Operator: Your next question comes from the line of George Hill from Deutsche Bank. Please go ahead.
George Hill: Yes. Good morning, guys. This is kind of a two-part question that go together. I guess, can you talk about — think about the segment’s how we should look at apportioning the $1 billion in cost savings. And kind of the other side of that is the cut in CapEx seems pretty severe. Its taking $0.5 billion or so [indiscernible] $2 billion number. How should we think about from a segment perspective, kind of where the CapEx cuts are coming from, and kind of how they’re being apportioned. And I don’t know if you can kind of give any examples, specifically of big sources of cost cutting savings, where the bigger sources of CapEx savings? Thanks.
A – Manmohan Mahajan: Yes, sure. So let me start with the cost savings. We’re expecting at least a $1 billion of cost saving. And I think the way you need to think about this is majority of this is going to be coming from our U.S Retail Pharmacy business. And you have three or four components, let me just walk through them real quick. Ginger talked about, we’re looking at all costs related to headquarters support office, and we’re going line by line. So that’s one. We are closing unprofitable locations, and that’s going to be accretive in the year. We have optimized store hours in certain locations to match with, where the local market already is. And I think the other big component of this is, we’ve looked at all the project spend, and all the projects that exist across the company, and I think the focus is there twofold.
More importantly, it’s how do we focus the organization on customer focus initiated so that we deliver more value. But then obviously, reducing the spend on the income statement. So that’s on the cost side. Look on the CapEx side, I’d say, if you look at the trend we’ve seen, you go back to maybe fiscal ’22, I think we were at around $1.4 billion in the year. We increased to — this is ’21, sorry. So — and then we went up $300 million. And again, last year was the peak of 2.1. And so all we’re trying to achieve here is getting back to kind of the normal levels of CapEx here. Two parts that are going to contribute into this, again, is one, as John talked about, we’re very focused on our health care segment, on profitable growth and so. We will see a lower level of CapEx or growth CapEx coming out from U.S Healthcare segment.
And then, if you look at a couple of drivers of the CapEx on the U.S Retail Pharmacy, Micro Fulfillment Centers as well as our digital transformation, some of those things are coming to fruition. And Ginger talked about, taking the pause on Micro Fulfillment Center, so that we increase the productivity and achieve the desired results [indiscernible]. So those are some of the factors, high-level that are driving the CapEx reduction.
Operator: Your next question comes from the line of Kevin Caliendo from UBS. Please go ahead.
Kevin Caliendo: Thanks and thanks for taking my question. The 60 clinics that are closing, sort of what was the driving factor there? Why were they not successful? Was it competition in the marketplace? Was it payer relationships? Like why weren’t you able to drive volumes in those markets? What happened there? What can you learn from that?
A – Manmohan Mahajan: Kevin, it’s a fair question. I think the way to think about the 60 clinic reductions is that some of them will be closed. In some cases, we’re going to transition those to affiliate relationships. But it comes down to how quickly can we unlock profitable growth. And in the Village, City, Summit, it’s about concentration of power and relevance within certain markets. Every one of our clinics actually shows month over month growth, but we don’t see the growth coming fast enough in certain markets. And so we’re going to pivot there and be very focused on where we can drive the most profitable growth. We’re growing through the right sizing of our footprint, and some of the changes in our relationships. But our strategy going forward will be really focusing on markets where we see that momentum and scale and at a level that we want to see to drive the profits and the margin expectations that we want.
So it’s really more of a discipline around focusing on markets where we can go deep and continue to grow in a compounded series way, profitably.
Kevin Caliendo: Okay. That — that’s helpful. Can I just ask a quick follow-up on cash flow? Is the right way to think about it? I know you didn’t provide fiscal ’24 free cash flow, but should we take the 655, add the 600 million and reduce CapEx? 500 million benefit in working cap and then adjust for net income, is that like a rough range of where you think it would — should come out for fiscal ’24?
A – Manmohan Mahajan: Yes, sure. So, look, as at the end of the stand, and as you rightly pointed out, we do not generally provide guidance on the free cash flows. But we have outlined — we do expect significant growth. And what we did here is we’ve carved out two significant drivers year-on-year. But having said that, and then we’re looking at a third one to that as well just on the U.S Healthcare, we are expecting in fiscal ’24 at the midpoint of the range to be breakeven on the EBITDA. And when you look at that year-on-year, that is significant improvement on the cash as well. So having said that, we’re also looking at other offsetting items. So, we just wanted to make sure we have kind of the three. We do expect significant improvement and we’ve those three key drivers there.
Operator: Your next question comes from the line of Brian Tanquilut from Jefferies. Please go ahead.
Brian Tanquilut: Hi, good morning. I guess, John, just a question of VillageMD, right. You’re clearly showing some expectation for meaningful year-over-year improvement there or at least the whole Walgreens Health segment. As I think about the fact that you’re opening new clinics, how does the J curve factor into this, right. Because I’m just trying to bridge to that significant improvement when you’re opening new clinics, simply [ph] you will lose money?
John Driscoll: Sure. Well, first of all, I think we’re essentially stopped the opening of new clinics. But remember, the J curve really refers most clearly to Village. With Summit and City, we’ve got consistent growing revenues that balance that a bit and actually help kind of develop — show a better profit profile. And then we’ve got solid growth building quarter-over-quarter which Shields, CareCentrix, our Analytics Business, our Clinical Trials business and U.S Healthcare. So I think you’ve got to think about it as a portfolio. The J curve specifically impacting the new clinics that we are in the early stage clinics at four village but we’ve got a lot of other levers to pull or really advantages in the momentum and the margin profile — improving margin profile across the other businesses.
Operator: Your next question comes from the line of Elizabeth Anderson from Evercore ISI. Please go ahead.
