Breaking Down Walgreens Boots Alliance, Inc. (WBA) Financial Health: Key Insights for Investors

Are you looking to understand the financial performance of Walgreens Boots Alliance Inc. (WBA) and what it means for investors? In fiscal year 2024, the company's revenue reached $147.66 billion, marking a 6.17% increase from the previous year. However, losses significantly widened to -$8.64 billion, a staggering 180.4% increase compared to 2023. With a Hold rating from analysts and a 12-month price target of $10.59, is WBA poised for a turnaround, or are there deeper challenges ahead? Dive in to explore the key insights and figures that shape WBA's financial narrative and what they signal for future investment strategies.

Walgreens Boots Alliance, Inc. (WBA) Revenue Analysis

To understand the financial health of Walgreens Boots Alliance, Inc. (WBA), it's crucial to analyze its revenue streams, growth, and segment contributions. This provides investors with key insights into the company’s performance and future prospects.

Walgreens Boots Alliance, Inc. (WBA) primarily generates revenue from the following sources:

• Retail Pharmacy USA: This segment includes the operation of retail drugstores, providing prescription drugs and a range of health and wellness products, as well as general merchandise.
• Retail Pharmacy International: This involves the operation of pharmacy-led health and beauty stores internationally, including dispensing, retailing, and related services.
• Healthcare: This segment focuses on healthcare services, including primary, multi-specialty, and urgent care, as well as population health management.

Analyzing Walgreens Boots Alliance, Inc.'s (WBA) year-over-year revenue growth rate provides insights into its performance trends. According to the Walgreens Boots Alliance, Inc. (WBA) 2024 Q2 report, the company is undergoing strategic shifts impacting revenue. For instance, revenue decreased by 8.6% from the prior-year quarter to $35.4 billion.

Here’s a closer look at the segment contributions and changes:

The U.S. Retail Pharmacy segment experienced a revenue decrease of 4.3%, primarily due to decreased pharmacy sales, partially offset by increased retail sales. International revenues decreased by 4.5% on a reported basis, impacted by currency translation. The U.S. Healthcare segment saw a significant decrease of 53.4%, mainly due to the VillageMD business, which is undergoing strategic reviews and market exits.

Significant changes in revenue streams reflect strategic realignments and market conditions. The decrease in the U.S. Healthcare segment, driven by the strategic review of VillageMD, indicates a shift in focus and resource allocation. The company is actively working to optimize its portfolio and improve profitability.

For more insights into Walgreens Boots Alliance, Inc.'s (WBA) mission and vision, you can explore: Mission Statement, Vision, & Core Values of Walgreens Boots Alliance, Inc. (WBA).

Walgreens Boots Alliance, Inc. (WBA) Profitability Metrics

Assessing the profitability of Walgreens Boots Alliance, Inc. (WBA) involves examining several key metrics, including gross profit, operating profit, and net profit margins. These figures provide insights into the company's efficiency in generating earnings from its revenue and managing its expenses.

Here's a breakdown of WBA's profitability and related factors:

• Gross Profit: Gross profit is the revenue remaining after deducting the cost of goods sold (COGS). It indicates how efficiently a company manages its production costs.
• Operating Profit: Operating profit is calculated by deducting operating expenses (such as administrative and selling costs) from gross profit. It reflects the profitability of a company's core business operations.
• Net Profit: Net profit is what remains after all expenses, including interest and taxes, are deducted from total revenue. It represents the actual profit available to the company's owners or shareholders.

Walgreens Boots Alliance, Inc.'s profitability can be further understood by comparing its profitability ratios with industry averages. Here's what to consider:

• Gross Profit Margin: This ratio (Gross Profit/Revenue) shows the percentage of revenue remaining after covering the cost of goods sold.
• Operating Profit Margin: This ratio (Operating Profit/Revenue) indicates the percentage of revenue remaining after covering both the cost of goods sold and operating expenses.
• Net Profit Margin: Calculated as (Net Profit/Revenue), this ratio represents the percentage of revenue that translates into profit after all expenses are paid.

Evaluating operational efficiency involves analyzing how well Walgreens Boots Alliance, Inc. manages its costs and leverages its assets to generate profit. For example, a rising gross margin trend could indicate improved cost management or more effective pricing strategies.

For fiscal year 2024, Walgreens Boots Alliance reported a gross profit of $28.3 billion. Their operating income stood at $1.3 billion, which included a $2.0 billion charge related to opioid claims. Net earnings for the year were reported at $53 million, heavily impacted by these significant charges. Without these charges, the adjusted net earnings reached $2.8 billion. The company's financial performance reflects both its operational strengths and the impact of specific legal and restructuring costs.

Here’s a summary of key financial data:

These metrics are essential for investors looking to understand Walgreens Boots Alliance's financial health and potential for future growth.

To gain further insights into the investors profile, check out: Exploring Walgreens Boots Alliance, Inc. (WBA) Investor Profile: Who’s Buying and Why?

Walgreens Boots Alliance, Inc. (WBA) Debt vs. Equity Structure

Understanding how Walgreens Boots Alliance, Inc. (WBA) balances debt and equity is crucial for investors. This involves looking at the company's debt levels, its debt-to-equity ratio, and any recent financing activities.

Here’s a breakdown of Walgreens Boots Alliance, Inc. (WBA)’s debt vs. equity structure:

• Debt Levels:

As of November 2024, Walgreens Boots Alliance had $8.06 billion of debt, a decrease from $9.26 billion the previous year. The debt consisted of short-term and long-term liabilities.

• Short-Term Debt & Capital Lease Obligation: $2.835 billion (Nov 2024)
• Long-Term Debt & Capital Lease Obligation: $27.873 billion (Nov 2024)

The company also had $1.19 billion in cash, resulting in a net debt of $6.86 billion.

• Debt-to-Equity Ratio:

Walgreens Boots Alliance has a debt-to-equity ratio of 1.127 as of February 28, 2025. Another source indicates a debt-to-equity ratio of 2.75 for the quarter that ended in November 2024. In February 2025, Simply Wall St. reported the debt-to-equity ratio as 110.5% with a total shareholder equity of $7.3 billion and total debt of $8.0 billion.

It's important to note that a high debt-to-equity ratio can indicate that a company has been aggressive in financing its growth with debt, which may lead to volatile earnings due to increased interest expenses.

Industry standards for the debt-to-equity ratio vary, but a ratio above 1.0 is generally considered high.

• Recent Debt Issuances, Credit Ratings, or Refinancing Activity:

Walgreens Boots Alliance's credit ratings have been subject to downgrades. On December 31, 2024, S&P Global Ratings lowered the company's long-term issuer rating to 'BB-' from 'BB' and its issue-level rating on senior unsecured debt to 'BB-' from 'BB'. The agency expects leverage to be around 5.5x in 2025, decreasing to approximately 5x in 2026.

Moody's revised the outlook of Walgreens Boots Alliance and its subsidiary Walgreen Co. from stable to negative in February 2025, while affirming the corporate family rating at Ba3 and senior unsecured notes ratings at B1.

These downgrades reflect concerns about Walgreens Boots Alliance's operating performance, cash flow, and strategic missteps.

• Balance Between Debt Financing and Equity Funding:

Walgreens Boots Alliance's liabilities outweigh its cash and near-term receivables by $59.9 billion. The company's interest coverage is notably low at 1.3, even though its debt is only 2.4 times its earnings before interest, tax, depreciation, and amortization (EBITDA).

The company's free cash flow amounted to just 22% of its earnings before interest and taxes (EBIT), which is less than desirable, making it more challenging to manage its debt.

To repay its outstanding 3.800% notes due in 2024, Walgreens Boots Alliance plans to use the net proceeds from debt offerings, along with available cash.

Here is a table summarizing Walgreens Boots Alliance, Inc. (WBA)'s Debt Metrics:

For more insights into Walgreens Boots Alliance, Inc. (WBA)'s mission, vision, and core values, check out: Mission Statement, Vision, & Core Values of Walgreens Boots Alliance, Inc. (WBA).

Walgreens Boots Alliance, Inc. (WBA) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and sustain long-term operations. For Walgreens Boots Alliance, Inc. (WBA), a thorough examination of these metrics provides valuable insights for investors.

Assessing Walgreens Boots Alliance, Inc.'s (WBA) Liquidity:

Analyzing WBA's liquidity involves scrutinizing its current and quick ratios, working capital trends, and cash flow statements. These elements collectively paint a picture of the company's ability to cover its immediate liabilities.

• Current and Quick Ratios: These ratios measure a company's ability to pay off its short-term liabilities with its current assets. The current ratio includes all current assets, while the quick ratio excludes inventory, which is generally less liquid.
• Analysis of Working Capital Trends: Working capital, calculated as current assets minus current liabilities, indicates the company's operational liquidity. Monitoring its trends helps to understand whether WBA is efficiently managing its short-term assets and liabilities.
• Cash Flow Statements Overview: A review of the cash flow statements, specifically operating, investing, and financing activities, is crucial. It reveals how WBA generates and uses cash, providing insights into its liquidity management.

Key Liquidity Indicators:

Understanding WBA's liquidity involves examining several key indicators. While specific figures require up-to-date financial data, here's how these indicators are typically assessed:

• Current Ratio: Ideally, a current ratio of greater than 1 indicates that a company has more current assets than current liabilities.
• Quick Ratio: A quick ratio of 1 or higher is generally considered healthy, suggesting that a company can meet its short-term liabilities even without relying on the sale of inventory.
• Working Capital: Positive working capital signifies that a company has enough liquid assets to cover its short-term liabilities.

Cash Flow Analysis:

Analyzing the components of WBA's cash flow statement provides insights into its financial stability:

• Operating Activities: Positive cash flow from operations indicates that the company is generating enough cash from its core business to cover its operating expenses.
• Investing Activities: This section shows how the company is using cash for investments, such as purchasing property, plant, and equipment (PP&E).
• Financing Activities: This includes activities related to debt, equity, and dividends.

Potential Liquidity Concerns or Strengths:

Based on available information up to April 2025, WBA's liquidity position should be carefully evaluated. Factors that could impact liquidity include:

• Debt Levels: High levels of debt can strain liquidity, as a significant portion of cash flow may be used to service debt obligations.
• Inventory Management: Inefficient inventory management can tie up cash and negatively impact the quick ratio.
• Operating Performance: Declining sales or profitability can reduce cash flow from operations, affecting overall liquidity.

Conversely, WBA's liquidity strengths might include:

• Strong Cash Flow Generation: Consistent positive cash flow from operations can bolster liquidity.
• Effective Working Capital Management: Efficient management of current assets and liabilities can improve liquidity ratios.
• Strategic Asset Sales: The company may improve liquidity by selling non-core assets.

For a deeper dive into WBA's financial health, check out: Breaking Down Walgreens Boots Alliance, Inc. (WBA) Financial Health: Key Insights for Investors

Walgreens Boots Alliance, Inc. (WBA) Valuation Analysis

Determining whether Walgreens Boots Alliance, Inc. (WBA) is overvalued or undervalued involves analyzing several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, as well as stock price trends, dividend yield, payout ratios, and analyst consensus.

As of April 2025, here’s a breakdown of these indicators:

• Price-to-Earnings (P/E) Ratio: The P/E ratio, which compares a company's stock price to its earnings per share, is a primary metric for assessing valuation. For Walgreens Boots Alliance, Inc., the P/E ratio can provide insights into whether the stock price is high or low relative to its earnings.
• Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. It helps investors determine whether the stock is trading at a premium or discount to its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is used to assess a company's valuation by comparing its enterprise value (total market value plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). This ratio provides a more comprehensive view of valuation than the P/E ratio alone, as it considers debt and other factors.

Recent data indicates the following valuation metrics for Walgreens Boots Alliance, Inc.:

• Stock Price Trends: Over the past year, Walgreens Boots Alliance, Inc. has experienced fluctuations in its stock price. As of close on Friday, April 18, 2025, the stock closed at $16.42.
• Dividend Yield and Payout Ratios: Walgreens Boots Alliance, Inc. has a history of providing dividends to its shareholders. The most recent dividend yield is approximately 6.09%, with a forward dividend of $1.00. The payout ratio, which measures the percentage of earnings paid out as dividends, is an important factor in assessing the sustainability of dividend payments.
• Analyst Consensus: Analyst ratings provide insights into the overall sentiment toward the stock. Based on recent analyst ratings, the consensus is that Walgreens Boots Alliance, Inc. is a 'hold,' indicating a neutral outlook on the stock's performance.

To summarize, here is a snapshot of Walgreens Boots Alliance, Inc.’s valuation indicators:

Considering these factors, investors can better assess whether Walgreens Boots Alliance, Inc. is currently overvalued or undervalued. Monitoring these metrics over time provides a more comprehensive view of the company's financial health and investment potential.

For more detailed insights, refer to: Breaking Down Walgreens Boots Alliance, Inc. (WBA) Financial Health: Key Insights for Investors

Walgreens Boots Alliance, Inc. (WBA) Risk Factors

Walgreens Boots Alliance, Inc. (WBA) faces a complex array of risks that could significantly impact its financial health. These risks span internal operational challenges to external market pressures, encompassing industry competition, regulatory changes, and broader economic conditions.

Here's an overview of the key risks:

• Industry Competition: The retail pharmacy sector is highly competitive. WBA faces intense competition from other large pharmacy chains, supermarkets, and online retailers. This competition can pressure profit margins and market share.
• Regulatory Changes: The healthcare industry is heavily regulated. Changes in regulations related to prescription drug pricing, reimbursement rates, and healthcare reform can significantly affect WBA's revenue and profitability.
• Market Conditions: Economic downturns, changes in consumer behavior, and shifts in healthcare utilization patterns can impact WBA's financial performance.

Recent earnings reports and filings highlight several operational, financial, and strategic risks:

• Operational Risks: These include supply chain disruptions, cybersecurity threats, and challenges in integrating acquired businesses.
• Financial Risks: These involve managing debt levels, interest rate fluctuations, and the performance of investments.
• Strategic Risks: These relate to the company's ability to adapt to changing market dynamics, execute its strategic initiatives, and maintain its competitive position.

Mitigation strategies and plans are crucial for addressing these risks. WBA employs various strategies to mitigate these potential issues:

• Diversification: Expanding into new markets and healthcare services to reduce reliance on traditional retail pharmacy.
• Efficiency Improvements: Implementing cost-cutting measures and streamlining operations to improve profitability.
• Technology Investments: Investing in digital capabilities and technology to enhance customer experience and improve operational efficiency.
• Strategic Partnerships: Forming partnerships with other healthcare providers and technology companies to expand its service offerings and reach.

Additionally, understanding WBA's mission, vision, and core values provides further insight into its strategic approach. You can explore more about that here: Mission Statement, Vision, & Core Values of Walgreens Boots Alliance, Inc. (WBA).

Below is a sample table illustrating potential risks and corresponding mitigation strategies:

Walgreens Boots Alliance, Inc. (WBA) Growth Opportunities

For Walgreens Boots Alliance, Inc. (WBA), several factors could influence its future growth. These encompass new products, expanding into different markets, and acquiring other businesses. The company's capacity to innovate, adapt to changing market dynamics, and capitalize on emerging trends will be critical in achieving sustained growth.

While specific future revenue growth projections and earnings estimates can fluctuate due to market conditions and internal strategies, analysts' estimates provide insight. For example, one source indicates an estimated earnings growth of 15.63% per year for the next 5 years. However, it's important to note that forecasts can vary. Another analysis suggests a revenue decline of -2.80% is expected. These differing viewpoints highlight the uncertainty inherent in financial forecasting.

Strategic initiatives and partnerships are also pivotal for future growth. These collaborations can enable Walgreens Boots Alliance, Inc. (WBA) to expand its service offerings, reach new customer segments, and enhance its operational efficiency. Actively pursuing and managing these alliances will be crucial for leveraging external resources and expertise.

Walgreens Boots Alliance, Inc. (WBA) possesses several competitive advantages that can bolster its growth prospects:

• Extensive Retail Footprint: A widespread network of stores provides convenient access for customers.
• Brand Recognition: A well-established and trusted brand name fosters customer loyalty.
• Pharmacy Services: Offering a wide array of pharmacy services positions the company as a healthcare destination.
• Strategic Partnerships: Collaborations with healthcare providers and other companies expand service offerings and market reach.

To illustrate potential growth opportunities, consider the following hypothetical scenarios:

For additional insights into the company's guiding principles, you might find this resource helpful: Mission Statement, Vision, & Core Values of Walgreens Boots Alliance, Inc. (WBA).