Walgreens Boots Alliance Reports Fiscal 2015 Year-End and Fourth Quarter Results

• Adjusted fiscal year 2015 net earnings attributable to Walgreens
  Boots Alliance per diluted share increase 18.3 percent to $3.88
  compared with the year-ago period; GAAP net earnings attributable to
  Walgreens Boots Alliance per diluted share increase 100 percent to
  $4.00
• Adjusted fiscal year 2015 net earnings attributable to Walgreens
  Boots Alliance increase 28.9 percent to $4.1 billion compared with the
  year-ago period; GAAP net earnings attributable to Walgreens Boots
  Alliance increase 118.4 percent to $4.2 billion
• Adjusted fourth quarter net earnings attributable to Walgreens
  Boots Alliance per diluted share increase 14.3 percent to $0.88
  compared with the year-ago period; GAAP net earnings attributable to
  Walgreens Boots Alliance per diluted share were $0.02 compared with a
  loss of $0.23 in last year’s fourth quarter
• Adjusted fourth quarter net earnings attributable to Walgreens
  Boots Alliance increase 30.1 percent to $969 million compared with the
  year-ago period; GAAP net earnings attributable to Walgreens Boots
  Alliance were $26 million compared with a loss of $221 million in last
  year’s fourth quarter
• Free cash flow totals $4.4 billion in fiscal year 2015, $1.1
  billion in the quarter; GAAP operating cash flow totals $5.7 billion
  in fiscal year 2015, $1.5 billion in the quarter

DEERFIELD, Ill.–(BUSINESS WIRE)–Walgreens Boots Alliance, Inc. (Nasdaq: WBA) today announced financial
results for fiscal year and fourth quarter 2015 that ended 31 August
2015.

Executive Vice Chairman and CEO Stefano Pessina said, “We are pleased
with our progress and performance in the fourth quarter and in our first
fiscal year since launching Walgreens Boots Alliance. While we have much
work to do and operate in some challenging markets, we are excited and
energized by the outlook and opportunities ahead as we put in place our
strategies for long-term, sustainable growth. We believe we can shape
the future of health care around the world through our ability to bring
global solutions to local communities, benefiting all participants,
populations and stakeholders.”

Overview of Fiscal Year and Fourth Quarter Results

In fiscal 2015, GAAP net earnings attributable to Walgreens Boots
Alliance increased 118.4 percent to $4.2 billion compared with the same
period a year ago, while GAAP net earnings attributable to Walgreens
Boots Alliance per diluted share increased 100 percent to $4.00 compared
with the same period a year ago.

Adjusted net earnings attributable to Walgreens Boots Alliance for
fiscal year 2015 increased 28.9 percent to $4.1 billion compared with
the same period a year ago. Adjusted net earnings attributable to
Walgreens Boots Alliance per diluted share for fiscal year 2015
increased 18.3 percent to $3.88 compared with the same period a year
ago. Earnings adjustments in fiscal year 2015 were a net reduction of
GAAP net earnings attributable to Walgreens Boots Alliance of $135
million or $0.12 per diluted share. (Please see the “Reconciliation of
Non-GAAP Financial Measures” table and accompanying disclosures at the
end of this press release for more detailed information regarding
non-GAAP financial measures herein, including the items reflected in
adjusted net earnings calculations.)

Net sales in fiscal year 2015 increased 35.4 percent to $103.4 billion
compared with the same period a year ago.

Fiscal 2015 fourth quarter net earnings attributable to Walgreens Boots
Alliance determined in accordance with GAAP were $26 million compared
with a loss of $221 million in the same quarter a year ago, while GAAP
net earnings attributable to Walgreens Boots Alliance per diluted share
were $0.02 compared with a loss of $0.23 in the same quarter a year ago.

Adjusted fiscal 2015 fourth quarter net earnings attributable to
Walgreens Boots Alliance increased 30.1 percent to $969 million compared
with the same quarter a year ago. Adjusted net earnings attributable to
Walgreens Boots Alliance per diluted share for the quarter increased
14.3 percent to $0.88 compared with the same quarter a year ago. Fiscal
2015 fourth quarter earnings adjustments were a net increase of GAAP net
earnings attributable to Walgreens Boots Alliance of $943 million or 86
cents per diluted share.

Net sales in the fourth quarter increased 49.7 percent to $28.5 billion
compared with the same quarter a year ago, largely due to the inclusion
of Alliance Boots consolidated results.

Combined net synergies for fiscal 2015 were $799 million. This includes
$81 million classified as synergies in the fourth quarter which related
to activities commencing in prior fiscal years. The company continues to
expect to reach at least $1.0 billion in combined net synergies in
fiscal 2016. This excludes the synergy benefits related to the company’s
strategic, long-term relationship with AmerisourceBergen and the
benefits of refinancing the legacy Alliance Boots indebtedness at a
lower cost.

Walgreens Boots Alliance generated free cash flow of $4.4 billion in the
fiscal year and $1.1 billion in the quarter. GAAP operating cash flow
totaled $5.7 billion in the fiscal year and $1.5 billion in the quarter.

Company Outlook

The company today introduced guidance for fiscal year 2016 with
anticipated adjusted net earnings per share attributable to Walgreens
Boots Alliance of $4.25 to $4.55 on a diluted basis. This guidance
assumes no material accretion from the agreement to acquire Rite Aid (as
covered separately yesterday), which is expected to close in the second
half of calendar 2016, but reflects an adverse impact on adjusted
earnings per share due to the suspension of the balance of the company’s
$3 billion share repurchase program to partly fund the transaction.

Restructuring Program

The company previously announced a $1.5 billion cost transformation
program through the end of fiscal year 2017, primarily in its Retail
Pharmacy USA division, to restructure and invest in the company’s future
in a way that is better for customers and simpler for employees,
resulting in a faster and more agile company. During the fourth quarter
of fiscal 2015, the company continued to make good progress with the
program and has achieved more than half of the program’s expected
savings as of the end of the fiscal year. In the Retail Pharmacy USA
division, this effort included: closing 75 stores in the quarter for a
total of 84 store closings in fiscal year 2015 as part of a plan to
close approximately 200 stores; reorganizing divisional and field
operations; driving operating efficiencies; and streamlining information
technology and other functions. Actions taken in the quarter resulted in
pre-tax charges to the company’s GAAP financial results in the quarter
of $382 million ($179 million in real estate costs, $120 million in
asset impairments and $83 million in severance and other business
transition and exit costs, with $372 million recorded in the Retail
Pharmacy USA division and $10 million recorded in the Retail Pharmacy
International division) and for the program to date of $542 million
($223 million in asset impairments, $202 million in real estate costs
and $117 million in severance and other business transition costs and
exit costs, with $523 million recorded in the Retail Pharmacy USA
division and $19 million recorded in the Retail Pharmacy International
division).

Business Segment Highlights

Retail Pharmacy USA:

The Retail Pharmacy USA division, whose principal retail pharmacy brands
are Walgreens and Duane Reade, had fiscal year 2015 total sales of $81.0
billion, an increase of 6.0 percent over the previous fiscal year. Total
sales in comparable drugstores (those open at least a year) increased
6.4 percent compared with the previous year. Comparable retail sales
increased 1.5 percent in the fiscal year, with an increase in basket
size partially offset by lower customer traffic compared with the
previous fiscal year.

Pharmacy sales, which represented 66.1 percent of division total sales
in fiscal year 2015, increased 8.2 percent compared with the previous
year, while comparable pharmacy sales increased 9.3 percent. The
division filled 894 million prescriptions (including immunizations) on a
30-day adjusted basis in the fiscal year, an increase of 4.4 percent
over the previous year. Prescriptions filled in comparable stores
increased 4.6 percent compared with the previous year. For the year
ending 31 August 2015, the division’s retail prescription market share
in the USA on a 30-day adjusted basis increased approximately 20 basis
points over the year-ago period to 19.1 percent, as reported by IMS
Health.

GAAP operating income in fiscal year 2015 decreased 7.2 percent over the
year-ago period to $3.9 billion. Adjusted operating income in fiscal
year 2015 increased 4.8 percent over the year-ago period to $5.1 billion.

Fourth quarter total sales for the Retail Pharmacy USA division were
$19.9 billion, an increase of 4.7 percent over the year-ago quarter.
Total sales in comparable drugstores increased 6.5 percent compared with
the same quarter a year ago. Comparable retail sales increased 0.4
percent in the fourth quarter with an increase in basket size partially
offset by lower customer traffic compared with last year’s fourth
quarter.

Pharmacy sales, which accounted for 67.4 percent of division total sales
in the quarter, increased 6.6 percent compared with the year-ago
quarter, while comparable pharmacy sales increased 10.0 percent. The
division filled 222 million prescriptions (including immunizations)
adjusted to 30-day equivalents in the quarter, an increase of 4.6
percent over last year’s fourth quarter. Prescriptions filled in
comparable stores increased 5.1 percent compared with the same quarter
last year. For the quarter ending 31 August 2015, the division’s retail
prescription market share in the USA on a 30-day adjusted basis
increased approximately 20 basis points over a year ago to 19.1 percent,
as reported by IMS Health.

GAAP operating income in the fiscal 2015 fourth quarter decreased 48.2
percent over the year-ago quarter to $511 million. Adjusted operating
income in the fourth quarter decreased 10.1 percent over the year-ago
quarter to $1.1 billion. The decrease in adjusted operating income
primarily resulted from having no equity earnings in Alliance Boots in
the current period versus three months in the comparable period.

The 2015 fiscal year (for periods subsequent to 31 December 2014) and
fourth quarter for the Retail Pharmacy USA division include results of
operations, the allocation of synergy benefits including Walgreens Boots
Alliance Development GmbH (WBAD) and an allocation of combined corporate
costs. The 2014 fiscal year and quarter included all corporate costs of
Walgreen Co., the full consolidated results of WBAD and equity income
from Walgreen Co.’s pre-closing 45 percent interest in Alliance Boots.

As of 31 August 2015, the division operated 8,173 drugstores across all
50 states, the District of Columbia, Puerto Rico and the US Virgin
Islands, a net decrease of 34 stores since the end of the prior fiscal
year.

Retail Pharmacy International:

The Retail Pharmacy International division, whose principal retail
brands are Boots in the UK, Thailand, Norway, the Republic of Ireland
and The Netherlands, Benavides in Mexico and Ahumada in Chile, had total
sales of $8.8 billion in the fiscal year since the 31 December 2014
combination. On a pro forma constant currency basis, comparable store
sales in the fiscal year since 31 December 2014 increased 3.6 percent
compared with the same period a year ago. GAAP operating income for the
fiscal year was $409 million, while adjusted operating income was $616
million.

Fourth quarter total sales for the Retail Pharmacy International
division were $3.5 billion. On a pro forma constant currency basis,
comparable store sales in the fourth quarter increased 4.3 percent
compared with the same period a year ago. GAAP operating income was $196
million, while adjusted operating income was $242 million.

As of 31 August 2015, the division operated 4,582 pharmacy-led health
and beauty retail stores in eight countries, a net increase of 20 stores
since 31 December 2014.

Pharmaceutical Wholesale:

The Pharmaceutical Wholesale division, which mainly operates under the
Alliance Healthcare brand, had total sales of $15.3 billion in the
fiscal year since 31 December 2014. On a pro forma constant currency
basis, sales in the fiscal year since 31 December 2014 increased 1.8
percent compared with the same period a year ago. GAAP operating income
for the period was $376 million, while adjusted operating income was
$450 million.

Fourth quarter total sales for the Pharmaceutical Wholesale division
were $5.8 billion. On a pro forma constant currency basis, sales
increased 5.0 percent compared with the same period a year ago. GAAP
operating income was $133 million, while adjusted operating income was
$158 million.

Comparability of Results

Walgreens Boots Alliance has organized its operations and reports
results in three segments: Retail Pharmacy USA, Retail Pharmacy
International and Pharmaceutical Wholesale. Segmental reporting includes
the allocation of synergy benefits, including WBAD’s results, and the
combined corporate costs for periods subsequent to 31 December 2014. The
company has determined that it is impracticable to allocate historical
results to the current segmental presentation.

Following the combination, the company eliminated the three-month
reporting lag and recast prior period results with no lag. The
combination on 31 December 2014 also means fiscal year 2015 reporting
includes the results of Alliance Boots for eight months (January through
August 2015) on a fully consolidated basis and four months (September
through December 2014) as equity income from Walgreen Co.’s pre-closing
45 percent interest.

The company’s balance sheet reflects the full consolidation of Alliance
Boots assets and liabilities as a result of the close of the combination
on 31 December 2014. The company’s purchase accounting remains
preliminary as contemplated by U.S. generally accepted accounting
principles (GAAP) and, as a result, there may be upon further review
future changes to the value, as well as allocation, of the acquired
assets and liabilities, associated amortization expense, goodwill and
the gain on the previously held equity interest.

Year-over-year comparisons of results require consideration of the
foregoing factors and are not directly comparable.

Conference Call

Walgreens Boots Alliance will hold a one-hour conference call to discuss
the fourth quarter results and yesterday’s acquisition announcement
beginning at 8:30 a.m. Eastern time today, 28 October 2015. The
conference call will be simulcast through the Walgreens Boots Alliance
investor relations website at: http://investor.walgreensbootsalliance.com.
A replay of the conference call will be archived on the website for 12
months after the call.

The replay also will be available from 11:30 a.m. Eastern time, 28
October 2015 through 4 November 2015, by calling 855-859-2056 within the
USA and Canada, or 404-537-3406 outside the USA and Canada, using replay
code 42212047.

Cautionary Note Regarding Forward-Looking Statements: All
statements in this release that are not historical including, without
limitation, estimates of and goals for future financial and operating
performance (including those under “Company Outlook” above), the
expected execution and effect of our business strategies, our
cost-savings and growth initiatives and restructuring activities and the
amounts and timing of their expected impact, and our pending agreement
with Rite Aid and the transactions contemplated thereby and their
possible effects, are forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Words such as “expect,” “likely,” “outlook,” “forecast,”
“preliminary,” “would,” “could,” “should,” “can,” “will,” “project,”
“intend,” “plan,” “goal,” “guidance,” “target,” “continue,” “sustain,”
“synergy,” “on track,” “believe,” “seek,” “estimate,” “anticipate,”
“may,” “possible,” “assume,” 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 that
could cause actual results to vary materially from those indicated,
including, but not limited to, those relating to the impact of private
and public third-party payers’ efforts to reduce prescription drug
reimbursements, the impact of generic prescription drug inflation, the
timing and magnitude of the impact of branded to generic drug
conversions, our ability to realize anticipated synergies and achieve
anticipated financial, tax and operating results in the amounts and at
the times anticipated, supply arrangements including our commercial
agreement with AmerisourceBergen Corporation, the arrangements and
transactions contemplated by our framework agreement with
AmerisourceBergen and their possible effects, the risks associated with
equity investments in AmerisourceBergen including whether the warrants
to invest in AmerisourceBergen will be exercised and the ramifications
thereof, the occurrence of any event, change or other circumstance that
could give rise to the termination, cross-termination or modification of
any of our contractual obligations, the amount of costs, fees,
expenses and charges incurred in connection with strategic transactions,
whether the actual costs associated with restructuring activities will
exceed estimates, our ability to realize expected savings and benefits
from cost-savings initiatives, restructuring activities and acquisitions
in the amounts and at the times anticipated, the timing and amount of
any impairment or other charges, changes in management’s assumptions,
the risks associated with governance and control matters, the ability to
retain key personnel, changes in economic and business conditions
generally or in the markets in which we participate, changes in
financial markets, interest rates and foreign currency exchange rates,
the risks associated with international business operations, the risk of
unexpected costs, liabilities or delays, changes in vendor, customer and
payer relationships and terms, including changes in network
participation and reimbursement terms, risks of inflation in the cost of
goods, risks associated with the operation and growth of our customer
loyalty programs, risks associated with acquisitions, divestitures,
joint ventures and strategic investments, including our ability to
satisfy the closing conditions and consummate the pending acquisition of
Rite Aid and related financing matters on a timely basis or at all, the
risks associated with the integration of complex businesses, subsequent
adjustments to preliminary purchase accounting determinations, outcomes
of legal and regulatory matters, including with respect to regulatory
review and actions in connection with the pending acquisition of Rite
Aid, and changes in legislation, regulations or interpretations thereof.
These and other risks, assumptions and uncertainties are described in
Item 1A (Risk Factors) of our Quarterly Report on Form 10-Q for the
fiscal quarter ended February 28, 2015, which is incorporated herein by
reference, and in other documents that we file or furnish with the
Securities and Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated or
anticipated by such forward-looking statements. Accordingly, you are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date they are made. Except to the
extent required by law, we do not undertake, and expressly disclaim, any
duty or obligation to update publicly any forward-looking statement
after the date of this release, whether as a result of new information,
future events, changes in assumptions or otherwise.

Please refer to the supplemental information presented below for
reconciliations of the non-GAAP financial measures used in this release
to the most comparable GAAP financial measure and related disclosures.

Notes to Editors:

About Walgreens Boots Alliance

Walgreens Boots Alliance (Nasdaq: WBA) is the first global pharmacy-led,
health and wellbeing enterprise.

The company was created through the combination of Walgreens and
Alliance Boots in December 2014, bringing together two leading companies
with iconic brands, complementary geographic footprints, shared values
and a heritage of trusted health care services through pharmaceutical
wholesaling and community pharmacy care, dating back more than 100 years.

The company employs more than 370,000* people and has a presence in more
than 25* countries; it is the largest retail pharmacy, health and daily
living destination in the USA and Europe. Including its equity method
investments, Walgreens Boots Alliance is a global leader in
pharmacy-led, health and wellbeing retail with over 13,100* stores in
11* countries. The company includes one of the largest global
pharmaceutical wholesale and distribution networks with over 350*
distribution centers delivering to more than 200,000** pharmacies,
doctors, health centers and hospitals each year in 19* countries. In
addition, Walgreens Boots Alliance is one of the world’s largest
purchasers of prescription drugs and many other health and wellbeing
products.

Its portfolio of retail and business brands includes Walgreens, Duane
Reade, Boots and Alliance Healthcare, as well as increasingly global
health and beauty product brands, such as No7, Botanics, Liz Earle and
Soap & Glory. More company information is available at www.walgreensbootsalliance.com.

* As at 31 August 2015 including equity method investments

** For 12 months ended 31 August 2015 including equity method
investments

Contacts

Walgreens Boots Alliance, Inc.
Media Relations
USA /
Michael Polzin
+1 847 315 2935
or
International / Laura
Vergani
+44 (0)207 980 8585
or
Investor Relations
Gerald
Gradwell and Ashish Kohli
+1 847 315 2922

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