of operations
The following discussion and analysis of our financial condition and results of
operations should be read together with the financial statements and the related
notes included elsewhere herein and the Consolidated Condensed Financial
Statements, accompanying notes and management's discussion and analysis of
financial condition and results of operations and other disclosures contained in
the Walgreens Boots Alliance, Inc. Annual Report on Form 10-K for the fiscal
year ended August 31, 2020. This discussion contains forward-looking statements
that involve risks and uncertainties. Our actual results may differ materially
from those discussed in forward-looking statements. Factors that might cause a
difference include, but are not limited to, those discussed below under
"Cautionary note regarding forward-looking statements", and in item 1A, risk
factors, in our Form 10-K for the fiscal year ended August 31, 2020. References
herein to the "Company", "we", "us", or "our" refer to Walgreens Boots Alliance,
Inc. and its subsidiaries, except as otherwise indicated or the context
otherwise requires.

Certain amounts in the management's discussion and analysis of financial
condition and results of operations may not add due to rounding. All percentages
have been calculated using unrounded amounts for the three months ended November
30, 2020 and November 30, 2019.

INTRODUCTION AND SEGMENTS
Walgreens Boots Alliance, Inc. ("Walgreens Boots Alliance") and its subsidiaries
are a global leader in retail and wholesale pharmacy. Its operations are
conducted through three reportable segments (sometimes referred to herein as
"divisions"):
•Retail Pharmacy USA;
•Retail Pharmacy International; and
•Pharmaceutical Wholesale.

See Note 14, Segment reporting and Note 15, Sales to the Consolidated Condensed Financial Statements for further information.

RECENT DEVELOPMENTS



Pharmaceutical Wholesale Transaction
On January 6, 2021, the Company entered into a Share Purchase Agreement (the
"Share Purchase Agreement") with AmerisourceBergen. Pursuant to the terms and
subject to the conditions set forth in the Share Purchase Agreement,
AmerisourceBergen will purchase the majority of the Company's Alliance
Healthcare business ("Business") for approximately $6.5 billion, comprised of
$6.275 billion in cash, subject to certain purchase price adjustments, and 2
million shares of AmerisourceBergen common stock (the "Transaction"). Alliance
Healthcare's investment in China and Italy and its operations in Germany are not
part of the Transaction.

The Transaction is subject to the satisfaction of customary closing conditions,
including receipt of applicable regulatory approvals. The Company will account
for the Transaction as a business disposition and report the financial results
of the Business as discontinued operations beginning in the second quarter of
fiscal year 2021.

In connection with the Transaction, the Company and AmerisounceBergen also
agreed to a (i) 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., (ii) a 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 global sourcing enterprise, (iii) a distribution
agreement pursuant to which AmerisourceBergen will supply branded and generic
pharmaceutical products to the Company's Boots UK business following the closing
of the Transaction and (iv) explore a series of strategic initiatives designed
to create incremental growth and efficiencies in sourcing, logistics and
distribution.

See Note 19, Subsequent events to the Consolidated Condensed Financial Statements for additional information.

VillageMD investment
Subsequent to November 30, 2020, the Company and VillageMD announced that the
Company has accelerated its investment in VillageMD to support the opening of
600 to 700 Village Medical at Walgreens primary care clinics in more than 30
U.S. markets within the next four years, with the intent to build hundreds more
thereafter.

In July 2020, the Company and VillageMD announced an expansion of their
partnership and the intent to open 500 to 700 clinics over a five-year period,
supported by the Company's investment in VillageMD over three years of $1.0
billion in equity and convertible debt, which included an initial $250 million
equity investment. The Company has now completed the remaining

WBA Q1 FY2021 Form 10-Q 33

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
$750 million investment, which will allow the Company to increase the minimum
number of clinics to 600 and expand the rollout at a faster pace. See Note 19,
Subsequent events to the Consolidated Condensed Financial Statements for
additional information.

FACTORS AFFECTING OUR RESULTS AND COMPARABILITY
The Company has been, and we expect it to continue to be affected by a number of
factors that may cause actual results to differ from our historical results or
current expectations. These factors include: the impact of the coronavirus
COVID-19 ("COVID-19") pandemic on our operations and financial results; the
financial performance of our equity method investees, including
AmerisourceBergen; the influence of certain holidays; seasonality; foreign
currency rates; changes in vendor, payer and customer relationships and terms
and associated reimbursement pressure; strategic transactions and acquisitions,
joint ventures and other strategic collaborations; changes in laws, including
U.S. tax law changes; changes in trade, tariffs, including trade relations
between the U.S. and China, and international relations, including the UK's
withdrawal from the European Union and its impact on our operations and
prospects and those of our customers and counterparties; the timing and
magnitude of cost reduction initiatives, including under our Transformational
Cost Management Program (as defined below); the timing and severity of the
cough, cold and flu season; fluctuations in variable costs; the impacts of
looting, natural disasters, war, terrorism and other catastrophic events, and
changes in general economic conditions in the markets in which the Company
operates. These and other factors can affect the Company's operations and net
earnings for any period and may cause such results not to be comparable to the
same period in previous years. The results presented in this report are not
necessarily indicative of future operating results.

Estimated COVID-19 impacts and uncertainties
COVID-19 has severely impacted, and is expected to continue to impact, the
economies of the U.S., the UK and other countries around the world. COVID-19 has
created significant public health concerns as well as significant volatility,
uncertainty and economic disruption in every region in which we operate, all of
which have adversely affected and may continue to adversely affect our
industries and our business operations. Further, financial and credit markets
have experienced and may again experience volatility. Policies and initiatives
designed to reduce the transmission of COVID-19 have resulted in, among other
things, temporary closure or reduced hours of operation of certain store
locations in U.S., UK and other countries, reduced customer traffic and sales in
our retail pharmacies and the adoption of work-from-home policies.

COVID-19 continued to affect global economic conditions during the three months
ended November 30, 2020. The Company expects this will continue in the second
quarter of fiscal 2021 (including a weaker cough, cold and flu season). The
situation surrounding COVID-19 remains fluid, and we are actively managing our
response in collaboration with customers, government officials, team members and
business partners and assessing potential impacts to our financial position and
operating results, as well as developments in our business. As COVID-19 impacts
the economies of the U.S., UK and other countries around the world, the Company
has put preparedness plans in place at our facilities to maintain continuity of
our operations, while also taking steps to keep our team members healthy and
safe.

During the three months ended November 30, 2020, we experienced certain adverse
impacts of COVID-19. Sales were negatively impacted with the majority of the
decline within the Retail Pharmacy International division. This reflected a
reduction in footfall in Boots UK stores as a second national lockdown was
declared in November and social distancing measures remained in place. Globally,
pharmacy volume was impacted by a decline in doctor visits and gross margin was
negatively impacted by higher supply chain costs in the UK. The Company took
measures to keep stores open, incurring incremental selling, general and
administrative expenses, including higher employee costs and store expenses
related to social distancing and incremental cleaning and COVID-19 drive-thru
testing sites expenses. The Company also took certain actions during the three
months ended November 30, 2020 to partly mitigate the impact of COVID-19 through
cost containment across the Company including temporary store closures and
decreasing store hours and reducing rent at some locations. However, operating
income was significantly and adversely impacted during the three months ended
November 30, 2020 as a result of COVID-19.

In response to COVID-19, various domestic and foreign federal, state and local
governmental legislation, regulations, orders, policies and initiatives have
been implemented designed to reduce the transmission of COVID-19, as well as to
help address economic and market volatility and instability resulting from
COVID-19. The Company has assessed and will continue to assess the impact of
these governmental actions on the Company. It has participated in certain of
these programs, including for example availing itself to certain tax deferrals
which were introduced by the CARES Act in the U.S. and certain tax deferral and
benefit and employee wage support in the UK, and may continue to do so in the
future.


WBA Q1 FY2021 Form 10-Q     34

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company has also taken a number of proactive actions consistent with
regulatory directives, such as digital 'order ahead' drive-thru with an
increased range of products available for drive-thru pick-up and curbside
collection, and put in place new delivery options available nationwide in the
U.S. To continue to work with customers and manage through the pandemic, the
Company launched a new COVID-19 testing program for businesses in fiscal 2020.
Since the launch of the program, the Company has administered more than 2.8
million COVID-19 tests across the US. The Company has worked with the federal
and state government to help administer COVID-19 vaccines to residents and staff
at more than 35,000 long-term care facilities in 49 states. The opportunity from
the distribution of vaccinations is likely to be partly offset by new COVID-19
related lock-downs and restrictions, and by increased growth investments.

As a result of COVID-19, a portion of our global workforce, including employees
and extended workforce, rapidly shifted to a work from home environment
beginning in March 2020 and many continue to work remotely. While our system of
internal controls were not specifically designed and implemented to accommodate
for this shift, we have evaluated and concluded that these changes to the
working environment did not have a material effect on the Company's internal
control over financial reporting during the most recent quarter, as further
described in Item 4. Controls and procedures below. The Company will continue to
monitor and assess the COVID-19 situation and its internal controls and seek to
mitigate any impact on their design and operating effectiveness.

The Company anticipates additional mandates and directives, including revisions
thereto, from foreign, federal, state, county and city authorities throughout
the continuation of the COVID-19 pandemic and for some time thereafter. The
impact of this activity on the U.S. and global economies and consumer, customer
and health care utilization patterns depends upon the evolving factors and
future developments related to COVID-19. As a result, the financial and/or
operational impact these COVID-19 related governmental actions and inactions
will have on our businesses, operating results, cash flows and/or financial
condition is uncertain, but the impact, singularly or collectively, could be
material and adverse.

We continue to closely monitor the impact of COVID-19 on our business and
geographies, including how it is impacting our customers, team members,
suppliers, vendors, business partners and distribution channels. However, the
future impact that COVID-19 will have on our financial position and operating
results may be affected by numerous uncertainties, including the severity of the
virus; the duration of the outbreak; governmental, business or other actions;
impacts on our supply chain; the effect on customer demand; store closures or
changes and our operations. The health of our workforce, and our ability to meet
staffing needs in our stores, distribution facilities, wholesale operations and
other critical functions cannot be predicted but is vital to our operations. The
impacts of a potential worsening of global economic conditions and continued
disruptions to, and volatility in, the credit and financial markets and consumer
spending, as well as other unanticipated consequences, remain unknown. Further,
additional waves of COVID-19 in fiscal 2021 or beyond could cause many of the
impacts to the Company described herein to return or be exacerbated. The
circumstances, containment and impacts of COVID-19 remain fluid due to rising
incident rates and associated additional lockdowns.

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 regarding forward-looking statements" and in Item 1A, Risk factors, in our Form 10-K for the fiscal year ended August 31, 2020.



Pharmaceutical wholesale business in Germany
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
Pharmaceutical Wholesale segment in its financial statements. The Company
accounted for this acquisition as a business combination involving noncash
purchase consideration of $291 million consisting of the issuance of an equity
interest in the combined business. See Note 2, Acquisitions to the Consolidated
Condensed Financial Statements for further information.

The potential impacts of Brexit
As a result of a referendum in June 2016, the UK withdrew from the European
Union ("Brexit") on January 31, 2020. It began a transition period in which to
negotiate a new trading relationship for goods and services that ended on
December 31, 2020. On December 24, 2020, the EU and UK agreed to a trade deal
with no tariffs nor quotas on products, regulatory and customs cooperation
mechanisms as well as provisions ensuring a level playing field for open and
fair competition. Since the referendum, there have been periods of significant
volatility in the global stock markets and currency exchange rates, as well as
challenging market conditions in the UK. Given the lack of comparable precedent,
it is unclear what financial, trade, regulatory and legal implications the
agreed Brexit trade deal will have on our business, particularly our UK and
other European

WBA Q1 FY2021 Form 10-Q     35

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

operations; however, Brexit and its related effects could have a material adverse impact on the Company's consolidated financial position and results of operations.




TRANSFORMATIONAL COST MANAGEMENT PROGRAM
On December 20, 2018, the Company announced a transformational cost management
program that is currently expected to deliver in excess of $2.0 billion of
annual cost savings by fiscal 2022 (the "Transformational Cost Management
Program"). 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 including
current plans to close approximately 200 Boots stores in the UK and
approximately 250 stores in the U.S..

The Company currently estimates that the Transformational Cost Management
Program will result in cumulative pre-tax charges to its generally accepted
accounting principles in the U.S. ("GAAP") financial results of approximately
$2.1 billion to $2.4 billion, of which $1.8 billion to $2.1 billion are expected
to be recorded as exit and disposal activities. The Company estimates that
approximately 80% of the cumulative pre-tax charges will be associated with cash
expenditures, primarily related to employee severance and business transition
costs, IT transformation costs and lease and real estate payments.

The Company currently estimates that it will recognize aggregate pre-tax charges to its GAAP financial results related to Transformational Cost Management Program as follows:



Transformational Cost Management Program Activities              Range of 

Charges


Lease obligations and other real estate costs1                   $350 to 400 million
Asset impairments2                                               $350 to 400 million
Employee severance and business transition costs                 $850 to 950 million
Information technology transformation and other exit costs       $250 to 300 million
Total cumulative pre-tax exit and disposal costs                 $1.8 to 2.1 billion
Other IT transformation costs                                    $300 to 350 million
Total estimated pre-tax costs                                    $2.1 to 

2.4 billion




1Includes impairments relating to operating lease right-of-use and finance lease
assets.
2Primarily related to asset write-offs from store closures, information
technology and other asset write-offs.

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) on
September 1, 2019.

Since the inception of the Transformational Cost Management Program to November
30, 2020, the Company has recognized aggregate cumulative pre-tax charges to its
financial results in accordance with GAAP of $1.4 billion, of which $1.2
billion are recorded as exit and disposal activities. See Note 3, Exit and
disposal activities, for additional information. These charges included $264
million related to lease obligations and other real estate costs, $354 million
in asset impairments, $471 million in employee severance and business transition
costs, $146 million of information technology transformation and other exit
costs and $139 million other information technology costs.

Costs under the Transformational Cost Management Program, which were primarily
recorded in selling, general and administrative expenses for the three months
ended November 30, 2020 and November 30, 2019, were as follows (in millions):


WBA Q1 FY2021 Form 10-Q     36

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                                            Retail Pharmacy          Retail Pharmacy             Pharmaceutical            Walgreens Boots
Three months ended November 30, 2020              USA                 International                 Wholesale              Alliance, Inc.
Lease obligations and other real estate
costs                                       $         22          $                -          $                -          $           22
Asset impairments                                      4                           -                           -                       4
Employee severance and business transition
costs                                                 21                          28                           2                      51
Information technology transformation and
other exit costs                                      10                          (6)                          1                       6

Total pre-tax exit and disposal costs $ 58 $


      22          $                4          $           83
Other IT transformation costs                         13                           6                           2                      21
Total pre-tax costs                         $         70          $               28          $                6          $          104



                                            Retail Pharmacy          Retail Pharmacy             Pharmaceutical            Walgreens Boots
Three months ended November 30, 2019              USA                 International                 Wholesale               Alliance, Inc.
Lease obligations and other real estate
costs                                       $          1          $                -          $                -          $             1
Asset impairments                                      8                           3                           -                       11
Employee severance and business transition
costs                                                 34                           1                           5                       40
Information technology transformation and
other exit costs                                       7                           4                           1                       12

Total pre-tax exit and disposal costs $ 49 $


       9          $                6          $            64
Other IT transformation costs                         17                           3                           1                       21
Total pre-tax costs                         $         66          $               12          $                7          $            86



Transformational Cost Management Program charges are recognized as the costs are
incurred over time in accordance with GAAP. The Company treats charges related
to the Transformational Cost Management Program as special items impacting
comparability of results in its earnings disclosures.

The amounts and timing of all estimates are subject to change until finalized.
The actual amounts and timing may vary materially based on various factors. See
"Cautionary note regarding forward-looking statements" below.

INVESTMENT IN AMERISOURCEBERGEN
As of November 30, 2020, the Company owned 56,854,867 shares of
AmerisourceBergen common stock (representing approximately 28% of its
outstanding common stock based on most recent share count publicly reported by
AmerisourceBergen) and may, subject to certain conditions, acquire up to an
additional 8,398,752 AmerisourceBergen shares in the open market.

The Company accounts for its investment in AmerisourceBergen using the equity
method of accounting, subject to a two-month reporting lag, with the net
earnings (loss) attributable to the investment classified within the operating
income (loss) of the Company's Pharmaceutical Wholesale segment. The Company
recognized equity losses in AmerisourceBergen of $1,373 million during the three
months ended November 30, 2020. These equity losses are primarily due to
AmerisourceBergen recognition of $5.6 billion, net of tax charges related to its
ongoing opioid litigation in its financial statements for the three months
period ended September 30, 2020.

The financial performance of AmerisourceBergen will impact the Company's results
of operations. Additionally, a substantial and sustained decline in the price of
AmerisourceBergen's common stock could trigger an impairment evaluation of our
investment. These considerations may materially and adversely affect the
Company's financial condition and results of operations. For more information,
see Note 5, Equity method investments to the Consolidated Condensed Financial
Statements.

On January 6, 2021, the Company entered into a Share Purchase Agreement with
AmerisourceBergen pursuant to which AmerisourceBergen will purchase the majority
of the Company's pharmaceutical wholesale operations, among other assets, for
$6.275 billion in cash (subject to customary purchase price adjustments) and 2
million shares of common stock of AmerisourceBergen. See "Recent Developments"
above and Note 19, Subsequent events to the Consolidated Condensed Financial
Statements for additional information.

WBA Q1 FY2021 Form 10-Q 37

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY
The following table presents certain key financial statistics.
                                                                                (in millions, except per share amounts)
                                                                              Three months ended
                                                                                 November 30,
                                                                                          2020                 2019
Sales                                                                                $    36,307          $    34,339
Gross profit                                                                               7,139                7,263
Selling, general and administrative expenses                                               6,207                6,262
Equity earnings (loss) in AmerisourceBergen                                               (1,373)                  13
Operating income (loss)                                                                     (440)               1,013
Adjusted operating income (Non-GAAP measure)1                                              1,318                1,463
Earnings (loss) before interest and income tax provision                                    (380)               1,048

Net earnings (loss) attributable to Walgreens Boots Alliance, Inc.

                 (308)                 845

Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure)1

                                                                        1,052                1,222
Net earnings (loss) per common share - diluted                                             (0.36)                0.95

Adjusted net earnings per common share - diluted (Non-GAAP measure)1


                1.22                 1.37


                                                                                            Percentage increases (decreases)
                                                                          

Three months ended November 30,


                                                                                                 2020                           2019
Sales                                                                                            5.7                             1.6
Gross profit                                                                                    (1.7)                           (5.0)
Selling, general and administrative expenses                                                    (0.9)                           (0.3)
Operating income (loss)                                                                        (143.5)                         (27.6)
Adjusted operating income (Non-GAAP measure)1                                                   (9.9)                          (15.6)
Earnings (loss) before interest and income tax provision                                       (136.3)                         (26.5)

Net earnings (loss) attributable to Walgreens Boots Alliance, Inc.

                                                                                           (136.4)                         (24.8)

Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure)1

                                                                        (13.9)                         (11.8)
Net earnings (loss) per common share - diluted                                                 (137.6)                         (19.8)
Adjusted net earnings per common share - diluted (Non-GAAP
measure)1                                                                                       (11.2)                          (6.0)



                                                                                             Percent to sales
                                                                         Three months ended November
                                                                                     30,
                                                                                            2020                    2019
Gross margin                                                                                19.7                    21.1
Selling, general and administrative expenses                                                17.1                    18.2



1See "--Non-GAAP Measures" below for a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP and related disclosures.





WBA Q1 FY2021 Form 10-Q     38


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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

WALGREENS BOOTS ALLIANCE RESULTS OF OPERATIONS



Net earnings (loss)
Net loss attributable to the Company for the three months ended November 30,
2020 was $308 million compared to net earnings of $845 million for the prior
year period. Diluted net loss per share was $0.36 compared to diluted net
earnings $0.95 for the prior year quarter. The decreases in net earnings and
diluted earnings per share are primarily due to the charges reflected in the
Company's equity earnings (loss) in AmerisourceBergen.

Other income for the three months ended November 30, 2020 was $60 million compared to income of $35 million for the prior year quarter, primarily reflecting equity earnings from other equity investments.

Interest was a net expense of $140 million and $166 million for the three months ended November 30, 2020 and 2019, respectively.



The effective tax rate for the three months ended November 30, 2020 was 38.2%
compared to 3.6% for the prior year quarter. The increase in the effective tax
rate for the three months ended November 30, 2020 was primarily due to the
discrete tax effect of equity earnings in AmerisourceBergen.

Adjusted net earnings (Non-GAAP measure)
Adjusted net earnings attributable to Walgreens Boots Alliance for the three
months ended November 30, 2020 decreased 13.9% to $1.1 billion, a decrease of
14.3% on a constant currency basis, compared with the prior year quarter.
Adjusted diluted net earnings per share decreased 11.2% to $1.22, a decrease of
11.6% on a constant currency basis, compared with the prior year quarter.

The decreases in adjusted net earnings and adjusted diluted net earnings per
share for the three months ended November 30, 2020 primarily reflect COVID-19
impacts across the retail businesses and lower U.S. pharmacy reimbursement,
partially offset by cost savings from the Transformational Cost Management
Program, U.S. retail gross margin and U.S. pharmacy procurement savings. The
decrease in adjusted diluted net earnings per share for the three months ended
November 30, 2020 was partially offset by a lower number of shares outstanding
compared with the prior year quarter. See "--Non-GAAP Measures" below for a
reconciliation to the most directly comparable financial measure calculated in
accordance with GAAP and related disclosures.

RESULTS OF OPERATIONS BY SEGMENT

Retail Pharmacy USA
This division comprises the Company's retail pharmacy business operating in the
U.S..

FINANCIAL PERFORMANCE                                                    

(in millions, except location amounts)


                                                                       Three months ended
                                                                          November 30,
                                                                                   2020                 2019
Sales                                                                         $    27,163          $    26,133
Gross profit                                                                        5,617                5,691
Selling, general and administrative expenses                                        4,825                4,843
Operating income                                                                      792                  848
Adjusted operating income (Non-GAAP measure)1                                         989                1,155

Number of prescriptions2                                                            204.6                213.0
30-day equivalent prescriptions2,3                                                  297.3                294.0
Number of locations at period end                                                   9,001                9,175




WBA Q1 FY2021 Form 10-Q     39

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                                                                                               Percentage increases (decreases)
                                                                              Three months ended November 30,
                                                                                                    2020                           2019
Sales                                                                                                3.9                            1.6
Gross profit                                                                                        (1.3)                          (5.2)
Selling, general and administrative expenses                                                        (0.4)                           0.2
Operating income                                                                                    (6.6)                         (27.3)
Adjusted operating income (Non-GAAP measure)1                                                      (14.4)                         (16.2)

Comparable sales4                                                                                    3.7                            1.6
Pharmacy sales                                                                                       5.9                            2.9
Comparable pharmacy sales4                                                                           5.0                            2.5
Retail sales                                                                                        (2.2)                          (2.2)
Comparable retail sales4                                                                             0.4                           (0.5)
Comparable number of prescription2,4                                                                (2.5)                           0.1
Comparable 30-day equivalent prescriptions2,3,4                                                      2.7                            2.8



                                                                                             Percent to sales
                                                                         Three months ended November
                                                                                     30,
                                                                                            2020                    2019
Gross margin                                                                                20.7                    21.8
Selling, general and administrative expenses                                                17.8                    18.5



1See "--Non-GAAP Measures" below for a reconciliation to the most directly
comparable financial measure calculated in accordance with GAAP and related
disclosures.
2Includes immunizations.
3Includes the adjustment to convert prescriptions greater than 84 days to the
equivalent of three 30-day prescriptions. This adjustment reflects the fact that
these prescriptions include approximately three times the amount of product days
supplied compared to a normal prescription.
4Comparable sales are defined as sales from stores that have been open for at
least twelve consecutive months without closure for seven or more consecutive
days, including due to looting or store damage, and without a major remodel or
being subject to a natural disaster, in the past twelve months as well as
e-commerce sales. E-commerce sales include digitally initiated sales online or
through mobile applications. Relocated stores are not included as comparable
sales for the first twelve months after the relocation. Acquired stores are not
included as comparable sales for the first twelve months after acquisition or
conversion, when applicable, whichever is later. Comparable sales, comparable
pharmacy sales, comparable retail sales, comparable number of prescriptions and
comparable number of 30-day equivalent prescriptions refer to total sales,
pharmacy sales, retail sales, number of prescriptions and number of 30-day
equivalent prescriptions, respectively. Comparable retail sales for previous
periods have been restated to include e-commerce sales. The method of
calculating comparable sales varies across the retail industry. As a result, our
method of calculating comparable sales may not be the same as other retailers'
methods.

Sales for the three months ended November 30, 2020 and 2019 The Retail Pharmacy USA division's sales for the three months ended November 30, 2020 increased 3.9% compared with the prior year quarter to $27.2 billion. Comparable sales increased 3.7% compared with the prior year quarter.



Pharmacy sales increased 5.9% for the three months ended November 30, 2020
compared with the prior year quarter and represented 76.8% of the division's
sales. The increase is primarily due to lower generic utilization and higher
volume. In the prior year quarter, pharmacy sales increased 2.9% and represented
75.4% of the division's sales. Comparable pharmacy sales increased 5.0% for the
three months ended November 30, 2020 compared to an increase of 2.5% in the
prior year quarter. The effect of generic drugs, which have a lower retail
price, replacing brand name drugs reduced prescription sales by 0.4% in the

WBA Q1 FY2021 Form 10-Q 40

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
three months ended November 30, 2020 compared to a reduction of 2.5% in the
prior year quarter. The effect of generics mix on division sales caused a
reduction of 0.3% for the three months ended November 30, 2020 compared to a
reduction of 1.8% for the prior year quarter. Third party sales, where
reimbursement is received from managed care organizations, governmental
agencies, employers or private insurers, were 97.5% of prescription sales for
the three months ended November 30, 2020 compared to 96.9% in the prior year
quarter. The total number of prescriptions (including immunizations) filled for
the three months ended November 30, 2020 was 204.6 million compared to 213.0
million in the prior year quarter. Prescriptions (including immunizations)
filled adjusted to 30-day equivalents were 297.3 million in the three months
ended November 30, 2020 compared to 294.0 million in the prior year quarter.

Retail sales decreased 2.2% for the three months ended November 30, 2020
compared with the prior year quarter and represented 23.1% of the division's
sales. In the prior year quarter, retail sales decreased 2.2% and comprised
24.6% of the division's sales. Comparable retail sales increased 0.4% in the
three months ended November 30, 2020 compared to a decrease of 0.5% in the prior
year quarter. The current period was impacted by a weaker cough, cold and flu
season and decrease in discretionary categories offset by increase in health and
wellness, excluding cough, cold and flu categories.

Operating income for the three months ended November 30, 2020 and 2019
Retail Pharmacy USA division's operating income for the three months ended
November 30, 2020 decreased 6.6% compared with the prior year quarter to $792
million. The decrease was primarily due to pharmacy reimbursement pressure and
adverse COVID-19 impacts partly offset by savings from the Transformational Cost
Management Program and acquisition-related costs related to Rite Aid stores in
the prior year quarter results.

Gross margin was 20.7% for the three months ended November 30, 2020 compared to
21.8% in the prior year quarter. Gross margin was negatively impacted in the
current period by pharmacy margins, which were negatively impacted by
reimbursement pressure and COVID-19 impacts.

Selling, general and administrative expenses as a percentage of sales were 17.8%
for the three months ended November 30, 2020 compared to 18.5% in the prior year
quarter. As a percentage of sales, expenses were lower in the current period
primarily due to savings related to the Transformational Cost Management Program
partially offset by COVID-19 impacts and higher growth investment.

Adjusted operating income (Non-GAAP measure) for the three months ended November
30, 2020 and 2019
Retail Pharmacy USA division's adjusted operating income for the three months
ended November 30, 2020 decreased compared with the prior year quarter 14.4% to
$989 million. The decrease was primarily due to lower pharmacy margins which
were negatively impacted by increased reimbursement pressure and COVID-19
impacts. See "--Non-GAAP Measures" below for a reconciliation to the most
directly comparable financial measure calculated in accordance with GAAP and
related disclosures.

Retail Pharmacy International
This division comprises the Company's retail pharmacy businesses operating in
countries outside the U.S. and in currencies other than the U.S. dollar,
including the British pound sterling, Euro, Chilean peso and Mexican peso and
therefore the division's results are impacted by movements in foreign currency
exchange rates. See Item 3, Quantitative and qualitative disclosure about market
risk, foreign currency exchange rate risk, for further information on currency
risk.

FINANCIAL PERFORMANCE                                                  (in 

millions, except location amounts)


                                                                     Three months ended
                                                                        November 30,
                                                                                 2020                 2019
Sales                                                                       $     2,574          $     2,745
Gross profit                                                                        961                1,056
Selling, general and administrative expenses                                        928                1,012
Operating income                                                                     34                   44
Adjusted operating income (Non-GAAP measure)1                                        84                   79

Number of locations at period end                                                 4,394                4,578



WBA Q1 FY2021 Form 10-Q     41

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

                                                                                           Percentage increases (decreases)
                                                                         

Three months ended November 30,


                                                                                                2020                           2019
Sales                                                                                           (6.2)                          (5.4)
Gross profit                                                                                    (9.0)                          (6.3)
Selling, general and administrative expenses                                                    (8.4)                          (3.5)
Operating income (loss)                                                                        (22.7)                         (43.7)
Adjusted operating income (loss) (Non-GAAP measure)1                                             6.4                          (40.5)

Comparable sales in constant currency2                                                          (3.1)                          (1.4)
Pharmacy sales                                                                                   0.1                           (3.7)
Comparable pharmacy sales in constant currency2                                                  3.8                            0.6
Retail sales                                                                                    (9.8)                          (6.3)
Comparable retail sales in constant currency2                                                   (7.6)                          (2.5)



                                                                                             Percent to sales
                                                                         Three months ended November
                                                                                     30,
                                                                                            2020                    2019
Gross margin                                                                                37.3                    38.5
Selling, general and administrative expenses                                                36.0                    36.9



1See "--Non-GAAP Measures" below for a reconciliation to the most directly
comparable financial measure calculated in accordance with GAAP and related
disclosures.
2Comparable sales in constant currency are defined as sales from stores that
have been open for at least twelve consecutive months without closure for seven
or more consecutive days, including due to looting or store damage, and without
a major remodel or being subject to a natural disaster, in the past twelve
months as well as e-commerce sales. E-commerce sales include digitally initiated
sales online or through mobile applications. Relocated stores are not included
as comparable stores for the first twelve months after the relocation. Acquired
stores are not included as comparable sales for the first twelve months after
acquisition or conversion, when applicable, whichever is later. Comparable sales
in constant currency, comparable pharmacy sales in constant currency and
comparable retail sales in constant currency refer to total sales, pharmacy
sales and retail sales, respectively. Comparable retail sales in constant
currency for previous periods have been restated to include e-commerce sales.
The method of calculating comparable sales in constant currency varies across
the retail industry. As a result, our method of calculating comparable sales in
constant currency may not be the same as other retailers' methods. The Company
presents certain information related to current period operating results in
"constant currency," which is a non-GAAP financial measure. Comparable sales in
constant currency, comparable pharmacy sales in constant currency and comparable
retail sales in constant currency exclude the effects of fluctuations in foreign
currency exchange rates. See "--Non-GAAP Measures."

Sales for the three months ended November 30, 2020 and 2019
Retail Pharmacy International division's sales for the three months ended
November 30, 2020 decreased compared to the prior year quarter 6.2% to $2.6
billion. Sales were positively impacted in the quarter by 1.9 percentage points
($53 million) as a result of currency translation. Comparable sales in constant
currency decreased 3.1%, primarily due to lower retail sales in Boots UK,
including COVID-19 impacts.

Pharmacy sales increased 0.1% for the three months ended November 30, 2020 compared to the prior year quarter and represented 38.9% of the division's sales. The positive impact of currency translation on pharmacy sales in the quarter was 1.5 percentage points. Comparable pharmacy sales in constant currency increased 3.8% from the prior year quarter primarily due to higher National Health Service ("NHS") reimbursement levels in the UK and pharmacy volumes in Mexico. This is partially offset by lower UK prescription volume and reduced demand for pharmacy services during the COVID-19 pandemic in the UK.



WBA Q1 FY2021 Form 10-Q     42


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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Retail sales decreased 9.8% for the three months ended November 30, 2020 compared to the prior year quarter and represented 61.1% of the division's sales. The positive impact of currency translation on retail sales in the quarter was 2.2 percentage points. Comparable retail sales in constant currency decreased 7.6% from the prior year quarter reflecting lower retail sales in Boots UK, including COVID-19 impacts.



Operating income for the three months ended November 30, 2020 and 2019
Retail Pharmacy International division's operating income for the three months
ended November 30, 2020 decreased compared to the prior year quarter 22.7% to
$34 million. The decrease reflects increased investment in the Transformational
Cost Management Program. Excluding the impact of the increased investment in the
Transformational Cost Management Program, the lower footfall is fully mitigated
by decisive cost management actions and strong performance of Boots.com.

Gross profit decreased 9.0% from the prior year quarter. Gross profit in the
quarter was positively impacted by 2.3 percentage points ($24 million) as a
result of currency translation. Excluding the impact of currency translation,
the decrease was primarily due to lower retail sales in Boots UK and higher
fulfillment costs partially offset by favorable timing of NHS reimbursement.

Selling, general and administrative expenses decreased 8.4% from the prior year
quarter. Expenses in the quarter were negatively impacted by 2.0 percentage
points ($21 million) as a result of currency translation. Excluding the impact
of currency translation, the decrease was due to short term cost mitigation and
savings from the Transformational Cost Management Program. As a percentage of
sales, selling, general and administrative expenses were 36.0% in the three
months ended November 30, 2020 compared to 36.9% in the prior year quarter.

Adjusted operating income (Non-GAAP measure) for the three months ended November
30, 2020 and 2019
Retail Pharmacy International division's adjusted operating income for the three
months ended November 30, 2020 increased 6.4% to $84 million compared to the
prior year quarter. Adjusted operating income in the quarter was positively
impacted by 5.8 percentage points ($5 million) as a result of currency
translation. Excluding the impact of currency translation, the increase was
mainly due to decisive cost management actions and strong performance of
Boots.com mitigating the impact of lower footfall. See "--Non-GAAP Measures"
below for a reconciliation to the most directly comparable financial measure
calculated in accordance with GAAP and related disclosures.

Pharmaceutical Wholesale
This division includes the Company's pharmaceutical wholesale businesses
operating in currencies other than the U.S. dollar including the British pound
sterling, Euro and Turkish lira, and thus the division's results are impacted by
movements in foreign currency exchange rates. See Item 3, Quantitative and
qualitative disclosure about market risk, foreign currency exchange rate risk,
for further information on currency risk.

On January 6, 2021, the Company entered into a Share Purchase Agreement with
AmerisourceBergen pursuant to which AmerisourceBergen will purchase the majority
of the Company's pharmaceutical wholesale operations, among other assets, for
$6.275 billion in cash (subject to customary purchase price adjustments) and 2
million shares of common stock of AmerisourceBergen. See "Recent Developments"
above and Note 19, Subsequent events to the Consolidated Condensed Financial
Statements for additional information.

FINANCIAL PERFORMANCE                                                                 (in millions)
                                                                       Three months ended
                                                                          November 30,
                                                                                   2020                 2019
Sales                                                                         $     7,125          $     6,007
Gross profit                                                                          560                  517
Selling, general and administrative expenses                                          455                  407
Equity earnings (loss) in AmerisourceBergen                                        (1,373)                  13
Operating income (loss)                                                            (1,268)                 122
Adjusted operating income (Non-GAAP measure)1                                         244                  229




WBA Q1 FY2021 Form 10-Q     43

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                                                                                           Percentage increases (decreases)
                                                                          

Three months ended November 30,


                                                                                                 2020                           2019
Sales                                                                                            18.6                           5.2
Gross profit                                                                                     8.5                            0.8
Selling, general and administrative expenses                                                     11.6                           2.9
Operating income (loss)                                                                       (1,140.6)                        (21.5)
Adjusted operating income (Non-GAAP measure)1                                                    6.7                            4.1

Comparable sales in constant currency2                                                           8.3                            8.3



                                                                                             Percent to sales
                                                                         Three months ended November
                                                                                     30,
                                                                                            2020                    2019
Gross margin                                                                                7.9                      8.6
Selling, general and administrative expenses                                                6.4                      6.8



1See "--Non-GAAP Measures" below for a reconciliation to the most directly
comparable financial measure calculated in accordance with GAAP and related
disclosures.
2Comparable sales in constant currency are defined as sales excluding
acquisitions and dispositions. The Company presents certain information related
to current period operating results in "constant currency," which is a non-GAAP
financial measure. Comparable sales in constant currency exclude the effects of
fluctuations in foreign currency exchange rates. See "--Non-GAAP Measures"
below.

Sales for the three months ended November 30, 2020 and 2019
Pharmaceutical Wholesale division's sales for the three months ended November
30, 2020, including results of the Company's new combined business in Germany
which were consolidated as of November, increased 18.6% compared to the prior
year quarter to $7.1 billion. Sales were positively impacted in the quarter by
2.3 percentage points ($137 million) as a result of currency translation.
Comparable sales in constant currency which exclude the incremental impact of
the joint venture, increased 8.3% compared to the prior year quarter, primarily
due to growth in emerging markets and COVID-19 related sales in France.

Operating income (loss) for the three months ended November 30, 2020 and 2019
Pharmaceutical Wholesale division's operating loss for the three months ended
November 30, 2020 was $1.3 billion, including $1.4 billion loss from the
Company's share of equity earnings in AmerisourceBergen. This compared with
operating income of $122 million in the prior year quarter, including $13
million from the Company's equity earnings in AmerisourceBergen. Operating loss
in the quarter was negatively impacted by 1.8 percentage points ($2 million) as
a result of currency translation. The operating loss is primarily due to $1.4
billion related to the Company's share of equity loss in AmerisourceBergen,
partially offset by sales growth.

Gross profit increased 8.5% from the prior year quarter. Gross profit in the
quarter was positively impacted by 2.4 percentage points ($12 million) as a
result of currency translation. Excluding the currency translation impact, the
increase was primarily due to sales growth partially offset by lower gross
margins.

Selling, general and administrative expenses increased 11.6% from the prior year
quarter. Expenses in the quarter were negatively impacted by 3.5 percentage
points ($14 million) as a result of currency translation. Excluding the currency
translation impact, the increase was due to additional costs due to impact of
sales growth and from the company's new joint venture in Germany. As a
percentage of sales, selling, general and administrative expenses for the three
months ended November 30, 2020 were 6.4% compared to 6.8% in the prior year
quarter.




WBA Q1 FY2021 Form 10-Q     44

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
Adjusted operating income (Non-GAAP measure) for the three months ended November
30, 2020 and 2019
Pharmaceutical Wholesale division's adjusted operating income for the three
months ended November 30, 2020, which includes $108 million from the Company's
share of adjusted equity earnings in AmerisourceBergen, increased 6.7% compared
to the prior year quarter to $244 million. Adjusted operating income in the
quarter was negatively impacted by 0.7 percentage points ($2 million) as a
result of currency translation. Excluding the impact of currency translation,
the increase in adjusted operating income was primarily due to sales growth and
a higher contribution of adjusted equity earnings from AmerisourceBergen. See
"--Non-GAAP Measures" below for a reconciliation to the most directly comparable
financial measure calculated in accordance with GAAP and related disclosures.

NON-GAAP MEASURES
The following information provides reconciliations of the supplemental non-GAAP
financial measures, as defined under the rules of the SEC, presented herein to
the most directly comparable financial measures calculated and presented in
accordance with GAAP. The Company has provided the non-GAAP financial measures,
which are not calculated or presented in accordance with GAAP, as supplemental
information and in addition to the financial measures that are calculated and
presented in accordance with GAAP.

These supplemental non-GAAP financial measures are presented because the
Company's management has evaluated its financial results both including and
excluding the adjusted items or the effects of foreign currency translation, as
applicable, and believes that the supplemental non-GAAP financial measures
presented provide additional perspective and insights when analyzing the core
operating performance of the Company from period to period and trends in its
historical operating results. These supplemental non-GAAP financial measures
should not be considered superior to, as a substitute for or as an alternative
to, and should be considered in conjunction with, the GAAP financial measures
presented.

The Company also presents certain information related to current period
operating results in "constant currency," which is a non-GAAP financial measure.
These amounts are calculated by translating current period results at the
foreign currency exchange rates used in the comparable period in the prior
year. The Company presents such constant currency financial information because
it has significant operations outside of the U.S. reporting in currencies other
than the U.S. dollar and such presentation provides a framework to assess how
its business performed excluding the impact of foreign currency exchange rate
fluctuations.

NON-GAAP RECONCILIATION
                                                                                                     (in millions)
                                                                                          Three months ended November 30, 2020
                                                       Retail              Retail Pharmacy            Pharmaceutical                                Walgreens Boots
                                                    Pharmacy USA            International                Wholesale             Eliminations          Alliance, Inc.
Operating income (loss) (GAAP)                      $      792          $               34          $         (1,268)         $          1          $   

(440)


Adjustments to equity earnings (loss) in
AmerisourceBergen                                            -                           -                     1,481                     -              

1,481


Acquisition-related amortization                            76                          20                        20                     -              

116


Transformational cost management                            70                          28                         6                     -                    104
LIFO provision                                              33                           -                         -                     -                     33
Acquisition-related costs                                   17                           2                         5                     -                     23

Adjusted operating income (Non-GAAP measure) $ 989 $


            84          $            244          $          1          $       1,318




WBA Q1 FY2021 Form 10-Q     45

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                                                                                                      (in millions)
                                                                                           Three months ended November 30, 2019
                                                        Retail              Retail Pharmacy             Pharmaceutical                                Walgreens Boots
                                                     Pharmacy USA            International                Wholesale              Eliminations          Alliance, Inc.
Operating income (GAAP)                             $       848          $               44          $             122          $          -          $       1,013
Adjustments to equity earnings in
AmerisourceBergen                                             -                           -                         80                     -            

80


Acquisition-related amortization                             77                          22                         19                     -            

118


Transformational cost management                             66                          12                          7                     -                     86
LIFO provision                                               33                           -                          -                     -                     33
Acquisition-related costs                                   122                           -                          1                     -                    124
Store optimization                                            9                           -                          -                     -                      9

Adjusted operating income (Non-GAAP measure) $ 1,155 $


             79          $             229          $          -          $       1,463




                                                                                               Three months ended November 30,
                                                                                                  2020                     2019

Net earnings (loss) attributable to Walgreens Boots Alliance, Inc. (GAAP)

                                                                                    $             (308)         $       845

Adjustments to operating income (loss):
Adjustments to equity earnings (loss) in AmerisourceBergen1                                            1,481                   80
Acquisition-related amortization2                                                                        116                  118
Transformational cost management3                                                                        104                   86
LIFO provision4                                                                                           33                   33
Acquisition-related costs5                                                                                23                  124

Store optimization3                                                                                        -                    9

Total adjustments to operating income (loss)                                                           1,759                  449

Adjustments to other income (expense):
Net investment hedging (gain) loss6                                                                        9                  (11)

Gain on sale of equity method investment7                                                                  -                   (1)
Total adjustments to other income (expense)                                                                9                  (12)

Adjustments to income tax provision:
U.S. tax law changes8                                                                                      -                   (6)
Tax impact of adjustments8                                                                               (67)                 (80)
Equity method non-cash tax8                                                                             (346)                  (2)
Total adjustments to income tax provision                                                               (412)                 (88)

Adjustments to post tax equity earnings from other equity method investments: Adjustments to equity earnings in other equity method investments9

                                        13                   28

Total adjustments to post tax equity earnings from other equity method investments

                                                                                               13                   28

Adjustments to net earnings (loss) attributable to noncontrolling interests:





WBA Q1 FY2021 Form 10-Q     46


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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
Acquisition-related amortization2                                                            (4)                   -
LIFO provision4                                                                              (3)                   -

Total adjustments to net earnings (loss) attributable to noncontrolling interests

                                                                     (8)                   -

Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. (Non-GAAP measure)

$ 1,052 $ 1,222



Diluted net earnings (loss) per common share (GAAP)10                       

$ (0.36) $ 0.95



Adjustments to operating income (loss)                                                     2.03                 0.50
Adjustments to other income (expense)                                                      0.01                (0.01)
Adjustments to income tax provision                                                       (0.48)               (0.10)

Adjustments to equity earnings in other equity method investments9

                                                                               0.01                 0.03

Adjustments to net earnings (loss) attributable to noncontrolling interests

                                                                                 (0.01)                   -

Adjusted diluted net earnings per common share (Non-GAAP measure)11

$ 1.22 $ 1.37



Weighted average common shares outstanding, diluted (in
millions)11                                                                               865.3                892.6



1Adjustments to equity earnings (loss) in AmerisourceBergen consist of the
Company's proportionate share of non-GAAP adjustments reported by
AmerisourceBergen consistent with the Company's non-GAAP measures. The Company
recognized equity losses in AmerisourceBergen of $1,373 million during the three
months ended November 30, 2020. These equity losses are primarily due to
AmerisourceBergen recognition of $5.6 billion, net of tax, charges related to
its ongoing opioid litigation in its financial statements for the three months
period ended September 30, 2020.
2Acquisition-related amortization includes amortization of acquisition-related
intangible assets and inventory valuation adjustments. Amortization of
acquisition-related intangible assets includes amortization of intangibles
assets such as customer relationships, trade names, trademarks and contract
intangibles. Intangible asset amortization excluded from the related non-GAAP
measure represents the entire amount recorded within the Company's GAAP
financial statements, the revenue generated by the associated intangible assets
has not been excluded from the related non-GAAP measures. Amortization expense,
unlike the related revenue, is not affected by operations of any particular
period unless an intangible asset becomes impaired or the estimated useful life
of an intangible asset is revised. These charges are primarily recorded within
selling, general and administrative expenses. Business combination accounting
principles require us to measure acquired inventory at fair value. The fair
value of the inventory reflects cost of acquired inventory and a portion of the
expected profit margin. The acquisition-related inventory valuation adjustments
excludes the expected profit margin component from cost of sales recorded under
the business combination accounting principles.
3Transformational Cost Management Program and Store Optimization Program charges
are costs associated with a formal restructuring plan. These charges are
primarily recorded within selling, general and administrative expenses. These
costs do not reflect current operating performance and are impacted by the
timing of restructuring activity.
4The Company's Retail Pharmacy USA segment inventory is accounted for using the
last-in-first-out ("LIFO") method. This adjustment represents the impact on cost
of sales as if Retail Pharmacy USA segment inventory is accounted for using
first-in first-out ("FIFO") method. The LIFO provision is affected by changes in
inventory quantities, product mix, and manufacturer pricing practices, which may
be impacted by market and other external influences. Therefore, the Company
cannot control the amounts recognized or timing of these items.
5Acquisition-related costs are transaction and integration costs associated with
certain merger and acquisition related activities. These costs include all
charges incurred on certain mergers and acquisition related activities, for
example, including costs related to integration efforts for successful merger
and acquisition activities. These charges are primarily recorded within selling,
general and administrative expenses. These costs are significantly impacted by
the timing and complexity of the underlying merger and acquisition related
activities and do not reflect the Company's current operating performance.
6Gain or loss on certain derivative instruments used as economic hedges of the
Company's net investments in foreign subsidiaries. These charges are recorded
within other income (expense). We do not believe this volatility related to
mark-to-market adjustment on the underlying derivative instruments reflects the
Company's operational performance.
7Includes significant gain on sale of equity method investment and related
adjustments.

WBA Q1 FY2021 Form 10-Q     47

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
8Adjustments to income tax provision include adjustments to the GAAP basis tax
provision commensurate with non-GAAP adjustments and certain discrete tax items
including U.S. tax law changes, a UK tax rate change and equity method non-cash
tax. These charges are recorded within income tax provision (benefit).
9Adjustments to post tax equity earnings from other equity method investments
consist of the proportionate share of certain equity method investees' non-cash
items or unusual or infrequent items consistent with the Company's non-GAAP
adjustments. These charges are recorded within post tax earnings (loss) from
other equity method investments. Although the Company may have shareholder
rights and board representation commensurate with its ownership interests in
these equity method investees, adjustments relating to equity method investments
are not intended to imply that the Company has direct control over their
operations and resulting revenue and expenses. Moreover, these non-GAAP
financial measures have limitations in that they do not reflect all revenue and
expenses of these equity method investees.
10Due to the anti-dilutive effect resulting from the reported net loss, the
impact of potentially dilutive securities on the per share amounts has been
omitted from the quarterly calculation of weighted-average common shares
outstanding for diluted earnings per share for the three months ended November
30, 2020.
11Includes impact of potentially dilutive securities in the quarterly
calculation of weighted-average common shares, diluted for adjusted diluted net
earnings per common share calculation purposes for the three months ended
November 30, 2020.

The Company considers certain metrics presented in this report, such as
comparable sales, comparable pharmacy sales, comparable retail sales, comparable
number of prescriptions, and comparable 30-day equivalent prescriptions, to be
key performance indicators because the Company's management has evaluated its
results of operations using these metrics and believes that these key
performance indicators presented provide additional perspective and insights
when analyzing the core operating performance of the Company from period to
period and trends in its historical operating results. These key performance
indicators should not be considered superior to, as a substitute for or as an
alternative to, and should be considered in conjunction with, the GAAP financial
measures presented herein. These measures, which are described in more detail in
this report, may not be comparable to similarly-titled performance indicators
used by other companies.

LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $1.1 billion (including $0.4 billion in non-U.S.
jurisdictions) as of November 30, 2020, compared to $0.8 billion (including $0.3
billion in non-U.S. jurisdictions) as of November 30, 2019. Short-term
investment objectives are primarily to minimize risk and maintain liquidity. To
attain these objectives, investment limits are placed on the amount, type and
issuer of securities. Investments are principally in U.S. Treasury money market
funds.

The Company's long-term capital policy is to: maintain a strong balance sheet
and financial flexibility; reinvest in its core strategies; invest in strategic
opportunities that reinforce its core strategies and meet return requirements;
and return surplus cash flow to stockholders in the form of dividends and share
repurchases over the long term. In June 2018, the Company's Board of Directors
reviewed and refined the Company's dividend policy to set forth the Company's
current intention to increase its dividend each year.

Cash provided by operations and the incurrence of debt are the principal sources
of funds for expansion, investments, acquisitions, remodeling programs,
dividends to stockholders and stock repurchases. Net cash provided by operating
activities for the three months ended November 30, 2020 was $1.2 billion,
compared to $1.1 billion for the prior year quarter. The $0.1 billion increase
in cash provided by operating activities reflects higher cash inflows from trade
accounts payable, income taxes, and non-current assets and liabilities partially
offset by higher cash outflows from accrued expenses and other liabilities,
accounts receivables and inventories. Changes in accrued expenses and other
liabilities are mainly driven by a non-comparable 2021 bonus payment. Changes in
trade accounts payables, income taxes and other non-current assets and
liabilities are mainly driven by timing of collections and payments.

Net cash used for investing activities was $259 million for the three months
ended November 30, 2020 compared to $402 million for the prior year quarter.
This change in net cash used for investing activities includes $231 million in
proceeds from sale-leaseback transactions for the three months ended November
30, 2020 compared to $147 million for the prior year quarter. Business,
investment and asset acquisitions were $77 million for the three months ended
November 30, 2020 compared to $180 million for the prior year quarter.


WBA Q1 FY2021 Form 10-Q 48

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
For the three months ended November 30, 2020, additions to property, plant and
equipment were $431 million compared to $387 million in the prior year quarter.
Capital expenditures by reporting segment were as follows (in millions):

                                             Three months ended November 30,
                                                     2020                       2019
Retail Pharmacy USA                $             353                           $ 303
Retail Pharmacy International                     58                              70
Pharmaceutical Wholesale                          21                              13
Total                              $             431                           $ 387

Significant capital expenditures primarily relate to growth initiatives and information technology projects.



Net cash used for financing activities for the three months ended November 30,
2020 was $352 million, compared to $866 million in the prior year period. In the
three months ended November 30, 2020 there were $3.3 billion in net debt
proceeds primarily from revolving credit facilities described below and
commercial paper debt compared to $4.7 billion in net proceeds in the prior year
period. For the three months ended November 30, 2020 there were $3.2 billion in
payments of debt made primarily for revolving credit facilities and commercial
paper debt compared to $4.7 billion for the three months ended November 30,
2019. The Company repurchased shares totaling $110 million to support the needs
of its employee stock plans for the three months ended November 30, 2020
compared to $473 million in the prior year quarter which also included stock
repurchase program described below. Proceeds related to employee stock plans
were $4 million during the three months ended November 30, 2020, compared to $14
million during the three months ended November 30, 2019. Cash dividends paid
were $405 million during the three months ended November 30, 2020, compared to
$410 million for the prior year quarter.

The Company expects to fund its working capital needs, capital expenditures,
pending acquisitions, dividend payments and debt service obligations from
liquidity sources including cash flow from operations, availability under
existing credit facilities, commercial paper programs, working capital financing
arrangements and current cash and investment balances. The Company believes that
these sources, and the ability to obtain other financing will provide adequate
cash funds for the Company's foreseeable working capital needs, capital
expenditures, pending acquisitions, dividend payments and debt service
obligations for at least the next 12 months. The Company's cash requirements are
subject to change as business conditions warrant and opportunities arise. The
timing and size of any new business ventures or acquisitions that the Company
may complete may also impact its cash requirements. Additionally, the Company's
cash requirements, and its ability to generate cash flow, have been and may
continue to be adversely affected by COVID-19 and the resulting market
volatility and instability. For further information regarding the impact of
COVID-19 on the Company, including on its liquidity and capital resources,
please see Item 1A, Risk factors in the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 2020.

See Item 3, Qualitative and quantitative disclosures about market risk, below for a discussion of certain financing and market risks.



Stock repurchase program
In June 2018, the Company's Board of Director's approved a stock repurchase
program (the "June 2018 stock repurchase program"), which authorized the
repurchase of up to $10.0 billion of the Company's common stock of which the
Company had repurchased $8.0 billion as of November 30, 2020. The June 2018
stock repurchase program has no specified expiration date. In July 2020, the
Company announced that it was suspending activities under this program. The
Company may continue to repurchase stock to offset anticipated dilution from
equity incentive plans.
The Company determines the timing and amount of repurchases, including
repurchases to offset anticipated dilution from equity incentive plans, based on
its assessment of various factors, including prevailing market conditions,
alternate uses of capital, liquidity and the economic environment. The Company
has repurchased, and may from time to time in the future repurchase, shares on
the open market through Rule 10b5-1 plans, which enable the Company to
repurchase shares at times when we otherwise might be precluded from doing so
under federal securities laws.

Commercial paper
The Company periodically borrows under its commercial paper program and may
borrow under it in future periods. The Company had average daily U.S. commercial
paper outstanding of $1.6 billion and $2.9 billion at a weighted average
interest rate of 0.63% and 2.55% for the three months ended November 30, 2020
and 2019, respectively. A subsidiary of the Company

WBA Q1 FY2021 Form 10-Q 49

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
had average daily commercial paper outstanding, which was issued under the Joint
HM Treasury and Bank of England's COVID Corporate Financing Facility commercial
paper program, of £300 million or approximately $401 million at a weighted
average interest rate of 0.43% for the three months ended November 30, 2020. The
subsidiary's repayment obligations are guaranteed by the Company.

Financing actions
On August 29, 2018, the Company entered into a revolving credit agreement (the
"August 2018 Revolving Credit Agreement") with the lenders and letter of credit
issuers from time to time party thereto. The August 2018 Revolving Credit
Agreement is an unsecured revolving credit facility with aggregate commitment in
the amount of $3.5 billion, with a letter of credit subfacility commitment
amount of $500 million. The facility termination date is the earlier of
(a) August 29, 2023, subject to extension thereof pursuant to the August 2018
Revolving Credit Agreement, and (b) the date of termination in whole of the
aggregate amount of the revolving commitments pursuant to the August 2018
Revolving Credit Agreement. Borrowings under the August 2018 Revolving Credit
Agreement will bear interest at a fluctuating rate per annum equal to, at the
Company's option, the alternate base rate or the Eurocurrency rate, in each
case, plus an applicable margin calculated based on the Company's credit
ratings. As of November 30, 2020, there were no borrowings outstanding under the
August 2018 Revolving Credit Agreement.

On November 30, 2018, the Company entered into a $1.0 billion credit agreement,
consisting of a $500 million senior unsecured revolving credit facility and a
$500 million senior unsecured term loan facility, with the lenders from time to
time party thereto, on March 25, 2019, the Company entered into an amendment to
such credit agreement (such credit agreement as so amended, the "November 2018
Credit Agreement") reflecting certain changes to the borrowing notice provisions
thereto. On April 2, 2020, the Company entered into a second amendment to the
November 2018 Credit Agreement (such credit agreement as so further amended, the
"Amended November 2018 Credit Agreement"), which amendment became effective as
of May 29, 2020. As of May 29, 2020, the $500 million revolving credit facility
portion of the November 2018 Credit Agreement was converted into a term loan
facility, such that the Amended November 2018 Credit Agreement consists of a
$1.0 billion senior unsecured term loan facility. The facility termination date
is the earlier of (a) May 29, 2021 and (b) the date of acceleration of all loans
under the Amended November 2018 Credit Agreement pursuant to its terms.
Borrowings under the Amended November 2018 Credit Agreement will bear interest
at a fluctuating rate per annum equal to, at the Company's option, the alternate
base rate or the Eurocurrency rate, plus an applicable margin of 1.25% in the
case of Eurocurrency rate loans and 0.125% in the case of alternative base rate
loans. As of November 30, 2020, there were $0.9 billion of borrowings
outstanding under the Amended November 2018 Credit Agreement.

On December 5, 2018, the Company entered into a $1.0 billion term loan credit
agreement with the lenders from time to time party thereto and, on August 9,
2019, the Company entered into an amendment to such credit agreement (such
credit agreement as so amended, the "December 2018 Credit Agreement") to permit
the Company to borrow, repay and reborrow amounts borrowed thereunder prior to
the maturity date. On April 2, 2020, the Company amended and restated the
December 2018 Credit Agreement (such credit agreement as so amended and
restated, the "A&R December 2018 Credit Agreement"). The A&R December 2018
Credit Agreement governs a $2.0 billion senior unsecured revolving credit
facility, consisting of the initial $1.0 billion senior unsecured revolving
facility (the "Initial Commitments") previously governed by the December 2018
Credit Agreement and a new $1.0 billion senior unsecured revolving credit
facility (the "New Commitments"). The facility termination date is the earlier
of (a) January 29, 2021 (the "Initial Maturity Date") (which date shall be
extended to February 26, 2021 or July 31, 2021 pursuant to the terms of the A&R
December 2018 Credit Agreement if the Company extends the maturity date of
certain of its existing credit agreements or enters into new bank or bond
financings with a certain maturity date and above an aggregate principal amount
as described in the A&R December 2018 Credit Agreement ) and (b) the date of
termination in whole of the aggregate amount of the commitments pursuant to the
A&R December 2018 Credit Agreement. Borrowings under the A&R December 2018
Credit Agreement will bear interest at a fluctuating rate per annum equal to, at
the Company's option, the alternate base rate or the Eurocurrency rate, plus an
applicable margin of (i) in the case of the Initial Facility from April 2, 2020
through and including the Initial Maturity Date, 0.75% in the case of
Eurocurrency rate loans and 0.00% in the case of alternate base rate loans and
(ii) in the case of the New Facility and the Initial Facility after the Initial
Maturity Date, 1.50% in the case of Eurocurrency rate loans and 0.50% in the
case of alternate base rate loans. As of November 30, 2020, there were
$0.7 billion borrowings outstanding under the A&R December 2018 Credit
Agreement. Concurrently with the execution of the 2020 Revolving Credit
Agreement described above, the A&R December 2018 Credit Agreement was partially
terminated in accordance with its terms and conditions, by the cancellation of
$1 billion of New Commitments, thereby reducing the amount available to $1
billion of Initial Commitments thereunder as of December 23, 2020. The A&R was
also amended to set the final maturity date under the agreement at January 29,
2021.

On January 18, 2019, the Company entered into a $2.0 billion 364-day revolving
credit agreement (as extended, the "January 2019 364-Day Revolving Credit
Agreement") with the lenders from time to time party thereto. The January 2019
364-Day

WBA Q1 FY2021 Form 10-Q     50

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
Revolving Credit Agreement is a senior unsecured 364-day revolving credit
facility, with an original facility termination date of 364 days following
January 31, 2019, subject to extension. On December 18, 2019, the Company
entered into an Extension Agreement (the "Extension Agreement") relating to the
January 2019 364-Day Revolving Credit Agreement with the lenders party thereto
and Mizuho, as administrative agent. The Extension Agreement extended the
Maturity Date (as defined in the January 2019 364-Day Revolving Credit
Agreement) for an additional period of 364 days to January 28, 2021. Such
extension became effective on January 30, 2020.Borrowings under the January 2019
364-Day Revolving Credit Agreement will bear interest at a fluctuating rate per
annum equal to, at the Company's option, the alternate base rate or the
Eurocurrency rate, in each case, plus an applicable margin calculated based on
the Company's credit ratings. As of November 30, 2020, there were no borrowings
outstanding under the January 364-Day Revolving Credit Agreement. The January
2019 364-Day Revolving Credit Agreement was partially terminated in accordance
with its terms and conditions, reducing the amount available to $0.5 billion as
of December 23, 2020, concurrently with the execution of the 2020 Revolving
Credit Agreement described below.

On August 30, 2019, the Company entered into three $500 million revolving credit
agreements (together, the "August 2019 Revolving Credit Agreements" and each
individually, an "August 2019 Revolving Credit Agreement") with the lenders from
time to time party thereto. Each of the August 2019 Revolving Credit Agreements
are senior unsecured revolving credit facilities, with facility termination
dates of the earlier of (a) 18 months following August 30, 2019, subject to
extension thereof pursuant to the applicable August 2019 Revolving Credit
Agreement, and (b) the date of termination in whole of the aggregate amount of
the commitments pursuant to the applicable August 2019 Revolving Credit
Agreement. Borrowings under each of the August 2019 Revolving Credit Agreements
will bear interest at a fluctuating rate per annum equal to, at the Company's
option, the alternate base rate or the Eurocurrency rate, plus an applicable
margin of 0.95% in the case of Eurocurrency rate loans. As of November 30, 2020,
there were no borrowings outstanding under the August 2019 Revolving Credit
Agreements. The August 2019 Revolving Credit Agreements were terminated in
accordance with their terms and conditions as of December 23, 2020. The August
2019 Revolving Credit Agreements were terminated concurrently with the execution
of the 2020 Revolving Credit Agreement described below.

The Company entered into a $750 million revolving credit agreement on April 1,
2020 (the "April 2020 Revolving Bilateral Credit Agreement") and a
$1.325 billion revolving credit agreement on April 2, 2020 (the "April 2020
Revolving Club Credit Agreement" and together with the April 2020 Revolving
Bilateral Credit Agreement, the "Other April 2020 Revolving Credit Agreements")
with the lenders from time to time party thereto. Each of the Other April 2020
Revolving Credit Agreements is a senior unsecured revolving credit facility,
with a facility termination date of the earlier of (a) March 31, 2021 (which
date shall be shortened pursuant to the terms of the applicable Other April 2020
Revolving Credit Agreement if the Company does not extend the maturity date of
certain of its existing credit agreements or enter into new bank or bond
financings with a certain maturity date and above an aggregate principal amount
as described in the applicable Other April 2020 Revolving Credit Agreement) and
(b) the date of termination in whole of the aggregate amount of the commitments
pursuant to the applicable Other April 2020 Revolving Credit Agreement.
Borrowings under the Other April 2020 Revolving Credit Agreements will bear
interest at a fluctuating rate per annum equal to, at the Company's option, the
Eurocurrency rate or the alternate base rate, plus an applicable margin of 1.25%
in the case of Eurocurrency rate loans. As of November 30, 2020, there were no
borrowings outstanding under the Other April 2020 Revolving Credit Agreements.
The other April 2020 Revolving Credit Agreements were terminated in accordance
with their terms and conditions as of December 23, 2020. The other April 2020
Revolving Credit Agreements were terminated concurrently with the execution of
the 2020 Revolving Credit Agreement described below.

On April 7, 2020, the Company and with WBA Financial Services Limited, a private
limited company incorporated under the laws of England and Wales ("WBAFSL"), as
co-borrowers, entered into a $500 million revolving credit agreement (the "April
7, 2020 Revolving Credit Agreement") with the lenders from time to time party
thereto. The April 7, 2020 Revolving Credit Agreement is a senior unsecured
revolving credit facility, with a facility termination date of the earlier of
(a) 364-days from April 7, 2020 and (b) the date of termination in whole of the
aggregate amount of the commitments pursuant to the April 7, 2020 Revolving
Credit Agreement. The Company and WBAFSL are co-borrowers under the April 7,
2020 Revolving Credit Agreement. Pursuant to the terms of the April 7, 2020
Revolving Credit Agreement, the Company provides a guarantee of any obligations
of WBAFSL under the April 7, 2020 Revolving Credit Agreement. Borrowings under
the April 7, 2020 Revolving Credit Agreement will bear interest at a fluctuating
rate per annum equal to, at the Company's option, the Eurocurrency rate or the
alternate base rate, plus an applicable margin of 1.50% in the case of
Eurocurrency rate loans. As of November 30, 2020, there were no borrowings
outstanding under the April 7, 2020 Revolving Credit Agreement. The April 7,
2020 Revolving Credit Agreement was terminated in accordance with its terms and
conditions on December 23, 2020. The April 7, 2020 Revolving Credit Agreement
was terminated concurrently with the execution of the 2020 Revolving Credit
Agreement described below.


WBA Q1 FY2021 Form 10-Q 51

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
On April 15, 2020, the Company issued in an underwritten public offering $0.5
billion of 3.20% notes due 2030 and $1.0 billion of 4.10% notes due 2050. Total
issuance costs relating to the notes, including underwriting discounts and
estimated offering expenses were $13.3 million.

On October 20, 2020, the Company redeemed in full the £400 million aggregate
principal amount outstanding of its 2.875% notes due 2020 issued by the Company
on November 20, 2014.

On December 23, 2020, the Company entered into a revolving credit agreement (the
"2020 Revolving Credit Agreement") with the lenders from time to time party
thereto. The 2020 Revolving Credit Agreement includes a (i) a $1.25 billion
senior unsecured 364-day revolving credit facility (the "364-Day Facility") and
(ii) a $2.25 billion senior unsecured 18-month revolving credit facility, with a
swing line subfacility commitment amount of $350 million. The 364-Day Facility's
termination date is the earlier of (i) 364 days from December 23, 2020, the
effective date (subject to the extension thereof pursuant to the 2020 Revolving
Credit Agreement) and (ii) the date of termination in whole of the aggregate
amount of the revolving commitments under the 364-Day Facility pursuant to the
2020 Revolving Credit Agreement. The 18-Month Facility's termination date is the
earlier of (i) 18 months from the effective date (subject to the extension
thereof pursuant to the 2020 Revolving Credit Agreement) and (ii) the date of
termination in whole of the aggregate amount of the revolving commitments under
the 18-Month Facility pursuant to the 2020 Revolving Credit Agreement.

After the entry into the 2020 Revolving Credit Agreement and the full or partial
termination of the Company's other credit agreements as discussed herein, as of
December 23, 2020, the Company had an aggregate borrowing capacity of $9.5
billion including funds already drawn.

Debt covenants
Each of the Company's credit facilities described above contain a covenant to
maintain, as of the last day of each fiscal quarter, a ratio of consolidated
debt to total capitalization not to exceed 0.60:1.00, subject to increase in
certain circumstances set forth in the applicable credit agreement. As of
November 30, 2020, the Company was in compliance with all such applicable
covenants.

Credit ratings
As of January 6, 2021, the credit ratings of Walgreens Boots Alliance were:

Rating agency        Long-term debt rating   Commercial paper rating     Outlook
Fitch                        BBB-                       F3              Negative
Moody's                      Baa2                      P-2              Negative
Standard & Poor's             BBB                      A-2              Negative



In assessing the Company's credit strength, each rating agency considers various
factors including the Company's business model, capital structure, financial
policies and financial performance. There can be no assurance that any
particular rating will be assigned or maintained. The Company's credit ratings
impact its borrowing costs, access to capital markets and operating lease costs.
The rating agency ratings are not recommendations to buy, sell or hold the
Company's debt securities or commercial paper. Each rating may be subject to
revision or withdrawal at any time by the assigning rating agency and should be
evaluated independently of any other rating.

AmerisourceBergen relationship
As of November 30, 2020, the Company owned 56,854,867 AmerisourceBergen common
shares representing approximately 28% of the outstanding common stock based on
most recent share count publicly reported by AmerisourceBergen and had
designated one member of AmerisourceBergen's board of directors. As of November
30, 2020, the Company can 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. The amount of permitted open
market purchases is subject to increase or decrease in certain circumstances.
Subject to applicable legal and contractual requirements, share purchases may be
made from time to time in open market transactions or pursuant to instruments
and plans complying with Rule 10b5-1. See Note 5, Equity method investments, to
the Consolidated Condensed Financial Statements for further information.




WBA Q1 FY2021 Form 10-Q     52

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
On January 6, 2021, the Company entered into a Share Purchase Agreement with
AmerisourceBergen pursuant to which AmerisourceBergen will purchase the majority
of the Company's pharmaceutical wholesale operations, among other assets, for
$6.275 billion in cash (subject to customary purchase price adjustments) and 2
million shares of common stock of AmerisourceBergen. See "Recent Developments"
above and Note 19, Subsequent events to the Consolidated Condensed Financial
Statements for additional information.

OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any unconsolidated special purpose entities and,
except as described herein, the Company does not have significant exposure to
any off-balance sheet arrangements. The term "off-balance sheet arrangement"
generally means any transaction, agreement or other contractual arrangement to
which an entity not consolidated by the Company is a party, under which we have:
(i) any obligation arising under a guarantee contract, derivative instrument or
variable interest; or (ii) a retained or contingent interest in assets
transferred to such entity or similar arrangement that serves as credit,
liquidity or market risk support for such assets.

At November 30, 2020, the Company had $17 million of guarantees outstanding and no amounts issued under letters of credit.



CONTRACTUAL OBLIGATIONS AND COMMITMENTS
There have been no material changes, outside of the ordinary course of business,
in the Company's outstanding contractual obligations disclosed in the Company's
Annual Report on Form 10-K for the year ended August 31, 2020.

CRITICAL ACCOUNTING POLICIES
The Consolidated Condensed Financial Statements are prepared in accordance with
GAAP and include amounts based on management's prudent judgments and estimates.
Actual results may differ from these estimates. Management believes that any
reasonable deviation from those judgments and estimates would not have a
material impact on our consolidated financial position or results of operations.
To the extent that the estimates used differ from actual results, however,
adjustments
to the statement of earnings and corresponding balance sheet accounts would be
necessary. These adjustments would be made in future periods. For a discussion
of our significant accounting policies, please see the Company's Annual Report
on Form 10-K for the fiscal year ended August 31, 2020. Some of the more
significant estimates include business combinations, leases, goodwill and
indefinite-lived intangible asset impairment, cost of sales and inventory,
equity method
investments, pension and postretirement benefits and income taxes. See Note 17,
New accounting pronouncements, to the Consolidated Condensed Financial
Statements for additional information.

NEW ACCOUNTING PRONOUNCEMENTS
A discussion of new accounting pronouncements is described in Note 17, New
accounting pronouncements, to the Consolidated Condensed Financial Statements of
this Quarterly Report on Form 10-Q and is incorporated herein by reference.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report and other documents that we file or furnish with the SEC contain
forward-looking statements that are based on current expectations, estimates,
forecasts and projections about our future performance, our business, our
beliefs and our management's assumptions. In addition, we, or others on our
behalf, may make forward-looking statements in press releases or written
statements, on the Company's website or in our communications and discussions
with investors and analysts in the normal course of business through meetings,
webcasts, phone calls, conference calls and other communications. Some of such
forward-looking statements may be based on certain data and forecasts relating
to our business and industry that we have obtained from internal surveys, market
research, publicly available information and industry publications. Industry
publications, surveys and market research generally state that the information
they provide has been obtained from sources believed to be reliable, but that
the accuracy and completeness of such information is not guaranteed. Statements
that are not historical facts are forward-looking statements, including, without
limitation, those regarding estimates of and goals for future financial and
operating performance as well as forward-looking statements concerning the
potential impacts on our business of the spread and impact of COVID-19, the
expected execution and effect of our business strategies, our cost-savings and
growth initiatives, pilot programs, strategic partnerships and initiatives, and
restructuring activities and the amounts and timing of their expected impact and
delivery of estimated cost savings, the withdrawal of the UK from the European
Union and its possible effects our amended and restated asset purchase agreement
with Rite Aid and the transactions contemplated thereby and their possible
timing and effects, our commercial agreement with AmerisourceBergen, the
arrangements and transactions contemplated by our framework agreement with
AmerisourceBergen and their possible effects, the closing of the sale of certain
pharmaceutical wholesale operations to AmerisourceBergen pursuant to the Share
Purchase Agreement dated January 6, 2021, estimates of the impact of
developments on our earnings, earnings per share and other financial and
operating metrics, cough, cold and flu season, prescription volume, pharmacy
sales trends, prescription margins and reimbursement rates, changes in generic

WBA Q1 FY2021 Form 10-Q     53

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
prescription drug prices, retail margins, number and location of new store
openings, network participation, vendor, payer and customer relationships and
terms, possible new contracts or contract extensions, competition, economic and
business conditions, outcomes of litigation and regulatory matters, the level of
capital expenditures, industry trends, demographic trends, growth strategies,
financial results, cost reduction initiatives, impairment or other charges,
acquisition and joint venture synergies, competitive strengths and changes in
legislation or regulations. All statements in the future tense and all
statements accompanied by words such as "expect," "likely," "outlook,"
"forecast," "preliminary," "pilot," "would," "could," "should," "can," "will,"
"project," "intend," "plan," "goal," "guidance," "target," "aim," "continue,"
"sustain," "synergy," "transform," "accelerate," "model," "long-term," "on
track," "on schedule," "headwind," "tailwind," "believe," "seek," "estimate,"
"anticipate," "upcoming," "to come," "may," "possible," "assume," and variations
of such words and similar expressions are intended to identify such
forward-looking statements, which are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are not guarantees of future performance and
are subject to risks, uncertainties and assumptions, known or unknown, that
could cause actual results to vary materially from those indicated or
anticipated, including, but not limited to, those relating to the impact of
private and public third-party payers' efforts to reduce prescription drug
reimbursements, risks relating to the spread and impact of COVID-19, including
the adverse impact on the global economy as well as our business, the risks
associated with the withdrawal of the UK from the European Union, fluctuations
in foreign currency exchange rates, the timing and magnitude of the impact of
branded to generic drug conversions and changes in generic drug prices, our
ability to realize synergies and achieve financial, tax and operating results in
the amounts and at the times anticipated, the inherent risks, challenges and
uncertainties associated with forecasting financial results of large, complex
organizations in rapidly evolving industries, particularly over longer time
periods, and during periods with increased volatility and uncertainties, supply
arrangements including our commercial agreement with AmerisourceBergen, the
arrangements and transactions contemplated by our framework agreement with
AmerisourceBergen and their possible effects, the risks associated with our
equity method investment in AmerisourceBergen, circumstances that could give
rise to the termination, cross-termination or modification of any of our
contractual obligations, the amount of costs, fees, expenses and charges
incurred in connection with strategic transactions, whether the costs and
charges associated with restructuring initiatives, including the
Transformational Cost Management Program and Store Optimization Program, will
exceed estimates, our ability to realize expected savings and benefits from
cost-savings initiatives, including the Transformational Cost Management Program
and Store Optimization Program, restructuring activities and acquisitions and
joint ventures in the amounts and at the times anticipated, the timing and
amount of any impairment or other charges, the timing and severity of cough,
cold and flu season, risks relating to looting and vandalism in regions in which
we operate and the scope and magnitude of any property damage, inventory loss or
other adverse impacts, risks related to pilot programs and new business
initiatives and ventures generally, including the risks that anticipated
benefits may not be realized, changes in management's plans and assumptions, the
risks associated with governance and control matters, the ability to retain key
personnel, changes in economic and business conditions generally or in
particular markets in which we participate, changes in financial markets, credit
ratings and interest rates, the risks relating to the terms, timing and
magnitude of any share repurchase activity, the risks associated with
international business operations, including international trade policies,
tariffs, including tariff negotiations between the U.S. and China, and
relations, the risks associated with cybersecurity or privacy breaches related
to customer information, changes in vendor, customer and payer relationships and
terms, including changes in network participation and reimbursement terms and
the associated impacts on volume and operating results, risks related to
competition including changes in market dynamics, participants, product and
service offerings, retail formats and competitive positioning, risks associated
with new business areas and activities, risks associated with acquisitions,
divestitures, joint ventures and strategic investments, including those relating
to the asset acquisition from Rite Aid, the risks associated with the
integration of complex businesses, the impact of regulatory restrictions and
outcomes of legal and regulatory matters and risks associated with changes in
laws, including those related to the December 2017 U.S. tax law changes,
regulations or interpretations thereof. These and other risks, assumptions and
uncertainties are described in Item 1A, Risk factors, in the Walgreens Boots
Alliance Annual Report on Form 10-K for the fiscal year ended August 31, 2020
and in other documents that we file or furnish with the SEC. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those indicated or
anticipated by such forward-looking statements. All forward-looking statements
we make or that are made on our behalf are qualified by these cautionary
statements. Accordingly, you are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date they are made.
Except to the extent required by law, we do not undertake, and expressly
disclaim, any duty or obligation to update publicly any forward-looking
statement after the date of this report, whether as a result of new information,
future events, changes in assumptions or otherwise.

WBA Q1 FY2021 Form 10-Q 54

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WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES

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