Aaron Alt: Happy to offer some perspective. We were pleased in the quarter to actually achieve operating leverage with gross profit growing faster than SG&A. SG&A did grow, of course volume also grew, and so the primary component of our increase in cost was tied to the variable cost of serving higher volumes. It is also the case though that as Jason has highlighted in his strategic remarks, we are investing against our business and some of the SG&A growth was purposeful relative to the investments we’re making in places like the Navista and other elements of our growth plans. But I will end with the fact that we are very focused on SG&A as a whole and the team continues to look for further opportunities as we have in prior years to optimize our cost structure.
Operator: Thank you very much sir. We’ll now move to Kevin Caliendo of UBS. Please go ahead.
Kevin Caliendo: Thanks. Thanks for taking my question. I have two. Can you give us an update on the progress of the United contracts renewal timing, any updates you have there? And just to follow-up on that SG&A question, were there purposeful investments made when you saw sort of upside from interest in other things in SG&A in the quarter? I’m just trying to quantify how much was in the original plan versus maybe how much was incremental given some of the upside that you saw below the line?
Jason Hollar: Yes, sure. I’ll touch on both points here. There’s no updates with the Optum contracted those through this fiscal year. And as I highlighted before, they are a great customer of ours, long-standing customer, one that brings a lot of innovation to healthcare, and one that we’ve worked very hard over the years to attempt to exceed their expectations, and we think we’re doing a great job of that, and we’d love to keep working with them, of course. Now, I do get a lot of questions around the order of magnitude of this, and I’m not going to go into details, but just a couple of points, you know, given the number of questions I’ve received, is we have disclosed in the past, and I think it comes through in every K, just the order of magnitude, so last year they were over $30 billion customer of ours, and I see a lot of people attempting to try to model out impacts and things of that nature.
And there’s a couple things that I’m not sure is real clear about the scope of business we have with them today. It is a prime, the majority of the revenue we have with them is through our base PD business and a lot of that is mail order volume. So what you have here are the typical markers of a large customer, PD majority and mail order. So those are all, you know, markers of lower than average margin type of business and so we do have other business with them of course too. They are very large and have a lot of breadth into various parts of the industry, but for us those tend to be a little bit of the overweight of how we support them. As it relates to the SG&A, the only thing I would say is no it’s not like that what we do is we look at the capabilities and the necessities needed both short-term and long-term.
Short-term is going to be on volume and making sure we can support our customers in getting that strong volume growth across the enterprise and in place we are then looking to balance that with longer term investments whether it’s the Navista network we’ve called out before as investments, but we also have others that we went through during investor day and have had a number of updates even today, within our at-Home business we have three new facilities that we’re bringing online over the course of the next year or two within the medical distribution three facilities I talked about today, we have on the pharma side the consumer health new logistics center. So I also made some comments around some of the IT capabilities within pharma, some of the e-commerce and intralogics capability.
So we are investing where it makes sense efficiently, very well aligned to our strategy. And these are non-investments that you can just turn on and off. So it’s something that we’re going to invest as appropriate, but only what we have to do as well. We want to take away waste and invest it where there’s growth is the key objective.
Aaron Alt: For those working on their models, it’s probably worth pointing out that with respect to the Q2 profitability in the business, it was the case that last year we called out unusual strength in the overall farm of demand, particularly from large customers, as well as a very strong cough, cold and flu season, so as you’re looking at your comparisons keep that in mind.
Operator: Thank you very much sir. [Operator Instructions] We’ll now move to Mr. George Hill of Deutsche Bank. Please go ahead.
George Hill: Yes. Good morning, Jason and Aaron. And forgive me if I kind of missed this or if you guys talked through this already, but as it relates to the planned restatement of the other segment, it looks like the growth in the near-term is coming in, but termed kind of the long-term targets. I just kind of wonder if you could address kind of or disagree in which sub-segments you’re seeing the softness relative to the long-term expectations for the balance of the year or this year versus what you think kind of accelerates coming out and kind of closes the gap in the longer-term guidance?
Aaron Alt: The businesses that report through other for us going forward will be our at-Home business, our Nuclear Precision Health Business, and our OptiFreight business. Those are what we have traditionally called our growth businesses as part of other segments. And indeed over the long-term we expect them, the CAGR on their collective growth to be 8% to 10 percent. The disconnect you’re referencing which is the 6% to 8% in fiscal ‘24 is only driven by the impact of the non-recurring adjustments from Q2 on the at-Home business that we referenced a couple of weeks ago as we talked about our expectations for Q2. Each of the businesses contribute to the revenue and profit growth for other. For instance, we carry forward in our earlier disclosures, I think you can get pretty close we disclosed the revenue of the individual pieces.
And indeed, we’ve talked about nuclear, doubling its profit off of its fiscal ‘21 baseline by fiscal ‘26 as well. I believe and so you’re able to get to that component of other through that.
