Walgreens Boots Alliance (WBA) 31 Mar 212021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Walgreens Boots Alliance, Inc.

Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over today to Mr. President Relations Vice Special Senior Gradwell, of and Investor Projects. Gerald ahead. go Please

morning, welcome quarter the XXXX. and and of our year Good gentlemen, for to ladies earnings call fiscal second

as Chief today Kehoe, CEO, James Global Stefano transitions our there Role. of Chief he Gourlay; also Roz me Walgreens Boots Alex our with for Officer; Pessina questions Operating call of Walgreens is the the Brewer, On this to any former the Executive Co-Chief Executive Financial Boots Officer Alliance; and quarter are fully relevant Officer Alliance; Chairman

risks the materials will on most presentation, to financial certain the We today's discussion latest to the financial they our hand presentation Before website note we after and changes Harbor in presentation, statements some take to regulatory you use forward-looking competitive based are otherwise. constitute or uncertainties Please and for undertake events, see could information. and will, cause and to over materially. appendix relating related the that these you factors information, new relate I GAAP Relations comparable comments, for subject publicly results usual, update particular, in this a Certain declarations. and our any spread impact no that projections be risk COVID future are XX-K you in this available by We risks and may statements make In that pandemic. measures of XX-Q to presentation to Roz our a as whether Safe affected statement cautionary to of on vary as opening future and to forward-looking actual through to result assumptions results and of and of legal the refer as obligation directly in non-GAAP I Form current statements made statements forward-looking Investor market, reconciliations the expectations, measures. forward-looking

the of announcement, questions Please business recast well earnings an to Alliance financial disposition pending issued X-K presentation during be to answers this make morning that we reflect segments. our X-K. may as providing the reference reportable that addition we and information aware a Healthcare historical our operating our to of In to contained this new in have our as statements

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Thank business. you to company you, Gerald. earnings a for our be some expected weeks I Walgreens saying Boots our of joining call initial I our starting more today my drive days because to optimistic I impression the and and ahead value lies job, WBA the about for on two am the even by to the again am of I future since shareholders. half at glad early how this potential Alliance. After my ability that first and sustainable vast being spending for in after long-term confirmed wanted opportunity

lives and operations core a pharmacies. greater force I've truly their met is of reach of by motivated lives to passion. millions to What learned be unmatched deeply are stores how and of gained and global of our help world the incredibly people who talented also our by already for It WBA that partners and some our time is customers of have positioned some leaders, a initiatives, in expertise I depth this definitely our been wide briefed members specialty people passionate purpose every visiting rollout. remarkable on we incredible good During and have is with vaccine I our many and in understanding the I've lead happier healthier uniquely our day. I've across including share team and

collaboration. like Of shown the shelves, personal is open ensuring vital without learned terrible the pharmacy to deadly strategic in leadership vaccination we've team We direction. need and by record insights by moved have that role This customers to build appreciate course, clear closely WBA keeping obvious leadership our during its our us never more faced protective to out by and medications, lessons pickup have it setting health to more equipment now the to shared impact launching what our is access, and testing new and vital continue on profoundly. allowed provides the year the even up options, creatively divisive we patients We've quickly, them. by and with wellness of pandemic continue than more and forward nothing a When some more the fought doors in neighborhoods by extensive along virus time. in mobile to units in the and with providing rolling and played of great worked delivery last on And the programs these take communities together experience with team propel demonstrates before.

healthcare to our Outpatients new filling of reach agility, engagement continue consumer team of them growth and a that deep we be to establishing better. trust WBA. even we our we loyalty best-in-class find focused As have a can will ways and and customers intensely solutions, need brands building and and all in accelerating and serve across on culture

beginning what XXX We U.S. than personalization latest capabilities achieved, platforms, physical more the assets, members that healthcare only be see patients but with and with traction, particularly loyalty consumer centric, our in the Our of of bring lead gaining the million program digital mass are enabled must with omnichannel on the can tech just definitely are we to future one-to-one engage way and and level. and the a our customers together best locations to

challenges. me assessing from much I continue as time more spend our be more strengths you'll Of and to hearing course our

need be business our more raise year of to on giving to time results reporting and earnings take several obstacles the immediately further guidance, core from overcome are deliver and that these most reach will financial ahead more But in the and have we growth in position about already pressing Overall, significant invest of with despite to COVID. more And others later heights. of new expectations, in challenges, all show we solve. take full confidence to us challenges positions happening impacts addressed assets to QX the strong unmatched today evidence will in that we world-class operational there markets, you a hear to And Some the future strong across and partnerships call. with shareholder are returns. initiatives and major we're can the

James then Alex to on more us over both it turn I'll that, depth to our results and into with and take operations. So James?

Thank you, and Roz, morning. good

announced majority business of of Healthcare our the $X.X Xth AmerisourceBergen we sale Alliance the January, of billion. for to the On

With discontinued liabilities of be and the and to reported as operations are divested in the been announcement, such the reflected related the assets, results. financial as of quarter have operating results business second

stem basis, was with JV information. With earnings expectations, our Please segment our retail our businesses EPS winter business retail U.S., Germany. going venture year into businesses operations in in of of the Prime pharmacy States earnings year-on-year which International also X-K In material the way, on Ireland to XX.X%. Boots development and X.X% costs of continuing businesses. a we reorganized We lockdown of United result associated COVID-XX Please adjusted December, have the be our segments. segment share Across in segment segments, The surge at its and of consolidated two outlined a our measures many than and continuing let's lower full experienced currency outside adopted our the Chile, the and before will restrictions iA Technology basis. the constant our the including designed wholesale November, costs last into now and and operating the of our impact the Healthcare in January for came turn UK, of Walgreens operations includes local out a in our well and Adjusted within markets. of are reporting stricter franchising in the COVID-XX early AmerisourceBergen in of Mexico, On UK, U.S. increases. Republic our $X.XX, February. our a on filing of the included joint two that States and reported refer Opticians, the overhead U.S. across results. and a incidences transaction, separately segment. ahead in International. $X.XX, Thailand, to to are call, operating a to state within Walgreens outside company communities includes EPS United renewed many prior startup temporarily that the The note our all has AllianceRx corporate continued decline equity on eased a and pharmacy the further and states our As and

indicated significantly had both, categories. and prior has As on be and a store scripts, lower incidences of than levels front our on social impact we caused last flu to call, cough/cold/flu distancing have on seasonal this restrictions year significant pharmacy

we was safeguard operational strong COVID-XX impact and and heavily better this, the In through of performance to segment in and confident summary, expected than Overall, increased particular, a half across growth year. per rollout we improved second Despite share the as Additionally, of delivered pharmacy SG&A for saw delivering to an $X.XX quarter. exceeded as adverse store we second mass digital margins, both headwinds second fiscal between better remain number invested cost continued as of the quarter in COVID-XX our International our In prepare in management, estimate environments, fronts. of actively strong vaccinations. we performance our we participation, we expectations. related manage $X.XX well of continue the

was As year. and $X.X X.X% free flow generation year-to-date flu higher prior strong than of accelerate, cash billion, the with COVID-XX subsides, season cash vaccinations

mid-to-high increasing Finally, based from our to are underlying adjusted low of guidance growth. the performance, we single-digit growth our strength on full-year single-digit EPS

detail results. now look in Let's at the more

including currency of more quarter. COVID-XX in than negative sales points the up X were quarter X.X% a Second of X.X%. the tailwind impact percentage had

both However, formation year. of in declined impacts assets. a and includes was On $X.XX reflecting business result Germany continuing EPS expected operations and approximately us largely up a JV. EPS Total as a XX% benefit of to discontinued operations of X.X%. discontinued than versus this the the the adjusted discontinued approximately performance Adjusted basis, accounting COVID-XX good includes quarter, in divested offset $XXX $X.XX operations required management. by The operating stronger underlying for prior depreciating the nonoperational adjusted a stop growth the EPS $X.XX operations to year income by was the favorable tax decline million, higher percentage was $XXX constant for prior currency of of on million additional continuing quarter, A currency offset and contributed was constant $X.XX, EPS an of XX.X%. partially cost Adjusted basis activity XX.X% percentage a constant of X X currency points growth. decline share repurchase rate points contributed and

impact However, better point full significant quarter lower these to were XX to mostly the from the tax by expectations. rate rate percentage offset a COVID-XX. slightly XX was basis due The than year-to-date tracking year discrete benefits. than very our more On tax tax is second

Finally, increased continuing to partly and a in sale by tax COVID-XX. Health income operating GAAP effective basis, on on partial a the investment gain rate with the due Option of lower lower X.X% offset Care our EPS

decline a Total currency EPS partial currency X.X%. due points, on was the of year-to-date in impacts was a including approximately within decreased tailwind currency on higher than Year-to-date entirely XX.X%, to impacts. Care up mainly basis partially strong gain $X.XX, move currency offset a X%. the of a currency investment our by decline Option across underlying management constant offset including reflecting continuing to basis business EPS by GAAP constant part favorable income constant performance, a constant let's a by percentage cost AmerisourceBergen. charge EPS sales declined On a COVID-XX equity operating our of of XX earnings the Now all On XX.X% driven $X.XX, sale sales Health. highlights. XX% of adjusted advanced basis, adjusted in in COVID-XX X.X%. were Adjusted expected X.X%, businesses.

volumes by flu X.X% increased testing, XX%, down reduction revenue Despite benefit quarter. year. let's and immunizations in in retail to of from Sales to and volume overall including than adversely XXXX prescriptions. higher quarter foot script X.X% points the to impacted margin. profit and partly XXX points reimbursement offset continued X.X sales, last Adjusted pharmacy retail new-to-therapy by approximately COVID-XX, pharmacy be spend the the lower and leap significantly higher X.X% lower impact and mainly percentage traffic, XX.X% gross retail Now Adjusted move initiatives, lower SG&A roll procurement out increased U.S. savings quarters year. in due a single-digit. impacts. excluding an to and was and XX.X% the gross income low Adjusted increase incidents, to approximately investments the increased segment. Both basis COVID-XX estimated in with strategic a in million The including negative vaccinations. prepare $XX declined higher the operating COVID-XX COVID-XX AOI declined was

optimization partly only Market low XXX million These of lapping at savings the washout comps look let's Now combined sales quarter pharmacy as by year U.S. up XX.X%, for exceptionally by declined weak leap by around and season, items flu scripts and COVID-XX of growth year were were the impact by factors Comparable but the the also including versus XX one-time profit, the impact by with increased points, last prior X over year. than points. more sales vaccinations, programs. will single-digit down pressure in inflation doctor points scripts An decreased and some offset was while Adjusted store partly offset Total of X.X%. basis procurement lower versus basis prior year. year, boosted more script negatively detail comp with store were which which XXX pharmacy. reimbursement brand end impacted X% our scripts. by visits share around this pharmacy favorable basis lower phasing optimization programs included gross from offset X.X%,

and XXX store Comp to our retail retail impacted in to U.S. year. the low retail down led X.X%. business. points. programs by Total negatively declines the X.X% were leap and comps sales basis comps The excluding significant and decreased of our in products e-cigarettes quarter, declined flu impacted sales by exceptionally optimization next and Turning cough/cold/flu retail incidences level X.X% this tobacco

Wellness Excluding cough/cold/flu, our Health and well with sales did business up X%.

category COVID-XX declined promotional XX% mid-single-digit profit optimization. reflecting driven Beauty gross in grew the partly that lower is points, initiated by basis of activity. However, heavily seasonal $XXX to impacted by increase sales clearance by promotional quarter Gross the X.X%, declined Digitally margin and with offset non-comparable costs in reduced XX only sales an million. and

next segment, the International as to constant Turning currency to talk I'll and numbers. usual,

percentage a focused the in our the incidence XX.X% and all in Boots are very of wholesale execution strong UK, rates segment continued and geographies. Opticians, with and venture be quarter, COVID-XX this, Germany. to Ireland, heavily our across the due International additional formation a Our growth in lockdowns to across of notably increased from contributions XX expectations e-commerce Despite impacted businesses. of outperformed by including we higher points that business joint number Sales encouraged

to wholesale prior and the anticipate dilutive increases from this noting versus just a year. percentage on the formation. points, worth modestly X.X% that profit growth were impact in an approximately sales X.X% of segment year-on-year. profit adjusted XX.X% operating existing JV is down benefit, to formation entirely in will reduced and UK down to sales total the of margin almost quarter offset decline have our accretive in dilution million the above SG&A is Latin X.X We effective the business, Germany in prior the with It of a as as this led absolute retail only sales. post in AOI This quarter, by Ireland. Germany $XXX declines ongoing to margin America segment. Boots of percentage in Boots Gross profit management Excluding Boots region JV wholesale the XX.X% XX% UK very partially due was with XX% Cost German to declined

May. our Boots at as doctor Comparable scripts pharmacy reduced phasing locations delivered and now average UK look basket as that with and in levels to as retail build performance Boots of store than in particularly exceptional visits Lower down as stores around since this where This and Comparable UK. X.X%. year-on-year, XX%, well reflected footfall around increased Convenience last declined high sales around funding NHS travel Overall, favorable XX% another last transactions part stronger demand, in XX% detail services. year. below but by not Boots.com street sales Health for prescription retail were offset demand Beauty seen well by flagship XX.X% stores strengthen Retail compensated was evident subdued and was and down offering. we continued figure yet Let's was sales size than XXX% growth an last remained our of year. out major were more more omnichannel

sales government XXX%. is to the lead a During This fastest to will year. in the of to of world the reopening we and the closer January UK already as path the was in full exit immunizers The the conditions Boots.com defined February complete one a lockdowns growth improved has market country. and

now cash on X.X the of to the cash a despite improvement factors. inventory and mid-to-high improved Based terms macro on flow continue are in of next level our cash adjusted working strong We full the capital Turning focused guidance digits very lapping year half payment was year, flow. performance. flow the million reflects EPS raising remained balance first excess single with$ guidance. strong prior year At and initiatives Free billion growth profit outlook results the the delivered and and year, currencies. remove outlook a up to first constant year-on-year in for extend to $XX to the key two half we

through guidance. expected XX half announced much stronger expected successfully original delivered we we COVID environment first our than performance a Firstly, managed when tougher we and than

the second Secondly, EPS given we dynamics, half situation delivering ongoing XX of strong while in the committed remain remains year. the COVID fluid growth the to

cough/cold/flu quarter. see the through continuation and persistent full the we into third headwinds, at we lockdowns, are some look season an and we weak managing year exceptionally As will

across our also COVID XX vaccinations, our omnichannel, healthcare investments increasing and startup. technology We are

management, rate, is However, a our upon be on fiscal $XX these vaccination a million tax new strong of forecast than the more of the includes And around pharmacy by benefit will offset course rate. XX dependent and than to performance, predicated million this international favorable forecast margins, that vaccinations year. from better supply. very XX cost favorable is expected administering availability The

visibility EPS yet guidance associated volatility However, ongoing be we In year full that around clear XX will be please strong rate will it recognize second the rollout. improved all performance applied half not with half summary, is vaccine COVID payors. the are but our and raising first reflect by there to growth and drivers, if

WBA now me key cover our Let initiatives.

First, be a activity. few majority our and operations. proceeds. we the healthcare tech-enabled our The transaction trimmed innovative future call on year. will announced are stake pharmacy we our track took Care updates on fiscal Healthcare of within our close Since to M&A cash an approximately Further, recent ownership in in our to a resulting establishing Also iA, startup. quarter on that in good Alliance progress automation company last continues making million pharmacy Option of we underpin $XXX Health this January,

engineering incorporate started overall also provider scheduling launch. care healthcare Software we their have and successful we moving In technology development very summary, at We scheduling channel. management a of in of pace gaps on capabilities are ensuring and recently in minority track, on platform. our focused we will advanced physical the Vim, development is in investment and digital and underway well a the and completed

is very Our Transformational Cost plan. also on much Program Management

$XX savings of included around from Alliance divested. Our Healthcare savings of excess the in $X goal million business billion we of

offset goal lost opportunities reducing other the the we we as long-term businesses exclude However, Healthcare are divested have Alliance to contribution. cost the saving not to

the Now International to let's turn initiatives.

is quarter, on at measured turn The recovery. pace. our focus in a last to our investing YouGov future efficiencies pillar is Boots high. June as at central of priorities into now said a and by cost five-year reputation I As one our top supporting continues

ensuring Our store bottle to online capacity our proving effective is fulfillment to based online flex demand. way of can be an distribution meet we

successful where all with as local and Walgreens Find total when find ever our traffic to healthcare XX% sales is services, the an growth quarter connecting the Find they of services Leveraging pace high our enhancing was to investments accessible month healthcare retail platform, conveniently largest December Health of to online dermatologists. Corp affordable of customers as existing Boots.com hubs increasing sales street. second Boots doctors, the returns Care fact, are XXX% UK and range and well [ph], as targeted therapists In aim and continue and at the foot In-store customer people UK at need help them. experience in represented

new Number stores. than new with COVID-XX-XX we proceeding XXX out million The Building previous fixtures five, according hubs vaccination X.X specialist attracting in Germany $X planned major to stocking rolled now once Boots beauty Seven is Building expect key in wholesale XX have formation stores, over role JV we coming and on years. Boots. to annual brands a we revenues UK, play Combined reputation completed community growing the over COVID will for our to the continue UK additional success and quarters, XXX only tests improved to brands quarter and have exceed the the completing unlock we added NHS. and we available for rollout total profitability operated in our on-trend in plan. the to by that billion customers are of now the new on our largely beauty taking over from we cult and counters During more were

venture to to continues of the joint the fiscal the our locations. stores and grow China almost year Finally, nicely since X,XXX having in total beginning XXX taking

to hand to over it to Alex me Now initiatives. U.S. speak the let

of patients environment. March, to administered XX,XXX and we key thing of vaccines million qualified of a we number patients lines our our personally every we've our booking would appointments. accessing the over with one each evolution over introduced One with call, our vaccines on to the you, is vulnerable as continue support play another to of mass transforming our associates we have to and Nuance operations month healthcare deploy the role who our our extremely the across continues capabilities. X.X business, accessibility United developing of X time priorities to digital capacity This our strategic challenging earnings vaccines to and In to thank approximately populations. modernizing accelerated busy also at care taking James. in associates against the front X an on many states retail this MyWalgreens local I States, responding of to to of vaccination vaccination communities has to to COVID-XX, the ready operations Rico. Thank We’ve the had able execute in of pharmacist is scheduling. communities, in community, the vaccines facilities, and also and during against teams improve nationwide network. Americans and the and have become last pharmacies, significance million to digital million importance than administer amongst with operations providing federal sites, Puerto greater of Uber vaccine the We've our the we're belief our location. In with our XXXX strategic locations vulnerable By now more federal address the We've pandemic, total and Walgreens directly By governments state year worked the healthcare to the pharmacy end date. initial a partnering over platforms XX,XXX the problem reinforces ensuring COVID role in to vaccination locations local method we vaccination and crystal the had of pandemic. the that the have offer our role administered through partnering both another in accelerated bring to play program. to are across of app the We're past at and on visit clear in recognition rapidly in and DC the and rollouts Walgreens equal partnered quarter COVID of the like customers voice Earlier we XX access to in part our our pharmacy vaccine we long-term and as most with fight Walgreens administration [ph] importantly, pandemic. appointments Working to into officials in mobilized program. ever quarter

with solutions tests to began employers we've locations. We testing last manage & to their Test and up Improving working testing have We're integrated Protect customers vaccination pandemic and is our top X our since in COVID the undertaken than offer provide provide business-to-business community. more costs, valuable we service million allowing today year testing to expand time, our new in services called X,XXX a our free and healthcare launched the to to pharmacies but services pharmacist employees. priority, more efficiency to the to of local both importantly partners

the which microfilament routes. maintenance center then in patients Phoenix area the As announced depending a pharmacy are in for their automated enhanced pharmacy April. the preferred in majority brings Company delivered local James This capabilities qualifying automated our on year, prepares earlier which mentioned center patient's network, medications in pharmacy this a and establishing workflow iA, we first with to local stake to Walgreens or solutions home Walgreens together to

out Dallas the are start in summer. We second will which a market in we building now operating

in we a to automated to iA a integrated have pharmacists we care to enable due enabled more operation, As efficient more part part models. our key local the model, create in pharmacy play exciting hub-and-spoke plans

We and we open and Walgreens now Medical of XX to and on have at by locations XX running track are the Village Phoenix. the summer in locations end up Houston

As by and integrated the experience care primary create many this engaging believe cost lower care. pharmacists to doctors, more help patient with and we of I times, a coordinating we our said will

providers, front, Find to telehealth benefits Care Further, platform accelerated relationships telehealth physical local services, healthcare VillageMD enrollment digital providing the pandemic. by go healthcare continues tools. our also and locations the offerings. by connects of an educational integration on grow beyond Our patients to healthcare their Find Care

and and traffic base our Find app was on in accessible the traction. Care The increasing building below app the and the audience XX million are on providers has gaining is user a wide now platform. reached number We quarter. the of online just Visit

services much this have and conditions. driven quarter. over on more now increased traffic over visits XX versus platform, was states, a of XX XX than vaccination While treating related providers in XXX prior XX% by the by the We non-COVID COVID testing enquiries, delivering

Turning retail transformation. next to

mobile providing In approximately prior loyalty with As importantly, Membership we XX higher score my versus new month, loyalty the million was usage previous most year. million XX% was quarter. And new our versus last program with for that XX is to Walgreens promoter grown you prior the Last from month, products and has XX% to Balance all up app increase November, score valuable most our XX% loyalty net our resonating last is launched than program. MyWalgreens customers. the services. Rewards, members customized know, date, which a benefits, app

We our boosted second XX personalization are points on by strategy, retail points through last with quarter year. mass continuing to XXX building list in engage basis of in our customers quarter, the basis the sales which

to progresses, in delivery, a pandemic drive-thru options really to the an products, orders X and digital retail increase strong are the completed have digitally launch, they on These last retail having pickup. access a we driving are store, want pickup over or enhanced when with been growth. platforms, curbside customers quarter. and initiated retail of date, November's in pickup them, customers contributing where combination physical our through XX% Since digital giving million to sales focused As home choice of of stores

adding partnerships We've addition U.S. one DoorDash. with now XX a Instacart delivery to placing hand. the same the nationwide minutes We retail order partner from orders just day, also last your capabilities continued and completed in with in Postmates expand quickest convenient by existing the of options to our to omnichannel mile available average, product and the pickup most are the in on having in

you will customers services we income we continue to products identify additional our Walgreens our new pleased the a want, options quarter, the to accessible are offerings, digital we account it, in and alternative really made for provide financial both card with financial this our streams. MasterCard, purchases. this will but from bank determine progress all global this InComm online our redefine on convenient and launch technology the and serve on an of priorities models which them earn the rewards Together, example data debit omnichannel customers. we've a generate and business the yesterday services we is to and new company pharmacy, with cash core As convenience assure leading I are allow is leveraging of available services to summer. A great payments that we with later development our shoppers, offering our which in-store agreement MyWalgreens and And be beginning. Payments, will retail, Overall, we just announced and

Our with ever patients our we now assets relationships Roz. opportunity growing you deepen and hand have to I'll of expand our local capabilities, with and and in positioned the are uniquely community back to customers. the list

Thank Alex. you,

been accomplished has operationally performance you've good a COVID-XX, had result, quarter, and As we've guidance. raised as this been EPS impacted we've year our a lot while quarter our by full has overall a heard, and financial

the on there than that for and foundation to pandemic truly further team to response note, the is this have our be today on any the to Stefano everything opportunities want that to is understand moment to with the of company with of business. working still for look WBA stabilize is to to in you where Again, Pessina I incredible base in forward to has the acknowledging And take done entire looking capitalize future it this work as I'm future. us. a However, to what bring we don't that board done the thank point he this front growth. capable to

we've ahead. short poised communities minority healthcare teachers, in in essential U.S. the already as million one to administered many underserved days months, few of vaccinations that, example in the vaccinations a workers such more millions As and and well to we're X them as professionals of deliver just in as

Another focus businesses. our is in of healthcare to our and us business sale from on I and our funds intend Healthcare company, where our how forward. across review business, move lead allow range we the of taking at how which order decisively begun swiftly the to reinvest and reinvest as further I'm detailed And will that, look drive we the as returns. opportunity we make we in assets, in we do investments close to capital. plans Alliance core how that I'd should and apply to have financial allocate a long well a WBA

know, discuss two simply discuss with perspective they to and you had with regularly with benefit across plan to ensure strategic But of of much time and to this opportunities and begin excited further and broad for meetings, each be my a inside. for about more it's and very ahead. once As I've many me valuable will calls board more anything I later to pharmacy the return, investment shareholders our the and energized have forward now, am do but at been I'm we you communicate distribution, of study time, in I due those financial provide a I reviewing to to company the for planning addition transparency. range in further equity point. meet healthcare from only weeks, I'm and in on having for There to half too to look early to the sharing also future

I for operator it your the open will over turn call with questions. So to and that, the

Your first from Instructions] Kevin Caliendo question [Operator UBS. comes with

Hi thanks for call. taking my

your and the in softer a second we congratulations wanted best to role second the the And out reimbursement benefit is off what Yes, would $XX vaccines that cars time-ish or we one be where beyond can anything point about that the did was, else if explanation, be as model in the there half this about you off trying jump the to Are and the give and grow have the for rate. We're focus din. XX. little trying forward for I given going of number of was think of guidance guidance. the would I in point of sort might the of where imply vaccine guidance street number, Roz through to the - additional be half year. are on second First, a forward. the then we big where than new number any to think didn't second us luck big what bit terms half and really pretty in fiscal 'XX year, fiscal half jump figure all really going that think may how some fiscal

James not growth. would softer, that's that be be second given I'm here. hi to the we've growth and and range Yes, a half you believe XX% X%, sure of XX% then X%, why mid-to-high would is today X% the Kevin, X% because

to first of that half start at we is Two expected when XX%. we the point. said the originally grow guidance the that's we to second So XX% at the gave year,

to we see I actually, you time and has to original you XX six compared vaccine gave COVID compared and ago, the asked ago than is current overall about in guidance. and and And this million this to And more what's months guidance talk really months the one half our actually months So guidance want been solidly our the within opportunity because the one. despite six second is ago we three negative.

in put cough/cold/flu, And of in completely the the vaccinations, in positive but series probably lockdowns have a offset tight the you've and all So U.K. full restrictions opportunity. the vaccine role U.S.

to So COVID actually, the at your some about and quarter. if will look benefit we is net of vaccinations original compared third that the into guidance negative $X.XX after of continue

U.K. is look in the lockdown So still a will we're one going reopen. forward, dynamics the first and the if you at third in quarter, retail

April be the the time some it's All back mid of for June. business XX. I think will U.K. rest

cases half impact and in the is that last Look that third per, QX. effectively of they they’ve the quarter U.S. UK. could while itself. into somewhat are impacted the So May say concerned level impacts some down were the up as now significantly continue still the come negative of market will XX,XXX at Right you same we're

second would full the we've exactly view absorbing and on $X.XX is, we we're a our year negative. about what basis we do in So half said done

just actually and cough/cold/flu, negative So the call the lockdown April, market up would in call COVID second the UK been that have I continued mid stronger in But the into mid-to-high into a probably negative key to April. actually would in up, single is digit a say expected. mid the is half

started so of Beyond prior negative we're loving, and falls majority the we second the that, year into coming upside have and we vaccination strongly, back really half. the

most million had vaccinations, in rounding. our a recent from So we benefit $XX QX, results not

I answered one. hope on have your So, this question

No, Thank that's you. helpful. been

Next Valiquette Barclays. question from Steven with comes

to a the on increased but first the for Great, well. leading as half provide? thanks. let fiscal the your Good Thanks. Roz of But the a offer first related several question rank the to expectations? comments, you there upside one difficult versus the and of my additional be this factor related built half. single But of list in do guidance little EPS is year, some morning to EPS the of can greatest mentioned kind amount really bit, James, overall congrats 'XX fiscal in driving order your is some upside everything. to you me growth overall the to you Which think for from second it'd company original overall any is 'XX drivers, is color factors

great is last Yes, question. of Year-on-year what off net COVID. I'd it’s said a with opportunity start just repeating negative. the on actually I a vaccination

and beauty would we particularly saw to in out through single out, the I defend biggest UK, our terms would think the two of UK. call firstly So the the where and our it in ramp position assets ability items, up I I in call e-commerce

this XXX% two up months the up record quarter XXX%, were of and delivered consistently but we've last months year-on-year. quarter first the So was the

winning the and in beauty in the fallen competition off has in So UK net, completely. we're market the

of the mitigation in control the thing second and UK overhead The is impacts. COVID

I Well, on out So down segment. International a the call, incorporation that in the number quarter I'll venture. the includes call are joint overheads gave of German just X% the in the

in year-on-year. started If you we're it ahead M&A the it's call we take we out. of overheads impact thought could XX% dramatic just That segment, is out team the and down what when way achieve the

as overheads Ireland over businesses And there's on I think and and So well. massively, then Opticians assets. the are finally, there's outperforming it is I think achieved e-commerce massively

in if it's a like. of So the UK quite segment collection outperformance you

had competitors one our spoken second is The segment. impact January. about We've many in have there and of traumatic the fairly the The same. standout U.S. cough/cold/flu a margins are big from

our has of So the XX%, number and outperformed the expectations. a But massive on basis is of U.S. cough, which basis peel into that bleeds flu overall, scripts by down year, on margin points segment away zero straight and that, points. store if front you XXX the incidences the down XXX because seasonal are

were the been XX U.S. basis every generics in points. we performance. to some up Retail largely points. market. quarter, accelerating margins of pharmacy expected, one the better savings much were historical that's XX in And of by So year-on-year due pretty the is better generics, down than the come margins quarter. That's the basis second on in also And organization margins deflation but than in reflecting out have procurement consistent

next U.S. vaccinations, that's we the where So outperformance. When area saw very general margins you P&L we you forward in will margin the for be outlook U.S. your across and probably so accretive, well. build get business the vaccinations the as favorable with to were look will the of the as rest year have business thing quite noting, we happy models, biggest should we in as of profit but

overheads, So U.S. good segment big was we're outperformance and and e-commerce margins the then that about three on in factors. UK feeling the

that's helpful, thanks. Okay, very

question with Hynes comes from Next Mizuho Ann Securities.

Hi, good morning. Thank you congratulations, Roz. and

Did they been you have a from more administration on to vaccine some the in know really think your assumption vaccine. have your I guidance. settings? of retail there changed discussions And Biden I question So this the push I week vaccine don't Administration. to the want

next? case, the Thanks. capacity administration? was could got allocation retail do you happens think settings And the what more this from be Walgreens what maybe ultimate vaccine costs if Government, incremental for and about Federal talk So any about

pharmacist, for the involved, in involved, faster a clear. including Ann, faster [ph] means we increased and arms more we will of to vaccine and in lot vaccine pharmacies encouraged were an across by again, in settings remember is, I coming will pharmacies We're people's is many announcements the Hi the number of is particularly than will first is than you pandemic power think our it plans and And have of the comments. reason the be said more opening Alex the be this getting well. it highlight network of What here. as original the pharmacies secondly, for and Federal is, the Yes, pharmacies power all pharmacy closing think as all really this other the I sure. of

really XX be XX a to course, prepared in what ahead, think we So also between I of we're given in James on And better able depending the between terms in said of a internal XX, range. a give remarks, we've and range, weeks we guidance we'll and shots what see, seeing. million

factor. range So we've the because given, reasons the for that one key of that's of

So We're again, where that's ready. we are.

We again ready, are important here. as well we're our to vaccine of communities very our the busy. ready, people very initiatives. doing again, ready of with networks administration the proud work is ready and other scheduler doing with and we're the the are also we over are are We're many as -- follow vulnerable underserved we And guidance continue communities, in and

to we are I opportunity, fast as in get and maximize ready think shots So these the people's as possibly really arms we can.

relatively Yes, given and and on the on and then continued we around UK be the were probably million, than than to higher ranges, downside, the we forecast expected. from And of the upside can availability simplistically, reason assumption. the three swing vaccinations. gone the this it time, on the XX up predicated wide But so million have the ago, worse form an have same are XX to cough/cold/flu we to into has what XX. XX lockdown two months and has we additional months thinking But is has gone at is

but it, we obviously million, We're comfortable all with the some XX there, and dependent on but ready are risk So receive. entirely it's volatility. receive but we we're fairly the supply always there's get to indications

right, you. All thank

I we $XX fully for commercial picks there's we up confirmed that set not one yet our pay which the price for hopeful being is I'm working Obviously, going is we're every guaranteed first but to from very to make that to that number understand yet not Kevin, vaccine, and Medicare partners they we're think additional sure that's question comment, get are every the with what vaccine. and we'll which are been either. on maybe And

Baird. Next Coldwell question with from comes Eric

any early on realize thanks. specifics Good too it's provide to for numbers. Roz, very much you Hi, morning. we

but wages the in in employers country are on items that in practically low is like question interested it's initiatives direction. like of position more tobacco, years, of those for fully as Also, guess I ESG towards which wage, sort become position moving I'm things been importance deemphasizing of headed centric a Our philosophical company. hasn't your general, in Walgreens exited. has topic you much. more a on the to minimum $XX kinds for nature. ESG your many Thank very on appears skilled positions, an

me is that that's surprised time of about to let the have initiatives. it here those getting the for numbers. things is talk U.S. thanks because work of pathway terms pleasantly of on that I've We'll states wage do a the the those then question. time. inside we And wages the bit there there happening ESG little Eric, federally company Particularly, a the about one where over apply across over period In we'll continue has in of a matched been a period regulated, and been

of even those health priority. around a asked that's to continue We'll look really me we've that's that. upon, early continue like issues opine The second everything committed and that's was be to to we'll This tobacco, my to pandemic question think really too I tobacco from what's one early and more you read learned at but is going on wellness tobacco? company and things for to of but look at the

Cowen. Charles from comes question with Rhyee Next

a but that do that major what result like the well. think as you focus question in Walgreens It and footprint you of at physical question change seems in store a as obviously, be well do here terms taking might maybe be for major Starbucks. you for digital focus, thanks for in that might you long, a focus mean as for for can you, was the future Yes, the think the Roz, for been congratulations in that company? digital a maybe that What and here haven't to for seemed you. what

at I us from in of of for million I that to will area. enable had platform one of made dug numbers as learn It my excited priorities. that about the we've opportunity into year we one for thanks here time. digital WBA. Yes, that accelerate this the question. the received, was investments that the And surprises I'm pleasant some I'm this will also members loyalty It excited. at the be over XXX initial to

As and FY into I the 'XX. half going look second at

of there's think we that to this space see lot in monetize. I opportunity a can just

work us that we're we and stores great us traffic I U.S. what into really our mean, then how the increased And we're gives if standpoint, customers party encouraging. that to XXXX third personalize strong target execute anywhere data I is as we I we and think all, and of using our are you the of stores that have First to first very than customers gives store. a coming you see from party in about in do area omnichannel. set two know some talking better actually, can an doing times opportunity really vaccines, then measure learning XX% we have the and right new that I'm around all that the Also now, a can data.

here opportunity really personalization about growth that some and in potential excited us, just early signs space is there's I there's more think as forward, a mass So, this I'm for we and it. look

really Starbucks Thanks, applicable you've could if you is anything follow-up, that think here? from learned I that

can't that platform Sure, that, is one a digital learned I've of things the standalone.

You have have as to connection a well. human

the stores, by customer visited of pharmacists in what really in I've I'm in front of deliver encouraged creating as so relationships employees And really can demeanor of base. store. our I'm impressed the our with deep personal of terms terms

just connection. combine great to human got as here, Starbucks I connection with So opportunity digital did we've a a think a

Thank you.

with from comes question Nephron Eric Percher Next Research.

Thank deployment. you. capital I’ve a question for James on

ops, some progress recall will of through the you we've moved year, the part we offsetting dilution was to to now putting that that discussion initial work. operations I billion as $X but discontinued So focus the with of the on that sold

your perspective get the of play end So I'd and the sale completed. the is and reduction hear repurchase we love that year debt may on in how to or as share to

to pursue be $X.X Yes, need keep where of about the to they the have already share is are what the said BBB. metrics we down we're I basically term. short billion is, because we to that credit want required to retain $X we said that's buybacks not use What going think debt pay and billion in to we've to

be could concentration healthcare out be that around the know been And the pharmacy. recent VillageMD. in have we will on So opportunities when the examples of building acceleration

increase on of in space centers been second the that to and kind the interesting because and sweet will fulfillment higher stores, overall the pharmacy the in relevance better free maintenance value outcomes it's iA in up And one of our market. over automation pharmacist and the within time. driving activities and of the drive has work that's The healthcare in scripts this

the date become later [indiscernible] developed what's business? So the that's business we premature now. ambassadors and what and in that's in date, right pharmacy have effectively a healthcare. the and we will the tech the comments free the that's also and piece is, that consumer exciting. very platform we what did be centric what outcomes. up and how efficient will to pharmacist's the And time we technology other very then into the say much not do work innovative more of on second think that that, is how entity displaying U.S., the you that's new year, on a the operator into to And exclusively development showcasing do It's get turn and -- healthcare difference on It's goes in I but to build part of deep based out in this launch most

a we for a and longer as this done, very launch exciting. We with think on will -- it of very, and KPIs I bring setting lot will extensively. comes but team. Roz also forming term to board We're And the it's comfortable business, also get we more stuff the gets are

come And attractive of remaining is we in acquisitions would don't targets don’t year's so and repurchases, I know we would to deploy would expect a some across share yet. the $X.X consider all if time, we billion mostly maybe that

you. Thank

Morgan Goldwasser with Next question Stanley. comes from Ricky

has factor back especially question and another Yes, with of I'm healthcare welcome. comments for change to yet your are about been female that healthcare sort the of top new pandemic. the Roz, we investors, and brick-and-mortar congratulations. CEO the think footprint of goes digital. when so excited happy how mind sort morning accessing human of group, combination or hi, good The of the the consumers sort physical to strategy post My and join see very around

versus do that of sort brick-and-mortar around or So number one looking the looking think that storefronts is strategy of the is digital things Are that is of ideal footprint you any footprint of or or a you're the of you and digital what right thought stores is base at? XXXX the sort it? then at also build right

they but just group in this I So can be some most of turn they're both. that the in. Right? significant over And Alex, look that, it's and when think will I'm a remind U.S., of to X,XXX that question zip going a distribution the stores the It's before I to in I attractive. wide at codes the combination that is

But little store broader positions could will create more? why take and or Now, in a do it a Alex, we don't about many U.S.? the together talk you bit we too come have strategy. in This

before, in Roz we think what hi what we moment comfortable I of the and said actually Thanks, stores communities the Sure. redesigning do Ricky. number U.S., and we have in doing is we're Yes, we're I with the at the serve.

Walgreens, think X,XXX also so ago from helped different due got a couple locations in important other company. a in services and just way is no are doing thought And report of who really FedEx the of how There'll pickup be that have examples across through years doing are, in we're would with a of to the pandemic who have was these they the well I doing vaccinations we has that be with big. illustrate testing now number would quite point would of thought coming The extremely the example MyWalgreens. things. financial service inside two many America

continue understand that the continue services, the all them. very services we have we best So products how to to be confident corners, to for provide we different and

positions. are in and a to And I healthcare our the local, so ahead said they are Roz they IT is of health new the place services, in terms data putting in are of And also the better ethical solutions platforms and even clearly, use period service analytics. provide specific job very way. over they in particularly to human wellness think, and communities as very and

our space, So to continue again, though more common America. across in confident we footprint the be

add, flexibility we in just X,XXX stores five a thing off said Yes lease we've and one manage have the amount to have in years. before, fair next we we of how footprint, about the as because coming

aggressively that issue to Cost Management of our necessarily that and not for Transformational compared footprint, is overpaying the So in we're the the as value Program. locations we part will market sometimes tackle the

will every into cost to as we opportunity these year the ones. basis an for resize up, store entering most each opposed giving are the XXX to be lease to turnover as natural us phase the XXX the news cost is, of to a a locations good the on comes we're structure negotiations As stores now itself. into change store the effective But and whether coming right

Yes.

very Thank you, helpful.

Deutsche comes with Hill question George from Bank. Next

morning. Good

me aboard them sure Roz. And of going these let all questions It's -- largely you a the load are kind echo couple then for that are of welcome I'm to up. housekeeping. short I'll First,

ramp as we million count? the I'm trying the anything or XX there that should we following two-shot of results to And think the up or it out to pull can million the from one-shot that, in the guidance figure is that of confidence March then range vaccinations, the increase inoculations the all is really XX quarter you. the and increase out the is to injections? on James in rate? Thank or vaccine reimbursement just, So

give it’s piece Maybe it's to you XX question. of shots. got sure I No, your not I'm million me last could it the shot, again?

of just the confidence could wondering the just March third increase is there in going really quarter you the in economics the or just, to on, I you range that guidance there's month largely increase quarter-to-date and in of is the anything it for out? sorry. call the I'm from the guys vaccine? vaccine I the I'm in or what else March call the company if anything saw And that kind Sure. was or causes would fiscal

also it. the we it calling reason the same Bs. full the U.K., in don't in on margins factors better That's Bs guidance U.S. half, visibility It's the and of March pharmacy half coming the of lot and still think up margins before. second I but the in No, the the a year retail the impacts from the necessarily We're of first said main basis for

March we're cough/cold/flu The is U.K in I think we in is, as what continues. seeing said, lockdown.

and because maybe comes two to year Alex read some was very, place, extremely hard each seeing it foot seeing all weeks. in back are We them it's more last add traffic numbers March the are we But was very here, over day different. last can in buoyant the

we careful in be gives So for us nothing any we in guidance we're the how to on see giving cause we but concern today. got March whatsoever interpret,

Yes, people category, to beauty as as return well also think better a as seeing which travel. beyond George, we're And expected. think not other we we I about is photographic expected, doing what

It to is impact line had, in that So are days the still back encouraging to what coming given the that, nothing in yes. we when XXXX these not beyond. expected, we beyond had started but see early pandemic

Thank you.

from with Guggenheim. comes Santangelo Glen question Next

that appreciate term tailwinds I for Roz, term in my you transient they second, and very high only level aside near the question. a longer investors, thanks focused on all be Putting ask but for taking of the couple Yes, to I you've maybe that that a seem and the for headwinds on board question. competitive pharmacy both on could weeks, within a the back years the you been competitive the and end in of – business, landscape and thread may given be and competitive the Thanks. over consistent landscape. the and sort reimbursement that front coming you evolve how so Walgreens I’d perspective e-commerce roll how off, a pharmacy view pressure landscape side

to best encouragements company, they made, our secondly like very day, ahead have viable too to and them This I know competitive of every and to give year the of not those understand, as easier work areas pharmacists things early in by retail to well that it's with this doing kinds we I’m who is get question, do and marketplace. investments what remain the though diversify we seeing that as really company we complex to an in is a have is look Glen by encourage to I’m of talking that’s but the investments sort a healthcare Yes, one work our or at a to it’s VillageMD, how were position company me overall. appreciated the iA a job that pharmacy are investments good with and then only

back innings all to know great differentiator and we're WBA is we're to position. it really by, it, Many beginnings, highly It clear might has that, think Horizon But there the And to now, diversify that the about for that tech-enabled I'm us. of encouraged this been our platform as I that I about these itself. in so right you X. key have work encouraged come will early of think good partnerships we'll defining but bones has ahead we good upon. and a you is to embarking said, is define really, I'm company that James talk that way

that and that. on you And so at we'll us, things back we come are can differentiate to those looking

you. Thank

from comes question Jefferies. Tanquilut Brian Next with

my think focuses the I so quarter. again. and good business. headwind a share called morning market losses on base stabilizing Hi, for guess out congratulations as Alex, for question is And, you the I mentioned, Roz, Roz

you up just of arrest last the pricing to was initiatives guys strategy are called what I I in pricing that So then side. you we pharmacy were in term the starting under pressure well if on out as guess near quarter, thinking follow and impression of terms pricing, that? is stabilize kind to And my recall,

how about you. this going this quarter thinking and that has So Thank should be reemerged forward? we

Hi, thanks, Brian.

pretty of share and what really a the a On the we stronger comfortable quarter all it previous that of all, pandemic. with weeks little market of seeing we first all Texas, we're made basis and in through or the was, in caused is think, consistent mean loss weeks we're quarter of I pharmacy lot previous What the closed was XX than stores couple trend part two for have bad really last March. weather, XX a points were of the bit

to solid We've bit competitors to was we steady with knew a that that volume expected. was manage lost as as think one more in state coming we key of Medicaid. into move be retail So But honest that we continues are DC a Medicaid. pharmacy. Med our

although grow we're of the So we're year season, as just pricing as is disclose into contracts I more and we start the about think don't see of are when there that get XXXX will terms on and which so expect, commercial as we solid and for more progresses. to we trends, commercial pretty of the Medicare course

So in about there's speak nothing new pricing. to

good side, honest. we're On be feeling to retail the

progress really giving with has value have think data significantly the Roz has good NPS started as higher use and tying I first said be honest be also as the we customer into whole to Walgreens this, this, we more just the to said. listed which is I said party end is program, to Roz experience. honest MyWalgreens, way to The score said than of old them front James made the

that, So to changing really end about for in I to got here is feeling important the we've and retention is accelerate done but front And our so really our very omnichannel But, as independently, really the continued pushing change. this think early hard win we're very work innings marketplace strategy going the and to on period grocers, the going We've marketplace. we're of good to customers our online be grow the we last create got, well. keep to back here the customers. more from

Awesome, you. thank

Thank today. for operator have That's you questions. Thank all all you. we your time for

For the sorry, out after made we comments. just reiterate I get her that the will would you point reach I'm to in those that we call. didn't to, Roz

that. is speak she feet desk committed assured she to as aware She's she she requests many and We that has before get out to do can under can. of business of take and After very understand as have a had need those, me to get lot time her her. to she the does the some see but to

and to much to look you you indeed. that again we'll So in forward time. months speak very Thank we'll three

call. conference today's concludes This

may now disconnect. You