Stan Berenshteyn: Hi, thanks for taking my questions. On ISP, I realize it’s still early, but can you maybe give us a sense of how this program has been deployed thus far? Is it for prescriptions that sometimes fall outside of the formulary for the PBMs and instead of going to a cash pay type of situation, you end up filling it? What kind of use cases that you’ve seen thus far in the deployment here?
Raj Beri: Thanks, Stan for the question there. Yes, I think, again, as Scott mentioned, it’s a little bit different by PBM by PBM. I think there are definitely examples of those cases where they’re either high deductible cash pay, fall out of the formulary, that these are just medications that are not actually staying within that PBM’s ecosystem. And that forms a compelling use case for them to work with us overall. What we’re actually also seeing is that the mix of drugs is very different than the drugs that we see in our consumer cash offering overall. And so when we look at that type of mix, we’re not seeing it cannibalized at all. And we see that there’s a lot of covered drugs for maintenance meds that are life sustaining.
And so for that reason, for us, it’s really expanding the serviceable addressable market. And we see this as really, really great incrementality. And that’s why we want to roll it out to as many lives as possible. And so it’s a win-win for PBMs who are capturing this new revenue stream. And it’s a win-win for us as we’re capturing new consumers.
Operator: Thank you. Our next question comes from the line of Daniel Grosslight of Citi.
Daniel Grosslight: Hi, guys. Thanks for taking the question. You mentioned that direct contracting could be a bit of a revenue headwind or at least a PTR per MAC headwind, given the lower admin fee. I’m curious if this quarter, volume has offset some of this admin fee headwind in your direct contracts, volume was strong broadly, but in your direct contracts that volume offset the lower admin fee. And then as we think about fiscal 2024, do you anticipate the mix shift to, the continued mix shift I should say to direct contracting will be a headwind?
Karsten Voermann: Hi, this is Karsten, and thanks for the question, Daniel. From our perspective, first of all, yes, I think we have seen volume benefits when we look at our MAC counts year-over-year, for example, they grew quite significantly in the higher single digits. That was offset, but to some degree by our PTR per MAC, which drifted down ever so slightly when you look at that either YOY or QOQ for that matter. So from those perspectives, the two things offset to some degree and part of the drivers for the PTR per MAC changes are number one, that as we indicated on prior calls and in our filing, we do have a contra rev component to a portion of what would otherwise be marketing expense. And number two, I think the direct contracting effects we have, there can be a volume gain versus a slight drop in revenue component to it. But as we said at the beginning of the call, when you’re looking at PTR per MAC sort of Q over Q, it’s barely down at all.
Operator: Thank you. Our next question comes from the line of Robert Simmons of D.A. Davidson.
Robert Simmons: Hey, thanks for taking the question. So I was wondering how much of a revenue hit when will the customer and etcetera just related to that $10 million payment be going forward? I know that $10 million itself is one off, but how much business are you walking away from?
Karsten Voermann: Thanks for the question. I’ll take that one. This is Karsten again. I think what’s really important to note here is that this is a one-time event and non-recurring in our view, which is why we drove it into and what led to the adjusted revenue metric. We really elected to make the payment to accelerate when particular customers transition off our manufacturer solutions and in specific our VitaCare services that we’re restructuring. VitaCare had an ongoing services obligation to this customer, who’s a big one for us and important to us as well. And as part of accelerating the wind down and weeping the savings, we wanted to make sure that customer is in good shape with the transition because we continue to earn revenue off them in other areas.
And the payment was part of ensuring that they’re in good standing, that they were supportive of the transition that we’re asking them to make, and that they’re able to set themselves up in their new environment successfully. It really allowed us to benefit from the VitaCare restructuring more quickly and to fully reap our expected rewards from that restructuring starting at the very beginning of 2024 in our anticipation.
Operator: Thank you. Our next question comes from the line of Parker Snure of Raymond James.
Parker Snure: Hey, good morning and thanks for the question. This is Parker on for John Ransom. Just following up on that previous question, I just want to understand the mechanics of why it was a revenue write down versus a cost line item. Was this essentially like a prior period adjustment to revenue? Like was this revenue previously booked and it is now being not fulfilled and that’s why it’s a revenue write down? Just trying to get actually kind of mechanical understanding of why it was contra revenue and not considered necessarily a cost line item. And then just kind of building off of that, is this $26 million kind of run rate in the Pharma Man Sol business a good run rate to build off of going forward or is there going to maybe be a slight step down given that you’re walking away from some of this business? Thanks.
Scott Wagner: I’ll take those in reverse order. I think, thanks for the question, Parker. On the 26, I think that is absolutely a good base and one of the reasons we made the payment is so that the customer is quite happy with the way things have worked out for them. I think to the first part of your question, the sole reason that this is contra rev is because it’s a payment to a customer and payments to customers under S, under 606 are inherently contra rev except in extraordinarily limited circumstances. So, from that perspective, payment to customer equals contra rev. There was no revenue book that’s being reversed or anything of that sort at all. It’s simply a matter of the cash expenditure that went to a customer and the guidance indication of how that should be treated.
Operator: Thank you. Our next question comes from the line of George Hill of Deutsche Bank.
George Hill: Hey, good morning, guys, and thanks for taking the questions. I kind of have two quick ones that I’ll lump together. On the Q2 call, you guys talked about the ESI relationship being in the pilot stage. We’d just love to hear what you’ve learned as the rollout has continued. And then second, I wanted to come back to Charles’s question as it related to retail partnerships. And again, we know the use of the discount cards tends to be a headwind for the retailers. I guess anything that you could share about kind of the economics or what’s the value prop for the retailer in these relationships I think would be helpful. Thank you.
