On December 6, 2017June 1, 2021 the Company announced that it had reached an agreement with China National Accord Medicines Corporation Ltd.completed the Alliance Healthcare Sale, for total consideration of $6.9 billion, which includes cash consideration of $6.7 billion, subject to become an investornet cash and working capital adjustments. The Company recorded a gain before currency translation adjustments of $1.1 billion and a net gain on disposal of $0.3 billion. The gain on sale was presented as part of results of the discontinued operations. After giving effect to the Alliance Healthcare Sale, the Company beneficially owns approximately 28.5% of AmerisourceBergen’s outstanding common stock, based on the share count publicly reported by AmerisourceBergen in its subsidiary Sinopharm Holding Guoda Drugstores Co.most recent Quarterly Report on Form 10-Q.

In connection with the Alliance Healthcare Sale, the Company and AmerisourceBergen also agreed to (i) a three-year extension through 2029 of the U.S. pharmaceutical distribution agreement pursuant to which branded and generic pharmaceutical products are sourced from AmerisourceBergen in the U.S., Ltd. (“GuoDa”),(ii) a leading retail pharmacy chain in China. Following a public tender process,three-year extension of the agreement, that provides AmerisourceBergen the ability to access generics pharmaceutical products through Walgreens Boots Alliance Development GmbH, the Company’s bid met allglobal sourcing enterprise, (iii) a distribution agreement pursuant to which AmerisourceBergen will supply branded and generic pharmaceutical products to the requirements setCompany’s Boots UK business following the closing of the Alliance Healthcare Sale and (iv) a commitment to pursue a series of strategic initiatives designed to create incremental growth and efficiencies in sourcing, logistics and distribution.

In July 2020, the Company and VillageMD announced an expansion of their partnership and the 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 sellerCompany’s investment in VillageMD over three years of $1.0 billion in equity and convertible debt, which included an initial $250 million equity investment.

On January 6, 2021, the Company and VillageMD announced the acceleration of the Company's investment in VillageMD. The Company completed the remaining $750 million investment during the twelve months ended August 31, 2021, which will support the opening of 600 to acquire700 clinics in more than 30 U.S. markets over a 40 percent equityfour-year period, with the intent to build hundreds more thereafter.

The Company held approximately 22% ownership interest in GuoDaVillageMD as of August 31, 2021 and accounted for approximately $416 million. On July 5, 2018, the Company acquired its 40 percent equity interest and began to account for this investmentit using the equity method of accounting. It was anticipated, assuming full conversion of the debt, that the Company would hold approximately 30% ownership interest in VillageMD upon conversion.

On September 19, 2017,December 29, 2020, the Company announced that it had secured regulatory clearance for an amended and restated asset purchase agreement to purchase 1,932 stores, three distribution centers and related inventory from Rite Aid Corporationacquired a majority equity interest in Innovation Associates, Inc. (“Rite Aid”iA”) for $4.375 billion in cash and other consideration. The purchases of these stores occurred in waves during fiscal 2018 for totala cash consideration of $4.2 billion$451 million. iA is a leading-edge provider of software enabled automation solutions for retail, hospital, federal healthcare and have beenmail-order pharmacy markets. The Company accounted for this acquisition as a business combinations. The transition ofcombination and consolidates iA within the first distribution center and related inventory occurredUnited States segment in September 2018 and the transition of the remaining two distribution centers and related inventory remains subject to closing conditions set forthits financial statements.

On November 1, 2020, the Company had agreed to acquire Rite Aid. Pursuant to such termination, the Company paid Rite Aid a termination fee of $325 million. The Company also reimbursed $25 million of transaction costs of Fred’s, Inc. in connection with the termination of an asset purchase agreement among the Company, Rite Aid and Fred’s, Inc. that was subject to the completion of the acquisition of Rite Aid by Walgreens Boots Alliance. See note 7, debt, to the Consolidated Financial Statements for additional information relating to the termination of the amended agreement and plan of merger and related matters.

$296 million consisting of the issuance of an equity interest in the combined business. See note 2, acquisitions,Note 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 31, 2021, the Company owned 58,854,867 shares of AmerisourceBergen common stock. Asstock, representing approximately 28.5% of August 31, 2018its outstanding common stock based on the share count most recently reported by AmerisourceBergen. The Company has a shareholders agreement with AmerisourceBergen, which was most recently amended and 2017,restated in connection with the Alliance Healthcare Sale (the “A&R Shareholders Agreement”). Pursuant to the A&R Shareholders Agreement, the Company owned 56,854,867 AmerisourceBergen common shares, representing approximately 26% of the outstanding AmerisourceBergen common stock, which investment the Company accounts for using the equity method of accounting, subject to a two-month reporting lag and hadhas designated one member of AmerisourceBergen’s board of directors. As of August 31, 2018, theThe Company canis 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 issuedCompany accounts for its investment in March 2013 pursuantAmerisourceBergen using the equity method of accounting, subject 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 pursuanttwo-month reporting lag, with the net earnings attributable to which the Company sources branded and generic pharmaceutical products from AmerisourceBergen ininvestment classified within the U.S. and an agreement which provides AmerisourceBergen the ability to access generics pharmaceutical products throughoperating income of the Company’s global sourcing enterprise. In May 2016, certain agreements were extended for three years to now expire in 2026.United States segment.

In addition, the Company has completed a number of additional acquisitions, divestitures and strategic initiatives in recent years designed to grow its businesses and enhance its competitive position. Please refer to management’sSee Management’s discussion and analysis of financial conditionin Part II, Item 7 and results ofNote 2 Discontinued operations, in part II, item 7, belowNote 6 Equity method investments and note 2, acquisitions, note 3, exit and disposal activities, and note 5, equity method investments,Note 19 Related parties, to the Consolidated Financial Statements included in partPart II, itemItem 8, below for additional information.

The retail pharmacy and pharmaceutical wholesale industriesindustry across the globe areis highly competitive and dynamic and havehas 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. The 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 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

The retail pharmacy industry across the globe relies significantly on private and governmental third-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-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 “ACA”) was enacted to help control federal healthcare spending, including for prescription drugs, in the United States.U.S. These changes generally are expected to reduce Medicaid reimbursements in the United States.U.S. State Medicaid programs are also expected to continue to seek reductions in reimbursements. When third-party payers or governmental authorities take actions that restrict eligibility or reduce prices or reimbursement rates, sales and margins in the retail pharmacy industry could be reduced, which would adversely affect industry profitability. In some cases, these possible adverse effects may be partially or entirely offset by controlling inventory costs and other expenses, dispensing more higher margin generics, finding new revenue streams through pharmacy services or other offerings and/or dispensing a greater volume of prescriptions.

These industry dynamics and challenges are continuous and have intensified in recent years. Since the completion of the strategic combination withof Walgreens and Alliance Boots in December 2014, the Company has had a continuous focus on operational efficiencies and cost reduction. During fiscal 2019, the Company intends to maintain this focus, including the evaluation of a number of potential strategic cost management initiatives.

Generic prescription drugs have continued to help lower overall costs for customers and third-party payers. The 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.

The 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 the Company competes to evolve. Pharmacists are on the frontlines of the healthcare delivery system, and the Company believes rising healthcare costs and the limited supply ofaccess to primary care physicians present 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 2018,2021, our segment sales were: Retail Pharmacy USA, $98.4 billion; Retail PharmacyUnited States, $112.0 billion and International $12.3 billion; and Pharmaceutical Wholesale, $23.0$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 note 16, segmentNote 17 Segment reporting and Note 18 Sales, to ourthe Consolidated Financial Statements included in partPart II, itemItem 8 below which information is incorporated herein by reference.for additional information.

The Retail Pharmacy USA divisionUnited States segment includes the Company's Walgreens business, which includes the operations of retail drugstores, health and wellness services, and mail and central specialty pharmacy services, and its equity method investment in AmerisourceBergen.

Sales for the segment are principally derived from the sale of prescription drugs and a wide assortment of retail products, including health and wellness, beauty, personal care and consumables and general merchandise. The United States segment (excluding equity method investments) has pharmacy-led health and beauty retail offerings in 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands, each focused on helping people feel happy and healthy. The Company operated 9,5608,965 retail stores in the divisionsegment as of August 31, 2018.2021. The principal retail pharmacy brands in the divisionsegment are Walgreens and Duane Reade. The Company is a market leader in the United StatesU.S. and, as of August 31,

The Company also provides specialty pharmacy and mail services. As of August 31, 2018, the Company 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 the Company and some of which are operated by health systemour strategic healthcare partners. The Company has more than 85,000 healthcare service providers, including pharmacists, pharmacy technicians, nurse practitioners and other health related professionals.

The Company filled 823.1827.5 million prescriptions (including immunizations)vaccinations) in the divisionsegment in fiscal 2018.2021. Adjusted to 30-day equivalents, prescriptions filled were 1.11.2 billion in fiscal 2018.2021. The Company fills prescriptions under Medicare, Medicaid and other publicly financed or sponsored health benefit and prescription drug plans and programs, including the federal 340B drug pricing program. Sales where reimbursement is received from managed care organizations, governmental agencies, PBM companies and private insurance were approximately 98%97% of the division’ssegment’s fiscal 20182021 Pharmacy sales.

The 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 20182021 sales. Sales from Medicare Part D plans were approximately 19%20% of the division’ssegment’s fiscal 20182021 sales.

In fiscal 2021, the Company also introduced the new myWalgreens Credit Card program, featuring two industry-first retail health and wellness credit cards. The Company’s U.S. loyalty program, Balance® Rewards, is designedmyWalgreens Mastercard and the myWalgreens Credit Card are the first ever of their kind to reward its 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 in store or through walgreens.com. As of August 31, 2018, the number of active Balance® Rewards members totaled approximately 88 million. For this purpose, an active memberwherever Mastercard is defined here as someone who has used their card in the last six months.accepted.

AmerisourceBergen supplies and distributes a significant amount of generic and branded pharmaceutical products to the division’ssegment’s pharmacies. The 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 filled that are generic and the rate at which new generic drugs are introduced to the market. Because any number of factors outside of the Company’s control can affect timing for a generic conversion, the 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 the 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.

The Company continuously faces reimbursement pressure from PBM companies, government, health maintenance organizations, managed care organizations and other commercial third-party payers; agreements with these payers are regularly subject to expiration, termination or renegotiation. In addition, plan changes with rate adjustments often occur in January and the Company’s reimbursement arrangements may provide for rate adjustments at prescribed intervals during their term. The Company experienced lower reimbursement rates in fiscal 20182021 as compared to the same period in the prior year. The Company expects these pressures to continue.

The Company has also worked to develop and expand its relationships with commercial third-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.

The Retail Pharmacy 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.beauty 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 4,7674,031 retail stores in the divisionsegment as of August 31, 20182021 (see properties in partPart I, itemItem 2 below for information regarding geographic coverage) and has grown its omni-channel platform, including its online presence, significantly in recent years. The Company’s principal retail pharmacy brands are Boots inIn the United Kingdom, Thailand, Norway, the Republic of Ireland and The Netherlands, Benavides in Mexico and Ahumada in Chile. In Europe,UK, the Company is a market leader and its retail stores are conveniently located and itswith 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 the Company serves.

The Boots omni-channel offering is differentiated from that of competitors due to the product brands the Company owns, such as No7, Boots Pharmaceuticals,Liz Earle, Soap & Glory, Liz Earle,Botanics, Sleek MakeUp, BotanicsBoots Pharmaceuticals and ‘only at Boots’ exclusive products, together with its long established reputation for trust and customer care. The Company’s brands portfolio is enhanced by its 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.

The 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, the ‘order and collect’ service normally allows customers to order from a range of over 33,00037,000 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, 2018.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, 2018,2021, the number of active Boots Advantage Card members totaled approximately 15 million. For this purpose, an active member is defined 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 618548 practices, of which 167160 operated on a franchise basis as of August 31, 2018.2021. 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 the Company and its competitors’ pricing actions, promotional offers and events and the 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 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 pound sterling and the Euro 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 the Company’s other divisions.these topics, see Risk factors in Item 1A below.

The Company markets products and services under various trademarks, trade dress and trade namestradenames and relies on a combination of patent, copyright, trademark, service mark and trade secret laws, as well as contractual restrictions to establish and protect its proprietary rights. The Company owns numerous domain names, holds numerous patents, has registered numerous trademarks and has filed applications for the registration of a number of other trademarks and service marks in various jurisdictions. The 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 the business.

The Walgreens Boots AllianceCompany’s business is affected by a number of factors including, among others, COVID-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 its own or competitor discount programs and pricing actions and the timing of changes in levels of reimbursement from governmental agencies and other third-party payers. See the summary of quarterly results (unaudited) in note 18, 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. The 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 its business or that of any of its divisions.segments.

Effective inventory management is important to the Company’s operations. The Company uses various inventory management techniques, including demand forecasting and planning and various forms of replenishment management. Its working capital

needs typically are greater in the months leading up to the winter holiday season. The Company generally finances its inventory and expansion needs with internally-generated funds and short-term 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.

The 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. In fiscal 2018,2021, 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 in the Retail Pharmacy USA division, in the aggregate accounted for approximately 32%33% of the Company’s consolidated sales in fiscal 2018.2021.

See note 16, segmentNote 17 Segment reporting, to the Consolidated Financial Statements.Statements included in Part II, Item 8 below for additional information.

In the countries in which the Company does business, the Company is subject to national, state and local laws, regulations and administrative practices concerning retail and wholesale pharmacy operations, including regulations relating to the Company’s participation infilling 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 the Company’s businesses. The 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.

The Company is also governed by national, state and local laws of general applicability in the countries in which it does business, including laws regulating matters of working conditions, health and safety and equal employment opportunity. In connection with the operation of its businesses, the 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 the results of operations or capital expenditures of the Company in fiscal 2018.

The industries in which the Company operates are highly competitive. As a leader in the retail pharmacy industry and as a retailer of general merchandise, the 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. The Company’s pharmaceuticalCompany'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. The Company competes primarily on the basis of service, convenience, variety and price. Its 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 the Company’s geographic dispersion.

As of August 31, 2018,2021, the Company employed approximately 354,000315,000 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 equity method investments.

WhileThe 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 global brands portfolio ofCompany’s diversity and inclusion initiatives. The CLP Committee is also responsible for periodically reviewing the Company’s compensation and benefits programs as well as management development and succession planning practices and strategies. The reports and recommendations to the Board via the CLP Committee underpin the broader framework that guides how the Company is enhanced by in-house product researchattracts, retains and development capabilities,develops its workforce in line with Company values.

The Company’s compensation and benefits are designed to support the amount spent byfinancial, mental, and physical well-being of employees and their families. The Company offers a comprehensive range of benefits to full- and part-time employees. In the U.S. the Company on researchoffers healthcare coverage, insurance benefits, access to a digital well-being program and development activities is not material.

The Company has a talent management process that is designed to identify and assess talent across the organization and provide equal and consistent opportunities for employees to develop their skills. Several levels of employees participate in the Company’s annual performance management process to create development plans that support their particular career objectives. The Company offers numerous resources and programs to attract, engage, develop, advance and retain colleagues. Training and development programs provide employees the support they need to perform in their current roles while planning and preparing for future opportunities. In the U.S. the Company has created Walgreens University which provides training, leadership development and career advancement programs to employees at all levels. Walgreens University is a multi-channel platform that offers U.S. employees access to instructor-led classroom training, online learning, personal and professional development tools. In the UK, an apprenticeship program focused on developing career aspirations and fundamental skills is offered to Boots UK employees. Across the globe, the Company offers on-demand self-paced learning resources for all employees regardless of role or location.

A diverse, equitable and inclusive organization is an essential part I, item 1A belowof the Company’s business strategy, as we believe it positively impacts Company performance, growth and employee engagement. The Company’s policies strictly prohibit any form of discrimination or racial profiling, and the Company has several training programs in place which help identify and eliminate unconscious bias towards women and minority groups. The Company launched a global Diversity & Inclusion Report in September 2020 and recently released its Diversity, Equity & Inclusion Report in September 2021, on the Company’s website, detailing its commitment to DE&I by highlighting the Company's DE&I strategy, initiatives, and key metrics. In addition to the Diversity, Equity & Inclusion Report, the Company also released the fiscal 2020 EEO-1 Form in September 2021, on the Company's website, a report filed to the Equal Employment Opportunity Commission (EEOC) on the racial, ethnic and gender composition of its U.S. work force.

The Company established a Global Inclusion Council comprised of senior leaders from across its divisions and functions to drive a culture of diversity and inclusivity throughout the Company. It also developed a Leadership Accountability Model to ensure that managers are held accountable for information regarding risks attendantrecruitment, retention and development of people of color and women at every level of the organization. Beginning in fiscal 2021, a portion of the bonus incentive for all bonus eligible employees has been linked to the Company’s foreignperformance on the Leadership Accountability Model goals.

The Company is committed to creating and upholding safe environments for employees, customers, contractors and patients across all of its business operations. The Company has a Health, Safety and Environmental Committee which works to continuously improve the management of health and safety. To create a safe and productive workplace, employees across the Company are offered avenues to report incidents including calling a toll-free, confidential hotline, submitting an online report, emailing the compliance officer and contacting human resources.

The Company files with the Securities and Exchange Commission (the “SEC”) its 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 filed by the Company 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 the Company, that file electronically. The Company makes available free of charge on or through its website at

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-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-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. 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 have established pharmacy network payments on the basis of actual acquisition cost, which could have an impact on reimbursement practices in other commercial and governmental arrangements. Future changes to the pricing benchmarks used to establish pharmaceutical pricing, including changes in the basis for calculating reimbursement by third-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 needs typically is at a lower margin than comparable 30-day prescriptions.prescriptions, and specialty pharmacy sales are generally also lower margin. Our Retail Pharmacy USA divisionUnited States segment also has experienced a shift in pharmacy mix towards Medicare Part D prescriptions in recent years, and that trend may continue. Preferred Medicare Part D networks have increased in number in recent years; however, we do not participate in all such networks. We have accepted lowermarket competitive reimbursement rates in order to secure preferred relationships with Medicare Part D plans serving senior patients with significant pharmacy needs. We also have worked to develop and expand our relationships with commercial third-party payers to enable new and/or improved market access via participation in the pharmacy provider networks they offer. If we are not able to generate additional prescription volume and other business from patients participating in these programs that is sufficient to offset the impact of lower reimbursement, or if the degree or terms of our participation in such preferred networks declines from current levels in future years, our results of operations could be materially and adversely affected.

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.

The profitability of our pharmacy businesses depends upon the utilization of prescription drugs. Utilization trends are affected by, among other factors, the introduction of new and successful prescription drugs as well as lower-priced generic alternatives to existing brand name drugs. Inflation in the price of drugs also can adversely affect utilization, particularly given the increased prevalence of high-deductible health insurance plans and related plan design changes. New brand name drugs can

In addition, if we experience an increase in the amounts we pay to procure pharmaceutical drugs, including generic drugs, it could have a material adverse effect on our results of operations. Our gross profit margins would be adversely affected to the extent we are not able to offset such cost increases. Any failure to fully offset any such increased prices and costs or to modify our activities to mitigate the impact could have a material adverse effect on our results of operations. Additionally,Also, any future changes in drug prices could be significantly different than our expectations.

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 planplans to implementincrease the Store OptimizationTransformational Cost Management Program described in management’s"Management’s discussion and analysis of financial condition and results of operationsoperations" in partPart II, itemItem 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 this program.these programs. Our financial goals assume a level of productivity improvement, including those reflected in the Store OptimizationTransformational Cost Management Program and other 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 business operations, financial condition and financial results of operations could be materially and adversely impacted.

Our abilityperformance has been, and may continue to successfully manage and execute these initiatives and realize expected savings and benefits in the amounts and at the times anticipated is important to our business success. Any failure to do so, which could result from our inability to successfully execute organizational change and business transformation plans,be, adversely impacted by changes in global, national, regional or regionallocal economic conditions competition, changes in the industries inand consumer confidence. These conditions can also adversely affect our key vendors and customers. External factors that affect consumer confidence and over which we compete, unanticipated costsexercise no influence include unemployment rates, inflation, levels of personal disposable income, levels of taxes and interest and global, national, regional or charges, losslocal economic conditions, health epidemics or pandemics (such as COVID-19), as well as looting, vandalism, acts of key personnelwar or terrorism. Changes in economic conditions and otherconsumer confidence could adversely affect consumer preferences, purchasing power and spending patterns, which could lead to a decrease in overall consumer spending as well as in prescription drug and health services utilization and which could be exacerbated by the increasing prevalence of high-deductible health insurance plans and related plan design changes. In addition, reduced or flat consumer spending may drive us and our competitors to offer additional products at promotional prices. All of these factors described herein, could have a material adverse effect onmaterially and adversely impact our businesses,business operations, financial condition and results of operations.

The level of competition in the retail pharmacy and pharmaceutical wholesale industries is high. Changes in market dynamics or actions of competitors or manufacturers, including industry consolidation and the emergence of new competitors and strategic alliances, could materially and adversely impact us. Disruptive innovation, or the perception of potentially disruptive

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. For example, in June 2018, online retailer Amazon.com, Inc. announced its pending acquisitionAll of PillPack, an online pharmacy with licenses throughout the United States, subject to regulatory approvals and other customary closing conditions. Some industry analysts have speculated that the acquisition, if completed, could provide a platform for Amazon to significantly expand into the market for prescription drugs. Our retail pharmacyour businesses face intense competition from local, regional, nationalmultiple existing and global companies, including other drugstore and pharmacy chains, independent drugstores and pharmacies, mail-order pharmacies and various other retailers such as grocery stores, convenience stores, mass merchants, online and omni-channel pharmacies and retailers, warehouse clubs, dollar stores and other discount merchandisers,new businesses, some of which are aggressively expanding in markets we serve. Businesses inWe continue to develop our Pharmaceutical Wholesale division face intense competition from direct competitors, including national and regional cooperative wholesalers, and alternative supply sources such as importers and manufacturers who supply directlyofferings to pharmacies. Competition may also come from other sources in the future. As competition increases in the markets in which we operate, a significant increase in general pricing pressures could occur, which could require us to reevaluate our pricing structures to remain competitive. For example, if we are not able to anticipate and successfully respond to changes in market conditions in our Pharmaceutical Wholesale division, including changes driven by competitors, suppliers or manufacturers and increased competition from national and regional cooperative wholesalers, it could result in a loss of customers or renewal of contracts or arrangements on less favorable terms.

Specialty pharmacy represents a significant and growing proportion of prescription drug spending in the United States,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 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 in the future, enter into specialty pharmacy and other agreements without involving our joint venture. If this joint venture is not able to compete effectively in this evolving and highly competitive market and successfully adapt to changing market conditions, our business operations, financial condition and results of operations could be materially and adversely affected.

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

As of August 31, 2018,2021, 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 resulting from these agreements. 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 noncontrolling 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. For example, in July 2018, we acquired a 40% minority stake in Sinopharm Holding GuoDa Drugstores Co., Ltd., a leading retail pharmacy chain in China. 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 infrastructure, some of which are significant. Upgrades involve replacing existing systems with successor systems, making changes to existing systems, or cost-effectively acquiring new systems with new functionality. Implementing new systems carries significant potential risks, including failure to operate as designed, potential loss or corruption of data or information, changes in security processes, cost overruns, implementation delays, disruption of operations, and the potential inability to meet business and reporting requirements. WhileWe rely on strategic partners and other service providers to help us with certain significant information technology projects and services. Information technology projects or services frequently are long-term in nature and may take longer to complete and cost more than we expect and may not deliver the benefits we project once they are awarecomplete. Any system implementation and transition difficulty may result in operational challenges, reputational harm, and increased costs that

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 which we interact that 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 these third-parties are subject to risks imposed by data breachesregulatory actions, customer attrition, remediation expenses, and cyber-attacksclaims from customers, financial institutions, payment card associations and other events or actions that could damage, disrupt or close down their networks or systems. Security processes, protocols and standards that we have implemented and contractual provisions requiring security measures that we may have sought to impose on such third-parties may not be sufficient or effective at preventing such events, which could result in unauthorized access to, or disruptions or denials of access to, or misuse of, information or systems that are important to our business, including proprietary information, sensitive or confidential data, and other information about our operations, customers, employees and suppliers, including personal information.

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 time and raise our operating costs. We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, and other forms of electronic payment. If these companies become unable to provide these services to us, or if their systems are compromised, it could disrupt our business. The payment methods that we offer also subject us to potential fraud and theft by persons who seek to obtain unauthorized access to or exploit any weaknesses that may exist in the payment systems. If we fail to comply with applicable rules or requirements, or if data is compromised due to a breach or misuse of data relating to our payment systems, we may be liable for costs incurred by payment card issuing banks and other third parties or subject to fines and higher transaction fees, or our ability to accept or facilitate certain types of payments could be impaired. In addition, our reputation could suffer and our customers could lose confidence in certain payment types, which could result in higher costs and/or reduced sales and materially and adversely affect our results of operations.

Political, economic and regulatory influences are subjecting the healthcare industry to significant changes that could adversely affect our results of operations. In recent years, the healthcare industry has undergone significant changes in an effort to reduce costs and government spending. These changes include an increased reliance on managed care; cuts in certain Medicare and Medicaid funding in the United StatesU.S. and the funding of governmental payers in foreign jurisdictions; consolidation of competitors, suppliers and other market participants; and the development of large, sophisticated purchasing groups. We expect the healthcare industry to continue to change significantly in the future. Some of these potential changes, such as a reduction in governmental funding for certain healthcare services or adverse changes in legislation or regulations governing prescription drug pricing, healthcare services or mandated benefits, may cause customers to reduce the amount of our products and services they purchase or the price they are willing to pay for our products and services. We expect continued governmental and private payer pressure to reduce pharmaceutical pricing.pricing, and these pressures could be further exacerbated if payer deficits or shortfalls increase due to COVID-19 or otherwise. Changes in pharmaceutical manufacturers’ pricing or distribution policies and practices as well as applicable government regulations, including, for example, in connection with the federal 340B drug pricing program, could also significantly reduce our profitability.

We operate in a highly regulated and litigious environment. We are involved in legal proceedings, including litigation, arbitration and other claims, and investigations, inspections, audits, claims, inquiries and similar actions by pharmacy, healthcare, tax and other governmental authorities, including those contained in Note 11 Commitments and contingencies, to the Consolidated Financial Statements included in Part II, Item 8 for additional information. For example, in January 2019, Walgreen Co., on behalf of itself, its subsidiaries and certain identified affiliates, resolved matters regarding certain dispensing practices by entering into, among other things, a Corporate Integrity Agreement with the Office of Inspector General of the United States electoralDepartment of Health and Human Services. The Corporate Integrity Agreement has a five-year term and provides that Walgreen Co. shall, among other things, continue the compliance program it created to address compliance with federal health care program requirements, provide annual certifications of compliance and provide training and education for certain covered employees. Failure to meet the Corporate Integrity Agreement obligations could have material adverse consequences for us, including reputational harm and monetary penalties for each instance of non-compliance. In addition, in the event of a breach or deliberate violation of the Corporate Integrity Agreement, we could be excluded from participation in federal healthcare programs, or subjected to other significant penalties, which could seriously harm our results of operations, liquidity and changesfinancial results.

Legal proceedings, in political leadership have generated uncertainty with respectgeneral, and securities, derivative action and class action and multi-district litigation, in particular, can be expensive and disruptive. Some of these suits may purport or may be determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary damages, and could resultmay remain unresolved for several

years. For example, we are a defendant in significant changesnumerous litigation proceedings relating to opioid matters, including federal multidistrict litigation that consolidated numerous cases filed against an array of defendants by various plaintiffs such as counties, cities, hospitals, Indian tribes, and others, as well as numerous lawsuits brought in legislation, regulation and government policy that could significantly impact our businessesstate courts. Additionally, the Company has received from the Department of Justice and the health care and retail industries. There have been multiple attempts to repeal, modify or otherwise invalidate all, or certain provisionsAttorney Generals of the ACA, which was enacted in 2010 to provide health insurance coverage to millions of previously uninsured Americans through a combination of insurance market reforms, an expansion of Medicaid, subsidies and health insurance mandates. We cannot predict whether current or future efforts to modify these lawsnumerous states subpoenas, civil investigative demands and/or adopt new healthcare legislation will be successful, nor can we predict the impact that such a development would have on our business and operating results. Future legislation or rulemaking or other regulatory actionsrequests concerning opioid matters. From time to time, the Company is also involved in legal proceedings as a plaintiff involving antitrust, tax, contract, intellectual property and other matters. See Note 11 Commitments and contingencies, to the Consolidated Financial Statements included in Part II, Item 8 below for additional information.

The Company’s financial results may also be adversely affected by the litigation and other legal proceedings of companies in which it has an equity method investment. For example, AmerisourceBergen is involved in litigation and legal proceeding, including those relating to opioid matters. Any unfavorable outcome or developments under the ACA or otherwise could adversely impact the number of Americans with health insurance and, consequently, prescription drug coverage, increase regulation of pharmacy services, result in changessettlement related to pharmacy reimbursement rates, and otherwise change the way we do business. We cannot predict the timing or impact of any future legislative, rulemaking or other regulatory actions, but any such actionsthese proceedings could have a material adverse impacteffect on the Company’s financial results.

We cannot predict with certainty the outcomes of these legal proceedings and other contingencies, and the costs incurred in litigation can be substantial, regardless of the outcome. Substantial unanticipated verdicts, fines and rulings do sometimes occur. As a result, we could from time to time incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could harm our reputation and have a material adverse effect on our results of operations in the period in which the amounts are accrued and/or our cash flows in the period in which the amounts are paid. In addition, as a result of governmental investigations or proceedings, the Company may be subject to damages, civil or criminal fines or penalties, or other sanctions, including the possible suspension or loss of licensure and/or suspension or exclusion from participation in government programs. The outcome of some of these legal proceedings and other contingencies could require us to take, or refrain from taking, actions which could negatively affect our operations. Additionally, defending against these lawsuits and proceedings may involve significant expense and diversion of management’s attention and resources.

We operate in complex, highly regulated environments around the world and could be materially and adversely affected by changes to applicable legal requirements including the related interpretations and enforcement practices, new legal requirements and/or any failure to comply with applicable regulations. Businesses in our Pharmaceutical Wholesale division are subject to a range of regulations relating to such things as product margins, product traceability and the conditions under which products must be stored. Our retail pharmacy and health and wellness services businesses are subject to numerous country, state and local regulations including licensing, billing practices, utilization and other requirements for pharmacies and reimbursement arrangements. The regulations to which we are subject include, but are not limited to: country and state registration and regulation of pharmacies and drug discount card programs; dispensing and sale of controlled substances and products containing pseudoephedrine; applicable governmental payer regulations including Medicare and Medicaid; data privacy and security laws and regulations including HIPAA; the ACA or any successor thereto; laws and regulations relating to the

the ability to seize or recall products and impose significant criminal, civil and administrative sanctions for violations of these laws and regulations. We are also governed by foreign, national and state laws of general applicability, including laws regulating matters of working conditions, health and safety and equal employment opportunity and other labor and employment matters as well as employee benefit, competition and antitrust matters. In addition, we could have significant exposure if we are found to have infringed another party’s intellectual property rights.

Changes in laws, regulations and policies and the related interpretations and enforcement practices may alter the landscape in which we do business and may significantly affect our cost of doing business. The impact of new laws, regulations and policies and the related interpretations and enforcement practices generally cannot be predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement, increase our operating costs and require significant capital expenditures. Untimely compliance or noncompliance with applicable laws and regulations could result in the imposition of civil and criminal penalties that could adversely affect the continued operation of our businesses, including: suspension of payments from government programs; loss of required government certifications; loss of authorizations to participate in or exclusion from government programs, including the Medicare and Medicaid programs in the United StatesU.S. and the National Health Service in the United Kingdom;UK; loss of licenses; and significant fines or monetary penalties. Any failure to comply with applicable regulatory requirements in the United StatesU.S. or in any of the countries in which we operate could result in significant legal and financial exposure, damage to our reputation and brand, and have a material adverse effect on our business operations, financial condition and results of operations.

We are subject to laws concerning our business operations and marketing activities in foreign countries where we conduct business. For example, we are subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”), U.S. export control, anti-money laundering and economic and trade sanction laws, and similar anti-corruption and international trade laws in certain foreign countries, such as the U.K.UK Bribery Act, any violation of which could create substantial liability for us and also harm our reputation. The FCPA generally prohibits U.S. companiesViolations of these laws and their officers, directors, employees, and intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business abroad or otherwise obtaining favorable treatment. The FCPA also requires that U.S. public companies maintain books and records that fairly and accurately reflect transactions and maintain an adequate system of internal accounting controls. If we are found to have violated the FCPA,regulations or any other anti-bribery, anti-corruption or international trade laws we may facesubject us to penalties, sanctions, including civil and criminal fines, disgorgement of profits, and suspension or debarment of our ability to contract with governmental agencies or receive export

We areAs a large corporation with operations in the U.S. and numerous other jurisdictions, around the world. As such, we are subject to tax laws and regulations of the U.S. federal, state and local governments as well as various foreign jurisdictions. We compute our income tax provision based on enacted tax rates in the jurisdictions in which we operate. As the tax rates vary among jurisdictions, a change in earnings attributable to the various jurisdictions in which we operate could result in an unfavorable change in our overall tax provision.

of operations. Similarly, changes in tax laws and regulations that impact our customers and counterparties or the economy generally may also impact our financial condition and results of operations.

Tax laws and regulations are complex and subject to varying interpretations, and we are subject to regular review and audit by both domestic and foreign tax authorities. Any adverse outcome of such a review or audit could have a negative impact on our effective tax rate, tax payments, financial condition and results of operations. In addition, the determination of our income tax provision and other tax liabilities requires significant judgment, and there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe our estimates are reasonable, theThe ultimate tax determination may differ from the amounts recorded in our financial statements and may materially affect our results of operations in the period or periods for which such determination is made. Any significant failure to comply with applicable tax laws and regulations in all relevant jurisdictions could give rise to substantial penalties and liabilities. Any changes in enacted tax laws (such as the recent U.S. tax legislation), rules or regulatory or judicial interpretations; or any change in the pronouncements relating to accounting for income taxes could materially and adversely impact our effective tax rate, tax payments, financial condition and results of operations.

As of September 30, 2018, affiliates ofAugust 31, 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 15.3%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. There are other arrangements between affiliates of Mr. Pessina and the Company, with required disclosures included in the Company’s annual proxy statement.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

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 the risk factor captioned “Certain stockholders may have significant voting influence over matters requiring stockholder approval” above.

In June 2018, our Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $10 billion of our common stock. The repurchase program does not have an expiration date and we are not obligated to repurchase a specified number or dollar value of shares, on any particular timetable or at all. There can be no assurance that we will repurchase stock at favorable prices. TheActivity under this program was suspended in July 2020 and there can be no assurance whether or when activity will resume. If resumed, the repurchase program may be suspended or terminated at any time and, even if fully implemented, may not enhance long-term stockholder value.

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

The following information regarding the Company’s properties is provided as of August 31, 20182021 and does not include properties of unconsolidated, partially-owned entities.

The Retail Pharmacy USA divisionUnited States segment operated 9,5608,965 retail stores and sevenfive specialty pharmacies. The Retail Pharmacy International divisionsegment operated 4,7674,031 retail stores. In addition, the Retail Pharmacy International divisionsegment also owned or leased 394343 standalone Boots Opticians locations. The Company’s domestic and international retail locations, which included Boots Opticians and specialty pharmacy locations, covered approximately 150140 million square feet. The Company owned approximately 12%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, leases,Note 5 Leases, to the Consolidated Financial Statements included in partPart II, itemItem 8 below for additional information.

The Company operated 2022 retail distribution centers with a total of approximately 14 million square feet of space, of which 13 locations were owned. Geographically, 1517 of these retail distribution centers were located in the United StatesU.S. and five were located outside of the United States.U.S. In addition, the Company used public warehouses and third-party distributors to handle certain retail distribution needs. The Company’s Retail Pharmacy USA divisionUnited States segment also operated twothree prescription mail service facilities which occupied approximately 260280 thousand square feet. One of these prescription mail service facilities was leased.The Company's United States segment also operated one manufacturing facility, which occupied approximately 6.1 million square feet.

The Company operated 29141 pharmaceutical distribution centers located outside of the United States,in Germany, of which 11740 were owned. These pharmaceutical distribution centers occupied approximately 134 million square feet and were operated by the Pharmaceutical Wholesale division, which supplied third-party customers as well as the Retail Pharmacy International division in certain countries.feet.

The Company operated 2421 principal office facilities, which occupied approximately three5.8 million square feet. NineFour of these principal office facilities were owned, and twoeight of which were located in the United States.U.S.

The information in response to this item is included in note 10, commitmentsNote 11 Commitments and contingencies, to the 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, 2018,2021, there were approximately 56,00048,077 holders of record of Walgreens Boots Alliance common stock.

The Company has paid cash dividends every quarter since 1933. Future dividends will be determined based on earnings, capital requirements, financial condition and other factors considered relevant by the Walgreens Boots AllianceCompany's Board of Directors.

Walgreens Boots Alliance, Inc. (“Walgreens Boots Alliance”) and its subsidiaries areis a global pharmacy-led health and wellbeing enterprise.leader in retail pharmacy. Its operations are conducted through threetwo reportable segments:

See Note 17 Segment reporting and Note 18 Sales, to the Consolidated Financial Statements included in Part II, Item 8 below for additional information.

The Company’s current expectations described above are forward-looking statements and our actual results may differ. Factors that might cause a difference include, but are not limited to, those discussed below under “Cautionary note 16, segment reporting,regarding forward-looking statements” and in Item 1A, Risk factors.

See Note 21. Subsequent events to the Consolidated Financial Statements included in Part II. Item 8 herein for further information.

On September 19, 2017,June 1, 2021, the Company completed the Alliance Healthcare Sale. See Item 1. Business. Recent Transactions for further details on the Alliance Healthcare Sale.

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 markets. The Company accounted for this acquisition as a business combination and consolidates iA within the transitionUnited States segment in its financial statements.

On November 1, 2020, the Company and McKesson Corporation closed a transaction to form a combined pharmaceutical wholesale business in Germany, as part of a strategic alliance. The Company owns a 70% controlling equity interest in the combined business which is consolidated by the Company and reported within the International 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 remaining two distribution centers and related inventory remains subject to closing conditions set forthissuance of an equity interest in the amended and restated asset purchase agreement.combined business. See Note 3 Acquisitions, to the Consolidated Financial Statements included in Part II, Item 8 below for additional information.

On December 20, 2018, the Company continuesannounced a transformational cost management program that was expected to expect to complete integrationdeliver in excess of the acquired stores and related assets$2.0 billion of annual cost savings by fiscal 2022 (the “Transformational Cost Management Program”). At the end of fiscal 2020, at2021, the Company had delivered this annual cost savings goal.

Building on the successful implementation of the Transformational Cost Management Program to date and as part of the Company's strategic realignment to create even greater focus on the Company’s core business, on October 12, 2021, the Company’s Board of Directors approved an estimated totalexpansion and extension of the Transformational Cost Management Program through the end of fiscal 2024. The expanded Transformational Cost Management Program is expected to deliver incremental savings from existing programs and a comprehensive funnel of new initiatives which are intended to improve operating effectiveness and better position the core business for the future. The expansion of the program reflects further strategic initiatives to optimize real estate, implement a global business and centralized services model, as well as leverage technology and new business models to streamline processes across the organization. As a result, the Company is increasing its annual savings target to $3.3 billion of annual cost savings by fiscal 2024.

The Transformational Cost Management Program, which is multi-faceted and includes divisional optimization initiatives, global smart spending, global smart organization and the transformation of the Company’s information technology (IT) capabilities, is designed to help the Company achieve increased cost efficiencies. To date, the Company has taken actions across all aspects of the Transformational Cost Management Program. The actions under the Transformational Cost Management Program focus on all reportable segments and the Company’s global functions. Divisional optimization within each of the Company’s segments includes activities such as optimization of stores. As a result of the expanded program, the Company now plans to reduce its presence by up to 150 Boots stores in the UK and up to 150 stores in the United States over the next three years, which are incremental to the previously planned reduction of approximately $750 million,200 Boots stores in the UK and approximately 250 stores in the United States.

The Company currently estimates that the Transformational Cost Management Program will result in cumulative pre-tax charges to its GAAP financial results of approximately $3.6 billion to $3.9 billion, of which is reported$3.3 billion to $3.6 billion are expected to be recorded as acquisition-related costs. During fiscal 2018,exit and disposal activities. The Company estimates that approximately 85% of the cumulative pre-tax charges relating to the Transformational Cost Management Program represent current or future cash expenditures, primarily related to employee severance and business transition costs, IT transformation and lease and other real estate payments.

In addition to the impacts discussed above, as a result of the actions related to store closures taken under the Transformational Cost Management Program, the Company recorded $508 million of transition adjustments to decrease retained earnings due to the adoption of the new lease accounting standard (Topic 842) that became effective on September 1, 2019. See Note 1 Summary of major accounting policies, to the Consolidated Financial Statements additional information.

Since the inception of the Transformational Cost Management Program to August 31, 2021, the Company has recognized aggregate cumulative pre-tax charges to its financial results in accordance with GAAP of $221$1.5 billion, of which $1.3 billion is recorded as exit and disposal activities. See Note 4 Exit and disposal activities, to the Consolidated Financial Statements included in Part II. Item 8 below for additional information. These charges included $353 million related to integration of the acquired storeslease obligations and related assets. In addition, the Company continues to expect to spend approximately $500other real estate costs, $252 million in asset impairments, $513 million in employee severance and business transition costs, $163 million of capital on store conversionsinformation technology transformation and related activities.other exit costs, and $200 million in other information technology costs.