1、Reimagining Local Healthcare and Wellbeing for All 2023 Walgreens Boots Alliance,Inc.All rights reserved.Third Quarter Fiscal 2023 ResultsJune 27,2023Cautionary Note Regarding Forward-Looking Statements:All statements in this presentation that are not historical are forward-looking statements for pu

2、rposes of 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 targe

3、ts and related assumptions and drivers,as well as forward-looking statements concerning the expected execution and effect of our business strategies,the potential impacts on our business of COVID-19,our cost-savings and growth initiatives,including statements relating to our expected cost savings un

4、der our Transformational Cost Management Program and expansion and future operating and financial results of our U.S.Healthcare segment,including our long-term sales targets and profitability expectations.All statements in the future tense and all statements accompanied by words such as“expect,”“out

5、look,”“forecast,”“would,”“could,”“should,”“can,”“will,”“project,”“intend,”“plan,”“goal,”“guidance,”“target,”“aim,”continue,”“transform,”“accelerate,”“model,”“long-term,”“believe,”“seek,”“estimate,”“anticipate,”“may,”“possible,”“assume,”“focus,”“align”“build,”“preliminary,”“forward,”“goal,”“advance,”

6、“integrate,”“synergies,”“increase,”and 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 are subject to risks,uncertainties and assumptions,known or unknown,that coul

7、d 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 August 31,2022 and in other documents that we file or furnish with the Securities and Exc

8、hange Commission.If one or more of these risks or uncertainties materializes,or if underlying assumptions prove incorrect,actual results may vary materially from those indicated or anticipated by such forward-looking statements.All forward-looking statements we make or that are made on our behalf ar

9、e qualified by these cautionary statements.You should not place undue reliance on forward-looking statements,which speak only as of the date they are made.We do not undertake,and expressly disclaim,any duty or obligation to update publicly any forward-looking statement after the date of this present

10、ation,whether as a result of newinformation,future events,changes in assumptions or otherwise.Non-GAAP Financial Measures:Todays presentation includes certain non-GAAP financial measures,including all measures whose label includes the words“adjusted”,“constant currency”,“core”or“free cash flow”or va

11、riations of such words and similar expressions,and we refer you to the endnotes on page 39 and the Appendix to the presentation materials for reconciliations to the most directly comparable U.S.GAAP financial measures and related information.Free cash flow is defined as net cash provided by operatin

12、g activities in a period less additions to property,plant and equipment(capital expenditures),plus acquisition related payments made in that period.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 c

13、alculation 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 Companys control or cannot be reasonably predicted,and

14、that would impact 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 may vary materially from the corresponding GAAP financial m

15、easures.These measures exclude certain items that at times materially impact the comparability of the Companys results of operations.The adjusted information is intended to be indicative of the Companys core operations,and to assist readers in evaluating performance and analyzing trends across perio

16、ds by providing what the Company believes is a useful measure for predictive purposes.These results should be considered in addition to,not as a substitute for,results reported in accordance with GAAP.These presentation materials and the appendix hereto are integrally related and are intended to be

17、presented,considered and understood together.Safe Harbor and Non-GAAP 2023 Walgreens Boots Alliance,Inc.All rights reserved.2Refer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Four strategic Four strategic priorities underpin priorities underpin our

18、transformationour transformation3 2023 Walgreens Boots Alliance,Inc.All rights reserved.Focusing and simplifying our portfolio,and optimizing capital allocation Transforming core retail pharmacy business while managing through consumer headwindsScaling and driving profitability of our healthcare ass

19、ets across the care continuumInvesting in strategic talent and capabilities4Refer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Build our next growth engine Build our next growth engine with consumerwith consumer-centric centric healthcare solutionshe

20、althcare solutionsFocus the portfolio;optimize Focus the portfolio;optimize capital allocationcapital allocationBuild a highBuild a high-performance performance culture and a winning teamculture and a winning teamTransform and align the coreTransform and align the coreGood progress across our four s

21、trategic priorities year-to-dateAdvancing tech-enabled pharmacy operating model through digital,telepharmacy capabilitiesMicrofulfillment centers now supporting over 40%of store footprintFlat U.S.retail comp sales YTD lapping+8.8%last year,with gross margin up over+100 bpsBoots UK retail comp sales+

22、12.7%YTD with continued share gainsTransformational Cost Management Program raised from$3.5 billion to$4.1 billion by FY24VillageMD acquisition of Summit Health,creating a leading independent care delivery platformAccelerated full acquisition of Shields Health Solutions and CareCentrixSigned Horizon

23、 as fourth payor partner for Walgreens HealthCommitted to clinical trials business with first eight contracts signed$8 billion sales run-rate for U.S.Healthcare achieved in 3QMonetized shares of AmerisourceBergen with total proceeds of$4.1 billion YTDExited Option Care Health position with total pro

24、ceeds of$800 million YTDAnnounced sale of Farmacias Ahumada in Chile;sold Guangzhou Pharmaceuticals stakeAligned enterprise B2B sales and contracting teams with healthcare expertise,to sell integrated services that improve outcomes and lower cost of care for payors/health systemsAppointed Rich Rubin

25、o as CFO of VillageMD;formerly held CFO roles at Medco Health Solutions,Aerie Pharmaceuticals,and Cedar Gate TechnologiesAppointed Beth Leonard as SVP,Chief Communications Officer;formerly held corporate affairs roles at EmblemHealth and Americas Health Insurance Plans 2023 Walgreens Boots Alliance,

26、Inc.All rights reserved.Refer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Returned to growth with 3Q adj.EPS+3.6%5 2023 Walgreens Boots Alliance,Inc.All rights reserved.Sales+8.9%on a constant currency basis,exceeding expectations,driven by solid co

27、re business and rapidly scaling healthcare growth engine Adj.EPS growth of+3.6%on a constant currency basis was held back by:Lower COVID-related demand Softening macroeconomic environment and shifting consumer behaviors Weaker respiratory season impacting script volume,front of store sales,CityMD tr

28、affic Strong quality of earnings considering 4.7%adverse net impact from COVID-19,ABC,sale and leaseback,incentive accruals,and tax Despite weaker results,good line of sight to accelerating AOI growth in 4QRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slide

29、s 41-55Updating FY23 guidance and providing preliminary FY24 commentary6 2023 Walgreens Boots Alliance,Inc.All rights reserved.Updating FY23 adj.EPS guidance to$4.00-$4.05 to reflect consumer and category trends,lower COVID-19 related contribution,and a more cautious macroeconomic forward view;expec

30、ting FY23 core adj.EPS flat to+1%ex.COVID-19 and Fx Visibility to high quality drivers of sustainable AOI growth Expecting LSD-MSD AOI growth in FY24 with U.S.Retail Pharmacy and U.S.Healthcare more than offsetting headwinds from COVID,net sale and leaseback,and ABC AOI growth to outpace adj.EPS due

31、 to offsets from tax and NCI Continued confidence in building to sustainable,long-term low-teens adj.EPS growth over timeRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-557 2023 Walgreens Boots Alliance,Inc.All rights reserved.Taking immediate actio

32、ns to drive shareholder value Raising Transformational Cost Management Program goal,with$800 million of cost savings expected in FY24 Implemented capital and project spend reductions;working capital optimization program launched,benefitting FY24 Advancing portfolio simplification to pay down debt an

33、d fund strategic initiatives Announcing swift actions to improve the U.S.Healthcare path to profitability VillageMD:Leveraging WBA marketing expertise to accelerate patient panel build,and appointing new CFO with deep healthcare experience Summit Health:Right-sizing CityMD clinic operations,and aggr

34、essively integrating prior acquisitions Raising and accelerating long-term synergy target for VillageMD/Summit Health to$200 million by calendar year 2026,from$150 million by calendar year 2027Accelerating synergies between U.S.Healthcare and Walgreens operationsRefer to safe harbor and non-GAAP on

35、slide 2 and endnotes on slide 39 2023 Walgreens Boots Alliance,Inc.All rights reserved.8We are integrating our care delivery assets to drive growth Healthcare and Pharmacy mutually reinforce each otherEasier,extended access via a combination of physical and digital points of careSCALING OUR NEXT-GEN

36、 CARE CONTINUUMDifferentiated Value-Based Care DEEPENING WALGREENS BRAND LOYALTYCORE RETAIL PHARMACY SERVES AS CORNERSTONE OF CARE DELIVERYMore patient visits and lower cost,improved outcomesAggregate addressable value per customer increases significantly Trusted brand with close connection to consu

37、mersFaster Core GrowthTech-enabledexperiencePatient acquisitionand retentionCombining pharmacyandmedical careGreater market access and partner interestRefer to safe harbor and non-GAAP on slide 2 and endnotes on slide 39Enterprise-wide approach to healthcare delivery drives sales growth 2023 Walgree

38、ns Boots Alliance,Inc.All rights reserved.9Next generation of specialty pharmacyConversion of Walgreens locations to Shields partner sitesContract pharmacy collaborationsMedical billing solutions with AllianceRxOutcomes-driven post-acute careSTARS/HEDIS gap closures with Walgreens and Walgreens Heal

39、thWalgreens as DME providerMember programs for Walgreens OTC,food suppliesBest-in-class value-based primary careTeam-based approach to healthcare deliveryAmbulatory care pharmacist programsScript uplift at Walgreens co-located sitesCore retail pharmacyCornerstone of Healthcare PortfolioExpanding exi

40、sting services and new service linesWalgreens infrastructure allows for low incremental overhead to support sales growthClinical trials recruitment,trial execution leveraging pharmacy capabilitiesEnabling population healthRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconcil

41、iations on slides 41-553Q 2023 financial highlights Constant currency sales growth+8.9%U.S.comparable sales+7.0%,led by Pharmacy+9.8%,with Retail ex.tobacco+0.2%International constant currency sales+6.9%,led by Boots UK comparable retail sales+13.4%U.S.Healthcare pro forma segment sales growth of+22

42、%to$2.0 billion 3Q 2023 adj.EPS of$1.00 vs.prior year adj.EPS of$0.96,+3.6%on a constant currency basis Strong quality of earnings considering 4.7%adverse net impact from COVID-19(19%headwind to adj.EPS),ABC(8%headwind),sale and leaseback,incentive accruals,and tax Lowering full-year adjusted EPS to

43、 guidance$4.00-$4.05 to reflect consumer and category trends,lower COVID-19 related contribution,and a more cautious macroeconomic forward view10 2023 Walgreens Boots Alliance,Inc.All rights reserved.Refer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-5

44、5WBA 3Q23 Financial Highlights 2023 Walgreens Boots Alliance,Inc.All rights reserved.$in millions(except EPS)3Q23Reported FxB/(W)vs.3Q22Constant FxB/(W)vs.3Q22Sales$35,415+8.6%+8.9%Operating IncomeGAAP($477)($157)Adjusted$959+0.4%+0.6%Net EarningsGAAP$118($171)Adjusted$860+3.1%+3.4%EPSGAAP$0.14($0.2

45、0)Adjusted$1.00+3.3%+3.6%113Q23 GAAP includes after-tax charges of$323 million impairment related to pharmacy license intangible assets in Boots UK3Q22 GAAP includes$532 million after-tax charge for opioid-related claims and lawsuits offset by$420 million after-tax gain on sale of ABC sharesRefer to

46、 safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55WBA Year-to-Date Financial Highlights12 2023 Walgreens Boots Alliance,Inc.All rights reserved.$in millions(except EPS)YTD23Reported FxB/(W)vs.YTD22Constant FxB/(W)vs.YTD22Sales$103,659+3.4%+4.8%Operating Inc

47、omeGAAP($6,431)($8,640)Adjusted$3,188(27.4)%(26.6)%Net EarningsGAAP($2,900)($7,652)Adjusted$2,864(21.9)%(20.9)%EPSGAAP($3.36)($8.85)Adjusted$3.32(21.7)%(20.7)%YTD23 GAAP includes$5.5 billion after-tax charge for opioid-related claims and lawsuits and$1.5 billion after-tax gain on sale of ABC and Opt

48、ion Care Health sharesYTD22 GAAP includes$2.5 billion after-tax gain on investments in VillageMD and Shields,$420 million after-tax gain on sale of ABC shares offset by$532 million after-tax charge for opioid-related claims and lawsuitsRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 3

49、9,and reconciliations on slides 41-55U.S.Retail PharmacyFinancials13 2023 Walgreens Boots Alliance,Inc.All rights reserved.Comp sales growth+7.0%in 3Q compared to prior year+1.8%Adj.operating income growth of+8.4%excluding ABC in 3Q1.AOI margin excludes equity income from AmerisourceBergen$in millio

50、ns3Q23B/(W)vs.3Q22YTD23B/(W)vs.YTD22Sales$27,866+4.4%$82,648+0.3%Adj.gross profit$5,383(3.2)%$17,143(6.9)%Adj.SG&A%of sales16.3%1.6%p17.4%0.4%pAdj.operating income$962(0.4)%$3,134(26.1)%Adj.operating margin13.0%+0.1%p3.4%(1.2)%pRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and re

51、conciliations on slides 41-55U.S.Pharmacy14 2023 Walgreens Boots Alliance,Inc.All rights reserved.Comp sales+9.8%with growth primarily due to brand inflation and script growthComp scripts+1.6%;comp scripts excluding immunizations+2.8%in a slowing market 0.8 million COVID-19 vaccinations in 3Q23 vs.4

52、.7 million in 3Q22 Returned 300 stores to normal pharmacy operating hours in 3Q;optimizing operating hours in another 500 stores0.2 million COVID-19 PCR tests1in 3Q23 vs.3.9 million in 3Q22Gross margin negatively impacted in 3Q by fewer COVID-19 vaccinations and PCR tests,reimbursement pressure net

53、of procurement savings,and brand mix impactsGross profit increased year over year excluding COVID-191.COVID-19 PCR tests are excluded from 30-day equivalent prescription calculation3Q23 vs.3Q22|YTD23 vs.YTD223Q23Total3Q23 ComparableYTD23TotalYTD23ComparablePharmacy sales+6.3%+9.8%+0.7%+6.5%Prescript

54、ions+0.3%+1.6%(0.4)%(0.6)%Prescriptions ex.Immunizations+1.5%+2.8%+1.8%+2.8%Refer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55U.S.Retail15 2023 Walgreens Boots Alliance,Inc.All rights reserved.Comp ex.tobacco+0.2%including 90 bps impact from holiday

55、 seasonal weakness and 80 bps drag from lower sales of OTC test kits Comp led by strength in grocery&household+4.7%and beauty+3.7%Flat cough cold flu comp sales in 3Q,but significant slowdown in May and into 4Q against last years strong trendsDigital retail sales+19%on top of+25%last year,driven by

56、3.7 million same-day pick-up orders in 3QModest gross margin pressure in 3Q with accelerating growth in promotional units;YTD retail gross margin remains up over+100 bps year over year3Q23 vs.3Q22|YTD23 vs.YTD223Q23YTD23Total retail sales(1.0)%(0.7)%Comparable retail sales(0.2)%+0.0%Refer to safe ha

57、rbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55InternationalFinancials16 2023 Walgreens Boots Alliance,Inc.All rights reserved.$in millions3Q23Constant FxB/(W)vs.3Q22YTD23Constant FxB/(W)vs.YTD22Sales$5,573+6.9%$16,414+6.8%Adj.gross profit$1,173+10.3%$3,421+6.5%

58、Adj.SG&A%of sales17.3%(0.2)%p16.7%+0.7%pAdj.operating income$208+20.9%$676+26.9%Adj.operating margin3.7%+0.4%p4.1%+0.6%p3Q sales growth of+6.9%driven by Boots UK+10.2%and Germany wholesale+3.8%Double-digit gross profit growth reflects solid growth across all International marketsGermany integration

59、continues ahead of expectationsAOI growth of+21%despite$40 million year-over-year headwind from sale and leaseback transactionsRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Boots UKFinancials17 2023 Walgreens Boots Alliance,Inc.All rights reserv

60、ed.3Q23 vs.3Q22|YTD23 vs.YTD22(constant Fx)3Q23YTD23Pharmacy comp.sales+5.7%+2.1%Retail comp.sales+13.4%+12.7%Pharmacy comp sales+5.7%,the best performance in 6 quartersStrong retail comp sales+13.4%in 3Q Store footfall improved+7%vs.prior year Continued growth in store basket size,+20%vs.pre-COVID

61、levels9th consecutive quarter of retail market share expansion for Boots Gains across all categories,led by Beauty Successful launch of owned brand No7 Future Renew skincare range,with over 500,000 transactions in first four weeksB sales+25.2%vs.prior year,representing over 14%of Boots retail salesR

62、efer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55U.S.HealthcareFinancials18 2023 Walgreens Boots Alliance,Inc.All rights reserved.U.S.Healthcare pro forma sales growth+22%to$2 billion in 3Q VillageMD+22%growth:organic growth and footprint expansion

63、Shields+35%growth:contract wins and expansion of existing partnerships CareCentrix+15%growth:new service offerings with existing partnershipsAdjusted EBITDA loss reflects new clinic expansions at VillageMD(45%of co-located clinics have been open less than one year),and fewer CityMD visits from fewer

64、 respiratory incidences,partly offset by positive contribution from Shields$in millions3Q23B/(W)vs.3Q22YTD23B/(W)vs.YTD22Sales$1,975+$1,379$4,597+$3,424Adj.gross profit$114+$135$267+$253Adj.SG&A($286)($179)($750)($517)Adj.operating loss($172)($44)($483)($265)Adj.EBITDA($113)($7)($346)($168)Refer to

65、safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55U.S.HealthcareKey Metrics 19 2023 Walgreens Boots Alliance,Inc.All rights reserved.Current Status1Organic Contracted Lives22.9MOrganic Partners(Payor/Provider)24VillageMD/Summit Health Value-Based Lives3850KS

66、ites of Care:Health Corners116VillageMD Co-Located Clinics217Total VillageMD/Summit/CityMD Locations870$millions3Q23Pro Forma YOY GrowthSales by Business:VillageMD$1,498+22%Shields$115+35%CareCentrix$359+15%Organic$2NMTotal U.S.Healthcare$1,975+22%1.Metrics as of May 31,2023 2.Organic business only;

67、excludes VillageMD,CareCentrix,and Shields 3.Includes all risk-based lives;full risk-lives of 179KRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Cash Flow20 2023 Walgreens Boots Alliance,Inc.All rights reserved.YTD cash generation of$1.2 billion

68、in operating cash flow and$116 million of free cash flowYear-over-year free cash flow adversely impacted by lower earnings primarily due to lapping COVID-19 vaccine and testing volumes,lower working capital contributions,and increased capex including growth initiativesImplemented capital and project

69、 spend reductions;working capital optimization program launched,benefitting FY24$in millionsYTD23B/(W)vs.YTD22Operating cash flow$1,219($2,595)Cash capital expenditures($1,633)($392)Acquisition-related payments$530$530Free cash flow$116($2,457)Refer to safe harbor and non-GAAP on slide 2,endnotes on

70、 slide 39,and reconciliations on slides 41-55WBA FY23 Outlook21 2023 Walgreens Boots Alliance,Inc.All rights reserved.Expecting core adj.EPS flat to+1%October 2022 June 2023Core business growth+8-10%+0-1%Fx impact(2)%(1)%Adjusted EPS$4.45-$4.65$4.00-$4.05FY23 guidanceAdj.EPS growthCOVID-19 headwind(

71、15)-(17)%(20)%growth YOY(8)-(12)%(20)-(21)%Lower COVID-19 contribution vs.original expectations($0.23)Deteriorating consumer conditions and recent cough cold flu slowdown($0.20-$0.25)Reduced ABC ownership net of interest savings($0.05)%growth YOY CFx(6)-(10)%(19)-(20)%Refer to safe harbor and non-GA

72、AP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55FY23 segment assumptions22 2023 Walgreens Boots Alliance,Inc.All rights reserved.WBASales raised with Summit Health deal,U.S.Retail Pharmacy upside,FxYTD sales above expectations with branded drug inflation and 1H retail strengthF

73、avorable Fx outlook vs.Oct.guidanceFY23(Jun-23)Comments$130.5-$134.0B$4.7-$4.9BFY23(Oct-22)U.S.Retail PharmacyInternationalU.S.Healthcare$105.5-$107.5B$4.5-$4.6B$20.4-$20.9B$830-$870M$4.9-$5.3B$(350)-$(330)M$(240)-$(220)M$137.3-$139.3B$3.9-$4.1B$109.0-$110.0B$3.8-$3.9B$22.0-$22.5B$900-$920M$6.3-$6.8

74、B$(600)-$(550)M$(380)-$(340)MSalesAOISalesAOISalesAOISalesAOIAdj.EBITDAAOI reflects consumer&COVID-19 headwinds,U.S.Healthcare below expectationsAOI reflects lower COVID-19 demand,reduced ABC stake,shifting consumer behaviorsStrong execution across all international markets led by Boots UKAccelerate

75、d integration initiatives underway to drive strong sequential adj.EBITDA improvement in 4QAdj.EBITDA reflects recent VMD clinic expansion,fewer CityMD visits due to weaker respiratory season,and continued integration of Summits multi-specialty businessesAdj.EPS Impact1$(0.25)-$(0.23)$(0.25)-$(0.23)1

76、Impact includes AOI,tax,NCIRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55FY23 corporate assumptions23 2023 Walgreens Boots Alliance,Inc.All rights reserved.Adj.Tax RateShare RepurchasesM&A ActivityBetter than expected performance through 3Q to r

77、everse with 4Q adjusted tax rate of 23%Anti-dilutive share purchases onlyFY23 guidance assumes current company structureInterest ExpenseHigher debt levels related to Summit Health transaction and higher average interest ratesEMI/NCIReflects Summit Health transaction,and accelerated Shields and CareC

78、entrix full ownershipFY23(Jun-23)Comments16%$-$(500)-$(490)$175-$19012%$-$(600)-$(580)$335-$355$millionsCorporate Costs/Other$(240)-$(230)$(210)-$(200)Transformational Cost Management Program savings and incentive accrualsFY23(Oct-22)Refer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,

79、and reconciliations on slides 41-55WBA FY24 Preliminary Commentary24 2023 Walgreens Boots Alliance,Inc.All rights reserved.Long-term tailwinds outweigh near-term headwindsTailwindsHeadwindsU.S.Healthcare scaling and synergies,with significant step-up in profitabilityTargeted actions to improve profi

80、tabilityMaturing VillageMD clinic profileFull year of Summit Health contributionContinued Rx volume growth,supported by differentiated pharmacy modelFront of store initiatives gaining tractionTransformational Cost Management Program cost savings of$800M in FY24Consumer sentiment and spendingOngoing

81、reimbursement pressureWages and inflationLower COVID-related demandStep-down in sale and leaseback activityHigher effective tax rateNeutralCurrencyRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Expecting LSD-MSD AOI growth;AOI growth outpaces adj

82、.EPS due to higher tax rate/non-controlling interest25 2023 Walgreens Boots Alliance,Inc.All rights reserved.Expecting AOI decline due to prior year asset mobilization gains and Chile saleContinued strong execution and TCMP savings offsetting high labor and cost inflationU.S.HealthcareU.S.Retail Pha

83、rmacyInternationalExpecting significant AOI growth from first full year of Summit Health,VillageMD clinic maturation,and Shields/CareCentrixTaking immediate actions to optimize path to profitabilityRaising and accelerating Summit Health synergy targetExpecting AOI flat to down,absorbing lower COVID-

84、19,step down in sale and leaseback gains,and reduced ABC ownership stakeGross profit growing(ex.COVID-19),boosted by script growth and retail initiatives(owned brands,CPI);TCMP savings help offset labor costs and investmentsRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconc

85、iliations on slides 41-55U.S.Pharmacy Profit Growth Drivers 2023 Walgreens Boots Alliance,Inc.All rights reserved.26 Differentiated tech-enabled operating model underpins growth;becoming the pharmacy practice setting of choice Expecting solid comp script growth ex.immunizations from improved operati

86、ng hours,increased access,and growth in specialty Investments in microfulfillment centers,centralization,and AI/IVR free up capacity to expand pharmacy services Integrating clinical assets,driving strong quality measures and payor engagement across pharmacy business and U.S.Healthcare segment Aligne

87、d enterprise B2B sales and contracting teams under recently appointed,experienced healthcare leadership,to sell integrated services that improve outcomes and lower cost of care for payors/health systemsExpecting U.S.pharmacy gross profit growth ex.COVID-19Refer to safe harbor and non-GAAP on slide 2

88、,endnotes on slide 39,and reconciliations on slides 41-55U.S.Retail Profit Growth Drivers 2023 Walgreens Boots Alliance,Inc.All rights reserved.27Category performance improvement program enables assortment decisions delivering at least$200 million run-rate savings by FY24Accelerating margin-accretiv

89、e owned brandsDriving convenience through scaling digital and omnichannel platform,with digitally-enabled retail sales to grow HSDEvolving our format and product offering to create more value for the healthcare consumer Improving the in-store experience by reducing executional complexities Projectin

90、g retail gross profit growth led by LSD comp growth and continued margin improvementRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55U.S.Healthcare Right to Win 2023 Walgreens Boots Alliance,Inc.All rights reserved.28Unique capabilities:Leveraging

91、our trusted brand and high-quality assets to create significant synergies with Walgreens and be the independent partner of choiceScaling business:Exiting FY23 with run-rate sales$8 billion,pro forma growth+25%Addressing underperformance at VillageMD and Summit Health,with immediate actions in place

92、to accelerate path to profitability Focused marketing to grow CityMD patient base and optimizing cost structure through integration initiatives Leveraging WBA marketing expertise to accelerate VillageMD patient panel growth Strengthening management:new VillageMD CFO in place Raising VillageMD/Summit

93、 Health synergy targetQuickly scaling our U.S.Healthcare business with sharper focus on profitabilityRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Summit Health Profit Drivers 2023 Walgreens Boots Alliance,Inc.All rights reserved.29 First full y

94、ear of profit contribution in FY24 Rebound in top-line growth at CityMD,driven by targeted marketing Improving profit from optimizing CityMD clinic operations and integrating prior Summit acquisitions Multi-specialty sales growth from increasing provider counts and referralsacross Summits network,in

95、 addition to improved productivity per provider Raising and accelerating synergy capture goal to$200M in calendar year 2026 from$150M in calendar year 2027Summit Health expected to drive meaningful U.S.Healthcare AOI growthRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconci

96、liations on slides 41-55VillageMD Profit Drivers 2023 Walgreens Boots Alliance,Inc.All rights reserved.30 Optimizing for regional density in existing markets Exploring new asset-light and virtual models to improve access and return on investment Focusing marketing efforts to drive overall patient pa

97、nel growth in existing clinics New leadership tasked to accelerate cost control to meet profitability goals Strong risk performance driven by maturing clinic profile,accelerating fee for service conversion to risk,and continued MLR improvementVillageMD leveraging existing scale to pivot to profitabl

98、e growthRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Scaling VillageMDs Model31 2023 Walgreens Boots Alliance,Inc.All rights reserved.Demonstrated ability to lower Medicare Advantage medical loss ratio(MLR)over time88.0%86.8%78.3%76.4%78.7%79.2

99、%71.9%74.0%71.1%ArizonaGeorgiaHouston202120222023E MLR performance has been strong across strategic marketsNote:2023E performance based on same store population;reflects clinics in more mature marketsRefer to safe harbor and non-GAAP on slide 2 and endnotes on slide 39Aligning enterprise B2B sales a

100、nd contracting teams under recently-appointed,experienced healthcare leadershipHorizon Blue Cross Blue Shield signed as fourth payor partner for Walgreens HealthShields and CareCentrix signed new deals with leading national health solution and care delivery organizationShields signed 6 new contracts

101、 YTDDriving results:32Health CornersB2B Sales&Contracting TeamPayorsHealth SystemsProviders 2023 Walgreens Boots Alliance,Inc.All rights reserved.Refer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Capital Allocation Priorities33 2023 Walgreens Boots

102、Alliance,Inc.All rights reserved.Investment in the Core Business Portfolio Simplification and Strategic M&A Capital Return to Shareholders Strong Balance Sheet and Solid Credit Rating1234Growing dividend over timeExcess liquidity for share repurchaseMaintain strong balance sheetSolid investment grad

103、e credit ratingPortfolio simplification to unlock valueValue-accretive M&A(bolt-on)aligned to strategyDisciplined,returns-based investment with reprioritized project spendFocus is on core investments,debt paydown,and dividendRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and recon

104、ciliations on slides 41-5534Raising Transformational Cost Management Program target to$4.1 billion with$800 million of savings in FY24 Increased goal driven by execution to date and expansion of program Sixth target increase since program inception Savings help offset headwinds and fuel growth inves

105、tments Robust pipeline of additional opportunities Savings in$BIncremental In-Year SavingsCumulative SavingsFY19+$0.3$0.3FY20+$1.0$1.3FY21+$0.8$2.1FY22+$0.6$2.7FY23+$0.6$3.3FY24+$0.8$4.1Total Program Targeted Savings$4.1Prior FY24 Target$3.5 2023 Walgreens Boots Alliance,Inc.All rights reserved.Refe

106、r to safe harbor and non-GAAP on slide 2 and endnotes on slide 39Organization restructuring Transforming headquarters to better align to strategic prioritiesPharmacy of the future operating modelOptimizing labor model elevating pharmacist and patient engagement,AI/tech-enabled centralization of in-s

107、tore activities,telepharmacy solutions drive efficiencies and script upliftAllianceRx integrationFull integration and alignment to Walgreens Specialty Pharmacy strategy,cost synergies for back-office integration completed with further opportunities to pursueLocation optimization and store operating

108、hoursFocusing on marketplace strategy,closing additional stores,select format investments,rightsizing store operating hours35 2023 Walgreens Boots Alliance,Inc.All rights reserved.Increased Transformational Cost Management Program savings target supported by new initiativesRefer to safe harbor and n

109、on-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Accelerating portfolio simplification36 2023 Walgreens Boots Alliance,Inc.All rights reserved.Reached agreement for the sale of the Farmacias Ahumada chain in Chile,with transaction expected to be completed by the end of cale

110、ndar 2023Completed exit from Option Care Health with sale of remaining 10.8 million shares for proceeds of approximately$330 million in June;total proceeds of approximately$800 million YTDSuccessfully completed monetization of partial holdings in ABC shares via Variable Prepaid Forward structure,wit

111、h no dilutive impact to WBAs adj.EPS until 4Q FY25;ABC proceeds of$4.1 billion YTD with remaining stake valued at$5 billionRefer to safe harbor and non-GAAP on slide 2,endnotes on slide 39,and reconciliations on slides 41-55Building momentum and accelerating our healthcare transformation37 2023 Walg

112、reens Boots Alliance,Inc.All rights reserved.Returned to adj.EPS growth in 3Q with strong sales growth Taking immediate actions to drive sustainable core growth and deliver shareholder value Pivoting our healthcare focus to accelerating profitability Fueling our transformation through portfolio simp

113、lification while remaining committed to capital allocation prioritiesQ&A 2023 Walgreens Boots Alliance,Inc.All rights reserved.382023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39Endnotes39Pleaseseeappendixforreconciliationsofnon-GAAPfinancialmeas

114、uresandrelateddisclosures.TheCompanypresentscertaininformationrelatedtocurrentperiodoperatingresultsin“constantcurrency,”whichisanon-GAAPfinancialmeasure.Theseamountsarecalculatedbytranslatingcurrentperiodresultsattheforeigncurrencyexchangeratesusedinthecomparableperiodintheprioryear.TheCompanyprese

115、ntssuchconstantcurrencyfinancialinformationbecauseithassignificantoperationsoutsideoftheUnitedStatestransactingincurrenciesotherthantheU.S.dollarandthispresentationprovidesaframeworktoassesshowitsbusinessperformedexcludingtheimpactofforeigncurrencyexchangeratefluctuations.U.S.RetailPharmacysegmentGA

116、APresults,dollarsinmillions3Q23:grossprofit$5,327;selling,generalandadministrativeexpenses$4,990;SG&Aasapercentofsales17.9%;operatingincome$395;andoperatingmarginexcludingequityearningsinAmerisourceBergen1.2%.YTD23:grossprofit$17,038;selling,generalandadministrativeexpenses$22,215;SG&Aasapercentofsa

117、les26.9%;operatingloss$4,990;andoperatingmarginexcludingequityearningsinAmerisourceBergen(6.3)%.InternationalsegmentGAAPresultsonareportedcurrencybasis,dollarsinmillions3Q23:grossprofit$1,173;selling,generalandadministrativeexpenses$1,475;SG&Aasapercentofsales26.5%;operatingloss$302;andoperatingmarg

118、in(5.4)%.In3Q23comparedtoyear-agoquarter,onareportedcurrencybasis,thesegmentssalesincreased5.0%;andoperatingmargindecreased7.3percentagepoints.YTD23:grossprofit$3,421;selling,generalandadministrativeexpenses$3,264;SG&Aasapercentofsales19.9%;operatingincome$156;andoperatingmargin1.0%.InYTD23comparedt

119、oyear-agoperiod,onareportedcurrencybasis,thesegmentssalesdecreased1.6%;andoperatingmargindecreased1.0percentagepoint.U.S.HealthcaresegmentGAAPresults,dollarsinmillions3Q23:grossprofit$89;selling,generalandadministrativeexpenses$611;SG&Aasapercentofsales30.9%;andoperatingloss$522.YTD23:grossprofit$13

120、8;selling,generalandadministrativeexpenses$1,569;SG&Aasapercentofsales34.1%;andoperatingloss$1,431.Adjustedgrossmarginisanon-GAAPfinancialmeasuredefinedasadjustedgrossprofitbysegmentdividedbysegmentsales.Adjustedgrossprofitisanon-GAAPfinancialmeasuredefinedasgrossprofitbysegment,excludingtheimpactof

121、costsassociatedwithLIFOprovision,acquisition-relatedamortizationandacquisition-relatedcosts.TheCompanyisprovidingcomparativedatarelatingtothesenon-GAAPfinancialmeasurestoprovideinvestorswithadditionalperspectiveandinsightswhenanalyzingthecoreoperatingperformanceofthesegmentsfromperiodtoperiod.Adjust

122、edEBITDAmarginfortheU.S.Healthcaresegmentisanon-GAAPfinancialmeasuredefinedasAdjustedEBITDAdividedbysegmentsales.FortheCompanysU.S.Healthcaresegment,AdjustedEBITDAisdefinedassegmentoperatingincome/(loss)beforedepreciation,amortization,andstock-basedcompensation;inadditiontotheseitems,theCompanyexclu

123、descertainothernon-GAAPadjustments,whentheyoccur,asfurtherdefined.AllreferencestonetearningsornetlossaretonetearningsornetlossattributabletoWBA,andallreferencestoEPSaretodilutedEPSattributabletoWBA.FortheCompanysU.S.RetailPharmacyandInternationalsegments,comparablesalesaredefinedassalesfromstorestha

124、thavebeenopenforatleasttwelveconsecutivemonthswithoutclosureforsevenormoreconsecutivedays,includingduetostoredamage,andwithoutamajorremodelorbeingsubjecttoanaturaldisasterinthepasttwelvemonthsaswellase-commercesales.E-commercesalesincludedigitallyinitiatedsalesonlineorthroughmobileapplications.Reloc

125、atedstoresarenotincludedascomparablesalesforthefirsttwelvemonthsaftertherelocation.Acquiredstoresarenotincludedascomparablesalesforthefirsttwelvemonthsafteracquisitionorconversion,whenapplicable,whicheverislater.Comparablesales,comparablepharmacysales,comparableretailsales,comparablenumberofprescrip

126、tionsandcomparablenumberof30-dayequivalentprescriptionsrefertototalsales,pharmacysales,retailsales,numberofprescriptionsandnumberof30-dayequivalentprescriptions,respectively.Themethodofcalculatingcomparablesalesvariesacrosstheretailindustry.Asaresult,ourmethodofcalculatingcomparablesalesmaynotbethes

127、ameasotherretailersmethods.WithrespecttotheInternationalsegment,comparablesales,comparablepharmacysalesandcomparableretailsales,arepresentedonaconstantcurrencybasis,whichisanon-GAAPfinancialmeasure.Refertothediscussionaboveforfurtherdetailsonconstantcurrencycalculations.U.S.RetailPharmacyprescriptio

128、ns(includingvaccination)arereportedona30-dayequivalentbasis.PrescriptionmarketshareinformationisanestimatederivedfromtheuseofinformationunderlicensefromIQVIAPrescriptionServicesasofMay31,2023.IQVIAexpresslyreservesallrights,includingrightsofcopying,distributionandrepublication.U.S.RetailPharmacyrefi

129、llscriptsinitiatedviadigitalchannelisinclusiveofprescriptionsfilledatWalgreensandDuaneReade.BootsUKretailmarketshareinsights,wherequoted,asofMay13,2023.FortheU.S.Healthcaresegment,theCompanyconsiderscertainmetrics,suchasnumberofpayor/providerpartnershipsatperiodend,numberoflocationsofWalgreensHealth

130、Cornersatperiodend,numberofVillageMDco-locatedclinicsatperiodendandnumberoftotalVillageMD/Summit/CityMDlocationsatperiodend,tobekeyperformanceindicatorsbecausetheCompanysmanagementhasevaluateditsresultsofoperationsusingthesemetricsandbelievesthatthesekeyperformanceindicatorspresentedprovideadditiona

131、lperspectiveandinsightswhenanalyzingthecoreoperatingperformanceoftheCompanyfromperiodtoperiodandtrendsinitshistoricaloperatingresults.Thesekeyperformanceindicatorsshouldnotbeconsideredsuperiorto,asasubstitutefororasanalternativeto,andshouldbeconsideredinconjunctionwith,theGAAPfinancialmeasurespresen

132、tedherein.Thesemeasuresmaynotbecomparabletosimilarly-titledperformanceindicatorsusedbyothercompanies.WithrespecttothetotalnumberofVillageMDlocations,locationsaredefinedastheprimarycarelocationswheretheCompanyortheCompanysaffiliatesleaseorlicensespaceandtheprovidersareemployedbyeithertheCompanyoroneo

133、ftheCompanysaffiliates.TheselocationsareprimarilybrandedasVillageMedicalwheretheCompanyemploystheprovidersbut,insomeinstances,mayoperateundertheirownbrands.Workingcapitalincludeschangesinthefollowingoperatingassetsandliabilities:accountsreceivablenet;inventories;othercurrentassets;tradeaccountspayab

134、le;andaccruedexpensesandotherliabilities.Digitallyinitiatedsalesincludeonlineordersandmobileapplicationpurchasesofretailproducts,photoanddigitalscripts,includingSaveaTriprefills.2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39Appendix40Theinform

135、ationonthefollowingpagesprovidesreconciliationsofthesupplementalnon-GAAPfinancialmeasures,asdefinedunderSECrules,presentedinthispresentationanddiscussedontherelatedconferencecalltothemostdirectlycomparablefinancialmeasurescalculatedandpresentedinaccordancewithgenerallyacceptedaccountingprinciplesint

136、heUnitedStates(GAAP).TheCompanyhasprovidedthenon-GAAPfinancialmeasuresinthepresentation,whicharenotcalculatedorpresentedinaccordancewithGAAP,assupplementalinformationandinadditiontothefinancialmeasuresthatarecalculatedandpresentedinaccordancewithGAAP.Pleaserefertothenotestothe“NetEarnings(Loss)toAdj

137、ustedNetEarningsandDilutedNetEarnings(Loss)PerSharetoAdjustedDilutedNetEarningsPerShare”reconciliationtableonslide46fordefinitionsofnon-GAAPfinancialmeasuresandrelatedadjustmentspresentedinthispresentation.Thesesupplementalnon-GAAPfinancialmeasuresarepresentedbecausemanagementhasevaluatedtheCompanys

138、financialresultsbothincludingandexcludingtheadjusteditemsortheeffectsofforeigncurrencytranslation,asapplicable,andbelievethatthesupplementalnon-GAAPfinancialmeasurespresentedprovideadditionalperspectiveandinsightswhenanalyzingthecoreoperatingperformanceoftheCompanysbusinessfromperiodtoperiodandtrend

139、sintheCompanyshistoricaloperatingresults.Thesesupplementalnon-GAAPfinancialmeasuresshouldnotbeconsideredsuperiorto,asasubstitutefororasanalternativeto,andshouldbeconsideredinconjunctionwith,theGAAPfinancialmeasurespresentedinthepresentation.TheCompanydoesnotprovideareconciliationfornon-GAAPestimates

140、onaforward-lookingbasis(includingtheinformationrelatedtofiscalyear2023guidance)whereitisunabletoprovideameaningfuloraccuratecalculationorestimationofreconcilingitemsandtheinformationisnotavailablewithoutunreasonableeffort.Thisisduetotheinherentdifficultyofforecastingthetimingoramountofvariousitemsth

141、athavenotyetoccurred,areoutoftheCompanyscontroland/orcannotbereasonablypredicted,andthatwouldimpactdilutednetearningspershare,themostdirectlycomparableforward-lookingGAAPfinancialmeasure.Forthesamereasons,theCompanyisunabletoaddresstheprobablesignificanceoftheunavailableinformation.Forward-lookingno

142、n-GAAPfinancialmeasuresprovidedwithoutthemostdirectlycomparableGAAPfinancialmeasuresmayvarymateriallyfromthecorrespondingGAAPfinancialmeasures.TheCompanyconsiderscertainmetrics,suchascomparablesales,comparablepharmacysales,comparableretailsales,comparablenumberofprescriptions,andcomparable30-dayequi

143、valentprescriptions,numberofpayor/providerpartnerships,numberoflocationsofWalgreensHealthCorners,numberofco-locatedVillageMDclinicsandnumberoftotalVillageMD/Summit/CityMDlocations,atperiodend,tobekeyperformanceindicatorsbecausetheCompanysmanagementhasevaluateditsresultsofoperationsusingthesemetricsa

144、ndbelievesthatthesekeyperformanceindicatorspresentedprovideadditionalperspectiveandinsightswhenanalyzingthecoreoperatingperformanceoftheCompanyfromperiodtoperiodandtrendsinitshistoricaloperatingresults.Thesekeyperformanceindicatorsshouldnotbeconsideredsuperiorto,asasubstitutefororasanalternativeto,a

145、ndshouldbeconsideredinconjunctionwith,theGAAPfinancialmeasurespresentedherein.Thesemeasuresmaynotbecomparabletosimilarly-titledperformanceindicatorsusedbyothercompanies.Amountsmaynotaddduetorounding.Allpercentagesandratioshavebeencalculatedusingunroundedamounts.Certainassumptionsandsupplementalinfor

146、mationUnlessotherwiseindicatedorthecontextotherwiserequires:Thispresentationassumesconstantcurrencyexchangeratesafterthedatehereofbasedoncurrentrates;andAllfinancialestimatesandgoalsassumeconstantcurrencyexchangeratesafterthedatehereofbasedoncurrentratesandnomajormergers,acquisitions,divestituresors

147、trategictransactions.Referencesinthispresentationtothe“company,”“we,”“us”or“our”refertoWalgreensBootsAlliance,Inc.anditssubsidiaries,anddonotincludeunconsolidatedpartially-ownedentities,exceptasotherwiseindicatedorthecontextotherwiserequires.OurfiscalyearendsonAugust31,andreferenceshereinto“fiscal20

148、23refertoourfiscalyearendingAugust31,2023.2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ReconciliationofNon-GAAPfinancialmeasuresWalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions,exceptnetdebtratioandlease

149、adjustednetdebtratio)LEASEADJUSTEDNETDEBTAsofMay31,2023Totaldebt(GAAP)1$11,902Less:Cashandcashequivalents(GAAP)2(970)Netdebt10,932Operatingleaseobligations(GAAP)324,537Financeleaseobligations(GAAP)3982Less:Non-contractualleasepayments4(2,661)Less:Contractualsubleaseincome5(482)Leaseadjustednetdebt(N

150、on-GAAPmeasure)$33,30841TheCompanydefinesnetdebtratioasnetdebtdividedbyadjustedearningsbeforeinterest,tax,depreciationandamortization(AdjustedEBITDA)andleaseadjustednetdebtratioasleaseadjustednetdebtdividedbyAdjustedEBITDAbeforefixedoperatingleasecosts(AdjustedEBITDAR).Furtherdefinitionsandreconcili

151、ationstotheclosestGAAPmeasuresareincludedbelow.Managementusesleaseadjustednetdebt,netdebtratioandleaseadjustednetdebtratioassupplementalmeasurestoGAAPmeasurestoreviewtheliquidityofoperations.WebelievethatthesemeasuresareusefulindicatorstoassessthestrengthoftheCompanysbalancesheetanditsabilitytomeeti

152、tsfinancialobligations.NetDebtisnotameasureofourliquidityunderGAAPandshouldnotbeconsideredasanalternativetoCashFlowsfromOperatingActivitiesorCashFlowsfromFinancingActivities.NETDEBTRATIOAsofMay31,2023Netdebt$10,932AdjustedEBITDA(Non-GAAPmeasure)65,494Netdebtratio2.0XLEASEADJUSTEDNETDEBTRATIOAsofMay3

153、1,2023Leaseadjustednetdebt(Non-GAAPmeasure)$33,308AdjustedEBITDAR(Non-GAAPmeasure)78,849Leaseadjustednetdebtratio3.8X1Representsshort-termdebtandtotallong-termdebt,includingthecurrentportionoflong-termdebtreportedontheCompanysconsolidatedcondensedbalancesheetasofMay31,2023.2RepresentsCashandcashequi

154、valentsandMarketablesecuritiesreportedontheCompanysconsolidatedcondensedbalancesheetsasofMay31,2023.3Representsthecurrentandlong-termportionofoperatingandfinanceleaseobligationsreportedontheCompanysconsolidatedcondensedbalancesheetasofMay31,2023.4Non-contractualleasepaymentsrepresentthepresentvalueo

155、ftheCompanysoperatingleaseobligationsrelatedtooptionalrenewalperiodsthathavenotbeencontractuallyexercisedbutarereasonablycertainofbeingexercised,discountedusingtheCompanysweightedaverageincrementalborrowingrateovertheweightedaverageremainingleaseterm.5Contractualsubleaseincomerepresentsfuturesubleas

156、erentalincomeduetotheCompanyundernon-cancelablesubleaseterms,discountedusingtheCompanysweightedaverageincrementalborrowingrateovertheweightedaverageremainingleaseterm.6TheCompanydefinesAdjustedEBITDAasoperatingincome/(loss)beforedepreciation,amortization,andstock-basedcompensation;inadditiontothesei

157、tems,theCompanyexcludescertainothernon-GAAPadjustments,whentheyoccur,asfurtherdefined.AdjustedEBITDAiscalculatedforthetrailingtwelvemonthperiodendedMay31,2023.7TheCompanydefinesAdjustedEBITDARasAdjustedEBITDAbeforefixedoperatingleasecost.AdjustedEBITDARiscalculatedforthetrailingtwelvemonthperiodende

158、dMay31,2023.2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ReconciliationofNon-GAAPfinancialmeasuresNETLOSSTOADJUSTEDOPERATINGINCOME,ADJUSTEDEBITDAandADJUSTEDEBITDARAsReportedTwelvemonthsendedMay31,2023Netloss(GAAP)$(3,821)Post-taxearningsfromo

159、therequitymethodinvestments(39)Incometaxbenefit(1,942)Interestexpense,net530Otherincome,net(1,981)Operatingloss(GAAP)(7,253)Certainlegalandregulatoryaccrualsandsettlements17,283Acquisition-relatedamortization21,090Transformationalcostmanagement31,002Acquisition-relatedcosts4326Adjustmentstoequityear

160、ningsinAmerisourceBergen5241LIFOprovision6160Impairmentofintangibleassets71,082Adjustedoperatingincome(Non-GAAPmeasure)3,932Depreciationexpense1,420Stock-basedcompensationexpense8142AdjustedEBITDA(Non-GAAPmeasure)5,494Operatingleasecost93,355AdjustedEBITDAR(Non-GAAPmeasure)$8,84942WalgreensBootsAlli

161、ance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions)2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ReconciliationofNon-GAAPfinancialmeasures1Certainlegalandregulatoryaccrualsandsettlementsrelatetosignificantchargesassociatedwi

162、thcertainlegalproceedings,includinglegaldefensecosts.TheCompanyexcludesthesechargeswhenevaluatingoperatingperformancebecauseitdoesnotincursuchchargesonapredictablebasisandexclusionofsuchchargesenablesmoreconsistentevaluationoftheCompanysoperatingperformance.ThesechargesarerecordedwithinSelling,gener

163、alandadministrativeexpenses.DuringthetrailingtwelvemonthsendedMay31,2023,theCompanyrecordedchargesrelatedtothepreviouslyannouncedopioidlitigationsettlementframeworksandcertainotherlegalmatters.2Acquisition-relatedamortizationincludesamortizationofacquisition-relatedintangibleassets,inventoryvaluatio

164、nadjustmentsandstock-basedcompensationfairvaluationadjustments.Amortizationofacquisition-relatedintangibleassetsincludesamortizationofintangibleassetssuchascustomerrelationships,tradenames,trademarks,developedtechnologyandcontractintangibles.Intangibleassetamortizationexcludedfromtherelatednon-GAAPm

165、easurerepresentstheentireamountrecordedwithintheCompanysGAAPfinancialstatements.Therevenuegeneratedbytheassociatedintangibleassetshasnotbeenexcludedfromtherelatednon-GAAPmeasures.Amortizationexpense,unliketherelatedrevenue,isnotaffectedbyoperationsofanyparticularperiodunlessanintangibleassetbecomesi

166、mpaired,ortheestimatedusefullifeofanintangibleassetisrevised.ThesechargesareprimarilyrecordedwithinSelling,generalandadministrativeexpenses.Thestock-basedcompensationfairvaluationadjustmentreflectsthedifferencebetweenthefairvaluebasedremeasurementofawardsunderpurchaseaccountingandthegrantdatefairval

167、uation.Post-acquisitioncompensationexpenserecognizedinexcessoftheoriginalgrantdatefairvalueofacquireeawardsareexcludedfromtherelatednon-GAAPmeasuresasthesearisefromacquisition-relatedaccountingrequirementsoragreements,andarenotreflectiveofnormaloperatingactivities.3TransformationalCostManagementProg

168、ramchargesarecostsassociatedwithaformalrestructuringplan.ThesechargesareprimarilyrecordedwithinSelling,generalandadministrativeexpenses.Thesecostsdonotreflectcurrentoperatingperformanceandareimpactedbythetimingofrestructuringactivity.4Acquisition-relatedcostsaretransactionandintegrationcostsassociat

169、edwithcertainmerger,acquisitionanddivestituresrelatedactivities.Thesecostsincludechargesincurredrelatedtocertainmergers,acquisitionanddivestituresrelatedactivitiesrecordedinoperatingincome,forexample,costsrelatedtointegrationeffortsformerger,acquisitionanddivestituresactivities.Examplesofsuchcostsin

170、cludedealcosts,severance,stockcompensationandemployeetransactionsuccessbonuses.ThesechargesareprimarilyrecordedwithinSelling,generalandadministrativeexpenses.Thesecostsaresignificantlyimpactedbythetimingandcomplexityoftheunderlyingmerger,acquisitionanddivestituresrelatedactivitiesanddonotreflecttheC

171、ompanyscurrentoperatingperformance.5AdjustmentstoequityearningsinAmerisourceBergenconsistoftheCompanysproportionateshareofnon-GAAPadjustmentsreportedbyAmerisourceBergenconsistentwiththeCompanysnon-GAAPmeasures.6TheCompanysU.S.RetailPharmacysegmentinventoryisaccountedforusingthelast-in-first-out(“LIF

172、O”)method.ThisadjustmentrepresentstheimpactoncostofsalesasiftheU.S.RetailPharmacysegmentinventoryisaccountedforusingfirst-infirst-out(“FIFO”)method.TheLIFOprovisionisaffectedbychangesininventoryquantities,productmix,andmanufacturerpricingpractices,whichmaybeimpactedbymarketandotherexternalinfluences

173、.Therefore,theCompanycannotcontroltheamountsrecognizedortimingoftheseitems.7ImpairmentofintangibleassetsdonotrelatetotheordinarycourseoftheCompanysbusiness.TheCompanyexcludesthesechargeswhenevaluatingoperatingperformancebecauseitdoesnotincursuchchargesonapredictablebasisandexclusionofsuchchargesenab

174、lesmoreconsistentevaluationoftheCompanysoperatingperformance.ThesechargesarerecordedwithinSelling,generalandadministrativeexpenses.DuringthethreemonthsendedMay31,2023,theCompanyrecognizeda$431millionimpairmentofpharmacylicenseintangibleassetsinBootsUKofwhich$132millionwasattributedtoadditionalstorec

175、losuresrecognizedaspartoftheTransformationalCostManagementProgram.8IncludesGAAPstock-basedcompensationexpenseexcludingexpensesrelatedtoacquisition-relatedamortizationandacquisition-relatedcosts.9RepresentsfixedoperatingleasecostforthetrailingtwelvemonthsendedMay31,2023.WalgreensBootsAlliance,Inc.and

176、SubsidiariesSupplementalInformation(unaudited)432023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage3944ReconciliationofNon-GAAPfinancialmeasuresWalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions,exceptpershareamou

177、nts)NETEARNINGS(LOSS)TOADJUSTEDNETEARNINGSANDDILUTEDNETEARNINGS(LOSS)PERSHARETOADJUSTEDDILUTEDNETEARNINGSPERSHAREThreemonthsendedMay31,Changevs.3Q22NinemonthsendedMay31,Changevs.FY2220232022AmountPercent20232022AmountPercentNetearnings(loss)attributabletoWalgreensBootsAlliance,Inc.(GAAP)$118$289$(17

178、1)(59.1)%$(2,900)$4,752$(7,652)NMAdjustmentstooperating(loss)income:Certainlegalandregulatoryaccrualsandsettlements12687347,249 734Acquisition-relatedamortization2274201851 616Transformationalcostmanagement3414185697 458Impairmentofintangibleassets4299299 Acquisition-relatedcosts57040257 155Adjustme

179、ntstoequityearningsinAmerisourceBergen66160178 155LIFOprovision7515589 64Totaladjustmentstooperating(loss)income1,4361,2759,620 2,181Adjustmentstootherincome,net:Gainonsaleofequitymethodinvestments8(179)(421)(1,692)(421)Gainsoninvestments,net9(76)(76)(2,576)Impairmentofequitymethodinvestmentandinves

180、tmentsindebtandequitysecurities10 190Adjustmenttogainondisposalofdiscontinuedoperations11 38Lossoncertainnon-hedgingderivatives122626 1Totaladjustmentstootherincome,net(229)(421)(1,742)(2,768)Adjustmentstointerestexpense,net:Earlydebtextinguishment13404Totaladjustmentstointerestexpense,net404Adjustm

181、entstoincometax(benefit)provision:Equitymethodnon-cashtax14102533 55Taximpactofadjustments14(408)(331)(1,968)(466)Totaladjustmentstoincometax(benefit)provision(397)(306)(1,935)(411)Adjustmentstopost-taxearningsfromotherequitymethodinvestments:Adjustmentstoearningsfromotherequitymethodinvestments1592

182、431 49Totaladjustmentstopost-taxearningsfromotherequitymethodinvestments92431 49NM-Notmeaningful.Percentageincreasesabove200%orwhenoneperiodincludesincomeandotherperiodincludeslossareconsiderednotmeaningful.2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnot

183、esonpage3945ReconciliationofNon-GAAPfinancialmeasuresWalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions,exceptpershareamounts)NETEARNINGS(LOSS)TOADJUSTEDNETEARNINGSANDDILUTEDNETEARNINGS(LOSS)PERSHARETOADJUSTEDDILUTEDNETEARNINGSPERSHAREThreemonthsendedMay31,Change

184、vs.3Q22NinemonthsendedMay31,Changevs.FY2220232022AmountPercent20232022AmountPercentAdjustmentstonetlossattributabletonon-controllinginterests:Transformationalcostmanagement3(1)Earlydebtextinguishment13(1)(1)Acquisition-relatedcosts5(16)2(71)(18)Acquisition-relatedamortization2(61)(31)(139)(119)Total

185、adjustmentstonetlossattributabletonon-controllinginterests(77)(31)(210)(140)AdjustednetearningsattributabletoWalgreensBootsAlliance,Inc.(Non-GAAPmeasure)$860$834$26 3.1%$2,864$3,667$(803)(21.9)%DILUTEDNETEARNINGS(LOSS)PERSHAREDilutednetearnings(loss)percommonshare(GAAP)16$0.14$0.33$(0.20)(59.0)%$(3.

186、36)$5.49$(8.85)NMAdjustmentstooperating(loss)income1.661.4711.14 2.52Adjustmentstootherincome,net(0.27)(0.49)(2.02)(3.20)Adjustmentstointerestexpense,net0.01 0.01Adjustmentstoincometax(benefit)provision(0.46)(0.35)(2.24)(0.47)Adjustmentstopost-taxearningsfromotherequitymethodinvestments0.010.030.04

187、0.06Adjustmentstonetlossattributabletonon-controllinginterests(0.09)(0.04)(0.24)(0.16)Adjusteddilutednetearningspercommonshare(Non-GAAPmeasure)17$1.00$0.96$0.03 3.3%$3.32$4.23$(0.92)(21.7)%Weightedaveragecommonsharesoutstanding,diluted(inmillions)17863.8865.3863.8 866.0NM-Notmeaningful.Percentageinc

188、reasesabove200%orwhenoneperiodincludesincomeandotherperiodincludeslossareconsiderednotmeaningful.2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ReconciliationofNon-GAAPfinancialmeasures1Certainlegalandregulatoryaccrualsandsettlementsrelatetosig

189、nificantchargesassociatedwithcertainlegalproceedings,includinglegaldefensecosts.TheCompanyexcludesthesechargeswhenevaluatingoperatingperformancebecauseitdoesnotincursuchchargesonapredictablebasisandexclusionofsuchchargesenablesmoreconsistentevaluationoftheCompanysoperatingperformance.Thesechargesare

190、recordedwithinSelling,generalandadministrativeexpenses.DuringthethreeandninemonthsendedMay31,2023,theCompanyrecordedchargesrelatedtothepreviouslyannouncedopioidlitigationsettlementframeworksandcertainotherlegalmatters.2Acquisition-relatedamortizationincludesamortizationofacquisition-relatedintangibl

191、eassets,inventoryvaluationadjustmentsandstock-basedcompensationfairvaluationadjustments.Amortizationofacquisition-relatedintangibleassetsincludesamortizationofintangibleassetssuchascustomerrelationships,tradenames,trademarks,developedtechnologyandcontractintangibles.Intangibleassetamortizationexclud

192、edfromtherelatednon-GAAPmeasurerepresentstheentireamountrecordedwithintheCompanysGAAPfinancialstatements.Therevenuegeneratedbytheassociatedintangibleassetshasnotbeenexcludedfromtherelatednon-GAAPmeasures.Amortizationexpense,unliketherelatedrevenue,isnotaffectedbyoperationsofanyparticularperiodunless

193、anintangibleassetbecomesimpaired,ortheestimatedusefullifeofanintangibleassetisrevised.ThesechargesareprimarilyrecordedwithinSelling,generalandadministrativeexpenses.Thestock-basedcompensationfairvaluationadjustmentreflectsthedifferencebetweenthefairvaluebasedremeasurementofawardsunderpurchaseaccount

194、ingandthegrantdatefairvaluation.Post-acquisitioncompensationexpenserecognizedinexcessoftheoriginalgrantdatefairvalueofacquireeawardsareexcludedfromtherelatednon-GAAPmeasuresasthesearisefromacquisition-relatedaccountingrequirementsoragreements,andarenotreflectiveofnormaloperatingactivities.3Transform

195、ationalCostManagementProgramchargesarecostsassociatedwithaformalrestructuringplan.ThesechargesareprimarilyrecordedwithinSelling,generalandadministrativeexpenses.Thesecostsdonotreflectcurrentoperatingperformanceandareimpactedbythetimingofrestructuringactivity.4Impairmentofintangibleassetsdonotrelatet

196、otheordinarycourseoftheCompanysbusiness.TheCompanyexcludesthesechargeswhenevaluatingoperatingperformancebecauseitdoesnotincursuchchargesonapredictablebasisandexclusionofsuchchargesenablesmoreconsistentevaluationoftheCompanysoperatingperformance.ThesechargesarerecordedwithinSelling,generalandadminist

197、rativeexpenses.DuringthethreemonthsendedMay31,2023,theCompanyrecognizeda$431millionimpairmentofpharmacylicenseintangibleassetsinBootsUKofwhich$132millionwasattributedtoadditionalstoreclosuresrecognizedaspartoftheTransformationalCostManagementProgram.5Acquisition-relatedcostsaretransactionandintegrat

198、ioncostsassociatedwithcertainmerger,acquisitionanddivestituresrelatedactivities.Thesecostsincludechargesincurredrelatedtocertainmergers,acquisitionanddivestituresrelatedactivitiesrecordedinoperatingincome,forexample,costsrelatedtointegrationeffortsformerger,acquisitionanddivestituresactivities.Examp

199、lesofsuchcostsincludedealcosts,severance,stockcompensationandemployeetransactionsuccessbonuses.ThesechargesareprimarilyrecordedwithinSelling,generalandadministrativeexpenses.Thesecostsaresignificantlyimpactedbythetimingandcomplexityoftheunderlyingmerger,acquisitionanddivestituresrelatedactivitiesand

200、donotreflecttheCompanyscurrentoperatingperformance.6AdjustmentstoequityearningsinAmerisourceBergenconsistoftheCompanysproportionateshareofnon-GAAPadjustmentsreportedbyAmerisourceBergenconsistentwiththeCompanysnon-GAAPmeasures.7TheCompanysU.S.RetailPharmacysegmentinventoryisaccountedforusingthelast-i

201、n-first-out(“LIFO”)method.ThisadjustmentrepresentstheimpactoncostofsalesasiftheU.S.RetailPharmacysegmentinventoryisaccountedforusingfirst-infirst-out(“FIFO”)method.TheLIFOprovisionisaffectedbychangesininventoryquantities,productmix,andmanufacturerpricingpractices,whichmaybeimpactedbymarketandotherex

202、ternalinfluences.Therefore,theCompanycannotcontroltheamountsrecognizedortimingoftheseitems.8Includessignificantgainsonthesaleofequitymethodinvestments.DuringthethreeandninemonthsendedMay31,2023,theCompanyrecordedagainof$179millionand$1.6billion,respectively,inOtherincome,net,duetoapartialsaleofitseq

203、uitymethodinvestmentinAmerisourceBergenandOptionCareHealth.DuringthethreemonthsendedMay31,2022,theCompanyrecordedagainof$424millioninOtherincome,netduetoapartialsaleofitsequitymethodinvestmentinAmerisourceBergen.9Includessignificantgainsresultingfromthechangeinclassificationofinvestmentsaswellasthef

204、airvalueadjustmentsrecordedtoOtherincome,net.DuringthethreemonthsendedMay31,2023,theCompanyrecordedpre-taxgainsof$76millionrelatedtothechangeinclassificationofitspreviouslyheldequitymethodinvestmentinOptionCareHealthtoaninvestmentinequitysecurityheldatfairvalue.DuringthethreemonthsendedNovember30,20

205、21,theCompanyrecordedpre-taxgainsof$2.2billionand$402millionforVillageMDandShields,respectively,relatedtothechangeinclassificationofpreviouslyheldminorityequityinterestsanddebtsecuritiestofairvalueonbusinesscombinations.ThesegainswererecordedinOtherincome,net.10Impairmentofequitymethodinvestmentandi

206、nvestmentsindebtandequitysecuritiesincludesimpairmentofcertaininvestments.TheCompanyexcludesthesechargeswhenevaluatingoperatingperformancebecausethesedonotrelatetotheordinarycourseoftheCompanysbusinessanditdoesnotincursuchchargesonapredictablebasis.Exclusionofsuchchargesenablesmoreconsistentevaluati

207、onoftheCompanysoperatingperformance.ThesechargesarerecordedwithinOtherincome,net.11DuringthethreemonthsendedFebruary28,2022,theCompanyfinalizedtheworkingcapitaladjustmentswithAmerisourceBergenrelatedtothesaleoftheAllianceHealthcarebusiness,resultingina$38millionchargerecordedtoOtherincome,netintheCo

208、nsolidatedCondensedStatementofEarnings.12IncludesfairvaluegainsorlossesonthevariableprepaidforwardderivativesandcertainderivativeinstrumentsusedaseconomichedgesoftheCompanysnetinvestmentsinforeignsubsidiaries.ThesechargesarerecordedwithinOtherincome,net.TheCompanydoesnotbelievethevolatilityrelatedto

209、themark-to-marketadjustmentsontheunderlyingderivativeinstrumentsreflectstheCompanysoperationalperformance.13DuringthethreemonthsendedMay31,2022,theCompanyincurreda$4millionlossinconnectionwiththeearlyextinguishmentofdebtrelatedtotheintegrationofShields.TheCompanyexcludesthesechargesasrelatedactiviti

210、esdonotreflecttheCompanysongoingfinancialperformance.14Adjustmentstoincometax(benefit)provisionincludeadjustmentstotheGAAPbasistax(benefit)provisioncommensuratewithnon-GAAPadjustmentsandcertaindiscretetaxitemsincludingU.S.andUKtaxlawchangesandequitymethodnon-cashtax.Thesechargesarerecordedwithininco

211、metax(benefit)provision.15Adjustmentstopost-taxearningsfromotherequitymethodinvestmentsconsistoftheproportionateshareofcertainequitymethodinvesteesnon-cashitemsorunusualorinfrequentitemsconsistentwiththeCompanysnon-GAAPadjustments.Thesechargesarerecordedwithinpost-taxearningsfromotherequitymethodinv

212、estments.AlthoughtheCompanymayhaveshareholderrightsandboardrepresentationcommensuratewithitsownershipinterestsintheseequitymethodinvestees,adjustmentsrelatingtoequitymethodinvestmentsarenotintendedtoimplythattheCompanyhasdirectcontrolovertheiroperationsandresultingrevenueandexpenses.Moreover,theseno

213、n-GAAPfinancialmeasureshavelimitationsinthattheydonotreflectallrevenueandexpensesoftheseequitymethodinvestees.16Duetotheanti-dilutiveeffectresultingfromthereportednetloss,theimpactofpotentiallydilutivesecuritiesonthepershareamountshasbeenomittedfromthecalculationofweighted-averagecommonsharesoutstan

214、dingfordilutedEPSfortheninemonthsendedMay31,2023.17Includesimpactofpotentiallydilutivesecuritiesinthecalculationofweighted-averagecommonshares,dilutedforadjusteddilutednetearningspercommonsharecalculationpurposes.WalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)462023Walgr

215、eensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ThreemonthsendedMay31,2023U.S.RetailPharmacy1InternationalU.S.HealthcareCorporateandOtherWalgreensBootsAlliance,Inc.Sales$27,866$5,573$1,975$35,415Grossprofit(GAAP)$5,327$1,173$89$6,588Acquisition-relatedam

216、ortization52531LIFOprovision5151Adjustedgrossprofit(Non-GAAPmeasure)$5,383$1,173$114$6,670Selling,generalandadministrativeexpenses(GAAP)$4,990$1,475$611$48$7,123Certainlegalandregulatoryaccrualsandsettlements(268)(268)Acquisition-relatedamortization(76)(15)(152)(243)Transformationalcostmanagement(10

217、3)(194)(113)(3)(414)Impairmentofintangibleassets(299)(299)Acquisition-relatedcosts(3)(2)(59)(6)(70)Adjustedselling,generalandadministrativeexpenses(Non-GAAPmeasure)$4,540$965$286$39$5,830Operatingincome(loss)(GAAP)$395$(302)$(522)$(48)$(477)Certainlegalandregulatoryaccrualsandsettlements268268Acquis

218、ition-relatedamortization8115178274Transformationalcostmanagement1031941133414Impairmentofintangibleassets299299Acquisition-relatedcosts3259670AdjustmentstoequityearningsinAmerisourceBergen6161LIFOprovision5151Adjustedoperatingincome(loss)(Non-GAAPmeasure)$962$208$(172)$(39)$959Grossmargin(GAAP)19.1

219、%21.0%4.5%18.6%Adjustedgrossmargin(Non-GAAPmeasure)19.3%21.0%5.8%18.8%Selling,generalandadministrativeexpensespercenttosales(GAAP)17.9%26.5%30.9%20.1%Adjustedselling,generalandadministrativeexpensespercenttosales(Non-GAAPmeasure)16.3%17.3%14.5%16.5%Operatingmargin2 1.2%(5.4)%(26.4)%(1.5)%Adjustedope

220、ratingmargin(Non-GAAPmeasure)2 3.0%3.7%(8.7)%2.4%ReconciliationofNon-GAAPfinancialmeasuresWalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions)472023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ThreemonthsendedM

221、ay31,2022U.S.RetailPharmacy1InternationalU.S.HealthcareCorporateandOtherWalgreensBootsAlliance,Inc.Sales$26,695$5,305$596$1$32,597Grossprofit(GAAP)$5,499$1,095$(21)$6,572LIFOprovision5555Acquisition-relatedamortization55Adjustedgrossprofit(Non-GAAPmeasure)$5,559$1,095$(21)$6,633Selling,generalandadm

222、inistrativeexpenses(GAAP)$5,716$995$213$95$7,019Acquisition-relatedcosts(1)(11)(28)(40)Transformationalcostmanagement(127)(47)(11)(185)Acquisition-relatedamortization(74)(16)(106)(196)Certainlegalandregulatoryaccrualsandsettlements(734)(734)Adjustedselling,generalandadministrativeexpenses(Non-GAAPme

223、asure)$4,781$921$108$56$5,865Operating(loss)income(GAAP)$(90)$100$(234)$(95)$(320)Certainlegalandregulatoryaccrualsandsettlements734734Acquisition-relatedamortization7916106201Transformationalcostmanagement1274711185AdjustmentstoequityearningsinAmerisourceBergen6060Acquisition-relatedcosts1112840LIF

224、Oprovision5555Adjustedoperatingincome(loss)(Non-GAAPmeasure)$966$174$(129)$(56)$955Grossmargin(GAAP)20.6%20.6%(3.5)%20.2%Adjustedgrossmargin(Non-GAAPmeasure)20.8%20.6%(3.5)%20.3%Selling,generalandadministrativeexpensespercenttosales(GAAP)21.4%18.8%35.7%21.5%Adjustedselling,generalandadministrativeex

225、pensespercenttosales(Non-GAAPmeasure)17.9%17.4%18.0%18.0%Operatingmargin2(0.8)%1.9%(39.3)%(1.4)%Adjustedoperatingmargin(Non-GAAPmeasure)2 2.9%3.3%(21.6)%2.4%ReconciliationofNon-GAAPfinancialmeasuresWalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions)482023Walgreen

226、sBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39NinemonthsendedMay31,2023U.S.RetailPharmacy1InternationalU.S.HealthcareCorporateandOtherWalgreensBootsAlliance,Inc.Sales$82,648$16,414$4,597$103,659Grossprofit(GAAP)$17,038$3,421$138$20,596Acquisition-relateda

227、mortization166985Acquisition-relatedcosts6060LIFOprovision8989Adjustedgrossprofit(Non-GAAPmeasure)$17,143$3,421$267$20,831Selling,generalandadministrativeexpenses(GAAP)$22,215$3,264$1,569$167$27,215Certainlegalandregulatoryaccrualsandsettlements(7,249)(7,249)Acquisition-relatedamortization(221)(45)(

228、501)(766)Transformationalcostmanagement(368)(206)(113)(10)(697)Impairmentofintangibleassets(299)(299)Acquisition-relatedcosts(4)29(205)(18)(197)Adjustedselling,generalandadministrativeexpenses(Non-GAAPmeasure)$14,373$2,745$750$139$18,007Operating(loss)income(GAAP)$(4,990)$156$(1,431)$(167)$(6,431)Ce

229、rtainlegalandregulatoryaccrualsandsettlements7,2497,249Acquisition-relatedamortization23645570851Transformationalcostmanagement36820611310697Impairmentofintangibleassets299299Acquisition-relatedcosts4(29)26518257AdjustmentstoequityearningsinAmerisourceBergen178178LIFOprovision8989Adjustedoperatingin

230、come(loss)(Non-GAAPmeasure)$3,134$676$(483)$(139)$3,188Grossmargin(GAAP)20.6%20.8%3.0%19.9%Adjustedgrossmargin(Non-GAAPmeasure)20.7%20.8%5.8%20.1%Selling,generalandadministrativeexpensespercenttosales(GAAP)26.9%19.9%34.1%26.3%Adjustedselling,generalandadministrativeexpensespercenttosales(Non-GAAPmea

231、sure)17.4%16.7%16.3%17.4%Operatingmargin2(6.3)%1.0%(31.1)%(6.4)%Adjustedoperatingmargin(Non-GAAPmeasure)2 3.4%4.1%(10.5)%2.7%ReconciliationofNon-GAAPfinancialmeasuresWalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions)492023WalgreensBootsAlliance,Inc.Allrightsrese

232、rved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39NinemonthsendedMay31,2022U.S.RetailPharmacy1InternationalU.S.HealthcareCorporateandOtherWalgreensBootsAlliance,Inc.Sales$82,394$16,686$1,173$100,254Grossprofit(GAAP)$18,332$3,508$15$21,855LIFOprovision6464Acquisition-relatedamortization1818A

233、djustedgrossprofit(Non-GAAPmeasure)$18,414$3,508$15$21,936Selling,generalandadministrativeexpenses(GAAP)$16,006$3,182$505$283$19,975Acquisition-relatedcosts2(73)(24)(60)(155)Transformationalcostmanagement(319)(114)(25)(458)Acquisition-relatedamortization(300)(50)(249)(598)Certainlegalandregulatoryac

234、crualsandsettlements(734)(734)Adjustedselling,generalandadministrativeexpenses(Non-GAAPmeasure)$14,655$2,945$233$198$18,031Operatingincome(loss)(GAAP)$2,656$326$(491)$(283)$2,209Certainlegalandregulatoryaccrualsandsettlements734734Acquisition-relatedamortization31750249616Transformationalcostmanagem

235、ent31911425458AdjustmentstoequityearningsinAmerisourceBergen155155Acquisition-relatedcosts(2)732460155LIFOprovision6464Adjustedoperatingincome(loss)(Non-GAAPmeasure)$4,243$563$(218)$(198)$4,389Grossmargin(GAAP)22.2%21.0%1.2%21.8%Adjustedgrossmargin(Non-GAAPmeasure)22.3%21.0%1.2%21.9%Selling,generala

236、ndadministrativeexpensespercenttosales(GAAP)19.4%19.1%43.1%19.9%Adjustedselling,generalandadministrativeexpensespercenttosales(Non-GAAPmeasure)17.8%17.6%19.9%18.0%Operatingmargin2 2.8%2.0%(41.8)%1.9%Adjustedoperatingmargin(Non-GAAPmeasure)2 4.6%3.4%(18.6)%3.9%ReconciliationofNon-GAAPfinancialmeasure

237、sWalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions)502023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage391Operatingincome(loss)forU.S.RetailPharmacyincludesequityearningsinAmerisourceBergen.Asaresultofthetwo-mon

238、threportinglag,operatingincome(loss)forthethreeandninemonthperiodendedMay31,2023includesAmerisourceBergenequityearningsfortheperiodofJanuary1,2023throughMarch31,2023andtheperiodofJuly1,2022throughMarch31,2023,respectively.Operating(loss)incomeforthethreeandninemonthperiodendedMay31,2022includesAmeri

239、sourceBergenequityearningsfortheperiodofJanuary1,2022throughMarch31,2022andtheperiodofJuly1,2021throughMarch31,2022,respectively.2OperatingmarginsandadjustedoperatingmarginshavebeencalculatedexcludingequityearningsinAmerisourceBergenandadjustedequityearningsinAmerisourceBergen,respectively.Reconcili

240、ationofNon-GAAPfinancialmeasuresWalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)512023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ReconciliationofNon-GAAPfinancialmeasuresWalgreensBootsAlliance,Inc.andSubsidiariesSupp

241、lementalInformation(unaudited)(inmillions)OPERATINGLOSSTOADJUSTEDEBITDAFORTHEU.S.HEALTHCARESEGMENTThreemonthsendedMay31,NinemonthsendedMay31,2023202220232022Operatingloss(GAAP)1$(522)$(234)$(1,431)$(491)Acquisition-relatedamortization2178 106570 249Acquisition-relatedcosts359 265 24Transformationalc

242、ostmanagement4113113Adjustedoperatingloss(Non-GAAPmeasure)(172)(129)(483)(218)Depreciationexpense43 992 23Stock-basedcompensationexpense516 1345 17AdjustedEBITDA(Non-GAAPmeasure)$(113)$(106)$(346)$(178)521TheCompanyreconcilesAdjustedEBITDAfortheU.S.HealthcaresegmenttoOperatinglossastheclosestGAAPmea

243、sureforthesegmentprofitability.TheCompanydoesnotmeasureNetearningsattributabletoWalgreensBootsAlliance,Inc.foritssegments.2Acquisition-relatedamortizationincludesamortizationofacquisition-relatedintangibleassets,inventoryvaluationadjustmentsandstock-basedcompensationfairvaluationadjustments.Amortiza

244、tionofacquisition-relatedintangibleassetsincludesamortizationofintangibleassetssuchascustomerrelationships,tradenames,trademarks,developedtechnologyandcontractintangibles.Intangibleassetamortizationexcludedfromtherelatednon-GAAPmeasurerepresentstheentireamountrecordedwithintheCompanysGAAPfinancialst

245、atements.Therevenuegeneratedbytheassociatedintangibleassetshasnotbeenexcludedfromtherelatednon-GAAPmeasures.Amortizationexpense,unliketherelatedrevenue,isnotaffectedbyoperationsofanyparticularperiodunlessanintangibleassetbecomesimpaired,ortheestimatedusefullifeofanintangibleassetisrevised.Thesecharg

246、esareprimarilyrecordedwithinSelling,generalandadministrativeexpenses.Thestock-basedcompensationfairvaluationadjustmentreflectsthedifferencebetweenthefairvaluebasedremeasurementofawardsunderpurchaseaccountingandthegrantdatefairvaluation.Post-acquisitioncompensationexpenserecognizedinexcessoftheorigin

247、algrantdatefairvalueofacquireeawardsareexcludedfromtherelatednon-GAAPmeasuresasthesearisefromacquisition-relatedaccountingrequirementsoragreements,andarenotreflectiveofnormaloperatingactivities.3Acquisition-relatedcostsaretransactionandintegrationcostsassociatedwithcertainmerger,acquisitionanddivest

248、ituresrelatedactivities.Thesecostsincludechargesincurredrelatedtocertainmergers,acquisitionanddivestituresrelatedactivitiesrecordedinoperatingincome,forexample,costsrelatedtointegrationeffortsformerger,acquisitionanddivestituresactivities.Examplesofsuchcostsincludedealcosts,severance,stockcompensati

249、onandemployeetransactionsuccessbonuses.ThesechargesareprimarilyrecordedwithinSelling,generalandadministrativeexpenses.Thesecostsaresignificantlyimpactedbythetimingandcomplexityoftheunderlyingmerger,acquisitionanddivestituresrelatedactivitiesanddonotreflecttheCompanyscurrentoperatingperformance.4Tran

250、sformationalCostManagementProgramchargesarecostsassociatedwithaformalrestructuringplan.ThesechargesareprimarilyrecordedwithinSelling,generalandadministrativeexpenses.Thesecostsdonotreflectcurrentoperatingperformanceandareimpactedbythetimingofrestructuringactivity.5IncludesGAAPstock-basedcompensation

251、expenseexcludingexpensesrelatedtoacquisition-relatedamortizationandacquisition-relatedcosts.2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ReconciliationofNon-GAAPfinancialmeasuresEQUITYEARNINGSINAMERISOURCEBERGENThreemonthsendedMay31,Ninemonth

252、sendedMay31,2023202220232022EquityearningsinAmerisourceBergen(GAAP)$58$127$187$330Gainfromantitrustlitigationsettlements(8)3Turkeyhyperinflationimpact1 6 LIFOexpense/(credit)7(3)31(13)Acquisition-relatedintangiblesamortization3239 98 114Litigationandopioid-relatedexpenses2 4 Acquisitionintegrationan

253、drestructuringexpenses10 15 Taxreform3 4 7Employeeseverance,litigation,andother18 21 45Restructuringandotherexpenses10 10 Impairmentofnon-customernotereceivable 4Impairmentofassets 5Goodwillimpairment 2Certaindiscretetaxexpense4(2)7Gainonremeasurementofequityinvestment(1)(18)Adjustedequityearningsin

254、AmerisourceBergen(Non-GAAPmeasure)$119$188$365$48453WalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions)2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ReconciliationofNon-GAAPfinancialmeasuresWalgreensBootsAl

255、liance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions)ADJUSTEDEFFECTIVETAXRATEThreemonthsendedMay31,2023ThreemonthsendedMay31,2022(Loss)earningsbeforeincometaxprovisionIncometax(benefit)provisionEffectivetaxrate(Loss)earningsbeforeincometaxprovisionIncometax(benefit)provisionEffect

256、ivetaxrateEffectivetaxrate(GAAP)$(382)$(330)86.3%$(18)$(242)NMImpactofnon-GAAPadjustments1,207417858339Adjustedtaxratetrue-up(10)(8)Equitymethodnon-cashtax(10)(25)Subtotal$825$68$841$65ExcludeadjustedequityearningsinAmerisourceBergen(119)(188)Adjustedeffectivetaxrateexcludingadjustedequityearningsin

257、AmerisourceBergen(Non-GAAPmeasure)$706$689.6%$653$659.9%54NinemonthsendedMay31,2023NinemonthsendedMay31,2022(Loss)earningsbeforeincometaxprovisionIncometax(benefit)provisionEffectivetaxrateEarningsbeforeincometaxprovisionIncometaxprovisionEffectivetaxrateEffectivetaxrate(GAAP)$(5,044)$(1,707)33.8%$4

258、,743$2054.3%Impactofnon-GAAPadjustments7,8781,787(583)398Adjustedtaxratetrue-up18168Equitymethodnon-cashtax(33)(55)Subtotal$2,833$228$4,160$617ExcludeadjustedequityearningsinAmerisourceBergen(365)(484)AdjustedeffectivetaxrateexcludingadjustedequityearningsinAmerisourceBergen(Non-GAAPmeasure)$2,468$2

259、289.2%$3,676$61716.8%NM-Notmeaningful.Percentageincreasesabove200%orwhenoneperiodincludesincomeandotherperiodincludeslossareconsiderednotmeaningful.2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39ReconciliationofNon-GAAPfinancialmeasures1Freecas

260、hflowisdefinedasnetcashprovidedbyoperatingactivitiesinaperiodlessadditionstoproperty,plantandequipment(capitalexpenditures),plusacquisitionrelatedpaymentsmadeinthatperiod.Thismeasuredoesnotrepresentresidualcashflowsavailablefordiscretionaryexpendituresasthemeasuredoesnotdeductthepaymentsrequiredford

261、ebtserviceandothercontractualobligationsorpaymentsforfuturebusinessacquisitions.Therefore,webelieveitisimportanttoviewfreecashflowasameasurethatprovidessupplementalinformationtoourentirestatementsofcashflows.2DuringthethreemonthsendedFebruary28,2023,theCompanypaid$335milliontosettleliabilityclassifi

262、edshare-basedpaymentawardsrelatedtoacquiringtheremaining30%equityinterestinShields.TheCompanyalsopaidone-timecompensationcostsrelatedtoVillageMDsacquisitionofSummit.DuringthethreemonthsendedMay31,2023,theCompanypaid$101milliontosettleliabilityclassifiedshare-basedpaymentawardsrelatedtoacquiringthere

263、maining45%equityinterestinCareCentrix.Thesepaymentsarenotindicativeofnormaloperatingperformance.FREECASHFLOWThreemonthsendedMay31,NinemonthsendedMay31,2023202220232022Netcash(usedfor)providedbyoperatingactivities(GAAP)$(20)$1,629$1,219$3,813Less:Additionstoproperty,plantandequipment(525)(371)(1,633)

264、(1,241)Plus:Acquisitionrelatedpayments2101 530 Freecashflow(Non-GAAPmeasure)1$(444)$1,258$116$2,57255WalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions)2023WalgreensBootsAlliance,Inc.Allrightsreserved.Refertosafeharborandnon-GAAPonpage2andendnotesonpage39Suppleme

265、ntalFinancialInformationSupplementalsale-leasebackfinancialinformationThreemonthsendedChangevs.3Q22NinemonthsendedChangevs.FY22May31,2023May31,2023U.S.RetailPharmacyGainonsale-leaseback1$263$149$647$298Incrementalsale-leasebackincreasestorent3(61)(27)(163)(69)Gainonsale-leaseback,netofrentincreases$

266、202$123$483$228InternationalGainonsale-leaseback2$24$(36)$132$72Incrementalsale-leasebackincreasestorent3(4)(4)(4)(4)Gainonsale-leaseback,netofrentincreases$20$(41)$128$6756WalgreensBootsAlliance,Inc.andSubsidiariesSupplementalInformation(unaudited)(inmillions)1Asreportedfortheperiodpresented.Record

267、edinSelling,general&administrativeexpenseswithintheConsolidatedCondensedStatementofEarnings.2Excludes$6millionand$47millionofgainsrelatedtotheoptimizationofwarehouselocationsaspartofacquisitionintegrationactivitiesinGermanyforthethreeandninemonthsendedMay31,2023,respectively.3RepresentsincrementalGAAPfixedrentcostsreportedintheperiodpresentedasaresultoftheCompanyssale-leasebackprograms.