Manmohan Mahajan : Yes, let me dig the guidance first and then Rick can talk about [DER-C] a little bit more. So from a guidance perspective, if you think about the midpoint of the range, you’re calculating in the second half and thinking about ‘25 and the first on the tax rate side, we expect fairly normalized tax rate for the second half. We did have a significant benefit that be recognized in the second quarter and timing of that played out here. So, that I think is, there is no more headwind from taxes if that’s your starting point for fiscal ‘25. And then, yes, as I said, I thing a couple of themes to consider. First is U.S. Healthcare growth, significant growth expected. We’re maintaining guidance in fiscal ‘24. And as we look out, we do see growth continuing both at Shields as well as at Village as they concentrate on their core markets and continue to drive the cost down in the business.
Our own cost savings initiatives, we’ve talked about $1 billion of cost saving from the year and we’re on track to achieve that. And there are actions that we will continue to take in the second half. And so you will see, a, wraparound benefit into ‘25 as well as the new initiatives that’ll continue on cost efficiency side. I talked about retail, negative 3% comp expected for the year as we thought about the second half guidance or second half implied guidance. And so we do see, however, it improving over time slightly. And to going into ‘25, the actions that Tracey just talked about and team is taking, they will take hold. And I think that we do expect some improvement in ‘25 for that. And then seasonality, I think you got a factor in as well.
You talked about earlier in the call around vaccine portfolio, obviously there’s seasonally there, cold, cough, flu, there is seasonality there and Boots, there is a season there. So yes, those are maybe some of the things that you want to consider.
Rick Gates: Yes, and just to answer on the [DER] fees and impacts that we might be seeing there outside of obviously cash flow, which obviously works its way out throughout the year. We really aren’t seeing a negative impact on reimbursement. By and large, what we’re seeing is that we are contracting for the rates that we were performing against either historically and or even if there was a negative impact on the reimbursement, we were signing and pay for performance contracts that we have the ability to overperform on. And so I would say that DER-C has been really neutral to us when you look at it from a reimbursement perspective.
Operator: Our next question comes from George Hill with Deutsche Bank.
George Hill: Hey, good morning, guys, and thanks for taking the question. And I kind of have a couple of what I’ll call kind of brief quick-hit questions, which first, for Rick, I guess I would ask, when we think about potential changes to the reimbursement model, you touched on this. I guess could you talk about the push and pull a little bit on those discussions? Mid-melon, I guess, just if you could make a quick comment on earnings cadence between fiscal Q3 and Q4. And Tim, I know hearing a lot here but just kind of an update on portfolio strategy. A lot of us look at the company and do some of the parts analysis. There are arguments to be made that you’re getting the core U.S. business for free, given the value of other assets. Kind of just want to know how you think about the portfolio and how to unlock value.
Tim Wentworth: Great. Thanks. I’ll have Rick take the first part of your question, and then I’ll Manmohan takes a second and I will take third.
Rick Gates: George, thanks for the question. The push-pull when it comes to some reimbursement model changes, I would say we obviously work with PBMs hand-in-hand to understand what payers are looking for in the marketplace and the ecosystem. If obviously, they’re looking for a standard-based reimbursement model, an AWP-based model. We have those with them. If they are look for cost-plus models or other types of reimbursement models, we work with them to make sure they have the solutions to go to payers that may be looking forward. So right now, I think it’s an opportunity for us to continue to put different types of models in a market and then see what a payer uptake really looks like and really try to advance those models as we move forward.
Manmohan Mahajan : Yes, from a cadence perspective, I think what we’re looking at here is fairly balanced here in third and fourth quarter.
George Hill: Then finally the portfolios —
Tim Wentworth: George, let me be real clear, because I don’ t think it was ambiguous but we have been over the last several months digging deeply into the core business as well as every piece of our portfolio obviously the big chunks you know what they are and with their brand names are and so forth, but also looking at our store footprint, looking as you heard before, our suppliers and our assortment, look at manager compensation, looking at workflow design and pharmacies, and working with deans as well as looking our automation. But when you step back to the large piece, to your sum of the parts question, obviously we’re very conscious of that fact. We have about a half a dozen things that need to either fit, they need to synergize, the need to offer upside in a long-term runway for growth either by themselves or perhaps combined with other things, they need to unlock capabilities that we would otherwise not be able to have unlocked or else we need find a better place for them.
