Walgreens Boots Alliance Reports Fiscal 2023 Second Quarter Results
Walgreens Boots Alliance (WBA) reported its second quarter fiscal 2023 results, revealing a 20.3% decrease in EPS to $0.81, and a 27.2% drop in adjusted EPS to $1.16 due to reduced COVID-19 vaccine and testing volumes. Sales rose 3.3% year-over-year to $34.9 billion. Operating income plummeted to $0.2 billion from $1.2 billion in the previous year, reflecting a $306 million charge related to opioid claims and acquisition costs. Despite challenges, WBA maintains its full-year adjusted EPS guidance at $4.45 to $4.65, expecting growth in core business.
- Sales increased 3.3% year-over-year to $34.9 billion.
- Maintaining full-year adjusted EPS guidance of $4.45 to $4.65.
- Invested $3.5 billion in VillageMD's acquisition of Summit Health.
- EPS decreased 20.3% to $0.81; adjusted EPS down 27.2% to $1.16.
- Operating income fell to $0.2 billion from $1.2 billion year-over-year.
- $6.0 billion operating loss year-to-date reflecting opioid-related charges.
Results In Line with Expectations; On Track to Full-Year Guidance
Second quarter financial highlights and recent equity sales
-
Second quarter earnings per share (EPS*) decreased 20.3 percent to
$0.81 $1.16 -
Second quarter sales increased 3.3 percent year-over-year, to
$34.9 billion -
Invested
$3.5 billion VillageMD's acquisition ofSummit Health in January, acceleratingU.S. Healthcare segment sales and path to profitability -
Approximately
$1.5 billion
Fiscal 2023 outlook
-
Maintaining full-year adjusted EPS guidance of
$4.45 $4.65
Chief Executive Officer
"WBA exited a solid second quarter with acceleration in February, adding to our confidence in driving strong growth in the second half of the year. With the closing of
Overview of Second Quarter Results
WBA second quarter sales increased 3.3 percent from the year-ago quarter to
Operating income was
Net earnings in the second quarter were
EPS in the second quarter was
Net cash provided by operating activities was
Overview of Fiscal 2023 Year-to-Date Results
Sales in the first six months of fiscal 2023 were
Operating loss in the first six months of fiscal 2023 was
For the first six months of fiscal 2023, net loss was
Loss per share for the first six months of fiscal 2023 was
Net cash provided by operating activities was
Business Highlights
WBA continues to achieve strong results across its business and strategic priorities, including:
Transform and align the core
-
U.S. pharmacy comparable script volume growth of 3.5 percent excluding immunizations, ahead of expectations and sequentially improving vs. the first quarter of fiscal 2023 - Addressed industry-wide pharmacist labor shortage by returning an incremental ~500 stores to normal pharmacy operating hours, with ~1,900 stores still impacted at quarter-end
- Continuing to play a leading role in COVID-19 vaccinations and testing, administering 2.4 million vaccinations in the quarter compared to 11.8 million in the prior year
-
U.S. retail comparable sales decline of (1.0) percent, including a 500 basis point headwind from lower OTC test kits, on top of a very strong prior year performance of 14.7 percent - Operating nine automated micro-fulfillment centers at quarter-end, supporting ~3,600 stores
-
Boots
UK retail comparable sales growth of 16.0 percent, on top of robust prior year growth of 22.0 percent
Build our next growth engine with consumer-centric healthcare solutions
-
Invested
$3.5 billion Summit Health , closedJanuary 3, 2023 -
Signed
Horizon Blue Cross Blue Shield of New Jersey as fourth payor partner forWalgreens Health -
Closed full acquisition of Shields on
December 28, 2022 -
Full acquisition of
CareCentrix expected to close in the third quarter of fiscal 2023 -
Managing approximately 806,000 value-based lives under
VillageMD/Summit Health -
Operating 210 co-located
VillageMD clinics, part of approximately 730 total locations inclusive ofSummit Health -
Operating 117
Walgreens Health Corners - Signed the Company's first five clinical trials contracts
Focus the portfolio; optimize capital allocation
-
Sold 15.5 million shares of Option Care Health common stock in March, with after-tax cash proceeds of
$466 million -
Sold 6.0 million shares of AmerisourceBergen common stock in December, with after-tax cash proceeds of
$972 million -
Sold entire stake of
Guangzhou Pharmaceuticals in December for approximately$150 million
Build a high-performance culture and a winning team
-
Appointed
Rick Gates as senior vice president and chief pharmacy officer,Walgreens -
Appointed
Tracey Brown as executive vice president, retail and chief customer officer,Walgreens - Launched FY22 Environmental, Social, and Governance (ESG) Report
- Included as part of the Dow Jones Sustainability Indices (DJSI) for the third consecutive year, scoring in the 87th percentile within the Food & Staples Retailing industry group
Business Segments
Pharmacy sales increased 0.3 percent compared to the year-ago quarter, negatively impacted by a 3.5 percentage point headwind from AllianceRx
Retail sales decreased 1.8 percent and comparable retail sales decreased 1.0 percent in the second quarter compared to comparable sales growth of 14.7 percent in the prior year quarter. Excluding tobacco, comparable retail sales decreased 0.5 percent including a 500 basis point headwind from lower sales of OTC test kits, partly offset by strong core growth across all categories.
Gross profit decreased 10.2 percent compared with the year-ago quarter. Adjusted gross profit decreased 9.8 percent. Gross profit and adjusted gross profit were entirely driven by a 10 percentage point headwind from lower contributions from COVID-19 vaccinations and testing. Reimbursement net of procurement savings was offset by higher retail gross profit from gross margin expansion and strong underlying sales performance across categories.
Selling, general and administrative expenses (SG&A) increased 6.3 percent to
Operating income in the second quarter was
International:
The International segment had second quarter sales of
Boots
Gross profit decreased 0.7 percent compared with the year-ago quarter, including an adverse currency impact of 8.2 percentage points. Gross profit increased 7.5 percent on a constant currency basis, reflecting higher
SG&A in the quarter decreased 18.2 percent from the year-ago quarter to
Operating income increased 104.0 percent from the year-ago quarter to
Gross profit was
Second quarter SG&A was
Operating loss was
Conference Call
WBA will hold a conference call to discuss the second quarter results beginning at
*All references to net earnings or net loss are to net earnings or net loss attributable to WBA, and all references to EPS are to diluted EPS attributable to WBA.
**"Adjusted," "constant currency" and free cash flow amounts are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial measures, including a reconciliation to the most closely correlated GAAP measure. The Company defines Adjusted EBITDA as segment operating income/(loss) before depreciation, amortization, and stock-based compensation; in addition to these items, the Company excludes certain other non-GAAP adjustments, when they occur, as further defined.
Cautionary Note Regarding Forward-Looking Statements: This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These include, without limitation, estimates of and goals for future operating, financial and tax performance and results, including our fiscal year 2023 guidance, our long-term growth algorithm, outlook and targets and related assumptions and drivers, as well as forward-looking statements concerning the expected execution and effect of our business strategies, including the potential impacts on our business of COVID-19, our cost-savings and growth initiatives, including statements relating to our expected cost savings under our Transformational Cost Management Program and expansion and future operating and financial results of our
These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions, known or unknown, that could cause actual results to vary materially from those indicated or anticipated.
These risks, assumptions and uncertainties include those described in Item 1A (Risk Factors) of our Form 10-K for the fiscal year ended
We do not undertake, and expressly disclaim, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
Please refer to the supplemental information presented below for reconciliations of the non-GAAP financial measures used in this release to the most comparable GAAP financial measure and related disclosures.
Notes to Editors:
About
A trusted, global innovator in retail pharmacy with approximately 13,000 locations across the
WBA employs more than 325,000 people and has a presence in nine countries through its portfolio of consumer brands:
The Company is proud of its contributions to healthy communities, a healthy planet, an inclusive workplace and a sustainable marketplace. WBA has been recognized for its commitment to operating sustainably: the Company is an index component of the Dow Jones Sustainability Indices (DJSI) and was named to the 100 Best Corporate Citizens 2022.
(WBA-ER)
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED) (in millions, except per share amounts) |
|||||||||||||||
|
Three months ended |
|
Six months ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Sales |
$ |
34,862 |
|
|
$ |
33,756 |
|
|
$ |
68,244 |
|
|
$ |
67,656 |
|
Cost of sales |
|
27,807 |
|
|
|
26,047 |
|
|
|
54,236 |
|
|
|
52,374 |
|
Gross profit |
|
7,055 |
|
|
|
7,708 |
|
|
|
14,008 |
|
|
|
15,283 |
|
Selling, general and administrative expenses |
|
6,934 |
|
|
|
6,565 |
|
|
|
20,091 |
|
|
|
12,956 |
|
Equity earnings in AmerisourceBergen |
|
75 |
|
|
|
103 |
|
|
|
129 |
|
|
|
202 |
|
Operating income (loss) |
|
197 |
|
|
|
1,246 |
|
|
|
(5,954 |
) |
|
|
2,529 |
|
Other income (expense), net |
|
552 |
|
|
|
(198 |
) |
|
|
1,544 |
|
|
|
2,418 |
|
Earnings (loss) before interest and income tax provision (benefit) |
|
749 |
|
|
|
1,047 |
|
|
|
(4,410 |
) |
|
|
4,947 |
|
Interest expense, net |
|
141 |
|
|
|
100 |
|
|
|
252 |
|
|
|
186 |
|
Earnings (loss) before income tax provision (benefit) |
|
607 |
|
|
|
947 |
|
|
|
(4,662 |
) |
|
|
4,761 |
|
Income tax provision (benefit) |
|
70 |
|
|
|
172 |
|
|
|
(1,377 |
) |
|
|
447 |
|
Post-tax earnings from other equity method investments |
|
6 |
|
|
|
31 |
|
|
|
13 |
|
|
|
24 |
|
Net earnings (loss) |
|
544 |
|
|
|
806 |
|
|
|
(3,272 |
) |
|
|
4,337 |
|
Net loss attributable to non-controlling interests |
|
(159 |
) |
|
|
(78 |
) |
|
|
(253 |
) |
|
|
(126 |
) |
Net earnings (loss) attributable to |
$ |
703 |
|
|
$ |
883 |
|
|
$ |
(3,018 |
) |
|
$ |
4,463 |
|
|
|
|
|
|
|
|
|
||||||||
Net earnings (loss) per common share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.81 |
|
|
$ |
1.02 |
|
|
$ |
(3.50 |
) |
|
$ |
5.16 |
|
Diluted |
$ |
0.81 |
|
|
$ |
1.02 |
|
|
$ |
(3.50 |
) |
|
$ |
5.15 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
862.6 |
|
|
|
863.5 |
|
|
|
863.1 |
|
|
|
864.6 |
|
Diluted |
|
863.4 |
|
|
|
865.2 |
|
|
|
863.1 |
|
|
|
866.4 |
|
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (in millions) |
||||||
|
|
|
|
|
||
Assets |
|
|
|
|
||
Current assets: |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
1,088 |
|
$ |
1,358 |
Marketable securities |
|
|
752 |
|
|
1,114 |
Accounts receivable, net |
|
|
5,730 |
|
|
5,017 |
Inventories |
|
|
8,757 |
|
|
8,353 |
Other current assets |
|
|
1,362 |
|
|
1,059 |
Total current assets |
|
|
17,689 |
|
|
16,902 |
|
|
|
|
|
||
Non-current assets: |
|
|
|
|
||
Property, plant and equipment, net |
|
|
11,576 |
|
|
11,729 |
Operating lease right-of-use assets |
|
|
22,024 |
|
|
21,259 |
|
|
|
28,343 |
|
|
22,280 |
Intangible assets, net |
|
|
13,864 |
|
|
10,730 |
Equity method investments |
|
|
4,069 |
|
|
5,495 |
Other non-current assets |
|
|
2,913 |
|
|
1,730 |
Total non-current assets |
|
|
82,790 |
|
|
73,222 |
Total assets |
|
$ |
100,479 |
|
$ |
90,124 |
|
|
|
|
|
||
Liabilities, redeemable non-controlling interests and equity |
|
|
|
|
||
Current liabilities: |
|
|
|
|
||
Short-term debt |
|
$ |
4,222 |
|
$ |
1,059 |
Trade accounts payable |
|
|
12,720 |
|
|
11,255 |
Operating lease obligations |
|
|
2,340 |
|
|
2,286 |
Accrued expenses and other liabilities |
|
|
8,822 |
|
|
7,899 |
Income taxes |
|
|
124 |
|
|
84 |
Total current liabilities |
|
|
28,228 |
|
|
22,583 |
|
|
|
|
|
||
Non-current liabilities: |
|
|
|
|
||
Long-term debt |
|
|
8,820 |
|
|
10,615 |
Operating lease obligations |
|
|
22,195 |
|
|
21,517 |
Deferred income taxes |
|
|
2,081 |
|
|
1,442 |
Accrued litigation obligations |
|
|
6,365 |
|
|
551 |
Other non-current liabilities |
|
|
3,193 |
|
|
3,009 |
Total non-current liabilities |
|
|
42,654 |
|
|
37,134 |
|
|
|
|
|
||
Redeemable non-controlling interests |
|
|
158 |
|
|
1,042 |
Total equity |
|
|
29,439 |
|
|
29,366 |
Total liabilities, redeemable non-controlling interests and equity |
|
$ |
100,479 |
|
$ |
90,124 |
|
||||||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS |
||||||||
(UNAUDITED) |
||||||||
(in millions) |
||||||||
|
|
Six months ended |
||||||
|
|
2023 |
|
2022 |
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net (loss) earnings |
|
$ |
(3,272 |
) |
|
$ |
4,337 |
|
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
1,055 |
|
|
|
1,024 |
|
Deferred income taxes |
|
|
(1,600 |
) |
|
|
94 |
|
Stock compensation expense |
|
|
293 |
|
|
|
170 |
|
Earnings from equity method investments |
|
|
(143 |
) |
|
|
(226 |
) |
Gain on previously held investment interests |
|
|
— |
|
|
|
(2,576 |
) |
Gain on sale of equity method investments |
|
|
(1,512 |
) |
|
|
— |
|
Impairment of equity method investments and investments in equity securities |
|
|
8 |
|
|
|
190 |
|
Other |
|
|
(383 |
) |
|
|
(60 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
||||
Accounts receivable, net |
|
|
(221 |
) |
|
|
495 |
|
Inventories |
|
|
(237 |
) |
|
|
(803 |
) |
Other current assets |
|
|
(107 |
) |
|
|
(37 |
) |
Trade accounts payable |
|
|
1,279 |
|
|
|
46 |
|
Accrued expenses and other liabilities |
|
|
(684 |
) |
|
|
(476 |
) |
Income taxes |
|
|
92 |
|
|
|
154 |
|
Accrued litigation obligations |
|
|
6,795 |
|
|
|
— |
|
Other non-current assets and liabilities |
|
|
(125 |
) |
|
|
(147 |
) |
Net cash provided by operating activities |
|
|
1,239 |
|
|
|
2,184 |
|
Cash flows from investing activities: |
|
|
|
|
||||
Additions to property, plant and equipment |
|
|
(1,108 |
) |
|
|
(870 |
) |
Proceeds from sale-leaseback transactions |
|
|
942 |
|
|
|
475 |
|
Proceeds from sale of other assets |
|
|
3,261 |
|
|
|
33 |
|
Business, investment and asset acquisitions, net of cash acquired |
|
|
(6,813 |
) |
|
|
(1,918 |
) |
Other |
|
|
134 |
|
|
|
99 |
|
Net cash used for investing activities |
|
|
(3,583 |
) |
|
|
(2,181 |
) |
Cash flows from financing activities: |
|
|
|
|
||||
Net change in short-term debt with maturities of 3 months or less |
|
|
1,128 |
|
|
|
1,289 |
|
Proceeds from debt |
|
|
1,716 |
|
|
|
9,928 |
|
Payments of debt |
|
|
(1,530 |
) |
|
|
(7,331 |
) |
Acquisition of non-controlling interests |
|
|
(1,039 |
) |
|
|
(2,108 |
) |
Proceeds from issuance of non-controlling interests |
|
|
2,523 |
|
|
|
— |
|
Stock purchases |
|
|
(150 |
) |
|
|
(187 |
) |
Proceeds related to employee stock plans, net |
|
|
22 |
|
|
|
32 |
|
Cash dividends paid |
|
|
(829 |
) |
|
|
(833 |
) |
Other |
|
|
(75 |
) |
|
|
(22 |
) |
Net cash provided by financing activities |
|
|
1,766 |
|
|
|
769 |
|
Effect of exchange rate changes on cash, cash equivalents, marketable securities and restricted cash |
|
|
13 |
|
|
|
(16 |
) |
Changes in cash, cash equivalents, marketable securities and restricted cash: |
|
|
|
|
||||
Net (decrease) increase in cash, cash equivalents, marketable securities and restricted cash |
|
|
(566 |
) |
|
|
756 |
|
Cash, cash equivalents, marketable securities and restricted cash at beginning of period |
|
|
2,558 |
|
|
|
1,270 |
|
Cash, cash equivalents, marketable securities and restricted cash at end of period |
|
$ |
1,993 |
|
|
$ |
2,027 |
|
SUPPLEMENTAL INFORMATION (UNAUDITED)
REGARDING NON-GAAP FINANCIAL MEASURES
The following information provides reconciliations of the supplemental non-GAAP financial measures, as defined under
These supplemental non-GAAP financial measures are presented because management has evaluated the Company’s financial results both including and excluding the adjusted items or the effects of foreign currency translation, as applicable, and believes that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the Company’s business from period to period and trends in the Company’s historical operating results. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the press release.
The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred, are out of the Company’s control and/or cannot be reasonably predicted, such as unusual one-time charges, tax expenses, and material litigation expenses, and that would impact diluted net earnings per share, the most directly comparable forward-looking GAAP financial measure. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.
Constant currency
The Company also presents certain information related to current period operating results in “constant currency,” which is a non-GAAP financial measure. These amounts are calculated by translating current period results at the foreign currency exchange rates used in the comparable period in the prior year. The Company presents such constant currency financial information because it has significant operations outside of the
Comparable sales
For the Company's
With respect to the International segment, comparable sales, comparable pharmacy sales and comparable retail sales, are presented on a constant currency basis, which is a non-GAAP financial measure. Refer to the discussion above in "Constant currency" for further details on constant currency calculations.
Key Performance Indicators
The Company considers certain metrics, such as comparable sales, comparable pharmacy sales, comparable retail sales, comparable number of prescriptions, comparable 30-day equivalent prescriptions, number of payor/ provider partnerships, number of locations of
With respect to the total number of
NET EARNINGS (LOSS) AND DILUTED NET EARNINGS (LOSS) PER SHARE |
||||||||||||||||
|
|
(in millions, except per share amounts) |
||||||||||||||
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net earnings (loss) attributable to |
|
$ |
703 |
|
|
$ |
883 |
|
|
$ |
(3,018 |
) |
|
$ |
4,463 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustments to operating income (loss): |
|
|
|
|
|
|
|
|
||||||||
Certain legal and regulatory accruals and settlements 1 |
|
|
427 |
|
|
|
— |
|
|
|
6,981 |
|
|
|
— |
|
Acquisition-related amortization 2 |
|
|
247 |
|
|
|
250 |
|
|
|
577 |
|
|
|
415 |
|
Transformational cost management 3 |
|
|
145 |
|
|
|
70 |
|
|
|
283 |
|
|
|
273 |
|
Acquisition-related costs 4 |
|
|
148 |
|
|
|
44 |
|
|
|
187 |
|
|
|
115 |
|
Adjustments to equity earnings in AmerisourceBergen 5 |
|
|
31 |
|
|
|
51 |
|
|
|
117 |
|
|
|
94 |
|
LIFO provision 6 |
|
|
20 |
|
|
|
(5 |
) |
|
|
38 |
|
|
|
9 |
|
Total adjustments to operating income (loss) |
|
|
1,018 |
|
|
|
411 |
|
|
|
8,183 |
|
|
|
906 |
|
Adjustments to other income (expense), net: |
|
|
|
|
|
|
|
|
||||||||
Gain on sale of equity method investments 7 |
|
|
(544 |
) |
|
|
— |
|
|
|
(1,513 |
) |
|
|
— |
|
Net investment hedging loss 8 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Impairment of equity method investment and investment in equity securities 9 |
|
|
— |
|
|
|
190 |
|
|
|
— |
|
|
|
190 |
|
Gain on previously held investments 10 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,576 |
) |
Adjustment to gain on disposal of discontinued operations 11 |
|
|
— |
|
|
|
38 |
|
|
|
— |
|
|
|
38 |
|
Total adjustments to other income (expense), net |
|
|
(544 |
) |
|
|
228 |
|
|
|
(1,513 |
) |
|
|
(2,347 |
) |
Adjustments to income tax provision (benefit): |
|
|
|
|
|
|
|
|
||||||||
Equity method non-cash tax 12 |
|
|
14 |
|
|
|
12 |
|
|
|
23 |
|
|
|
30 |
|
Tax impact of adjustments 12 |
|
|
(122 |
) |
|
|
(109 |
) |
|
|
(1,560 |
) |
|
|
(135 |
) |
Total adjustments to income tax provision (benefit) |
|
|
(108 |
) |
|
|
(97 |
) |
|
|
(1,537 |
) |
|
|
(105 |
) |
Adjustments to post-tax earnings from other equity method investments: |
|
|
|
|
|
|
|
|
||||||||
Adjustments to earnings from other equity method investments 13 |
|
|
13 |
|
|
|
10 |
|
|
|
22 |
|
|
|
24 |
|
Total adjustments to post-tax earnings from other equity method investments |
|
|
13 |
|
|
|
10 |
|
|
|
22 |
|
|
|
24 |
|
Adjustments to net loss attributable to non-controlling interests: |
|
|
|
|
|
|
|
|
||||||||
Transformational cost management 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
Acquisition-related costs 4 |
|
|
(40 |
) |
|
|
(3 |
) |
|
|
(54 |
) |
|
|
(20 |
) |
Acquisition-related amortization 2 |
|
|
(42 |
) |
|
|
(56 |
) |
|
|
(78 |
) |
|
|
(88 |
) |
Total adjustments to net loss attributable to non-controlling interests |
|
|
(82 |
) |
|
|
(59 |
) |
|
|
(133 |
) |
|
|
(109 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted net earnings attributable to |
|
$ |
1,000 |
|
|
$ |
1,377 |
|
|
$ |
2,004 |
|
|
$ |
2,833 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Diluted net earnings (loss) per common share (GAAP) 14 |
|
$ |
0.81 |
|
|
$ |
1.02 |
|
|
$ |
(3.50 |
) |
|
$ |
5.15 |
|
Adjustments to operating income (loss) |
|
|
1.18 |
|
|
|
0.48 |
|
|
|
9.47 |
|
|
|
1.05 |
|
Adjustments to other income (expense), net |
|
|
(0.63 |
) |
|
|
0.26 |
|
|
|
(1.75 |
) |
|
|
(2.71 |
) |
Adjustments to income tax provision (benefit) |
|
|
(0.12 |
) |
|
|
(0.11 |
) |
|
|
(1.78 |
) |
|
|
(0.12 |
) |
Adjustments to post-tax earnings from other equity method investments |
|
|
0.02 |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.03 |
|
Adjustments to net loss attributable to non-controlling interests |
|
|
(0.09 |
) |
|
|
(0.07 |
) |
|
|
(0.15 |
) |
|
|
(0.13 |
) |
Adjusted diluted net earnings per common share (Non-GAAP measure) 15 |
|
$ |
1.16 |
|
|
$ |
1.59 |
|
|
$ |
2.32 |
|
|
$ |
3.27 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding, diluted (in millions) 15 |
|
|
863.4 |
|
|
|
865.2 |
|
|
|
863.8 |
|
|
|
866.4 |
|
1 |
Certain legal and regulatory accruals and settlements relate to significant charges associated with certain legal proceedings, including legal defense costs. The Company excludes these charges when evaluating operating performance because it does not incur such charges on a predictable basis and exclusion of such charges enables more consistent evaluation of the Company’s operating performance. These charges are recorded within Selling, general and administrative expenses. During the three and six months ended |
2 |
Acquisition-related amortization includes amortization of acquisition-related intangible assets, inventory valuation adjustments and stock-based compensation fair valuation adjustments. Amortization of acquisition-related intangible assets includes amortization of intangible assets such as customer relationships, trade names, trademarks, developed technology and contract intangibles. Intangible asset amortization excluded from the related non-GAAP measure represents the entire amount recorded within the Company’s GAAP financial statements. The revenue generated by the associated intangible assets has not been excluded from the related non-GAAP measures. Amortization expense, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired, or the estimated useful life of an intangible asset is revised. These charges are primarily recorded within Selling, general and administrative expenses. The stock-based compensation fair valuation adjustment reflects the difference between the fair value based remeasurement of awards under purchase accounting and the grant date fair valuation. Post-acquisition compensation expense recognized in excess of the original grant date fair value of acquiree awards are excluded from the related non-GAAP measures as these arise from acquisition-related accounting requirements or agreements, and are not reflective of normal operating activities. |
3 |
Transformational Cost Management Program charges are costs associated with a formal restructuring plan. These charges are primarily recorded within Selling, general and administrative expenses. These costs do not reflect current operating performance and are impacted by the timing of restructuring activity. |
4 |
Acquisition-related costs are transaction and integration costs associated with certain merger, acquisition and divestitures related activities. These costs include charges incurred related to certain mergers, acquisition and divestitures related activities recorded in operating income, for example, costs related to integration efforts for merger, acquisition and divestitures activities. Examples of such costs include deal costs, severance, stock compensation and employee transaction success bonuses. These charges are primarily recorded within Selling, general and administrative expenses. These costs are significantly impacted by the timing and complexity of the underlying merger, acquisition and divestitures related activities and do not reflect the Company’s current operating performance. |
5 |
Adjustments to equity earnings in AmerisourceBergen consist of the Company’s proportionate share of non-GAAP adjustments reported by AmerisourceBergen consistent with the Company’s non-GAAP measures. |
6 |
The Company’s |
7 |
Includes significant gains on the sale of equity method investments. During the three and six months ended |
8 |
Gain or loss on certain derivative instruments used as economic hedges of the Company’s net investments in foreign subsidiaries. These charges are recorded within Other income (expense), net. We do not believe this volatility related to mark-to-market adjustment on the underlying derivative instruments reflects the Company’s operational performance. |
9 |
Impairment of equity method investment and investment in equity securities includes impairment of certain investments. The Company excludes these charges when evaluating operating performance because these do not relate to the ordinary course of the Company’s business and it does not incur such charges on a predictable basis. Exclusion of such charges enables more consistent evaluation of the Company’s operating performance. These charges are recorded within Other income (expense), net. |
10 |
Includes significant gains on business combinations due to the remeasurement of previously held minority equity interests and debt securities to fair value. During the three months ended |
11 |
During the three months ended |
12 |
Adjustments to income tax provision (benefit) include adjustments to the GAAP basis tax (benefit) provision commensurate with non-GAAP adjustments and certain discrete tax items including |
13 |
Adjustments to post-tax earnings from other equity method investments consist of the proportionate share of certain equity method investees’ non-cash items or unusual or infrequent items consistent with the Company’s non-GAAP adjustments. These charges are recorded within post-tax earnings from other equity method investments. Although the Company may have shareholder rights and board representation commensurate with its ownership interests in these equity method investees, adjustments relating to equity method investments are not intended to imply that the Company has direct control over their operations and resulting revenue and expenses. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all revenue and expenses of these equity method investees. |
14 |
Due to the anti-dilutive effect resulting from the reported net loss, the impact of potentially dilutive securities on the per share amounts has been omitted from the calculation of weighted-average common shares outstanding for diluted EPS for the six months ended |
15 |
Includes impact of potentially dilutive securities in the calculation of weighted-average common shares, diluted for adjusted diluted net earnings per common share calculation purposes. |
NON-GAAP RECONCILIATIONS BY SEGMENT
|
|
(in millions) |
||||||||||||||||||
|
|
Three months ended |
||||||||||||||||||
|
|
|
|
International |
|
|
|
Corporate and
|
|
|
||||||||||
Sales |
|
$ |
27,577 |
|
|
$ |
5,651 |
|
|
$ |
1,634 |
|
|
$ |
— |
|
|
$ |
34,862 |
|
Gross profit (GAAP) |
|
$ |
5,825 |
|
|
$ |
1,198 |
|
|
$ |
32 |
|
|
$ |
— |
|
|
$ |
7,055 |
|
Acquisition-related amortization |
|
|
5 |
|
|
|
— |
|
|
|
18 |
|
|
|
— |
|
|
|
23 |
|
Acquisition-related costs |
|
|
— |
|
|
|
— |
|
|
|
60 |
|
|
|
— |
|
|
|
60 |
|
LIFO provision |
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
20 |
|
Adjusted gross profit (Non-GAAP measure) |
|
$ |
5,850 |
|
|
$ |
1,198 |
|
|
$ |
110 |
|
|
$ |
— |
|
|
$ |
7,158 |
|
Selling, general and administrative expenses (GAAP) |
|
$ |
5,527 |
|
|
$ |
846 |
|
|
$ |
504 |
|
|
$ |
56 |
|
|
$ |
6,934 |
|
Certain legal and regulatory accruals and settlements |
|
|
(427 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(427 |
) |
Acquisition-related amortization |
|
|
(72 |
) |
|
|
(15 |
) |
|
|
(137 |
) |
|
|
— |
|
|
|
(224 |
) |
Transformational cost management |
|
|
(138 |
) |
|
|
(4 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
(145 |
) |
Acquisition-related costs |
|
|
— |
|
|
|
20 |
|
|
|
(98 |
) |
|
|
(10 |
) |
|
|
(88 |
) |
Adjusted selling, general and administrative expenses (Non-GAAP measure) |
|
$ |
4,890 |
|
|
$ |
846 |
|
|
$ |
269 |
|
|
$ |
44 |
|
|
$ |
6,050 |
|
Operating income (loss) (GAAP) |
|
$ |
373 |
|
|
$ |
353 |
|
|
$ |
(472 |
) |
|
$ |
(56 |
) |
|
$ |
197 |
|
Certain legal and regulatory accruals and settlements |
|
|
427 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
427 |
|
Acquisition-related amortization |
|
|
78 |
|
|
|
15 |
|
|
|
154 |
|
|
|
— |
|
|
|
247 |
|
Transformational cost management |
|
|
138 |
|
|
|
4 |
|
|
|
— |
|
|
|
2 |
|
|
|
145 |
|
Acquisition-related costs |
|
|
— |
|
|
|
(20 |
) |
|
|
158 |
|
|
|
10 |
|
|
|
148 |
|
Adjustments to equity earnings in AmerisourceBergen |
|
|
31 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
31 |
|
LIFO provision |
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
20 |
|
Adjusted operating income (loss) (Non-GAAP measure) |
|
$ |
1,067 |
|
|
$ |
352 |
|
|
$ |
(159 |
) |
|
$ |
(44 |
) |
|
$ |
1,215 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross margin (GAAP) |
|
|
21.1 |
% |
|
|
21.2 |
% |
|
|
2.0 |
% |
|
|
|
|
20.2 |
% |
||
Adjusted gross margin (Non-GAAP measure) |
|
|
21.2 |
% |
|
|
21.2 |
% |
|
|
6.7 |
% |
|
|
|
|
20.5 |
% |
||
Selling, general and administrative expenses percent to sales (GAAP) |
|
|
20.0 |
% |
|
|
15.0 |
% |
|
|
30.9 |
% |
|
|
|
|
19.9 |
% |
||
Adjusted selling, general and administrative expenses percent to sales (Non-GAAP measure) |
|
|
17.7 |
% |
|
|
15.0 |
% |
|
|
16.5 |
% |
|
|
|
|
17.4 |
% |
||
Operating margin2 |
|
|
1.1 |
% |
|
|
6.2 |
% |
|
|
(28.9 |
)% |
|
|
|
|
0.3 |
% |
||
Adjusted operating margin (Non-GAAP measure)2 |
|
|
3.5 |
% |
|
|
6.2 |
% |
|
|
(9.8 |
)% |
|
|
|
|
3.2 |
% |
||
1 |
Operating income for |
2 |
Operating margins and adjusted operating margins have been calculated excluding equity earnings in AmerisourceBergen and adjusted equity earnings in AmerisourceBergen, respectively. |
|
|
(in millions) |
||||||||||||||||||
|
|
Three months ended |
||||||||||||||||||
|
|
|
|
International |
|
|
|
Corporate and
|
|
|
||||||||||
Sales |
|
$ |
27,667 |
|
|
$ |
5,563 |
|
|
$ |
527 |
|
|
$ |
(1 |
) |
|
$ |
33,756 |
|
Gross profit (GAAP) |
|
$ |
6,487 |
|
|
$ |
1,206 |
|
|
$ |
15 |
|
|
$ |
— |
|
|
$ |
7,708 |
|
LIFO provision |
|
|
(5 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
Acquisition-related amortization |
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5 |
|
Adjusted gross profit (Non-GAAP measure) |
|
$ |
6,487 |
|
|
$ |
1,206 |
|
|
$ |
15 |
|
|
$ |
— |
|
|
$ |
7,709 |
|
Selling, general and administrative expenses (GAAP) |
|
$ |
5,199 |
|
|
$ |
1,033 |
|
|
$ |
227 |
|
|
$ |
106 |
|
|
$ |
6,565 |
|
Acquisition-related costs |
|
|
— |
|
|
|
(23 |
) |
|
|
— |
|
|
|
(21 |
) |
|
|
(44 |
) |
Transformational cost management |
|
|
(52 |
) |
|
|
(13 |
) |
|
|
— |
|
|
|
(5 |
) |
|
|
(71 |
) |
Acquisition-related amortization |
|
|
(93 |
) |
|
|
(17 |
) |
|
|
(135 |
) |
|
|
— |
|
|
|
(245 |
) |
Adjusted selling, general and administrative expenses (Non-GAAP measure) |
|
$ |
5,053 |
|
|
$ |
981 |
|
|
$ |
92 |
|
|
$ |
79 |
|
|
$ |
6,205 |
|
Operating income (loss) (GAAP) |
|
$ |
1,390 |
|
|
$ |
173 |
|
|
$ |
(212 |
) |
|
$ |
(106 |
) |
|
$ |
1,246 |
|
Adjustments to equity earnings in AmerisourceBergen |
|
|
51 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
51 |
|
Acquisition-related amortization |
|
|
99 |
|
|
|
17 |
|
|
|
135 |
|
|
|
— |
|
|
|
250 |
|
Transformational cost management |
|
|
52 |
|
|
|
13 |
|
|
|
— |
|
|
|
5 |
|
|
|
70 |
|
LIFO provision |
|
|
(5 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
Acquisition-related costs |
|
|
— |
|
|
|
23 |
|
|
|
— |
|
|
|
21 |
|
|
|
44 |
|
Adjusted operating income (loss) (Non-GAAP measure) |
|
$ |
1,588 |
|
|
$ |
226 |
|
|
$ |
(77 |
) |
|
$ |
(79 |
) |
|
$ |
1,657 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross margin (GAAP) |
|
|
23.4 |
% |
|
|
21.7 |
% |
|
|
2.9 |
% |
|
|
|
|
22.8 |
% |
||
Adjusted gross margin (Non-GAAP measure) |
|
|
23.4 |
% |
|
|
21.7 |
% |
|
|
2.9 |
% |
|
|
|
|
22.8 |
% |
||
Selling, general and administrative expenses percent to sales (GAAP) |
|
|
18.8 |
% |
|
|
18.6 |
% |
|
|
43.1 |
% |
|
|
|
|
19.4 |
% |
||
Adjusted selling, general and administrative expenses percent to sales (Non-GAAP measure) |
|
|
18.3 |
% |
|
|
17.6 |
% |
|
|
17.5 |
% |
|
|
|
|
18.4 |
% |
||
Operating margin2 |
|
|
4.7 |
% |
|
|
3.1 |
% |
|
|
(40.2 |
)% |
|
|
|
|
3.4 |
% |
||
Adjusted operating margin (Non-GAAP measure)2 |
|
|
5.2 |
% |
|
|
4.1 |
% |
|
|
(14.6 |
)% |
|
|
|
|
4.4 |
% |
||
1 |
Operating income for |
2 |
Operating margins and adjusted operating margins have been calculated excluding equity earnings in AmerisourceBergen and adjusted equity earnings in AmerisourceBergen, respectively. |
|
|
(in millions) |
||||||||||||||||||
|
|
Six months ended |
||||||||||||||||||
|
|
|
|
International |
|
|
|
Corporate and
|
|
|
||||||||||
Sales |
|
$ |
54,781 |
|
|
$ |
10,840 |
|
|
$ |
2,622 |
|
|
$ |
— |
|
|
$ |
68,244 |
|
Gross profit (GAAP) |
|
$ |
11,711 |
|
|
$ |
2,248 |
|
|
$ |
49 |
|
|
$ |
— |
|
|
$ |
14,008 |
|
Acquisition-related amortization |
|
|
11 |
|
|
|
— |
|
|
|
44 |
|
|
|
— |
|
|
|
54 |
|
Acquisition-related costs |
|
|
— |
|
|
|
— |
|
|
|
60 |
|
|
|
— |
|
|
|
60 |
|
LIFO provision |
|
|
38 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38 |
|
Adjusted gross profit (Non-GAAP measure) |
|
$ |
11,760 |
|
|
$ |
2,248 |
|
|
$ |
153 |
|
|
$ |
— |
|
|
$ |
14,161 |
|
Selling, general and administrative expenses (GAAP) |
|
$ |
17,225 |
|
|
$ |
1,789 |
|
|
$ |
958 |
|
|
$ |
119 |
|
|
$ |
20,091 |
|
Certain legal and regulatory accruals and settlements |
|
|
(6,981 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,981 |
) |
Acquisition-related amortization |
|
|
(145 |
) |
|
|
(29 |
) |
|
|
(348 |
) |
|
|
— |
|
|
|
(522 |
) |
Transformational cost management |
|
|
(265 |
) |
|
|
(11 |
) |
|
|
— |
|
|
|
(7 |
) |
|
|
(283 |
) |
Acquisition-related costs |
|
|
(1 |
) |
|
|
32 |
|
|
|
(146 |
) |
|
|
(12 |
) |
|
|
(127 |
) |
Adjusted selling, general and administrative expenses (Non-GAAP measure) |
|
$ |
9,833 |
|
|
$ |
1,780 |
|
|
$ |
464 |
|
|
$ |
100 |
|
|
$ |
12,177 |
|
Operating (loss) income (GAAP) |
|
$ |
(5,385 |
) |
|
$ |
459 |
|
|
$ |
(909 |
) |
|
$ |
(119 |
) |
|
$ |
(5,954 |
) |
Certain legal and regulatory accruals and settlements |
|
|
6,981 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,981 |
|
Acquisition-related amortization |
|
|
155 |
|
|
|
29 |
|
|
|
392 |
|
|
|
— |
|
|
|
577 |
|
Transformational cost management |
|
|
265 |
|
|
|
11 |
|
|
|
— |
|
|
|
7 |
|
|
|
283 |
|
Acquisition-related costs |
|
|
1 |
|
|
|
(32 |
) |
|
|
206 |
|
|
|
12 |
|
|
|
187 |
|
Adjustments to equity earnings in AmerisourceBergen |
|
|
117 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
117 |
|
LIFO provision |
|
|
38 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38 |
|
Adjusted operating income (loss) (Non-GAAP measure) |
|
$ |
2,172 |
|
|
$ |
468 |
|
|
$ |
(311 |
) |
|
$ |
(100 |
) |
|
$ |
2,229 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross margin (GAAP) |
|
|
21.4 |
% |
|
|
20.7 |
% |
|
|
1.9 |
% |
|
|
|
|
20.5 |
% |
||
Adjusted gross margin (Non-GAAP measure) |
|
|
21.5 |
% |
|
|
20.7 |
% |
|
|
5.8 |
% |
|
|
|
|
20.7 |
% |
||
Selling, general and administrative expenses percent to sales (GAAP) |
|
|
31.4 |
% |
|
|
16.5 |
% |
|
|
36.5 |
% |
|
|
|
|
29.4 |
% |
||
Adjusted selling, general and administrative expenses percent to sales (Non-GAAP measure) |
|
|
17.9 |
% |
|
|
16.4 |
% |
|
|
17.7 |
% |
|
|
|
|
17.8 |
% |
||
Operating margin2 |
|
|
(10.1 |
)% |
|
|
4.2 |
% |
|
|
(34.6 |
)% |
|
|
|
|
(8.9 |
)% |
||
Adjusted operating margin (Non-GAAP measure)2 |
|
|
3.5 |
% |
|
|
4.3 |
% |
|
|
(11.9 |
)% |
|
|
|
|
2.9 |
% |
||
1 |
Operating loss for |
2 |
Operating margins and adjusted operating margins have been calculated excluding equity earnings in AmerisourceBergen and adjusted equity earnings in AmerisourceBergen, respectively. |
|
|
(in millions) |
||||||||||||||||||
|
|
Six months ended |
||||||||||||||||||
|
|
|
|
International |
|
|
|
Corporate and
|
|
|
||||||||||
Sales |
|
$ |
55,699 |
|
|
$ |
11,381 |
|
|
$ |
577 |
|
|
$ |
(1 |
) |
|
$ |
67,656 |
|
Gross profit (GAAP) |
|
$ |
12,834 |
|
|
$ |
2,413 |
|
|
$ |
36 |
|
|
$ |
— |
|
|
$ |
15,283 |
|
LIFO provision |
|
|
9 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9 |
|
Acquisition-related amortization |
|
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
Adjusted gross profit (Non-GAAP measure) |
|
$ |
12,855 |
|
|
$ |
2,413 |
|
|
$ |
36 |
|
|
$ |
— |
|
|
$ |
15,304 |
|
Selling, general and administrative expenses (GAAP) |
|
$ |
10,290 |
|
|
$ |
2,186 |
|
|
$ |
292 |
|
|
$ |
188 |
|
|
$ |
12,956 |
|
Transformational cost management |
|
|
(193 |
) |
|
|
(66 |
) |
|
|
— |
|
|
|
(14 |
) |
|
|
(273 |
) |
Acquisition-related amortization |
|
|
(226 |
) |
|
|
(34 |
) |
|
|
(143 |
) |
|
|
— |
|
|
|
(403 |
) |
Acquisition-related costs |
|
|
3 |
|
|
|
(62 |
) |
|
|
(24 |
) |
|
|
(32 |
) |
|
|
(115 |
) |
Adjusted selling, general and administrative expenses (Non-GAAP measure) |
|
$ |
9,874 |
|
|
$ |
2,024 |
|
|
$ |
126 |
|
|
$ |
143 |
|
|
$ |
12,166 |
|
Operating income (loss) (GAAP) |
|
$ |
2,746 |
|
|
$ |
227 |
|
|
$ |
(257 |
) |
|
$ |
(188 |
) |
|
$ |
2,529 |
|
Transformational cost management |
|
|
193 |
|
|
|
66 |
|
|
|
— |
|
|
|
14 |
|
|
|
273 |
|
Acquisition-related amortization |
|
|
238 |
|
|
|
34 |
|
|
|
143 |
|
|
|
— |
|
|
|
415 |
|
LIFO provision |
|
|
9 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9 |
|
Acquisition-related costs |
|
|
(3 |
) |
|
|
62 |
|
|
|
24 |
|
|
|
32 |
|
|
|
115 |
|
Adjustments to equity earnings in AmerisourceBergen |
|
|
94 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
94 |
|
Adjusted operating income (loss) (Non-GAAP measure) |
|
$ |
3,277 |
|
|
$ |
389 |
|
|
$ |
(90 |
) |
|
$ |
(143 |
) |
|
$ |
3,434 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross margin (GAAP) |
|
|
23.0 |
% |
|
|
21.2 |
% |
|
|
6.2 |
% |
|
|
|
|
22.6 |
% |
||
Adjusted gross margin (Non-GAAP measure) |
|
|
23.1 |
% |
|
|
21.2 |
% |
|
|
6.2 |
% |
|
|
|
|
22.6 |
% |
||
Selling, general and administrative expenses percent to sales (GAAP) |
|
|
18.5 |
% |
|
|
19.2 |
% |
|
|
50.6 |
% |
|
|
|
|
19.1 |
% |
||
Adjusted selling, general and administrative expenses percent to sales (Non-GAAP measure) |
|
|
17.7 |
% |
|
|
17.8 |
% |
|
|
21.7 |
% |
|
|
|
|
18.0 |
% |
||
Operating margin2 |
|
|
4.6 |
% |
|
|
2.0 |
% |
|
|
(44.4 |
)% |
|
|
|
|
3.4 |
% |
||
Adjusted operating margin (Non-GAAP measure)2 |
|
|
5.4 |
% |
|
|
3.4 |
% |
|
|
(15.6 |
)% |
|
|
|
|
4.6 |
% |
||
1 |
Operating income for |
2 |
Operating margins and adjusted operating margins have been calculated excluding equity earnings in AmerisourceBergen and adjusted equity earnings in AmerisourceBergen, respectively. |
OPERATING LOSS TO ADJUSTED EBITDA FOR
|
|
(in millions) |
||||||||||||||
|
|
Three months ended |
|
Six months ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Operating loss (GAAP) 1 |
|
$ |
(472 |
) |
|
$ |
(212 |
) |
|
$ |
(909 |
) |
|
$ |
(257 |
) |
Acquisition-related amortization 2 |
|
|
154 |
|
|
|
135 |
|
|
|
392 |
|
|
|
143 |
|
Acquisition-related costs 3 |
|
|
158 |
|
|
|
— |
|
|
|
206 |
|
|
|
24 |
|
Adjusted operating loss (Non-GAAP measure) |
|
|
(159 |
) |
|
|
(77 |
) |
|
|
(311 |
) |
|
|
(90 |
) |
Depreciation expense |
|
|
34 |
|
|
|
11 |
|
|
|
49 |
|
|
|
13 |
|
Stock-based compensation expense 4 |
|
|
16 |
|
|
|
5 |
|
|
|
29 |
|
|
|
5 |
|
Adjusted EBITDA (Non-GAAP measure) |
|
$ |
(109 |
) |
|
$ |
(62 |
) |
|
$ |
(233 |
) |
|
$ |
(72 |
) |
|
|
|
|
|
|
|
|
|
||||||||
1 |
The Company reconciles Adjusted EBITDA for the |
2 |
Acquisition-related amortization includes amortization of acquisition-related intangible assets, inventory valuation adjustments and stock-based compensation fair valuation adjustments. Amortization of acquisition-related intangible assets includes amortization of intangible assets such as customer relationships, trade names, trademarks, developed technology and contract intangibles. Intangible asset amortization excluded from the related non-GAAP measure represents the entire amount recorded within the Company’s GAAP financial statements. The revenue generated by the associated intangible assets has not been excluded from the related non-GAAP measures. Amortization expense, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired, or the estimated useful life of an intangible asset is revised. These charges are primarily recorded within Selling, general and administrative expenses. The stock-based compensation fair valuation adjustment reflects the difference between the fair value based remeasurement of awards under purchase accounting and the grant date fair valuation. Post-acquisition compensation expense recognized in excess of the original grant date fair value of acquiree awards are excluded from the related non-GAAP measures as these arise from acquisition-related accounting requirements or agreements, and are not reflective of normal operating activities. |
3 |
Acquisition-related costs are transaction and integration costs associated with certain merger, acquisition and divestitures related activities. These costs include charges incurred related to certain mergers, acquisition and divestitures related activities recorded in operating income, for example, costs related to integration efforts for merger, acquisition and divestitures activities. Examples of such costs include deal costs, severance, stock compensation and employee transaction success bonuses. These charges are primarily recorded within Selling, general and administrative expenses. These costs are significantly impacted by the timing and complexity of the underlying merger, acquisition and divestitures related activities and do not reflect the Company’s current operating performance. |
4 |
Includes GAAP stock-based compensation expense excluding expenses related to acquisition-related amortization and acquisition-related costs. |
EQUITY EARNINGS IN AMERISOURCEBERGEN
|
|
(in millions) |
||||||||||||||
|
|
Three months ended |
|
Six months ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Equity earnings in AmerisourceBergen (GAAP) |
|
$ |
75 |
|
|
$ |
103 |
|
|
$ |
129 |
|
|
$ |
202 |
|
Gain from antitrust litigation settlements |
|
|
(8 |
) |
|
|
— |
|
|
|
(8 |
) |
|
|
3 |
|
|
|
|
1 |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
LIFO expense / (credit) |
|
|
3 |
|
|
|
(10 |
) |
|
|
24 |
|
|
|
(10 |
) |
Acquisition-related intangibles amortization |
|
|
27 |
|
|
|
41 |
|
|
|
65 |
|
|
|
75 |
|
Litigation and opioid-related expenses |
|
|
2 |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
Acquisition integration and restructuring expenses |
|
|
5 |
|
|
|
— |
|
|
|
23 |
|
|
|
— |
|
Tax reform |
|
|
1 |
|
|
|
1 |
|
|
|
4 |
|
|
|
4 |
|
Employee severance, litigation, and other |
|
|
— |
|
|
|
15 |
|
|
|
— |
|
|
|
27 |
|
Impairment of non-customer note receivable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Impairment of assets |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
5 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
Certain discrete tax expense |
|
|
— |
|
|
|
3 |
|
|
|
(2 |
) |
|
|
3 |
|
Gain on remeasurement of equity investment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(18 |
) |
Adjusted equity earnings in AmerisourceBergen (Non-GAAP measure) |
|
$ |
107 |
|
|
$ |
154 |
|
|
$ |
246 |
|
|
$ |
297 |
|
ADJUSTED EFFECTIVE TAX RATE
|
|
(in millions) |
||||||||||||||||||
|
|
Three months ended |
|
Three months ended |
||||||||||||||||
|
|
Earnings
|
|
Income tax
|
|
Effective tax
|
|
Earnings
|
|
Income tax
|
|
Effective tax
|
||||||||
Effective tax rate (GAAP) |
|
$ |
607 |
|
|
$ |
70 |
|
|
|
|
$ |
947 |
|
|
$ |
172 |
|
|
|
Impact of non-GAAP adjustments |
|
|
474 |
|
|
|
96 |
|
|
|
|
|
639 |
|
|
|
55 |
|
|
|
Adjusted tax rate true-up |
|
|
— |
|
|
|
26 |
|
|
|
|
|
— |
|
|
|
53 |
|
|
|
Equity method non-cash tax |
|
|
— |
|
|
|
(14 |
) |
|
|
|
|
— |
|
|
|
(12 |
) |
|
|
Subtotal |
|
$ |
1,081 |
|
|
$ |
177 |
|
|
|
|
$ |
1,586 |
|
|
$ |
268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Exclude adjusted equity earnings in AmerisourceBergen |
|
|
(107 |
) |
|
|
— |
|
|
|
|
|
(154 |
) |
|
|
— |
|
|
|
Adjusted effective tax rate excluding adjusted equity earnings in AmerisourceBergen (Non-GAAP measure) |
|
$ |
975 |
|
|
$ |
177 |
|
|
|
|
$ |
1,432 |
|
|
$ |
268 |
|
|
|
|
|
(in millions) |
||||||||||||||||||
|
|
Six months ended |
|
Six months ended |
||||||||||||||||
|
|
(Loss)
|
|
Income tax
|
|
Effective tax
|
|
Earnings
|
|
Income tax
|
|
Effective tax
|
||||||||
Effective tax rate (GAAP) |
|
$ |
(4,662 |
) |
|
$ |
(1,377 |
) |
|
|
|
$ |
4,761 |
|
|
$ |
447 |
|
|
9.4% |
Impact of non-GAAP adjustments |
|
|
6,671 |
|
|
|
1,369 |
|
|
|
|
|
(1,441 |
) |
|
|
60 |
|
|
|
Adjusted tax rate true-up |
|
|
— |
|
|
|
191 |
|
|
|
|
|
— |
|
|
|
75 |
|
|
|
Equity method non-cash tax |
|
|
— |
|
|
|
(23 |
) |
|
|
|
|
— |
|
|
|
(30 |
) |
|
|
Subtotal |
|
$ |
2,009 |
|
|
$ |
160 |
|
|
|
|
$ |
3,319 |
|
|
$ |
552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Exclude adjusted equity earnings in AmerisourceBergen |
|
|
(246 |
) |
|
|
— |
|
|
|
|
|
(297 |
) |
|
|
— |
|
|
|
Adjusted effective tax rate excluding adjusted equity earnings in AmerisourceBergen (Non-GAAP measure) |
|
$ |
1,763 |
|
|
$ |
160 |
|
|
|
|
$ |
3,023 |
|
|
$ |
552 |
|
|
18.3% |
FREE CASH FLOW
|
|
(in millions) |
||||||||||||||
|
|
Three months ended |
|
Six months ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net cash provided by operating activities (GAAP) |
|
$ |
745 |
|
|
$ |
1,085 |
|
|
$ |
1,239 |
|
|
$ |
2,184 |
|
Less: Additions to property, plant and equipment |
|
$ |
(497 |
) |
|
$ |
(416 |
) |
|
|
(1,108 |
) |
|
|
(870 |
) |
Plus: Acquisition related payments 2 |
|
$ |
429 |
|
|
$ |
— |
|
|
|
429 |
|
|
|
— |
|
Free cash flow (Non-GAAP measure) 1 |
|
$ |
677 |
|
|
$ |
669 |
|
|
$ |
560 |
|
|
$ |
1,314 |
|
1 |
Free cash flow is defined as net cash provided by operating activities in a period less additions to property, plant and equipment (capital expenditures), plus acquisition related payments made in that period. This measure does not represent residual cash flows available for discretionary expenditures as the measure does not deduct the payments required for debt service and other contractual obligations or payments for future business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statements of cash flows. |
2 |
During the three months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230328005332/en/
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Source:
FAQ
What were Walgreens Boots Alliance's second quarter earnings results for WBA in fiscal 2023?
How did WBA perform in terms of revenue in the second quarter of fiscal 2023?
What are the key negative financial impacts reported by WBA for fiscal 2023?
What guidance has WBA provided for fiscal year 2023?
