WBA - Earnings call transcript Q4 2017 | Walgreens Boots Alliance, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Walgreens Boots Alliance Fourth Quarter 2017 Earnings Conference Call.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Gerald Gradwell, Senior Vice President, Investor Relations. Please begin.

Gerald Gradwell

Hello, and welcome to our earnings call. results Vice Vice Chief Financial President take through Executive George Officer; Officer, our you Executive Fairweather, and our Pessina, Chairman Executive and and will Stefano usual. as Global Chief and Operating Co-Chief Boots also for of Alex will Gourlay, us Officer join Alliance, Walgreens is here questions.

of extent Relations update website the statements presentation a obligation to risks will of and changes competitive and otherwise. link uncertainties Investor be as webcast future cause as results our are for undertake forward-looking no and in any After Certain investor.walgreensbootsalliance.com. we publicly future a discussion archived on required information, the or factors find subject by XX-Q for this could at this regulatory projections to result to and results based the actual forward-looking presentation, the relate XX in webcast to law, events, they a assumptions and months. that risk statement You'll statements to vary expectations our latest market, on on and forward-looking after materially. presentation new to website made call, this whether statements. Form current our XX-K see constitute that of the Please Except are

on GAAP As comparable we our directly available non-GAAP and in Investor a reconciliations refer website the certain presentation measures reminder, most and the Relations today's financial related you materials measures, presentation includes appendix to the financial to information. for

by night, case to CVS have performance-based your focused to I just announced not pharmacy draw would new outcomes. you last seen reducing attention hand and results, in PBM, over made announcement a like costs I improving to George on may it. our clinical review Before network anyone the to CVS

their Caremark this members. Walgreens store and CVS's and number to network Formed the States, service community-based United pharmacies including pharmacy a a partnership between PBM creates of initiative a independently CVS owned and clients across through XX,XXX

this not results since any announced in following year-end, the did be of network As but have you questions our happy it take new on today, will it we on presentation comment presentation. our we has may been the to

we much slightly to end But will am over hour allow the our say now the I I than to pleased we to you run take the presentation longer for slightly. usual, questions will you only will how presentation. numbers. Given today, of have still cover hand to George full through the at

George Rollo Fairweather

Thank you, Gerald.

some flow have impacted performance in significantly year, headwinds currency strong and recognized, delivered conditions. numbers GAAP In of merger of the quarter, fourth fees. despite termination business the the in challenging both and profit Rite Aid-related been terms costs, that including a have market cash We adjusted the our course, by we

to better due U.S. However, quarter basis, volumes overall, grow continuing final with market the adjusted was mainly share on pharmacy strategy. to line and in an our

As June, XXth on repurchase $X announced we a share you know, billion program.

we've keeping decided operate possible, to we repurchases. is an program. our $X.X share to fiscal to a quarter, the billion to have of since $X addition and add our anti-dilutive completed shares, the During the commitment sheet balance efficient the In repurchases. as billion purchased in routine with year-end, additional as This

come other regulatory in Rite our news clearance September, I'll course, recent was Of Aid which shortly. onto

our I First, quarter you will through take results. fourth

strong. particularly expected year, we throughout we indicated the quarter the fourth As to be

Aid-related down Walgreens billion, operating up impact significant were up of was to in diluted a case. than X.X positive earnings $XXX net equity income impact, Boots tax effective The calculate billion, discrete around income and mainly earnings in termination you'll a On to negative EPS currency, the less X.X%. net lower per As a constant attributable was $X.XX. being U.S. from was adjusted were billion, When This share income XX% higher costs, fees. was basis, the million, merger up AmerisourceBergen, can comparable in year. excluding in up last net versus in XX.X%. year. first the Adjusted the GAAP decrease and XX.X%, to Adjusted three diluted sales This operating Boots than GAAP billion, items. This recall, quarter was which the particularly see, quarter same benefited $X.XX, dollar Alliance last sterling X.X% was $X.X was we stronger versus constant from Adjusted this Currency quarters. up is XX.X%. than comparable percentage last XX.X%, had rate, due and points was XX.X%. currency Walgreens the quarter up you quarter. quarter XX.X%. the the Sales the XX.X% up X.X% than were Alliance year attributable $X.X Rite comparable earnings for we were X.X%. currency, $X.X $XX.X constant

in quarter. with line Our the rate core which was excludes third impacts, in our discrete tax rate, tax

comparable compared performance adjusted comparable up improvement improved Pharmacy our the Adjusted billion, starting to quarter. operating in USA. the quarters. for with sales, an $X.X of of by percentage billion, now over quarter, versus up points increase turning year-ago Retail $XX.X Retail resulting pharmacy increasing of sales was the SG&A up up X.X% over Adjusted of both X.X%. percentage were XX.X% quarters reflecting was sales store operating X.X X was a consecutive income profit USA year-ago Pharmacy XX.X%. So the XX Adjusted SG&A $X.X point, an X.X% segments, to in and of year-ago as margin has sales Adjusted billion, retail. percentage quarter, X.X%, gross

So total stores, offset increase filled pharmacy basis XX-day pharmacy. was pressure including basis million partnerships. volume sales and prescriptions to strategic We of more adjusted sales U.S. strong XXX.X at of with brand immunizations, partially our specialty, next, on Within D XX.X%. increased our in pharmacy X.X% growth X.X%. by a On generics. central positive an up volume This up reimbursement impact Medicare filled a growth impact Part due the sales, and by which comparable of scripts detail primarily excludes pharmacy inflation were X%. were the and from let's look for

quarter fourth reported market quarter points the basis sales on last basis categories. the health partially quarters, impact includes the delivering we in categories partially Our XX-day care and was and This to X.X% growth promotional wellness personal the Compared the and same comparable plans changes as on prior in the our sales beauty year. XXX were and e-commerce lower, focused to Total offset through merchandise announced on improved by profit of higher were sales of with foundations last due quarter place general than XX.X%, margin quarter long-term previously down retail down adjusted put certain in year-ago retail margins. usual in took the and to the retail last the prescriptions over up year, mainly quarter. we year consumables in Gross declines were Comparable operations. approximately share growth. of X.X% same in closure were quarter, actions for in to the the

due margin mentioned, changes higher-margin to we to addition, and on just was improved the In I as categories. promotions, higher as increasingly mix focus

This told capital. benefits, to stores in and the our implementing you operational offering been ongoing program early starting we performance. has simplify see X,XXX we're reduced to call were that and On improve now completed our the a including working approximately retail program efficiencies last I and

category CYO brands own customers Glory. is be Soap continued brands driven owned exciting other our cosmetics introducing in new to program differentiation stores by colorful In launched to and creative. line has growth designed & in of sales Beauty with beauty our improvement continued collection Nottingham, new by better of our than younger our stores, which margin as is beauty sales and NoX well. strategy be and terrific in profit two supported stores, markedly perform the we our Our differentiation to strong to during makeup encourage quarter. developed U.S. to Boots and brands

online Boots. which the by have UK, ethnically addition, to launch launched Sleek is to the base. diverse healthier a successful in a Since stores in Developed the with young, Sleek our brand-new YourGoodSkin, ago. scientists, Walgreens of in our a customer we promote skincare We MakeUP fastest-growing exclusive product year-end, and Walgreens years brands two Boots is is one range, skin. in and have, after visibly launched designed

as beauty of own well we is over said As to be expected are offer completed to enhanced weeks, of around next the This offering stores developing earnings on offering X,XXX. call, introducing enhanced last the our total in I the brands, number few as X,XXX the program beauty our to additional stores. bringing with

a X.X% division. results constant currency. in UK's sales the the up to sales X.X% the due of than International a more pharmacy adjusted of categories, decline currency putting in cost $X.X Comparable volumes currency Pharmacy were gross SG&A, due for for basis. Comparable the Retail while X.X% our product foundations continued So the in decreased prescription in Adjusted billion, the work by higher year-ago for constant constant comparable down a look constant were X.X% retail was on on compensated down on decreasing in division decreased down retail profit to store by Boots We've across division with This Sales gross now to comparable sales currency. quarter the pharmacy launches. X.X%, a X.X%. at $X.X the product X.X%. the timing of beauty sales retail being in with mainly with number billion, versus currency was due impacted the was future quarter, basis UK, Boots new sales profit. UK Comparable control division to which for This was lower constant lower up place let's growth.

up constant costs, better percentage in measures of first due operating points lower quarters resulted have adjusted of million, reflecting a This SG&A reduce at UK. was in the particularly in reduce X.X%, to than As margin taken XX.X%, constant done currency operating costs. percentage a This an X.X work three increase income in constant was sales, Adjusted a percentage basis we've to again, the adjusted on performance in we X.X%, was points $XXX much of X.X currency. currency. the to

versus down was due X.X was to currency. ABC, at operating generic earnings market growth constant $XXX The by our offset some weighted quarter same and increased $XX division constant year, margin, a of UK market million million, basis. on country in income adjusted the in of in Adjusted quarter. X.X% in same operating which estimate emerging the million Sales ownership. level basis. of last constant was the currency gross the pressures Europe. to including was Continental up Adjusted procurement $XX mainly Wholesale excludes of percentage now growth XX.X% from lower ABC, markets currency due on basis This partially in wholesale billion, So the our quarter being look $X.X sales, division. Pharmaceutical challenging were ahead company's for on This conditions the margin, the a let's year up last mainly division versus from X.X%, up points benefited with

So full now me for XXXX. let numbers turn the year to fiscal

coming of has just strong as This X%. top our per summary, this merger $X.XX I year, decrease said, guidance. termination in financial been including, previously, I've As with of Rite Aid a down the end GAAP a above of special primarily diluted earnings items, net results In was the share number said reflects fees.

increased up earnings The was XX.X% Importantly, share constant rate XX.X% XX.X%. currency. in our effective per diluted adjusted $X.XX, adjusted tax to by

we benefited particularly items. discrete the year, from During favorable

rate in in U.S. year. our fiscal Operating $X geographic and mix billion ever, earnings reflects entities. the of As and the the was the the $X.X non-U.S. pre-tax billion quarter our flow tax full cash of taxation also

Over of lower days billion, the capital inventory. payables the and improved reflecting $X.X inflow our course year, working was

the of cash As $XXX positive of over was million. efficiency, capital focus quarter flow. we've Cash two the a working $X.X generated our capital driving years, in on expenditure billion result last

year, $X.X the line For year. broadly fiscal expenditure was last which in billion, totaled with

the in We as $X.X continued stores proposition, impressive fiscal in this we've in program an previously invest systems, talked to quarter and and our develop of which full free $X.X to year. core as our U.S. our billion IT resulted the Overall, upgrades key to cash including the flow about. beauty billion customer areas well for

I fourth debt $X.X further which quarter, program, billion addition in we earlier, the made of to In of repurchase our balance early repayments the mentioned share sheet. optimize to

next Rite turning So Aid. to

X,XXX states. key of confirm delighted you the As extend and past week, network, which particularly the acquired Aid assets. the be related Aid September, readiness We're in first our to we Southern this regulatory stores and IT systems. the operational stores Northeast will transaction, in purchase know, secured the In we've Rite transitional clearance for to completing the Rite of

rebranding integrate the deliver then benefit a of stores acquired and we acquisition, spring will course, these rebrand is begin into and anticipated stores Over We providing process. Initially, complex, existing Walgreens acquiring we to onto phases for will Walgreens IT all must, with with Aid of stores in Rite time, stores. Walgreens' transitional the offer. services completion the retail fully This XXXX. full systems as in the costly full To relatively is time-consuming network. transfer prior our retained

complete related and to be three of the expect assets integration We the within estimated years. The costs to million. next are $XXX this stores the of acquired acquisition-related approximately

plan store in conversions capital In $XXX invest on million to around addition, activities. we and incremental related expenditure

As previously announced, anticipate of years. synergies we four to realizing over annum, next per we million within realize expect the $XXX which

estimate related over regulatory scope in optimizing able review comprehensive to assets decision been close $XXX expected We clearance, fiscal have this store and cash XX-month cost This savings The to we $XXX resulted our of approximately be determine year all XXX to has the of by the XXXX. spend. a the substantially period, Following annum the portfolio end XXXX. spring an combined be in million, cost program are complete per million to stores approximately the approximately of to resulting for locations. beginning

of out the adjust program results, both will, course, adjusted costs. reporting optimization and operating We our when acquisition-related

in XXXX. So $X.XX. expecting share to per guidance diluted be adjusted earnings $X.XX net We're for turning range now fiscal of to to the

based As rest current constant rates for of guidance the the is year. on fiscal usual, this remaining exchange

significantly Aid in before, earnings do said we've net expect As adjusted transaction we period. share the diluted not Rite to this per impact

been Rico, the Walgreens be continue As is I'm largest recent sure where and to the Puerto have challenging in chain. appreciate, so pharmacy hurricanes you'll very

reporting impact of tirelessly indicate be everyday cost We share damage to stores. in our million. We medicines in adjusted earnings few of very could are estimates to and could the proud who give results. impact life, the all is that $XX estimate this storm our a on to Rico. per store quarter customers Rico's that around including for of Based the our trading Puerto first plan majority worked when adjust We Puerto our work have in this need. to The access closures our continues cents. people damage The to they the infrastructure initial quarter, first our adversely this by to-date,

to on Part Moving D. Med

not to market its Med XXXX, practice it's it's business to Although point out our recent on that in I comment future sales year-over-year. expecting expectations, that we're usual D worthwhile speculation, to grow Walgreens given feel Part

at you material, business, with agreement also which end of note Fareva, should the of partnership not sale that contract our includes While our manufacturing the this will October. commence

future, margin Stefano will International. we to result, for expect we year this comments. to the a within between more Pharmacy concluding hand the low halves. As won't balanced now have Retail over phasing, sales be I two about in his these Thinking

Stefano Pessina

Thank you, George.

we all year busy variety back hard coming work, another a strong round than for since how achieved us, comparatively that been to in as determination but has So in financial a have heard, of when Walgreens It commitment to quarter, the team. ways, Boots you we think transaction mind in years the another a amazing busy off very our to and bear quarter a have time three of delivered Alliance. of of create year. much short It's such financial period completed is growth, good it you less the to and

underestimate in XX% earnings growth adjusted appreciate annual share, to progress I been that project earning create value Since three the Economic the to years, has be it of we over more. our during and shareholders. has from we per much XX% averaging may compound we that may choose we progress our made. diluted Alliance, past It have promises Walgreens been growth how looking outside, view over on been the period. delivered Over net delivered have easy delivered have delivered this to is it, people clear. started the a Boots growth has impressive. to And however real year-on-year

areas, commercially the different size opportunities always Alliance been in is ways. that many and Walgreens us Part benefit have large of growth a many We and like different and Boots of different complex gives scope both that deliver in we geographically. many organization its clear

so structure resources the of And to deciding more in our deliver part, order need our where most in these operation. healthy financial mixture our to Co-COOs create operational is during hands-on we the business and managers use about our Naturally, decision are with influenced country becomes best where that in have we transformation from is development, value. relevant by task and have and would amount by needed. growth and why the as operational strategic keep and businesses financial to business them I needed expertise, work work to expertise Alex the work is given we stage we strength their of The which those being proven Ornella and know and in strengths around experience. core characterize company our the differ skills deliver country, primarily expertise. are appropriate continuing by huge of

and For businesses, for of all the constantly new investing growth, services balancing we developing controlling of costs. and our products are benefits

still for company all. on as are see every health. company, is this good see as as We efficient continue need an as the transform focus benefits. is I our from any financial to this the businesses I to making use it, I measure the work all we to an to company announce no us do It is but it efficiency to true health, Also, to on economic the it concerns of to organization robust range is time, and focused bit as structure of we further operational strength. our execution, be providing Make some for assets and doing of its invest September, issue way will the as essential at efficiency its and creation. Rite saw the real shareholders. opportunities our hear that Aid much not work as far across I value longer have said, The are the tangible these review and and work our are pure deal where our business. progress parties. about overall same I within In a financial deny always than we or process benefits continued the key structured a of believe we progress need from and a on could from the be of to do financial amount is business. enhancement to growth I from opportunity. are be we able at a economic From move restructuring some time deliver the to of I will Then not in all there cash raised business need these acquisition the operational of be value that expected. in we our U.S. cost to I the that acceptable economic and extraordinary was time, with that of mistake, be to more in far value had growth were optimistic We a complicated way could to

up innovative what what from so work network. deal the of very to was is a had range core new with announced and I and originally minority pending very is of able we these partnership we different year, foundation (XX:XX), both was for finally process for U.S. doing of from and on And aimed These future. in of FedEx including latest acquisition not Fareva have the transaction have This developing strategic next the it the ended the transformation public at today our putting of in we the within place phase stores group and and deals the into am with review and in our announced, developing most range products now, services businesses I undertaking the While our our America. get we and different our partnership are perhaps investment originally pleased deals and over envisaged. bringing

very Of course, much these is work-in-progress. all of a

in an the always organization that are will and We be case. transformation

in Change change them. must works and that is Change with are market that opportunities. good. life. them changing we a sign and organization brings an Change constantly and are is to of adapt We

and even our organization in sure our skills to continuing right ourselves, so, that To embrace our us and do We to make to ready delivering to our are businesses that is we are whoever change, they system them. drive are way work achieved truly we our at overall. for work change, ensure at help our must the be. study within times, right products the differentiate challenge both and weaknesses must by customers, continue our address and and to in understand markets the price wherever right to continue and and structure, services and our Our them, that change, to ensure right. our understand strengths We market play truly may our

with Sometimes, and hard experience effort, and work new the by internally sometimes through partner, organization. bringing sometimes into skills

a but recognize not our The dynamic approach mindset. day. they I often far individually businesses see it, to a organization us may more small, more changes doing are adapt dynamic across You far and all every these deliver but with

contain of personal an factors mixture a noise, lot to speculation compelling of a and point a lot turn, scale view. attract of markets all of well-being, commentary, leads which in their with Our attention. and and agenda, political economic comment reflecting huge These

see the a the market, way manage not of a our dynamic in and businesses through that team, must As we trends this addresses our the true underlying noise markets to management recognize commentary. and

about I as see, can So hope company. very remain our you I optimistic

deal, truly us. achieved have the past We indeed, few still deal ahead in and year, of past massive years, great delivered the opportunities great a see in a I

markets our we about. areas, opportunities many fully many in creating spoken a in ways, long and come vision. In businesses flexibility I is a company we embrace market lead opportunities moving organization that have great a have respond have how We the with which to the many approach and embrace well in give way parts, these in many an to placed us in and

to many levers and organization growth value. our have deliver We in

our you many we to have to In the seek per that have level at record give guidance delivering never be We that I that targets together. coming proud double-digit I be heard, know the giving to right for guidance that sure work will is ahead, in ahead. against we guidance you growth share the We lightly reflects strategically operationally, we we but of track that. set driver take economically we earning ourselves. again, we skills am markets, our our And and set achieve. our we the have can bring what guidance beyond my our the a well, ever, headwinds as the that the prospects growth the and people, adjusted real our Thank strategy all are, and year these year as make face year structure, of value, of well and view entire as for into continuing assessment to continue for the deliver to believe realistic inherent just and assured ahead, businesses have, our as account you. offer of well In this can not team to

will Gerald. I hand Now you back to

Gerald Gradwell

We'll the open for Thank questions. your you, lines Stefano. now

Operator

of Hill RBC. question George from first is The

Your open. line is

George Hill

other the separate from channels of be might then this And the stabilizes? you side changes two retail between where for taking guys And and morning guess, mix for the you In and business, out can the questions I it thanks difference then Thanks. I gross have to guess, client think the you how share? business, Alex, questions. or the players as pricing margin? of what taking do good And I pressure relates do you. Hey on guess, impact I break promotional U.S.

Alexander W. Gourlay

so Hi, much. George. Thanks

reimbursement the we we of question, and levers clear is have we've I been this. address I life our really that part on think that pressure very to first use think clear

to and pricing pressure Also business, on the Scripts partnership in that that and of this open has a side, now our in CVS, everyone our Gerald so pricing year, partnership the in of the are bigger joined we any mix we you networks for a pricing And businesses, driven of said also The different the that course, forward. don't side on the that our And fantastic work we commercial. by we of government in one different on give organization We terms and us partnering with cost are AllianceRx that including, types of morning, in our with of on as see we've a it that to course, to course with optimization, another also the print position that course can real On saw up philosophy. of lever of pharmacy partnership WBAD with recently Express is, side. of us have help deal side. you market pricing very the with changed reimbursement of partnership, manage the this been fundamentally opportunity which lot changing have, going specialty. which to and see

see how we So that – it that's today. we see

in the remarks, margin terms in front-end retail promotional the we his growth we the both when our deliberate seeing in are change do And the in aggressively side, saw maybe that sales. change but end. And front again, said improved the made good of in On a George more side. was in prepared margin as we trend impact and gross And QX in beauty. consistently, this the we the additional primarily that you

sales, last you In against beauty the bps years XX that look we've in front-end in category seen improvement two period the fact, time. a if over of

both our in different in prepared to the retail said these different side the we in opportunities hard, partners continue his we with and So and working to see come pharmacy as they remarks, strategies as side drive work Stefano ways.

George Hill

I as know Okay. don't follow-up us. then. a George if Maybe update would quick

the As any direction the evolved, of color? of front store, or contribution the back profit has versus store business

George Rollo Fairweather

what don't and to much in really I statements the prepared to said. said – to just add nothing have Really has we what Alex

if we to which gross obviously were RPI, AllianceRx the Prime we looking I add would the third you thing attention one we'd the at when consolidate. remember fact to I that the post Just establishment venture, percentage think of the Alex, in quarter and I joint profit Walgreens drew

mix you If about that time. a at recall, we by in impacted said XXX of and the course basis that have points, months I three didn't full

in it's in as that pharmacy the both the we're mean, mind. States. we're see, the our very progress making pleased, can bearing But I the in business So with of worth part and you that retail just

George Hill

Okay. Thank I color, guys. the you. appreciate

George Rollo Fairweather

Thanks, George.

Operator

question next is of from Lisa JPMorgan. The you. Thank Gill

line Your is open.

Lisa C. Gill

Thanks very much.

First, services trying bring for I to start around future to Stefano's comment new the and that products wanted just to with healthcare. and change

of reimbursement it You that understand getting? amount consistently you're outcome Are well you've certain talked and Caremark bring this hear how some the idea engagement. relationships What in in world about pharmacy? services we And the side. new about you'll these are is that on the of this the the of the a changing think I being see What new some risk member do to engagement. relationship reimbursed? drive just way elements order got the network around new about things in products able new you're is that that as of with seeing you are we to want to as be of to changing

Alexander W. Gourlay

Lisa. Hi, It's Alex here.

from networks you outcomes. the networks in that of driven of involved and drives the networks CVS as peers. becoming we Again, that ones as some get of behaviors in that the see you different we for yesterday pharmacist the the a and can in health the also over overall terms pharmacy surely service previous get and you outcomes well. can being that pharmacies, the they more can't the we what And have don't I and be in, also of for see as role all clearly and affects that the I see Med all but time patient that different and announcement to been by to we slowly think commercial and paid how the explicit payment provide of see in think, important payment are but in more D

And that's clear. UK. and we Europe, slow, similar certainly particularly happening very saw but the in something in that's very think I it's

a have our lot we bottle. in So, as That just model outcomes peer more the of rather changes sure. experience for tablets into group to a for is than dispensing services

are network. was of anyone with we the and the are improvement insurance Aid, said much companies. to I very through open but as was sides, clearly we are quality by speak not think and serve. in and as network you the to the to can see. network. Medicaid the in customers Rite that on just very strategies Med becoming the commercial happy on the improve nodal, reach and improve peers more They driven That's of very the sides. And occasions, changing, also networks also for PBMs that many then about our we that The to deal the And the D our

Lisa C. Gill

just there about we your some Great. that George know you that going us actually assumptions for grow, D Part I comments EPS, were know the perhaps business FX, think would just in XXXX. I when around around I we your see Medicare wouldn't second question key be fiscal it we And understand? assumption market else then people as will help can think into thought the XXXX. but anything see the my

that thinking should operating about metrics the have into you other But You've that shown should U.S. XXXX? be think key these we XXXX? go go as that as we you is in leverage can growth we can talked into to scripts. new that we is you profit any And bring about grow there

George Rollo Fairweather

gather combination I very to said, I direction driving we in from you've that remarks divisions, grow or what continue we're Obviously, top growth adjusted thinking. in managing our our don't we really line, confident you'll on tried of business the operating point through prepared give in can specific think my you total that of our to guidance very but in that much the of a contribution full business. forming of the way from our this thing and our of costs think, life. have in the control which the margins year remind I keeping everyone fiscal just, of in costs acquisition The of because is obviously, I Prime year, the we'll AllianceRx sort that tight very, much new one a course, of resulted saving very would very is,

Lisa C. Gill

Okay, I'm did sorry, else, great. George? something you have

Alexander W. Gourlay

Yeah, is the lever so very end in important strategy I'll add here. just Remember as thing. a that our one front well

of sales. partnerships and with again, progress front also a strong there's track as George think play think I year. and we've actively as it costs has strategy has percent an cost our And I partnership. where where record, George our our Med the quarters is of UnitedHealth that we're So making with elements in in key strong Prime was and a through of consecutive ahead said, very course, important We're D will mentioned, managing as end costs, we XX the of preparing and, have reduced game

So as different U.S.A. front sorry, our have again, business continue just to that point our I developed the many – to we forward. going can ways would overall we end evidence that operating grow profit

Lisa C. Gill

you. Thank Perfect.

Stefano Pessina

look the the the group, operating group and operating constant, flat is that this will very number have this adjusted every are particularly – adjusted at at look, Stefano. at constant if It's over income, income, see you you time, overall the very overall But said very if we we is years. you but

a So specialty the we have of course, as in you probably that lower you because, this integration a probably, have margin. AllianceRx as very you expect products future understood, be will the of little and full will weaker have know, have to

for the But an have year, you have is with see that coming this overall to constant. of are which the we part that we will quite able hit on and full they So the have an even we year to year. compensate effect been margin just that can there partial effect

have we many, we many took able are levers. So different to at action shown that

Lisa C. Gill

Right.

a So just going it's so I when lower specialty, we to a percentage. dollar obviously, straight, that higher but be think amount, about margin have

think your XXXX. just about this think the So talked as about that? in grow, quarter you but will could like I we headwind business, dollars in we margin when the correct of have a Am EBIT about

Alexander W. Gourlay

is but by the good specialty as important half much a in said specialty be very very I know well, you the will still Yes, will than George absolutely. the business, as margin market the much business business, answer, smaller. But it's previous think as a we XXXX. past and The faster grow

Lisa C. Gill

Okay. Great. much. Thank so you

Operator

from Thank you. Sachs. Jones Robert question next Goldman of The is

open. is line Your

Robert Patrick Jones

Thanks the for questions.

Just retail gross wanted to during narrow preferred transition. profit challenges seems go last this some we've like grow to few And certainly posed back networks over years. it it's aggressive pharmacies to the dollars for seen to the shift and

shift profit as expectations be gross we the this should thinking about pharmacy out the we dollar within look how U.S. curious XXXX business. into Just growth and business the impact on to the

Alexander W. Gourlay

really Again, a it's similar Robert. similar going answer, be but answer. to it's sorry, I'm a Hi,

are said the what we'll his at carefully achieve look we can remarks, available levers achieving we Stefano as all us, and we you'd look carefully to prepared we in As use expect. to what will and

So business. in we our as confident of D share, that grow are can George in we other said the in and remarks, prepared Med books

So will grow. continue volume to

be We to with want make And last government. sure that that to available course, that. we we the announcement to commercial continue and to them incentives, with access in to the time. fill was that over night model develop hard to not of real change effectively, really And example just networks again, another as continue are us, partners to to in hard peers, gain both work the products, but cost of will give to paid the our services the they work

So we market, are our work the I think market, market. is in the we the And with to very adapt we evidence good.

we'll we be that market remain So time, assets remain continue Aid, particularly grow to to grow growth will the volume we market in gross retain of basis continue profit very dollars. share and the really Rite achieved over the we of and and pharmacy have XXX dispensing with held acquisition that that points positive positive the in that

Stefano Pessina

results in the though look end past, it all the the given than at Everything of businesses. done have day, guidance, our end. the the be the of elements the synthesis how – We at guidance, give we at our really couldn't we have of guidance, we that end to of guidance. you is what At our Stefano At day it's – have the the clearer And that. here. we have in and our look delivered

Robert Patrick Jones

appreciate that. I No,

I EPS for flow. the one But I just more on. bit building on were had we blocks the just just it's think looking for little I think a George to get that cash follow-up to

a think As us sense you about with above at the you trend to on modeling were flow with associated the the coming XXXX? the as expenses cash better Just cost as we look cost cash trying savings out cost into give initiative, handle transformation where get costs look to just we year. a programs I Can the continues associated looking bit little a for. for

George Rollo Fairweather

we Well, the to main the and seen, have were delighted where we anticipated completed we the you've transformation program, last with year in results exactly cost obviously, that come be. costs, as them and

the Rite In and we're store cash the clearly and we've that of rebranding. to have investment the in Aid announced and then the today, stores the optimization going the terms in of majority the program that is conversion capital

factor deliver give guidance. to tried cash to But that strong to into very we've I'm really our confident ability so about flow. continue a And

is explained just capital as same We my continuing efficiency. talk is driving had to year a about prior capital life of the flow particular, in strong a lot to improve but in to way as year. ended, working were our well. life, we similarly cost another think which of very the cash I working We able a I remarks, really efficiency, continue, way the improve for really in year

continue confident obviously, the And forward. to on those. very the the really we're on we expenditure think all it returns comes times, very that I a when so And evaluate projects to the do, cash going I'm I'm confident we're many returns programs. said going be all as business very that and investment our to similarly generative strong we in we've get on way capital very And disciplined we'll that

Alexander W. Gourlay

period summer, that of a lower challenges one over and Just X,XXX (XX:XX) not designed in example, decided to into the to Walgreens stores these face in we did And was we some really in in simplified cost stores weeks. stores give these period just stores can the tell matter a very time and of in as also both and for front for you of out I lower-volume rest short us end, working lessons get but capital of well. successfully of this achieve terms

Robert Patrick Jones

for Thanks color. the all it. Got

Operator

of Brian question from Tanquilut next Jefferies. Thank you. The is

Your line is open.

Bryan Ross

a Rite trade-off to talked and in you a I about that about these the Rite and more about retain? you'll add the of – focused between But set how stores – of end would assets store outside you optimal are stores? mean, Aid you how maybe with the networks access have retaining stores on those ultimately already you sizable is and This presence? you it markets the you that? I about productive of Aid the Aid your about the for some I where had bolstering preferred stores question how are you And nice is thinking are I Brian XXX thinking to how on guess, program. it of Bryan on Is Ross Tanquilut. terms rationalization for more asset guess thinking before networks. a it about the be that talked Rite are

Alexander W. Gourlay

it looked question. majority be at Rite really transaction, actually And these the Bryan. majority by being forward. quite the of going closed – vast that are the the own of Yeah, closures was location. will within another are and the one Aid location vast really Thanks for Hi, it really, team's simple. Post mile drugstore we

future country. described mainly think good record and is spending have each the million, strategy. of within the and file a do to of one So on means this network, a and is terms and the strong But as South it We really, the the to how It value buying very is I economically $XXX micro numbers very by other, very thing it access do. of mile million of understand remaining, really it level economics that to real we ones clearly. understand see also And can approximately the in George it. of a really transfers. our this of in because about the is the detail Northeast that you Walgreens $XXX also We improving in

Bryan Ross

guess, in Thank investment from you're what the related through view talk gone have have are to you going be a Are keeping, on you. what on the stores a math, you'll that getting – doing to I and – additional on Aid already follow-up And phase the of our kind you're been those half terms the stores? I of even what's that how many of remodeled thoughts great. majority about those, that the closing, stores of in Okay, about guess, can guess, I just remodeling type CapEx? and the be some that from you stores forward, your improve then then you'd have, Rite or –

George Rollo Fairweather

majority the as Thanks, these been you have Again, Bryan. know, this the sizable remodeled. stores, of in Yes. amount occasion, not

are they in therefore, shape. So good

the there view of develop move a very into However, have And Walgreens would proposition point return some stores. with further, which also some that important these we'll that as are in require also some to front-end a network we capital. of the from just opportunity investment are additional good

again but mentioned figure So just has not for, a of George for billion. also $X.X integration, figure a

the was less or stores it think more remaining into improvement that going forward. buying for I capital we're open and

Bryan Ross

Okay. Thanks for the color.

Operator

next [Robert is Baird] W. Coldwell you. The of (XX:XX). Eric from Thank (sic) Walgreens question

Your line is open.

Eric W. Coldwell

I Maybe should work at Walgreens.

with better So than MiFID we be here, a have it what might career coming.

Stefano Pessina

welcome. You're

Eric W. Coldwell

Yes, look, though. I'm call the open. regulators to Got

story honestly, about right So is of so much the investment this gross retail. especially margin U.S. now, in

very where simplification, done enhancement, And stores could how margin you've give you've you're from in at few in you seen stores? you've ex-U.S. in U.S. team mid-XXs, the that where Retail beauty, is, when was You question gross a management those guys Pharmacy. is that's years, done done much historically proxy us some came look XX%-plus the mix you you gross came improvement margin last for Europe My it. you've Thanks. good the actually

George Rollo Fairweather

that on and answer, understand level give But sorry details, Eric, that. reassuring don't keep well. for the the know worked that model of you'd Walgreens, if you we you know answer. I'm We really we can't unfortunately, you give give but really the that we can't you we

value diligently we're that working appropriately Stefano coming believe an making described. the through U.S.A. economic you model apply we and that to progress We strong in are can at and that see

X,XXX into So X,XXX, stores the almost differentiation. with we're again,

opportunity farther to much have more We go there.

improvements are we And volume drive can ways in that materially improved also cost that see have as cash of and carefully and we as the operating in to happen. the retail again, can goods, on with you and improvements also long-term well You (XX:XX) make customer that generic working side in see how experience. constant investing also costs side, our the suppliers both our to

of and our Promoter many and Our going retailer. internal improving pharmacy-led forward a are Net beauty Score's more towards brand measures of health, wellness

work on model. this to continue we So diligently

the achieved and we more is understand is the We we adapt market has about absolutely believe that changing, we changing it. We understand appropriately. know continue market to strongly will customer American the

what So that more again, can I the know But more any we I with you we are are give promise can't progress satisfied don't say. We detail. we making. you

Stefano Pessina

reason both you and has we is that margins. it we And at said pharmacy And used under would from for pharmacy, have say. I in coming shop very, with you But decades, look shrunk new time, creating good, time quite have we if front on the had margin pharmacy, compensate. a this very to a we the way better over been margin of just being the – stores completely UK, why see UK higher the under pressure to with we are the and developed or model cope increasing the as – it initially that have which over you is margin to and the pressure the in because

are to So we to U.S., new have yes, levers not we so that still In believe many pharmacy will margin the but worried. in pressure, the adapt. It's we compensate is profit company it model particularly create level decent. we meantime, of go keep satisfactory. a are to which overall at out the under for of the help But we the that us the trying to the

Alexander W. Gourlay

improve the encourage to I the in would see take you Eric, UK. a UK, also, model we I continue trip to And how mean, the to

this that really is started season the UK year. in gifting holiday our the really example, marketplace strong For because strong in

have only. think the I often again, call this conversation we about U.S.A. a So in

in we can bring I looking model We market. and continue drive, model at group sometimes even what which improve American worth the to understanding that continue to of and to we think more the to and have a Europe it's knowhow terms in the whole

Eric W. Coldwell

and very I'm me resume, let go going Thanks know. And great. to hit so submit much. that on ahead That's

Stefano Pessina

Thank you.

Eric W. Coldwell

Thanks, guys.

Operator

next is Stanley. The you. question Morgan Goldwasser Thank of from Ricky

is open. line Your

Ricky R. Goldwasser

morning. Yeah, hi, good

Amazon talk are CVS that and market evolve changing landscape to tracking the So is is partnerships (XX:XX) and key obviously, to the about evaluating of are how a going the we some customers forward? these yours, versus partnerships fact as are to their partners, changing thinking similar there But changes you entry, about your and your the are (XX:XX) continues M&A impacting potential have hear strategy. strategic very been and

Stefano Pessina

No, not that but is changing market was from which have to changing, in the us. tell I it's a direction you (XX:XX)

substantially change. doesn't strategy have to So our

partnership, future still adapt different same. to Our is idea our reality a our the trying idea of stores practically of to

experience Of just but is are the some make piece. building basic we have, from have, we due by we are that strategy we many course, we changes the we the are of course, that piece we learning And said strategy adapting, have just, are same. to and times, still the many, experience as the we

We many right have now, that times, build have many, And platform we have this are I future changing. to that company. on you can to said things the the and worked create, see

You are can constantly see we delivering. that

we And delivery of create because to is the something coming years would pickup our that expanding the fact the we constantly of trials that about, Whilst over phase In have a eight are I execution to think I tests we have not now, You'll we everywhere from spoken months, all already FedEx point we see our in stores. have collaboration costs, now use our this have only believe, a quite our in now And our are we and are sales. tested we network Puerto the also fantastic just course, first customers our I done except fruition. in the said it's this really everywhere these stores. in case, to hold practically, FedEx, pharmacies. the as has our FedEx is to is that directly FedEx fast. controlling the store, of Rico, and deliver will different seven, all with but been feel that

what And we so consistent saying we are that were with past. you'll see in the

George Rollo Fairweather

to out we Again, I deliver rolled partnership you business not having Ricky. drugstore the of last And point, also a last about really the which the idea when well. we affected Stefano fantastic months to just the as the our is here. ability by those what Hi, of mile, say in in to hurricane, mile from to partnership, to this think customers just as on matter and have the FedEx every partners said, and want believe FedEx's available we've single apart FedEx a

last online So changes. people I one changing are think just many quick particularly this that it rapidly idea which of rapidly as with struggling struggling example the think we the market with, of that's I are business mile, And are – how the many with.

for supply is marketplace stat chain think returned, in of that the customer a I believe a customer reversal and Piracy last that intend the parcels that's returned, the e-commerce with is example, problem. with others, the solve XX% big in get get FedEx mile, problem. to for big businesses for these at problems best what of We customers some can working people we we many do. and and is

Ricky R. Goldwasser

do think addressing thought a more about omni-channel, the competing effectively with FedEx we as just but partnership, mail? on So also so both the it

George Rollo Fairweather

end repeat Could quite hear So, your Ricky, quite question. question. catch your of I the question? I I didn't couldn't you apologize. your

Ricky R. Goldwasser

that response mail? the like think should FedEx kind not we the also with more on competing just Just as opportunity as of about effectively omni-channel, partnership, to but

George Rollo Fairweather

that we at forward. the costs mean, In obviously, pharmacy, on hard We look – still opportunity work pharmacy. yeah, reducing that's an and going I cost in

patients convenient, who are before. many and to close said We customers, both products, very I many, buy retail people

So looking if about partnership. do it. with at anything we are know for an that is one we to and that going this the But sure opportunity let I'm of you certainly that's opportunities

Ricky R. Goldwasser

regarding then eight quarters. been question most last we've has seen the And improvement in Obviously, SG&A the just guidance. one the last substantial

savings us So about for just that XXXX? run for the you you rate with new should you've share given rate tax about? can talked the think as what are then assuming we And

George Rollo Fairweather

very guidance to much life. a that additional up the on stress would Rite way continuing of look on prepared But haven't you've level, Clearly, we gave we to adjusted the take seen the just I'll that, the notwithstanding obviously, efficiencies. through given coming I as at that. on SG&A are have transition. so guidance, we in composition. EPS costs go our drive comments, we Aid really we'll It's But

apples just SG&A But be period. focus be we on life. as relentless. continue way that of So go won't will quite the absolutely the It's improving with apples comparing through to we

nature. Prime and as a has the in in gross We Alex have there's we'll then course, have acquisition because coming have by of, percentage it's I a Prime will, effect because also mix lower year of from already margin full think the explained, the terms a we'll mix year effect

as given couple excluding discrete comments, not for ABC percent in there guidance said a rate, the terms was was items. tax I tax In we've specific our my equity Within of tax, of prepared of effective that, but income rate XX.X%.

can world really course of be to the were one things post tax be to So, start year-by-year. equal, to accretion in final Rite and of which we income highest Aid moment. tax will as And being excluding through tend see point, Rite of the you will to continues we at in level discretes, post, higher course, really, Aid, of have start we the the course, the of XX.X%. higher time rates other of we come of over would in U.S., discretes vary from and have proportion, proportion terms a The thinking a the

Ricky R. Goldwasser

Thank you. Great.

Operator

you. is The Concepcion from next Alvin Thank question Citi. of

open. is line Your

Alvin Caezar Concepcion

then taking know fiscal I rate XXXX. my for accretive And you. year, that. wondering first after about a Rite I accretion follow-up be mentioned I'm run Thank question. that I shouldn't level XXXX, in but the talk if you Thanks Aid materially you in for guess, the full have could

George Rollo Fairweather

few acquired to on as not help given systems. start phased thinking, the we've we've just numerical of said, so terms, beyond be them guidance or with the testing terms Rite we've a And specific in acquiring basis. what we'll first the but in the you your Aid IT stores, the week to last We've in said

those existing do to phased a take getting we really IT elaborated to convert treat our pharmacists of roughly management seven is we pharmacy we – file be got everyone convert we've part that on have time, then of over XX-month stores, we end months optimization spring – a is stores got until the more and particularly do which little XXXX. the next on have going we'll as the to program, on the talked them XXXX an up, which And detail, from then to basis buys over Alex spring internal the when like the we've moved putting the is the program which of acquire So I conversion. which has then six, remerchandising, the to the store next about, program We through our have acquiring the in the And rebranding, systems, important very trained obviously and logistics over. got year.

complete to we about. that till the as really, a Rite see take from So number benefit which very years full Aid will said confident of absolutely transaction, we're it originally, we've the

Alexander W. Gourlay

first this that really from really the quickly Alex (XX:XX:XX) Hi, working feel the it's by prepared have transferred well. really remarks almost in point about closely, this good got mentioned gone of an George we The been two stores was here. for on have going really operational Alvin, team years, and has view, execution. actually Again, and we

done and So this well I We're really good. of inside it and get well and prepared get feeling job this think execute network. network we're Walgreens we'll

Alvin Caezar Concepcion

comps you in know do it S., you. it's front you're if And your what a positive guidance? becomes transition, the turn hit positive so in at I need point the to order and undergoing end XXXX. Thank I'm in XXXX to wondering necessary U.

George Rollo Fairweather

lot that. key differentiated fantastic on only our offering, it's is important profitable And we our at lessons promote not to so very as area a promotions way. Boots profit. As the A it number. is And doesn't our do developing and particularly to products I mix. course, of we're the when improving able has the about so, of And own economic ago, disciplined one we of minutes again particularly a said, give make and we do on we're offer, very growing it I said what's value. component sense focus Alex guidance focused improving fantastic customers value we creation driving before, as on Alex the our the being driving that shareholder beauty think mix, in don't overall unnecessarily top in in way a had from that just is said our line, evaluate few in all learned offers And of

Alvin Caezar Concepcion

Great. If I squeeze more. in could one

profile about trends What Just wanted margin How could seeing you Just is your has color order. been ask of of sales, to business. on provide the your terms in it kind there? how mail are sizable any curious if mail looking? order you

Alexander W. Gourlay

it's Prime order our AllianceRx, of business. is part Mail part of so

stages So really, very this. we're early of the at

customers it in I receive think separately convenient way how think we don't their network. we We the think most do they from way prescriptions as in, the want came make a to. for a of previous question order of to that mail

that business, case the working this network. order on mail customer-focused our So confident with partners but by with we're closely Prime we over having grow other pharmacy closely also including a in really can time approach,

Alvin Caezar Concepcion

Thank you.

Operator

The you. of Thank question next is Kevin from Caliendo Company. & Needham

Your open. line is

Kevin Caliendo

their us going opportunity Question preferred they're lot wondering take Walgreens and how Obviously, that networks. Hi, that into Walgreens to you And good might in guys. the fit morning, Anthem Can of for through on Ingenio. network? restructure a just XXXX. come

Alexander W. Gourlay

the It's today. the point Yeah. was absolutely to think, with share the not a of situation obviously, of I This to an back view of of low PBM from here. a networks. network have everyone. go pharmacy that point partner the within the a Yeah, contract. And relatively we it's Anthem business I contract, evolving want we Alex book

part believe PBM. our Anthem So as play evolving performance-based our the customer higher offer, we things pharmacies, can in evolve we with our networks, quality a better big

Kevin Caliendo

we the bit in of XXXX year goes look should XXXX cadence more for the or Okay. business Thanks. over think will for little about as fiscal be, the similar as bit or the saw you a level some Can on? just – mentioned about you like little to year, the earnings comments it or we But even earlier. international what you course and talk cadence a be it said,

Alexander W. Gourlay

again, forming product in to businesses. the constant confident to in obviously, division, different with strategy some in very with continuing more America. rates. Boots that as UK, believe this, a of in products in in its we've has right the our very which Latin These guidance, overall business, market. international the a But by grow challenging factor got our position about markets key continue – markets a obviously got the of international and assume number are, nature, the challenging, obviously we is Currency ranges, But we we're strong differentiated to develop those

confident our in just So divisions, all about really we're prospects overall not Retail very of our in Pharmacy International. three

Kevin Caliendo

of things and we that that about cadence, wondering was There in earnings of terms I was should corporate in full how XXXX? quarterly Should a it progression. think talking fiscal XXXX that. modeling. about of for cadence the lot like were just think how in about a might happened I'm Walgreens' Well, the should change cadence terms certain XXXX in it in we some terms year look

George Rollo Fairweather

just Really, what said would I I re-emphasize in guidance.

the phasing, but I halves. As prepared as we I in this that the think be I between said expect two remarks, said, my more balanced to in

would we more explained XXXX that be year we fiscal weighted I guidance that. the gave think results that towards always demonstrate when the And obviously, announced final quarter. ago, today a we've

So thinking think, I think about best of would would it. the more way really be balanced

Kevin Caliendo

much, Well, Okay. so guys. Great. thanks

Operator

is The and from question Charles next you. Rhyee Cowen of Company. Thank

open. is line Your

Charles Rhyee

about are the you of how there, your considering can you things pharmacy other model business technologies LabCorp new question. that you're in of going? Hey, mean, details Alex, to threats evolving you trying with like competitive the is doing? when or all the go maybe out and meet automation pilot thanks talk taking kind for kind the outlooks more I talk can on in about you

George Rollo Fairweather

Sure. Sure, Charles.

Again, of with They're services patients very As all see stage, pilots at providing. and Stefano said, tests we that get really marketplace. consumers of behavior. progress the and on to we testing, have us use We'll them. differently (XX:XX:XX) currently this the consumer and in a we are pleased now are lot these

early the said, from had LabCorp, indications recent team examples, we of a customer the terms experience with of And positive. So one. you just the as some experience we learned but are previous early, That's before. had something that's we in course,

of an pilots to in Secondly, number we optical. increased are moving

industry big successful partnerships global successful so partners a American to the and the UK a have important business understand the have and again, most well bringing UK very in least, the well trial business very urgent U.S. that's with knowhow model is talked going in Hearingcare. happening market. here UK. again, Christmas. a Hearingcare, far. And are and in We in we're again, far. all the the care and we're progress after UK, with not well. in test that We with (XX:XX:XX) again, pleased the bringing a the this And about in we the that we're again, as in the in that business of to in but ground where, just And MedExpress, the again, last U.S. care. here urgent And so we

properly the convenient again, our course, healthcare new of using physical what in of locations, ways are access sure progress, partners so to with right in in customers partnerships in to brand, good. our target make give all market in so space. the far, in that through to the So developing best data work Walgreens All doing working appropriate people U.S.A. healthcare together managed, them and our terms business we're all using now all part being of models and that most working we

Stefano Pessina

have to very offer business to evolve tested formats to once help us a over the is so roll will us technology, a of will close develop strong the having of same And we – the partner are rapidly. the customers, forefront areas our really partners the is but continue want when to what I the of in help what partnership And of business basic customers. carefully countries right have the course, past and very will to rapidly, we for have other will partner. been we select experience adapt in sure will because in very, which for And and also strong the very able always be an that these partner important to idea not their as this we the do UK the partner element in us stress we had good to partnership we to important are, a exactly of are because required the at and have business a of sure, needs

Charles Rhyee

that very Thanks. And you're fragmented. at the market, how on the very looking us Can just partnership. give just as you a fast-growing to you and it's in the out Obviously, well Can thoughts or at follow-up how those some it on comment market? urgent really have that care, to MedExpress at does as growing that sense it acquisition through maybe building sense point Thanks. your – you're some looking on organically? make – own, large

George Rollo Fairweather

we're – inside It's behavior moment, really Walgreens really encouraging. and I and to I inside the early. box, it's changing mean, go back the looking we're customer the the at brand properties. Walgreens that's of at very And how

bring So, we of customers course, as We But things bring. also, in to great healthcare. we'll great believe to that We we build having analyze which bring already said, Stefano in what partnerships. associate locations, we a brand not built. successfully believe

lots But partners going today very place to the sure, are the these in assess urgent more future, as see of example and an look is is care, as delivered all be I that many like right, course, And will healthcare best and doing said, urgent communities a that. you're in and healthcare that people services. we of could of good understand So to in ideal deliver of work care. to more with the we for what drugstores

Charles Rhyee

prevent over-prescriptions and divergence one you've trying obviously, if a your in And some had big add to just us Thanks. Opioids, Can I you and maybe right on issue – you're a sense how doing of measures of these more. now. in Thanks. Great. what long terms place? could comments give

George Rollo Fairweather

key Sure, rolled America. even now We something was back back. our believe in another was spread XXX And months XX take to service in across it first that take we've out, that yeah. got And called our ago to XXX partners pharmacies by in now U.S.A. closer that the with now, provide we're evenly expanding I think, about I, it's partnership communities

tons well now I we've also bring as million they're got that of delighted we're is moment, sure unwanted think, drugs at back out so it's that their of to bathroom can not is very the drugs cabinets program going that very back, program I people So think well. we That and going others the doing are have their about, XX and ones misuse. available for well, make

education, play make thirdly, we're has the deal and a for with part issue this role in working way Secondly, an a and improve program drive play Faith that this to well. in to really continue pharmacist preventing with that. in as Good as understand And making place we're sure in to we years Dispensing other many are and that there how sure been a opportunities industry we any through positive pharmacists to that important really active situation,

Charles Rhyee

you. Thank Great.

Operator

Thank you. The question from next Leerink. David of is Larsen

Your line is open.

David M. Larsen

in potentially the Can have to much. more talk about the competitive Is perhaps we're relationship very an last you It on briefly pricing maybe and in CVS CVS this market? been seems seeing agreement some a that of you price friendly pressure you bit like very a side. of and Thanks reached just retail with easing of night? that indicator me the

Stefano Pessina

competition relationship on go one there can certain always CVS is me a good. have contracts, Let was thing, either not a which with say There our And way. war. been

I the ask this will so, precise. war of said more So not Having in idea comment to Alex – more is details.

Alexander W. Gourlay

so the us to in be a said them And we go for could network. will they drove performance And CVS in marketplace. and to so wanted always partner. They that certain this obviously, mean, pharmacies and with for agreed normal ways where part into have they health (XX:XX:XX) discussed in I calls, individual and agreements patients performance worked has Yes, the better as the is measure around outcomes of very, previous of been we where about with very manage network payers. always XX,XXX pharmacy important the and PBM this this

this for we important network this we're an important an is for and to look successful. So forward very move CVS. pleased. We move us making think And

David M. Larsen

Okay. go website And did to correctly? correctly? members Amazon that then facility? script and one would mail into could you them any on and you own Walgreens through the getting a Walgreens mail hear I is business, your considering where it ship more. hear chance, Are the then that in response And through I you to just by Did online order

George Rollo Fairweather

No.

I business. mail think a that we the it business we've We had AllianceRx as of Prime's deal with part announced last always combined mail summer.

to always which we're a fill. looking other prescriptions the reduce us to to receive network So potentially our the U.S.A. home. position give and to We customers believe any cost allows of than flexibility network, for that in their able have being mail and closer is cost customers lower at last ways the the to in pharmacy of

have. not that to So, response to option. customer at really I that's Amazon, we a the But we're it's think course, response looking a of opportunity

David M. Larsen

Thanks very much.

Operator

Thank Mushkin is you. Scott Research. next question The from of Wolfe

line Your open. is

Michael Otway

one. the over are of every guess, from three the we XXXX, to Otway guys frame savings, store should benefit first, any come and This the to next I how in three the for in year, those you years, morning, or of good you Hey, four can up savings optimization synergies to years Scott. questions. to the next savings ramp? savings – Mike is fiscal four the of those ramp should the Appreciate expect on the kind you over bulk taking we like

Alexander W. Gourlay

that structured take will that that we've They the a that set transfer we lead to doing, And come the a we're within experience the we time maximize in the as being for timescales through store. as we've of the set through go we've because team the store over programs, business there's buys, business. time acquiring thing, a so – is And well store basis. do and in got program, very way optimization, do a the up we the emphasized, this to important got with Alex of we the combined optimization store-by-store out a do I Walgreens like we, but into of file experienced that disciplined we – lot think on that a will and period

business it. we things our to about over the I time control end We're ways of move our as the benefit. million be of Again, clear the that and The will very So you would same the benefit as up best million $XXX ramp takes the with overall we the synergies. move $XXX describe – over but in it also on over both to should over more how by time. more of come working. our then The talked that XXXX, time terms we thing systems will is over and expect our in

Michael Otway

items that store? play couple years, categories on your What's that customers and the those front-end shopping general over Walgreens sales, you roll I a about And perspective? a the you but see that. trips for decision how expectation delivered talked a right, then the with time your and standpoint. the to that to here. of Is drag We doing consumables All promotional get my customer's the front-end from thank positive? some do you're view question for purchases you from it on then front-end just in can of a decreases as for back homes? little guess, comp of some do bigger role of these and some the that perspective. much the a you second Walgreens made bit other call, But a think longer things from kind overwhelm, front-end standpoint merchandise from And beauty ultimately positive the consumers them that all actually next store comp want these categories guys interaction of from term and maybe these picture over So or of items a just

Alexander W. Gourlay

– Hi, Yeah. is very does change. Mike, Walgreens' it's convenient, to be here. it's Alex and strategy Yeah, a always not convenient-driven that strategy the

and model in really how future customers the really from shop convenient more understand is today are will developing So we to a the and more location.

one do well to really better products, we can the of so want that better product also we doing well convenience, is one offer that's better forward, quality uniqueness of can think a find job quickly value, simplify going accomplish. can do they that number in We of also in and and really OTC We healthcare and price. products at good we're combination it they healthcare and in beauty. a So and believe

very offer. important to of that terms other In they're categories,

hard. working are we So

a For early own example, doing we and re-launched just is that's that on, roll-out. the The It fantastic. roll-in, product. is product, packaging brand Nice! well really

our the the as and of the again, continue of that convenience we and will improve quality part model. our quality So value of products improve to

into future, would the particularly with is I think the really a other Walgreens. a I (XX:XX:XX) also can to the is mature and platform, got good the that we're say platform we it app same in way. and customer evolving store we've the join mega app store more thing what's in second convenience a the under And that both store and people the important customer more, our connecting connect into really and there to allowing how

and invest So again, in beauty and in since capability growth going positive will Walgreens.com, continue we have seen combined in And assets we ecommerce health Walgreens.com, good under that forward. particularly all particular again, our of we to again. and do

changes. nothing to again, We to got So evolving adapt the just customer.

see unique to in on customer course, and us takes a as the value the makes more proposition, to Of all-drugstore said that more customer more which proposition, improvements importantly front-end want but And we than really we focused we just time, model. see emerging want sales, all, a of before.

Michael Otway

I you appreciate the though. color. Thank

Operator

you. Heinbockel will Thank from the question John And of Guggenheim Securities. last come

Your line is open.

John Heinbockel

Alex, it learned I think you but things the wanted you're from Aid. applied long you've you are to Rite business? or touch one not a at What well two So little could time. it's looking a the on been as yet, be to them are. that they doing Walgreen bit early as for Maybe know

Alexander W. Gourlay

they think, to costs, low most genuine And a you. is the front-end us thing model. volume for thank have lower I lower how run obvious cost, adopted Yes,

– apply the looking thinking journey started That's – our model summer that their said is they obvious reunderstanding forward. we've to So our very how to area we forward sure, X,XXX the with how I apply think for have as we before, lower-volume can me. to in I'm we stores and going one

We're improve a sure who that area will business, channel. of forward, two areas, going that second I and it we within teams find have discover the people. obvious we'll we talent great help drugstore have think more. is who at run understand the getting Walgreens the sure already I'm operational the really looking of in will we're lot talent that, great the getting I'm

going to forward. learn open You and very more learning always lots acquisitions we're from

John Heinbockel

of underperformance, base, core you or you if right, how of versus secondly, Aid Rite structural the issues? real versus stores not? so much at guess, then estate the look versus I And versus is operational those that

Alexander W. Gourlay

into we time, that be lessons Oh, Rite believe to what we improving Walgreens as from learning we and also and we well, returns WBA, Walgreens. the again, the we Walgreens get model, knowhow our will generate have from doing applying that Aid from in similar Aid are over everything by the by brand to Rite transforming from group, able today

So for of improve But the put understand can improve Rite Rite Walgreens some and profit are both so location further disadvantages think sure, – further having we them we that. can and We Aid all portfolio. we Aid there together. in some that, said

full-year the improve Stefano So to business of further. we're to said I we synergies clear will million his we're answer in forward. know a the but our prepared put plus these it's being to that anyway of of the period. question, course, are both And over and as always remarks, looking together And in improve core $XXX looking confident going

Stefano Pessina

remember and also, effect. of profitable a this, course, are the is will integrating be generally sure, we particularly we have not but will keep that eliminate the stores of transfer these files improving This in we synergies will, service, rest store, the organization, stores, to improving good we where efficiency the already so stores we double increase be the the the Walgreens certain And to transferring stores. file, it's To stores, to be the other that the into have. expecting, closing for that offer, the are that them at comparable stores the absolutely will Walgreens And the will stores. of the bad end, not stores which

John Heinbockel

Okay. you. Thank

Operator

no over are further There remarks. back you. to closing Thank call turn for I'll the questions. Gerald

Gerald Gradwell

very for the thanks for the presentation questions here you Thank and you, team indeed. your today. Thank everyone, much, to

here question. hours, free the IR any team available questions, contact feel Over that the and further next to answer whole team with of days, to has weeks, please Ashish anyone

Walgreens Boots Alliance (WBA) 25 Oct 172017 Q4 Earnings call transcript