Walgreens Boots Alliance, Inc. (WBA): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Walgreens Boots Alliance's portfolio, and honestly, the BCG Matrix is the perfect tool to map their turnaround strategy. We see clear Stars like Boots.com e-commerce growing 18.7% and Core U.S. Pharmacy sales up 14.6%, funded by the stable, high-share Cash Cows like the Rx fulfillment business generating the bulk of that $30.7 billion segment revenue. But the map also highlights serious Dogs, such as the U.S. Retail Front-End sales falling 5.3%, leading to a planned 500 store closures, and volatile Question Marks like VillageMD, which saw sales drop 6.5% even after a $3.0 billion goodwill hit. This analysis cuts straight to where Walgreens Boots Alliance, Inc. must invest, hold, or divest resources right now.

Background of Walgreens Boots Alliance, Inc. (WBA)

You're looking at Walgreens Boots Alliance, Inc. (WBA) right as it's navigating a major transition, so let's get straight to the numbers from late 2025. For the third quarter of fiscal 2025, which wrapped up on May 31, 2025, WBA posted total sales of $39.0 billion, marking a 7.2% increase year-over-year. Still, the bottom line showed some pressure, with adjusted earnings per share (EPS) coming in at $0.38, down from $0.63 in the prior year's quarter.

Breaking down those sales shows where the strength and weakness lie. The U.S. Retail Pharmacy segment was the biggest piece, bringing in $30.7 billion in Q3 sales, a 7.8% jump from the year before. However, you've got to note that the front-end retail sales within that segment actually dropped by 5.3%, which CEO Tim Wentworth pointed to as continued weakness. The International segment, which includes Boots UK and the Germany wholesale business, posted sales of $6.2 billion, up 7.8%.

The U.S. Healthcare segment, which houses VillageMD, CareCentrix, and Shields, reported third-quarter sales of $2.1 billion. While Shields saw significant growth at 24.8%, VillageMD sales decreased by 6.5%, reflecting shifts in its revenue mix. Overall, for the first nine months of fiscal 2025, total sales reached $117.0 billion.

Honestly, the biggest factor shaping WBA's near-term future is the pending acquisition. Walgreens Boots Alliance entered into a definitive agreement on March 6, 2025, to be acquired by entities affiliated with Sycamore Partners. This deal is expected to close in the third or fourth quarter of calendar year 2025, and once it does, WBA common stock will no longer trade on the Nasdaq, effectively becoming a private company. Because of this transaction, the company withdrew its full fiscal 2025 financial guidance.

Walgreens Boots Alliance, Inc. (WBA) - BCG Matrix: Stars

Stars are defined by having high market share in a growing market. Walgreens Boots Alliance, Inc. (WBA) identifies several business units that fit this profile, demanding significant investment to maintain their leadership positions and secure future Cash Cow status as market growth matures. Stars are the leaders in the business but still need a lot of support for promotion and placement. If market share is kept, Stars are likely to grow into cash cows. A key tenet of a Boston Consulting Group strategy for growth is to invest in Stars.

These units consume large amounts of cash due to their high growth rate, generally resulting in the same amount of money coming in that is going out. The business units or products with the best market share and generating the most cash are considered Stars. Monopolies and first-to-market products are frequently termed Stars too.

The current Stars within the Walgreens Boots Alliance, Inc. portfolio, based on high growth and market leadership, include key areas in both the International and U.S. Healthcare segments. These areas are critical for the company's turnaround strategy, requiring disciplined focus and capital allocation to sustain momentum.

The performance metrics for these Stars highlight their role as primary growth drivers for Walgreens Boots Alliance, Inc. as of the third quarter of fiscal year 2025. For instance, the U.S. Retail Pharmacy segment, which houses the Core U.S. Pharmacy, posted total segment sales of $30.7 billion in Q3 2025, up 7.8% year-over-year. The International segment, anchored by Boots UK, saw sales increase 7.8% to $6.2 billion.

Specific operational highlights reinforcing the Star classification include:

• Boots.com e-commerce sales represented 17% of Boots total retail sales.
• Boots UK comparable pharmacy sales increased 5.4% on a constant currency basis in Q3 2025.
• U.S. Retail Pharmacy segment pharmacy sales specifically increased 11.8%, driven by branded drug inflation and mix.
• The U.S. Healthcare segment, which includes Specialty Pharmacy, is a focus area for investment in the turnaround plan.

Walgreens Boots Alliance, Inc. (WBA) - BCG Matrix: Cash Cows

The U.S. Retail Pharmacy segment stands as a primary Cash Cow, generating segment sales of $30.7 billion in the third quarter of fiscal 2025. This segment's total sales increased by 7.8 percent year-over-year for the quarter ending May 31, 2025. The overall Walgreens Boots Alliance, Inc. total third quarter sales reached $39.0 billion, reflecting a 7.2 percent increase from the prior year period.

This core business unit maintains its market leadership through high-volume prescription fulfillment, which provides a stable revenue base, even as the front-end retail sales face headwinds. The strength of the pharmacy operation is evident in earlier fiscal periods, where comparable prescriptions filled in the first quarter of fiscal 2025 increased by 2.3 percent over the year-ago quarter, with comparable prescriptions excluding immunizations rising by 3.5 percent.

The International segment also houses a reliable Cash Cow in the Germany wholesale business, which demonstrated consistent growth. For the third quarter of fiscal 2025, the Germany wholesale business grew by 6.8 percent on a constant currency basis, contributing to the International segment's overall 5.9 percent constant currency sales increase.

The vast, established network of U.S. stores represents a high-share distribution channel, despite the Footprint Optimization Program actively managing underperforming locations. The U.S. Retail Pharmacy segment's total sales of $30.7 billion in Q3 FY2025 underscore the sheer scale of this established footprint, which is essential for essential market share capture.

• U.S. segment sales accounted for 84.1 percent of total net sales in a recent reported period.
• U.S. Retail Pharmacy comparable sales increased 10.3 percent in Q3 FY2025.
• International segment sales growth was 7.8 percent year-over-year in Q3 FY2025.
• The company is focused on cost savings within U.S. Retail Pharmacy to support profitability.

Walgreens Boots Alliance, Inc. (WBA) - BCG Matrix: Dogs

You're looking at the parts of Walgreens Boots Alliance, Inc. (WBA) that are struggling to gain traction, which is what we call the Dogs in the BCG Matrix. These are units operating in low-growth areas with a small slice of the market, and honestly, they often just tie up capital without much return.

The performance of the U.S. Retail Front-End is a clear indicator here. For the third quarter of fiscal 2025, retail sales within the U.S. Retail Pharmacy segment fell by 5.3% compared to the same quarter last year. This weakness is what CEO Tim Wentworth noted, pointing directly to the challenges in this part of the business. The segment's Adjusted operating income reflected this, dropping 30.2% to $350 million from $501 million in the year-ago quarter.

Here's a quick look at the hard numbers showing the drag from these underperforming retail areas:

To minimize cash consumption and focus resources, Walgreens Boots Alliance is actively pruning the footprint. The company plans to close approximately 500 underperforming U.S. stores in fiscal 2025 as part of a larger plan to shutter 1,200 locations over three years. This is a direct response to the low market share and poor performance in specific locations. Considering Walgreens has around 8,700 drugstores in the U.S., closing 500 represents a significant optimization effort.

The legacy retail operations are definitely feeling the heat from discounters, which shows up in specific product categories. Comparable retail sales were down 2.4% in Q3 2025, driven by weaker performance in key areas. This is where you see the low-growth market dynamic playing out in real time. The categories specifically cited for weaker sales include:

• Grocery
• Household items
• Health and wellness
• Beauty

The financial impact on the U.S. Retail Pharmacy segment's profitability is clear, as the Adjusted operating income decline was directly linked to these softer retail results, alongside other factors. Here are the primary drivers for the 30.2% drop in that segment's adjusted operating income for the quarter:

• Higher incentive accruals
• Lower retail sales
• Lower equity earnings in Cencora

Expensive turn-around plans for these types of units rarely work out well; divesting or minimizing exposure is usually the clearer path forward for cash preservation. Finance: draft the cash flow impact analysis for the 500 store closures by next Wednesday.

Walgreens Boots Alliance, Inc. (WBA) - BCG Matrix: Question Marks

These business units represent high-growth prospects within Walgreens Boots Alliance, Inc. (WBA) but currently hold a low market share, consuming cash while promising future returns if successfully scaled.

U.S. Healthcare segment, the high-growth engine with volatile results

The U.S. Healthcare segment is positioned as the long-term strategic pivot for Walgreens Boots Alliance, Inc. (WBA), aiming to transition the company beyond its traditional retail pharmacy base. For the first nine months of fiscal year 2025, total sales for the company reached $117.0 billion, marking a 6.3% increase year-over-year, with U.S. Healthcare being a key growth driver. However, the segment's results are volatile, as seen in the third quarter of fiscal 2025.

The segment's sales for Q3 2025 were $2.1 billion. This unit is not yet profitable, but its expansion is deemed crucial for the company's transformation. The strategic focus involves balancing necessary investment with managing future cash needs in an evolving environment.

VillageMD primary care, which saw Q3 sales decrease 6.5% due to clinic closures

VillageMD primary care is a prime example of a Question Mark, operating in a high-growth market but facing execution challenges that led to a market share contraction. In the third quarter of fiscal 2025, VillageMD sales decreased by 6.5% compared to the prior year's quarter. This decline was directly attributed to lower risk-based and fee-for-service revenue, which included the impact of clinic closures.

The strategic response involved significant footprint reduction. Walgreens Boots Alliance, Inc. (WBA) announced plans to close approximately 1,200 locations over three years, with 500 closures planned for 2025. Specifically for VillageMD, the company opted to exit approximately 160 clinics, with 140 locations having already ceased operations as of the Q3 announcement.

The financial impact of these struggles was significant:

The $3.0 billion non-cash impairment charge on VillageMD goodwill in 9M 2025

The reduced market share and lower performance expectations for VillageMD resulted in substantial non-cash write-downs on the investment's value. For the first nine months of fiscal 2025, the operating loss included a $3.0 billion non-cash impairment charge related to VillageMD goodwill and other long-lived assets. This charge reflects the need for heavy investment or divestiture, as the unit consumes cash without delivering expected returns.

This is part of a broader trend of asset revaluation:

• Operating loss in the first nine months of fiscal 2025 was $5.8 billion.
• The Q2 2025 operating loss included a $3 billion non-cash impairment charge related to VillageMD goodwill and other long-lived assets.

CareCentrix and Shields, which need significant investment to achieve scale and profitability

In contrast to VillageMD's contraction, other components of the U.S. Healthcare segment showed strong top-line growth, indicating potential for future Star status if investment is managed correctly. CareCentrix and Shields are showing growth, but their path to consistent profitability and scale remains a key focus area requiring capital deployment.

Growth rates for these businesses in Q3 2025 were notable:

• CareCentrix sales increased by 11.6% in Q3.
• Shields sales increased by 24.8% in Q3.

The strategic direction post-acquisition by Sycamore Partners on August 28, 2025, is to operate Shields Health Solutions and CareCentrix as separate, standalone companies. This separation is intended to allow focused management to better serve the growing demand for specialty pharmacy and health care services.