And speaking of Vital Care, customers save $400 a year in Vital Care, we’re thrilled to get over 0.5 million customers. So we see the market rational and there’s a fundamental reason for that and that’s kind of demand continues to exceed supply.
Operator: The next question comes from Simeon Gutman from Morgan Stanley. Please go ahead.
Simeon Gutman: Good morning, everyone. I wanted to follow-up please on the guidance. So the down $10 million that is — sounds like some buffer in case the first-half or second-half, I guess mix doesn’t pan out? And then just to confirm the right interpretation?
Brian LaRose: Yes, I’d say we’re taking a prudent view Simeon when we look at the year and that’s why we kind of gave a little bit more color on the half versus half. If you think about the half guide with EBITDA down in the first-half, flat to up in the second-half, that is an expectation around sort of the pattern of the supplies and CA categories.
Simeon Gutman: Okay. And the comment around 100 basis points improvement in supplies, has that flowed through to the first-half? And then I guess is that a one-year number? Is it a stack that’s an underlying like how should we interpret, that would suggest things are getting better sequentially? Or do you not run rate that into your first-half guide?
Ron Coughlin: So the comments on Q4 versus Q3 was a sequential improvement in the growth rate versus year ago. So sequential improvement in the growth rate versus year ago. In terms of Q1, we’re not going to break down at the segment level. What we said at the macro level is our momentum on the total business has continued into Q1. We see both category strength, as well as we’re happy with what we’re seeing in the — I guess, not early days anymore, but five or six weeks into our Q1.
Operator: Our next question comes from Steven Forbes from Guggenheim Securities. Please go ahead.
Steven Forbes: Good morning, Ron, Brian. I wanted to follow-up or start with ROIC return on invested capital. I think Brian you mentioned some high ROIC investments like coolers this year. So hoping maybe if you could just take a step back given the guidance for 2023 and speak to your ROIC targets and our hurdle rates? And just comment on whether the current environment is impacting your willingness or ability to spend non-strategic initiatives or if you’re still, sort of, achieving those hurdles and targets as you would expect?
Brian LaRose: Yes, I actually love this question, so thanks for it. If I think about our CapEx investments, if you think about where we guided on vet hospitals and small town rural locations, those are both meaningfully above any hurdle rate that we put out in terms of ROIC. Those small town rural locations are cash flow positive generally in the first year. In aggregate, those locations are performing above our expectations for the ones that we’ve actually rolled out. So 10 to 15 is a slight further step in to that scale pilot in year two. That remains a priority for us and that 50 to 55 hospitals continues to track for the 247 we have in place. In line or above our historical IPO model for vets. So those are tangibly above any kind of hurdle rate for ROIC.
What we are doing, if you look at the step down in CapEx from 2022 levels to 2023, we did have some sort of one-time-ish investments last year, freezers is the big one that we’ve referenced. We have freezers in over 1,000 locations now in our PCCs, that’s a return on investment, that doesn’t take a whole lot to compute. We look at the fresh market as a slightly below $1 billion market growing to $4 billion in the next three years. We think we have a competitive advantage in that market. So the investment was something that we felt really good about making.
