Rosalind Brewer
Chief Executive Officer at Walgreens Boots Alliance
Thank you, Jay. Hello, everyone, and thank you for joining us today. It's really great to be with you. I have to say, I'm definitely looking forward to sharing what we have in store for you in the next two and a half hours.
As you know, I recently passed my first six months at WBA and I'm even more excited about this company's potential than when I first joined. I took this job based on some deeply personal reasons. At the time, I was really enjoying selling coffee out in Seattle. So it was a big decision to leave that gig. But honestly, like many of us during the pandemic, I was thinking a lot about how I could contribute even more to the world. So when I was approached about the CEO role at WBA, I thought here's a chance to join a company right in the center of fighting COVID-19 and bringing hope and a helping hand to do so in many different communities.
I also saw how we can make meaningful progress on addressing some of the social determinants that lead to disparities in health among different racial and socioeconomic groups resulting in food deserts and care gaps and frankly, now that I'm at WBA, there is so much more promise ahead than I could have ever anticipated.
The pandemic definitely gave WBA a chance to step up like never before and we've delivered in so many ways but we're absolutely just getting started in terms of how we can mobilize to solve big complex problems. And we definitely believe that this momentum will accelerate our path to sustainable profitable growth moving forward. So during my entire life, I've been an avid learner. Some of you may remember that my undergraduate degree is in chemistry, and have applied what I've studied then throughout my entire career. That discipline is about hands-on investigation and rigorous research.
So it'll come as no surprise that since I've been at WBA, I've been taking a deep dive to really understand the business and speaking with our leaders and team members and all corners of the company as well as many outside experts. I conducted listening sessions and spent time in our stores, vaccine clinics, and back office operations. I've identified many gifts that we're waiting for me when I arrived based on some strong work that had already been done. And I've pinpointed where we've taken some wrong turns and haven't executed as well as we could have. I've also been very glad to see the many new ways we can capitalize on our core strengths. I believe we have some tremendous underlying momentum within this business and the pandemic has further proven the importance of pharmacies in local communities around the world.
I promise to you that after an extensive study, I wouldn't waste any time getting back to you about my assessment and where we're heading next. During this time, we'll clearly articulate the direction of our company and we'll provide what we hope leaves you feeling a greater sense of understanding in terms of our strategic direction. We'll share our learnings, present our opportunities and lay out our path forward.
So let me start by saying that we just announced positive fourth quarter results this morning. We exceeded expectations across all of our business segments, reflecting strong operational performance and surpassing our vaccination goals. James will be going into much greater detail with you on that soon, including our guidance for this year. So hopefully you see these earnings as an indication, among many others today, of a renewed, revitalized and re-energized company. Also, I'm very excited to share some important strategic investments later in today's session. We'll tell you more throughout the course of our time together this morning.
Today, I'm going to make good on my commitment to you and we're going to take you on a journey that includes three things: transparency, accountability and an extremely well-thought-out strategy. So let me be clear. This isn't our every day Walgreens strategy. Instead, it's about acceleration, execution, accountability and long-term growth. Strategy is also about mobilizing across the organization, uniting behind values-based culture, enabling strong alignment, leveraging momentum and having clarity on the end game. And it's also not just what you plan to do, but it's also what you plan not to do. We will make trade-offs and eliminate some work to focus on what matters most and we're going to hit on these same points again and again and again to hammer home just how much we've internalized this into our mindset.
So on that note, here's our agenda for today. First, I'll go into detail on our strategic priorities with a particular emphasis on the role we believe we are rightfully positioned to play within the healthcare ecosystem. Our CFO, James Kehoe and President of Walgreens, John Standley will join me during these portions of the meeting. James will discuss the financials, both the numbers reported today, and also our immediate and long-term growth model and fiscal year '22 guidance. Finally, we will end with a Q&A session, where we will look forward to engaging directly with you on our strategy and performance. And again, we hope this will signal the change to come, more of an ongoing dialog with our investor community and more visibility into what we're doing and how we're performing against our most important KPIs.
So to lead us more into that discussion, I thought I'd share a brief video highlighting who we are.
[Video Presentation]
That, of course, was just a brief snapshot of WBA and the vital work we do. With that in mind, I want to tell you a little bit about what we've been working on and why I am so optimistic about the opportunities ahead. These opportunities have everything to do with what you see on the screen right now. As we move forward, we plan to be: customer-centric with a relentless focus on what they need and what they want; hyper-localized, knowing that the best healthcare is deeply rooted in local communities; improving outcomes, since we're absolutely convinced we can further improve the health of our patients; scale and momentum, which we've seen most prominently during our response to the pandemic; lowering the cost of healthcare, since there are enormous inefficiencies in the healthcare system today; delightful customer experiences, so that our brands exceed expectations and leave lasting positive impressions; transformational partnerships, which will allow us to achieve the quality and speed we want; and pharmacy, pharmacy at the center since this has always been and will continue to be our foundation and our key differentiator.
These themes will appear throughout the presentation today, and we hope that you will see how these strategies interconnect and how we intend to leverage our strengths to build our future. As I mentioned, I came to this role with a very open mind about what the company needed and what it needed from me. Of course, based on my direct experience as a customer, a patient, a parent, and a caregiver, I already had a view and the reactions of others when they heard I was joining the company gave me an additional insight into the deep emotional connections our brands have.
What has impressed me most are the genuine areas of strengths we have. Anyone who has had recent experience with our services will understand; they will understand it when I say that our greatest strengths are our people and our presence in local communities across the world. We have deep relationships with our customers and patients, including chronic patients who are most in need and struggle managing the complexity of their conditions. And we are often the first place people turn for their well-being. So the scale, the reach, the ambition of this company is extraordinary. And the skills, the experience and the commitment of our people is even more extraordinary. I think it's fair to say I have never seen anything like it.
These are truly powerful brands that resonate around the world. But to survive and thrive, we need to be able to show we are more and more relevant. And we must be able to deliver what our customers and our patients need; how and when they need it. The company is making significant progress in this respect. We have already achieved a lot recently, which is both driving change internally and being recognized externally but we have a lot more work to do.
We also, of course, have a phenomenal history and legacy that gives us a strong foundation on which to build and rebuild. And our expertise sits squarely in one of the most important and expanding industries out there right now. But I also can't deny that we face stiff challenges. We operate in a highly competitive arena and the scale of our markets and nature of our business means it's very cost-sensitive and we continue to need to manage margin pressure in our core pharmacy business. In many areas, we have little room for error as we're dealing with people's health and, in many cases, their very lives.
We are operating in markets that can and do change rapidly through regulation, innovation or just simply necessity. And we need to be on top of our game to meet those challenges and deliver on the opportunities they bring. On balance, however, I see more opportunity for us than headwinds and we have tremendous momentum and future potential. I hope that by the end of our event today, you will understand why and see how we're pursuing a strategy to deliver our very best.
So as I mentioned before, nothing demonstrates us at our peak performance more than our response to the pandemic. As you know, we've played a key role in testing and vaccine administration, both across the U.S. and around the world. We acted swiftly to ensure those programs reached every part of our communities. We reached out into the most remote, underserved and reluctant communities to administer vaccinations, to educate and to support. We changed our pharmacy and retail model to offer new services, new ways to access advice, medicines, and provisions, safely and conveniently. We worked tirelessly as not just a service provider or a retailer, but as an advocate, a comforter, an advisor, a friend to those who needed us. We re-routed our resources, financial, technological and people to the things that mattered most. And we did this, all the way from the White House and Capitol Hill right to long-term care homes, schools and community centers.
As you can see here, the statistics of what we've delivered are truly impressive. They show how quickly and effectively we can act when we need to and they demonstrate how we deliver expanded healthcare services into the very heart of the community. This was a great lesson for us. Historically, we would have had the tendency to move a little slowly. We've proven that our pace can change and can be rapid and much of this infrastructure, momentum and mindset will be preserved in our new operating model.
We should not forget that it's the size and underlying strength of our business that allowed us, at very short notice, to deploy the training, supplies and some $500 million in funding to support our people in the field in fulfilling their mission. I could spend hours with stories of great work of our team. But let me just give you a quick window on to that work.
[Video Presentation]
A key element of our response to the pandemic was to respond rapidly to changing customer behavior, driven by the restrictions that COVID protections placed on people. One key enabler here was the deployment of a personalization engine at the heart of an entire ecosystem. It was designed to deliver an elevated customer experience; revolutionize our customer interactions; drive improved pharmacy outcomes; deploy our vast resources more effectively; and integrate our omnichannel retail experience. At the same time, this ecosystem rapidly builds on our existing data resources and customer understanding to help drive further growth across the business.
We've made tremendous progress scaling our technological and customer assets and we've announced previously, we have partnered with the absolute best technology innovators across the industry to accelerate our ambitions. The early impact of this work has been seen throughout the year. But in recent quarters, we really began to see the flywheel effect kick in as the number of people using our customer engagement platform became significant. This cycle of delivering growth from insight-driven personalization in turn provides even more insight, forming a core element of our customer-focused future strategy.
In the U.S. alone, we have one of the largest and farthest-reaching physical networks in the country with a huge body of highly-trained and capable staff. Our team includes over 26,000 licensed pharmacists with regular and frequent interactions with some of the highest cost and highest dependency patients in the country. We have relationships with all the main payers across all the areas of pharmacy and we operate on most of the best corners of America. We also have over a century of experience as a credible independent expert when it comes to health and well-being products, services and advice. Our neutrality in the broader healthcare ecosystem is a tremendous asset and it's one we intend to deploy going forward.
In the past few years, we've invested to develop our capabilities and healthcare services, both within the company and through strategic investments. This allows us to offer a range of services in a variety of ways that simply could not be provided through the pharmacy alone. Now, of course, it's important to ensure that our offering and strategy are relevant and move with the needs of the market. So the skills and experience we need to drive the company must also change over time. We're working hard to complement the huge range of experience and expertise we have on our management and our executive team by infusing new talent, new skills and fresh ideas. And I guess I'm a prime example of that. And this combination of existing and new will form a key part of the real magic that will deliver the transformation of our business and our business model.
Additionally, we have a strong understanding of our customers, the challenges they face, and the hopes, the fears, the passions and the problems, and those problems that influence their healthcare and lifestyle decisions. In fact, I'm confident that this is the secret sauce which will allow us to elevate all of our other strengths and assets to the next level of delivery and operational excellence.
It's the deep relationships that we have with our patients, whether they're looking for help in managing complex and awful debilitating health conditions or seeking advice and resources to help them effectively manage their well-being or trying to balance their own health with those they love and care for. These people turn to us week after week, year after year and we know that we can profoundly change their lives for the better by integrating their care; improving health outcomes; providing lower cost than the existing health system. We're uniquely positioned to play a larger role in the healthcare ecosystem; something I will talk to you about a little bit later this morning.
So to summarize what we've covered so far, as we head into our new fiscal year, we're going to focus on: cultivating our strengths; sharpening our execution; and investing in our future. And, of course today, our aim is to give you a view of how we see our business developing and growing this year. But we'll also go well beyond that with our long-term growth algorithm which James will cover more with you later. And how we're going to get there has everything to do with the purpose and vision that unite us, which we're going to speak a little bit more about now and then go into our strategic ambitions, fiscal year '21 earnings, fiscal year '22 guidance and future growth.
I believe this will be the first time we've given this level of insight into our longer-term thinking. But I believe it reflects the extraordinary level of detail we've gone into with our review, with our planning and our analysis and the confidence we have in the strategy we're pursuing. It also shows our ability to transform this business and deliver sustainable growth.
We have an overall plan that will deliver sustained growth and profit based on robust, prudent and perhaps, most importantly, integrated healthcare, pharmacy and retail strategies. We've been actively working on our new healthcare initiative and we are well on our way to delivering on our ambitions for this new business area. We are actively putting in place the capabilities we need to deliver on our new operating model and to drive growth in our business. We are committed to enhancing communication and transparency to all our stakeholders, including you, our investors and the financial community overall and all of this will be delivered through a revitalized strategy, underpinned by an intensified focus on outstanding execution to drive strong growth and economic returns.
So let's turn now to talk briefly about the work we've done on the culture at our company. And what do I mean by that? Basically, I mean how does it feel to work here? How do we interact with each other and with our stakeholders? And what are the principles that unite us and inform our actions? I am a firm believer that every truly great company understands that culture needs to be at the center of their success. The legendary management consultant, Peter Drucker, once famously said, "culture eats strategy for breakfast." And what he means by this is you can have the best laid plans in the world but if you can't retain and recruit high-caliber talent and if they're not motivated to work hard and together as a team toward shared goals, you'll never accomplish much.
Years ago, company culture was one sometimes viewed as a light and fluffy stuff. But when done right, we know now that it can drive so much more than that. Strong cultures drive performance; performance since companies that are united by purpose have been proven to outperform the general market 15 to 1; and with recruitment, with 52% of job candidates saying that they will only accept a job offer if they know and agree with the company's purpose, vision and values; employee satisfaction, because nine out of 10 people are willing to trade a percentage of their lifetime earnings for greater meaning at work; customer retention, which is proven by the fact that 87% of consumers would purchase a product based on values and because the company advocated for an issue they cared about.
With this in mind, one of my first goals when I joined WBA was ensuring that we are known among the world's best companies for our culture. So in the last six months, we brought in some leading experts in this field to assess where we are today and where we need to be. We implemented initiatives where we listen closely to team members at all levels and in all corners of the company all around the world. As a result, we evolved and updated our company's purpose, vision and values to be our guiding light as we move forward and to influence our decisions, both big and small.
As you see here, our new purpose statement, more joyful lives through better health. We're referring here to physical, mental and emotional health and that can come in the form of a life-saving vaccination or can just be as simple as providing a great shade of lipstick that lifts someone's spirits. Our purpose is the 'why?' [Technical Issues], our enduring reason for being and the difference we want to make in the world.
Next, our vision, and that is to be the leading part and well-being for all. This is the 'what?' A company-wide aspiration over the long term that is measurable, unifying and delivers on our purpose. Our vision is designed to be built on our core strengths as a company and expand on what we can offer our patients and customers in the future. And when we say, all here, that means across every neighborhood, among every community. As you can see we looked at this statement word by word to make sure this is something simple, tangible and, most importantly, relevant; relevant for our colleagues every day. It allows them to measure their work against an overarching company target. And, of course, our purpose and vision are also the foundation that we've built our core strategy on.
We distilled our strategy into four priorities, all of which work together toward one central aim to deliver advantage growth and community healthcare, while transforming our core business. We have defined the four strategic priorities as you can see here. First, we will transform and align the core businesses. John Standley is going to take you through this in detail. And while our international leaders, Seb James and Annie Murphy will be joining us remotely for the Q&A, in the interest of time, I've asked John to talk you through the transformation work in the international businesses as well as his own business areas. James will then give an update on the Transformational Cost Management Program as part of this element of the strategy. We've seen tremendous success and momentum within that program and it will be critical as we continue to fund our journey.
The second strategic pillar is our ambition to build a range of consumer-centric healthcare solutions, which will form the engine for our next phase of growth. I'm excited to take you through our plans, including some of the latest news on investments, partnerships and the work we've done internally to build out our healthcare strategy. We'll also cover the evolution of the business model of these services and how we will see them developing in the coming months and years. We have a strong view on how our assets can help connect this ecosystem together, creating a unique position for Walgreens and helping to demystify healthcare for consumers.
Next, given the amount we have to do and the need to focus our resources, our third strategic priority is to refocus our portfolio of business interests. This will help us optimize the use of our resources, most notably, our management and executive time and our financial assets. It's absolutely critical that our portfolio of assets strongly connect back to our overall strategy. I spoke with you earlier about focus. Focusing how and where we spend our time and resources is a critical enabler of our strategy. James is going to take us through the work already underway on this. We've made some tremendous progress already, but more work remains.
I've already touched on our final core strategic priority; to build a high performance culture and a winning diverse team within the company. I'm very excited to share with you several key hires that I believe will help us build upon our momentum and accelerate our growth ambitions.
So let's ask John now to take us through the first strategic priority to transform and align the core businesses. John?