Ann Hynes: Great. Thank you. Very helpful.
Operator: Your next question comes from the line of Kevin Caliendo from UBS. Please go ahead. Your line is open.
Kevin Caliendo: Thanks and thanks so much for taking my question. In your prepared remarks around guidance, you mentioned that your expectations were around market growth in the pharmacy, maybe being a little bit lower now. I just love any clarity on what that meant and what might be driving that. And then secondly more a strategic question for Tim. Given your history and everything else as you think about pharmacy services, does it benefit Walgreens to actually own a PBM?
Tim Wentworth: Well, I’ll turn the first part of your question over to Manmohan and then be happy to answer the second part.
Manmohan Mahajan: Sure. As you think about the prescription market growth, as we shared the outlook in October, our guidance was that we’re going to grow in line with market on the prescription side. What we’ve continued to see in the first quarter is the market is growing at a slower pace. And that’s really driven by two factors. First is the weaker respiratory season, and the second is the impact or continued impact of Medicaid redetermination. So as we’re thinking about the full year now versus October, we expect the overall market growth to slow down roughly around 50 bps versus previous estimates.
Tim Wentworth: And as it relates to owning a PBM, I don’t think that that’s the best path for us, quite frankly. We — I love — and you’ve heard me say this in the past lives, I love being independent. I love being someone who can work across the ecosystem in a way that doesn’t create anything but trust. And having a small PBM, the economics of delivering really good service and really good costs favor large PBMs for really obvious reasons. They produce a lot of value by scale. And so buying a second-tier PBM for us does not make sense. I would much rather work with every PBM than own a small one.
Kevin Caliendo: Understood. Can I ask a quick follow-up if possible. This morning, Lilly announced a new program called Lilly Direct. I don’t even know if you guys were able to see it. But it sounds like something that maybe you could participate in. They’re talking about having a third-party online pharmacy fulfillment services, and they’re going to use existing pharmacy — existing pharmacies to help dispense. I don’t know if you’ve had a look at that. But is that something that you’re talking about in terms of some of the services you might be able to offer or work with something like this? Or how would this impact Walgreens?
Tim Wentworth: No, it’s a great question, and we did see it this morning. And my preface is, as I’ve mentioned, we can work inside of almost any reimbursement model and be a service provider to payors as well as patients as well as pharma. With that said, I can touch it over to Rick, who can speak a little bit as it relates to sort of how we think about that program and others like it that may evolve in the market.
Rick Gates: I think, Tim, you hit I think what we can talk about right now. I think what I would say is that, obviously, transparency for consumers and anything that lowers drug cost to consumers, we think is a good thing. And so obviously, we are supportive of those types of programs. We work with all of our partners, be it payor, PBM or pharma partners in order to help deliver against those. So is it an opportunity? Absolutely, and we certainly would support and work with Lilly on that.
Kevin Caliendo: Guys, thanks so much for all the details on this call. It’s been great.
Tim Wentworth: Thanks.
Operator: Your next question comes from the line of Elizabeth Anderson from Evercore ISI. Please go ahead. Your line is open.
Elizabeth Anderson: Hi, guys. Thanks so much for the question and nice to work with you again, Tim. I just maybe double-clicking on what you’ve talked about in terms of the pay-for-performance contracts that you’ve done so far. Can you tell maybe — and maybe this is a question for Tim and for Rick like sort of where focus on the contracts that you’ve signed has really focused on those contracts? And then as we think about the total opportunity, like do you have a sense of like what percent of those contracts like have some sort of element of that now and sort of as we think about the broader opportunity for that to improve going forward? Thank you.
Tim Wentworth: Yes, I will let Rick answer, other than to say I had a conversation last week with the CEO of a very, very large payor who wanted to sit our teams down to actually look at 2025 and how we may work together, particularly on Medicare Advantage, with them. And so there is a lot of — some of the other dynamics in the marketplace that are macro now are going to then bubble back through our contracting process and the kind of conversations that we can come to the table creatively with. Rick, in terms of the current state of play, you want to address that?
Rick Gates: Yes. And I would just say that, obviously, most of the pay-for-performance contracts still sit within the Medicare Part D space. So obviously, we not only contract on specific deliverables, but we obviously plan operationally on how we’re going to deliver against the ones that make sense so that we can deliver value within the ecosystem. We are starting to see in the Medicaid space that they are starting to have contracts come through. And obviously, generally then it would move into the commercial space. I think just reiterate what Tim said, I think we are having conversations and, obviously, our ability to deliver on these pay-for-performance contracts gives us more credibility to actually enter in more going forward.
Elizabeth Anderson: Got it. Thanks so much.
Operator: Our last question today will be from Brian Tanquilut from Jefferies. Please go ahead. Your line is open. Brian, your line is open. Your next question comes from the line of Stephanie Davis from Barclays. Please go ahead. Your line is open.
