When Walgreens announced its merger with Boots six years ago, it also told investors that the company would generate at least $9 billion in profit in 2016. But SEC has indicated that the figure was too far-fetched for the company and Walgreens’s top executives knew all along.
On Friday, the SEC alleged that despite Walgreens's former CEO Greg Wasson and CFO Wade Miquelon knowing fully well that the pharmacy company would miss the $9 billion target, Walgreens continued to assure investors of that figure during earnings calls throughout 2013 and 2014.
It was in August 2014 that Walgreens admitted that it wouldn't be able to meet that projection, and it drastically slashed its 2016 adjusted operating profit target down to $7.2 billion. Investor shock led the firm’s stock to plummet more than 14% at the time.
Following SEC’s allegations that it misled investors with an unrealistic profit expectation, Walgreens reached a settlement with the SEC by agreeing to pay a $34.5 million penalty - as announced on Friday. Wasson and Miquelon will each pay a $160,000 penalty. However, Walgreens did not admit or deny the allegations in its settlement.