Jason Hollar: Terrific. Happy to do so. So on pricing, I would think about pricing as being a fairly stairstep process beginning back with our first temporary price increase in March 2022 so what we have €“ and when we first shared was the 20% mitigation of inflation soon after in the fourth quarter of last year, then that went to 25% in the first quarter of this year. And then now we’re saying it’s over 30%. So you can see that, that’s a fairly consistent stairstep. And that’s how I think about the pricing side, less on the temporary price increases going forward and more on the rotation to more renewals as they come up, and that’s just a national function of where we’re at in this process as we get farther away from the initiation of those temporary price adjustments.
So a continuation of more of the same. How you get to a widening of that 30% to 50% by the end of the fiscal year is the costs starting to come down. So €“ and again, that’s largely focused on the international freight. So pricing, I would expect to just continue blocking and tackling all the way through to the end of fiscal 2024 is where most of the prices will adjust. And that’s why we indicate that we won’t get to full mitigation until about that point in time. As it relates to private label, I think it’s an interesting related question to pricing. Because yes, we want to work with our customers. All of our customers are dealing with challenges beyond the inflation in this category. They have actually much bigger challenges in other categories.
And the desire on our part is to work with them if there’s a possible win-win to find value in other ways, whether that is into more private label. It’s €“ of course, we’re doing everything we can to offset the increase €“ of the increases to start with to mitigate the inflation through other nonpricing means. And of course, part of this is also working with the supply base. And we indicated that we’re working on the distribution fees as well so that the supply base does their part. We do our part and our customers are going to have to absorb this as well. So if the whole industry has to address this, and that’s the collaborative approach that we’re taking with it.
Kevin Moran: Next question, please.
Operator: The next question comes from the line of Charles Rhyee calling from Cowen. Please go ahead.
Charles Rhyee: Yes, thanks for taking the question, guys. Just two real quick ones maybe on the model. First, Trish, I think you talked about Pharma distribution. We should think about the €“ it sounds like you’re kind of saying the contribution should be kind of even through the back half of the fiscal year here. It’s a little different than I think when you look back at normal seasonality, anything specific that you’d call out to why that might be this year?
Jason Hollar: Yes, let me take that. So that comment was the growth rates were going to be even year-over-year. So you’re exactly right, Charles, that there will continue to be the expectation of a normal seasonality. That largely comes from the brand inflation, albeit much lower than what it has been historically. We’re still talking less than 5% contribution, but that is all in the third quarter. So sequentially, we would still expect the third quarter to have that element associated with it. Trish’s comments were specifically related to the year-over-year growth rates being relatively equal between the two quarters.
Charles Rhyee: I see. Okay. I might have misheard. And then maybe if I can just follow up on €“ you keep talking about the at home €“ I’m sorry, you keep talking about at-home solutions and how that’s a good growth driver. In the past, you’ve kind of given a little bit of a breakout of the size of the business. Is there any kind of additional color you can give us here in terms of sizing of this business? How much it’s grown relative to the rest of the segment?
Jason Hollar: Sure. Yes. You can also go to our segments. But note, this is one of the two businesses we, every quarter, provide incremental revenue information on. And that business, I think, last year was $2.4 billion of revenue. And I believe, for both the first and second quarter, we grew it by around 9%. But again, you can look at the segment footnote to get the precise numbers each and every quarter.
Charles Rhyee: All right, thank you.
Operator: The next question comes from the line of Steven Valiquette calling from Barclays. Please go ahead.
Steven Valiquette: Great. Thanks. Good morning, everyone. So on Page 5 in the slide deck, you talked about €œjust generics program€ as one of the positive key variables. So I just wanted to get a little bit of color just to confirm kind of what you’re referring to as the biggest component within that. When thinking about €“ are you just referring to just better generic volume and generate compliance rates with customers? Or is it just better buying through Red Oak. And also it’s been really a much stronger new first-time generic launch calendar as well. But just curious, what’s the biggest piece within your comment about just the generics program, thanks.
Jason Hollar: Sure. Yes, overall, the biggest component for this particular quarter and most quarters that we’ve seen more recently has been volume. I continue to use the statement consistent market dynamics that’s referencing essentially the margin per unit. Yes, there’s ongoing deflation, but the buy-side sell side continues to be relatively in balance. And so when we see a year-over-year driver, it’s driven often by volume and/or mix. And we continue to see very broad strength across all the products, whether it be generics, brands, specialty €“ and so this particular quarter, we saw that as well. Again, not the biggest driver. But when I talk about cough, cold and flu, a lot of those products have gone generic. They’re more mature products, so they do tend to carry with it a little bit lower margin price points, things of that nature.
But that would be a component as well. But again, I’m only highlighting that, given how many questions we get on the topic, not that as a significant driver. But overall, the short answer is volume and mix.
Steven Valiquette: Got it. Okay, thanks.
Operator: The next question comes from the line of Eric Percher calling from Nephron Research. Please go ahead.
Eric Percher: Thank you. Question on nuclear theranostics, can you remind us where your investments are targeted in 2023 and where and when do we see ROI on those investments? And then given the development around Alzheimer’s treatments, what are you looking for relative to approval or policy change on testing that could lead to more significant step up in demand in that business?
Jason Hollar: Sure. So the theranostics business launched sometime last six, nine months, and we are starting to see now more of that contribution over the last couple of quarters. So it’s in the ramp up phase. So we are seeing positive returns already on those investments. This is a business, a business case. And the thing about the nuclear business that is both wonderful and also at times a little bit frustrating is that the business is a long-term business. It means that we have good visibility long-term, but also it means that we have to wait until we can get that benefit. Theranostics has been something we’ve been working on since, well before I arrived here in the organization three years ago, and it’s one that we’re now seeing the fruits of all those investments and efforts from that team.
As it relates to the second part of your question, Eric, I get lots of questions around trying to link our business, our nuclear business to specific approval, specific other drugs and therapies and how we can attach that. I would say that the beauty of this business and the success of this business is that it’s not directly linked to a very specific particular outcome. We have broad expertise capabilities, we are not dependent on any one particular area, and is that diversification and of which we’re seeing with the theranostics expansion being even more accentuated because we get to work with so many more manufacturers and partners that it just creates a broad opportunity for us to grow across the spectrum. So our business case for continued growth, our goal of achieving €“ doubling as a profit in this business from fiscal 2021 to 2026 is predicated on a lot of singles and doubles, not triples and home runs by, by attaching to a blockbuster type of drug.
So beyond that, we don’t talk about individual drugs, individual manufacturers or products. And so like I said, I just don’t think that’s the real draw for this business is the breadth that we have and the broad capabilities.
Eric Percher: Thank you.
Operator: The next question comes from the line of Brian Tanquilut calling from Jefferies. Please go ahead.
Taji Phillips: Thank you. It’s Taji on for Brian. So you mentioned expecting stabilization of supply chain headwinds, particularly in freight transportation. Can you just discuss any sense you might have around the cadence of that proven moving forward?
