New Rite Aid (RADCQ) 29 Sep 222023 Q2 Earnings call transcript

Good day and welcome to the Rite Aid Corporation Fiscal Year 2023 Second Quarter Earnings Conference Call. Please note today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks there will be a question-and-answer session. [Operator Instructions]. will of conference Investor I Purcell, to time President Vice Relations this turn over the Byron At and Treasurer. Mr. begin may you your Purcell, conference.

to President President and and We Executive Officer; quarter Thank morning, Schroeder, Chief conference our Executive Matt you Vice earnings Donigan, Erica second Chief fiscal Heyward you, call. and XXXX and good welcome everyone. join and Officer the Elixir President and Vice will Persaud, Andre Executive Officer, question-and-answer the begin Financial during Operating Retail call the Chris Officer; session. remarks. will Chief call also with prepared DuPaul, Chief

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

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

momentum today to become everyone. a full and our the and joining second earnings and service leading on continued good quarter Byron for Thanks QX saw call. modern Thanks to pharmacy. welcome build our morning call

EBITDA health outcomes. last same a billion X.XX XX.X X.X expected communities business. demand the growth, vaccines for at progress We've strong was quarter customers Revenue during impacted made improving associate in adjusted were prescription better X.X XX,XXX sales negatively including and in million. achieving last QX reductions for significant EBITDA our for pharmacists compared and to SG&A team of Retail quarter adjusted on our second and the the key are to year. together X,XXX year's gross was decline margins caring PCR the dollars driving expenses quarter COVID by quarter profit tests. pharmacy drive are compared across operating Elixir, of to and We good in that million billion including initiatives

expected reduction same acute and and increased vaccine increased sales as and due Diving front X.X%. X.X% as starting with with maintenance Total spending performance X.X% testing immunizations closures. in year over by prescriptions comparable X.X% store same well prior supply X.X%. excluding Our into in our consumer business, challenges. expectations this revenues end however our segment environment continued driven the the cautious COVID pharmacy quarter trailed COVID revenue Overall increasing decreased results increasing to planned retail chain store same prescriptions prescriptions store store

markets ability prescription and demonstrates This pharmacy with and limited We basis the local stores in as participation XX our PBS. strength pharmacy over our market also our navigate improved overall bringing to XX% customer volatile us our networks increase for share teams to share. points as well relationships of same by their labor

season, While vaccines. seeing in we for we demand flu the more are are already flu early

demand of and the also with more the likely way vaccines two over received dialog, for our or Analytics customers seen the co-administrations Clinical We've help few fourth season we more at can time. customers who on X.X our agree bivalent million have the to identified vaccines flu last protect COVID more Using strong the are same just teams flu ensure to vaccines weeks. of third during the have We height in quarter. to

result, a almost who got COVID of vaccine. those As also their XX% bivalent received another vaccine

Rite enrolled improvements in increase adherence adherence way company. is Every for XXX,XXX drive we new medication is the customers program to Aid million the of refill our our gross since customers. for areas increased One encourage courtesy One July. medication provides key in to of X% XX program. our profit adherence have in

the expect benefit XX half this is pharmacy the gross just the FY second with most million this add in profit initiative of year. accruing to We This in XXXX in beginning. of

but as with commercializes flu season, our of to expand tests, PCR tests Quest going provide the Front-end flu every to there footprint. other this in testing look points. forward PCR new to drives has the availability engage drives care strategic declining We're of year. has our basis this We expect script important convenient better soft and and allowed OTC of customer’s only we a test expect costs with the which sales offering drive for result exploring second company to PCR partnership it the growth same-store Quest antigen testing not in customers. medications be to that And X help customers demand our further for to resell in store We more quarter, health options customers our second excited reduced adherence. for their with the of to enroll an for this adherence it in XX forward partnerships also were plan we And health Diagnostics, work to What's tests, to improving saw lower courtesy in a quarter for demand continue to and to is dispensed. million test antigen outcomes our kits us lot we partnership. while for tests increased over about

good in and Excluding and results, consumable beauty points. by strong in however, year's basis cigarettes very XX by tobacco we alcohol overall categories, products, general health, care. seasonal, offset and underperformance increased prior We results personal merchandise, saw

particularly York our shrink, stores. from this quarter front-end New we experienced in urban this, Beyond unexpected headwinds

in we year. the half of cautious environment, see economic back the current the Given expect consumer a to

which addition, products. these expect environment chain during current challenged challenges to and to remainder in remain for Pharmacy year our to has continue year, more in detail. supply reason is sales do these challenges, particularly Retail the are in our seeing markets. the to guidance ability We the stock, full In Despite pressure discuss we private EBITDA positive Matt of front-end in sales the the will that our indicators over-the-counter the some label adjustment

reduced due the the improved in have margins to front-end of our amount program, markdowns. loyalty Our which change

the Bartell's drug survey. seen the We also improvements the brand have Ipsos positioning strong equity brand in by as measured of banner

one market fact, store number is In the Seattle drug Bartell's in brand the now.

for improvements, as improvements seen Brand the an increased equity know, early are our position of ranking Rite also to Aid. brand in traffic have stores. you We indicator

continued enhanced to on Elixir quarter side a operational the drive improved improved last and efficiencies, is On and and momentum from cost as more to we business, control. of Elixir rebates Elixir driven noted so meaningful capabilities its much build as have And performance network continues by on the well service build PBM. to reporting than to customers. automation, our we've better before, management as

and cash well pharmacy, adjudication a mail-order platform specialty as as include assets and Laker, business. analytics adjudication pharmacy, card our Our

now back-office integrating We both and and of Aid functions have integrated Elixir segments. across the are processes platforms all and substantially of the Rite

are as incumbent sticking more vendors. business with remains business, potential While slowed new we their winning has competitive, our clients our and growth are PBM still sales

loss is We we retention PBMs current more we closing to year. we the our willing will business, for expect in previously XX% and accelerate And client one you our renewals retention XX% coming given high. exclude which expect in for that the outlook are again, retention, is at if companies sales We're reported, be to on X/X/XX for change our overall. the

to a drug the second as expense. second was and a billion This rebate due strong decrease management a adjusted primarily quarter. second of quarter, spend second to reported year's due $XX.X well planned versus our billion and Elixir $XX.X quarter compared Elixir last million of network in by million For previously membership as announced industry consolidation, of X.X to EBITDA offset to loss a revenues client year's partially higher reduction SG&A adjusted in Insurance quarter was and X.X EBITDA utilization. performance due last combination Elixir's for

at in And savings just of in corporate We in to planned XXX the year. half this half improvements, for achieving year, Back continue overall, of run are guidance Elixir. we've and and to we operations in administrative the we therefore, expect back And raising XXXX. rate additional of the and been million productivity the of a the business and rest based the first the the our on in first SG&A reductions fiscal to half Elixir through of SG&A SG&A expense payroll, fiscal is focused EBITDA achieve reduction beginning. million driving on $XX this expect momentum store reductions year,

called We are a front-end large-scale in the of Way. process the our Rite reinvention of operations

in initiative in XXXX. this XX XX to productivity labor contribute to expect improvements We FY million million and

of also with investing are reliable supply stores with and service improve Seattle, starting acquisition. We provide automation center This better, productivity. Bartell's our our distribution in will with the which more in came chain our our

We initiative. this also expect a FY XX% This and benefit distribution in will chain in handling for ROI supply XXXX. drive costs

the our and growth and creating with We This the engagement gross XX% respect over first-party, our last a to in expectations the marketplaces. delivery digitally exceeding new mind. ultimately engagement. our in personalized omnichannel with revenues customer driven process and of customers of year-over-year overall strong a increased top convenience launching increase customer in also our profit digital and digital quarter, for capabilities experience customers drove with We're customer engagement demonstrated with third-party, more focused

store. locating We're simpler or the New having In pickup underserved picked and are the Rite addition, options in home it from before of offering These in we're prescriptions on in in offices to delivered markets. their to growth and receive other York a end stores of building to prescriptions track further to achieve meaningful the a new of pharmacies capabilities or four make their markets apothecary Virginia reminders, pilot up transfer pharmacy small-format start to underserved digital by year. pharmacies to helpful the open Aid

make structure. we hear our our as capital to financial progress position, Turning you'll continue from on momentarily Matt, to

business. FY in to XXXX. As the times the we our of for close, our Elixir encouraging teams year. bond next successful to the into we and quarter, FY results. a strong front-end our that To We're excited by to growth capture reduction business our our despite With ratio XXXX, flow of take value operating economic remain committed I'll you really are over cash keep environment positively challenges to and year encouraged difficult additional in we achieving our our by outstanding market ability tender driving for I'm business, over performance. resulted our turn We a committing script advantage pharmacy and things offer this opportunities, impact $XX free that, go solid share, our of even to target this generate executed to forward, committed we a X.X end financial the long-term of our and million modern know, Matt as confident grow remain in to Matt? in debt. shareholders results growth leverage during

morning, good vaccine from revenue, or closed and were impact the Heyward a of down and driven million quarter prior COVID second by $XXX.X for Thanks, the membership the stores, and everyone. decline at X.X% Elixir. in year lower Revenues quarter testing

the a previously on gain These store leasebacks company's retirement the closures. completed to distribution share. loss and the loss in offset of XXXX. Second $X.XX Elixir. stores the that in our the share per this the quarter primarily impairment of on at announced current of loss centers net by impairment to process last net a impacted per for or increase or charges items Net on A developing tender quarter quarter. share from due few operating $XXX.X loss facility a Elixir. bond or budget $XXX.X was were We've gain offer was $X.XX million begun exit by certain of two year's driven higher compared sale $XXX.X $X.XX resulting charge words related net fiscal and million charge is the quarter and of second of to debt we also The for partially goodwill impairment million by per

caused beginning are several principles. The of of process update a this at us, the of season, and the there generally include the of for based Elixir update impairment have results, to While on the valuation Insurance factors. recorded based future factors certain other XXXX These of accepted of upon event that for impairment years. and an are lives estimate factors triggering under latest business bid to our selling our fiscal assessment work we goodwill accounting months noted that ahead and we've related an XXXX was

said, not I additional build outlook XXXX to much give plan out fiscal to for on this color at have time. we XXXX prepared As are our work the any detailed fiscal do and to

discuss an $X.XX increase segment last in closures, million let's in results pharmacy same-store expected both year's was the X%. decrease than Pharmacy the for operating XXX,XXX increased billion, maintenance X.X prescriptions. COVID-related by increase quarter the second the fiscal same-store Retail and immunization of Now in revenue sales administered to in quarter. in store quarter which $XX.X Retail non-COVID an second business last key year's vaccines our drivers second segments. offset sales COVID lower driven partially in million with segment XXXX Pharmacy We quarter acute was X.X% of compared revenue of and by

alcohol X.X% recorded our million same-store of impact Front-end vaccine up profit to cycled increased markdowns testing We offset acute gross Front-end in general in PCR Outside scripts impact, from reduction $X shrink loyalty was a in by the maintenance COVID the of antigen benefited sales. the impact and demand, annual were reduction impacted cautious increase were also from in a change physical and our scripts expectations of sales due a on stores. the to margin testing than somewhat XX chain of consumer were a our Front-end health number supply basis were inventories and versus less year. challenges. products up decreases we sales tobacco by driven in as disproportionate by X.X%. program. and a last resulting urban increased merchandise. offset products, cigarettes same-store by and Front-end increases consumable sales, points Front-end excluding

by sales revenues. volumes shrink $XX.X Second was and higher quarter year's or decrease in adjusted last X.X% to of million Retail and vaccinations The EBITDA compared to quarter prescription adjusted and Pharmacy adjusted of $XX.X of front-end EBITDA COVID segment or results, reduced lower margin increased COVID revenues EBITDA is and second testing, million offset EBITDA attributed pressures, X.X% SG&A.

we rate generic our courtesy refill, of As have begun a our prescriptions Heyward to quarter. increase percent the during noted, through as of dispensing total

corporate driven this the the adjusted planned store payroll, were EBITDA SG&A to the Based momentum store occupancy, of We and on the or fiscal to points Pharmacy now $XX the XX the our year Retail by administrative EBITDA back in cost expect earnings million in XXXX closures year. due to our million in initiatives. a SG&A quarter expenses better that benefit expenses and adjusted year, percent to call. in reduction expenses we half this provide $XX and savings million as additional expect basis half of we lower compared in reductions operating, than discussed of payroll, $XXX and operating prior year-end a million to segment back achieve second of revenue store $XXX

EBITDA of I want quarterly Before spend minutes business. moving a Elixir, retail the talking couple in to cadence adjusted to about our in

products. fourth profit quarter for fourth fluctuations flu Because to quarter immunizations, first is Pharmacy the will in in quarter and profitable profit cold, margin back being in highest gross prescriptions, our which which administered almost sales quarter is products, highest typically business. contribute our fluctuate demand our and and this, front-end factors for our and demand quarter-by-quarter quarters of retail and weakest strongest profit. which gross to demand These are typically flu are of our typically highly front-end to gross exclusively cough, for seasonal sensitive Our for are over-the-counter year. fiscal in half of second due our the and our

fiscal our retail admin focused Pharmacy I'll the Services by additional corporate and now reducing are Additionally, shift with noted, on million we Elixir. of as in back half SG&A $XX to the segment, I efforts expenses. year just expense

adjusted X.XX reduction from revenues cash a I'll year's or in expense, quarter, network as X.X% loss, due increased revenues flows balance and X.X% by primarily and adjusted quarter and management $XXX For of to the quarter second client drugs. gross turn million to our a a higher-cost our lost or SG&A membership to performance or benefited of well Insurance in strong revenue resulting Elixir saw current revenues. offset decreased second sheet. of decrease last $XX.X million X% Elixir by partially was billion planned with utilization quarter of from increased associated million versus in offset Elixir's EBITDA second announced partially $XX.X rebate decline as clients. The profit EBITDA now previously

expect Our inflation, and quarter of seasonal securitize build cash inventory shows due of activities CMS cash interest to bonus the million we by driven receivable of payments and for flow this the which of $XXX and build for increases year, the statement use later from the operating to expense. timing the in

are timing sales million. in provided and later $XX for reverse the activities leaseback investing file year. these store of were investing Included we quarter. our activities the in script All closings million to proceeds to expect by attributed $X that net items Cash was sale of

net the in and Our out $X.X business. billion balance continue debt CMS end retail of was our the we inventory quarter our build to seasonal at receivable as approximately

in to and We the leverage for range expect to generate fiscal our be by ratio of end year. positive free the lower the cash five year the times flow

and lowering pressures fiscal second results we for year, of Based Now front-end to chain the supply guidance. the sales year. EBITDA guidance turn front-end our continued I'll are and segment and retail our upon anticipating throughout remainder quarter on adjusted

Adjusted million. million and Retail be a to to segment in $XXX range range previously saw to million. our previously our year. EBITDA expected a quarter are reduction between is of our second new raising net guidance Elixir $XXX $XXX will the results the million to impact $XXX remainder expectation $XXX continue guidance We we is that for our million from the for announced EBITDA million the $XX XXXX Pharmacy based in on for million $XXX of fiscal The of announced in the

brand As that in cold the second recent gross front-end of several markdowns impact discussed flu from our of higher to in benefit on a year continued is and the to of be margins. half rollout that will earlier, similar bivalent rollout is QX trajectory decrease products challenges half we half management of there front-end Offsetting expectation in supply from performance half reductions drive year. year both immunizations, these of to businesses, cough, front benefit first reductions labor will significant We our flu expense. profit the the retail first efficiencies, at the closures, the continued and and and the an and of the are half, due sales beginning drive EBITDA back achieved expected the that SG&A in pharmacy factors front-end the retail the than including the that of store vaccines, the store chain owned improved benefits retail operating that

in core saw in retail reduce which half $XXX of half to further in the expect We admin This and store million. contrast operating, reductions increase in in the of Adjusted second million store SG&A second year between the costs. to by demand. driven additional year, back labor, due $XXX half year EBITDA is last vaccine at an and to to be of expected SG&A the Elixir the expense is

expected remainder to performance be that be that despite net rebate We and fiscal network year QX $XX.X loss we $X.XX between continue per will January through on billion. per million. the are saw Total of is and approximately revenues management in reduction expected trends expect $XXX be occur lives $XX of share the $X.XX and to X. expenditures share. are to Adjusted to the SG&A billion Capital expected between the and

including digital. investments pursuing grow continue We in our prescription business, investments make to and purchases file to

cash our week. you free to to round of for expense of supply expect could last announced reflects Erica, technologies lines questions? rate our impact $XXX We completes our and projected latest our automating And at the and the Interest to phone please flow approximately continue transforming pay remarks. enhance increases to we to by generate debt. positive chain be seek open and is the This million Elixir. down also prepared continue to efficiency processes

[Operator Instructions].

with Your ISI. from comes question first Elizabeth Anderson Evercore

challenges, My question that have questions. so Thanks they're some you any you first easing for the noted is, seen much guys. supply Hi, sign chain yet?

to The from is areas hear Andre it it's chain in supply now number and good that is some again Elizabeth the to quite that actually; are of a you let eased the us. specifics. And problem important has areas. comment I'll in on isolated

in-stock And based categories further suppliers right in When the Elizabeth, at Hi, Heyward. chain, biggest manufacture. get are further upon one out. challenges has seeing constraints dates their on Thanks, ability to being but labor improved, pushed out important well look it's are to we we're us supply our the from thanks. rate that capacity, of flattened and and the commitments now,

at challenged in with So that's of this this year the for the time. really rest we're headwind point

Yes. the they but trucking of ports. the own out our our chain bit to color. getting key board, wages our We've some illness. and of by tight are cold, associates now. as kind flu people the A on and I'll be the of comment to sick, now. then just gives sick, across a own seen talking people lot own And of and own think, I and due a are The this an labor COVID. issue, little is for and cough, in seen actually relief both market, and labor seems our issue is People impacted at are indication because about you labor part of We've go that right of stores supply the relief it getting a --

it. Got

that? might when thinking million, been is if about ex-COVID, you seems right basis core quarter, way in have the that at also Okay. quarter. on -- retail did I'm the that your think It's seems required EBITDA a the like and in like like your it the you test negative obviously, And the it to XXX,XXX EBITDA vaccines about $XX.X least

you Matt, that. answer I'll let

at did on that an for think a Yes. quarter, to aggressive impact that negative our Elizabeth, a I headwind kind ground do had and the of antigens. a certainly XXX,XXX get pretty vaccines on some of we benefits No, testing. question. in But slight We in, certainly doesn't estimate, read so we number. Matt. you Thanks the it's Testing, script made a but actually EBITDA. up had that's $XX the vaccines on

The I other we basis comps, that even you're vaccines, thanks challenging to ongoing is the through don't well. to quarter, to the working that about the that term, disproportionate And quarter we depressing this something results shrink many would inventory if seeing the a flat issues is expect though recorded you one, the that quarter and stores the have continue are part had amount positive shrink are our related that the to EBITDA occur for talked on in an the still we of quarter just urban we're front-end of you on the impacted work with that is did we second at and there. thing that out impact the certainly thanks the to But long currently SG&A. of when headwinds, and expect not but on front-end as -- pull

the I'm quantify if it. impact Got And was terms dollars did of you in the I what in the shrink of shrinks, -- sorry quantify quarter? it, missed

million in was quarter. was than year's it It worse second $X last

Okay, you. thank got it,

Your with Morgan. J.P. line next from Gill Lisa comes of the question

put flu some COVID And of numbers about the pay secondly, vaccines morning. once see for guidance, think like about, example, how back for just in think expectations? vaccine, kind questioning up currently thanks should you when around health half profitability, of perhaps know kind number managed that, of more emergency think public your vaccine cough, vaccine, there Matt, way to about then how talked you have very care Is done, flu. line Hi, we following do about the COVID is your cold, I flu vaccines on of we that Good of much. that that and flu a the one, vaccine. we we

any us -- be just of the color can about think half year would think help back to the So great? those things how about you in

thank you. Happy Lisa, that. to Yes, address

X do of with million of planned to the close second first vaccines. vaccines year, this I'll in flu all, We So all of and year. to to the plan flu half be them start almost are

the is gross in second Flu profit that per the are big $XX a us. So script. for about year pretty half tailwind of vaccines

they're think sponsored year, touching point, So don't COVID, to a profitable government is this that's but COVID in ZIP is in where line margins in quarter. up code year. happens at same we -- we the But million question program, seeing by the we COVID. about moment, kind expectation on my and for first saw we're some it the a probably that end on last still of very vaccines about I when did stops more vaccination. your X.X commercial somewhere Incidentally, goes that the being COVID,

to cold impact go back going what one assumption. really the normal a measures, the pretty pretty for that think quarter. And benefit which see in happening, cough, season. of cough, vaccines, cold indications I this profit dollars in lockdown that flu, normal nice fourth guidance the I tried kind have of to absent flu with we and something back given expect go half we us in would a pretty going to call Hemisphere we year, and flu and I Cough, seeing of another we're that's give going to the back -- out us the year year on back half was for got an do and have of of we assumes to thought the lay had is to year, you as around the pre-COVID reasonable half the Our cold cold pretty right don't I But to we're gross would cough, what and flu out number bivalent which I kind is given see a season. of of back Southern think implementation a

about well with actually and first bead are as just about we some on And half these I second additional first the second The with executing a higher the vaccines got which you a by then improve. think, actually that $XX on contrast run on almost guidance SG&A with were fulfilling that quarters. SG&A to lower done, standpoint from million closing closures get efficiently. other $XX what to We year cuts, still demand. overwhelmed because during SG&A the from half think where the got store is that thing initiatives to we've accomplish actually vaccine we're to better our And were we of taking. need to million we Comparing last rate expect the SG&A much, to we I

that So in the pause we are some kind but half the really confidence us of give here, in I'll these second guidance indicators that have.

we Matt, seeing that just for I flu. prescriptions just And in of weeks, would Tamiflu higher add just would last -- much add volumes are I the sorry, few

will think it do still And number heavy two, flu pretty we all indicators. COVID number is So be season, a that, one, raging.

So...

that we sick. Xst, right. feels that thing I it everybody's to way, any No, also are your off. was just the lives want roll January are feels Elixir. timing to about one benefit could going design about impact, and a that on understand But But year-end. plan network, that there curious, But start quick follow I'm think to numbers? rebate, have be you've as the up about comment going Xst as PBM your I going benefit for that fiscal there but We forward, is of just talked limited talked to changes It think the just XXXX for dates incremental given will of fiscal January your it the the of know impact we you've about anything

Chris add you, could color. it hand Matt, maybe I'll and to

Yes.

given probably standpoint, plan got season to XXXX, on we down a fiscal loss with though. finalizing do think client that the a I talked of is estimates, in then lot ultimate the lives selling the we would work best step our a expect results the can and from still for more out. The of comment to about. build the We're XXXX, live I fiscal I combined in Lisa, pure number

So it'd be we're give to at number. premature management do the fiscal from network into a expect for benefits me getting minimum an you XXXX. exact continue to I

took. in think what from goodwill grow down, I expect the that's lives and book the our be drove pure some to specialty clearly, have that impairment opportunities we we would to a But we standpoint, outside business.

the Okay, great. comments. Thanks for

George with Hill of Deutsche comes question next Bank. Your line the from

you're and Heyward, bit I promotional can wanted you loyalty? seeing taking guess, customer we I of about little a morning the bit little know impacts maybe, Matt, around if there's the comps to talk discount perspective, of ask loyalty questioned that Good just questions. accounting you the a from talk Matt the for you accounting Matt out financial like and during And I kind in Heyward, a which of guess Yes. about and the and call guys thanks about program, about a new I quarter. on how I there impact the and kind kind front-end quantify? program the can changes can

and attract program growth a new customers just with significant Aid, to these discounts competitors of was I doing move for been more expected. a our they very target eliminate And Sure. are market say process. say was Hey in By they loyalty you through and large, want them we in can the you say. significant program on how more margins, the in current including Rite improvements many losing without significant modern George, our to first, for numbers. Andre, we're change loyalty very loyalty but we comment -- Matt that there? by to than driven customers say our the are has would number line let see the that me change we would good have added our better new the a and us, rolling has in many the quantify the that digitally would introduce program that just fact oriented change to the program which in the markdowns indicators, can loyalty and this them, I that goal would

loyalty What's It's the have a Good we program XX% in incremental George. to also program now incremental trips also stores. Heyward. the program, we're are morning call into when that be is program. we this started big the old the personalized six trips is months in much numbers, we've from retained did seeing over to our launch what exciting the now, summer. we and making the the new, offers a is our customers of conversion When what Thanks, made early the in we stores look to they at old digital-first And our have that ability we adopters program. Yes. bang have which premium of drive our more and for folks to we the this right to

in. jump I'll George,

front-end benefit to asked on a we're soft. is -- by got not. basis a more to program very got the year, our you of you elimination, comps of this a markdown by able You benefit loyalty impact cycling numbers and point fulfillment script script had in bought you the have front-end was then you quantify about purchase, benefit. of in promo-based element that program fact for the kind discount were the of public the to our been markdowns. half when that, the which certain it noise got kind it also on With XX% a discount being of eliminate a -- item-based margins that switched much specific XX% total on front-end and kind everything eliminations XXX side actually margin or And were once been margin promotion the that -- seeing the to either pharmacy regardless And in purchases. question now to the that XX% But is to And the by if we're about program, XX% the had the has impact that first in all or program good. the right you've masked benefit getting old XX% you with line margin and if because level

a of relates write-down this maybe is a follow-up, investors. had just goodwill feel guess pop some to whether charges -- around store the are we business earnings earnings moving other of was of how underlying of I just the quarter. about up guess, to be step of basis, -- go-forward of kind of the then how this we And quality, And that initiatives another quick we've like guess, in and it of down I or and Elixir some morning, kind the the more thinking or Matt, you talked as had kind should investors closures? not one of kind like about you kind I on new We being comment a Elixir in helpful. parts like do to taken just it kind and get quality? That's kind forecasting lot the of ask kind Okay. from prior to just quality seems earnings you I as underlying on it -- I there's of relates earnings. kind see

that for driven been event EBITDA year. The to our all to expect goodwill which of by fact a down. Yes, from think, for I comment the certainly laid quality our change EBITDA, solid. reasons lives a estimate out half year, half standpoint, I and is from we And the for think the look quality triggering increase the earnings we I is, is measure expect right of year. back back the we've to about open the in in impairment the And an earnings really I on next think Elixir you of go is the lives as that

drove the impairment And on for so that is Elixir. the goodwill what

wound a through earnings continue we EBITDA. to and just going a were be XXX closures, the store that unprofitable quality a deal because fleet -- drag in our improving that closing were these On to I be stores way stores have on argue the EBITDA great about would on is drag

-- certainly charges, to $XX we're EBITDA million earnings benefit the remind they're those from you, a are this so quality. they leases substantial and year And I'll in that closures the of are terminate those actually substantial, getting improves noncash charges our while underlying from

said I'm organic just matters. growth committed and what is paying me let the George, Yes. in. down to Everything that's Listen, bottom line, At true. jump Matt debt.

We have a very strong growth culture.

quarter and both growth, sales, taking in this at market productivity pharmacy We and growth, improvements share, significant reductions Rite SG&A Elixir improvements, Aid. script have specialty Elixir just demonstrated in

So our everything achieve can within we to to do we going EBITDA that can growth we are control.

factors Now I day, will control, it's changing grow -- we do. now, at of this And but and are the COVID of the I kind there to best think know But degree of end of landscape. there out macro noisy organically particularly quarter. a the even are can grow the company that can and indications issues the economy

in a shrinking probably Yes. And quick serves we think the then could again, how calendar I about I with Elixir it Matt, a us is expectation maybe, again, you that appears segment be that many number as nationally. given just as step XXXX assume to PDP that and down one is Could just PDP last that, to remind relates Heyward, Elixir. jump lives one if

that Yes, step around next serve then number number the right now XXX,XXX we down and year. will is

you. thank Okay,

plans MAPD number getting you health are interested as the been for expertise space well Medicare benefits we showing we the largest or to us that is, from as have that And government with X/X. health in along our health have Medicare are where in plans, And a shrinking into is retain said, we while supporting Medicare as plan that Advantage And perspective. growth. know, health nationally, business commercial you of that that who plans,

Okay, you. thank appreciate I it Heyward.

Thanks George.

Bank Your the next question America. Reuter line of comes from of William with the

were the by expect for incumbents, also more question with companies to do do but you're and year Elixir, staying you going you that gain why think do occurred disappointed lives ability based like year in improve think somewhat this sounds Good left calendar the future on next less What you the first morning. and My it to their that will that years? opportunity, change likely companies an is future. you this that better in to upon

actually lot pandemic, I in under have Good what's to that been And because and what the coming from question Yes. the XX%, this that XX%, from fewer a we've PBM. switching it switch. indicators economic to of distracted It's of vendors. we've In flip XX% resources vendors. of means rates around the companies think, are PBM is the to change of switching frankly, levels around rest Well, at And which historically, happened up you retention not companies pressure. a very retention light meaning see companies a of consultants requires heard out all environment. by environment, would are of the seen

XX%, environment, rate one us think that indication which high you that we what's retention benefited has in this of going the an is which is client on. lost, our sense very in I take that so just out if is And

all back go normal -- will consultants to do the believe we So that that, levels. do

season have sales had three in We strongest years. our

we slower year expected. given more than So business. the was But we we cycle, how are than in and three have pipeline years, a it we this last sold sold had we still much lives closing

remaining to an any not it. Got were That value the more be estate, those, for what of that a the way continue you both after of of which of that value makes there completed in And maybe own? leasebacks any sale stores but is estimate sense. centers, can of real round ballpark you the may quarter, the the then range there distribution

question. Hey Matt. Bill, the Thanks it's for

the do have not we any center So further opportunities distribution sale on for side leasebacks.

to the owned about stores the On left in probably XXX XX we've store got side, portfolio.

working possibility with candidates all owned that to not least But be for of going sale of on. them we're variety a a reasons. do a there's of stores that's for Now number of are the still leaseback transaction that kind to at

that supply products Got you're important just to able that the was was get. it. that the one And And questions asked you about of it it then me, not lastly your first mentioned chain. you sounded for like

on So opportunity it this dollars disruption that And your year private therefore, some gross get what to think like the next would more or less the any year challenges. back? chain where you're in those next what experiencing there or year label? then private label's maybe Is way sounds be tailwind profit to about supply of drag

Andre, to go then Matt, Okay, comment you Matt? want maybe ahead.

Andre kind our Yes, guidance, more I'll then give we and have what first in jump of built color. on in can

excited benefit label pretty in set year. we a an -- as us gross supply program the $XX of first expecting to had million rollout and beginning that year, to EBITDA a the guidance we are private -- the profit/EBITDA we're started that give ambitious we our think pretty about about kind of for I

presentation that outlook improving a for us year, changing I and penetration, you the of the think own that the when brand that of kind is for risk number out. get large a part factored is back year. of But half is private benefit into our the label -- which at can of takes now me, one puts excuse

capture ability benefit an years. in is still there think to do I So that future

Perfect.

ahead. Go

Sorry.

was just you I say but to thanks, can Sorry, continue. going

fine. Thank that's you. No,

line comes Your Karru Jefferies. with next from Martinson question of the

Good morning.

script For still files we script those that do XX get closing, file in the for and are looking to stores script? sold we that you're XX per what at valuations

general, file. vary, Karru, script just obviously, of buy I does it Hey the Matt. the the facts in the it's side. will the The short that's yes. and circumstances, standpoint value on mean, on right depending is answer it side, like script But range in of the from

how get And did those much Okay. we for sold? script files

go I look. back have and to

probably two I quarters, the and follow we'll for million, $XX gotten we've that think between verify about sure, you. up but Karru, with

markets Okay. average for and store on there And one shrink this have, closure programs we this when mean, we of look stores that does urban be insurance what at the closing? and you should I the an is the mindset and of change some increased your shrink

with you just think what I to I on until well say pretty mean, would we've I done you don't ourselves this why on pat think, quarter. how Andre, -- And then comment the Andre, shrink I back, New you footprint. where insurance been is the already our think out and means. shrinking this reason we comment is was guys The have this market we a on Andre? pointed can York that because

Thanks, Heyward.

hit. any It's on margin First, there shrink. insurance gross isn't a

team has program. retail XX last our our the done product over improving improving incredible is, protection, client second work on The organized months, the

shrink environment and is we City, headline in, the just read to is city. in not social news reducing I the think you and on upon based operate everything media that in the see New particularly here conducive York the

you work alleviate doing issues just on to can comment serve our of communities? And we're still of pilot some some and these the

format do piloting -- some We're prescription-only our to as we in of a the a in stay and how is communities. communities. pharmacy only We Yes. goal the looking operate at just pharmacy

police ensure lastly, just of had then to officers extent to the our everything some -- literally it. to for to to of looking some And and have who do community of into products putting go the also. off-duty there us to using want these at buy this, stores showcases communities customers wants we're behind the We we've even in

that are and on where liquidity we where the And end we do we'll Okay. feel today year?

X.X X.X in we in the on at We're I securitized, this quarter have now about don't a in -- talked secure of as receivable some about that second CMS by leverage a inventory timing always payments, that CMS as low coupled QX of end to from billion would back causes the range. kind the a and low billion of the of about talked well point accruals, receivables our We the -- particular, liquidity. build in timing the causes liquidity the the to we ratio getting interest back be an billion liquidity standpoint. the And in as expectation call, in Xs if the of right year. would always have with to X.X be And a

Okay. facility And during how CMS normally the guys is, builds XXX, the year XXX, securitized? call you on it, depending that it

to Yes, X X, yes. but probably closer than

guys. Okay, thank it. you Appreciate very much

Karru. Thanks

time additional for one is question. there And

from question J.P. final Your Casella comes line the with Morgan. of Carla

to taking to in or in. any for discount get those, CMS wondering offer you cost change at market changed that me seeing the rates or that the the Great, have are all? thanks funding has on you facility, I'm

the that's It same way move not to benchmark does. has, it's but LIBOR close LIBOR Carla. in at kind the indices The LIBOR, that It's pricing rate. pricing the at tracks very of that

cost There too. receivable. we securitize be the will on to cost dissimilar to our kept of not an that increased revolver, But it be it So an will will cost, be other increased there funds.

we getting still we're a good as net-net, get. can So as deal

Okay, great.

still cheaper? attractive funding or it's so revolver source an of And over the

as the we frees I frees any that up getting something the that and liquidity because -- so basically It's CMS of amount up because is same have. isn't reason other it and does itself the cost around just collateralizes what liquidity debt of it -- the that you're receivable like it it much is the revolver, the

the Okay. leaseback, rate? the will Great. give sense could us And with that then on associated or the you sale be that cap a implied of rent

of leasebacks sale rate under just quarter is this done on X%. cap the round latest we've the So

all for all little we've just considered. in us, us, move but seen the other pretty the So still bit given market funds is market of still on cost things disruption a the a attractive

different That's from And then been do -- press last one, have cases of you or you settlements on where ongoing, Okay. remaining there's and great. opioid one I'm lot away wondering, the a two that to any does was on major Michigan, -- settlements in complete states or counties outstanding year still did other are those last Ohio that cases nationwide? you there call and some out

provide of there the besides Carla a had we Virginia. West color previously in West ongoing several other discussion West settlements Yes, We the A at which what Virginia, with more discussed. had of in is movement and counties announced York. can't New Ohio that. been really any and settlement We really still lot got by haven't seven than Virginia, than lot

you. Okay, great. Thank

any turn will I call Donigan closing the now Heyward over remarks. to for

season a very well. the you available, vaccine robust flu do flu time And I'd didn't shot my -- Thanks I get season if I strains protect And you is mention both covers be your of the and again remiss and for ongoing anticipate your yourselves to and to new both COVID ahead. for to for families, our highly got Thanks attention and And ourselves today. And husband your just COVID. today. a protect that our yours we all I encourage bivalent new and old I the we wish vaccine which once all bivalent there and infections. strains

for you participating. Thank

disconnect may You at time. this