Walgreens Boots Alliance Review : largest pharmacy chain

Обзор walgreens boots alliance: крупнейшая аптечная сеть

Walgreens Boots Alliance (NASDAQ: WBA) - the world's largest pharmacy chain, which was formed by the merger at the end of 2014 of two companies: Walgreens и Alliance Boots. The company has 100 years of experience in healthcare.

Business structure

The company's activities are divided into three divisions.

Pharmacy chain in the USA. The most profitable direction, consisting of more than 9 thousand pharmacies, which are present in 50 states, dc, Puerto Rico and the U.S. Virgin Islands. Major brands: Walgreens и Duane Reade.

International pharmacy chain. In addition to North America, Walgreens Boots Alliance operates on all continents of the Earth., excluding Australia and Antarctica. The company owns over 4,400 pharmacies in these regions. Major brands: Boots, Benavides и Smoked.

Pharmaceutical wholesale. Only works in 10 European countries and Egypt under the Alliance Healthcare brand. The main activity is the sale of drugs and other medical products to pharmacies, doctors and hospitals from 306 distribution centers. In the third quarter of 2021, this division was transferred to the subsidiary AmerisourceBergen.

Walgreens Boots Alliance operates in 25 countries, and its network of pharmacies has grown by 62% - to 13 449 shops.

Обзор walgreens boots alliance: крупнейшая аптечная сеть

Обзор walgreens boots alliance: крупнейшая аптечная сеть

Revenue structure by segment, billion dollars

RevenueShare in overall results
Pharmacy chain in the USA107,70177,1%
International pharmacy chain10,0047,2%
Pharmaceutical wholesale23,95817,2%
Magazines−2,126−1,5%

Revenue structure by region, billion dollars

RevenueShare in overall results
USA107,70177,1%
Great Britain12,0998,7%
Europe without UK17,27012,4%
Other countries2,4671,8%

Dividends and buyback

Walgreens Boots Alliance - US dividend aristocrat, company for over 45 years in a row increased its dividend payments.

Walgreens Boots Alliance Board of Directors, watching quotes fall, started a fairly aggressive buyback program: for the last 5 years the company bought out about 20% their shares. At the same time, in the short term, the management decided to abandon the buyback of securities from the market in order to increase financial stability and reduce the debt burden..

Обзор walgreens boots alliance: крупнейшая аптечная сеть

Обзор walgreens boots alliance: крупнейшая аптечная сеть

Обзор walgreens boots alliance: крупнейшая аптечная сеть

Обзор walgreens boots alliance: крупнейшая аптечная сеть

results

Walgreens Boots Alliance shows little growth, financial results of the company are stable, excluding 2020, when the retailer had to make a series of write-offs. As a result, net profit decreased to $ 0.456 billion - against an average annual value of $ 4-5 billion.

IN 1 In the quarter of 2021, the company recorded an operating loss of $ 1.4 billion due to investments in its subsidiary AmerisourceBergen.

Walgreens Boots Alliance Key Goals for 2021:

  1. Complete the sale of Alliance Healthcare.
  2. Achieve approximately $ 2 billion in annual savings.
  3. Show Adjusted EPS Growth About 10%.

Financial results for the last 5 years, billion dollars

RevenueEBITDANet profitNet debt
2016117,3517,7194,1739,221
2017118,2147,2114,0789,634
2018131,5378,1845,02413,612
2019136,8667,0363,98215,813
2020139,5373,2390,45615,225
9м2021103,1162,9811,91514,35

Arguments for

Dividend aristocrat. Walgreens Boots Alliance более 45 years increases dividends.

High safety margin. The company needs $ 400 million per quarter to maintain its dividend payments, and she earns about a billion dollars excluding one-time write-offs. Because probably, that dividend growth and buyback will continue.

Arguments against

Amazon. The largest IT retailer plans to enter the market for the sale of prescription drugs.

Debt load and credit rating. The multiplier "net debt / EBITDA »equal 3,49. The company has low ratings due to high levels of net debt:

  • Fitch: BBB−, negative outlook;
  • Moody’s: Baa2, negative outlook;
  • Standard & Poor’s: BBB, negative outlook.

What is the bottom line

Walgreens Boots Alliance May Like Investors, who build their portfolio of stocks based on the following principles:

  1. Decent dividend yield, about 4% with an average for the American market of about 2%.
  2. Further growth of dividend payments.
  3. Solid financial results.
  4. Buyback availability.
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