Good afternoon, and thank you for joining us for the next session here at TD Cowen's Eighth Annual Future of Health Conference. Apologies for those who had issues accessing some of the earlier panels. We are working to get those made available for replay. As soon as we get that kind of sorted out, we'll let everyone know. And again, apologies for that, but glad that everyone could join us for this session here. You know, I'm pleased to be joined by John Driscoll, Executive Vice President and President of Walgreens' U.S. Healthcare segment. In this session, we're gonna be talking about really the transformation of site of care and how care delivery has been changing. Really, since starting in 2021, Walgreens began its path of transforming its business into a healthcare services model through its acquisitions of VillageMD, Shields Health Solutions, and CareCentrix. Later acquiring, well, VillageMD merging with Summit Health- CityMD in 2022. This saw the company add primary care, specialty care, post-acute, post-acute care coordination, capabilities as to its national footprint of retail pharmacies. John, who joined Walgreens in, sorry, in October 2022, is tasked with transforming Walgreens' healthcare segment into a value-based care delivery model. Prior to Walgreens, John was CEO of CareCentrix, and prior to that, a group president at Medco Health Solutions. John, really pleased to have you with us today. Well, delighted, Charles. We've got a lot going on, but excited to talk about it. Yeah, absolutely. Just a reminder, if you have some questions, we'll try to get them in. You can use the chat function on the link that you're watching. So anyways, with that, John, maybe you can kind of provide a high-level review of the strategy that Walgreens has undertaken, and what you think the underlying advantages you see in the model that you've chosen to work towards. So I think the reason why I'm excited about working at Walgreens and working through this inflection point, where we build on our legacy pharmacy franchise, is to really put points on the board around how retail and healthcare can be relevant to reducing the total cost of care and improving the patient journey. Walgreens has, you know, is within five miles of every consumer. We've got 9,000 stores, 200,000 clinicians, who are in a model that gets us the reach, frequency, and relevance in patients' lives. You know, 58% of patients go to their pharmacy as the first step in non-emergent care. So we're part of the care journey, but we're not participating in some of the fastest-growing profit pools in our legacy pharmacy, nor are we necessarily relevant. You know, healthcare is pervasively disconnected for the from a patient perspective, and particularly from a pharmacy perspective. I think we've got a unique opportunity because we've got trust, data, relevance, reach, traffic, to make healthcare to basically enhance other healthcare parties, but also to participate with the investments we've made with Village, our most important investment, as in participating in the transformation of value-based care. Scripts and pharmacy is directly relevant to the chronically ill, and we've got a model that works, and we're seeing that in our legacy markets. We've got 2,000 hospital relationships based on our legacy pharmacy work, that many of those faculty practices are looking to participate more in risk. We've got a partnership with Pearl that will allow us to build kind of more of an MSO services model, but in the ACO REACH area, but also to provide a flexible, more tech-forward solution for those who don't want to partner necessarily in as deep a way with Village or do not want to be employed physicians, which is the Village model. We are, you know, Shields is our participation in specialty pharmacy for hospitals, and it's rapidly growing, drives real results, and post-acute is another area of a rapidly growing and relevant home and community opportunity to develop products around a network services in the post-acute world. What clinical trials recruiting? I think we've talked about eight or nine pharma companies. I think we're up to 11, where we're directly participating in clinical trials, recruiting, managing those patients during those clinical trials, and rebuilding that as a profit pool. We are investing in places where our pharmacy experience is relevant and where it can be added value. And I can go... I don't wanna drone on on this one piece, but we are seeing positive results in patient outcomes in virtual and physical connection with Village. We are seeing the relevance of leveraging CareCentrix's long-term, deep relationships in post-acute and helping Walgreens really be a more added value partner to the health plans we work with. And we're seeing an acceleration in Shields and in clinical trials recruiting because of our legacy pharmacy relationships. And each one of these is involved in providing lower-cost alternatives that are driving higher adherence. I'm happy to go area by area, but our strategy is to build on what we've got, invest in areas that we think are gonna be relevant to the future, where there's increased profit pools, tie it together, scale, and repeat. The only other thing I'd say is, it's our goal here is to have an unconflicted model. So whether it's patients, providers, or health plans, to take, take advantage of the fact that we are independent and really be the independent partner of choice, which I think allows us to play more on the same side of the street of whether it's a hospital-based provider, a physician that wants to be employed, a health plan that doesn't necessarily trust its PBM, or a pharma company that needs more direct contract contact with its clinical trials recruits. In each of these areas, we think there's a real advantage in being an independent. You know, there's a lot there to unpack, but maybe first to dive in. Sure. You know, the partnership with Pearl, you know, that just came out recently. Maybe you can kinda go into more details, share with us sort of how that relationship works. You know, what are sort of the key advantages here, and how do you see that working alongside the investments in VillageMD? Well, VillageMD, we're really focusing on VillageMD, Summit, and CityMD, and really on our power markets, where we can invest and leverage those relationships. It is a relatively expensive journey that's driving results. And again, it's expensive, but, you know, about two-thirds of our sites have only been up and open for 18 months, and so we're looking for- and that is, I think it's in 21 different markets, and we're gonna focus on the most important ones as we grow VillageMD. But there are probably thousands of communities where we could work with hospital-based systems and independent doctor groups. We don't have the capital nor the patients to develop the, that kind of integrated model everywhere. So we were looking for a more flexible model for those markets that are... Where Village is not relevant or where we don't want to invest capital. And so what Pearl allows us to do, in more of an MSO services place, where we will be taking risk with Pearl, and we wanted a technology partner that had a plug-in simple solution, that had shown good results, and was relevant to the, that provided relevant information at the point of care without an expensive install, so that we can create a flexible way to work with Walgreens as we want to lean into risk for doctors that want a tech-forward solution. And again, we're a partner that really valued our local pharmacy relationships, our historical health, hospital relationships, and what we can do in the stores. It's a way, ultimately, of providing more community access to more groups outside of those Village markets, so we can leverage our infrastructure in the stores. Effectively, we've got all this relevant infrastructure for healthcare. We need to drive more value in it, and one of the ways to do that is to partner at risk in markets where Village is not or doesn't intend to be, and do it in a tech-forward, asset-light way. So I mean, the proof will be in the pudding, Charles, but we haven't signed up anybody yet. But I think we're gonna that's gonna be in addition to Village driving growth, where we've got a more integrated model. I think that Pearl's gonna be terrific help in providing a, a different version of access to the same opportunity in the transition to value in markets where either we don't want to make that investment or, or... But we do actually have partners that wanna work with us. Yeah. All of that still ties back to leveraging sort of this, you know, national footprint of 9,000 pharmacies that you have across the country and really changing the way people think of the pharmacist as not just a place where you pick up prescriptions, but really as a care provider and a key part of that. You know, you've spoken in the past about sort of integrating, and you talked a little bit earlier about, you know, the pharmacy tied to the patient care team. You know, what's needed to change the mindset of consumers and patients, that this is more effective, equally, you know, a better way to deliver care? Well, I think there's a lot of better ways to deliver care, but I don't think we have to change the mindset. I think we have to change the workflow, Charles. If you think about it, like, I was in a VillageMD, this is the nature of running around the country, in Chicago yesterday, and you look at where patients can, and doctors and pharmacists can walk at a co-located clinic back and forth. That's working, and we're seeing the lift in scripts every month from our basically our share, if you will, within the VillageMD patients. We're seeing how the pharmacist, and the patient, and the docs are finding it more effective to work together, and we're driving better outcomes. I think it's more about making sure we optimize the workflow, whether it's virtual, physical. Patients deserve better, more convenience, easier access. We make it really hard in the healthcare system to access care, so that gives us the right to win, if you will, to make it accessible, and then we have to set up, and we are, workflow that is seamless. I think the consumers want care to be easier, want to be able to have their care. See, we can do same-day appointments at Village. You can get your scripts faster. We need to make it really simple. So it's more about our performing and workflow than I think it is about changing the consumer's mind. Charles, I don't know whether you've been to our Boots UK stores, but with the in the NHS... Territorial e-, England, as w- and even more so in Wales and Scotland, we are increasing the number of services that pharmacists can provide in stores. The demand outstrips supply in terms of an interest of the consumers, and this was just- this hasn't been widely marketed, but it is super successful, and the pharmacists like it, and the patients like it. Because if you've got a, you know, a UTI or you're concerned about your blood pressure, why should you have to set up an appointment with the doctor, wait for two weeks or more, make sure you get evaluated by the NP, look at your record, come back, when really you need to be... You know, coronary heart disease is the most, most likely killer in the United States. Easy, most important way to manage it is, is checking your blood pressure. You know, a pharm tech can do that and then titrate the drugs. There are regulatory changes that happen there, but the key point, tying back to your question, is it didn't require a mindset change for patients to immediately start accessing healthcare that they needed at a more accessible point. So I think it's on us to figure out workflow rather than to change the patient mindset. But that connection between the consumer piece and the healthcare piece is, I think, where a lot of retailers have failed historically, and we aim to win it. Yeah. No, that means... are there a lot of changes that need to be done here, regulatory-wise, to be able to- You know, there are some. It depends on the level of service. What's great today is we're testing out virtual models that don't require that. So I'll give you an example. In stores in New York, where today we've got iPads where you can immediately get a telemedicine consult with a CityMD or a Summit doctor. That's easy. It's just digitally connecting, 'cause at the point of prescription, some chronic members have questions or have needs, and they want an answer immediately. It's sort of meeting the patient where they are. We're also moving to virtual pharmacy in states where we can do that, and we're changing the mix of services in other states. I think there's a lot we can do by simplifying workflow and leveraging digital tools while we work towards some of the regulatory changes. There is a broad mix of things we can do right now, and we're testing that as well with health plans because there's also an appetite with health plans to have us, just because we've got access, immediate access to patients, to do more. I'll get... I mean, the one we've talked, you and I have talked about before is colorectal screening, where we're getting three times the yield with Blue Shield. So we're testing and growing in a lot of these areas around places where you need a consumer engaged, where there's a consumer need that is impeded, if you will, by the natural barriers of the healthcare system, and we can play immediately. Yeah. Maybe going back to, you know, sort of your opening comments, right? You're talking about the... I wanna touch on the payer-agnostic portion of it. You know, obviously, I think a lot of folks, you know, look at sort of having the payer piece when you look at some of the other models that are vertically integrated in the market today, whether it has retail or not. The payer portion definitely seems to offer support, right? 'Cause it has membership to drive volumes. That's obviously something that you're not, you know, benefiting from, per se, but maybe talk a little bit more about sort of having a payer-agnostic model. You know, you have some relationships with payers currently. You know, to me, it seems like, to your point, right, you can be sort of a plug-and-play network, you know, for maybe more regional health plans. You know, what is sort of the, you know, the feedback you've gotten sort of in the early days with some of your partners? Maybe you can kind of share some of that with us. So I don't look at us as payer-agnostic. We've got to be payer-friendly. We've actually got relationships with everyone, even some of the empires of integration that will go unnamed. But we have really a great relationship with most health plans, particularly in Medicare, because our adherence programs are second to none. And so we have to. And we've consolidated all of our go-to-market and payer relationships so that we're approaching them from a one Walgreens perspective. We're offering a portfolio of services. We've not integrated that as effectively as the past, and we're looking to be an added-value partner, partnering directly with health plans to compete on bids for business, partnering with health plans that need adherence and improvement in Stars. I think we're aggressively pursuing that in a way that was more transactional historically, and we're bringing a relationship focus. I don't wanna be agnostic. I wanna be—I want, I wanna be deeply engaged. Different, different, the needs of Horizon are different than the needs of GuideWell, are different than the needs of a United or an Aetna. We are working to deepen our relationships on a performance basis with all of them, not just on the drug and adherence side, but when they talk to Walgreens, you're also talking to CareCentrix, what we can do with Shields, what we can do with Village, and I think that's gonna allow us to deepen our relationships. We haven't really taken advantage of that independence, but I think they're... The white space for addressable opportunity, whether it's adherence services, or partnering in risk, or improving the outcomes and lowering the cost on specialty drugs, we're just scratching the surface of. And again, we're looking at it as that those are, you know, there's probably 50 critical relationships. We've got, you know, contractual relationships with all of those payers as well as a number of others, and we're gonna partner with them and find ways where we can basically deliver for them and take risk on it. You talk about taking risk. I mean, what are the sort of the key pieces that you... Is there anything else that you need at this point to enable you to do that? Is it a degree of more maturity within the VillageMD base or more integration into the core stores, or are you able to go contract now? I think we've got a terrific underwriting, we got a terrific underwriting capability when we bought CareCentrix. We've got, or they bought me, depending on how you look at it. We've got some, some decent underwriting as well in our finance department at Walgreens. We've got a history in the case of Village and of Shields, of embedded actuarial and economic teams there. I think we're good from a capability perspective. We've got a track record in the legacy markets of Village, as we talked about, and looking at some of the Medicare info that we've shared across, you know, Dallas, Houston, and Phoenix, that we've delivered outcomes. Even in our fee-for-service contracts, Charles, like, like Summit Medical Group actually has really good outcomes from a track record in terms of reducing hospital admissions per thousand for their commercial and Medicare population. So there's two components, one, well, three components. You need to have that underwriting, actuarial, and contracting, you need an organization that can perform, and you need a track record. And I think we're in pretty good shape to scale it. And we're, I'm very comfortable in continuing. I think there's a lot of opportunity to flip the fee-for-service volume we've got at Village, or convert it over time, City Summit, and continue to grow the risk-based business at CareCentrix. We're looking forward to getting into market with Pearl and proving we can do it there as well, and show that in an integrated, even on a contracted basis, with the right digital integration, not physical integration, that we can also leverage our contact with the stores, and frankly, with, you know, your chronically ill member patient is gonna see their pharmacist a lot more frequently than their doctor. In 30%-40% of the cases, folks who are in Medicare Advantage or managed care plans, they don't have a primary care doctor, or they don't know their primary care doctor. We can help simplify, integrate, and again, I think that's a lot based on convenience, we can help solve that. But from a capability, track record, and team perspective, I think we're in pretty good shape. I see. You know, I think in the past, you guys gave some targets in terms of co-located VillageMD, Walgreens kind of locations. If I recall, something like 600 by 2025 and 1,000 by 2027. You know, are those kind of still sort of the milestones we should be thinking about? I think we should be. Is that the right framework? Yeah, I think we should be—I, I'm, I'm obsessively focused on delivering better results faster, and I think that we are always open to revisiting capital and capital-light options. I think we'll have more to talk about in terms of the, the look forward, but I, I think we've, we've talked about this, Charles. I want to concentrate on markets where we've got real market power. I wanna deliver more profitability. We need to, and we feel the responsibility to our shareholders to deliver more profitability from some of the markets we've invested in. I think our, our, our focus is, is gonna be accelerating profitable growth while we're thoughtfully expanding and allocating capital, is sort of how, how I think you should think about our strategy right now and going forward. That, that's helpful. And that kind of leads into... there's a question here from the audience, and I guess it gets to that, right? I think investors are concerned about sort of the economics of the healthcare services model. You know, obviously you're in a heavy investment phase, so it's a little hard to see it, I'm sure. Anything that you can share about sort of, you know, sort of the returns on capital, maybe on some of the mature sites, anything that you can kind of share that kind of gives you confidence? What do you think the business model looks like, you know, several years out, once we're kind of, you know, more fully integrated, more, you know, a bigger base of co-located stores, et cetera, that's matured? I, I, you-- obviously, we're in a quiet period right now- Yeah ... But I think we've talked about how we've got three markets. I mean, remember, of our 301 locations, you know, two-thirds of them have been, been opened in the last 18 months, and I think 43% just in the last 12. And so it's a pretty—we've already committed a lot of capital, and we are in the investment phase there. We're seeing positive, profitable momentum in every other area in our, in our healthcare book. But if you look at the legacy markets at Village, like the, you know, Houston, Dallas, Phoenix, that we've shared, where we've kind of carefully drawn out cohort analysis, we've got a model that is delivering consistent improvement in MLR reductions, and it's through the traditional stuff, reducing hospital admits per 1,000, reducing, the variability of unmanaged diabetes. It's being brilliant at the basics of managing chronic care. And I think what you're gonna see is us being a lot more thoughtful about capital investments over time, leveraging the investments we've made, and really focusing on driving a higher return on capital than you've seen historically. But we are productively impatient, I would say, in terms of making that and we're seeing the results. We have a model that works at Village that I think we can scale, and it's our responsibility to show that, you know, put more points on the board, and that's what we're focused on. If we think about that then, this is sort of a continuation of this question, what do you think, then—obviously, VillageMD, you have evidence that it is delivering results, improving, lowering cost of care. Obviously, that is good in a risk-based model for Village. What are sort of the additional benefits do you expect to see to the total cost of care once you start layering in CareCentrix? More heavily, you know, specialty care through Summit. And, you know, what makes this unique versus, you know, 'cause I think, you know, investors are looking and saying, "We can invest in Walgreens, who's undergoing this healthcare strategy, or we could invest in a very specific, you know, at-risk provider groups or, you know, there's other options." You know, what do you think is unique that we think that investors should take a harder look here? Well, I think, like, as from an investor perspective, we're a growth bargain. You know, for any number of reasons, I could argue. But I think what my goal here... I think, what's the right way to think about this? I mean, my model of success is sort of the Optum model, where each one of these businesses does well on its own, and where it's logical, you connect and grow. And I think that's the way we think about it. And each one of them is growing. We see whether it's every clinic we've got open, every business unit we own, is actually growing month-over-month, quarter-over-quarter. A number of them are quite profitable, and what we wanna do is make sure we're delivering, investing, and expanding in-home and community-based services, that we are continuing to sign up more hospital specialty pharmacy deals with Shields. And I think where those connect, we had a bid the other day with a health plan that wanted to compete against one of the PBMs that was trying to commoditize us, and we went in with a joint bid with the health plan, with our pharmacy arm, and CareCentrix. And you're gonna see those mixes of where someone's got a another plan has a region that's got a real problematic line in terms of managing complex diabetes based on their mix. Well, we've got pharmacies that are relevant. We can provide unique DME and home health services. So we'll customize where we need to connect, but each one of these is gonna make sense and grow on its own. And that's the way I think you think about it over time. We're not gonna mash it together, we're gonna respond to the market and try to be creative, like in this most recent health plan bid, where we were able to edge out the PBM and come up with kind of a unique offering because of our mix of assets. I think with clinical trials recruiting, we've got an opportunity to leverage our relationships with pharma, as well as at the back end on real-world evidence and managing complex patients, and especially because right now when we deliver, which we are, on clinical trials recruiting. We are a natural partner as those drugs and devices come in, so that gives an advantage, again, more services and more profitable services and more volume to the stores connecting to, because based on the relationships we have with drugs, the pharma and device manufacturers who want us to recruit members for their trials. So I think that each one of them has to make sense on its own, but it gives us a unique ability to kind of mix it up where we see it's relevant. I guess kind of tying it all together here, if we, if we think about the model going forward, is it fair to think it's... you have this pharmacy footprint, and where you have, you know, great density with your other assets, that's where you kind of lean in and invest more capital- You got it. Whereas elsewhere, partnership looks like the more likely route. You know, if we think about that, then, going forward, I mean, we're still early days. I guess, you know, what is, to you, what does success look like, you know, in a 12-month period, a 24-month period, you know, five years? What... You know, how do you define success? Well, it— ... Maybe not in time frames that specific but, you know, generally speaking, what are you looking for? Each, each- As you lead this business? It's a little bit like, it's a little bit of a different version of the answer you had—I gave you before. Each one of these business is growing faster and is more profitable than our base business. Each one of those businesses leverages and ties in and creates more profitable volume for our legacy pharmacy assets, and we have creatively pulled together those assets where it makes sense for health plans, or health systems, or providers so that the patient experience—We make healthcare easy for the patient. We are driving a more profitable series enterprise for all of our investors, and we're lowering the total cost of care. Is that possible to express in, maybe, in terms of like, you know, a return on invested capital hurdle or anything like that? It is, but in a quiet period... it would be unwise, and I'd lose my job if I gave you- Yeah, I thought I'd try. ... Specifics. But no, I think. Yeah ... But I just, the message I'd say is- Yeah ... We feel a moral responsibility to drive a faster and a, a, and a larger quantum of value based on the trust and the capital we've been, we've been given by the shareholders. We know that we aren't where we need to be. We are committed to improving that performance and committed to do it consistently over time. Yeah, no, I completely understand that and, you know, wish you luck and, look forward to, you know, in a few weeks when we get to hear more on the outlook. But, you know, John, thanks really for your time and for your insight here. I really appreciate it, and I'm sure- Delighted, Charles ... Appreciate it as well. So, We're open to talk to shareholders at any time. Great, and, thank you everyone for joining us for this session, and look forward to having you join us on the next session. Thank you.