Segment reporting

6 Months Ended

Feb. 28, 2021

Segment Reporting [Abstract]

Segment reporting

Segment reporting

On January 6, 2021, the Company entered into a 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 as well as a portion of the Company’s retail pharmacy international businesses in Europe. The majority of the Disposal Group was previously included in the Pharmaceutical Wholesale segment. Effective as of the second quarter of fiscal year 2021, the Company no longer has the Pharmaceutical Wholesale segment and is aligned into two reportable segments: United States and International. The operating segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker) to assess segment performance and allocate resources among the Company’s operating segments. The chief operating decision maker uses adjusted operating income to assess segment profitability. The chief operating decision maker does not use total assets by segment to make decisions regarding resources; therefore, the total asset disclosure by segment has not been included.

United States

The Company's United States segment includes the Walgreens business which includes the operations of retail drugstores, health and wellness services, and mail and central specialty pharmacy services, and its equity method investment in AmerisourceBergen. Sales for the segment are principally derived from the sale of prescription drugs and a wide assortment of retail products, including health and wellness, beauty, personal care and consumables and general merchandise.

International

The Company's International segment consists of pharmacy-led health and beauty retail businesses outside the U.S. and pharmaceutical wholesaling and distribution business in Germany. Pharmacy-led health and beauty retail businesses include Boots branded stores in the UK, the Republic of Ireland and Thailand, the Benavides brand in Mexico and the Ahumada brand

in Chile. Sales for these businesses are principally derived from the sale of prescription drugs and health and wellness, beauty, personal care and other consumer products.

The results of operations for reportable segments include procurement benefits. Corporate-related overhead costs are not allocated to reportable segments and are reported in the “Corporate and Other” column.

The following table reflects results of operations of the Company's reportable segments (in millions):

	Three months ended				Six months ended
	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Sales:
United States	$	27,344	$	27,245	$	54,507	$	53,377
International	5,425		4,091		9,709		7,870
Corporate and Other1	10		—		—		—
Walgreens Boots Alliance, Inc.	$	32,779	$	31,336	$	64,217	$	61,247
Adjusted Operating income:
United States	$	1,163	$	1,422	$	2,318	$	2,725
International	146		203		232		290
Corporate and Other	(83)		(43)		(129)		(89)
Walgreens Boots Alliance, Inc.	$	1,225	$	1,582	$	2,422	$	2,926

1 Includes certain eliminations.

The following table reconciles adjusted operating income to operating income (in millions):

	Three months ended				Six months ended
	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Adjusted operating income	$	1,225	$	1,582	$	2,422	$	2,926
Adjustments to equity earnings (loss) in AmerisourceBergen	(45)		(73)		(1,526)		(152)
Transformational cost management	(178)		(118)		(278)		(198)
Acquisition-related amortization	(114)		(98)		(209)		(197)
Certain legal and regulatory accruals and settlements	(60)		—		(60)		—
LIFO provision	(2)		(28)		(35)		(61)
Acquisition-related costs	5		(99)		(16)		(223)
Store optimization	—		(30)		—		(39)
Operating income	$	832	$	1,136	$	298	$	2,057