drug stores n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Drug Stores PowerPoint Presentation
Download Presentation
Drug Stores

Loading in 2 Seconds...

play fullscreen
1 / 13

Drug Stores - PowerPoint PPT Presentation


  • 91 Views
  • Uploaded on

Drug Stores. Trevor Yerrick Section 2. Agenda. Quick Background Drug Stores Industry Walgreen Co. Important Developments to Consider Alliance Boots Acquisition AmeriSource Bergen Agreement Full-Information Forecasting Sales EPM EATO Final Valuation Buy/Sell/Hold Recommendation.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Drug Stores' - maitland


Download Now An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
drug stores

Drug Stores

Trevor Yerrick

Section 2

agenda
Agenda
  • Quick Background
    • Drug Stores Industry
    • Walgreen Co.
  • Important Developments to Consider
    • Alliance Boots Acquisition
    • AmeriSource Bergen Agreement
  • Full-Information Forecasting
    • Sales
    • EPM
    • EATO
  • Final Valuation
    • Buy/Sell/Hold Recommendation
quick background
Quick Background
  • Drug Store Industry
    • Traditional vs. In-store
    • Pharmacy Benefit Managers (PBMs)
  • “Nation’s largest drugstore chain”
    • 8,582 locations, including 8,116 drug stores
    • 2013: $72.2 B in sales, $45.5 B in prescription sales
    • Recent trend of expansion through acquisitions
      • Alliance Boots (45%) acquisition in 2012, option to purchase remaining 55% in 2015
important developments
Important Developments
  • Alliance Boots Acquisition (45% now, remaining 55% in 2016)
    • Synergies
      • 2014 - expected $375-425 million (increased after Q2)
      • 2016 - $1 billion
    • Revenues (AB + WAG)
      • 2016 - $130 billion
    • Operating Income
      • 2016 - $8.5-9.5 billion
    • Net Debt
      • 2016 - $11 billion
important developments1
Important Developments
  • AmeriSource Bergen Agreement
    • Leading pharmaceutical distributor
      • $79.7 in revenue (2012)
    • WAG + ASB
      • 10 year agreement worth $400 billion (to ASB)
        • Included 5% purchase of ASB stock by WAG (up to 23%)
      • Together - largest purchaser of pharmaceuticals worldwide
        • CVS expected to attempt a similar arrangement in future
    • Results
      • Better prices for branded and generic drugs
      • Significantly decreased inventory levels (daily delivery and complete distribution through ASB)
full information forecasting
Full-Information Forecasting
  • Sales (See ‘Sales Forecast’ tab in spreadsheet)
    • Forecasted Prescription Sales and “Other” Sales to 2015
      • Growth rates disrupted in 2012 & 2013 because of contract dispute with Express Scripts
    • 2016 – Adjusted for WAG management’s estimation of sales upon completion of Alliance Boots acquisition
      • $130 billion in sales by 2016
      • 65-35 split – prescription sales vs. other in-store sales
      • Growth rate post-2016 - decreases by 0.5% per year until it reaches 3.5%
full information forecasting1
Full-Information Forecasting
  • EPM (See ‘EPM Forecast’ tab in spreadsheet)
    • Synergies w/ Alliance Boots and AmeriSource Bergen
      • Cost of Sales – ASB
      • SG&A – AB and ASB
    • Operating income in 2016 – close to WAG management projection of $8.5-9.5 billion
  • As a result of synergies and rising sales, EPM steadily increases through 2022
    • Approx. 5% post-2018
full information forecasting2
Full-Information Forecasting
  • EATO (See ‘EATO Forecast’ tab in spreadsheet)
    • Synergies w/ AmeriSource Bergen
      • Inventories
    • Accounted for AB in Enterprise Assets and Liabilities using AB 2013 Annual Report
  • As a result of synergies and rising sales, EATO increases significantly post-2016 (acquisition of AB)
    • Approx. 6.50 in 2016
    • 8.00 after 2020
final valuation
Final Valuation
  • Enterprise Value:
    • $80,906,113,490
  • Adjusting for Mid-Year:
    • $85,055,377,700
  • Adjusting for the Valuation Date:
    • $90,837,597,910
  • See ‘Adjustments’ Tab
final recommendation
Final Recommendation
  • Enterprise Value:
    • $90,837,597,910
  • (NFL)
    • ($5,066,000,000)
  • Equity Value:
    • $85,771,597,910
  • Number of Shares Outstanding:
    • 951,900,000
  • Implied Share Value:
    • $90.11
  • Current Share Price:
    • $67.38
  • Recommendation:
    • BUY!!