If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to the Section 13(a) of the Exchange Act. ☐

 

References in this Annual Report on Form 10-K (this “Form 10-K”) to the “Company,” “we,” “us” or “our” refer to Walgreens Boots Alliance, Inc. and its subsidiaries from and after the effective time of the Reorganization on December 31, 2014 and, prior to that time, to the predecessor registrant Walgreens and its subsidiaries and in each case do not include unconsolidated partially-owned entities, except as otherwise indicated or the context otherwise requires. Our fiscal year ends on August 31, and references herein to “fiscal 2017”2021” refer to our fiscal year ended August 31, 2017.2021.

This Form 10-K includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. See cautionary note regarding forward-looking statements in management’sManagement’s discussion and analysis of financial condition and results of operations in partPart II, itemItem 7 below.

All trademarks, trade names and service marks used herein are the property of their respective owners.

Walgreens Boots Alliance, Inc., a Delaware corporation (“Walgreens Boots Alliance” or the “Company”), is a global leader in retail pharmacy, impacting millions of lives every day through dispensing medicines, and providing accessible high-quality care. With more than 170 years of trusted healthcare heritage and innovation in community pharmacy, the first global, pharmacy-ledCompany is meeting customers' and patients' needs through its convenient retail locations, digital platforms and health and wellbeing enterprise with salesbeauty products. The Company is proud of $118.2 billion inits contributions to healthy communities, a healthy planet, an inclusive workplace and a sustainable marketplace. Walgreens Boots Alliance is a participant of the fiscal year ended August 31, 2017. Our purpose isUnited Nations Global Compact and adheres to help people across the world lead healthier and happier lives.its principles-based approach to responsible business.

OurThe Company provides customers with convenient, omni-channel access through its portfolio of retail and business brands which includes Walgreens, Duane Reade Boots and Alliance Healthcare,Boots as well as increasingly global health and beauty product brands, such as No7, NICE!, Soap & Glory, Finest Nutrition, Liz Earle, Botanics, Sleek MakeUP and Botanics. OurYourGoodSkin. The Company's global brands portfolio is enhanced by ourits in-house product research and development capabilities. We seekThe Company seeks to drive further drive innovative ways to address global health and wellness challenges. Strategic partnerships with some of the world’s leading companies enable the Company to extend its healthcare solutions and convenience offerings to the communities it serves. We believe we arethe Company is well positioned to expand customer offerings in existing markets and become a health and wellbeingwell-being partner of choice in emerging markets. Additionally, through its strategic partnerships, the Company will be able to dramatically enhance Walgreens Boots Alliance's marketing effectiveness and power the Company's strategic initiative around mass personalization - delivering the right offers and content to customers.

Walgreens Boots Alliance was incorporated in Delaware in 2014 and as described below, is the successor of Walgreen Co., an Illinois corporation, which was formed in 1909 as a successor to a business founded in 1901. Our principal executive offices are located at 108 Wilmot Road, Deerfield, Illinois 60015. Our common stock trades on the NASDAQNasdaq Stock Market under the symbol “WBA”.

On December 29, 2020, the Company acquired a majority equity interest in Innovation Associates, Inc. (“iA”) for a cash consideration of $451 million. iA is a leading-edge provider of software enabled automation solutions for retail, hospital, federal healthcare and mail-order pharmacy benefit manager Prime Therapeutics LLCmarkets. The Company accounted for this acquisition as a business combination and consolidates iA within the United States segment in its financial statements.

On November 1, 2020, the Company and McKesson Corporation closed a transaction to form a combined central specialty pharmacy and mail services company, AllianceRx Walgreens Prime,pharmaceutical wholesale business in Germany, as part of a strategic alliance. AllianceRx Walgreens PrimeThe Company owns a 70% controlling equity interest in the combined business which is consolidated by Walgreens Boots Alliancethe Company and reported within the Retail Pharmacy USA divisionInternational segment in its financial statements. The Company accounted for this acquisition as a business combination involving noncash purchase consideration of

$296 million consisting of the issuance of an equity interest in the combined business. See note 6, acquisitionsNote 3 Acquisitions, to the Consolidated Financial Statements included in Part II, Item 8 below for furtheradditional information.

The Company also holds a substantial investment in AmerisourceBergen. As of August 25, 2016, we exercised additional warrants to purchase 22,696,91231, 2021, the Company owned 58,854,867 shares of AmerisourceBergen common stock, at an exercise price of $52.50 per share for an aggregate exercise price payment of $1.19 billion. Following the August 25, 2016 warrant exercise, we do not hold any further warrants to purchase shares of AmerisourceBergen common stock. As of August 31, 2017 and 2016, we owned 56,854,867 AmerisourceBergen common shares, representing approximately 26% and 24%28.5% of theits outstanding AmerisourceBergen common stock respectively,based on the share count most recently reported by AmerisourceBergen. The Company has a shareholders agreement with AmerisourceBergen, which was most recently amended and hadrestated in connection with the Alliance Healthcare Sale (the “A&R Shareholders Agreement”). Pursuant to the A&R Shareholders Agreement, the Company has designated one member of AmerisourceBergen’s board of directors. As of August 31, 2017, we canThe Company is also permitted, subject to certain conditions, to acquire up to an additional 8,398,752 AmerisourceBergen shares in the open market, and thereafter to designate a secondanother member of AmerisourceBergen’s board of directors, subject in each case to applicable legal and contractual requirements.directors. The amount of permitted open market purchases is subject to increase or decrease in certain circumstances.

The warrants were issued in March 2013 pursuant to a Framework Agreement between Walgreens, Alliance Boots GmbH (“Alliance Boots”) and AmerisourceBergen. Concurrently, Walgreens, Alliance Boots and AmerisourceBergen announced various other agreements and arrangements, including a ten-year pharmaceutical distribution agreement between Walgreens and AmerisourceBergen pursuant to which we source branded and generic pharmaceutical products from AmerisourceBergen in the U.S. and an agreement which provides AmerisourceBergen the ability to access generics pharmaceutical products through our global sourcing enterprise. In May 2016, certain agreements were extendedCompany accounts for three years to now expire in 2026.

See note 5, equity method investments to the Consolidated Financial Statements included herein for further information. Due to the March 18, 2016 effective date and the two-month reporting lag, our results for the 12 month period ended August 31, 2016 include approximately three and a half months of equity method income relating to our investment in AmerisourceBergen. Similarly, our results for the 12 month period ended August 31, 2017 include approximately ten and a half months of equity income reflecting our increased ownership following the exercise on August 25, 2016 of the second tranche of warrants.

The retail pharmacy and pharmaceutical wholesale industriesindustry across the globe areis highly competitive and have been experiencingdynamic and has experienced consolidation and an evolving competitive landscape in recent years. Prescription drugs play a significant role in healthcare and constitute a first line of treatment for many medical conditions. We believeThe Company believes the long-term outlook for prescription drug utilization is strong due, in part, to aging populations, increases in life expectancy, increases in the availability and utilization of generic drugs, the continued development of innovative drugs that improve quality of life and control healthcare costs and increases in the number of persons with insurance coverage for prescription drugs, including, in the United States,U.S., “baby boomers” increasingly becoming eligible for the federally funded Medicare Part D prescription program. Pharmaceutical wholesalers act as a vital link between drug manufacturers and pharmacies and healthcare providers in supplying pharmaceuticals to patients.

The retail pharmacy industry across the globe relies significantly on private and governmental third partythird-party payers. Many private organizations throughout the healthcare industry, including pharmacy benefit management (“PBM”) companies and health insurance companies, have consolidated in recent years to create larger healthcare enterprises with greater bargaining power. Third partyThird-party payers, including the Medicare Part D plans and the state-sponsored Medicaid and related managed care Medicaid agencies in the United States,U.S., can change eligibility requirements or reduce certain reimbursement rates. In addition, in many European countries, the government provides or subsidizes healthcare to consumers and regulates pharmaceutical prices, patient eligibility and reimbursement levels to control costs for the government-sponsored healthcare system. Changes in law or regulation also can impact reimbursement rates and terms. For example, the Patient Protection and Affordable Care Act (the

Generic prescription drugs have continued to help lower overall costs for customers and third partythird-party payers. We expectThe Company expects the utilization of generic pharmaceuticals to continue to increase. In general, in the United States,U.S., generic versions of drugs generate lower sales dollars per prescription, but higher gross profit dollars, as compared with patent-protected brand name drugs. The impact on retail pharmacy gross profit dollars can be significant in the first several months after a generic version of a drug is first allowed to compete with the branded version, which is generally referred to as a “generic conversion”. In any given year, the number of major brand name drugs that undergo a conversion from branded to generic status can vary and the timing of generic conversions can be difficult to predict, which can have a significant impact on retail pharmacy sales and gross profit dollars. In general, in the U.S., the specialty prescription business is also growing and generates higher sales dollars per prescription, but lower gross margin, as compared to generic prescription drugs.

We expectThe Company expects that market demand, government regulation, third-party reimbursement policies, government contracting requirements and other pressures will continue to cause the industries in which we competethe Company competes to evolve. Pharmacists are on the frontlines of the healthcare delivery system, and we believethe Company believes rising healthcare costs and the limited supply ofaccess to primary care physicians present new opportunities for pharmacists and retail pharmacies to play an even greater role in driving positive outcomes for patients and payers through expanded service offerings such as immunizations and other preventive care, healthcare clinics, pharmacist-led medication therapy management and chronic condition management.offerings.

OurThe Company's operations are organized into three divisions, which are also ourconducted through two reportable segments:

For fiscal 2017,2021, our segment sales were: Retail Pharmacy USA, $87.3 billion; Retail PharmacyUnited States, $112.0 billion and International $11.8 billion; and Pharmaceutical Wholesale, $21.2$20.5 billion. Additional information relating to our segments is included in management’sManagement’s discussion and analysis of financial condition and results of operations in partPart II, itemItem 7 below and in noteNote 17 segmentSegment reporting and Note 18 Sales, to ourthe Consolidated Financial Statements included in partPart II, itemItem 8 below for additional information.

The United States segment includes the Company's Walgreens business, which information is incorporated herein by reference.includes the operations of retail drugstores, health and wellness services, and mail and central specialty pharmacy services, and its equity method investment in AmerisourceBergen.

The Company also provideprovides specialty pharmacy and mail services. As of August 31, 2017, we had approximately 400 in-store clinic locationsservices and offers other health and wellness services throughout the United States, someU.S., most of which are operated by theour strategic healthcare partners. The Company and

We fillThe Company fills prescriptions for many state Medicaid public assistance programs. Sales from all such Medicaid plans were approximately 4% of the division’ssegment’s fiscal 20172021 sales. Sales from Medicare Part D plans were approximately 19%20% of the division’ssegment’s fiscal 20172021 sales.

Our U.S. loyaltyIn fiscal 2021, the Company also introduced the new myWalgreens Credit Card program, Balance® Rewards, is designedfeaturing two industry-first retail health and wellness credit cards. The myWalgreens Mastercard and the myWalgreens Credit Card are the first ever of their kind to reward our most valuable customersmore personalized wellbeing choices and encourage shopping inoffer industry-leading rewards at Walgreens locations, Walgreens.com, Duane Reade stores, via the Walgreens mobile app, and online. Balance® Rewards members receive special pricing on select products and earn everyday rewards points for purchasing most merchandise that can be instantly redeemed at our stores or through walgreens.com. As of August 31, 2017, the number of active Balance® Rewards members totaled 88.2 million. For this purpose, we define an active member as someone who has used their card in the last six months.wherever Mastercard is accepted.

AmerisourceBergen supplies and distributes a significant amount of generic and branded pharmaceutical products to the division’ssegment’s pharmacies. We purchase ourThe Company purchases its non-pharmaceutical merchandise from numerous manufacturers and wholesalers.

The division’ssegment’s sales, gross profit margin and gross profit are impacted by, among other things, both the percentage of prescriptions that we fillfilled that are generic and the rate at which new generic drugs are introduced to the market. Because any number of factors outside of ourthe Company’s control can affect timing for a generic conversion, we facethe Company faces substantial uncertainty in predicting when such conversions will occur and what effect they will have on particular future periods.

The current environment of ourthe Company’s pharmacy business also includes ongoing reimbursement pressure, and a shift in pharmacy mix towards 90-day at retail (one prescription that is the equivalent of three 30-day prescriptions) and, an increased volume of Medicare Part D prescriptions.prescriptions and increased consumer use of prescription discount cards. Further consolidation among generic manufacturers coupled with changes in the number of major brand name drugs anticipated to undergo a conversion from branded to generic status may also result in gross margin pressures within the industry.

WeThe Company continuously facefaces reimbursement pressure from PBM companies, government, health maintenance organizations, managed care organizations and other commercial third partythird-party payers; our agreements with these payers are regularly subject to expiration, termination or renegotiation. In addition, plan changes with rate adjustments often occur in January and ourthe Company’s reimbursement arrangements may provide for rate adjustments at prescribed intervals during their term. WeThe Company experienced lower reimbursement rates in fiscal 20172021 as compared to the same period in the prior year. We expectThe Company expects these pressures to continue.

WeThe Company has also have worked to develop and expand ourits relationships with commercial third partythird-party payers to enable new and/or improved market access via participation in pharmacy provider networks they offer. The prescription volume impact of new agreements and relationships typically is incremental over time.

Our Retail PharmacyThe International division (excluding equity method investments) hassegment consists of pharmacy-led health and beauty retail businesses outside the U.S. and the pharmaceutical wholesaling and distribution business in eight countries, each focused on helping people lookGermany.

Pharmacy-led health and feel their best. Webeauty retail businesses include Boots branded stores in the United Kingdom (“UK”), the Republic of Ireland and Thailand, the Benavides brand in Mexico and the Ahumada brand in Chile. Sales for these businesses are principally derived from the sale of prescription drugs and health and wellness, beauty, personal care and other consumer products. The Company operated 4,7224,031 retail stores in the divisionsegment as of August 31, 20172021 (see properties in partPart I, itemItem 2 below for information regarding geographic coverage), and havehas grown ourits omni-channel platform, including its online presence, significantly in recent years. Our principal retail pharmacy brands are Boots inIn the United Kingdom, Thailand, Norway,UK, the Republic of Ireland and The Netherlands, Benavides in Mexico and Ahumada in Chile. In Europe, we areCompany is a market leader and ourits retail stores are conveniently located and ourwith pharmacists are well placed to provide a significant role in the provision of healthcare services, working closely with other primary healthcare providers in the communities we serve.the Company serves.

The Boots omni-channel offering is differentiated from that of competitors due to the product brands we own,the Company owns, such as No7, Boots Pharmaceuticals,Liz Earle, Soap & Glory, Liz Earle,Botanics, Sleek MakeUp, Botanics,Boots Pharmaceuticals and ‘only at Boots’ exclusive products, together with ourits long established reputation for trust and customer care. OurThe Company’s brands portfolio is enhanced by ourits in-house product research and development capabilities. The Company has introduced new beauty brands and beauty halls in key locations. Certain of the product brands of the Company are also sold by third-party retailers.

OurThe Company’s retail store networks are typically complemented by online platforms. In the United Kingdom,UK, through the boots.com website and integrated mobile application, ourthe ‘order and collect’ service normally allows customers to order from a range of over 35,00037,000 products by 8:00 p.m. and collect from noon the following day from approximately 99%74% of the United Kingdom’sUK’s retail stores as of August 31, 2017.stores.

The Boots Advantage Card loyalty program, where customers earn points on purchases for redemption at a later date, continues to be a key element of the Boots offering. As of August 31, 2017,2021, the number of active Boots Advantage Card members totaled 15.5 million. For this purpose, we define an active member as someone(members who hashave used their card in the last six months.months) totaled approximately 12 million.

In addition, Boots in the United KingdomUK is one of the leaders in the optical market with 637548 practices, of which 178160 operated on a franchise basis as of August 31, 2017.2021. Approximately 30% of these optical practices are located in Boots stores with the balance being standalone optical practices.

The components of the division’ssegment’s sales are Pharmacy (typically the sale of prescription drugs and provision of pharmacy-related services, subject to variation in particular jurisdictions depending upon regulatory and other factors) and Retail (primarily

(primarily the sale of health and beauty products including beauty, toiletries and lifestyle merchandising, non-prescription drugs and, in the United Kingdom,UK, the provision of optical services). Further, the segment also has a wholesale business in Germany with 41 distribution centers which distribute prescription medicines to pharmacies and other similar health care facilities.

The division’ssegment’s Pharmacy sales, gross margin and gross profit dollars are impacted by governmental agencies and other third-party payers seeking to minimize increases in the costs of healthcare, including pharmaceutical drug reimbursement rates. In the UK, which is the segment’s largest market for Pharmacy sales, the amount of government funding available for pharmacy services is typically reviewed and agreed with the pharmacy industry on an annual basis.

The segment’s Retail sales, gross profit margin and gross profit dollars are impacted by, among other things, the highly competitive nature of the health and beauty category, specifically ourthe Company and our competitorsits competitors’ pricing actions, promotional offers and events and ourthe customer’s desire for value and convenience.

The division’s Pharmacy sales, gross margin and gross profit dollars are impacted by governmental agencies and other third party payers seeking to minimize increases in the costs of healthcare, including pharmaceutical drug reimbursement rates. In the United Kingdom, which is the division’s largest market for Pharmacy sales, the amount of government funding available for pharmacy services is typically reviewed and agreed with the pharmacy industry on an annual basis. In fiscal 2018, the UK Department of Health has indicated that they plan to implement funding cuts to reduce costs within the National Health Service, the publicly-funded healthcare system.

In addition, performance as measured in U.S. dollars is impacted by the exchange rates used to translate these amounts into U.S. dollars, the exchange rate of British Pounds Sterling and the Europound sterling being the most significant.

The division’s salessegment’s performance and relevant exchange rates are subjectalso impacted by the current environment, including the uncertainty as a result of COVID-19. For more information relating to less seasonality than our other divisions.these topics, see Risk factors in Item 1A below.

We marketThe Company markets products and services under various trademarks, trade dress and trade namestradenames and relyrelies on a combination of patent, copyright, trademark, service mark and trade secret laws, as well as contractual restrictions to establish and protect ourits proprietary rights. We ownThe Company owns numerous domain names, holdholds numerous patents, havehas registered numerous trademarks and havehas filed applications for the registration of a number of our other trademarks and service marks in various jurisdictions. We holdThe Company holds assorted business licenses (such as pharmacy, occupational, liquor and cigarette) having various lives within multiple legal jurisdictions, which are necessary for the normal operation of ourthe business.

OurThe Company’s business is affected by a number of factors including, among others, ourCOVID-19, its sales performance during holiday periods (including particularly the winter holiday season) and during the cough, cold and flu season (the timing and severity of which is difficult to predict), significant weather conditions, the timing of ourits own or competitor discount programs and pricing actions and the timing of changes in levels of reimbursement from governmental agencies and other third partythird-party payers. See the summary of quarterly results (unaudited) in note 19, supplementaryNote 20 Supplementary financial information, to the Consolidated Financial Statements included in partPart II, itemItem 8 below.

Inventories are purchased from numerous domestic and foreign suppliers. We doThe Company does not believe that the loss of any one supplier or group of suppliers under common control would have a material adverse effect on ourits business or that of any of our divisions.its segments.

Effective inventory management is important to ourthe Company’s operations. We useThe Company uses various inventory management techniques, including demand forecasting and planning and various forms of replenishment management. OurIts working capital

needs typically are greater in the months leading up to the winter holiday season. WeThe Company generally finance ourfinances its inventory and expansion needs with internally generatedinternally-generated funds and short-term borrowings.debt. For additional information, see the liquidity and capital resources section in management’sManagement’s discussion and analysis of financial condition and results of operations in partPart II, itemItem 7, below.

We sellThe Company sells to numerous retail and wholesale customers. No single customer accounted for more than 10% of the Company’s consolidated sales for any of the periods presented. TwoIn fiscal 2021, substantially all of our retail pharmacy sales were to customers covered by third-party payers (e.g., pharmacy benefit managers, insurance companies and governmental agencies) that agree to pay for all or a portion of a customer's eligible prescription purchases. Three third-party payers accounted for approximately 25%33% of the Retail Pharmacy USA division’sCompany’s consolidated sales in fiscal 2017. One payer2021.

See Note 17 Segment reporting, to the Consolidated Financial Statements included in the Retail Pharmacy International division accountedPart II, Item 8 below for approximately 18% of the division’s sales in fiscal 2017.additional information.

In the countries in which we dothe Company does business, we arethe Company is subject to national, state and local laws, regulations and administrative practices concerning retail and wholesale pharmacy operations, including regulations relating to our participation inthe Company’s filling of prescriptions under Medicare, Medicaid and other publicly financed or sponsored health benefit plans;plan and prescription drug plans and programs including the federal 340B drug pricing program; regulations prohibiting kickbacks, beneficiary inducement and the submission of false claims; the Health Insurance Portability and Accountability Act (“HIPAA”); the ACA; licensure and registration requirements concerning the operation of pharmacies and the practice of pharmacy; and regulations of the U.S. Food and Drug Administration, the U.S. Federal Trade Commission, the U.S. Drug Enforcement Administration and the U.S. Consumer Product Safety Commission, as well as regulations promulgated by comparable foreign, state and local governmental authorities concerning the operation of ourthe Company’s businesses. We areThe Company is also subject to laws and regulations relating to licensing, tax, foreign trade, intellectual property, privacy and data protection, currency, political and other business restrictions.

We areThe Company is also governed by national, state and local laws of general applicability in the countries in which we doit does business, including laws regulating matters of working conditions, health and safety and equal employment opportunity. In connection with the operation of ourits businesses, we arethe Company is subject to laws and regulations relating to the protection of the environment and health and safety matters, including those governing exposure to, and the management and disposal of, hazardous substances. Environmental protection requirements did not have a material effect on our results of operations or capital expenditures in fiscal 2017.

The industries in which we operatethe Company operates are highly competitive. As a leader in the retail pharmacy industry and as a retailer of general merchandise, we competethe Company competes with various local, regional, national and global retailers, including chain and independent pharmacies, mail order prescription providers, grocery stores, convenience stores, mass merchants, online and omni-channel pharmacies and retailers, warehouse clubs, dollar stores and other discount merchandisers. Our pharmaceuticalThe Company's wholesale businessesofferings and related investments compete with other pharmaceutical wholesalers as well as alternative supply sources such as importers and manufacturers who supply directly to pharmacies. We competeThe Company competes primarily on the basis of service, convenience, variety and price. OurIts geographic dispersion helps mitigate the impact of temporary, localized economic and competitive conditions in individual markets. See “properties”“Properties” in partPart I, itemItem 2, below for further information regarding ourthe Company’s geographic dispersion.

As of August 31, 2017, we2021, the Company employed approximately 345,000315,000 persons globally, of which approximately 110,000 of whom113,000 were part-time employees working less than 30 hours per week. Employees based in the U.S. and the UK account for 77% and 18% of the Company’s total workforce, respectively. The foregoing does not include employees of unconsolidated partially-owned entities.

The Company’s Board of Directors (the “Board”), through its Compensation and Leadership Performance Committee (the “CLP Committee”), provides oversight of human capital matters, including the Company’s diversity and inclusion initiatives. The CLP Committee is also responsible for periodically reviewing the Company’s compensation and benefits programs as a result, no Alliance Boots sales were included in our sales prior to December 31, 2014. In fiscal 2015, all our sales priorwell as management development and succession planning practices and strategies. The reports and recommendations to the completionBoard via the CLP Committee underpin the broader framework that guides how the Company attracts, retains and develops its workforce in line with Company values.

The Company’s compensation and benefits are designed to support the financial, mental, and physical well-being of the Second Step Transaction on December 31, 2014 occurred within the United States, Puerto Rico, Guamemployees and their families. The Company offers a comprehensive range of benefits to full- and part-time employees. In the U.S. Virgin Islands. Subsequentthe Company offers healthcare coverage, insurance benefits, access to a digital well-being program and an employee assistance program. In addition, the Second Step Transaction, Alliance Boots results have been fully consolidated.Company provides benefits such as paid time off, defined contribution plans, paid maternity and paternal leave, and a stock purchase plan. The Company continuously evaluates its wellness offerings through competitive benchmarking and bi-annual employee surveys. Certain financial information relatingrelated to foreign and domestic operations, including total revenues and long-lived assets aggregated by our U.S. and non-U.S. operations,retirement related benefit plans is included in note 17, segment reportingNote 14 Retirement benefits, to the Consolidated Financial Statements included in partPart II, itemItem 8 below for additional information.

For more information is incorporated herein by reference. See “risk factors”on COVID-19 workplace and community response, see COVID-19 disclosures in part I, item 1A below for information regarding risks attendant to our foreign operations.Management’s discussion and analysis of financial condition and results of operations in Part II, Item 7, below.

We file with the Securities and Exchange Commission (the “SEC”) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, as well as proxy statements and registration statements. You may read and copy any material we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically. We makeThe Company makes available free of charge on or through ourits website at http://investor.walgreensbootsalliance.com ourits Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we filethe Company files or furnishfurnishes them to the SEC. The contents of ourthe website are not, however, a part of this Form 10-K or ourthe Company’s other SEC filings.

In addition to the other information in this report and our other filings with the SEC, you should carefully consider the risks described below, which could materially and adversely affect our business operations, financial condition and results of operations. COVID-19 amplifies and exacerbates many of the risks we face in our business operations, including those discussed below. These risks are not the only risks that we face. Our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial.

The substantial majority of the prescriptions we fill are reimbursed by third partythird-party payers, including private and governmental agency payers. The continued efforts of health maintenance organizations, managed care organizations, PBM companies, governmental agencies, and other third partythird-party payers to reduce prescription drug costs and pharmacy reimbursement rates, as well as litigation and other legal proceedings relating to how drugs are priced, may adversely impact our results of operations. In the United States,U.S., plan changes with rate adjustments often occur in January and our reimbursement arrangements may provide for rate adjustments at prescribed intervals during their term. In addition, the timing and amount of periodic contractual reconciliations payments can vary significantly and may not follow a predictable path. Further, in an environment where some PBM clients utilize narrow or restricted pharmacy provider networks, some of these entities may offer pricing terms that we may not be willing to accept or otherwise restrict our participation in their networks of pharmacy providers.

In addition, many payers in the United StatesU.S. are increasingly considering new metrics as the basis for reimbursement rates, such as average sales price, average manufacturer price, and actual acquisition cost.rates. It is possible that the pharmaceutical industry or regulators may evaluate and/or develop an alternative pricing reference to replace average wholesale price, which is the pricing reference used for many of our contracts. In addition, many state Medicaid fee-for-service programs moved to establishhave established pharmacy network payments on the basis of actual acquisition cost, by April 1, 2017, which potentially could have an impact on reimbursement practices in other commercial and governmentgovernmental arrangements. Future changes to the pricing benchmarks used to establish pharmaceutical pricing, including changes in the basis for calculating reimbursement by third partythird-party payers, could adversely affect us.

Our Retail Pharmacy USA divisionUnited States segment seeks to grow prescription volume while operating in a marketplace with continuous reimbursement pressure. A shift in the mix of pharmacy prescription volume towards programs offering lower reimbursement rates could adversely affect our results of operations. For example, our Retail Pharmacy USA divisionUnited States segment has experienced a shift in pharmacy mix towards 90-day at retail in recent years.years and more recently during the COVID-19 pandemic, and specialty pharmacy represents a significant and growing proportion of prescription drug spending in the U.S. and a larger proportion of our revenues. Our 90-day at retail offering for patients with chronic prescription

We derive a significant portion of our sales in the United StatesU.S. from prescription drug sales reimbursed through prescription drug plans administered by a limited number of PBM companies. PBM companies typically administer multiple prescription drug plans that expire at various times and provide for varying reimbursement rates, and often limit coverage to specific drug products on an approved list, known as a formulary, which might not include all of the approved drugs for a particular indication. Changes in pricing and other terms of our contracts with PBM companies can significantly impact our results of operations. There can be no assurance that we will continue to participate in any particular PBM company’s pharmacy provider network in any particular future time period.period or on terms reasonably acceptable to us. If our participation in the pharmacy provider network for a prescription drug plan administered by one or more of the large PBM companies is restricted or terminated, we expect that our sales would be adversely affected, at least in the short-term. If we are unable to replace any such lost sales, either through an increase in other sales or through a resumption of participation in those plans, our operating results could be materially and adversely affected. If we exit a pharmacy provider network and later resume participation, there can be no assurance that we will achieve any particular level of business on any particular pace, or that all clients of the PBM company will choose to include us again in the pharmacy network for their plans, initially or at all. In addition, in such circumstances we may incur increased marketing and other costs in connection with initiatives to regain former patients and attract new patients covered by such plans.

Many organizations in the healthcare industry, including PBM companies, have consolidated in recent years to create larger healthcare enterprises with greater bargaining power, which has resulted in greater pricing pressures. If this consolidation trend continues, it could give the resulting enterprises even greater bargaining power, which may lead to further pressure on the prices for our products and services. If these pressures result in reductions in our prices, our businesses would become less profitable unless we are able to achieve corresponding reductions in costs or develop profitable new revenue streams.

Our Board of Directors approved the plans to increase the Transformational Cost Management Program described in "Management’s discussion and analysis of financial condition and results of operations" in Part II, Item 7 below as part of an initiative to reduce costs and increase operating efficiencies. There can be no assurance that we will realize, in full or in part, the anticipated benefits of these programs. Our financial goals assume a level of productivity improvement, including those reflected in the healthcare industry also can alter market dynamicsTransformational Cost Management Program and impactother business optimization initiatives. If we are unable to implement the programs or deliver these expected productivity improvements, while continuing to invest in business growth, or if the volume and nature of change overwhelms available resources, our businessesbusiness operations, financial condition and competitive positioning. For example, following the entry into our strategic relationship with AmerisourceBergen providing for, among other things, generic drug purchasing through our global sourcing enterprise, someresults of our retail pharmacy competitors subsequently established relationships with other pharmaceutical drug wholesalersoperations could be materially and others relating to generic drug procurement. adversely impacted.

Our performance has been, and may continue to be, adversely impacted by changes in such global, sourcing enterprises, whethernational, regional or local economic conditions and consumer confidence. These conditions can also adversely affect our key vendors and customers. External factors that affect consumer confidence and over which we exercise no influence include unemployment rates, inflation, levels of personal disposable income, levels of taxes and interest and global, national, regional or local economic conditions, health epidemics or pandemics (such as a resultCOVID-19), as well as looting, vandalism, acts of mergers, acquisitions

The level of competition in the retail pharmacy and pharmaceutical wholesale industries is significant competition for attractive targetshigh. Changes in market dynamics or actions of competitors or manufacturers, including industry consolidation and opportunities when available. There can be no assurance that attractive acquisition or otherthe emergence of new competitors and strategic relationship opportunities will be available, that we will be successful in identifying, negotiating and consummating favorable transaction opportunities, or that any such transactions we complete will be successful and justify our investment of financial and other resources therein.

innovation, by existing or new competitors could alter the competitive landscape in the future and require us to accurately identify and assess such changes and if required make timely and effective changes to our strategies and business model to compete effectively. All of our businesses face intense competition from multiple existing and new businesses, some of which are aggressively expanding in markets we serve. We continue to develop our offerings to respond to market dynamics; however, if our customers are not receptive to these changes, if we are unable to expand successful programs in a timely manner, or we otherwise do not effectively respond to changes in market dynamics, our businesses and financial performance could be materially and adversely affected.

Specialty pharmacy represents a significant and growing proportion of prescription drug spending in the U.S., a significant portion of which is dispensed outside of traditional retail pharmacies. Because our specialty pharmacy business focuses on complex and high-cost medications, many of which are made available by manufacturers to a limited number of pharmacies (so-called limited distribution drugs), that serve a relatively limited universe of patients, the future growth of this business depends to a significant extent upon expanding our ability to access key drugs and successfully penetrate key treatment categories. Accordingly, it is important that we and our affiliates compete effectively in this evolving and highly competitive market, or our business operations, financial condition and results of operations. These transactionsoperations could be materially and adversely affected. To better serve this evolving market, in March 2017, we and Prime Therapeutics LLC, a PBM, closed a transaction to form a combined central specialty pharmacy and mail services company, AllianceRx Walgreens Prime, using an innovative model that seeks to align pharmacy, PBM and health plans to coordinate patient care, improve health outcomes and deliver cost of care opportunities. Certain clients of our joint venture were and are not obligated to contract through our joint venture, and have in the past, and may also cause us to significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition or investment, issue common stock that would dilute our current stockholders’ percentage ownership, or incur asset write-offs and restructuring costsin the future, enter into specialty pharmacy and other related expenses that could have a material adverse impact onagreements without involving our operating results. Acquisitions, joint venturesventure. If this joint venture is not able to compete effectively in this evolving and strategic investments also involve numerous other risks, including potential exposurehighly competitive market and successfully adapt to assumed litigation and unknown environmental and other liabilities, as well as undetected internal control, regulatory or other issues, or additional costs not anticipated at the time the transaction was completed. No assurance can be given that our acquisitions, joint ventures and other strategic alliances will be successful and will not materially adversely affectchanging market conditions, our business operations, financial condition orand results of operations.operations could be materially and adversely affected.

The portion of total consumer expenditures with retailers occurring online and through mobile applications has continued to increase and has accelerated significantly during the COVID-19 pandemic. The pace of this increase could further accelerate in the future. Our business has evolved from an in-store experience to interaction with customers across numerous channels, including in-store, online, mobile and social media, among others. Omni-channel and differentiated retail models are rapidly evolving and we must keep pace with changing customer expectations and new developments by our competitors. We must compete by offering a consistent and convenient shopping experience for our customers regardless of the ultimate sales channel and by investing in, providing and maintaining digital tools for our customers. If we are unable to successfully identify, complete and integrate acquisitions, joint ventures and strategic investmentsmake, improve, or develop relevant customer-facing technology in a timely manner that keeps pace with technological developments and effective manner,dynamic customer expectations, our businessability to compete and our results of operations and growth strategies could be negativelymaterially and adversely affected.

The success of certain Rite Aid assets.

Our substantial international business operations are important to our growth and prospects, including particularly those of our Retail Pharmacy International and Pharmaceutical Wholesale divisions,segment, and are subject to a number of risks, including:

outside the United States, including foreign currency devaluation, higher interest rates, inflation,U.S.; and increased government regulation or ownership of traditional private businesses;

These factors can also adversely affect our payers, vendors and customers in international markets, which in turn can negatively impact our businesses. We cannot assure you that one or more of these factors will not have a material adverse effect on our business operations, results of operation and financial condition.

The products we sell are sourced from a wide variety of domestic and international vendors, and any future disruption in our supply chain or inability to find qualified vendors and access products that meet requisite quality and safety standards in a timely and efficient manner could adversely impact our businesses. The loss or disruption of such supply arrangements for any reason, including for issues such as COVID-19 or other health epidemics or pandemics, labor disputes, loss or impairment of key manufacturing sites, inability to procure sufficient raw materials, quality control issues, ethical sourcing issues, a supplier’s financial distress, natural disasters, civil unrestlooting, vandalism or acts of war or terrorism, trade sanctions or other external factors over which we have no control, could interrupt product supply and, if not effectively managed and remedied, have a material adverse impact on our business operations, financial condition and results of operations.

In March 2013, Walgreens, Alliance BootsThe Company and AmerisourceBergen announcedare parties to various agreements and arrangements, including a ten-year pharmaceutical distribution agreement between Walgreensthe Company and AmerisourceBergen pursuant to which we source branded and generic pharmaceutical products from AmerisourceBergen in the U.S. and an agreement which provides AmerisourceBergen the ability to access genericsgeneric pharmaceutical products through our global sourcing enterprise. In May 2016, certain of theseThese agreements were amended in June 2021 in connection with the Alliance Healthcare Sale. Pursuant to those amendments, the U.S. distribution agreement was extended for three yearsthrough 2029 and the parties committed to now expirepursue additional opportunities in 2026. In addition, in March 2013, Walgreens,sourcing and distribution. The parties also agreed that Alliance Healthcare UK will remain the distribution partner of Boots and AmerisourceBergen entered into agreements and arrangements pursuant to which we have the right, but not the obligation, to purchase a minority equity position in AmerisourceBergen and gain associated representation on AmerisourceBergen’s board of directors in certain circumstances.until 2031. As of the date of this report, AmerisourceBergen distributes for our Retail Pharmacy USA division substantially all of our branded and generic pharmaceutical products. Consequently, our business in the United States may be adversely affected by any operational, financial or regulatory difficulties that AmerisourceBergen experiences.experiences, including those resulting from COVID-19. For example, if AmerisourceBergen’s operations are seriously disrupted for any reason, whether due to a natural disaster, pandemic, labor disruption, regulatory action, computer or operational systems or otherwise, it could adversely affect our business in the United States and our results of operations.

Our distribution agreement with AmerisourceBergen is subject to early termination in certain circumstances and, upon the expiration or termination of the agreement, there can be no assurance that we or AmerisourceBergen will be willing to renew the agreement or enter into a new agreement, on terms favorable to us or at all. If such expiration or termination occurred, we believe that alternative sources of supply for most generic and brand-name pharmaceuticals are readily available and that we could obtain and qualify alternative sources, which may include self-distribution in some cases, for substantially all of the prescription drugs we sell on an acceptable basis, such that the impact of any such expiration or termination would be

As of August 31, 2017,2021, we beneficially owned approximately 26%28.5% of the outstanding AmerisourceBergen common stock and had designated one member ofnominee for election to AmerisourceBergen’s board of directors. In addition, we have the right, but not the obligation, under the transactions contemplated by the Framework Agreement dated as of March 18, 2013 by and among theThe Company Alliance Boots and AmerisourceBergen (the “Framework Agreement”) to acquire up to an additional 8,398,752 AmerisourceBergen shares in the open market and thereafter designate another member of AmerisourceBergen’s board of directors, subject in each case to applicable legal and contractual requirements. There can be no assurance that we will complete any specific level of such potential equity investmentsaccounts for its investment in AmerisourceBergen or that our existingusing the equity method of accounting, subject to a two-month reporting lag, with the net earnings attributable to the investment orclassified within the operating income of the Company’s United States segment. The financial performance of AmerisourceBergen, including any future investment if completed,charges which may arise relating to its ongoing opioid litigation matters, will ultimately be profitable. Ifimpact the Company’s results of operations. Additionally, a substantial and sustained decline in the price of AmerisourceBergenAmerisourceBergen’s common stock subsequently declines substantially, we could experience a loss on ortrigger an impairment evaluation of such investment, which could materially and adversely affect our financial condition and results of operations.investment. Further, our ability to transact in AmerisourceBergen securities is subject to certain restrictions set forth in our agreements with AmerisourceBergen and arising under applicable laws and regulations, which in some circumstances could adversely our ability to transact in AmerisourceBergen securities in amounts and at the times desired. We could also encounter unforeseen costs, circumstances or issues existing or arising with respect toThese considerations may materially and adversely affect the transactions and collaboration we anticipate resulting from the Framework Agreement. Many of these potential circumstances are outside of our control and any of them could result in increased costs, decreased revenue, decreased synergies and the diversion of management time and attention. If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits may not be realized fully or at all, or may take longer to realize than expected, which could have a material adverse impact on our business operations,Company’s financial condition and results of operations.

From time to time, we make debt or equity investments in companies that we may not control or over which we may not have sole control. For example, while we have a significant equity investment in AmerisourceBergen and have a designee serving on the boardSome of directors of AmerisourceBergen as of the date of this report, we do not have the ability to control day-to-day operations of that company. Although the businesses in which we have made non-controllingnoncontrolling investments often have a significant health and daily living or prescription drug component, some of them operate in businessesmarkets or industries that are different from our primary lines of business and/or operate in different geographic markets than we do. Investments in these businesses, among other risks, subject us to the operating and financial risks of the businesses we invest in and to the risk that we do not have sole control over the operations of these businesses. We rely on the internal controls and financial reporting controls of these entities and their failure to maintain effectiveness or comply with applicable standards may materially and adversely affect us. Investments in entities over which we do not have sole control, including joint ventures and strategic partnerships and alliances, present additional risks such as having differing objectives from our partners or the entities in which we are invested, becoming involved in disputes, or competing with those persons. From time to time, we may make additional investments in or acquire other entities that may subject us to similar risks.

We rely extensively on our computer systems to manage our ordering, pricing, point-of-sale, pharmacy fulfillment, inventory replenishment, customer loyalty programs, finance and other processes. Our systems are subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches including credit card or personally identifiable information breaches, vandalism, theft, natural disasters, catastrophic events, human error and potential cyber threats, including malicious codes, worms, phishing attacks, denial of service attacks, ransomware and other sophisticated cyber attacks,cyber-attacks, and our disaster recovery planning cannot account for all eventualities. If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them, and may experience loss or corruption of critical data and interruptions or disruptions and delays in our ability to perform critical functions, which could materially and adversely affect our businesses and results of operations.

In addition, we are currently making, and expect to continue to make, substantial investments in our information technology systems and

could materially and believe we are taking reasonable action to mitigate known risks, there can be no assurance that we will not experience significant issues withadversely affect our existing systems prior to implementation, that our technology initiatives will be successfully deployed as planned or that they will be timely implemented without significant disruption to ourbusiness operations and results of operations. We also could be adversely affected by any significant disruption in the systems of third parties we interact with, including strategic and business partners, key payers and vendors.

The regulatory environment surrounding data security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements across businesses and geographic areas. We are required to comply with increasingly complex and changing data security and privacy regulations in the jurisdictions in which we operate that regulate the collection, use and transfer of personal data, including the transfer of personal data between or among countries. In the U.S., for example, HIPAA imposes extensive privacy and security requirements governing the transmission, use and disclosure of health information by covered entities in the health care industry, including health care providers such as pharmacies. In addition, the California Consumer Privacy Act, which went into effect on January 1, 2020, imposes stringent requirements on the use and treatment of “personal information” of California residents, and other jurisdictions have enacted, or are proposing similar laws related to the protection of personal data. Outside the U.S., for example, the European Union’s General Data Protection Regulation, which became effective in May 2018, greatly increased the jurisdictional reach of European Union data protection laws and added a broad array of requirements for handling personal data, including the public disclosure of significant data breaches, and provides for greater penalties for noncompliance. Other countries have enacted or are considering enacting data localization laws that require certain data to stay within their borders.

Compromises of our data security systems or of those of businesses with whomwhich we interact which resultsthat result in confidential information being accessed, obtained, damaged or used by unauthorized or improper persons, have in the past and could in the future adversely impact us. Any such compromise could harm our reputation and expose us to regulatory actions, customer attrition, remediation expenses, and claims from customers, financial institutions, payment card associations and other persons, any of which could materially and adversely affect our reputation, business operations, financial condition and results of operations. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, a security breach couldincidents may require that we expend substantial additional resources related to the security of information systems and disrupt our businesses.

We accept payments using a variety of methods, including cash, checks, credit and debit cards, gift cards and mobile payment technologies such as Apple Pay™, and we may offer new payment options over time. Acceptance of these payment options subjects us to rules, regulations, contractual obligations and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules governing electronic funds transfers. These requirements and related interpretations may change over time, which has made and could continue to make compliance more difficult or costly. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which could increase over

We have outstanding debt and other financial obligations and significant unused borrowing capacity.obligations. As of August 31, 2017,2021, we had approximately $13$9.0 billion of outstanding indebtedness, including short-term borrowings.debt. Our debt level and related debt service obligations could have negative consequences, including:

We may incur or assume significantly more debt in the future, including in connection with acquisitions, strategic investments or joint ventures. If we add new debt and do not retire existing debt, the risks described above could increase. Incurrence of additional debt by us and changes in our operating performance could also adversely affect our credit ratings. Any actual or anticipated downgrade of our credit ratings, including any announcement that our ratings are under review for a downgrade or have been assigned a negative outlook, could adversely affect our cost of funds, liquidity, financial covenants, competitive position and access to capital markets and increase the cost of existing facilities, which could materially and adversely affect our business operations, financial condition, and results of operations. We also could be adversely impacted by any failure to renew or replace, on terms acceptable to us or at all, existing funding arrangements when they expire, and any failure to satisfy applicable covenants.

Our long-term debt obligations include covenants that may adversely affect our ability, and the ability of certain of our subsidiaries, to incur certain secured indebtedness or engage in certain types of transactions. In addition, our existing credit agreements require us to maintain as of the last day of each fiscal quarter a ratio of consolidated debt to total capitalization not to exceed a certain level. Our ability to comply with these restrictions and covenants may be affected by events beyond our control. If we breach any of these restrictions or covenants and do not obtain a waiver from the lenders, then, subject to applicable cure periods, our outstanding indebtedness could be declared immediately due and payable. This could have a material adverse effect on our business operations and financial condition.

The Company is a holding company with no business operations of its own. Its assets primarily consist of direct and indirect ownership interests in, and its business is conducted through, subsidiaries which are separate legal entities. As a result, it is dependent on funding from its subsidiaries, including Walgreens and Alliance Boots,international subsidiaries, to pay dividends and meet its obligations. Additionally, Walgreens Boots Alliance’sThe Company’s subsidiaries may be restricted in their ability to pay cash dividends or to make other distributions to Walgreens Boots Alliance,the Company, which may limit the payment of cash dividends or other distributions to the holders of Walgreens Boots Alliancethe Company's common stock. Credit facilities and other debt obligations of Walgreens Boots Alliance,the Company, as well as statutory provisions, may further limit the ability of Walgreens Boots Alliancethe Company and its subsidiaries to pay dividends. Payments to Walgreens Boots Alliancethe Company by its subsidiaries are also contingent upon its subsidiaries’ earnings and business considerations. Future dividends to the Company will be determined based on earnings, capital requirements, financial condition and other factors considered relevant by its Board of Directors.

Our operating results have historically varied on a quarterly basis, including increased variability during the COVID-19 pandemic, and may continue to fluctuate significantly in the future. Factors that may affectFor instance, our quarterly operating results, some of which are beyond the control of management, include, but are not limited to the timing of the introduction of new generic and brand name prescription drugs; inflation, including with respect to generic drug procurement costs; the timing and severity of the cough, cold and flu season; changes in payer reimbursement rates and terms; fluctuations in inventory, energy, transportation, labor, healthcare and other costs; significant acquisitions, dispositions, joint ventures and other strategic initiatives; asset impairment charges; the relative magnitude of our LIFO provision in any particular quarter; foreign currency fluctuations; seasonality; prolonged severe weather in key markets; and many of the other risk factors discussed herein. Accordingly, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful and investors should not rely on the results of any particular quarter as an indication of our future performance.

As of August 31, 2017,2021, we had $25.8$12.4 billion of goodwill and $9.9 billion of other intangible assets.assets on our Consolidated Balance Sheets. We evaluate this goodwill and other indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that wouldcould more likely than not reduce the fair value of a reporting unit or indefinite-lived intangible asset below its carrying value. As part of this impairment analysis, we determine fair value for each reporting unit using both the income and market approaches. We determine fair value of indefinite-lived intangible assets using the relief from royalty method and excess earnings method of the income approach. Definite-lived intangible assets are evaluated for impairment if an event occurs or circumstances change that indicate the carrying amount may not be recoverable. Estimated fair values could change if, for example, there are changes in the business climate, changes in the competitive environment, adverse legal or regulatory actions or developments, changes in capital structure, cost of debt interest rates,and equity, capital expenditure levels, operating cash flows, or market capitalization. Because of the significance of our goodwillcapitalization, whether due to COVID-19 or otherwise. There can be no assurance that impairments will not occur, and intangible assets, any future impairment of these assets could require material non-cash charges to our results of operations, which couldmay have a material adverse effectimpact on our financial condition and results of operations.

We operate certain defined benefit pension plans in the United Kingdom,UK, which were closed to new entrants in 2010, as well as smaller plans in other jurisdictions. The valuation of the pension plan’splans’ assets and liabilities depends in part on assumptions, which are primarily based on the financial markets as well as longevity and employee retention rates. This valuation is particularly sensitive to material changes in the value of equity, bond and other investments held by the pension plans, changes in the corporate bond yields which are used in the measurement of the liabilities, changes in market expectations for long-term price inflation, and new evidence on projected longevity rates. Funding requirements and the impact on the statement of earnings relating to these pension plans are also influenced by these factors. Adverse changes in the assumptions used to calculate the value of pension assets and liabilities, including lower than expected pension fund investment returns and/or increased life expectancy of plan participants, or regulatory change could require us to increase the funding of its defined benefit pension plans or incur higher expenses, which would adversely impact our results of operations and financial position.

As of August 31, 2017, affiliates of Stefano Pessina, our Executive Vice Chairman and Chief Executive Officer (the(together with his affiliates, the “SP Investors”), had sole or shared voting power, directly or indirectly, over an aggregate of approximately 14%16.9% of our outstanding common stock. The SP Investors have agreed to, for so long as they have the right to designate a nominee for election to the Board, to vote all of their shares of common stock in accordance with the Board’s recommendation on matters submitted to a vote of the Company’s stockholders (including with respect to the election of directors). The SP Investors’ significant interest in our common stock potentially could determine the outcome of matters submitted to a vote by our stockholders. The influence of the SP Investors could result in the Company taking actions that other stockholders do not support or failing to take actions that other stockholders support. As a result, the market priceIn addition, issuances or sales of our common stock could be adversely affected.

Conflicts of interest, or the appearance of conflicts of interest, could arise between our interests and the interests of the other entities and business activities in which our directors or officers are involved. For example, potential conflicts of interest could arise if a dispute were to arise between the Company and other parties to the Companyshareholders agreement (the “Company Shareholders Agreement, including theAgreement”) with certain SP Investors. Mr. Pessina, our Executive Vice Chairman, and Chief Executive Officer, indirectly controls Alliance Santé Participations S.A. (“ASP”), a privately-held company which is a party to the Company Shareholders Agreement, and he and his partner Ornella Barra, our Co-ChiefChief Operating Officer, International serve as directors of ASP. SimilarThere are other arrangements between affiliates of Mr. Pessina and the Company, with required disclosures included in the Company’s annual proxy statement, including with respect to Alliance Healthcare Italia SpA, which is an entity indirectly owned and controlled by Mr. Pessina and in which the Company has an indirect 9% interest, which operates Boots branded stores in Italy. Conflicts of interest, or the appearance of conflicts of interest, or similar issues could arise in connection with these or other transactions in the future. While our contractual arrangements place restrictions on the parties’ conduct in certain situations, and related party transactions are subject to independent review and approval in accordance with our related party transactiontransactions approval procedures and applicable law, the potential for a conflict of interest exists and such persons may have conflicts of interest, or the appearance of conflicts of interest, with respect to matters involving or affecting both companies.

Certain provisions of our certificate of incorporation and bylaws, as well as provisions of the Delaware General Corporation Law (the “DGCL”), could make it difficult for stockholders to change the composition of the Board or discourage, delay, or prevent a merger, consolidation, or acquisitions that stockholders may otherwise consider favorable. These provisions include the authorization of the issuance of “blank check” preferred stock that could be issued by the Board, limitations on the ability of stockholders to call special meetings, and advance notice requirements for nomination for election to the Board or for proposing matters that can be acted upon by stockholders at stockholder meetings. We are also subject to the provisions of Section 203 of

the DGCL, which prohibits us, except under specified circumstances, from engaging in any mergers, significant sales of stock or assets, or business combinations with any stockholder or group of stockholders who own 15% or more of our common stock.

Under the Company Shareholders Agreement, the SP Investors are entitled to designate one nominee to the Board (currently Stefano Pessina) for so long as the SP Investors continue to meet certain beneficial ownership thresholds and subject to certain other conditions. Pursuant to the Company Shareholders Agreement, the SP Investors have agreed that, for so long as they have the right to designate a nominee to the Board, they will vote all of their shares of common stock in accordance with the Board’s recommendation on matters submitted to a vote of our stockholders (including with respect to the election of directors).

While these provisions do not make us immune from takeovers or changes in the composition of the Board, and are intended to protect our stockholders from, among other things, coercive or otherwise unfair tactics, these provisions could have the effect of making it difficult for stockholders to change the composition of the Board or discouraging, delaying, or preventing a merger, consolidation, or acquisitions that stockholders may otherwise consider favorable. See also

In June 2018, our Board of Directors approved a new stock repurchase program authorizing the risk factor captioned “Certain stockholders may have significant voting influence over matters requiring stockholder approval” above.

There are no unresolved written comments that were received from the SEC Staff 180 days or more before the end of ourthe fiscal year relating to ourthe Company’s periodic or current reports under the Securities Exchange Act of 1934.Act.

The following information regarding ourthe Company’s properties is provided as of August 31, 20172021 and does not include properties of unconsolidated, partially-owned entities.

Our Retail Pharmacy USA divisionThe United States segment operated 8,1008,965 retail stores and sevenfive specialty pharmacies. Our Retail PharmacyThe International divisionsegment operated 4,7224,031 retail stores. In addition, our Retail Pharmacythe International divisionsegment also owned or leased 418343 standalone Boots Opticians locations. OurThe Company’s domestic and international retail locations, which included Boots Opticians and specialty pharmacy locations, covered approximately 112140 million square feet. WeThe Company owned approximately 14%10% and 4% of these Retail Pharmacy USA divisionUnited States segment and Retail Pharmacy International divisionsegment locations, respectively. The remaining locations were leased or licensed. For more information on leases, see note 4, leasesNote 5 Leases, to the Consolidated Financial Statements included in partPart II, itemItem 8 below for additional information.

WeThe Company operated 28941 pharmaceutical distribution centers located outside of the United States, primarily in Europe,Germany, of which 11940 were owned. These pharmaceutical distribution centers occupied approximately 134 million square feet and werefeet.

The Company operated by our Pharmaceutical Wholesale division, which supplied third party customers as well as our Retail Pharmacy International division in certain countries.

The information in response to this item is included in noteNote 11 commitmentsCommitments and contingencies, to ourthe Consolidated Financial Statements included in partPart II, itemItem 8 below for additional information.

As previously disclosed, the Company has been under investigation by certain counties within the State of California for alleged noncompliance with state hazardous waste regulations. The Company has worked with state and local officials in an effort to resolve this Form 10-K.matter. The Company executed a settlement agreement in October 2020 which includes a monetary payment and injunctive provisions, including funding of supplemental environmental projects. The total settlement value is $3.5 million. On December 17, 2020, the settlement was approved by a California state court in Alameda County (People of the State of California v. Walgreen Co., Case No. RG20081172), and its injunctive provisions will be in effect for three years.

Walgreens Boots Alliance’s common stock is listed on the NASDAQNasdaq Stock Market under the symbol WBA. As of August 31, 2017,2021, there were approximately 63,27548,077 holders of record of Walgreens Boots Alliance common stock.

The following table sets forth the high and low closing prices of our common stock by quarter during the fiscal years ended August 31, 2017 and 2016 as reported by the Consolidated Transaction Reporting System.

On March 31, 2017, Walgreens Boots Alliance, Inc. and its subsidiaries is a global leader in retail pharmacy. Its operations are conducted through two reportable segments:

The Company has taken a number of proactive actions consistent with regulatory directives, such as digital 'order ahead' drive-through offering services with an increased range of products available for drive-through pick-up and curbside collection and put in place new delivery options available nationwide in the U.S during fiscal 2021. To continue to work with customers and manage operations through the pandemic, the Company launched a new COVID-19 testing program for businesses in fiscal 2020. As of August 31, 2021, the Company has administered 12.9 million COVID-19 tests in the U.S. as part of its Test & Protect efforts. In the International segment, Boots administered more than 3.7 million COVID-19 tests in the UK, mostly undertaken in partnership with the National Health Service (“NHS”). Boots UK has a strategic alliance. AllianceRx Walgreens Prime is consolidated by Walgreens Boots Alliancegrowing private test offering with several at home and reported withinin-store tests available, in addition to testing partnerships with several major airlines.

The Company has worked with the Retail Pharmacy USA divisionCenters for Disease Control and Prevention (“CDC”), U.S. Department of Health and Human Services (“HHS”) and the U.S. government to help administer COVID-19 vaccines to high priority groups, including long-term care facility residents and staff. The United States segment also expanded vaccination models to ensure convenient access, including same-day and walk-in appointments, mobile clinics, employer partnerships and extended hours. As of August 31, 2021, the United States segment had administered approximately 34.6 million COVID-19 vaccinations, including 13.5 million in its financial statements. See note 6, acquisitions for further information.the three months ended August 31, 2021.

On December 31, 2014, Walgreens Boots Alliance becameThe situation surrounding COVID-19 remains fluid, and could result in additional mandates and directives, including revisions thereto, from foreign, federal, state, county and city authorities throughout the successor of Walgreens pursuant to a merger to effect a reorganization of Walgreens into a holding company structure, with Walgreens Boots Alliance becoming the parent holding company. Pursuant to the Reorganization, Walgreens became a wholly owned subsidiary of Walgreens Boots Alliance, which was formed for the purposescontinuation of the Reorganization,COVID-19 pandemic and each issuedfor some time thereafter. The impact on the U.S. and outstanding shareglobal economies and consumer, customer and health care utilization patterns depends upon the evolving factors and future developments related to COVID-19. As a result, the financial and/or operational impact on the Company, operating results, cash flows and/or financial condition is uncertain, but the impact, singularly or collectively, could be material and adverse.

In October 2021, the Company announced the launch of Walgreens common stock converted onits new healthcare strategy. The Company plans to become a one-to-one basis into Walgreens Boots Alliance common stock. Also on December 31, 2014, followingleading provider of local clinical care services by leveraging its consumer-centric technology and pharmacy network to deliver value-based care. The Company also plans to continue to transform its core pharmacy and retail business. The Company’s goal is to provide better consumer experiences, improve health outcomes and lower costs. At the completioncenter of the Reorganization,Company’s healthcare strategy is Walgreens Boots Alliance completedHealth, a technology-enabled care model powered by a nationally scaled, locally delivered healthcare

platform. To advance its strategy, the acquisition of the remaining 55% of Alliance Boots GmbHCompany announced majority investments in Village Practice Management Company, LLC (“Alliance Boots”VillageMD”) thatand CareCentrix, which it believes will strengthen Walgreens did not previously own (the “Second Step Transaction”)Health capabilities in exchange for £3.133 billion in cashprimary care, post-acute care and 144.3 million shares of Walgreens Boots Alliance common stock. Alliance Boots became a consolidated subsidiary and ceased being accounted for under the equity method immediately upon completion of the Second Step Transaction. For financial reporting and accounting purposes, Walgreens Boots Alliance was the acquirer of Alliance Boots. The Consolidated Financial Statements (and other data, such as prescriptions filled) reflect the results of operations and financial position of Walgreens and its subsidiaries for periods prior to December 31, 2014 and of Walgreens Boots Alliance and its subsidiaries for periods from and after the effective time of the Reorganization on December 31, 2014.home care.

In addition, we have undertaken a number of additional acquisitions, divestitures and strategic initiatives in recent years designed to grow our businesses and enhance our competitive position. Please refer to note 3, exit and disposal activities, note 5, equity method investments and note 6, acquisitionsSee Note 21. Subsequent events to the Consolidated Financial Statements included in partPart II. Item 8 herein for further information.

See Note 2 Discontinued operations, to the Consolidated Financial Statements included in Part II, itemItem 8 below for additional information.

In July 2020, the Company and VillageMD announced an expansion of Rite Aid Corporation (“Rite Aid”)their partnership and related mattersthe intent to open 500 to 700 “Village Medical at Walgreens” physician-led primary care clinics over a five-year period. This expanded partnership was supported by the Company’s investment in VillageMD over three years of $1.0 billion in equity and convertible debt, which included an initial $250 million equity investment.