Goodwill and other intangible assets

9 Months Ended

May 31, 2025

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and indefinite-lived intangible assets are evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or intangible asset below its carrying value.

VillageMD

During the three months ended February 28, 2025, the Company completed a quantitative impairment analysis for goodwill related to its VillageMD reporting unit within the U.S. Healthcare segment due to market indications of value received in the second quarter as part of the ongoing sale process for legacy Village Medical and updated management forecasts for VillageMD’s calendar year 2025, which were lower than previous projections for certain businesses that were used in the Company’s most recent annual impairment assessment, completed in the fourth quarter of fiscal 2024. Based on this analysis, the Company recorded a goodwill impairment charge of $1.5 billion, in Operating income (loss) within the Consolidated Condensed Statements of Earnings.

During the three months ended February 28, 2025, as a result of the factors leading to the interim goodwill impairment analysis performed, the Company evaluated VillageMD’s other intangible and long-lived assets for impairment. The assessment resulted in an impairment charge of $1.6 billion recognized within the U.S. Healthcare segment as a component of Selling, general, and administrative expenses within the Consolidated Condensed Statements of Earnings. As part of this impairment analysis, the fair values of the asset groups and intangible assets were determined using the income approach.

Total goodwill and long-lived asset impairment charges recognized in Operating income (loss) for VillageMD for the three months ended February 28, 2025 were $3.0 billion, prior to attribution of loss to non-controlling interests. Total impairment charges attributable to the Company, net of tax and non-controlling interests were $1.9 billion.

During the three months ended February 29, 2024, the Company completed a quantitative impairment analysis for goodwill related to its VillageMD reporting unit within the U.S. Healthcare segment due to downward revisions in its longer term forecast received during the quarter, including the impact of closing approximately 90 additional clinics, slower than expected trends in patient panel growth and multi-specialty productivity trends and recent changes in Medicare reimbursement models. These impacts were partly offset by cost savings initiatives. Based on this analysis, the Company recorded a goodwill impairment charge of $12.4 billion, prior to attribution of loss to non-controlling interests, in Operating income (loss) within the Consolidated Condensed Statements of Earnings. The impairment charge reflects lower than previously expected longer term financial performance expectations, a reduction in the multiples for publicly traded peer companies, and increases in discount rates.

During the three months ended February 29, 2024, as a result of the factors leading to the interim goodwill impairment analysis performed, the Company evaluated VillageMD’s other intangible and long-lived assets for impairment. The assessments resulted in an impairment charge of $266 million recognized primarily within the U.S. Healthcare segment as a component of Selling, general, and administrative expenses within the Consolidated Condensed Statements of Earnings. As part of this impairment analysis, the fair values of the asset group and intangible assets were determined using the income approach.

Other reporting units

On March 6, 2025, the Company entered into the Merger Agreement with affiliates of Sycamore Partners. See Note 1. Accounting policies for further information. The Company compared the fair value of the expected consideration to be paid pursuant to the Merger Agreement with the fair value of its reporting units in the aggregate and concluded that goodwill of the U.S. Retail Pharmacy and CCX Next, LLC (“CareCentrix”) reporting units were more likely than not impaired as of February 28, 2025. As a result, the Company completed quantitative impairment analyses resulting in goodwill impairment charges recorded in Operating income (loss) within the Consolidated Condensed Statements of Earnings of $2.0 billion and $178 million for the U.S. Retail Pharmacy and U.S. Healthcare segments, respectively. The impairment loss within the U.S. Retail Pharmacy reporting unit reflects continued softness in U.S. retail sales, the impact of recent legal settlements, and a higher discount rate than was used in the Company’s most recent annual impairment assessment, completed in the fourth quarter of fiscal 2024.

Further, in the three months ended February 28, 2025, the Company recorded, within Selling, general and administrative expenses, an impairment loss of $115 million related to indefinite-lived pharmacy license and trade name intangible assets in the Boots reporting unit, as part of the International segment.

Total goodwill and indefinite-lived intangible asset impairment charges recognized in Operating income (loss) as a result of entering into the Merger Agreement for the U.S. Retail Pharmacy, CareCentrix, and Boots reporting units were $2.3 billion for the three months ended February 28, 2025.

As part of the Company’s impairment analyses, fair values of the reporting units were determined using both the income and market approaches. The income approach requires management to estimate a number of factors, including the projected future operating results, economic projections, anticipated future cash flows and discount rates. The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping as well as recent guideline transactions.

The determination of the fair value of the reporting units requires the Company to make significant estimates and assumptions related to the business and financial performance of the Company’s reporting units. These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies, control premiums appropriate for acquisitions in the industries in which the Company competes, discount rates, terminal growth rates, forecasts of revenue, operating income, depreciation, amortization, working capital requirements and capital expenditures. Future increases in discount rates or deterioration in the observable prices for guideline companies could result in further goodwill impairment in subsequent periods.

The changes in the carrying amount of goodwill by reportable segment are as follows (in millions):


Goodwill roll forward:	U.S. Retail Pharmacy		International		U.S. Healthcare		Walgreens Boots Alliance, Inc.
August 31, 2024 1	$	10,947	$	1,388	$	3,173	$	15,506


Impairments	(2,008)		—		(1,645)		(3,653)
Cumulative translation adjustments	—		28		—		28
May 31, 2025	$	8,938	$	1,415	$	1,528	$	11,882

1.As of August 31, 2024, prior cumulative goodwill impairment charges of $1.7 billion and $12.7 billion were recognized in the International and U.S. Healthcare segments, respectively. There were no goodwill impairment charges in the U.S. Retail Pharmacy segment prior to August 31, 2024.