WBA - Earnings call transcript Q3 2021 | Walgreens Boots Alliance, Inc.

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Operator

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

Third 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]. conference recorded. today’s that note is being Please [Operator Instructions]. the would Gerald to like hand now to conference Gradwell. over I Thank you.

You may begin, sir.

Gerald Gradwell

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

today me Walgreens for Officer; any also of James and with call Standley, Alliance; the are Brewer, of Executive Boots Chief the Global our here President relevant Roz Kehoe, John questions. Officer Chief Financial is On Walgreens

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

now I a website call, archived After XX to months. webcast Relations will Roz. to at presentation our You you Investor the for be over on hand on the this the will website webcast link and find investor.walgreensbootsalliance.com. will

Rosalind Brewer

Thank our everyone. good Welcome you, and to Gerald, morning, earnings call.

we're third earlier this morning. pleased we me by Let with that financial performance, which quarter saying our start announced

the Our expectations, further beauty driven execution recent Many the and restrictions various the photo investments digitally-driven months, businesses. remarkable, administration, deliver deliver geographies, and have sales ways, customers. total call above targeting leadership by vaccine to precisely pace increased including of operational emphasizing team adjusted $X.XX that our we and being a is initiative move and well, been lifted and were were the in strong really recent Walgreens as quite in increases must and mobility excellence, This per and are our across particular vaccinations our our and COVID-XX in of more earnings scale. company our our In teams at driving in with highlight. marketing many categories I at share demonstrates ability by in our technology have this performed both Boots revenues answered

groups accelerate to technology our our communities communities our proud and remained and or continue administered now be retail a underserved. are and to we've logistics most partnerships digital, with faith especially more and health to Strategically, transform that around officials, cost offering community utilizing transformational create those the modern restructure their keep destinations healthy an to to drive and by our team have public safe, stated medically close vaccinations committed others. neighborhood and extensive previously deeply creating to over We improvement. million our members priorities, infrastructure, commitment of and quickly XX pharmacy, I to

sites. results. at observe our more It's out priorities you'll I time teams, and to insights also great on All about to more by continue as as vaccination being today spend provides of what these hear firsthand our James our carried stores

visits, these and that [Technical again our I’ve over incredible over company the Difficulty] has. strengths During

store I the healthcare returns. company, loyalty, to review are One also including are the where And now, brand the make a investments, across last our customers have extensive of growth to phase opportunities communicated our of tremendous we understanding example allocate across is quarter, on capital of expansive our and detailed deliver the in business an mentioned millions of conducting We next U.S. and and you and plans heart should trust as them. our of initiative. we best right further I'm previous of in financial footprint deep tech-enabled uniquely-positioned and X,XXX communities There healthcare long-range capitalize

build choices deliver solutions pharmacy our ensure the build But excellence. leveraging further, our core win. solutions, evolving we that capabilities out meet pharmacy to needs, we their what customers to by operate this simply, with order and our want, first build and assets as to we to the unique have we that pharmacy upon foremost, assets the will be and core businesses the of in must guided to in continue our Said of As future order continue and healthcare retail we today. new of while

and providers, determine all which we more bills trying hearing is them. we platforms What manage way and can customers. space builds often these problems in positioned incredibly help them different Next, that healthcare deeper are we're And appointments, of the even to a best our sprawling But need from to channels. strengths our are and on know where that overwhelmed is to relationships we even complicated. overall medication, on different them establishes health and are we to they offer address conditions, with

end the will that most level and our enabled with So, we innovative expect. quality and that the on services must customers be have technology, products laser-focused and potential be be can a at delivered that value that most the

must we Lastly, landscape. speed mindful this be in is a priority changing that rapidly

further categories, about it deploy forward over right, take assess our with on our turn operations. James? I'll it depth to and fantastic James into future. there's scale. we'll more to and potential about plans. the with We excited again, And for us just But then spending more you we're will and soon new that, to and at very the results time here prospects I'm appropriately into enough and accelerate quickly getting looking sharing

James Kehoe

Thank you, related In $X.XX, prior excellent a versus and had ahead expectations currency on impacted was by Adjusted well up EPS key year Total an prior Roz of year basis. we morning. $X.XX, XX.X% above constant summary, EPS adjusted COVID and good XX.X% was two factors. quarter.

depressed which the Firstly, ago a pandemic. with we was year associated were lucky restrictions the severe weak in COVID-XX quarter, by

investments of Secondly, was also COVID across vaccinations vaccinations. with the Cash we to made have the quarter prior than accelerated us strong the X,XXX growth. executed EPS locations. strong and generation The provide of XX% quarter in also to single-digit current flow to cash strongly around $X.X significant billion, full from free mid to to third our higher XX.X% adjusted we growth guidance high pace year-to-date increase year Thanks approximately year. allows performance

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

COVID-XX Third quarter The increased of sales XX.X% German constant increase growth was X.X the EPS U.S. less restrictions. strong continuing operating favorably basis, period the performance driven included International The impacted increase due of year venture basis and tax joint in a in mostly currency of XX.X% a percentage basis, November. constant $X.XX, X% in prior a severe XX.X%. income the point Total benefit and higher to last driven Adjusted catch-up reflecting impacts a segments. by on adjusted in profitability formation sales income constant On advanced in a rebound adjusted in due entirely in gross the growth currency adjusted EPS quarter, profit the the currency by from was initial a as currency on operating COVID-XX strong in constant operating a XX.X% U.S. double-digit and both rate quarter's $X.XX quarter result to rate. a that growth International tax was in adjustment the strong

impairment Finally, reflecting on $X.XX quarter GAAP Care gains of billion Health. basis, $X.XX, to investment current continuing and year in by increased the charges $X to related Option EPS a prior

X.X% a on adjusted Now, repurchases. year-to-date of was income currency and sales on let's adjusted up X.X% basis. operating in Year-to-date constant U.S. constant segment and income from almost Adjusted International prior has with weak lower the expense currency from currency interest year basis, prior X.X% constant EPS continuing reflecting basis, growth, a impact increased increase to a to year operating share rebounded a the doubling very move income rose COVID-XX. favorable a On operating a X.X%, due $X.XX, highlights.

traffic operating investments from both initiatives. X.X than percentage in and driven gross sales especially consumer in improvement COVID-XX than discretionary driven increase areas spend compensated improvements sales, as the let's segment. increased retail. over profit more vaccinations the as strong points growth as Now beauty growth We sequential vaccinations. U.S. increased mainly Adjusted cost urban X.X% vaccinations foot second to the profit XXX income Adjusted rolling of fast-growing Sales and XX.X% against such and improved gross quarter primarily and out to saw move year-on-year growth of retail. basis approximately in and the year. increased by costs, in growth growth margins notable higher pharmacy by across the with point quarter, X.X% executed X.X% was and XX.X% photo. the The we related in Adjusted improved. categories, last COVID-XX increased strong trends, in an and impact SG&A saw Both pharmacy retail X.X% and the XX.X% in quarter the behind for both pharmacy

around look at were U.S. in increased more comparable million detail sales completed vaccinations up this and COVID-XX in pharmacy. boosted growth let's by XX X.X%. while points. pharmacy Now quarter, We X.X%, scripts comp Comparable script basis XXX the

bolstered profit by margin result sales to improved vaccinations. and and doctors’ Solid nicely, as improved favorable growth reflecting strong softened. more patients underlying trends, headwinds gross market Adjusted also were a seasonal as results of offices gross script from grew mix returned

to the from basis Store categories of came XX.X% growth tobacco X.X%. result store in XX basis increased as discretionary increased boosted sales impact back and optimization beauty XXX the growing year-on-year, Performance increased adverse sales personalization U.S. Total nicely, largely X.X% a excluding improved around results by business. categories. stronger negative Comp areas Gross XXX and from cold, our X.X% subsided e-cigarettes our comps next favorable up retail basis improved, were photo across in flu retail quarter, mix as impacts mass margin retail especially and and advancing points. sales points and programs. cough, traffic discretionary sequentially, with Turning to due including XX%. urban points

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

due contribution point venture from a percentage Opticians. across the XX.X% the in Germany. Boots XX.X of profitability in focused UK, wholesale impacted including and high we increased be segment Boots UK pandemic, International Our we encouraged the by start of to weak the are footfall by on continued as COVID-XX negatively the street. said, the That with continued sales rebound in formation Ireland joint Sales left and execution to our quarter,

XX.X% Adjusted Excluding this up operating most was as across up sales $XXX $XX income versus year, from tightly million costs benefit, sales year international were quarter markets. ongoing reflecting prior rebounded lows were prior and million the recovery controlled. in

now lower more than and restrictions. we the sales funding for favorable lapped retail Let's at Boots Comparable increased the continued recover, increased UK. in pharmacy look prior volume. as more phasing services [Technical X.X%, and of to XX.X% demand NHS year stronger of COVID-XX sales detail offset script Comparable Difficulty] start

third However, footfall the continued XX% last quarter the was in at declines levels. was Nevertheless, strength and of encouraged are compared pre-COVID the April to XX% in basket over XX% levels to saw size, up below May pre-COVID XX% the in which pandemic by the to in that we year. peak quarter compared we around

at the growth originally Boots.com of sales the International XX% regaining strong categories pandemic retail than height are are more we recovery total market gradual it delivered and quarter performing We and the in of for was grocers the segment, loss the the accounted discretionary And strong to is quarter. share while Overall, strongly. rapidly XX% sales for anticipated. of a

eliminate cash to cash levels. extend optimal successful million sizable $X.X more capital are excess the the Free with Working flow year-on-year profit as year and capital and benefits driving flow. of was months working up flow to billion first inventory strong reflecting delivered next Turning strong cash terms we initiatives payment initiatives. $XXX results in nine the

benefited the the favorabilities, of destocking cash COVID-XX from have associated Act. associated We with some including timing related one-time safety benefits inventory CARES with benefits and

business. of Looking will strongest this adversely business. cash flow cash for the fourth divestiture generation in quarter the Historically, Alliance impacted the the quarter forward fourth Healthcare quarter was by the be

Turning guidance. now year to full

lapping led international were across year, Our was restrictions the a most strong. third severe of and performance quarter clearly rebound pandemic less We in markets. very restrictions to the footfall the in the current peak improved and U.S. last year

and expecting vaccinations than in successfully our at a year-on-year a are Additionally, strong The EPS quarter peak although were the the fourth a slower testament completed we little quarter solid was XX comps the for quarter. this quarter, growth capabilities. vaccinations, prior to executional million third year We rate tougher.

administer less are fourth we to quarter our accelerate ramping vaccinations quarter our and growth We the will up compared third digital the and in plans. healthcare as investments we

EPS to guidance. now Turning

are adjusted factors. guidance from around is We potential high EPS our raising The continuing to three XX% full-year growth. swing to mid basis based on single-digit

forecast our now Firstly, XX in quarter third with million full-year around vaccinations assumes compared in quarter. to fourth million vaccinations million the XX X the

growth a On increasing of an around in X%. growth Secondly, we expect to normal foot our visibility X% COVID-XX reposition operational some returns to adjusted improved as adjusted to EPS many has for quarter summary, have growth drivers. we our are an traffic drag raised earnings basis, X%, And X% of impact to should performance business, and and markets guidance more to investments In around continued reflect EPS changes reopen, company around investments and with transformation fourth we resulted annualized quarter approximately in four the finally, to success. strong XX% patterns. are volatility continued and

cover know strategic key our initiatives. me Let

and continue our physical channels. our the make in We and business through transforming stores progress to through healthcare, deliver in we digital pharmacy which our both ways

care One improved a of spend of model. pharmacists’ is the and our on their through time more core be foundation to the services. adherence healthcare for will integrated simplify outcomes free and role more This health up objectives to

the is steps One and to modernize pharmacies. automate our key of

Our and will around X,XXX together XXX Two plays Dallas, and time, locations an workflow brings pharmacy it around pharmacies. iARx are as these recent are support automated centers Walgreens capabilities. role enhanced now operational investment fulfillment important two Phoenix solutions Over pharmacies. micro supporting and in

deployment next be nine And by decided for completed We to end year have fulfillment the the of micro calendar we the centers. also markets expect XXXX.

plans patient our are rollout with VillageMD positive We following continued accelerating also response.

calendar and We further this locations have the calendar by XX sites, this opened XX be This year. end bring a will of year. sites already approximately by XX have identified we opened the number co-located of to the to of end

co-locations. formed an are integrated services the virtual give to in co-locations, available at collaboration addition these This an physical Walgreens In access nine we same to patients will that healthcare additional with locations. VillageMD pharmacy the expanded

our and provide Finally, testing range in are COVID of testing, wider building forward. we on customers our our success to developing diagnostics for going a solutions business

retail. value, turning across evolving U.S. Now to our We're model retail consumer services and convenience.

quarter. our platform around personalization additional is refining and We're offerings XXX in nicely Our was gain prior customer XX progressing Membership engagement sales the building the million momentum. by and XX% boosted to over insights. quarter we simply myWalgreens members mass basis up consumer as personalized points of retail

pandemic Secondly, is to the work options throughout offer we've the experience improve omnichannel undertaken our with and consumers. convenience resonating

quickly drive-thru curbside, completed past orders. mentioned are have shape. we've taking and delivery streams million the last profit in X alternative The now We mile

offerings Our helping better digital uniquely working dataset. based now third-party them our Walgreens with across Advertising with first-party and is Group video, on and customers, is brand providers connect expanding scaled its

credit of debit Additionally, to we early fall, products. in launch the series card plan exciting a and

behind the it product completed SAP will operational point speed efficiencies Finally, a And of availability delivery. capital of working rollout customer we've unlock improve view, of improvements. S/XHANA. the scenes, and This and will from significant

initiatives. international door next Turning

progress an Boots excellent services healthcare with and online in made available. developing offering. During providers healthcare we Hub Boots almost the third-party now Health XXX offers quarter, digital now for our marketplace

follow the innovative which online. with the doctors patients advice DOCTOR, can As in we Boots more physicians connects and to Hub, over from a part ONLINE service, seek future. XX Patients launched market-leading conditions on of new Health recently and

this recently beauty now lifting year. over And the and to discretionary gradually XXX strong side, UK on with XX% gains their the brands share products, On introduced gradual And as particularly spend in increasing we We restrictions. the we've major are to market XX in in quarter, capitalize have retail of categories. customers delivered available online sales life brands returns the marketing campaign stores a new quarter. our in normal, advancing beauty launched designed with on

a COVID the in support is undertaken are million in We programs. continued to quarter, booster one tests vaccination the in play UK's test completed with providers to-date, Boots COVID the NHS. and to leading X partnership over well-positioned testing major of role mostly with

stores, private for Roz a offering China, a hand X,XXX tests have almost have also comments. I'll last we callout We year. And testing several it stores now up growing test same a major and X,XXX several period with quick to in-store at-home in back to compared addition now closing to to the partnerships available, with airlines. finally,

Rosalind Brewer

James. you, Thank

and good So we for the year our Therefore, a for while of raising today, a investing full forward. more our focus prospect principles some healthcare. leaning will as three two our maximizing a continue growth our as the particularly and moving the we path into all heard the with at of such enterprise you of as forward; be capital accordingly, our as including the time; performance key there and all operator performance amount solid balancing key whole. in pharmacy business the Currently, of have performing of our our my of to immediate time, a and financial mid tailwinds we ensuring at our and our a challenging future, and I'm same next as our ahead built and in consumerization and the metrics; learnings long-term look plans very to into as sharing delivered strategy, into approach win, quarter, guidance applying the our fall existing we of at disciplined best-in-class right forward our centerpiece value have assets, localization right financial needs our the to innovation over be year allocation and are our leveraging core years; guiding on do allocating the to I in a and culture; to work to by success examining parts what focus driving

by many for shown they have our they around million members as administered vaccinations accomplishments and empathy, and XX the more for than team me all once the that members Let world. team again our resilience, thanking care and close customers both other for

purpose serve. for over communities the coupled power capabilities exceptional shows trusted represent our the years year unified focus This be the and come. success with focus root that of we success last to of and highly Our brands our the will

like the Operator? to open to I'd questions. Now, line

Operator

[Operator Instructions].

Your the Credit Rice first question comes from A.J. Suisse. of line with

A.J. Rice

don't a And with choice approach take U.S. you the necessarily of focused of specific mind, I over away. Walgreens if things your areas comment the few VillageMD results internal Is ask of the one, of of that? lot on your Or a Roz, effort but is you're exploit forward? that your UK most the around lot is aspects opportunity really type seeing But I of the a the still of there's about that relationships, and then you are just opportunity the retooling there? to sounds opportunity? I Do going see of your details includes interesting a greatest those comments. comments I of know relationship done the thoughts would wondered of and if any almost might thing, that of has -- that collaborator type the two Walgreens last like to strategic of or greatest one parts the not year -- lot things, well, it strategy like obviously also of vendors. review second a international early and months One, review. strategic operations, your I think, aspect about review providers

Rosalind Brewer

that for question. you thank A.J.,

we business. [Technical about Let with question are me entire your the start that the Difficulty] across look first

areas. geographies they global. that I of So other in one of the U.S. a They The the WBA our a say based those right business evaluations now, is doing and is, in at business would look of recovery we're thing total but UK may the feel about slower the this we're because are in global some business. seeing size the construct,

next looking we full in at So company. evaluate look a as enterprise what's the are we

that to is is and and to And this our and our tell I both. The collaborations what it's opportunity that. looking team business. base the with that question second then There's will partnerships sure company around in will that, part done in And believe said balance your with collaborations, us as forward. partnerships. I very as also of business are, you the just key they be our tell analyze will see of you we of at mentioned, some work building had, it's has a where that you partnerships strong. portion partners is these Those I grow I I One tremendous bit will thing some of base see really and that innovate making going be about that an

it A.J., you both thank of is those that question. for So and

Operator

of with Barclays. Your next question Valiquette comes line from Steven the

Steven Valiquette

could still or let’s and next XX results? so? for the in embedded just monetize asset So startup sometime was the this that that embedded healthcare enterprise of drive good I'm say if Or months Walgreens enabled and the updates in is within to tech Walgreens. digital hear Thanks. the Walgreens around remarks future foreseeable something prepared within operation just your curious, overall it the potentially is some that's separate

Rosalind Brewer

of customer do. work standalone? address and Steven, of that do enterprise company, [Technical we we things healthcare, look terms looking is at of vision the that will part and at And partner one what that looking we're how the what's So what that how when what we are with, within of Difficulty] is in question. for we the the that tech so and important a we long-term company, be the enabled embed we be at could

about will fall. in the share we So that more

Operator

of comes JPMorgan. Gill line with Your the question from Lisa next

Lisa Gill

to the One, understand a role co-location? a And James of made questions. pharmacist. you the VillageMD, just had the I your on Just seeing lift prescription about I then, couple comment in of wanted simplifying

paid up you're So script? seeing consultation VillageMD of with we the the of actually versus any do if the Roz, else or you're time freeing have you're for example, pharmacist, the You for getting And fulfillment where you getting services? around relationship, paid where comments anyone have consultation any those do changing just are for reimbursement? you or

Rosalind Brewer

Lisa, have James respond both question that you. let to me for John and

John Standley

in in. I'll John. is I'll Hi, first. Lisa. jump This jump

pharmacy, So, we care a a a it of for the partnership VillageMD do that might yes, in the can VillageMD collaborative model patients of kind because is kind great in barriers relationship. down chronic for bunch breaks us with you and have that of

a So definitely us to I think we the script we the lot learnings roll a from in develop of time for relationship as here. that's the there's opportunities VMD have VMDs uplift to going experience. across is additional over out And there model, store the advance as continue chain the in

So that’s piece question. the of that I think

As our and to today that's with and a our a provide been and it really around partners, lot the I a adherence here. programs P-for-P like opportunities D lot drive with of the of services we our to we're it's various focus work gone. and has that to that has of about other other Medicare lot where effort pharmacists, think relates future Part programs talking that But

that create we opportunity about we're And for I free as kind we think down growth revenues our a thinking in the pharmacists And of so, it. iA the investments up there, how future That's of look line. think lot of there's avenues really move to forward. we making we're

James Kehoe

you’re XX approximate over Lisa. month, fulfillment rolled thing, centers will the Because month period. one micro XX can an I just correct, be If out add

We 'XX. of the for their up one why it be you're do that? that's guess give part that pharmacist that's free of top in I pay-for-performance. paid visibility simple the up The more profession? for on two were we’ll And that do running fall. we've released development first it the you is how I and is of stuff this key and internally, role question simplistic It's have clear at get added think the will diagnostics. next nine the the the end is reduces question so and the all diagnostics And do services? is and and bills hopefully question, in in course this is funding people role operate I recognizing completed how the then is, within role means testing So pharmacists huge you U.S. and the is expand medical value And going ratios providing system, the the up that are in in loss are testing is fact that. U.S. played pandemic One critical And that mention a their so did the payers the played in less that hospitals the pandemic. overall being the -- medical and the we're key that now time how to already now the during we which down. The asking think

with health the at environment. become that improved has sharing to win-win to closely stage we where this working up So some everybody of health spending are improving payers time outcomes freeing outcome and for we are resources, they're

version. two up. year a the simple to So getting journey that's these it's centers three But in here

Lisa Gill

kind with you prescription, of you VillageMD, Just out and around lift that think the can incremental relationships when going there incremental my give so anything you can back there? to as have co-location in roll question about we initial a us is co-locations

John Standley

things over of little develop But We up We're continue running, it'll Lisa. it's for you and I to and run a think us these early towards benefit see time so to us a here. to getting definitely a XX on give little guide that there.

Operator

next of from Your line Hill Bank. George Deutsche comes the with question

George Hill

little press vaccine. a mix And about contribution the product COVID from explicit what more then vaccines pharmacy the due ex be one improved release Could a you. the in the pharmacy COVID U.S. looks to like you half one, about noted that margin guess of I the to and margin you and for vaccine? the from kind guys the you entirely talk quarter? was Could bit Jim, business during

James Kehoe

Yes.

take to want those. Just

what’s forward, tough move to with quarter. in it's we COVID. XX% up EPS -- due to As XX% getting not due COVID track to what's obviously, and the that's result increasingly up But a

of of assume can you think the region impact in XX%. COVID I was XX% the to

the I million there's on from from two in we we is recovering margin in last growth of quarter. in had nice had the aspects. conjunction the solid vaccinations the year, is we core So with the we're key word When saw XX One recovery used then recovery, driver a COVID. the And vaccination the that. And and week quarter. a

This gross secondly, had not growth of You at it's performance. great driven. sales a saw the the here. very a were spectacular then front U.S., margin actually one-shot store scripts And We much And in XX%. up the wonder high is single-digit.

point And pretty on that basis would it's base from So that. It's up the from XX%. margins. XXX business vaccinations again, prior decent vaccination margins year, We was photo. I basically up the we were turning points. The all was retail actually Beauty It versus up was drove on were out coming quarter mix. coming XX%. cylinders all more question. on and a upside on the of margins. to then flattish had And

SG&A. rollout quarter. but XX we We transparent in in that lesser we too you just on vaccinations amount estimate a extent. of expect on million in the SG&A is, the billion on get QX, year excited for during full invested something the the We've a But of of just X before similar margin been million, quite of vaccinations, incremental $X.X the build basis year

We in increase have to higher you fourth -- you are at actually vaccination quarter. net estimate be think overheads X.X% and seeing X.X% we the I because in basis So the that quarter. to the -- that look they in will point a on

the overheads. of have efforts. fair it's we question. covers spending on against amount I a Mostly that pressure your hope vaccination So all

Operator

Brian Your Tanquilut question the with comes next of from line Jefferies.

Brian Tanquilut

up last follow on just to your few comments there. James,

for you about implies pretty some think QX when you that comp I gave, it mean, big headwinds a is $X.XX about there. something from still under year COVID last had guidance I $X, As the

year-over-year you is in Or that but thinking I this it a So your out should vaccinations basis, else we there as know called guidance? fewer conservatism? on we should vaccination, thinking at I'm And about considering look just if a QX basis? sequential on we this is about how be be anything

James Kehoe

this. a a We amount it's Yes, good question. time spent of fair on

XX% is back I leads or range on the XX% the of to XX% in would growth. year full of number QX the to kind XX% So EPS that XX%, QX into

one X impact in we will there. there's the X SG&A we've expect fourth in an prepared we comment to in of million remarks, called So add points. to X too have percentage the up out is be would it EPS I quarter, vaccinations The significantly

in we're of points plus XX% That's there EPS. to in a shift And then -- X onetime quarters of So projects. another on payouts. items X X absorbing growth. kind between there's XX% facing. couple We of impairment growth X are probably to the range a on of bonus It's

X%. for core we as heavy to X% we innovation, somewhere in it, work growth this both XX. looking at were So this through of but we vaccination the to absorbing of doing also future We're dissected a as region XX and in for

So that core fairly performing. comfortable the was

of the guidance go back the at of guidance I you single-digit, year, now and feel If the in to of it's important. and at mind, the part -- of do the beginning year we're the gave XX%. original quite we Bear low original beginning at

I half, XX%, So so growth. to decline first said a we internally, first we and XX% on down cylinders would to was it In the I was think second here. executed said half XX% goal, the and the crazy we thought XX% gave aggressive at half. guidance, the XX%, good people actual When all least a we think decline

full our second take of out that comes XX%, year the XX% you in at half. growth If

the So we're actually with projection. quite happy

been X QX. and we I shift million we vaccines a million there's X QX go what of from think March, to into if in about compare back said to

in general, So to administration than this Difficulty] into [Technical more stores. was much QX. very as We've lot with request recent ramped vaccinated just under Biden originally and QX, shifting anticipated, a thought came essentially March; system. say, the possible. in the hired because in people get more we expense up opening in and X,XXX in people in I hours we as quickly lighter than line more put QX We And we it's we're stronger would

why QX terms of but quite profile So this of is happy we're in with than proportionately QX the earnings. the stronger is quality QX,

Operator

Elizabeth the Next from question Anderson comes Evercore. line of with

Elizabeth Anderson

any script of script of You I [Technical can wondering your for really terms about core of you gave how quarter vaccine. from the Difficulty] sort in assumptions fourth if June the the about could growth the you to growth commentary was in helpful a pacing early comment and the reopening lot going? COVID just comments of talk

James Kehoe

it, I or but handle can can. you John maybe

John Standley

about a at can trends talk I the Yes, least little bit.

I a facing think continued business were of bit the in what in have of we we really started into June that that some underlying the little kind saw abated here. the quarter third has is headwinds and

some well. new we has and we in And turned as headwinds prescriptions. June. improve, which But anti-infective to June abated we those came the have on So saw continued positive heavy as quarter, early had seasonal again, through now in therapy

in amount of business So quarter. fourth decent the amount and head the we prescription seen business underlying momentum we've decent as a of into a

And so I that's positive. think really

of well. the some front is that of And also end happening in kind as

James Kehoe

Yes.

but QX mind in XXX is -- X.X, of from basis million we vaccines. said coming what bear that's So points the in that vaccines are the on XX

XXX you to than coming to if have fast you're going less forward So from basis points QX, vaccines.

the It's single-digit. to as going we short-term. a mid growth single-digit very strong won't the kind vaccinations in it's scripts high by be the But quite in because So now quarter. be start said, John of had -- probably to for influenced rate

Operator

Ricky Your next question Morgan Goldwasser of from from comes the line Stanley.

Ricky Goldwasser

of in implied that starting you're Or if fair think for we and And sort year half have any about should fiscal we growth the key EPS should of are but at you and of fiscal new kind look data that if so, that year? as headwinds should at use second think about similar to sort to we guiding and I this XXXX all a of points should to guiding, As there look to early in? point uncertainties, we factor like 'XX, the there's year date, it's the assume not and least but tailwinds know still XXXX, we you're COVID understanding the XXXX? X.XX,

James Kehoe

just coming maybe Ricky, ask through I clearly. you not I'm Can very you're really sorry, to repeat that?

Ricky Goldwasser

Yes.

implied for number, So the should all fiscal think starting I X.XX, year And about point if have 'XX -- how what trying to 'XX we is think XXXX? to fair when growth half think we similar year? as with think it's you're of use of understand seeing it to points data second that's as the about a us in we EPS should for -- this about Just you the the growth now, XXXX to 'XX, your... in this that similar sort of

James Kehoe

I think, give all, guidance. we first don't of

of is stream a saying I'm anything So I guess. comments, just

and starting right, X.XX. Difficulty] to you the [Technical gets So base. That's you're

key many million participants your with they thing next money vaccinations continuation XX struggle I will year be think to as pediatrics here. normal. market And a will you've Obviously, what of there in booster as as to vaccinations will everybody into is get has on? next in are there When got into the look be strong of the because come base vaccinations? a will year answers. back the desire questions There's U.S.

next What adverse would that's is, earlier so watching that big of have The still those question somewhat other think is seeing I some the think, recovery Roz lapping over that did of we UK, thing we're more COVID I the are time. say here, of anticipated a and the closely. will than we slight But in have some on, for year. quite base gradual impacts improve we out

the The shareholder of over that's -- back we to other through company innovative long-term what and Roz's as comprehensive later months, time. layout fall. investments to is exactly the we and what's the in pace be is investments more value pace the and the comprehensive there be is a strategy of getting team to will over what's coming this modernize But and working comments the one want drive

number. going COVID base. with So forward, have -- the but There's I nothing unusual to think it's else wrestle the we in vaccination number mostly the

to to have pretty two year, if be of because beginning. year big next cold, was next you're cough, you're QX, QX. I you halves in XX headwind But the which at look vaccinations going think tough million lapping flu, of the QX will a

wouldn't here. think weeds any big So in items think on are what -- I I I the would just COVID. vaccination about it's and get lost

Operator

comes question of Coldwell. from the line Your Eric next

Eric Coldwell

Appreciate it.

if thoughts might us I'm that more if staffing about across been ranker as around improvements Alliance then as just recently So follow-up, of share flow would balance an that hoping inflation, as the cash sheet wage you've working building and capital give a next country, around retain ability lot you deployment got over on et might something as proceeds in little you us color months, curious was get back just could I XX strong give be staffing, the involved your is the thought well repurchase, from a your on with That priorities great. really with ask we strength I capital and the profile and the you including a forward? COVID look process And could inflation, cetera. there's attract wage industries most staff? update a levels well. to

Rosalind Brewer

of ask the to then talk first you, I'll question, and wages. I'll take John part Thank that about Eric.

team's $X.X What where will how much billion of roughly very that changing deploy in see a on of continue future. is innovation leadership that in I first that and with all, about energy I on. don't you a to part probably and the that tell disciplined that's we being we say there's company. will the will invest. expenditures, will lot spend that focus So already you my tell is lot we We'll too this that a that. aware And year work are you that about put accelerate underway this we to really capital, on and capital of and there I part

investing in that doing seen we'll stores, digital. in out capital work those In going you've us -- the we're see you'll build areas. addition, in but in past, So the

continue. will so And that

$X.X to want staying billion to say wages? in us will you on you a billion But do terms about $X.X in what to John, that of we really deploy of Just talk insight see of little give expenditures. we around we how bit do the line range capital. will capital

John Standley

Sure.

question think generally, and -- the is I I market think think -- I well. about as your about more just employment

to meet able And been the probably so have we through we've really problem. regional and in has really out work million with those But through heating have get of -- all various available our we seen One were example think didn't a levers we've operate very third our instances, to and definitely quarter of needs really us yes, it's XX it's been a that what kind more to vaccinations up the to there. with busy business. is to able I

So situation we deal kind area-by-area the of arise. to and basis continue issues on an watch as with it

Rosalind Brewer

I don't and Rx had, add more can want around rollout the we've as -- work we're in store in also around that I Ricky, and in. overlook that is our already investments to Renewal The mention also personalization, to invested the mass more investments planned. fulfillment there area. work the that have the about partnerships capital? around your doing level our our terms part question I the on we've want mentioned, spoke one work digital, specifically we've then to micro I that of the to work that speaking hub part that we of been And

capital we kind that continue So the you'll around see us work where future. in of apply

Operator

Your Cowen. next question comes Rhyee from of the with line Charles

Charles Rhyee

a for here. or Maybe question Roz James

will and is hit like existing positively something that going converted disposal receive think I those you households end? payments? that represent credit Can it's what to will front for increase talk thought for potential how households. base July, being your impact guys direct households, pretty million the think you which And in could through be to customer a about XX to starting much sizable tax income payments your of child indexes in have I

Rosalind Brewer

I'm have John one. He's that. close that going Charles, actually, to to respond to

John Standley

for Yes. question. Yes, thanks the

we business. money have is that out in of a it And terms of look pandemic the earlier at in credit, maybe it the came starts here. impact material probably bit. this It doesn't some guess, So a on stimulus monthly I looked as

how it's see like obviously, feel doesn't little us. But plays. one hugely it going here to to into bit material get and it be this So we'll a

Charles Rhyee

be prescription Medicaid. of through a maybe lot a from because coverage side, that these insurance have houses Is will --

end? So a to impacted? disposable income is purchasing you the necessarily the would front of increase as that not Or front-end that not items would go the items the lot in this it is expect, just or

John Standley

at of was filtered stimulus how we as performed it I other think, of more relative of in it No, I all. size, was incentives, of we just on think that just, the that's money it kind into. times If size type of kind relative look

Operator

Glen comes from Guggenheim. Santangelo of the next line with Your question

Glen Santangelo

up respect I suggest your some been follow seem think COVID the gross correctly, that on If with to your just you comments prepared have to might flat margins made wanted ex profit year-over-year. to margins. I of I you you profit heard gross vaccines,

if sure correct secondly, aided last be that's you So favorable the could discussed maybe the call, some I'm not pricing generic one, that? margin. if on you confirm trends then quarter And that may

curious, kind about should just forward? how I'm maybe a trends vaccines margin that and just could that we of current so the profit And gross you ex going little about more unpack help think COVID think bit to us

James Kehoe

said. broadly It's you Yes. what correct

for this So of vaccinations, the from mix flat. if the benefit favorable margin out was quarter, take you broadly

So of procurement model. in generic of margins the volume generic a the the more we generic more a model in month the terms The is decent terms had But you and scaled you in procurement. a -- better quarter. the quarter decent get, sell

the script fact that the growth was X.X%. helped So by it's significantly

from is in pressure the has generic which So rest volume. amount come sustainable said with we've a And only, as position it's not we year general. a offset significant through and occasions, in of the many reimbursement to start procurement

watch-out with in volatile significantly. one variable The pharmacy delivered So extrapolate is accruals wouldn't and and and the in quarter business. take margin the can the the the shift specific then I is quite is, timing quarter. of volume payments And highly

is the to you point to look on that not to pick forward look in the at Don't the a best quarter projections. the way volume as get business. because you're wrong proxy is at for plus leverage good advice always my and the a likely So it of because anchor time pharmacy year-to-date a

happy one not in had pressure But said, to margins, that's that dollars quarter. favorable well long-term expect as the driven did model continued XX store we of played over of not profit. margins. especially we We for. to significant get base do That's by horizon. seen we've million business gross on as fabulous vaccinations quarter, going positive community. reimbursement we a invested very number is We're a fairly it's quite role because The the we’ve And quarters and So that return change. from a changing with that now of being fairly the front

all So we had a very along. good quarter

Operator

from Your Eric Nephron line Percher next question comes the Research. of with

Eric Percher

be And versus to urban markets. in overall may about and cities? of You've suburban a market in interested performance York the point, have also, patterns Chicago perspective this large Las a performance the well. Any New gross that you're real Difficulty] if maybe spoken And Vegas there's question the hear and difference, been or But margin what [Technical been this I'm margin look as does the the seeing? at different there? X than

James Kehoe

It's a we urban had Yes. fabulous the because time both -- as skew the you know, markets in we distinct -- in a UK, with have in U.S. actually and

XX%. transactions in interesting previous down people well. one of the on spending it in for third So Once actually up as were that the quarter, urban U.S. went power And prior -- the the XX%. shows the to quarter started stores were statistic QX, again, back street in transactions is and economy and

up the again. are in -- again is people consumer are traveling footfall U.S. cities driven, filling So very back people and

every of formats. a our one So we saw four major skew,

up, gain on ongoing was up, recovery we in the urban year-on-year urban look you sales at we than biggest see slightly, suburban think if there. less transactions the an same transaction where is play were So the still area. but true will was up was urban And but down rural actual

John Standley

the I Yes, big opportunity, think. I think that's

of opened present up James seen it's our So been -- I But opportunity. urban sort as -- a we've stores have stores upside our as we've things I think suburban rural. in of think like said and real really X take-off,

James Kehoe

Yes, April, up April, time in urban. were transactions down was the you in opportunity. XX%. were as March, at particularly looked they that By March they Upside May, XX% into it got

So there's May, see into and as a that market difference between March, we April, June continuation well.

the very that happy in recovery U.S. we're with the seeing, So we're particularly

longer where and as they're lockdown of than with to clarity still UK some where been people However, we lockdown anticipated, and not would a will out to that lack fully work. when encouraged counterbalance be go I of there's to the back

Gerald Gradwell

all very time indeed. for had the much, Thank today. That's on call Okay. you we

we to to. I have in the ever, IR some here the to get weekend, week questions. As know very you we a additional that chance well. have don't get any we team didn't a for And we that as did holiday get are Thank holiday I to the fantastic and you hope weekend before will speak are much around next you indeed. event

call. earnings to We the on you again will quarter speak next next

Operator

for Thank call. participating in you today's conference

You at may your this now time. lines disconnect

Walgreens Boots Alliance (WBA) 1 Jul 212021 Q3 Earnings call transcript