We are a Weakness Walgreens Boots Alliance, Inc. (NASDAQ: WBA) is in ValueInVestorsclub by Quads1025. This article will summarize Bears’ papers on the WBA. When the paper was published, the company’s shares were traded at $ 10.28.
Pharmacy shelf filled with pharmaceuticals and health care products that can be purchased without the company’s pharmaceutical, nutrients, and prescriptions.
The WBA is a US, Germany, UK and international medical, pharmacy and retail companies. There are three sectors: US Pharmacy, International and US Medical. The US retail pharmacy accounts for 78%of revenue and 77%of integrated EBIT.
The pressure on the repayment rate of pharmacy is putting pressure on the cash flow of the WBA due to the negative rotation of the FCF. It is also led by margin generic drugs with 90%of the retail business, and the growth potential of this sector is limited. Because branded medicines are expensive, the Pharmacy Benefits Manager (PBMS) reduces margin of pharmacy companies such as WBA, so the higher the price, the more it does not affect customers. All product mixes can provide lower margins due to the growth of brand drugs.
The WBA has $ 4.7 billion in debt in 2025-26. The average cost of this debt is 4%, but if the ratio is high, the expected cost of the new debt is about 8%. This will lead to $ 190 million in interest. Another potential risk is that the lawsuit filed by DOJ claims that the WBA spends millions of illegal prescriptions. The penalty must be about $ 110 billion, and the top range is close to a market cap.
The company stopped dividends of $ 0.25 for each quarter. The WBA also raised cash by investigating the sales of the US medical departments. Assets such as VillageMD, Shields, and Carecentrix have been provided, but there have been no major development in the last few months. Such measures are expected to increase the alarm and expect the expected cash flow in core operations.
The total margin decreased from 21.8%to 18%in 2022. In 2027, margins will be reduced to 16%. The WBA must earn about $ 2 billion in EBITDA by 2027, which has already been accompanied by a fine of $ 650 million, $ 11 billion in CAPEX, and $ 400 million. This does not affect the WBA’s $ 110 billion additional fines faced at a new settlement.
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