Walgreens 2014 Annual Report Download - page 17

assets as of that date. Because the Company’s investment in Alliance Boots is denominated in a foreign currency
(British pounds Sterling), translation gains or losses impact the value of the investment. See Note 5 to the
Company’s Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional information.
Available Information
We file with the Securities and Exchange Commission our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and all amendments to those reports, proxy statements and registration
statements. You may read and copy any material we file with the SEC at the SEC’s Public Reference Room at
100 F Street, NE, Washington, D.C. 20549. You may also obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website at
http://www.sec.gov that contains reports, proxy and information statements, and other information regarding
issuers, including us, that file electronically. We make available free of charge on or through our website at
investor.walgreens.com our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act as soon as reasonably practicable after we file or furnish them to the SEC. The contents of the Company’s
website are not, however, a part of this Form 10-K or the Company’s other SEC filings.
Item 1A. Risk Factors
In addition to the other information in this report and our other filings with the SEC, you should carefully
consider the risks described below, which could materially and adversely affect our business, financial condition
and results of operations. These risks are not the only risks that we face. Our business operations could also be
affected by additional factors that are not presently known to us or that we currently consider to be immaterial to
our operations.
Risks Relating to Existing Business
Reductions in third party reimbursement levels, from private or government plans, for prescription drugs
could reduce our margin on pharmacy sales and could have a significant adverse effect on our
profitability. In addition, a shift in pharmacy mix toward lower margin plans and programs could
adversely affect our profitability.
The substantial majority of the prescriptions we fill are reimbursed by third party payers, including private and
governmental payers. The continued efforts of health maintenance organizations, managed care organizations,
pharmacy benefit management companies, government entities, and other third party payers to reduce
prescription drug costs and pharmacy reimbursement rates, as well as litigation relating to how drugs are priced,
may adversely impact our profitability. Plan changes with rate adjustments often occur in January and our
reimbursement arrangements may provide for rate adjustments at prescribed intervals during their term. In
addition, some of these entities may offer pricing terms that we may not be willing to accept or otherwise restrict
our participation in their networks of pharmacy providers. Certain provisions of the Deficit Reduction Act of
2005 (the DRA) sought to reduce federal spending by altering the Medicaid reimbursement formula for multi-
source (i.e., generic) drugs (AMP). While those reductions did not go into effect, the ACA, which was signed
into law on March 23, 2010, enacted a modified reimbursement formula for multi-source drugs. The modified
formula, when implemented, is expected to reduce Medicaid reimbursements, which could adversely affect our
revenues and profits. There have also been a number of other recent proposals and enactments by the federal
government and various states to reduce Medicare Part D and Medicaid reimbursement levels in response to
budget deficits. We expect other similar proposals in the future.
In addition, a shift in the mix of pharmacy prescription volume toward programs offering lower reimbursement
rates could adversely affect our profitability. We experienced a shift in pharmacy mix toward 90-day at retail in
fiscal 2014 and expect that trend to continue in fiscal 2015. Our 90-day at retail offering for patients with chronic
prescription needs typically is at a lower margin than comparable 30-day prescriptions. Additionally, we decided
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