Healthcare Turf

Walgreens (WAG), the country’s largest drugstore chain, is poised to expand even further into healthcare. At Walgreens’ annual shareholder conference, company officials talked about a new educational program for patients with chronic and complex diseases, and even mentioned the possibility of a Walgreens role in the emerging accountable care organizations. Until recently, most retail clinics have confined themselves to minor acute care. Now, however, Walgreens and some other outlets are beginning to branch into chronic disease care, as well.

Questions:

1.  According to Terry, what will Walgreen’s lower operating expenses translate into?  In other words, what limitations of this expansion are at issue?

2.  Who is Walgreen’s competition in this field?  What trends in healthcare policies do you think have prompted their latest moves and acquisitions?

3. Look at Walgreen’s Annual meeting press release.  What is the company’s free cash flow and what has that allowed them to do?

Source:
Terry, K. (2011). Walgreens Eyes Further Expansion Into Healthcare Turf. Good!, BNET.com, January 18 (Retrievable online at http://www.bnet.com/blog/healthcare-business/walgreens-eyes-further-expansion-into-healthcare-turf-good/2378?tag=mantle_skin;content)

Staff. (2011) Walgreens Reviews 2010 Performance Progress and Future Opportunities at Annual Meeting, Fierce Healthcare.com, January 13 (Retrievable online at http://www.fiercehealthcare.com/press-releases/walgreens-reviews-2010-performance-progress-and-future-opportunities-annual)

Searching for Free Cash Flow

The South Africa-based company, Harmony Gold, is having problems securing ongoing funding after using up more than $1 billion U.S. Its latest quarterly report shows that the company is grappling to produce free cash flow.

QUESTIONS:

1. What is free cash flow and why is this a worry for the company?
2. With respect to free cash flow, why was it a good sign to analysts that Harmony paid its first dividend in five years on September 21, 2009?
3. Explain each of the following in terms of helping or hurting Harmony’s free cash flow position:
   1. Cash raised from selling residual shares in Gold Fields, after an earlier bid for the company failed.
   2. Incremental cash increases earned from the rising price of gold sales
   3. Significant projects to replace aging assets used in the mining process

SOURCE: Sergeant, B. “For Harmony Gold, Free Cash Flow Remains Elusive,” Mineweb – Gold News (Retrievable online at http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=91685&sn=Detail)