Walgreens Boots Alliance(WBA) - 2025 Q2 - Quarterly Report

Sales Performance - Sales for the three months ended February 28, 2025 increased 0.6 percent to $6.1 billion, with a 4.1 percent increase on a constant currency basis [263]. - Sales for the six months ended February 28, 2025 increased 5.3 percent to $12.5 billion, with a 5.3 percent increase on a constant currency basis [272]. - Pharmacy sales decreased 6.7 percent in the three months ended February 28, 2025, with comparable pharmacy sales in constant currency increasing 3.6 percent [264]. - Pharmacy sales decreased 4.1 percent in the six months ended February 28, 2025, with comparable pharmacy sales in constant currency increasing 5.9 percent [273]. - Retail sales increased 1.1 percent for the three months ended February 28, 2025, with comparable retail sales in constant currency increasing 4.5 percent [265]. - Retail sales increased 5.1 percent for the six months ended February 28, 2025, with comparable retail sales in constant currency increasing 5.8 percent [274]. - Sales for the three months ended February 28, 2025 decreased by $23 million to $2.2 billion, with VillageMD sales down $101 million to $1.5 billion, while CareCentrix and Shields saw increases of 6.5% to $390 million and 29.7% to $183 million respectively [285]. - Sales for the six months ended February 28, 2025 increased by $218 million to $4.3 billion, with VillageMD sales up $24 million to $3.1 billion, and CareCentrix and Shields also showing significant growth [293]. Operating Income and Profitability - Operating income for the three months ended February 28, 2025 decreased 51.7 percent to $101 million, impacted by currency translation and cost inflation [269]. - Adjusted operating income for the three months ended February 28, 2025 decreased 4.7 percent to $234 million, reflecting cost inflation and technology investments [271]. - Operating income for the six months ended February 28, 2025 decreased 25.5 percent to $242 million, influenced by cost inflation and technology investments [278]. - Adjusted operating income for the six months ended February 28, 2025 increased 3.6 percent to $401 million, driven by strong retail performance and market growth [279]. - Gross profit for the three months ended February 28, 2025 was $346 million, an increase of $155 million compared to the same quarter last year, driven by higher contributions from VillageMD and growth at Shields [286]. - Gross profit for the six months ended February 28, 2025 was $585 million, an increase of $269 million compared to the year-ago period, driven by contributions from VillageMD and Shields [294]. - Adjusted operating income for the three months ended February 28, 2025 improved by $150 million to $117 million, driven by higher contributions from VillageMD and growth at Shields [291]. - Adjusted EBITDA for the three months ended February 28, 2025 was $158 million, an improvement of $140 million compared to the same quarter last year, reflecting growth at VillageMD and Shields [292]. - Adjusted operating income for the six months ended February 28, 2025 improved by $271 million to $142 million, reflecting better performance from VillageMD and Shields [297]. - Adjusted EBITDA for the six months ended February 28, 2025 was $228 million, an improvement of $250 million compared to the year-ago period, indicating strong operational performance [298]. Net Loss and Impairments - The net loss attributable to Walgreens Boots Alliance for the six months ended February 28, 2025, was $3,118 million, compared to a net loss of $5,975 million for the same period in 2024, indicating an improvement of 47.9% [311]. - The company recorded an impairment of goodwill, intangibles, and long-lived assets amounting to $5,343 million for the six months ended February 28, 2025, down from $13,090 million in the prior year, a reduction of 59.1% [311]. - Total adjustments to operating loss for the six months ended February 28, 2025, amounted to $7,190 million, compared to $14,797 million for the same period in 2024, a decrease of 51.5% [311]. - The company recorded pre-tax gains of $157 million related to the change in classification of its previously held equity method investment in BrightSpring [12]. - The Company had total operating lease obligations of $22.1 billion, with $2.4 billion classified as current [333]. - Total non-cash impairment charges for goodwill and long-lived assets were $5.4 billion and $5.7 billion for the three and six months ended February 28, 2025, respectively [9]. Cash Flow and Financing Activities - Cash, cash equivalents, and restricted cash were $1.2 billion as of February 28, 2025, down from $3.2 billion as of August 31, 2024 [324]. - The Company had outstanding total debt of $8.0 billion as of February 28, 2025, with $1.4 billion classified as current [330]. - Net cash used for operating activities improved to $339 million for the six months ended February 28, 2025, compared to $918 million for the same period in 2024 [339]. - Negative operating cash flows for the six months ended February 28, 2025 were primarily due to legal settlements totaling $1.1 billion [340]. - Net cash provided by investing activities was $342 million for the six months ended February 28, 2025, down from $902 million in the prior year [341]. - Total additions to property, plant, and equipment were $503 million for the six months ended February 28, 2025, compared to $858 million in the same period of 2024 [344]. - Net cash used for financing activities increased significantly to $2.0 billion for the six months ended February 28, 2025, compared to $127 million in the prior year [345]. - The Company suspended its cash dividend, which totaled $432 million in the six months ended February 28, 2025, down from $828 million in the same period of 2024 [350]. - As of February 28, 2025, the Company had repurchased $8.0 billion of its $10.0 billion stock repurchase program [351]. Strategic Initiatives and Outlook - The Company anticipates cash needs over the next several years, including litigation and debt refinancing, as part of its decision to suspend cash dividends [321]. - The Company is exploring strategic monetization of non-core assets to provide additional liquidity [325]. - The Company's long-term credit ratings were downgraded to BB- with a negative outlook by Standard & Poor's and Ba3 with a stable outlook by Moody's [355].