Walgreens Boots Alliance Inc (WBA) — Q2 2024 Earnings Call Transcript

Good morning. Thank you for joining us for the Walgreens Boots Alliance earnings call for the second quarter of fiscal year 2024. I'm Chris Dale, Group Vice President of Finance, Planning and Analysis, filling in for Tiffany. Joining me on today's call are Tim Wentworth, our Chief Executive Officer; Mary Langowski, President of US Healthcare; and Manmohan Mahajan, Global Chief Financial Officer. In addition, Rick Gates, Senior Vice President and Walgreens Chief Pharmacy Officer, and Tracey Brown, President of Walgreens Retail and Chief Customer Officer, will participate in Q&A. As always, during the conference call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to a number of factors, including those listed on slide 2 and those outlined in our latest Form 10-K filed with the Securities and Exchange Commission. We undertake no obligation to publicly update any forward-looking statement after this presentation, whether as a result of new information, future events, changes in assumptions, or otherwise. You can find our press release and the slides referenced on this call in the Investors section of the Walgreens Boots Alliance website. During this call, we will discuss certain non-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measures and the reconciliations are set forth in the press release. You may also refer to the slides posted to the Investors section of our website for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call. I will now turn the call over to Tim.

Thanks, Chris, and good morning, everyone. WBA's second quarter operational results were in line with our expectations despite continued challenges in the U.S. retail environment. Adjusted EPS of $1.20 reflects good execution and cost discipline in our U.S. retail pharmacy segment, continued strong performance in international, our first quarter of positive adjusted EBITDA in U.S. Healthcare, and positive impacts from tax planning benefits. During the quarter, we recognized a $5.8 billion after-tax non-cash goodwill impairment charge net of non-controlling interest related to our investment in VillageMD. This charge is excluded from any of our adjusted non-GAAP earnings measures. We are narrowing full-year adjusted EPS guidance to a range of $3.20 to $3.35. This guidance reflects the challenging retail environment in the U.S. and our decisions to both wind down the sale-leaseback program and to sell additional shares of Cencora in a further effort to simplify our financial reporting. We expect these impacts to be partially offset by execution in pharmacy services and tax favorability. We have recently solidified our leadership team, which I believe has the capabilities and commitment to best lead WBA into its future. Once again, I'm excited to welcome our newest WBA leaders who were announced this quarter: Elizabeth Burger as Chief Human Resources Officer, Lanesha Minnix as Chief Legal Officer, and Mary Langowski as President of U.S. Healthcare. They join Manmohan Mahajan, who was confirmed as our Chief Financial Officer, and Beth Leonard, who was named our Chief Corporate Affairs Officer in rounding out our Executive Committee. Together, our Executive Committee is comprised of individuals that bring an established track record of operational excellence and are all based together in Chicago, working to drive collaboration and acting with urgency to drive results. Over the next three months, we will continue the intense review of our portfolio of assets in an effort to ensure that each contributes to the growth we aspire to deliver and drives our go-forward strategy to be the leading retail pharmacy and health services partner that creates deep relationships and trust. Let me share further detail on the progress happening across our businesses to date. In our U.S. retail pharmacy business, we are navigating a challenging backdrop and exploring innovative pathways to boost profitability and growth. Our U.S. customers are confronting considerable pressure from multiyear inflationary trends and depleted household savings with U.S. household debt at record levels and delinquency rates on the rise. Our shoppers are making deliberate choices to seek value, resulting in channel-shifting behavior. We're responding to these market dynamics by making investments in key value items and focusing our capabilities to engage with customers in an intelligent, targeted way. Additionally, we have implemented initiatives to improve front-end performance. We are leaning into the massive opportunity to increase own brand penetration, now standing at 17.1%, up 95 basis points year-over-year. We expect that we can further expand with a meaningful margin advantage over national brands. We plan to deepen our partnership with a reduced set of national suppliers, carefully selecting who we work with alongside our own brands. Operationally, we're intensely focused on the customer experience and meeting customers where, when, and how they want to shop. That means enhancing the experience not only in-store but also through online ordering for pickup and same-day delivery, where over 80% of orders are received in less than an hour. Additionally, we are empowering our store managers and field leaders to share in our company’s anticipated growth and increase their ability to impact areas that matter most to their stores and their customers. To do this, we are realigning incentives to place much greater weight on individual store performance. Moving to pharmacy, we delivered another quarter of strong execution with outperformance in pharmacy services led by our vaccines portfolio. While market growth was slower than originally anticipated, we maintained market share. Our 11 micro-fulfillment centers currently support 4,600 stores, which is over half our footprint. Earlier this year, we talked about pausing the rollout of additional micro-fulfillment centers as we optimize the model that gives our pharmacists and technicians the ability to spend more time on customer-facing activities. We are seeing benefits such as improved MPA scores, patient retention, and adherence. Not only is this better for the patient, but it also improves team member retention and talent acquisition as they perform more of the clinical activities that they are well-trained to do. We are focused on creating an environment that makes us the practice setting of choice for pharmacists. In fact, earlier this month, we kicked off our first Dean's Advisory Council meeting with the mission of re-energizing and evolving the definition of community pharmacy as demand for pharmacy services increases while the industry faces a pronounced labor shortage. We are on a mission to achieve provider status for our pharmacists given their influence, which was so clearly highlighted during the pandemic. This would allow them to be reimbursed for providing select health care services to patients. As an example of what is ultimately possible, in the UK, the NHS Pharmacy First Service, which launched on January 31st, expands the role of Boots pharmacists throughout England to advise and prescribe for the treatment of seven common health conditions. This model serves as a use case of new ways to fully deploy pharmacist capabilities to lighten the burden on the broader healthcare system. Speaking of value, there is real opportunity for change and transparency in reimbursement models to help slow the inflationary pressures on drug prices and our patients' wallets. We are having more active and constructive conversations with PBMs and other payers around cost-plus models. Many of these discussions are still in early stages, but they share a general theme. There is value to all from a transparent, predictable model where what patients pay at the counter is rationally tied to the cost of the drug. We don't expect an industry shift to happen overnight, as there are a number of dynamics that need to be worked out, but it's especially encouraging to see PBMs and payers open to these models. Now turning to U.S. Healthcare, we have reached an important milestone, delivering our first-quarter positive adjusted EBITDA and another quarter of significant year-on-year growth. Shields continues to deliver strong top and bottom-line performance as their differentiated model is driving significant value for health system partners, which has resulted in several recent long-term extensions. VillageMD's actions to accelerate profitability, including recent rightsizing of their cost structure, optimizing their clinic footprint, and growing patient panels are driving improvement in adjusted EBITDA. Full risk lives grew by 19% year-on-year in the second quarter. As Village prioritizes density in their highest opportunity markets, they decided in January to exit a total of approximately 160 clinics, inclusive of the 60 that had been previously communicated. As of today, they have already exited 140 locations. Manmohan will discuss in more detail our recent reevaluation of our investment in VillageMD. Shifting to International, the business once again performed well, demonstrating strong and consistent execution highlighted by meaningful retail comp growth at Boots UK and a 12th consecutive quarter of market share gains. Finally, let me offer further detail on the progress of our swift actions to right-size the WBA cost structure and increase cash flow across the company. We have a very high degree of visibility into the $1 billion in cost savings this year, as actions already taken to date will account for a significant majority of the total. We're driving savings primarily in our U.S. retail pharmacy segment in three ways: organizational initiatives, including support office workforce reductions, location optimization, and additional pharmacy and retail operating model improvements. We are also working to improve cash flow by prioritizing projects and capital spend. In the first half, CapEx was $250 million lower than the prior year period. We are on track to deliver a $600 million reduction for the full year and $500 million in working capital benefits in fiscal 2024.

Thank you, Tim. Good morning, everyone. I'm excited to join you all today and I'm thrilled to be a part of this iconic company. I've spent 25 years in the healthcare, government, and retail sectors. My career is focused on leading teams to unlock new areas of growth, commercialize new products and healthcare services, and accelerate execution through financial discipline. I've been fortunate to have worked with some of the most successful Fortune 50 and healthcare growth companies that have sought to embrace and drive change to improve the healthcare system. At CVS Health, I led and executed a strategy to expand healthcare services, leveraging the company's core assets, including leading aspects of CVS' acquisition of Aetna. Most recently, I was CEO of Solera Health, a leading digital health technology company serving payers and employers, where I led a transformation of the business, launching new condition product lines, a new technology platform, and a new economic model to support sustained growth. My vantage point of working across providers, pharma, payers, and retail has made one thing clear: very few companies have the platform, access, and reach of Walgreens. Since the announcement, I have heard from health plans, health systems, and others who see an opportunity to partner with Walgreens. They know the value of our community presence, the role our pharmacists can play, and the need for higher touch, more frequent, and lower-cost engagement to drive better health outcomes. Healthcare is changing, and consumer expectations are changing. In the face of that, we believe Walgreens is still in the best position to be the most convenient entry point into the healthcare system. And our position as an independent partner able to work with any health plan or PBM is a true strength that we will capitalize on. Finally, I want to congratulate the team on achieving positive adjusted EBITDA in U.S. healthcare this quarter. It's a significant milestone, and we will continue to build on this progress to drive value for our shareholders, customers, and patients. Thanks to Tim and the board for this opportunity. I'll now turn it to Manmohan.

Thank you, Mary, and good morning, everyone. Overall, second quarter operational results were in line with our expectations. Sales grew 5.7% on a constant currency basis. U.S. Retail Pharmacy increased 4.7%, International was up 3.2%, and U.S. Healthcare delivered performance sales growth of 14%. Adjusted EPS of $1.20 increased year-over-year by 2.8% on a constant currency basis, reflecting improved profitability in our U.S. Healthcare segment, impact of cost savings, and a lower adjusted effective tax rate, offset by the lower U.S. retail performance and lower sale leaseback gains. The lower adjusted effective tax rate reflects the initial recognition of a deferred tax asset in certain international jurisdictions. GAAP net loss for the second quarter included a $5.8 billion noncash impairment charge related to VillageMD goodwill. During the fourth quarter of fiscal '23, we disclosed that our annual goodwill impairment test for our VillageMD reporting unit resulted in its fair value exceeding its carrying value by a narrow margin. As a result, we have been closely monitoring the performance of the business for potential indicators of impairment. In February, we received a downward revised longer-term forecast from VillageMD management, including the impact of closing approximately 160 clinics, inclusive of the 60 previously communicated, slower than expected trends in patient panel growth and multi-specialty productivity, and recent changes in Medicare reimbursement models. These impacts were partly offset by actions taken to right-size the cost structure. Given this revised forecast, we performed an interim test of VillageMD reporting unit goodwill that resulted in a fair value below its carrying value. Accordingly, we recognized a $12.4 billion noncash goodwill impairment charge prior to the attribution of loss to non-controlling interests. On an after-tax basis and net of 47% non-controlling interest, this resulted in a net loss of $5.8 billion in the quarter. This charge is excluded from non-GAAP earnings measures. The fair value of the business was determined using a combination of the income and market approaches. The impairment charge is due to the lower than previously expected longer-term financial performance expectations, challenged market multiples for VillageMD's peer group, which have continued to decline, and increased discount rates. As a reminder, our share of VillageMD's net assets carrying value also included a $2 billion gain recognized on the equity interest owned by the company immediately prior to the acquisition of majority equity interest in VillageMD during the first quarter of fiscal '22. This goodwill write-off is noncash, and we do not believe it will have a significant impact on our financial position or our ability to invest across businesses going forward. During the first half of fiscal '24, we have seen positive financial impacts from the recent actions taken by VillageMD management team to accelerate profitability. We believe the focused approach on improving performance in core markets, as well as rightsizing the cost structure, will provide VillageMD a platform for future growth. The second quarter also included a $455 million noncash impairment charge related to certain long-lived assets in the U.S. Retail Pharmacy segment. As part of a deep dive exercise over the last several months, we concluded during the quarter that instead of continuing to build a new technology platform for pharmacy operations in the U.S., it would be better to modernize our existing system over time with new capabilities in an agile and capital-efficient manner with much lower disruption risk. As a result, we recognize the charge against the underlying software and development assets. Finally, similar to last quarter, we recognized a $474 million gain on the sale of Cencora shares, partly offset by a $396 million after-tax noncash charge for fair value adjustments on variable prepaid forward derivatives related to Cencora shares. Now let's move on to the first half highlights. Sales increased 7.2% on a constant currency basis. Adjusted EPS declined 20.5% on a constant currency basis due to weaker U.S. retail performance and lower sale leaseback gains, partly offset by improved profitability in U.S. Healthcare and a lower adjusted effective tax rate. GAAP net loss was $6 billion compared to a loss of $3 billion in the first half of fiscal '23. As I explained earlier, the second half of the fiscal '24 included certain noncash impairment charges. The prior year period included a $5.4 billion after-tax charge for opioid-related claims and lawsuits, partly offset by a $1.4 billion after-tax gain on the sale of Cencora shares. Now let me cover the U.S. Retail Pharmacy segment. Note that all comparable figures are on a leap year-adjusted basis for all segments. Sales grew 4.7% year-on-year driven by brand inflation in pharmacy, prescription volume, and a higher contribution from pharmacy services, which was partly offset by a 4.5% decline in the retail business. AOI declined 29.5% versus the prior year quarter due to lower retail sales volume, elevated levels of shrink, and lower sale leaseback gains, partially offset by continued progress on cost savings initiatives. Looking ahead, we are winding down the sale leaseback program and do not anticipate any material benefit going forward. Sale leaseback gains, net of incremental rent expense, were an approximately $125 million headwind to AOI in the quarter. Let me now turn to U.S. Pharmacy. Pharmacy comp sales increased 8.7%, mainly driven by brand inflation, volume growth, and contribution from pharmacy services. Comp scripts grew 2.9% excluding immunizations, in line with the overall prescription market. The ongoing impact of Medicaid redeterminations continued to negatively impact overall market growth. Pharmacy services performed better than expected driven by our vaccines portfolio. Pharmacy adjusted gross profit was down slightly versus the prior year quarter, with margin negatively impacted by brand mixed impacts and reimbursement pressure net of procurement savings. Turning next to our U.S. Retail business. We continue to see a challenging retail environment with a shift in discretionary spend away from the drug channel as consumers seek value. Comparable retail sales declined 4.3% in the quarter. There were three main drivers. First, as consumers continue to pull back on discretionary spending, we saw an impact of approximately 170 basis points from weaker sales in holiday seasonal and general merchandise categories. Second, as expected, we saw a weaker than normal respiratory season, which directly impacted comparable sales by approximately 90 basis points. Third-party data showed flu, cold, and respiratory activity was down 6% compared to the prior year quarter. Additionally, as cold and flu serves as a primary trip driver, there was also an incremental impact from the lower attachment sales. Lastly, weather conditions in January led to a headwind of approximately 40 basis points in the quarter. Retail gross margin declined year-on-year, impacted by higher shrink, partly offset by benefits from category performance improvement programs. Turning next to the International segment, and as always, I will talk in constant currency numbers. The International segment again exceeded our expectations in this quarter, total sales grew 3.2% with Boots UK increasing 3% and Germany wholesale up 5.3%. Segment adjusted growth profit increased by 3.2%. Adjusted operating income was down 32% entirely due to lapping the real estate gains in the year-ago period, with underlying growth offsetting inflationary pressures. Let's now cover Boots, UK in detail. Comp pharmacy sales were up 1.7%. Comp retail sales increased 5.9%, with all categories showing growth, led by beauty and personal care. Across formats, destination health and beauty, flagship, and travel locations performed particularly well. Boots.com sales increased 16.8% year-on-year and represented over 17% of our UK retail sales. Turning next to U.S. Healthcare. The U.S. Healthcare segment delivered its first quarter of positive adjusted EBITDA. This was the third consecutive quarter of significant year-on-year improvement in adjusted EBITDA. Second quarter sales of $2.2 billion increased 33% compared to the prior year quarter aided by the acquisition of Summit Health. On a pro forma basis, segment sales increased 14%. VillageMD sales of $1.6 billion grew 20% on a pro forma basis. The year-on-year increase was driven by same clinic performance and growth in full risk lives. Shield sales were up 13%, as new health system contracts and expansion of existing partnerships led to an over 40% increase in the number of patients on service in the quarter versus the prior year. Adjusted EBITDA was $17 million, an improvement of $127 million compared to last year, mainly driven by VillageMD and Shields. We believe VillageMD continues to make progress to accelerate profitability by rightsizing its cost structure and growing its patient panel. Shields saw robust adjusted EBITDA growth compared to the prior year period. Turning next to cash flow. Operating cash flows in the first half of fiscal '24 were negatively impacted by roughly $700 million in payments related to legal matters, $380 million in annuity premium contributions related to Boots' pension plan, and underlying seasonality. Capital expenditures declined by $250 million versus the first half of fiscal '23. As a result, free cash flow was down by approximately $2 billion versus the prior year. We expect second-half free cash flow improvement compared to the first half driven by several factors. First, we expect lower payments related to legal matters in the second half of fiscal '24. Second, we remain on track to reduce capital expenditure by approximately $600 million year-over-year. Third, we expect to deliver working capital improvement of $500 million during fiscal '24. While we did see some benefit from these initiatives during the first half of '24, we expect the majority of these benefits will impact the second half. Lastly, similar to prior years, we believe the underlying working capital seasonality in the U.S. Retail Pharmacy and International segments will have a favorable impact in the second half of the year compared to the first half. I will now turn to guidance. We are narrowing our fiscal '24 adjusted EPS guidance to $3.20 to $3.35. The updated range incorporates a challenging U.S. retail environment, lower sale leaseback gains, and reduced Cencora equity income offset by the execution in pharmacy services and a lower adjusted effective tax rate. On the tailwinds, we continue to see strong execution in our pharmacy services business, which has delivered results ahead of our initial plan to date. In addition, we now expect our adjusted effective tax rate to be under 5%. On the headwinds, we expect the challenging retail backdrop will continue to negatively impact our U.S. retail sales in the short term. We now expect fiscal '24 retail comp sales to be down approximately 3%. Second, with the early wind down of the sale leaseback program, no material gains are expected in the future. Third, the block sale of Cencora shares in February will reduce equity earnings going forward. Lastly, as discussed with the first quarter results, we forecast slightly lower market growth in the U.S. pharmacy business compared to our initial guidance. Importantly, based on the progress made in the U.S. Healthcare segment through the first half, we continue to expect segment adjusted EBITDA to be breakeven at the midpoint of the guidance range. This represents an increase of $325 million to $425 million over fiscal '23. Next, I will provide additional details on the factors impacting earnings in the second half. In the second half, we will be lapping adjusted EPS of $1.66 in the prior year period. We expect several key factors to impact the year-over-year comparison. First, the wind down of the sale leaseback program is expected to be a significant headwind in the second half. Second, we will lap incentive accruals reduction in the third and fourth quarters of fiscal '23. Third, our updated guidance implies a higher tax rate over the remainder of the year. The U.S. Healthcare segment remains on track to achieve $165 million of year-over-year adjusted EBITDA improvement in the second half, based on the midpoint of the guidance range. And finally, within our U.S. Retail Pharmacy business, we expect year-on-year improvement in the second half, driven by cost savings initiatives.

To wrap up, we have hard work ahead of us in our journey to simplify and strengthen WBA, but we are encouraged by our progress. This team has a clear mandate to act with everything on the table to put our business on the right track. We are well positioned to drive capital-efficient growth, rooted in our retail pharmacy footprint, and build out an asset-light health services strategy to deliver care for communities and create value for partners. We've kicked off our strategic planning work. Over the next three to six months, this team is undergoing an in-depth analysis to determine the actions necessary to achieve what we believe will be the optimal portfolio with a focus on maximizing growth potential and generating cash flow. We are reviewing every business through a longer-term lens focused on strategic fit, synergy potential, financial upside, and new or complementary capabilities. We are taking a thoughtful approach, fueled by a sense of urgency to find opportunities to unlock value or validate existing pathways. In my five months with WBA, I have been most impressed with our 330,000 team members' commitment to our company. In my experience, it's very hard to get that. That pride is foundational to our future growth, ability to consistently execute and create sustainable long-term shareholder value. That dedication also gives me and our team great confidence in our future. Now I would like to open the line for questions.

Great. Thanks very much. Good morning, Tim. I have a multi-part question. I just really want to start with your comments where you talked about boosting profit and growth. You talked about new reimbursement models. You talked about provider status. So you talked about a lot of different things that you think can come into play. Can you maybe just talk about your line of sight and timing to get there would be the first part. And then secondly, I want to say welcome to Mary. Mary, as we think about the profitability and we think about capitation and the commitment of Village in the capitated markets, the comments were made today around the number of closings, now 140 locations closed. Can you maybe just talk about what you see as the future of the capitation and then putting that all together, I just really want to understand how to think about the progression going into '25. Tim, I know you have a big strategic review coming. I know you're not ready to give guidance on '25, but are there kind of some building blocks to think about when we think about the progression of the back half of '24 going into '25?

Thanks, Lisa. A lot there. So I’ll take the first part and probably have Rick Gates add a little color. We'll have Mary take your question and then Manmohan goes ahead and talk about the back half of the year into '25. In terms of new reimbursement models, growth, et cetera, you clearly, as we said last quarter, we're now just coming into the '25 conversations that are more structured with payers, particularly PBMs, as it relates to reimbursement. And what I would say, which is what I've said in my prepared remarks, is we are having very constructive conversations as well as ad hoc conversations with certain payers. This leads me to believe in our team to have confidence that there are multiple ways for us to create value for payers and that the pressures on reimbursement clearly indicate that the way we've been operating for the last 25 years is not going to work. And I think everyone acknowledges that. And the conversation of how we help the PBMs win in their marketplaces with this drive to higher transparency, more member-friendliness, and so forth really aligns us quite well in those conversations. I don't know Rick if you want to take and add any color to those conversations your team is obviously very close to them.

Yes, Lisa, this is Rick. I'll just add we are just in earnest starting up those 2025 negotiations, but I will say you also talked about some of the expanded services. We have gotten traction not only on our inherent-based programs and our performance against those to continue to secure more inherent-based contracts going forward. Vaccines have been a very strong part of what we're doing, but we're working very closely in the selling cycle right now when it comes to testing, test and treat as we expand those opportunities across the country as well and that the pay-by-state really process is still evolving until there's a federal provider status which Tim talked about in his remarks.

And thanks, Rick. So bottom line, Lisa, we know that the longer-term structural changes that are very likely to occur will take multiple years and we're prepared. We're also working with our distributor to reconfigure the way that we work with them to ensure that we are again making sure that the value that flows to us, as well as through us, is what it should be.

Thanks Lisa. I'll just say to reiterate what I said in my opening remarks that peers and health systems are approaching us and are very interested in working with Walgreens to help them drive medic savings. We've got unmatched assets in the marketplace given our reach with consumers and that's something that a lot of the traditional players now system don't have. So we'll be working with them and having conversations in the coming months.

We had some of those underway. I expect them to accelerate meaningfully with Mary’s arrival. And by the way, this is an appropriate time for me to also thank John Driscoll. In my prepared remarks, I did not do that and of course John actually helped me find and recruit Mary. John did a lot of terrific work during his time here at WBA. I look forward to continuing to work with him in a different role as an advisor through the end of the year. So thank you to John.

Sure, Tim. So Lisa, this is Manmohan. As you think about the building blocks for '25, let me start by saying we're not providing fiscal '25 guidance on this call. As you heard in Tim's prepared remarks, we are working through a strategic review with the executive team in place now and a detailed three-year plan, so we will share that input over the next three to six months. But let me share some themes as you think about the second half and as you think about '25. In terms of the second half, a couple of things to point out that I think are obvious and you understand. One is we do not expect any meaningful contributions from sale leaseback in the second half, so it's pretty clean in terms of not including any sale leaseback gains from that perspective. And second is the lower adjusted effective tax rate, the timing of that played out for us in the second quarter. And so we do expect a much more normalized tax rate in the second half.

So, George, let me be real clear. Because I don't think it was ambiguous, but we have been over the last several months digging deeply into the core business, as well as every piece of our portfolio. Obviously, the big chunks, you know what they are and what their brand names are and so forth, but also looking at our store footprint, looking at our suppliers and our assortment, manager compensation, workflow design in pharmacies, working with deans, as well as looking at our automation. But when you step back to the large piece, to your sum of the parts question, obviously we're very conscious of that fact. We have about a half a dozen things that need to either fit, synergize, offer upside in a long-term runway for growth either by themselves or perhaps combined with other things, need to unlock capabilities that we would otherwise not be able to have unlocked or else we need to find a better place for them. And so from our perspective, I can tell you that for example, Mary on the U.S. Healthcare side, which has its own collection of assets independent from Boots and Shields and CareCentrix and the businesses that we have, Mary has been doing a complete strip down of every one of those businesses and looking at both, is it staffed right, is it built for growth, do the market support growth? And this is going to culminate in part, and let me be really clear, I don't want to send a message that there's some big bang coming, but when we sit down with our board at the end of April, we are going to give them outside-in context about the forces in healthcare over the next 5 to 10 years. We're then going to look at how that impacts the people that we serve: both the payers, the health systems, the consumers, the patients, and the pharma companies, and then we are going to make a series of either recommendations or next steps so that the board is very clear where we're headed in some things. We have some things already underway as part of this, as we go from examining things to testing markets and so forth. I'm not going to get detailed on that point, other than to say again, it's dynamic. It is across the company, and I am super excited to have a fully staffed executive committee based here in Chicago to do it alongside me.