Miquelon had forecast in April that the drugstore chain’s pharmacy division would show $8.5 billion in sales for fiscal-year 2016. Three months later, he reduced the forecast by somewhat more than a rounding error: $1.1 billion. The Journal cited unnamed sources as saying that Miquelon was pressured to leave the company.
For his part, Miquelon said the departure was his choice. Still, he walked away with $3.2 million in severance pay plus a $1.2 million performance bonus. Days before the finance chief’s “resignation,” pharmacy-unit chief Kermit Crawford announced he would retire at year-end.
As reported by the Journal, “Behind the botched numbers and management shake-up are Walgreen’s efforts to capture a larger role as a middleman dispensing prescription drugs under Medicare’s Part D, which subsidizes costs for the elderly and disabled. The saga at Walgreen — which derives 25% to 30% of its prescriptions from Medicare Part D plans — shows the broader risks for those operating in the Medicare ecosystem.”
Miquelon and Crawford took the blame for the company’s failure to take into account a spike in the price of some popular generic drugs when making the original 2016 forecast, according to the Journal.
The idea that a billion-dollar forecasting error was solely the fault of two individuals may strain credibility. Other company executives also apparently failed to notice the change in drug pricing. Might Miquelon have been, in effect, paid to take the blame? He appeared, at least, to suggest as much himself. “All senior leaders are constantly updated on all relevant financial matters and in turn apprise all board members transparently and expeditiously,” the Journal quoted him as saying.
For their part, Walgreen directors told investors they had no idea the change in the pharmacy forecast was coming, according to the Journal.
Walgreen has made news several times over the past few years, not all of it positive. Most recently it earned the Obama administration’s displeasure for considering a tax inversion in which it would relocate its headquarters to Switzerland after completing its acquisition of European pharmacy chain Alliance Boots. Then, on the day it announced its decision not to go ahead with that move, its stock tanked by more than 14%.
Miquelon was a key player in Walgreen’s highly public pricing feud with pharmacy benefits manager Express Scripts in 2011 and 2012. That standoff cost the company at least $4 billion, most analysts agreed.
In a January 2014 CFO article, Miquelon noted that “CFOs are often labeled as skeptics, the people who say ‘no,’ which may be a little unfair. The CFO is the one who has to be able to vet things, to say, ‘What has to be true for this other thing to be true? And what are the consequences if we’re wrong?’ ”
One consequence may be losing your job.