And then over time, as we get our sea legs, so to speak, we typically expand those margins from single-digit gross profit back in line with what’s more commensurate with our chronic margin profile. To your point, we get more efficient in the back office within pharmacy fulfillment as well as we typically earn the ability to expand our relationship with biopharm, whether it’s monetizing patient experiential data, work through certain financial incentives for volumes and in performance on our end. So again, some of them that we’ve talked about, like the collaboration with Krystal to commercialize VYJUVEK which is a very unique and novel new therapy as well as others like [indiscernible] and VYEPTI for chronic migraine. Over time, it adds to the portfolio but there’s clearly an upfront cost in terms of gross margin rate.
Pito Chickering: Okay. And then there’s nothing a lot of concern around the launch of the new open drugs lower margins and/or biosimilar impact to gross margins. I guess if we take a 3- to 5-year view, can you give us a sense of the impact of both of these categories on your gross margin? And more specifically, if you think about the gross profit dollar growth, do we normalize in a 3- to 5-year sort of range back in high single digits or more? Or are we thinking more around mid-single digits for the next 3 to 5 years?
Mike Shapiro: Yes. The way we’ve articulated the value proposition, Pito, look, we’ve said, first and foremost, that with a chronic portfolio that’s growing at a pace considerably faster than the higher-margin rate acute portfolio that over time, we do see that headwind in the form of gradual headwinds around our gross profit rate. But our gross profit to some extent, is out of our control and that it’s expressed over a denominator that includes the ASP of chronic branded therapies over which we have limited or no control. And so the way we manage the business is we’re relentless and we’re focused on growing gross profit dollars. With a gross profit rate headwind, that would imply that gross profit dollars over time would grow modestly slower than the top line because we would expect that the majority of our growth to consistently be driven from that chronic portfolio but really focusing on that gross profit dollar growth is really how we think about it.
In terms of what the impact on certain factors like things going biosimilar or subcutaneous, we’ve managed through and we’ve delivered solid top line growth aside from a number of those events over the last 5 years and we’d expect to continue to be able to do so.
Pito Chickering: So if I could just ask that just a different way. I mean, as I think about gross profit year-over-year growth in multiyear view, the gross profit dollars should still be growing in the high single-digit plus range even with all the orphan drugs and the biosimilars?
Mike Shapiro: Yes. We’ve articulated that the top line of this enterprise, we would expect to be in the high single digits. And so the gross profit dollars would expand a notch below that.
Operator: Our next question will be coming from Michael Petusky of Barrington Research.
Michael Petusky: Mike, I may have missed this. I think I heard 50% of the claims were impacted in the quarter in regard to the Change incident. But I didn’t hear if you quantify, did you quantify the impact on cash flow from ops in the quarter?
Mike Shapiro: We didn’t. But if you look at the outflow on the cash flow on the balance sheet, you can see the pronounced increase in accounts receivable which really was close to the impact of — for the — from February 21 through the end of the quarter, the inability to transmit more than half of our claims.
Michael Petusky: Okay. And then just in terms of the cadence of the catch-up and this isn’t so much in terms of the submitting of claims and all that goes along with that. But just in terms of the catch-up in terms of cash flows, I mean, I’m assuming it’s way better than to 1/3, 1/3, 1/3 for the next 3 quarters. I’m assuming it’s much more front-end loaded than that. Can you just speak to that?
Mike Shapiro: Yes. I think that’s right, Mike. I think you know we tend to be a little conservative on outlook. Look, the team has made tremendous progress in working through the backlog. We’re working with payers every single day. Obviously, they’re getting flooded with backlogs as well. And so we would expect to make considerable progress in the second quarter and recovering from the cash flows definitely within the year. So I would characterize it as better than your 1/3, 1/3, 1/3 for sure.
Michael Petusky: Okay. All right. And just last, just making sure that — I think I understand this. In terms of the challenges of the first quarter and all the things, both on gross margin change that you listed, I’m assuming that, that does not alter plans in terms of ambulatory — new ambulatory facilities over the course of the year, is that fair?
John Rademacher: Mike, yes, it’s John. No, there is no change in our approach to ambulatory infusion suites and our continued build out there. And those are capital light. So it allows us to continue to move forward. As I mentioned, we opened 3 in the quarter. We’re continuing to continue our path of identifying the right geographies to continue that build out. So no pause or no change in our strategy from that perspective.
Operator: Our next question will come from Joanna Gajuk of Bank of America.
Joanna Gajuk: So I guess a couple of follow-ups here. In terms of quantifying we just talk about cash flow but any way to help us understand the dollar impact on the cost side of things in the quarter?
