes to Consolidated Financial Statements are an integral part of these Statements.
WBA Fiscal 2024 Form 10-K
76
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
For the years ended August 31, 2024, 2023 and 2022
(in millions, except shares)
Equity attributable to Walgreens Boots Alliance, Inc.
Common
stock
shares
Common
stock
amount
Treasury
stock
amount
Paid-in
capital
Accumulated
other
comprehensive
loss
Retained
earnings
Non-controlling
interests
Total
equity
August 31, 2021
865,373,636
$12
$(20,593)
$10,988
$(2,109)
$35,121
$
402
$
23,822
Net earnings (loss)
—
—
—
—
—
4,337
(199)
4,138
Other comprehensive loss, net
of tax
—
—
—
—
(696)
—
(32)
(728)
Dividends declared and
distributions
—
—
—
—
—
(1,657)
(7)
(1,664)
Treasury stock purchases
(3,910,000)
—
(187)
—
—
—
—
(187)
Employee stock purchase and
option plans
3,175,821
—
97
(70)
—
—
—
27
Stock-based compensation
—
—
—
133
—
—
95
228
Acquisition of non-controlling
interests
—
—
—
74
—
—
(118)
(44)
Business combination
—
—
—
—
—
—
3,944
3,944
Redeemable non-controlling
interests redemption price
adjustments and other
—
—
—
(175)
—
—
5
(170)
August 31, 2022
864,639,457
$12
$(20,683)
$10,950
$(2,805)
$37,801
$
4,091
$
29,366
Net loss
—
—
—
—
—
(3,080)
(427)
(3,507)
Other comprehensive (loss)
income, net of tax
—
—
—
—
(189)
—
13
(176)
Dividends declared and
distributions
—
—
—
—
—
(1,663)
(51)
(1,714)
Treasury stock purchases
(4,438,228)
—
(150)
—
—
—
—
(150)
Employee stock purchase and
option plans
3,472,557
—
116
(71)
—
—
—
45
Stock-based compensation
—
—
—
58
—
—
133
191
Acquisition of non-controlling
interests
—
—
—
171
—
—
13
184
Business combination
—
—
—
(16)
—
—
4,534
4,518
Redeemable non-controlling
interests redemption price
adjustments and other
—
—
—
(431)
—
—
(4)
(435)
August 31, 2023
863,673,786
$12
$(20,717)
$10,661
$(2,993)
$33,058
$
8,302
$
28,322
Net loss
—
—
—
—
—
(8,636)
(6,813)
(15,449)
Other comprehensive income,
net of tax
—
—
—
—
96
—
4
100
Dividends declared and
distributions
—
—
—
—
—
(1,074)
(7)
(1,081)
Treasury stock purchases
(3,100,000)
—
(69)
—
—
—
—
(69)
Employee stock purchase and
option plans
3,426,647
—
124
(100)
—
—
—
25
Stock-based compensation
—
—
—
73
—
—
87
160
Other
—
—
—
11
—
—
(13)
(1)
August 31, 2024
864,000,433
$12
$(20,662)
$10,645
$(2,897)
$23,348
$
1,561
$
12,005
The accompanying notes to Consolidated Financial Statements are an integral part of these Statements.
WBA Fiscal 2024 Form 10-K
77
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the years ended August 31, 2024, 2023 and 2022
(in millions, except per share amounts)
2024
2023
2022
Sales
$
147,658
$
139,081
$
132,703
Cost of sales
121,134
112,009
104,437
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
(14,076)
(6,882)
1,387
Other income, net
340
2,043
2,998
(Loss) earnings before interest and income tax provision
(benefit)
(13,736)
(4,839)
4,385
Interest expense, net
482
580
400
(Loss) earnings before income tax provision (benefit)
(14,219)
(5,419)
3,985
Income tax provision (benefit)
1,246
(1,858)
(30)
Post-tax earnings from other equity method investments
17
33
50
Net (loss) earnings
(15,448)
(3,528)
4,065
Net loss attributable to non-controlling interests
(6,812)
(448)
(271)
Net (loss) earnings attributable to Walgreens Boots
Alliance, Inc.
$
(8,636)
$
(3,080)
$
4,337
Net (loss) earnings per common share:
Basic
$
(10.01)
$
(3.57)
$
5.02
Diluted
$
(10.01)
$
(3.57)
$
5.01
Weighted average common shares outstanding:
Basic
863.1
863.2
864.4
Diluted
863.1
863.2
865.9
The accompanying notes to Consolidated Financial Statements are an integral part of these Statements.
WBA Fiscal 2024 Form 10-K
78
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended August 31, 2024, 2023 and 2022
(in millions)
2024
2023
2022
Net (loss) earnings
$
(15,448)
$
(3,528)
$
4,065
Other comprehensive income (loss), net of tax:
Pension/post-retirement obligations
(8)
(541)
203
Unrealized gain (loss) on cash flow hedges
5
(2)
7
Net investment hedges (loss) gain
(68)
(130)
248
Movement on available for sale debt securities
1
(2)
(95)
Share of other comprehensive income (loss) of equity method
investments
45
122
(226)
Currency translation adjustments
126
377
(865)
Total other comprehensive income (loss)
100
(176)
(728)
Total comprehensive (loss) income
(15,348)
(3,704)
3,337
Comprehensive loss attributable to non-controlling interests
(6,808)
(435)
(303)
Comprehensive (loss) income attributable to Walgreens Boots
Alliance, Inc.
$
(8,540)
$
(3,269)
$
3,640
The accompanying notes to Consolidated Financial Statements are an integral part of these Statements.
WBA Fiscal 2024 Form 10-K
79
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended August 31, 2024, 2023 and 2022
(in millions)
2024
2023
2022
Cash flows from operating activities
:
Net (loss) earnings
$
(15,448)
$
(3,528)
$
4,065
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Depreciation and amortization
2,459
2,257
1,990
Deferred income taxes
917
(2,371)
(366)
Stock compensation expense
182
385
391
Earnings from equity method investments
(230)
(286)
(468)
Impairment of goodwill, intangibles and long-lived assets
14,370
1,293
1,214
Gain on previously held investment interests
—
—
(2,576)
Gain on sale of equity method investments
(1,520)
(1,855)
(559)
Impairment of equity method investments and investments in equity and debt
securities
364
36
233
Gain on sale-leaseback transactions
(295)
(925)
(619)
Loss (gain) on variable prepaid forward contracts
946
(19)
—
Other
(242)
(173)
99
Changes in operating assets and liabilities:
Accounts receivable, net
(464)
72
808
Inventories
(31)
287
(433)
Other current assets
82
(188)
(72)
Trade accounts payable
1,409
1,243
244
Accrued expenses and other liabilities
(536)
(561)
(138)
Income taxes
30
441
(51)
Accrued litigation obligations
(333)
6,378
—
Other non-current assets and liabilities
(643)
(228)
137
Net cash provided by operating activities
1,018
2,258
3,899
Cash flows from investing activities
:
Additions to property, plant and equipment
(1,381)
(2,117)
(1,734)
Proceeds from sale-leaseback transactions
898
1,767
1,308
Proceeds from sale of other assets
2,860
4,495
1,334
Business, investment and asset acquisitions, net of cash acquired
(402)
(7,313)
(2,189)
Other
(97)
75
216
Net cash provided by (used for) investing activities
1,878
(3,094)
(1,064)
Cash flows from financing activities
:
Net change in short-term debt with maturities of 3 months or less
(2)
(1)
(11)
Proceeds from debt
31,365
6,276
11,958
Payments of debt
(30,474)
(8,978)
(8,360)
Acquisition of non-controlling interests
—
(1,316)
(2,108)
Proceeds from issuance of non-controlling interests
—
2,725
—
Proceeds from variable prepaid forwards
424
2,568
—
Treasury stock purchases
(69)
(150)
(187)
Cash dividends paid
(1,260)
(1,659)
(1,659)
Early debt extinguishment
(318)
—
(1,591)
Other
(203)
(351)
459
Net cash used for financing activities
(538)
(887)
(1,499)
Effect of exchange rate changes on cash, cash equivalents, marketable securities and
restricted cash
4
20
(47)
Changes in cash, cash equivalents, marketable securities and restricted cash
Net increase (decrease) in cash, cash equivalents, marketable securities and restricted
cash
2,362
(1,702)
1,288
Cash, cash equivalents, marketable securities and restricted cash at beginning of period
856
2,558
1,270
Cash, cash equivalents, marketable securities and restricted cash at end of period
$
3,218
$
856
$
2,558
The accompanying notes to Consolidated Financial Statements are an integral part of these Statements.
WBA Fiscal 2024 Form 10-K
80
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of major accounting policies
Organization
Walgreens Boots Alliance Inc. and its subsidiaries (the “Company”), is an integrated healthcare, pharmacy and
retail leader with a 170-year heritage of caring for customers and patients. Its operations are conducted through
three reportable segments: U.S. Retail Pharmacy, International and U.S. Healthcare. See Note 16. Segment
reporting, for further information.
Basis of presentation
The Consolidated Financial Statements include all subsidiaries in which the Company holds a controlling interest
and certain Variable Interest Entities (“VIEs”) for which the Company is the primary beneficiary. The Company
uses the equity-method of accounting for equity investments in less than majority-owned companies if the
investment provides the ability to exercise significant influence. All intercompany transactions have been
eliminated.
The preparation of financial statements in accordance with accounting principles generally accepted in the United
States of America (“GAAP”) requires management to use judgment in the application of accounting policies,
including making estimates and assumptions. The Company bases its estimates on the information available at
the time, its experiences and various other assumptions believed to be reasonable under the circumstances.
Adjustments may be made in subsequent periods to reflect more current estimates and assumptions about matters
that are inherently uncertain. Actual results may differ.
Adverse global macroeconomic conditions, the impact of opioid related claims and litigation settlements, the
influence of certain holidays, seasonality, foreign currency rates, changes in vendor, payor and customer
relationships and terms, strategic transactions including acquisitions, dispositions, asset impairments and changes
in laws and regulations in the markets in which the Company operates and other factors on the Company’s
operations and net earnings for any period may not be comparable to the same period in previous years.
Certain amounts in the Consolidated Financial Statements and accompanying notes may not sum due to
rounding. Percentages have been calculated using unrounded amounts for all periods presented. Certain prior
period data, has been reclassified in the Consolidated Financial Statements and accompanying notes to conform
to the current period presentation.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, qualifying money market funds, and other highly liquid
investments with an original maturity of three months or less at the date of acquisition. Credit and debit card
receivables, which generally settle within one to seven business days, of $235 million and $122 million were
included in cash and cash equivalents at August 31, 2024 and 2023, respectively.
Restricted cash and other cash flows from operating activities
Restricted cash
The Company is required to maintain cash deposits with certain banks that consist of deposits restricted under
contractual agreements and cash restricted by law and other obligations.
WBA Fiscal 2024 Form 10-K
81
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following represents a reconciliation of cash and cash equivalents in the Consolidated Balance Sheets to total
cash, cash equivalents, marketable securities and restricted cash in the Consolidated Statements of Cash Flows
for fiscal 2024, 2023 and 2022 (in millions):
August 31, 2024
August 31, 2023
August 31, 2022
Cash and cash equivalents
$
1,319
$
728
$
1,358
Marketable securities
1,790
11
1,114
Cash and cash equivalents - assets held for sale
(included in other current assets)
—
24
—
Restricted cash (included in other current and
non-current assets)
110
93
86
Cash, cash equivalents, marketable securities and
restricted cash
$
3,218
$
856
$
2,558
Other cash flows from operating activities
Other cash outflows from operating activities primarily include non-cash adjustments. For fiscal 2024, the
adjustment of $242 million primarily includes a $131 million pre-tax gain on early termination of leases and a
pre-tax gain of $102 million related to the early extinguishment of debt. For fiscal 2023, the adjustment of
$173 million primarily includes a pre-tax gain of $83 million from the reclassification of Option Care Health
from an equity method investment to an investment in equity securities at fair value. For fiscal 2022, the
adjustment of $99 million primarily includes $46 million of dividends from the Company’s equity method
investments.
Accounts receivable
Accounts receivable are stated net of allowances for doubtful accounts. Accounts receivable balances primarily
consist of trade receivables due from customers, including amounts due from third-party payors (e.g., pharmacy
benefit managers, insurance companies and governmental agencies). Trade receivables were $4.8 billion and
$4.3 billion at August 31, 2024 and 2023, respectively. Other accounts receivable balances, which consist
primarily of receivables from vendors and manufacturers, including receivables from Cencora, Inc. (“Cencora”)
(see Note 17. Related parties, for further information), were $1.0 billion and $1.1 billion at August 31, 2024 and
2023, respectively.
Charges for the Company’s expected credit losses are recognized based upon all available information regarding
the collectability of receivables, including historical information, current conditions and reasonable and
supportable forecasts of future economic conditions over the short contractual life of the receivable. The
allowance for expected credit losses for trade receivables at August 31, 2024 and 2023 were $110 million.
Inventories
The Company values inventories on a lower of cost and net realizable value or market basis. Inventories include
product costs, inbound freight, direct labor, warehousing costs for retail pharmacy operations, and distribution
costs of products, and are reduced by vendor allowances not classified as a reduction of advertising expense.
The Company’s U.S. Retail Pharmacy segment inventory is accounted for using the last-in-first-out (“LIFO”)
method. The total carrying value of the segment inventory accounted for under the LIFO method was $6.3 billion
and $6.2 billion at August 31, 2024 and 2023, respectively. At August 31, 2024 and 2023, U.S. Retail Pharmacy
segment inventory would have been greater by $3.7 billion and $3.6 billion, respectively, if it had been valued on
a lower of first-in-first-out (“FIFO”) cost and net realizable value.
WBA Fiscal 2024 Form 10-K
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company’s International segment inventory is accounted for using average cost and the FIFO method. The
total carrying value of the inventory for International segment was $2.0 billion at August 31, 2024 and 2023.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Major repairs, which extend the
useful life of an asset, are capitalized; routine maintenance and repairs are charged against earnings. Depreciation
is provided on a straight-line basis over the estimated useful lives of owned assets. Leasehold improvements,
equipment under finance lease and finance lease properties are amortized over their respective estimated useful
life or over the term of the lease, whichever is shorter.
The following table summarizes the Company’s property, plant and equipment (in millions) and estimated useful
lives (in years):
Estimated useful life
2024
2023
Land and land improvements
1
20
$
1,455
$
1,778
Buildings and building improvements
3 to 50
6,117
6,683
Fixtures and equipment
3 to 20
9,720
9,782
Capitalized system development costs and software
3 to 10
3,528
3,821
Assets under construction
673
1,400
Finance lease properties
1,143
1,075
$
22,636
$
24,540
Less: accumulated depreciation and amortization
12,863
12,953
Balance at end of year
$
9,772
$
11,587
1.
Land is not depreciated.
The Company capitalizes application development stage costs for internally developed software. Amortization
expense for capitalized system development costs and software was $414 million, $371 million and $307 million
in fiscal 2024, 2023 and 2022, respectively. Unamortized costs were $1.4 billion and $1.5 billion at August 31,
2024 and 2023, respectively.
Depreciation and amortization expense for property, plant and equipment, including capitalized system
development costs and software was $1.5 billion, $1.4 billion and $1.4 billion for fiscal 2024, 2023 and 2022,
respectively.
Leases
The Company leases certain retail stores, clinics, warehouses, distribution centers, office space, land and
equipment. Initial terms for leased premises in the United States are typically 10 to 25 years, followed by
additional terms containing renewal options at five-year intervals, and may include rent escalation clauses.
Non-U.S. leases are typically for shorter terms and may include cancellation clauses or renewal options.
The lease term of real estate leases includes renewal options that are reasonably certain of being exercised.
Options to extend are considered reasonably certain of being exercised based on evaluation if there are
significant investments within the leased property which have useful lives greater than the non-cancelable lease
term, performance of the underlying store and the Company’s economic and strategic initiatives. Short-term
leases with an initial term of 12 months or less are not recorded on the balance sheets.
WBA Fiscal 2024 Form 10-K
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company determines if an arrangement contains a lease at the inception of a contract. The lease
classification is determined at the commencement date. Right-of-use assets represent the Company’s right to use
an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease
payments arising from the lease during the lease term. Right-of-use assets and lease liabilities are recognized at
the commencement date based on the present value of the remaining future minimum lease payments during the
lease term. Lease commencement is the date the Company has the right to control the property. The Company
utilizes its incremental borrowing rate to discount the lease payments. The incremental borrowing rate is based
on the Company’s estimated rate of interest for a collateralized borrowing over a similar term as the lease term.
The operating lease right-of-use assets also include lease payments made before lease commencement date and
lease incentives, and are recorded net of impairment. Operating leases are expensed on a straight line basis over
the lease term.
The Company accounts for lease components and non-lease components as a single lease component. Variable
lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease
payments based on changes in index rates or usage, are not included in the right-of-use assets or lease liabilities.
These are expensed as incurred. 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. Other real estate leases contain one fixed lease payment that includes real estate taxes, common
area maintenance and insurance. These fixed payments are considered part of the lease payment and included in
the right-of-use assets and lease liabilities. The Company does not separately account for the land portion of the
leases involving land and building.
Finance leases are recognized within property, plant and equipment and as a finance lease liability within accrued
expenses and other liabilities and other non-current liabilities.
See Note 4. Leases, for further information.
Business combinations
The Company allocates the fair value of purchase consideration to the tangible and intangible assets purchased
and the liabilities assumed on the basis of their fair values at the date of acquisition. The determination of fair
values of assets acquired and liabilities assumed requires estimates and the use of valuation techniques when a
market value is not readily available. Any excess of purchase price over the fair value of net tangible and
intangible assets acquired is allocated to goodwill. If the Company obtains new information about facts and
circumstances that existed as of the acquisition date during the measurement period, which may be up to one year
from the acquisition date, the Company may record adjustments to fair value of the purchase consideration and
the allocation of purchase consideration to all tangible and intangible assets acquired and identified and liabilities
assumed.
Variable interest entities
The Company consolidates certain subsidiaries of Village Practice Management Company Holdings, LLC
through its principal subsidiary Village Practice Management Company, LLC (“VillageMD”), which are clinical
entities and managed services organizations (collectively, the “Entities”) where VillageMD has a controlling
financial interest. The Entities were established to employ healthcare providers, contract with payors, or to
deliver healthcare services to patients and are designed to comply with certain regulatory and legal requirements.
VillageMD generally has no equity interests in the Entities. The Entities are variable interest entities because
there is insufficient equity at-risk in the Entities to finance their operations without additional financial support
WBA Fiscal 2024 Form 10-K
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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and the equity holders of the Entities generally lack the characteristics of a controlling financial interest.
VillageMD’s service agreements (“SAs”) are variable interests in the Entities because they transfer substantially
all the residual risks and rewards of ownership in the Entities to VillageMD.
VillageMD has the power to direct the activities of the Entities that most significantly impact their economic
performance through the SAs. The activities that most significantly impact the economic performance of the
Entities pertain to establishing the scope of services provided, fees charged for clinical services, negotiation and
execution of contracts and managing policies and procedures related to management of VillageMD’s patient
population.
The SAs generally provide VillageMD with rights to substantially all the earnings of the Entities and obligate
VillageMD to fund losses of the Entities. As a result, VillageMD is the primary beneficiary of the Entities and
consolidates the Entities. The assets and liabilities of the Entities and the Entities’ results of operations are
presented in the Company’s consolidated financial statements.
The Entities’ revenues consist of amounts recognized for services provided to patients. Cost of sales and Selling,
general and administrative expenses consist primarily of provider compensation expenses as well as clinical
operating and support costs. VillageMD is also exposed to the risk of loss from certain Entities’ involvement
with risk-based arrangements.
There are generally no restrictions on the Entities’ assets or on the settlement of its liabilities. The assets of the
Entities can be used to settle obligations of VillageMD and creditors of Entities have recourse to the general
credit of the Company.
The following table summarizes the Entities’ assets and liabilities (in millions) as of August 31, 2024 and 2023,
respectively.
August 31, 2024
August 31, 2023
Total assets
$
928
$
881
Total liabilities
540
486
Goodwill and indefinite-lived intangible assets
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed
in business combinations. Goodwill is assigned to reporting units. Reporting units are aggregated and deemed a
single reporting unit if the components have similar economic characteristics. Acquired intangible assets are
recorded at fair value.
Goodwill and indefinite-lived intangible assets are evaluated 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 intangible asset below its carrying value. As part of the Company’s impairment
analysis, fair value of a reporting unit is generally determined using the income and market approaches. The
income approach requires management to estimate a number of factors for each reporting unit, including
projected future operating results, economic projections, anticipated future cash flows and discount rates. The
market approach estimates fair value using comparable marketplace fair value data from within a comparable
industry grouping, as well as recent guideline transactions. The determination of the fair value of the reporting
units requires the Company to make significant estimates and assumptions with respect to the business and
financial performance of the Company’s reporting units. These estimates and assumptions primarily include, but
are not limited to the selection of appropriate peer group companies, control premiums appropriate for
acquisitions in the industries in which we compete, discount rates, terminal growth rates, forecasts of revenue,
operating income, depreciation, amortization, working capital requirements and capital expenditures.
WBA Fiscal 2024 Form 10-K
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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company also compares the sum of estimated fair values of reporting units to the Company’s fair value as
implied by the market value of its equity securities. This comparison provides an indication that, in total,
assumptions and estimates are reasonable. Future declines in the overall market value of the Company’s equity
securities may provide an indication that the fair value of one or more reporting units has declined below its
carrying value.
Indefinite-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to
its carrying value. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is
recognized and the asset is written down to its estimated fair value. Indefinite-lived intangible assets fair values
are estimated using the relief from royalty method and multi-period excess earnings method of the income
approach. The determination of the fair value of the indefinite-lived intangibles requires the Company to make
significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to
forecasts of revenues and expenses, the selection of appropriate royalty rate and discount rates.
See Note 6. Goodwill and other intangible assets, for further information regarding the Company’s intangible
assets.
Equity method investments
The Company uses the equity method of accounting for equity investments if the investment provides the ability
to exercise significant influence, but not control, over operating and financial policies of the investee. The
Company’s proportionate share of the net income or loss of these investees is included in consolidated net
earnings. Judgment regarding the level of influence over each equity method investment includes considering
key factors such as the Company’s ownership interest, legal form of the investee (e.g. limited liability
partnership), representation on the board of directors, participation in policy-making decisions and material intra-
entity transactions.
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. Factors considered by the
Company when reviewing an equity method investment for impairment include the length of time (duration) and
the extent (severity) to which the fair value of the equity method investment has been less than cost, the
investee’s financial condition and near-term prospects, and the intent and ability to hold the investment for a
period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is
recognized in the period identified.
See Note 5. Equity method investments, for further information.
Financial instruments
The Company uses derivative instruments to hedge its exposure to market risks, including interest rate and
currency risks, arising from operating and financing risks. Additionally, the Company economically hedges a
portion of its exposure to equity price risk related to its investment in Cencora through variable prepaid forward
(“VPF”) derivative contracts. In accordance with its risk management policies, the Company does not hold or
issue derivative instruments for trading or speculative purposes.
Derivatives are recognized on the Consolidated Balance Sheets at their fair values. When the Company becomes
a party to a derivative instrument and intends to apply hedge accounting, it formally documents the hedge
relationship and the risk management objective and strategy for undertaking the hedge, which includes
designating the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net
investment hedge. The accounting for changes in fair value of a derivative instrument depends on whether the
WBA Fiscal 2024 Form 10-K
86
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Company had designated it in a qualifying hedging relationship and on the type of hedging relationship. The
Company applies the following accounting policies:
•
Changes in the fair value of a derivative designated as a fair value hedge, along with the gain or loss on
the hedged asset or liability attributable to the hedged risk, are recorded in the Consolidated Statements
of Earnings in the same line item, generally interest expense, net.
•
Changes in the fair value of a derivative designated as a cash flow hedge are recorded in accumulated
other comprehensive loss in the Consolidated Statements of Comprehensive Income and reclassified
into earnings in the period or periods during which the hedged item affects earnings and is presented in
the same line item as the earnings effect of the hedged item.
•
Changes in the fair value of a derivative designated as a hedge of a net investment in a foreign
operation are recorded in cumulative translation adjustments within accumulated other comprehensive
loss in the Consolidated Statements of Comprehensive Income. Recognition in earnings of amounts
previously recorded in cumulative translation adjustments is limited to circumstances such as complete
or substantially complete liquidation of the net investment in the hedged investments in foreign
operations.
•
Changes in the fair value of a derivative not designated in a hedging relationship are recognized in the
Consolidated Statements of Earnings.
Cash receipts or payments on a settlement of a derivative contract are reported in the Consolidated Statements of
Cash Flows consistent with the nature of the underlying hedged item.
For derivative instruments designated as hedges, the Company assesses, both at the hedge’s inception and on an
ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting
changes in fair values or cash flows of hedged items. Highly effective means that cumulative changes in the fair
value of the derivative are between 80% and 125% of the cumulative changes in the fair value of the hedged
item. In addition, when the Company determines that a derivative is not highly effective as a hedge, hedge
accounting is discontinued. When it is probable that a hedged forecasted transaction will not occur, the Company
discontinues hedge accounting for the affected portion of the forecasted transaction and reclassifies any gains or
losses in accumulated other comprehensive loss to earnings in the Consolidated Statements of Earnings. When a
derivative in a hedge relationship is terminated or the hedged item is sold, extinguished or terminated, hedge
accounting is discontinued prospectively.
Pension and post-retirement benefits
The Company has various defined benefit pension plans that cover some of its non-U.S. employees. The
Company also has a post-retirement healthcare plan that covers qualifying U.S. employees. Eligibility and the
level of benefits for these plans vary depending on participants’ status, date of hire and or length of service.
Pension and post-retirement healthcare plan expenses and valuations are dependent on assumptions used by
third-party actuaries in calculating those amounts. These assumptions include discount rates, healthcare cost
trends, long-term return on plan assets, retirement rates, mortality rates and other factors.
The Company funds its pension plans in accordance with applicable regulations. The Company records the
service cost component of net pension cost and net post-retirement healthcare benefit cost in Selling, general and
administrative expenses in the Consolidated Statements of Earnings. The Company records all other net cost
components of net pension cost and net post-retirement benefit cost in Other income, net in the Consolidated
Statements of Earnings. The post-retirement healthcare plan is not funded.
See Note 13. Retirement benefits, for further information.
WBA Fiscal 2024 Form 10-K
87
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Redeemable non-controlling interests
The Company presents non-controlling interests in temporary equity within its Consolidated Balance Sheets if it
is redeemable at a fixed or determinable price on a fixed or determinable date on the option of the holder, or upon
the occurrence of an event that is not solely within the control of the Company.
The carrying amount of the redeemable non-controlling interests is equal to the greater of the carrying value of
non-controlling interests adjusted each reporting period for income or loss attributable to the non-controlling
interests as well as any applicable distributions made or the redemption value. Re-measurements to the
redemption value of the redeemable non-controlling interests are recognized in Paid-in capital within the
Consolidated Balance Sheets. The Company reports the portion of its earnings or loss for redeemable
non-controlling interest as Net loss attributable to non-controlling interests, in the Consolidated Statements of
Earnings.
The following is a roll forward of the redeemable non-controlling interests in the Consolidated Balance Sheets
(in millions):
2024
2023
2022
Opening balance
$
167
$
1,042
$
319
Recognition upon acquisition of subsidiary
1
—
—
2,684
Acquisition of non-controlling interests
2
—
—
(2,047)
Net income (loss) attributable to Redeemable non-controlling interests
1
(21)
(73)
Redemption price adjustments and other
3
6
460
159
Reclassifications to Accrued expenses and other liabilities
4
—
(1,314)
—
Ending balance
$
174
$
167
$
1,042
1.
Fiscal 2022 includes $1.9 billion of redeemable non-controlling interests, representing the maximum
purchase price to redeem non-controlling units in VillageMD for cash, and redeemable non-controlling
interests in Shields Health Solutions Parent, LLC (“Shields”) and CCX Next, LLC (“CareCentrix”). On
November 24, 2021, VillageMD commenced a tender offer to purchase up to $1.9 billion of units in
VillageMD for cash. The tender offer was fully subscribed and settled on December 28, 2021. The tender
offer was funded by cash proceeds provided to VillageMD pursuant to the Unit Purchase Agreement.
2.
Fiscal 2022 includes $1.9 billion paid to existing shareholders of VillageMD as part of the fully subscribed
tender offer and the acquisition of the remaining 30% non-controlling equity interests in the pharmaceutical
wholesale business in Germany.
3.
Remeasurement of non-controlling interests, probable of redemption but not currently redeemable, to their
redemption value, is recorded to Paid-in capital in the Consolidated Balance Sheets. In fiscal 2023, Shields
and CareCentrix redeemable non-controlling interests were recorded to redemption value.
4.
Represents the reclassification of the Shields and CareCentrix redeemable non-controlling interests to
Accrued expenses and other liabilities in the Consolidated Balance Sheets resulting from the Company’s full
acquisition of Shields and CareCentrix.
See Note 2. Acquisitions and other investments, for further information.
Non-controlling interests
The Company presents non-controlling interests as a component of equity on its Consolidated Balance Sheets
and reports the portion of earnings or losses for non-controlling interests as Net loss attributable to
non-controlling interests in the Consolidated Statements of Earnings.
WBA Fiscal 2024 Form 10-K
88
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Non-controlling interests primarily relates to VillageMD. As of August 31, 2024 and 2023, VillageMD
non-controlling interests comprise 16.0 million and 16.0 million preferred units and 6.7 million and 6.5 million
common units, including incentive units, respectively.
Preferred units non-controlling interests have an aggregate liquidation preference of $4.9 billion. All preferred
units are convertible into VillageMD common units and certain preferred units are also subject to redemption
features controlled by the Company. All preferred units participate in dividends declared by the VillageMD
board in the ordinary course of business and in distributions upon a winding-up or change in control of
VillageMD. Certain preferred units also participate in cumulative compounding dividends that accumulate at a
rate of 5.5% per annum based on the adjusted issue price of the preferred unit and may be settled in cash or
shares at the option of the preferred unit holder.
Currency
Assets and liabilities of non-U.S. dollar functional currency operations are translated into U.S. dollars at
end-of-period exchange rates while revenues, expenses and cash flows are translated at average monthly
exchange rates over the period. Equity is translated primarily at historical exchange rates and the resulting
cumulative translation adjustments are included as a component of Accumulated other comprehensive loss in the
Consolidated Balance Sheets.
Assets and liabilities not denominated in the functional currency are remeasured into the functional currency at
end-of-period exchange rates, except for non-monetary balance sheet amounts, which are remeasured at
historical exchange rates. Revenues and expenses are recorded at average monthly exchange rates over the
period, except for those expenses related to non-monetary balance sheet amounts, which are remeasured at
historical exchange rates. Gains or losses from foreign currency remeasurement are generally included in Other
income, net within the Consolidated Statements of Earnings.
Commitments and contingencies
The Company assesses its liabilities and contingencies for outstanding legal proceedings, and reserves are
established on a case-by-case basis for those legal claims for which management concludes that it is probable
that a loss will be incurred and that the amount of such loss can be reasonably estimated. Substantially all of
these contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss
and/or the measurement of any loss can be complex. With respect to litigation and other legal proceedings where
the Company has determined that a loss is reasonably possible, the Company may be unable to estimate the
amount or range of reasonably possible loss due to the inherent difficulty of predicting the outcome of and
uncertainties regarding such litigation and legal proceedings. The Company’s assessments are based on estimates
and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or
inaccurate, and unanticipated events and circumstances may occur that might cause the Company to change those
estimates and assumptions. Therefore, it is possible that an unfavorable resolution of one or more pending
litigation or other contingencies could have a material adverse effect on the Company’s Consolidated Financial
Statements in a future fiscal period. 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. Adverse rulings or
determinations by judges, juries, governmental authorities or other parties could also result in changes to
management’s assessment of current liabilities and contingencies. Accordingly, the ultimate costs of resolving
these claims may be substantially higher or lower than the amounts reserved. See Note 10. Commitments and
contingencies, for further information.
WBA Fiscal 2024 Form 10-K
89
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue recognition
Sales are recognized at an amount that reflects the consideration to which the Company expects to be entitled in
exchange for transferring control of goods or services to the customer. Sales are reported on the gross amount
billed to a customer less discounts if it has earned revenue as a principal from the sale of goods and services.
Sales are reported on the net amount retained (i.e., the amount billed to the customer less the amount paid to a
vendor) if the Company has earned a commission or a fee as an agent.
Retail and Pharmacy
The Company recognizes revenue, net of taxes and expected returns, at the time it sells merchandise, provides
services or dispenses prescription drugs to the customer. The Company estimates revenue based on expected
reimbursements from third-party payors (e.g., pharmacy benefit managers, insurance companies and
governmental agencies) for dispensing prescription drugs. The estimates are based on all available information
including historical experience and are updated to actual reimbursement amounts.
The Company’s loyalty rewards programs represent separate performance obligations and are accounted for
using the deferred revenue approach. When goods are sold, the transaction price is allocated between goods sold
and loyalty points or Walgreens cash awarded based upon the relative standalone selling price. The revenue
allocated to the loyalty points is recognized upon redemption. Loyalty programs breakage is recognized as
revenue based on the redemption pattern. Customer purchases of the Company’s own gift cards are not
recognized as revenue until the card is redeemed. Gift card breakage (i.e., unused gift card) is recognized as
revenue based on the redemption pattern.
The Company recognizes contract liabilities to record the Company’s obligation to transfer additional goods or
services to a customer for which the Company has received consideration, for example the Company’s
myWalgreens and Boots Advantage Card loyalty programs. Under such programs, customers earn Walgreens
Cash or reward points on purchases for redemption at a later date.
Wholesale
Wholesale revenue is recognized, net of taxes and expected returns, upon shipment of goods, which is generally
also the day of delivery.
Healthcare services
The Company provides healthcare services under fee-for-service and value-based arrangements. Fee-for-service
revenues are recognized at the point-in-time medical care is provided. Revenues are reported based on expected net
collection rates, which are calculated based on historical collection rates in relation to amounts billed at the time of
service. Most of the Company’s value-based arrangements are Medicare Advantage (“MA”) contracts or direct
contracting arrangements under the Centers for Medicare and Medicaid Services (“CMS”) Accountable Care
Organization Realizing Equity, Access, and Community Health (“ACO REACH”) Model. Revenues from value-
based arrangements (“risk-based revenues”) are primarily earned from contracts in which the Company has full or
shared risk for the healthcare payor’s eligible members (“value-based patients”). Risk-based revenues are
recognized ratably over the term of the contract (generally, one year or less) as the Company’s stand-ready
obligation to provide healthcare services is satisfied. The Company receives fees from payors that are generally
based on a fixed monthly percentage of the premium received by the payor from the payor’s members, or a portion
of the payor’s savings relative to an agreed-upon financial benchmark. The Company estimates transaction price
based on historical data and data from the payors. Estimates are adjusted to the final settlement amount received
from the payor. The Company evaluates whether it is a principal or agent in an arrangement based on the
Company’s exposure to financial risk under the arrangement and the Company’s control over the provision of
services. The Company has determined that it acts as a principal in the vast majority of its arrangements.
WBA Fiscal 2024 Form 10-K
90
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cost of sales
Retail, Pharmacy and Wholesale
Cost of sales includes the purchase price of goods and cost of services rendered, store and warehouse inventory
loss, inventory obsolescence, warehousing costs for retail operations, purchasing costs, freight costs, cash
discounts, vendor allowances and supplier rebates. Cost of sales is derived based upon point-of-sale scanning
information with an estimate for shrinkage and is adjusted based on periodic inventory counts.
Vendor allowances are principally received as a result of purchases, sales or promotion of vendors’ products.
Allowances are generally recorded as a reduction of inventory and are recognized as a reduction of cost of sales
when the related merchandise is sold. Allowances received for promoting vendors’ products, if received for a
specific, incremental, identifiable cost, are offset against advertising expense and result in a reduction of Selling,
general and administrative expenses to the extent of advertising costs incurred, with the excess treated as a
reduction of inventory costs. Rebates or refunds received by the Company from its suppliers, mostly in cash, are
considered as an adjustment of the prices of the supplier’s products purchased by the Company.
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.
Medical claims expense represents medical claims expenses related to fee-for-service and value-based
arrangements and primarily includes costs for third-party healthcare service providers, including contracted
providers, that provide medical care to patients. Medical claims expense and the liability for unpaid claims
include estimates of the Company’s obligations for medical care services that have been rendered by third parties
for which the Company is contractually obligated to pay, but for which claims have either not yet been received,
processed or paid. The Company develops estimates for medical care services incurred but not reported
(“IBNR”) utilizing actuarial models when a sufficient amount of medical claims history is available from the
third-party healthcare service providers. In developing its unpaid claims liability estimates, the Company applies
different estimation methods depending on which incurred claims are being estimated.
Cost of care represents the cost of employed providers and certain affiliated providers, including base
compensation, quality incentive bonuses, provider benefits and share-based compensation. Clinic operating and
support costs include costs incurred to operate clinics, including clinical care support staff, patient support staff,
population health management employees, rent, utilities and supplies.
Selling, general and administrative expenses
Selling, general and administrative expenses mainly consist of salaries and employee costs, occupancy costs,
depreciation and amortization, credit and debit card fees and expenses directly related to stores. In addition, other
costs included are headquarters’ expenses, advertising costs (net of vendor advertising allowances), wholesale
warehousing costs and insurance.
Advertising costs
Advertising costs are reduced by the portion funded by vendors, if reimbursement represents a specific,
incremental, identifiable cost, and expensed as incurred or when services have been received. Net advertising
expenses, which are included in Selling, general and administrative expenses in the Consolidated Statements of
Earnings, were $694 million, $775 million and $862 million for fiscal 2024, 2023, and 2022, respectively.
WBA Fiscal 2024 Form 10-K
91
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Impairment of long-lived assets
The Company evaluates the recoverability of long-lived assets whenever events or changes in circumstances
indicate that the carrying value of such an asset may not be recoverable. Long-lived assets related to the
Company’s retail, pharmacy and healthcare operations include property, plant and equipment, definite lived
intangibles, and right of use assets. The evaluation of long-lived assets is performed at the lowest level of
identifiable cash flows, typically at the store level for retail pharmacy operations. If the asset group fails the
recoverability test, then an impairment charge is determined based on the difference between the fair value of the
asset group compared to its carrying value. 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.
Impairment charges for long-lived assets included in Selling, general and administrative expenses in the
Consolidated Statements of Earnings were $1.7 billion, $863 million and $380 million for fiscal 2024, 2023 and
2022 respectively.
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. Although we believe these estimates are reasonable,
actual results could differ from those estimates due to the inherent uncertainty involved in making such
estimates.
Stock compensation plans
Stock based compensation is measured at fair value at the grant date. The Company grants, performance shares
and restricted units, and has historically granted stock options, to the Company’s non-employee directors,
officers and employees. The Company recognizes compensation expense on a straight-line basis over the
requisite service period. The fair value of each performance share granted assumes that performance goals will
be achieved at 100 percent. Subsequently, the Company reassesses the probability of achieving the performance
goals and vesting and adjusts compensation expense accordingly, including the reversal of previously recognized
compensation expense if it is no longer probable that the awards will vest. Certain performance shares are also
subject to market conditions based on total shareholder return. Such conditions are included in the fair-value-
based measure of the award at the grant date. See Note 12. Stock compensation plans, for further information on
the Company’s stock-based compensation plans.
Insurance
The Company obtains insurance coverage for catastrophic exposures as well as those risks required by law to be
insured. In general, the Company’s U.S. subsidiaries retain a significant portion of losses related to workers’
compensation, property, comprehensive general, pharmacist, and vehicle liability and full-risk value-based
arrangements, while non-U.S. subsidiaries manage their exposures through insurance coverage with third-party
carriers. The U.S. Healthcare segment also maintains medical malpractice insurance including professional
liability insurance. Management regularly reviews the probable outcome of claims and proceedings, the expenses
expected to be incurred, the availability and limits of the insurance coverage and the established accruals for
liabilities. Liabilities for losses are recorded based upon the Company’s estimates for both claims incurred and
claims incurred but not reported. The provisions are estimated in part by considering historical claims
experience, demographic factors and other actuarial assumptions.
Income taxes
The Company accounts for income taxes according to the asset and liability method. Under this method, deferred
tax assets and liabilities are recognized based upon the estimated future tax consequences attributable to
WBA Fiscal 2024 Form 10-K
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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax basis. Deferred tax assets and liabilities are measured pursuant to tax laws using rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that
includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets
to the amounts more likely than not to be realized.
In determining the provision for income taxes, the Company uses income, permanent differences between book
and tax income, the relative proportion of foreign and domestic income, enacted statutory income tax rates,
projections of income subject to Subpart F rules and unrecognized tax benefits related to current period results.
Discrete events such as the assessment of the ultimate outcome of tax audits, audit settlements, recognizing
previously unrecognized tax benefits due to lapsing of the applicable statute of limitations, recognizing or
de-recognizing benefits of deferred tax assets due to future year financial statement projections and changes in
tax laws are recognized in the period in which they occur.
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. In
evaluating the tax benefits associated with the various tax filing positions, the Company records a tax benefit for
uncertain tax positions using the highest cumulative tax benefit that is more likely than not to be realized.
Adjustments are made to the liability for unrecognized tax benefits in the period in which the Company
determines the issue is effectively settled with the tax authorities, the statute of limitations expires for the return
containing the tax position or when more information becomes available.
Earnings per share
The dilutive effect of outstanding stock options and restricted stock units on earnings per share is calculated
using the treasury stock method. Stock options are anti-dilutive and excluded from the earnings per share
calculation if the exercise price exceeds the average market price of the common shares. There were 14.1 million,
17.8 million and 17.1 million weighted outstanding options to purchase common shares that were anti-dilutive
and excluded from the earnings per share calculation for fiscal 2024, 2023 and 2022, respectively.
Due to the anti-dilutive effect resulting from the reported net loss, an incremental 7.5 million and 3.0 million of
potentially dilutive securities were omitted from the calculation of weighted-average common shares outstanding
for fiscal 2024 and 2023, respectively.
Cash dividends declared per common share
Cash dividends per common share declared were as follows:
Quarter ended
2024
2023
November
$
0.4800
$
0.4800
February
$
0.2500
$
0.4800
May
$
0.2500
$
0.4800
August
$
0.2500
$
0.4800
Total
$
1.2300
$
1.9200
WBA Fiscal 2024 Form 10-K
93
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
New accounting pronouncements
Adoption of new accounting pronouncements
Acquired contract assets and contract liabilities in a business combination
In October 2021, the FASB issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations
(Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU
requires an entity to recognize and measure contract assets and contract liabilities acquired in a business
combination in accordance with Topic 606 (Revenue from Contracts with Customers). This ASU is expected to
reduce diversity in practice and increase comparability for both the recognition and measurement of acquired
revenue contracts with customers at the date of and after a business combination. This ASU is effective for
business combinations completed in fiscal years beginning after December 15, 2022 (fiscal 2024). The Company
adopted this ASU effective September 1, 2023 and the adoption did not impact the Company’s results of
operations, cash flows, or financial position.
Liabilities—Supplier Finance Programs
In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Topic 405-50)—
Disclosure of Supplier Finance Program Obligations. This ASU requires that a buyer in a supplier finance
program disclose sufficient information about the program to allow a user of financial statements to understand
the program’s nature, activity during the period, changes from period to period, and potential magnitude. This
ASU is expected to improve financial reporting by requiring new disclosures about the programs, thereby
allowing financial statement users to better consider the effect of the programs on an entity’s working capital,
liquidity, and cash flows. This ASU is effective for fiscal years beginning after December 15, 2022 (fiscal 2024),
except for the amendment on roll forward information, which is effective for fiscal years beginning after
December 15, 2023 (fiscal 2025). The Company adopted this ASU effective September 1, 2023 and the adoption
did not impact the Company’s disclosures within these Consolidated Financial Statements.
New accounting pronouncements not yet adopted
Leases—Common Control Arrangements
In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842) – Common Control Arrangements. The ASU
amends the accounting for leasehold improvements in common control arrangements by requiring a lessee in a
common control lease arrangement to amortize leasehold improvements that it owns over the improvements’
useful life to the common control group, regardless of the lease term, if the lessee continues to control the use of
the underlying asset through a lease. Further, a lessee that no longer controls the use of the underlying asset will
derecognize the remaining carrying amount of the improvements through an adjustment to equity, reflecting the
transfer of the asset to the lessor under common control. This ASU is effective for fiscal years beginning after
December 15, 2023 (fiscal 2025), including interim periods within those fiscal years. Early adoption is permitted
in any annual or interim period as of the beginning of the related fiscal year. The Company has evaluated the
effect of adopting this new accounting guidance and does not expect adoption will have a material impact on the
Company’s results of operations, cash flows, or financial position.
Segment Reporting—Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)—Improvements to
Reportable Segment Disclosures. This ASU is expected to improve disclosures related to an entity’s reportable
segments and provide additional, more detailed information about a reportable segment’s expenses. This ASU
requires the Company to disclose significant segment expenses that are regularly provided to the chief operating
decision maker (“CODM”) and are included within each reported measure of segment operating results. The
WBA Fiscal 2024 Form 10-K
94
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ASU also requires the Company to disclose the total amount of any other items included in segment operating
results that were not deemed to be significant expenses for separate disclosure, along with a qualitative
description of the composition of these other items. In addition, the ASU requires disclosure of the CODM’s title
and position, as well as detail on how the CODM uses the reported measure of segment operating results to
evaluate segment performance and allocate resources. The ASU also aligns interim segment reporting disclosure
requirements with annual segment reporting disclosure requirements. This ASU is effective for fiscal years
beginning after December 15, 2023 (fiscal 2025) and interim periods within fiscal years beginning after
December 15, 2024 (fiscal 2026). The amendments in this ASU must be applied on a retrospective basis to all
prior periods presented in the financial statements and early adoption is permitted. The Company has evaluated
the effect of adopting this new accounting guidance. While the standard requires additional disclosures related to
the Company’s reportable segments, the standard will not have any impact on the Company’s consolidated
operating results, financial condition, or cash flows.
Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax
Disclosures. This ASU is expected to enhance the transparency and decision usefulness of income tax disclosures
by requiring public business entities on an annual basis to disclose specific categories in the rate reconciliation,
additional information for reconciling items that meet a quantitative threshold, and certain information about
income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 (fiscal 2026). The
amendments in this ASU are required to be applied on a prospective basis and retrospective adoption is
permitted. The Company is currently evaluating the effect of adopting this new accounting guidance.
Note 2. Acquisitions and other investments
Summit acquisition
On January 3, 2023, VillageMD, through its parent company, following an internal reorganization, completed the
acquisition of WP CityMD TopCo (“Summit”), a provider of primary, specialty and urgent care in exchange, for
$7.0 billion aggregate consideration, consisting of $4.85 billion of cash consideration paid, $2.05 billion in
preferred units of VillageMD issued to Summit equity holders and $100 million of cash paid one year following
closing. The cash consideration includes $87 million of cash paid to fund acquisition-related bonuses to Summit
employees which was recognized as a compensation expense of the Company. In addition, VillageMD paid off
approximately $1.9 billion in net debt of Summit. In connection with the amended Agreement and Plan of
Merger, and in order to finance the acquisition, the Company and Cigna Health & Life Insurance Company
acquired preferred units of VillageMD in exchange for $1.75 billion and $2.5 billion in aggregate consideration,
respectively. Following the Summit acquisition, the Company remains the largest and consolidating equity
holder of VillageMD with ownership of approximately 53% of the outstanding equity interests on a fully diluted
basis.
Further, the Company entered into a credit agreement with VillageMD pursuant to which the Company provided
VillageMD senior secured credit facilities (the “VillageMD Secured Loan”) in the aggregate amount of
$2.25 billion, consisting of (i) a senior secured term loan facility in an aggregate original principal amount of
$1.75 billion to support the acquisition of Summit; and (ii) a senior secured revolving credit facility in an
aggregate original committed amount of $500 million available for general corporate purposes. In connection
with the issuance of the senior secured credit facilities, the Company received a $220 million credit for certain
fees payable by VillageMD in the form of preferred units of VillageMD. The intercompany facilities eliminate in
consolidation. On August 2, 2024, the Company and VillageMD acknowledged the existence of defaults under
the VillageMD Secured Loan. On August 6, 2024, the Company and VillageMD entered into a forbearance
agreement relating to the intercompany facilities, whereby the Company has agreed not to exercise certain
WBA Fiscal 2024 Form 10-K
95
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
remedies available to it under the terms of the credit agreement, subject to VillageMD’s compliance with the
conditions set forth in the forbearance agreement, and the Company is actively engaged in discussions with
VillageMD’s stakeholders and other third parties with respect to the future of its investment in VillageMD.
The Company accounted for this acquisition as a business combination resulting in consolidation of Summit
within the U.S. Healthcare segment in its financial statements. In fiscal 2024, the Company completed the
purchase price allocation.
The following table summarizes the consideration for the acquisition and the amounts of identified assets
acquired and liabilities assumed at the date of the transaction (in millions):
Purchase price allocation:
Cash consideration
1
$
4,778
Deferred consideration
100
Summit debt paid at closing
1,963
Fair value of equity consideration
2
1,971
Fair value of non-controlling interests
13
Total
$
8,825
Identifiable assets acquired and liabilities assumed:
Cash and cash equivalents
$
69
Accounts receivable, net
381
Property, plant and equipment
607
Intangible assets
3
3,359
Operating lease right-of-use assets
756
Other assets
174
Operating lease obligations
(773)
Deferred tax liability
(735)
Other liabilities
(466)
Total identifiable net assets
$
3,372
Goodwill
$
5,454
1.
Cash consideration excludes $87 million of cash paid to fund acquisition-related bonuses to Summit
employees that was recognized as compensation expense of the Company.
2.
The fair value of the non-controlling interests was calculated based on the implied equity value of
VillageMD, allocated to all units on an as-converted basis.
3.
Intangibles acquired include provider networks and trade names with fair values of $1.9 billion and
$1.5 billion, respectively. Estimated useful lives are 15 years and 11 to 15 years, respectively.
The goodwill represents anticipated future growth and expansion opportunities into new healthcare offerings and
new markets. $416 million of the goodwill is expected to be tax deductible.
Supplemental pro forma information—Summit
The following table represents unaudited supplemental pro forma consolidated sales for the years ended
August 31, 2023 and 2022, as if the acquisition of Summit had occurred at the beginning of each period
presented. The unaudited pro forma information has been prepared for comparative purposes only and is not
WBA Fiscal 2024 Form 10-K
96
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
intended to be indicative of what the Company’s results would have been had the acquisition occurred at the
beginning of each period presented or results, which may occur in the future.
(Unaudited, in millions)
2023
2022
Sales
$
140,039
$
135,379
Actual sales of Summit, from the acquisition date, for the year ended August 31, 2023, included in the
Consolidated Statements of Earnings are as follows (in millions):
2023
Sales
$
1,896
Pro forma net earnings of the Company, assuming the acquisition had occurred at the beginning of fiscal 2022,
would not be materially different from the results reported.
VillageMD acquisition
On November 24, 2021, the Company completed the acquisition of VillageMD, a national provider of value-
based primary care services. Pursuant to the terms and subject to the conditions set forth in the Unit Purchase
Agreement, the Company purchased additional outstanding equity interests of VillageMD, increasing the
Company’s total beneficial ownership in VillageMD’s outstanding equity interests from approximately 30% to
approximately 63%, on a fully diluted basis, for a purchase price of $5.2 billion. The total purchase price was
comprised of cash consideration of $4.0 billion and a promissory note of $1.2 billion. The cash consideration of
$4.0 billion consisted of $2.9 billion paid to existing shareholders, including $1.9 billion paid to existing
shareholders as part of the fully subscribed tender offer concluded on December 28, 2021, and $1.1 billion paid
in exchange for new preferred units issued by VillageMD. Subject to notice being served, the Company had an
option to prepay, and VillageMD had an option to require redemption of, the promissory note at any time. The
promissory note was eliminated in consolidation within the Consolidated Balance Sheets as of August 31, 2022.
The promissory note was paid in January 2023 prior to the Summit acquisition.
The Company accounted for this acquisition as a business combination resulting in consolidation of VillageMD
within the U.S. Healthcare segment in its financial statements. A non-controlling interest was recognized at fair
value.
As a result of this acquisition, in the three months ended November 30, 2021, the Company recognized a pre-tax
gain in Other income, net in the Consolidated Statements of Earnings of $1.6 billion related to the fair valuation
of the Company’s previously held minority equity interest. The Company also recorded a pre-tax gain of
$577 million in Other income, net in the Consolidated Statements of Earnings related to the conversion to equity
of the Company’s previously held investment in convertible debt securities of VillageMD, reclassified from
within Accumulated other comprehensive income in the Consolidated Balance Sheets. A majority of the gains
did not generate a tax expense.
In fiscal 2023, the Company completed the purchase price allocation and recorded certain deferred income tax
related measurement period adjustments based on additional information, resulting in an increase to goodwill of
$125 million.
WBA Fiscal 2024 Form 10-K
97
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the consideration for the acquisition and the amounts of identified assets
acquired and liabilities assumed at the date of the transaction (in millions):
Purchase price allocation:
Total purchase price
$
5,200
Less: purchase price for issuance of new preferred units at fair value
1
(2,300)
Net consideration
2,900
Fair value of share-based compensation awards attributable to pre-combination services
2
683
Fair value of previously held equity and debt
3,211
Fair value of non-controlling interest
3,257
Total
$
10,051
Identifiable assets acquired and liabilities assumed:
Tangible assets
1
$
634
Intangible assets
3
1,621
Liabilities
(370)
Total identifiable net assets
$
1,885
Goodwill
$
8,166
1.
Comprised of cash consideration of $1.1 billion and a promissory note of $1.2 billion. This consideration
was provided in exchange for the issuance of new preferred units by VillageMD. VillageMD’s tangible
assets acquired exclude this $1.1 billion of cash and $1.2 billion promissory note receivable.
2.
Primarily related to vested share-based compensation awards.
3.
Intangibles acquired include primary care provider network, trade names and developed technology, with a
fair value of $1.2 billion, $295 million and $76 million, respectively. Estimated useful lives are 15, 13 and 5
years, respectively.
The goodwill represents anticipated future growth and expansion opportunities into new markets.
Shields acquisition
On October 29, 2021, the Company completed the acquisition of Shields, a specialty pharmacy integrator and
accelerator for hospitals. Pursuant to the terms and subject to the conditions set forth in the Securities Purchase
Agreement, the Company purchased additional outstanding equity interests of Shields, increasing the Company’s
total beneficial ownership in Shields’ outstanding equity interests from 25% to approximately 70%, for cash
consideration of $969 million. The Company accounted for this acquisition as a business combination resulting
in consolidation of Shields within the U.S. Healthcare segment in its financial statements. A non-controlling
interest was recognized at fair value. Under the terms of the transaction agreements, the Company had an option
to acquire the remaining equity interests of Shields in the future. Shields’ other equity holders had an option to
require the Company to purchase the remaining equity interests. Considering the contractual terms related to the
non-controlling interests, it was classified as redeemable non-controlling interests in the Consolidated Balance
Sheets upon acquisition.
In fiscal 2022, as a result of this acquisition the Company remeasured its previously held minority equity interest
in Shields at fair value resulting in a pre-tax gain of $402 million recognized in Other income, net in the
Consolidated Statements of Earnings. A majority of the gain did not generate a tax expense.
In fiscal 2023, the Company completed the purchase price allocation and recorded certain deferred income tax related
measurement period adjustments based on additional information, resulting in an increase to goodwill of $72 million.
WBA Fiscal 2024 Form 10-K
98
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the consideration for the acquisition and the amounts of identified assets
acquired and liabilities assumed at the date of the transaction (in millions):
Purchase price allocation:
Cash consideration
$
969
Fair value of share-based compensation awards attributable to pre-combination services
13
Fair value of previously held equity interests
502
Fair value of non-controlling interests
589
Total
$
2,074
Identifiable assets acquired and liabilities assumed:
Tangible assets
$
84
Intangible assets
1
1,060
Liabilities
(600)
Total identifiable net assets
$
544
Goodwill
$
1,529
1.
Intangibles acquired include customer relationships, trade names and developed technology, with a fair
value of $896 million, $47 million and $117 million. Estimated useful lives are 13, 13 and 5 years,
respectively.
The goodwill represents anticipated future growth and expansion opportunities into new healthcare offerings.
On December 28, 2022 the Company acquired the remaining 30% equity interest for approximately $1.4 billion
of cash consideration.
CareCentrix acquisition
On August 31, 2022, the Company completed the acquisition of CareCentrix. Pursuant to the terms and subject to
the conditions set forth in the Membership Interest Purchase Agreement, the Company acquired approximately
55% controlling equity interest in CareCentrix, a participant in the post-acute and home care management
sectors, for cash consideration of $339 million. The cash consideration includes $12 million paid to employees,
which was recognized as compensation expense by the Company.
The Company accounted for this acquisition as a business combination resulting in consolidation of CareCentrix
within the U.S. Healthcare segment in its financial statements. A non-controlling interest was recognized at fair
value. Under the terms of the transaction agreements, the Company had an option to acquire the remaining equity
interests of CareCentrix in the future. CareCentrix’s other equity holders also had an option to require the
Company to purchase the remaining equity interests. Considering the contractual terms related to the
non-controlling interests, it was classified as redeemable non-controlling interests in the Consolidated Balance
Sheets.
In fiscal 2023, the Company completed the purchase price allocation and recorded certain measurement period
adjustments based on additional information, primarily related to acquired intangible assets and certain liabilities
assumed, resulting in an increase to goodwill of $56 million.
WBA Fiscal 2024 Form 10-K
99
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In fiscal 2023, the Company completed the purchase price allocation. The following table summarizes the
consideration for the acquisition and the amounts of identified assets acquired and liabilities assumed at the date
of the transaction (in millions):
Purchase price allocation:
Cash consideration
1
327
Contingent consideration
4
Fair value of share-based compensation awards attributable to pre-combination services
66
Fair value of non-controlling interests
217
Total
$
614
Identifiable assets acquired and liabilities assumed:
Tangible assets
$
358
Intangible assets
2
426
Liabilities
(680)
Total identifiable net assets
$
104
Goodwill
$
509
1.
Excludes $12 million of cash paid to employees, which was recognized as compensation expense by the
Company.
2.
Intangibles acquired include customer relationships, trade names and developed technology, with a fair
value of $247 million, $93 million and $86 million, respectively. Estimated useful lives are 13, 13 and 5
years, respectively.
The goodwill represents anticipated future growth and expansion opportunities into new healthcare offerings.
On March 31, 2023, the Company acquired the remaining 45% equity interest in CareCentrix for approximately
$378 million of cash consideration.
Supplemental pro forma information
The following table represents unaudited supplemental pro forma consolidated sales for fiscal 2022 acquisitions,
for the year ended August 31, 2022, as if the acquisitions had occurred at the beginning of fiscal 2022. The
unaudited pro forma information has been prepared for comparative purposes only and is not intended to be
indicative of what the Company’s results would have been had the acquisitions occurred at the beginning of the
period presented or results which may occur in the future.
(Unaudited, in millions)
2022
Sales
$
134,314
Actual sales of the acquisitions for the year ended August 31, 2022 included in the Consolidated Statements of
Earnings are as follows (in millions):
2022
Sales
$
1,795
Pro forma net earnings of the Company, assuming the acquisitions had occurred at the beginning of fiscal 2022,
would not be materially different from the results reported.
See Note 16. Segment reporting, for further information.
WBA Fiscal 2024 Form 10-K
100
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other acquisitions
On March 3, 2023, the Company completed the acquisition of Starling MSO Holdings, LLC (“Starling”), a
primary care and multi-specialty group, for total consideration of $284 million. Total consideration includes
$222 million of cash consideration and $62 million of VillageMD equity issued to Starling equity holders,
including employees. VillageMD equity issued to employees will be recognized as compensation expense in the
future. As a result of the acquisition, the Company recognized goodwill and intangible assets of $103 million and
$128 million, respectively. In fiscal 2024, the Company completed the purchase price allocation.
The Company acquired prescription files and related pharmacy inventory primarily in the U.S. for an aggregate
purchase price of $533 million and $324 million during fiscal 2024 and 2023, respectively.
Note 3. Exit and disposal activities
Transformational Cost Management Program
On December 20, 2018, the Company announced a transformational cost management program that was
expected to deliver in excess of $2.0 billion of annual cost savings by fiscal 2022 (the “Transformational Cost
Management Program”). The Company achieved this goal at the end of fiscal 2021. The program was
subsequently expanded and extended, with the most recent update in fiscal 2023, when the Company increased
its annual cost savings target from $3.5 billion to $4.5 billion by the end of fiscal 2024. While most of the
initiatives under the program were completed by the end of fiscal 2024, certain initiatives are expected to extend
into fiscal 2025. 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. 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. The Transformational Cost Management Program resulted in the approval to close
approximately 650 Boots stores in the United Kingdom (“UK”) and approximately 950 stores in the U.S. As of
August 31, 2024, the Company has closed 624 and 676 stores in the UK and U.S., respectively.
Cumulative pre-tax charges to the Company’s GAAP financial results for the Transformational Cost
Management Program were $4.3 billion, of which pre-tax charges for exit and disposal activities were
$4.0 billion. The charges were primarily recorded within Selling, general and administrative expenses within the
Consolidated Statements of Earnings. These charges included $1.7 billion related to lease obligations and other
real estate costs, $1.0 billion in asset impairments, $1.0 billion in employee severance and business transition
costs and $300 million of IT transformation and other exit costs. In addition to the impacts discussed above, as a
result of the actions related to store closures taken under the Transformational Cost Management Program, the
Company recorded $508 million of transition adjustments to decrease retained earnings due to the adoption of the
new lease accounting standard (Topic 842) that became effective on September 1, 2019.
WBA Fiscal 2024 Form 10-K
101
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Costs related to exit and disposal activities under the Transformational Cost Management Program for fiscal
2024, 2023 and 2022, respectively, were as follows (in millions):
Fiscal 2024
U.S. Retail
Pharmacy
International
U.S.
Healthcare
Corporate
and Other
Walgreens Boots
Alliance, Inc.
Lease obligations and other real
estate costs
$
535 $
— $
— $
—
$
535
Asset impairments
104
16
8
—
128
Employee severance and
business transition costs
93
(3)
6
6
102
Information technology
transformation and other exit
costs
39
19
13
—
70
Total pre-tax exit and disposal
charges
$
770 $
32 $
26 $
6
$
835
Fiscal 2023
U.S. Retail
Pharmacy
International
U.S.
Healthcare
Corporate
and Other
Walgreens Boots
Alliance, Inc.
Lease obligations and other real
estate costs
$
492 $
23 $
— $
1
$
516
Asset impairments
183
149
109
—
441
Employee severance and
business transition costs
111
20
6
13
150
Information technology
transformation and other exit
costs
30
21
—
—
51
Total pre-tax exit and disposal
charges
$
816 $
213 $
115 $
14
$
1,158
Fiscal 2022
U.S. Retail
Pharmacy
International
U.S.
Healthcare
Corporate
and Other
Walgreens Boots
Alliance, Inc.
Lease obligations and other real
estate costs
$
247 $
2 $
— $
—
$
249
Asset impairments
132
58
—
—
190
Employee severance and
business transition costs
156
29
—
25
210
Information technology
transformation and other exit
costs
12
29
—
—
40
Total pre-tax exit and disposal
charges
$
546 $
118 $
— $
25
$
690
WBA Fiscal 2024 Form 10-K
102
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The changes in liabilities and assets related to the exit and disposal activities under Transformational Cost
Management Program include the following (in millions):
Lease
obligations and
other real
estate costs
Asset
impairments
Employee
severance and
business
transition costs
Information
technology
transformation
and other exit
costs
Total
Balance at August 31, 2022
$
10
$
—
$
76
$
27
$
113
Costs
516
441
150
51
1,158
Payments
(105)
—
(160)
(55)
(320)
Other
(411)
(441)
2
—
(849)
Balance at August 31, 2023
$
10
$
—
$
70
$
22
$
102
Costs
535
128
102
70
835
Payments
(223)
—
(145)
(62)
(430)
Other
(315)
(128)
—
(28)
(471)
Balance at August 31, 2024
$
8
$
—
$
26
$
2
$
36
Other exit and disposal activities
In fiscal 2024, VillageMD approved the closure of approximately 160 clinics. As a result, long-lived and
intangible assets of $303 million were impaired within the U.S. Healthcare segment. The impairment charges
were recorded in Selling, general and administrative expenses within the Consolidated Statements of Earnings.
In fiscal 2024, management ceased development of, and abandoned, a multi-year internal software development
project within the U.S. Retail Pharmacy segment. As a result, previously capitalized internally-developed
software of $455 million was impaired. The impairment charge was recorded in Selling, general and
administrative expenses within the Consolidated Statements of Earnings.
Note 4. Leases
Supplemental balance sheet information related to leases was as follows (in millions):
Balance sheet supplemental information:
August 31, 2024
August 31, 2023
Operating leases:
Operating lease right-of-use assets
$
20,335
$
21,667
Operating lease obligations - current
$
2,382
$
2,347
Operating lease obligations - non-current
20,921
22,124
Total operating lease obligations
$
23,303
$
24,472
Finance leases:
Right-of-use assets included in:
Property, plant and equipment, net
$
680
$
678
Lease obligations included in:
Accrued expenses and other liabilities
$
74
$
57
Other non-current liabilities
917
919
Total finance lease obligations
$
991
$
976
WBA Fiscal 2024 Form 10-K
103
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Supplemental income statement information related to leases was as follows (in millions):
Statement of earnings supplemental information:
2024
2023
2022
Operating lease cost
Fixed
$
3,473
$
3,404
$
3,240
Variable
1
909
850
825
Finance lease cost
Amortization
$
68
$
47
$
44
Interest
53
51
50
Sublease income
2
$
111
$
115
$
105
Impairment of right-of-use assets
526
495
218
Gains on sale-leaseback transactions
2
U.S. Retail Pharmacy
$
295
$
747
$
558
International
3
—
178
61
Total gain on sale-leaseback
2
$
295
$
925
$
619
1
Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales
volume.
2
Recorded in Selling, general and administrative expenses within the Consolidated Statements of Earnings.
3
Includes gain on sale-leaseback related to the Germany wholesale business of $178 million for fiscal 2023,
and $61 million for Boots UK for fiscal 2022. The gain for fiscal 2023 includes $47 million related to the
optimization of the Germany warehouse locations as part of acquisition integration activities.
Other supplemental information was as follows (in millions):
Other supplemental information:
2024
2023
2022
Cash paid for amounts included in the measurement of
lease obligations
Operating cash flows from operating leases
$
3,684
$
3,579
$
3,351
Operating cash flows from finance leases
51
47
47
Financing cash flows from finance leases
71
52
43
Total
$
3,807
$
3,679
$
3,441
Right-of-use assets obtained in exchange for new lease
obligations
Operating leases
$
1,457
$
2,323
$
2,078
Finance leases
80
30
11
Total
$
1,536
$
2,352
$
2,089
Weighted average lease term and discount rate for real estate leases as of August 31, 2024 were as follows:
Weighted average lease terms and discount rates:
August 31, 2024
August 31, 2023
Weighted average remaining lease term in years
Operating leases
9.2
9.6
Finance leases
17.6
17.4
Weighted average discount rate
Operating leases
5.60%
5.35%
Finance leases
5.18%
5.25%
WBA Fiscal 2024 Form 10-K
104
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The aggregate future lease payments for operating and finance leases as of August 31, 2024 are as follows (in
millions):
Future lease payments (fiscal years):
Finance lease
Operating lease
1,2
2025
$
128
$
3,668
2026
123
3,599
2027
121
3,519
2028
99
3,383
2029
88
3,162
Later
892
12,792
Total undiscounted minimum lease payments
$
1,451
$
30,123
Less: Present value discount
460
6,820
Lease liability
$
991
$
23,303
1.
Total undiscounted minimum lease payments include approximately $3.5 billion of payments related to
optional renewal periods that have not been contractually exercised, but are reasonably certain of being
exercised.
2.
Total undiscounted minimum lease payments exclude sublease rental income of approximately $592 million
due to the Company under non-cancelable sublease terms.
Note 5. Equity method investments
Equity method investments as of August 31, 2024 and 2023 were as follows (in millions, except percentages):
2024
2023
Carrying value
Ownership
percentage
Carrying value
Ownership
percentage
Cencora
$
1,563
10%
$
2,534
16%
Others
705
8% - 50%
963
8% - 50%
Total
$
2,269
$
3,497
Cencora investment
As of August 31, 2024 and 2023, the Company owned 20.0 million and 31.8 million shares of Cencora common
stock, respectively, representing approximately 10.2% and 15.9% of its outstanding common stock based on the
share count publicly reported by Cencora in its most recent filings with the SEC. The Company has the ability to
exercise significant influence in Cencora through the Company’s board representation.
In fiscal 2024, 2023 and 2022, the Company sold shares of Cencora common stock for total consideration of
approximately $2.7 billion, $3.4 billion and $900 million respectively. These transactions resulted in the
Company recording pre-tax gains, inclusive of equity method basis difference adjustments, of $1.5 billion,
$1.6 billion and $417 million, respectively, in Other income, net in the Consolidated Statements of Earnings,
including $63 million, $160 million and $32 million of losses, respectively, reclassified from within
Accumulated other comprehensive loss in the Consolidated Balance Sheets. As part of the Company’s sale of
Cencora common stock during the third quarter of fiscal 2024, the Company recognized a cumulative equity
method basis difference adjustment, of which an immaterial amount pertained to fiscal 2023.
WBA Fiscal 2024 Form 10-K
105
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of August 31, 2024 and 2023, the Company has pledged 20.0 million and 17.3 million shares of Cencora
common stock, respectively, as collateral upon entering into VPF derivative contracts. See Note 8. Financial
instruments, for further information.
The Company accounts for its equity investment in Cencora using the equity method of accounting, with the net
earnings attributable to the Company’s investment being classified within the operating income of its U.S. Retail
Pharmacy segment. Due to the timing and availability of financial information of Cencora, the Company
accounts for this equity method investment on a financial reporting lag of two months. Equity earnings in
Cencora are reported as a separate line in the Consolidated Statements of Earnings.
The Level 1 fair market value of the Company’s equity investment in Cencora common stock at August 31, 2024
and 2023 was $4.8 billion and $5.6 billion, respectively. As of August 31, 2024, the carrying value of the
Company’s investment in Cencora exceeded its proportionate share of the net assets of Cencora by $1.5 billion.
This premium of $1.5 billion was recognized as part of the carrying value in the Company’s equity investment in
Cencora. The difference is primarily related to goodwill and the fair value of Cencora intangible assets.
Other investments
At August 31, 2024, the Company’s other equity method investments primarily include its U.S. investment in
BrightSpring Health Services (“BrightSpring”), and the Company’s investments in China in Sinopharm Medicine
Holding Guoda Drugstores Co., Ltd (“Guoda”), and Nanjing Pharmaceutical Company Limited (“Nanjing”). As
of August 31, 2024, the Company owned approximately 18% and 11% of common stock outstanding in its
investments in BrightSpring and Nanjing, respectively. The Company has the ability to exercise significant
influence over the investees through the Company’s board representation. As such, the Company accounts for its
equity investments in BrightSpring and Nanjing using the equity method of accounting. On September 11, 2024,
the Company sold shares of BrightSpring common stock for total consideration of approximately $129 million,
reducing the Company’s ownership percentage to approximately 12%. The Company will continue to account for
its remaining investment in BrightSpring under the equity method of accounting. In fiscal 2024 and 2022, the
Company recognized other-than-temporary impairments of $364 million and $124 million, respectively, related
to equity method investments in China. The impairments were derived using Level 3 inputs, including financial
projections and market multiples of comparable companies. The Company did not recognize any significant
equity method investment impairments in fiscal 2023.
In fiscal 2022, the Company acquired majority equity interests in VillageMD and Shields, both formerly
accounted for as equity method investments. The Company accounted for these acquisitions as business
combinations resulting in the remeasurement of its previously held minority equity interests and convertible debt
securities at fair value resulting in pre-tax gains of $2.2 billion and $402 million for VillageMD and Shields,
respectively, recognized in Other income, net in the Consolidated Statements of Earnings. As a result of these
transactions, the Company consolidated VillageMD and Shields within the U.S. Healthcare segment in its
financial statements. In addition, in fiscal 2022 the Company sold its ownership interest in Guangzhou
Pharmaceutical Corporation (“GP Corp”) for total consideration of approximately $150 million.
Option Care Health investment
During fiscal 2022, the Company sold shares of Option Care Health common stock for total consideration of
approximately $363 million. During fiscal 2023, the Company sold its remaining investment in Option Care
Health for total consideration of approximately $798 million. These transactions resulted in the Company
recording pre-tax gains of $186 million and $145 million, respectively, in Other income, net in the Consolidated
Statements of Earnings. As of May 31, 2023, the Company no longer exercised significant influence over the
operating and financial policies of Option Care Health and reclassified its investment from an equity method
WBA Fiscal 2024 Form 10-K
106
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
investment to an investment in equity securities at fair value, recognizing a pre-tax gain of $76 million included
in Other income, net within the Consolidated Statements of Earnings.
Summarized financial information
Summarized financial information for the Company’s equity method investments in aggregate is as follows:
Balance sheet (in millions)
August 31,
2024
2023
Current assets
$
54,470
$
48,185
Non-current assets
25,044
25,618
Current liabilities
58,231
52,093
Non-current liabilities
16,470
17,999
Shareholders’ equity
1
4,813
3,711
1
Shareholders’ equity at August 31, 2024 and 2023 includes $432 million and $520 million, respectively,
related to non-controlling interests.
Statements of earnings (in millions)
2024
2023
2022
Sales
$
304,895
$
279,118
$
268,189
Gross profit
12,466
12,457
13,248
Net earnings
1,922
1,799
1,988
Share of earnings from equity method investments
230
286
468
The summarized financial information for equity method investments has been included on an aggregated basis
for all investments as reported at the end of each fiscal year end.
Note 6. Goodwill and other intangible assets
Goodwill and indefinite-lived intangible assets are evaluated for impairment annually during the fourth quarter,
or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair
value of a reporting unit or intangible asset below its carrying value.
In the second quarter of fiscal 2024, the Company completed a quantitative impairment analysis for goodwill
related to its VillageMD reporting unit within the U.S. Healthcare segment due to downward revisions in its
longer term forecast received during the quarter, including the impact of closing approximately 90 additional
clinics, slower than expected trends in patient panel growth and multi-specialty productivity trends, and recent
changes in Medicare reimbursement models. These impacts were partly offset by cost savings initiatives. Based
on this analysis, the Company recorded a goodwill impairment charge of $12.4 billion, prior to attribution of loss
to non-controlling interests, in Operating loss within the Consolidated Statements of Earnings. The impairment
charges reflect lower than previously expected longer term financial performance expectations, a reduction in the
multiples for publicly traded peer companies, and increases in discount rates. As of August 31, 2024, the
Company believes the carrying value of the VillageMD reporting unit approximates its fair value. As of
August 31, 2024, the carrying value of goodwill within the VillageMD reporting unit was $1.5 billion.
WBA Fiscal 2024 Form 10-K
107
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the fourth quarter of fiscal 2024, the Company completed its annual quantitative impairment analysis for
goodwill and recognized an impairment charge of $332 million related to its CareCentrix reporting unit within
the U.S. Healthcare segment due to downward revisions to its longer term forecasts received during the fourth
quarter. As of August 31, 2024, the Company believes the carrying value of the CareCentrix reporting unit
approximates its fair value. As of August 31, 2024, the carrying value of goodwill within the CareCentrix
reporting unit was $178 million.
Based on the analysis completed as of the June 1, 2024 valuation date, the fair values of the Company’s other
reporting units exceeded their carrying amounts ranging from approximately 18% to approximately 124%.
As part of the Company’s impairment analyses, fair value of the reporting units were determined using both the
income and market approaches. The income approach requires management to estimate a number of factors,
including the projected future operating results, economic projections, anticipated future cash flows and discount
rates. The market approach estimates fair value using comparable marketplace fair value data from within a
comparable industry grouping as well as recent guideline transactions.
The determination of the fair value of the reporting units requires the Company to make significant estimates and
assumptions related to the business and financial performance of the Company’s reporting units. These estimates
and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies,
control premiums appropriate for acquisitions in the industries in which the Company competes, discount rates,
terminal growth rates, forecasts of revenue, operating income, depreciation, amortization, working capital
requirements and capital expenditures. Future increases in discount rates or deterioration in the observable prices
for guideline companies could result in further goodwill impairment in subsequent periods.
Changes in the carrying amount of goodwill by reportable segment consist of the following activity (in millions):
Goodwill roll forward:
U.S. Retail Pharmacy
International
1
U.S. Healthcare
Walgreens Boots
Alliance, Inc.
August 31, 2022
$
10,947
$
1,293
$
10,040
$
22,280
Acquisitions
2
—
—
5,588
5,588
Measurement period
adjustments
—
—
252
252
Currency translation
adjustments and other
—
85
(18)
67
August 31, 2023
$
10,947
$
1,378
$
15,863
$
28,187
Measurement period
adjustments
—
—
19
19
Impairments
—
—
(12,701)
(12,701)
Currency translation
adjustments and other
—
9
(8)
1
August 31, 2024
$
10,947
$
1,388
$
3,173
$
15,506
1.
As of fiscal 2022, prior period goodwill impairment charges of $1.7 billion were recognized in the
International Segment.
2.
In fiscal 2023, additions to goodwill primarily relate to VillageMD’s acquisition of Summit.
WBA Fiscal 2024 Form 10-K
108
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The fair values of indefinite-lived intangibles within the Boots reporting unit, as part of the International segment,
exceeded their carrying value amounts ranging from approximately 6% to approximately 73%. As of August 31,
2024 and 2023, the carrying value of the indefinite-lived intangibles within the Boots reporting unit was $5.6 billion
and $5.5 billion, respectively. There were no impairments of indefinite-lived intangibles in fiscal 2024.
In fiscal 2023 and 2022, the Company recorded impairment losses of $431 million and $783 million,
respectively, related to certain pharmacy license and trade name indefinite-lived intangible assets in the Boots
reporting unit within the International segment. The impairments were recorded within Selling, general and
administrative expenses within the Consolidated Statements of Earnings.
The Company evaluates the recoverability of definite-lived intangible assets whenever events or changes in
circumstances indicate that the carrying value of such an asset may not be recoverable. The evaluation of
definite-lived intangible assets is performed at the lowest level of identifiable cash flows. During the second
quarter of fiscal 2024, as a result of the factors leading to the interim goodwill impairment analysis performed,
the Company evaluated VillageMD’s other intangible and long-lived assets for impairment. The assessment
resulted in an impairment charge of $266 million, including a charge related to certain provider network
intangibles. The charge was recognized primarily within the U.S. Healthcare segment as a component of Selling,
general, and administrative expenses within the Consolidated Statements of Earnings. As part of this impairment
analysis, the fair values of asset groups and intangible assets were determined using the income approach.
No material impairment was recorded for definite-lived intangibles in fiscal 2023 or 2022.
The carrying amount and accumulated amortization of intangible assets consist of the following (in millions):
Intangible assets:
August 31, 2024
August 31, 2023
Gross amortizable intangible assets
Customer relationships and loyalty card holders
1
$
4,868
$
4,658
Provider networks
2,957
3,202
Trade names and trademarks
2,294
2,300
Developed technology
469
469
Others
156
137
Total gross amortizable intangible assets
$
10,745
$
10,767
Accumulated amortization
Customer relationships and loyalty card holders
1
$
2,127
$
1,784
Provider networks
411
233
Trade names and trademarks
558
401
Developed technology
221
143
Others
62
48
Total accumulated amortization
3,379
2,609
Total amortizable intangible assets, net
$
7,367
$
8,158
Indefinite-lived intangible assets
Trade names and trademarks
$
4,759
$
4,650
Pharmacy licenses
848
828
Total indefinite-lived intangible assets
$
5,607
$
5,477
Total intangible assets, net
$
12,973
$
13,635
1
Includes purchased prescription files.
WBA Fiscal 2024 Form 10-K
109
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amortization expense for intangible assets was $963 million, $815 million and $639 million in fiscal 2024, 2023
and 2022, respectively.
Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at
August 31, 2024 is as follows (in millions):
2025
2026
2027
2028
2029
Estimated annual amortization expense
$
974
$
930
$
840
$
756
$
688
Note 7. Debt
Debt carrying values are presented net of unamortized discount and debt issuance costs, where applicable, and
foreign currency denominated debt is translated to the U.S. dollar using the spot rates as of the balance sheet
date. Debt consists of the following (all amounts are presented in millions of U.S. dollars and debt issuances are
denominated in U.S. dollars, unless otherwise noted):
August 31, 2024
August 31, 2023
Short-term debt
Credit facilities
1
November 2021 DDTL due November 2024
$
290
$
—
$850 million note issuance
1
0.9500% unsecured notes due 2023
—
850
$8 billion note issuance
1
3.800% unsecured notes due 2024
1,157
—
Other
2
58
68
Total short-term debt
$
1,505
$
917
Long-term debt
Credit facilities
1
November 2021 DDTL due November 2024
$
—
$
289
December 2022 DDTL due January 2026
1,000
999
August 2023 DDTL due November 2026
1,000
—
$1.5 billion note issuance
1
3.200% unsecured notes due 2030
498
498
4.100% unsecured notes due 2050
635
793
$6 billion note issuance
1
3.450% unsecured notes due 2026
1,445
1,444
4.650% unsecured notes due 2046
295
318
$8 billion note issuance
1
3.800% unsecured notes due 2024
—
1,156
4.500% unsecured notes due 2034
301
301
4.800% unsecured notes due 2044
657
869
£700 million note issuance
1
3.600% unsecured Pound Sterling notes due 2025
391
381
€
750 million note issuance
1
2.125% unsecured Euro notes due 2026
833
814
$4 billion note issuance
3
4.400% unsecured notes due 2042
236
263
$750 million note issuance
1
8.125% unsecured notes due 2029
740
—
Other
2
13
20
Total long-term debt, less current portion
$
8,044
$
8,145
WBA Fiscal 2024 Form 10-K
110
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
Notes, borrowings under credit facilities and commercial paper are unsecured debt obligations of the
Company and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of
the Company from time to time outstanding.
2.
Other debt represents a mix of fixed and variable rate debt with various maturities and working capital
facilities denominated in various currencies.
3.
Notes are senior debt obligations of Walgreen Co.
At August 31, 2024, the future maturities of short-term and long-term debt, excluding debt discounts, issuance
costs and finance lease obligations (See Note 4. Leases, for further information on the future lease payments),
consisted of the following (in millions):
Amount
2025
$
1,505
2026
2,838
2027
1,835
2028
1
2029
751
Later
2,651
Total estimated future maturities
$
9,581
$750 million Note Issuance
On August 12, 2024, the Company issued, in an underwritten public offering, $750 million of 8.125% notes due
2029. The notes contain a call option which allows for the notes to be repaid, in full or in part, at 104%, 102%
and 100% of the principal amount of the notes to be redeemed, in each case plus accrued and unpaid interest at
August 15, 2026, August 15, 2027 and August 15, 2028 respectively.
$850 million Note Issuance
On November 17, 2021, the Company issued, in an underwritten public offering, $850 million of 0.95% notes
due 2023. The notes contained a call option that allowed for the notes to be repaid, in full or in part, at 100% of
the principal amount of the notes to be redeemed, in each case plus accrued and unpaid interest. On
November 17, 2023, the Company repaid the note in full.
Credit facilities
August 2023 Revolving Credit Agreement
On August 9, 2023, the Company entered into a $2.25 billion unsecured three-year revolving credit facility (the
“August 2023 Revolving Credit Agreement” or “August 2023 RCF”). Interest on borrowings under the revolving
credit facility accrues at applicable margins based on the Company’s Index Debt Rating by Moody’s or Standard
and Poor (“S&P”) and ranges from 75 basis points to 150 basis points over specified benchmark rates for
Secured Overnight Financing Rate (“SOFR”) loans, as applicable. Additionally, the Company pays commitment
fees to maintain the availability under the August 2023 Revolving Credit Agreement at applicable fee rates based
upon certain criteria at an annual rate on the unutilized portion of the total credit commitment. The August 2023
Revolving Credit Agreement’s termination date is August 9, 2026, or earlier, subject to the Company’s discretion
to terminate the agreement. As of August 31, 2024, there were no borrowings outstanding under the August 2023
Revolving Credit Agreement.
WBA Fiscal 2024 Form 10-K
111
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 2023 Delayed Draw Term Loan
On August 9, 2023, the Company entered into a $1 billion senior unsecured delayed draw term loan credit
agreement (the “August 2023 DDTL”). Interest on borrowings under the August 2023 DDTL accrues at
applicable margins based on the Company’s Index Debt Rating by Moody’s or S&P and ranges from 75 basis
points to 150 basis points over specified benchmark rates for SOFR loans, as applicable. The August 2023 DDTL
was drawn for general corporate purposes. The August 2023 DDTL matures on November 17, 2026. As of
August 31, 2024, there was $1 billion in borrowings outstanding under the August 2023 DDTL. Amounts
borrowed under the August 2023 DDTL that are repaid or prepaid may not be reborrowed.
December 2022 Delayed Draw Term Loan
On December 19, 2022, the Company entered into a $1.0 billion senior unsecured delayed draw term loan credit
agreement (the “December 2022 DDTL”). Interest on borrowings under the December 2022 DDTL accrues at
applicable margins based on the Company’s Index Debt Rating by Moody’s or S&P and ranges from 87.5 basis
points to 150 basis points over specified benchmark rates for SOFR loans, as applicable. The December 2022
DDTL was drawn for the purpose of funding the consideration due for the purchase of Summit and paying fees
and expenses related to it. The December 2022 DDTL matures on January 3, 2026. As of August 31, 2024, there
was $1.0 billion in borrowings outstanding under the December 2022 DDTL. Amounts borrowed under the
December 2022 DDTL that are repaid or prepaid may not be reborrowed.
June 2022 Revolving Credit Agreements
On June 17, 2022, the Company entered into a $3.5 billion unsecured five-year revolving credit facility and a
$1.5 billion unsecured 18-month revolving credit facility, with designated borrowers from time to time party
thereto and lenders from time to time party thereto (the “2022 Revolving Credit Agreements”). Interest on
borrowings under the revolving credit facilities accrues at applicable margins based on the Company’s Index
Debt Rating by Moody’s or S&P and ranges from 80 basis points to 150 basis points over specified benchmark
rates for eurocurrency rate and SOFR loans, as applicable. Additionally, the Company pays commitment fees to
maintain the availability under the revolving credit facility at applicable fee rates based upon certain criteria at an
annual rate on the unutilized portion of the total credit commitment. The five-year facility’s termination date is
June 17, 2027, or earlier, subject to the Company’s discretion to terminate the agreement. The 18-month
facility’s termination date was December 15, 2023, or earlier, subject to the Company’s discretion to terminate
the agreement. On August 9, 2023 the Company terminated the 18-month facility under the 2022 Revolving
Credit Agreements. All outstanding obligations under the 18-month revolving credit facility have been paid and
satisfied in full. As of August 31, 2024, there were no borrowings outstanding under the five-year revolving
credit facility.
November 2021 Delayed Draw Term Loan
On November 15, 2021, the Company entered into a $5.0 billion senior unsecured multi-tranche delayed draw
term loan credit facility, (the “November 2021 DDTL”) consisting of (i) a 364-day senior unsecured delayed
draw term loan facility in an aggregate principal amount of $2.0 billion (the “364-day loan”), (ii) a two-year
senior unsecured delayed draw term loan facility in an aggregate principal amount of $2.0 billion (the “two-year
loan”) and (iii) a three-year senior unsecured delayed draw term loan facility in an aggregate principal amount of
$1.0 billion (the “three-year loan”). Borrowings under the November 2021 DDTL bear interest at a fluctuating
rate per annum equal to SOFR, plus an applicable margin. The applicable margins for the 364-day and two-year
loans were 0.75% and 0.88%, respectively. The applicable margin for the three-year loan is 1.05%. An aggregate
amount of $3.0 billion or more of the November 2021 DDTL was drawn for the purpose of funding the purchase
of the increased equity interest in VillageMD, and paying fees and expenses related to the foregoing, with the
WBA Fiscal 2024 Form 10-K
112
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
remainder used for general corporate purposes. In fiscal 2023, the Company repaid the 364-day loan and the
two-year loan in full. The maturity date on the three-year loan is November 24, 2024. As of August 31, 2024,
there was $290 million in borrowings outstanding under the November 2021 DDTL. Amounts borrowed under
the November 2021 DDTL and repaid or prepaid may not be reborrowed.
Debt covenants
Each of the Company’s credit facilities described above contain a covenant to maintain, as of the last day of each
fiscal quarter, a ratio of consolidated debt to total capitalization not to exceed 0.60:1.00, subject to increase in
certain circumstances set forth in the applicable credit agreement. The credit facilities contain various other
customary financial covenants. As of August 31, 2024, the Company was in compliance with all such applicable
financial covenants.
Commercial paper
The Company periodically borrows under its commercial paper program and may borrow under it in future
periods. As of August 31, 2024 and 2023, the Company had no borrowings outstanding under the commercial
paper program.
Interest
Interest paid by the Company was $578 million, $606 million and $420 million in fiscal 2024, 2023 and 2022,
respectively.
In fiscal 2024, the Company recognized a gain of $102 million related to the early extinguishment of debt within
Interest expense, net in the Consolidated Statements of Earnings. The cash payments related to the early
extinguishment of debt are classified as cash outflows from financing activities in the Consolidated Statements of
Cash Flows.
Credit ratings
In fiscal 2024, the Company’s long-term ratings were downgraded below investment grade to BB with a negative
outlook by Standard and Poor’s and Ba3 with a stable outlook by Moody’s (with respect to the Company’s
Corporate Family Rating). The reduction in the Company’s credit ratings has limited impact to the cost of
interest on existing debt, but has minimally increased borrowing margins under certain credit facilities that are
tied to ratings grids or similar terms. The Company’s current credit ratings significantly reduce the Company’s
ability to issue commercial paper, has and may continue to increase the cost of new financing for the Company,
and may decrease access to credit and debt capital markets. As of August 31, 2024, the Company had an
aggregate borrowing capacity under committed revolving credit facilities of $5.8 billion, with no funds drawn
under these facilities.
Note 8. Financial instruments
The Company uses derivative instruments to hedge its exposure to market risks, including interest rate and
currency risks, arising from operating and financing risks. The Company has non-U.S. dollar denominated net
investments and uses foreign currency denominated financial instruments, specifically foreign currency
derivatives and foreign currency denominated debt, to hedge its foreign currency risk.
The Company economically hedges a portion of its exposure to equity price risk related to its investment in
Cencora through VPF derivative contracts.
WBA Fiscal 2024 Form 10-K
113
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The notional amounts and fair value of derivative instruments outstanding were as follows (in millions):
August 31, 2024
Notional
Fair value
Location in Consolidated
Balance Sheets
Derivatives designated as hedges
:
Cross currency interest rate swaps
$
50
$
1
Other current assets
Foreign currency forwards
7
—
Other current assets
Cross currency interest rate swaps
253
5
Other non-current assets
Foreign currency forwards
4
—
Other non-current assets
Foreign currency forwards
923
15
Accrued expenses and other
liabilities
Cross currency interest rate swaps
356
5
Accrued expenses and other
liabilities
Foreign currency forwards
2
—
Other non-current liabilities
Derivatives not designated as hedges
:
Foreign currency forwards
$
534
$
3
Other current assets
Total return swap
211
11
Other current assets
Foreign currency forwards
3,606
52
Accrued expenses and other
liabilities
Variable prepaid forward contracts
1,185
1,332
Accrued expenses and other
liabilities
Variable prepaid forward contracts
2,541
2,587
Other non-current liabilities
August 31, 2023
Notional
Fair value
Location in Consolidated
Balance Sheets
Derivatives designated as hedges
:
Foreign currency forwards
$
31
$
1
Other current assets
Cross currency interest rate swaps
650
28
Other non-current assets
Foreign currency forwards
805
2
Accrued expenses and other
liabilities
Cross currency interest rate swaps
102
2
Accrued expenses and other
liabilities
Foreign currency forwards
4
—
Other non-current liabilities
Derivatives not designated as hedges
:
Foreign currency forwards
$
3,139
$
6
Other current assets
Total return swap
168
1
Other current assets
Foreign currency forwards
817
2
Accrued expenses and other
liabilities
Total return swap
26
1
Accrued expenses and other
liabilities
Variable prepaid forward contracts
3,195
2,548
Other non-current liabilities
Net investment hedges
The Company uses cross currency interest rate swaps and foreign currency forward contracts to hedge net
investments in subsidiaries with non-U.S. dollar functional currencies. For qualifying net investment hedges,
changes in the fair value of the derivatives are recorded in Cumulative translation adjustments within
Accumulated other comprehensive loss in the Consolidated Balance Sheets.
WBA Fiscal 2024 Form 10-K
114
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash flow hedges
The Company may use foreign currency forwards and interest rate swaps to hedge the variability in forecasted
transactions and cash flows of certain floating-rate debt. For qualifying cash flow hedges, changes in the fair
value of the derivatives are recorded in Unrealized gain (loss) on cash flow hedges within Accumulated other
comprehensive loss in the Consolidated Balance Sheets, and released to the Consolidated Statements of Earnings
when the hedged cash flows affect earnings.
Derivatives not designated as hedges
The Company enters into derivative transactions that are not designated as accounting hedges. These derivative
instruments are economic hedges of foreign currency risks and equity price risk. The Company also uses total return
swaps to economically hedge variability in compensation charges related to certain deferred compensation obligations.
In fiscal 2024 and 2023, the Company entered into VPF derivative contracts with third-party financial institutions
and received upfront prepayments related to the forward sale of shares of Cencora common stock. The upfront
prepayments are recorded within Accrued expenses and other liabilities and Other non-current liabilities in the
Consolidated Balance Sheets as derivatives. The Company has pledged shares of Cencora common stock as
collateral upon entering into the VPF derivative contracts. The VPF derivative contracts provide the Company with
current liquidity while allowing it to maintain voting and dividend rights in the Cencora common stock, as well as
the ability to participate in future stock price appreciation during the term of the contracts up to a cap price specified
in the contracts. The VPF derivative contracts are expected to settle per their respective forward settlement dates, at
which time the Company will be obligated, unless it elects to settle otherwise as described below, to deliver the full
number of shares of Cencora common stock specified in the contracts to settle the agreements. The Company may
receive additional cash payments to be determined based on the price of the Cencora common stock at the forward
settlement dates relative to the forward floor and cap price specified in the contracts. Subject to certain conditions,
the Company may elect to net settle the contract by delivery of shares (or payment of the cash value thereof) in lieu
of receiving any additional cash. The aggregate number of Cencora shares to be delivered in connection with the
VPF derivative contracts will not exceed the shares subject to forward sale.
The terms of the VPF derivative contracts were as follows (in millions):
Transaction date
Shares pledged and
maximum shares
subject to forward sale
Prepayment
amount
Forward settlement date
May 11, 2023
4.6
$
644
Fourth quarter, fiscal 2025
June 15, 2023
2.2
325
Third quarter, fiscal 2025
August 3, 2023
5.3
801
First quarter, fiscal 2026
August 4, 2023
5.3
797
Third quarter, fiscal 2026
November 9, 2023
2.7
424
Fourth quarter, fiscal 2026
20.0
$
2,991
The income (expense) due to changes in fair value of derivative instruments were recognized in the Consolidated
Statements of Earnings as follows (in millions):
Location in Consolidated Statements of
Earnings
2024
2023
2022
Total return swaps
Selling, general and administrative expenses
29
12
(33)
Foreign currency forwards
Other income, net
1
(39)
(273)
523
Variable prepaid forward
Other income, net
(946)
19
—
1.
Excludes remeasurement gains and losses on economically hedged assets and liabilities.
WBA Fiscal 2024 Form 10-K
115
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivatives credit risk
Counterparties to derivative financial instruments expose the Company to credit-related losses in the event of
counterparty nonperformance, and the Company regularly monitors the credit worthiness of each counterparty.
The Company and its counterparties are subject to collateral requirements for certain derivative instruments,
which mitigates credit risk for both parties.
Derivatives offsetting
The Company does not offset the fair value amounts of derivative instruments subject to master netting
agreements in the Consolidated Balance Sheets.
Note 9. Fair value measurements
The Company measures certain assets and liabilities in accordance with Accounting Standards Codification
(“ASC”) Topic 820, Fair Value Measurements and Disclosures, which defines fair value as the price that would
be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the
measurement date. In addition, it establishes a fair value hierarchy that prioritizes observable and unobservable
inputs used to measure fair value into three broad Levels:
Level 1 -
Quoted prices in active markets that are accessible at the measurement date for identical assets and
liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2 -
Observable inputs other than quoted prices in active markets.
Level 3 -
Unobservable inputs for which there is little or no market data available. The fair value hierarchy
gives the lowest priority to Level 3 inputs.
Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):
August 31, 2024
Level 1
Level 2
Level 3
Assets:
Money market funds
1
$
1,790
$
1,790
$
—
$
—
Cross currency interest rate swaps
2
6
—
6
—
Foreign currency forwards
3
3
—
3
—
Investments in equity securities
4
19
19
—
—
Investment in debt securities
5
98
—
98
—
Total return swaps
11
—
11
—
Liabilities
:
Variable prepaid forward
6
$
3,919
$
—
$
—
$
3,919
Foreign currency forwards
3
67
—
67
—
Cross currency interest rate swaps
2
5
—
5
—
WBA Fiscal 2024 Form 10-K
116
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2023
Level 1
Level 2
Level 3
Assets:
Money market funds
1
$
11
$
11
$
—
$
—
Cross currency interest rate swaps
2
28
—
28
—
Foreign currency forwards
3
6
—
6
—
Investments in equity securities
4
17
17
—
—
Investments in debt securities
5
15
—
15
—
Total return swaps
1
—
1
—
Liabilities
:
Variable prepaid forward
6
$
2,548
$
—
$
—
$
2,548
Foreign currency forwards
3
5
—
5
—
Total return swaps
1
—
1
—
Cross currency interest rate swaps
2
2
—
2
—
1.
Money market funds are valued at the closing price reported by the fund sponsor and classified as
Marketable securities on the Consolidated Balance Sheets.
2.
The fair value of cross currency interest rate swaps is calculated by discounting the estimated future cash
flows based on the applicable observable yield curves. See Note 8. Financial instruments, for further
information.
3.
The fair value of forward currency contracts is estimated by discounting the difference between the
contractual forward price and the current available forward price for the residual maturity of the contract
using observable market rates. See Note 8. Financial instruments, for further information.
4.
Fair values of quoted investments are based on current bid prices as of August 31, 2024 and August 31,
2023.
5.
Includes investments in Treasury debt securities.
6.
The fair value of the derivative was derived from a Black-Scholes valuation. The inputs used in valuing the
derivative included observable inputs such as the floor and cap prices of the VPF, dividend yield of Cencora
shares, risk free interest rate, and contractual term of the instrument, as well as unobservable inputs such as
implied volatility of Cencora shares. The implied volatility ranged from 24.5% - 34.5% for the lower strike and
19.6% - 22.7% for the upper strike as of August 31, 2024, and 23.2% - 24.7% for the lower strike and 18.1% -
19.1% for the upper strike as of August 31, 2023. See Note 8. Financial instruments, for further information.
There were no transfers between Levels in fiscal 2024 or 2023.
The roll forward of the fair value of the VPF derivatives associated with the forward sale of shares of Cencora
common stock, classified as Level 3, for fiscal 2024 and 2023 is as follows (in millions):
2024
2023
Opening balance
$
(2,548)
$
—
VPF derivative additions
(424)
(2,568)
Unrealized (losses) gains recorded in Other income, net
(946)
19
Ending balance
$
(3,919)
$
(2,548)
The carrying value of the Company’s credit facilities approximated their respective fair values due to their short-
term nature.
The Company reports its debt instruments under the guidance of ASC Topic 825, Financial Instruments, which
requires disclosure of the fair value of the Company’s debt in the footnotes to the Consolidated Financial
Statements. As of August 31, 2024, the carrying amounts and estimated fair values of long term notes
WBA Fiscal 2024 Form 10-K
117
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
outstanding including the current portion were $7.2 billion and $6.4 billion, respectively. The fair values of the
notes outstanding are Level 1 fair value measures and determined based on quoted market price and translated at
the August 31, 2024 rate, as applicable. The fair values and carrying values of these issuances do not include
notes that have been redeemed or repaid as of August 31, 2024. The carrying value of the Company’s
commercial paper, credit facilities, accounts receivable and trade accounts payable approximated their respective
fair values due to their short-term nature.
Note 10. Commitments and contingencies
The Company is involved in legal proceedings arising in the normal course of its business, including litigation,
arbitration and other claims, and investigations, inspections, subpoenas, audits, claims, inquiries and similar
actions by governmental authorities in pharmacy, healthcare, tax and other areas. Some of these proceedings may
be class actions, and some involve claims for large or indeterminate amounts, including punitive or exemplary
damages, and they may remain unresolved for several years. Legal proceedings in general, and securities, class
action and multi-district litigation, in particular, can be expensive and disruptive.
From time to time, the Company is also involved in legal proceedings as a plaintiff involving antitrust, tax,
contract, intellectual property and other matters. Gain contingencies, if any, are recognized when they are
realized.
The Company has been involved or is currently involved in numerous legal proceedings, including litigation,
arbitration, government investigations, audits, reviews and claims. These include routine, regular and special
investigations, audits and reviews by CMS, state insurance and health and welfare departments, the U.S.
Department of Justice (the “DOJ”), state Attorneys General, the U.S. Drug Enforcement Administration (the
“DEA”), the U.S. Federal Trade Commission (the “FTC”) and other governmental authorities
.
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. The Company’s business, compliance and reporting practices are subject to
intensive scrutiny under applicable regulation, including review or audit by regulatory authorities. As a result, the
Company regularly is the subject of government actions of the types described herein. The Company also may be
named from time to time in qui tam actions initiated by private parties. In such an action, a private party purports
to act on behalf of federal or state governments, alleges that false claims have been submitted for payment by the
government and may receive an award if its claims are successful. After a private party has filed a qui tam action,
the government must investigate the private party’s claim and determine whether to intervene in and take control
over the litigation. These actions may remain under seal while the government makes this determination. If the
government declines to intervene, the private party may nonetheless continue to pursue the litigation on its own
purporting to act on behalf of the government.
The results of legal proceedings, including government investigations, are often uncertain and difficult to predict,
and the costs incurred in these matters can be substantial, regardless of the outcome. In addition, as a result of
governmental investigations or proceedings, the Company may be subject to damages, civil or criminal fines or
penalties, or other sanctions, including the possible suspension or loss of licensure and suspension or exclusion
from participation in government programs.
The Company describes below certain proceedings involving the Company in which the amount of loss could be
material or the nature of the dispute is qualitatively material. The Company accrues for legal claims when, and to
the extent that, the amount or range of probable loss can be reasonably estimated. If only a range of probable loss
can be determined, and no one estimate within that range is a better or more probable estimate than any other
estimate, the Company accrues the low end of the range. The Company believes there are meritorious defenses
with respect to the claims asserted against it, and it intends to defend each of these cases vigorously, as
WBA Fiscal 2024 Form 10-K
118
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
applicable, but there can be no assurance as to the ultimate outcome. With respect to litigation and other legal
proceedings where the Company has determined a material loss is reasonably possible, except as otherwise
disclosed, the Company is not able to make a reasonable estimate of the amount or range of loss that is
reasonably possible above any accrued amounts in these proceedings, due to various reasons, including: the
existence of factual and legal arguments that, if successful, will eliminate or sharply reduce the possibility of
loss; lack of sufficient information about the arguments and the evidence plaintiffs will advance with respect to
their damages; some of the cases have been stayed; certain proceedings present novel and complex questions of
public policy; legal and factual determinations and judicial and governmental procedure; the large number of
parties involved; and the inherent uncertainties related to such legal proceedings.
Securities Claims Relating to Rite-Aid Merger
On December 11, 2017, purported Rite-Aid shareholders filed an amended complaint in a putative class action
lawsuit in the U.S. District Court for the Middle District of Pennsylvania (the “M.D. Pa. class action”) arising out
of transactions contemplated by the merger agreement between the Company and Rite-Aid. The amended
complaint alleged that the Company and certain of its officers made false or misleading statements regarding the
transactions. On August 23, 2023, the Company, the other defendants in the M.D. Pa. class action, and the lead
plaintiffs entered into a binding agreement to settle all claims in the M.D. Pa. class action in which Defendants
admitted no liability. The settlement of approximately $193 million was approved by the court on October 23,
2023, has been fully paid and the lawsuit has been dismissed with prejudice.
In October and December 2020, two separate purported Rite-Aid shareholders filed actions in the same court
opting out of the class in the M.D. Pa. class action and making nearly identical allegations and demands for relief
as those in the M.D. Pa. class action (the “Opt-out Actions”). On March 5, 2024 the parties reached an agreement
to resolve this litigation and the court has prohibited further opt-out litigation with respect to the M.D. Pa. class
action.
On March 19, 2021, a putative shareholder filed a derivative suit in the District Court of Delaware (
Clem v.
Skinner, et al.
, 21-CV-406 Del Dist. Ct.) against certain current and former Walgreens directors and officers,
seeking damages based on alleged breaches of fiduciary duty and seeking contribution under Section 21D of the
Exchange Act of 1934, as amended, in connection with the M.D. Pa. class action. The plaintiff’s allegations in
this derivative suit concern the same public statements at issue in the M.D. Pa. class action. The parties have
reached an agreement to resolve this matter subject to court approvals.
Claims Relating to Opioid Abuse
On December 9, 2022, the Company entered into a Multistate Settlement Agreement (the “Multistate Agreement”)
which had the potential to resolve a substantial majority of opioid-related lawsuits filed against the Company by the
attorneys general of participating states and political subdivisions (the “Settling States”) and litigation brought by
counsel for tribes. Under the Multistate Agreement, the Company announced that it expected to settle all opioid
claims against it by such Settling States, their participating political subdivisions, and participating tribes for up to
approximately $4.8 billion and $155 million, respectively in remediation payments to be paid out over 15 years. The
Multistate Agreement provided for the payment of up to approximately $754 million in attorneys’ fees and costs
over six years beginning in year two of the Multistate Agreement. The Multistate Agreement, which became
effective on August 7, 2023, included no admission of wrongdoing or liability by the Company.
In the first quarter of fiscal 2023, the Company recorded a $6.5 billion liability associated with the Multistate
Agreement and other opioid-related claims and litigation settlements which was reflected in the Consolidated
Statements of Earnings within Selling, general and administrative expenses as part of the U.S. Retail Pharmacy
segment.
WBA Fiscal 2024 Form 10-K
119
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has now resolved its litigation with all states, territories, tribes and 99.7% of litigating
subdivisions within Settling States or in separate agreements. Estimated liabilities for these settlements are fully
accrued. Incentive payments to Settling States with non-participating political subdivisions are subject to
reduction and those subdivisions are still entitled to pursue their claims against the Company.
The Company will continue to vigorously defend against any litigation not covered by the Multistate Agreement,
including private plaintiff litigation. The Company continues to believe it has strong legal defenses and appellate
arguments in all of these cases.
As of August 31, 2024, the Company has accrued a total of $6.6 billion liability associated with the Multistate
Agreement and other opioid-related claims and litigation settlements, including $623 million and $6.0 billion of
the estimated settlement liability in Accrued expenses and other liabilities, and Accrued litigation obligations,
respectively, in the Consolidated Balance Sheets.
The Company remains a defendant in multiple actions in federal courts alleging claims generally concerning the
impacts of widespread opioid abuse, which have been commenced by various plaintiffs. In December 2017, the
U.S. Judicial Panel on Multidistrict Litigation consolidated many of these cases in a consolidated multidistrict
litigation, captioned
In re National Prescription Opiate Litigation
(MDL No. 2804, Case No. 17-MD-2804),
which is pending in the U.S. District Court for the Northern District of Ohio (“N.D. Ohio”). The Company is a
defendant in the following multidistrict litigation bellwether cases:
•
Two consolidated cases in N.D. Ohio (
Cnty. of Lake, Ohio v. Purdue Pharma L.P., et al.
, Case No.
18-op-45032;
Cnty. of Trumbull, Ohio v. Purdue Pharma L.P., et al.
, Case No. 18-op-45079). In
November 2021, the jury returned a verdict in favor of the plaintiffs as to liability, and a second trial
regarding remedies took place in May 2022. In August 2022, the court entered orders providing for
injunctive relief and requiring the defendants to pay $651 million over a 15-year period to fund
abatement programs. The court found that the damages are subject to joint and several liability and as
such made no determination as to apportionment. These decisions are currently on appeal.
•
Louisiana Assessors Ins. Fund v. AmerisourceBergen Drug Corp., et al
., 1:18-op-46223 (M.D. La.).
•
Pioneer Tele, Coop. Inc. Employee Benefits Plan v. Purdue Pharma LP et al
., 1:18-op-46186 (W.D.
Okla.).
•
United Food and Comm. Workers Health and Welfare Fund of Northeastern Pennsylvania v. Purdue
Pharma, LP et al.
, 1:17-op-45117 (E.D. Pa.).
•
Sheet Metal Workers Local No. 25 Health & Welfare Fund v. Purdue Pharma, LP et al
.,
1:18-op-45002 (E.D. Pa.).
The Company also has been named as a defendant in multiple actions brought in state courts relating to opioid
matters. A trial date has been set in the following case pending in state court:
•
Florida (
Florida Health Sciences Center, Inc., et al. v. Richard Sackler, et al.
, Case No. CACE
19-018882, Seventeenth Judicial Circuit Court, Broward County, Florida—September 2025).
The relief sought by plaintiffs in these matters includes compensatory, abatement, restitution and punitive
damages, as well as injunctive relief. Additionally, the Company has received from the DOJ and the Attorneys
General of numerous states subpoenas, civil investigative demands, and other requests concerning opioid-related
matters. The Company and the DOJ are in active negotiations for potential settlement of purported violations of
the federal Controlled Substances Act and the federal False Claims Act in dispensing prescriptions for opioids
and other controlled substances at its pharmacies nationwide. There are no assurances that a settlement
acceptable to both parties will be reached.
WBA Fiscal 2024 Form 10-K
120
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On September 23, 2022, a putative shareholder filed a derivative suit in the United States District Court for the
Northern District of Ohio (
Vladimir Gusinsky Revocable Trust v. Pessina et al
., 22-CV-1717) against certain
current and former Walgreens directors and officers, seeking damages based on alleged breaches of fiduciary
duty, unjust enrichment and violations of section 14A of the Securities and Exchange Act of 1934 in connection
with the oversight of risks related to opioids. After an initial dismissal, the case was refiled on November 4,
2023, in the United States District Court for the Northern District of Illinois (
Vladimir Gusinsky Revocable Trust
v. Pessina et al
., 23-CV-15654). The court granted final approval of a settlement on June 18, 2024 which
includes a net $28 million payment to the Company from insurers and certain corporate governance changes.
Defendants admitted no liability and denied all allegations of wrongdoing.
Usual and Customary Pricing Litigation
The Company is defending a number of claims, lawsuits, and investigations alleging that the Company’s retail
pharmacies overcharged for prescription drugs by not submitting the correct usual and customary price during
the claims adjudication process. The Company has accrued a total liability of $339 million for all usual and
customary pricing litigation in Accrued expenses and other liabilities within the Consolidated Balance Sheets.
In one such case, Humana initiated an arbitration before the American Arbitration Association on August 13,
2019, seeking monetary damages on the basis of the aforementioned allegation. At the conclusion of that matter,
the arbitrator issued an award in Humana’s favor in the amount of $642 million. The Company asked a federal
court to vacate that award. On December 29, 2023, the parties reached an agreement to resolve the Humana
dispute for $360 million.
On March 23, 2017, a putative class of employee and union benefit funds and individual insureds filed suit in the
United States District Court for the Northern District of Illinois (
Russo et al. v. Walgreen Co. et al.
, Case No.
1:17-cv-02246) making similar allegations and seeking monetary damages. The plaintiffs’ motion for class
certification is fully briefed but was stayed pending the outcome of settlement discussions. The parties reached
an agreement to settle this matter, subject to court approvals. Additionally, a group of Blue Cross Blue Shield-
affiliated plans filed suit in federal and state courts in Illinois making similar allegations and seeking similar
damages (
BCBSM, Inc. et al v. Walgreen Co. et al.
, Case 1:20-cv-01853; Healthcare
Service Corp. v. Walgreen
Co., et al.
, Case No. 2021 L 000621).
Derivative Suit Relating to Insulin Pens
On March 19, 2021, a putative shareholder filed a derivative suit in the Delaware Court of Chancery (
Clem v.
Skinner et al
., 2021-0240) against certain current and former Walgreens directors and officers, seeking damages
based on alleged breaches of fiduciary duty and unjust enrichment in connection with certain allegedly false
reimbursement claims to government healthcare payors related to insulin pens. The matter was dismissed with
prejudice on February 20, 2024, and on May 7, 2024, the plaintiff withdrew his appeal.
Commercial Arbitration Award
On June 10, 2022, Everly Health Solutions, formerly known as PWNHealth LLC (“Everly/PWN”), initiated an
arbitration with the American Arbitration Association alleging that an agreement between Everly/PWN and the
Company was exclusive, and that the Company breached the agreement when it in-sourced certain services
previously performed by Everly/PWN related to Covid testing. Everly/PWN also alleged fraudulent inducement,
misappropriation, and improper use of PWN’s mark. Everly/PWN sought monetary damages for its alleged claims.
On March 19, 2024, the arbitrator issued a Final Award in the amount of $988 million including interest. The
Company disputes the alleged claims and the Final Award in part because it believes it is in contravention of a
contractual cap on damages, which limits damages to $79 million. The Company has petitioned a federal court in
WBA Fiscal 2024 Form 10-K
121
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Delaware to vacate the final award, but there can be no assurance as to the ultimate outcome. The Company has
accrued $79 million for this matter in Accrued expenses and other liabilities within the Consolidated Balance Sheets.
Securities Claims Relating Decrease in to Share Price
On July 12, 2024, a purported shareholder filed a putative class action lawsuit in the United States District Court
for the Northern District of Illinois (
Bhaila v. Walgreens Boots Alliance, Inc.
, 24-cv-05907) against the Company
and certain of its executives (together, “Defendants”) alleging that Defendants violated securities laws by
disseminating materially false and misleading statements and/or concealing material adverse facts concerning the
Company’s pharmacy division. In addition, on September 17, 2024, a purported shareholder filed a putative class
action lawsuit in the United States District Court for the Northern District of Illinois (
Westchester Putnam
Counties Heavy & Highway Laborers Local 60 Benefits Fund v. Walgreens Boots Alliance, Inc.,
24-cv-08559)
alleging that the Company and certain current and former executives violated securities laws by disseminating
materially false and misleading statements and/or concealing material adverse facts relating to the Company’s
U.S. Healthcare segment. The complaints seek monetary damages for alleged losses caused by decreases in the
Company’s share price following disclosure of the Company’s performance and business outlook. Defendants
expect the cases to be consolidated. Defendants intend to vigorously defend against the lawsuits.
Shareholder Derivative Action Relating to Decrease in Share Price
Three purported shareholders have filed derivative suits in the United States District Court for the Northern
District of Illinois (
Tobias v. Wentworth et al.
, 24-cv-07755 (Aug. 27, 2024);
Hollin v. Wentworth et al
.,
24-cv-08244 (Sept. 10, 2024);
Lovoi v. Wentworth et al.
, 24-cv-09110 (Sept. 27, 2024)) against the Company’s
directors and certain of the Company’s officers, and against the Company as a nominal defendant (together,
“Defendants”), alleging that the individual Defendants breached their fiduciary duties to the Company by
willfully or recklessly making and/or causing the Company to make false and misleading statements related to
the Company’s internal controls and overall expected performance, thereby artificially inflating the Company’s
stock price. The complaints seek damages based on alleged overstatements of the Company’s expected revenue
for fiscal 2024, as well as equitable relief including the institution of certain corporate governance measures. The
plaintiffs’ allegations in these derivative suits generally concern the same issues and time period (October 12,
2023 to June 26, 2024) as alleged in the
Bhaila
putative class action.
Note 11. Income taxes
The components of (Loss) earnings before income tax provision (benefit) were (in millions):
2024
2023
2022
U.S.
$
(15,599)
$
(7,553)
$
2,998
Non–U.S.
1,380
2,134
987
Total
$
(14,219)
$
(5,419)
$
3,985
WBA Fiscal 2024 Form 10-K
122
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Income tax provision (benefit) consists of the following (in millions):
2024
2023
2022
Current provision
Federal
$
91
$
242
$
39
State
52
(13)
37
Non–U.S.
185
283
260
$
328
$
512
$
336
Deferred provision
Federal
$
910
$
(1,886)
$
(78)
State
259
(364)
(20)
Non–U.S.
(251)
(120)
(268)
918
(2,370)
(366)
Income tax provision (benefit)
$
1,246
$
(1,858)
$
(30)
The Company’s effective tax rate for fiscal 2024 was an expense of 8.8% due to the impact of a non-cash
expense to record a valuation allowance on certain U.S. federal and state deferred tax assets primarily related to
opioid liabilities recognized in prior periods, VillageMD earnings not taxable to the Company, and goodwill
impairment, which is primarily not deductible for tax purposes.
The Company’s effective tax rate for fiscal 2023 was a benefit of 34.3%. due to a reduction in the valuation
allowance held against capital loss carryforwards, changes to deferred taxes as a result of internal legal entity
restructuring, and tax benefits related to a measurement change in prior year tax positions. These benefits were
partially offset by the impact of certain nondeductible charges for opioid related claims and litigation settlements
recorded during fiscal 2023.
The difference between the statutory federal income tax rate and the effective tax rate is as follows:
2024
2023
2022
Federal statutory rate
21.0%
21.0%
21.0%
State income taxes, net of federal benefit
(1.8)
5.8
0.4
Foreign income taxed at non-U.S. rates
(0.3)
(3.0)
(3.0)
Non-taxable income
0.3
2.5
(2.7)
Non-deductible expenses
(0.9)
(4.9)
3.0
Change in valuation allowance
1
(13.2)
6.0
(9.0)
Tax benefits from restructuring
—
1.1
—
Uncertain tax positions
(0.4)
(0.5)
1.3
Non-controlling interest
(10.1)
(2.9)
1.2
Goodwill impairment
(7.2)
—
—
Tax credits
0.5
2.8
(1.0)
Conversion of equity investment
—
—
(11.8)
Change in tax basis in foreign assets
2
2.2
—
—
Change in outside basis difference
1.4
1.9
—
Change in measurement of prior year tax positions
—
3.5
—
Other
(0.3)
1.0
(0.2)
Effective income tax rate
3
(8.8)%
34.3%
(0.8)%
WBA Fiscal 2024 Form 10-K
123
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1
Net of changes in related tax attributes and tax benefits from capital losses generated and utilized.
2
Represents the initial recognition of tax basis in intangible assets in foreign jurisdiction and the related
valuation allowance.
3
Effective tax rate for fiscal 2024 represents a tax expense on a pre-tax loss.
The deferred tax assets and liabilities included in the Consolidated Balance Sheets consist of the following (in
millions):
August 31,
2024
August 31,
2023
Deferred tax assets:
Compensation and benefits
$
100
$
98
Insurance
125
131
Accrued rent & lease obligations
4,969
5,265
Legal liability
1,477
1,551
Allowance for doubtful accounts
36
23
Tax attributes
7,894
7,784
Stock compensation
62
74
Derivatives
225
—
Deferred income
5
8
Equity method investment
29
76
Intangible assets
499
—
Post retirement benefit
91
—
Other
86
143
Total deferred tax assets
$
15,598
$
15,153
Less: valuation allowance
9,642
7,360
Total deferred tax assets, net
$
5,956
$
7,793
Deferred tax liabilities:
Accelerated depreciation
$
341
$
254
Inventory
371
403
Intangible assets
1,008
1,024
Lease right-of-use asset
4,392
4,690
Outside basis difference
340
1,045
Post retirement benefit
196
—
Other
82
180
Total deferred tax liabilities
$
6,730
$
7,596
Net deferred tax (liabilities) assets
$
(774)
$
197
As of August 31, 2024, the Company has recorded deferred tax assets for tax attributes of $7.9 billion, primarily
reflecting the benefit of $2.5 billion in U.S. federal, $1.2 billion in state and $28.1 billion in non-U.S. ordinary
and capital losses. In addition, these deferred tax assets include $189 million of income tax credits. Of these
deferred tax assets, $6.9 billion will expire at various dates from 2025 through 2041. The residual deferred tax
assets of $1.0 billion have no expiration date.
The Company believes it is more likely than not that the benefit from certain deferred tax assets will not be
realized. The assessment of realization of deferred tax assets is performed based on the weight of the positive and
negative evidence available to indicate whether the asset is recoverable, including tax planning strategies that are
prudent and feasible. In recognition of this risk, the Company has recorded a valuation allowance of $9.6 billion
against those deferred tax assets as of August 31, 2024.
WBA Fiscal 2024 Form 10-K
124
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As a result of cumulative losses in the U.S., the Company increased its valuation allowance by $2.3 billion, of
which $2.2 billion pertained to certain U.S. and state deferred tax assets, primarily related to opioid settlements
reached in fiscal 2023 (see Note 10. Commitments and contingencies for further information). The amount of the
deferred tax asset considered realizable, however, could be adjusted if verifiable evidence of future taxable
income, such as recognition of gains from the monetization of non-strategic assets, success of strategic
initiatives, or the identification of tax planning strategies, becomes available, or if operational results improve,
offering positive evidence of taxable income that outweighs historical negative evidence of cumulative losses.
Income taxes paid, net of refunds were $297 million, $64 million and $387 million for fiscal 2024, 2023 and
2022, respectively.
ASC Topic 740, Income Taxes, provides guidance regarding the recognition, measurement, presentation and
disclosure in the financial statement of tax positions taken or expected to be taken on a tax return, including the
decision whether to file in a particular jurisdiction. As of August 31, 2024 and 2023, unrecognized tax benefits of
$725 million and $703 million were reported within Other non-current liabilities, respectively; $394 million and
$413 million were reported against deferred taxes, respectively; and $75 million and $116 million were reported
against related tax receivables in Other non-current assets, respectively, on the Consolidated Balance Sheets.
These amounts include interest and penalties, when applicable.
The following table provides a reconciliation of the total amounts of unrecognized tax benefits (in millions):
2024
2023
2022
Balance at beginning of year
$
1,106
$
1,110
$
1,098
Gross increases related to tax positions in a prior period
91
12
63
Gross decreases related to tax positions in a prior period
(443)
(19)
(51)
Gross increases related to tax positions in the current period
273
12
21
Settlements with taxing authorities
(12)
(7)
(19)
Lapse of statute of limitations
(3)
(2)
(2)
Balance at end of year
$
1,012
$
1,106
$
1,110
At August 31, 2024, 2023 and 2022, $618 million, $588 million and $529 million, respectively, of unrecognized
tax benefits would favorably impact the effective tax rate if recognized. During the next twelve months, based on
current knowledge, it is reasonably possible the amount of unrecognized tax benefits could decrease by up to
$45 million due to anticipated federal and state tax audit settlements and the expirations of statutes of limitations
associated with tax positions related to multiple state tax jurisdictions.
The Company recognizes interest and penalties in the income tax provision in its Consolidated Statements of
Earnings. At August 31, 2024 and 2023, the Company had accrued interest and penalties of $182 million and
$125 million, respectively. For the years ended August 31, 2024, 2023 and 2022, the amounts reported in income
tax expense related to interest and penalties were $57 million, $29 million and $13 million, respectively.
The Company files a consolidated U.S. federal income tax return as well as income tax returns in various states
and multiple foreign jurisdictions. It is generally no longer under audit examinations for U.S. federal income tax
purposes for any years prior to fiscal 2014. With few exceptions, it is no longer subject to state and local income
tax examinations by tax authorities for years before fiscal 2010. In foreign tax jurisdictions, the Company is
generally no longer subject to examination by the tax authorities in the UK prior to 2015, Luxembourg prior to
2019 and in Germany prior to 2017.
WBA Fiscal 2024 Form 10-K
125
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the fiscal 2024, the Internal Revenue Service (the “IRS”) issued the Company a Revenue Agent’s Report
(the “RAR”) for tax years 2014 through 2017. The Company disagrees with the RAR and has appealed certain
issues. The primary disputed issue relates to the valuation of the call option exercised to acquire Alliance Boots
GmbH (“Alliance Boots”), described in more detail below.
On August 2, 2012, the Company acquired a 45% equity interest in Alliance Boots along with a call option to
acquire the remaining 55% equity interest in Alliance Boots, valued at $866 million. During the fiscal year ended
August 31, 2014 (“fiscal 2014”), the Company entered into an amendment to the purchase and option agreement
which accelerated the option period. Upon the amendment and immediate exercise of the call option, the
Company was required to compare the fair value of the amended option with the book value of the original
option. The fair value of the amended option was estimated to be zero. As a result, the Company recognized a
non-cash loss on the exercise of the call option of $866 million in its fiscal 2014 financial statements.
Subsequently, the option was transferred to a foreign subsidiary during the fiscal year ended August 31, 2015. As
the transferred option was worthless, no income was recognized for U.S. tax purposes. The IRS disagrees with
the Company’s conclusion regarding the value of the option and is seeking an additional tax of $2.7 billion plus
penalties and interest. The Company intends to vigorously defend its position on the transfer pricing matter
through the IRS’s administrative appeals office and, if necessary, judicial proceedings and is confident in its
ability to prevail on the merits.
The Company has received tax holidays from Swiss cantonal income taxes relative to certain of its Swiss
operations. The income tax holidays expired in September 2022. A reduced tax rate was effective through August
2024. The holidays had a beneficial impact of $9 million and $104 million (inclusive of capital GILTI tax cost)
during fiscal 2023 and 2022, respectively. This benefit is primarily included as part of the foreign income taxed
at non-U.S. rates line in the effective tax rate reconciliation table above.
At August 31, 2024, it is not practicable for the Company to determine the amount of the unrecognized deferred
tax liability it has with respect to temporary differences related to investments in foreign subsidiaries and foreign
corporate joint ventures that are essentially permanent in duration.
U.S. tax law changes
On August 16, 2022, the United States government enacted the IRA. The IRA establishes a new corporate
alternative minimum tax based on financial statement income adjusted for certain items. The new minimum tax
is effective for fiscal 2024. The enactment of the IRA did not have a material impact to the Company’s financial
statements.
During 2019, the U.S. Treasury Department issued regulations to apply retroactively covering certain
components of the Tax Cuts and Jobs Act of 2017. Certain guidance included in these regulations is inconsistent
with the Company’s interpretation that led to the recognition of $247 million of tax benefits in prior periods. The
tax benefits relate to the Company’s one-time transition tax on certain un-repatriated earnings of foreign
subsidiaries, which was enacted as part of the 2017 U.S. tax law changes. Despite this guidance, the Company
remains confident in its interpretation of the U.S. tax law changes and intends to defend this position through
litigation, if necessary. However, if the Company is ultimately unsuccessful in defending its position, it may be
required to reverse all or a portion of the benefits previously recorded.
Non—U.S. tax law changes
The Organization for Economic Co-operation and Development (“OECD”) has announced an Inclusive
Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules (“Pillar Two”) for a new 15%
global minimum tax applicable to large multinational corporations. Certain jurisdictions in which the group
operates, including the United Kingdom and Ireland, have enacted Pillar Two legislation that will be effective
WBA Fiscal 2024 Form 10-K
126
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
from fiscal 2025. The OECD and its member countries continue to release new guidance and legislation on Pillar
Two and we continue to evaluate the impact on our financial position of the global implementation of these rules.
Based on enacted laws, Pillar Two is not expected to materially impact our effective tax rate or cash flows in the
next fiscal year. New legislation or guidance could change our current assessment.
Note 12. Stock compensation plans
In fiscal 2021, the Company’s Board of Directors approved the Walgreens Boots Alliance, Inc. 2021 Omnibus
Incentive Plan (the “2021 Omnibus Plan”). The 2021 Omnibus Plan replaced the Walgreens Boots Alliance, Inc.
2013 Omnibus Incentive Plan and provides incentive compensation to the Company’s non-employee directors,
officers and other eligible employees.
The Company may grant performance shares, restricted stock units, and stock options under the 2021 Omnibus
Plan. Performance shares issued under the 2021 Omnibus Plan offer performance-based incentive equity awards
to certain employees. Restricted stock units and stock options are also equity-based awards with vesting
requirements that are granted to employees. These awards are subject to restrictions as to continuous employment
except in the case of death, normal retirement or total and permanent disability. Stock-based compensation
expense associated with such plans for fiscal 2024, 2023 and 2022 was $73 million, $58 million and
$133 million, respectively.
Certain majority-owned subsidiaries within the U.S. Healthcare segment maintain standalone stock-based
compensation plans. Stock-based compensation expense associated with such plans for fiscal 2024, 2023 and
2022 was $110 million, $327 million and $269 million, respectively, including the impact of fair value
adjustments resulting from acquisitions. Awards granted under standalone stock-based compensation plans
include subsidiary units, profits interests, and options. Awards generally vest over time or subject to achievement
of certain subsidiary performance targets. Certain awards accelerate vesting upon a change in control or upon the
Company’s acquisition of additional subsidiary equity above a certain threshold.
Unrecognized compensation cost related to non-vested awards, inclusive of awards issued under the 2021
Omnibus Plan and the standalone subsidiary stock compensation plans, was $276 million at August 31, 2024,
which will be fully recognized over the next three years.
Note 13. Retirement benefits
The Company sponsors several retirement plans, including defined benefit plans, defined contribution plans and
a post-retirement health plan.
Defined benefit pension plans (non-U.S. plans)
The Company has various defined benefit pension plans outside the U.S. The principal defined benefit pension
plan is the Boots Pension Plan (the “Boots Plan”), which covers certain employees in the UK. The Boots Plan is
a funded final salary defined benefit plan providing pensions and death benefits to members. The Boots Plan was
closed to future accrual effective July 1, 2010, with pensions calculated based on salaries up until that date. The
Boots Plan is governed by a trustee board, which is independent of the Company. The plan is subject to a full
funding actuarial valuation on a triennial basis.
Boots Plan Annuitization
On November 23, 2023, with financial support from the Company, Boots Pensions Limited (“Trustee”), in its
capacity as trustee of the Boots Plan, entered into a Bulk Purchase Annuity Agreement (“BPA”) with Legal &
General Assurance Society Limited (“Legal & General”) to insure the benefits of all 53,000 of its members.
WBA Fiscal 2024 Form 10-K
127
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under the BPA, the Trustee acquired a bulk annuity policy (the “Buy-In”) from Legal & General which will fund
ongoing and future pension benefit payments to the Boots Plan members. The BPA is being funded through the
existing Boots Plan assets, as well as incremental pre-tax contributions by the Company to the Boots Plan. The
Company will accelerate the payment of approximately $210 million. Additionally, the Company has committed
to make an incremental contribution to the Boots Plan, which is expected to be approximately $760 million to
$820 million, of which approximately $375 million was paid on December 7, 2023 and the remaining amount is
expected to be paid within the next two years.
In conjunction with the Buy-In, the Boots Plan was amended resulting in an interim remeasurement of the Boots
Plan. The remeasurement resulted in an increase in the funded status of the Boots Plan of $124 million. The
change resulting from the remeasurement was recorded in Accumulated other comprehensive loss within the
Consolidated Balance Sheets. The BPA allows for the future potential conversion of the BPA into a buy-out
where Legal & General would assume full responsibility to directly provide pensions or other benefits to the
Boots Plan members, at which time the Boots Plan can be terminated.
The following tables present classes of defined benefit pension plan assets by fair value hierarchy (in millions):
August 31, 2024
Level 1
Level 2
Level 3
Annuities:
Annuity policies, less deferred premium
1
$
5,487
$
—
$
—
$
5,487
Debt securities:
Corporate bonds
2
10
—
10
—
Real estate:
Real estate
3
81
—
—
81
Other:
Other investments, net
4
416
7
409
—
Total
$
5,994
$
7
$
419
$
5,568
August 31, 2023
Level 1
Level 2
Level 3
Equity securities:
Equity securities
5
$
264
$
—
$
264
$
—
Debt securities:
Fixed interest government bonds
6
1,044
848
196
—
Index linked government bonds
6
1,364
1,364
—
—
Corporate bonds
2
1,214
—
1,214
—
Real estate:
Real estate
3
466
—
—
466
Other:
Other investments, net
4
1,242
142
338
761
Total
$
5,594
$
2,354
$
2,012
$
1,228
1
Includes a bulk annuity policy acquired as part of the Buy-In from Legal & General, net of $860 million of
deferred premiums. The fair market value of the annuity assets have been calculated based on the price paid
for the annuity contracts, updated to reflect changes in market conditions, views on insurer pricing and the
most recently available membership data at the balance sheet date. The value of the deferred premiums are
the amounts agreed under the Deferred Premium Agreements as part of the Buy-In.
WBA Fiscal 2024 Form 10-K
128
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
Includes bonds issued by corporations in both segregated and commingled funds and are valued using
recently executed transactions, or quoted market prices for similar assets and liabilities in active markets, or
for identical assets and liabilities in markets that are not active. If there have been no market transactions in
a particular fixed income security, its fair value is calculated by pricing models that benchmark the security
against other securities with actual market prices.
3
Includes investments in certain property funds which are valued based on the underlying properties. These
properties are valued using a number of standard industry techniques such as cost, discounted cash flows,
independent appraisals and market based comparable data. Real estate investments are categorized as
Level 3 investments.
4
Includes net receivable (payable) amounts for unsettled transactions, cash and cash equivalents, derivatives,
insurance linked securities and direct private placements. Cash is categorized as a Level 1 investment and
cash in commingled funds is categorized as a Level 2 investment. Amounts receivable (payable) are
categorized as level 2 investments. Cash equivalents are valued using observable yield curves, discounting
and interest rates and are categorized as Level 2 investments. Derivatives which are exchange-traded and for
which market quotations are readily available are valued at the last reported sale price or official closing
price as reported by an independent pricing service on the primary market, or exchange on which they are
traded, and are categorized as Level 1 investments. Over-the-counter derivatives typically are valued by
independent pricing services and are categorized as Level 2 investments. Insurance linked securities are
categorized as Level 2. Direct private placements are typically bonds valued by reference to comparable
bonds and are categorized as Level 3 investments.
5
Includes investments in commingled funds, are valued based on quoted prices and are primarily exchange-
traded. Securities for which official close or last trade pricing on an active exchange is available are
classified as Level 1 investments. If closing prices are not available, or the investments are in a commingled
fund, securities are valued at the last quoted bid price and typically are categorized as Level 2 investments.
6
Includes government bonds comprising fixed interest and index linked bonds issued by central governments
and are valued based on quotes received from independent pricing services or from dealers who make
markets in such securities. Pricing services utilize pricing which considers readily available inputs such as
the yield or price of bonds of comparable quality, coupon, maturity and type, as well as dealer-supplied
prices.
The following table summarizes the changes of Level 3 assets, reconciled by asset class, held during fiscal 2024
(in millions):
August 31,
2023
Net realized
and unrealized
gains/(losses)
Net purchases,
issuances
and settlements
August 31,
2024
Annuity policies, less deferred premium
1
$
48
$
355
$
5,084
$
5,487
Real estate
2
466
(52)
(334)
81
Other investments, net
3
713
(55)
(659)
—
Total
4
$
1,228
$
248
$
4,092
$
5,568
1.
As part of the Buy-In with Legal & General, the Trustee exchanged substantially all of the Boots Plan assets
that existed prior to the Buy-In for a bulk annuity policy, held as a Boots Plan asset as of August 31, 2024.
Net purchases, issuances, and settlements primarily includes the $6.0 billion initial purchase price for the
annuity policy, less $860 million remaining deferred premiums and $229 million of annuity payments
received in fiscal 2024. Net gains primarily include unrealized gains on fair market value adjustment of the
annuity, less interest accruals and other adjustments related to the the deferred premium.
2.
Net purchases, issuances and settlements primarily include disposals of property funds or capital
distributions related to disposals of property fund assets. Net losses are realized.
WBA Fiscal 2024 Form 10-K
129
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3.
Net purchases, issuances and settlements include the disposal of various directly held investments. Net
losses are realized.
4.
There were no transfers in and out of Level 3 in fiscal 2024.
Components of net periodic pension income for the defined benefit pension plans and cumulative pre-tax
amounts recognized in comprehensive loss are as follows (in millions):
Boots and other pension plans
2024
2023
2022
Service costs (Selling, general and administrative expenses)
$
4
$
4
$
5
Interest costs (Other income, net)
276
264
149
Expected returns on plan assets/other (Other income, net)
(284)
(340)
(280)
Total net periodic pension income
$
(4)
$
(72)
$
(126)
Net actuarial loss (gain)
$
262
$
730
$
(251)
Prior service cost
(273)
(1)
(1)
Total pre-tax comprehensive loss (income)
$
(11)
$
729
$
(252)
Change in benefit obligations for the defined benefit pension plans (in millions):
2024
2023
Benefit obligation at beginning of year
$
5,515
$
5,967
Service costs
4
4
Interest costs
276
264
Amendments
(281)
—
Net actuarial loss (gain)
104
(897)
Benefits paid
(309)
(286)
Currency translation adjustments
125
463
Benefit obligation at end of year
$
5,433
$
5,515
Change in plan assets for the defined benefit pension plans (in millions):
2024
2023
Plan assets at fair value at beginning of year
$
5,594
$
6,603
Employer contributions
435
40
Benefits paid
(309)
(286)
Return on assets
138
(1,275)
Currency translation adjustments
136
511
Plan assets at fair value at end of year
$
5,994
$
5,594
Amounts recognized in the Consolidated Balance Sheets (in millions):
August 31, 2024
August 31, 2023
Other non-current assets
$
795
$
306
Accrued expenses and other liabilities
(11)
(10)
Other non-current liabilities
(223)
(216)
Net asset recognized at end of year
$
561
$
80
WBA Fiscal 2024 Form 10-K
130
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for all pension
plans, including accumulated benefit obligations in excess of plan assets, were as follows (in millions):
August 31, 2024
August 31, 2023
Projected benefit obligation
$
5,433
$
5,515
Accumulated benefit obligation
5,423
5,503
Fair value of plan assets
1
5,994
5,594
1
Represents plan assets of The Boots plan, the Company’s only funded defined benefit pension plan.
Estimated future benefit payments for the next 10 years from defined benefit pension plans to participants are as
follows (in millions):
Estimated future benefit
payments
2025
$
312
2026
325
2027
334
2028
344
2029
356
2030-2034
1,855
The assumptions used in accounting for the defined benefit pension plans were as follows:
2024
2023
Weighted-average assumptions used to determine benefit obligations
Discount rate
4.90%
5.22%
Rate of compensation increase
3.63%
3.73%
Weighted-average assumptions used to determine net periodic benefit cost
1
Discount rate
5.40%
4.20%
Expected long-term return on plan assets
6.00%
4.90%
Rate of compensation increase
3.73%
3.04%
1.
The assumptions shown are at the beginning of each fiscal year. As part of the BPA, the UK plan assumptions
were remeasured on November 23, 2023.
In determining the rate of return on plan assets assumption, the Company considers the market pricing for buy-in
policy annuities and the expected market return for residual assets. A change in any of these assumptions would
have an effect on its net periodic pension income. A 25 basis point increase in the discount rate would result in a
decline of $149 million to the Company’s pension benefit obligation. A 25 basis point decrease on the expected
return on plan assets assumption would decrease the Company’s net periodic pension income by $15 million.
Defined contribution plans
The principal retirement plan for U.S. employees is the Walgreen Profit-Sharing Retirement Trust, to which both
the Company and participating employees contribute. The Company’s contribution is in the form of a guaranteed
match which is made pursuant to the applicable plan document approved by the Walgreen Co. Board of
WBA Fiscal 2024 Form 10-K
131
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Directors. Plan activity is reviewed periodically by certain Committees of the Walgreens Boots Alliance Board of
Directors. The profit-sharing provision is an expense of $223 million, $239 million and $234 million in fiscal
2024, 2023 and 2022, respectively. The Company’s contributions were $223 million, $241 million and
$236 million in fiscal 2024, 2023 and 2022, respectively.
The Company also has certain contract based defined contribution arrangements. The principal one is in the UK
in which both the Company and participating employees contribute. The cost recognized in the Consolidated
Statements of Earnings was $101 million, $83 million and $90 million in fiscal 2024, 2023 and 2022,
respectively.
Post-retirement healthcare plan
The Company provides certain health insurance benefits to retired U.S. employees who meet eligibility
requirements, including age, years of service and date of hire. The costs of these benefits are accrued over the
service life of the employee.
The Company’s post-retirement health benefit plan obligation was $114 million and $113 million in fiscal 2024
and 2023, respectively and is not funded. The Company expects to make contributions of $7 million in fiscal
2025.
Note 14. Capital stock
In June 2018, Walgreens Boots Alliance authorized 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, which
program has no specified expiration date. In July 2020, the Company announced that it had suspended activities
under this program and no shares were repurchased in fiscal 2023 or 2024. As of August 31, 2024, the Company
had approximately $2.0 billion remaining under the June 2018 stock repurchase program.
The Company determines the timing and amount of repurchases based on its assessment of various factors
including prevailing market conditions, alternate uses of capital, liquidity, the economic environment and other
factors. The timing and amount of these purchases may change at any time and from time to time. 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 a company to repurchase shares at times when it otherwise might be precluded from
doing so under insider trading laws.
In addition, the Company continued to repurchase shares to support the needs of the employee stock plans.
Shares totaling $69 million, $150 million and $187 million were purchased to support the needs of the employee
stock plans during fiscal 2024, 2023 and 2022, respectively. As of August 31, 2024, 45 million shares of
common stock were reserved for future issuances under the Company’s various employee benefit plans.
WBA Fiscal 2024 Form 10-K
132
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15. Accumulated other comprehensive loss
The following is a summary of net changes in accumulated other comprehensive loss (“AOCI”) by component
and net of tax for fiscal 2024, 2023 and 2022 (in millions):
Pension/post-
retirement
obligations
Unrealized
gain (loss)
on cash
flow hedges
Net
investment
hedges
(loss) gain
Unrealized
gain (loss)
on available
for
sale debt
securities
Share of
OCI of
equity
method
investments
Cumulative
translation
adjustments
Total
Balance at August 31, 2021
$
(359)
$
(10)
$
(35)
$
96
$
(29)
$
(1,772) $
(2,109)
Other comprehensive income
(loss) before reclassification
adjustments
278
6
327
451
(326)
(833)
(97)
Amounts reclassified from
AOCI
(22)
3
—
(577)
31
—
(565)
Other
(6)
—
—
—
—
—
(6)
Tax (provision) benefit
(48)
(2)
(79)
32
70
—
(27)
Net change in other
comprehensive income (loss)
203
7
248
(95)
(226)
(833)
(696)
Balance at August 31, 2022
$
(157)
$
(3)
$
213
$
1
$
(254)
$
(2,605) $
(2,805)
Other comprehensive (loss)
income before
reclassification adjustments
(705)
(7)
(172)
(2)
6
379
(500)
Amounts reclassified from
AOCI
(26)
4
—
—
158
(14)
121
Tax benefit (provision)
190
—
42
1
(42)
—
190
Net change in other
comprehensive (loss) income
(541)
(2)
(130)
(2)
122
364
(189)
Balance at August 31, 2023
$
(698)
$
(5)
$
83
$
—
$
(132)
$
(2,240) $
(2,993)
Other comprehensive income
(loss) before reclassification
adjustments
14
—
(65)
—
(6)
124
68
Amounts reclassified from
AOCI
(14)
8
(4)
—
63
(2)
51
Tax (provision) benefit
(8)
(3)
1
1
(13)
—
(23)
Net change in other
comprehensive (loss) income
(8)
5
(68)
1
45
122
96
Balance at August 31, 2024
$
(706)
$
(1)
$
15
$
—
$
(88)
$
(2,118) $
(2,897)
Note 16. Segment reporting
The Company is aligned into three reportable segments: U.S. Retail Pharmacy, International and U.S. Healthcare.
The operating segments have been identified based on the financial data utilized by the Company’s Chief
Executive Officer (the “chief operating decision maker”) to assess segment performance and allocate resources
among the Company’s operating segments. The chief operating decision maker uses adjusted operating income to
assess segment profitability. The chief operating decision maker does not use total assets by segment to make
decisions regarding resources; therefore, the total asset disclosure by segment has not been included.
WBA Fiscal 2024 Form 10-K
133
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. 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. Sales for the segment are principally derived from the sale of
prescription drugs and a wide assortment of retail products, including health and wellness, beauty, personal care
and consumables and general merchandise.
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. 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. In fiscal 2024, the Company
completed the sale of the Farmacias Ahumada business in Chile.
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. 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 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 results of operations for reportable segments include procurement benefits. Corporate-related overhead costs
are not allocated to reportable segments and are reported in “Corporate and Other”.
WBA Fiscal 2024 Form 10-K
134
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table reflects results of operations of the Company’s reportable segments (in millions):
2024
2023
2022
Sales:
U.S. Retail Pharmacy
Pharmacy
$
88,867
$
82,118
$
80,434
Retail
26,911
28,195
28,643
Total
$
115,778
$
110,314
$
109,078
International
Pharmacy
$
3,598
$
3,664
$
3,727
Retail
7,887
7,324
6,924
Wholesale
12,067
11,211
11,178
Total
$
23,552
$
22,198
$
21,830
U.S. Healthcare
$
8,345
$
6,570
$
1,795
Corporate and Other
1
$
(16)
$
—
$
—
Walgreens Boots Alliance, Inc.
$
147,658
$
139,081
$
132,703
Adjusted operating income:
U.S. Retail Pharmacy
$
2,167
$
3,689
$
5,029
International
793
935
726
U.S. Healthcare
(134)
(566)
(370)
Corporate and Other
(202)
(187)
(251)
Walgreens Boots Alliance, Inc.
$
2,624
$
3,871
$
5,133
Depreciation and amortization:
U.S. Retail Pharmacy
$
1,422
$
1,362
$
1,415
International
370
328
355
U.S. Healthcare
651
560
211
Corporate and Other
16
8
9
Walgreens Boots Alliance, Inc.
$
2,459
$
2,257
$
1,990
Capital expenditures:
U.S. Retail Pharmacy
$
1,041
$
1,421
$
1,207
International
247
308
295
U.S. Healthcare
91
375
218
Corporate and Other
2
13
15
Walgreens Boots Alliance, Inc.
$
1,381
$
2,117
$
1,734
1.
Includes certain eliminations.
WBA Fiscal 2024 Form 10-K
135
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table reconciles adjusted operating income to operating (loss) income (in millions):
2024
2023
2022
Adjusted operating income (Non-GAAP measure):
$
2,624
$
3,871
$
5,133
Impairment of goodwill, intangibles and long-lived assets
(13,422)
(299)
(783)
Acquisition-related amortization
(1,075)
(1,126)
(855)
Transformational cost management
(891)
(1,181)
(763)
Acquisition-related costs
(542)
(323)
(223)
Certain legal and regulatory accruals and settlements
(561)
(7,466)
(768)
Adjustments to equity earnings in Cencora
(162)
(211)
(218)
LIFO provision
(47)
(187)
(135)
Store damage and inventory loss insurance recovery
—
40
—
Operating (loss) income (GAAP measure)
$(14,076)
$
(6,882)
$
1,387
No single customer accounted for more than 10% of the Company’s consolidated sales for any of the periods
presented. Substantially all of our pharmacy sales are to customers covered by third-party payors (e.g., pharmacy
benefit managers, insurance companies and governmental agencies) that agree to pay for all or a portion of a
customer’s eligible prescription purchases. In the U.S. Retail Pharmacy segment, three third-party payors
accounted for approximately 34%, 33%, and 31% of the Company’s consolidated sales in fiscal 2024, 2023 and
2022, respectively.
Geographic data for sales is as follows (in millions):
2024
2023
2022
United States
$
124,176
$
116,883
$
110,873
Germany
12,067
11,211
11,178
United Kingdom
9,550
8,984
8,894
Other
1,864
2,003
1,757
Sales
$
147,658
$
139,081
$
132,703
Geographic data for long-lived assets, defined as operating lease right-of-use assets and property, plant and
equipment, is as follows (in millions):
2024
2023
United States
$
25,873
$
28,951
United Kingdom
3,538
3,622
Other
697
681
Total long-lived assets
$
30,108
$
33,254
Note 17. Related parties
The Company has a long-term pharmaceutical distribution agreement with Cencora pursuant to which the
Company sources branded and generic pharmaceutical products from Cencora. Additionally, Cencora receives
sourcing services for generic pharmaceutical products.
WBA Fiscal 2024 Form 10-K
136
WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Related party transactions with Cencora (in millions):
2024
2023
2022
Purchases, net
$
73,918
$
65,173
$
62,174
Trade accounts payable, net of receivables
$
9,259
$
7,814
$
6,915
Note 18. Subsequent events
Footprint Optimization Program
On October 14, 2024, the Company’s Board of Directors approved a plan to optimize its footprint and close
underperforming stores, primarily within the Company’s U.S. Retail Pharmacy segment (the “Footprint
Optimization Program”). The Footprint Optimization Program includes plans to close approximately 900 to
1,000 stores primarily across the U.S.
Hurricane Helene and Milton
In September and October 2024, Hurricane Helene and Hurricane Milton struck the Southeast region of the U.S.
The Company has significant store locations in this region and these hurricanes have caused business disruptions,
including store closures in the affected areas. The Company is assessing the extent of the damage resulting from
these hurricanes.
WBA Fiscal 2024 Form 10-K
137
Management’s Report on Internal Control
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the
participation of our management, including our principal executive officer and principal financial officer, we
conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in
Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). As permitted by the SEC, our assessment of internal
controls over financial reporting excludes internal control over financial reporting of equity method investees.
However, our assessment of internal control over financial reporting with respect to equity method investees did
include controls over the recording of amounts related to our investments that are recorded in the Consolidated
Financial Statements, including controls over the selection of accounting methods for our investments, the
recognition of equity method earnings and losses and the determination, valuation and recording of our
investment account balances.
Based on our evaluation, management concluded that our internal control over financial reporting was effective
as of August 31, 2024. Deloitte & Touche LLP, the Company’s independent registered public accounting firm,
has audited our internal control over financial reporting, as stated in its report which is included herein.
/s/
Timothy C. Wentworth
/s/
Manmohan Mahajan
Timothy C. Wentworth
Manmohan Mahajan
Chief Executive Officer
Executive Vice President and Global Chief
Financial Officer
October 15, 2024
WBA Fiscal 2024 Form 10-K
138
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Walgreens Boots Alliance, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Walgreens Boots Alliance, Inc. and
subsidiaries (the “Company”) as of August 31, 2024 and 2023, the related consolidated statements of earnings,
comprehensive income, equity, and cash flows for each of the three years in the period ended August 31, 2024,
and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of August 31, 2024
and 2023, and the results of its operations and its cash flows for each of the three years in the period ended
August 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of August 31, 2024, based
on criteria established in
Internal Control — Integrated Framework (2013)
issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated October 15, 2024, expressed an
unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Goodwill and Indefinite-Lived Intangible Assets Impairment VillageMD Reporting Unit and Boots’
Pharmacy Licenses Indefinite-lived Intangible Assets – Refer to Notes 1 and 6 to the financial statements
Critical Audit Matter Description
The Company’s evaluation of goodwill and indefinite-lived intangible assets for impairment involves the
comparison of the fair value of each reporting unit or asset to its carrying value. The Company uses the income
and/or the market approaches to estimate the fair value of its reporting units in its goodwill impairment analysis.
The income approach requires management to estimate a number of factors for each reporting unit, including
WBA Fiscal 2024 Form 10-K
139
projected future operating results, economic projections, anticipated future cash flows and discount rates. The
market approach requires management to estimate fair value using comparable marketplace fair value data from
within a comparable industry grouping or a comparable marketplace transactional multiple. The Company uses
the multi-period excess earnings model and the relief from royalty model to estimate the fair value of the
indefinite-lived intangible assets. Changes in assumptions or the selection of companies in the comparable
industry group could have a significant impact on the valuation of the reporting units and the amount of a
goodwill or indefinite-lived intangible asset impairment charge, if any.
We identified the valuation of the VillageMD reporting unit and the Boots’ Pharmacy Licenses indefinite-lived
intangible asset as a critical audit matter due to the materiality of the assets’ carrying values, the difference
between the fair values and the carrying values of the reporting unit, and because of the continued
underperformance compared to historical forecasts at each of the businesses. Auditing management’s judgments
used in the quantitative assessment regarding significant assumptions such as future revenue growth, EBITDA
margins, the selection of discount rates, the selection of the valuation approaches, and the market multiples
selected requires a high degree of auditor judgment and an increased extent of effort, including the need to
involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the fair value of goodwill for the VillageMD reporting unit and the Boots’
Pharmacy Licenses indefinite-lived intangible asset included the following, among others:
•
We tested the effectiveness of controls over the goodwill and indefinite-lived intangible asset
impairment analyses, including those over the development of forecasts of business assumptions (e.g.,
revenues, EBITDA margins), valuation methodologies, and the selection of market multiples and
discount rates.
•
We evaluated management’s ability to accurately forecast business assumptions (e.g., revenues,
EBITDA margins) by comparing actual results to management’s historical forecasts.
•
We evaluated the reasonableness of management’s forecasts of business assumptions (e.g., revenues,
EBITDA margins) by performing certain procedures, including comparing the forecasts and planned
initiatives to third-party economic and industry data.
•
We evaluated, with the assistance of our fair value specialists, the (1) valuation methodologies;
(2) selection of market multiples for the VillageMD reporting unit; and (3) discount rates utilized for
the VillageMD reporting unit and Boots’ Pharmacy Licenses indefinite-lived intangible asset, by
performing certain procedures, including:
•
Comparing the valuation methodologies used to generally accepted valuation practices for each
asset type.
•
Evaluating the appropriateness of the Company’s selection of companies in its industry
comparable group, similar marketplace transactions, and market multiples for comparability to the
reporting unit.
•
Testing the source information underlying the determination of the discount rate and the
mathematical accuracy of the calculation.
•
Developing an independent discount rate range and comparing the discount rate selected by
management to this range.
•
We validated the accuracy of the impairment charge recorded for the VillageMD reporting unit.
WBA Fiscal 2024 Form 10-K
140
Income Taxes – Uncertain Tax Positions—Refer to Notes 1 and 11 to the financial statements
Critical Audit Matter Description
The Company has a complex legal structure involving numerous domestic and foreign locations with constantly
changing tax laws and regulations. The Company’s management is required to interpret and apply these tax laws
and regulations in determining the amount of its income tax liability and provision. When an uncertain tax
position is identified by management, the Company must evaluate whether it is more likely to be sustained than
not on the basis of its technical merits. In evaluating the tax benefits associated with the various tax filing
positions, the Company records a tax benefit for uncertain tax positions using the highest cumulative tax benefit
that is more likely than not to be realized. The evaluation of each uncertain tax position requires management to
apply specialized skill, knowledge, and significant judgment related to the identified position. This significant
judgment includes determining the correct value of the uncertain tax position based on the selected method of
measurement, data, and assumptions determined by management.
Because of the numerous taxing jurisdictions in which the Company files its tax returns and the complexity of tax
laws and regulations, auditing certain uncertain tax positions and the determination of whether the more likely
than not threshold was met requires a high degree of auditor judgment and increased extent of effort, including
the involvement of our income tax specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to certain uncertain tax positions included the following, among others:
•
We tested the effectiveness of controls over income taxes, including those over identifying uncertain
tax positions and measuring liabilities.
•
We evaluated, with the assistance of our tax specialists, a selection of underlying tax positions to
evaluate the more likely than not principle as it applied to the specific underlying tax position.
•
We evaluated, with the assistance of our tax specialists, a selection of the Company’s uncertain tax
positions by performing the following:
•
Obtaining management and third-party opinions or memoranda regarding the analysis of uncertain
tax positions and identifying the key judgments and evaluating whether the analysis was
consistent with our interpretation of the relevant laws and regulations.
•
Evaluating management’s method of measuring its liability for unrecognized tax benefits,
including underlying data and assumptions.
•
Evaluating the basis for certain intercompany transactions, such as transfer pricing, as well as
internal restructuring, by comparison to economic studies performed by management and third-
party data.
•
Evaluating the matters raised by tax authorities in former and ongoing tax audits and considering
the implications of these matters on open tax years.
•
Assessing changes and interpretation of applicable tax law.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
October 15, 2024
We have served as the Company’s auditor since 2002.
WBA Fiscal 2024 Form 10-K
141
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Walgreens Boots Alliance, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Walgreens Boots Alliance, Inc. and subsidiaries
(the “Company”) as of August 31, 2024, based on criteria established in
Internal Control — Integrated
Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of August 31, 2024, based on criteria established in
Internal Control — Integrated Framework
(2013
) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated financial statements as of and for the year ended August 31, 2024, of the
Company and our report dated October 15, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
October 15, 2024
WBA Fiscal 2024 Form 10-K
142
Item 9. Changes in and disagreements with accountants on accounting and financial disclosure
None.
Item 9A. Controls and procedures
Evaluation of disclosure controls and procedures
Management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls
and procedures as of the end of the period covered by this Form 10-K. The controls evaluation was conducted
under the supervision and with the participation of the Company’s management, including its Chief Executive
Officer (“CEO”) and Chief Financial Officer (“CFO”).
Based upon the controls evaluation, our CEO and CFO have concluded that, as of the end of the period covered
by this report, our disclosure controls and procedures were effective to provide reasonable assurance that
information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified by the SEC, and that such information is accumulated and
communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure.
Report on internal control over financial reporting
Management’s report on internal control over financial reporting and the report of Deloitte & Touche LLP, the
Company’s independent registered public accounting firm, related to their assessment of the effectiveness of
internal control over financial reporting are included in Part II, Item 8 of this Form 10-K and are incorporated in
this Item 9A by reference.
Changes in internal control over financial reporting
In the ordinary course of business, the Company reviews its internal control over financial reporting and makes
changes to its systems and processes that are intended to enhance such controls and increase efficiency while
maintaining an effective internal control environment. Changes may include such activities as updating existing
systems, automating manual processes, standardizing controls and modifying monitoring controls.
As we transform our business processes, we continue to make strategic changes in how we perform certain key
business functions. These changes include the continued leveraging of extended workforces via third-party
outsource arrangements as well as our continued implementation of new information systems. These initiatives
are not being implemented in response to any identified internal control deficiency or weakness. As these
changes occur, we will evaluate quarterly whether such changes materially affect, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.
In connection with the evaluation pursuant to Exchange Act Rule 13a-15(d) of the Company’s internal control
over financial reporting (as defined in Exchange Act Rule 13a-15(f)) by the Company’s management, including
its CEO and CFO, no changes during the quarter ended August 31, 2024 were identified that have materially
affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent limitations on effectiveness of controls
Our management, including the CEO and CFO, do not expect that our disclosure controls and procedures or our
internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter
how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s
objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in
WBA Fiscal 2024 Form 10-K
143
all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or
fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgements in decision-making can be faulty and
that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by management override of the controls.
The design of any system of controls is based in part on certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over
time, controls may become inadequate because of changes in conditions or deterioration in the degree of
compliance with policies or procedures.
Item 9B. Other information
Securities Trading Plans of Directors and Executive Officers
During the three months ended August 31, 2024, none of the Company’s directors or executive officers adopted
or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was
intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading
arrangement” (as those terms are defined in Regulation S-K, Item 408).
Indemnification Agreements of Directors and Select Officers
In June 2024, the Board approved a form of indemnification agreement (the “Indemnification Agreement”) to be
entered into by and between the Company and each of its directors and select officers to provide for rights to
indemnification and advancement of expenses generally consistent with the Company’s Amended and Restated
Bylaws, which provide for mandatory indemnification and advancement of expenses to the fullest extent
authorized by the General Corporation Law of the State of Delaware for directors and officers of the Company.
The foregoing description of the Indemnification Agreement is not complete and is qualified in its entirety by
reference to the Indemnification Agreement filed herewith as Exhibit 10.2 and incorporated herein by reference.
Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections
Not applicable.
WBA Fiscal 2024 Form 10-K
144
PART III
The Company intends to file with the SEC a definitive proxy statement for its next Annual Meeting of
Stockholders (the “Proxy Statement”) pursuant to Regulation 14A not later than 120 days after August 31, 2024.
The information required by Part III (Items 10, 11, 12, 13 and 14) is incorporated by reference to the disclosure
in that Proxy Statement. The Company’s next Annual Meeting of Stockholders is scheduled to be held on
January 30, 2025.
Item 10. Directors, executive officers and corporate governance
We have adopted an insider trading policy (the “Insider Trading Policy”) applicable to our officers, directors,
team members and certain persons and entities (collectively, “Covered Persons”) that we believe are reasonably
designed to promote compliance with insider trading laws, rules, and regulations, and the Nasdaq listing
standards.
The foregoing summary of the Insider Trading Policy is not complete and is qualified in its entirety by reference
to the Insider Trading Policy attached hereto as Exhibit 19.
The information required by Item 10, with the exception of the information relating to the executive officers of
the Company, which is presented in Part I under the heading “Information about our executive officers,” is
incorporated herein by reference to the Company’s Proxy Statement, including the following sections: Proposal–
1 Election of Directors; Compensation discussion and analysis and Governance.
The Company has adopted a Code of Conduct and Business Ethics applicable to all employees, officers and
directors that incorporates policies and guidelines designed to deter wrongdoing and to promote honest and
ethical conduct and compliance with applicable laws and regulations. The Company has also adopted a Code of
Ethics for CEO and Financial Executives. This Code applies to and has been signed by the CEO, the CFO and the
Chief Accounting Officer. The Company intends to promptly disclose on its website in accordance with
applicable rules required disclosure of changes to or waivers, if any, of the Code of Ethics for CEO and Financial
Executives or the Code of Conduct and Business Ethics for directors and executive officers.
Charters of all committees of the Company’s Board of Directors, as well as the Company’s Corporate
Governance Guidelines and Code of Ethics for CEO and Financial Executives and Code of Conduct and Business
Ethics, are available on the Company’s website at investor.walgreensbootsalliance.com or, upon written request
and free of charge, in printed hard copy form. Written requests should be sent to Walgreens Boots Alliance, Inc.,
Attention: Investor Relations, Mail Stop #1833, 108 Wilmot Road, Deerfield, Illinois 60015.
Item 11. Executive compensation
The information required by Item 11 is incorporated herein by reference to the following sections of the
Company’s Proxy Statement: Director Compensation; Executive Compensation; Executive compensation
corporate governance; and Governance.
The material incorporated herein by reference to the material under the caption “Compensation Committee
Report” in the Proxy Statement shall be deemed furnished, and not filed, in this Form 10-K and shall not be
deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange
Act as a result of this furnishing, except to the extent that the Company specifically incorporates it by reference.
Item 12. Security ownership of certain beneficial owners and management and related stockholder matters
The information required by Item 12 is incorporated herein by reference to the following sections of the
Company’s Proxy Statement: Security Ownership of Certain Beneficial Owners and Management; and Equity
Compensation Plan Information.
WBA Fiscal 2024 Form 10-K
145
Item 13. Certain relationships and related transactions and director independence
The information required by Item 13 is incorporated herein by reference to the following sections of the
Company’s Proxy Statement: Related Party Transactions; Director Independence; and Governance.
Item 14. Principal accountant fees and services
The information required by Item 14 is incorporated herein by reference to the following section of the
Company’s Proxy Statement: Independent Registered Public Accounting Firm Fees and Services.
WBA Fiscal 2024 Form 10-K
146
PART IV
Item 15. Exhibits and financial statement schedules
(a) Documents filed as part of this report:
(1)
Financial statements.
The following financial statements, supplementary data and reports of
independent public accountants appear in Part II, Item 8 of this Form 10-K and are incorporated herein
by reference.
Consolidated Balance Sheets at August 31, 2024 and 2023
Consolidated Statements of Equity, Earnings, Comprehensive Income and Cash Flows for the years
ended August 31, 2024, 2023 and 2022
Notes to Consolidated Financial Statements
Management’s Report on Internal Control
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
(2)
Financial statement schedules and supplementary information
Schedules I, II, III, IV and V are not submitted because they are not applicable or not required or
because the required information is included in the Financial Statements referenced in (1) above or the
notes thereto.
(b) Exhibits
Exhibit
No.
Description
SEC Document Reference
2.1*
Purchase and Option Agreement by and among
Walgreen Co., Alliance Boots GmbH and AB
Acquisitions Holdings Limited dated June 18,
2012 and related annexes.
Incorporated by reference to Annex B-1 to the
proxy statement/prospectus forming a part of the
Registration Statement on Form S-4 filed with
the SEC pursuant to Rule 424(b)(3) on
November 24, 2014.
2.2*
Amendment No. 1 to Purchase and Option
Agreement and Walgreen Co. Shareholders
Agreement, dated August 5, 2014, by and among
Walgreen Co., Alliance Boots GmbH, AB
Acquisitions Holdings Limited, Walgreen
Scotland Investments LP, KKR Sprint
(European II) Limited, KKR Sprint
(2006) Limited and KKR Sprint (KPE) Limited,
Alliance Santé Participations S.A., Stefano
Pessina and Kohlberg Kravis Roberts & Co. L.P.
Incorporated by reference to Annex B-2 to the
proxy statement/prospectus forming a part of the
Registration Statement on Form S-4 filed with
the SEC pursuant to Rule 424(b)(3) on
November 24, 2014.
2.3
Agreement and Plan of Merger, dated
October 17, 2014, by and among Walgreen Co.,
Walgreens Boots Alliance, Inc. and Ontario
Merger Sub, Inc.
Incorporated by reference to Annex A to the
proxy statement/prospectus forming a part of the
Registration Statement on Form S-4 filed with
the SEC pursuant to Rule 424(b)(3) on
November 24, 2014.
2.4
Amendment No. 1 to Agreement and Plan of
Merger, dated December 23, 2014, by and
among Walgreen Co., Walgreens Boots
Alliance, Inc. and Ontario Merger Sub, Inc.
Incorporated by reference to Exhibit 2.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on
December 24, 2014.
WBA Fiscal 2024 Form 10-K
147
Exhibit
No.
Description
SEC Document Reference
2.5
Amendment No. 2 to Agreement and Plan of
Merger, dated December 29, 2014, by and
among Walgreen Co., Walgreens Boots
Alliance, Inc. and Ontario Merger Sub, Inc.
Incorporated by reference to Exhibit 2.3 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
November 30, 2014 filed with the SEC on
December 30, 2014.
2.6*
Amended and Restated Asset Purchase
Agreement, dated as of September 18, 2017, by
and among Walgreens Boots Alliance, Inc.,
Walgreen Co. and Rite Aid Corporation.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on
September 19, 2017.
2.7*
Share Purchase Agreement, dated as of
January 6, 2021, by and between Walgreens
Boots Alliance, Inc., and Cencora, Inc (formerly
known as AmerisourceBergen Corporation).
Incorporated by reference to Exhibit 2.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on January 8,
2021.
2.8*
Securities Purchase Agreement, by and among
Walgreen Co., the several equity holders of
Shields Health Solutions Parent, LLC listed on
Schedules A and B thereto, the stockholders of
WCAS Shields Holdings, Inc. listed on Schedule
C thereto, Shields Health Solutions Parent, LLC,
WCAS Shields Holdings, Inc. and WCAS XIII
Associates, LLC, solely in its capacity as
Sellers’ Representative thereunder.
Incorporated by reference to Exhibit 2.1 to
Walgreen’s Boots Alliance, Inc.’s Current
Report on Form 8-K filed with the SEC on
September 21, 2021.
2.9*
Class D Preferred Unit Purchase Agreement,
dated as of October 14, 2021, by and among
WBA Acquisition 4, LLC, WBA Financial,
LLC, Walgreens Boots Alliance, Inc., Village
Practice Management Company, LLC and
certain members of Village Practice
Management Company, LLC.
Incorporated by reference to Exhibit 2.1 to
Walgreen’s Boots Alliance, Inc.’s Current
Report on Form 8-K filed with the SEC on
October 14, 2021.
2.10*
Securities Purchase Agreement and Agreement
and Plan of Merger, dated September 19, 2022,
by and among WBA Acquisition 4, LLC,
Walgreen Co., WBA Shields Merger Sub, LLC,
certain equityholders of WCAS Shields
Holdings, LLC listed on Schedule A thereto,
WCAS Shields Holdings, LLC, Shields Health
Solutions Parent, LLC and WCAS XIII
Associates, LLC, solely in its capacity as
Sellers’ Representative thereunder.
Incorporated by reference to Exhibit 2.1 to
Walgreen’s Boots Alliance, Inc.’s Current
Report on Form 8-K filed with the SEC on
September 20, 2022.
2.11*
Agreement and Plan of Merger, dated as of
November 7, 2022, by and among WP CityMD
Topco LLC, Village Practice Management
Company, LLC, Project Teton Merger Sub LLC
and Shareholder Representative Services LLC.
Incorporated by reference to Exhibit 2.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on November 8,
2022.
WBA Fiscal 2024 Form 10-K
148
Exhibit
No.
Description
SEC Document Reference
2.12*
Class E Preferred Unit and Class F Preferred
Unit Purchase Agreement, dated as of
November 7, 2022, by and among WBA
Acquisition 5, LLC, Walgreens Boots Alliance,
Inc., Cigna Health & Life Insurance Company,
Village Practice Management Company, LLC
and certain members of Village Practice
Management Company, LLC.
Incorporated by reference to Exhibit 2.2 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on November 8,
2022.
2.13
First Amendment to Agreement and Plan of
Merger, dated as of November 14, 2022, by and
among WP CityMD Topco LLC, Village
Practice Management Company, LLC and
Project Teton Merger Sub LLC.
Incorporated by reference to Exhibit 2.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on January 5,
2023.
2.14*
Second Amendment to Agreement and Plan of
Merger, dated as of January 3, 2023, by and
among WP CityMD Topco LLC, Village
Practice Management Company Holdings, LLC,
Village Practice Management Company, LLC
and Project Teton Merger Sub LLC.
Incorporated by reference to Exhibit 2.2 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on January 5,
2023.
2.15*
Amended and Restated Class E Preferred Unit
and Class F Preferred Unit Purchase Agreement,
dated as of January 3, 2023, by and among WBA
Acquisition 5, LLC, Walgreens Boots Alliance,
Inc., Cigna Health & Life Insurance Company,
Evernorth Health, Inc., Village Practice
Management Company, LLC and certain
members of Village Practice Management
Company, LLC.
Incorporated by reference to Exhibit 2.3 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on January 5,
2023.
3.1
Amended and Restated Certificate of
Incorporation of Walgreens Boots Alliance, Inc.
Incorporated by reference to Exhibit 3.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K12B filed with the SEC on
December 31, 2014.
3.2
Amended and Restated Bylaws of Walgreens
Boots Alliance, Inc.
Incorporated by reference to Exhibit 3.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on July 12,
2024.
4.1**
Indenture, dated as of July 17, 2008, between
Walgreen Co. and Wells Fargo Bank, National
Association, as trustee.
Incorporated by reference to Exhibit 4.3 to
Walgreen Co.’s registration statement on Form
S-3ASR filed with the SEC on July 14, 2008.
4.2
Form of Walgreen Co. 4.400% Note due 2042.
Incorporated by reference to Exhibit 4.5 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on September 13, 2012.
4.3
Form of Guarantee of Walgreens Boots
Alliance, Inc.
Incorporated by reference to Exhibit 4.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K12B filed with the SEC on
December 31, 2014.
WBA Fiscal 2024 Form 10-K
149
Exhibit
No.
Description
SEC Document Reference
4.4
Indenture dated November 18, 2014 among
Walgreens Boots Alliance, Inc. and Wells Fargo
Bank, National Association, as trustee.
Incorporated by reference to Exhibit 4.1 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on November 18, 2014.
4.5
Form of 3.800% Notes due 2024.
Incorporated by reference to Exhibit 4.6 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on November 18, 2014.
4.6
Form of 4.500% Notes due 2034.
Incorporated by reference to Exhibit 4.7 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on November 18, 2014.
4.7
Form of 4.800% Notes due 2044.
Incorporated by reference to Exhibit 4.8 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on November 18, 2014.
4.8
Form of 3.600% Notes due 2025 (£).
Incorporated by reference to Exhibit 4.3 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on November 20, 2014.
4.9
Form of 2.125% Notes due 2026 (
€
).
Incorporated by reference to Exhibit 4.4 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on November 20, 2014.
4.10
Indenture, dated as of December 17, 2015,
between Walgreens Boots Alliance, Inc. and
Wells Fargo Bank, National Association, as
trustee.
Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 filed with
the SEC on December 17, 2015.
4.11
First Supplemental Indenture, dated as of
October 13, 2021, by and between Walgreens
Boots Alliance, Inc. and Wells Fargo Bank,
National Association, as trustee.
Incorporated by reference to Exhibit 4.13 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2021 filed with the SEC on October 14, 2021.
4.12
Form of 3.450% Notes due 2026.
Incorporated by reference to Exhibit 4.5 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on June 1,
2016.
4.13
Form of 4.650% Notes due 2046.
Incorporated by reference to Exhibit 4.6 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on June 1,
2016.
4.14
Form of 3.200% Notes due 2030.
Incorporated by reference to Exhibit 4.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on April 15, 2020.
4.15
Form of 4.100% Notes due 2050.
Incorporated by reference to Exhibit 4.2 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on April 15, 2020.
4.16
Form of 8.125% Notes due 2029.
Incorporated by reference to Exhibit 4.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on August 12,
2024.
WBA Fiscal 2024 Form 10-K
150
Exhibit
No.
Description
SEC Document Reference
4.17
Walgreen Co. Shareholders Agreement, dated as
of August 2, 2012, among Walgreen Co.,
Stefano Pessina, KKR Sprint (European II)
Limited, KKR Sprint (2006) Limited and KKR
Sprint (KPE) Limited, Alliance Santé
Participations S.A., Kohlberg Kravis Roberts &
Co. L.P. and certain other investors party
thereto.
Incorporated by reference to Exhibit 4.1 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on August 6, 2012.
4.18
Letter Agreement between Stefano Pessina and
Walgreens Boots Alliance, Inc., dated July 23,
2020.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on July 27,
2020.
4.19
Amendment No. 1 to Purchase and Option
Agreement and Walgreen Co. Shareholders
Agreement, dated August 5, 2014, by and among
Walgreen Co., Alliance Boots GmbH, AB
Acquisitions Holdings Limited, Walgreen
Scotland Investments LP, KKR Sprint
(European II) Limited, KKR Sprint
(2006) Limited and KKR Sprint (KPE) Limited,
Alliance Santé Participations S.A., Stefano
Pessina and Kohlberg Kravis Roberts & Co. L.P.
Incorporated by reference to Annex B-2 to the
proxy statement/prospectus forming a part of the
Registration Statement on Form S-4 filed with
the SEC pursuant to Rule 424(b)(3) on
November 24, 2014.
4.20
Amendment No. 2 to Purchase and Option
Agreement and Walgreen Co. Shareholders
Agreement, dated December 31, 2014, as
Amended by Amendment No.1, dated as of
August 5, 2014, by and among Walgreen Co.,
Alliance Boots GmbH, AB Acquisitions
Holdings Limited, Ontario Holdings WBS
Limited, KKR Sprint (European II)Limited,
KKR Sprint (2006) Limited and KKR Sprint
(KPE) Limited, Alliance Santé Participations
S.A., Stefano Pessina and Kohlberg Kravis
Roberts & Co. L.P.
Incorporated by reference to Exhibit E to the
Schedule 13D filed by Alliance Santé
Participations S.A. filed with the SEC on
December 31, 2014).
4.21
Description of Registered Securities.
Filed herewith.
10.1†
Walgreens Boots Alliance, Inc. Management
Incentive Plan (as amended and restated
effective July 9, 2024).
Filed herewith.
10.2†
Walgreens Boots Alliance, Inc. 2021 Omnibus
Incentive Plan.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on February 2,
2021.
10.3†
Form of Performance Share Award agreement
(effective October 2022).
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on October 28,
2022.
WBA Fiscal 2024 Form 10-K
151
Exhibit
No.
Description
SEC Document Reference
10.4†
Form of Performance Share Award agreement
(effective October 2021).
Incorporated by reference to Exhibit 10.4 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
November 30, 2021 filed with the SEC on
January 6, 2022.
10.5†
Form of Stock Option Award agreement
(effective October 2021).
Incorporated by reference to Exhibit 10.5 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
November 30, 2021 filed with the SEC on
January 6, 2022.
10.6†
Form of Stock Option Award agreement
(effective January 2021).
Incorporated by reference to Exhibit 10.3 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on February 2,
2021.
10.7†
Form of Restricted Stock Unit Award agreement
(effective October 2023).
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
November 30, 2023 filed with the SEC on
January 4, 2024.
10.8†
Form of Restricted Stock Unit Award agreement
(effective March 2023).
Incorporated by reference to Exhibit 10.8 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2023 (File No. 1-36759) filed with the SEC on
October 12, 2023.
10.9†
Form of Restricted Stock Unit Award agreement
(effective October 2022).
Incorporated by reference to Exhibit 10.2 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on October 28,
2022.
10.10†
Form of Restricted Stock Unit Award agreement
(effective October 2021).
Incorporated by reference to Exhibit 10.6 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
November 30, 2021 filed with the SEC on
January 6, 2022.
10.11†
Form of Restricted Stock Unit Award agreement
(effective January 2021).
Incorporated by reference to Exhibit 10.4 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on February 2,
2021.
10.12†
Form of Restricted Stock Unit Award agreement
for Executive Chairman (effective October
2023).
Incorporated by reference to Exhibit 10.2 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
November 30, 2023 filed with the SEC on
January 4, 2024.
10.13†
Form of Restricted Stock Unit Award agreement
for Executive Chairman (effective October
2022).
Incorporated by reference to Exhibit 10.3 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on October 28,
2022.
WBA Fiscal 2024 Form 10-K
152
Exhibit
No.
Description
SEC Document Reference
10.14†
Form of Restricted Stock Unit Award agreement
for Executive Chairman (November 2021).
Incorporated by reference to Exhibit 10.7 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
November 30, 2021 filed with the SEC on
January 6, 2022.
10.15†
Amendment to the amended and restated
Walgreens Boots Alliance, Inc. 2013 Omnibus
Incentive Plan.
Incorporated by reference to Exhibit 10.5 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on February 2,
2021.
10.16†
Walgreens Boots Alliance, Inc. 2013 Omnibus
Incentive Plan (as amended and restated).
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on January 19,
2018.
10.17†
Form of Stock Option Award agreement
(effective October 2020).
Incorporated by reference to Exhibit 10.2 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on October 30,
2020.
10.18†
UK Sub-Plan under the Walgreens Boots
Alliance, Inc. 2013 Omnibus Incentive Plan.
Incorporated by reference to Exhibit 10.16 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K filed with the SEC on October 28,
2015.
10.19†
Form of Stock Option Award agreement under
UK Sub-plan (effective October 2020).
Incorporated by reference to Exhibit 10.3 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on October 30,
2020.
10.20†
Form of Stock Option Award agreement under
UK Sub-plan (effective October 2019).
Incorporated by reference to Exhibit 10.29 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2019 filed with the SEC on October 28, 2019.
10.21†
Walgreen Co. 2002 Executive Deferred
Compensation/Capital Accumulation Plan.
Incorporated by reference to Exhibit 10(g) to
Walgreen Co.’s Annual Report on Form 10-K
for the fiscal year ended August 31, 2002.
10.22†
Amendment to the Walgreen Co. 2002 et. al.
Executive Deferred Compensation/Capital
Accumulation Plans.
Incorporated by reference to Exhibit 10.3 to
Walgreen Co.’s Quarterly Report on Form 10-Q
for the fiscal quarter ended February 28, 2009.
10.23†
Walgreen Co. 2006 Executive Deferred
Compensation/Capital Accumulation Plan
(effective January 1, 2006).
Incorporated by reference to Exhibit 10(b) to
Walgreen Co.’s Quarterly Report on Form 10-Q
for the fiscal quarter ended November 30, 2005.
10.24†
Walgreens Boots Alliance, Inc. Executive
Retirement Savings Plan (as amended and
restated effective January 1, 2020).
Incorporated by reference to Exhibit 10.43 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2019 filed with the SEC on October 28, 2019.
10.25†
First Amendment to the Walgreens Boots
Alliance, Inc. Executive Retirement Savings
Plan (as amended and restated effective
January 1, 2020).
Incorporated by reference to Exhibit 10.38 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2021 filed with the SEC on October 14, 2021.
WBA Fiscal 2024 Form 10-K
153
Exhibit
No.
Description
SEC Document Reference
10.26†
Second Amendment to the Walgreens Boots
Alliance, Inc. Executive Retirement Savings
Plan (as amended and restated effective
January 1, 2020).
Incorporated by reference to Exhibit 10.31 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2023 filed with the SEC on October 12, 2023.
10.27†
Walgreens Boots Alliance, Inc. Executive
Severance and Change in Control Plan (as
amended and restated effective August 6, 2019).
Incorporated by reference to Exhibit 10.47 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2019 filed with the SEC on October 28, 2019.
10.28†
Offer Letter agreement between Stefano Pessina
and Walgreens Boots Alliance, Inc.
Incorporated by reference to Exhibit 10.29 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
February 28, 2015 filed with the SEC on April 9,
2015.
10.29†
Offer Letter agreement between Walgreens
Boots Alliance, Inc. and Ginger L. Graham,
dated September 20, 2023.
Incorporated by reference to Exhibit 10.34 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2023 filed with the SEC on October 12, 2023.
10.30†
Employment Agreement between Walgreens
Boots Alliance, Inc. and Timothy Charles
Wentworth, dated October 9, 2023.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on October 11,
2023.
10.31†
Employment Agreement between Alliance
UniChem Plc and Ornella Barra, dated
December 10, 2002.
Incorporated by reference to Exhibit 10.20 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
February 28, 2015 filed with the SEC on April 9,
2015.
10.32†
Agreement among Alliance Boots plc, Alliance
UniChem Plc and Ornella Barra, dated July 31,
2006.
Incorporated by reference to Exhibit 10.21 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
February 28, 2015 filed with the SEC on April 9,
2015.
10.33†
Novation of Service Agreement among Alliance
Boots Holdings Limited, Alliance Boots
Management Services MC S.A.M and Ornella
Barra, dated June 1, 2013.
Incorporated by reference to Exhibit 10.22 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
February 28, 2015 filed with the SEC on April 9,
2015.
10.34†
Offer Letter agreement between Walgreen Co.
and Manmohan Mahajan, dated December 16,
2015.
Incorporated by reference to Exhibit 10.39 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2023 filed with the SEC on October 12, 2023.
10.35†
Offer Letter agreement between Walgreens
Boots Alliance, Inc. and Manmohan Mahajan,
dated January 31, 2024.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
February 29, 2024 filed with the SEC on
March 28, 2024.
WBA Fiscal 2024 Form 10-K
154
Exhibit
No.
Description
SEC Document Reference
10.36†
Offer Letter agreement between Walgreens
Boots Alliance, Inc. and Mary Langowski, dated
January 12, 2024.
Filed herewith.
10.37†
Walgreens Boots Alliance, Inc. Long-Term
Global Assignment Relocation Policy.
Incorporated by reference to Exhibit 10.45 to
Walgreens Boots Alliance, Inc.’s Annual Report
on Form 10-K for the year ended August 31,
2023 filed with the SEC on October 12, 2023.
10.38†
Form of Indemnification Agreement between
Walgreens Boots Alliance, Inc. and its directors
and officers.
Incorporated by reference to Exhibit 10.2 to
Walgreens Boots Alliance, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended
May 31, 2024 filed with the SEC on June 27,
2024.
10.39†
Separation and Consulting Agreement, by and
between Walgreen Co. and John Driscoll, dated
March 27, 2024.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on March 28,
2024.
10.40
Shareholders’ Agreement, dated as of August 2,
2012, by and among Alliance Boots GmbH, AB
Acquisition Holdings Limited and Walgreen Co.
Incorporated by reference to Exhibit 10.1 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on August 6, 2012.
10.41
Framework Agreement, dated as of March 18,
2013, by and among Walgreen Co., Alliance
Boots GmbH and Cencora, Inc. (formerly known
as AmerisourceBergen Corporation).
Incorporated by reference to Exhibit 10.1 to
Walgreen Co.’s Current Report on Form 8-K
filed with the SEC on March 20, 2013.
10.42
Amended and Restated AmerisourceBergen
Shareholders Agreement, dated as of June 1,
2021, between Cencora, Inc. (formerly known as
AmerisourceBergen Corporation) and
Walgreens Boots Alliance, Inc.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on June 4,
2021.
10.43
Amendment No. 1 to the Amended and Restated
AmerisourceBergen Shareholders Agreement,
dated as of August 2, 2022, by and between
Walgreens Boots Alliance, Inc., and
Amerisource Bergen Corporation.
Incorporated by reference to Exhibit 10.2 to
Cencora, Inc.’s Quarterly Report on Form 10-Q
filed with the SEC on August 3, 2022.
10.44
Amendment No. 2 to the Amended and Restated
Shareholders Agreement, dated as of August 16,
2024, by and between Walgreens Boots
Alliance, Inc. and Cencora, Inc.
Incorporated by reference to Exhibit 10.2 to
Cencora, Inc.’s Form 8-K filed with the SEC on
August 16, 2024.
10.45*
Second Amended and Restated Limited Liability
Company Agreement of Shields Health
Solutions Parent, LLC.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on October 29,
2021.
WBA Fiscal 2024 Form 10-K
155
Exhibit
No.
Description
SEC Document Reference
10.46
Appointment and Waiver Agreement, dated as
of November 24, 2021, by and among
Walgreens Boots Alliance, Inc., WBA
Acquisition 5, LLC and Village Practice
Management Company, LLC.
Incorporated by reference to Exhibit 10.2 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on
November 26, 2021.
10.47
Nomination Rights Agreement, dated as of
December 7, 2022, by and among Walgreens
Boots Alliance, Inc., Village Practice
Management Company, LLC and Village
Practice Management Company Holdings, LLC.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on December 7,
2022.
10.48
Amended and Restated Limited Liability Company
Agreement of Village Practice Management
Company Holdings, LLC, dated as of January 3,
2023, by and among Village Practice Management
Company Holdings, LLC and its members.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on January 5,
2023.
10.49
Delayed Draw Term Loan Credit Agreement,
dated as of November 15, 2021, by and among
Walgreens Boots Alliance, Inc., the Designated
Borrowers from time to time party thereto, the
Lenders from time to time party thereto and Bank
of America, N.A., as Administrative Agent.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance Inc.’s Current Report
on Form 8-K filed on November 16, 2021.
10.50
5-Year Revolving Credit Facility, dated as of
June 17, 2022, by and among Walgreens Boots
Alliance, Inc., the Designated Borrowers from
time to time party thereto, the Lenders and L/C
Issuers from time to time party thereto and Wells
Fargo Bank, National Association, as
Administrative Agent.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on June 21,
2022.
10.51
Delayed Draw Term Loan Credit Agreement,
dated as of December 19, 2022, by and among
Walgreens Boots Alliance, Inc., the Designated
Borrowers from time to time party thereto, the
Lenders from time to time party thereto and
Toronto Dominion (Texas) LLC, as
Administrative Agent.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on
December 20, 2022.
10.52
Delayed Draw Term Loan Credit Agreement,
dated as of August 9, 2023, by and among
Walgreens Boots Alliance, Inc., the Lenders
from time to time party thereto and Bank of
America, N.A., as Administrative Agent.
Incorporated by reference to Exhibit 10.1 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on August 10,
2023.
10.53
Three-Year Revolving Credit Agreement, dated
as of August 9, 2023, by and among Walgreens
Boots Alliance, Inc., the Designated Borrowers
from time to time party thereto, the Lenders
from time to time party thereto and Bank of
America, N.A., as Administrative Agent and
Swing Line Lender.
Incorporated by reference to Exhibit 10.2 to
Walgreens Boots Alliance, Inc.’s Current Report
on Form 8-K filed with the SEC on August 10,
2023.
WBA Fiscal 2024 Form 10-K
156
Exhibit
No.
Description
SEC Document Reference
19
Walgreens Boots Alliance, Inc. Insider Trading
Policy.
Filed herewith.
21
Subsidiaries of the Registrant.
Filed herewith.
23.1
Consent of Deloitte & Touche LLP.
Filed herewith.
31.1
Certification of the Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
Filed herewith.
31.2
Certification of the Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
Filed herewith.
32.1
Certification of the Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, 18 U.S.C. Section 1350.
Furnished herewith.
32.2
Certification of the Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, 18 U.S.C. Section 1350.
Furnished herewith.
97
Walgreens Boots Alliance, Inc. Policy on
Recoupment of Incentive Compensation
Filed herewith.
101.INS
Inline XBRL Instance Document (The
following financial information from this
Annual Report on Form 10-K for the fiscal year
ended August 31, 2024 formatted in Inline
XBRL (Extensive Business Reporting
Language) includes: (i) the Consolidated
Balance Sheets; (ii) the Consolidated
Statements of Equity; (iii) the Consolidated
Statement of Earnings; (iv) the Consolidated
Statements of Comprehensive Income; (v) the
Consolidated Statements of Cash Flows; and
(vi) Notes to Financial Statements).
Filed herewith.
101.SCH
Inline XBRL Taxonomy Extension Schema
Document
Filed herewith.
101.CAL
Inline XBRL Taxonomy Extension Calculation
Linkbase Document
Filed herewith.
101.DEF
Inline XBRL Taxonomy Extension Definition
Linkbase Document
Filed herewith.
101.LAB
Inline XBRL Taxonomy Extension Label
Linkbase Document
Filed herewith.
101.PRE
Inline XBRL Taxonomy Extension Presentation
Linkbase Document
Filed herewith.
104
Cover Page Interactive Data File (formatted as
Inline XBRL document and included in
Exhibit 101)
Filed herewith.
WBA Fiscal 2024 Form 10-K
157
*
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Copies of any
omitted schedule or exhibit will be furnished supplementally to the SEC upon request.
**
Other instruments defining the rights of holders of long-term debt of the registrant and its consolidated
subsidiaries may be omitted from Exhibit 4 in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K.
Copies of any such agreements will be furnished supplementally to the SEC upon request.
†
Indicates a management contract or compensatory plan or arrangement required to be filed as exhibits
pursuant to Item 15(b) of this Form 10-K.
WBA Fiscal 2024 Form 10-K
158
Item 16. Form 10-K summary
None.
WBA Fiscal 2024 Form 10-K
159
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WALGREENS BOOTS ALLIANCE, INC.
October 15, 2024
By: /s/
Manmohan Mahajan
Manmohan Mahajan
Executive Vice President and Global Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)
Pursuant to the requirements of the Securities and Exchange Act of 1934 this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ Timothy C. Wentworth
Timothy C. Wentworth
Chief Executive Officer (Principal
Executive Officer) and Director
October 15, 2024
/s/ Manmohan Mahajan
Manmohan Mahajan
Executive Vice President and Global
Chief Financial Officer (Principal
Financial Officer)
October 15, 2024
/s/ Todd D. Heckman
Todd D. Heckman
Senior Vice President, Global
Controller and Chief Accounting
Officer (Principal Accounting Officer)
October 15, 2024
/s/ Stefano Pessina
Stefano Pessina
Executive Chairman of the Board
October 15, 2024
/s/ Janice M. Babiak
Janice M. Babiak
Director
October 15, 2024
/s/ Inderpal S. Bhandari
Inderpal S. Bhandari
Director
October 15, 2024
/s/ Ginger L. Graham
Ginger L. Graham
Director
October 15, 2024
/s/ Bryan C. Hanson
Bryan C. Hanson
Director
October 15, 2024
/s/ Robert L. Huffines
Robert L. Huffines
Director
October 15, 2024
/s/ Valerie B. Jarrett
Valerie B. Jarrett
Director
October 15, 2024
/s/ John A. Lederer
John A. Lederer
Director
October 15, 2024
/s/ Thomas E. Polen
Thomas E. Polen
Director
October 15, 2024
/s/ Nancy M. Schlichting
Nancy M. Schlichting
Director
October 15, 2024
/s/ William H. Shrank
William H. Shrank
Director
October 15, 2024
WBA Fiscal 2024 Form 10-K
160
[THIS PAGE INTENTIONALLY LEFT BLANK]
For Our Stockholders
Support Office
Walgreens Boots Alliance, Inc.
108 Wilmot Road
Deerfield, Illinois 60015
+1(847)315-3700
Stock Market Listing
The Nasdaq Stock Market LLC
Symbol: WBA
Annual Meeting of Stockholders
You are cordially invited to attend the
meeting to be held on January 30, 2025 at
8:30 a.m. Central Time, exclusively online
at www.virtualshareholdermeeting.com/
WBA2025. Information regarding how to
virtually attend will be included in the
proxy materials for the Annual Meeting.
All stockholders of record as of the close
of business on December 2, 2024 will be
sent a formal notice of the meeting and
proxy materials.
Investor Information
As of August 31, 2024, Walgreens Boots
Alliance, Inc. had approximately 41,530
stockholders of record.
Investor information is available at
investor.walgreensbootsalliance.com.
The following documents are available on
the investor site: a copy of our Annual
Report on Form 10-K for the fiscal year
ended August 31, 2024, including the
related financial statements and the financial
statement schedules, and certain other SEC
filings, charters of all committees of our
board of directors, our code of conduct and
business ethics, our code of ethics for CEO
and financial executives, our corporate
governance guidelines, our financial press
releases, our proxy statements, and our
2024 Annual Report to Stockholders.
These and other reports may also be
obtained without charge upon request to:
Investor Relations
Walgreens Boots Alliance, Inc.
108 Wilmot Road, Mail Stop #1849
Deerfield, Illinois 60015
+1(847)315-2922
Investor.relations@wba.com
Walgreens Boots Alliance, Inc. has
provided the certifications of the Chief
Executive Officer and Chief Financial
Officer pursuant to Section 302 of the
Sarbanes-Oxley Act as Exhibits 31.1 and
31.2 to its Annual Report on Form 10-K for
the fiscal year ended August 31, 2024.
Electronic Delivery
To receive proxy statements, annual reports
and related materials electronically, refer to
the proxy statement sent to stockholders
with this annual report. After January 30,
2025, contact our Investor Relations
team at +1 (847)315-2922 or go to investor.
walgreensbootsalliance.com/contact-us
to request electronic delivery.
Transfer Agent and Registrar
For assistance on matters such as lost
shares or name changes on shares,
please contact:
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
www.shareowneronline.com
Direct Stock Purchase Plan
EQ Shareowner Services sponsors and
administers a direct stock purchase plan
called Shareowner Services Plus Plan.
It is a convenient method of acquiring
additional Walgreens Boots Alliance, Inc.
stock through the reinvestment of dividends,
optional cash payments,or both. For a plan
prospectus and enrollment form, please call
EQ Shareowner Services at +1 (888)368-
7346 and allow 1-2 weeks for delivery, or
go to www.shareowneronline.com to enroll
online, or download the enrollment form
and prospectus. General inquiries to
EQ Shareowner Services regarding your
Walgreens Boots Alliance, Inc. stock should
also be directed to +1 (888)368-7346.
Value of Investment as of August 31
2019
2020
2021
2022
2023
2024
Walgreens Boots Alliance, Inc.
100.00
77.22
107.31
77.46
59.25
23.28
S&P 500
100
121.94
159.94
141.98
164.62
209.29
S&P 500 Health Care
100
122.54
155.59
145.79
158.32
190.15
S&P 500 Consumer Staples
100
111.26
127.32
132.52
137.10
162.57
Copyright© 2024 Standard & Poor’s, a division of S&P Global. All rights reserved.
This performance graph and accompanying disclosure is not soliciting material, is not deemed filed with the SEC, and is not incorporated by reference in any of the company’s filings under the Securities Act or the
Exchange Act, irrespective of the timing of, and any general incorporation language in, any such filings.
Comparison of Five-Year
Cumulative Total Return*
The following graph compares the five-year cumulative
total return of Walgreens Boots Alliance, Inc. common stock
with the S&P 500 Index, S&P 500 Health Care Index, and S&P
500 Consumer Staples Index. The graph assumes a $100.00
investment made August 31, 2019 in the applicable stock or
index and the reinvestment of all dividends. The historical
performance of our common stock is not necessarily
indicative of future stock performance.
*$100 invested on 8/31/19 in stock or index, including reinvestment of dividends.
Fiscal year ending August 31.
S&P 500 Health Care includes 65 companies.
S&P 500 Consumer Staples includes 38 companies.
0
$20
$100
$150
$200
$250
8/24
8/23
8/22
8/21
8/20
8/19
S&P 500 Consumer Staples
S&P 500
S&P 500 Health Care
Walgreens Boots Alliance, Inc.
Contact Us
Walgreens Boots Alliance, Inc.
Deerfield, IL 60015, USA
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