Matt Schroeder - Group Vice President of Strategy & Investor Relations and Treasurer John T. Standley - Chairman of The Board, Chief Executive Officer, President and Chairman of Executive Committee Kenneth A. Martindale - Chief Operating Officer and Senior Executive Vice President Frank G. Vitrano - Chief Administrative Officer, Chief Financial Officer and Senior Executive Vice President

John Heinbockel - Guggenheim Securities, LLC, Research Division Karru Martinson - Deutsche Bank AG, Research Division Edward J. Kelly - Crédit Suisse AG, Research Division Matthew J. Fassler - Goldman Sachs Group Inc., Research Division Carla Casella - JP Morgan Chase & Co, Research Division William Frohnhoefer - BTIG, LLC, Research Division Michael R. Minchak - JP Morgan Chase & Co, Research Division Kevin A. McClure - Wells Fargo Securities, LLC, Research Division

Good morning. My name is Tasha, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rite Aid First Quarter Earnings Call. [Operator Instructions] Mr. Schroeder, you may begin your conference.

Thank you, Tasha, and good morning, everyone. We welcome you to our first quarter conference call. On the call with me are John Standley, our Chairman, President and Chief Executive Officer; Ken Martindale, our Chief Operating Officer; and Frank Vitrano, our Chief Financial and Chief Administrative Officer. On today's call, John will give an overview of our first quarter results and discuss our business, Ken will give an update on some of our key initiatives, Frank will discuss the key financial highlights and fiscal 2014 outlook and then we will take questions. As we mentioned in our release, we are providing slides related to the material we will be discussing today. These slides include annual earnings and sales guidance. The slides are provided on our website, www.riteaid.com, under the Investor Relations Information tab. This guidance is a point-in-time estimate, and the company expressly disclaims any current intention to update it. This conference call and the related slides will be available on the company's website until the next earnings call, unless the company withdraws them earlier, and should not be relied upon thereafter. We will not be referring to the slides directly in our remarks, but hope you will find them helpful as they summarize some of the key points made on the call. Before we start, I'd like to remind you that today's conference call includes certain forward-looking statements. These forward-looking statements are made in the context of certain risks and uncertainties that can cause actual results to differ. These risks and uncertainties are described in our press release, in Item 1A of our most recent annual report on Form 10-K and other documents we file or furnish to the Securities and Exchange Commission. Also, we will be using a non-GAAP financial measure. The definition of the non-GAAP financial measure, along with the reconciliations to the related GAAP measure, are described in our press release. Also included in our slides are the non-GAAP financial measures of adjusted EBITDA gross profit and adjusted EBITDA SG&A and the reconciliations of these measures to their respective GAAP financial measures. With these remarks, I'd now like to turn it over to John. John T. Standley: Thank you, Matt, and thank you, everyone, for joining us to review our first quarter results for fiscal 2014. We kicked off our new fiscal year by posting strong results that demonstrate our continued progress in improving our operational and financial performance. A key highlight was our third consecutive quarter of profitability. We generated net income of nearly $90 million or $0.09 per diluted share in this year's first quarter compared to a net loss of more than $28 million or $0.03 per diluted share in last year's first quarter. This significant improvement was driven primarily by an increase in adjusted EBITDA and decreases in interest and debt retirement expenses. In terms of adjusted EBITDA, we generated nearly $345 million in the first quarter, an increase of more than $70 million compared to the same period last year. Key drivers were improvement in pharmacy gross margin resulting from the introduction of new generic medications, an improvement in front-end gross margin and continued strong expense control. Our continued financial progress has given us better access to financial markets. We recently announced 2 additional debt refinancing transactions as part of our ongoing efforts to lower interest expense, extend our maturities and give us greater financial flexibility to execute our business plan. We expect to realize significant savings as a result of these transactions, and Frank will share additional details in just a few moments. As we continue to improve our operational and financial performance, we're also making significant progress in transforming our more than 4,600 stores into true neighborhood destinations for health and wellness. This ongoing transformation is part of our long-term strategy that positions Rite Aid to deliver a more comprehensive wellness experience that goes beyond filling prescriptions. At the same time, the key initiatives we're implementing to support this strategy helped not only in meeting our customers' health and wellness needs but also in positioning our associates to deliver a more personalized drugstore experience. A great example is our Wellness store initiative, designed to showcase the various pharmacy services we offer, while supplementing this experience with a more wellness-focused, front-end assortment. A key component of the Wellness stores are Wellness Ambassadors who serve as guides that bridge the front end of the store and the knowledge and services provided by our pharmacists. In the first quarter, we focused on delivering tools that help our Wellness Ambassadors conduct community outreach so that they can also serve as a bridge between the communities we serve and our Rite Aid stores. Expansion of our pharmacy service offerings is another key pillar of our wellness transformation. During the quarter, we increased Medication Therapy Management sessions by 68% year-over-year, driven primarily by an increase in targeted interventions. During targeted interventions, pharmacists provide one-on-one counseling to eligible patients to achieve goals such as cost savings and eliminating gaps in care. Though MTM is currently not a significant source of direct revenue, we feel it has tremendous potential to make a more widespread impact on improving patient health outcomes while lowering U.S. health care costs. Another key element of our wellness transformation has been our highly popular wellness+ customer loyalty program. Since launching wellness+ in 2010, we said that we'll continue to look for ways to further enhance this phenomenal program. That's why we're very excited to announce the launch of wellness65+, the largest extension of wellness+ since its debut 3 years ago. wellness65+ is designed to attract, retain and benefit seniors for making Rite Aid their drugstore of choice. We think wellness65+ will give seniors a compelling reason to become loyal Rite Aid customers and take advantage of all of the services and benefits we have to offer. At this point, I'd like to turn it over to our Chief Operating Officer, Ken Martindale, who will provide additional details on our key initiatives, including more information about wellness65+. Ken? Kenneth A. Martindale: Thanks, John, and thanks to everybody for joining us on the call this morning. As John mentioned earlier, we continue to make significant progress in transforming our more than 4,600 stores into true neighborhood destinations for health and wellness, and our key initiatives continue to play a critical role in bringing this transformation to life. Our highly successful wellness+ customer loyalty program continues to deliver strong results while providing phenomenal value and unique wellness rewards to our customers. At the end of the quarter, we had over 25 million active members, defined as those who have used their card at least twice over the past 26 weeks. We've seen a slight increase in active membership over both last quarter and the prior year quarter. Card usage continues to be strong as wellness+ members accounted for 77% of front-end sales and 70% of prescriptions filled, both of which represent increases over last year's first quarter. At the same time, the number of combined Gold and Silver members, who are our most valuable and satisfied customers, increased by nearly 4% year-over-year, and more than 50% of these customers continue to shop in our stores every week. As John mentioned, we are very excited about the launch of wellness65+, and I want to take a few moments to explain how the program will work and why we think it will be so beneficial to seniors. When seniors enroll in the program, they will become eligible for a special wellness65+ offering of pharmacy services that include a complete review of the patient's medications. Members are encouraged to make an appointment with the pharmacist to conduct the review. This will give them an opportunity to better understand their medications and why compliance to their medication therapy is so important. Patients will also receive a review of their immunization history and be able to ask questions regarding any over-the-counter products that they might be taking. In addition, our pharmacists will provide free blood pressure screening, answer patient questions about their overall health status and assist with questions related to Medicare Part D. This comprehensive packages of services is designed to help seniors get to know our Rite Aid pharmacists while enabling the pharmacists to demonstrate their commitment to helping patients more effectively manage their medications and achieve better health outcomes. Also in conjunction with the launch of wellness65+, all wellness+ members can now earn 1 point for every $1 they spend on copayments for prescriptions supported by government-funded programs, except in New York and New Jersey, up to a maximum of 25 points per prescription. This is a terrific benefit for the many seniors who fill prescriptions for Medicare Part D. This important change will provide our senior patients with a better opportunity to earn Silver or Gold status and save 10% to 20% every day on front-end purchases. Another key feature will be our wellness65+ Wednesday events to be held each month beginning July 3. On the first Wednesday of each month, seniors will be encouraged to attend themed health events at every Rite Aid store across the country that will feature free health screenings, valuable health information and other special offers. In addition, those enrolled in wellness65+ will become Gold members for the day on wellness Wednesdays and receive a 20% discount on their front-end purchases throughout the day. We're also supporting the launch of the comprehensive promotional campaign that includes an emphasis on community outreach. One unique component will be our nationwide wellness65+ mobile tour, which kicks off July 8 and will visit 200 locations over the next 9 months. Tour stops will include visits to local senior centers, churches and popular community events. We view this mobile tour as a great opportunity for potential senior customers to get to know their neighborhood Rite Aid pharmacists and Wellness Ambassadors, which will help our associates demonstrate that with us, it's really personal. wellness65+ goes well beyond simply offering senior customers a discount. It gives them a pathway for building strong relationships with our associates and understanding that the Rite Aid experience goes far beyond filling prescriptions. I'm sure you can see why we are so excited about the launch of the new program. In terms of other initiatives, our Wellness stores represent another great opportunity to deliver engaging wellness experiences to additional customers. During the first quarter, we converted 108 stores to our brand-new Genuine Well-being format. By the end of the quarter, we had 905 Wellness stores in our chain, and our goal is to have approximately 1,200 Wellness stores by the end of the fiscal year. As we expand our wellness format to additional stores, we're continuing to staff these stores with our customer-focused Wellness Ambassadors, associates specifically dedicated to driving a higher level of customer engagement. By the end of the first quarter, we had more than 1,500 Wellness Ambassadors working in our stores to provide this personalized level of customer service. Looking ahead, Wellness Ambassadors will play a critical role in explaining the benefits of our new wellness65+ program, encouraging seniors to enroll and in participating in outreach events throughout their communities. In addition, we continue to make strategic investments to fuel business growth through programs such as our file-buy initiative. During the quarter, we completed $11.8 million in prescription file buys, and we'll continue to pursue additional opportunities as we head forward. To sum it up, our key initiatives continue to generate positive results while positioning Rite Aid to deliver a convenient and personal wellness experience. The ever-evolving wellness+ program and our Genuine Well-being store format demonstrate how we remain committed to enhancing our unique brand of health and wellness and delivering the best drugstore experience possible to our customers. At this time, I'll turn it over to our Chief Financial and Chief Administrative Officer, Frank Vitrano, who will provide additional details about our financial results. Frank? Frank G. Vitrano: Thanks, Ken. Good morning, everyone. First quarter record results reflect solid progress in our turnaround and continued benefit from our various initiatives. On the call this morning, I plan to walk through our first quarter financial results, discuss our liquidity position, certain balance sheet items, our capital expenditure program, the recent refinancing transaction and finally, provide updated fiscal '14 annual guidance. As previously reported, revenues for the quarter were $6.3 billion, which was $175 million or 271 basis points lower than last year's first quarter. The decrease was due to the impact of lower-cost generics on pharmacy sales. Overall, same-store sales decreased 2.5% in the quarter, reflecting a higher generic penetration rate. Front-end same-store sales were up 40 basis points, and pharmacy same-store sales were lower by 3.8%, which included an approximate 458-basis-point negative impact from new generic drugs. Pharmacy same-store comp scripts decreased 10 basis points. Prior year script count included the benefit of the ESI/Walgreens dispute. Today, we estimate we are retaining approximately 75% of those new scripts. Adjusted EBITDA in the quarter was $344.8 million or 5.5% of revenues, which was a $70.6 million or 25.7% increase than last year's first quarter of $274.2 million or 4.2% of revenues. Results were driven by improved pharmacy and front-end gross margin trends and solid expense control. Net income for the quarter was $89.7 million or $0.09 per diluted share compared to last year's first quarter net loss of $28.1 million or $0.03 loss per diluted share. The improvement was driven by higher adjusted EBITDA, lower interest expense and lower loss on debt retirement. Total gross profit dollars in the quarter were $72.2 million higher than last year's first quarter and 190 basis points higher as a percent to revenues. Adjusted EBITDA gross profit, which excludes specific items, primarily LIFO and the wellness+ revenue deferral, was favorable to the prior year first quarter by $56.3 million and 167 basis points as a percent to revenues. Front-end gross profit dollars and rate were favorable. Pharmacy gross profit dollars and rate were also higher due to the benefit of new generics partially offset by continued pharmacy reimbursement rate pressure. The pharmacy rate increases were also driven by the reduction in sales due to higher generic penetration. Selling, general and administrative expenses for the quarter were lower by $78.8 million and 53 basis points lower as a percent to revenue as compared to last year. Last year's first quarter had a reversal of a tax indemnification asset of $60.2 million related to the Jean Coutu tax settlement, as well as a $20.9 million legal settlement of the assistant store managers' wage and hour class action lawsuit. Adjusted EBITDA SG&A, which excludes specific items, were lower by $14.3 million or higher by 43 basis points as a percent to revenues compared to last year. The decrease in dollars reflects the above-mentioned $20.9 million legal settlement partially offset by wage and benefit increases, as well as costs associated with the wellness remodel. On a run-rate basis, adjusted EBITDA SG&A was higher by $6 million, which reflects our various expense-control initiatives. FIFO inventory was flat to the first quarter of last year. Our cash flow statement results for the quarter shows net cash from operating activities as a source of $184.4 million as compared to a source of $363.6 million in last year's first quarter. An increase in operating income, along with the timing of accounts receivable receipts this year, was more than offset by a $98 million reduction in inventory in the prior year and a change in the timing of interest and benefit payments. Net cash used in investing activities for the quarter was $82.1 million versus $75.7 million last year. During the first quarter, we remodeled 108 stores and closed 8 stores. At the end of the first quarter fiscal '14, we have completed and grand reopened 905 Wellness stores. Front-end same-store sales in the Wellness stores now exceeds the non-Wellness stores by over 350 basis points. Now let's discuss liquidity. At the end of the first quarter, we had $1.142 billion of liquidity. We had $542 million of borrowings outstanding under our $1.795 billion senior secured credit facility, with $113 million outstanding letters of credit. Total debt net of invested cash was lower by $151 million from last year's first quarter. Our leverage ratio, defined as total debt less invested cash over LTM adjusted EBITDA, improved to 4.9x from 6.5x as compared to the first quarter of fiscal '13. Now let's turn to fiscal '14 guidance. We updated our guidance based on the anticipated benefit of our wellness remodel program, customer loyalty program and other initiatives to grow sales and drive operational efficiencies. We also considered the cycling of scripts from the Walgreens/ESI dispute, planned wage and benefit increases, a softening of the new generic benefit in the second half of fiscal '14 and challenging reimbursement rate environment, including implementation of AMP during the year. We have not included any Affordable Care Act benefit in fiscal '14 as the program will only be in effect for 2 months of the fiscal year and we expect usage to be minimal in the early stages. The company expects total sales to be between $24.9 billion and $25.3 billion and expect adjusted EBITDA to be between $1.090 billion and $1.175 billion for fiscal '14. Same-store sales are expected to be in the range from a decrease of 75 basis points to an increase of 75 basis points, which reflects the anticipated negative pharmacy sales impact of approximately 250 basis points from new generic introductions and continued reimbursement rate pressure. We expect a fiscal '14 earnings range of net income of $22 million or earnings per diluted share of $0.01 to a net income of $162 million and earnings per diluted share of $0.16. The guidance includes the refinancing loss on debt retirement charges for the 2 most recent refinancings, as well as lower interest expense. As was previously announced, we increased the lower end of our adjusted EBITDA guidance from $1.075 billion to $1.090 billion based upon the results of the first quarter. The range of guidance is primarily driven by our same-store sales range and pharmacy margins. Our fiscal '14 capital expenditure plan is unchanged and expect to spend $400 million, with $175 million allocated to remodels and $65 million for file buys. We are planning to open 2 new stores, complete 16 relocations and remodel 400 Wellness stores in fiscal '14. We expect to be free cash flow positive for the year, and we also expect to close a total of 50 stores, of which the guidance include a store lease closing provision for 10 to 15 stores, with the balance closing upon lease expiration. As previously announced over the past 2 weeks, we completed a $1.31 billion refinancing of our $500 million 7.5% senior secured note due in 2017 and our $810 million 9.5% senior note also due in 2017, replacing said debt with a new $500 million second lien Tranche 2 term loan due in 2021 and an $810 million senior note due in 2021. Annual cash interest savings are expected to be $35.4 million per year. The loss on debt retirement charge is expected to be $63 million and will be recorded in the second quarter fiscal 2014 results. Combined with the February refinancing, we expect to lower annual cash interest by $85 million. This completes my portion of the presentation, and now I'd like to turn it back to John. John T. Standley: Thank you, Frank, and great job by you and the team on the refinancings. Frank G. Vitrano: Thank you. John T. Standley: I'd like to add to Ken's comments about wellness65+ by saying that we're really excited to begin offering additional benefits to senior patients in a way that differentiates our pharmacy experience from the competition. Seniors tend to rely on their neighborhood pharmacies as much as any demographic we serve, and part of what we're trying to do is build strong personal relationships with these customers so that they understand the services we provide and feel comfortable engaging with our associates to meet their unique wellness needs. Let me end by saying that we're pleased with our first quarter results as they illustrate our continued operational and financial progress and our ongoing commitment to providing the best products, services and care to meet our customers' unique needs. I thank our dedicated teams of associates with their commitment to our vision for the future and working tirelessly to exceed our customers' expectations. We look forward to continuing to build on our recent success while positioning Rite Aid to be the customers' #1 choice for health and wellness. That concludes our prepared remarks for today. We'll now open up the phone lines for any questions.

[Operator Instructions] Your first question comes from the line of John Heinbockel with Guggenheim Securities. John Heinbockel - Guggenheim Securities, LLC, Research Division: I want to hit on wellness65 first, and then I have another question. So the expanded interventions you guys are going to do, does that require much additional labor? And I assume the Wellness Ambassador will not do that, that'll be the pharmacist. But is there much more labor to be built in? Kenneth A. Martindale: John, it's Ken. There's not really a lot of incremental labor. We're working on modifying workflows and really building this into their ongoing daily activities. And so the Wellness Ambassadors are going to be the key link to getting them back to the pharmacy. But the pharmacists, you're right, they're going to be conducting the engagements. And they really are -- they've been doing a lot of that today, but we're really formalizing it more now. John Heinbockel - Guggenheim Securities, LLC, Research Division: And then you also talked about, I guess, a national ad campaign around 65+. Will that also encompass all of wellness+? And I assume that, that is -- is that incremental spend, that campaign, or that just will replace other spending you were going to do otherwise? Kenneth A. Martindale: It basically is going to replace the spend that we've had in place for the last couple of years. And the main focus this year is going to be on 65, but we'll continue to drive wellness+ in everything else that we do as well. John Heinbockel - Guggenheim Securities, LLC, Research Division: Now if I'm a Gold customer already, on the first Wednesday, I just get the 20% that I would've gotten any other day, I don't get the 20% plus another 20%, correct? Kenneth A. Martindale: That's correct. You get 20% every single day, so you don't need to come in special on Wednesday. John Heinbockel - Guggenheim Securities, LLC, Research Division: All right. And then just one more thing on 65+, when you look at Gold and Silver customers, can you size how many of those -- what percentage of those are 65+? Because I would imagine there's -- it's a lot of them because you need to be pharmacy to get there, right? Frank G. Vitrano: What's interesting about it, John, is that because we couldn't give points on government scripts, it's probably not as heavily skewed in that direction as you would think it would be, which is why this is an interesting opportunity for us. John Heinbockel - Guggenheim Securities, LLC, Research Division: Okay. And then just lastly, if you look at cycling the ESRX benefit from a year ago, how much did that hurt EBITDA by -- in this quarter? There had to be some negative impact, right? Frank G. Vitrano: I mean, if you look at it last year, we said the benefit in the quarter was somewhere between $18 million and $22 million, and theoretically, we've lost 25% of those scripts. That's a good way of thinking about it.

Your next question comes from the line of Karru Martinson with Deutsche Bank. Karru Martinson - Deutsche Bank AG, Research Division: When we look at that $85 million of interest savings, where is that cash going to go? Frank G. Vitrano: Karru, that's a great question. I mean, one of the things that...

John's over here, trying to spend it. Frank G. Vitrano: Obviously, this year, we have upsized -- we've increased our CapEx a bit, and we're not going to -- not necessarily going to give guidance for next year in terms of where CapEx spend is. But it clearly gives us the added flexibility, Karru, to further increase our capital expenditure program for the current -- for next year, as well as be able to continue to pay down debt. When we did the refinancing back in February by upsizing revolver and having more drawn on the revolver, that really gave us the flexibility of being able to pay down debt as we generated some incremental cash flow here. So you'll continue to see a balance of increasing CapEx as well as paying down some debt. Karru Martinson - Deutsche Bank AG, Research Division: And can you just remind us, in terms of the wellness remodels, what the current -- the costs are on a per-store basis and what you're seeing on those early remodels in terms of their return? Frank G. Vitrano: Yes. Sales return, the front-end sales bump we're seeing is -- based upon the first quarter, was just over 350 basis points on the front end. On the pharmacy side, we're not seeing the same level of script growth, but we are seeing positive script growth there. The average spend on a remodel right now is about $430,000 per remodel, and about $100,000 of that, Karru, is what we're defining as true maintenance items, where we're addressing steel in the store or floors or ceiling. We're dealing with some of the exterior issues that we would have had. Karru Martinson - Deutsche Bank AG, Research Division: Okay. And just lastly for me, you had a very strong year. As you mentioned, you took rating -- leverage down here about 1.5 turns. Your ratings really haven't changed. What are the rating agencies telling you guys that they want to see next from you? Frank G. Vitrano: I think, basically -- I mean, clearly, we're clearly happy with the progress that we've made. And in terms of where they're going to continue to look is make sure that we're continuing our performance and look to continue to lower our debt and improve our overall cash flow.

Your next question comes from the line of Edward Kelly with Crédit Suisse. Edward J. Kelly - Crédit Suisse AG, Research Division: John, could we start -- I just want to go through some questions on the gross margin. Obviously, the gross margin benefit from generics is going to wane as we progress throughout the year. Can you help us sort of understand what the cadence of this ends up looking like? Do we begin to see a bigger, more dramatic falloff in this upcoming quarter? And then, I think you mentioned gross margins potentially being -- pharmacy gross margins potentially being down in the back half. I just want to make sure that, that's kind of what you're suggesting. John T. Standley: That is a good summary of what we're suggesting. So I think it's really a back-half issue that we're reflecting in our guidance. The benefit from the new generics will slow dramatically as we get into the third and fourth quarter, and so that's really what we've reflected in our guidance. Edward J. Kelly - Crédit Suisse AG, Research Division: Do you think, in your fiscal second quarter, the benefit should be less than what it was this quarter? Is that fair? John T. Standley: Yes. Edward J. Kelly - Crédit Suisse AG, Research Division: Would it be materially less? John T. Standley: We're trying not to honestly guide quarter by quarter. It's going to be less than it was in the first quarter, but our margin pressure is really in the back half. Edward J. Kelly - Crédit Suisse AG, Research Division: And John, if your contracts were completely guaranteed, right, so if you had guaranteed contracts across your entire business as opposed to some portion MAC-ing, would you see that gross margin decline in the back half of the year? John T. Standley: Probably to some degree. Edward J. Kelly - Crédit Suisse AG, Research Division: You think you still would? John T. Standley: Still would to some degree, it might be lessened but... Edward J. Kelly - Crédit Suisse AG, Research Division: Okay. And what percentage of your contracts there are guaranteed versus MAC at this point? John T. Standley: 60-40. Edward J. Kelly - Crédit Suisse AG, Research Division: 60-40? John T. Standley: Yes. Edward J. Kelly - Crédit Suisse AG, Research Division: And what's the opportunity to get that higher over time? John T. Standley: I mean, we've got a mix of Medicaids and government scripts and things like that. So I think it can go up a little bit, but it's probably not going to change dramatically from here. Edward J. Kelly - Crédit Suisse AG, Research Division: So there's a natural ceiling on how much... John T. Standley: There is, yes. Edward J. Kelly - Crédit Suisse AG, Research Division: Okay. And then the other question on the gross margin I wanted to ask you is on the front end. You, obviously, mentioned improved front-end gross margins this quarter, which was probably a little bit of a surprise just because we all think that the landscape is getting more competitive. So could you maybe elaborate on what's going on here and just give us your thoughts on what you're seeing out there from a competitive standpoint? John T. Standley: I think it is, I guess, relatively speaking, a little bit more competitive environment over the last couple of months that I -- in terms of what we've seen in the marketplace. I mean, I think, for us, it was a lot around execution. I think we did a good job managing promotional monies and margin and whatnot in the quarter, and we did a pretty solid job. Private label was a contributor, and so it was one of those things where I think we hit a lot of good things. Edward J. Kelly - Crédit Suisse AG, Research Division: Your competition has still not put -- not great front-end comps, and there's 1 player that comes to mind. Are you seeing any acceleration in promotions out there at all? John T. Standley: I think it has, probably over the last couple of months, gotten a little more promotional, in my view on it, I guess. Edward J. Kelly - Crédit Suisse AG, Research Division: Yes, all right. And then the last question I have for you is on guidance. I mean, you obviously had a strong quarter. You don't give quarterly guidance, so it's hard to say how much it beat your expectation by, but it certainly beat ours by a fair amount. And you only ended up raising the low end of the guidance. So I guess the question is, are there any new concerns that have sort of popped up related to the rest of the year? Or is it -- it's only the first quarter, right, so is it just too early to... John T. Standley: It's too early. That's changing from where we sit. And we -- again, we are looking at this margin pressure from pharmacy at the back half.

Your next question comes from the line of Matt Fassler with Goldman Sachs. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: I want to ask you a question on the expense cadence that sort of runs parallel to the gross margin question. So to the extent that you expect gross profit growth to moderate sharply and the margin benefit to moderate as well, the expense control becomes that much more important here. This quarter, your adjusted EBITDA expenses were up only 40 basis points year-on-year, which is a very tightly controlled cost cadence relative to what you've done in a typical quarter. Should we think of that as being representative of what you're able to do? Or are your initiatives going to perhaps take that up a bit? John T. Standley: That's probably in the range, generally, of what we're going to do. Obviously, we can see we have some margin pressure on the back half, but we're very focused on customer service and to continue trying to build our top line. So we're going to try and run our business efficiently, but do what we need to do to take good care of our patients and customers. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: And taking another crack at the quarterly piece without getting terribly precise and this is -- let's just talk trajectory. Obviously, the gross margin story, if it just plays out based on comparisons and the flow of generics, that would be a gradually eroding story. I'm assuming a pretty consistent expense line. The -- you'd go from up nicely to flat to down sort of in a straight line. Is that the cadence you would anticipate? Or are you thinking more of kind of an even year-on-year performance as you work your way through the year? John T. Standley: I think it's a little lumpier than that. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: Lumpier than even -- or you're saying not as ... John T. Standley: As you've just described it, relative to your previous description, I think it could be a little lumpier than that. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: Lumpy in a predictable way or in a less predictable way? John T. Standley: In a predictable way, but just in terms of the way things cycle. It's not a gradual, it's a little sharper than that. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: Got it. So maybe the second quarter, you -- by the second quarter, you will already see some of the dip that you've implied in guidance? John T. Standley: Yes, again, we're not going to guide quarter by quarter. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: Fair enough. And then just last question, a cleanup question. The private label penetration, please, this year compared to last. Kenneth A. Martindale: It's pretty flat, Matt. It might be up like maybe -- off the top of my head, maybe 10, 20 basis points, but it's pretty flat overall.

Your next question comes from the line of Carla Casella with JP Morgan. Carla Casella - JP Morgan Chase & Co, Research Division: You talked a little about in general, but on the wellness+ side, you mentioned specific same-store sales, and the wellness+ are up 350 basis points. Can you give the comparable number for pharmacy? How much pharmacy is that? Frank G. Vitrano: Carla, they're up -- over the non-Wellness stores, they're up about 50 basis points. Carla Casella - JP Morgan Chase & Co, Research Division: Okay. And then sequentially, you mentioned the wellness+ numbers represented 77% of the front end. That was down a little bit from fourth quarter. Is that just a timing issue, you think? Or is there some trial and non-repeat? John T. Standley: Down. Carla Casella - JP Morgan Chase & Co, Research Division: I think the first quarter we had 79% of usage numbers. John T. Standley: It's seasonality. There's some seasonality during the holidays. Carla Casella - JP Morgan Chase & Co, Research Division: Okay. I guess that leads a little bit in my next question on seasonal. Can you just talk about how important seasonal was in 1Q and how that compares to some of the other quarters? Seasonal front-end merchandise I'm thinking of. John T. Standley: I mean, the seasonal business is fairly good right now. There's a little bit of confusion because of the movement of Easter month-to-month. But in general, it's been reasonably good. Frank G. Vitrano: Summer has been pretty good. John T. Standley: Summer has been pretty good. Garden's been pretty good. So in general, it's been pretty good. Carla Casella - JP Morgan Chase & Co, Research Division: Okay, great. And then one just housekeeping item. In the past, when you've looked at the value of the scripts as you do your file buys, you've always -- you've commented that $10 to $12 is kind of a fair range of value per script. Is that still the case? Or has the market dramatically moved? John T. Standley: Actually, Carla, the range that we've given is $10 to $20, okay, again, depending on the particulars of the independent that we're buying. I think that range hasn't really changed that much.

Your next question comes from the line of Will Frohnhoefer with BTIG. William Frohnhoefer - BTIG, LLC, Research Division: Just a question about the mobile tour, if you will, of wellness65. Can we think of that as potentially a preliminary cut at what will likely be a much larger pool of below 65s going forward in the Affordable Healthcare Act? Is this kind of community outreach kind of program? Is that associated with a larger goal over time? John T. Standley: I think this is -- it really isn't. We model this a little bit after some of the success we had with our 50th anniversary celebration with RA50 last year. And we found that when we get out into the community, we do a pretty good job of reaching out and touching a lot of people. And so we've mobilized a lot of our folks in different communities to go out and hold these events and talk eyeball to eyeball to a lot of these seniors that are looking for solutions. So it's really driven specifically to support the launch of wellness65+. William Frohnhoefer - BTIG, LLC, Research Division: Okay. And I think you indicated before it's not going to have a significant amount of incremental impact on the cost structures as it stands right now. Is that correct? John T. Standley: That's correct.

Your next question comes from the line of Lisa Gill with JP Morgan. Michael R. Minchak - JP Morgan Chase & Co, Research Division: Mike Minchak in for Lisa. So just another question on the margins. The 5.5% EBITDA margin in the quarter, that's the highest you've delivered in recent memory. Obviously, that's going to moderate somewhat going forward, generics and reimbursement pressure being the 2 big factors. Can you talk about any other puts and takes that are there and then remind us what you're assuming in terms of timing of when the new AMP pricing goes into effect? Frank G. Vitrano: Yes, I mean, in terms of the kind of puts and takes that we've talked a little bit about that, obviously, the benefits we expect to get from the wellness remodels and the loyalty program and the various other initiatives that we've had in place is clearly pieces to it. And with regard to AMP, right now, we're anticipating it's going to kick in, in the second half of the year. John T. Standley: And I guess as we've talked about the margin pressures in the second half related to new generics and reimbursement rates, we think, in the next fiscal year, while we haven't gotten guidance out there yet, the new generic pipeline ticks back up again a little bit, and we think some of those margin pressures will moderate as we get into '15. Michael R. Minchak - JP Morgan Chase & Co, Research Division: Right. And then just switching gears talking about health care reform. Can you talk about some of the conversations you're having with the payers? How does reimbursement look like it's shaping up? Is it similar to what you're seeing with your current payer contracts? And then are you seeing plans looking to preferred networks versus open networks? John T. Standley: I missed the beginning of the question, I'm sorry. Could you say the question one more time? Michael R. Minchak - JP Morgan Chase & Co, Research Division: Yes. In terms of the conversations you're having with payers, how does reimbursement look like it's shaping up? Are you seeing -- how does it compare to what you're seeing with your current contracts? John T. Standley: Well, I mean, we have a lot of contracts in place, so I'm not sure the environment is changing dramatically from kind of the run rate. Just continued pressure, I guess, is the best way to describe it. Michael R. Minchak - JP Morgan Chase & Co, Research Division: And then in terms of preferred versus open networks? John T. Standley: I mean, most of the providers that we work with -- most of the payers that we work with have and have had limited networks. They continue to engage with us about joining limited networks. So it's not so much them coming and signing us up to limited networks, it's really can they get traction with those in the marketplace. I think that's almost the bigger issue here at this point because.... [Technical Difficulty]

And your next question comes from the line of Steven Valiquette with UBS. Steven Valiquette – UBS: John T. Standley: Steven Valiquette – UBS: John T. Standley: Steven Valiquette – UBS: John T. Standley:

Kevin A. McClure - Wells Fargo Securities, LLC, Research Division: This is Kevin McClure standing in for Bryan. Most of our questions have been answered. One quick one and maybe a little preliminary -- premature to get your thoughts, but do you have any preliminary thoughts on the potential script count benefit from the implementation of the Affordable Care Act in fiscal 2015? And what do you estimate the potential conversion rate could be from your Rx customers buying a few items on the front end? John T. Standley: So I guess, a couple of things. First, on the Affordable Care Act, it's still a fairly murky picture from our perspective in terms of how this will roll out over the next couple of years, what the addressable population is going to actually turn out to be. So I think there's still a few pretty good questions sort of rolling around in this thing, and I think there's some timing issues that appear to be potentially out there -- I mean, of how this thing will impact us, I think. Having said that, I think, if you were trying to estimate down the road when things are fully implemented, what it might look like, if you had a sense for the addressable population that you thought was going to come to market and you sort of looked at our market share, that's probably the best proxy that we can give you at this point to make some sort of estimate in terms of what the impact could be down the road. But I think that takes some time to develop based on what we can see today. In terms of pharmacy customers on the front end, it's a very high percentage of pharmacy customers that shop our front end. Probably 90% of our pharmacy customers shop our front end to some degree.

And at this time, there are no further questions. John T. Standley: Okay. We thank everyone for joining us. Thank you very much for being on the call. We appreciate it, and we'll talk to you soon ... Frank G. Vitrano: Despite the technical difficulties. John T. Standley: Despite the technical difficulties. Thank you.