Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Walgreens Boots Alliance Q2 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. Thank you. Tiffany Kanaga, Vice President, Global Investor Relations, you may begin. Good morning. Thank you for joining us for the Walgreens Boots Alliance Earnings Call for Q2 of Fiscal Year 2022. I'm Tiffany Kanaga, Vice President of Global Investor Relations. Joining me on today's call are Roz Brewer, our Chief Executive Officer; James Kehoe, our Chief Financial Officer; and John Standley, President of Walgreens. As always, during the conference call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to a number of factors, including those listed on slide two and those outlined in our latest Forms 10-K and 10-Q filed with the Securities and Exchange Commission. We undertake no obligation to publicly update any forward-looking statements after this presentation, whether as a result of new information, future events, changes in assumptions, or otherwise. You can find our press release and the slides referenced on this call in the Investors section of the Walgreens Boots Alliance website. The slides and the press release also contain further information about non-GAAP financial measures that we will discuss today during this call. I will now turn the call over to Roz. Thanks, Tiffany, and good morning, everyone. Walgreens Boots Alliance once again delivered strong results in Q2. Sales increased 3.8% in constant currency or high single digits on a core basis, excluding the negative impact of AllianceRx Walgreens and the positive M&A activity in Walgreens Health. Adjusted EPS grew 26.5%. Our good performance reflects execution across each of our business segments. Our U.S. retail sales comp of 14.7% was the highest in over 20 years, above even last quarter's record, and we are seeing significant recovery in our international markets. At the same time, we are building our next growth engine, Walgreens Health, which is on pace toward its long-term target. Of course, we continue to serve communities with COVID testing and vaccinations to fight the pandemic. During the quarter, we also undertook important actions to advance our strategic priorities and to ensure our asset portfolio is strongly aligned. We initiated a review of the Boots business and this process is progressing well. Looking ahead, we are maintaining our full-year adjusted EPS guidance of low single-digit growth, which we raised in January. Our outlook incorporates healthy fundamentals in our core business, as demonstrated with robust sales and earnings growth year to date, balanced against ongoing investments in our growth initiatives and our people. We are delivering against our Investor Day commitments as laid out in October. We're moving quickly to execute our vision of consumer-centric, technology-enabled healthcare solutions which extend well beyond the pharmacy walls. As we begin to offer a care delivery experience that improves health outcomes and lowers costs for patients, providers, and payers, we are well-positioned to drive accelerated, sustainable value creation. Next, I wanna take a moment to review Walgreens' initiatives to provide local communities with access to important resources during the pandemic and as we navigate the recovery into an endemic scenario. In the U.S., we administered 11.8 million COVID-19 vaccinations within the quarter and over 62 million to date. Our pharmacy team members are healthcare heroes. The majority of our patients and customers see their pharmacists more than they do any other healthcare provider, and we recognize their tireless dedication and contributions to the pandemic response. The Omicron wave in December and January also drove elevated levels of COVID testing, both in-store and at home. We completed 6.6 million in-store COVID tests during the quarter and over 27 million to date. In addition to our drive-through testing at no cost to patients, we've now launched convenient at-home COVID PCR test collection kits with LabCorp at no cost nationwide. This is particularly important for uninsured, socially vulnerable, and medically underserved populations who continue to be among those most impacted by COVID. As we all start to resume normal activities, Walgreens will remain a partner to our communities to ensure safer connections and improved mobility. Our leadership in vaccines and testing is just one way that we are becoming the leading partner in reimagining local healthcare and wellbeing for all. Q2 included significant progress towards each of our four strategic priorities. Let me update you on our latest initiatives and then spend a moment on the drivers of execution at Walgreens Health. First, we are transforming and aligning the core business and building a pharmacy of the future that will enable and support our healthcare strategy. We saw continued momentum online in Q2, with digital sales up 38% in the U.S. or 116% on a two-year stack basis. Same-day pickup orders accelerated sequentially to 3.9 million orders. We have also enrolled over 96 million myWalgreens members, up nearly 11 million since the fourth quarter. We are now focused on activating members through personalized omni-channel messaging and offers. Additionally, our alternative profit streams are performing well, including our media advertising business, which launched a year ago and is running ahead of expectations. We continue to see digital media as a significant opportunity for us. Finally, we have three automated micro-fulfillment centers open and are on pace to have 22 by the end of fiscal 2024, driving significant efficiencies and cost savings over time. We expect these centers to ultimately cover 40%-50% of prescriptions for pharmacies served, removing routine tasks and excess inventory from the local sites. Second, we're building a platform of technology-enabled healthcare solutions with the consumer in mind, which is well-positioned to fuel our next phase of growth. Nearly half of our store footprint will have a healthcare touchpoint between our organic Walgreens Health Corners and the co-located clinics with VillageMD. VillageMD has now opened 102 co-located clinics, and the rollout has accelerated to an average pace of one opening every three days for calendar year 2022. On the Health Corners front, we remain on pace to have 100 sites in operation by year-end. Third, we are refocusing our portfolio and optimizing capital allocation. We continue to apply a rigorous strategic lens to our equity investments and explore all options to unlock value. Recently, we have gained full ownership of the AllianceRx Walgreens business and our German wholesale JV, creating greater agility ahead. We have also announced the strategic review of our Boots business. This process is progressing well, and we will pursue an outcome that maximizes value. Finally, we are building a diverse winning team that will underpin our strategic priorities. Our deep and experienced bench is executing our strong results today and implementing the bold steps necessary to drive growth ahead. We are making rapid progress towards building out Walgreens Health with a clear path to a run rate of more than $4 billion exiting fiscal year 2022, well on our way to our goal of $9- 10 billion in sales by fiscal 2025. We will improve health outcomes and lower costs for payers and providers by delivering care through owned and partnered assets. The goal is to support the patient journey across the entire care continuum through omni-channel solutions. This is why you see these complementary assets spanning primary care through VillageMD, specialty pharmacy through Shields, and post-acute care through our pending CareCentrix investment. The Health Corners play an important role in addressing care gaps through our health advisors. Today, Blue Shield of California and Clover Health members can walk in and have access to clinical services like A1C testing, colorectal cancer screening, and blood pressure monitoring. I'm particularly moved by stories of these patients receiving emotional support while navigating what can be an overwhelming and impersonal experience in U.S. healthcare. Much like our pharmacists, our health advisors are becoming trusted neighborhood sources of education, recommendations, and connections that can help our patients to better manage their wellness. This is a transformational process to become a leader in value-based care as only Walgreens can do through our trusted customer relationships, local knowledge, and deep data insights. We will leverage our strong footprint and independent standing to offer uniquely consumer-centric solutions for our communities. We are executing on our vision today. Our partnership with VillageMD positions them to be one of the largest and most differentiated primary care providers in the U.S. The collaboration is a significant growth catalyst, driving 1,000 co-located clinics across more than 30 markets by 2027. VillageMD is in 22 markets today, most recently expanding to Boston, Jacksonville, and Tucson in February, Denver in January, and San Antonio in December. VillageMD's care delivery model is highly scalable with attractive unit economics over time. Shields continues to rapidly expand its platform, representing specialty patients across more than 30 disease states with more than 70 health system partners nationwide. In November and February, Shields inked new deals with two significant health systems with geographic reach in the Northwest and Northeast U.S. Importantly, WBA and Shields are collaborating to identify instances where their networks intersect to combine Shields' operational expertise with WBA's robust nationwide pharmacy network. In our organic Walgreens Health business, we are pleased with the rollout of our Health Corners with Blue Shield of California and Clover Health, where we are gathering tremendous insights. We are in the process of signing on incremental partners, and we will initiate the next wave of nine Health Corners in California in April. We also continue to refine the consumer app, adding new features to increase access, engagement and convenience. Overall, we are tracking well against our key milestones for Walgreens Health and remain very excited about our growth potential. We are executing across our balanced plans for fiscal 2022 as we build a strong foundation for sustainable low teens EPS growth. We are reimagining healthcare and well-being for all with a clear path towards accelerated value creation. With that, I'll hand it over to James to provide more color on our results and our outlook. Thank you, Roz, and good morning. We had an excellent quarter with focused execution across all of our businesses. Adjusted EPS was $1.59, ahead of expectations and on a constant currency basis, up 26% versus prior year. We continue to execute strongly in COVID vaccinations and testing. Our U.S. retail comps were the highest in 20 years, and our international markets continue to recover nicely. We increased our investments to build out our Walgreens Health business with an EPS impact of five percentage points in the quarter. Operating cash flow was $1.1 billion in the quarter, with free cash flow of $669 million. Finally, we are maintaining our full-year outlook of low single-digit growth in adjusted EPS. Let's now look at the results in more detail. Q2 sales advanced 3.8% on a constant currency basis. Strong growth from Walgreens and the international segment and sales contributions from Walgreens Health more than offset a 570 basis points impact from the sales decline in AllianceRx Walgreens. Overall, if you exclude the negative impact from AllianceRx and the positive M&A activity in Walgreens Health, core sales growth was high single digits. Adjusted operating income increased 35.9% on a constant currency basis, driven by strong gross profit performance in both pharmacy and retail in the U.S. and a continued rebound in international sales and profitability. Adjusted EPS was $1.59 in the quarter, a constant currency increase of 26%, driven entirely by adjusted operating income. The result was held back by a higher tax rate, which reduced EPS growth by 15 percentage points. GAAP EPS decreased 4.1% to $1.02, reflecting a charge to the company's equity investments related to the impairment of minority investments, as well as lapping a $191 million gain on the partial sale of our investment in Option Care Health in the year-ago quarter. Now let's move to the year-to-date highlights. Year-to-date sales advanced 5.7% on a constant currency basis, including a 400 basis point negative impact from AllianceRx. Without this impact, year-to-date sales growth was 9.7%. Adjusted operating income increased 42% on a constant currency basis, reflecting strong adjusted gross profit growth across pharmacy and retail in the U.S. and a continued rebound in international segment sales and profitability. Adjusted EPS advanced 39%. GAAP EPS increased by $4.54 to 5.15, reflecting a $2.5 billion after-tax gain in the first quarter related to the valuation of our prior investments in VillageMD and Shields, as well as lapping a $1.2 billion charge net of tax from the company's equity earnings in AmerisourceBergen in the year-ago period. Now let's move to the U.S. segment. Sales increased 1.2% in the quarter, with a strong performance from Walgreens more than offsetting a 680 basis point headwind from a 43% sales decline in the Alliance Rx specialty business. Comparable sales advanced 9.5% in the quarter. Adjusted gross profit increased 13.7%, with both pharmacy and retail growing in the low teens. Strong sales growth and favorable mix was only partially offset by lower reimbursement rates and higher shrink and distribution costs. Adjusted SG&A spend increased 8.3%, primarily due to investments relating to vaccinations and labor, partially offset by savings from the Transformational Cost Management Program. SG&A as a percentage of sales increased 120 basis points to 18.3% of sales, and this was almost entirely due to an adverse mix impact as a result of AllianceRx. Adjusted operating income growth of 37% was entirely due to strong gross profit performance. Now, let's look in more detail at U.S. pharmacy. Pharmacy sales declined 3.3%, held back by a 9.1 percentage point negative impact from AllianceRx. Comparable pharmacy sales were up 7.3%, while comp scripts increased 4.7%, with COVID-19 vaccinations accounting for 275 basis points of the script growth. We completed 11.8 million COVID-19 vaccinations in the quarter and administered 6.6 million COVID-19 tests. Pharmacy benefited in the quarter from improved seasonal scripts as well as higher-than-expected flu immunizations. However, stores continued to be challenged by temporary operating hour reductions due to labor shortages and a surge of Omicron-related absences. Pharmacy adjusted gross profit grew nicely as strong sales growth at Walgreens and favorable profit mix more than offset reimbursement pressure. Turning next to our U.S. retail business. Comp retail sales increased 14.7%, the highest increase in more than 20 years. Excluding tobacco, comps were up 15.7%, with OTC test kits contributing approximately 690 basis points of growth. Compared to Q2 of 2020 pre-COVID levels, comp sales were up mid-teens. We saw broad growth across all categories, led by a 43% growth in health and wellness, driven by at-home COVID-19 tests and cough, cold, flu. Transactions were up 9.5% and discretionary categories performed well, with personal care comp sales growing 9.7% and beauty growing 6.5%. While gross margin declined slightly, strong sales growth drove low teens growth in gross profit. Turning next to the international segment, and as always, I'll talk to constant currency numbers. Sales increased 7.5% in the quarter, reflecting the ongoing recovery and strong execution across our retail portfolio, particularly in Boots U.K., where sales advanced 15%. Adjusted operating income was $226 million in the quarter, up 60% versus prior year, led by sales growth and tight cost control. In Germany, the integration of the McKesson wholesale business is very much on track, with operational synergy benefits running ahead of schedule. Let's now look in more detail at Boots U.K.. Comparable pharmacy sales increased 3.6%. Stronger demand for services contributed to the increase, with sales up almost 75% year on year, benefiting from COVID-19 testing and vaccinations, as well as new online healthcare services. Comp retail sales increased 22% despite the headwind created by the Omicron variant. This reflected strong commercial execution and a recovery from the strict restrictions in the comparable quarter. Market share strengthened across all categories, with beauty performing particularly well. boots.com sales declined in the quarter as footfall at our physical stores increased 52%. However, the boots.com business remains in a very strong position, with sales up 60% compared to the pre-COVID levels. More than 15% of total U.K. retail sales comes from our digital channel, up from around 9% pre-COVID, with an increasing proportion of sales originating from our mobile app. Turning next to Walgreens Health. As mentioned last quarter, our majority investments in Shields and VillageMD closed on October 29 and November 24, respectively. Segment sales were $527 million in the quarter, with $446 million from VillageMD and $81 million from Shields Health. Walgreens Health AOI was a loss of $77 million in the quarter. Organic investments increased sequentially and accounted for $31 of the 77 million operating loss. Investments at VillageMD more than offset the profit contribution from Shields Health and led to a $46 million AOI loss from majority investments. VillageMD sales advanced 145% on a pro forma basis, and they are executing against the planned investments to grow the business and to quickly expand the clinic footprint. Shields delivered a strong quarter. Pro forma sales growth was 63% with improved operating margins, driven by growth from new and recently signed contracts and from expanding our value-added proposition with existing health system partners. Let's now look at some of the key metrics for Walgreens Health. We are on track to meet our December 2022 goal of two million lives and more than 100 Walgreens Health Corners, with 47 already up and running. The next wave of nine locations is scheduled to launch in California in April. The rollout of VillageMD continues with 94 co-located clinics open at the end of the second quarter, up from 81 at the end of Q1. As of today, we have 102 co-located clinics open, progressing towards our goal of 200 by the end of calendar year 2022. Our fiscal 2022 sales goal is now at $2.2 billion given a delay in the closing of the CareCentrix investment. There are no changes to our underlying sales assumptions. As you can see, VillageMD and Shields are delivering impressive growth with pro forma combined sales growth of 128% in the quarter. Turning next to cash flow. We generated $1.3 billion of free cash flow in the first half of the year, $550 million below prior year as we cycled through some exceptional headwinds. Strong growth in operating income was offset by the working capital impact of a decline in the AllianceRx Walgreens business, the year-over-year impact of COVID-19 related government support and increased capital expenditures behind key growth initiatives, including the rollout of new automated micro-fulfillment centers, the VillageMD footprint expansion, and continued omni-channel and digital investments. Turning now to full year guidance. We are maintaining our full year guidance of low single-digit growth in adjusted EPS. We have, however, raised our estimate for the base business from 5%-7% growth to 6%-8% growth to reflect strong U.S. front of store performance and increased testing revenue. This upside is being reinvested in building out our healthcare business, which now represents an estimated five percentage point headwind to EPS growth compared to four percentage points previously. In summary, we are confirming our full year EPS guidance of low single-digit growth, and I would remind you that this is better than our original guidance provided at the start of the fiscal year. With that, let me now pass it back to Roz for her closing comments. Thank you, James. Let me be brief so we can take as many questions as possible. We are executing well with another strong quarter, marking another step in our transformation. We are making significant progress across our strategic priorities. Our team members continue to amaze me with their dedication and talent as I visit many of our stores and offices across our regions. It's because of their hard work that Walgreens Boots Alliance has been recognized with recent honors, such as being named Fast Company’s list of the world’s 50 most innovative companies and Time’s 100 Most Influential Companies. Our team members, in particular, provide me with deep conviction that we have what it takes to truly reimagine healthcare and well-being for all and deliver long-term value creation. Now, I would like to open the line for questions. Operator? Thank you. As a reminder, if you'd like to ask a question, please press star then one on your telephone keypad. Our first question is from Lisa Gill with JPMorgan. Your line is open. Thanks very much, and thanks for all the comments. First, I just wanted to start, James, with your comment that you said the quarter was ahead of your expectations. When I think about, you know, the next several quarters, were there things that were pulled forward into this quarter, would be my first question. How are you thinking? You made a comment about testing. I would assume testing was very strong in January and February, but what have you seen more recently when we think about, you know, your higher revenue due to testing? Is that just because of what you saw in the most recent quarter or expectations going forward? Yeah. Hi. So no, I made the comment about ahead of expectations. I believe we're maybe $0.20 ahead of consensus. Versus our internal forecast, we were about $0.08 ahead. Where we saw continued buoyancy was on retail. Front of store had continued, particularly in the first two months of the quarter, and then secondly on testing as Omicron was peaking. They were the two items that drove our beat versus our internal forecast, which I said was about $0.08. We've seen a slowdown, obviously, since then, and maybe I'll pass it over to John Standley for a couple of comments on what he's seeing currently. Well, I guess part of the big news there really is just, we did start vaccinating the fourth shot yesterday. What was slowing down has kind of picked up a bit, here in the last 24 hours as far as the vaccine goes. I think on the testing it did slow down, you know, as we came through the holidays in January into February, now it's March. But there has been a still steady business there for, you know, travel and those people still, you know, still needing to test. Down quite a bit, but a nice steady stream still ongoing. Okay. John, just as a follow-up, you know, we hear pharmacist as a provider, and I know you've been a big proponent of this, and we absolutely agree that throughout the pandemic the pharmacists have been on the front line. But what does that really mean? Does that change reimbursement? Does it change, you know, their role, when we think about them from a healthcare perspective? Yeah, it's pretty important point. I know Roz was in D.C. a couple of days ago. We did get a piece of legislation moving here just in the last week that's the Equitable Community Access to Pharmacist Services Act. That's really around provider access and our ability to bill under Medicare Part D for services around testing and treating influenza and strep and things like that. I really think that's a pretty sizable addressable market today that's honestly largely moved out of primary care physicians anyway and gone into convenient care. It's a real opportunity in our business to have a really convenient solution. We provide access, obviously, you know, close to 9,000 locations. I think our pharmacists and our technicians are more than capable, as we've shown, you know, during the pandemic, of delivering these kinds of services. That's a pretty big game changer if we can gain access, you know, to that market and, you know, in terms of how we grow our business and in terms of the value we can provide in the communities we serve. Great. Thank you. Our next question is from Steven Valiquette with Barclays. Your line is open. Thanks. Good morning, everyone. Just regarding the Boots business and the ongoing strategic review of that asset, just a couple of interrelated questions. First, can you remind us where this asset stands at the moment, just on how much the profitability in fiscal 2022 is impaired by COVID versus the pre-COVID baselines? And if I missed this, are you able to disclose how much of the international segment operating profit of $226 million this quarter is specifically related to the Boots asset that's under strategic review? Thanks. James, I'll turn that one over to you on Boots. Yes. If I could just pick the last part of your question first. In general, about 5% of revenue is Germany, and Germany doesn't make very much money. It's a wholesale business. It's driving a lot of favorable synergies in the go-forward position, but right now it's only marginally profitable. So you could presume that the majority of the profitability in the International segment is related to the U.K. business. I'm sorry, the first part of your question? Yeah. You might have alluded to this a little bit during the prepared remarks, but as we think about just the profitability of that segment in fiscal 2022, where does it stand with- Oh, yeah, yeah. The profitability on pre-COVID baselines? Are we well above? Are we still below? Are we kind of in line? Just any rough percentage around that might be helpful just to frame it. Thanks. No, I think we're still quite a bit below, call it the two or three year stacks. Foot traffic hasn't fully recovered in the U.K. I think it's like 15% below where it was two years ago, just in terms of foot traffic. First of all, they had a fabulous quarter, given that they had a big spike in Omicron in the quarter, and it's a very foot traffic-driven business, and the traffic shifts really quickly. Look at the quarter they just had, and foot traffic was actually up 52%, but it still remains about 15% below where it was two years ago, right? It hasn't fully recovered. I think if you cycle back a couple of conference calls, what we said was, we expect the Boots U.K. business to broadly get back to the pre-COVID levels when they're exiting 2022. I would say that if you actually looked at it on a sales basis, it'll be 2023 year before Boots fully gets back to pre-COVID levels. There's a lot of good growth ahead in the U.K. and international segment driven by that. You know, they've done a spectacular job on cost control. Then secondly, the other part that I don't think we get credit for is boots.com in the U.K. That's 60% growth on a two-year stack basis. I don't think there's many retailers in the U.K. that have a Boots.com business that represents 15% of sales. This is a business that used COVID as a time to reinvent itself and exit much, much more strongly than it went into COVID. This is a business with massive momentum. It's well-positioned for the future. It has a large and fast-growing dot com business. We're very happy with it. As I said, your question is a good one. It won't fully recover until fiscal year 2023, so there's a lot of positive growth ahead. Okay. That's very helpful. Thanks. Thank you. Thanks. The next question is from Elizabeth Anderson with Evercore. Your line is open. Hi, guys. Thanks so much for the question this morning. In terms of you talked about sort of reinvesting in the healthcare business, when you were talking about the components of the two, the second half EPS numbers. One, could you talk about sort of where those, you know, what those increased investments are? Two, can you talk about your sort of where you're seeing labor costs come in versus your expectations? I know that you sort of pointed to that as a driver of SG&A, and, you know, obviously, with well-known their costs are coming up. I just wanted to understand sort of how that's trending as we move through the fiscal year. Thanks. Elizabeth, thanks for the question. I'll start off with Walgreens Health, and then I'll ask members of the team to join in. From a Walgreens Health perspective, you know, we continue to invest. As you all know, we made the investments in VillageMD, CareCentrix, and Shields. We're pleased with where we are with those investments, and we're integrating where it makes sense in our healthcare continuum. That work is ongoing and we're satisfied in that respect. We did mention when we were at our Investors Day back in October that, you know, we would continue to invest in the business, and we'll continue to do that. And I will also mention that, you know, we're seeing really good performance, particularly in our specialty pharmacy area with Shields. That would be ongoing. I'm gonna ask James to talk with any further detail on Walgreens Health with the investments. Then John, if you could take it from there. Yeah, just quickly, Elizabeth. Elizabeth, you know, basically what we said is we, while we maintain guidance, we took up guidance on the base business, and we increased the investment on healthcare from four percentage points of EPS to five percentage points. One is to send a clear message that we're serious and we're making strong progress. As we're in the second half of the year, there's a fairly big shift between H1 and H2. Second half is about 7% of each EPS headwinds coming from the investments in healthcare. Specifically, what were we doing? We've increased slightly, and VillageMD has increased slightly its investments behind the opening of the co-located clinics. You'll recall in the last conference call, we raised the guidance for the full year from 160 clinics in the calendar year to 200. Now we're just aligning a bit the expenses and the phasing of those rollouts. Probably it's a longer term positive, and we're just readjusting the expenses in the short term. The other thing is we're really doubling down on the organic investments to meet the requirements of Blue Shield of California and Clover Health. We're making strong progress against both of those. Call it a reinforcement of expenses exiting the year because, you know, we're resilient here. We wanna exit the year stronger than when we entered. This is all about investing in the future growth of the company. John, I'm gonna pass it over to you on the labor question. Yeah. I think I just make a couple of comments. One, I'm really excited about the investments, you know, that we're making in the Walgreens business. We're really deep into our micro fulfillment strategy and rollout. You know, as we've talked about previously, this is really a program we're rolling out to support our pharmacists and get, you know, work out of our store and free up team member time to really provide additional services in the pharmacy. I'm really excited about that investment and the progress that we're making there. You know, we touched on with Lisa earlier about, you know, some of the potential value drivers there. I think there's just a lot of upside there for us in the future, so super excited about that. There's other investments that we're making in the business in addition to that, you know, around pharmacy, with automation in our call centers and things like that to improve the experience and take, you know, other work out of the stores and out of the pharmacy. On the labor side, you know, as we talked about over several quarters, we have made some really significant investments here. We raised our starting wage across the company to $13 last fall, and we'll move up to $15 in the fall of 2023. And we have also made changes to our tech starting wages, went to $15 in the fall into 16.50 this coming fall. I think we talked about where we were with some investments. Last quarter, we had about $120 million of investments that we've made for wage premiums in hard to staff areas with pharmacists as well as recognition bonuses that we paid to really recognize our team members for really the hard work and dedication that they've shown here through the pandemic. I think as we look forward on where we are versus our expectations related to all of that, I think, you know, we included in our updated guidance here about $40 million of additional expense in the back half of the year. Pretty close to what we expected. Got it. Thank you. Our next question is from A.J. Rice with Credit Suisse. Your line is open. Hi, everybody. Thanks for the question. I wondered, obviously, you're rolling out at a nice pace, both the health centers, the Walgreens Health centers as well as the VillageMD, and you've got a number of them that are co-located. I wonder if it's possible to start to talk or provide a little more information on how that is impacting the retail operations. Or can you point to increased script volume or increased foot traffic in the front end that you can attribute to either the co-located VillageMD or the health centers, how that's changing the profile of the stores on those ones that have the co-located offerings? Thank you, A.J., for that question. So first of all, it's still early days for us in terms of the number of VillageMD clinics and to see that transfer of script volume over to the stores. What's more important here is that, you know, just to remind everyone that this is a primary care physician practice, and what we're really building are key relationships, the relationship with the consumer, between the primary care physician and the pharmacist. That's where we're seeing the greatest uptick right now is in patient satisfaction and access to healthcare, you know, in neighborhood markets. You know, we'll continue to look at this and look at script uplifts. Right now, the focus is really on gaining the confidence and creating new relationships in the marketplace. The other thing I will tell you is, you know, as we see these expand across the U.S., I will tell you know, after having walked several of them and watched the patient feedback, it's comforting to see just how much engagement we're getting with the patient and also too, it's actually great for our pharmacists because they are much more engaged with the patient and the customer because they have the information coming over directly from the primary care physician's office just in, you know, inside the building. So we'll continue to update you as we see those numbers come in from script count growth, but it's still a little bit too early for that. Yeah, just to add into that, just to give you some perspective, I wanna clarify. You'll see two benefits as we go forward. One is we're absolutely convinced on script uplifts. We're just not providing the number on a quarterly basis, and we'll do a more comprehensive update in the future. The other one not to underestimate, and this is more an impact on VillageMD's performances. They have a lot of older practices where a pharmacist and a doctor together managing a patient deliver lower medical costs than just a primary care physician by themselves. The other big hypothesis that has to play out in the co-located stores is the combined effort of a pharmacist together with a primary care physician in managing down the cost of health care over time. As I said, they have strong evidence on their standalone clinics, and that will translate over time to improved health performance on the clinics they've co-located with us. There's a bunch of KPIs we're watching very, very closely. You know, bear in mind it takes two years for a clinic to get up to a kind of a reasonable level of operations, and achieve a break-even. It does take time for the statistics to come through, but we're absolutely convinced that both of these will be in great territory over the coming year or two. Okay, thanks a lot. That was very interesting. The next question is from Charles Rhyee with Cowen. Your line is open. Thanks for taking the question. Maybe wanna ask, you know, as you previously kind of talked about that in addition to Blue Shield of California and Clover that you're engaging, you know, with a number of interested parties, you know, to get to the two million lives goal by the end of this year. Can you kinda give a sense of what type of, you know, folks you're speaking with and, you know, kinda characterize, you know, where you are in those discussions and, perhaps how close you might be, to signing some? Yes. Charles, thanks for that question. We had committed that we would have five significant relationships by the end of the year, and I will tell you that we have two of those, one in Blue Shield of California, and then the other one with Clover. There's a third one that we've just recently signed and we'll be announcing shortly here. We feel like we're on a really good track record here in terms of how we are looking at these entities and moving them forward. The other significant piece is that we are adding Health Corners out in California to support the current relationships with Blue Shield of California and also with Clover. We've got more of the Health Corners coming on. As just a reminder, those Health Corners, you know, they are becoming the health advisors in the community and provide something on top of, you know, when you think about the work we're doing with VillageMD. We are encouraged and really aggressive in developing these relationships. We have a commercial team that is working alongside to make sure that these come online, and then we do the work that we need to do to bring the Health Corners up to speed to support them. We will hit the five contracts that we talked about at the beginning of the year. Great. I appreciate that. Just to follow up, if we think about the work you're doing with Health Corners, you know, the partnership with Blue Shield, you know, VillageMD, clearly we saw with COVID testing, you know, a real rise in people doing at-home testing. Have you thought about, you know, the role of at-home diagnostics has and how that would fit within sort of the Walgreens Health business that you're building? Yes. You know, we learned a lot during the COVID testing process, and I think we talked earlier about the work we're doing with LabCorp to provide at-home COVID tests. You know, it's giving us a real bright light into what more we can do in this space. I know that John Standley's team is developing a lot of the work around diagnostics and at-home testing through our retail business. I don't know, John, if you wanted to add anything more to that question. No, I do think it's a big opportunity and an excellent way, you know, for us to engage with our chronic patients to help them manage their disease state. I think there's plenty of good upside here, and more of these types of tests are becoming available all the time. We're working closely with a lot of pharma and manufacturers to try and gain access to those capabilities as they come to market. The only other thing I would add to that too is that, you know, the discussion earlier around being able to test and treat in our stores. It's not only against the COVID virus, but it's also, you know, just imagine if there's a strep throat diagnosis. You know, our pharmacist hopefully will be able to test that in store, which we currently do, and then treat and send the patient home. While that's not in-home testing, it is creating an opportunity for the patient to take care of themselves and recover in a home setting. That's helpful. Thank you. The next question is from Brian Tanquilut with Jefferies. Your line is open. Hey, good morning, and thanks for taking the question. It's Jack Slevin for Brian. I just wanna look at the 2022 guidance and really use that and where we stand with the back half of the year as a jumping off point to look at 2023. When you look at what you're implying with the guidance and you know, acknowledging that it sounds like there's some upside maybe from fourth boosters or fourth shots. At the upper end of the guidance is about 179 of EPS in the back half of the year. Historically, you've done roughly 50% or a little bit lower than 50% of your EPS in the back half of your fiscal year. When I bridge from, call it, $3.60-3.70 EPS, it's implied on a full year basis from that back half guide. Can you just help me look at the back half of this year bridging to that $5.15 EPS that you sort of put a stake in the ground around at Investor Day and how we get there, based on back half performance? Thanks. Jack, let me start off by, I'm gonna start really talking about 2023 and then any specifics on the H2 of the year and the guidance that we've already provided. Maybe this'll create a broader discussion for us. First of all, you know, we're not providing any guidance for fiscal 2023, but we are exiting the year with a real position of strength. We're executing on what we said we would do, including the raising of our fiscal 2022 guidance that we did just not too long ago. You'll see a few things in the numbers here. We indicated, you know, that we would make some strategic moves here and make some further investments. We're really positioned in 2023 to continue to deliver on our Walgreens Health investments. When you think about it, the growth in Walgreens Health is about 125% in the quarter. We'll hit a $4 billion run rate level of sales as we exit the year. We still have long-term plans to hit a $9- 10 billion number in 2025. The one thing I do wanna mention is, if you look at the fiscal 2022 guidance, there's some additional detail in there. We had incremental people investments in pharmacy around $158 million. That's roughly about 14 cents of EPS above our October guidance. We had minimum wage increases in the October guidance. You know, with just looking at that's about a 2% EPS headwind in the second half of the year. We also just looking at inflation. Inflation is on the rise, so we expect to pass through most of that and inflationary impacts and some impacts in the short term, also. When you look at this, I just wanna summarize that, you know, we're not gonna give guidance for 2023. We, you know, came out of the quarter strong and we're managing through the second half. James, anything you wanna add on the second half? Yeah, Jack, I think as you look to it, we said before versus our internal estimates, we beat in Q2 by about $0.08, and we're reinvesting that. We believe we've got a bunch of exciting growth opportunities, particularly in Walgreens Health, that we wanna fund exiting the year. I think as you look in H2, bear in mind a couple of things is, and I'm gonna give you two numbers. It's the EPS growth in Q3 and Q4 of last year. In Q3, which was the peak of vaccinations, we grew EPS 97%. That's a pretty tough comp. In Q4, we grew 26%. The average is somewhere in there in the 60% range. That's more recycling. I think it shouldn't really come as a surprise to most of you on the phone, if you've done the math on vaccinations and the contribution last year. What we're facing in the second half of the year is we're lapping vaccinations, and our best estimate of that is around a 20% headwind in the second half. It's almost math. The second part is the labor investments that John mentioned before, five percentage points, and the last one is Walgreens Boots, seven. The Walgreens Boots had been signaled well in advance. The vaccinations, you know, we all knew about what we delivered last year, and the only real new news in the second half is this 5% of labor investments. That being said, I don't wanna go out and say the guidance is conservative, but we haven't factored in the impact of the fourth shot for the over fifties. We're still assessing how much that is worth. Could it be two million, three million, four million vaccines? It's probably in the midpoint, maybe three million. So is there $0.05-0.08 of upside there? Yeah, there probably is. You know, between now and the end of year, a lot of stuff can change. Things I'm excited about, though, you know, I recently went through a review on inflation. We have basically offset all the inflationary impacts, and that includes a massive increase in the cost of international ocean freight, which is one of the biggest headaches for most retailers right now. We're sitting in a fairly decent position with regards to inflation. We think our model will work and we're looking forward and quite optimistic about the future. The front of store has had a spectacular year. Okay, we've had a fair amount of assistance from the BinaxNOW OTC test, but, you know, we over-deliver there and we execute it very strongly. You know, maybe, John, you could give some insight into, you know, the front of store plans we have on own brand and other areas into next year. We're quite excited, Jack, as we look forward into 2023, but we're not getting into the game of giving 2023 guidance on every conference call. John? Yeah. I'll..... Yeah. Pick that up. I mean, I think a couple of things. You know, we're obviously, you know, we've talked some about myWalgreens and mass personalization. I think we've done a great job here, but we have a lot of upside, you know, with our program here and kinda where we're going between that program and the Walgreens Advertising Group and the different things that we're working on there. I think just from an omni-channel experience, some of the capabilities we've built and where we can go here over the next couple of years, I think a lot of potential and exciting upside for us. As James mentioned, we're very focused on own brand. We think we have an opportunity to expand in additional categories in the store, but also develop in existing categories the own brand offering. We're making some good investments there in terms of how we go to market and how we position it within the store. We're pretty excited, you know, about the things that we're doing there. I think we've talked a little bit about the fact that we are taking a very careful look at a lot of our merchandising and where we're going for the future, inside the box, from a front-end perspective. As we look at that, you know, there hasn't probably been a full store reset in most of these stores, maybe ever since they were built. We've a pretty big rethink merchandising opportunity ahead of us, on the front end as well. It'd just be a couple of things, James, I'd call out. Got it. Appreciate all the color and great job on the quarter. Thank you. The next question is from George Hill with Deutsche Bank. Your line is open. Hey, good morning, guys, and thanks for taking the question. I guess I was gonna ask another question about Walgreens Health. If I look at the presentation versus the prior quarter, it looks like you guys are ratcheting back full year revenue expectations pretty sharply despite increasing the number of co-located clinics. I was wondering if you could just put a little more color around the expectations there and kinda what's driving the revision. Yeah. You know, we should have probably cut or made that clear. It's only due to CareCentrix. We've had some regulatory follow-up questions. The closing we previously assumed would be actually at the end of the previous quarter. We're just delayed in terms of closing. There's absolutely no impact on long-term projections here. I would actually say quite the opposite. Just look at the pro forma sales growth that we're seeing on the two businesses. VillageMD growing 145%, and Shields, which is actually a more mature business even than VillageMD, growing at 63%. Shields is probably substantially ahead of the original plan we had in mind, and Village is very much on track. You know, we can't get involved in anything CareCentrix is doing right now because the acquisition hasn't closed, but our understanding is they're doing quite well as well. We're actually really excited because this pro forma sales growth in any business of 128%, that's why we're investing as we exit the year. We'll be going in next year with a $4 billion+ run rate company with a target within three years to be at $10 billion, approaching $10 billion. The more we get our arms around this and the more we get into it, the more we're convinced these are very easily achievable targets. That's helpful. Thank you. Yeah. Cheers. Bye. That will conclude our question and answer session. I'll turn the call over to Roz Brewer for any closing remarks. Thanks everyone for your time and your interest in WBA. I'm really glad we were able to take several questions today and cover a range of topics, including the continued success we're seeing in our core business, particularly vaccinations and testing. I think you've recognized the momentum in our international segment, our significant progress in our healthcare business, and also too, new ways that we're serving our patients and our customers even further. We're really pleased that you recognize that. I couldn't be more excited about where we're heading right now, and we're pleased that the great work of our teams can be seen in our strong quarter. We'll continue to execute well across our strategic priorities and keep you up to date on those. We're really confident in our actions and the plans that we have to exit fiscal 2022 in a position of strength, much stronger than before the pandemic, which was our plan all along. As we build our growth engine and really try and drive the sustainable value creation we've been talking about, we'll keep you posted. We've got work ahead of us, but we're encouraged and excited. Thank you, and talk to you again real soon. Ladies and gentlemen, this concludes today's conference call. 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