Mass J.P. Morgan Healthcare Conference January 15, 2014 Greg Wasson President and CEO 2 1
Mass Safe Harbor and Non-GAAP Safe Harbor and Non-GAAP � Certain statements and projections of future results made in these presentations constitute forward-looking statements that are based on current market, competitive and regulatory expectations that involve risk and uncertainty. Except to the extent required by the law, we undertake no obligation to update publicly any forward-looking statement after these presentations, whether as a result of new information, future events, changes in assumptions or otherwise. � Please see our latest Form 10-K &10-Q filings for a discussion of risk factors as they relate to forward-looking statements. � Today’s presentation includes certain non-GAAP financial measures, and we refer you to the Appendix to the presentation materials available on our investor relations website for reconciliations to the most directly comparable GAAP financial measures and related information. 3 A Walgreens Welcome to San Francisco A Walgreens Welcome to San Francisco 135 Powell St. San Francisco (Corner of Powell and O’Farrell) 4 2
Mass Our Journey Over the Past 5 Years Our Journey Over the Past 5 Years Slowed store openings to focus on core Strategic acquisitions brought leading-edge concepts Launched Balance Rewards loyalty program Alliance Boots partnership and long- term strategic relationship with AmerisourceBergen 5 Our Purpose and Vision Our Purpose and Vision Our Purpose... To help people get, stay and live well Our Vision... To be the first choice in healthy and daily living for everyone in America – and beyond 6 3
Mass Our Strategic Growth Drivers Our Strategic Growth Drivers Creating a Well Experience Advancing Establishing an Efficient Community Pharmacy Global Platform 7 Creating Value for our Shareholders Creating Value for our Shareholders Our Progress over the Past 5 Years… GAAP Net Total Operating Cash Earnings: ~$11B Shareholder Flow: Return: Adjusted Net ~$20B Earnings: ~$13B* 145% * Non-GAAP Financial Measures – see Appendix. 8 4
Mass Today’s Agenda Today’s Agenda Industry Trends Strategic Growth Drivers Value Creation 9 Dynamic Industry - Healthcare Healthcare spend is 17% of GDP, growing to 20% by 2020 10,000 Americans turning 65 daily -- spending twice as much on healthcare Healthcare reform adding 30 million insured Americans 10 5
Mass Dynamic Industry - Healthcare 70% of Americans who visit the ER don’t have or don’t utilize a primary care physician Emerging healthcare delivery models RPh w/ patient Shifting from fee-for-service to pay- for-performance 11 Dynamic Industry - Retail Consumers looking for value Blurring of retail channels Growing digital commerce 12 6
Mass How Walgreens is Best Positioned How Walgreens is Best Positioned 8,200 health and daily living destinations 70,000 of the most trusted professionals in healthcare 400 healthcare clinics 370 worksite clinics 200 health system pharmacies 75 infusion pharmacies 2 central fill mail facilities 2 central specialty care centers How Walgreens is Best Positioned How Walgreens is Best Positioned Over 11,000 stores and 370 distribution centers operating in 25 countries* *Including associates and joint ventures of Alliance Boots 14 7
Mass Our Strategic Growth Drivers Our Strategic Growth Drivers Creating a Well Experience Advancing Establishing an Efficient Community Pharmacy Global Platform 15 Creating a Well Experience Creating a Well Experience Opened or converted more than 600 Well Experience locations to date Extraordinary customer care Right products and solutions Every community in America 16 8
Mass Stepping Out to Create Stepping Out to Create Something New & Unique... Something New & Unique... Manhattan Beach, CA Flagship, Chicago Net Zero, Evanston, IL Johns Hopkins Medical 17 Accelerated Daily Living Trends Accelerated Daily Living Trends Front End Comp Store Sales % Change 3% 2% YOY % Change YOY % Change YOY % Change YOY % Change 1% 0% -1% One - Year % Change -2% Two - Year Stack -3% Dec Dec Dec Dec Jan Jan Jan Jan Feb Feb Feb Feb Mar/Apr Mar/Apr Mar/Apr Mar/Apr May May May May June June June June July July July July Aug Aug Aug Aug Sep Sep Sep Sep Oct Oct Oct Oct Nov Nov Nov Nov Dec Dec Dec Dec One-Year One-Year One-Year One-Year -2.3% -2.3% -2.3% -2.3% -0.4% -0.4% -0.4% -0.4% -1.4% -1.4% -1.4% -1.4% -0.2% -0.2% -0.2% -0.2% 1.2% 1.2% 1.2% 1.2% 0.8% 0.8% 0.8% 0.8% 2.3% 2.3% 2.3% 2.3% 2.2% 2.2% 2.2% 2.2% 2.9% 2.9% 2.9% 2.9% 2.3% 2.3% 2.3% 2.3% 1.9% 1.9% 1.9% 1.9% 2.5% 2.5% 2.5% 2.5% Two-Year Two-Year -1.7% -1.7% 1.2% 1.2% 0.6% 0.6% -0.7% -0.7% 0.2% 0.2% -0.2% -0.2% -0.1% -0.1% 1.6% 1.6% 1.4% 1.4% -0.6% -0.6% 0.2% 0.2% 0.2% 0.2% Two-Year Two-Year -1.7% -1.7% 1.2% 1.2% 0.6% 0.6% -0.7% -0.7% 0.2% 0.2% -0.2% -0.2% -0.1% -0.1% 1.6% 1.6% 1.4% 1.4% -0.6% -0.6% 0.2% 0.2% 0.2% 0.2% FY 2013 FY 2014 *February FE Comp excludes the benefit of Leap Day 18 9
Mass Our Strategic Growth Drivers Our Strategic Growth Drivers Creating a Well Experience Advancing Establishing an Efficient Community Pharmacy Global Platform 19 Advancing Community Pharmacy Advancing Community Pharmacy Patient Adherence Improves Outcomes Patient Adherence Improves Outcomes Increased pharmacist time with patient Non-adherence costs U.S. healthcare system $300B/year Studies find improved adherence after one on one consultation with pharmacist 1. Outcomes Pharmaceutical Health Care, 2011. 2. www.dhs.state.mn.us/main/groups/business_partners/documents/pub/dhs16_140283.pdf. 20 Accessed April 24, 2012. 3. Isetts BJ et al. Am J Pharm Assoc . 2008;48:203-214. 10
Mass Advancing Community Pharmacy Advancing Community Pharmacy Growing Immunizations Growing Immunizations Estimated Size of US Immunization Market* Walgreens Immunizations Administered Millions Pneumococcal/ 10 Seasonal 8.7 Zoster/ Influenza Varicella $1.5B 7.4 8 6.8 6.7 Hep A/ $3.5B Hep B 6 $0.9B $10.3B 4 $1.2B Meningitis 2 0.8 $1.2B $2.0B 0 HPV TetDipPertussis/Td FY09 FY10 FY11 FY12 FY13 *Walgreen Co. Estimates 21 Advancing Community Pharmacy Advancing Community Pharmacy Centers of Excellence (COE) Centers of Excellence (COE) COE staffed by specially trained pharmacists 89% of the US HIV population has access to one of our 750 HIV Centers of Excellence Expanding centers for other complex diseases like multiple sclerosis and cystic fibrosis 22 11
Mass Advancing Community Pharmacy Advancing Community Pharmacy Expanding the Offering at Healthcare Clinics Expanding the Offering at Healthcare Clinics 23 Advancing Community Pharmacy Advancing Community Pharmacy Innovative Offerings: Diagnostics Innovative Offerings: Diagnostics Lab tests on samples as small as 1/1,000 Results to you and your doctor in less Pricing dramatically low rates and the size of a typical blood draw than four hours, on average accepting major insurance carriers as well as Medicare and Medicaid. 24 12
Mass Advancing Community Pharmacy Advancing Community Pharmacy Specialty and Infusion Specialty and Infusion Specialty is the fastest growing pharmacy segment -- with 3% of the population projected to drive 50% of total drug spend by 2017 Walgreens is well positioned with the integrated multi-channel assets in place Offering the largest home infusion network in the nation 25 Advancing Community Pharmacy Advancing Community Pharmacy Differentiated Experience Differentiated Experience Accessible pharmacist Mobile/online Privacy for health tests Integrated healthcare Convenient prescription pick-up 26 13
Mass Advancing Community Pharmacy Advancing Community Pharmacy Focusing on Patient Care through Strategic Partnerships Focusing on Patient Care through Strategic Partnerships Johns Hopkins Stanford University Medicine Cancer Research Center 27 Advancing Community Pharmacy Advancing Community Pharmacy Walgreens Well Transitions Program Walgreens Well Transitions Program Overall Unplanned Admissions – Hospitals <30 Days by TIme 25% Patients eligible but not enrolled Well Transitions Procedure: 21.3% Patients enrolled in program 20.0% -Bedside delivery of discharge 20% Readmissions % 18.4% medications -Medication reconciliation 15% 13.1% 12.8% -Two follow-up phone calls to 10.0% reinforce adherence 10% -Continuity with Walgreens 5% community pharmacists 0% CY13 Q1 CY13 Q2 CY13 Q3 28 14
Mass Advancing Community Pharmacy Advancing Community Pharmacy Building Physician Partnerships Building Physician Partnerships 29 Advancing Community Pharmacy Advancing Community Pharmacy Winning Medicare Part D Winning Medicare Part D Med D Volume Growth 52wks through Nov 2013 vs LY. 30-day equivalent prescriptions Preferred Plans 14.1% Market Walgreens 21.2% Other Chain Drug 14.0% Independents 8.0% 17.3% Food 13.4% Mass 30 15
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