How WBA (Walgreens Boots Alliance) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a retail pharmacy giant like Walgreens Boots Alliance (WBA) makes money is essential for investors and anyone interested in the business of healthcare retail. In this post, we break down Walgreens Boots Alliance's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

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Quick Walgreens Boots Alliance Overview

Walgreens Boots Alliance operates as a global leader in retail pharmacy, healthcare, and pharmaceutical wholesale services. Revenue comes primarily from U.S. Retail Pharmacy operations, including prescription sales, front-end retail merchandise, and pharmacy services, alongside international pharmacy and healthcare segments. Additional context includes its VillageMD healthcare clinics and Boots UK operations, which contribute to diversified healthcare delivery.

Revenue Breakdown

• Total Revenue (Q2 2025): $34.2B (+3% YoY)
  • U.S. Retail Pharmacy: $28.1B (82% of total)
  • International: $3.5B (10% of total)
  • U.S. Healthcare: $2.6B (8% of total)
  • Growth is powered by prescription volume increases and healthcare expansion, despite softer front-end sales.

Gross Profit and Margins

• Gross Profit: $5.8B (17% gross margin)
  • Cost of Revenue: $28.4B (+4% YoY)
  • Walgreens Boots Alliance maintains moderate margins due to high-volume prescription reimbursements and supply chain efficiencies, offset by generic drug pricing pressures.
• Most costs come from pharmaceutical procurement, inventory, and healthcare service delivery.

Operating Income and Expenses

• Operating Income: $0.4B (+15% YoY, 1.2% margin)
• Operating Expenses: $5.4B (+2% YoY)
  • R&D: $0.1B (+10% YoY, 0.3% of revenue) — focused on digital health tools and VillageMD clinic innovations
  • SG&A: $3.2B (+1% YoY, 9.4% of revenue) — driven by store operations, marketing, and administrative overhead
  • Walgreens Boots Alliance continues to prioritize innovation while controlling costs through store optimizations and operational streamlining.

Net Income

• Pre-Tax Income: $0.3B (+20% YoY, 0.9% margin)
• Income Tax: $0.1B (33% effective tax rate)
• Net Income: $0.2B (+25% YoY, 0.6% net margin)
• Walgreens Boots Alliance converts a moderate portion of sales into profit due to scale in pharmacy operations and cost discipline.

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What Drives Walgreens Boots Alliance's Money Machine?

• U.S. Retail Pharmacy: 82%+ of revenue from prescriptions and over-the-counter products, bolstered by high customer footfall.
• Prescription Metrics: Over 300 million scripts filled quarterly, with generics comprising 90% of volume for cost savings.
• Healthcare Investments: VillageMD clinics expanding primary care access, adding $2.6B in revenue despite early-stage scaling.
• Future growth areas: Digital pharmacy and international expansion, though not yet profitable due to upfront investments.

Visualizing Walgreens Boots Alliance's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant healthcare investments, 0.6% of revenue drops to the bottom line.

Key Takeaways

• Walgreens Boots Alliance's money comes overwhelmingly from U.S. Retail Pharmacy
• High gross and net margins illustrate the power of Walgreens Boots Alliance's pharmacy scale and supply chain
• Heavy investment in healthcare clinics, balanced by efficiency in operating costs
• Ongoing growth is driven by prescription demand and clinic expansion

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FAQ About Walgreens Boots Alliance's Income Statement

1. What is the main source of Walgreens Boots Alliance's revenue in 2025?

Walgreens Boots Alliance generates over 82% of its revenue from U.S. Retail Pharmacy. Additional revenue sources include International operations 10% and U.S. Healthcare 8%.

2. How profitable is Walgreens Boots Alliance in Q2 2025?

Walgreens Boots Alliance reported net income of $0.2B in Q2 2025, with a net margin of approximately 0.6%, reflecting moderate profitability driven by pharmacy scale and cost controls.

3. What are the largest expense categories for Walgreens Boots Alliance?

The biggest expenses on Walgreens Boots Alliance's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $0.1B in Q2 2025, as Walgreens Boots Alliance prioritizes healthcare innovation and digital tools.

4. Why does U.S. Healthcare operate at a loss?

U.S. Healthcare, despite generating $2.6B in revenue, posted an operating loss of over $0.5B in Q2 2025. This is because Walgreens Boots Alliance aggressively invests in VillageMD clinic network expansion, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does Walgreens Boots Alliance's effective tax rate compare to previous years?

Walgreens Boots Alliance's effective tax rate in Q2 2025 was 33%, consistent with previous years. This moderate rate is primarily due to standard U.S. corporate taxation and international operations.