(Reuters) - Drugstore retailer Walgreen Co’s WAG.N Chief Financial Officer, Wade Miquelon, and another top executive lost their jobs after a $1 billion forecasting error in the company’s Medicare-related business, the Wall Street Journal reported.
Walgreen named Kraft Foods Group Inc’s KRFT.O former CFO, Timothy McLevish, to replace Miquelon — its CFO of six years — on Aug. 4.
Miquelon last month cut by $1.1 billion a forecast of $8.5 billion in pharmacy unit earnings for the year ending August 2016 that he had made at an April board meeting, the journal said. (on.wsj.com/VEh0xC)
Miquelon’s departure was due to his transitioning to newer opportunities, Walgreen told Reuters in an email.
The company had earlier said Miquelon would continue as advisor to assist it with a strategic partnership with Alliance Boots Holding Ltd [ABN.UL].
The newspaper report said the forecast error also led to the departure of Kermit Crawford, Walgreen’s president of pharmacy, health and wellness.
Crawford announced his retirement last month after 31 years with the company.
He will continue as an advisor, and moves forward to pursue new opportunities outside, Walgreen said.
The forecasting error was based partly on contracts to sell drugs under Medicare, WSJ said.
Walgreen, which gets 25-30 percent of its prescriptions from Medicare Part D plans, had not factored in a spike in the price of some generic drugs that it sells as part of annual contracts, the paper said.
The company said it did not break down its pharmacy business revenue by segment.
Medicare Part D subsidizes the cost of prescription drugs and prescription drug insurance premiums for Medicare benefits in the United States.
Walgreen would pay Miquelon severance of $3.2 million and a performance bonus of about $1.2 million, and pay $3.3 million to Crawford as severance and consultation fees, the company said in a regulatory filing this month.
Miquelon, 49, joined Walgreen in June 2008 as senior vice president and CFO. In 2012, he was promoted as executive vice president, CFO and president, international, and joined the board of Alliance Boots.
Miquelon is also credited with playing a central role in launching the Walgreens-Alliance Boots deal.
Walgreen said earlier this month it would buy the 55 percent it does not already own of Alliance Boots for 3.13 billion pounds ($5.3 billion) in cash and 144.3 million shares, giving a total deal of about $15 billion.
Reporting by Shailaja Sharma in Bangalore; Editing by Joyjeet Das