Walgreens 2011 Annual Report Download - page 5

• As we refresh our stores, we continue to broaden the range of health
and daily living products we offer. In fiscal 2011, we expanded our
highly successful Walgreens private brand selections for the value-
minded consumer with the launch of a new brand name, “Nice!”.
With Nice! and Duane Reade’s “Good & Delish,” we now offer more
than 400 high-quality grocery and household private-brand products.
Beer and wine selections – including Walgreens Big Flats 1901 –
have now been added to nearly 5,300 stores.
• In pharmacy, we continue to make great progress on our initiative to
advance community pharmacy – enhancing the patient’s experience,
expanding our scope of services, and improving productivity to lower
cost. Patients are beginning to see something new at Walgreens;
in our new pilot store design, we are bringing our pharmacists out
into the store to promote more face-to-face conversations and personal
interactions with patients.
• Through our pharmacies and health centers, we advanced our
leadership in providing flu shots and other immunizations, delivering
6.4 million flu shots last year as we continued to serve as the number-
one provider of flu shots other than the federal government. Teaming
with the U.S. Department of Health and Human Services, Walgreens
donated more than $10 million worth of flu shots to uninsured and
underserved families.
• Building on our core business, we advanced our multi-channel strategy
with the acquisition of a leading e-commerce site, drugstore.com.
We gained not only the drugstore.com and Beauty.com websites
and their customer service and distribution centers, but also access
to more than 3 million online customers and 60,000 drug, health,
beauty and skincare products – expanding our already strong online
offering. As well, we introduced our new “Web Pickup” services at many
Chicago-area and San Jose, California, locations, enabling customers to
shop online and pick up their orders at a store in as little as an hour.
• Today, no retailer in America is better positioned than Walgreens
to bring “bricks and clicks” together, combining our thousands of
convenient locations in communities across the country with the
convenience of outstanding online access.
• As we continue to focus on – and invest in – our core business,
we completed the sale of our pharmacy benefit management business
to Catalyst Health Solutions, Inc., for $525 million, subject to
certain adjustments.
• Importantly, we continue to take steps to control costs and increase
productivity. We achieved our three-year goal to deliver $1 billion in
annual pre-tax savings through our “Rewiring for Growth” initiative,
and advanced this strategy by launching “Fuel Well” – building continuous
improvement and innovative cost-reduction and productivity gain into
our daily business operations.
The evolving consumer and health care system
Through our ongoing transformation, Walgreens is ready to meet
the evolving needs of consumers and patients in today’s challenging
economy and changing health care system.
Three years after the “Great Recession” began, research shows that
value-minded consumers are seeking more than good quality at low
prices – they also want connection and community, kindness and
empathy, and a positive shopping experience.
Patients are seeking value, quality and personal service as the health care
system continues to change through both legislation and market dynamics.
The Patient Protection and Affordable Care Act of 2010 is expected to
bring 32 million more Americans into the health care system in 2014,
and the aging population faces a higher incidence of chronic and
complex conditions. Patients and payers are seeking new solutions to
address the growing need to provide convenient access to quality
health care and, at the same time, rein in skyrocketing health care costs.
Pharmacy is a key part of the solution – and a leading provider of
accessible, affordable health care in communities across the nation.
Our pharmacies help reduce costs by driving greater penetration of
generic drugs – roughly 74 percent last year – resulting in significant
savings on each prescription. For chronic conditions, we also promote
90-day refills at our retail pharmacies, which provide on average 6 to 8
percent savings compared with three 30-day prescriptions.
Walgreens also provides a broad range of health care and clinical services
as extensions of our traditional pharmacy services:
• Our more than 350 in-store Take Care health clinics across the nation,
with a plan to expand this number over the next few years, offer a wide
range of convenient, affordable health care services as an alternative
to costlier primary care physicians and emergency room care.
• In addition to our extensive immunizations program, Walgreens
pharmacies provide medication adherence services, counseling and
other assistance that help lower medical costs by improving outcomes.
Our range of health testing services, including blood glucose,
A1C hemoglobin levels and free blood pressure tests, also serve
to help lower costs through prevention.
2011 Walgreens Annual Report Page 3
Sales
In billions of dollars
75
60
45
30
15
0
1110090807
Earnings
In billions of dollars
* Fiscal 2009 includes after-tax restructuring costs of $160 million.
** Fiscal 2010 includes after-tax restructuring costs of $67 million, after-tax
Duane Reade costs of $56 million, and $43 million of taxes related to the
elimination of the Medicare Part D tax benefit for retirees.
*** Fiscal 2011 includes after-tax restructuring costs of $28 million, after-tax
Duane Reade costs of $7 million and $18 million of after-tax drugstore.com costs.
The shaded portion represents an after-tax gain on the sale of our pharmacy
benefit management business of $273 million.
2.5
3.0
2.0
1.5
1.0
.5
0
1110090807 * ** ***
* Fiscal 2009 includes 1.2 percent attributable
to restructuring costs.
** Fiscal 2010 includes 1.5 percent attributable
to restructuring costs and Duane Reade costs.
*** Fiscal 2011 includes 2.1 percent attributable
to restructuring costs, Duane Reade costs
and drugstore.com costs.
Expenses
Selling, General and Administrative expense
growth in percent
20
16
12
8
4
0
1110090807 * ** ***