NASDAQ: WBA Walgreens Boots Alliance, Inc. is an Anglo-American holding company headquartered in Deerfield, Illinois, that owns Walgreens, Boots, and a number of pharmaceutical manufacturing, wholesale, and distribution companies. The company was formed on December 31, 2014, after Walgreens purchased the 55% stake in UK and Switzerland-based Alliance Boots that it did not already own. The total price of the acquisition was $4.9 billion in cash and 144.3 million common shares with fair value of $10.7 billion. Walgreens had previously purchased 45% of the company for $4.0 billion and 83.4 million common shares in August 2012 with an option to purchase the remaining shares within three years. Walgreens became a subsidiary of the newly created company after the transactions were completed.
The company is organized into three divisions: Retail Pharmacy USA (Walgreens and Duane Reade), Retail Pharmacy International (Boots and other retail operations internationally), and Pharmaceutical Wholesale, incorporating Alliance Healthcare.The new holding company began trading on the NASDAQ on December 31, 2014.
The combined business has operations in over 25 countries. Walgreens had formerly operated solely within the United States and its territories, while Alliance Boots operated a more international business.
In October 2018, Walgreens Boots Alliance published its fourth quarter earnings report. Fiscal year 2018 sales were $131.5 billion, up 11.3% from fiscal 2017, and GAAP net earnings increased to $5.0 billion.
The Company sells to numerous retail and wholesale customers. No single customer accounted for more than 10% of the Company’s consolidated sales for any of the periods presented. In fiscal 2018, substantially all of our retail pharmacy sales were to customers covered by third-party payers (e.g., pharmacy benefit managers, insurance companies and governmental agencies) that agree to pay for all or a portion of a customer’s eligible prescription purchases. Three third-party payers, in the Retail Pharmacy USA division, in the aggregate accounted for approximately 32% of the Company’s consolidated sales in fiscal 2018.
management said it expects adjusted earnings per share this fiscal year to be roughly flat at constant currencies, down from the previous guidance for growth of 7% to 12%. Looking further ahead as strategic initiatives begin to take hold, they believe the company should be able to achieve “improved performance” starting in fiscal 2020, before returning to mid- to high-single-digit adjusted EPS growth after that.
in the first quartNet income fell to $1.16 billion, or $1.24 a share, from $1.35 billion, or $1.36 a share, in the same period a year ago. Excluding nonrecurring items, the company said adjusted EPS declined 5.4% to $1.64, below the $1.72 that FactSet analysts were expecting.
“A number of the trends we had been expecting and preparing for impacted us significantly more quickly than we had anticipated,” Pessina (CEO) said during an earnings call with analysts on April 2nd 2019, citing “increased reimbursement pressure in the quarter, lower generic deflation, lower brand inflation and lower-than-anticipated benefits from our work to refresh and renew our retail offering, primarily in the U.S.”
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Sales fiscal 2018 compared to fiscal 2017
Retail Pharmacy International division’s sales for fiscal 2018 increased 4.0% to $12.3 billion. Sales in comparable stores increased 4.7%. The positive impact of currency translation on each of sales and comparable sales was 6.1 percentage points, and as such, comparable store sales in constant currency decreased 1.4%.
Pharmacy sales increased 4.3% in fiscal 2018 and represented 35.0% of the division’s sales. Comparable pharmacy sales increased 4.7%. The positive impact of currency translation on pharmacy sales and comparable pharmacy sales was 5.8 percentage points and 5.9 percentage points, respectively. Comparable pharmacy sales in constant currency decreased 1.2% mainly due to lower prescription volume and continuing UK government reimbursement pressure.
Retail sales increased 3.8% for fiscal 2018 and represented 65.0% of the division’s sales. Comparable retail sales increased 4.7%. The positive impact of currency translation on each of retail sales and comparable retail sales was 6.2 percentage points. Comparable retail sales in constant currency decreased 1.5% primarily due to Boots UK, reflecting a challenging retail market.
Operating income fiscal 2018 compared to fiscal 2017
Retail Pharmacy International division’s operating income for fiscal 2018 increased 13.6% to $842 million. Operating income was positively impacted by 7.1 percentage points ($53 million) of currency translation. The remaining increase was due to lower selling, general and administrative expenses primarily due to costs from the Cost Transformation Program in the year ago period.
Gross profit increased 4.3% in fiscal 2018. Gross profit was positively impacted by 6.1 percentage points ($289 million) of currency translation.
Selling, general and administrative expenses increased 2.6% from fiscal 2018. Expenses were negatively impacted by 5.9 percentage points ($236 million) as a result of currency translation. As a percentage of sales, selling, general and administrative expenses were 33.5% in fiscal 2018, compared to 34.0% in the prior fiscal year.
And this is a really good sign for a long term hold
Stock repurchase programs are a good sign of a long term hold most of the time. Plus we love the dividends WBA stock dividend.
In April 2017, Walgreens Boots Alliance authorized a stock repurchase program (the “April 2017 stock repurchase program”), which authorized the repurchase of up to $1.0 billion of Walgreens Boots Alliance common stock prior to the program’s expiration on December 31, 2017. In May 2017, the Company completed the April 2017 stock repurchase program, purchasing 11.8 million shares. In June 2017, Walgreens Boots Alliance authorized a new stock repurchase program, which authorized the repurchase of up to $5.0 billion of Walgreens Boots Alliance common stock prior to the program’s expiration on August 31, 2018, which authorization was increased by an additional $1.0 billion in October 2017 (as expanded, the “June 2017 stock repurchase program”). In October 2017, the Company completed the June 2017 stock repurchase program, purchasing 77.4 million shares. In June 2018, Walgreens Boots Alliance authorized a new stock repurchase program (the “June 2018 stock repurchase program”), which authorized the repurchase of up to $10.0 billion of Walgreens Boots Alliance common stock of which the Company had repurchased $2.7 billion as of August 31, 2018. The June 2018 stock repurchase program has no specified expiration date.
The Company purchased 72 million and 59 million shares under stock repurchase programs in fiscal 2018 and 2017 at a cost of $4.9 billion and $4.8 billion, respectively. The Company determines the timing and amount of repurchases, including repurchases to offset anticipated dilution from equity incentive plans, based on its assessment of various factors, including prevailing market conditions, alternate uses of capital, liquidity and the economic environment. The Company has repurchased, and may from time to time in the future repurchase, shares on the open market through Rule 10b5-1 plans, which enable the Company to repurchase shares at times when it otherwise might be precluded from doing so under insider trading laws.
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