Earnings call transcript Q3 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Walgreens Boots Alliance Third Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

President Investor Vice begin you your conference. of Kanaga, Relations, Global may Tiffany

Tiffany Kanaga

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

will me call Vice U.S. of Walgreens Brewer, Officer Healthcare; Gates, Senior are Joining and our James Chief Officer; at President Executive on John in Chief our Driscoll, today's President Pharmacy Kehoe, Financial Roz Q&A. Chief participate Officer; and Rick

references to headwind COVID-XX tests. the U.S. vaccines, on include All today’s drive-through OTC call tests, and

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

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

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

now I'll turn the call Roz. over to

Roz Brewer

not third disappointed our did start with are an call to quarter change today's our acknowledgment and good to performance guidance. and fiscal like Tiffany, our in I'd have Thanks, the everyone. morning, overall to that XXXX we meet expectations,

public into full-year trends dynamics quarter, changing seen we earnings sales outlook, growth While that We to that the our return have factoring pressures margin good adjusted we achieved are created several growth in and market in drop in the uncertain value to the prioritizing emergency. steeper vaccines There environment. challenging and has consumers end COVID and of off been health with a more testing economic a have response

Healthcare. for experiencing slower profit also a ramp are U.S. We

actions immediate to strategy long-term committed we and unlock remain our to value. profitability path accelerate Importantly, through to our

is underpinned our priorities. remain long-term I in progress of the confident significant strategic by our transformation, against which each trajectory of four

are scalable telepharmacy We in with a TelePharm and transform pharmacy our we partnership to announcing align our business core how our improve with operating continuing provide with advancements model. access are pharmacists. to and expand tech patients to for services; Today, flexibility when care; engage enabled and

also by covering supported Our over store micro Walgreens is centers, our model XX% fulfillment our footprint. of

In basis have margin and U.S. X.X% retail, last again. growth successfully gross our year's points sales retail yet XXX comp over up flat record year-to-date lapped is

acquisition significant healthcare, independent create next full on made progress to ago portfolio just continuum. sales engine a $X VillageMD XXXX. of care rate the Summit years a accelerated in our also of billion from building growth our This run has acquired in two care Shield delivery segment gone contribution zero and third of we leading and have across CareCentrix. We rapidly the to assets establishing of the platform, quarter

exited $X.X proceeds. million our fund Health the the for have from To also year transformation ABC billion sale shares realized in fiscal Option we $XXX and our portfolio, focus of in and this proceeds Care position

we in invest strengthening recently, Rich CFO, Rubino. capabilities, Finally, have bench to VillageMD's continued strategic talent to and welcome most

nearly X%. returned third growth, Turning to the adjusted to quarter, EPS WBA up

Third quarter X%. sales X% were were comp solid, up currency. sales growing in constant almost U.S.

and clear on pickup Boots. that continue gain day top appreciate with X.X% last out of by X.X It in consumers is the to call same orders. a notable, digital services year million XX% value, sales, convenience delivered U.S. up range International the quarter. also was and me Let of retail XX% up Walgreens

growth pressure, margin factors. by quarter the three only was offset increased earnings external outsized held Our partly in expense discipline and back

unfortunately have volumes patient quarter, sharply. a wildcard and demand, in administered saw testing we as willingness XX% vaccines COVID-related also down vaccinate. had to called we the First, quarter into and out less are COVID down year-on-year seen XXX,XXX lower-than-expected the Walgreens heading COVID-XX

are forward. taking We in further reducing for going turn contributions the of our COVID expectations prudent [Indiscernible]

projecting COVID X the million vaccines million million currently in in XX and fiscal line vaccines to with administer year to are next season compared COVID expected to typical We XX.X XXXX. flu

to we've similar environment and cautious Second rapid been other a impacted value-driven the the by of consumer. more and macro retailers, softening and

outlook. SNAP the feeling on and pulling back rates, is and inflation an and lower customer uncertain Our promotional higher refunds, strongly responding benefits spend interest discretionary of seasonal economic and They and tax to activity. strain are

sharp XX% units a increase example, channel, the over in up five-week retail unit For while a is just including period, non-promotional promotional running X%. fell

see we remaining retail environment that add me pricing rational. as Let the

which have February to May. industry broader COVID, may on these points adjusted be [Day market fall] excluding script slowed percentage pressure immunizations consumer We also related almost has from to seen headwinds. growth excluding X volume (ph) some

pharmacy retail core consumer Our relatively positioned business in and volatile is confidence. well times of resilient

external at to immune trimmed while up these our same ramping not savings. accordingly, expectations the cost time efforts around our and have we're pressures However,

a we've drag respiratory recent weaker experienced Third, from season. a

through higher strength. flu volume category in CityMD’s and against feeling store cough front sales, traffic trends. margin into the fourth are quarter of last likely through year's especially trends persist cold We script our effects to These our the category are in the

leaseback, sale impact earnings accelerating quarter. to sell quality gives trend the we adjusted operating growth a adjusted of Importantly, of in shares, and accruals, from of fourth strong COVID X.X% to sight considering tax. net income in incentive us the ABC adverse This line EPS achieved

our and up lower X%, This guidance. macroeconomic COVID excluding represents forward be expect now earnings core cautious and view. reflecting contribution, Let to currency. flat We me turn and more a XXXX $X.XX guidance trends, adjusted to at to fiscal COVID-XX consumer EPS $X.XX, updated category to

providing are preliminary also We commentary. XXXX fiscal

factors that next year, Let me consumer are COVID impacting and namely likely pressure headwinds. be clear, some extend there to into the are today macroeconomic-driven us

our that loan today of and There to resumption annualized into We are should the end be challenges stimulus sentiment, fiscal XXXX, respiratory consumer not weaker other spending to as student closely season. payments. factors the watching emerging and and specific such as more fiscal of business are the such are

and enhance flow year, business. several profitability Most in initiatives we next aggressive Healthcare cash importantly, our have to into undertaken especially

We growth U.S. and expect U.S. and Healthcare XXXX fiscal from offsetting and and than should leaseback AOI higher headwinds growth non-controlling ABC. in operating outpace adjusted sale Businesses more offsets with the low-to-mid-single-digit due interest. tax Retail adjusted COVID, from Pharmacy EPS, to

discussion full-year quarter We will of guidance detailed fourth XXXX more provide a we when report and XXXX results.

of enhance continued EPS sustainable immediate following are growth journey. positive value, earnings our shareholder with growth improving taking operating To low-teens and time. the accelerate to in quality we adjusted our long-term drive confidence The building support trends profitability actions to over

our goal savings of billion, $X.X includes raising are transformational cost XXXX. we savings this fiscal program management First, in to million $XXX

working launched we've Second, we capital and have spend capital reductions, program. optimization project implemented and a

and Third, profitability Healthcare's an even VillageMD pursuing focused simplification on Fourth, path are actions Health. portfolio faster we accelerate pace. U.S. several to we are at announcing to Summit specific

between We segment accelerating the and Healthcare also are our Walgreens business. synergies U.S. our core

opportunity deliver our healthcare We will have The pharmacy local country. communities and to unique this flywheel healthcare retail accessible, deliver healthcare wellbeing also in and a working quality to of and more will improve a affordable, step are with footprint, and likely our sustainable national as trusted medical faced first offerings. Americans issue. and when a local pharmacist, pharmacy shareholder with of XX% to digital It brand non-emergency their visit value. starts together

clinical and across health plans Shield, cost. proving and outcomes a platform We've and that care health scale our early is absolutely and help Summit, leading continuum. assets Add to the to patients with improve work corners our CareCentrix created trials. at that, and lower VillageMD,

next is driving partnerships Our market teams expanding the turn. to will which greater and step access, getting our are to

deepen and consumers, healthcare and As reinforce engagement retail will brand. jointly pharmacy trusted our we serve

Let's delivery integrated look In enhances that adherence. team tangible how a through partnering value healthcare of portfolio. VillageMD, at with we're based our few examples driving our

this building virtual clinics. Texas and seamless, a we're summer. virtually care supported coming in Arizona online More concierge coordination. more extra connections to by are in Walgreens digital standalone To make the We program provide piloting XX with are experience healthcare now pharmacies than and Georgia

integrated and diabetic driven hospital reduction We reduction patients. model. has over pilot material over AXC in care pharmacist The exploring an are a XX-days XX% ambulatory in readmissions also

patients over roughly Difficulty] day. to their provider that improving the CareCentrix VillageMD while platform XX% sites leading Remember clinics a and co-located medical also filled prescription equipment have plans. VillageMD [Technical that offer benefit to co-located point-of-care experience. health are have administrative per of for partnering open at Walgreens. get opt member durable and management for solution services and savings, a medical overall healthcare turnkey This national should drive been

Walgreens access to Shields Walgreens together partners specialty specialty and to for contract to also the are systems. is drugs health existing converting pharmacy single and Shield increase Walgreens services. to establish locations pharmacy as working

opportunity Pharmacy with similar across are the The pharmacy testing programs insights. screening. of strong such at successful cancer programs and chose new Members last kit test up compared visit pick such We've lines those data completion mail. fall results an California seen the at-home our Health, that the on at-home to with for Based access to Blue received XX testing to when as and boost we kit. Shield the already had members payer Walgreens points we exploring we service rate colorectal one other to a state pickup, at-home percentage Finally, with higher patient results, are launching due healthcare additional was conducted screening services as locations diagnostic these to Walgreens in partners. analytics

can improved lower guidance In not headline I’m working cost summary, satisfied today's revisions. outcomes do. to only our healthcare and are retail as Walgreens pharmacy businesses together and by

sustainable to However, and I coming together see to to to the our consumers, value partners enterprise approach shareholders. deliver

right the have strategy. We

each macroeconomic challenges are priorities We the across for are good measures appropriate driving we and of account and to strategic recent progress uncertainty. our taking

necessary toward a while sense reimagine wellness Through urgency, local all. strong we to profitability for the and healthcare pushing today, actions with harder of continuing are discussed

over it results our more I'll to outlook. that, on to our and With James provide hand color

James Kehoe

summary, our earnings growth and quarter, Thank third returned while were to you, In below in adjusted good Roz, morning. the we EPS expectations.

lower encountered and business, U.S. in XX%. respiratory a on incidences. by delivered behaviors, a we our plan, currency of our COVID growth slowdown ahead we Overall, sales constant led basis shifting recent pharmacy consumer up X.X% As contributions,

healthcare prior billion which U.K. added year. Boots business, versus $X.X solid our business, comp and sales a Our the in retail which delivered XX% scaling

points sale tax. incentive increased AmerisourceBergen. offset headwind EPS X.X% on These contribution a were point of from due constant ownership partly percentage and COVID-XX lower XX Adjusted X accruals, despite reduced favorability’s from percentage basis leaseback, and and by a a to currency

percentage items be X.X quality of in net a quarter. of EPS overall demonstrates All and out growth headwind to this the these good earnings point to

to we COVID around fiscal $X.XX guidance the reflects forward discussed, adjusted trends, category key I Roz from a color the given outlook uncertainty. EPS are ‘XX an cautious contribution and will As our assumptions overall more to revised guidance. macroeconomic underpinning Later, $X.XX. This view lower updated continued more lowering and provide consumer our

income incentive operating sale percentage Adjusted let's But constant leaseback from X.X% ownership, partly at included increased quarter results reduced look in detail. COVID-XX a first, drag third from accruals. and point This gains X% by a and offset XX basis. on the headwind a more AmerisourceBergen currency and

All out of an these items X% growth. net to headwind AOI approximately to

GAAP after basis to net prior $XXX licenses a U.K. $XXX million. earnings $XXX included X.X% quarter million, current the to charge compared of impairment $XXX earnings on in related year. a pharmacy declined to increased Adjusted a million currency The net million tax constant

to let's net down year-to-date ownership XX the a XX.X%, GAAP basis. reduced to X of on and currency loss in of increased reflecting contribution move billion highlights. $X.X X.X% lower Adjusted were billion, AmerisourceBergen percentage points. a Year-to-date of percentage was a points sales XXXX. compared of earnings $X.X earnings Now COVID-XX EPS constant

related including and With year the for billion opioid after claims current $X.X tax charge lawsuits. a

a of to gross move point with decline increased to The Sales negative SG&A stake in AOI percentage X%. segment. X.X% the X% expense impact X profit COVID-XX, declined the income. quarter led profit the of ABC up gross U.S. offset Adjusted Pharmacy of let's decline X.X% and to down inclusion of more a our AOI X.X% growth Now AmerisourceBergen X.X%. comp sales reflecting year-on-year, Retail than equity a before reduction the from slight led in sell

inflation. both script to advanced on Pharmacy. comparable turn and basis, increased sales brand driven U.S. now growth me by a and X.X% Pharmacy Let X.X%

Excluding a prior from reflecting and quarter broader the comp scripts market deceleration immunizations, prescription grew trends. slight X.X%,

of although As expected, cost than goods profit lower reimbursement offset profit adjusted pressure. gross growth excluding gross more declined sold increased COVID, as year-on-year, script and

our to next retail Turning U.S. business.

a quarters third through backdrop. in retail several the as some consumer very quarter good headwinds navigated encountered Following performance, business the macroeconomic the difficult of

seasonal holiday sales pulled Excluding by COVID-XX sales X.X%, kits. tobacco, comp weakness to XX basis spending back discretionary held basis due XX grew points and due to back consumers as lower OTC points on test of

flat, quarter and third but decline incidences. up versus beauty, in the cold cold range. in fan saw shows in X% sales flu, flu and data second X.X% in in down the significantly a grocery household, May due increase slowed with We respiratory activity, the up XX% a solid to X.X%. growth mid-XX% IQVIA and down respiratory were Cough in quarter, May,

expansion, quarters recent market pressure Following with year-on-year several similar XX-week seen in under around We've units, modest as retail of consecutive gross came period. quarter. trends margin in the most promotional third our margin the up broader the X%

However, more than margin increased effective has by XXX management. on points, a year-to-date gross by basis, driven basis margin

XX%, a Turning up the from International Adjusted operating X%. U.K. well. The continues despite numbers. headwind and always, with across as of year-on-year transactions. good to currency million and income wholesale was next segment to sale Sales markets. X% Boots and talk $XXX leaseback increased increased I'll all segment $XX grew very growth to Germany international international perform XX%, million constant

look now And a across U.K. skincare comp Future retail We at pharmacy same than with increased Boots.com Renew, sales and XX% in XX% XX%. the pre-COVID innovative year-on-year, sales and Boots market share comp launched comp recently Boots.com. response. of product line Boots gains detail XX%, equivalent versus of This comes U.K. positive successfully on launched last consumer now the more have for categories. retail in very was ninth range Boots Walgreens. year. Over XX% from U.K. with all in a grew grew quarter grew quarter. comes of X%, our doubled sales consecutive new more the advanced Let's sales top sales this quarter

existing $X.X U.S. next billion XX%. was the continues sales rapidly the forma year, up an were XX% Turning $X ongoing sales Healthcare Legacy business Healthcare. The with reaching more prior forma on was in than additional VillageMD the and maturation growth past scale clinics by to opened XX doubling basis. billion, year clinic pro clinics. to U.S. from with of driven the footprint, pro VillageMD expansion growth a sales of

delivered contract health a by season that approximately of impacted to Summit led addition Shields across sales partnerships. however, expansion was, strong existing up referrals fewer growth with quarter, another and driven the of Health by system forma Summit visits CityMD and weaker million and Network. respiratory fewer XX% including new the CareCentrix XX%. further $XXX of six were partners pro wins, Health sales

growth and clinic been Summit the Adjusted expansions. at improvement Health, patient lower offset EBITDA [tunnels] loss at by new visit has by Shields. the (ph) EBITDA reflects and CityMD profile cost We partly results whereas VillageMD continued fourth weaker-than-expected with in anticipate sales. VillageMD and quarter impacted volume, align build traffic reflects the as we

risk year-over-year Let's now of the full based in at VillageMD and Healthcare based include the key end, XXX,XXX XXX,XXX managed reflecting the of lives. look lives for addition at based from Business. some value lives VillageMD U.S. of metrics growth XX% legacy quarter value value Total XXX,XXX business approximately Summit. the lives

Our robust expand a clinical contracts trials and business continues signed with to pipeline. eight

billion earnings $X.X free to initiatives. flow expenditures increased million. The cash working due operating year-over-year lower of contribution $XXX a We decline cash cash flow. from to and lower capital to capital generated related reflected growth next of with COVID-XX, Turning flow,

we projects are to reduce our of spend of capital ahead, optimization rolling capital plan initiatives set and Looking are generation. out to working comprehensive cash enhance reprioritizing

guidance. to now Turning

We a updating to decline $X.XX, around adjusted guidance currency of our XX%. EPS are constant full-year ‘XX $X.XX

spring have to faster vaccinations. has expectations COVID COVID-XX XX million And adjusted core assumptions beginning our pace. the of of EPS $X.XX reduced booster of COVID-XX up testing At at our despite contribution than is fiscal year, Excluding we X%. and vaccinations. an at ForEx XX.X the the recommendation, even is the to The EPS decelerated the impact million original from year. start flat lower the we expected full-year

quarter incorporated of Additionally, as $X.XX realign the a goals outlook, we to sales consumer to have more impacts fourth recent and reflect we to cautious leading trends. margin impact $X.XX a our

$X.XX led headwind. reducing in Finally, stake to while our has a improved has, our however, It position. ownership debt AmerisourceBergen

a billion X assumptions Starting XX% XX%, U.S. project up of to segments. we Let billion, decline me with $XXX for percentage now $X.X is business and $X.X through reduced XX Retail stake from our of now in to Pharmacy, point reflecting projected sales AOI points walk a AmerisourceBergen. COVID-XX year-on-year. around low-single-digits of you headwind from percentage our each ownership at our billion,

two AOI X% these X%. Excluding up impacts, to growth is

around International original our towards is the the the of are operating income to which performance XX%. U.K. especially segment, This basis, to a top represents is $XXX next Turning of strong constant year. million, well approximately performing execution, X% Sales this to end in constant grow Adjusted expectations. of currency growth X% projected on currency reflecting

for CityMD, into ramp new U.S. VillageMD outlook Summit's at of slower visits continued prior reflects of integration revised sites Healthcare Our multi-specialty business. up and lower the the acquisitions

We basis. expect pro versus billion year prior sales $X.X a XX% $X.X on increase billion, and of billion growing approximately $X.X an a of to form

are million $XXX factors earlier. I including of loss mentioned We projecting an adjusted million, to the EBITDA $XXX

profit the we far plan, adjusted and underway, improvement and quarter drive expect actions year rapid fourth are EBITDA performance has While to the below correction been this so beyond. sequential in

to with average guidance we the quarter tax approximately result assumptions, $X.XX of quarter. quarter rate lowest rate EPS $X.XX typically have reflects More tax a so far to now and the the rate fiscal of is fourth fourth our XX%. expected by corporate quarter this tax in weighed down seen of higher basically extrapolate now implies some The full-year to quarter. the the expect XX% to $X.XX. is fourth is the specifically, be favorability around Full-year $X.XX of in the fourth much our reversing to benefits and Turning ‘XX, around we

proxy a as quarter for the extrapolate to incorrect be would XXXX. it such As

the result additional First, tax rate normalizing $X.XX would quarter. for in an in the

our businesses. Second, seasonality of impacts all

and adjusted ABC, five of EPS an annual the adjusted excluding the the in of COVID-XX share. past the accounting around tax impact fourth seasonality income rate, comes would quarter. operating XX% adjusting quarter over approximately and our per To conclude, back in from fourth for years, Looking result for $X

would like the cover key expect long-term to the I we outweigh near-term tailwinds factors pressures. XXXX will influence Overall, Next, the performance. that to

with we challenges spending, expect faced some in in in do are labor the of to ‘XX. continued ‘XX increases Some We expected to together see consumer weakness fiscal into costs. continue moderate

pressure. pressure offset somewhat not past and away over continue way While it the has going is identify the reimbursement XX we will eased to months, to

activity as a statutory addition In leaseback lap Switzerland. favorable be in rates performance sale rate expect we ‘XX the the very fiscal and higher and and we will lower U.K. tax and fiscal introduced in are tax ‘XX, higher both

we significant However, a U.S. and a maturing to profile drivers profit business initiatives profitability. have multiple sustainable Our Summit profit the clinic will first path Healthcare that profit strong actions driver, including drive VillageMD accelerate their to of be full-year and will Health, growth

We gains of script initiatives. expect and of volume performance These the contribution include successful penetration improvement program. own and continued from growth category strong further brand store front expansion our

transformational Lastly, the management million year. will $XXX least program cost of deliver savings at next

a deeper XXXX. into look Next, let's take

adjusted Retail led U.S. We to segment XXXX Pharmacy. the execution income in operating and solid low-to-mid-single-digits, expect Healthcare by fiscal U.S. grow

profitability. provide are expecting rapidly We U.S. gaining the to business we the will EBITDA accelerate total taking on delivery. and the as the of color company path Healthcare more are is John immediate to Driscoll driver now actions accelerate we will growth, much be to largest scale, AOI

step AOI management of to core sale items, $XXX contributions gross cost slightly, lower Pharmacy gains. and by solid $XXX a and profit. We led due these expanding down down transformational be anticipate Retail savings and COVID flat growth approximately we in program million leaseback to Absent to expect U.S. million

and lap the manages as inflation. growth Finally, for as lose presence. sale to interest. international and business due will said, being business growth real an non-controlling of contribution high profit decline estate AOI flat AOI well the outpace in success AOI rate the Core to cost year-on-year relatively business share e-commerce Chile. small of expect We a to is levels and and through labor be our gains growing we expect That we with gains EPS, from long-term and our International sizable tax higher positioned do market advantaged

in Pharmacy more Next, detail. we'll look at U.S.

gross growth tech our offerings. up COVID, enabled clinical and pharmacy more to we spend Underpinning time grow service the model, on expect our profit. programs Excluding frees which for differentiated supporting operating to pharmacy is capacity pharmacists expanding

improved are and operating growth solid We from lives script hours, in growth increased to projecting benefiting access specialty.

pharmacies under payer provider-centric a integrating new and approach. strategy with are a Shields We specialty AllianceRx community-based agnostic go-to-market

we for addition, U.S. pharmacy across that have and initiatives from to launched our integrated clinical In and continue multiple healthcare quality engagement leverage our see assets. partners programs business and payers

Moving now improvement. by Retail Gross continued profit U.S. margin driven and be business. comp growth to will low-single-digit growth our

creating assortment in significant savings where through performance value fiscal are of decisions should $XXX We at least management, category deliver XXXX. million

are higher our accelerating We of innovation brands increased significantly display, penetration points brands. national own through and margins our are and brand than own distribution have that

more scale store We value including store health a we feedback evolve on both and concepts. a consumers store with platform are and our concept formats, forward as e-commerce for early new focused our creating favorable digital wellness and

me drivers. Let profit hand now our strategy U.S. to growth to and it over Healthcare discuss John

John Driscoll

Good morning.

match and As confident improved reduce our action demand. deliver healthcare raising we we remain value Roz and transition cost and a season to drive James disappointed flu pace softer market drive U.S. missed We're our We Directly take due and the VillageMD underperformance. profitability. of optimizing goals. to cold We're to synergy related while profitability. actions revenue immediate are targets synergies COVID, capture year rightsizing in taking accelerating scale demand. We're and year market with and to and anticipate outlined, will and range the path through business, CityMD better structure, profitability. this our overhead to Healthcare we're to of as

VillageMD enhance Summit we the recruited platform, CFO, Rubino, be in our markets accelerate path and density can We to by integration We've of on our to VillageMD's the and combined assets seasoned Village believe a our existing supporting the to digital profitability that healthcare to and Business. management with growth Rich VillageMD we Financial focusing value gaining team. Village of Chief continue Officer enhance

our intense portfolio. harvesting of care three-year value-based the vision growth that to double implementing synergies a more market optimization. focus by medical successfully delivering integrates plans, that impact care pharmacy execution improve model respective a their an building cost relentless care We're on companies, than on term, will healthcare value-based through performance plan Achieving operational differentiated excellence and depends we're of on Longer Walgreens for each high and delivery our XXXX. a and across

Walgreens enterprise has a unique reach, care, and engagement, right primary to care consumer and our the win, in investments with to specialty, home.

to individual enhanced continue We of recruiting assets that scaling connected to patients, healthcare the quickly is for of core value clinical business. value our our example providers, see Walgreens A pharmacy great create to plans. trials our and

Next, let in drive me where see to turn to U.S. AOI Health, we Healthcare. Summit opportunity meaningful

the are the obviously unlocking will fiscal to marketing the Leveraging year we ‘XX. at profit Summit in contribute to disappointed value While and CityMD, campaigns CityMD we pace base expect Summit of WBA, growth invest with we in full sites. targeted materially of increase to patient

continue from growth synergies acquisitions. cost on and focus and improve to excellence should optimization continued prior Our operational

goal are we accelerating capture XXXX from million XXXX. to million $XXX in calendar the Finally, year raising in synergy and $XXX

to VillageMD. Turning

Over the new clinic pace markets. we've the in of few last openings slowed months,

working new with cost asset our and to support new panel accelerate are leadership models. and we cost our our are strategic growth more their to objectives growth. regional effective better cost density performance, marketing to a profitable To As patient of manner, in support We've plans care we've efforts expanded engagement studied have we our refocused and in virtual lower more to of leverage launching control. clinics achieve light growth

more continue risk be risk the to to our of are proven mature by of model. continuing fee on service focused We performance impressed performance lives VillageMD conversion and accelerate our based our to markets the for

delivery high a model. is care VillageMD quality

clinics mentioned, level development. market our performance of an most and VillageMD But Medicare demonstrated are the including we where Arizona, achieved ability the James to our VillageMD early As markets, density, bend if Georgia, of has of mature have the we on Houston, an of curve. appropriate stage cost focus at newer more Advantage

as and for based with we volume leverage healthcare our in we service markets, business. And We models replicating will care fee to healthcare the performance across this risk other other our focus our convert integrated will U.S. assets on pharmacy model. also

for on go-to-market systems our legacy refocused systems of As noted aligned platform assets. the of part under one In partner team choice and for our of health health executives through encouraging our slide. we sales with healthcare combination results pharmacy of summary, products health short-term approach, plans health portfolio seasoned U.S. plans some health independent with of remains Walgreens the the and our healthcare

Our portfolio for outcomes for systems, of and consistently moving quickly healthcare we at meet better a to costs market which plans, patients, is value. suited fee from delivers service demands is that well fee the believe lower to for

While there advance to is priorities. we plans, done, our clearly work place structure now organizational have leadership, the an to be in rapidly

to over Now let back it turn me James.

James Kehoe

Capital pay John. core remain priorities Thanks, allocation on focused business dividend. investments, debt down, and our

simplifying are returns-based value and disciplined unlock organic we core to our We And flexibility. provide to in our business. pursue portfolio will financial continue investment

maintaining rating committed grade We to dividend. and are investment our very our

take management let's the Now, cost a at program. transformational look quick

this is since and year, at We target savings $XXX $X.X this we savings are of in of the XXXX million increase raising saved the the billion With program projecting billion began. the least $X.X are end target cumulative by sixth ‘XX.

the more restructuring, of of priorities. saving initiatives. to the couple to cost completed Let me XXX This elimination headquarters support our workforce. U.S. and with to led We which align office talk our resources than a roles, XX% around corporate just an our of better included representing our organization transforming strategic

of our model centralization the improve solutions. activities centers, fulfillment and significant will and savings patient of also optimizing enabled role These model pharmacists drive the the engagement. pharmacy tech through telepharmacy the elevate future we're of in-store Our micro operating initiatives will

expect and XXX and our and locations hours opening Finally, an locations we the to U.S. locations XXX will U.K. in in continue additional optimize the to close

our our you optimization from further have overall proceeds seen, since portfolio simplify business, billion Option $X.X we with exited are of we As Care XXXX. August have to position fully Health accelerating the

Let contracts monetization EPS no structure. until VPF is me recent variable approach, forward a also highlight the our shares Under mature. dilution of there the using AmerisourceBergen prepaid

upside. Please price dividends stake note in receive is some AmerisourceBergen worth to share continue and $X billion. that We the remaining we approximately retain

me Roz pass With now closing comments. back her that, it to for let

Roz Brewer

Thank James. you,

let Before heard. through and have right we off Q&A, you've differentiated to has win kick model our me up we WBA what sum the strategy right in place. the

actions now with motion are improve the next of healthcare phase We profitability. transformation to entering aggressive in our

challenges long-term on are deliver shareholder addressing moving current at head value. to and pace a We

We have the scale.

We have skills. the

urgency. profit of sense growth have the sustainable have We we ahead. the plans to right And drive

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

Operator

Lisa first comes [Operator of Gill from line the And question JP your Instructions] from Morgan.

Your line is open.

Lisa Gill

next all the and on much, But fourth around into year. from as CityMD area about to but substantial focus your the utilization Business, and I just very commented where think John on first opposite by manage U.S. and is talking on both also for side. We've is detail. the heard care about talked miss both end going performance, want about the then utilization. growth there's quarter a VillageMD thanks into Thanks the we Healthcare around negative

Is and So to seeing your about for think lives we a Medicare can me VillageMD you're know, think you we current Advantage One, that help utilization what and square about there? that? you when headwind?

about part we opportunities COVID or think about CityMD that there? you respiratory And the XXXX? what forward the visits, And think that's that then, of talking are synergy not $XXX as like secondly, things pull is you're seeing do the about you when million think for

John Driscoll

Lisa. Thanks,

for bending the a think mixed terms You consistently seeing is us. in solid of performance blessing curve utilization cost I Village. at actually, sort know, We're it's of,

this our integrate and also better some the City profitability opportunity the that We ancillary hit and City, bit. positions utilization hit that ability to both harvesting of the They think Village with on care CityMD the both partner. utilization, of better think a a and of we lab over them from NPS. managed there were are value-based and in as But there's business I on early Summit demonstrating that and to stages high side think an we're embedded time. at City, of quarter very the the hit cost the reduce at I lessons because have us Summit

a some quarter-over-quarter at improvement, of improvement think synergies, we cost mean, in get going we XX% looking a EBITDA expecting significant healthcare at as of to the I you're see QX. are And I

to also opportunities think on value on cost the but So got model. the I we've side, our optimize side

Operator

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

is open. line Your

George Hill

for running three guess, the Yes. OCF And there's know to like talk you about you. not we so B, the A, James, to company thinking Good grow Thank it are of dividend early relates Rx And pharmacy dividend? can that expecting, years? pieces OP cash ‘XX? couple there's the the to can in I at you question. guess, guys, lots we thanks through I the and what the ABC. And talk I morning, moving kind with targeted look flow guess, reimbursement below taking then quarters. a calendar next year. meaningfully how you pressure pressure, is prior for are leg about expected expectations reimbursement as the And of, down

James Kehoe

Okay.

incremental a on is so have low-to-mid-single-digit. I we And one lot Let income flow. the to programs expenditures. me see ’XX, just And in emphasize out second and cover capital significantly do capital EBITDA, and grow cash -- to one we next growth working strong we giving we're that we're building is curtailing And will work clearly our year. first, dividend are first commentary operating of want

absolutely both So the crystal investment the our clear, to grade rating. I it dividend, absolutely to want committed to we make and to are committed, dividend

we $X point I in ABC highlight prepared in out stake billion. the specifically did that still is our would comments worth And

generation we're of going flow cash -- of as short-term going billion firepower an numbers billion future on on the look cash becomes getting plenty while forward. capital this year. a in starts healthcare in transformation, basis, that quickly the we But and and incremental aggressive even have mind, the at and into are free So we're you forward EBITDA $X Bear in breaking it flow actions our flow, investing $X move tool. more cash working And we much through into on capital approximately short-term. we do we as

‘XX. calendar on question second The then was reimbursement. Your

that the fiscal step This that. as we've actually looking about down to on positive. previous this XX%. and the the year, would we said the that been comment was much did similar environment year a that comment current an back Reimbursement I is has sorry over XX% year. last Okay, we XX-months, say more

to We ask further more has see comments recognized do has that discussions. value don't make more Gates, two productive actually improved. the pressure table, to in because to such Maybe much it's the negotiations, and Head So be adherence of more the comments is and and other give providers last future to the to Pharmacy medical in significantly years, some general, but reimbursement productive improved on bringing Rick comments. on discussions payers we P&L activities I'll want our net ability much outcomes and improve starting with too payers -- we're for our over

Rick Gates

Yes.

know, as this we lot cost James saying, reimbursement expectations line just on middle and through D at negotiations, solution, moment we're And prescriptions, U.S. obviously, looking are which ‘XX are ecosystem. know, year. you at on obviously, this Part we're QX. Pharmacy to also Healthcare on going they're but through know, we're currently us But, so we're and can't and across reemphasize conversations reimbursement Medicare contracts you working ancillary then that You generally a commercial going of services, in with through for We're comment what into healthcare important, increased procurements, in as is into a within offsets continuously improved from reducing to holistic the fill. seeing pressure benefiting the

are which that better that contracts, get reimbursement over we want performance we obviously And I the or based the of performing reemphasize point to performing are paper said is in other as back James well. just part

for ‘XX this in at I on expectations line but moment. with we So can't are ‘XX, comment

Operator

next Ann line question comes from from of the Hynes Mizuho And your Securities.

is open. line Your

Ann Hynes

morning. Great. Thanks. Good

next of year. biggest embedded will think So guidance? given in secondly, remarks growth lower-than-expectations. what Thanks. what Can by maybe versus weakness market in expectations? you back maybe driven your weakness pharmacy coming what share hours market is -- healthcare then that commented your What is you were just the scripts to do within is And versus the you driver that decide risk not main your prepared for

Roz Brewer

question. Ann, first the healthcare, Rick hit thanks John you I'm business. I then to and piece ask going about talk that. on scripts for will to the to and

John Driscoll

executing core which is in are We've challenge by the And to portfolio. Yes. the and is, laser focused Ann, where am cost value. laid across unlocking out we that on the growth really profit I encouraged exactly opportunity.

to as see for of our business. mentioned the in all the unlock to embedded I I'm to responsibility look It's and dig on growth. the us, there. that continue also you kind will grow we to, of, We And part signs And will answer, improved in focus of positive to confident earlier consistent So profitability buyers. that the grow, continue see on profitable but time. of that over performance from

Roz Brewer

start you me first, let in on our detail a store bit Ann, give we So, just where are performance. little off

most end X,XXX XXX those in hours our to been reduced we continuing pharmacy quarter, we've almost pharmacists hours. quarter. the hours. new the We're stores, stores pharmacists the of their full in that extent operating optimized challenged in X,XXX. current improvements had at And recently market, then roughly on resulting X,XXX our we've staffing, operating incremental are to operating in in the on So the returning hired see regular And bringing hired reduced to stores locations to about hours

is incentives now things One that the at limitation of the point available work. We're seeing initial that we're the of seeing where pharmacists. we're the

into And script go more bit detail so, a the Rick, on can actual improvement? little you

Rick Gates

the talking fiscal we're year I about through that And you're Yes. X% growth trying Ann think to ‘XX. get at

are from walked obviously Roz always market seen their lagging growth, aggregate about through us. of is One QX, we've returning key seeing set to drivers bit a in slowing normal little as impacting and QX script, we've kind seen of, had well. talked the to those, given Roz are think But a we've underlying big that our positives four think what that that growth growth I is of through. I is market store pace know, had kind QX a performance, for You hours we part what there. we which it’s talked hours, some which of

we've a very market positive flowing this into way. that The is contracted year access coming in through

we access into bit and growth. are hour operation adherence good given impacts, continue We but care year-over-year seeing are of stagnated growth The at year. positive heading we to look well. adherence They and a when seeing programs, have store some year-over-year next the are as little conversations you

X% we it is to, that although are things and are slowed the store the I think, quarter-over-quarter normal. to guided most growth, So has from two returning down which earlier impacting market where hours

James Kehoe

on the year, business Ann And non-operating headwind a then year-on-year maybe maybe U.S. absorbing we headwind $XXX chart. next be mentioned significant and And We a million addition, tailwinds I well to the believe COVID. because back lower sale could add. and actually be And as in headwinds then there'll from leaseback. growth on core go we'll

is basically on already. There's a that's have more least XXX of couple and you $XXX on million optimization correctly, Two mentioned transformational essentially items, million have We U.S. CPI, management a we've margin of of business, and of couple Healthcare. we savings cost store savings, cost improvement. program more front identified at those and the

business. we then U.S. synergies in the have healthcare And

and savings billion. excess optimization cost our $X year, So next as well in of

defined. and more already So controllable it's much

on the months, headquarter plus basically give are the but that that the This billion Now lot on was and is And about of up a reduction, inflation and on pressure, support of well office, savings and the over are We reimbursement restructuring. cost wages eaten in corporate a some in done the of XXX savings business. we're just controllable U.S. in done it four that be $XXX reductions office. will of of U.S. the by space done examples advanced of head savings those excess was million. some and were $X

the cost pace we're address moving and to really envelope. at the after So challenges going

Operator

Michael America. from comes a Cherny question of of from line next Bank Your

Your open. line is

Michael Cherny

taking Good morning, you my question. and thank for

thread. do you we're should contribution, So that, an be? What focused have at something you really mean leaseback been guidance specific on. what stay out maybe, company's still for underlying contribution. I to more previously does increase look know I on in does of your And long-term growth already at the getting core the earnings sale a ABC what but multi-year It's I this James, the from how ‘XX, you factor underlying there. look continue should the you targets? savings understand into know where that on cost that When versus not have targets into business that assume targets.

is what now how doing factor achieving reported especially the So into previously growing core how those you're does -- and targets?

James Kehoe

of Yes. take quarter, the it bunch in fourth quarter, another we a forward the look And COVID, headwinds call got And if and direction. a maybe which I'll leaseback and headwind actually sale XX. could of XX we've out is fourth to points you another probably from and

slight is XX%, in XX% like quarter. giving So the EPS, growth core decline a growth fourth in we're the basically more guide but the is

working. So flywheel is we're that seeing the

short-term on flywheel know, had the You starting margins some in is but perform. to retail, in pressure the we've

and discuss data is operating the entire give COVID, horizon. second on Then sale income the next the we -- low-to-mid-single-digit as and headwinds of any over leaseback, that we absorbing point are growth and year, course other absorbing

So subtract income. two, is if more out those like adjusted the operating low-to-mid-single-digit in you low-teens a growth

back we quickly. where So back coming coming see and flywheel the

gains leaseback that run in project ‘XX. sale you're right, you forward, If the and out

to But those then, U.S. of consistently business, get should previous more last the low-single-digit. the by is working business plus in on it improved targets the So year. prospects healthcare the flywheel the profit us

guiding not we're guidance, we every earnings is see We're quarter. improving that. not that the but successively power core to confirming Now

fourth quarter And and in of the I next people going think year. positively be of the then will this into quality very particularly surprised by earnings year

Operator

comes question the And Romanski from from TD Cowen. Lucas line next your of

is open. line Your

Lucas Romanski

the bulk is have on about you risk Now Charles. your platform there. Healthcare I enable talked and about eventually? October, the Lucas in in health risk delivery to how that to some health on for and you plan seeing low wanted partnerships partnerships in Last assets guys take plans in healthcare from you from health appetite to taking place? would of the now ask and This Hi. of on to appetites regions. U.S. Business What MLR show you four been adding able high-XXs terms the ability are market your for plan mid-XXs lower you the have you've to

U.S. to over segment two, risk that for growth your the are increasing thinking see as moving you you about a time if how path then to driving Healthcare exposure and And earnings forward?

John Driscoll

it’s thanks the question, John. Lucas, for

the delivery per per capitated appetite We whether performance MA are for earn and pharmacy your with cost care on risk business but sorts, the the risk a specialty population, on remarkably and and of it of There consistent in closing member care is two improve opportunities our robust of the or products interest enhance seeing month, in to the in total, and outcomes. is that one, different -- services Shields. risk, performance gaps a is lower

by encouraged a around demand high performance -- deliver got, record notion whether systems. track while going the City, And CareCentrix, of the constituency or of of products of Shields corners, going VillageMD, us think to be partner or NPS independent and results plans portfolio delivering are very that our you on, the on care, that and build we every performance And lower across risk the health delivering will every part for I and opportunity are choice we've health it's product health that those of on to keeping up the honestly cost of allow are being know, for patients based providers. a to the based

more embedded and you'll of see -- of more news about we that's own. and the we So will that, unlocking I part think profitability assets the

Operator

from Rice your And from A.J. question Suisse. Credit next line comes the of

open. is line Your

A.J. Rice

down, on Can need working prioritizing us for Hi, you you on everybody. like give of more is target, how what little you the let times cash I as down, need comments maybe a debt you leverage thoughts far you either any debt updated pay feel on any you on -- go about to those? can -- pay you talk to opportunity me then flow incremental time been capital bit missed a might a And over -- Thanks, goal quickly what maybe expand -- think be couple there? know the it's optimization.

James Kehoe

Yes.

big of on a on haven't working but by working let's It's say, not look setting think a levels if we've it, run fulfillment done me above part stores pharmacy, I effectively of is centers, personally we're which into reduced to those. high above we're XX-days, the than we will And as We've five-year side. amount second $X.X are centers. inventory the XX take X,XXX fair capital, the store which and back front a One high We've billion. we for put place inventory. as period, in probably high. those XX-days, capital less of over, quite of micro fairly if you on is the initiatives address both centralize out on of

capital time, but millions in. is probably perpetual program, billion opportunity, as of program almost and to micro we've new And, forecasting this speak. and of in multi-year put working for new $X capital it's optimization was on we I hundreds that's that. just a at have captured of the you running, emphasize, together centers, want hundreds When inventory first the that by system year rolling systems we're know, out inventory identified XX% even we pharmacy a and driven putting fulfillment management for we every We're working going

So initiatives we year. huge rolling have out really drive that next will benefits

down operating grade On rating. And it's that, so do with to which just of The worked during improve within expect so to expect And and the talked We're XXX. now. think confidently we're to targeting is pay secondly, the get we to course -- we target about. cash ‘XX. metrics targeted Moody's of metrics, right within debt do flow, fiscal both not our have then we do our investment I to

Operator

ISI. from from Elizabeth Evercore comes Your of next question Anderson the line

open. is line Your

Elizabeth Anderson

how if Hi, of what wondering both from about Business thinking could also much temporarily potential on thinking U.S. XXXb, impact but Pharmacy Shield business? could the could talk of the question. in so guys. core opportunity potential you about ‘XX Thanks. then be was and Thanks you're you the for sort if how through there, impact maybe I the the fiscal potential you're about talk in that

Rick Gates

into and restrictions. to Yes. add guidance me join XXXb, know, see be latest I'll look prior assumptions here. our XXXb you if John a Rick, production the comfortable still fiscal actually and manufacturer and at actions in with you -- year-over-year and up This Current wants very ‘XX. expect account in are we But, to slight is taking start as do

things as itself. know, October obviously, at continued and business about since we is site headline developments and that restrictions there's that the of we look in think and think to QX litigation impact negatively do can I the three

government proactive However, opening with who covered XXXb share impact more in starting data up back third, proactively pharmacy. up their which entities, And to get we a to active to the and contract entities. still with to that are working way, marketplace a very we very as entities covered are work signed the continue us are is to value back in for continue

it, we the we're this we do about we into So do projected some what for of looking at but think a slight headwinds good which offset growth. see that line sight of as year, is still can

I want to don't if you John, And add? know

John Driscoll

of the contract services know, position, those out to to business. think specialty see turns I an the the really pharmacy it's be pharmacies. business sustainability advantage for contracts. we continued You not Shields pharmacy strong based and demand specialty XXXb-related It's is in because a hospital And actually

to really that need confident pharmacy patients. the actually position, a in best-in-class highly is we're a well delivers drugs platform so that adherence of And high the manage a just are to integrates hospitals with of and and needing specialty hospitals need Shields great for that with core chronic because those partner growth services

Operator

And your Research. final Eric of Nephron from question from comes the Percher line

Your open. line is

Eric Percher

was ramp difficult Thank to next year. significant you. $XXX loss million together It's piece what to profit Healthcare the from been U.S.

months does Now any How ‘XX year million, look taking? for closed? which can the you looking the you're they're outlook how million on outlook? at together insight fiscal you and coming contributions the actions relative $XXX tell ‘XX fiscal net of ago $XXX then when year the to to businesses six us And

James Kehoe

the in address the we're set about XXX the light about so we yes, the of was Yes. patient here months go to looking Summit Eric, and Village. And some base we've base expectations and six here building have and at original that. a panels here, has slowness at series actions at extensively versus talked come what -- ago,

versus the intact. change I out The think way you best original is we goals. absolutely model is believe year-on-year this the could

So fact unlikely recover months we it fair to the one? this way. probably want be John, we'll and in of year-on-year slightly do But to might the it XXXX. will We're think is that XX XXX in you in the It's behind, would build but six base is more. here. probably loss a

John Driscoll

at look to way right the that's think it. I

low seeing, that taken is a and be prepared the ‘XX think I I we that you to action for each as more guidance, of even ramp of think, we I we are XX% probably be that give each because QX confusing. revenue a a of of think right over would and have expect unlock profitability. QX extensive our sight. should sub-segment, out demand companies. And taking will, the And And in Eric, we'd said, a to But we the segment you line now laid swift know, of improvement target we're I are markets embedded to guidance. that our lot not give

solid integration synergies, demand. opportunities So on cost with

So month-over-month targets. I improvement in see categories QX. guidance, in each -- those I incremental you these and think of think, comfortable you'll we'll more towards we be But giving

James Kehoe

multiply reemphasize and EBITDA John will we to means you just take And that, Yes. that XX%, by I that's in XX%, deliver. loss the when Eric, it think QX, says

to we we're fourth quarter, decent the sight year. the positive line segment very of in first-half of next have and EBITDA So EBITDA close getting the breakeven for to in

Operator

the closing to now for back some call And have will question-and-answer our turn reached over we end final remarks. session. of Roz Brewer the I

Roz Brewer

the healthcare Listen, for the thank our you phase priorities. and next of also capital our of our evolution retail transformation, pharmacy allocation this morning on your questions business,

better on communities, I on us. move that's we swiftly and head faster commitment our local a shareholders, to employees, a address have heard to moving strong to at and know, value us, priorities important challenges deliver and our our to executing from to the hope pace you our You our

made The quality assets. in they're that, improving far. next these We actions we've are investments strong focused phase committed. And that really reinforce so on our already to healthcare and requires good motion against aggressive want profitability of our actions, about and feel we're our our I transformation and

So we're where focused profitable our on turning our profitability the in inherent have assets growth, into we of portfolio growth already. embedded

scale the plans is next the ahead. drive and skills, the [Technical us right So Difficulty] for with the phase and to and we urgency operate growth have

thank time your you for So today.

Operator

for your participation. you call. This concludes today's conference Thank

You may now disconnect.

Walgreens Boots Alliance (WBA) 27 Jun 232023 Q3 Earnings call transcript