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

John Heinbockel - Guggenheim Securities, LLC, Research Division Mark Wiltamuth - Jefferies LLC, Research Division Robert P. Jones - Goldman Sachs Group Inc., Research Division Lisa C. Gill - JP Morgan Chase & Co, Research Division Judah Frommer George Hill - Deutsche Bank AG, Research Division John W. Ransom - Raymond James & Associates, Inc., Research Division Karru Martinson - Deutsche Bank AG, Research Division Karen Eltrich Paul A. Simenauer - JP Morgan Chase & Co, Research Division Lee J. Giordano - Imperial Capital, LLC, Research Division Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division

Ladies and gentlemen, thank you for standing by, and welcome to the Rite Aid Third Quarter Fiscal 2014 Conference Call. [Operator Instructions] I will now turn the conference over to Mr. Matt Schroeder. Please go ahead, sir.

Thank you, Crystal, and good morning, everyone. We welcome you to our third quarter conference call. On the call with me are John Standley, our Chairman and Chief Executive Officer; Ken Martindale, our President and Chief Operating Officer; and Frank Vitrano, our Chief Financial and Chief Administrative Officer. On today's call, John will give an overview of our third 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're providing slides related to the material we will be discussing today. These slides include annual earnings and sales guidance. These 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'll 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 in 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: Thanks, Matt, and thank you, all, for joining us to review our third quarter results for fiscal 2014. In the third quarter, we delivered another solid performance by successfully executing our key initiatives, controlling costs and making operational progress as we continue building and strengthening our unique brand of health and wellness. A key highlight was our fifth consecutive quarter of net income, which increased nearly $10 million to $71.5 million or $0.04 per diluted share compared to $61.9 million or $0.07 per diluted share for last year's third quarter. Current year earnings per diluted share were negatively impacted by $0.03 per share due to the redemption of our company's Series G and Series H Convertible Preferred Stock during the quarter. Our increase in net income was driven by strong adjusted EBITDA results and lower interest expense. Our result for adjusted EBITDA shows that our core operating performance remained solid despite our cycling of the historic generic wave that positively impacted our performance over the past year. Adjusted EBITDA for the quarter was $282.3 million compared to $295.3 million for the same quarter last year. Prior year adjusted EBITDA included an $18.1 million benefit from the settlement of interchange fee litigation. Without the impact of this benefit on prior year results, adjusted EBITDA for this year's third quarter would have increased by about $5 million over last year. Our strong adjusted EBITDA results were driven by an increase in pharmacy gross profit due to prescription count growth, as well as drug purchasing efficiencies and strong SG&A expense control. These benefits were somewhat offset by a decrease in front-end gross profit due to the competitive and promotional retail environment. Same-store sales for the quarter were higher by 2.3%, driven by our 3.5% increase in pharmacy same-store sales, partially offset by a 0.2% decrease in front-end same-store sales. Our increase in same-store prescription count, along with higher pharmacy inflation, fueled the increase in pharmacy same-store sales. Our front-end results were negatively impacted by the same challenges other retailers are facing, most notably, cautious consumer spending in a competitive promotional environment. Flu immunizations were a key factor in driving our 0.7% increase in same-store prescription count. The increase in prescription count was a strong result for our team, considering that we're cycling the benefit of the ESI-Walgreens dispute from last year. As we continue to deliver solid operational and financial results, we also made significant progress in transforming our nearly 4,600 stores into true neighborhood destinations for health and wellness. Customers are responding positively to our Wellness Store remodels, which now represent nearly 1/4 of all Rite Aid stores. Additionally, seniors are signing up for the wellness65+ loyalty program, as we look to engage this key demographic with exclusive benefits and personalized service. And our emphasis on community engagement is at an all-time high, as store teams focus on building personal relationships with their neighbors, while promoting our immunization services and wellness65+ program. As we continue to strengthen our reputation as a wellness provider, we're also focused on positioning ourselves for future growth. A great example is how we're beginning to approach our real estate and Wellness Store strategies. Over the past few years, we've been highly focused on renovating our best stores which we expect to operate long-term. As our remodeling efforts continue to gain momentum, we're also beginning to build a pipeline for relocations and net new stores that will, over time, help us grow the company. Remodels will continue to be a key part of our strategy over the next few years, but during that time, we will be laying the foundation for our growth strategy and to taking our company's performance to an even higher level. At this time, I'd like to turn it over to our President and Chief Operating Officer, Ken Martindale, who has additional information regarding our key initiatives. Ken? Kenneth A. Martindale: Thanks, John, and thanks to everybody for joining us on the call this morning. Our key initiatives played a crucial role in helping us deliver solid results for the quarter, while also demonstrating our commitment to actively working with our customers to keep them well. A key highlight was our successful flu immunization campaign. It's clear that an increasing number of customers understand just how convenient it is to visit their local Rite Aid to receive their annual flu shot. Today, our pharmacists have administered over 2.4 million flu shots, and we expect to meet our goal of 2.5 million for the year. Looking ahead, current indications point to a milder flu season, which means we could be facing challenging prescription growth and flu shot comparisons as we cycle the heavy flu activity from last year's fourth quarter. During the third quarter, we continued converting stores to our Genuine Well-being format. We completed remodels at 94 stores and relocated 4 stores during the quarter, bringing our total to 1,117 Wellness Stores across the chain. As John mentioned earlier, nearly 1/4 of all Rite Aid locations are now Wellness Stores. These stores continue to outperform the rest of the chain, both in terms of front-end same-store sales and same-store script count. They also generated additional momentum in the pharmacy compared to previous quarters. In addition, we now have more than 1,900 Wellness Ambassadors working in our Wellness Stores, providing more personalized levels of customer service. Wellness Ambassadors continue to play a critical role in driving flu shot awareness, wellness65+ enrollment and our community engagement efforts. Our Genuine Well-being renovations continue to evolve as we test additional unique offerings that meet our customer-specific product and educational needs, while also strengthening our brand positioning. Most recently, we began piloting expanded beauty departments in several Wellness Stores that feature a broader selection of prestige brands and specially-trained beauty advisors. Much like our Wellness Ambassadors, they engage consumers through product demonstrations, helpful tips and personalized service. We're also testing a new merchandising initiative in several Wellness Stores that focuses on creating a more engaging shopping environment in a number of key health categories. Throughout the OTC department, our merchants have combined educational materials, interactive product displays, cross-merchandising and creative fixturing to create a more satisfying shopping experience. This concept was developed in collaboration with multiple innovative supplier partners. Our wellness+ customer loyalty program continues to be a key pillar that supports our broader health and wellness positioning. This is especially true with our new wellness65+ loyalty program, which continues to be very well received by seniors in the third quarter. Enrollment has now surpassed 1.3 million members and the program is attracting new senior customers, while strengthening the loyalty of our existing senior members. Our wellness65+ Wednesday events, held the first Wednesday of each month at every store, have proven to be a hit. During these themed events, wellness65+ members can take advantage of valuable health information, free health screenings and exclusive offerings, while becoming Gold members for the day and receiving a 20% discount on nearly all front-end items. In terms of the broader wellness+ program, we are increasingly focused on leveraging consumer insights gained from the program, such as trip frequency and basket composition, to create special, targeted offers based on their unique preferences and purchase history. During the quarter, we ramped up these efforts and experienced some initial success as we further refine our customer relationship marketing. We will continue working closely with our supplier partners to further strengthen loyalty and build stronger, more personalized relationships with our wellness+ members. We continue to strengthen our presence in the digital space, with the latest update to our mobile app, which offers enhanced functionality and optimized experience for iPad users, and capabilities for e-commerce. We are pleased with the level of customer engagement the app is achieving. It now accounts for more than 50,000 prescription refills each week. Earlier this morning, we were pleased to announce the extension and expansion of our long-standing partnership with GNC. Our new agreement runs through 2019 and allows us to add at least 300 additional GNC store-within-a-store locations. This partnership provides a strong point of difference, both in our industry and for our customers. We're extremely excited by the opportunity to continue making GNC's lineup of products available to our customers. This agreement will help us further deliver on our promise of meeting the unique health and wellness needs of our customers. Rite Aid brand products performed well during the quarter and continued to resonate with value-conscious consumers. Rite Aid brand penetration for the quarter was 18.4%, an increase of 30 basis points over the same period last year. At the same time, we continue to make strategic investments in growth opportunities, with programs such as our file buy initiative. We completed $29 million in prescription file buys for the quarter, and we now estimate spending approximately $80 million on file buys for the fiscal year. To sum it up, by immunizing a record number of customers, completing additional Wellness Store remodels and further growing the wellness65+ membership, we took significant steps during the quarter to extend the reach of our unique health and wellness brand. These key wellness initiatives are helping us engage our customers at a higher level, while setting the stage for continued progress as we look ahead. At this time, I will turn it over to our Chief Financial and Administrative Officer, Frank Vitrano, who will provide additional details about our financial results. Frank? Frank G. Vitrano: Thanks, Ken. Good morning, everyone. Third quarter results reflect solid progress in our turnaround and continued benefits from our various initiatives. On the call this morning, I plan to walk through our third quarter financial results, discuss our liquidity position, certain balance sheet items, our capital expenditure program, and finally provide updated fiscal '14 annual guidance. As previously reported, revenues for the quarter were $6.358 billion, which was $120 million or 1.9% higher than last year's third quarter. The increase was due to higher pharmacy sales. Overall same-store sales increased 2.3% in the quarter, reflecting a higher pharmacy inflation rate. Front-end same-store sales were down 20 basis points and pharmacy same-store sales were higher by 3.5%, which included an approximate 88-basis-point negative impact from new generic drugs compared to a 924-basis-point negative impact from new generic drugs in the prior year's third quarter. Pharmacy same-store comp scripts were up 70 basis points, primarily due to an increase in flu shots. Adjusted EBITDA in the quarter was $282.3 million or 4.4% of revenues, which was $13 million lower than last year's third quarter of $295.3 million or 4.7% of revenues. Prior year adjusted EBITDA included an $18.1 million benefit from the settlement of interchange fee litigation. The current quarter's results were primarily driven by an increase in pharmacy gross profit, driven by script count growth and generic purchasing efficiencies, as well as strong expense control, offset by a decrease in front-end gross profit. Front-end gross profit was impacted by a heightened promotional environment in the quarter. Net income for the quarter was $71.5 million or $0.04 per diluted share compared to last year's third quarter net income of $61.9 million or $0.07 per diluted share. The improvement was driven by lower interest expense and lower lease termination and impairment charges, partially offset by a higher LIFO charge of $25 million and a reduction in adjusted EBITDA. Diluted earnings per share were negatively impacted by $0.03 due to the redemption of the company's Series G and Series H 7% PIK Convertible Preferred Stock, back on September 30, as was previously announced. Total gross profit dollars in the quarter were $10.7 million lower than last year's third quarter and 72 basis points lower as a percent of revenues. Adjusted EBITDA gross profit, which excludes specific items, primarily LIFO and wellness+ revenue deferral, was favorable to the prior year third quarter by $8.9 million and lower by 40 basis points as a percent of revenues. Pharmacy gross profit dollars were higher, however, margin rate was lower. Pharmacy gross profit benefited from new generics, lower product acquisition costs, partially offset by continued pharmacy reimbursement rate pressure and cost increases on certain generic drugs. Front-end gross profit dollars and rate were both lower. Front-end results were negatively impacted by lower sales and higher markdowns as a result of the previously mentioned competitive environment. Selling, general and administrative expenses for the quarter were higher by $20.1 million and 17 basis points lower as a percent of revenues compared to last year. Adjusted EBITDA SG&A dollars, which excludes specific items, were higher by $21.9 million but 11 basis points better as a percent of revenues compared to last year. The increase was driven by last year's interchange fee litigation settlement, wage and benefit increases, partially offset by our various expense control initiatives. FIFO inventory was higher than last -- was higher than the third quarter of last year by $88.7 million, driven by higher pharmacy inventory inflation. Our cash flow statement results for the quarter shows net cash from operating activities as a source of $247 million as compared to a source of $269 million in last year's third quarter, with timing differences causing variances in accounts receivable, accounts payable and other assets and liabilities. Net cash used in investing activities for the quarter was $97.4 million versus $96.4 million last year. During the third quarter, we remodeled 94 stores, relocated 4 stores, and closed 9 stores. At the end of the third quarter of fiscal '14, we have completed and grand reopened 1,117 wellness stores. Front-end same-store sales in the Wellness Stores exceeded the non-Wellness Stores by 320 basis points, and script growth in the Wellness Stores continues to improve and exceeded the non-Wellness Stores by 140 basis points. During the quarter, we repurchased, in full, $21 million of 7% Rite Aid Lease Management Company preferred stock, which had been classified in Other noncurrent liabilities. This amount is reflected under financing activities on the cash flow statement. Now let's discuss liquidity. At the end of the third quarter, we had $1.1 billion of liquidity. We had $590 million of borrowings outstanding under our $1.795 billion senior secured credit facility, with $88 million of outstanding letters of credit. Total debt, net of invested cash, was lower by $44.1 million from last year's third quarter. Our leverage ratio, defined as total debt less invested cash over LTM-adjusted EBITDA, improved to 4.5x from 5.6x as compared to the third quarter of fiscal '13. Now let's turn to fiscal '14 guidance. We updated our guidance based upon the anticipated benefits of our wellness remodel program, customer loyalty program and other initiatives to grow sales and drive operational efficiencies. We also considered cycling the scripts from the Walgreens-ESI dispute, as well as planned wage and benefit increases. The revised guidance also reflects continued reimbursement rate pressure, more drug cost increases than expected, and a significantly lower benefit from new generics, as the vast majority of the new generic wave is in the company's run rate. We expect a soft flu season as compared to last year, and the current competitive environment to remain promotional. The company expects total sales to be between $25.3 billion and $25.425 billion and expect adjusted EBITDA to be between $1,250,000,000 and $1,280,000,000 for fiscal '14. Same-store sales are expected to be in the range from an increase of 35 basis points to an increase of 85 basis points, which reflects the anticipated negative pharmacy sales impact of approximately 240 basis points from new generic introductions and continued reimbursement rate pressure. We expect a fiscal 2014 earnings range of net income of $204 million or earnings per diluted share of $0.17, to net income of $259 million and earnings per diluted share of $0.23. The range of guidance is primarily driven by our same-store sales range and pharmacy margin. Our fiscal 2014 capital expenditure plan is expected to be higher, spending $415 million, with $175 million allocated to remodels and $80 million for file buys. We are planning to open 1 new store, complete 14 relocations and to remodel 400 Wellness Stores in fiscal '14. We expect to be free cash flow positive for the year, with a range of $250 million to $300 million. We expect to close a total of 35 stores, of which the guidance includes a store lease closing provision for 15 stores, with the balance closing upon lease expiration. We have closed 29 stores through the third quarter. This completes my portion of the presentation, and I'll now turn it back to John. John T. Standley: Thank you, Frank. We're pleased with our results for the third quarter, and I wanted to take a moment to thank the entire Rite Aid team for their hard work. We delivered solid results despite the headwinds that we anticipated for the second half of the year, and that says a lot about our associates' commitment and ability to execute our game plan and take great care of our customers. That concludes our prepared remarks for this morning. We will now open the phone lines for questions.

[Operator Instructions] Your first question comes from the line of John Heinbockel with Guggenheim Securities. John Heinbockel - Guggenheim Securities, LLC, Research Division: So a few things. John, in light of recent developments in the sector, do you guys -- is doing something with regard to generic purchasing economics, is that a higher priority given that your competitors have made moves? Or you don't really think that's a big deal competitively? John T. Standley: John, honestly, it's something I think we've said it all the way along. If something -- if we could find someone who is the right strategic fit for us, it might make sense for us to go down that road. But I think it's got to be the right situation for us to do it. John Heinbockel - Guggenheim Securities, LLC, Research Division: But it's not a greater priority today than it was a month ago? John T. Standley: Well, it's something we -- again, we've looked at carefully over a period of time. So it's not that we haven't been thinking about it. It's -- so it's been on our radar and continues to be on our radar. John Heinbockel - Guggenheim Securities, LLC, Research Division: Okay. So let me shift gears, then, a little bit, maybe on the GNC, the expansion of that relationship. So two things. You say at least 300, is there a cap in terms of the most you can do? And then secondly, outside of just more stores, is there anything else that is included here that wasn't before? Like, for example, I don't think you sell GNC products on your website. Could you do that going forward? Kenneth A. Martindale: First off, John, we don't have a cap on the stores. So as we continue to remodel stores and take a look at what we're doing, we can expand this even further if we want to. And both companies would be open to that. So I think we're looking at that. The website is a little problematic. They've got some restrictions on their side that makes it a little challenging for us to put it on our website at this point. But we are working through some of those issues, and at some point, we may be able to. John Heinbockel - Guggenheim Securities, LLC, Research Division: Is there anything else in terms of product that you didn't previously get in the stores or it's just really the number of locations? Kenneth A. Martindale: There is nothing specific on products at this point. We're working on a couple of options there, but I think the bigger issue is, we've kind of rejuvenated the efforts to grow this business together. I think we were maybe a little distracted with some of the turnaround stuff we were working on. And they were expanding and doing a lot of things internationally. And we spent a fair amount of time together going through this, and I think we're both very committed to building this to even a stronger relationship than what we have. So it's going to be a very big part of our business going forward. John Heinbockel - Guggenheim Securities, LLC, Research Division: All right. And one last thing for you, Ken. If you think about the promotional environment, what do you do tactically here, within the construct of wellness+, the loyalty program? Do you do more plus ups, you accelerate that in the short run? Or because wellness+ is really more geared over the long-term, you don't really do that and kind of let the promotional environment just kind of run its course? Kenneth A. Martindale: Well, ideally, we'd let the promotional environment run its course. But at the same time, we need to stay competitive. And I think we've said before that we don't want to be irrational, but we're going to make sure that we're competitive in the marketplace. And so we stepped up our external marketing a little bit and put a little hotter deals on the street. So we'll continue to do that. But I think what wellness+ gives us is the opportunity to do some things directly with the consumer. And we're focusing very hard on that. The first couple of years was all about building a good strong base and trying to lock in some of those consumers from a loyalty perspective. And now we're starting to talk to a much more -- on a personalized basis, tailoring a lot of the offers to them. And so I would expect that we're going to do a lot more of that over the next couple of years. And the stronger that, that gets for us, the less we need to rely on the promotions that we run.

Your next question comes from the line of Mark Wiltamuth with Jefferies. Mark Wiltamuth - Jefferies LLC, Research Division: You had some comments that the flu looked like it might be a little softer this season. How big was flu in that fourth quarter comp? And did it help your margins in that fourth quarter period? Frank G. Vitrano: Mark, last year, fourth quarter was very strong. It kind of started in December and then probably peaked in January. And if we look at the benefit on the pharmacy side, as well as the front-end side, it was probably -- it was clearly a benefit on the margin, probably to the tune of about $20 million last year. Mark Wiltamuth - Jefferies LLC, Research Division: Okay. And then, just a little more color on the front-end margin weakness you had in this quarter. Was this really just competitors getting a little more aggressive with their circulars? Or was it more reactionary in what was going out there category by category? Kenneth A. Martindale: It's primarily just the competitive environment. Again, like we said with John, we didn't want to be irrational in responding to this stuff, but, clearly, we want to stay competitive. And so we heated up the ads that we had on the street and there's a little bit of margin impact there.

Your next question comes from the line of Robert Jones with Goldman Sachs. Robert P. Jones - Goldman Sachs Group Inc., Research Division: Just -- actually, I just wanted to go back to the trend of channel participants aggregating generic purchasing. I'm wondering, one of these JVs has obviously been in place for the better part of a year. We've seen some other announcements recently. Have you seen a change in the competitive pricing environment yet? Or if it's too early, I guess, do you anticipate these joint ventures resulting in a noticeable change in generic pricing? John T. Standley: The only -- I guess, the only kind of anecdotal comment I could make there is there are significantly more Med D preferred networks out there. So that may be a place where this is maybe showing up over time. Other than that, I mean, we're seeing, as always, a significant amount of reimbursement rate pressure. But it's not different than it has been, probably. Robert P. Jones - Goldman Sachs Group Inc., Research Division: Great. I guess, just related to that topic, as somebody who still continues to buy their generics direct. As you evaluate these different scenarios, and these joint ventures have obviously taken a couple different forms, is purchasing your own generics still a -- is it still a key initiative for you guys or is that something that you would also reconsider if the opportunity was right? And then just lastly, around that, if you could help us get an idea of how much working capital today is tied up from you guys actually purchasing your own generics? John T. Standley: So I guess, a couple of things. What we've pretty much said all the way along, because this activity has been going on in the marketplace over now a few years, and we have always been very open-minded to do what we think creates the most value here for our patients and for our shareholders. And so we've kind of stared at this pretty carefully over time. And it really comes down to if we can find, again, somebody who's really the right partner and strategic fit for us, then there may be something that makes sense for us. Otherwise, it is pretty strategic and important to us to maintain control over purchasing generics because it is a very key part of our business.

Your next question comes from the line of Lisa Gill with JPMorgan. Lisa C. Gill - JP Morgan Chase & Co, Research Division: Frank, I just wanted to follow up on one of the comments you made around generic purchasing, and that, in the quarter, you saw better generic purchasing efficiency. Can you help me to understand what that entails? John T. Standley: Yes. This is John. It's really good efforts by our team in the marketplace to purchase drugs at the best cost we can. So we've made some savings that helped us offset some reimbursement rate pressure. Lisa C. Gill - JP Morgan Chase & Co, Research Division: Okay, great. And then, there's obviously a lot of talk about the Affordable Care Act and what networks will look like. And just from a cost perspective, more narrow networks going forward. John, are you having any discussions with any of the managed care players or others around narrow networks as we move into '14? John T. Standley: Yes, we are. And honestly, it's an ongoing drumbeat. It's really -- it's almost -- we actually are in a number of narrow networks today. It's really going to be around what the uptake is on those narrow networks because we've honestly participated in a number of narrow networks for many years. And it's going to be interesting to see if consumers or employers really move strongly in that direction here as we watch kind of what goes on here through selling season and obviously, enrollment in Med D. Lisa C. Gill - JP Morgan Chase & Co, Research Division: All right. So basically, you're saying, at this point, though, the number of narrow networks, has that also increased? So there's 2 things to watch, right? The first would be the number of narrow networks hereafter? And then secondly, the patient adoption, is that... John T. Standley: Yes. I think that's right. And I think -- from what I can see, there are more narrow networks out there today than there were 2, 3 years ago. Lisa C. Gill - JP Morgan Chase & Co, Research Division: Okay, great. And then if I can just squeeze one last one in around the Affordable Care Act. I think on the last call, we discussed the fact that your stores are in pretty good locations around the Medicaid population. Can you maybe just talk about any updated thoughts around capturing incremental scripts for Medicaid, because it looks like that's primarily where the expansion will be in 2014? John T. Standley: Well, right now, what we can see is that enrollment activity has been pretty slow so far. And even for people who may be Medicaid-eligible, it's been moving fairly slowly. But as we've mentioned before, we do have -- in 1,000 stores today, we have independent licensed insurance agents in those stores, helping people evaluate whether they're qualified for a subsidy or Medicaid or help them find private insurance. So we're trying to engage with consumers right at the store. We have lots of materials and information in our stores to help consumers. We have a good tool on our website that you can connect to, to help a consumer evaluate where they might come out here or qualify for Medicaid or a subsidy. So we're really working it on the consumer side, I think, as -- probably, as good as we can. And we have to kind of see how it works from there.

Your next question comes from the line of Edward Kelly with Crédit Suisse.

It's actually Judah on for Ed. I just wanted to go back to the guidance a little bit. Frank, you have a good list of what's contemplated in your guidance, but can you tell us kind of what's changed or help us understand what's changed from kind of when you gave guidance after Q2 to Q3? Which of those items have kind of changed in your model? Frank G. Vitrano: Yes, I would say -- I mean, we talked about a couple of things. Obviously, the flu comparison, we knew about that kind of going into the guidance. And as we have talked about it in the last call, we recognized that the back half of the year was going to be softer than the front half of the year. Obviously, we also knew about the cycling of the generic wave. That certainly wasn't new and we had contemplated that in the guidance. Two, really, pieces of new information here is the front-end promotional -- the front-end promotional environment is greater than what we had anticipated, and we saw a piece of that in the third quarter. And the other piece is, we've seen a higher degree of price increases for generics than what we had anticipated. So those are some of the key factors that are kind of baked into the numbers here. John T. Standley: I think it's mostly a lot on the upside. I mean, honestly, third quarter came in pretty solid, probably even a little better than we expected. But with flu behaving the way it is, with the promotional environment that we're sort of staring out, looking at some of the cost increases coming down the pipe here on the generic drugs, it feels like the up on this guidance may not be as strong as we thought.

Okay, that's helpful. And just touching on November sales. If we strip out flu from the comp script count, it looks like the underlying script count slowed a bit from kind of the prior months. Is there any update you can give on how things are trending now? Or if that may have been an anomaly in November? John T. Standley: Yes. We definitely -- I think that's an accurate statement. We kind of got around, I think, some of the cycling on the Walgreens-ESI. We did see script count slow down. If you took out flu shots, our growth in immunizations, we definitely slowed down a bit. That slowing trend has continued into December. Flu is really almost nothing out there compared to where we were a year ago at this time on flu. So it's kind of -- it's going to be a drag, it looks like to us, which is, again, some of the thinking that went into the guidance. So where we sit right now is script count is running behind a year ago.

Your next question comes from the line of George Hill with Deutsche Bank. George Hill - Deutsche Bank AG, Research Division: Most of my questions, I guess, have been touched on. Maybe just 2, briefly. Just from the increased promotional environment, on a year-over-year basis or a sequential basis, is there any way that you can kind of quantify that and quantify what expectations around spend might look like going forward? John T. Standley: When you say commercial environment, are you talking about, I'm sorry? George Hill - Deutsche Bank AG, Research Division: Promotional. John T. Standley: Oh, promotional. Okay, I'm sorry. In terms of year-over-year, we saw some impact, certainly, in the margin for this quarter. We think there's some potential it'll have a little impact on the fourth quarter. It's hard to know. I don't know if I could give you exact insight as to how long that continues. It does tend to come and go, so somebody will kind of get aggressive and then they'll see the impact on their financials. After a while, they'll take their foot off the gas and things will settle down a little bit. I think it's kind of -- but I'm not sure how long the cycle will last this time. George Hill - Deutsche Bank AG, Research Division: Okay. And then maybe just on scripts, I guess. Can you talk about trends with 90 days at retail and what is your kind of 90-day at retail script dispensing look like? John T. Standley: I think the trend continues to grow. My reaction is, kind of looking at our data versus competitors, it's probably growing a little bit more slowly for us than what I see maybe being done at a couple of our competitors. Some of that, maybe just philosophically, I guess, the way we're sort of approaching it maybe versus the way some others are. So it is increasing, but not at the same rate or impact levels that I see at some other companies.

Your next question comes from the line of John Ransom with Raymond James. John W. Ransom - Raymond James & Associates, Inc., Research Division: Longer term, could you speak to your opportunity with your real estate, particularly, say, the bottom 30 stores? I've got the flu. John T. Standley: Get a script. I was going to say get a script at Rite Aid, would you? We're going to continue to work with that group of stores. We've done a couple of different things we talked about over time. We've worked with some value concepts which, honestly, we continue to make some progress with, that we're -- I think we'll continue to work with in the future. Some of them are just getting better by overall virtue of the strengthening of our business. As our brand is recovering here, we've made some headway. I think that's helped some of these stores. And there, in that bottom 30%, some of them are real estate issues, as you talked about. Some of them -- there are some other things that we can do to help them. So I think we just continue to sort of gradually work our way through some of those. I think the bigger point probably is that we're kind of at this transitional point in our company. It's been turnaround, turnaround, turnaround talk for a long time. And I think we're finally kind of getting to that point where we have enough free cash flow and enough momentum in our business, where we're really starting to think about how does this company really grow over the long-term, which is certainly a lot more fun to work on than some of the other stuff we had to go through over the last 5 years. And so now we're really starting to look at that real estate portfolio in a different way, and start to think about how maybe some of those stores really maybe need to get relocated or maybe some of those stores are in markets where we really need to grow the store count in those markets to really get the proper penetration to be successful in those markets. So I think there's some additional opportunities for us to bring to bear over the next few years in some of those situations that could help really change the trajectory of our company. And that's pretty exciting and fun. John W. Ransom - Raymond James & Associates, Inc., Research Division: Do you think, from an outsider perspective, when could -- maybe a third leg of your real estate growth, when could that be evident to the numbers, do you think? John T. Standley: Well, I think it's gradual. I think you'll just see continued improvement over time. But as we -- we've got another, I think, solid 24 months of store renovations in front of us. But as we come through that cycle, I think you'll see our relocation and that new store activity pick up. And that will address some of those issues that you're talking about. John W. Ransom - Raymond James & Associates, Inc., Research Division: Okay. And then secondly, I know you touched on this in other ways, but on the February comp, what is the effect of flu on script comps? I know you gave a dollar number, but what would you say the script number looks like in 4Q, if the flu holds where it is? John T. Standley: We lost him. We were dwelling on that, trying to see if we can come up with a quick answer but I'm not -- but we didn't.

Your next question comes from the line of Karru Martinson with Deutsche Bank. Karru Martinson - Deutsche Bank AG, Research Division: When you guys look at the environment for file buys, I mean, what are you seeing? It seems like you've accelerated that a little bit, and what's the opportunity there? Frank G. Vitrano: Karru, that's one that we continue to look for opportunities to be able to do more file buys. And what we're finding is there are more opportunities. We increased our expectations for the year from $65 million to $80 million. And we're pretty active in the marketplace, knocking on doors, looking to talk to independents that are willing to sell here. And I think it's -- there's still a lot of opportunity here. Karru Martinson - Deutsche Bank AG, Research Division: And just a follow-up on the real estate question. I mean, given the outperformance of the Wellness remodels, what do you feel is kind of holding back accelerating that program? John T. Standley: Well, I think we talked a lot about a couple -- I mean, Ken said it nicely today, I thought. One is, the format continues to evolve, so -- and we're excited about the new attributes that we keep bringing to the format as it continues to develop. So that's a piece of it. So innovation, I would say, is a piece of it. Part of it is just, again, we talked a lot about our ability to consistently execute it. It is a very significant effort to convert to a Wellness Store and we want to do it right and come out of the blocks with a really great store. So I think that's certainly a piece of it. And we continue to just think about capital and how much we want to invest. So those are all the dynamics that we always kind of look at. Karru Martinson - Deutsche Bank AG, Research Division: All right. Just lastly, you guys have come a long way over the last couple of years, and yet, the rating agencies still -- I think Moody's still has you as a Caa2 on certain parts of your cap structure. I mean, what are they looking for in terms of making the rating reflect where your credits metrics are today? Frank G. Vitrano: Yes, we continue to talk with the rating agencies, updating them on our progress. There has been movements both on S&P and Moody's. Obviously, we'd like to see continued progress there. But what they're looking for is continued sustainability on our progress in growing EBITDA and becoming less leveraged. I mean, those are, really, the 2 metrics they're looking at.

Your next question comes from the line of Karen Eltrich with Mitsubishi.

's A couple of questions. With regards to remodels, as you employ this program, how many stores have you looked at that you think have the potential to be 24-hour? How many stores can you actually add drive-thru? And are you still deploying the discount store format? John T. Standley: So let me make sure I got the third -- drive-thrus, we're not adding a significant number of drive-thrus if the store doesn't have it. Oftentimes, it's hard to add it. I mean... Kenneth A. Martindale: For a remodel. John T. Standley: Yes, for a remodel. Most of our free-standing stores, they already have it. If you're in line, it's pretty hard to tack one on, in most instances, unless you're on the end of a shopping center and there's enough room to really put it in. So not a huge number of additional drive-thrus. In terms of 24-hour stores, we continue to look at that pretty strategically. We want to have, in key markets, a network of 24-hour stores. And I think in locations where we believe there's real business for a 24-hour store, we're also looking at that pretty carefully. So I don't know if I have an exact number for you, but you'll see a few more, but it won't be thousands.

Okay. And what are your guys thoughts on strategic vision with regards to walk-in clinics? Because that seems to be a big trend within the industry. John T. Standley: I think it's been an interesting process or -- to watch that business, to watch that business evolve. In the early stages, it really looked like a hard road to sort of go down. And as I think that model has developed, as Walgreens and CVS and others have built networks of these things and as we watched changes in health care occurring, as an outsider looking into that business, it looks like a business that could do well over time. And the real question is, how does it sort of fit into the overall sort of pharmacy model. And I think part of that depends on what you're trying to do. If you're focused on just general health care or trying to be a health care destination, I don't think it's a bad offering to have in the store. Our focus has really been a little bit on -- or a lot on our best patients, polychronic patients. And a lot of the efforts and energy that we put in have really been around that patient base. And one of the questions, I think, that's going to play out over time is how these clinics work for those types of patients.

Okay. So in other words, whether or not they're profitable patients. John T. Standley: Well, it's really -- it's not a question of whether or not the clinic patients are profitable patients. They may be profitable for the clinic. The question is how integrated -- other than getting an acute script, how integrated is it into the overall pharmacy model. And I think there's some interesting things being done in the space with that today that probably makes that model may be even more compelling than it was a few years ago.

Great. It actually leads over into my next question with wellness+. You talked how you're kind of entering the next phase with regards to data mining. What are you doing in terms of crossover, in terms of being able to, when you have the strong front-end customer, getting them into the pharmacy? What kind of information are you getting that is kind of facilitating that process? And what is your current penetration of wellness+ that are shopping both sides of the store? Kenneth A. Martindale: Well, in shopping both sides of the store, what we see is that if we have a good pharmacy patient, they almost always shop the front-end of our store. So our real challenge is to work on the folks that are shopping primarily the front-end or only the front-end and move them to the pharmacy. And we've been working on that initiative for a number of years. And I think what wellness+ does for us is it gives us the opportunity to more closely track these folks and hopefully, over time, improve that ratio. What we're doing with these folks, we've segmented them into very specific customer segmentation. And I don't really want to get too deep into what we're doing, but we're focusing on 6 different groups of customers, and those 6 groups shop our stores, both front-end and back-end, very differently. And so that's kind of the first level of our work here. And we're working pretty diligently to understand those groups of customers and move them around the store in ways that drives more business for us.

Your next question comes from the line of Carla Casella with JPMorgan. Paul A. Simenauer - JP Morgan Chase & Co, Research Division: This is Paul Simenauer on the line for Carla Casella. I just have a few questions. First, how's the promotional environment been so far in December, and does the shortened season this year help or hurt margins? Kenneth A. Martindale: The promotional environment, I would say, is similar to what it's been the last couple of months. It's still probably more aggressive than it has been. I don't know -- I mean, from a margin perspective, if you're talking about a gross margin percentage, I don't know that the shortened season has any impact. Where it does impact, I think, all retailers, is that we have 1 week less, basically, of selling season. And what it looks like is happening is that, that week, we lost a lot of that just because there wasn't a week and we're not seeing a tremendous amount of uptick after that week. So it's kind of steady-state, like it would have been for quite a number of years, but we lost 4 or 5 real strong selling days at the start of the season that we probably won't get back. Paul A. Simenauer - JP Morgan Chase & Co, Research Division: Got it, got it. And I just want to make sure of one thing, I'm not sure if you mentioned this earlier. Did you guys -- I want to check if you have the number for the impact on the front-end gross margin this quarter from promotions versus the mix shift. I'm not sure if you have that off-hand. Kenneth A. Martindale: I don't think we have that. I would tell you that it is both of those things. One of the real anomalies in the last quarter, looking at a year ago, was battery sales. And it sounds kind of crazy, but when we have an event like the hurricane, what happens is everybody comes in and buys that product. They buy it all at full retail. And so clearly, we don't have that very often, and you've got some of those kinds of things. You've still got the consumer a little bit slow, so there's a number of factors that are influencing it. I don't know that we have a breakdown of exactly where the margin came from, but it's really both. You've identified the 2 issues.

Your next question comes from the line of Lee Giordano with Imperial Capital. Lee J. Giordano - Imperial Capital, LLC, Research Division: Yes. It looks like private label ticked up as a percentage of the mix. Can you talk about the long term opportunity you see in private label? And are you using your loyalty program to kind of push customers to private label to help increase your margins? Kenneth A. Martindale: Long-term, there's clearly a lot of upside potential for us. I think one of the things that we've seen this year is our OTC categories, there was a number of large manufacturers over the last couple of years that left that category for a while because of some manufacturing issues they had. And many of them are coming back to the market, which impacts those particular categories, which are important categories to us. So we've seen a slowdown earlier this year. I think what you're starting to see is we're starting to get back -- around some of those things, we're starting to get some additional momentum back into private label. So I think we've still got a little while before we get through all those things, but you're going to see private label continue to accelerate. As far as pushing our wellness+ members to them, we really don't do that. Our brand has to stand on its own. And the way that we use the wellness+ program, it's really brand-agnostic, and it needs to be built upon what that particular customer likes to do and how they want to shop. And so we're working much more on trying to provide them deals and offers on products that they want to buy. And if they're a private-label shopper, private label would be in the mix. And if they're a brand shopper, for the most part, it will be brand awareness. So we're not really pushing them one way or another with private label.

And your last question comes from the line of Bryan Hunt with Wells Fargo Securities. Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division: I was wondering, first of all, if you could talk about SNAP payments in general, and whether you are starting to see an impact for the reduction in SNAP monies available to those consumers? And in general terms, can you talk about, maybe, what percent of front-end sales have been tied to SNAP historically? Frank G. Vitrano: Bryan, it's actually, for us, it's not a large piece of our business. It's less than 1% of our total revenues. And right now we really haven't seen any significant change. Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division: Great. Next, when you look at generics, this was kind of a lull in 2013. Can you talk about, in general terms, the potential reacceleration in generic -- transfer from branded to generic drugs in 2014? John T. Standley: I think we've talked about this as a little bit of a slower year. We did have some items in this fiscal year that were multisourced when they came out, which probably helped us a little bit. Next year, we will see a pickup, we think, in terms of the dollar value of brand drugs that become generic. Some of those we'll maybe single source as they come to market, but we definitely think the volume will be higher than it was in this fiscal year. Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division: In terms of the contribution to margins, is there any way you can maybe align it with what you saw in calendar 2012 or 2011? John T. Standley: Significantly less. It's not going to be anywhere near those magnitudes. Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division: Okay. And then my last question. You are, obviously, generating free cash flow and forecasting, and it looks like you'll generate free cash flow again next year. A nice luxury to have. Is there any way you can evaluate for us what your priorities are for free cash generation? Seems like a great opportunity to maybe put the accelerator down on remodels. John T. Standley: Well, look, we're obviously -- we'll give some guidance about CapEx for next year. As -- and we'll talk a lot about next year in our next earnings call, but we're looking very carefully into the renovation program. We've had some really good success there. We're excited about the progress that we're making, so that's certainly an area that we'll continue to look at for investment. There may be some investments we need to make to move our real estate pipeline along as we start to seed that again. So there could be some investments there. We have opportunities to invest in other things in our business to increase our efficiency. We're always looking at our systems and things that we can do kind of behind-the-scenes here from -- even into distribution and logistics, there may be opportunities for us to make our company more efficient and drive our business. So there's a number of different areas for us to look, and we're pretty excited about a lot of the opportunities that we're thinking about for next year and beyond. Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division: So it sounds like, just to sum it up, you're more growth and savings oriented as opposed to absolute debt reduction with excess cash flow at this point? John T. Standley: That would be me. Frank G. Vitrano: Bryan, there's always going to be some balance here ... there'll always be some balance. Clearly, we've been stepping up our CapEx program here. And next year, we'll step it up again. Not sure that we will spend all of our available cash on CapEx, so there clearly will still be a portion of that we'll use to pay down some debt. Bryan C. Hunt - Wells Fargo Securities, LLC, Research Division: Well, if that's the direction you're going, it's well deserved, given the progress.

Okay. This concludes our call. I want to thank everybody for participating. And happy holidays, everybody. John T. Standley: Thank you, all, very much. Appreciate it.

This concludes today's conference call. You may now disconnect.