New Rite Aid (RADCQ) 27 Jun 182019 Q1 Earnings call transcript

Good afternoon. My name is Christina and I will be your conference operator today. At this time, I would like to welcome everyone to the Rite Aid Fiscal 2019 First Quarter Earnings Conference Call. [Operator Instructions] Thank you. Matt Schroeder, Chief Accounting Officer, you may begin.

Christina. you, Thank everyone. Good evening, you to earnings welcome first our call. conference We quarter

we Chief results are with will Kermit on our and Officer. Darren On call Kermit Chief the Darren John provide Financial John and our Crawford, Officer; first will Chief Karst, our me President today’s Officer; On business. Administrative take Executive an update tonight Stanley, questions. update provide and the and then an Chief Chairman our quarter and call, Operating will and on

in we slides provided tab. the As These be we related under to our Information are mentioned release, discussing are the on slides will www.riteaid.com Relations providing our website, material we Investor today.

as to in the hope be of remarks, the not key points referring will made We them summarize they on some them our helpful, call. but you’ll find

and gross to reconciliations our measures Commission. press release. slides and of to included in Exchange non-GAAP start, call measure. to on the our conference results differ. of annual the or GAAP are certain we’ll Before The cause and uncertainties SG&A related recent to measures specific that adjusted our measure that release. to the in the in GAAP forward-looking their Also, other profit includes most in can certain non-GAAP with our our item certain described reconciliations the Securities report release furnish like risks Also financial are the definition are in we you statements be non-GAAP of measures XX-K statements. adjusted context that to These in uncertainties press EBITDA we XA and are EBITDA these presented using documents remind today's I'd along and of forward-looking filed These Form the risks measure, described actual and

I’d turn John. these With now it like to to over remarks,

for on today. joining thanks Thanks the everyone us call Matt, and to

in operating continue segment our while Our our in Retail segment, growth. Pharmacy make first quarter to to results support show investments we Pharmacy continued progress Services

to executing the with strategy, to During also great leader talk combination pursuing the taking our markets, to wellness. substantial and a strengthen opportunity create continued significantly cost in us Albertsons deliver more our all standalone give focused and enhance combining and our scale customers business growth, and omni-channel value and health few access will customers and position and opportunity these our revenue create food, density new capabilities profile to to about a compelling to we us as differentiated we We'll for truly by tremendous quarter our achieve in compelling shareholders. compete on markets, which This synergies transform opportunities our in of care improve better will of moments. financial long-term just a existing

for our our to $XX in we results some let's discuss net Before $XX.X take last time from first quarter. do, first Overall continuing loss compared operations million year's to was quarter. the million,

million, compared $XXX EBITDA Our prior $XXX.X year's loss adjusted forma our from for per to was from the with continuing million. last Adjusted performance in continuing share the quarter adjusted operations EBITDA of $X.XX year of operations consistent period. net was pro

for in sold for For that comparing that compared by Segment supported prior earned, Adjusted increased income would our year’s EBITDA to Segment. Services expense is have In $X.X by driven of made quarter fee to in then for million, effective last Pharmacy adjusted The pro we our year. adjusted Segment, all management. number by if forma TSA gross the our was decreased EnvisionRxOptions. results the million, Retail under the purposes forma year, includes stores been WBA pro our period. EBITDA to driven EBITDA delivered had consecutive and primarily growth second Retail investments which pharmacy last Pharmacy that we’ve margin growth the This adjusted improvement $XX.X for was strong EBITDA Pharmacy

have D for did to additional Medicare the that the and pipeline terms we submit remained Medicare in have to continue book I’m and a of we calendar of to XXXX. prospects enrollment a strong market announce In business. EnvisionRxOptions, strong re-enter lives selling Part Part in pleased some gained D of season our commercial bid California

During the billion. WBA reduce the the quarter, we to approximately $X debt us last sale group proceeds to stores of The asset our to enabled by sold from WBA. have

And and transforming these believe accelerate further a options, player our regional pharmacy a will XX Our strategy. we nationwide. we’re is the as making from LTM with deliver ratio approximately we’re sale we and over as every using of time, X.X progress pre-asset working five we’re around top and substantially has combination same through X,XXX improved to combined the drug be Overall, customers position. new opportunity leverage have the net a debt our defend will to after On efforts company carefully By cash serve at At even basis, currently our to consolidating ratio. million result, times adjusted billion. food our better the to outstanding $X and to we compared strategic to a counters competitive unique our we value. business our competitive a positioned improve a Albertsons. implement with In reviewing pleased hard evolving retailer, enhance with strong position marketplace, EBITDA, significant significantly week our

increased compete market have better markets scale matters. scale We in with highly recognizable will to where local brands

program presence strong XX% portfolio number stronger in a one best-in-class markets which of platform grocery customers two products, when own areas existing allow and and how will of or and key where, healthy brand have all shop to and with positions in will a a combined and the metropolitan pharmacy want. we they have innovative of of will loyalty We omni-channel

in in to expect incremental runway synergies We billion revenue cost realize opportunities. with $XXX $X.X million

initiatives basis. our increasing compete competition, on these the and also will flow in to Aid diversified All for in the standalone and face pressure update an Kermit? rate with that, our delever it strong areas combination will I'd Rite reimbursement allow Albertsons. Kermit about will we're to of a reinvest and like industry. and on enhance drug We turn our potential that cash in With than to excited us a have in most factors some business faster consolidation of can and Crawford of COO, ability terms over key to President our

joining future Thank personal In deliver the progress stage you, to important we everyone John components a implement strategy various serve. of our and thanks higher and first us level for we the to the care today. making for growth set in communities continued of as quarter, we

slow the allergy sales sales were for returned and earlier same-store level an our as categories, to front-end Easter, May. summer by results impacted Although a more trends normal as a well start in

first successful our of having customer our wellness+ continued many We winning with rewards, are cash, program, is which enhanced to positively campaign supported was an of award quarter. which of Customers which XX in a is loyalty with points. has very the success sign-up marketing critical during easier great this example responding program, A three step by replaced bonus comprehensive introduction initiatives. the re-launch a simplified most the

same points compared quarter, more XX transactions, than earning doubled to the During redeeming bonus last period year. the and for cash first

highlighted XX% sales. last more for our continuing in compared increased circulation continue first to from be Also, create evolution more advertising to transactions by build print leverage digital initiatives. we marketing to us we reduction direct quarter, our print invested year's the channel. potential are as of more marketing, to digital CRM than in customers This further our front-end engaged to personalization our is first for quarter opportunities best XX% accounted helping [card][ph] database of our Our and and

the Additionally, increasing app requested app to number our mobile unique last by the refills base compared XX%, to continues quarter. year's first through grow user with of prescription

Our the to our customer a same XX%. have reward e-commerce omni-channel experience improved own network made to fulfillment transitioned from access allowed card by have enjoy an increase assortment. cost has offering all improve realizing also to lowered which provider we customers that our our time, benefits the and online our are e-commerce online our fulfillment lead members to distribution expanded our our business, To we have us wellness+ enhancements third-party and

redesigned offering brand development. to major be beauty Aid health, on items with and items in Pharmacy new to of care Rite in personal margin. OTC frontend and emphasis continues brands. or additional various XXX a drive Most of new with revenue emphasis Our Aid introduced point care are or stages Rite and Year-to-date rollout we've our own personal help items Daylogic

and continue increase brand see opportunity to our a deliver their items We as Nature. utilizing through value Open such to significant own Albertsons, penetration combination Organics expertise in and brand own with

is that specific is own each to tailored one local the of offerings create efforts supports program brand that market. initiatives to Our

area of than footprint. more the better to This both pleased example at and is and leadership fiscal reducing peered the support to empowering Aid’s our this thus involves new each Rite retail After XX are structure of year received we've we our boundaries, stores pharmacy. approach hyper the new very region feedback days redrawing far. number Another the frontend local leaders lead our which district with implemented process and in we the of beginning

gives leaders more the structure new SG&A ability through but better and their our visits. support store reduces Our frequent not only also to teams customers

which with additional results drive positive through such from store wellness convenience innovative to offering continue features health We and formats, our pharmacy. see along wellness as expanded

sales the store year. terms top more remodels quarter, network. satisfaction have which same-store our stores experience nearly excellent have of to X,XXX for the to we count. than prior an be chain outperform overall quarter, wellness improved the now rest continues sixth script we our of we in our the represent priority front-end to and the With customer of completed during entire and stores, continue These XX two-thirds compared consecutive Providing customer the

of satisfaction margin to challenge, of In quarter. a reimbursement year In Pharmacy compared this a a in prior rates we due in quarter underperformance all-time reached more despite continue pharmacy, second a but to year. remains first an consecutive generic reimbursement rate gross environment. customer fact, see constant the rate to slight the high stable purchasing stabilize area overall for increased pressure

best effectively stated long-term drug before, option cost priority. managing be our continues for purchasing As the to top we a have identifying

file growth we $XX we've in on million In quarter $XX are continue File allocated initiatives, will terms tremendous of these a to buys making focusing for our most volume script the investments. million invested and script of year. during the and strategic build buys the opportunity we

to continue end payers Medicare to to fiscal D we participation be expect efforts our XXXX. should planned these of thanks Part we which front-end our with in and significant reminder, be and back-half also increase of second strategic continuing prescription partnerships sales. As with payer cycle preferred plan priority. the also will by therefore, We're a critical same-store Developing help fully to the the stronger partners engage exclusion improve in count quarter these in year, a networks efforts, to will the

trusted the needs. being for of goal our our customers on advisor focused remain their meet better healthcare pharmacy changing also We to

freeing us personal process alerts higher provide to with courtesy In this provide pharmacist like our the refills, immunization, messaging up Refills, us and and operational in mentioned pharmacists additional level time Onetrip services capabilities we've For starts management, improving care. medication efficient are become up therapy text medication free administering previous time for more automated of and as how calls, a adherence. for while efficiency our to helping also to such pharmacy

As prescriptions we therapy in saw equivalent quarter. incremental these the a result of first to grow efforts, management medication XX,XXX

marketing supported in We season, immunizations for more to billed After strong we with a very year's Through by a team’s an quarter. first percent last flu the prescriptions turned compared non-flu patients increase have XX-day our condition. doubled than also to increased these significant efforts, chronic immunizations seen non-flu effort. focus of

a to saw separated teamed older get XX we two vaccine. two strong new adults shingles the CDC to Specifically, due shingles years six availability this doses the of our West presence businesses healthcare immunizations Coast. positive. to vaccine The growth with On integrated in recommends and our scale Rite attractive, in that Medicare we from and very The expertise healthy of even progress by to a a We're for Rite our create to And an Albertsons greater outreach to Aid pharmacy on due excited discussed early to which and key non-compliant with dedicated meditation as this PBM results markets, Part EnvisionRxOptions. have fiscal this further been increased more D XXXX especially have Health improve conducts up months support Dialog prevent effort adherence. complications average, effort in in ability fourth significant in team shingles opportunity disease. the merger makes of medication this patients Aid call, the unique our and enrollment quarter to finally the

to year will first to in May, the we Medicare area also of several of of month-over-month enrolled calendar revenue quarter. middle be for in important significant of As all in and next Commercial our months. We Specialty the client We’ve far to goal in we XXX,XXX season secured lives. the continues growth strategy remainder opportunity are steady grow in third-party the rate continue have business. over as are XXX,XXX we season Remaining go-forward excess of our lives to an the enrolled already thus this lives perform and that anticipate our Envision’s sales continue meet Part the over key through our pharmacy seeing D growth continues force in new specialty Likewise, selling solidified strong of well will plans, expected in XXXX. they renewals renewals XX%. three we’re the be and in tracking won. client two to retention with health XXX,XXX

continued right deliver both level a for that ventures unique continued opportunities support. opportunity us assets be communities we and give in continue RediClinic Envision, to to Dialogs of serve. healthcare higher explore Health With systems the key RediClinic, we joint Beyond to and a care - with

on grocery taking store health in leverage patients. see with combination a we’ve as a Dialog performer We mentioned to we're mentioned for a outcomes RediClinic Alderson, previous through further for is setting. calls, tremendous proven earlier Aid in Health Rite better As driving potential RediClinic how critical steps we

Health analytical networks, We in continue heading great to value in see to capabilities driven would utilizing deliver be potential critical the of forward. which performance Dialog

have we comprehensive has be other several to Darren, at efforts, how Aid foundation's highly issue continue and all on epidemic Among it abuse. more to available other that to the to organizations to than to our comes plaguing our when help mention also lock-phone we address our over implement company taken wanted country. a steps Through with Rite Aid working made pharmacies. to of and misuse it Rite and turn focused especially, help key address communities steps, the drug of I the opioid this Before abuse is I strategy X,XXX the

units high chain XXX to other offer or dispose with this packets can chain, to also epidemic. and to leading at forward We efforts a officials free role you to take home. safe medication also know organizations. the innovator drugstore gives the we of to prescription law partnered which to Thank plan helping prevention students online leadership the technology know units communities are this look Aid disposal pharmacy with install time. continuing We forces working in foundation and leading in first medication to our school bring we address closely XXX a Earlier enforcement first a a drug to solve launched own leftover abuse we we patients, DisposeRx that these with on in-store year. joined also cannot the this communities by issue and unwanted several next We’ve programs month, our We to but serve. we’ve became nearly also Rite your we safe unit, additional that neighbors, district them we prescriptions key on disposal for over elected in way The school serve. our install as has our

we’ll Darren Karst more it on turn results. Now, to Darren? information our over for financial

use the us progress as financial Kermit and for asset through well our WBA bond redemptions recap our joining today. the and as of on Thanks, everyone quarter to walk results related I first thanks sales. will proceeds

The cash does discussed $X.X as and to As proceeds include all about million This X, be three WBA sale to after completed WBA term March totaling used call sometime received been we have all $XXX centers September $XXX our and nearly on the billion. distribution not pay transfer received to-date our XXXX. we to after X,XXX of first of we million amount will of had off XX, proceeds sell last that stores received loans. of

debt to an which XXXX, remaining down cash aggregate as quarter balance two our April the our as our about notes, on resulted from X.XX% net cash indentures times of due of We our under notes pay $XXX June and allow billion permanently notes requirements. on reflect on of redeemed principal us commitments trailing up redeemed the X.XX% million, $X We've proceeds which a quarter of XXXX, we in revolving in million call our approximately us XX $X.X reduced billion we this which X.XX% Thus, $X.X principal also offers approximately X.XX% due XXXX. borrowing gave our remaining proceeds also ratio and end credit and billion to to a completed a $XX excess EBITDA. and freed XX. million required debt of and of notes bond reduced leverage on X.X repayment under our The notes receipt to of our due offers X.XX% $XXX proceeds

which Our revolver million our we X.XX% to turn I’ll total billion. liquidity results. was a review our borrowings year's the as quarter. in loss $X.XX now notes of Net share today recent at first reflects or of per made under or per $X.XX our is loss income to million our share net quarter X.X strong for the $XX.X $XXX.X redeem last first company versus of

adjusted a sales $XX million Retail X.X% year The X.X% decrease or the X.X%. certain from million a loss the remain net TSA was $X.X with Adjusted was was quarterly not we to quarter. basis, the the per was which Pharmacy charges quarter which same-store billion networks prior compared WBA. from net loss include primarily $X.X the to by under prior quarter WBA versus Same-store XXX-day stores current that quarter. period. script was recorded $XX the participate EBITDA of was share quarter supported Financing $XXX million net divested being year. revenue impact by was forma EBITDA. $XXX pro the adjusted prior seasonal fiscal being million Pharmacy loss fees, million increase in the for down the partially sales results by our in considering forma our gain pharmacy in earlier Adjusted During of million loss Note operations as would EBITDA $XX.X actual the to termination quarter of do due decreased in and excluded of our year million. start an sales interest year by adjusted due due $XXX.X versus have prior sales. to continuing offset X,XXX Pharmacy the by been $XX.X to Services prior year net to million in TSA $X.XX to $X.X million in quarter current by we decreased segment of expense, operations a count on the in or stores $XX from adjusted prior first the quarterly of soft When X.X% timing our were million versus operating store where in for lower per able $XX.X prior that million year of pro year's which was transaction or all costs last increase year impairment sold slow the same-store summer by caused quarter XXXX for that quarter. a the Net for $XX from Easter sold compared in prior lease higher quarter. Adjusted were were EBITDA closures on the than entire part million X.X% X.X% Pharmacy loss million year Actual loss increased declined our of been reflect continuing $XX.X a results results segment Retail XXX the sale a allergy when and of in have billion impacted stores were that prior earned and same-store the million primarily adjusted if an adjusted operations. the segment, quarter $XXX a Revenues $X.X in these decreased loss share In or and sales in year. EBITDA EBITDA. the or $X.XX store piece would continuing to categories. decline and

rate basis gross percent last $XX.X were the first of exclusions first The costs. improvement as year-over-year were to the due at margin to of in SG&A the and by higher SG&A quarter profit Retail million $XX.X dollars basis worse while a a most $XX.X was was improvements revenues. as points of in quarter SG&A year’s better Pharmacy million was basis EBITDA cycle EBITDA first year. primarily XX segment more the compared gross revenues. year, by percent network drug stable Adjusted profit in impact rates of XX the year’s for this of Retail expenses gross quarter percent $XX.X was favorable pharmacy million last gross higher in reimbursement XX points Pharmacy better, prior points. X by quarter basis expect points margin Total quarter, as the and to Adjusted year’s segment revenues. as lower We of August a last increased than revenues percent million but than a and

The pharmacy charges of a from fee $XX.X Our somewhat TSA quarter income the increases rate was inclusion million. the adjusted leverage offset the forma EBITDA was Retail in quarter, TSA in litigation quarter or EBITDA SG&A SG&A current $X.X increase After first other inclusion of negative was year's EBITDA operating expense result pro retail year which million. improved EBITDA million from WBA, pharmacy last $XXX.X expenses. by $XX.X fees revenues reflects prior in from reduced adjusted million, segment WBA a and X.X% the than higher the adjusting of for sales. segment in by of of

$X.X membership. Medicare primarily an due Our X% increase D an million Part which increase of was revenues had segment $XX.X our in pharmacy to of billion services or

and had continued As call, last we Part to a this we our see enrollments D said earnings very successful on bid year. XXXX strong Medicare

a grow covered quarter of so of the had for good year the adjusted services enrollments remainder million. $XX.X adjusted last lives expect million also over commercial difficult add calendar covering the comparison. variance was million part, course Last the results EBITDA XXXX. season reflects in year was over current this We've in now and as Adjusted strong start $XX.X won. We lower EBITDA year's pharmacy the particularly The a operating the throughout XXX,XXX lives year-over-year for quarter to EBITDA lives throughout are $XX.X were commercial of our other with year's future we compression XXX,XXX of selling and first we current quarter, investments the year segment are consistent margin investments invest our strategy growth. impacted by business with These in operating and and as for for Envision. than

Our which shows segment CMS statement the million year reflects in cash of differences year. in use current including working operating cash the from receivable our quarter as in flow activities the capital $XX.X timing of in a by it Services which not funded for net prior Pharmacy was was primarily the build reinsurance

used investing to reinsurance continue working be We a $XX.X for in expect fiscal in $XX.X Net drag on cash of capital year versus million million was this activities to year. last XXXX. absence the quarter the

our quarter, stores X,XXX million operations, the base. wellness At almost the and $XX.X quarter, first file spent During XX continuing of XX% stores is end the we remodeled operated the buys. which of we on store within

of We our the continue performance wellness to with stores. pleased be

than non-wellness higher. our growth in sales these points same-store and frontend quarter, script XXX the stores was XX points first higher XXX the basis have approximately wellness that stores past months stores been in our basis remodeled in were For

our outlook. Turning to

guidance XXXX today. fiscal our confirming are We

XXXX. reflects the more our expectations to guidance continued reimbursement expected rate fiscal be environment albeit is Our in for stable than reimbursement pressure

continued and initiatives drive efficiencies. items initiatives We benefits exclusions sales also generic that include and of same-store of of second-half expected historical Key the drive are benefits year, and our in and grow the clinical our expect cycling program file script to sales remodel with purchasing buys. consistent other anticipated to operational the wellness experience planned the

expect As first second half continue the stronger than somewhat of be a to half. year the to result, we the

merger call. completes And up turn portion over John? to with my pending now our wrap not Additionally, to That of effect give presentation. our to does the Albertsons. John it guidance our I’ll back

Thanks Darren.

taking wellness+ quarter. we We've their strategy team job I'd thank to We've to the we successfully been all these footprint has an begin of for aggressive our new Aid our our our team Before retail really various like loyalty outstanding rewards. our components work of efforts. a to support questions, implemented the transitioned field and in executing during done structure implementing of Rite new and great program

We’re this, buys and do store to all we associates a working to our WBA completing file TSA we other wellness Albertsons. supporting and each pursue to opportunity we're additional the and great through combine And deliver as to also tremendous remodels we customers. with sold as our a are stores hard support of experience

prepared greatly remarks the us the really efforts. concludes make appreciate team has for That of – we Our to help call. the the our up most stepped and make most of opportunities their have we

open the phone We lines questions. your now will for Operator?

comes from question Rhyee first Your Cowen. Instructions] Charles [Operator from

open. Your line is

James Charles. on for

Can Albertsons engaged Just plan preferred you you Part D bids in more conversations Aid benefit and on plan received noted Rite that networks any those Rite have of being and The in you additional sponsors have in gone? better from XXXX. Aid sponsors with regarding purchasing of have how assumed bids is participation elaborate the any conversations just in costs by calendar combination been well if drug placed? any

do want or to to You start start you with with me want that that?

start I with. can

standalone say, a with we Rite have So, as first me - as our Aid. the let as we're payers, different conversations been just working

a point. this had combination conversations around haven't actually we at So,

that So, tell would up you for Part basically - we networks. I signed are we’ve today all D open Medicare

preferred say, is preferred right as to on networks of We networks get into we the our it one to continue work this priorities year.

having about conversations. prudent very been that. we've But those are consistently So, we

with far As contract the [indiscernible] through an have XXXX goes we our - purchasing, XXXX. know, option as have a May McKesson current March we as until but you

just we're the so is what at purchasing possible pricing can the best process beginning us best get. we to for And look that alternative get generic the to

would on what I to I add guess that. So, just

for be opportunities challenge. some that's team out the may and way But to XXXX. find timing here, the Kermit is going opportunity out played really find biggest in XXXX. our to on there the things We are So, a hard just probably and based working things

think the go And also the But conversations. couple those really conversations if for in XXXX I and so find can. want of in XXXX I table we think where to hopefully things we we'll a setting for it's

Envision due has position think of peers, two in vertical - Also changed these impact EnvisionRx’s had have larger do market on its deals selling an any of transactions season? the the you to

a None transactions I of don’t think mentioned this are of in so. done there. we out pipeline as those at vertical robust time. We do kind point have

implications in further the year. all line of terms don’t maybe So, how out. renew contracts And every down play they those the of

will So, I overtime. think, play whatever this does out

PBM marketplace, which will unique that unaffiliated vertical company. position all, fully marketplace, In we in that differentiated put its a once functioning, on a in also we business a it a dust is is with us with also settles the think terms fully of key be I have have there. that position those or model I in and here, happened. After transparent think, think capable the as payer commercial a the part of I we an insurance will the model integrations

see back pharmacy exclusion in last for like certain lift in anniversary should a And drag much level from we how an the networks XQ half? in this and result we one expect same should quarter a drag again, me. of with the The of

that plans will have that from. quarter is the we the said we of what at end those been excluded cycle Well, we’ve second

business anticipate to better. we back so, do the of be And our half

I see of second you’ll in half think the our fiscal us positive year. actually

specific what been means. we’ve of in think quantifying don’t that I But terms

look we ime if Yes, a trend, but is do sales. you And comp negative within quarter. see established little the bit a think do impact at it’s lessening you gradual guidance I the for range each overt

Your from Goldman question next Jones comes from Robert Sachs.

Your line is open.

the for Thanks questions.

on you of and of networks, So, actually these anything same-store are the up improvement can impact same-store share lap back might us just some you like Is following that call back as some of these of the as some guys about from? some D as excluded script participating D once be in networks into the year. exclusions you there in in Part you commentary, the there'll next these networks on growth are you expect Part sounds talked the with the far from you half level

there's I of going One we're to cycle. is, two Well, think kind things.

we're in air and the get still terms we're on when timing these one in these in not back have good, can currently access I into back for think that's up impact, at like that out XXXX. cycle are that to the least bit, the networks will that's We network, things to for cycle run XXXX So, be we it rate, not little couple of so far either, the regaining network our of of going half. but a we’ll negative a in

that that the therapy just some count, we kind was talked growth. keep at can wellness+ mandate this that the to can using might to gain preferreds if hope plan levers of additional is loss, way of so think got think and are opportunity a customers, some really plan I even of can that for script accelerate kind have between if think we access is service kind count in good or script plan our we all here file about do it levels access of medication steady, we're things about script I it. to grow those before customers, of other things kind grow great what from that we we So, it us to buys, That's script up through our some then count way to return Kermit count tangled that doing and attract the

if seems in potential Albertsons, kind in? curious of if on one you’re to look commercial proxy see pressure Envision, am certainly what, that. then more you’re where I would book, thinking in does - in fit so share to curious has the And there just week, what’s out then a I with that quick question you continuing it Envision, some this first, ones guess how combination one at more been maybe the behind could Envision in was market interest you am if just strategic. and ask just And the the willing of tactical, know I I about light future mentioned two like strategic particularly just asset, then if PBM so the you you I know,

think, of and there I some where the starting, on we the I margin So, feeling the side, pressure are on side commercial the think commercial we’re side on business.

way on, the feeling of bit a little we’re that. we think, I based XXXX, calendar So underwrote pressure from

side terms helps the Kermit season, we performed hopefully, the things season. kind really and That our strong earnings we’re get see that, bit shake Envision is mentioned, of it bid, on of for selling should, just I company. as we’ll XXXX to of D the of bode into how Darren also business, on to the commercial we California In we’re have to see, out. a Medicare both depending of quite the go start expectations on growth add need we We is in middle back in commercial versus pretty having now think a well think of selling just good the of of into really kind do XXXX business. excited here for some I well hope, how us terms the which Part should and for the a growth obviously trajectory and off

our In through we business modest to overhang outpacing is of key working units, the it, fastest it And part from normal of as merger terms retail be it’s expect to our part we even business. of our the of WBA, sort growth of growing fastest it it growing strategic way a really business. still, returned is part the get value after the today, of

we key into our competitive asset Envision pharmacy our bigger key that And it’s lives be can will help also lives the something And a think when stand-alone think the we help put and drive think strategic a us so a our have it’s more a that we that have have. stores on basis that network think at marketplace. will we we network strategic asset asset, company, look we’ll combined and we to that in it’s pharmacy very to I bigger

of of see - cornerstone off So, feed they the a really of how you and going each it other strategy forward. can kind is

question Evercore from next ISI. Muken Ross Your from comes

Your line open. is

Ross. with for million a the Is the This to think flow it in right the of SG&A I plays misunderstanding through TSA that question is EBITDA, or had TSA I only am that? fees. just $XX.X on Anderson P&L in the fees Elizabeth

They do SG&A through the line, run yes.

So that’s the only…

As an income line.

sort of into And price McKesson the reset obviously, the sustainability just you but look maybe on you can you XXXX at comment fiscal with on improvement of interim in generic also and sort of have how XXXX, – sort of the the throughout the period?

there’s world. kind mean always I the downs ups and in of purchasing generic

couple current terms drugs will see certainly a XXXX, the we’ll have discontinue some kind don’t of cause we savings. manufacturers there So, But see are cost as our or provide expectation of marketplace in I you where year that that is years our instances to little like per guide savings into those so generic pipeline backup right what kind losing in we kind se XXXX continued now. cost sometimes continue means the backup, yet bit. have modest XXXX purchasing. a do in know to items, if exclusivity There which new drug of some for in we on view with in the we if solid generics, last of of in-line our on you know that we is certain should realign portfolio cost go can

excited earlier they more running most what terms with RediClinic, attractive terms terms of you you with in can and offering And least to conversations about of guys? plans your of what your of working then bit be sort the in most found a in or lastly, you, they’re talk about you’re mentioned little health

one low you cost is a that’s Well, know I think, we thing just solution.

of them know them. you great we communities is one further know You to serve, for their clinics healthcare know, a also allows network It for in you our to but I’m… the answer extend bring someone into

And extends brand. our

So brand there. it’s another have out place to their

I Darren into of is about that rooms, a would is keep people emergency urgent this of retail just add they that making setting. to cost you out out lower John, care sure

extending looking we in lower addition to their a and they’re locations very think that’s great costs, setting, cost manage to. for in you to locations, members to have be much attracts their of to more locations, for having retail members convenient their So, their part brand go location know that right thing I

next Carla JPMorgan. comes from from Our Casella question

Your line is open.

of couple questions. cash a have flow type debt I

you forma? purchase you that draw your First where the rest of to you XX all the availability that call $X.X at point, say, the on did if $XXX end pro and the full billion was revolver bonds you million the that mentioned of after stood a after revolver quarter so

the we that revolver did We the kind was, think did to say redemption. make use do you what revolver math... don’t I if of the but

Yes, is is off the billion that net X.XX%. after liquidity $X.X of basically, of paid we -

Okay, great.

that’s So in second quarter.

you do so the basis so of revolving Yes, in math kind $X.X more, do can billion, can you the there. kind

I’m timing new the if capital payables. working working were that issues little of we in a accounts - and receivable timing mix use of was a issues for there’s had then, business. adjusting expected And your or anything Any capital, or it’s the was in wondering more just than if

receivable then, is, I The really had isn’t of builds the a way Some highlighted and but also that repaid year for timing, from build some that which the reinsurance new. anything over receivable following portion was time of used works historically it We've CMS products of the CMS. that that.

is through reinsurance have we year. reinsurance that products do and So place those not this some of funded in

The So the bit a larger build little is all. that’s just net.

new or question had And when seasonality we’re or some The normalizing there is on bit then, you one last a to run we start lower a business. Services as timing August wondering, normalize than talking gross and or Pharmacy that does that the I’m margin, rate? well, year in

tight that I going versus gross think thinking to is think guidance year. that year, we’ve for our done year some my underwriting on this guess in little is now the for for based reflects year margin the Well, did we're on a this is the I right be next that. sitting where We

time have for one We question. more

ABC. question comes George from from last Your Hill

line is Your open.

and we year? having your calendar on pressure the calendar ask, comments ABC's reimbursement stabilization 'XX? do just thinking might trying on I'm there about your is, downward might interpret guess, RBC, are kind run fiscal going what calendar payer on we in Or just 'XX how should to of pricing runs your I'm about your And forward-looking stabilized ask any a But that through of telegraphing be talk you of guys Wishful I part. guys. about pressure. just That's are I because 'XX? Kermit, fiscal beyond statement. your thinking wanted contracts think about comments beginning the to That be the reimbursement to 'XX the to

points of at term will the Well, year. contract different

So, we will getting extend that to quarters. I we're this, the as last others and We drive tell a number rates through in over XXXX. will pressure calendar but of you our contracts to continue these where key are is we What anticipate volume. calendar into beyond stabilized XXXX go to will XXXX, some try rate of do couple to

rates look as all So, various we our managing our contracts. we're of at

Are what us Envision, D just that guess, maybe are then you're And I with you're guys guess, Med at the last at success where success more I because the Are pretty a I in be chooser up in one would guys employer in success Just can any the follow-up you good is, comments having you Med D on having you helpful. you guys space? success, guess, seeing space? having clip. lives remind picking subsegments

our Primarily area. it’s user growth space, that’s

us joining forward you this to for with everybody thank to want catching and We evening up soon. Okay. look

Thanks everybody.

you. Thank

conference today's call. concludes This

disconnect. now may You