Walgreens and Alliance Boots Outline Strategic Growth Drivers at Analyst Meeting

London meeting highlights strategic partnership with Alliance Boots as Walgreens positions itself to become first choice for health and daily living in America and beyond

DEERFIELD, Ill.--(BUSINESS WIRE)--With an unmatched global platform at the corner of the retail and health care industries, Walgreens (NYSE: WAG) (Nasdaq: WAG) outlined its strategic growth drivers and long-term goals at its 2013 Analyst Meeting today in London.

“This combination accelerates our core strategies, creates an unmatched global supply chain and provides a platform for global expansion beyond the U.S. and Europe into new markets around the world”

Summarizing Walgreens key growth drivers to position the company for long-term growth and shareholder value creation, President and CEO Greg Wasson said, “We are focused on creating a complete Well Experience for our customers across all of our touch points; transforming the role community pharmacy plays in health care; and establishing an unprecedented and efficient global platform through our strategic partnership with Alliance Boots. As our two iconic brands come together, we will have a platform that will be very difficult, if not impossible, to replicate.”

Wasson outlined Walgreens fiscal year 2016 financial goals assuming the exercise of the company’s option to proceed to a full combination with Alliance Boots. Together, the companies aim to have sales of $130 billion or greater; adjusted operating income between $9 billion and $9.5 billion, or $8.5 billion to $9 billion on a GAAP basis; $1 billion in combined synergies; and operating cash flow of $8 billion or more.*

“This combination accelerates our core strategies, creates an unmatched global supply chain and provides a platform for global expansion beyond the U.S. and Europe into new markets around the world,” said Wasson.

During the meeting, executives with Alliance Boots provided analysts with insights into their financial performance and the businesses they operate including Boots, its pharmacy-led health and beauty retailing business, and Alliance Healthcare, its pharmaceutical wholesaling and distribution business.

Stefano Pessina, Executive Chairman of Alliance Boots, commented, “The Alliance Boots financial track record, growth strategy and unique portfolio of businesses across many countries position us well to take full advantage of opportunities in the changing health care markets. We believe our Group represents a solid investment for Walgreens, and that together we will create a successful, sustainable and profitable global player. I have full confidence in this, both as the leader of Alliance Boots and a shareholder in Walgreens.”

Later, leadership from Walgreens outlined how Walgreens is creating a Well Experience for customers through four strategies – customer value, innovative products and services, systematic localized offerings and the most relevant networks and formats.

Analysts also learned how Walgreens is pursuing its health care strategy through a comprehensive care offering with the goal of developing the most complete national network of integrated health care services in the country; a differentiated experience to serve customers where, when and how they want; and strategic partnerships that improve care, drive down costs and ultimately meet patient needs for better overall health.

Finally, Walgreens and Alliance Boots executives outlined how they intend to create long-term shareholder value through the companies’ joint synergy programs. Walgreens reiterated its goal to achieve $1 billion in combined synergies in the fourth year of the strategic partnership, which represents approximately 1 percent of the estimated combined pharmacy and general merchandise cost of goods sold by fiscal year 2016.

“With many of last year’s headwinds turning into this year’s tailwinds, our performance this year is all about execution,” Wasson said. “We won’t let the tailwinds alone carry us. Rather, we must optimize those tailwinds to get the most from them. We are confident we have the strategies, structure and talent in place to do that and to create long-term shareholder value.”

A video webcast of the conference was simulcast through Walgreens investor relations website at: http://investor.walgreens.com. The webcast and presentation materials will be archived on the website for 12 months after the conference. An audio podcast also will be available on the investor relations website.

* Figures assume constant currency and exercise of option to acquire remaining 55 percent interest in Alliance Boots GmbH

About Walgreens

As the nation's largest drugstore chain with fiscal 2012 sales of $72 billion, Walgreens (www.walgreens.com) vision is to become America’s first choice for health and daily living. Each day, Walgreens provides more than 6 million customers the most convenient, multichannel access to consumer goods and services and trusted, cost-effective pharmacy, health and wellness services and advice in communities across America. Walgreens scope of pharmacy services includes retail, specialty, infusion, medical facility and mail service, along with respiratory services. These services improve health outcomes and lower costs for payers including employers, managed care organizations, health systems, pharmacy benefit managers and the public sector. The company operates 8,067 drugstores in all 50 states, the District of Columbia and Puerto Rico. Take Care Health Systems is a Walgreens subsidiary that is the largest and most comprehensive manager of worksite health and wellness centers and in-store convenient care clinics, with more than 700 locations throughout the country.

About Alliance Boots

Alliance Boots is a leading international, pharmacy-led health and beauty group delivering a range of products and services to customers. For the financial year ended 31 March 2012, Alliance Boots reported revenue of £23.0 billion ($35.7 billion***), (£25.4 billion ($39.4 billion***) including share of associates and joint ventures), and EBITDA of £1,443 million ($2,237 million***), (£1,568 million ($ 2,430 million***) including share of associates and joint ventures). Working in close partnership with manufacturers and pharmacists, Alliance Boots is committed to improving health in the local communities it serves and helping its customers and patients to look and feel their best. Alliance Boots focus is on growing its two core businesses: pharmacy-led health and beauty retailing and pharmaceutical wholesaling and distribution. Alliance Boots has a presence in more than 25** countries and employs over 116,000** people. Alliance Boots has pharmacy-led health and beauty retail businesses in 11** countries and operates more than 3,330** health and beauty retail stores, of which just over 3,200** have a pharmacy. In addition, Alliance Boots has around 625** optical practices, of which around 185** operate on a franchise basis. Its pharmaceutical wholesale businesses supply medicines, other healthcare products and related services to more than 170,000** pharmacies, doctors, health centers and hospitals from over 370** distribution centers in 21** countries.

** Figures include Alliance Boots associates and joint ventures (including Galenica).

*** At a $1.55=£1 exchange rate.

Cautionary Note Regarding Forward-Looking Statements. Statements in this release that are not historical, including, without limitation, estimates of future financial performance, including the amounts and timing of future accretion and synergies, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "likely," "outlook," "forecast, "would," "could," "should," "can," "will," "project," "intend," "plan," "goal," "continue," "sustain," "synergy," "on track," "believe," "seek," "estimate," "anticipate," "may," "possible," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, those relating to the transactions contemplated by the Purchase and Option Agreement and other agreements relating to our strategic partnership with Alliance Boots and their possible effects, the parties' ability to realize anticipated synergies and achieve anticipated financial results, the risks associated with international business operations, the risks associated with governance and control matters, whether the option to acquire the remainder of the Alliance Boots equity interest will be exercised and the financial ramifications thereof, changes in vendor, payer and customer relationships and terms, changes in network participation, levels of business with Express Scripts customers, the implementation, operation and growth of our customer loyalty program, changes in economic and market conditions, competition, risks associated with new business areas and activities, risks associated with acquisitions, the ability to realize anticipated results from capital expenditures and cost reduction initiatives, outcomes of legal and regulatory matters, and changes in legislation or regulations. These and other risks, assumptions and uncertainties are described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K, which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, Walgreens does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the initial distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.

Adjusted Operating Income is a non-GAAP financial measure, which is not calculated or presented in accordance with generally accepted accounting principles in the United States (GAAP), and is provided as supplemental information in addition to the financial measures that are calculated and presented in accordance with GAAP. This supplemental non-GAAP financial measure is presented because management evaluates the company’s financial results on both a GAAP and adjusted basis and believes that the non-GAAP financial measure provides 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 operating results. This supplemental non-GAAP financial measure 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 this press release. The company does not provide a non-GAAP 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 that are out of the Company’s control and the information is not available without unreasonable effort.