New Rite Aid (RADCQ) 24 Jun 212022 Q1 Earnings call transcript

Good day. Thank you for standing by, and welcome to Rite Aid Corporation Fiscal Year 2022 Quarter One Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. you. Thank Instructions] [Operator like Mr. the now your over speaker today, to would conference hand to I Kruse. Trent please Sir, ahead. go

conference XXXX right. All Thank quarter fiscal welcome you, morning, earnings first good everyone. Ludie, We to you call. and our

On the are Jim and Peters this Schroeder. Heyward Donigan, Matt with call me morning

related at today. As are These in slides provided we investors.riteaid.com. we material on are release, mentioned the will website slides we providing our our to be discussing

meant reference are facilitate While to the the not slides, of management company's your call. be to the slides will review directly be speaking these used document to results and as a following

that in the documents Heyward? non-GAAP described and Before includes that release results the actual measures, differ. to furnish our like with Also, certain measure, of to are SEC. release GAAP can I'd These we over release The in measures These using to that, the Heyward. and uncertainties recent will to along to are be XA me in with turn XX-K Item risks statements. press accompanying you our risks and of we forward-looking report our statements start, most context our that described let the annual certain uncertainties slides. reconciliation definition slides. call in non-GAAP forward-looking file are press and related the Form we other and or the in And presented cause today's the conference in and call remind certain or of

our on I'm extraordinary continued our quarter and results we morning, efforts nation delivered this COVID-XX. our everyone. Trent, our and with against good Thanks, to vaccinate pleased guidance as

our say administered our proud to dedication expectation COVID the X.X quarter. result teams, million a we of the in vaccines of and As nearly I'm exceeded

over their shot the XX% last evolving goal X, vaccines vaccine quarter to by the our As nation of we demonstrate of the X of total, In serve. we began and we the first continue year. of we national address of throughout now in getting adapt communities late administering great flexibility since million support provided have today, the needs July to

now individuals over. and we who vaccinating are example, For are XX

went began also and possible. equity. vaccines know And the health, like and play identify critical health businesses, them, local vaccine need reached take where role education, into are action. as of getting ensure COVID a out we accommodating vaccines, We of with organization, we they walk-ins need We in the convenient COVID communities, delivering departments helping faith-based accessible to have response and to make quick partners and jurisdictional to we and as In to community partnering a for getting people areas people who to are. to order our schools real those

clearly health some partnerships of incredible to communities for through the who nation, most, world pharmacists Elixir all administered a Through these our of normal all been plan want field of of conducted pandemic. efforts we their and all continue clinics the vaccine This our to us all quarter our phase our needed almost for take million the employer associates, possible we of together the to efforts recognize health X the conduct when also not heroic to return delivered to and and across time have I around quarter. vaccines this care rest sense began state. where would the during X,XXX we work nearly COVID of the of off-site without We the of vaccine customers. clinics

even vaccines. scripts of nearly our business. we grew see results through several X% improved COVID excluding our So we as the first momentum in quarter, to moved and started Acute areas

it's unclear fully medication recovered certain to levels. are not levels, will categories. pre-pandemic to we have recovered still prep Although skin when we And recover acute gastrointestinal and as in categories normalized such most

So as week. officially reopened example, an California fully last just

people opening we're think systems still about that's going and uncertain. getting doctors of the why you when to health back people So an prescriptions, we and of example challenges and face some

also in categories back are for seasonal, saw front-end customers signs in which business our were moving important encouraging forward. as We us and like buying cosmetics both categories

customers increase we once We progressed stand ready that and to resume habits. results. key and pivot also make team this, inventory bolstering delivered we've saw during to improved key our stores, It been office while exciting Easter and in our like only drove our preparing not in and in chain enhance functions and to ready was strong last transformation, versus when work sales their also are to normal company back demand the shopping strategic continuing turn integrate and product efforts see but our Day, pandemic, sales go-to-market customers the better holidays we strategy. Elixir, investments to to withstand At our quarter our Mother's sell-through margin, for supply to more our year

shortly, of still discuss critical work us will I to we future ahead drive and Elixir As transform have success.

first revenue for at and improved note $X.X very to I top range. quarter $XXX As that results by grew inventory to would we adjusted the generated EBITDA guidance of is million, best years. the which turns quarter we of in overall, we've X% X.X% the seen And our our result billion, was many times, X

the enhance leverage us. is continues chain-wide digital of our all start, the together well meeting us execute are our the remainder a ensure with outperforming allowing We notes, we enhanced to been on we experience initial to strategy on of commerce expectations. our is experience the DoorDash, pharmacies, Throughout pandemic, during with Dialog. our financial make of we've needs our Not quarter network and unified continued top down of and significant Elevating guidance, retail Elixir, to as did deliver and partnership strategy. as the off RxEvolution bring to priority be we fast our to deliver our continue paid quarter to customers. a Health also also progress flexibility launch to for we only we our and already nimble which We on our XXXX

to scheduling for additional vaccine customers in COVID services and that and provide testing developed we our clinical schedule leveraged experience vaccines be tool will a stores. beyond they as COVID seamless example, launched a For

We also XX% now over our X,XXX stores exterior with program the refresh complete. or on progressed of

In as progresses. Jim Virginia learning which on XX us addition, opened, this to three This Boise, quarter, what we brings the new Virginia opened seven we're share in stores, Idaho, in seeing market. stores up it important work in more opened flagship and will four this flagship and of and Beach,

customers to shelves improve know as continue our target we're fresh whole our across like seeing entire hard mix. customer to We are products merchandising offerings Looking and footprint, exciting the product aligned organic health to our attributes our in our and and values focus. stock working better-for-you, product we green,

communities. In to addition, continuing our health whole pharmacists our are support to provide

customers one, tip that allowed critical The processes, on Aid alternative experience as Store? to materials expected teams the thriving ESG business; chain, a from clear illustrates progress Rite these of XX%, More the be made our also customer for in out has around remedies. sold. planet; CEO focused our a continue These starts diverting same third diverse overall great as year to at thriving talented leading traditional eliminate enjoyed. landfills, come. or row, with second serving the three, And with progress are: number and thriving across work to to always progress community. Aid. a the we new team welcome sustainability their four sustainability to of the Rite workplace; we've planned important topic. summer retailer to has Some with our store us commitment the female stores as report to indicators and today, than including of examples Bartell's this complete XX,XXX And more the consultations Aid key systems meaningful reduce converted Minding commitment deliver each and result top, chemicals and pillars of of to continues for brand our initiatives and Aid, annual and Bartell recyclable overall Who's the a Maintaining Board card this include a recognized one Rite products We've and four, Bartell's incredibly traditional was plan. integration the to two, thriving that in at made loyal tons report our and against drug the DEI integration the And Rite as diversity efforts at lays we framework from published service corporate pillars. toxic sheets approximately our four leadership half to as pillars later

Elixir. let me say words few about a Now,

understand better on improvement. Elixir mentioned both our I basis. opportunities Rite I've the been last overseeing and time As in spoke, I'm digging to and we a day-to-day strengths for now Aid

expect will to the term, clear Elixir talented time work And moving encouraged While as before, at mentioned valuable clients opportunity ourselves still regional have that deliver Elixir for our growth the a we order the mid-market We're and with I'm our we provides highly of in take We growth. full target achieve long have can our for employers. to urgency to plans Elixir. know at we great position results to do offering best achieve we it I've to by to potential. profitable health much and and team over believe

in rebate efficiencies of to offering operational provide and order of to In leveraging platform to teams, Elixir, benefits clients. in capabilities order to maximizing our the maximize clinical for that overall technology win our our costs improve provide and value to will to them members experience, compete Dialog Elixir, member improve outcomes and Rite a sales to help the integrated expanding Aid clients will offering, underwriting investments drive We health will in we reduce by Health and care and to including health make these their their enable our and and value common thrive. better integrated markets moving

offerings capabilities. and We enhancing are our operational also product

to we solutions our all ensure Aid cost all and opportunities to of clients new and fact, Aid capability on Rite since we business business, engagement, tailored Aid our we refining markets focus integrated Rite health Rite reduction flexibility on new strategies networks solutions, our for and maximum are relevant greatest significant markets We're our continuing And putting forward powered customer lines savings, go-to-market health oriented clinical anchored Dialog. members. real and their in impact Health value In consumer is by improved this have are we can and limited analytic deliver formulary and where with as outcomes. in prioritizing

us enable still the season selling and the on robust in terms it's investments fair offerings In opportunities than last and current focus next year, win in but as increase we're not as We enhancing presenting making of more anticipate our selling product now opportunities will our to an additional our share. pre-COVID XXXX. season, XXXX it's year's and

Now, it to to make a over Jim, closing before few I want passing comments.

the and focus of cash rapidly are debt The and we on generating changing is our And we achieve results financial delivering the at to our strong free pandemic, and As what by continue working our the adapt continue health through time, needs pace same of into And remain done, real to transforming dynamic, we performance. to recovery work emerging the teams reducing objectives to our prepare clear operational ratio. shareholders. improving excellence will flow, from engagement to deliver future care to consumer customers. the value, leverage creating when needed and on and it of very our the today improve together improving all, be our for needs

the care costs personalized focus stronger will every connector it engagement in for validates drive turn and that thrive Rite Jim life. lower Our helping And as health better additional now our on the services belief trusted our care Aid that I'll Retail Segment. through help for Jim? over overall coordination, achieve on progress health comments customers Pharmacy some customers our whole to day

broader continuing around In you, environment, to vaccine our and role quarter. Thank while be the ecosystem. We and what healthcare executed in a strong exciting Rite pharmacists prove to can administration, the continues COVID grew in dynamic well first delivered play invaluable results business Aid Heyward. our

moving the and past over impact The pharmacy day this swiftly as Our have connector. serve have on highlighted the year efforts communities and we profound teams care importance pharmacies the acting every trusted are team's decisively. the of

also continue business together customers, our We while will our to to operationally. work serve strengthening

LEAN LEAN already of has and engage has and an continuous our pharmacists positively our consultations. meaningfully customers weapon environment capital of productivity improvement. the implementation a our ongoing key of us to helping that's availability working and foster impacted Our become methodology

to have of pharmacists year conviction the of As healthcare Aid. come is Rite in broadly. to pharmacists critical the by Program the be and the have proven future believe to well what over we our the in system life before even the the our has on COVID. risen role that nation's that our in a provide and defeat pharmacists to believed the partnership access this of nation Retail realized glue was Pharmacy This well as and with past pharmacists their health. can more of through school, vaccinating were future connects the we support outcomes success indispensable these with unprecedented Federal play knew of clearly COVID time. firmly everyday protecting stage help in front services individuals And as to the This on are effort serve articulated scope their pandemic lines communities at was, as With elevated we and and CDC as education, during teams role, national this played an care individuals serve delivered. key of store to places pharmacists vaccines, an We the the this the worship champion whole elevated for role truly pharmacists and and challenging practice throughout believe that expand bodes and for value

and to increasing continue menu in our will of and services remedies a keep the doctors' wider spectrum of immunizations, that diagnostics between We customers visits. emphasize thriving

COVID the moment tests another update last through take in testing test quarter share enhanced Now an slant. brings we a began digital-first to which around administered that's let our which first included during vaccinations. total market marketing quarter, performance to administered latest We the testing them in XXX,XXX the approach, year. nearly provide me - XXX,XXX X.X grew first million, nimble a we Notably, since and offering

compelling ways consumers with we regional found As around efforts, influencers part delivered and to engage in local success COVID traditional ROI with These of to engaging efforts new vaccines. our marketing help and channels. we continue digital testing to messaging amplify and beyond our explore

we in On the X.X nearly vaccine front, vaccines administered million COVID quarter. mentioned, first as Heyward the

stand inspiring. quarter, the of share strong grit doses, second XX% administering as scheduling. work very our also our vaccinations we in focused on a we these market digital seen are saw consumer-focused has share. general and up During short exceeding to been of demonstrates teams compliance over teams the The to in pharmacy which vaccines approach We've our of hustle nothing

are much vaccine and vaccines, testing weekly XX continue provide we a the market months to anticipate we and seeing the deceleration ahead than administer and expected the what we COVID While basis. first quarter. And on now customers delivered and in testing in do will Pfizer to lower up, providers be our vaccine numbers the

will vaccines as Matt can individuals and any our emerge, we younger guidance. approved call, while benefit latest be there in the in discuss shots more not are booster for later are reacceleration As assuming potential

scripts at look COVID X%. excluding we we grow saw pharmacy as Now our results acute vaccines, nearly

particularly with growth and approximately In scripts cardiovascular grew addition, X% psychotherapeutics. maintenance strong in

a higher with health customers or and During care, lower allow plans provide to MTM These a us XX% successfully level Medication completed our help we of XX,XXX overall over the nearly achieve at rate. better Management efforts Therapy costs. quarter, outcomes success

pain in management pharmacists recent touch among accessible neighborhood and on for Our topics, to training most by are customers communities on months our and including the and engage are this alternative clinical focused pharmacists to health. their taking on our trusted remedies most key steps women's conducting we further points courses

unlock full are to efforts our We truly our pharmacists. excited the continue to of potential

make Beyond points. across and consumer progress pharmacists, continue experience of digital on engaging our we physical touch creating the a more and work incredible our to meaningful enduring

to bringing open. flagship XX As this new total stores we stores pilot earlier, Heyward mentioned us opened quarter, seven

true the learned compared investment viewed demographics, total that that accommodate evolving aligning serve. many in the said, customers. margins in and value approach which translates like identifying we reestablished can improved That example, and not our much position. know one missed changes strong and single store provide increase among communities demand our out our components but physical rebranded physical we've beer we're categories of resonates impact in requires drive and market surgical there's to previous These of curated related to learning offerings by the we a customers prototype also very improve health made, One concepts merchandise various different translated regions. positive a unique what assortment. X% across learn consumer exist across and and place. approach are the a we indications solution remodels. formats, see the also changes our set support. over markets and that We're and meet their condition. allow returns also so geographies to where our of on flat elevated stores quickly, very flagship continue and related fully and increase even three us stores' only months, open are approach We our service to an Early our have our the test our future over and new beauty look localization to changes a we and and beauty to stores and lower we learning category In other through sales beer, stores' opportunities positively services, while that seeing markets the each assessing reduced what the offerings for customer We're of that have each test their merchandise, overall of the pursuing pivoted we well and and to to into We how experience. flagship We not costs put new elements doesn't well our and one-size-fits-all to truly engineer over merchandise. what in now are stores reaction been six and to feel we're that and to differences We're XX% not and

our and will key and analytical will utilizing approach by and of investment, type market-by-market fleet to of markets, of timing methodological upgrade We guide on prioritizing basis. store-by-store level investment a continue the that investment

remerchandise and our seeing we our and is categories. Now at that we products, in all nearly by weak continued was and continue strength expanded and life look multi-cultural and comparison, respiratory On of X% performance vitamins, cosmetics, as categories, upper initiative the inventory decor, category the color fresh and our our from This our that enhancing cough, in we garden in cold eliminate season. reduce expanding stack first-aid. to overall are while we pressure clear are coming despite X,XXX flu reduce within plus CBD, categories a to locations, two-year led enhanced right-size to foods,

As remerchandising a Heyward is our turns but year. improved buying that mentioned. recent by number were in And a efforts, the we result inventory to last was that that our win, improvement of not X times, of real the in only fact cycling the we light best X% as X% from especially years, panic

gain In consumer. share on and versus terms we most market basis share, this our dollars share target market serve. two-year both in years markets the gain two of with in to both stack year continue to importantly, growth front-end we ago units we perhaps and a continue And

oral and In As to with at the a we standards, brands, portfolio architecture, household launched brands, beverage, chemicals. brand brand we first-aid, new look progress evolution new of quarter, quality own care first and are own making new over brands package own new across new cosmetics, XX design. we the our items reinvent whole our

approximately we fiscal new expect launch reminder, items XXX brand XXXX. a own As to in

design baby. and pet improvements refreshed of September. our packaging own these in on brand brand brand, solution be We new revealing and in have a We'll Pawtown, begun executing

critical also assortment, component us deliver brands - while brands a to our own to profitability. Our merchandising positioning updated improved our remain

the mortar, and initiatives Rite consumer-focused all experience Aid enhance to our deliver customers. teams brick for digital Beyond continue to

we fourth in saw we our we sales, Within brand weekly almost digital on run most than for orders efforts our marketplace delivery continued businesses. the year. average and double XX% well growth profitability delivery the own last quarter the gains. our of more marketplace and compared business, rate profitable our which advance bodes we marketplace increase digital per our to of productive store, As our delivered XXX% In channels, business, an in

fulfillment and where us Our investment meet both across services in and scheduling, they us future enabling for pharmacy retail growth by our customers are. positions to pickup

are We we rest continued halo expect commitment have the overall we experience and RxEvolution. consumer to our business, across the product in make our customers, sizes, energy, continued passion, first our new enhancing quarter and these across of teams. investments attracting and results Thanks increasing our satisfaction driving pleased chain. to improving basket and effect availability, bigger a In sales with closing, progress toward the our the of to

build that and today we and are gain market in on can to We our deliver continue future. relevance share, strategy, both confident the

growth, focused Our remain to us and revitalizing propelling we work is accelerating life. experience bringing for our our the customers on forward our as truly mission

through engagement will life. Rite that, lower connector, over With As customers every comments that on personalized stronger health whole to for coordination, the trusted Aid some help care for services day care better I'll our and achieve it drive costs our Matt turn financial performance. Matt? health now

Thank, good everyone. morning, Jim, and

as we financial While our are but pleased continue to the we in quarter many only period. other provide challenges to the not first with accomplished emerge results, the from milestones pandemic, began we first quarter

quarter, of that our XXXX. matures our secured at only senior instrument as debt we before end the As of leaving have July credit XXXX notes, completed facility paying the down our

senior we next within the months. XX this with to mature We the secured credit in expect Although December XXXX, first facility address maturity does ended billion $X.X until quarter liquidity. the not

us we to taken strong ample gives our to Our strategic and flexibility and steps liquidity on extend maturities initiatives. execute have runway

Pharmacy or were the results. million Retail Segment. to by our the by at from the offset partially quarter, Turning decline growth prior Revenues driven first Pharmacy at year's X.X% Segment, quarterly Services up $XXX

per or program income a $X year's lower by in million expense. quarter. income net in offset million or for litigation EBITDA, driven partially the charges year net our $XX.X an adjusted from LIFO loss in million current share impairment versus per last intangible tax per million year restructuring-related operations share of share settlements $XX.X to First net These year's increase $X.XX asset $X.XX the adjusted benefited an $XXX $XX XX% per quarter and the of million, increase benefits results share. $XX.X administration the over million higher prior the related operations primary result or from first were in year net was continuing driver quarter COVID quarter, from Current markdown million. continuing prior by $X.XX to costs, was first optimization was credit compared increase prior expense was merchandise quarter and first loss Adjusted loss benefit lower for vaccinations. or or of of of the the an of $X.XX quarter. the increase year's the $XXX prior EBITDA Adjusted in from The an quarter,

up business the Now Pharmacy increased our drivers X.X% last $X.X key due of of same-store Segment billion, Retail of with increase and same-store segments. sales or Pharmacy in operating an revenue million $XXX for to quarter Drugs. the over higher vaccines let's was of X.X% was year's Retail the first prescription Bartell acquisition which quarter, XX.X%. count discuss results impact the COVID

the Excluding maintenance same-store vaccines, same-store while scripts X%. COVID basis, of impact a X% on acute increased prescriptions increased

a work acute in acute for of continued This results down end are to impact encouraging, prior flu cold year's and decline some room The future. Cosmetic the and front cough, as the was procedures. front-end sales point the of cough, at almost scripts decreased in growth have XX%. same-store and due but the year, sales XXXX is While gains. cycling by COVID-related sales products COVID levels driven cigarettes volumes products soft basis, and shows seasonal in reach we declined the and same-store improved Front-end last excluding on we cold to over increase XX% XX.X%. elective script two-year on flu-related sales, tobacco

basis was adjusted Retail to a or pharmacy the increase Segment was in decline the Retail first but X.X% revenues $XX.X year's million EBITDA higher, XX year's profit first adjusted And year's XX front-end growth. revenues. of our Pharmacy SG&A was adjusted in basis but revenue for of last quarter, from gross quarter. higher, last was a compared of inclusion to quarter the $XX.X points as SG&A lower EBITDA EBITDA compared in The Segment, cost percentage adjusted was offset the last now COVID in of SG&A increased current by dollars Pharmacy first Pharmacy quarter. given Elixir. X.X% by driven better year than quarter Bartell $XX EBITDA Services Segment million or million to primarily gross The $XX expense revenues million the I'll of First shift quarter SG&A profit. due increase vaccines, to points

the revenues. $XX.X of our management revenues, For or sheet. and last due of the or first decrease our of quarter first million D Part quarter, reduction network Elixir was year's to turn planned I'll $XXX cash $XX and saw adjusted good in essentially billion, to were in a large balance membership to $X.X quarter revenues. Medicare offset by million EBITDA X.X% X.X% adjusted flat client. X.X% decline first to our now million of EBITDA Improvements revenues in flows discount card and loss a commercial Elixir's or business

a million accounts million $XXX receivable shows use accrued the Our of $XX.X year. were activities receivable by anticipated related our management cash flow build payable last liabilities. operating to of cash accounts in Increases and quarter statement source offset to for changes from in compared in good due inventory CMS a and the of timing

sale total reduction continued generate We inventory transactions activities a a that few in generated Cash working store leaseback to completed leaseback in from million of the $X.X - quarter. the $XX.X million used fiscal expect proceeds was quarter. for capital additional in XXXX initiatives. benefit investing We

Our approximately net balance quarter. was $X.X debt fiscal billion of at end our the

for guidance Now XXXX. let's fiscal turn to

first year sales children be the key counter better levels. Substantially for rest to of the the assumptions. Acute following or the below impact includes over of prior from are vaccines range benefits reduced guidance XX. than expected under year, additional but front-end assumptions for and for and Our quarter to vaccinations no scripts boosters COVID compared the historical

Elixir Continued EBITDA will medical D Medicare investing more sales growth member partially and large of continued reimbursement lives impacted by D Elixir pressure from the planned operating margin improve Part drive technology satisfaction pressure reduction will ratio in in drive believe and due deliver rate network revenue. wages a management, improved And retail increases the due which a client better expected is is to on pressure Elixir in to our to tied experience. and we Medicare investments to increases an in platform, lead efficient Retail business. good by to that a The commercial increase spend and in to Pharmacy will future company's offset loss revenue and client. Part the business, SG&A personnel to develop in and be loss customer

quarter, encouraged in are business COVID predict. of upcoming items in markets immunizations, cough, flu the the and recovery severity season first such the to we impacts covenant and expansion difficult the of continued are the cold as the operate but which in with our of We on

we move As monitor be year, to and these is revenues specifics. digital initiatives and $X.X variables the approximately Capital expected by billion be our a EBITDA and let between a and $XXX focus me be update be store are million. $XXX Segment Total of be with fiscal that, $XXX expected base, to investments and the expected purchases, $XX.X impact million $XXX and is Pharmacy between $XX.X loss With range continue into and guidance expected billion between throughout Adjusted of are followed Elixir. on million XXXX Services billion technology to Net to other billion. loss the to of and a will in million between needed. $X as in revenues we jump to expenditures $XXX million. with guidance expected

reductions. generate million inventory of million Additionally, interest working projected to and benefit $XXX is to be from expect further capital expense a approximately $XXX we

ratio the at something This in be times phone our upcoming the around line a end are 'XX leverage please the to Ludie, We X of years. to targeting prepared questions. times, ratio expect and leverage remarks. the X open for in area our fiscal completes

question And George Bank. Instructions] comes line the Deutsche of Hill of from [Operator our first

line Your open. is

could Matt, year, the lump for as the guys, the that it Good a morning, And commentary towards as you right or any of cadence to together. your as for Matt. give I couple big taking sorry, moving second about might Heyward that I'll of to guess, out got relates commentary, us fiscal end guess, questions. here I thanks you relates have the I'm and balance call as the actually the I And pieces first, guidance? we it think I dropped anything Matt, and

If call the that vaccine you out earnings contribution the of Thank the you. like quarter, to anything of helpful? super specific would kind could financial be explicitly impact in

ahead. go Matt, Yes,

George. Sure, Thanks.

the question expenses X.X the million that in said impact vaccination the second we numbers. administered did in benefit strip if as out $XX know, it quarter. take, you you somewhere the does the the Your is before, vaccinations - vaccines from incremental first, we on per And

business went but As in over the flu, and happen far key quickly the to come of going weigh potentially them as guidance, cold with back that cough, to to points to guidance if kind the wide acute in pretty think expect and the variables script, range. all how throughout year. levels I are the as I on move at the I scripts we or what's or of And think we things pre-pandemic

or most medical in summer boosters, is benefit loss a always quarter, did on the And would vaccine is vaccine I the of just variable about pressures in about from from starting certainly sales in fact a and is so softest there QX quarter, And then while activity we flu and I to D year. revenues immunizations talked We then think very front QX Jim And other expansion that numbers to loaded. of much flu is front-end far ratio seen our cold further be really said, get activity the Elixir impact we benefit. then of QX. there of we front-end that element we've you the given some in the Med without limited probably cough, terms expect for QX. but the some a that's the talk another of the get of in seasonal the vaccine more QX. on recognize And seasonal end, business. in think benefit As we populations basically the some quarters,

QX I quarter And year cadence so to the of be a would expect probably softest standpoint. from the

started the guidance get Like literally that. you to dropped section. I said, appreciate out into I as voice your

to appreciate Sorry I that. to go the color. Thanks, back guys.

Thank you.

of Gill line our question next Lisa of from comes And the JPMorgan.

open. Your line is

Thanks very much.

the on first, Matt, - vaccine. Just to around I just up comments your follow just wanted

XX.X to like take you right maybe in that $XXX guidance quarter. about $XXX you seen shot, in your for about you've think So million year in million, a roughly into $XX this Can you EBITDA the what if roughly XXXX. underlying did million I we think $XXX talk that it's million the of have just rest the And the going trends? as

business, I talked not you've the and expecting you've size because business next a of this number you just a to can talk that as Heyward, really been on large time do delivered factors hoped? growth on you Aid and it's Elixir your you and really the to had - and over? about make the then And hasn't work taken just to saw just in understand, know I in needed the scale first Elixir of going Do year. you business that like get long scale secondly, commitment like that So Rite size what's really talked quarter? we it want a it client, underlying what about where you the loss maybe into what feels think much about have

with go the me start let Yes, then vaccine. let and I'll Matt that, back - to to

been lot started. then a is doubt a long has before time, for there even, Aid done, work Elixir Rite is And watch, Rite that lot would sooner. probably and been my under even should for around have faster a of no I Aid years lot say pre a I So, few and with there a quite

up a Rite the issue. we mode the but have of we have integrating do We So definitely only Elixir. just we both assets. at integrating absolutely catch the Not not size in all the scale also terms within with have is scale, and in Aid, are size that and

We our do have system significant opportunities adjudication our platform, to industry, own of order all We some a our we our with we capabilities lot rebate competitive improve PBM do pharmacy, and of need opportunities own of looking because become efficiencies specialty very our regard. a we we do more our in focused the have and our in - really that pharmacy, are to state-of-the-art our We still do own have own the have have so we business, revisiting paper are are managing that and we do mail and health at business, complicated government operation of well experience. clients, but business, own that clinical of aggregators, lot experience has in own business, plan Laker employer is rebates, and experience we exchange a as significant significant as amount own our commercial very we exceptions. which scale a very

issue. size So and isn't our scale

developing opportunities That's is go-to-market our all are sure talent. that are that issue that strategy, state-of-the-art, Our underway we making that have, clinical, we us for invest finalizing sure right coordinators. and solutions effort significant assets of big leverage the integrated a in take increase in proposal fabulous terms people right now, and it's the talent our in investment we market underwriters of to sales advantage a the just making our number have of

exciting up labor, employers. health around around really plan, So mid-market around ramping very go-to-market our strategies in

Stephanie excellent Tom - can Wilson, also really making and these into service, And great our ramping up our business sales new our ramping working it's under now, meantime, I market that strategic as teams, loving up right and sure about improving account with we business, up with our with teams, both me in been, our - and providing talented Susan Thomas, meet ramping absolutely employer opportunity. of Warburton I'm under ramp the under fast our management this on leadership dig we're for it's team the Hemmerling. Colette up with how our So to focused leadership

really, products in Rite integrated using then good solution. Dialog driving rebates and the and getting Rite limited network anchor analytic for really our solutions markets Aid getting - So, Aid and Health

- strong I it's work. all it. very degree, we'll to so start And benefits to turn to, the this back which think it of is So the now, just middle and which really is some the It plan sales on health the I'm time. in bullish see see of really over of then course taking the heading pipeline, the we're Matt, and cycle, employer I'll - And on is 'XX. right into vaccines. cycle,

Yes, referenced script. strip you see a was quarter. of I your what Lisa, in the the would kind vaccine tell impact know, of things that, in I underlying in would point you out I the first I think business we couple the to numbers question you

are acute two-year down and still a XX%. of Although scripts is basis huge flu cough, a cold quarter-over-quarter, front-end it's and know, still our XX%, of then for you on year-over-year, down not part stack sales,

I signs trends the COVID you I know, kind matter the acute trends, would back when the benefit the some is, so of that the of in is you of scripts and recovery, are, our back we're fact is, And that especially - peel seeing think what still some category. what COVID there business peel seeing we're kind in you for call, related great vaccines of

a as tell we going is guidance. year's we're cautious we're got being and kind And in think you be, think that's to line so can't sight going time, we of that how clear back, think but come there about and the - to think how about I I I we've activity when that exactly think is of I

our next line from of the And comes Glen Guggenheim. Santangelo question of

Your line is open.

I want sort a Thanks on little for the follow-up of just to guidance taking question. my bit.

Could the sort rate out you're sense You much higher of so little incurring put some inflation. a year, continued of that we for those Matt, how incremental maybe context and guidance? comments maybe, the gave give around this bit costs can for flush within impact in us us pressure, wage you a

of kind we're not dollar specific points Glen, giving those. around Yes,

give can I some just think color you commentary. I

it's of our a on business. pressure think, rate standpoint, part I always

right And point some as kind certainly the is a I over is our and we've people a business, our done think in that always that adjustments that we're keys retail our that and have pretty rate talent - business. work are our with make - are or kind consistent at Andre we of Jim last but conditions, a in think what the success really job seen the and and in cost I looking making there at to to but in we that's come sure reimbursement got trucking partially to starting the mass then stores. of part on recognition we great is headwind the does our long-term cost. business our side, store And to wage we've probably market labor, right pressure in of in focusing had two, on year a against partially a both

need the be that customer right I that there think so to we dollars some spent in results getting is incremental the sure to definitely are And make experience.

Yes.

that's product below minimum be we're sell. training to that investment going and associates, from - in obviously are believe it's require think going sales growth front-end. experience, the wage. transformation we what to I'll service we that's titles want some is them associates on And asking to the folks off This our that it, And folks customer our them from for to we cashiers we're cases It's have going already is the markets doing pay real, growth We it's customer important. than and really these front cashiers is the salespeople. service - more and and the what - changed order - and organic seen some and these where now being and to see although is associates. are to one actually We're we in and we're than in in of more to paying I organic giddy-up in to sales. in end asking call

ways that plans than we that in and of I just way, demonstrating that in life, partners and how health our have as front. our of is the value question more rate. show number said we're PBMs, that creating partners. with we to have. reminder, value a different the fact new to mean We've competitors But very not a on I I'm we're far a contracts reimbursement begun Sorry, really collaborative than PBM your think, we with our are business, a ever are in side at embracing was of our it's that real many on with nothing plan real that getting health on is signed

negotiation rate value more we're from a have So our creation a of philosophy really to much a away philosophy partners. with migrated transactional

profitability I But, about and Segment earn big EBITDA maybe you put perspective, and that perspective, from and $XX appreciate $XX those picture vaccine I mean, the comments. Pharmacy commentary was you million Heyward, in a all Retail million if in vaccine.

just kind modestly you vaccine. you that segment, ex script and in to profitable your were the of would imply X% retail growth So X% organic had

looking get free the It - times Matt's And but seems that's to better, flow. to that that company interest almost the with times, we're your you I so down $XXX I could leverage million on hoping math can of that's up in the four follow just - the sort the coming to that six I cash is like in years, $X of million free leverage of with to needed at CapEx comments, is generating in to use at is sustainable see cash billion have in flow requirements, in sitting bring away he level. struggling taking kind hope And to far how where kind think what think from of we're expense requirements. totality $XXX way a up

a finally it to And be. us you overall feels in so understand to in improvement to Elixir, I'm lot just of trying things get happen to it improvement want to an of the picture to where really scripts, get path is an there. big Is need kind the it just like

was that a long-winded question. of kind Sorry,

in the ultimate this Yes. with of situation Well, company that a taking I debt. amount dilemma mean of is over the

much need are a that I so can I organic pandemic. of think early the indicators company of have showing a - that demonstrating even some And we middle And is growth. that think of we do very we in in had

see, turns business will what and inventory of hope ex-OTC If recent if our you our you look and call, at results raise underlying that acute, improving. at can I our is look you

just is, the acute most part come we have has our profitable back. so cold, that's not issue duress, and been has that been has business under the And the of yet and think flu, right that not is business cough, all the and extreme now I but still

to at look increase. as at factors we we like take rebound consideration into we all as a business those and just would have look what out, and So the that and it this model plus look ex of

so the have can taken said, is that We have our growing fixed market pharmacies shown market think into share. have scripts. number We one can't the that we've day, we scripts, to in take repeatedly, because of costs have shares, At our is we is we shrink maintain. end, this, on our front what end we to the we that have grow way priority I

market scripts. discussions grow Elixir important. is why That's to mentioned Jim have are we our the why PBM with important. about strategic So so and so That's access what

services clinical is Our growth significant opportunity. very

vaccines, about it's clinical gap around all we closure, management - we of adherence business it's scripts, do about just isn't the this therapy do. We do about So care and and that services will to grow. see Elixir tied our really Medicare issue The didn't mention but EBITDA believe biggest earlier, is now with MLR Elixir Part biggest right perspective issue, D an and I this from medication business. our the

say a have the from positive, D this doubt mean also no net in - suffered negative this a So to - the businesses, I we There been of and business Part about - year are past is COVID. separate is benefiting from really two and It's we be business. kind PBM us. we while are are vaccines, net a - kind net-net for we easy. But those isn't the that, going of

you So, model comment, this and Matt, out. can you help then we of know, course can you

the interest, think, know, on additional the you CapEx, some et Matt, thoughts I cetera.

when, expense for from a business. our have that all position maybe got invest may the improve the But things we as together CapEx we guidance, do of to are work to base And be think the through for in a it's from us stir recognizing you the there and flat us - pretty part to acute investments know, things Yes, positive to interest CapEx able pieces about. those to those the you to CapEx, we that working do to be business standpoint, fully moderately the to and us that our in - scripts rest I invest over as advantage this business we cash year, opportunities pre-pandemic are get I with this of the pandemic able when take talked we in work do the and those back for the making levels rebound, you need is what the and numbers certainly to flow the free better we think to of guidance, capital improvement. need all puts there probably to time. need to that And

when many if be living weapon I a We're they'll with boosters, the don't will permanent, COVID. what with vaccines COVID And is it think, we arsenal. XX. our in know how other do vaccines we're under vaccines, boosters, a year is as COVID are a or company. there say thing one-time shot thing know a next COVID is I the booster for you And whether us not year, living would will this

that of any year. assuming not are happens this We

it fair just a here However, arsenal. I think, is and our like very part vaccines, these like just that assume shots, flu just say, shingles, to are of pneumonia like to permanent

of think the I I benefits you So it's - think, one of know, COVID.

we and company our layered organization. into of about have think another capabilities forward into you next going year, testing on set If our vaccine

partners requirements services. to increased for remain that pharmacies And healthcare and world, and that see so the very will indispensable to are more to continue world for clinical continue in for the the country bullish more and I going be we

the And of Evercore. our comes question of next line from Anderson Elizabeth

open. is line Your

color I of year. profit, rate business bit the help additional could PBM the of contribution for in was if of you run terms wondering provide EBITDA a little the on

the color other should you the so or I maybe guess 'XX of to are there? You there that and about, scripts the about know, said sort us mentioned, you you talking MLR know, obviously relation understand provide you help year-over-year. to the you - margin in pathway can improve situation, but revamping then any How FY

it as Yes, suggest and it, about think answer about maybe when when business, think two of lines Matt, we we this would three. you I

within the have three Segment. Pharmacy enterprises Services We major

we D Matt? discount Insurance, card business, have have is business. have and cash we Medicare which PBM our We the Elixir Part our our

first think first increased continues trends Yes, I - EBITDA quarter, we've in that of throughout of from standpoint, the year. obviously kind to expect all, from discount relates in that a which the we've kind seen of and business, increased volumes seen the card

set. really think I the predominantly are got we've You for know, lives year - commercial obviously on business, the this

for two are kind months least We then year. end And so, of still could see numbers what's of calendar quarter you least 'XX, I through some for the lives a impact the kind Med business, have year. are at already season again fiscal the of But what out of think we going play have on the of lot to year. And know the last at the is our the calendar large opportunities an first of that the part, what selling the those baked. on through in end D

from that, on for bid membership we're of think members, know in kinds the business, a I you bid on continuing are size submit doing and focused did the get focused a of XXXX, to process fiscal bid. last that to We of you our you hopeful, good know, but is get where the know, it right the benefit of a the We just well where our standpoint, those we're MLR D things year. the commercial impact on are candidly things Med in months now. can a really than better the in business this two cadence But right Elizabeth, position

cadence kind kind will of the look of move at a first rest So kind the know, and around, guiding that's at fiscal you but think the bad over Elixir not of year. the you probably business point of I things the look quarter, in obviously to

Okay.

fiscal should 'XX rate. margin - we Pharmacy the expect the 'XX fiscal to Services margin under sorry So be

bid EBITDA be what in pretty I months 'XX consistent from two quarter. selling last would in changes - the margin and exception margin you expect 'XX with anything the this our the that for business with season to of the rate saw the

of Goldman Jenna next from question the line of our And comes Sachs. Giannelli

open. is line Your

Thanks for taking my question.

next bigger degree on So, that of years out growth, just improvement, you flow, over some Are I cash EBITDA of this might that still potential time that leasebacks levers guess, X point? as getting growth we EBITDA free in outside quarter. you this other think to of the you philosophically there delever leverage you couple did sale to help maybe at target or working are that a could any kind have, really that to

Matt?

and growth is main EBITDA the lever that we what focused on. are Jean, start. I'd I'll start. say, is I'll

on in I either. think the good helpful. from last think I think we've management down year out be done this don't denominator. to company, But standpoint numerator growing what with is necessarily are on runway leverage job then the this a capital that there debt targets both it'll we're pay of I working some and year. of front, start to we that EBITDA and focused the and working using And ratio

big not year. though you and recent Okay, to 'XX, then I don't prescriptions permanently Or we come cough, could expecting is fully that new just just the transient, consumer know I more this can. volumes thinking about it. acute flu thank this you. one are behaviors? these longer something I cold in recover know And of if you've a it's reflecting the perhaps about some but reduced about picture, just guess, possibility there thinking talked curious lot see when we'll how it out the areas of Just term? we you're versus

fascinating Yes, it's discussion. really a

and theories is right everything couple now. have We theory a of a

if post vacation any thing, you if see off, traveling, traffic most and airports, you that at say, opening, American behavior of don't masks see the in because at it's we look happened change vaccine would I you are and I look first people in in the communities what's ripping The unbelievable. if traffic significant look evidence at are

minute personal going this is a So because I be these think there's and in personal spreading with without and opinion, to a in of weren't they're fully school, masks, and probably I if a and comes is wearing kids cough, a but everyone's back in And the the my mostly to back - that cold vengeance. the going are on level people depressed prediction cough it's be - back school just infection, personally still kids school. drag flu masks, cold

And saying than are some experts worse of ever. the

not ever good and flu It happen? be on over question worse could that two to year is, Now when exposed everyone's been they than haven't cold to because on the years. does because in and good COVID, it immunity while cough, so a a half

does I think that seen now de-masking question of in kind the situation. happen school is back we because just when right the haven't

XXX,XXX Yes, the XXX. then So not other over disappeared, disappeared. don't how we sure tamiflu last We we XXX. I prescriptions think know, it's had flu year, thing we're something pre-COVID, did like and flu

literally flu so And disappeared.

be more nobody shots, other. got everyone wearing each flu and it masks, because seeing could it because was Now, people was be could

next so the these impact at really I've because a think chance the least the So is the people of say that that us with don't that just immunity. vengeance now read or on at of of significant. right caution a here come know, it's there back for scientists lack But has this year, year whether some point been we're and because side erring so I

that's right now, know So much as I as we think.

the would improvement kind as a a only quarter comments, Heyward's throughout the in is noticed color - mentioned did we nice are The the of during quarter. as to we comments I thing steady see that we steady add the improvement

everything cold Heyward actual how low early first direction in that but flu What down season flu, back, it it on did don't last some we're of that the quarter have and a more we it and part is of when comes year. strong than it back, back do terms progress. trending indicators the we said and when positive comes steadily very comes was leading So and in and forecast the cough, the know for

season. bad - Allergy allergy

Allergy… Yes.

that. say won't I

And our the from Carla line question next of Casella comes of JPMorgan.

Your line open. is

remodels, plans gave for I purely they to given store converting build to you bit considering color have stores? Are and I total give you openings flagships, existing if opportunity? could more a your any you a flagships? they store the year, new wondering us how was I missed relative think existing are it? Those little the of if your on And are big the stores. And may

things. not there's remodels. stores, Well, of the new are are couple I Number a they flagships think one,

store on We in whole variety significance, company, full that really future, new not a note progress. we And styles at remodels. should we for also are although which right a is We're time that now. of we're work just in include openings working still that remodel will of might a different any plan this planning the of the finalizing

planning however some are We store closures.

commentary on that? any Jim, So other

bringing will Only future flagship roadmap our that or openings. thing shovel the we year I But certainly would this the openings, progressing of clarify additional is our ground no be for store on new stores store that new on. in

the builds the a provided remodels outside with file We allocate so that are buys function assured which and improvements between number we our our rest flavors of stores remodel exterior in of years, continue breakdown fleet, haven't which touched a of number of of haven't step all will in how along of But CapEx plan been other and our many opportunities. those recent of refreshes. of XX we

So you flavors variety a remodels of throughout improvement continued see of expect to year. of a the

of And mine a worth I she of went was seen one didn't they and couldn't out stuff. we're it thought Rite love Ulta a about, friend store, a that she now to think encourage $XXX and our and in you of maybe to host who flagship hasn't we'd bought Beauty Beach said a was Virginia Aid, she it stores, an believe Aid, it promptly was Rite anyone

and helping store towards communities. improve with merchandise, communities, want into So it's see. a of toward more is to that's we're going set destination, of the that call really to first health early go type we a And vulnerable really but reduced days, pharmacy indicators, we're OTC, a to comment remodel these targeted exciting curated care really of care on another remodel I focused health what early where that just vulnerable

in I some information store think we'll of wide health and destination, share So the near-term. it's the to have range care a the exciting flagship to

at store give of it X,XXX? the year you today is is at Did sort still the end, whole count about quarter -

It's X,XXX.

Okay. One question on Elixir.

What's for platform. is time on really growth that? in about business to accelerate something a or… frame the converting that that's You talked And common necessary to that you

the that Laker because the we accelerate platforms necessary two know we accelerate The it's do Laker system. don't We - I operate on the have do built growth. But they up Well, now, growth to as and on can running. we enrollment have thing PBMs MedTrak, the billing - of configuring, two like one one around up different all around solutions, processes platforms, business. around around clinical that's and Envision processes legacy for the is and these setting have administering for around and eligibility, benefits, sets of they

to competitive So and also be profitable one more drive standard adjudication need get then for super us way to to standard business platforms. and to set and drive we improved of cost the processes, need EBITDA, on the platform one the digital drive really we that and to operating Laker efficiencies of

which who Rite from what will onto then migrate month. Aid XXXX, on are put So, for government the then there. programs year we We're our we beginning to itself, and are is year, client year we to work are our business, of that at - customer off you're 'XX and we're XX first that commercial kicking will focusing XXXX, this fiscal fiscal we our actual associates first platform new Elixir looking the calendar business, pivot - calendar of

increased investment question, Okay, and one labor, your just in other great. And you mentioned talent. On labor some follow-up. also

much of your labor talk costs So the retail costs expecting to versus when Elixir? about are are wage you from come how from you increases, increased

Elixir All issue you it's and Rite - issue, primarily retail in is this to issue right. front-end It's not Aid comment? this a with want of team. tech the some not is Matt, really a areas

we number, stores. we a from a states from time the get start in average believe a paying really to obviously is need the to didn't to Carla, be to in we And where an that right. we're that's I positions. mean, think - do we about we the here need things wage $XX that order I but think the from the depends in something coming I hour, that's that - in But give pressure up and standpoint. we're over ramping talent standpoint have to on our specific competitive is our No,

Okay, thanks.

reached to back like our it turn Heyward of would we Q&A for the And have session. end I to the remarks. closing

everyone. Thanks, Thank you much. so

and such footprint it really doctors we past. achieve joy just and the the tears in health teams our the to for in the certainly life. quarter an can to for it's the connector our in COVID as to accessible the accelerate communities local gather them for in from state role arms. our the trusted as spontaneous ways shots and I people As and taking in have been a today, work, seeing stories the important most. that systems who To people our been with state me, leaders, grandchild bucket But in see with or clinics store for hosted more as need list to organizations played at touch we whole care various and to new even This in it's the we've us taking to across than the for in past, partnerships who brought hear role government the the for opportunity - I leaders our represented amazing. and day need have as Through connector national, on health our just participate for amazing well trips, trip and we amazing be sorry, every the past see bucket people NAACP worship think communities our opportunity and celebrations, of and an the of close a been and I'm people communities first truly in clapping been care time purpose deeply us the vaccine life, our has you where in clinics, learn, AFL-CIO, helps

doctor, health work and help get back take So talking testing and of treatments to people for lifesaving focused achieve help COVID diagnostic now And medications shot we fall. you or getting health us needed beyond our taking customers are back to back we've focus you a on continues, them your medications, mission get to is get to and get our This the were our people lifesaving their means care diagnostic flu we encouraging tests get customers ensuring ensure us to this to been vaccines treatment. will vaccines. their to whole on back getting and to what our your This brings helping lives. earlier. taking But to your their about

So this even came come it could though last flu year, year. really never badly

to flu thriving to months XX lives. of And and we're so to again get taken but people achieve we normal, reinforce not the health just past back committed importance This back a get get want to and to a have helping toll whole shot. their only to

get the keep and are in know mind, progress thriving and updating second that that forward day here we with you our Thanks may you So doctor. doctor call. everyone quarter earnings we to look and in to back visits every to be to for your their our need mental to health, on to support us encourage between during joining to their we the proactive get they health generally with

ladies And concludes participating. today's you. Thank this you call. and for conference Thank gentlemen,

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