George Hill: Thanks.
Matt Sims: Next question, please.
Operator: Yes, sir. We’ll now take a Stephen Baxter of Wells Fargo. Please go ahead sir.
Stephen Baxter: Yes hi, good morning. Thanks for the questions, a couple of quick ones. On COVID vaccines and commercial channel, I think last quarter you kind of indicated or implied that the contribution was around $25 million. I was hoping you could update it on what the performance was this quarter and whether you factor anything into the balance of the year. And, and then just to try one more time on the non-recurring medical adjustment. Can you just tell us on the $20 million, if what does that actually represent in terms of the underlying accounting or business activity? Thank you.
Jason Hollar: Yes. So for the vaccine, we just kind of walk through the last couple of quarters and I’ll give you a flavor of the benefits and the trends and such. So as we talked last quarter, we’ve highlighted in Q1 with the FDA approval at the beginning of September we were staged to hit the ground running and we had fairly significant volume in that first quarter, but as anticipated we indicated that point that we would expect it to peak within Q2 and so we expected higher volume, higher contribution in Q2 versus Q1 and that was because we saw October as the largest month within that season. And then as expected, we saw that wind down over the course of November and December, still seeing some level of volume in Q3, but I would expect it to be quite insignificant, compared to what we saw in Q1 and then Q2.
Overall, I think the key message is that this is consistent with our expectations, as Aaron highlighted in his comments already. We had multiple drivers of growth for the pharma segment in the second quarter. It was strength with the generics program within brand. It was COVID driving that component and then we had these investments and primarily the cost to serve partial offset to those other two drivers. So overall, Phil feel good about the overall health of the business and the contribution of COVID within it.
Aaron Alt: Yes with respect to the non-recurring adjustments. We previewed this back at the JP Morgan conference and when we updated our commentary around the medical business and our comment that — is our coming out, which is and we have continued to dig deep across the portfolio, we’ve taken a decision to take some non-recurring adjustments, which the majority of which hit the at-Home business, which now reports or will report as part of other in Q3, as well as component hitting the wave mark business which is part of the new GMPD business. So if you read through the update to our guidance for the year where we moved from approximately 400 to approximately 380 driven by the impact of the non-recurring adjustments you can reach your own conclusions as to the relative quantification and the distribution given those comments. Thanks. Operator Thank you very much, sir. Our next question is coming Charles Rhyee from TD Cowen, please go ahead.
Charles Rhyee: Yes, thanks for taking the question. Just wanted to follow-up on Allen’s question there on the vaccine impact. I understand your saying that it kind of, you expect it to peak in the December quarter. Would you say that the contribution, though, from vaccine was higher than in the first quarter given that you had still three months of overall and if we look at that relative to what you had expected the higher costs that you incurred? Did you use that to fund those kind of investments? Just wanted to get a sense on relative contribution?
Jason Hollar: Yes, as I highlighted, October was the peak month and since we only had a partial September, it is clearly higher in Q2 than in Q1. We did have November and December contributions as well, but it really tailed off by the time we got to the end of the quarter and that’s why you would expect there it be very little it was just typical for vaccines in general, so there’s nothing we’re seeing there. And again I think that the way you ask the question around the funding of investments I’ll just go back to my prior answer to that question. There were costs associated with the vaccine rollout. As you can imagine, that’s a lot of volume to ramp up for really two months-worth of support. Our team did a fantastic job working with the manufacturers and our customers to play that role when we were not involved in the vaccine distribution before for COVID.
So I feel very good about our role and we did have to incur cost associated with the ramp up and ramp down in such a short period of time. But that was not necessarily used as currency to fund other programs, where the programs are important strategically and all very consistent with the plans and the actions and the forecast we’ve laid out here, so there is no changes as it relates to how we are approaching these both short-term requirements, as well as long-term investments.
Aaron Alt: Probably worth emphasizing that Jason’s point is that September and October were the high points for COVID for us from a distribution perspective would we tailing off thereafter.
Matt Sims: Next question, please.
Operator: Thank you very much, gentlemen. And our last question today will be coming from Mr. Daniel Grosslight of Citi. Please go ahead, sir.
Daniel Grosslight: Hi, guys. Thanks for taking the question. I want to just go back quickly to the medical profitability question and confirm one thing, that $20 million one-time item that was wholly kind of concentrated this quarter. So without that, the medical profitability would have been around $90 million. And then on your commentary around shipping rates coming down and benefiting you, and the volatility in Red Sea, if you look at the — China to Westcoast shipping rates, they have spiked materially in January. So I’m wondering how, I guess couple of thigs there; one how that may kind of roll through you contracts. And then given that you capitalize those costs and expenses over two to three quarters post those cost being capitalized. How that might impact the cadence of your medical improvement plan in fiscal ’25? Thank you.
Aaron Alt: So the first-half of that question, you are thinking about things correctly. I’ll go back and emphasize we were really pleased with the operational performance of the business and given that we’ve adjusted our yearly guidance just to reflect the impact of the non-recurring adjustments in Q2, your conclusion on the math would be reasonable.
