QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Accelerated filer ☐ | |||||
Non-accelerated filer ☐ | Smaller reporting company | ||||
Emerging growth company |
WBA Q1 2023 Form 10-Q |
Item 1. | ||||||||||||||
a) | ||||||||||||||
b) | ||||||||||||||
c) | ||||||||||||||
d) | ||||||||||||||
e) | ||||||||||||||
f) | ||||||||||||||
Item 2. | ||||||||||||||
a) | ||||||||||||||
b) | ||||||||||||||
c) | ||||||||||||||
d) | ||||||||||||||
e) | ||||||||||||||
f) | ||||||||||||||
g) | ||||||||||||||
h) | ||||||||||||||
i) | ||||||||||||||
j) | ||||||||||||||
k) | ||||||||||||||
Item 3. | ||||||||||||||
Item 4. |
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item 2. | |||||||||||
Item 5. | |||||||||||
Item 6. |
November 30, 2022 | August 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Non-current assets: | |||||||||||
Property, plant and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Equity method investments (see Note 5) | |||||||||||
Other non-current assets | |||||||||||
Total non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities, redeemable non-controlling interests and equity | |||||||||||
Current liabilities: | |||||||||||
Short-term debt | $ | $ | |||||||||
Trade accounts payable (see Note 16) | |||||||||||
Operating lease obligations | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Income taxes | |||||||||||
Total current liabilities | |||||||||||
Non-current liabilities: | |||||||||||
Long-term debt | |||||||||||
Operating lease obligations | |||||||||||
Deferred income taxes | |||||||||||
Accrued litigation obligations | |||||||||||
Other non-current liabilities | |||||||||||
Total non-current liabilities | |||||||||||
Commitments and contingencies (see Note 10) | |||||||||||
Total liabilities | |||||||||||
Redeemable non-controlling interests | |||||||||||
Equity: | |||||||||||
Preferred stock $ | |||||||||||
Common stock $ | |||||||||||
Paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Treasury stock, at cost; | ( | ( | |||||||||
Total Walgreens Boots Alliance, Inc. shareholders’ equity | |||||||||||
Non-controlling interests | |||||||||||
Total equity | |||||||||||
Total liabilities, redeemable non-controlling interests and equity | $ | $ |
WBA Q1 2023 Form 10-Q | 1 |
Three months ended November 30, 2022 | ||||||||||||||||||||||||||
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, 2022 | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | ( | — | ( | |||||||||||||||||||
Dividends declared and distributions | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||
Treasury stock purchases | ( | — | ( | — | — | — | — | ( | ||||||||||||||||||
Employee stock purchase and option plans | — | ( | — | — | — | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Redeemable non-controlling interests redemption price adjustments and other | — | — | — | ( | — | — | — | ( | ||||||||||||||||||
November 30, 2022 | $ | $ | ( | $ | $ | ( | $ | $ | $ |
Three months ended November 30, 2021 | ||||||||||||||||||||||||||
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 | $ | $ | ( | $ | $ | ( | $ | $ | $ | |||||||||||||||||
Net earnings (loss) | — | — | — | — | — | ( | ||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||
Dividends declared and distributions | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Treasury stock purchases | ( | — | ( | — | — | — | — | ( | ||||||||||||||||||
Employee stock purchase and option plans | — | ( | — | — | — | ( | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||
Business combination | — | — | — | — | — | |||||||||||||||||||||
Non-controlling interests contribution and other | — | — | — | — | — | — | ||||||||||||||||||||
November 30, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | $ |
WBA Q1 2023 Form 10-Q | 2 |
Three months ended November 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Sales | $ | $ | ||||||||||||
Cost of sales | ||||||||||||||
Gross profit | ||||||||||||||
Selling, general and administrative expenses | ||||||||||||||
Equity earnings in AmerisourceBergen | ||||||||||||||
Operating (loss) income | ( | |||||||||||||
Other income, net | ||||||||||||||
(Loss) earnings before interest and income tax (benefit) provision | ( | |||||||||||||
Interest expense, net | ||||||||||||||
(Loss) earnings before income tax (benefit) provision | ( | |||||||||||||
Income tax (benefit) provision | ( | |||||||||||||
Post-tax earnings (loss) from other equity method investments | ( | |||||||||||||
Net (loss) earnings | ( | |||||||||||||
Net loss attributable to non-controlling interests | ( | ( | ||||||||||||
Net (loss) earnings attributable to Walgreens Boots Alliance, Inc. | $ | ( | $ | |||||||||||
Net (loss) earnings per common share: | ||||||||||||||
Basic | $ | ( | $ | |||||||||||
Diluted | $ | ( | $ | |||||||||||
Weighted average common shares outstanding: | ||||||||||||||
Basic | ||||||||||||||
Diluted |
WBA Q1 2023 Form 10-Q | 3 |
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Comprehensive income: | |||||||||||
Net (loss) earnings | $ | ( | $ | ||||||||
Other comprehensive loss, net of tax: | |||||||||||
Pension/post-retirement obligations | ( | ( | |||||||||
Unrealized (loss) gain on cash flow hedges | ( | ||||||||||
Net investment hedges (loss) gain | ( | ||||||||||
Movement on available for sale debt securities | ( | ||||||||||
Share of other comprehensive income (loss) of equity method investments | ( | ||||||||||
Currency translation adjustments | ( | ||||||||||
Total other comprehensive loss | ( | ( | |||||||||
Total comprehensive (loss) income | ( | ||||||||||
Comprehensive loss attributable to non-controlling interests | ( | ( | |||||||||
Comprehensive (loss) income attributable to Walgreens Boots Alliance, Inc. | $ | ( | $ |
WBA Q1 2023 Form 10-Q | 4 |
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net (loss) earnings | $ | ( | $ | ||||||||
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income taxes | ( | ||||||||||
Stock compensation expense | |||||||||||
Earnings from equity method investments | ( | ( | |||||||||
Gain on previously held investment interests | ( | ||||||||||
Gain on sale of equity method investments | ( | ||||||||||
Other | ( | ||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net | ( | ||||||||||
Inventories | ( | ( | |||||||||
Other current assets | ( | ( | |||||||||
Trade accounts payable | |||||||||||
Accrued expenses and other liabilities | ( | ( | |||||||||
Income taxes | |||||||||||
Accrued litigation obligations | |||||||||||
Other non-current assets and liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Additions to property, plant and equipment | ( | ( | |||||||||
Proceeds from sale-leaseback transactions | |||||||||||
Proceeds from sale of other assets | |||||||||||
Business, investment and asset acquisitions, net of cash acquired | ( | ( | |||||||||
Other | |||||||||||
Net cash provided by (used for) investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Net change in short-term debt with maturities of 3 months or less | |||||||||||
Proceeds from debt | |||||||||||
Payments of debt | ( | ( | |||||||||
Stock purchases | ( | ( | |||||||||
Proceeds related to employee stock plans, net | |||||||||||
Cash dividends paid | ( | ( | |||||||||
Other | ( | ( | |||||||||
Net cash (used for) provided by financing activities | ( | ||||||||||
Effect of exchange rate changes on cash, cash equivalents, marketable securities and restricted cash | ( | ||||||||||
Changes in cash, cash equivalents, marketable securities and restricted cash: | |||||||||||
Net increase in cash, cash equivalents, marketable securities and restricted cash | |||||||||||
Cash, cash equivalents, marketable securities and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents, marketable securities and restricted cash at end of period | $ | $ |
WBA Q1 2023 Form 10-Q | 5 |
WBA Q1 2023 Form 10-Q | 6 |
Purchase price allocation: | ||||||||
Total purchase price | $ | |||||||
Less: purchase price for issuance of new preferred units at fair value 1 | ( | |||||||
Net consideration | ||||||||
Fair value of share-based compensation awards attributable to pre-combination services 2 | ||||||||
Fair value of previously held equity and debt | ||||||||
Fair value of non-controlling interest | ||||||||
Total | $ | |||||||
Identifiable assets acquired and liabilities assumed: | ||||||||
Tangible assets 1 | $ | |||||||
Intangible assets 3 | ||||||||
Liabilities | ( | |||||||
Total identifiable net assets | $ | |||||||
Goodwill | $ |
WBA Q1 2023 Form 10-Q | 7 |
Purchase price allocation: | ||||||||
Cash consideration | $ | |||||||
Fair value of share-based compensation awards attributable to pre-combination services | ||||||||
Fair value of previously held equity interests | ||||||||
Fair value of non-controlling interests | ||||||||
Total | $ | |||||||
Identifiable assets acquired and liabilities assumed: | ||||||||
Tangible assets | $ | |||||||
Intangible assets 1 | ||||||||
Liabilities | ( | |||||||
Total identifiable net assets | $ | |||||||
Goodwill | $ |
WBA Q1 2023 Form 10-Q | 8 |
Purchase price allocation: | ||||||||
Cash consideration 1 | $ | |||||||
Contingent consideration | ||||||||
Fair value of share-based compensation awards attributable to pre-combination services | ||||||||
Fair value of non-controlling interests | ||||||||
Total | $ | |||||||
Identifiable assets acquired and liabilities assumed: | ||||||||
Tangible assets | $ | |||||||
Intangible assets 2 | ||||||||
Liabilities | ( | |||||||
Total identifiable net assets | $ | |||||||
Goodwill | $ |
Three months ended November 30, | ||||||||
(Unaudited, in millions) | 2021 | |||||||
Sales | $ |
WBA Q1 2023 Form 10-Q | 9 |
Three months ended November 30, | ||||||||
(in millions) | 2021 | |||||||
Sales | $ |
WBA Q1 2023 Form 10-Q | 10 |
Three months ended November 30, 2022 | U.S. Retail Pharmacy | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | $ | $ | $ | |||||||||||||||||||
Asset impairments | |||||||||||||||||||||||
Employee severance and business transition costs | |||||||||||||||||||||||
Information technology transformation and other exit costs | |||||||||||||||||||||||
Total pre-tax exit and disposal charges | $ | $ | $ | $ |
Three months ended November 30, 2021 | U.S. Retail Pharmacy | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | $ | $ | $ | |||||||||||||||||||
Asset impairments | |||||||||||||||||||||||
Employee severance and business transition costs | |||||||||||||||||||||||
Information technology transformation and other exit costs | |||||||||||||||||||||||
Total pre-tax exit and disposal charges | $ | $ | $ | $ |
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 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Costs | ||||||||||||||||||||||||||||||||
Payments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Other | ( | ( | ( | |||||||||||||||||||||||||||||
Balance at November 30, 2022 | $ | $ | $ | $ | $ |
WBA Q1 2023 Form 10-Q | 11 |
Balance Sheet supplemental information: | November 30, 2022 | August 31, 2022 | ||||||||||||
Operating leases: | ||||||||||||||
Operating lease right-of-use assets | $ | $ | ||||||||||||
Operating lease obligations - current | ||||||||||||||
Operating lease obligations - non-current | ||||||||||||||
Total operating lease obligations | $ | $ | ||||||||||||
Finance leases: | ||||||||||||||
Right-of-use assets included in: | ||||||||||||||
$ | $ | |||||||||||||
Lease obligations included in: | ||||||||||||||
Total finance lease obligations | $ | $ |
Three months ended November 30, | ||||||||||||||
Statement of Earnings supplemental information: | 2022 | 2021 | ||||||||||||
Operating lease cost | ||||||||||||||
Fixed | $ | $ | ||||||||||||
Variable 1 | ||||||||||||||
Finance lease cost | ||||||||||||||
Amortization | $ | $ | ||||||||||||
Interest | ||||||||||||||
Sublease income | $ | $ | ||||||||||||
Impairment of right-of-use assets | ||||||||||||||
Gain on sale and leaseback 2 |
WBA Q1 2023 Form 10-Q | 12 |
Three months ended November 30, | ||||||||||||||
Other supplemental information: | 2022 | 2021 | ||||||||||||
Cash paid for amounts included in the measurement of lease obligations | ||||||||||||||
Operating cash flows from operating leases | $ | $ | ||||||||||||
Operating cash flows from finance leases | ||||||||||||||
Financing cash flows from finance leases | ||||||||||||||
Total | $ | $ | ||||||||||||
Right-of-use assets obtained in exchange for new lease obligations | ||||||||||||||
Operating leases | $ | $ | ||||||||||||
Finance leases | ||||||||||||||
Total | $ | $ |
Weighted average lease terms and discount rates: | November 30, 2022 | August 31, 2022 | ||||||||||||
Weighted average remaining lease term in years | ||||||||||||||
Operating leases | ||||||||||||||
Finance leases | ||||||||||||||
Weighted average discount rate | ||||||||||||||
Operating leases | % | % | ||||||||||||
Finance leases | % | % |
Future lease payments (fiscal years): | Finance lease | Operating lease | ||||||||||||
2023 (Remaining period) | $ | $ | ||||||||||||
2024 | ||||||||||||||
2025 | ||||||||||||||
2026 | ||||||||||||||
2027 | ||||||||||||||
2028 | ||||||||||||||
Later | ||||||||||||||
Total undiscounted minimum lease payments | $ | $ | ||||||||||||
Less: Present value discount | ||||||||||||||
Lease liability | $ | $ |
WBA Q1 2023 Form 10-Q | 13 |
November 30, 2022 | August 31, 2022 | ||||||||||||||||||||||
Carrying value | Ownership percentage | Carrying value | Ownership percentage | ||||||||||||||||||||
AmerisourceBergen | $ | $ | |||||||||||||||||||||
Others | |||||||||||||||||||||||
Total | $ | $ |
WBA Q1 2023 Form 10-Q | 14 |
Goodwill roll forward: | U.S. Retail Pharmacy | International | U.S. Healthcare | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||
August 31, 2022 | $ | $ | $ | $ | ||||||||||||||||||||||
Acquisitions | ||||||||||||||||||||||||||
Adjustments 1 | ||||||||||||||||||||||||||
Currency translation adjustments | ||||||||||||||||||||||||||
November 30, 2022 | $ | $ | $ | $ |
WBA Q1 2023 Form 10-Q | 15 |
Intangible assets: | November 30, 2022 | August 31, 2022 | |||||||||
Gross amortizable intangible assets | |||||||||||
Customer relationships and loyalty card holders 1 | $ | $ | |||||||||
Primary care provider network | |||||||||||
Trade names and trademarks | |||||||||||
Developed technology | |||||||||||
Purchasing and payor contracts | |||||||||||
Others | |||||||||||
Total gross amortizable intangible assets | $ | $ | |||||||||
Accumulated amortization | |||||||||||
Customer relationships and loyalty card holders 1 | $ | $ | |||||||||
Primary care provider network | |||||||||||
Trade names and trademarks | |||||||||||
Developed technology | |||||||||||
Purchasing and payor contracts | |||||||||||
Others | |||||||||||
Total accumulated amortization | |||||||||||
Total amortizable intangible assets, net | $ | $ | |||||||||
Indefinite-lived intangible assets | |||||||||||
Trade names and trademarks | $ | $ | |||||||||
Pharmacy licenses | |||||||||||
Total indefinite-lived intangible assets | $ | $ | |||||||||
Total intangible assets, net | $ | $ |
2023 (Remaining period) | 2024 | 2025 | 2026 | 2027 | 2028 | ||||||||||||||||||||||||||||||
Estimated annual amortization expense | $ | $ | $ | $ | $ | $ |
WBA Q1 2023 Form 10-Q | 16 |
November 30, 2022 | August 31, 2022 | ||||||||||
Short-term debt | |||||||||||
Credit facilities | |||||||||||
Unsecured | |||||||||||
Unsecured -year credit facility due 2023 | |||||||||||
$ | |||||||||||
Other 2 | |||||||||||
Total short-term debt | $ | $ | |||||||||
Long-term debt | |||||||||||
Credit facilities | |||||||||||
Unsecured -year credit facility due 2023 | $ | $ | |||||||||
Unsecured -year credit facility due 2024 | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
$ | |||||||||||
£ | |||||||||||
€ | |||||||||||
$ | |||||||||||
Other 2 | |||||||||||
Total long-term debt, less current portion | $ | $ |
WBA Q1 2023 Form 10-Q | 17 |
WBA Q1 2023 Form 10-Q | 18 |
November 30, 2022 | Notional | Fair Value | Location in Consolidated Condensed Balance Sheets | ||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||
Foreign currency forwards | $ | $ | Other current assets | ||||||||||||||
Foreign currency forwards | Other non-current assets | ||||||||||||||||
Cross currency interest rate swaps | Other non-current assets | ||||||||||||||||
Foreign currency forwards | Other current liabilities | ||||||||||||||||
Foreign currency forwards | Other non-current liabilities | ||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||
Foreign currency forwards | $ | $ | Other current assets | ||||||||||||||
Total return swap | Other current assets | ||||||||||||||||
Foreign currency forwards | Other current liabilities |
August 31, 2022 | Notional | Fair Value | Location in Consolidated Condensed Balance Sheets | ||||||||||||||
Derivatives designated as hedges: | |||||||||||||||||
Foreign currency forwards | $ | $ | Other current assets | ||||||||||||||
Cross currency interest rate swaps | Other current assets | ||||||||||||||||
Cross currency interest rate swaps | Other non-current assets | ||||||||||||||||
Foreign currency forwards | Other non-current assets | ||||||||||||||||
Foreign currency forwards | Other current liabilities | ||||||||||||||||
Derivatives not designated as hedges: | |||||||||||||||||
Foreign currency forwards | $ | $ | Other current assets | ||||||||||||||
Foreign currency forwards | Other current liabilities | ||||||||||||||||
Total return swap | Other current liabilities |
WBA Q1 2023 Form 10-Q | 19 |
Three months ended November 30, | |||||||||||||||||
Location in Consolidated Condensed Statements of Earnings | 2022 | 2021 | |||||||||||||||
Foreign currency forwards | Selling, general and administrative expenses 1 | $ | $ | ||||||||||||||
Total return swap | Selling, general and administrative expenses | ( | |||||||||||||||
Foreign currency forwards | Other income, net 1,2 | ( | ( | ||||||||||||||
November 30, 2022 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Money market funds 1 | $ | $ | $ | $ | |||||||||||||||||||
Cross currency interest rate swaps 2 | |||||||||||||||||||||||
Foreign currency forwards 3 | |||||||||||||||||||||||
Investments in debt securities 4 | |||||||||||||||||||||||
Total return swaps | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign currency forwards 3 | $ | $ | $ | $ | |||||||||||||||||||
WBA Q1 2023 Form 10-Q | 20 |
August 31, 2022 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Money market funds 1 | $ | $ | $ | $ | |||||||||||||||||||
Investments in debt securities 4 | |||||||||||||||||||||||
Cross currency interest rate swaps 2 | |||||||||||||||||||||||
Foreign currency forwards 3 | |||||||||||||||||||||||
Investments in equity securities 5 | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign currency forwards 3 | $ | $ | $ | $ | |||||||||||||||||||
Total return swaps |
WBA Q1 2023 Form 10-Q | 21 |
WBA Q1 2023 Form 10-Q | 22 |
WBA Q1 2023 Form 10-Q | 23 |
WBA Q1 2023 Form 10-Q | 24 |
WBA Q1 2023 Form 10-Q | 25 |
Three months ended November 30, | |||||||||||||||||
Location in Consolidated Condensed Statements of Earnings | 2022 | 2021 | |||||||||||||||
Service costs | Selling, general and administrative expenses | $ | $ | ||||||||||||||
Interest costs | Other income, net | ||||||||||||||||
Expected returns on plan assets/other | Other income, net | ( | ( | ||||||||||||||
Total net periodic pension income | $ | ( | $ | ( |
Pension/ post-retirement obligations | Unrealized loss on cash flow hedges | Net investment hedges | Unrealized gain (loss) on available for sale securities | Share of OCI of equity method investments | Currency translation adjustments | Total | |||||||||||||||||||||||||||||||||||
Balance at August 31, 2022 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||
Other comprehensive (loss) income before reclassification adjustments | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI | ( | ||||||||||||||||||||||||||||||||||||||||
Tax benefit (provision) | ( | ||||||||||||||||||||||||||||||||||||||||
Net change in other comprehensive (loss) income | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
Balance at November 30, 2022 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | $ | ( |
WBA Q1 2023 Form 10-Q | 26 |
Pension/ post-retirement obligations | Unrealized gain (loss) on cash flow hedges | Net investment hedges | Unrealized gain (loss) on available for sale securities | Share of AOCI of equity method investments | Currency translation adjustments | Total | |||||||||||||||||||||||||||||||||||
Balance at August 31, 2021 | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||
Other comprehensive (loss) income before reclassification adjustments | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
Tax benefit (provision) | ( | ||||||||||||||||||||||||||||||||||||||||
Net change in other comprehensive (loss) income | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
Balance at November 30, 2021 | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | $ | ( |
WBA Q1 2023 Form 10-Q | 27 |
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Sales: | |||||||||||
U.S. Retail Pharmacy | $ | $ | |||||||||
International | |||||||||||
U.S. Healthcare | |||||||||||
Walgreens Boots Alliance, Inc. | $ | $ | |||||||||
Adjusted operating income (Non-GAAP measure): | |||||||||||
U.S. Retail Pharmacy | $ | $ | |||||||||
International | |||||||||||
U.S. Healthcare | ( | ( | |||||||||
Corporate and Other | ( | ( | |||||||||
Walgreens Boots Alliance, Inc. | $ | $ | |||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Adjusted operating income (Non-GAAP measure) | $ | $ | |||||||||
Certain legal and regulatory accruals and settlements | ( | ||||||||||
Acquisition-related amortization | ( | ( | |||||||||
Transformational cost management | ( | ( | |||||||||
Adjustments to equity earnings in AmerisourceBergen | ( | ( | |||||||||
Acquisition-related costs | ( | ( | |||||||||
LIFO provision | ( | ( | |||||||||
Operating (loss) income (GAAP measure) | $ | ( | $ |
WBA Q1 2023 Form 10-Q | 28 |
Three months ended November 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
U.S. Retail Pharmacy | ||||||||||||||
Pharmacy | $ | $ | ||||||||||||
Retail | ||||||||||||||
Total | ||||||||||||||
International | ||||||||||||||
Pharmacy | ||||||||||||||
Retail | ||||||||||||||
Wholesale | ||||||||||||||
Total | ||||||||||||||
U.S. Healthcare | ||||||||||||||
Walgreens Boots Alliance, Inc. | $ | $ |
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Purchases, net | $ | $ |
November 30, 2022 | August 31, 2022 | ||||||||||
Trade accounts payable, net of Trade accounts receivable | $ | $ |
WBA Q1 2023 Form 10-Q | 29 |
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Depreciation expense | $ | $ | |||||||||
Intangible assets amortization | |||||||||||
Total depreciation and amortization expense | $ | $ |
WBA Q1 2023 Form 10-Q | 30 |
November 30, 2022 | August 31, 2022 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Restricted cash - (included in other current assets) | |||||||||||
Cash, cash equivalents, marketable securities and restricted cash | $ | $ |
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Opening balance | $ | $ | |||||||||
Acquisition of non-controlling interests 1 | |||||||||||
Net loss attributable to Redeemable non-controlling interests | ( | ( | |||||||||
Redemption price adjustments 2 | |||||||||||
Reclassifications to Accrued expenses and other liabilities 3 | ( | ||||||||||
Other | ( | ||||||||||
Ending balance | $ | $ |
WBA Q1 2023 Form 10-Q | 31 |
Quarter ended | 2022 | 2021 | ||||||||||||
November | $ | $ |
WBA Q1 2023 Form 10-Q | 32 |
WBA Q1 2023 Form 10-Q | 33 |
WBA Q1 2023 Form 10-Q | 34 |
WBA Q1 2023 Form 10-Q | 35 |
Transformational Cost Management Program Activities | Range of Charges | ||||
Lease obligations and other real estate costs 1 | $1,250 to 1,350 million | ||||
Asset impairments 2 | $750 to 800 million | ||||
Employee severance and business transition costs | $1,025 to 1,075 million | ||||
Information technology transformation and other exit costs | $300 to 350 million | ||||
Total cumulative pre-tax exit and disposal charges | $3.3 to 3.6 billion | ||||
Other IT transformation costs | $275 to 325 million | ||||
Total estimated pre-tax charges | $3.6 to 3.9 billion |
Three months ended November 30, 2022 | U.S. Retail Pharmacy | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | 79 | $ | — | $ | — | $ | 79 | |||||||||||||||
Asset impairments | 18 | — | — | 18 | |||||||||||||||||||
Employee severance and business transition costs | 11 | 1 | 4 | 16 | |||||||||||||||||||
Information technology transformation and other exit costs | 11 | 5 | — | 17 | |||||||||||||||||||
Total pre-tax exit and disposal charges | $ | 119 | $ | 6 | $ | 4 | $ | 130 | |||||||||||||||
Other IT transformation costs | 8 | 1 | — | 8 | |||||||||||||||||||
Total pre-tax charges | $ | 127 | $ | 7 | $ | 4 | $ | 138 |
Three months ended November 30, 2021 | U.S. Retail Pharmacy | International | Corporate and Other | Walgreens Boots Alliance, Inc. | |||||||||||||||||||
Lease obligations and other real estate costs | $ | 87 | $ | 2 | $ | — | $ | 89 | |||||||||||||||
Asset impairments | 15 | 25 | — | 40 | |||||||||||||||||||
Employee severance and business transition costs | 20 | 10 | 7 | 37 | |||||||||||||||||||
Information technology transformation and other exit costs | 1 | 7 | 1 | 9 | |||||||||||||||||||
Total pre-tax exit and disposal charges | $ | 123 | $ | 44 | $ | 9 | $ | 175 | |||||||||||||||
Other IT transformation costs | 18 | 10 | — | 27 | |||||||||||||||||||
Total pre-tax charges | $ | 141 | $ | 53 | $ | 9 | $ | 203 |
WBA Q1 2023 Form 10-Q | 36 |
(in millions, except per share amounts) | |||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Sales | $ | 33,382 | $ | 33,901 | |||||||
Gross profit | 6,953 | 7,574 | |||||||||
Selling, general and administrative expenses | 13,158 | 6,391 | |||||||||
Equity earnings in AmerisourceBergen | 53 | 100 | |||||||||
Operating (loss) income (GAAP) | (6,151) | 1,283 | |||||||||
Adjusted operating income (Non-GAAP measure) 1 | 1,014 | 1,777 | |||||||||
(Loss) earnings before interest and income tax (benefit) provision | (5,159) | 3,900 | |||||||||
Net (loss) earnings attributable to Walgreens Boots Alliance, Inc. (GAAP) | (3,721) | 3,580 | |||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure) 1 | 1,004 | 1,455 | |||||||||
Diluted net (loss) earnings per common share (GAAP) | (4.31) | 4.13 | |||||||||
Adjusted diluted net earnings per common share (Non-GAAP measure) 1 | 1.16 | 1.68 |
Percentage increases (decreases) | |||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Sales | (1.5) | 7.8 | |||||||||
Gross profit | (8.2) | 14.2 | |||||||||
Selling, general and administrative expenses | 105.9 | 10.4 | |||||||||
Operating (loss) income (GAAP) | NM | NM | |||||||||
Adjusted operating income (Non-GAAP measure) 1 | (42.9) | 48.5 | |||||||||
(Loss) earnings before interest and income tax (benefit) provision | NM | NM | |||||||||
Net (loss) earnings attributable to Walgreens Boots Alliance, Inc. (GAAP) | NM | NM | |||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure) 1 | (31.0) | 53.5 | |||||||||
Diluted net (loss) earnings per common share (GAAP) | NM | NM | |||||||||
Adjusted diluted net earnings per common share (Non-GAAP measure) 1 | (30.8) | 53.2 | |||||||||
Percent to sales | |||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Gross margin | 20.8 | 22.3 | |||||||||
Selling, general and administrative expenses | 39.4 | 18.9 |
WBA Q1 2023 Form 10-Q | 37 |
WBA Q1 2023 Form 10-Q | 38 |
FINANCIAL PERFORMANCE | (in millions, except location amounts) | ||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Sales | $ | 27,204 | $ | 28,032 | |||||||
Gross profit | 5,886 | 6,347 | |||||||||
Selling, general and administrative expenses | 11,698 | 5,091 | |||||||||
Equity earnings in AmerisourceBergen | 53 | 100 | |||||||||
Operating (loss) income (GAAP) | (5,758) | 1,356 | |||||||||
Adjusted operating income (Non-GAAP measure) 1 | 1,105 | 1,690 | |||||||||
Number of prescriptions 2 | 211.3 | 218.0 | |||||||||
30-day equivalent prescriptions 2,3 | 311.6 | 313.8 | |||||||||
Number of locations at period end | 8,817 | 8,942 |
Percentage increases (decreases) | |||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Sales | (3.0) | 3.2 | |||||||||
Gross profit | (7.3) | 12.6 | |||||||||
Selling, general and administrative expenses | 129.8 | 6.7 | |||||||||
Operating (loss) income (GAAP) | NM | NM | |||||||||
Adjusted operating income (Non-GAAP measure) 1 | (34.6) | 46.3 | |||||||||
Comparable sales 4 | 3.8 | 7.9 | |||||||||
Pharmacy sales | (4.2) | 1.1 | |||||||||
Comparable pharmacy sales 4 | 4.8 | 6.8 | |||||||||
Retail sales | 0.8 | 10.1 | |||||||||
Comparable retail sales 4 | 1.4 | 10.6 | |||||||||
Comparable number of prescription 2,4 | (3.1) | 7.1 | |||||||||
Comparable 30-day equivalent prescriptions 2,3,4 | — | 6.2 |
Percent to sales | |||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Gross margin | 21.6 | 22.6 | |||||||||
Selling, general and administrative expenses | 43.0 | 18.2 |
WBA Q1 2023 Form 10-Q | 39 |
WBA Q1 2023 Form 10-Q | 40 |
FINANCIAL PERFORMANCE | (in millions, except location amounts) | ||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Sales | $ | 5,189 | $ | 5,818 | |||||||
Gross profit | 1,050 | 1,207 | |||||||||
Selling, general and administrative expenses | 944 | 1,153 | |||||||||
Operating income (GAAP) | 106 | 54 | |||||||||
Adjusted operating income (Non-GAAP measure) 1 | 116 | 164 | |||||||||
Number of locations at period end | 3,978 | 4,020 |
Percentage increases (decreases) | |||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Sales | (10.8) | 35.8 | |||||||||
Gross profit | (13.0) | 21.9 | |||||||||
Selling, general and administrative expenses | (18.2) | 21.1 | |||||||||
Operating income (GAAP) | 96.5 | 39.8 | |||||||||
Adjusted operating income (Non-GAAP measure) 1 | (28.9) | 89.0 | |||||||||
Comparable sales in constant currency 2 | 5.9 | 12.0 | |||||||||
Pharmacy sales | (14.7) | 13.6 | |||||||||
Comparable pharmacy sales in constant currency 2 | 1.2 | 9.2 | |||||||||
Retail sales | (8.1) | 18.0 | |||||||||
Comparable retail sales in constant currency 2 | 8.7 | 13.7 |
WBA Q1 2023 Form 10-Q | 41 |
Percent to sales | |||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Gross margin | 20.2 | 20.7 | |||||||||
Selling, general and administrative expenses | 18.2 | 19.8 |
WBA Q1 2023 Form 10-Q | 42 |
FINANCIAL PERFORMANCE | (in millions, except location amounts) | ||||||||||
Three months ended November 30, | |||||||||||
2022 | 2021 | ||||||||||
Sales | $ | 989 | $ | 51 | |||||||
Gross profit | 17 | 20 | |||||||||
Selling, general and administrative expenses | 454 | 65 | |||||||||
Operating loss (GAAP) | (436) | (45) | |||||||||
Adjusted operating loss (Non-GAAP measure) 1 | (152) | (13) | |||||||||
Adjusted EBITDA (Non-GAAP measure) 1 | (124) | (10) | |||||||||
Number of payor/provider partnerships at period end | 3 | 2 | |||||||||
Number of locations with Walgreens Health Corners at period end | 112 | 45 | |||||||||
Number of VillageMD co-located clinics at period end 2 | 182 | 72 | |||||||||
Number of total VillageMD clinics at period end 2 | 375 | 256 |
WBA Q1 2023 Form 10-Q | 43 |
WBA Q1 2023 Form 10-Q | 44 |
Three months ended November 30, 2022 | ||||||||||||||||||||||||||||||||
U.S. Retail Pharmacy | International | U.S. Healthcare | Corporate and Other | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||||
Operating (loss) income (GAAP) | $ | (5,758) | $ | 106 | $ | (436) | $ | (63) | $ | (6,151) | ||||||||||||||||||||||
Certain legal and regulatory accruals and settlements | 6,554 | — | — | — | 6,554 | |||||||||||||||||||||||||||
Transformational cost management | 127 | 7 | — | 4 | 138 | |||||||||||||||||||||||||||
Acquisition-related amortization | 78 | 14 | 238 | — | 330 | |||||||||||||||||||||||||||
Acquisition-related costs | 1 | (11) | 47 | 3 | 39 | |||||||||||||||||||||||||||
Adjustments to equity earnings in AmerisourceBergen | 86 | — | — | — | 86 | |||||||||||||||||||||||||||
LIFO provision | 18 | — | — | — | 18 | |||||||||||||||||||||||||||
Adjusted operating income (loss) (Non-GAAP measure) | $ | 1,105 | $ | 116 | $ | (152) | $ | (56) | $ | 1,014 |
Three months ended November 30, 2021 | ||||||||||||||||||||||||||||||||
U.S. Retail Pharmacy | International | U.S. Healthcare | Corporate and Other | Walgreens Boots Alliance, Inc. | ||||||||||||||||||||||||||||
Operating income (loss) (GAAP) | $ | 1,356 | $ | 54 | $ | (45) | $ | (82) | $ | 1,283 | ||||||||||||||||||||||
Transformational cost management | 141 | 54 | — | 9 | 203 | |||||||||||||||||||||||||||
Acquisition-related amortization | 140 | 17 | 8 | — | 165 | |||||||||||||||||||||||||||
Acquisition-related costs | (3) | 39 | 24 | 11 | 71 | |||||||||||||||||||||||||||
Adjustments to equity earnings in AmerisourceBergen | 43 | — | — | — | 43 | |||||||||||||||||||||||||||
LIFO provision | 14 | — | — | — | 14 | |||||||||||||||||||||||||||
Adjusted operating income (loss) (Non-GAAP measure) | $ | 1,690 | $ | 164 | $ | (13) | $ | (63) | $ | 1,777 |
WBA Q1 2023 Form 10-Q | 45 |
Three months ended November 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net (loss) earnings attributable to Walgreens Boots Alliance, Inc. (GAAP) | $ | (3,721) | $ | 3,580 | ||||||||||
Adjustments to operating (loss) income: | ||||||||||||||
Certain legal and regulatory accruals and settlements 1 | 6,554 | — | ||||||||||||
Transformational cost management 2 | 138 | 203 | ||||||||||||
Acquisition-related amortization 3 | 330 | 165 | ||||||||||||
Acquisition-related costs 4 | 39 | 71 | ||||||||||||
Adjustments to equity earnings in AmerisourceBergen 5 | 86 | 43 | ||||||||||||
LIFO provision 6 | 18 | 14 | ||||||||||||
Total adjustments to operating (loss) income | 7,166 | 495 | ||||||||||||
Adjustments to other income, net: | ||||||||||||||
Net investment hedging loss 7 | — | 1 | ||||||||||||
Gain on previously held investments 8 | — | (2,576) | ||||||||||||
Gain on sale of equity method investments 9 | (969) | — | ||||||||||||
Total adjustments to other income, net | (969) | (2,574) | ||||||||||||
Adjustments to income tax (benefit) provision: | ||||||||||||||
Equity method non-cash tax 10 | 8 | 18 | ||||||||||||
Tax impact of adjustments 10 | (1,438) | (26) | ||||||||||||
Total adjustments to income tax (benefit) provision | (1,430) | (8) | ||||||||||||
Adjustments to post-tax earnings (loss) from other equity method investments: | ||||||||||||||
Adjustments to earnings (loss) in other equity method investments 11 | 8 | 15 | ||||||||||||
Total adjustments to post-tax earnings (loss) from other equity method investments | 8 | 15 | ||||||||||||
Adjustments to net loss attributable to non-controlling interests: | ||||||||||||||
Transformational cost management 2 | — | (1) | ||||||||||||
Acquisition-related amortization 3 | (37) | (32) | ||||||||||||
Acquisition-related costs 4 | (14) | (17) | ||||||||||||
Total adjustments to net loss attributable to non-controlling interests | (51) | (50) | ||||||||||||
Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure) | $ | 1,004 | $ | 1,455 | ||||||||||
Diluted net (loss) earnings per common share (GAAP) 12 | $ | (4.31) | $ | 4.13 | ||||||||||
Adjustments to operating (loss) income | 8.29 | 0.57 | ||||||||||||
Adjustments to other income, net | (1.12) | (2.97) | ||||||||||||
Adjustments to income tax (benefit) provision | (1.65) | (0.01) | ||||||||||||
Adjustments to post-tax earnings (loss) from other equity method investments 11 | 0.01 | 0.02 | ||||||||||||
Adjustments to net loss attributable to non-controlling interests | (0.06) | (0.06) | ||||||||||||
Adjusted diluted net earnings per common share (Non-GAAP measure) 13 | $ | 1.16 | $ | 1.68 | ||||||||||
Weighted average common shares outstanding, diluted (in millions) 13 | 864.3 | 867.6 |
WBA Q1 2023 Form 10-Q | 46 |
Three months ended November 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Operating loss (GAAP) 14 | $ | (436) | $ | (45) | ||||||||||
Acquisition-related amortization 3 | 238 | 8 | ||||||||||||
Acquisition-related costs 4 | 47 | 24 | ||||||||||||
Adjusted operating loss (Non-GAAP measure) | (152) | (13) | ||||||||||||
Depreciation expense | 15 | 2 | ||||||||||||
Stock-based compensation expense 15 | 12 | — | ||||||||||||
Adjusted EBITDA (Non-GAAP measure) | $ | (124) | $ | (10) |
1 | 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 within Selling, general and administrative expenses. During the three months ended November 30, 2022, the Company recorded a $6.5 billion charge related to the previously announced opioid litigation settlement frameworks and certain other opioid-related matters. | ||||
2 | Transformational Cost Management Program charges are costs associated with a formal restructuring plan. These charges are primarily recorded within Selling, general and administrative expenses. These costs do not reflect current operating performance and are impacted by the timing of restructuring activity. | ||||
3 | Acquisition-related amortization includes amortization of acquisition-related intangible assets, inventory valuation adjustments and stock-based compensation fair valuation adjustments. 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 within Selling, general and administrative expenses. Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of the inventory reflects cost of acquired inventory and a portion of the expected profit margin. The acquisition-related inventory valuation adjustments exclude the expected profit margin component from cost of sales recorded under the business combination accounting principles. 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. | ||||
4 | Acquisition-related costs are transaction and integration costs associated with certain merger, acquisition and divestitures related activities. These costs include charges incurred related to certain mergers, acquisition and divestitures related activities recorded in operating income, for example, costs related to integration efforts for merger, acquisition and divestitures activities. Examples of such costs include deal costs, severance and stock compensation. These charges are primarily recorded within Selling, general and administrative expenses. 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. | ||||
5 | Adjustments to equity earnings in AmerisourceBergen consist of the Company’s proportionate share of non-GAAP adjustments reported by AmerisourceBergen consistent with the Company’s non-GAAP measures. | ||||
6 | 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. | ||||
7 | Gain or loss on certain derivative instruments used as economic hedges of the Company’s net investments in foreign subsidiaries. These charges are recorded within Other income, net. We do not believe this volatility related to mark-to-market adjustment on the underlying derivative instruments reflects the Company’s operational performance. | ||||
8 | Includes significant gains on business combinations due to the remeasurement of previously held minority equity interests and debt securities to fair value. During the three months ended November 30, 2021, the Company recorded such pre-tax gains of $2.2 billion and $402 million for VillageMD and Shields, respectively. | ||||
9 | Includes significant gains on the sale of equity method investments. During the three months ended November 30, 2022, the Company recorded a gain of $969 million in Other income, net due to a partial sale of its equity method investment in AmerisourceBergen. |
WBA Q1 2023 Form 10-Q | 47 |
10 | Adjustments to income tax (benefit) provision include adjustments to the GAAP basis tax (benefit) provision 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 (benefit) provision. | ||||
11 | Adjustments to post tax earnings (loss) from other equity method investments consist of the proportionate share of certain equity method investees’ non-cash items or unusual or infrequent items consistent with the Company’s non-GAAP adjustments. These charges are recorded within post tax earnings (loss) from other equity method investments. 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. | ||||
12 | Due to the anti-dilutive effect resulting from the reported net loss, the impact of potentially dilutive securities on the per share amounts has been omitted from the quarterly calculation of weighted-average common shares outstanding for diluted EPS for the three months ended November 30, 2022. | ||||
13 | Includes impact of potentially dilutive securities in the quarterly calculation of weighted-average common shares, diluted for adjusted diluted net earnings per common share calculation purposes for the three months ended November 30, 2022. | ||||
14 | The Company reconciles Adjusted EBITDA for 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. | ||||
15 | Includes U.S. GAAP stock-based compensation expense excluding expenses related to acquisition-related amortization and acquisition-related costs. |
WBA Q1 2023 Form 10-Q | 48 |
WBA Q1 2023 Form 10-Q | 49 |
Three months ended November 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
U.S. Retail Pharmacy | $ | 452 | $ | 355 | ||||||||||
International | 71 | 84 | ||||||||||||
U.S. Healthcare | 87 | 15 | ||||||||||||
Total additions to property, plant and equipment | $ | 610 | $ | 454 |
WBA Q1 2023 Form 10-Q | 50 |
Rating agency | Long-term debt rating | Commercial paper rating | Outlook | ||||||||
Moody’s | Baa2 | P-2 | Negative watch | ||||||||
Standard & Poor’s | BBB | A-2 | Stable outlook |
WBA Q1 2023 Form 10-Q | 51 |
WBA Q1 2023 Form 10-Q | 52 |
WBA Q1 2023 Form 10-Q | 53 |
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 repurchase programs 1 | Approximate dollar value of shares that may yet be purchased under the plans or program 1 | ||||||||||||||||||||||
09/01/22 - 09/30/22 | — | $ | — | — | $ | 2,003,419,960 | ||||||||||||||||||||
10/01/22 - 10/31/22 | 4,438,228 | 33.79 | — | 2,003,419,960 | ||||||||||||||||||||||
11/01/22 - 11/30/22 | — | — | — | 2,003,419,960 | ||||||||||||||||||||||
4,438,228 | — |
WBA Q1 2023 Form 10-Q | 54 |
Exhibit No. | Description | SEC Document Reference | ||||||||||||
2.1** | 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 equity holders 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 Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on September 20, 2022. | ||||||||||||
2.2** | 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 (File No. 1-36759) filed with the SEC on November 8, 2022. | ||||||||||||
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 (File No. 1-36759) filed with the SEC on January 5, 2023. | |||||||||||||
2.4** | 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 (File No. 1-36759) filed with the SEC on January 5, 2023. | ||||||||||||
2.5** | 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 (File No. 1-36759) filed with the SEC on November 8, 2022. | ||||||||||||
2.6** | 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 (File No. 1-36759) filed with the SEC on January 5, 2023. | ||||||||||||
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 (File No. 1-36759) filed with the SEC on December 31, 2014. | |||||||||||||
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 (File No. 1-36759) filed with the SEC on June 10, 2016. |
WBA Q1 2023 Form 10-Q | 55 |
10.1* | Form of Performance Share Award agreement. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on October 28, 2022. | ||||||||||||
10.2* | Form of Restricted Stock Unit Award agreement. | Incorporated by reference to Exhibit 10.2 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on October 28, 2022. | ||||||||||||
10.3* | Form of Restricted Stock Unit Award agreement for Executive Chairman. | Incorporated by reference to Exhibit 10.3 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on October 28, 2022. | ||||||||||||
10.4* | Separation Agreement, General Release and Waiver, by and between John Standley and Walgreens Boots Alliance, Inc., dated November 20, 2022. | Incorporated by reference to Exhibit 10.1 to Walgreens Boots Alliance, Inc.’s Current Report on Form 8-K/A (File No. 1-36759) filed with the SEC on November 23, 2022. | ||||||||||||
Form of Eighth Amended and Restated Limited Liability Company Agreement of Village Practice Management Company, LLC. | Incorporated by reference to Exhibit 10.1 to Walgreen’s Boots Alliance, Inc.’s Current Report on Form 8-K (File No. 1-36759) filed with the SEC on November 8, 2022. | |||||||||||||
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 (File No. 1-36759) filed with the SEC on December 7, 2022. | |||||||||||||
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 (File No. 1-36759) filed with the SEC on December 20, 2022. | |||||||||||||
10.8** | 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 (File No. 1-36759) filed with the SEC on January 5, 2023. | ||||||||||||
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | |||||||||||||
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | |||||||||||||
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. | |||||||||||||
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. |
WBA Q1 2023 Form 10-Q | 56 |
101.INS | Inline XBRL Instance Document (The following financial information from this Quarterly Report on Form 10-Q for the quarter ended November 30, 2022 formatted in Inline XBRL (Extensive Business Reporting Language) includes: (i) the Consolidated Condensed Balance Sheets; (ii) the Consolidated Condensed Statements of Equity; (iii) the Consolidated Condensed Statements of Earnings; (iv) the Consolidated Condensed Statements of Comprehensive Income; (v) the Consolidated Condensed Statements of Cash Flows; and (vi) Notes 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 Q1 2023 Form 10-Q | 57 |
Walgreens Boots Alliance, Inc. | |||||
(Registrant) | |||||
Dated: January 5, 2023 | /s/ James Kehoe | ||||
James Kehoe | |||||
Executive Vice President and Global Chief Financial Officer | |||||
Principal Financial Officer | |||||
Dated: January 5, 2023 | /s/ Manmohan Mahajan | ||||
Manmohan Mahajan | |||||
Senior Vice President, Global Controller and Chief Accounting Officer | |||||
Principal Accounting Officer |
WBA Q1 2023 Form 10-Q | 58 |
/s/ | Rosalind G. Brewer | Chief Executive Officer | Date: January 5, 2023 | |||||||||||
Rosalind G. Brewer |
/s/ | James Kehoe | Global Chief Financial Officer | Date: January 5, 2023 | |||||||||||
James Kehoe |
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares |
Nov. 30, 2022 |
Aug. 31, 2022 |
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Equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 32,000,000 | 32,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 3,200,000,000 | 3,200,000,000 |
Common stock, issued (in shares) | 1,172,513,618 | 1,172,513,618 |
Treasury stock, at cost (in shares) | 310,171,383 | 307,874,161 |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
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Nov. 30, 2022 |
Nov. 30, 2021 |
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Comprehensive income: | ||
Net (loss) earnings | $ (3,816) | $ 3,531 |
Other comprehensive loss, net of tax: | ||
Pension/post-retirement obligations | (5) | (5) |
Unrealized (loss) gain on cash flow hedges | (2) | 1 |
Net investment hedges (loss) gain | (29) | 44 |
Movement on available for sale debt securities | 0 | (96) |
Share of other comprehensive income (loss) of equity method investments | 4 | (46) |
Currency translation adjustments | 23 | (94) |
Total other comprehensive loss | (10) | (196) |
Total comprehensive (loss) income | (3,826) | 3,336 |
Comprehensive loss attributable to non-controlling interests | (94) | (51) |
Comprehensive (loss) income attributable to Walgreens Boots Alliance, Inc. | $ (3,732) | $ 3,387 |
Accounting policies |
3 Months Ended |
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Nov. 30, 2022 | |
Accounting Policies [Abstract] | |
Accounting policies | Accounting policies Basis of presentation The Consolidated Condensed Financial Statements of Walgreens Boots Alliance, Inc. (“Walgreens Boots Alliance” or the “Company”) included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The Consolidated Condensed 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 Consolidated Condensed Financial Statements included herein are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited Consolidated Condensed Financial Statements should be read in conjunction with the audited financial statements and the notes thereto included in the Walgreens Boots Alliance Annual Report on Form 10-K for the fiscal year ended August 31, 2022, as amended by Form 10-K/A for the fiscal year ended August 31, 2022 filed on November 23, 2022. The preparation of financial statements in accordance with 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. In the opinion of management, the unaudited Consolidated Condensed Financial Statements for the interim periods presented include all adjustments necessary to present a fair statement of the results for such interim periods. The impact of COVID-19, the influence of certain holidays, seasonality, foreign currency rates, changes in vendor, payor and customer relationships and terms, strategic transactions including acquisitions, dispositions, changes in laws and general economic conditions 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 Condensed Financial Statements and associated notes may not add due to rounding. Percentages have been calculated using unrounded amounts for all periods presented. New accounting pronouncementsAdoption of new accounting pronouncements Disclosures by business entities about government assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. This ASU requires disclosures that are expected to increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The Company adopted the new standard effective September 1, 2022, and the adoption did not impact the Company's disclosures within these consolidated condensed financial statements. New accounting pronouncements not yet adopted Acquired contract assets and contract liabilities in a business combination In October 2021, the FASB issued 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 fiscal years beginning after December 15, 2022 (fiscal 2024). The Company is evaluating the effect of adopting this new accounting guidance. 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 is evaluating the effect of adopting this new accounting guidance.
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Acquisitions |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions and other investments VillageMD acquisition On November 24, 2021, the Company completed the acquisition of Village Practice Management Company, LLC (“VillageMD”). 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 has an option to prepay, and VillageMD has an option to require redemption of, the promissory note at any time. The promissory note is eliminated in consolidation within the Consolidated Condensed Balance Sheets. 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 Condensed Statements of Earnings of $1,597 million 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 Condensed 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 loss in the Consolidated Condensed Balance Sheets. A majority of the gains did not generate a tax expense. In the three months ended November 30, 2022, 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. 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):
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 Health Solutions Parent, LLC (“Shields”). 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 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 Condensed Balance Sheets upon acquisition. As a result of this acquisition, in the three months ended November 30, 2021, 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 Condensed Statements of Earnings. A majority of the gain did not generate a tax expense. In the three months ended November 30, 2022, 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. 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):
1.Intangibles acquired include customer relationships, trade names and developed technology, with a fair value of $896 million, $47 million and $117 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 September 20, 2022, the Company announced the acceleration of its plans for full ownership of Shields. The Company entered into a definitive agreement to acquire the remaining 30% equity interest for approximately $1.4 billion of cash consideration. As a result, as of November 30, 2022, the redeemable non-controlling interest to be acquired was reclassified to Accrued expenses and other liabilities in the Consolidated Condensed Balance Sheets. On December 28, 2022, the Company completed the acquisition of the remaining 30% equity interest in Shields. CareCentrix acquisition On August 31, 2022, the Company completed the acquisition of CCX Next, LLC (“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 leading player 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 Condensed Balance Sheets. In the three months ended November 30, 2022, the Company 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 $62 million. As of November 30, 2022, the Company had not completed the analysis to assign fair values to all tangible and intangible assets acquired and liabilities assumed. As such, the preliminary purchase price allocation will be subject to further refinement and may change. These changes may relate to finalization of the fair value of the purchase consideration and the allocation of purchase consideration to all tangible and intangible assets acquired and identified and liabilities assumed. The following table summarizes the consideration for the acquisition and the preliminary amounts of identified assets acquired and liabilities assumed at the date of the transaction (in millions):
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 October 11, 2022, the Company announced the acceleration of its plans for full ownership of CareCentrix. The Company entered into a definitive agreement to acquire the remaining 45% equity interest for approximately $392 million of cash consideration, less transaction expenses. As a result, as of November 30, 2022, the redeemable non-controlling interest to be acquired was reclassified to Accrued expenses and other liabilities in the Consolidated Condensed Balance Sheets. The acquisition is expected to close in the third quarter of fiscal 2023. Supplemental pro forma information The following table represents unaudited supplemental pro forma consolidated sales for the three months ended November 30, 2021, as if the acquisitions of VillageMD, Shields and CareCentrix had occurred at the beginning of the period. 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.
Actual sales of the acquired companies for the three months ended November 30, 2021, included in the Consolidated Condensed Statements of Earnings are as follows:
Pro forma net earnings of the Company, assuming the acquisitions had occurred at the beginning of each period presented, would not be materially different from the results reported. See Note 14. Segment reporting for further information. Other acquisitions and investments The Company acquired certain prescription files and related pharmacy inventory primarily in the United States (“U.S.”) for the aggregate purchase price of $55 million and $74 million during the three months ended November 30, 2022 and 2021, respectively.
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Exit and disposal activities |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exit and disposal activities | 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. On October 12, 2021, the Company expanded and extended the Transformational Cost Management Program through the end of fiscal 2024 and increased its annual cost savings target to $3.3 billion by the end of fiscal 2024. In fiscal 2022, the Company increased its annual cost savings target from $3.3 billion to $3.5 billion, by the end of fiscal 2024. The Company is currently on track to achieve the savings target. The Transformational Cost Management Program, which is multi-faceted and includes divisional optimization initiatives, global smart spending, global smart organization and the transformation of the Company’s information technology (IT) capabilities, is designed to help the Company achieve increased cost efficiencies. To date, the Company has taken actions across all aspects of the Transformational Cost Management Program which focus on the U.S. Retail Pharmacy and International reportable segments along with the Company's global functions. Divisional optimization within the Company’s segments includes activities such as optimization of stores, including plans to close approximately 350 Boots stores in the UK and approximately 450 to 500 stores in the U.S. As of November 30, 2022, the Company has closed 244 and 363 stores in the UK and U.S., respectively. The Company currently estimates that the Transformational Cost Management Program will result in cumulative pre-tax charges to its GAAP financial results of approximately $3.6 billion to $3.9 billion, of which $3.3 billion to $3.6 billion are expected to be recorded as exit and disposal activities. 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. From the inception of the Transformational Cost Management Program to November 30, 2022, the Company has recognized cumulative pre-tax charges to its financial results in accordance with GAAP of $2.1 billion , which were primarily recorded within Selling, general and administrative expenses within the Consolidated Condensed Statements of Earnings. These charges included $681 million related to lease obligations and other real estate costs, $461 million in asset impairments, $739 million in employee severance and business transition costs and $219 million of information technology transformation and other exit costs. Costs related to exit and disposal activities under the Transformational Cost Management Program for the three months ended November 30, 2022 and 2021, respectively, were as follows (in millions):
The changes in liabilities and assets related to the exit and disposal activities under Transformational Cost Management Program include the following (in millions):
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Leases |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LeasesThe Company leases certain retail stores, clinics, warehouses, distribution centers, office space, land, and equipment. Initial terms for leased premises in the U.S. are typically 15 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. Lease commencement is the date the Company has the right to control the property. The Company recognizes operating lease rent expense on a straight line basis over the lease term. In addition to minimum fixed rentals, some leases provide for contingent rentals based on sales volume. Supplemental balance sheet information related to leases were as follows (in millions):
Supplemental income statement information related to leases were as follows (in millions):
1Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume. 2Recorded within Selling, general and administrative expenses within the Consolidated Condensed Statements of Earnings. Other supplemental information was as follows (in millions):
Weighted average lease term and discount rate for real estate leases were as follows:
The aggregate future lease payments for operating and finance leases as of November 30, 2022 were as follows (in millions):
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Leases | LeasesThe Company leases certain retail stores, clinics, warehouses, distribution centers, office space, land, and equipment. Initial terms for leased premises in the U.S. are typically 15 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. Lease commencement is the date the Company has the right to control the property. The Company recognizes operating lease rent expense on a straight line basis over the lease term. In addition to minimum fixed rentals, some leases provide for contingent rentals based on sales volume. Supplemental balance sheet information related to leases were as follows (in millions):
Supplemental income statement information related to leases were as follows (in millions):
1Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume. 2Recorded within Selling, general and administrative expenses within the Consolidated Condensed Statements of Earnings. Other supplemental information was as follows (in millions):
Weighted average lease term and discount rate for real estate leases were as follows:
The aggregate future lease payments for operating and finance leases as of November 30, 2022 were as follows (in millions):
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity method investments | Equity method investments Equity method investments were as follows (in millions, except percentages):
AmerisourceBergen investment As of November 30, 2022 and August 31, 2022, the Company owned approximately 19.6% and 25.4%, respectively, of AmerisourceBergen common stock based on the share count publicly reported by AmerisourceBergen in its filings with the SEC. On November 10, 2022, the Company sold 13.2 million shares of AmerisourceBergen common stock through a registered public offering and a concurrent share repurchase by AmerisourceBergen for total consideration of approximately $2.0 billion, decreasing the Company's ownership of AmerisourceBergen’s common stock from approximately 52.9 million shares, held at August 31, 2022, to approximately 39.6 million shares held as of November 30, 2022. The transaction resulted in the Company recording a pre-tax gain of $969 million in Other income, net in the Consolidated Condensed Statements of Earnings, including a $110 million loss reclassified from within Accumulated other comprehensive loss in the Consolidated Condensed Balance Sheets. On December 13, 2022, the Company sold 6.0 million shares of AmerisourceBergen common stock pursuant to Rule 144 and a concurrent share repurchase by AmerisourceBergen, for total consideration of approximately $984 million, decreasing the Company's ownership of AmerisourceBergen’s common stock from approximately 39.6 million shares, held at November 30, 2022, to approximately 33.7 million shares held as of January 5, 2023 reflecting approximately 16.7% of AmerisourceBergen outstanding common stock. The Company accounts for its equity investment in AmerisourceBergen 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 AmerisourceBergen, the Company accounts for this equity method investment on a financial reporting lag of two months. Equity earnings from AmerisourceBergen are reported as a separate line in the Consolidated Condensed Statements of Earnings. During the three months ended November 30, 2022 and 2021, the Company recognized equity earnings in AmerisourceBergen of $53 million and $100 million, respectively. The Level 1 fair market value of the Company’s equity investment in AmerisourceBergen common stock at November 30, 2022 and August 31, 2022 was $6.8 billion and $7.7 billion, respectively. As of November 30, 2022 the carrying value of the Company’s investment in AmerisourceBergen exceeded its proportionate share of the net assets of AmerisourceBergen by $2.9 billion. This premium of $2.9 billion was recognized as part of the carrying value in the Company’s equity investment in AmerisourceBergen. The difference was primarily related to goodwill and the fair value of AmerisourceBergen intangible assets. Other investments The Company’s other equity method investments primarily include its U.S. investments in Option Care Health, through its subsidiary HC Group Holdings I, LLC (“HC Group Holdings”), and BrightSpring Health Services, and the Company’s investments in China in Sinopharm Medicine Holding Guoda Drugstores Co., Ltd, Guangzhou Pharmaceuticals Corporation, and Nanjing Pharmaceutical Company Limited. On December 15, 2022, the Company sold its ownership interest in Guangzhou Pharmaceuticals Corporation for total consideration of approximately $150 million. The Company reported $7 million of post-tax equity earnings and $7 million of post-tax equity losses from other equity method investments for the three months ended November 30, 2022 and 2021, respectively. During the three months ended November 30, 2021, 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 Condensed 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.
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets | 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. Based on the analysis completed during fiscal 2022, as of the June 1, 2022 valuation date, the fair values of the Company’s reporting units exceeded their carrying amounts ranging from approximately 7% to approximately 198%. The Boots reporting unit's fair value was in excess of its carrying value by approximately 7%, compared to 18% as of June 1, 2021. As of November 30, 2022, the carrying value of goodwill within the Boots reporting unit was $919 million. The fair values of indefinite-lived intangibles within the Boots reporting unit approximate their carrying values. As of November 30, 2022 and August 31, 2022, the carrying value of the indefinite-lived intangibles within the Boots reporting unit was $5.5 billion. Indefinite-lived intangible assets fair values are estimated using the relief from royalty method and excess earnings method of the income approach. 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. 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, the impact of COVID-19, its severity, duration and its impact on global economies, general economic conditions, as well as our profitability. The Company will continue to monitor these potential impacts and economic, industry and market trends, and the impact these may have on the reporting units. Changes in the carrying amount of goodwill by reportable segment consist of the following (in millions):
1Includes measurement period adjustments related to acquisition of VillageMD, Shields and CareCentrix. See Note 2. Acquisitions and other investments for further information. The carrying amount and accumulated amortization of intangible assets consist of the following (in millions):
1Includes purchased prescription files. Amortization expense for intangible assets was $159 million and $165 million for the three months ended November 30, 2022, and 2021, respectively. Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at November 30, 2022 is as follows (in millions):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt carrying values are presented net of unamortized discount and debt issuance costs, where applicable, and foreign currency denominated debt is translated 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):
1Notes are unsecured and unsubordinated 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. 2Other debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 3Notes are senior debt obligations of Walgreen Co. and rank equally with all other unsecured and unsubordinated indebtedness of Walgreen Co. On December 31, 2014, the Company fully and unconditionally guaranteed the outstanding notes on an unsecured and unsubordinated basis. The guarantee, for so long as it is in place, is an unsecured, unsubordinated debt obligation of the Company and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Company. $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 contain a call option which allow 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. Credit facilities June 17, 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 and ranges from 80 basis points to 150 basis points over specified benchmark rates for eurocurrency rate and Secured Overnight Financing Rate (“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 is December 15, 2023, or earlier, subject to the Company's discretion to terminate the agreement. As of November 30, 2022, there were no borrowings outstanding under the 2022 Revolving Credit Agreements. November 15, 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”). An aggregate amount of $3.0 billion or more of the November 2021 DDTL was drawn for the purpose of funding the consideration due for the purchase of the increased equity interest in VillageMD, and paying fees and expenses related to the foregoing, and the remainder can be used for general corporate purposes. The maturity dates on the 364 days loan, the two-year loan and the three-year loan are February 15, 2023, November 24, 2023 and November 24, 2024, respectively. As of November 30, 2022, there were $4.0 billion in borrowings outstanding under the November 2021 DDTL. Amounts borrowed under the November 2021 DDTL and repaid or prepaid may not be reborrowed. Borrowings under the November 2021 DDTL bear interest at a fluctuating rate per annum equal to, at the Company’s option, the alternate base rate, eurocurrency rate or, from and after the date that daily SOFR becomes available under the November 2021 DDTL, the daily SOFR, in each case, plus an applicable margin. For the 364-day tranche, the applicable margin is (i) prior to the six month anniversary of the Margin Trigger Date, as defined in the November 2021 DDTL (the “Margin Trigger Date”), 0.70% in the case of eurocurrency rate loans and daily SOFR loans, and 0.00% in the case of alternate base rate loans and (ii) on and after the six month anniversary of the Margin Trigger Date, 0.75% in the case of eurocurrency rate loans and daily SOFR loans, and 0.00% in the case of alternate base rate loans. For the 2-year and 3-year tranche, the applicable margin is 0.85% and 1.00%, respectively, in the case of eurocurrency rate loans and daily SOFR loans, and 0.00% in the case of alternate base rate loans. 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 covenants. As of November 30, 2022, the Company was in compliance with all such applicable covenants. Commercial paper The Company periodically borrows under its commercial paper program and may borrow under it in future periods. The Company had average daily commercial paper outstanding of $69 million and $712 million at a weighted average interest rate of 3.75% and 0.25% for the three months ended November 30, 2022 and 2021, respectively. Interest Interest paid by the Company was $160 million and $153 million for the three months ended November 30, 2022 and 2021, respectively.
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Financial instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments | 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 notional amounts and fair value of derivative instruments outstanding were as follows (in millions):
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 Currency translation adjustments within Accumulated other comprehensive loss in the Consolidated Condensed Balance Sheets. 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 Condensed Balance Sheets, and released to the Consolidated Condensed 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. The Company also utilizes total return swaps to economically hedge variability in compensation charges related to certain deferred compensation obligations. The income (expenses) due to changes in fair value of these derivative instruments were recognized in earnings as follows (in millions):
1.In fiscal 2023, certain expenses related to derivative instruments used as economic hedges, were presented as Other income, net within the Consolidated Condensed Statements of Earnings, whereas these expenses were recorded within Selling, general, and administrative expenses within the Consolidated Condensed Statements of Earnings in prior periods. 2.Excludes remeasurement gains and losses on economically hedged assets and liabilities. 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. Derivatives offsetting The Company does not offset the fair value amounts of derivative instruments subject to master netting agreements in the Consolidated Condensed Balance Sheets.
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Fair value measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | 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):
1Money market funds are valued at the closing price reported by the fund sponsor and classified as marketable securities on the Consolidated Condensed Balance Sheets. 2The 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 additional information. 3The 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 additional information. 4Includes investments in Treasury debt securities. 5Fair values of quoted investments are based on current bid prices. There were no transfers between Levels for the three months ended November 30, 2022. The carrying value of the Company's commercial paper and 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 Condensed Financial Statements. As of November 30, 2022 the carrying amounts and estimated fair values of long term notes outstanding including the current portion were $7.6 billion and $7.0 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 November 30, 2022 rate, as applicable. The fair values and carrying values of these issuances do not include notes that have been redeemed or repaid as of November 30, 2022. See Note 7. Debt, for further information. The carrying values of accounts receivable and trade accounts payable approximated their respective fair values due to their short-term nature.
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Commitments and contingencies |
3 Months Ended |
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Nov. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | 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 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. We describe below certain proceedings against the Company in which the amount of loss could be material. We accrue for legal claims when, and to the extent that, the amount or range of probable loss can be reasonably estimated. We believe we have meritorious defenses in each of these proceedings, and we intend to defend each case vigorously, 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, we are 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: we have factual and legal arguments that, if successful, will eliminate or sharply reduce the possibility of loss; we do not have 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 litigations. Litigation Relating to 2016 Goals On December 29, 2014, a putative shareholder filed a derivative action in federal court in the Northern District of Illinois against certain current and former directors and officers of Walgreen Co. and Walgreen Co., as a nominal defendant, arising out of certain public statements the Company made regarding its former fiscal 2016 goals. (Cutler v. Wasson et al., No. 1:14-cv-10408 (N.D. Ill.)) The action asserts claims for breach of fiduciary duty, waste and unjust enrichment. On May 18, 2015, the case was stayed in light of a securities class action that was filed on April 10, 2015, described below. On November 3, 2016, the Court entered a stipulation and order extending the stay until the resolution of the securities class action. The securities class action was resolved on October 13, 2022, as described below. On November 8, 2022, the Court extended the stay in the derivative action until February 2023. On April 10, 2015, a putative shareholder filed a securities class action in federal court in the Northern District of Illinois against Walgreen Co. and certain former officers of Walgreen Co. (Washtenaw County Employees’ Retirement System v. Walgreen Co. et al., No. 1:15-cv-3187 (N.D. Ill.)) The action asserts claims for violation of the federal securities laws arising out of certain public statements the Company made regarding its former fiscal 2016 goals. The Company’s motion to dismiss the consolidated class action complaint filed on August 17, 2015 was granted in part and denied in part on September 30, 2016. The court granted plaintiff’s motion for class certification on March 29, 2018, and plaintiff filed a first amended complaint on December 19, 2018. A motion to dismiss the first amended complaint was granted in part and denied in part on September 23, 2019. Fact discovery and expert discovery have concluded. On November 2, 2021, the Court denied plaintiffs’ motion for summary judgment and granted in part and denied in part defendants’ cross motion. On March 2, 2022 the Court granted the Company’s motion to reconsider a portion of that ruling. On June 29, 2022 the Court granted preliminary approval of a settlement in the amount of $105 million and issued a final judgment order approving the settlement on October 13, 2022. 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 alleges that the Company and certain of its officers made false or misleading statements regarding the transactions. The Court denied the Company’s motion to dismiss the amended complaint on April 15, 2019. The Company filed an answer and affirmative defenses, and the Court granted plaintiffs' motion for class certification. Fact and expert discovery have concluded and summary judgement briefing is complete. 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 as those in the M.D. Pa. class action (the “Opt-out Actions”). The Opt-out Actions have been stayed until the earlier of (a) 30 days after the entry of an order resolving any pre-trial dispositive motions in the M.D. Pa. class action, or (b) 30 days after the entry of an order of final approval of any settlement of the M.D. Pa. class action. Claims Relating to Opioid Abuse The Company is among an array of defendants in multiple actions in federal courts alleging claims generally concerning the impacts of widespread opioid abuse, which have been commenced by various plaintiffs such as counties, cities, hospitals, Indian tribes, and others. 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 (MDL) bellwether cases: •One case remanded to the U.S. District Court for the Northern District of California (City and Cnty. of San Francisco, et al. v. Purdue Pharma L.P., et al., Case No. 3:18-cv-07591-CRB). Following a bench trial, the court entered a liability finding against Walgreens in August 2022. The court scheduled a second trial regarding remedies for November 2022 to determine how much is to be paid, but that proceeding has been continued indefinitely. The Company has the right to appeal any judgment but is unable to predict the outcome relative to remedies or apportionment as well as the outcome of any appeal as the trial is ongoing. •Two 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 in that case returned a verdict after trial 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 $650.6 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. •One case remanded to the U. S. District Court for the Eastern District of Oklahoma (The Cherokee Nation v. McKesson Corp., et al., Case No. 18-CV-00056-RAW-SPS), which has since been remanded to the District Court of Sequoyah County, Oklahoma, in a decision that is on appeal. The court has indicated that trial will commence in March 2023, although the parties have jointly requested a stay. •Five additional bellwether cases designated in April 2021: (1) Cobb Cnty. v. Purdue Pharma L.P., et al., Case No. 18-op-45817 (N.D. Georgia); (2) Durham Cnty. v. AmerisourceBergen Drug Corp., et al., Case No. 19-op-45346 (M.D. North Carolina); (3) Montgomery Cnty. Bd. of Cnty. Commrs., et al. v. Cardinal Health, Inc., et al., Case No. 18-op-46326 (S.D. Ohio); (4) Board of Cnty. Commrs. of the Cnty. of Santa Fe v. Purdue Pharma L.P., et al., Case No. 18-op-45776 (D. New Mexico); and (5) Cnty. of Tarrant v. Purdue Pharma L.P., et al., Case No. 18-op-45274 (N.D. Texas). •Two consolidated cases in N.D. Ohio (Cnty. of Summit, Ohio, et al v. Purdue Pharma L.P., et al., Case No. 18-op-45090; Cnty. of Cuyahoga, Ohio, et al. v. Purdue Pharma L.P., Case No. 18-op-45004), previously scheduled for trial in November 2020 but postponed indefinitely. The Company also has been named as a defendant in numerous actions brought in state courts relating to opioid matters. Trial dates have been set in cases pending in state courts in the following states: •New Mexico (State of New Mexico, ex rel. Hector Balderas, Attorney General v. Purdue Pharma L.P., et al., Case No. D-101-cv-2017-02541, First Judicial District Court, Santa Fe County, New Mexico - concluded in October 2022 and awaiting court ruling). •West Virginia (State of West Virginia, ex rel. Patrick Morrisey, Attorney General v. Walgreens Boots Alliance, Inc., et al., Civil Action No.20-C-82 PNM, Circuit Court of Kanawha County, West Virginia, - June 2023). •Michigan (State of Michigan, ex rel. Dana Nessel, Attorney General v. Cardinal Health, Inc., et al., Case No. 19-016896-NZ, Circuit Court for Wayne County, Michigan - February 2023). •Alabama (Mobile County Board of Health, et al. v. Fisher, et al., Case No. CV-2019-902806.00, Circuit Court of Mobile County, Alabama - scheduled for trial in January 2023, but currently stayed pending a petition to the Alabama Supreme Court). •Nevada (State of Nevada v. McKesson Corporation, et al., Case No. A-19-796755-B, Eighth Judicial District Court, Clark County, Nevada - May 2023). •Missouri (Jefferson County, Missouri v. Dannie E. Williams, M.D., et al., Case No. 20JE-CC00029, Twenty-Third Judicial Circuit, Jefferson County, Missouri - April 2024). •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 - October 2024). Two consolidated cases in New York state court (County of Suffolk v. Purdue Pharma L.P., et al., Index No. 400001/2017; County of Nassau v. Purdue Pharma L.P., et al., Index No. 400008/2017, Supreme Court of the State of New York, Suffolk County, New York) were resolved as to the Company in June 2021. The relief sought by various plaintiffs in these matters includes compensatory, abatement, restitution and punitive damages, as well as injunctive relief. Additionally, the Company has received from the U.S. Department of Justice (“DOJ”) and the Attorneys General of numerous states subpoenas, civil investigative demands, and other requests concerning opioid-related matters. The Company continues to communicate with the DOJ regarding 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. On May 5, 2022, the Company announced that it had entered into 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. This settlement agreement is not an admission of liability or wrong-doing and would resolve opioid lawsuits filed and future claims by the state and government subdivisions in the State of Florida. The estimated settlement amount of $683 million includes $620 million in remediation payments, which will be paid to the State of Florida in equal installments over 18 years, and will be applied as opioid remediation, as well as a one-time payment of $63 million for attorneys’ fees. In fiscal 2022, the Company recorded a $683 million liability associated with this settlement. On November 2, 2022, the Company announced that it had agreed to financial amounts and payment terms as part of settlement frameworks (the “Settlement Frameworks”) that have 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 Settlement Frameworks with the Settling States and counsel for tribes, 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 Settlement Frameworks provide for the payment of up to approximately $754 million in attorneys’ fees and costs over 6 years beginning in year two of the Settlement Frameworks. The Settlement Frameworks include no admission of wrongdoing or liability by the Company. As of November 30, 2022, the Company concluded that Settlement Framework discussions had advanced to a stage where a broad settlement of opioid claims by Settling States was probable, and for which the related loss was reasonably estimable. As a result of those conclusions and the Company’s ongoing assessment of other opioid-related claims, the Company recorded a $6.5 billion liability associated with the Settlement Frameworks and other opioid-related claims and litigation during the three months ended November 30, 2022. The settlement accrual is reflected in the Consolidated Condensed Statement of Earnings within Selling, general and administrative expenses as part of the U.S. Retail Pharmacy segment. The Company recorded $619 million and $5.9 billion of the estimated settlement liability in Accrued expenses and other current liabilities, and Accrued litigation obligations, respectively, in the Consolidated Condensed Balance Sheet. Loss contingencies are highly subjective, the Company cannot predict if any agreement will become effective, and unpredictable or unfavorable developments can occur. The amount of the actual loss may differ materially from the accrual estimate. On December 9, 2022, the Company committed the Settlement Frameworks to a proposed settlement agreement (the “Proposed Settlement Agreement”) that is contingent on (1) a sufficient number of Settling States, including those that have not sued, agreeing to the Proposed Settlement Agreement following a sign-on period, and (2) following a notice period, a sufficient number of political subdivisions within Settling States, including those that have not sued, agreeing to the Proposed Settlement Agreement (or otherwise having their claims foreclosed). Should some States or their political subdivisions decline to participate in the Proposed Settlement Agreement, but the Company nonetheless concludes that sufficient participation exists to warrant going forward with the settlement, during both of the two sign-on periods, there will be a corresponding reduction in the amount due from the Company to account for the entities that do not participate. Those non-participating Settling States or political subdivisions would be entitled to pursue their claims against the Company. The Company cannot predict if or when the Proposed Settlement Agreement will become effective. The Company will continue to vigorously defend against any litigation not covered by the Proposed Settlement Agreement, including private plaintiff litigation. The Company continues to believe it has strong legal defenses and appellate arguments in all of these cases.
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Income taxes |
3 Months Ended |
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Nov. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The effective tax rate for the three months ended November 30, 2022 was a benefit of 27.5%, primarily due to a reduction in the valuation allowance and impact of the opioid-related claims and litigation. The Company recognized a tax benefit due to the reduction of a valuation allowance previously recorded against deferred tax assets related to capital loss carryforwards. The reduction is primarily due to capital loss carryforwards utilized in the current period against capital gains recognized on the sale of shares in AmerisourceBergen and based on forecasted capital gains. See Note 5. Equity method investments for further information. This benefit was partially offset by the impact of certain nondeductible opioid-related claims recorded in the three months ended November 30, 2022. See Note 10. Commitments and contingencies for further information. The effective tax rate for the three months ended November 30, 2021 was an expense of 7.2%, primarily due to lower tax expense on gains from consolidation of the Company’s investment in VillageMD and Shields, as a portion of these gains were not subject to tax. See Note 2. Acquisitions and other investments for further information. Income taxes paid for the three months ended November 30, 2022 and 2021 were $5 million and $34 million, respectively.
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Retirement benefits |
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Retirement benefits | Retirement benefits The Company sponsors several retirement plans, including defined benefit plans, defined contribution plans and a postretirement 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. Components of net periodic pension income for the defined benefit pension plans (in millions):
The Company made cash contributions to its defined benefit pension plans of $1 million for the three months ended November 30, 2022, which primarily related to committed payments. The Company plans to contribute an additional $35 million to its defined benefit pension plans during the remainder of fiscal 2023. 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 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 $65 million and $69 million for the three months ended November 30, 2022 and 2021, respectively. The Company also has certain contract based defined contribution arrangements. The principal one is UK based to which both the Company and participating employees contribute. The cost recognized in the Consolidated Condensed Statement of Earnings was $20 million and $25 million for the three months ended November 30, 2022 and 2021, respectively.
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Accumulated other comprehensive income (loss) |
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Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss) The following is a summary of net changes in accumulated other comprehensive income (loss) (“AOCI”) by component and net of tax for the three months ended November 30, 2022 and 2021 (in millions):
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment reporting | 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. 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 AmerisourceBergen. 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 a pharmaceutical wholesaling 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, the Benavides brand in Mexico and the Ahumada brand in Chile. Sales for these businesses are principally derived from the sale of prescription drugs and health and wellness, beauty, personal care and other consumer products. U.S. Healthcare The Company’s U.S. Healthcare segment is a consumer-centric, technology-enabled healthcare business that engages consumers through a personalized, omni-channel experience across the care journey. The U.S. Healthcare segment delivers improved health outcomes and lower costs for payors and providers by delivering care through owned and partnered assets. The U.S. Healthcare segment currently consists of a majority position in VillageMD, a leading national provider of value-based primary care services; a majority position in Shields, a specialty pharmacy integrator and accelerator for hospitals; a majority position in CareCentrix, a leading player in the post-acute and home care management sectors, and the Walgreens Health organic business that contracts with payors and providers to deliver clinical healthcare services to their members and members’ caregivers through both digital and physical channels. 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”. The following table reflects results of operations of the Company’s reportable segments (in millions):
The following table reconciles adjusted operating income to operating income (in millions):
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Sales |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales | Sales The following table summarizes the Company’s sales by segment and by major source (in millions):
See Note 18. Supplemental information for further information on receivables from contracts with customers.
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Related parties |
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related parties | Related parties The Company has a long-term pharmaceutical distribution agreement with AmerisourceBergen pursuant to which the Company sources branded and generic pharmaceutical products from AmerisourceBergen. Additionally, AmerisourceBergen receives sourcing services for generic pharmaceutical products. Related party transactions with AmerisourceBergen (in millions):
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New accounting pronouncements |
3 Months Ended |
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Nov. 30, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New accounting pronouncements | Accounting policies Basis of presentation The Consolidated Condensed Financial Statements of Walgreens Boots Alliance, Inc. (“Walgreens Boots Alliance” or the “Company”) included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The Consolidated Condensed 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 Consolidated Condensed Financial Statements included herein are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited Consolidated Condensed Financial Statements should be read in conjunction with the audited financial statements and the notes thereto included in the Walgreens Boots Alliance Annual Report on Form 10-K for the fiscal year ended August 31, 2022, as amended by Form 10-K/A for the fiscal year ended August 31, 2022 filed on November 23, 2022. The preparation of financial statements in accordance with 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. In the opinion of management, the unaudited Consolidated Condensed Financial Statements for the interim periods presented include all adjustments necessary to present a fair statement of the results for such interim periods. The impact of COVID-19, the influence of certain holidays, seasonality, foreign currency rates, changes in vendor, payor and customer relationships and terms, strategic transactions including acquisitions, dispositions, changes in laws and general economic conditions 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 Condensed Financial Statements and associated notes may not add due to rounding. Percentages have been calculated using unrounded amounts for all periods presented. New accounting pronouncementsAdoption of new accounting pronouncements Disclosures by business entities about government assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. This ASU requires disclosures that are expected to increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The Company adopted the new standard effective September 1, 2022, and the adoption did not impact the Company's disclosures within these consolidated condensed financial statements. New accounting pronouncements not yet adopted Acquired contract assets and contract liabilities in a business combination In October 2021, the FASB issued 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 fiscal years beginning after December 15, 2022 (fiscal 2024). The Company is evaluating the effect of adopting this new accounting guidance. 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 is evaluating the effect of adopting this new accounting guidance.
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Supplemental information |
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Nov. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental information | Supplemental information 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 $3.7 billion and $4.0 billion at November 30, 2022 and August 31, 2022, respectively. Other accounts receivable balances, which consist primarily of receivables from vendors and manufacturers, including receivables from AmerisourceBergen, were $1.2 billion and $1.1 billion at November 30, 2022 and August 31, 2022, respectively. See Note 16. Related parties for further information. Depreciation and amortization The Company has recorded the following depreciation and amortization expense in the Consolidated Condensed Statements of Earnings (in millions):
Accumulated depreciation and amortization on property, plant and equipment was $12.9 billion at November 30, 2022 and $12.8 billion at August 31, 2022. Restricted cash The Company is required to maintain cash deposits with certain banks which consist of deposits restricted under contractual agency agreements and cash restricted by law and other obligations. The following represents a reconciliation of Cash and cash equivalents in the Consolidated Condensed Balance Sheets to total Cash, cash equivalents, marketable securities and restricted cash in the Consolidated Condensed Statements of Cash Flows as of November 30, 2022 and August 31, 2022, respectively (in millions):
Redeemable non-controlling interest The following represents a roll forward of the redeemable non-controlling interest in the Consolidated Condensed Balance Sheets (in millions):
1.The three months ended November 30, 2021 includes $1.9 billion of redeemable non-controlling interest representing the maximum purchase price to redeem non-controlling units in VillageMD for cash. On November 24, 2021, VillageMD commenced a tender offer to purchase up to $1.9 billion of units in VillageMD for cash. As of November 24, 2021, the Company recorded the $1.9 billion as redeemable non-controlling interest. 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.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 Condensed Balance Sheets. During the three months ended November 30, 2022, the Company announced the acceleration of its plans for full ownership of Shields and CareCentrix. The Shields and CareCentrix redeemable non-controlling interests were recorded to redemption value. 3.Represents the reclassification of the Shields and CareCentrix redeemable non-controlling interests resulting from acceleration of the Company's plans for full ownership of Shields and CareCentrix. See Note 2. Acquisitions and other investments for further information. Earnings per share The dilutive effect of outstanding stock options 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. During the three months ended November 30, 2022 and November 30, 2021 there were 19.3 million and 16.1 million weighted outstanding options, respectively, to purchase common shares that were anti-dilutive and excluded from the earnings per share calculation. Due to the anti-dilutive effect resulting from the reported net loss, an incremental 2.6 million of potentially dilutive securities were omitted from the calculation of weighted-average common shares outstanding for the three months ended November 30, 2022. Cash dividends declared per common share Cash dividends per common share declared were as follows:
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Subsequent events |
3 Months Ended |
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Nov. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent events | Subsequent events Acquisition of Summit Health-CityMD On November 7, 2022, VillageMD entered into an Agreement and Plan of Merger (as amended, “the Agreement”) to acquire all of the outstanding equity interests in WP CityMD TopCo (“Summit Health-CityMD”). On January 3, 2023, VillageMD, through its parent company following an internal reorganization, completed the acquisition of Summit Health-CityMD 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 Health-CityMD equity holders and $100 million of cash to be paid one year following closing. In addition, VillageMD paid off approximately $1.9 billion in net debt of Summit Health-CityMD. In connection with the Agreement, and in order to finance the acquisition, the Company and Cigna Health & Life Insurance Company (“Cigna”) acquired Preferred Units of VillageMD in exchange for $1.75 billion and $2.5 billion in aggregate consideration, respectively. Following the Summit Health-CityMD 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, on January 3, 2023, the Company entered into a credit agreement with VillageMD pursuant to which the Company provided VillageMD senior secured credit facilities 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 Health-CityMD; 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 senior secured credit facilities will eliminate in consolidation. Delayed Draw Term Loan Credit Agreement On December 19, 2022, the Company entered into a $1.0 billion senior unsecured delayed draw term loan credit agreement (the “Credit Agreement”). The Credit Agreement was fully drawn to fund the investment in VillageMD and matures on January 3, 2026. Borrowings under the Credit Agreement bear interest at a fluctuating rate per annum equal to, at the Company’s option, the alternate base rate, the term SOFR or the daily SOFR, in each case, plus an applicable margin. The applicable margin is in each case based on the rating of the Company’s corporate debt obligations as determined by Moody’s or S&P. Amounts borrowed under the Credit Agreement and repaid or prepaid may not be reborrowed.
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Accounting policies (Policies) |
3 Months Ended |
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Nov. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The Consolidated Condensed Financial Statements of Walgreens Boots Alliance, Inc. (“Walgreens Boots Alliance” or the “Company”) included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The Consolidated Condensed 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 Consolidated Condensed Financial Statements included herein are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited Consolidated Condensed Financial Statements should be read in conjunction with the audited financial statements and the notes thereto included in the Walgreens Boots Alliance Annual Report on Form 10-K for the fiscal year ended August 31, 2022, as amended by Form 10-K/A for the fiscal year ended August 31, 2022 filed on November 23, 2022. The preparation of financial statements in accordance with 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. In the opinion of management, the unaudited Consolidated Condensed Financial Statements for the interim periods presented include all adjustments necessary to present a fair statement of the results for such interim periods. The impact of COVID-19, the influence of certain holidays, seasonality, foreign currency rates, changes in vendor, payor and customer relationships and terms, strategic transactions including acquisitions, dispositions, changes in laws and general economic conditions 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 Condensed Financial Statements and associated notes may not add due to rounding. Percentages have been calculated using unrounded amounts for all periods presented.
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Adoption of new accounting pronouncements; New accounting pronouncements not yet adopted | Adoption of new accounting pronouncements Disclosures by business entities about government assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. This ASU requires disclosures that are expected to increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The Company adopted the new standard effective September 1, 2022, and the adoption did not impact the Company's disclosures within these consolidated condensed financial statements. New accounting pronouncements not yet adopted Acquired contract assets and contract liabilities in a business combination In October 2021, the FASB issued 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 fiscal years beginning after December 15, 2022 (fiscal 2024). The Company is evaluating the effect of adopting this new accounting guidance. 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 is evaluating the effect of adopting this new accounting guidance.
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Acquisitions (Tables) |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Identifiable Assets Acquired and Liabilities Assumed | 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):
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 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):
1.Intangibles acquired include customer relationships, trade names and developed technology, with a fair value of $896 million, $47 million and $117 million, respectively. Estimated useful lives are 13, 13 and 5 years, respectively. The following table summarizes the consideration for the acquisition and the preliminary amounts of identified assets acquired and liabilities assumed at the date of the transaction (in millions):
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Schedule of Pro Forma Information | 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.
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Exit and disposal activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | Costs related to exit and disposal activities under the Transformational Cost Management Program for the three months ended November 30, 2022 and 2021, respectively, were as follows (in millions):
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Change in Restructuring Liabilities | The changes in liabilities and assets related to the exit and disposal activities under Transformational Cost Management Program include the following (in millions):
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Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases were as follows (in millions):
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Schedule of Supplemental Income Statement and Other Information | Supplemental income statement information related to leases were as follows (in millions):
1Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume. 2Recorded within Selling, general and administrative expenses within the Consolidated Condensed Statements of Earnings. Other supplemental information was as follows (in millions):
Weighted average lease term and discount rate for real estate leases were as follows:
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Schedule of Aggregate Future Lease Payments Under Operating Leases | The aggregate future lease payments for operating and finance leases as of November 30, 2022 were as follows (in millions):
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Schedule of Aggregate Future Lease Payments Under Finance Leases | The aggregate future lease payments for operating and finance leases as of November 30, 2022 were as follows (in millions):
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Equity method investments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments | Equity method investments were as follows (in millions, except percentages):
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Goodwill and other intangible assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill by reportable segment consist of the following (in millions):
1Includes measurement period adjustments related to acquisition of VillageMD, Shields and CareCentrix. See Note 2. Acquisitions and other investments for further information.
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Schedule of Finite-Lived Intangible Assets by Major Class | The carrying amount and accumulated amortization of intangible assets consist of the following (in millions):
1Includes purchased prescription files.
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Schedule of Future Amortization Expense | Estimated future annual amortization expense for the next five fiscal years for intangible assets recorded at November 30, 2022 is as follows (in millions):
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Borrowings | 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):
1Notes are unsecured and unsubordinated 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. 2Other debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 3Notes are senior debt obligations of Walgreen Co. and rank equally with all other unsecured and unsubordinated indebtedness of Walgreen Co. On December 31, 2014, the Company fully and unconditionally guaranteed the outstanding notes on an unsecured and unsubordinated basis. The guarantee, for so long as it is in place, is an unsecured, unsubordinated debt obligation of the Company and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Company.
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Long-Term Debt | 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):
1Notes are unsecured and unsubordinated 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. 2Other debt represents a mix of fixed and variable rate debt with various maturities and working capital facilities denominated in various currencies. 3Notes are senior debt obligations of Walgreen Co. and rank equally with all other unsecured and unsubordinated indebtedness of Walgreen Co. On December 31, 2014, the Company fully and unconditionally guaranteed the outstanding notes on an unsecured and unsubordinated basis. The guarantee, for so long as it is in place, is an unsecured, unsubordinated debt obligation of the Company and will rank equally in right of payment with all other unsecured and unsubordinated indebtedness of the Company.
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Financial instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional Amounts, Fair Value and Balance Sheet Presentation of Derivative Instruments Outstanding | The notional amounts and fair value of derivative instruments outstanding were as follows (in millions):
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Gains and (Losses) due to Changes in Fair Value Recognized in Earnings | The income (expenses) due to changes in fair value of these derivative instruments were recognized in earnings as follows (in millions):
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Fair value measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):
1Money market funds are valued at the closing price reported by the fund sponsor and classified as marketable securities on the Consolidated Condensed Balance Sheets. 2The 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 additional information. 3The 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 additional information. 4Includes investments in Treasury debt securities. 5Fair values of quoted investments are based on current bid prices.
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Retirement benefits (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Costs (Income) | Components of net periodic pension income for the defined benefit pension plans (in millions):
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Accumulated other comprehensive income (loss) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accumulated Other Comprehensive Income (Loss) | The following is a summary of net changes in accumulated other comprehensive income (loss) (“AOCI”) by component and net of tax for the three months ended November 30, 2022 and 2021 (in millions):
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Segment reporting (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Operating Income (Loss) from Segments to Consolidated | The following table reflects results of operations of the Company’s reportable segments (in millions):
The following table reconciles adjusted operating income to operating income (in millions):
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Sales (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table summarizes the Company’s sales by segment and by major source (in millions):
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Related parties (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Related party transactions with AmerisourceBergen (in millions):
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Supplemental information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Depreciation and Amortization Expense | The Company has recorded the following depreciation and amortization expense in the Consolidated Condensed Statements of Earnings (in millions):
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Restrictions on Cash and Cash Equivalents | The following represents a reconciliation of Cash and cash equivalents in the Consolidated Condensed Balance Sheets to total Cash, cash equivalents, marketable securities and restricted cash in the Consolidated Condensed Statements of Cash Flows as of November 30, 2022 and August 31, 2022, respectively (in millions):
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Schedule of Redeemable Noncontrolling Interest | The following represents a roll forward of the redeemable non-controlling interest in the Consolidated Condensed Balance Sheets (in millions):
1.The three months ended November 30, 2021 includes $1.9 billion of redeemable non-controlling interest representing the maximum purchase price to redeem non-controlling units in VillageMD for cash. On November 24, 2021, VillageMD commenced a tender offer to purchase up to $1.9 billion of units in VillageMD for cash. As of November 24, 2021, the Company recorded the $1.9 billion as redeemable non-controlling interest. 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.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 Condensed Balance Sheets. During the three months ended November 30, 2022, the Company announced the acceleration of its plans for full ownership of Shields and CareCentrix. The Shields and CareCentrix redeemable non-controlling interests were recorded to redemption value. 3.Represents the reclassification of the Shields and CareCentrix redeemable non-controlling interests resulting from acceleration of the Company's plans for full ownership of Shields and CareCentrix. See Note 2. Acquisitions and other investments for further information.
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Schedule of Dividends Payable | Cash dividends per common share declared were as follows:
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Acquisitions - Schedule of Pro Forma and Actual Information (Details) $ in Millions |
3 Months Ended |
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Nov. 30, 2021
USD ($)
| |
Business Combination and Asset Acquisition [Abstract] | |
Sales, pro forma | $ 34,564 |
Sales, actual | $ 51 |
Exit and disposal activities - Restructuring Reserve Activity (Details) - Transformational Cost Management Program $ in Millions |
3 Months Ended |
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Nov. 30, 2022
USD ($)
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Restructuring Reserve [Roll Forward] | |
Beginning balance | $ 113 |
Costs | 130 |
Payments | (53) |
Other | (78) |
Ending balance | 113 |
Lease obligations and other real estate costs | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 10 |
Costs | 79 |
Payments | (19) |
Other | (59) |
Ending balance | 10 |
Asset Impairments | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 0 |
Costs | 18 |
Payments | 0 |
Other | (18) |
Ending balance | 0 |
Employee severance and business transition costs | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 76 |
Costs | 16 |
Payments | (24) |
Other | 0 |
Ending balance | 68 |
Information technology transformation and other exit costs | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 27 |
Costs | 17 |
Payments | (10) |
Other | 0 |
Ending balance | $ 35 |
Leases - Narrative (Details) |
Nov. 30, 2022 |
---|---|
Lessee, Lease, Description [Line Items] | |
Term of renewal contract | 5 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of lease | 15 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of lease | 25 years |
Leases - Supplemental Income Statement Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
|
Operating lease cost | ||
Fixed | $ 813 | $ 805 |
Variable | 192 | 205 |
Finance lease cost | ||
Amortization | 11 | 11 |
Interest | 12 | 13 |
Sublease income | 29 | 25 |
Impairment of right-of-use assets | 67 | 68 |
Gain on sale and leaseback | $ 189 | $ 87 |
Leases - Other Supplemental Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
|
Cash paid for amounts included in the measurement of lease obligations | ||
Operating cash flows from operating leases | $ 828 | $ 846 |
Operating cash flows from finance leases | 11 | 12 |
Financing cash flows from finance leases | 10 | 11 |
Total | 849 | 869 |
Right-of-use assets obtained in exchange for new lease obligations | ||
Operating leases | 602 | 544 |
Finance leases | 1 | 5 |
Total | $ 603 | $ 549 |
Leases - Average Lease Terms And Discounts (Details) |
Nov. 30, 2022 |
Aug. 31, 2022 |
---|---|---|
Weighted average remaining lease term in years | ||
Operating leases | 9 years 10 months 24 days | 10 years |
Finance leases | 18 years 9 months 18 days | 19 years |
Weighted average discount rate | ||
Operating leases | 4.90% | 4.83% |
Finance leases | 5.20% | 5.19% |
Leases - Future Lease Payments for Operating and Finance Leases (Details) - USD ($) $ in Millions |
Nov. 30, 2022 |
Aug. 31, 2022 |
---|---|---|
Finance lease | ||
2023 (Remaining period) | $ 67 | |
2024 | 87 | |
2025 | 86 | |
2026 | 86 | |
2027 | 86 | |
2028 | 86 | |
Later | 956 | |
Total undiscounted minimum lease payments | 1,453 | |
Less: Present value discount | 520 | |
Lease liability | 933 | $ 936 |
Operating lease | ||
2023 (Remaining period) | 2,606 | |
2024 | 3,389 | |
2025 | 3,285 | |
2026 | 3,193 | |
2027 | 3,104 | |
2028 | 2,944 | |
Later | 11,824 | |
Total undiscounted minimum lease payments | 30,345 | |
Less: Present value discount | 6,560 | |
Lease liability | $ 23,785 | $ 23,803 |
Equity method investments - Schedule of Equity Method Investments (Details) - USD ($) $ in Millions |
Nov. 30, 2022 |
Aug. 31, 2022 |
---|---|---|
Schedule of Equity Method Investments [Line Items] | ||
Carrying value of equity method investments | $ 4,426 | $ 5,495 |
AmerisourceBergen | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value of equity method investments | $ 2,877 | $ 3,916 |
Ownership percentage | 19.60% | 25.40% |
Others | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value of equity method investments | $ 1,548 | $ 1,579 |
Others | Minimum | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 4.00% | 8.00% |
Others | Maximum | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 50.00% | 50.00% |
Total | ||
Schedule of Equity Method Investments [Line Items] | ||
Carrying value of equity method investments | $ 4,426 | $ 5,495 |
Goodwill and other intangible assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
Aug. 31, 2022 |
Jun. 01, 2022 |
Jun. 01, 2021 |
|
Goodwill [Line Items] | |||||
Goodwill | $ 22,582 | $ 22,280 | |||
Indefinite-lived intangible assets | 5,557 | 5,528 | |||
Amortization of intangible assets | 159 | $ 165 | |||
Minimum | |||||
Goodwill [Line Items] | |||||
Reporting unit fair value in excess of carrying amount (as a percent) | 7.00% | 7.00% | |||
Maximum | |||||
Goodwill [Line Items] | |||||
Reporting unit fair value in excess of carrying amount (as a percent) | 198.00% | 18.00% | |||
Boots Reporting Unit | |||||
Goodwill [Line Items] | |||||
Goodwill | 919 | ||||
Indefinite-lived intangible assets | $ 5,500 | $ 5,500 |
Goodwill and other intangible assets - Schedule of Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Nov. 30, 2022
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 22,280 |
Acquisitions | 25 |
Adjustments | 258 |
Currency translation adjustments | 19 |
Goodwill, ending balance | 22,582 |
Reportable Segments | U.S. Retail Pharmacy | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 10,947 |
Acquisitions | 0 |
Adjustments | 0 |
Currency translation adjustments | 0 |
Goodwill, ending balance | 10,947 |
Reportable Segments | International | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 1,293 |
Acquisitions | 0 |
Adjustments | 0 |
Currency translation adjustments | 19 |
Goodwill, ending balance | 1,312 |
Reportable Segments | U.S. Healthcare | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 10,040 |
Acquisitions | 25 |
Adjustments | 258 |
Currency translation adjustments | 0 |
Goodwill, ending balance | $ 10,323 |
Goodwill and other intangible assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Millions |
Nov. 30, 2022
USD ($)
|
---|---|
Estimated annual intangible assets amortization expense [Abstract] | |
2023 (Remaining period) | $ 466 |
2024 | 603 |
2025 | 571 |
2026 | 553 |
2027 | 491 |
2028 | $ 441 |
Income taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||
Effective tax rate | (27.50%) | 7.20% |
Income taxes paid | $ 5 | $ 34 |
Retirement benefits (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
|
Components of net periodic benefit costs [Abstract] | ||
Service costs | $ 1 | $ 1 |
Interest costs | 59 | 39 |
Expected returns on plan assets/other | (75) | (74) |
Total net periodic pension income | (15) | (33) |
Employer cash contributions to defined benefit pension plans | 1 | |
Expected employer cash contributions to defined benefit plan in current fiscal year | 35 | |
U.S. Retail Pharmacy | ||
Components of net periodic benefit costs [Abstract] | ||
Profit sharing provision expense | 65 | 69 |
Foreign Plan | ||
Components of net periodic benefit costs [Abstract] | ||
Cost recognized in the consolidated condensed statements of earnings | $ 20 | $ 25 |
Sales (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
|
Disaggregation of Revenue [Line Items] | ||
Sales | $ 33,382 | $ 33,901 |
Reportable Segments | U.S. Retail Pharmacy | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 27,204 | 28,032 |
Reportable Segments | U.S. Retail Pharmacy | Pharmacy | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 20,218 | 21,105 |
Reportable Segments | U.S. Retail Pharmacy | Retail | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 6,986 | 6,927 |
Reportable Segments | International | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 5,189 | 5,818 |
Reportable Segments | International | Pharmacy | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 867 | 1,017 |
Reportable Segments | International | Retail | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 1,650 | 1,796 |
Reportable Segments | International | Wholesale | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 2,672 | 3,005 |
Reportable Segments | U.S. Healthcare | ||
Disaggregation of Revenue [Line Items] | ||
Sales | $ 989 | $ 51 |
Related parties (Details) - Affiliated Entity - AmerisourceBergen Corporation [Member] - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
Aug. 31, 2022 |
|
Related Party Transaction [Line Items] | |||
Purchases, net | $ 15,440 | $ 15,791 | |
Trade accounts payable, net of Trade accounts receivable | $ 6,961 | $ 6,915 |
Supplemental information - Narrative (Details) - USD ($) shares in Millions, $ in Billions |
3 Months Ended | ||
---|---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
Aug. 31, 2022 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable from related party | $ 1.2 | $ 1.1 | |
Accumulated depreciation and amortization on property, plant, and equipment | $ 12.9 | 12.8 | |
Antidilutive securities excluded from EPS calculations (in shares) | 19.3 | 16.1 | |
Incremental Common Shares Attributable to Dilutive Effect of Share-Based Payment Arrangements | 2.6 | ||
Trade Accounts Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Receivables | $ 3.7 | $ 4.0 |
Supplemental information - Depreciation and Amortization Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
|
Supplemental Cash Flow Elements [Abstract] | ||
Depreciation expense | $ 336 | $ 335 |
Intangible assets amortization | 159 | 165 |
Total depreciation and amortization expense | $ 495 | $ 500 |
Supplemental information - Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions |
Nov. 30, 2022 |
Aug. 31, 2022 |
Nov. 30, 2021 |
Aug. 31, 2021 |
---|---|---|---|---|
Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 2,349 | $ 1,358 | ||
Marketable securities | 1,883 | 1,114 | ||
Restricted cash | 82 | 86 | ||
Cash, cash equivalents, marketable securities and restricted cash | $ 4,314 | $ 2,558 | $ 4,268 | $ 1,270 |
Supplemental information - Schedule of Redeemable Noncontrolling Interest (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Nov. 24, 2021 |
Nov. 30, 2022 |
Nov. 30, 2021 |
|
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Beginning balance | $ 1,042 | $ 319 | |
Acquisitions of non-controlling interests | 0 | 2,489 | |
Net loss attributable to Redeemable non-controlling interests | (22) | (21) | |
Redemption price adjustments | 440 | 7 | |
Reclassifications from redeemable non-controlling interests | (1,314) | 0 | |
Other | 12 | (8) | |
Ending balance | 157 | 2,787 | |
Conversion of Stock [Line Items] | |||
Acquisitions of non-controlling interests | $ 0 | 2,489 | |
VillageMD | |||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Acquisitions of non-controlling interests | 1,900 | ||
Conversion of Stock [Line Items] | |||
Acquisitions of non-controlling interests | $ 1,900 | ||
Value of purchase tender offer | $ 1,900 |
Supplemental information - Summary of Dividends per Share (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Nov. 30, 2022 |
Nov. 30, 2021 |
|
Supplemental Cash Flow Elements [Abstract] | ||
Cash dividends declared (in dollars per share) | $ 0.4800 | $ 0.4775 |
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