Following the report made by Walgreen Co. (NYSE:WAG) that the company made a loss in the fourth quarter due to the large accounting charge levied against it, the charges have arisen from their pursuit of the European company Alliance Boots GmbH.

The charges, reported to amount to $866 million, are related to Walgreen Co. (NYSE:WAG) exercising an option it held to purchase remaining shares from Alliance Boots earlier than planned. It was as far back as 2012 when Walgreen took out a 45 percent stake in their European counterpart with the option to buy the rest valid until 2015.

The report from the company states that they lost $239 million in the fourth quarter, this amounted to 25 cents per share. Year on year comparisons to the fourth quarter of last year mean the losses are compared with earnings of $657 million, which amounted to 69 cents per share, a year earlier.

Walgreen Co.’s newly installed Chief Financial officer, Timothy McLevish, made a statement to business analysts today, in which he stated that the losses ‘only tell part of the story’. He held up as evidence the fact that if it was not for the charge levied against his company, Walgreen would have matched the Wall Street projected earnings per share.

Though he did say there was more to do, Walgreens CEO Greg Wasson also said that the company had closed the previous fiscal year ‘by exercising the second step of … (Walgreens) strategic transaction with Alliance Boots’. He also claimed that business had been boosted by the action leading to the ‘completion of the transition of our pharmaceutical distribution to AmerisourceBergen.

The deal in question means that Walgreen (NYSE:WAG) are now a global business, it had been debated earlier in the year whether the company would make an inversion and remove their HQ from Chicago to Switzerland or the UK. The holding company, Walgreen Boots Alliance, will be located in Delaware.

Other market analysts, including equity analyst Jeff Windau, have been noted as saying the situation will need to be monitored following the Alliance Boots acquisition. Though Windau was on record as saying he was generally relieved by Walgreens performance in meeting expectations this quarter.

He also commended the company’s management of their costs and said “They’re becoming more of a role of health care patients … We think this will help them grow in the long term”. However Morningstar’s senior analyst Visnu Lekrajhas said that drug stores such as Walgreen are at a disadvantage when it comes to the pharmaceutical supply chain. He said this was due to facing stiffer competition and pharmacy benefit managers who had the ability to squeeze from their end.

It seems this will be a turbulent year for Walgreen (NYSE:WAG) though there is still cause for some optimism in the work of their staff, who should also be anxious as the company completes the merger with Alliance Boots. The company expects to make $650 million in savings this year from the deal.

Walgreen (NYSE:WAG) opened at 59.60 and is currently trading at 59:40 with a daily high of 61.34 and a daily low of 58.39 compared with a 52 week low of 54.11 and a high of 76.39

Get Free Updates and Stock Alerts!

*We only send one email per week