Walgreens Boots Alliance, Inc.

Q1 2022 Earnings Conference Call

1/6/2022

spk_0: oh
spk_1: land that in place on mute to prevent any background noise after the speakers remarks the lobby a question and answer session if you like that the question during this time press star followed by the number one on your color phone keypad if you like to withdraw your question press one again thank you to funny you may begin your conference
spk_2: good morning thank you for joining us for the walgreen booth alliance earnings call for the first quarter of fiscal year twenty twenty two i'm tiffany canada vice president of global and that the relation during the on today's call or rug burn or chief executive officer and games keto our chief financial officer as always during the conference call we anticipate making projections and forward looking statements based on our current expectation or actual results could do differ materially due to a number of factors including those listed on fly to and those outlined in our latest form of ten k and ten que filed with the securities and exchange commission we undertake no obligation to publicly update any forward looking statements after the presentation weather as a result of new information future then changes in a function or otherwise you can find our press release and the five reference on this call in the investor thaksin of the walgreen booth the went by the fbi than the properly also contain further information about nine gap financial measures that we will discuss today during the call
spk_3: i will now through in the call over to iraq going to the me and good morning everyone we're all a very strong third to go year both portersville brinkley and point that was born in compton currently an adult the dps good fifty three percent well ahead of or expectation the trunk form of would underpinned by in his execution because all of our business button and supported by ongoing contributions from back for the him into account the vaccination burchill would forbidden i am very proud of the continued success of our core businesses a fungal and us retail a robot recovery that our international market we are we're even or for your a joke with apia garden the low angle that are girl both his work previously we are capitalizing on our first quarter performance and overall business momentum for make incremental and buckman of one hundred and twenty million dollars in our people or two percentage points against it via as a reminder building a high performance culture in winning team is why we're for key strategic priori and the foundational to the other three are transform and align the core beckon build our next group engine with consumer centric calculus solution and third or group of portfolio and optimize capital allocation absent these and criminal and buckman a ribeye adopted a p of guiding her physical twenty two will have been three the bars percent growth you may recall that our original garden already included a four percentage point had one from investment the build out or help your growth engine and berkman got withdrawn lead believe local and the company for it hearted loathing earnings growth over the long term and we will show you today we are delivering well again bird up today commitment and laid out in october and making meaningful progress toward their strategic priority while it remains early days in implementing our vision the both that we are taking a clear and we are committed to creating for trainable value or shareholders i want to take a moment for the gulf or will win the fight against the current currently with dinner three walgreen leadership in promoting the help of the consumer woman in our community and the us we administered fifteen point six million cold nineteen vaccinations with them before this achievement with made possible through the extraordinary work of our pharmacy team numbers we recognize their dedication to the putting our patient our customers and our community as we continue to help lead the nation effort and combating the pandemic nearly one year after we began or vaccination program with one cold a shot at a long term care facility in columbus ohio we reached an important milestone the walgreen at the end of the first quarter fifty million coded vaccinations that minister to numbers of our community and the monday we have administered over fifty six million called vaccination and we are not flowing down in our apple walgreens began offering it back the boosters in september and today we have it minister over nine million doses as of november we started at minutes during college vaccination the children aged bar to eleven and balham the third the clock the you are so thin kind of many families prepare to travel and gather for the holidays and variant continue to emerge we are particularly proud of being a larger few the i heard back think provider in the pharmacy channel of a powerful testament to the trust the family the played big in our walgreen form of the pin numbers importantly about forty percent of walgreens toward offering of by the recovered vaccine two children ages five to eleven are located in areas with a high social boehner ability index score our testing and diagnostic did not have also accelerated with over twenty two point nine million colbert have completed today not only will we continue to grow the bible forbid as part of our pandemic effort we are building on the platform as we are developing a wider range of have been diagnosed diagnostic solution for our customers our execution back being unhealthy our outperforming than fourth quarter and our healthcare and up new are clear that towards fulfilling our vision to be the leading partner in reimagine local health care and wellbeing for all we are making significant progress toward the brother commitments we have dabbled in october along longer for you to priority let me provide you with them detail on purple important initiative earth we are transforming and aligning the core business and building a bomb of feel the future that will enable and supporter help your strategy we had an especially strong first quarter online including buy online pick up the door digital fell for of eighty eight percent in the you are driven by three point six million thing they pick up orders walgreen thought it biggest fiber monday ever and importantly average order value is about thirty dollars online versus of twenty dollars and doors expanding our overall basketball as the digital channel continue to mature we are in the early any the possibilities for walgreens digital platform we've been rolled over ninety two million my walgreen members of seven point two million from the fourth quarter additionally our alternative profit businesses are growing nightly including media advertising and financial services beckon were building a platform a consumer censored help your solution which we expect the field or next phase of grow we called them are shield and village and a majority in bethnal and october and november respectively and are care centric involvement is scheduled to called buddy into the third quarter we have eighty one village and be coal located and are now open and the rollout has accelerated to a piece of a new opening every to be for calendar year twenty twenty two our consumer health app is live with are blue shield california and clover partners or the qualifying members we are operating forty seven help quarter including can breathe and opening in california when looking at a rapid caden of adding a new how corner every week on average and twenty twenty two third we are refocusing our portfolio and up my than capital allocation we are applying a rigorous strategic mood to our equity and buckman and exploring all option to unlock value most recently we have agreed to acquire one hundred percent ownership of both alliance or it walgreens time and are german hotel jd creating greater agility ahead i know it you're building a diverse winning team that will underpin architecture priority we're getting even closer to the consumer by adding tracy brown of our chief cuts were all the on the back of her innovation at the american diabetes association and fan club rg transformation in integration officer and the to alum on is applying her experience and of them and video to draw a line of o'clock they should it or forging ahead and healthcare with doctor fashionably of our cheap political officer and were made a tandem of our chief conical trial bother drawing on merit
spk_2: during the and care delivery and clinical pollution well at anthem icon and care more and holiday is a global cheat in a reported officer in friday or high performance culture
spk_3: i'm excited to share either more news with you in the week the come as we continue to round out the t and r result in cargo thin three we have a beat and experience bench place to driver strategic priority today and i'm pleased with a we're in the final stages of welcoming a leader for our walgreen help but you bring a little more what i'm describing to life let me share with you and antidote from one of our new how corners and california on just his birthday of operation in november we felt the value proposition and action a goon show california member introduce himself and told us he's diabetic and struggled to make a bid to his primary care physician for his a one a testing the girl to learn he can do that here along with the family that has killed one example of how we can quote care get through are convenient offering at the hell corners allowed i have increased confidence that when executed at scale it's innovative and consumer censored strategy but dr can growth in value creation ahead we are connecting or physical health corners with our digital air and our other you need complimentary asset to meaningfully reviewed call and improve health outcome and equity and when you factor in the continued expansion of coal look at a clinic for village and the nearly half of our footprint will be covered we are building community engagement today as only walgreens can do to our truck the customer relationship
spk_4: local knowledge and are deep data and fight with that are handed over to jane to provide more color on not legal and our outlook been cameras on good morning in summary we have an excellent start to the year which focused execution across all of our businesses a joke for the ps was one dollar sixty eight cents well ahead of expectations and up fifty three percent versus prior year on a constant currency basis we executed strongly and covert vaccinations and personally us retail comes for the highest and twenty years and the international markets continued to recover nicely operating cash flow was one point one billion dollars in the quarter with free cash flow of six hundred and forty five million dollars the strong first quarter performance allows us to increase our full your adjust for dps guidance from flush too low single digit growth let's now look at the results in more detail first quarter sales advance seven point six percent on a constant currency basis reflecting strong com growth and walgreens and the international segment adjusted operating income increased forty eight point five percent on a constant currency basis driven by strong gross profit performance and boat pharmacy and reach of in the us and continued rebound in international sales unprofitability adjusted dps was one dollar sixty eight cents on the quarter a constant currency increase of fifty three percent driven almost entirely by adjusted operating income the result was aided by around ten cents or nine percentage points of facing benefits
spk_5: got to keep us increased by four dollars fifty eight cents to for daughter's thirteen
spk_4: in village and the and she booth
spk_6: as well as a one point two billion dollar chart which net of tax from the cup
spk_4: these equity earnings and a source bergen in the year ago order now let's move to the us segment for bales increase three point two percent in the quarter what a strong performance from walgreens more than offsetting the two hundred and seventy basis for point headwind from a decline in the alliance or x walgreens prime business adjusted gross profit increase twelve point three percent with both pharmacy and retail growing nicely strong sales growth was partially offset by lower reimbursement and higher shrink costs adjusted as gnh spending increased four point two percent in the quarter to seventeen point two percent of sales twenty basis points higher than last year the year on year increase was primarily due to investments relating to vaccinations and labour partly offset by savings from the transformational cost management program and some facing benefits adjusted operating income increased forty six point three percent as the strong gross profit growth more than compensated for higher costs associated with the covert nineteen vaccination program now let's look in more detail at us pharmacy pharmacy sales grew one point one percent including the negative impact from alliance or x walgreens prime
spk_5: comparable pharmacy sales were up six point eight percent while conscripts increase six point two percent
spk_6: with vaccinations accounting for five hundred and thirty five basis points of the script growth
spk_7: we completed fifteen point six million covert nineteen vaccinations in the quarter and administered six point five million covert nineteen tess
spk_4: we are now administering covert nineteen tests at around seven thousand stores flu shots were down as we saw red term for more normalize levels compared to the record levels last year additionally underline scripts were challenged by staffing shortages and temporary operate in our reductions adjusted gross profit grew nicely a strong sales growth at walgreens more than offset reimbursement pressure turning next to our us retail business comp retail sales increase ten point six percent and excluding tobacco comps were up eleven point seven percent compared to pre covert levels on a two year stuck has come sales were up low double digits we saw broad growth across all categories led by twenty four point seven percent growth and health and wellness driven by at home covert nineteen test and cough cold flu transactions were up nine percent and discretionary categories performed well with beauty come sales go and sixteen point six percent and person care up eleven point six percent strong sales growth drove an increase in gross profit however gross margin but klein slightly constrained by higher shrink from organized crime theft and increased import freight cars turning next to the international segment and as always fall top the constant currency numbers sales increased thirty four point two percent than the quarter including the twenty five point six percentage point to uplift from the formation of a wholesale joint venture in germany we are lapping the formation of the germany j v on november first twenty twenty with the prior quarter including only one month of sales
spk_6: excluding the same but sales were up eight point six percent reflecting the ongoing recovery and strong execution across most international markets particularly in the uk for sales advanced thirteen point four percent
spk_4: adjusted operating income was one hundred and sixty four
spk_5: million dollars in the quarter up eighty nine percent versus prior year led by higher sales and pipe cost control
spk_4: let's now look in more detail it boots uk comparable pharmacy sales increased eight point eight percent stronger demand for services contributed to the increase would sales up more than two hundred percent year on year benefiting from covert nineteen testing flu vaccinations were also up and we recorded our largest ever season with two million vaccinations during the first quarter up one hundred and fifty percent compared the last year these positive developments were only partially offset by the non repeat of favorable prior year facing of nhs funding comparable retail sales increase sixteen point three percent reflecting a recovery and football and strong commercial execution market share strengthened across all categories with beauty performing particularly well despite these strong results football in the quarter remains around twenty percent below pre covert levels with particular challenges and travel locations we do however see continued strength and basket size which was up around twelve percent in the first quarter compared to pre covert levels finally boots dot com continue to do very well digital sales almost doubles compared for the equivalent pre covert quarter and now account for more than fifteen percent of total retail sales looking ahead we are monitoring the impact of only grown
spk_5: the uk government announced a move to slightly tighter restrictions which started on december thirteenth
spk_4: we expect that footfall will remain sensitive to new covert variants this is our first quarter reporting results for new walgreens held segment our majority investments and shields and village and the closed on october twenty ninth on november twenty fourth respectively shields is immediately a creative with sales of twenty five million dollars and adjusted operating income of ten billion dollars in the quarter reflecting six days of ownership village and the ad sales of twenty six million dollars and an adjusted operating the loss of three million dollars for this fiscal year we anticipate village md to be dilute to a p s consistent with our october statements organic investments and walgreens help were slightly lower than expected to to the timing of expenditures we expect to see rising investments over the course of the year let's now look at some of the key metres from blue shield we continue to work with other interested parties and we are approaching are december twenty twenty two goal of two million lives as we scale or access to lives and partnerships we will continue to build out or walgreens held corners where the goal of more than one hundred by the end of twenty twenty two with forty seven already up and running we continue to expand the village and the footprint and will be an expansion mode for the foreseeable future village and the currently as two hundred and fifty seven locations across a the markets eighty one of which are coal located with walgreens stores up from fifty five at the end of fiscal twenty one the goal is to have at least one hundred and sixty call okay clinics in place by the end of twenty two both village and the and shields are on a high growth trajectory on a pro forma basis they delivered strong sales growth and on most recent quarter with village and the advancing one hundred and eighty two percent and shoes growing sixty two percent overall we are very excited about our growth potential
spk_6: turning next to cash flow
spk_4: we generated six hundred and forty five million dollars of free cash flow in the first quarter one hundred and eighteen billion dollars below prior year strong growth and operating income was more than offset by the phasing of working capital prior year one time benefits associated with the passing of the cares act and they increased capital expenditures behind key growth and initiatives turning now the full year guidance we are raising our adjusted p ps guidance from flush to go single digit growth
spk_5: we now expect higher growth from our base business
spk_4: reflecting a strong first quarter and higher levels of vaccinations and testing we expect thirty million vaccinations this year five million higher than our previous guidance or walgreens health segment as tracking well against it's key milestones with both the shields and villages and the transactions closing and the first quarter and a walgreens help organic business continuing to invest in future growth what in this guidance we reflect that our decision to increase investments in our team members by an incremental one hundred and twenty million dollars have highlighted area by roz without this investment are full year adjust the dps growth would have been free to five percent let me know provide some additional color on the guidance race including pups and takes vs prior guidance as mentioned we are planning for higher vaccinations and the fiscal year additionally are us retail comps were very strong in the first quarter and we have seen this momentum continue into the second quarter and we are also driving type cost management across all of our segments balancing this we made a decision to increase or labor investments recent labour challenges let this somewhat softer script volumes in the first quarter and these investments should help improve the situation additionally as with many of our peers we are experiencing higher rates of shrink loss due to organized crime theft inflation is also on the rise and while we expect the past true the majority of these higher costs there may be some short term impacts in summary we are raising our adjusted just a dps guidance to low single digit growth driven largely by are us segment and let me know update you on some of the guy who's metrics we provided during our recent investor day sales in the us are now expected to be around two percentage points higher than previous guidance from by strengthen boat pharmacy and front of store
spk_5: as a result adjusted operating income is anticipated to be flap to up slightly better than our previous guidance
spk_4: sales projections for international of also improved ten nine to eleven percent growth mainly due to improve the market growth for german wholesale business we still expect international adjusted operating income growth of more than fifty percent walgreens health remains on track
spk_8: sales will be slightly lower due to the timing of regulatory approval related the care centrex however this as an immaterial impact on earnings
spk_3: finally we expect an adjusted tax rate of around sixteen percent consistent with proper guidance with that let me now passive to ross perot closing remarks thank you jane and summarize we're executing with a very strong start to the year and an increase that cool twenty twenty two outlook
spk_0: daddy the a transformation is i'm looking forward to continuing a dialogue with you about our execution and or grab next week at the jp morgan healthcare conference we are energized and focused on reimagine health care and wellbeing for every one with a clear path toward accelerated value creation across all our stakeholders
spk_9: now i'd like to open the line for question operator thank you at this time i was like to remind everyone in other test a question press start than a number one on your telephone keypad will pass i just a moment to come to roster
spk_10: and your first question and son eric called found some bad taste go ahead
spk_11: thanks very much in good morning i'm i'm first helping you can provide a little more color on what's going on with the alliance or ex walgreens prime we saw the headlines earlier this week that prime appeared on by dumb i guess bigger picture what's happening with that
spk_12: ah is there any impact on guidance that we should note from taking the holding from fifty five percent to one hundred percent and if you don't mind it might have a fine thank you eric let me
spk_4: are are by as king james to get a little bit eye color on your second question and then we'll go into the alliance are accepted at thank you
spk_12: yup so higher iq so we've taken that the steak from fifty five to one hundred percent as you was your products are adjusted operating income though be no change because we already consolidate one hundred percent and on you have the below the line adjustment for the minority interest to forty five percent so you will recall or we gave guidance at the beginning of the euro it was a material driver would in the us business we called out that numb the would be a seven percent decline and us revenues as a result of roughly and eight billion dollar decline in the the malign or rex walgreens prime business i'm and week we kind of stuff that
spk_4: there's a lot that and you know this business will lead to be restructured it's probably better under one owner and
spk_11: the we see we were more formulating the news and specialty strategy in the business we see now the we have the shoes us a combined with our specialty pharmacies combined with the alliance all right for walgreens prime business we do believe we can formulate an integrated specially business
spk_4: one called on a little bit model we we come up with more information on this
spk_12: you you raise some the legal disputes between the two parties they've now been resolved as a as a result of the acquisition looking at or guidance and as a slight negative impact because if we were decline in one hundred million and think i'm year on year we will now be declining hundred percent of that income on the net income basis as opposed to for
spk_4: thirty five percent or honestly this is a couple of cents on the full years i wouldn't even worry about it in the context of the guidance but i do want to reiterate i think you'll see us that the on the next six months come out with a more energized specialty strategy which will be more integrated and how we i'm a we have surround
spk_10: potential partners with the a series of integrated services so we're pretty excited by this
spk_13: they are you want to emphasize the yeah sorry i do want to emphasize the relationship this and we're still a significant part of his of there was in retail and we will continue to offer special the services to them on an ongoing basis as they require
spk_9: i eventually had a john stanley on the cards on and there anything you want to add to that
spk_0: response hi alliance or s now james that a great job bar summarizing you specialties a huge part of our business we do you know twenty billion plus dollars a specialty worse
spk_14: i can that portfolios change describe show big opportunity for some really excited i join you actually answered my follow up on deciding the specially business in total so on thanks very much show yeah he did the north some yeah north north of twenty billion so great thank you your next question come from lisa gal sen j p morgan please go ahead
spk_10: i think that that's and good morning am by they'd let for the thing you enter in virtually next week i they want me to start with first the clarification games with i understand in the got it when you talk about higher vaccination booth quarter with higher than we had anticipated obviously we now have boosters or even twelve plus and the us
spk_12: you talk about your advocating for vaccination and as well testing and the up the the guidance and then secondly i could play a broader question for you rather be think about the strategy and the health corners and how do we think about and note this is for you are prejean family but how do we think about the profitability their do you think that longer term you can do some kind of you know whether it's shared savings program or other had the program because getting an incremental script is great but only where the opportunity as rated to lower the overall cost and perpetually sharon though saving philip people help us understand that it well great ella james get started on chess
spk_4: i'm the leader been think he would be a five or six questions and or the first one vaccinations so we've increased the as blood from twenty five to thirty million on especially as a result of for high levels of activity on the first quarter or i do want to stress though the thirty is just a number pick that a point and on depending on the evolution of the variance and and guidance from the cdc and others this number could vary quite a bit i'm so they could be some potential upside to this are truly that and to but in is specifically on that we increase five million that's worth about nine cents and i'm testing we got a fairly large opportunity as well because actually the biggest driver in the first quarter is actually probably testing as opposed to vaccines when that's probably in the range of feudal twelve to fifteen concerns them just so fond of on the full year from give you a full year number from nine cents on vaccines and has been is called call twelve to fifteen cents so coin a sizable contribution to the full year i'm as we look at the third the million you break it out on approximately nineteen million or boosters and you can figure out what the rest is pediatrics i believe is somewhere in the region of to two and a half minutes so the rest is
spk_14: a people aged twelve plus so high i can't be much more specific than that from memory
spk_3: that it's kind of a base assumptions were not giving profitable the
spk_10: you can work it out from the sense know for sure that we just gave you
spk_3: i'm trying to remember that cover all your questions and it but yeah you covered all my questions and and that by thank you so much and uncle see you next week
spk_10: so lisa let me talk a little bit about how are thinking about our growth and walgreens health and how that lily leverages our core business and walgreens managed by a judge family so here's the way to think about this you know we're and you know creating an entity hear that does much more than just
spk_3: dispensing of of pharmaceuticals and sell and what the way to think about this is the number of village and d it is that we plan to bring together and you think about this and investment of five point two billion dollars will be opening at least six hundred of those village medical clinics within our entity and then adding the health corners we're trying to put the consumer in the middle of this and also getting them the visibility of what it costs to manage their healthcare over their lifetime
spk_10: when we think about where did the profitability come from and as it is much beyond the prescription usage when i think about you know a customer coming into village in day and actually i'm understanding more about their health care need it will help them understand the spending and then you know also to what comes from operating of primary care physician practice within our within our entity and then i think about the worst that can happen between optimizing for that asian between understanding what the pharmacist is our applying to that customer or patients health care needs and to get that repeatability and also getting the coast merck our patient the opportunity to come into one of our units and utilize that how corner and so just managing their care over time
spk_0: for instance you know the looking at their a once be levels and things like that have appeared a time will hopefully bring their costs to care down and keep them out of the healthcare system and returning to emergency rooms and hospital setting and so you know we'd not really articulate it a a a ad
spk_15: clear view on profitability are going forward but what i would tell you that this does take as well beyond just two of you know the additional script is much larger than that
spk_13: okay great and all that common i'll see you next week that sounds great and next question comes from a rice some credit says please go ahead
spk_15: bags hi everybody
spk_13: the front door in the u s ourselves we're really strong and i just
spk_4: as you that is you look at that are clearly at home testing probably add a component can you parse out a how much of that helped and how as you look at the rest of the year of with that demonstration gonna about seventy five hundred million a task
spk_12: does that have implications for you in terms of odd your ability to get those test yourself to sell to sell them or up and your expectations around that test the and and if their southern beyond that casting of it's really strong can you comment on that as well on the us out front in sales the they are take a shot at unmarried john come to it if you take the growth
spk_4: on front of store which was a
spk_12: the time point six was the highest and twenty years
spk_4: the mighty contribution coming from the covert nineteen screening tests was about three hundred and twenty basis points so was about twenty nine thirty percent of the of the growth rate so there is strong core performance and the front of store it's not just for on on at home posting
spk_16: them so that's roughly in the court road think it's a little over two hundred million dollars of revenue in the
spk_17: order on i think it's around six am from my got this wrong
spk_13: roughly six cents contribution thoughts with it's not a massively profitable sector it's below the average of the have the one this sector on a gross profit basis what you were looking for age okay yeah
spk_15: as urges during
spk_0: yeah thank god i just wanna james you know we stop really strong performance and okey see the beauty personal care all very strong categories
spk_18: good success with our mass personalization efforts and a little bit a halo from the vaccine testing so i think those are all good contributors to up to the strong performance and courts okay great thanks alot yeah next question consent churchill some thatcher back please go ahead
spk_12: yeah
spk_19: first i'd like to walk i'm tiffany board so tiffany look forward to working with you are and i guess kim jon i going to have two questions around our one is around when i would call underlying are actually you talk about the comp on the front of the store
spk_13: enjoying keen i guess can talk about where you feel like the when i recall the acute care script or the regular way script count looks like vs twenty on to do seems to be some debate about how close back to be fine we've gotten and i guess if we get if i could just make enough follow on on the front of the store james ah ha as the question about the in home has to i'm sorry of the and home testing of can talk about the impact that that had on the average you wanna take a shot john on the oregon you sure i mean i think the good idea i would just say on our acts i can we we saw
spk_12: for count growth in above and beyond what we saw in vaccinations but we think there's more opportunity for us they're just looking broadly at the marketplace the you know we are as as james and ross talk about making significant investments in the business
spk_4: you know both from a staffing perspective as well as with project nucleus and other capabilities were putting into to really drive that pharmacy experience and store so i think we still see a ton of side and growth opportunity just in the base pharmacy business the district you know to grow our marketshare and to love to push that forward and so george they are so you got room the the que one was from excluding them realize asians was up one point eight percent and i was little softer them where we would like to have to be one of a big drivers was medicaid or the market grew strongly and both medicaid and discounted products
spk_20: the we'd like the market and medicaid because we have a lower percentage overall sharon in the got rid of that being said in a don't there is a fairly strong connectivity between the scripts because i'm a pharmacist or dumervil jobs and there's been a high level of stress in the system and the investments
spk_0: so i think what has happened a little bit as because of stuffing shortages
spk_3: we've had the reduce operating hours in some locations i'm and to was some of those phone calls that happen to save you know adherents follow ups are they taking the medication those phone calls were not priority number one during the administration of the vaccinations so we gotta get a bit of a rebalancing in the year to go and we are reasonably confident that the actions were taken are definitely in the right direction so we should see an uptick in scripts and the in the coming months
spk_12: okay i personally think that
spk_4: your
spk_21: a year next question comes from elisabet enter said some ever car please go ahead
spk_12: hi guys thanks so much the question of either allah may be on a good question on your time the at hunter thing contribution of quarter that was intent on etc how are you thinking about that in the broader context of that the new died and that you put out well my be on tag team worked with them john on this you know that there is there was a fair amount of talk about free testing and still to be determined one that will be on the market we are as far as another isn't the website set up and the reason the the find defined
spk_22: procedural how it's all going to work so i think it's a couple of months away
spk_12: i think that the critical one right now is is stock available as am i give you an interesting statistic are have the one musher in the market generally as around seventeen eighteen percent or share of our share of the out of the at home to us
spk_23: the is forty forty five percent so i think what we've superbly executed against his
spk_12: or gunships with suppliers
spk_4: in all right now we're we're a little spotty and places on on on availability or read about seventy percent but week
spk_14: for the of the out
spk_3: so it's been a huge success of the two hundred billion didn't come just magically a pain because of from stock available as a on weed much more of we had what i think we have seven different types of covert at home tests and or stores in various places so we've out executed on this one and that's why with such a big
spk_14: contribution in the first quarter
spk_24: we think we will continue doubt execute we see our stock availability levels going up significantly i made month
spk_4: so we're feeling and a pretty good place in the next three months you know be beyond that nobody can tell it's all on what's the where are the variance at a particular point in time i think testing is here to stay for a considerable amount of time but our for forecasters know riding on this i can assure you of the
spk_6: that's really helpful every time i think you to wear and really helpful instead of getting your updated thoughts on the broader longer term picture with village and the are you wondering if you had a answered of data
spk_12: different the quarter of of and call located location in terms of know increase in sales and the walgreens
spk_4: you know that fernando barbecue or any other data you could point to us from that perspective no not really i think it's a little bit soon or the we need another portrait behind us you know we've got a think eighty one clinics open
spk_12: i'm in a we we still need on i was on the phone to some of the village guys them yesterday with we still need to get the same kind of stats they already have starts the prove that promises working with a doctor produces tremendous benefits in terms of thumb oh can't we need to replica
spk_25: a those statistics in the car located are convinced that will happen it's just the time in different you know i think as you look forward on on village run on sorry for look forward on our segment one thing about you the have a mindless you know the revenue is pretty sure small in the quarter because we're just closing the acquisitions in our a good way to think about these acquisitions
spk_0: as both but if if care centuries closes at the beginning of the third quarter we essentially will be doing a little over a billion a quarter in terms of revenue in the segment so you think about you for and you do a simplistic one race
spk_26: by the time we finish queue for will have a runway of about four billion probably north of four billion in terms of color the twelve month run race on the segment of the only kind of new inside we would give because a little bit endless models or little bit all over the place in terms of expectations so i don't think you're gonna see stability on on revenue want to get into cute free and at all depends on closing time on my first century or one for us closer look another billion a quarter for the remainder of the year got a superhero thing sure your next question and some michael journey and bank of america please go ahead good morning and thanks for all the colors so far i apologize like you find back this but i wanna make sure i understand allow the movie pieces on guy and you take their how it factors into the multiyear growth that you outlined at the better a back and but tolbert the it seems to me james that if and look at the pluses and minuses the you outlined which are quite helpful especially with some of the dynamics around or the casting benefit the you're seeing that the pluses more than offset the minuses relative to the magnitude of dps games or maybe i would have expect
spk_4: to the bit more and so i guess relative does and especially given that a lot of benefits are coded or are you feeling that we kept project recovered can look like fiscal twenty three but doesn't change anything the much directory jumping off point you expect for earnings growth relative to the previous album that you mention yeah i'm not sure we want to start getting them for like sure but i would say the
spk_12: let's talk about shrink for a minute because you could actually argue that shrink is somewhat correlated with covered in terms of it is something that has started at three gop post
spk_4: covert so what are an you know i'm not trying to get a direct correlation with it but a give you a number of you know the the shrink issue for us this year as in excess of fifteen cents a share so we don't anticipate the that will continue longer term solder as you said there's money put some takes in both directions
spk_12: so testing as a big number but so shrink and we're gonna have to redouble our efforts on shrink to get this number in a different direction and in honestly i think it's congress needs to step up a little bit fear because the magnitude of the problem is it's enormous we've of i don't know ten years for shrink up
spk_4: and a knock on it is it's we estimate that shrink is about forty to fifty percent higher on a percentage basis
spk_12: that was pre pre prior to sorry but your prior to ninety three prior to twenty so this is over the last two years were absorbing a fifty two percent increase in shrink and it's organized crime this is not as he theft it's not somebody who can't afford to eat tomorrow these are gangs that actually go in and empty or stories of beauty products
spk_13: and then you know it's it's a real issue for the it was with all of our peers it's a real issue you know the other one is inflation honestly i think we're doing a very good job of managing that we have some will have minor ups and downs quarter to quarter would generally were offsetting and full inflation either might be an old trees and negative on the full year so we're not talking about big numbers but i think we have to wait to see how the your evolved was too many moving peace as honestly in terms of
spk_10: in terms of what is the final vaccination number and year was the final testing and got lost john disturb commendable because we have an intention to build a diagnostics business longer term
spk_3: and that will provide partial offset as we get in for next year john arouse the on out on anything and maybe labor costs yeah so i mean i think god i think you know where we gonna diagnostic testing not just covered testing in over seven thousand stores we've got a a some good green shoots and a when she testing and are underway right now just the very early stages but i think that's a big opportunity for us and in our covered testing we do clear wage
spk_10: rapid testing in our stores and over four thousand location south as changes i think that's one example of some of the changes to our business will come out of out of congress mean for that are big opportunity us
spk_26: mike this is ross can i just add a couple of things here just for clarity cell and it you also notice that we made a significant in that done so far applying it very directly against a regaining our script business which could turn the numbers around in that area and and also as that
spk_27: he'll show for age fourth down to come on mine in a we're managing true that though the uncertainty here as as the other part that we need to think about and then i just wanted to mention the piece on strange and that we're managing less on a couple different levels gonna we were happening at door level but my myself personally
spk_0: and our government relations team has been in the washington d c area having conversations with
spk_28: you know our the national leaders on how do we get around this shrink issue and in a what we're saying i'm on online application and so we're working with our partners that are in the online business for the heavy to make sure that we can monitor the situation thought that level of uncertainty and the enormity of some of these issue that you may look at this and say and is there more to be had here but it's the uncertainty pizza what managing mike at that's helpful
spk_12: the all that for help quarters understand where be for thank you thank you
spk_4: a year or next question cousins teeth and valiquette some barclays please go ahead
spk_12: i think flag a miami one for to say a quick question i'm a quarterly came for burning in the remainder fiscal twenty two and each other operating profit for the company has always been up sequentially in fiscal two two versus fiscal one que and it's fiscal year historically has only reason why that would not be up to quench away and fiscal to que because the fiscal one que they shared him the sequential adjusted operating profit of the wedding related thoughts around the flu benefit for the company and that as will take you as well like
spk_4: sequential side i honestly don't have been in front of me i think we we do see he the to to will be positive corporate on the ps group you're on your because the was low levels of vaccination in the prior quarter so
spk_12: so when we have a good score second quarter the answer is yes
spk_4: obviously there's a lot up in the air in terms of how much of the to que one and you know that's twelve was from went on a daily basis is what is the estimate on the full year many people will get boosted what it's for pediatric number and a you know the quite a lot of detail work so are we will have a good causes a second quarter
spk_28: i'm not a the flue gas flu we are we aware a big with a very strong of struck a stranger we very strong
spk_0: on flu season in the uk which was up one hundred and fifty percent that we have a fairly weak one in the us
spk_26: the influence of and says generally were down compared to a record season last year so
spk_3: is that it go brilliantly the answer is no mom i would i think the exact number is why we were i think it was an eighty basis points and when
spk_13: here's the first quarter was eighty basis points negative to to a weaker flu season okay got it okay thanks
spk_29: he your next question and son john ran some some random chance please go ahead
spk_13: a good morning i'm a big as of called out three forty be as a risk and in a week notice that the manufacturers of want to go around from the course and that there's reduce support for this program for the contract honesty is that what kind of had one is that the sheer versus last year and a half ass with it you can thank you for that question i'm going to as our genes stanley to talk a lot of that about the impact of three forty be and is there's any other numbers game so close out the question john
spk_12: i don't think it's a huge of material eighty four percent moment where are you watching the situation here we go the administration in are supported by the idea is obviously to dead now accepts the medications to as as many folks who should have them as possible and that's really our objective is well bomb and obviously you know shields gives us a whole nother
spk_30: approach here as well
spk_31: as you look at the three forty be space
spk_30: but it's also you know an important part of our our specialty business and again just making sure that we can get
spk_31: patient access to the medications that they should have south i think is by far as what we can see exposure so far that's reflected and and the guys that were given
spk_13: yeah i would just some oil and it's it's now material year on year they gets tracking slightly behind budget but launched that's not the own material enough to talk about and then year on year at the i call it can a neutral and then just have one a dick picture question yeah i guess we're all train that twenty years the thinking that that idioms that just locked up especially market they can use their benefit structure and united healthcare does that diplomat as the or have an effect it will use their mail order the just at a high level and i are you just get to be rolled out fully but the are you how do you break that pdf added benefit structure cartel with recipe given that you you don't out of the and have and community pharmacy today will we can a hospital pharmacy what we just and soon our
spk_32: that our retail pharmacy them and what we have to or central fell we bring a i think a google
spk_0: by network have access to the marketplace with the a really strong can cook capabilities bomb and just you know says is an important part of that
spk_13: is our relationships with with pharma and just over the last few months we brought in ten new you know limited distribution drugstore portfolio now was common just over two hundred their efforts there important partners to us
spk_10: brockton so there i think there's
spk_13: there's ah space horse in this month market and you'll hear us talk about that as we know bring our strategy for here for me to the integration all our capabilities and we have i felt for shit thank you and the last question saturday today consent eric purchase from their friend research please go ahead thank you i'll stand the a macro from i know that that biden administration is concerning taking administrative action on the i r fees and these fees we understand to be significant for independent retail on to that pharmacies them interested to what extent they've been meaningful has a reimbursement pressure for walgreens his arm and he would it be material if we see limitations to the i r fees but forth thanks eric for the question john family you want to take balance you that so yeah we've you know we're working with industry groups in various states get to really try making the i are fees can i just aren't the way they're designed and so the that's really i think key component of it i'm from a uniform a regulatory perspective so we support
spk_10: efforts to just try and have a a a a fee structure that makes sense or retail pharmacy ah i'm is fairly compensated for the services that it provides actually can where we're headed here bomb i think the you know the the impact of it with we we just have to see as and then secondly
spk_0: you know do the pvm or others are several on the plan sponsors you know somehow ship the playing field and some other way you'd have to take into consideration trying to trying to determine the quantitative and path that what the changes might be but clearly some of the features don't make any sense
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