Walgreens Boots Alliance, Inc.
Q4 2006 Earnings Call Transcript

Published: 25 Sep 2006

[Rick J. Hans:]

Hello, and welcome to Walgreens’ audio webcast for the fourth quarter and fiscal year ending Aug. 31, 2006. I’m Rick Hans, Walgreens’ Director of Finance, and I’d like to thank you for tuning in. We invite you to use this information in conjunction with the press release and other financial information posted on our web site. Before we begin, I’d like to go over the safe harbor language. Certain statements and projections of future results made in this presentation constitute forward-looking information that is based on current market, competitive and regulatory expectations that involve risk and uncertainty. Please see our Form 10-K for the fiscal year ended August 31, 2005, for a discussion of factors as they relate to forward-looking statements. Before we review our earnings, I’d like to address Wal-Mart’s announcement last week regarding the selected generic medications that they’ll offer for $4. Our initial review of the program leads us to believe it won’t significantly impact our business. Nearly 95% of our pharmacy patients have prescription insurance coverage, meaning they’re responsible only for a small co-pay. For the 291 drugs that Wal-Mart will sell for $4, the average co-pay at Walgreens is $5.30 and for Medicare Part D patients, it’s only $3.18. I should also point out that Wal-Mart’s program covers less than 300 generic medications, while our pharmacies stock about 1,800 different generics. Over the years, our convenience, locations and services have proven to be bigger factors for our patients than a few dollars in price difference. Getting back to our earnings results, today we announced our 32nd consecutive year of record sales and profits, while we recorded our biggest store expansion year in company history. Including acquisitions and stores affected by Hurricane Katrina, we had a net increase of 476 new stores in fiscal 2006. We plan even more organic growth in fiscal 2007 with the anticipated opening of 500 new drugstores, for a net increase after relocations and closings of more than 400 stores. This past fiscal year saw other significant developments at Walgreens