WBA - Earnings call transcript Q1 2022 | Walgreens Boots Alliance, Inc.

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Operator

Good morning and welcome to the Walgreens Boots Alliance, Inc.

First Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. your begin may you conference. Tiffany,

Tiffany Kanaga

Kanaga, you Good Walgreens fiscal us Global Tiffany the joining Alliance morning. year Relations. earnings I’m of Thank Boots quarter call for first of for for President Vice XXXX. Investor the

Roz Joining our Officer; Chief Officer. Chief our Brewer, me Kehoe, call James Executive today’s Financial on are and

statements our current expectations. always, conference we call, on As anticipate making based during the projections and forward-looking

future those on Exchange outlined the changes a assumptions Our our actual number to statement slide presentation, as results X events, to those including Securities undertake after due XX-K and could Forms whether forward-looking in obligation of a listed in with latest update otherwise. information, and Commission. differ or factors, filed of any result publicly this no materially XX-Q We and new

Investors find referenced call and also our in this will that today during and the the release now this press Roz. call call. will I about website. financial discuss slides contain section information press the can The the over of release on non-GAAP turn You slides further Walgreens we to Alliance Boots measures the

Roz Brewer

Thanks, and good morning, Tiffany, everyone.

very are year. We to the a start fiscal off strong to

in contributions well from And enhanced vaccinations and This ongoing constant increased EPS grew all adjusted of XX%, across execution First sales performance was quarter and segments ahead by supported X.X% expectation. our by of currency. strong underpinned our business testing.

business. proud in I and recovery U.S. with very markets. and the in our testing success tailwinds international core am retail for our of businesses, growth Our strong vaccinations are continued of our robust

previously. single to digit year full our We are raising guidance EPS low growth flat versus adjusted

our performance incremental million of investment roughly business to percentage EPS. are momentum in on X overall We and or against our points quarter $XXX capitalizing first people make

and core; foundational and is and build for As our three: third, and X% winning building optimize of the X% healthcare four key culture these have consumer-centric our priorities allocation. with to Absent second, transform align investments, engine performance a one focus ‘XX the solutions; incremental is growth. capital strategic our guidance team other a high and reminder, been for growth next fiscal EPS would portfolio adjusted to first, revised

recall may long-term. investments percentage-point from a will we build position strongly out headwind growth to investments already guidance healthcare X our included our You growth that attractive earnings for the original the over that engine, believe low-teens Company

will are delivering we well our today, As meaningful and out laid October, towards strategic progress you we commitment Day Investor in against priorities. our show as making

help we steps are it role and our days shareholders. we While our at vaccinations early promoting the administered the remains our In pandemic, moment which a within Columbus, shot for COVID in members extraordinary through clear, million XX.X recognize creating our value our of the sustainable U.S., communities. customers, in after lead long-term milestone one our health pandemic. program facility taking XX a the the we we reached Nearly leadership our the the dedication to This quarter. quarter, and as are supporting our of are of an one Walgreens’ members. Ohio, in administered the committed I against to our demonstrates efforts the discuss the bold vaccinations in community. to to live we first our patients, who important vision, fight team was COVID-XX million achievement the at community We consumers continue implementing began pharmacy in work take possible with vaccination want for made care combating nation’s the in their we Walgreens to COVID to of year end

over and vaccinations, not to Walgreens began X boosters efforts. had administered XX offering vaccine million million administered slowing and down doses. over September, COVID have COVID we our we As in in are of date, we Monday,

families of to we just variants in administering travel gather stores of as to X XX, across many thousands children, emerge. ages to November, time and the the in U.S., continue holidays COVID As prepare started vaccinations to and for

particularly provider trust We in pediatric in proud largest channel team as to members. testament Walgreens are a being families powerful pharmacy vaccine that of our pharmacy the the the placing are

with stores Importantly index in to social Pfizer about are XX% children of XX Walgreens vulnerability COVID offering vaccine located score. to the ages X high areas a

will testing our we over vital platform as as range our a customers. diagnostics of efforts, and developing XX.X pandemic grow tests this we to-date. Not and with has also million accelerated, service diagnostic part continue on are business are Our of COVID completed wider testing this to we for building only solutions

execution clear steps our are healthcare re-imagining our leading to and vision vaccines investments wellbeing testing, partner in and outperformance towards for quarter in healthcare local the in Our our and be all. fulfilling first

progress broader our We along in priorities. October, four are we making established significant toward the commitments strategic

Let details initiatives. me with important provide you on some several

will $XX driven in core overall as that its size the to continues million Walgreens in stores, future and our same X.X and pickup first pharmacy day strategy. biggest orders. a Cyber digital strong the order expanding including importantly, is Monday our $XX pickup online, online And had saw business especially are about online of channel we buy by Digital up sales and were healthcare the value in average First, building basket mature. versus aligning ever. enable an We quarter store. support transforming the XX% U.S.,

since million digital We are members, for enrolled Walgreens’ X.X in XX We’ve possibilities million early MyWalgreens up over fourth the quarter. platform. of the innings

profits our nicely, financial are and Additionally, advertising businesses alternative including growing media services.

scheduled expect of closed next our investments in healthcare VillageMD Second, and majority and solutions, our is Shields growth. in end October respectively, we we’re third November, and to CareCentrix our fuel investment to We platform a quarter. phase of by the consumer-centric building of close which the

open new for a We to to a every have XX of co-located XXXX. as the calendar four has five now rollout centers pace VillageMD opening accelerated days year

and California our Shield Clover health consumer partners their app Our members. Blue for with qualifying is live

California. XX openings XX operating We are Health Corners, recent in including

cadence on new every a at Corner week adding Health looking in a of average XXXX. We’re rapid

Third, portfolio optimizing and refocusing we are allocation. our capital

options exploring to both, all German unlock our acquire and Walgreens We lens equity recently, JV, rigorous a AllianceRx Prime of and agreed Most to are creating our applying ownership XXX% wholesale have ahead. greater investments values. strategic we agility to

winning that building we our priorities. will a underpin Finally, team diverse strategic are

We’re closer Officer and getting even Club. at adding to Chief the Association her of Customer by on innovation Diabetes the as Brown Sam’s our consumer back the American Tracey

experience and Transformation at is Anita applying drive Chief and initiatives. Our across Optum Officer our her alignment to CVS Integration Allemand

in May more high clinical Holly Officer; Resources the Anthem, solution Officer in Clinical is with excited is their I’m share Chief CareMore. come Icon And team. as even driving Tandon our while to weeks our as culture. delivery with We’re in Dr. the Moodley, and healthcare Trials ahead continue you care to and news as and Ramita we to Global at Chief out drawing our on Human Clinical experiences Chief round our performance forging Sashi Officer

just in first of action. I share with our was a in me On describing we As bring today. a of its an stages drive I’m our strategic one saw To results segment. and say life, day in And pleased progress in let are California. little operation for from anecdote priorities new experienced demonstrate, we you in to we place Health Walgreens have of value welcoming to of to proposition our and final November, a leader Corners Health more our what bench the deep the

example can Our thrilled his that Shield make diabetic of This member one here, told do to how He California to his guests” and he just Blue introduced to he’s can and care physician learn his us our was for himself struggled we with convenient visit family. “care offering. testing. through along his primary AXC is

As roll will the value its drive at creation significant and growth out, have when I centric innovative executed strategies Health consumer confidence ahead. Corners scale, that increased and

are costs half complementary and digital factor Corners our nearly expansion VillageMD, Health We And clinics unique of will of when the and outcomes you health other our meaningfully our footprint with be assets equity. co-located and connecting improve covered. reduce in continued with to physical approximately our

local more and engagement data outlook. and customer are today it on We insight. over knowledge results only through provide color to hand that, deep our trusted our With our to building do, community relationships, I’ll can Walgreens our James our as

James Kehoe

guidance recover to flow us of year for morning. Adjusted COVID versus prior XX% an the all execution start Thank across our a excellent year focused strongly international and continued to to good testing, nicely. on adjusted $XXX vaccinations EPS In had Operating was free performance with in years, businesses. and U.S. accounts growth. $X.XX, basis. you, from first increase quarter markets currency up summary, expectations executed the cash we million. digit billion was to quarter and The year low well single of cash with Roz, retail EPS constant flow in of strong ahead We $X.X allows flat full in highest the our XX the and

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

almost on retail pharmacy the currency on the $X.XX, XX%, and $X.XX in Adjusted from $X.X operating the by in valuation constant in result constant quarter net and our tax X.X% quarter. and current the basis, increased advanced by of growth points U.S. billion tax Shields, was strong percentage EPS Adjusted a sales increased currency a a $X.XX gain XX.X% the well the of quarter reflecting as of driven international company’s EPS X Walgreens phasing after and driven profitability. by to around or $X.X currency in performance rebound equity related profit of in the adjusted AmerisourceBergen aided in VillageMD GAAP constant the entirely income quarter, basis, increase sales in strong and a in operating in billion investments income. segment. both continued ago gross was international year prior a charge The by to First benefits. $X.XX reflecting as comp earnings

offset for of growing XX move with transformational offsetting gross the SG&A due costs. sales, XXX performance in than basis-point basis year-on-year increased in last more decline the labor, Adjusted Strong quarter increase from offset to partly nicely. COVID-XX the strong with more program, Sales the Walgreens The higher relating compensated was operating primarily segment. XX.X% by higher retail shrink benefits. savings growth from management income points AllianceRx profit increased by the than program. gross the to profit higher and year. and let’s vaccinations both investments costs the X.X% U.S. to and reimbursement partially XX.X% from sales was to with business. increased phasing quarter growth than associated increased vaccination in a some a X.X% Adjusted XX.X% lower the Walgreens spend headwind Prime cost and as Adjusted pharmacy Now, strong

growth. impact U.S. comp while We X.X%, completed for Prime. scripts Walgreens Now, let’s script negative XXX in look and more accounting the pharmacy. points administered in COVID-XX X.X%, X.X% grew were million Comparable X.X increased detail Pharmacy including quarter vaccinations up tests. vaccinations million XX.X sales sales of AllianceRx from at the basis pharmacy the with COVID-XX

were levels are COVID-XX return around a saw we now more tests the year. to administering We compared record Flu at levels down stores. shots last to as normalized X,XXX

gross by growth sales Additionally, strong as challenged underlying and scripts at Walgreens pressure. offset hour staffing temporary profit reimbursement were grew nicely operating than reductions. shortages Adjusted more

were Comp on comp XX.X%. growing a two-year by drove Turning comp up tobacco, next growth at-home retail performed COVID-XX XX.X% profit. in personal health up all gross U.S. low-double-digits. cold, by broad cough, growth were X% sales our Strong and categories increase up tests flu. to led growth sales business. XX.X%. and driven XX.X% stack care categories, XX.X%, beauty basis, excluding an were comps levels retail discretionary Transactions Compared and sales wellness, We to with in saw sales and across increased well pre-COVID and up

by crime costs. from declined margin shrink organized constrained higher freight and theft gross import However, increased slightly,

and to numbers. up joint in to Germany. always, segment, points lift wholesale the the the of the formation currency quarter, XX.X% percentage as increased I’ll next Sales Turning including international constant XX.X from our in venture talk

of are the with X, the on JV of lapping Germany including formation the only We one prior quarter XXXX sales. November month

million up this sales in sales advanced execution where XX% in tight operating led the $XXX the the ongoing year, cost income Adjusted prior particularly most sales higher Excluding impact, were by across UK international strong quarter, markets, reflecting XX.X%. up control. recovery and and X.X% versus was

execution. services Market vaccinations a Let’s particularly reflecting footfall however detail below strong locations. more to more benefiting funding. developments and contributed increase from results, for vaccinations of demand footfall sales pre-COVID first strength with and around in now strong first we offset increased up COVID-XX at non-repeat We with up c%, testing. sales strengthened across pharmacy look were year to XX% XXX% remains our particular UK. to Flu Boots million phasing quarter, size, performing travel year-on-year, Comparable increased Despite were prior XXX% of positive than the in quarter, categories up in share partially in NHS challenges retail X.X%. beauty recovery X year. with largest by sales season last up, Comparable ever commercial which also in during these in well. These the compared favorable continued levels. quarter the do basket recorded the around levels with Stronger was XX% the compared pre-COVID all see only

sales. Finally, food XX% to Digital sales equivalent to and Boots.com for account of more well. continued very pre-COVID compared almost total do quarter than retail doubled the now

are of which The restrictions, December started on slightly tighter Omicron. announced UK Looking the the impact we move ahead, monitoring XXth. government to

COVID expect variants. to We that sensitive will footfall new remain

Health Walgreens This to Walgreens first our Health. new next quarter Turning results our reporting is segment. for

November Shields accretive of $XX adjusted quarter. and of VillageMD adjusted VillageMD loss Reflecting million Shields in million the had days of six and $XX XXth, in investments sales sales income majority with closed million of respectively. $X XXth and on immediately an October $XX million. is of operating Our ownership, and operating

For to the anticipate investments Organic statements. in to be Walgreens of than expenditures. we our due EPS, consistent this slightly with were timing year, dilutive lower October expected VillageMD to Health fiscal

course We over see expect the to rising investments the of year.

Let’s of at for key look Health. Walgreens the now metrics some

work In XXXX and addition goal we interested Blue continue our and lives. X partners million we are with Shields, to of to Clover approaching December other

than Walgreens XXX build and Corners end goal scale will already of running. a and more lives XX we up we out the our As of our with continue to by access with partnerships, to XXXX, Health

basis, goal VillageMD by Shields growing are the VillageMD XX sales fiscal potential. On co-located a Overall, their expansion mode VillageMD markets, up at strong the trajectory. most the about growth of growth future. with and in Shields pro are of Walgreens advancing least expand to the for our from has of ‘XX. they end co-located at end in have and clinics XXX with are continue be very VillageMD The on to Both footprint, We forma place across we’ll in XX growth high XXX% and foreseeable stores, a quarter ‘XX. recent currently XX which XX%. excited XXX delivered we is locations

in below income Turning by flow capital generated prior to capital, the time $XXX benefits $XXX million year expenditures Strong year. associated with next the of key Act of growth working more of flow. cash was quarter, prior cash passing free million offset behind the in growth one the We first operating CARES the than initiatives. increased phasing and

guidance. now Turning full to year

quarter We adjusted are higher from to higher growth vaccinations and guidance strong expect flat business, first our raising reflecting growth. from of base We now testing. our digit and a levels single EPS low

expect than XX We this vaccinations higher X million guidance. million previous our year,

growth. in incremental in first this Shields Within is by to segment key business team quarter the transactions decision its Health investments with and both, well and Walgreens our reflected future our continuing increase members Walgreens million. Our to invest in organic closing an $XXX we’ve Health tracking against the milestones the VillageMD guidance,

by As X%. without growth full Roz, adjusted year highlighted X% would EPS have our investment, earlier to been this

some Let raise, me now takes guidance. additional color puts the prior including on provide and versus guidance

As mentioned, planning for fiscal in higher we’re vaccinations year. the

help also a are Recent Additionally, investments And our situation. the this retail U.S. in labor improve and somewhat script led these the into we this, management in across Balancing made second quarter. the quarter, first increase we and volumes cost our continue driving softer first the segments. challenges decision we to labor were strong investments. to seen of should our momentum all very have quarter, comps tight

percentage due to And higher shrink is be raising now segment. Sales to guidance our the EPS let of driven theft. of through costs, recent Investor many with of update we in are And these we experiencing during higher our low-single-digit summary, Inflation of in majority to front driven are on guidance to In expect guidance, as also largely around we and we provided of both, store. impacts. may than U.S. pharmacy loss are expected me on peers, our by some rise. and while organized X crime our U.S. by short-term points some higher the Additionally, rates the there you strength pass be metrics previous now growth, Day. adjusted the

mainly wholesale anticipated remains market income business. Sales regulatory As to to expect adjusted be is slightly, than growth have the will CareCentrix. still of due to operating approval a adjusted to international projections to better of Health Sales be due to more Walgreens German operating improved for track. guidance. timing for XX%. previous result, our growth, flat slightly international XX% than improved X% income up our on We to related also lower growth

has on However, an this immaterial impact earnings.

prior Roz rate it consistent With with remarks. we me pass an that, for now Finally, let closing adjusted of around XX%, expect tax to guidance. back her

Roz Brewer

James. very outlook. Thank executing I the XXXX underway, with this to and progress you, Morgan with priorities. forward looking dialogue an summarize, and am our WBA’s strong is To rapid start our pleased we transformation JP next to and I’m fiscal the about conference. increased week progress continuing strategic you year a are at healthcare execution our with along

re-imagining on creation value focused stakeholders. clear and across toward all healthcare energized a path are our everyone wellbeing accelerated with and for We

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

Operator

question first [Operator from Baird. Instructions] Eric And comes Please from go your Coldwell ahead.

Eric Coldwell

note good Thanks that headlines Prime. color impact AllianceRx a provide any on I’m what’s and very XXX%? you from morning. breach might contract I more Number week happening taking a guidance is first this business? Thanks. fiduciary follow-up. if with We that what’s the can bigger I with claims. mind, picture, to earlier And that have hoping the one. holding to much, saw a there don’t should we little the guess, Walgreens be from dropping two, But, the on appeared on XX% you and going Prime Number

Roz Brewer

you, Thank Eric.

James little color you. of Let me by start into on give asking AllianceRx after the your bit we’ll out go second Thank first that. a to and then question,

James Kehoe

Hi, Yes. Eric.

XX% stake XXX%. taken we’ve So, to the from

change plot be for no of line out XXX%, the income, we As XX%. the have below you minority adjusted interest the consolidate you because to adjustment there’ll operating already then a and

recall U.S. $X X% gave was year, the AllianceRx roughly be within U.S. that the the Prime guidance called we of billion in at will revenues of a you in it So, the that a a there as an driver decline material We Walgreens result beginning decline business. would business. out when

this specialty We see and kind the this one stared we this So, we large strategy little specialty combined formulate business. an with have quicker. with the be to business. AllianceRx integrated -- and And Shields restructured. we specialty we that our formulating business, at come with decline said the this. will of business out this -- to do owner Hold at looked assets and we better combined It’s see in probably now honestly, on Walgreens we believe need information the more pharmacies do Prime bit new we’re as a can under on

the raised parties. They’ve legal been of disputes two some now You’ve the between a acquisition. resolved as result

reiterate, in at a a in of Looking services. so think it it cents more I this months surround that income XXX% is see in I with of in out strategy, if partners the on energized honestly, about full-year, will integrated of we the year-on-year, integrated want do of as net with because be which a you’ll how But potential guidance. context more us $XXX specialty a the next worry impact on couple we even now negative six slight our series maybe to be a has XX%. come will wouldn’t a income were But million declining to basis, guidance, opposed I income we declining

do to Prime So, with we’re do emphasize strong a want this. is pretty I excited very emphasize by as of -- I this. to want relationship the result

them as require. partners an services will significant they of We’re ongoing basis on retail, to specialty offer and still we continue to theirs in

Roz Brewer

you have actually there anything add Standley We to want John, John AllianceRx? response that call. the is to on

John Standley

of part these and assets did $XX we’re James No, is excited business. the summarizing huge bring described. James of specialty, portfolio, it. into Specialty We job to fully a our do a as great billion-plus back

opportunity So, us. for big

We’re really excited.

Eric Coldwell

John, total. on the sizing you business actually in answered just specialty my follow-up

So, much. thanks very

John Standley

so. billion, $XX of North

Operator

Lisa Your from next question Please ahead. go JP Gill comes from Morgan.

Lisa Gill

look very virtually forward next and Thanks I James good to week. morning. seeing and much, Roz, you

clarification, So, James. let with me just start first a

the know vaccination higher to want about is if guidance term, do can this understand, we Roz, guidance? of Obviously, in savings I I you talk talked expectation is -- Do Health as Standley, the an you sharing have we’re question the shared think how you this than and John for because do of the was as think is we testing a is, script about the you And broader those getting for secondly, lower how had quarter profitability to think program we whether the other longer cost about right, but I had savings. - or the we potentially the anticipated. do updated boosters don’t as incremental in it’s you types we about great, overall Can where for there? or for XX kind think that strategy just U.S. about your even And some opportunity you when higher programs, Just but now for vaccinations, well then, plus in and Corners.

as could understand us you to if help well. So, that

Roz Brewer

testing. get James I’ll let started on

James Kehoe

thank Lisa, So you.

five have there. questions or You six in

The first vaccinations. one is

bit. number of just could picked Depending a this variants the we’ve guidance evolution and activity estimate first a a the result increased point of million -- XX in in we’ve high CDC do I vary from XX as is the from So, number want the of and to XX though at quite on to others, a the levels especially the time. it’s quarter. stress million, and

So, just in actually. of we a that’s XX $X.XX. opposed the the XX to to specifically on well, full first actually testing, And had driver we increased testing that’s upside biggest worth X about the some but potential that And as probably to be large on as probably this there range cents, the kind then two, fairly because million could vaccines. in is opportunity year. actually of And quarter

giving full a you I’m So year number.

$X.XX vaccines is So, to $X.XX so full year. the it to $X.XX, and sizeable call a quite on contribution testing

we approximately are on As you million, XX boosters. XX look the out break at million it

the out the of You what X.X Pediatrics, to believe can X rest region in million. I somewhere million is. figure is

is So, people plus. the aged XX rest

So, I can’t from assumptions. much kind than be more specific it’s base our that of memory, but

We’re not giving profitability.

can that work trying from out You just share I I’m remember questions. it per we you. to cents all your the covered that gave

Lisa Gill

Yes, you covered all my questions on that side. Thank you so much.

James Kehoe

We’ll week. see next you

Roz Brewer

Lisa, thinking leverages So, core me our bit talk Health little Walgreens Standley. let that a how in about how growth business, managed about we’re by Walgreens and our really and John

So, about this. here’s think a to way

just entity are than We an dispensing pharmaceuticals. more does here that of creating much

the the $X.X to Corners. together, VillageMD this adding billion, this clinics when about entity then about within we’ll least to think bring medical think that of be So, opening is we units Health our number plan of at we of and those investment the way village XXX

about the the to come of of usage. the healthcare beyond consumer it their middle it also does over When manage much costs We’re them their the think put we what and trying the visibility in giving prescription profitability in is from where this this, lifetime. to

healthcare the also into and think patient’s Corner. patient applying about optimizing the the what of repeatability into is then spending. or about it a to will a their about between needs, actually work And customer needs, then, the Health that or customer between understanding I primary from within more entity. pharmacist And to that understand two, that for to our also happen and practice and units physician them think VillageMD operating the can get the care coming I healthcare patient, customer understanding comes utilize giving our help and one come opportunity what that

And will time, bring over things out them and of so down care settings. instance, over a cost for returning of that their their AXC their care hospital time hopefully period just and keep levels healthcare of managing and emergency system like to rooms looking the and at

just going script. on a But, that. would articulated well is really much does I larger profitability forward. It’s not we’ve so, you what additional take clear than beyond that view us tell this And the

Operator

Rice question Suisse. go next from from Please your And Credit comes A.J. ahead.

A.J. Rice

in really Thanks. The the bit. sales Hi U.S., of were little front And a we into that delve I just wondered everybody. store could if strong.

terms at-home how, As testing of had talking million that, out your get for much how at-home expectations beyond yourself something sales? tests, comment you tests And you the that as if them as administration, look year, you clearly front XXX that rest at in to about can really on the with strong, parse sell you that’s sending the probably on those U.S. to -- that look component. and testing around have end you of your and there’s or a testing? out Can ability does helped that well at implications the

James Kehoe

I’ll take John a shot at that and maybe can add it. to

highest the front contribution about coming on The tests of was -- basis points. XXX years. was you XX.X% COVID-XX from the which in the growth screening XX take the If was store,

So, it growth rate. was about XX%, XX% the of

so at-home the just So, that’s core It’s quarter. store. on there the strong performance of testing. not -- is front in roughly And in

and I think get I I revenue quarter, around $X.XX. $X.XX might the $XXX roughly it’s it’s little over a million contribution. wrong, this in of think

So, it’s the not of wellness a health and the a that A.J.? what It’s average were massively for profitable below gross looking sector sector. you profit Is on basis.

A.J. Rice

Okay...

John Standley

Yes.

testing. personal all categories, little I with of care, performance halo just saw We the vaccine bit I’ll good beauty, and and a mass personalization in James. very our think, efforts strong from OTC, really comment, success strong

contributors strong quarter. in the I all to good the were So, performance those think

A.J. Rice

a Okay, lot. great. Thanks

Operator

And Bank. Hill your next George from comes Please Deutsche from question go ahead.

George Hill

Yes.

First, I’d like to welcome aboard. Tiffany

or would call we comp around And and John, is a I Cause guess, gotten? baseline the could I -- kind about way could close around, about guess one to just I what about in with debate XXXX? versus So, where sneak back there you Tim if be to working script to care we’ve talked store two you on the Tiffany, And feel some looks of how questions As follow-on, the like I Rx? seems if I on look the the, question talk the underlying I the front can average… James. testing. you. forward I Can the Yes, regular talk have sorry. in-home store, testing guess comp asked of you -- call, what you on XXXX, the that in like A.J. script that’s front a the in-home the acute impact about would had about I’m of the

James Kehoe

shot a Do the you want to take on Rx? John

John Standley

we Sure. for think at think say just more saw I there’s would above we the broadly there and the what just vaccinations, we us looking script opportunity I mean, think I on saw beyond growth count marketplace. I -- Rx, in but

from as about pharmacy investments are, project Roz drive that to staffing talked experience capabilities and really we’re making We the both significant into store. as nucleus in other with perspective as well a business, in James putting and

So, just I and and ton base to opportunity still in pharmacy growth upside of business, see share the to forward. our push just we that a think grow market

James Kehoe

Yes.

So, was George, was we immunizations QX the a up was little where have to softer X.X%, it be. and excluding liked than would

That One share discounted Medicaid we percentage both Medicaid was grew the we have products. overall in the in and of in big category. like strongly the because where and drivers amount lower in of the Medicaid jobs done And pharmacists the the market investments. market testing is been level because are there quarter, the fairly said, and a strong is both connectivity vaccinations the being doing scripts and between there a high

of during reduce some the follow-ups say, phone is locations. not little bit to happen of I they calls that is And what number then were hours think because had in adherence we’ve priority has medication, shortages, staffing those calls the some So, those phone operating the happened administration a in of one vaccinations. to take two

and year to the direction. reasonably were the the to actions go, get definitely of taken are are a we in we confident right in that So, rebalance bit got a

an in should see So, we uptake coming months. scripts in the

Operator

Your from ahead. Evercore. question next Anderson comes from Elizabeth Please go

Elizabeth Anderson

context a cetera? broader administration’s on go-forward basis the are about put you in thinking that that that et the the I just you was about wanted thinking quarter in guess, how terms testing follow-up at-home when you on A.J.’s were about of the out? changes, with of to maybe question, super like new I of contribution helpful. guidance some How you’re of that talking

James Kehoe

I’ll That’s when in on There team John determined will talk still market. to tag amount with free a is this. that the about of testing. be be Maybe fair

As of and far it’s all there work. isn’t going up set I a there defined procedure isn’t a know how as website to

couple away. So, it’s a months I think of

critical now And the is right you I that availability. interesting give statistic. think an I stock one

Our around health market in the share wellness generally is and XX%, XX%.

Our test the at-home of share XX%, is XX%.

chain I and So, now, supply little partnerships on places we’re spotty suppliers. in availability. we’ve Right executed is fulfillment a think against superbly what with

we in of the clearly about at at-home test but We’re the sold channel. the XX%, majority

huge So, it’s been a success.

we It stock of in magically. of So, various million we of more places. in seven didn’t our tests And the had just -- availability. I COVID had come came much think because stores XXX different types at-home

why this the executed contribution think We such mid say see going would continue I that’s execute. on quarter. and first in one we we’ve availability levels will by So, significantly we out big We a have up our to month. stock

in So, we’re good pretty three feeling months. in a next the place

where our -- forecast is assure point all in that. now It’s but on I particular full tell. the time? amount time, stay on a think at are considerable here can a I this. year the riding is nobody can of variants what’s for to of you testing that, Beyond

Elizabeth Anderson

from That’s really very pharmacy from think us it’s co-located data I your about of the of if had in of you you I picture think sort in with sort of quarter, the wondering you other And if Walgreens, that updated broader terms giving location any helpful on data -- the or any to could perspective. in either longer finance thoughts sales term helpful. VillageMD. sort increase was or point

John Standley

No, really. not

bit a I it’s soon. think little

behind I to get the produces on phone of those guys tremendous stats still I XX -- yesterday, to kind still the some Village outcomes. co-located. same need have need statistics need was We that of quarter we We benefits a us. think the we stats. another terms already got, need in I They prove to of a doctor in working with the clinics replicate We’ve think open. pharmacist to

will just a happen. It’s timing convinced We’re difference. that

thing think be pretty the have mind the village our revenue in a the I to sorry, closes of we’re in on quarter, I’d in doing just a you of a because $X these look is will to if ask look you in the segment, terms as acquisitions. beginning A you think -- essentially quarter, CareCentrix little is, revenue about forward -- segment. acquisitions if we the quarter small third both good the forward one on closing way over at billion is

So, of call if you north in a $X billion it run rate QX, expectations. rate terms over think probably do time models a about QX little we’ll the of billion, a segment. bit a the XX place run of terms run about simplistic finish the kind of -- and all give, insight you would rate, of by $X we have we because in the bit little on are That’s new only months analysts'

quarter think closed, at stability into depends revenue you’re $X I as billion you’re get on CareCentrix. closing a don’t year. looking we see for the the on QX. time remainder to on that’s it of And once all going So, But

Elizabeth Anderson

you. it. Got That’s Thank helpful. super

Operator

Michael go Cherny from Your Bank Please next from ahead. question comes of America.

Michael Cherny

you’re to that with and the so pluses bit for the outlined, me, relative color I the have maybe keep this, minuses benefit EPS seeing, apologize, expected morning. factors offset around pieces the I’m testing of into want looking the guidance, would if a thanks are it of outlined in of sure some pluses moving that coming that in a especially which make back I James, than the I seems lot that you the back multi-year how magnitude growth at more. minuses more Good to you quite helpful, the that I I on dynamics the just particular And guidance, understand far. all at October. Investor the to Day It but the to

is labor like trajectory outlook what this previous to ‘XX, to inflation And know mentioned? else, And so, the anything a or about I missing change but pieces? predict that quantify does to given shrink relative terms guess, you there the of I relative moving we in that earnings or the expect look especially for anything the lot investments fiscal going in oriented, relative -- the COVID are there benefits COVID can’t of the growth the is anything jumping had off in we’re to you point

James Kehoe

year, you is Yes. would started to shrink sure shrink could I’m somewhat say into not actually start about COVID tick argue for it but I that talk of getting with that a that terms correlated in -- to COVID. because up next want let’s minute we has post something is

is of I’ll So, -- us excess share. issue a shrink a this but you $X.XX what to it, in trying The for a I’m are with direct get correlation number. give year not

we terms. that anticipate So, longer don’t that continue will

So in there’s directions. there -- many both as said, you takes puts and

So, testing number, big a is but is shrink. so

to XX. it estimate going little XX% step years efforts this number. to prior to on shrink to had, It’s ’XX a get our a not honestly, -- that XX number -- over to going it to think redouble a different enormous. running sounds We’re It’s basis It’s a I was at percentage to prior about here it’s problem on precise. of -- the of I’m because magnitude We’ve sorry, the Congress at direction. And shrink, shrink currently to X.XX%. That’s not to higher is is in up shrink exact sorry, have We XX% don’t than ‘XX. needs prior and is I where -- little the know, X% bit -- X.XX%. a

increase and So, years, These for issue it’s who in organized a theft. issue. gangs eat that it’s It’s And can’t products. tomorrow. this to beauty and is last crime. stores over of with -- This petty are shrink in we’re all the as is two real a empty absorbing not afford a somebody not real XX% of our our it’s go actually peers,

is The inflation. other one Honestly.

job managing that. very doing I think on we’re good a

we’re quarter-to-quarter, negative but be year. full We might inflation, have some -- we’ll have $X.XX the minor offsetting on generally ups and downs

big not year have testing? numbers. we’re final What’s maybe evolves. -- about There’s and the in add want and into think offset provide have how step honestly, But, that final a to number too ask of do many see because diagnostics vaccination we come intention the a in I year? pieces, next wait I’ll terms labor Roz, moving talking John we to And the business to you year. partial is So, an what to on we John or term, will anything, as get costs? longer build maybe bit, and in

John Standley

for big AXC our in now, in testing, rapid a Yes, mean, stages, where in over testing shoots we’ve testing absolutely. COVID in in clear some And do now. locations. got we’ve I stores, right It’s with our I diagnostic opportunity early very us. but think I underway X,XXX that are with just gone that’s testing think, COVID X,XXX over green we stores testing good

come opportunities that’s forward of so as we I to changes example move big us. our the business, for COVID one out that So, think some of of are

Roz Brewer

very a Mike, as come uncertain potential dose investment it that things not investment couple sure noticed for far, could directly we’re here as to in so also the But just much in regaining apply business, this area. turn numbers to the So, that. is also quite this And involved for applying in a done managing what a market, online, we’ll need around which Roz. fourth we’ve there. against I Can more labor are script we’re add just our through all And significant we how made that of we you clarity? labor.

personally seeing has part mention the we’re ending different happening is get we here applications. up goods what how around on store this we're and couple is government need that It's team And managing I online leaders leaving other the is levels. from relations shrink, the store piece with and national about. the of then we to issue? DC shrink level, And on on in that area, but just been think a Washington to myself So, at uncertainty wanted our conversations our our having do this

make situation. business to we’re heavy sure working are that the So, pretty our that monitor can in this with we online partners

helpful. certainty uncertainty of these be if more of the enormity some Mike, level and had we’re that’s managing, here. of to the is it’s that piece there it’s that But, So, issues that

Operator

next Valiquette question ahead. Steve Barclays. from Your comes Please from go

Steve Valiquette

XQ fiscal fiscal So, around in benefit in each operating flu just XQ your the Is adjusted sequential any fiscal be latest ’XX. always in fiscal the for has operating adjusted in up profit? well? what reason quarterly versus this XQ of are on company the fiscal fiscal that The why would of year, sequentially year, been up Company question a thoughts earnings the not quick profit just historically. Also, fiscal sequentially the on as versus XQ for XQ the cadence there in remainder

James Kehoe

not I’m of sure honestly I have front on me. sequential in it the don’t side,

because growth year-on-year I the levels we think in prior on EPS there quarter see of was do quarter. positive vaccination low

-- up good How the QX the in into second will Obviously, with a question is number? And your quite on was? of it's work, were what is a second so. will But we’re in a the much people good vaccinations daily on what estimate of is the full many the we boosted? of basis there’s yes. quarter shifted lot quarter, year? have And terms from get pediatric quarter. the will struggling And that’s a What second detailed QX. air part of lot we have So, the how a answer is

Steve Valiquette

Yes.

far updates as flu. as Just the on the

James Kehoe

Then -- we flu one season fairly compared Yes, flu. a up had season We in were generally weak last to the very was which had the UK, in Flu a incidences year. down strangely, a we strong strong record had U.S. a very XXX%.

So, answer did it go brilliantly? The is no.

it due script think exact first I was headwind XX look vaccinations, -- basis flu negative numbers, When the is number you the XX were on quarter like was something points weaker at think to that. I why we basis-point an the a season.

Operator

comes from Your James. John ahead. from Ransom question Please Raymond next go

John Ransom

morning. Good Hey.

couple have that risk. is about what Is noticed reduced this rounds we’ve How the last year? support for kind that of headwind and this have we the there’s You think this guys that Thanks. called as And a for versus pharmacies. should program the XXXB manufacturers -- contract won in that out long-term? year course a

Roz Brewer

to John that impact James the about will other if close bit Standley going question. John, XXXB. out of thank you for little numbers, question. a ask to talk John? there’s the any And our I’m

John Standley

think material at us moment. the don’t for hugely I issue a it’s

us as is the any the obviously, Shields we the here folks as that really here is patients as approach administration gives it’s medications supportive. to you our at them can business, who specialty watching get situation. to And possible. sure again, feel important idea that’s also to another that as actually obviously access And well, well. part the get of to should whole an objective they look XXXB We’re making obviously space, And but medications have. We as the just very access a our should have and

So, I so can guidance reflected in think as far, far given. the as that’s that what we we’ve in see exposure

James Kehoe

it’s not summarize, material just would I year-on-year.

I call think not it’s kind it year-on-year, to But it’s I’d then tracking of behind And slightly enough the about. talk budget. neutral. material

John Ransom

all to locked Okay. up that question. the market. CDM XX UnitedHealthcare took And then their just we’re guess, the zero. of that picture as a more years just I trained of thinking a structure. has just The benefits use big They Diplomat specialty can

mail order. I their use think people

be yet PBM level, So just given out high I do know that structure this just that own a to of at is specialty, break directly? PBM with cartel don’t you -- you benefit you how and fully, rolled but a

Roz Brewer

John?

John Standley

to Yes. in going I was if jump okay. that’s

us is what’s So, I access. think about important

pharmacies distribution in last retail just we and the so our strong and few we clinical limited XX to what great of capabilities. relationships just an XXX And community over probably today, in now of between pharmacies, over new today that marketplace in So, limited is network portfolio as really I pharma, dispense just drugs we with brought months, our our we have distribution our drugs. we important with have part the what hospital what what bring central, of a we to access in pharmacy have think through

all support those important mentioned So, They’re to you large we us, direct business their as with them partners and efforts. that contracting. well actually do PBMs of in as

that as we a integration capabilities I the have. you’ll market. So, space strategies think we all for bring about us of talk force this And hear in there’s that our our

Operator

Please And Eric Nephron comes question Percher Research. from the for ahead. go from today last

Eric Percher

pressure administration front. I’ll to taking understand for be to see fees Walgreens. we I interested fees, considering forward? if material pharma they’ve and macro is administrative pharmacies. action reimbursement spec would the it DIR for limitations these and fees meaningful stay Biden DIR a what I’m Thank extent the as we you. been know independent on that retail on be to And look significant

Roz Brewer

the Eric, Thanks, take Standley, one? do that to for you question, want John

John Standley

bet. You

really with various working of industry the that are we’re sure try really, So, way DIR states fees fair many and they’re in and performance make designed. kind aren’t, any today to the fees just groups which equitable,

regulatory the from a key component perspective. I And so it, that’s think really, of

the And we’re or where that it here. to So, and we pharmacy kind support of services is pharmacy retail community sense structure try makes that’s have compensated that for a really efforts where headed fairly just fee a provides.

not impact And it secondly, think somehow one, way. or we I have the sponsors, then other just see, or of in or regulation PBMs the what field plan specifically PBMs really the others is. the -- playing -- shift to would do some

to impact fees You’d take terms quantitative don’t into consideration have But of those of of determine in just changes sense. make any the trying some what to might these be. clearly,

Eric Percher

fair with been have deal And to they’re there that to that don’t sense you’ve fees fairly to fallen maybe make directly, that offsets? penalizing as and or is it assume has line had bottom the you

John Standley

Yes. over No, the been It’s years the last business. directly. to impactful several fairly

Roz Brewer

priorities. are achieve from values track us strong to early meaningful to long strategic to is really October. our call it’s mention days, commitments on, a over and for to earnings We’ve we important as hope making try you. that been Day fiscal growth your I you for want full these just continue takeaway call Investor we’re early sustainable shareholders, we’re the low-teens the for off our year. this Raising just we’re towards as that and, morning. everyone, guidance our you our see to right. against start out we year All laid thank but that road and joining clear is It’s you that creating Thank this as for the attractive progress EPS the still adjusted that delivering term. see I us,

the you. forward So, time today week. at appreciate I next who those your will to and join Thank look conference us

Operator

conference This today’s call. concludes

disconnect. now may You

Walgreens Boots Alliance (WBA) 6 Jan 222022 Q1 Earnings call transcript