Q2 2024 Cencora Inc Earnings Call

Alex: Hello and welcome to the Sencure Q2 2024 Earnings Call. My name is Alex, and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. And I'll hand it over to your host, Bennett Murphy, to begin. Please go ahead.

Hello, and welcome to releasing pure <unk> Q2, 2024, I think it's cool.

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Alex: Like to ask a question at the end of the presentation. Please press star followed by one on your telephone keypad.

Speaker Change: I'll hand, it over to your host and I must say to begin. Please go ahead.

Bennett S. Murphy: Thank you. Good morning, good afternoon, and thank you all for joining us for this conference call to discuss SYNCOR's fiscal 2024 second quarter results. I am Bennett Murphy, Senior Vice President, Head of Investor Relations, and Treasurer. Joining me today are Steve Collis, Chairman, President, and CEO, Jim Cleary, Executive Vice President, and CFO, and Bob Mauch, Executive Vice President, and COO.

Alex: Thank you good morning, good afternoon, and thank you all for joining US for this conference call to discuss second quarter fiscal 2024 second quarter results I embedded Murphy senior Vice President head of Investor Relations and Treasury. Joining me today are Steve Collis, Chairman, President and CEO, Jim Cleary, Executive Vice President and CFO and Bob March.

Executive Vice President and C O O.

Bennett S. Murphy: On today's call, we'll be discussing non-GAAP financial measures. Reconciliations of these measures to GAAP are provided in today's press release, which is available on our website at investor.sancora.com. We've also posted a slide presentation to accompany today's press release on our investor website. During this conference call, we will make forward-looking statements about our business and financial expectations on an adjusted non-gap basis, including but not limited to EPS, operating income, and income tax.

Alex: On today's call will be discussing non-GAAP financial measures reconciliations of these measures to GAAP are provided in today's press release, which is available on our website at investor Dot <unk> Dot Com. We've also posted a slide presentation to accompany today's press release on our Investor website.

During this conference call, we will make forward looking statements about our business and financial expectations on an adjusted non-GAAP basis, including but not limited to EPS operating income and income taxes.

Bennett S. Murphy: Forward-looking statements are based on management's current expectations and are subject to uncertainty and change. For a discussion of key risks and assumptions, we refer you to today's press release and our SEC filings, including our most recent 10Q. Cassand Core assumes no obligation to update any forward-looking statements in this call and may not be broadcast without the express permission of the company. You have an opportunity to ask questions after today's remarks by management. We ask you to limit your questions to one participant in order for us to get to as many participants as possible within the hour. With that, I will turn the call over to Steve.

Alex: These statements are based on management's current expectations and are subject to uncertainty and change for a discussion of key risks and assumptions. We refer you to today's press release, and our SEC filings, including our most recent 10-Q.

Alex: <unk> assumes no obligation to update any forward looking statements in this call cannot be rebroadcast without the express permission of the company you'll have an opportunity to ask questions. After today's remarks by management. We ask you to limit your questions to one per participant in order for us to get to as many participants as possible in the hour with that I'll turn the call over to Steve.

Steve Collis: Thank you, Bennett. Good morning and good afternoon to everyone on the call.

Steve Collis: Thank you Ben good morning, and good afternoon to everyone on the call.

Steve Collis: Before turning to discuss our second quarter results, I want to take a moment to introduce Bob Mauch, our current COO, who we announced in March will be succeeding me as CEO on October 1st. For nearly two decades, Bob has been an integral partner in shaping and implementing our strategy, in his role leading operations across our business. He has developed a deep relationship with our partners and team members, and his knowledge of our business and considerable expertise will significantly benefit the company as he leads Sencora into our next chapter. I want to extend my sincerest congratulations to Bob and will now turn the call over to him to make some brief comments. Bob

Steve Collis: Before turning to discuss our second quarter results I wanted to take a moment to introduce Bob mouse.

Steve Collis: Current C O O, who we announced in March will be succeeding me as CEO on October 1st.

For nearly two decades, Bob has been an integral partner in shaping and implementing our strategy.

Steve Collis: And Bob's Tom leading operations across our businesses. He has debated deep relationship with our partners and team members and his knowledge of our business and considerable expertise will significantly benefit the company as he leads in Korea, and China next chapter I wanted to extend.

Steve Collis: My Sincerest, congratulations to Bob and I will now turn the call to him to make some brief comments Bob.

Robert P. Mauch: Thank you, Steve. I'm excited to be joining today's call and look forward to deepening my relationships with our investor and analyst stakeholders in the quarters to come. It's an honor to succeed you as Sankora's third CEO on October 1st. Sancor's position as a leading healthcare solutions organization is rooted in our purpose, pharmaceutical-centric strategy, and growth mindset. Our purpose, capabilities, and the critical role that pharmaceuticals have in health care and patient outcomes motivate me personally and professionally. My parents owned independent community and long-term care pharmacies, so I grew up appreciating firsthand the critical role that pharmaceuticals play in positive patient outcomes.

Bob March: Thank you Steve I'm excited to be joining today's call and look forward to deepening of our relationships with our investor and analyst stakeholders in the quarters to come it's an honor to succeed you to become St. Coors third CEO on October one.

<unk> position as a leading health care solutions organization is rooted in our purpose.

Bob March: Pharmaceutical centric strategy and growth mindset.

Bob March: Our purpose capabilities and their critical role that pharmaceuticals have in health care and patient outcomes motivate me personally and professionally.

Robert P. Mauch: That experience helped shape my 30-plus-year career in pharmaceutical care, leading me to found Accenda, a health outcomes consulting firm for pharmaceutical manufacturers, and setting me on the path that eventually brought me to Sankora. Since then, I've had the pleasure of leading businesses across our company, building and fostering our strong relationships with market-leading customers and partners, and developing strong teams that are differentiated by their unique backgrounds and expertise. Throughout my 17 years at Sankora, I've worked closely with Steve and our teams to help shape our strategy.

Bob March: My parents owned independent community and long term care pharmacies. So I grew up appreciating firsthand the critical role that pharmaceuticals play and positive patient outcomes.

That experienced helped shape my 30, plus year career in pharmaceutical care, leading me to found extender health outcomes consulting firm for pharmaceutical manufacturers and setting me on the path that eventually brought me syncora.

Bob March: Since then I've had the pleasure of leading businesses across our company building and fostering our strong relationships with market, leading customers and partners and developing strong teams that are differentiated by their unique backgrounds and expertise.

Bob March: Throughout my 17 years at Suncor.

Bob March: I've worked closely with Steve and our teams to help shape our strategy.

Robert P. Mauch: During that time, I've had the opportunity to benefit from Steve's leadership and mentorship and his fierce devotion to our people and purpose. I'm grateful that I will be able to continue to work closely with Steve throughout this transition over the next several months, and I look forward to benefiting from his continued leadership, partnership, and guidance in his new role of executive chair later this year. Thank you to our Board of Directors and our team members for the trust and opportunity as I move into this new role.

Bob March: During that time I've had the opportunity to benefit from Steve's leadership, and Mentorship and as fierce devotion to our people and purpose.

Bob March: I'm grateful that I will be able to continue to work closely with Steve throughout this transition over the next several months and I look forward to benefiting from his continued leadership partnership and guidance in his new role of executive Chair later this year.

Speaker Change: Thank you to our board of directors and our team members for their trust and opportunity as I move into this new role together, we will continue to drive value for all our stakeholders, both now and in the years to come.

Robert P. Mauch: Together, we will continue to drive value for all our stakeholders, both now and in the years to come. I'm pleased to have the opportunity to join today's call and share how excited I am for my future role. With that said, I'll leave it to Steve and Jim to answer your questions as usual. I'll look forward to speaking with you all again in the weeks and months ahead. I'll now turn the call back to Steve to discuss our fiscal second quarter.

Speaker Change: I'm pleased to have had the opportunity to join today's call and share how excited I am for my future role with that said I'll leave it to Stephen Jim to answer your questions as usual.

Stephen: I'll look forward to speaking with you all more in the weeks and months ahead I'll now turn the call back to Steve to discuss our fiscal second quarter.

Steve Collis: Thank you, Bob. I also wanted to take a moment to acknowledge Gina Clark, our EVP and Chief Communications and Administration Officer, who we announced this morning will be retiring at the end of our fiscal year. Gina has had a distinguished career and made an enduring impact, leading large-scale initiatives across the organization, including uniting our company and our new globally inclusive identity, SYNCORA. Congratulations and thank you, Gina, for your significant contribution. Now turning to our second quarter, our ongoing focus on operational excellence and our team members' execution on our pharmaceutical-centric strategy drove another quarter of strong financial performance, with revenue growth of 8% and Adjusted EPS growth of Non-Defense.

Steve Collis: Thank you Bob I also wanted to take a moment to acknowledge Gina Clark, our EVP and Chief Communications and Administration Officer, who we announced this morning will be retiring at the end of our fiscal year.

Steve Collis: Gina has had a distinguished career and made an enduring impact leading large scale initiatives across the organization, including uniting our company under a new global inclusive identity St. Cora.

Steve Collis: Congratulations and thank you gena for your significant contributions.

Steve Collis: Now turning to our second quarter, our ongoing focus on operational excellence and our team members execution on our pharmaceutical centric strategy drove another quarter of strong financial performance with.

Steve Collis: With revenue growth of 8% and.

Steve Collis: And adjusted EPS growth of 9%.

Steve Collis: Our role at the Center of Healthcare is core to our strategy, and our positioning allows us to serve as a trusted partner while capturing opportunities presented by innovation, leveraging and investing in our infrastructure and extensive capabilities. We support access and efficiency across healthcare. Our multinational distribution footprint and global platform of commercialization services make us a natural partner for manufacturers bringing their products to market, with our increasing presence in pharma services.

Steve Collis: Our role at the center of Health care is core to our strategy and our positioning allows us to serve as a trusted partner, while capturing opportunities presented by innovation.

Steve Collis: Leveraging and investing in our infrastructure and extensive capabilities, we support access and efficiency across health care.

Steve Collis: Our multinational distribution footprint and global platform of commercialization services makes us a natural partner for manufacturers, bringing their products to market.

Steve Collis: Without increasing presence in pharma services we.

Steve Collis: We are able to cultivate relationships with pharma early in the development process and position ourselves as not only a provider of logistics and distribution services but also as an integrated partner able to support the successful commercialization of their products. Connecting with our manufacturer partners is key to better understanding and anticipating their ever evolving needs and challenges. In early April, we hosted our first Think Live series of the fiscal year, in which representatives from over 30 manufacturer partners and the Sincora team came together to share their insights on new ways we can collaborate and work to support ongoing innovation in the pharmaceutical space. Throughout the course of the year, we will host a number of these events focused on the different needs of our manufacturer partners, from biopharmaceuticals and cell and gene therapy developers to the largest established manufacturers.

Steve Collis: We are able to cultivate relationships with pharma early in the development process and position ourselves as not only a provider of logistics and distribution services, but also as an integrated partner able to support the successful commercialization of their products.

Steve Collis: Connecting with our manufacturer partners these key to better understanding and anticipating their ever evolving needs and challenges in early April we hosted our first in class series of the fiscal year.

Steve Collis: Representatives from over 30 manufacturer partners and the St. Cora team came together to share their insights on new ways, we can collaborate and work to support ongoing innovation in the pharmaceutical space.

Steve Collis: Over the course of the year, we will host a number of these events focus on the different needs of our manufacturer partners from Biopharma and cell and gene therapy developers to the largest established manufacturers.

Steve Collis: The discussions we are having with former innovators provide us with a deep understanding of their pipelines for life-altering innovation, giving us a direct line of sight to development opportunities for our commercialization services portfolio. Additionally, for products that have been launched, our role at the center of the supply chain and our global footprint allow us to capitalize on valuable insights and shared commercial opportunities, including for launches in additional geographies. Sincora has always endeavored to be a trusted industry partner.

Steve Collis: The discussions we are having with pharma innovative provides us with a deep understanding of their pipeline for life altering innovations.

He has a direct line of sight to development opportunities for our commercialization services portfolio.

Steve Collis: Additionally for products that have been launched a role at the center of the supply chain and our global footprint allow us to capitalize on valuable insights and shared commercial opportunities, including four launches in additional geographies.

Steve Collis: Same Cora has always endeavored to be a trusted industry partner.

Steve Collis: And our integrated approach to commercialization is increasingly sought out and appreciated by our former partners. To this end, we were pleased to win another integrated services and distribution contract with an emerging biotech this quarter. While small in the context of the Sincora enterprise, wins like this are important proof points that demonstrate our integrated model and global capabilities are differentiated and responding with manufacturers, as we continue to advance our commercialization capability. We further strengthen our ability to contribute.

Steve Collis: Our integrated approach to commercialization is increasingly sought out and appreciated by our pharma partners to this end we were pleased to win another integrated services and distribution contract with an emerging biotech this quarter.

Steve Collis: While small in the context of the same core enterprise wins like this are important proof points that demonstrate our integrated model and global capabilities are differentiated and resonating with manufacturers.

Steve Collis: As we continue to advance our commercialization capability.

Steve Collis: Further strengthen our ability to contribute to pharmaceutical outcomes and support innovation.

Steve Collis: Pharmaceutical Outcomes, and Support Innovation. As the entire healthcare ecosystem continues to advance, we are embracing the latest technology to support our customers' growth and provide actionable insights to our partners through data and analytics. We continue to develop solutions for our provider customers, allowing them to focus on patient care and efficiently run their practices. Recently, we introduced an enhanced application that combines clinical pharmacy and financial information in one place for specialty physicians.

Steve Collis: As the entire health care ecosystem continues to advance we are embracing the latest technology to support our customers' growth and providing actionable insights to our partners leveraging data and analytics.

Steve Collis: We continue to develop solutions for our provider customers, allowing them to focus on patient care and efficiently run their practices Reis.

Steve Collis: Recently, we introduced an enhanced application that combines clinical pharmacy and financial information in one place with specialty physicians.

Steve Collis: With this integrated platform, our customers can seamlessly aggregate data about their practices across our solution set to analyze their performance and drive success through customizable, easy-to-use dashboards. Similarly, given the investments we have made in our infrastructure to enhance the security of the U.S. pharmaceutical supply chain, we are now able to provide actionable insights to manufacturers leveraging our scale and rich data sets. As we continue to invest in our technology and capabilities, we increasingly see opportunities to create value-added, data-informed solutions that drive innovation and differentiation.

Steve Collis: With this integrated platform our customers can seamlessly aggregate data about the practices across our solution set to analyze the performance and drive success through customizable easy to use dashboards.

Steve Collis: Really given investments we have made in our infrastructure to enhance the security of the U S pharmaceutical supply chain we are.

Steve Collis: Not able to provide actionable insights to manufacturers leveraging our scale and rich datasets.

As we continue to invest in our technology and capabilities, we increasingly see opportunities to create value added data informed solutions that drive innovation and differentiation.

Steve Collis: The minority investment in One Oncology is another example of our approach to adding solutions that will deepen and expand our relationship with our partners, allowing us to support better healthcare outcomes in critical areas. Since completing our investment in One Oncology last June, the platform has continued to grow as oncologists increasingly recognize the value of joining a physician-led network of like-minded, community-based practitioners. To enhance its value proposition to physicians, One Oncology has advanced key IT and practice management technologies while investing in important clinical research and real-world evidence solutions to make community provider participation in clinical trials more seamless.

Steve Collis: On R&D investment and one oncology is another example of our approach to adding solution that will deepen and expand our relationship with our partners, allowing us to support better health care outcomes in critical areas.

Since completing our advanced spending one oncology last June the platform has continued to grow as oncologists increasingly recognize the value of joining a physician led network of Likeminded community based practitioners.

To enhance its value proposition to physicians, one oncology has advanced key Archie and practice management technologies, while investing in important clinical research and real world evidence solutions to make community provider participation in clinical trials more seamless.

Steve Collis: We are taking our learnings from our investment in One Oncology to unlock new growth opportunities for all our community oncology customers while allowing them to maintain their independence and treat cancer patients with high quality and cost-effective care in their local community. Our continued partnership with One Oncology leadership and TPG brings together our collective strength as we work jointly to advance accessible, quality cancer care. Our commitment to and investment in community oncology has been well received, as we are clearly focused on supporting the long-term vitality of community providers across the U.S. Our extensive capabilities, scale platform, and deep expertise enable us to collaborate with customers to overcome evolving challenges across the healthcare landscape.

Steve Collis: We are taking our learnings from our investment in one oncology to unlock new growth opportunities for all of our community oncology customers, while allowing them to maintain their independence and treat cancer patients with high quality and cost effective care in their local communities.

Our continued partnership with one oncology leadership team and TPG brings together our collective strength.

Steve Collis: As we work jointly to advance accessible quality cancer care.

Steve Collis: Our commitment to and investment in community oncology has been well received as we are clearly focused on supporting the long term vitality of community providers across the U S.

Steve Collis: Our extensive capabilities scale platform and deep expertise enable us to collaborate with customers to overcome the evolving challenges across the health care landscape.

Steve Collis: During the quarter, the healthcare industry faced an impactful disruption that prevented providers across the U.S. from receiving the claims payments they rely on to run their practices and ultimately care for patients. Our customers, particularly community providers, found themselves in a difficult position, uncertain if they could make payroll for their employees or cover expenses for critical medications needed for patient care.

Steve Collis: During the quarter, the health care industry faced an impactful disruption that prevented providers across the U S from receiving the claims payments they rely on to run their practices and ultimately capable patients.

Steve Collis: Our customers, particularly community providers found themselves in a difficult position I'm citizen, if they could make payroll for their employees or cover expenses for critical medications needed for patient care.

Steve Collis: Much like we did during the COVID-19 pandemic, our cross-functional teams were nimble in developing solutions, including offering flexible payment terms to allow our customers to keep their businesses running without jeopardizing care until claims processing was restored. By providing solutions and working to address our customers' needs, we deepened our relationships while supporting continuity and access to care. The work we do would not be possible without our purpose-driven team members who diligently work to support our customers and their patients.

Steve Collis: Much like we did during the COVID-19 pandemic.

Steve Collis: Our cross functional teams were nimble in developing solutions, including offering flexible payment terms to allow our customers to keep their businesses running without jeopardizing K until claims processing was restored <unk>.

Steve Collis: By providing solutions and working to address our customers' needs, we deepened our relationships, while supporting continuity and access to care.

Steve Collis: The work, we do would not be possible without our purpose driven team members, who diligently work to support our customers and their patients.

Steve Collis: At Sencora, we are focused on fostering a globally united culture that promotes the well-being of our 46,000 team members across our footprint. A recent example of the strength of our culture was in Lithuania, where we operate both a distribution business and a Senkora business services center. We were proud to be recognized by the Lithuanian Ministry of Social Security and Labor with the Safest Emotional Environment Award for our Shared Services Center, adding to the accolades the office has received in the past several years. This award is just one example of the strong culture Sankora has built and recognizes key elements of our people and culture strategy, including our leading benefits offering.

Steve Collis: In Colorado, we are focused on fostering a globally youre not a culture that promotes the wellbeing of our 46000 team members across our footprint.

Steve Collis: A recent example of the strength of our culture wasn't Lithuania, where we operate both the distribution business and our St. <unk> business services same time.

Steve Collis: We were proud to be recognized by the Lithia IGN Ministry of social security and labor with the safest emotional environment Award for our shared services same tab.

Steve Collis: Adding to the accolades to office has received in the past several years.

Steve Collis: This award is just one example of the strong culture St. Cora has bolt.

Steve Collis: And recognized key elements of our people and culture strategy.

Steve Collis: <unk>, a leading benefits offering.

Steve Collis: I'm proud our teams have embraced our multinational presence, which better allows us to serve our customers' needs across geographies and time zones while maintaining our purpose-driven culture. As we continue to grow as a globally united enterprise, we prioritize building a culture that celebrates the unique backgrounds and experiences of our team members and will provide diverse, differentiated perspectives, enhancing our business. As a crucial link in the pharmaceutical supply chain, it is imperative that Tencora has robust business resiliency plans to ensure the delivery of crucial pharmaceuticals, including in the face of a changing climate.

Steve Collis: I'm proud of our teams have embraced our multinational presence, which better allows us to serve our customers' needs across geographies and thompsons, while maintaining our purpose driven culture.

Steve Collis: As we continue to grow as a global United Enterprise, We prioritize building a culture that celebrates the unique backgrounds and experiences all of our team members and will provide diverse differentiated perspective, enhancing our business.

Steve Collis: Is a crucial link in the pharmaceutical supply chain. It is imperative that St. Cora has robust business resiliency plans to ensure the delivery of crucial pharmaceuticals, including in the face of a changing climate.

Steve Collis: As we further our business resiliency efforts, we are mindful of the impact our operations have on the environment and work closely with our partners to drive sustainability initiatives, help them understand their mission footprints, and ultimately report on our joint progress. In partnering with stakeholders across the supply chain on these important topics, we amplify our impact across our, While we continue to advance our work in our own operations and in partnership with other stakeholders, we were pleased that our efforts were acknowledged by Newsweek on its inaugural list of America's greenest companies, that recognizes the top 300 companies in the United States who are making progress to positively change the sustainability for, Running an environmentally responsible business will continue to be an important aspect of our business resiliency planning and aligns closely with our purpose of creating healthier futures.

Steve Collis: As we further our business resiliency efforts, we are mindful of the impact our operations have on the environment and work closely with our partners to drive sustainability initiatives help them understand the emission footprint and ultimately report on our joint progress in partnering with stakeholders.

Steve Collis: Ross the supply chain on these important topics, we amplify our impact across our footprint.

Steve Collis: While we continue to advance our work in our own operations and in partnership with other stakeholders. We were pleased that our efforts were acknowledged by Newsweek on a team All Bureau list of America's Greenest companies that recognizes the top 300 companies in the United States, who are making progress to positively change and sustain it.

Steve Collis: But the deep footprint.

Steve Collis: Running an environmentally responsible business will continue to be an important aspect of our business resiliency planning and aligns closely with our purpose of creating healthier futures.

Steve Collis: In closing, the ever-changing healthcare environment necessitates that we remain agile and adaptive, alongside our partners, both up and downstream. I am incredibly proud of our purpose-driven team members who exemplified their customer-centric approach and intellectual confidence to help providers maintain access to care during a challenging time. As we move into the second half of our fiscal year, we remain focused on creating a best-in-class customer experience, embracing innovation, and investing in our infrastructure to drive our pharmaceutical-centric strategy forward, creating value for all our stakeholders. I will now turn the call over to Jim for an in-depth review of our second quarter results and updated guidance. Jim? Thank you.

Steve Collis: In closing the ever changing healthcare environment necessitates that we remain agile and adaptive alongside our partners both up and downstream.

Steve Collis: Im incredibly proud of our purpose driven team members, who exemplify their customer centric approach and intellectual confidence to help providers maintain access to K during a challenging time as.

Steve Collis: As we move into the second half of our fiscal year, we remain focused on creating a best in class customer experience embracing innovation and investing in our infrastructure to drive our pharmaceutical centric strategy forward, creating value for all our stakeholders.

Steve Collis: I will now turn the call over to Jim.

Steve Collis: An in depth review of our second quarter results and updated guidance Jim.

Jim Cleary: Thanks Steve. Good morning and good afternoon, everyone.

Jim Cleary: Thanks, Steve Good morning, and good afternoon, everyone before I turn to my prepared remarks, I want to extend my congratulations to both Steve and Bob on our recently announced leadership succession plan.

Jim Cleary: Before I turn to my prepared remarks, I want to extend my congratulations to both Steve and Bob on our recently announced leadership succession plan. Since joining Sincora in 2015, I've had the pleasure of working closely with both Steve and Bob as we've executed on our pharmaceutical centric strategy and focused on creating long-term value. Steve's purpose-driven leadership and strategic vision have shaped Sencora into the company it is today, characterized by our foundation in pharmaceutical distribution, complementary solutions up and downstream, and long-standing leadership and specialty. I look forward to continuing to benefit from Steve's expertise as he steps into the executive chair role in October.

Jim Cleary: Since joining <unk> in 2015, I've had the pleasure of working closely with both Steve and Bob as we executed on our pharmaceutical centric strategy and focused on creating long term value.

Jim Cleary: <unk> purpose, driven leadership and strategic vision have shaped <unk> into the company. It is today characterized by our foundation in pharmaceutical distribution complementary solutions up and downstream and long standing leadership in specialty I look forward to continuing to benefit from Steve.

Jim Cleary: His expertise as he steps into the executive chair role in October.

Jim Cleary: Like Steve, Bob has deep knowledge of and passion for supporting positive patient outcomes through pharmaceutical-centric care. Bob's experience leading our commercial operations and building talented customer-focused teams will benefit our company and all its stakeholders in the years to come. Now turning to our results, Sencora delivered strong performance in our second quarter, and we are pleased to raise our adjusted operating income guidance for the full fiscal year. Our teams continue to execute and stay focused on providing customer-centric services and solutions, as evidenced in the quarter when we leveraged the strength of our balance sheet to support our customers during a time of industry-wide need.

Steve Collis: Steve Bob has deep knowledge and passion for supporting positive patient outcomes through pharmaceutical centric care Bob's experience, leading our commercial operations and building talented customer focused teams will benefit our company and all its stakeholders in the years to come.

Steve Collis: Now turning to our results <unk> delivered strong performance in our second quarter and we are pleased to raise our adjusted operating income guidance for the full fiscal year. Our teams continue to execute and stay focused on providing customer centric services and solutions as evidenced in the <unk>.

Steve Collis: <unk> when we leverage the strength of our balance sheet to support our customers during a time of industry wide need the important role we play at the center of healthcare powered by our people and the long term partnerships, we have forged positions us well to continue to innovate solve problems for customers and <unk>.

Jim Cleary: The important role we play at the center of healthcare, powered by our people and the long-term partnerships we have forged, positions us well to continue to innovate, solve problems for customers, and create significant value across the pharmaceutical supply chain.

Steve Collis: <unk> significant value across the pharmaceutical supply chain.

Jim Cleary: I'll now turn to a review of our consolidated second quarter results. And as a reminder, my remarks will focus on our adjusted non-GAAP financial results, unless otherwise stated. For a detailed discussion of our GAAP results, please refer to our earnings press release and presentation. Starting with revenue, our consolidated revenue was $68.4 billion, up 8%, with solid growth in both segments. In the quarter, we saw continued strong trends in sales of specialty products to physicians and health systems and growth in sales to some of our larger customers, offsetting the manufacturer price reductions in certain product classes, which were known well in advance.

Steve Collis: Now turn to a review of our consolidated second quarter results and as a reminder, my remarks will focus on our adjusted non-GAAP financial results unless otherwise stated for a detailed discussion of our GAAP results. Please refer to our earnings press release and presentation.

Steve Collis: Starting with revenue our consolidated revenue was $68 4 billion up 8% with solid growth in both segments in the quarter. We saw continued strong trends in sales of specialty products to physicians and health systems and growth in sales to some of our larger customers offsetting the manufacturer price.

Steve Collis: Reductions in certain product classes, which were known well in advance.

Jim Cleary: While we've continued to see growth in sales of GLP-1 products, this quarter, the growth rate moderated as we lapped the rapid adoption of the products in the second quarter of our fiscal 2023 and due to GLP-1 supply constraints in the quarter. Consolidated gross profit was $2.5 billion, up 7%. Consolidated gross profit margin was 3.70%, a decrease of one basis point.

Steve Collis: While we've continued to see growth in sales of <unk> products. This quarter the growth rate moderated as we lapped the rapid adoption of the products in the second quarter of our fiscal 2023 and due to <unk> supply constraints in the quarter.

Steve Collis: Consolidated gross profit was $2 5 billion up 7%.

Steve Collis: Consolidated gross profit margin was 370% a decrease of one basis point.

Jim Cleary: Consolidated operating expenses were $1.5 billion, up 5% due to higher distribution selling and administrative expenses to support revenue growth, offset in part by the efficiency actions we called out last year on our May earnings call. Consolidated operating income was $1.0 billion, an increase of 11% compared to the prior year quarter, with good growth in both segments, which I will discuss in more detail when reviewing the segment level results. Moving now to our net interest expense and effective tax rate for the second quarter.

Steve Collis: Consolidated operating expenses were $1 5 billion up 5% due to higher distribution selling and administrative expenses to support revenue growth offset in part by the efficiency actions, we called out last year on our May earnings call.

Steve Collis: Consolidated operating income was $1.0 billion, an increase of 11% compared to the prior year quarter with good growth in both segments, which I will discuss in more detail when reviewing the segment level results.

Steve Collis: Moving now to our net interest expense and effective tax rate for the second quarter net interest expense was $64 million flat year over year as you will recall, we called out an expected sequential step up in interest expense on our first quarter earnings call given the typical seasonal intra peer.

Jim Cleary: Net interest expense was $64 million, flat year over year. As you will recall, we called out an expected sequential step-up in interest expense on our first quarter earnings call, given the typical seasonal, intra-period, short-term borrowings and cash use. Higher interest expense in the second quarter compared to the prior year was offset by higher interest income and the September 2023 divestiture of our less-than-wholly-owned subsidiary in Egypt. During the quarter, we issued $500 million in senior notes due 2034 at a coupon of 5.125%.

Steve Collis: Short term borrowings and cash skews higher.

Steve Collis: Higher interest expense in the second quarter compared to the prior year was offset by higher interest income and the September 2023 divestiture of our lesson wholly owned subsidiary in Egypt.

Steve Collis: During the quarter, we issued $500 million in senior notes due 2034 at a coupon of five <unk>, 5%, we intend to use the proceeds from the notes issuance to repay our 2024 notes due this month.

Jim Cleary: We intend to use the proceeds from the notes issuance to repay our 2024 notes due this month. Regarding income taxes, our effective income tax rate was 20.9% compared to 19.0% in the prior year quarter. Turning now to diluted share count, our diluted share count was 201.2 million shares, a 2% decrease compared to the prior year's second quarter.

Steve Collis: Regarding income taxes, our effective income tax rate was 29% compared to 19.0% in the prior year quarter.

Steve Collis: Turning now to diluted share count or diluted share count was 201 2 million shares at 2% decrease compared to the prior year second quarter.

Jim Cleary: This was primarily driven by opportunistic share repurchases during the second half of fiscal 2023 and continued share repurchases in fiscal 2024, including $50 million in repurchases in the second quarter in conjunction with the Walgreens Boots Alliance Block Sale in February. Regarding our cash balance and adjusted free cash flow, we ended the quarter with approximately $2.1 billion of cash and year-to-date adjusted free cash flow of approximately half During the quarter, many of our customers were impacted by the Change Healthcare outage that severely limited customers' cash flows as claims payments were delayed.

Steve Collis: This was primarily driven by opportunistic share repurchases during the second half of fiscal 2023.

Steve Collis: And continued share repurchases in fiscal 2024, including $50 million in repurchases in the second quarter in conjunction with Walgreens Boots Alliance block sale in February.

Steve Collis: Regarding our cash balance and adjusted free cash flow, we ended the quarter with approximately $2 $1 billion of cash and year to date adjusted free cash flow of approximately half a million dollars.

Steve Collis: During the quarter many of our customers were impacted by the change healthcare outage that severely limited customers cash flows as claims payments were delayed.

Jim Cleary: To help our partners, we provided customers in need with extended payment terms, giving them the financial flexibility to maintain their operations and focus on caring for their patients. The support we provided to our customers created a cash flow headwind in the second quarter of approximately $600 million, which we fully expect will reverse in our third fiscal quarter. The strength of our balance sheet and execution by our team members has allowed us to play a pivotal role in supporting our customers during this challenging time.

Steve Collis: To help our partners, we provided customers in need with extended payment terms, giving them the financial flexibility to maintain their operations and focus on caring for their patients.

Steve Collis: The support we provided to our customers created a cash flow headwind in the second quarter of approximately $600 million.

Steve Collis: Which we fully expect will reverse in our third fiscal quarter.

Steve Collis: The strength of our balance sheet and execution by our team members has allowed us to play a pivotal role in supporting our customers. During this challenging time.

Jim Cleary: And I am appreciative of our team members who work diligently and collaboratively to understand our customers' needs and be agile in the face of uncertainty, while being prudent to ensure we also protect Sencora and its shareholders.

Steve Collis: And I am appreciative of our team members, who work diligently and collaboratively to understand our customers' needs and be agile in the face of uncertainty while being prudent to ensure we also protect sent Cora and its shareholders.

Speaker Change: This completes the review of our consolidated results now I will turn to our segment results for the second quarter.

Jim Cleary: This concludes our review of our consolidated results. Now I'll turn to our segment results for the second quarter. U.S. Healthcare Solutions Segment revenue was $61.3 billion, up 8% with solid growth in our distribution businesses, including continued growth in sales to specialty physician practices and health systems and volume growth in GLP-1. Excluding sales of GLP-1 products, which increased by $1.3 billion, segment revenue growth would have been nearly 6.5%. U.S. Healthcare Solutions Segment operating income increased 11% to $841 million as we continue to benefit from our leadership and specialty, both oncology and non-oncology, and solid utilization trends.

Speaker Change: U S Health care solutions segment revenue was $61 3 billion up 8% with solid growth in our distribution businesses, including continued growth in sales to specialty physician practices and health systems and volume growth in <unk>.

Steve Collis: Excluding sales of <unk> products, which increased by $1 3 billion.

Steve Collis: Segment revenue growth would have been nearly six 5%.

Steve Collis: U S health care solutions segment operating income increased 11% to $841 million as we continued to benefit from our leadership in specialty both oncology and non oncology and solid utilization trends in the quarter. We also saw a benefit from our focus on managing operating.

Jim Cleary: In the quarter, we also saw a benefit from our focus on managing operating expense growth as we compared to a period with elevated expenses prior to the efficiency actions we took last spring. As it relates to COVID contributions, in the quarter, we saw a decline in demand for commercial COVID-19 vaccines, and contributions related to exclusive COVID treatment distribution were not meaningful as expected. As we no longer expect contribution from exclusive COVID treatment distribution, we no longer plan to provide guidance for ex COVID growth rates.

Steve Collis: <unk> growth as we compared to a period with elevated expenses prior to the efficiency actions, we took last spring.

Steve Collis: As it relates to Covid contributions in the quarter, we saw a decline in demand for commercial COVID-19, vaccines and contributions related to exclusive COVID-19 treatment distribution, we're not meaningful as expected.

Steve Collis: As we no longer expect contribution from exclusive Covid treatment distribution, we no longer plan to provide guidance for ex COVID-19 growth rates as a reminder, in the first quarter, we recognized <unk> <unk> of exclusive treatment contribution which is the only contribution expected in this segment.

Jim Cleary: As a reminder, in the first quarter, we recognize six cents of exclusive treatment contribution, which is the only contribution expected in the segment this fiscal year, compared to 31 cents in the U.S. of the total 38 cents consolidated contribution for exclusive treatments in fiscal 2023. I will now turn to our international health care solutions segment. In the quarter, international health care solutions revenue was $7 point one billion dollars, up five percent on a reported basis or up 10 percent on a constant currency basis.

Steve Collis: This fiscal year compared to 31 in the U S of the totaled 38 consolidated contribution for exclusive treatments in fiscal 2023.

Jim Cleary: International Healthcare Solutions operating income was $193 million, up 10% on a reported basis, due primarily to growth for our less than wholly owned distribution business in Brazil and our Canadian business. In the quarter, our European distribution business delivered growth and benefited from manufacturer price adjustments in a developing market country, which offsets the decline in the value of local currency. On a constant currency basis, International Healthcare Solutions segment operating income growth was 22%.

Steve Collis: I will now turn to our international Health care solutions segment in the quarter International Healthcare solutions revenue was $7 1 billion up 5% on a reported basis or up 10% on a constant currency basis International Health care solutions operating income was $193 million up 10.

Jim Cleary: That completes the review of our segment level results. I'll now discuss our updated fiscal 2024 guidance expectations. As a reminder, we do not provide forward-looking guidance on a gap basis. So the following metrics are provided on an adjusted, non-gap basis.

Steve Collis: Percent on a reported basis due primarily to growth for our less than wholly owned distribution business in Brazil.

Steve Collis: And our Canadian business and.

Steve Collis: In the quarter, our European distribution business delivered growth and benefited from manufacturer price adjustments and a developing market country, which offsets the decline in value of local currency on a constant currency basis International Health care solutions segment operating income growth was 22%.

Speaker Change: That completes the review of our segment level results.

Speaker Change: Now discuss our updated fiscal 2024 guidance expectations. As a reminder, we do not provide forward looking guidance on a GAAP basis. So the following metrics are provided on an adjusted non-GAAP basis. I will also provide certain guidance metrics on a constant currency basis, I will start with EPS and then pre.

Jim Cleary: I will also provide certain guidance metrics on a constant currency basis. I will start with EPS and then provide detail on the income statement items driving our updated EPS guidance. We are raising the lower end of our fiscal 2024 EPS guidance and now expect EPS to be in the range of $13.30 to $13.50, from our previous range of $13.25 to $13.50, representing growth of 11% to 13%. The updated range reflects our expectation for continued growth and execution and the balance of our fiscal year, as well as updated expectations on a few items below the operating income line. Moving now to revenue.

Speaker Change: By detail on the income statement items, driving our updated EPS guidance.

Speaker Change: We are raising the lower end of our fiscal 2024, EPS guidance and now expect EPS to be in the range of $13 30 to $13 50.

Speaker Change: From our previous range of $13 25 to $13 50.

Speaker Change: Representing growth of 11% to 13% the updated range reflects our expectation for continued growth and execution in the balance of our fiscal year and also updated expectations on a few items below the operating income line.

Jim Cleary: Our guidance for consolidated revenue growth is unchanged at 10% to 12%. In the international healthcare solutions segment, we are narrowing our guidance range for segment-level revenue growth and now expect as reported revenue growth of 4% to 7% from the previous range of 4% to 8% and constant currency revenue growth of 7% to 10% from the previous range of 7% to 11%. Turning now to adjusted operating income, we expect consolidated adjusted operating income growth to be in the range of 9% to 11%, up from our previous guidance of 8% to 10% due to our updated expectations for the U.S.

Speaker Change: Moving now to revenue our guidance for consolidated revenue growth is unchanged at 10% to 12% in the international Health care solutions segment, we are narrowing our guidance range for segment level revenue growth and now expect as reported revenue growth of 4% to 7% from the previous <unk>.

Speaker Change: <unk>, a 4% to 8% and constant currency revenue growth of 7% to 10% from the previous range of <unk>.

Speaker Change: 7% to 11%.

Speaker Change: Turning now to adjusted operating income, we expect consolidated adjusted operating income growth to be in the range of 9% to 11% up from our previous guidance of 8% to 10% due to our updated expectations for the U S.

Jim Cleary: In the U.S. healthcare solutions segment, we now expect operating income growth to be in the range of 10% to 12%, up from our prior range of 9% to 11%. Our increased guidance reflects our strong performance to date and continued growth in the second half, though at a more moderate rate, primarily due to COVID-19 vaccine seasonality and compared to the prior year fourth quarter, which was the initial quarter that had a meaningful commercial COVID vaccine contribution.

Speaker Change: In the U S Health care solutions segment, we now expect operating income growth to be in the range of 10% to 12% up from our prior range of 9% to 11% our increased guidance reflects our strong performance to date and continued growth in the second half. So we had a.

Speaker Change: A more moderate rate, primarily due to COVID-19 vaccine seasonality and comparing to the prior year fourth quarter, which was the initial quarter that had a meaningful commercial COVID-19 vaccine contribution.

Jim Cleary: As context, in the first half, we saw segment level operating income growth of 16%, well above our initial expectations. When excluding commercial COVID-19 vaccine contributions, our growth was 8% in the first half. We are now switching to exclusive COVID therapies.

Speaker Change: As context in the first half we saw segment level operating income growth of 16% well above our initial expectations when excluding commercial a COVID-19 vaccine contributions our growth was 8% in the first half switched.

Speaker Change: Switching now to exclusive Covid therapies as a reminder, in the third and fourth quarters, we will have headwinds of <unk> and <unk>, respectively. As we lap prior year contributions from exclusive cobot therapy distribution.

Jim Cleary: As a reminder, in the third and fourth quarters, we will have headwinds of $0.05 and $0.08, respectively, as we lap prior year contributions from exclusive COVID therapy distribution. Turning now to our international healthcare solutions segment, our as-reported operating income growth guidance remains unchanged and reflects the strengthening of the dollar in recent weeks. On a constant currency basis, we now expect segment-level operating income growth to be in the range of 10% to 13%, up from our previous range of 9% to 12%.

Speaker Change: Turning now to our international Health care solutions segment, our as reported operating income growth guidance remains unchanged and reflects the strengthening of the dollar in recent weeks on a constant currency basis. We now expect segment level operating income growth to be in the range of 10% to 13% up from our <unk>.

Speaker Change: <unk> range of 9% to 12% regarding our adjusted effective tax rate. We now expect our adjusted effective tax rate to be approximately 21% from our previous range of 20% to 21% moving now to share count. We now expect our weighted average shares outstanding to be in the range of 200.

Jim Cleary: Regarding our adjusted effective tax rate, we now expect our adjusted effective tax rate to be approximately 21% from our previous range of 20% to 21%. Moving now to share count, we now expect our weighted average shares outstanding to be in the range of 201 to 202 million shares from our previous range of 200 to 202 million shares.

Speaker Change: One to 202 million shares from our previous range of 200 to 202 million shares.

Jim Cleary: Finally, turning to adjusted free cash flow, our guidance remains unchanged, and we expect to generate approximately $2.5 billion in adjusted free cash flow. In closing, our teams across Sincora have continued to execute, allowing us to deliver strong financial results. As I reflect on the second quarter, I am impressed by the way our talented team members came together to support our customers, exemplifying customer centricity and agility in responding to challenges. As we look to the second half of our fiscal year, our pharmaceutical-focused strategy, investments to enhance our infrastructure and drive innovation, and our commitment to our purpose will continue to drive differentiated value creation for all our stakeholders. Now I'll turn the call over to the operator to open the line for questions. Operator?

Speaker Change: Finally, turning to adjusted free cash flow our guidance remains unchanged and we expect to generate approximately $2 5 billion and adjusted free cash flow.

Speaker Change: In closing our teams across Syncora have continued to execute allowing us to deliver strong financial results as I reflect on the second quarter I am impressed by the way our talented team members came together to support our customers exemplifying customer centricity and agility in responding to challenges.

Speaker Change: As we look to the second half of our fiscal year, our pharmaceutical centric strategy investments to enhance our infrastructure and drive innovation and our commitment to our purpose will continue to drive differentiated value creation for all our stakeholders now I'll turn the call over to the operator to open the line for questions.

Speaker Change: Operator.

Operator: Thank you. As a reminder, if you'd like to ask a question, that's a star followed by one on the telephone keypad. Please limit yourself to one question only. Thank you. Our first question for today comes from Elizabeth Anderson of Evercore. Elizabeth, your line is now open, please go ahead.

Speaker Change: Thank you.

Speaker Change: I wonder if you'd like to ask a question.

Speaker Change: By one on the telephone keypad.

Speaker Change: Please limit yourself to one question only thank you.

Speaker Change: First question for today comes from Elizabeth Anderson of ethical.

Unknown Executive: Yeah, hi, hi, Elizabeth. Thanks for the question. I'll take it.

Elizabeth Anderson: I was supposed to your line is now open. Please go ahead.

Elizabeth Anderson: Hi, guys. Thanks. So much further question I think maybe one sort of on a high level basis.

Elizabeth Anderson: Talk about the succession plan and today is like how that came about and then as we think about sort of the next few months sort of the key priorities of that succession plan and then.

Speaker Change: Hi, Bob.

Bob March: You sort of take the reins fully.

Bob March: Later this week can we talk about sort of like what your initial stack.

Bob March: <unk>.

Bob March: Is there thanks.

Steve Collis: So, you know, our board has obviously been an obvious choice for a company of our size. And, you know, the enterprise that we manage is, of course, very focused on the practice of succession planning. And, you know, two weeks ago, I actually had my 30th anniversary with the company, and, of course, 13 years as CEO, and Bob has been in the COO position for two years. So we've been focused a lot on making sure that key executives have the right development opportunities.

Bob March: Yes, Hi, Hi, Elizabeth Thanks for the question.

Speaker Change: I'll take it.

Bob March: No.

Bob March: Our board has been obviously a company of our size.

Elizabeth Anderson: The enterprise that we manage of course is very focused on the practice of succession planning and.

Elizabeth Anderson: Two weeks ago, I actually had my <unk> anniversary with the company and of course, they're 10 years as CEO and Bob has been in the CFO position for two years. So we've been focused a lot on making sure that key executives have the loss development opportunities for me personally. It was personally it was really imperative that.

Steve Collis: For me, personally, it was really imperative that we had our internal candidates because of the importance of culture in our relationship, the importance of knowledge of our customers and the complex enterprises. Honestly, any new executive that comes into the company after six months, the first thing they say to me is, "I'm shocked how complicated everything is." And that's because it's a lot; we have a lot of different aspects to our business.

Elizabeth Anderson: We have our internal candidates.

Elizabeth Anderson: Cause of the importance of culture, and our relationship the importance of knowledge of our customers in the complex enterprises honestly any new executive that comes in the company. After six months. The first thing they say to me I'm shocked how complicated everything is and thats because its a lot we have a lot of different aspects to our business and.

Steve Collis: And, you know, it's so important that someone that knows the business really well would be my successor. And during the last few years, Bob has exemplified the sort of leadership characteristics that we look for, that the board and the management team look for in leadership. He's also a pharmacist, which I think is awesome. I'm not aware of one of the major public wholesalers that has been led by a pharmacist.

Elizabeth Anderson: So it's important that someone that knew the business really well would be my successor and during the last few years, Bob has exemplified the sort of leadership characteristics that we look for that the board and the management team looks to in dealership. He is also pharmacists, which I think is also my model way of one of the.

Elizabeth Anderson: Major public wholesalers that has been laid performances, perhaps I'm wrong Benneteau research. It so I think that that's a really nice.

Elizabeth Anderson: Also asterisk on bulbs, becoming the third CEO in <unk> history.

Steve Collis: Perhaps I'm wrong; Bennett will research it. So I think that that's a really nice, also, asterisk on Bob becoming the third CEO in Syncorus history. But, you know, Bob and I have worked very closely together, as well as the entire executive management team has worked very closely with Bob and Jim and myself, as we have guided the enterprise. And, you know, we have got six months left until the actual transition takes place on October 1.

Elizabeth Anderson: Bob and I have worked very closely together as.

Elizabeth Anderson: As well as the all the executive management team has worked very closely with Bob and Jim and myself as.

Elizabeth Anderson: As we have got at the enterprise and.

Elizabeth Anderson: We have got six months left until the actual transition takes place on October one.

Elizabeth Anderson: It's business as usual of course, Bob is thinking a lot about the future and what we.

Steve Collis: You know, it's business as usual, of course, Bob is thinking a lot about the future and what he will be like, and he'll be joining us on the next call. And you will get to know him better at conferences, etc. And, you know, the company's in very, very good hands, and the company's also in very good shape. So I think our investors should feel very good about us in Syncorus's position. So thanks. Thanks for the question.

Elizabeth Anderson: He will be lock and he will be joining us on the next call and you'll all get to know better at conferences et cetera.

Elizabeth Anderson: The company is in very very good hands and the company is also in very good shape. So I think on basis should feel very good about how <unk> positioned so thanks. Thanks for the question.

Operator: Thank you. Our next question comes from Lisa Gill of J.P. Morgan. Your line is now open, please go ahead.

Speaker Change: Thank you. Our next question comes from Lisa Gill of Jpmorgan your.

Lisa Gill: Your line is now open. Please go ahead.

Elizabeth Anderson: Yes.

Elizabeth Anderson: Yes.

Lisa Gill: Thanks very much. Good morning, everyone.

Lisa Gill: Thanks, Scott good morning, everyone.

Lisa Gill: I wanted to focus on the margin improvement and as we think about I think.

Speaker Change: Jim you talked about a couple of the key drivers specialty non specialty expense growth, but it's very impressive what you've been able to do you can you give us a little more color are you seeing anything for example on the Biosimilar side and then just secondly, I wanted to make sure that I understood that below the line impact because I'm coming up with a number that <unk> 12 impact.

Speaker Change: Based on the tax rate going up by a little bit and the share count going up by a little bit. So just really wanted to understand those two elements as we think about them playing out for the rest of the year and Steve I Hope this isn't our last earnings call with you.

Steve: I'll just go quickly now it's not all beyond all certainly beyond next quarter. Okay. Thank you, Lisa and I will handover to Jim Okay.

Lisa Gill: I wanted to focus on the margin improvement. And as we think about, you know, I think Jim, you talked about a couple of the key drivers, specialty, non-specialty, and expense growth. But it's very impressive what you've been able to do.

Jim Cleary: Lisa Thanks, Thanks, a lot.

Jim Cleary: Thank you Lisa for that question, we did have.

Lisa Gill: So can you give us a little more color? Are you seeing anything, for example, on the biosimilar side? And then, just secondly, I wanted to make sure that I understood the below-line impact because I'm coming up with a number that's like 12 cents impact based on the tax rate going up by a little bit and the share count going up by a little bit. So just really want to understand those two elements as we think about them playing out for the rest of the year. And Steve, I hope this isn't our last earnings call with you.

Steve Collis: I'll just go quickly. No, it's not. I'll be on.

Jim Cleary: Good quarter from the standpoint of both gross profit percentage.

Steve Collis: I'll certainly be on next quarter. So thank you, Lisa, and I'll hand over to Jim.

Jim Cleary: And operating income percentage during the quarter. So thank you for calling that out we did have very nice margins.

Jim Cleary: During the quarter and al.

Jim Cleary: Talk about a number of things that drove the margins one is the.

Jim Cleary: <unk> reductions that I talked about in my prepared remarks, particularly with regard to insulin.

Jim Cleary: Brought down revenue growth, but it caused an improvement.

Jim Cleary: Gross profit margin and as we've talked about in the past when the sort of thing happens our team works with manufacturers to make sure that we continue to be fairly compensated which is what successfully happened in this case. So the WAC reductions brought down revenue growth, but improved gross margin percentage and the other thing that impacted GP percent.

Jim Cleary: <unk> is.

Jim Cleary: The kind of the <unk> growth was less than we had expected and I talked about this in my prepared remarks also DLP one growth during the quarter was $1 $3 billion of growth versus $2 $1 billion of growth in the first quarter and that again.

Jim Cleary: Cause revenue growth to be a little bit lower but caused.

Jim Cleary: Gross profit percentage to be a little bit higher than the <unk> ones were a little bit less than we had expected another thing that really drove.

Jim Cleary: Gross profit margin during the quarter and during the first half was contribution from Covid vaccines and the margins are good on Covid vaccines, and our performance was better than we expected, particularly in the second quarter and so that helped our GP percentage and we'd expect that to draw.

Jim Cleary: <unk> in the third quarter.

Jim Cleary: Also a GP percentage was higher.

Jim Cleary: Year over year in the international segment. So all those things helped our margins and then from an operating margin standpoint. It is not only all of those things, but we've done a very good job focusing on managing operating expenses we had.

Jim Cleary: The opex efficiency initiatives that we executed a year ago, and we continue to focus on.

Jim Cleary: Opex and so we had GP growth of 7% Opex growth at 5% and so that operating leverage helped us which drove our 11%.

Jim Cleary: <unk> growth and so I think that addresses your margin question and on the.

Jim Cleary: Below the line stuff.

Jim Cleary: <unk>.

Jim Cleary: We just are seeing incrementally higher.

Jim Cleary: That tax rate and that would have to do with mix.

Jim Cleary: And in.

Jim Cleary: We're just seeing a little bit more income and growth in the U S, which has a little bit higher tax rate and then on share count.

Jim Cleary: Our guidance is now 201% to 202 million shares and after the first six months were $201 5 million and as we do some repurchases in the back half of the year with impacts fiscal year 'twenty five.

Jim Cleary: More than fiscal year.

Jim Cleary: 24, and so as a result of that we increased EPS guidance by increasing in a nickel at the bottom end of the range of our EPS guidance overall is up by two five cents at the midpoint of the range. So I think that addresses all of your questions Lisa. Thanks.

Jim Cleary: Okay. Lisa, thanks. Thanks a lot.

Jim Cleary: Thank you, Lisa, for that question. We did have a very good quarter from the standpoint of both gross profit percentage and operating income percentage during the quarter. So thank you for calling that out. We did have, you know, very nice margins during the quarter. And I'll, you know, talk about a number of things that drove the margins. One is the WAC reductions that I talked about in my prepared remarks, particularly with regard to insulin.

Speaker Change: Thank you our next.

Daniel: Next question comes from Daniel gross slightly offsetting.

Daniel Gross: Your line is now open. Please go ahead.

Daniel Gross: Hi, guys. Thanks for taking my question and congrats on a great run Sei's Steven Congrats Bob on your new role here.

Daniel Gross: Wanted to stick with kind of guidance and really around margins for the remainder of the year.

Daniel Gross: It does imply a step down in the second half a year over year growth, even when you back out the impact of Covid. So I'm curious if you could just provide a little more detail on the year over year growth step down in the second half and perhaps how the efficiency plan that you've put in place last year in the second half of 'twenty three is impacting that year over year.

Daniel Gross: <unk> growth rate.

Jim Cleary: That brought down revenue growth, but it caused an improvement in gross profit margin. And as we talked about in the past, when this sort of thing happens, our team works with manufacturers to make sure that we continue to be fairly compensated, which was successfully happened in this case.

Speaker Change: Yes, great I'd be happy to address all of those things. So our updated operating income guidance reflects our strong first half performance.

Speaker Change: And continued operating income growth in the back half of the year in the difference in growth rate in the first half versus the back half of FY 'twenty four is largely due to COVID-19 vaccine seasonality and related to that the COVID-19 vaccine contribution we saw in the first half of FY 'twenty four as well as the contribution we saw in the fourth quarter of FY 'twenty.

Speaker Change: Three and then also the back half has a headwind due to the five cents and <unk> <unk> of contribution from exclusive Covid therapies that we had in the third and fourth quarter of fiscal year 'twenty three and then you referenced the efficiency actions, we took a year ago April and so in the back half.

Speaker Change: You mentioned, we do lap the expense efficiency initiatives.

Speaker Change: We implemented last year so.

Speaker Change: In the U S. The first half we saw segment level operating income growth of 16% well above our initial expectations as I said in my prepared remarks, when you exclude COVID-19 vaccine contributions our growth was 8% in the first half and our guidance implies very good growth.

Speaker Change: In the back half in the U S.

Speaker Change: Due to expected continued strength of specialty and solid utilization trends that we've talked about for some time and the growth rate is impacted versus the first half for the specific reasons that I mentioned, which are mostly COVID-19 related and so I think that addresses your questions. Thanks.

Speaker Change: Thank you next.

Speaker Change: Next question comes from Eric Percher of Nephron Research. Your line is now open. Please go ahead.

Eric Percher: Thank you.

Eric Percher: I might switch gears to a question on the competitive environment at large and so Steve and Bob I'd be interested to hear your views.

Eric Percher: Given some volatility at the pharmacy, new leadership, and some consideration that mail and specialty of insourcing, though they seem to be sticking with the channel do you see any significant change and what do you need to do to compete at the low margin high.

Eric Percher: Volume into the market.

Eric Percher: And then maybe for Jim I'd come back to how are the Walgreens synergies you've identified progressing and I just want to make sure of that contract extends through 2029 and the original form.

Eric Percher: Yes.

Speaker Change: Yeah. Thanks, Thanks, Erika so.

Speaker Change: Look this industry.

Speaker Change: And at 430, if those with the company now and it's.

Speaker Change: <unk>.

Speaker Change: I think that our value proposition remains as in Texas.

Speaker Change: In fact, probably even more so with the complexity of regulatory environments with the sort of data and insights that we're able to do and also the way that we built out our businesses.

Speaker Change: Most of the different.

Speaker Change: Nuances that we've seen already relying on some form of partnership with adjacency within our industry and in many times all using the established channels.

Speaker Change: I just came as you would imagine back from Nics in RMA now, where we met with many strategic customers in sure.

Speaker Change: Our challenges in the industry, particularly on the reimbursement side, which are well documented.

Speaker Change: The post pandemic World is theres a lot of things in flux.

Speaker Change: But.

Speaker Change: I think all the more reason why we stay very close to our customers.

Speaker Change: We are almost always able to renew our customers and.

Speaker Change: We think that we provide great value to those customers.

Speaker Change: None more so than <unk>.

Speaker Change: Walgreens.

Speaker Change: We stay very close to them and we have a long term contract through 2029.

Speaker Change: The distribution side and even with boots through 2031, So I think we really focus on those customers and in fact, I think I made the comment to you. When I'll also tell you that one of the things Thats really changes how closely tied to those customers the larger customers and the small customers not just in the RFP sought but throughout the contract.

Speaker Change: And and hopefully throughout the long term strategic relationships that we have with these customers. So Jim I'll hand over to you now yes.

Jim Cleary: And I think Steve you fully addressed it in your answer that.

Jim Cleary: <unk> always working with Walgreens and our other large customers on mutually beneficial.

Jim Cleary: Opportunities and synergies in our management teams are meeting to pursue those sorts of things.

Jim Cleary: Thanks, Eric.

Jim Cleary: Thank you.

Jim Cleary: Next question comes from Allen Lutz.

Allen Lutz: Bank of America.

Allen Lutz: Your line is now open. Please go ahead.

Allen Lutz: Good morning, and thanks for taking the question I guess more of a high level question here, how should we start to think about the inflation reduction act and how that could impact <unk>.

Allen Lutz: Is there any way to think about any direct impact to revenue and margins and then could there be more upstream opportunities to work with manufacturers around some of these benefit design changes just wondering if you have any initial thoughts around that thanks.

Speaker Change: Yeah. So the inflation reduction act is certainly something that we are paying close attention to.

Allen Lutz: We always talk I mean, even going back to Dave you're always stays he would say what keeps you up at night and you'd say, Washington the onsite.

Allen Lutz: I think that certainly the case more so than.

Allen Lutz: Than ever but.

Allen Lutz: Of course, the negotiations are underway.

Allen Lutz: We're going to go through the steps in the process for the 10 part D products.

Allen Lutz: But you know.

Allen Lutz: It's hard for us to see that there would be any direct impact on us.

Allen Lutz: At least in the short to medium term beginning in 2028, part b drugs will be subject to negotiation and.

Allen Lutz: Of course, we want to be mindful of innovation.

Allen Lutz: It's important that we.

Allen Lutz: 75% of R&D by some accounts in the U S and.

Allen Lutz: Macy's to regulators is always less.

Allen Lutz: Make sure that this most cherished industry, probably one of the most innovative industries in the United States continues to be based here I mean.

Allen Lutz: It's not many decades ago when a lot of innovation took place in the U K and I'd say that largely has gone by the way side.

Allen Lutz: As an American based company, we would love to see that that sort of innovation continue again I think that that's also a very important part of the story that should not be lost.

Allen Lutz: Also we would see that manufacturers could adopt some changes in policies for example.

Allen Lutz: The different formats have longer patent Bluff, and we don't think that that's the way that.

Allen Lutz: Product development should be approached and.

Allen Lutz: And the last thing I'd say is witnessing Cora wincing corridor thinks about the future and thinks about reimbursement and thinks about our provider customers.

Allen Lutz: Benefit design has also been very.

Allen Lutz: And Hawaii punitive towards pharmacy, and we think thats spreading that out more would be of great benefit to the industry in two patients ultimate BBB <unk> and make it much more understandable I mean, the notion that pharmacy is expensive.

Allen Lutz: Often is directly derived from the way that the copays occur at the pharmacy counter and we think that deck.

Allen Lutz: At form of health care should be more encouraged it's a much much more efficient form of health care, which is very little disagreement on so thanks.

Speaker Change: Thanks for the question.

Allen Lutz: Thank you. Our next question comes from Stephanie Davis of Barclays. Your.

Stephanie Davis: Your line is now open. Please go ahead.

Stephanie Davis: Hey, guys. Thanks for taking my question and congrats on the quarter.

Stephanie July Davis: Given some of the G. L. P. One accessibility issues that havent called out.

Stephanie July Davis: Should we assume that <unk> revenue tailwind.

Stephanie July Davis: One to two point contribution range versus the historical closer to mid single digit and just given the lower calorie nature of this revenue stream, how should we think about the benefits.

Stephanie July Davis: Your margin versus what we looked at Pryor.

Jim Cleary: So the WAC reductions brought down revenue growth but improved gross margin percentage. You know, another thing that impacted GP percentage was that the GLP-1 growth was less than we had expected. And I talked about this in my prepared remarks also, GLP-1 growth during the quarter was $1.3 billion of growth versus $2.1 billion of growth in the first quarter. And that, again, caused revenue growth to be a little bit lower, but caused gross profit percentage to be a little bit higher, and the GLP-1s were a little bit less than we had expected.

Stephanie July Davis: Sure.

Jim Cleary: Another thing that really drove gross profit margin during the quarter and during the first half was contribution from COVID vaccines. The margins are good on COVID vaccines, and our performance was better than we expected, particularly in the second quarter. And so that helped our GP percentage, and we'd expect that to drop off in the third quarter. Also, GP percentage was higher year over year in the international segment.

Jim Cleary: So all those things helped our margins. And then from an operating margin standpoint, it's not only all those things, but we've done a very good job focusing on managing operating expenses. We had the OPEX efficiency initiatives that we executed a year ago, and we've continued to focus on OPEX.

Speaker Change: I'll take that Stephanie and.

Speaker Change: And thanks, a lot for the.

Stephanie July Davis: For the question and as we've talked.

Stephanie July Davis: <unk> talked about in the past the <unk> one products are a real driver of.

Stephanie July Davis: Revenue growth, but they are minimally profitable they are profitable for us, but minimally profitable and of course, we've set.

Stephanie July Davis: Had that for quite some time, but we do feel that they'll continue to be a driver of our topline growth and as I said earlier, what we saw in the second quarter is revenue growth of one $3 billion from DLP ones versus revenue growth.

Stephanie July Davis: $2 $1 billion from <unk> in the first quarter and so but we do think that they will be a driver of topline growth and of course, we are.

Stephanie July Davis: Just.

Stephanie July Davis: Just so pleased to be part of an industry, where there's this sort of innovation that benefits patients and just look forward to.

Stephanie July Davis: Being a beneficiary of ourselves of this sort of innovation for years to come.

Jim Cleary: And so we had GP growth of 7%, and OPEX growth of 5%, and so that operating leverage helped us, which drove our 11% OI growth. And so I think that addresses your margin question. And on the below the line stuff, we just are seeing incrementally higher tax rates, and that would have to do with NICs. And in, you know, we're just seeing a little bit more income and growth in the US, which has a little bit higher tax rate.

Speaker Change: Thanks Keith.

Speaker Change: Next question comes from Charles <unk> of TD Cohen.

Charles: Your line is now open. Please go ahead.

Charles: Yeah. Thanks, Thanks for the question.

Charles: Bob.

Charles: <unk>.

Charles: Great.

Charles: Hopefully catching up with you in person before you head off.

Speaker Change: I wanted to ask a question maybe for more for the World Courier side of the business. Obviously, there is talking to the buyers of secure act and.

Charles: And that could cause some restrictions on doing business with companies of concerns.

Charles: And also for companies that do business with companies of concern.

Charles: Just wanted to see if there's any potential impact if you sort of analyze sort of where maybe your customers on the world Courier side.

Charles: Our partnered with them.

Charles: Talk through sort of that impact and how that might affect you.

Charles: Thanks.

Speaker Change: I'm not.

Speaker Change: Exactly sure what regulations sale, but I can tell you.

Speaker Change: Feel incredibly good about.

Charles: Core has the ability to manage complex regulatory environment really whatever jurisdiction, we are and if we feel that we could be comfortable with the regulations and the jurisdiction. We just don't participate in the business.

Charles: The enterprise is of sufficient size and scale that nothing ever makes us want to compromise any of the standards. We have in fact, we keep on increasing those standards, we want to be the leader in them. So.

Charles: I think we.

Charles: I think we'll Korea in particular is one of the most.

Charles: A complex, but also.

Charles: Client and thoughtful and planned full businesses that I've ever had the privilege of leading.

Charles: While I am at St <unk>.

Charles: Think we'll be able to cope and I think maybe we can pull up directly with you and see if any particular concerns.

Speaker Change: Thank you.

Speaker Change: Question comes from Michael Cherny over their Inc.

Michael Cherny: Your line is now open. Please go ahead.

Michael Cherny: Great. Good morning, and thanks for taking my question congratulations on a nice quarter.

Michael Cherny: Maybe just.

Michael Cherny: Follow up I guess <unk> question earlier about the guidance.

Michael Cherny: Doing math on the fly, but I'm getting rough math of a call it 14th.

Charles: Operating uptick in terms of your EBIT increase is that the case in terms of the breakdown into guidance and then relative to the core U S health care business. As you think about your long term guidance relative to where you are shaking out this year against what's also a tough comp how do you reconcile those two pieces and how do you.

Charles: Think about the future.

Charles: Im not asking for an increase in guidance, but what could drive.

Charles: Growth guidance.

Charles: <unk> to be above where your long term targets are.

Speaker Change: Okay, Alright, great. Thank you for the question and there was.

Speaker Change: There was a lot in that question, so I'll try and dress it all I think.

Lisa Gill: Lisa had commented that.

Lisa Gill: She thought that the Oi increase in guidance was that about.

Jim Cleary: And then on share count, you know, our guidance is now 201 to 202 million shares. And after the first six months, we're at 201.5 million. And as we do some repurchases in the back half of the year, you know, it impacts fiscal year 25, more than fiscal year 24. And so, as a result of that, we increased EPS guidance by, you know, increasing by a nickel at the bottom end of the range. So our EPS guidance is overall up by 2.5 cents at the midpoint of the range.

Lisa Gill: About 12 cents and I think you said for 2014 and I'll just say that's kind of the kind of the increase in guidance implies yes, if that does imply that sort of increase in its really offset by the higher tax and the higher shares and so as a result of that we basically increased EPS guidance.

Lisa Gill: Bye.

Lisa Gill: By two five cents at the midpoint of the range and then I think the rest of the.

Lisa Gill: Questions. You asked yes, we have a lot of confidence in our long term guidance.

Lisa Gill: Five 8%.

Lisa Gill: Organic operating income growth and then another 3% to 4% from capital deployment, and so long term EPS growth guidance of 8% to 12% and importantly, that's double digit at the midpoint of the range and we have had a lot of success and for quite some time and in particular the <unk>.

Lisa Gill: Last couple of years.

Lisa Gill: Posted some very good growth rates that have been driven from anything from mark from things like our leadership.

Lisa Gill: Specialty to solid utilization trends and in particular as I called out on this call. Some of the numbers some of that kind of that some of the COVID-19 related earnings we've had been particularly helpful. In our operating.

Lisa Gill: Income growth and as I've said before we're a company that is so well positioned to benefit from innovation.

Lisa Gill: That that's one of the things that gives us confidence in our long term guidance. Thank you for the question.

Jim Cleary: And so I think that addresses all of your questions, Lisa. Thank you. Our next question comes from Daniel Grosslight of Citi. Your line is now open, please go ahead. Hi, guys. Thanks for taking the questions. Congratulations on a great run on SEO, Steven. Congratulations, Bob, on your new role here.

Lisa Gill: Thank you. Our next question comes from George Hill of Deutsche Bank.

Operator: Thank you. Our next question comes from Daniel Grosslight of Citi. Your line is now open, please go ahead.

George Hill: One is now open. Please go ahead.

George Hill: Yes.

Operator: Yeah, great. I'd be happy to address all those things. So our updated operating income guidance, you know, reflects our strong first half performance and continued operating income growth in the back half of the year. And the difference in growth rate in the first half versus the back half of FY24 is largely due to COVID vaccine seasonality. And related to that, the COVID vaccine contribution we saw in the first half of FY24 as well as the contribution we saw in the fourth quarter of FY23.

George Hill: Hey, guys. Good morning, and thanks for taking the question I guess first of all I want to say congrats to Bob on taking over the CEO role and Steve you guys know the little engine that did not the little engine that could.

Speaker Change: But I guess I want to hop in with two quick questions number one I want to follow up on Eric's.

Operator: And then also, the back half has a headwind due to the 5 cents and 8 cents of contribution from exclusive COVID therapies that we had in the third and fourth quarters of fiscal year 23. And then you referenced the efficiency actions we took a year ago, April. And so in the back half, as you mentioned, we do lap the expense efficiency initiatives that we implemented last year. So in the US, in the first half, we saw segment level operating income growth of 16%, well above our initial expectations.

Speaker Change: I want to follow up on Eric's question about the competitive environment more generally just because we've seen two sizable pieces of business, which hands in the last six months. So.

Speaker Change: So I guess, maybe just talk about if there's anything that we should be alluded to in the competitive dynamic and then Jim or Steve just one of the things we continue to hear about.

Speaker Change: The large drug retailers trying to increasingly go direct to the brand drug manufacturers on terms not necessarily on logistics trying to kind of claw back some economics from brand drug manufacturers. I guess can you comment is that anything that you're seeing or anything that you're facilitating and do you expect it to have any.

George Hill: Impact on your business either positively or negatively.

Operator: As I said, in my prepared remarks, when you exclude COVID vaccine contributions, our growth was 8% in the first half, and our guidance implies, you know, very good growth in the back half in the US due to expected continued strength of specialty and solid utilization trends that we've talked about for some time. And the growth rate is impacted versus the first half for the specific reasons that I mentioned, which are mostly COVID related. And so I think that addresses your questions, Ben.

George Hill: Yes.

Speaker Change: So thank you. Thank you George I do remember that article and so thank you and I do I do we are tremendously proud of the way that Syncora has has developed in the last few years and how strong our positioning is.

Jim Cleary: Thank you. Our next question comes from Eric Percher of Nephron Research. Your line is now open, please go ahead.

Operator: I might switch gears to a question on the competitive environment at large. And so for Steven, Bob, I'd be interested to hear your views, given some volatility under the pharmacy's new leadership and some consideration at Mayo and specialty of insourcing, though they seem to be sticking with the channel. Do you see any significant change? And what do you need to do to compete at the low margin, high volume end of the market? And then maybe for Jim, I'd come back to how the Walgreens synergies you've identified are progressing, and I just want to make sure that the contract extends through 2029 in its original form.

George Hill: I made a couple of comments on an earlier question about how well we are communicating on a regular basis without with our strategic customers.

Steve Collis: Yeah, thanks. Thanks, Erica. So I, you know, it's a look at this industry, you know, I've been in it for 30 years with the company now. And it's, I think that our value proposition remains as intact as ever, in fact, probably even more so, with the complexity of regulatory environments, with the sort of data and insights that we're able to do, and also the way that we've built out our businesses. You know, most of the different nuances that we see are really relying on some form of partnership or adjacency within our industry and, many times, are using, you know, the established channels.

Steve Collis: You know, I just came back, as you would imagine, from NACDS, and I remain where we met with many strategic customers. And sure, there are challenges in the industry, particularly on the reimbursement side, which are well documented. But you know, the post-pandemic world is, there's a lot of things in flux.

George Hill: There's not that many.

George Hill: Customers that choose to change the wholesale relationship and in the U S. In particular.

George Hill: We have the big Big large contracts saw Theres three public companies that I think.

Steve Collis: But, you know, that's all the more reason why we stay very close to our customers. You know, we are almost always able to renew our customers, and we think that we provide great value to those customers, none more so than at Walgreens, where we stay very close to them. And we have a long-term contract through 2029 on the distribution side, and even with Boots through 2031. So, you know, I think we really focus on those customers.

George Hill: Do a good job and it's a really stable industry and we all very integrated and stay close to our <unk>.

George Hill: To our customers. So it's not that your usual that customers do change.

George Hill: Not seeing a real big trend obviously, the mail order is a little bit different because you've got a lot of high value products going to very few distribution points. So sometimes you do see some direct.

George Hill: Contracting than that's been around for a long time, but by and large I think that the trend is to work within the industry again. The regulations are only getting more complicated we are going to have the new complex pedigree rules that are being implemented.

George Hill: It's hard to look at as good as our results have been it's hard to look at our results and say that we're not rare.

George Hill: Paragon of efficiency and working.

Steve Collis: Very very that literally in a low margin environment. So it's and building up around that with the cash flow that we have as Jim can give some long range guidance.

George Hill: I feel very good about our value proposition and our industry's value proposition and I think that we will be very enduring and.

Steve Collis: In fact, I think I made the comment to you when I last saw you that one of the things that's really changed is how close we stay to those customers, the larger customers and the small customers, not just on the RFP side, but throughout the contract term and, hopefully, throughout the long-term strategic relationships that we have with these customers. So, Jim, I'll hand over to you now. Yeah, and I think Steve, you

George Hill: I don't think theres too much else to call out Jim anything you'd add on the competitive environment.

Jim Cleary: Yeah, Okay. Thanks. Thanks.

Jim Cleary: For the engine that did that that's a big compliment.

Speaker Change: We have Sean to one operator.

Jim Cleary: Yeah, and I think, Steve, you fully addressed it in your answer that, you know, we are always working with Walgreens and our other large customers on mutually beneficial opportunities and synergies, and our management teams are needing to pursue those sorts of things. Thanks, Eric. Thank you. Our next question comes from Allen Lutz of Bank of America. Your line is now open, please go ahead. Good morning, and thanks for your question.

Speaker Change: Thank you. Our next question comes from Eric Coldwell of that.

Eric White Coldwell: So open please go ahead.

Jim Cleary: Yeah.

Operator: Thank you. Our next question comes from Allen Lutz of Bank of America. Your line is now open. Please go ahead.

Allen Lutz: Thanks very much.

Eric White Coldwell: And I'll reiterate all the congratulations across the board on.

Eric White Coldwell: U S pharma revenue growth you maintained the outlook.

Allen Lutz: Went to 13%.

Speaker Change: I think you guys know that I'm less worried about revenue growth or sensitivity to revenue, perhaps than maybe in other industries, but I am curious.

Allen Lutz: Second quarter was below Street, you have lower <unk> growth there are the handful of negative WAC price changes.

Allen Lutz: I think there is potential for lower priced humira and maybe some other biosimilars to gain traction now that the pbms are more aggressively pushing those lines.

Allen Lutz: And we also have the known customer loss, which I think the market is guest to meeting is around $1 5 billion a quarter. So.

Speaker Change: There's a lot of moving pieces there on the negative side on just in terms of top line growth optics, but you are maintaining that guidance.

Allen Lutz: What gives you confidence what are the drivers of doing 11% to 13% this year.

Speaker Change: And then maybe if I could just add on I know thats a ton but.

Allen Lutz: <unk> price changes I'm, just curious if you could tell us what you saw for the net WAC price change in March quarter.

Allen Lutz: Versus the prior year or recent years just to put that in comparison. Thank you so much.

Steve Collis: Yeah, so the Inflation Reduction Act is certainly something that we're paying close attention to. And, you know, we always talk. I mean, even going back to Dave Yost's days, he would say, you know, what keeps you up at night?

Allen Lutz: Yes. So there is there is a lot there and let.

Allen Lutz: Let me say with regard to our revenue guidance, what gave us the confidence of course to maintain that revenue guidance is just we're continuing to see solid utilization trends.

Allen Lutz: Across the market, we're continuing due to our strength in specialty and specialty growing better than the broader market Thats another thing thats, helping us.

Steve Collis: Eric and then.

Allen Lutz: Things that you called out of course, the WAC reduction for insulin is permanent.

Allen Lutz: Lower LP one growth.

Allen Lutz: During the quarter, perhaps that's temporary and driven more by some supply constraints during the quarter. So we'll have to wait and see on.

Allen Lutz: That and so we have and so we have good competence and our.

Allen Lutz: Revenue guidance, but then also.

Allen Lutz: <unk> talked about this a lot earlier on the call and in my prepared remarks, we spend a lot of time on GP on gross profit and operating profit and I commented on and on on a number of things that while it doesn't necessarily drive revenue growth has added <unk> to grow.

Allen Lutz: <unk> profit percentage and operating margin and so that's one thing that of course gives us the confidence to.

Allen Lutz: Increase our operating income guidance by a full percentage point at the bottom and top of the range like we did that.

Allen Lutz: Quarter, and then what is there a second part to the question.

Steve Collis: And he'd say, Washington's the answer, you know, and I think that's certainly the case more so than ever. But, you know, of course, the negotiations are underway. And, you know, there are, we're going to go through the steps in the process for the 10 Part D products.

Steve Collis: But you know, it's hard for us to see that there would be any direct impact on us, at least in the short to medium term. Beginning in 2028, Part B drugs will be subject to negotiation. And, you know, of course, we want to be mindful of innovation. It's, it's, it's important that we, you know, 75% of R&D, by some accounts, is in the US. And we, our message to regulators is always, you know, let's make sure that this most cherished industry, probably, you know, one of the most innovative industries in the United States, continues to be based here.

Allen Lutz: Okay, and you're going to see for the close.

Steve Collis: I mean, you know, it's not, it's not many decades ago when a lot of innovation took place in the UK. And I'd say that that largely has gone by the wayside. And, you know, as an American-based company, we would love to see that, you know, that sort of innovation continue here. And I think that that's also a very important part of the story that should not be lost. You know, also, we would see that manufacturers could adopt some changes in policies, for example, different formats have, you know, longer patent life. And we don't think that that's the way that, you know, product development should be approached.

Steve Collis: And, you know, and the last thing I'd say is when Sincora thinks about the future, and thinks about reimbursement, and thinks about our provider customers, you know, benefit design has also been very, in a way, punitive towards pharmacy. And we think that spreading that out more would be of great benefit. To the industry and to patients, ultimately, we all serve and make it much more understandable. I mean, the notion that pharmacy is expensive is often directly derived from the way that the copays occur at the pharmacy counter. And we think that that form of healthcare should be more encouraged. It's a much, much more efficient form of healthcare, on which there's very little disagreement.

Steve Collis: Okay.

Speaker Change: Thank you everyone for joining us on a busy busy Wednesday.

Steve Collis: We are really proud of the performance we reported in this quarter, which reflects the data dedication expertise and teamwork of all of our team members as you can see St. Cora is very well positioned for the future.

Steve Collis: So thanks for the question. Thank you. Our next question comes from Stephanie Davis of Barclays. Your line is now open, please go ahead. Hey guys, thanks for taking my question. Congratulations on the quarter. Given some of the GLT-1 accessibility issues...

Operator: Thank you. Our next question comes from Stephanie Davis of Barclays. Your line is now open, please go ahead.

Jim Cleary: Sure, I'll take that, Stephanie. And thanks a lot for the question. And as we've talked about in the past, the GLP-1 products are a real driver of revenue growth, but they are minimally profitable. They are profitable for us, but minimally profitable. And of course, we've said that for quite some time. And so, but we do think that it will be a driver of top-line growth. And, you know, we're just, you know, just so pleased to be part of an industry where there's this sort of innovation that benefits patients. And, you know, we just look forward to being a beneficiary ourselves of this sort of innovation for years to come.

Operator: Thank you. Our next question comes from Charles Rhyee of TD Cohen. Your line is now open, please go ahead.

Operator: Yeah, thanks, thanks for the questions. And, you know, congrats, Bob. And, you know, Steve, great work with him.

Steve Collis: Look forward to hopefully catching up with you in person before you head off. I wanted to ask a question related, maybe more to the world courier side of the business. Obviously, there's talk of the Biosecure Act, and that could cause some restrictions on doing business with companies of concern, and also for companies that do business with companies of concern. I just wanted to see if there's any potential impact, and if you've sort of analyzed sort of where maybe your customers on the world courier side are partnered with, and if you've thought through sort of that impact and how that might affect you on that side Thanks.

Steve Collis: You know, I'm not exactly sure what the regulations are, but I can tell you that I feel incredibly good about Syncora's ability to manage a complex regulatory environment, really in whatever jurisdiction we are in. And if we feel that we can't be comfortable with the regulations and the jurisdiction, we just don't participate in the business.

Steve Collis: The enterprise is of sufficient size and scale that nothing ever makes us want to compromise any of the standards we have. In fact, we keep on increasing those standards. We want to be a leader in them. So, you know, Charles, I think we, I think WorldKorea in particular is one of the most, you know, complex but also compliant and thoughtful and plan for businesses that I've ever had the privilege of leading, you know, while I'm at Syncora. So I think we'll be able to cope. And, you know, I think maybe we can follow up directly with you and see if there are any particular concerns.

Steve Collis: So in the in the supply chain is well established and we will continue to innovate and invest in support of our customers.

Operator: Thank you. Our next question comes from Michael Cherny of Lyrinc. Your line is now open, please go ahead.

Operator: Great. Good morning, and thanks for taking the question. Congratulations on a nice quarter. Maybe just a follow-up, I guess, to Lisa's question earlier about the guidance. I hate doing math on the fly, but I'm getting rough math of a call 14 cents an operating uptick in terms of your EBIT increase. Is that the case in terms of the breakdown to guidance? And then relative to the core US healthcare business, as you think about your long-term guidance relative to where you're shaking out this year against what's also a tough comp, how do you reconcile those two pieces? And what do you think about the future? I'm not asking for an increase in guidance, but what could drive it could be Growth Guidance continuing to be above where your long-term targets are.

Jim Cleary: Okay, all right, great. Thank you for the question. And there was, there was a lot in that question. So I'll try and address it all. I think Lisa had commented that she thought that the OI increase in, you know, guidance was about $0.12, and I think you said $0.14. And I'll just say that the increase in guidance implies, yes, it does imply that sort of increase, and it's really offset by the higher tax and the higher shares.

Jim Cleary: And so, as a result of that, you know, we basically increased EPS guidance by $0.025 at the midpoint of the range. And then I think the rest of the questions you asked. We have a lot of confidence in our long-term guidance of 5% to 8% organic operating income growth and then another 3% to 4% from capital deployment, so long-term EPS growth guidance of 8% to 12%, and importantly, you know, that's double-digit at the midpoint of the range.

Jim Cleary: And, you know, we have had a lot of success for quite some time, and in particular, the last couple years, and have, you know, posted some, you know, very good growth rates that have been driven from anything from our leadership in specialty to, you know, solid utilization trends. And in particular, as I called out on this call, some of the numbers, some of the, kind of, some of the COVID-related earnings we've had And as I said before, we're a company that's so well positioned to benefit from innovation that, you know, it's one of the things that gives us confidence in our long-term guidance. Thank you for the question.

Speaker Change: Thank you very much for your time have a good summer you will see you in early August.

Operator: Thank you. Our next question comes from George Hill of Deutsche Bank. Your line is now open. Please go ahead.

Speaker Change: Thank you for joining today's call you may now disconnect your lines.

Operator: Hey guys, good morning. Thanks for taking the question. I guess the first thing I want to say is congrats to Bob on taking over the CEO role. And Steve, you guys are now the little engine that did, not the little engine that could.

George Hill: But I guess I want to hop in with two quick questions. Number one, I want to follow up on Eric's question about the competitive environment more generally, just because we've seen two sizable pieces of business switch hands in the last six months. So I guess I'd just talk about if there's anything that we should be alerted to in the competitive dynamic. And then, Jim or Steve, just one of the things we continue to hear is about the large drug retailers trying to increasingly go direct to the brand drug manufacturers on terms, not necessarily on logistics, trying to kind of claw back some economics from the brand drug manufacturers. I guess, can you comment? Is that something that you're seeing or anything that you're facilitating? And do you expect it to have any impact on your business, either positively or negatively?

Steve Collis: Yeah, you know, so thank you. Thank you, George. I do remember that article.

Steve Collis: And so thank you. And I am, I am, you know, we are tremendously proud of the way that Syncora has developed in the last few years and how strong our positioning is. You know, I made a couple of comments in an earlier question about, you know, how well we are communicating on a regular basis with our strategic customers. You know, there's not that many customers that choose to, you know, change their wholesale relationship.

Steve Collis: And in the US, in particular, where the big, big, large contracts are, there are three public companies that I think all do a good job and it's a really stable industry. And we are all very integrated and stay close to our customers. So it's not that usual that customers do change. We're not seeing a real big trend. Obviously, mail order is a little bit different because, you know, you've got a lot of high-value products going to very few distribution points.

Unknown Executive: support of our customers. Thank you very much.

Steve Collis: So sometimes you do see some direct contracting there, and that's been around for a long time. But by and large, I think that the trend is to work within the industry. Again, the regulations are only getting more complicated. We're going to have the new complex pedigree rules that are being implemented.

Speaker Change: Court all of our customers.

Steve Collis: And, you know, and it's hard to look at our results and say that we're not really a paragon of efficiency and, you know, working, you know, very, very adaptively, you know, in a low margin environment. So it's and building up around that with the cashflow that we have, as Jim gives us a long-range garden. So, you know, I feel very good about our value proposition and our industry's value proposition. And I think that we'll be very enduring. And, you know, I don't think there's too much else to call out. Jim, anything you'd add on the competitive environment that you've experienced?

Steve Collis: Okay, thanks. Thanks. And thanks for the engine that did that. That's a big one.

Operator: Thank you. Thank you. Our next question comes from Eric Coldwell of Baird. Your line is now open, please go ahead.

Speaker Change: Thank you very much.

Operator: Thanks very much. And I'll reiterate all the congratulations across the board on US pharma revenue growth; you maintain the outlook of 11 to 13%. I think you guys know that I'm less worried about revenue growth or sensitivity to revenue perhaps than maybe in other industries. But I am curious. The second quarter was below straight. You have lower GLP-1 growth.

Eric White Coldwell: There are a handful of negative WAC price changes. I think there's potential for lower-priced Humira and maybe some other biosimilars to gain traction now that the PBMs are more aggressively pushing those lines. And we also have the known customer loss, which I think the market is guesstimating is around one and a half billion a quarter. So there's a lot of moving pieces there on the negative side, just in terms of top line growth optics, but you're maintaining that guidance.

Eric White Coldwell: What gives you confidence? What are the drivers of doing 11 to 13% this year? And then maybe if I could just add on, I know that's a ton, but WAC price changes. I'm just curious if you could tell us what you saw for the net WAC price change in the March quarter versus the prior year or recent years, just to put that in comparison. Thank you so much.

Jim Cleary: Yeah, so there's, there's a lot there. And, you know, let me say with regard to our revenue guidance. What, you know, gave us the confidence, of course, to maintain that revenue guidance is just, you know, we're continuing to see solid utilization trends across the market, you know, we're continuing, due to our strength and specialty, and specialty, you know, growing better than the broader market. That's another thing that's helping us, Eric.

Jim Cleary: And then, you know, of the things that you called out, of course, the WAC reduction for insulin is permanent, and the lower GLP-1 growth during the quarter, perhaps that's, you know, temporary, and driven more by some supply constraints during the quarter. So we'll have to wait and see on that. And, you know, I commented on a number of things that, while, you know, don't necessarily drive revenue growth, are additive to our, you know, gross profit percentage and operating margin.

Jim Cleary: And so that's 1 thing that, of course, you know, gives us the confidence to increase our operating income guidance by a full percentage point at the bottom and top of the range, like we did that quarter. And then was there a 2nd part to the question? No, that's good. Okay.

Steve Collis: Thank you everyone for joining us on a busy Wednesday. We are really proud of the performance we reported in this quarter, which reflects the dedication, expertise, and teamwork of all of our team members. As you can see, Sencora is very well positioned for the future. Our role in the supply chain is well established, and we will continue to innovate and invest in support of our customers. Thank you very much for your time; have a good summer, and we'll see you in early August.

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