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Walgreens turns to robots to fill prescriptions, as pharmacists take on more responsibilities

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Walgreens is using automation to fill more of customers’ prescriptions. Inside of a Dallas area facility, bright yellow robotic arms hold pill bottles up to dispensers, which release tablets like a carefully calibrated vending machine.

Melissa Repko | CNBC

NORTHLAKE, Texas — Bright yellow robotic arms are becoming a bigger part of Walgreens‘ workforce.

Inside of a large facility in the Dallas area, they fill thousands of prescriptions for customers who take medications to manage or treat high blood pressure, diabetes or other conditions. Each robot can fill 300 prescriptions in an hour, the company said — roughly the same number that a typical Walgreens pharmacy with a handful of staff may do in a day.

Walgreens Boots Alliance is opening the automated, centralized hubs to keep up in the fast-changing pharmacy industry. The pandemic has intensified the drugstore chain’s need to stay relevant as online pharmacies siphon off sales and more customers have items from toilet paper to toothpaste delivered to their doorstep. The global health crisis has also heightened demand for pharmacists, as hospitals and drugstores hired them to administer Covid vaccines and tests.

That has forced Walgreens and its competitors, CVS Health and Rite Aid, to rethink the role of their stores and pharmacists.

Walgreens’ new CEO, former Starbucks operating chief Roz Brewer, wants to make health care the company’s “growth engine.” It acquired the majority stake of VillageMD, a primary care company, and iA, a pharmacy and health-care automation technology company that is helping it build out the centralized hubs. It is exploring a potential sale of its U.K.-based Boots business.

By 2025, as much as half of Walgreens’ prescription volume from stores could be filled at the automated centers, said Rex Swords, who oversees facilities as Walgreens’ group president of centralized services, operations and planning.

That will free up more of pharmacists’ time to provide health care, Brewer said in an interview with CNBC’s Bertha Coombs.

“We’re doing all of this work, so that the pharmacist has an easier job, so that they can get back to being front and center, building a relationship with that patient and interacting the way they were trained — the work that they love to do,” she said.

Pharmacists will continue to fill time-sensitive medications and controlled substances at local stores as the company expands its use of robots.

Brian Tanquilut, an analyst for Jefferies, said the automation could help Walgreens focus on ways to differentiate from online pharmacies suh as Amazon-owned PillPack and Capsule, and CVS, which owns health insurer Aetna and pharmacy benefits manager Caremark.

“This is a complementary move to some of the health-care strategy they’ve laid out,” he said.

CVS uses robotics to assist in filling prescriptions in its highest volume stores, but through a spokesperson, the company declined to say how much of its overall volume is filled by automation.

Walgreens will share its fiscal second-quarter earnings on Thursday.

Pill bottles and caps move through a choreographed and highly automated assembly line in the Dallas area. Walgreens is building similar micro-fulfilment centers across the country.

Melissa Repko | CNBC

A glimpse of the future

The robot-powered center in Northlake, roughly 36 miles northwest of Dallas, offers a glimpse of Walgreens’ future. It is staffed by 220 workers, including a handful of licensed pharmacists.

Each day, about 35,000 prescriptions are filled at the Dallas area facility — but eventually that number will increase to as many as 100,000 daily, Swords said.

Over the next three years, Walgreens plans to grow to a total of 22 facilities that serve over 8,500 of the company’s nearly 9,000 stores. It has opened two others near Phoenix and Memphis.

Instead of getting filled by hand, pill bottles and caps move through a choreographed and highly automated assembly line.

Canisters of pills go into robot-powered pods at Walgreens’ automated facility in the Dallas area.

Melissa Repko | CNBC

A team of workers feed robot pods containers of pills. Each medication gets its own canister and pill counter. A yellow robotic arm grabs a labeled pill bottle and holds it up to the canister, which dispenses pills like a carefully calibrated vending machine.

Then, before the pill bottle leaves the pod, it get topped with a cap.

In the Dallas facility, the robot pods can dispense about 900 different medications. Some common medications are in multiple dispensers to keep up with the workload.

Pill bottles travel along the track. At one station, some get paired up with a patient’s other medications or the rest of his or her 90-day medication supply. Scanners read bar codes, so printers can prepare paperwork and bags that customers will later pick up.

Those prescriptions — now packaged in a bag — are ferried by Roomba-like rolling robots. The devices sort prescriptions and drop them into plastic totes that head to the same pharmacy location.

A worker places filled and packaged prescriptions on rolling robots at Walgreens’ centralized facility in the Dallas area. The robots help sort the prescriptions and drop them into plastic totes that head to the same pharmacy location.

Melissa Repko | CNBC

About 30% of prescriptions at the facility skip the automated assembly line, Swords said. Instead, workers manually prepare items like asthma inhalers, eye drops and temperature-controlled medications.

There are security and safety checks throughout the process, including pharmacists who verify the medications in canisters and pill bottles, electronic locks on the robot pods that can detect and stop dispensing if a canister is in the wrong spot, and zip ties on totes that transport the filled prescriptions to stores.

The facilities do not yet fill direct mail prescriptions, but that is on the program’s roadmap, Swords said.

More hands-on pharmacists

Trucks from AmeriSourceBergen drive the ready-to-pickup prescriptions to more than 500 drugstores across most of Texas, parts of Arkansas and parts of Louisiana — a radius of about 400 miles. The same trucks also deliver wholesale drugs to those pharmacies.

To customers, the change to automation would be hard to detect — aside from slightly different packaging.

For Walgreens, the investment could translate into cost savings and new streams of revenue. Walgreens President John Standley said at the company’s investor day in October that the micro-fulfillment centers will reduce the company’s working capital by $1.1 billion by 2025.

As more prescriptions get filled by robots, he said pharmacists can take on other duties that Walgreens can bill to insurers or customers, such as testing and treating medical conditions like strep or the flu and writing prescriptions for people at risk of HIV.

For example, as part of a pilot program, pharmacists in Ohio are counseling and managing care for patients with asthma and chronic obstructive pulmonary disease.

Rick Fernandez, a regional health care director for Walgreens in the Dallas area, said the pandemic underscored the value of pharmacists and how they can be used in smarter ways.

“It’s kind of dreary to be filling scripts all day long,” he said. “What we were hearing was pharmacy was more of an asset that people gave us credit for.”

Jefferies’ Tanquilut said the automation can reduce staffing needs and turn pharmacists into more hands-on medical providers. It’s not clear how that may play out — whether that will mean smaller pharmacy staff or a workforce that’s the same size or bigger, but with different roles. Another factor is state laws. Walgreens is urging state lawmakers to allow pharmacists to provide a longer list of health-care services.

The challenge, he said, will be convincing customers and insurers to pay — rather than expecting free advice.

“One of the key questions is ‘Are you getting paid for these things?'” he said. “The idea or the hope is that over time, there will be actual reimbursement for them providing that service to patients.”

Join us for Healthy Returns on Wednesday, March 30 to hear health care experts, including Walgreens Boots Alliance CEO Roz Brewer, discuss health tech investing, the drug market, health equity, wellness programs and more. Register here.

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Disney is raising prices, but this time, don’t blame inflation

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Another major American company is raising prices again, but this time, don’t blame inflation.

Disney is increasing the price on its streaming products and signaled that a price hike could be in the works at its theme parks as well. On Wednesday, the company said the price of Disney+ without ads is jumping $3 per month to $10.99 starting Dec. 8. Hulu with ads will increase by $1 per month to $7.99, and Hulu without ads will jump $2 per month to $14.99.

Then on Thursday, Disney Chief Executive Officer Bob Chapek indicated to CNBC’s Julia Boorstin that a price increase will likely happen at theme parks as long as people keep coming in droves.

“We read demand. We have no plans right now in terms of what we’re going to do, but we operate with a surgical knife here,” Chapek said. “It’s all up to the consumer. If consumer demand keeps up, we’ll act accordingly. If we see a softening, which we don’t think we’re going to see, then we can act accordingly as well.”

Instead of blaming the rising cost of materials, labor and gas, Disney is rationalizing the increases based on the consistency of the popularity of its products. Disney said Wednesday that Disney+ added 15 million new subscribers last quarter, blowing out expectations. It also said it expects further growth for core Disney+ (excluding India’s Disney+ Hotstar) next quarter beyond the 6 million it added in its fiscal third quarter.

Raising prices on the back of strong demand isn’t new for Disney. The price of theme park tickets has climbed for decades. During its most recent quarter, the company posted a 70% revenue increase in its parks, experiences and products division, rising to close to $7.4 billion. Per capita spending at domestic parks rose 10% and is up more than 40% compared with fiscal 2019.

Handout | Getty Images Entertainment | Getty Images

Disney strategically caps attendance at its parks, an effort that was borne out of the attempts to avoid crowding during the Covid pandemic. The move is a way to improve the customer experience. Additionally, the company has added Genie+ and Lightning Lane products, which curate guest experience and allow parkgoers to bypass lines for major attractions.

Beyond the parks, Disney annually asks cable TV providers to pay aggressive price hikes for ESPN because it knows there’s strong demand for its stable of live sports rights.

Disney+ first launched in November 2019 at $6.99 per month. About three years later, the price of the ad-free product will have risen 57%. The service now has more than 152 million customers.

Chapek has experienced his share of bumps in the road since taking over for Bob Iger as Disney CEO. But one thing hasn’t changed: consumers still seem to enjoy what Disney has to offer.

Correction: During its most recent quarter, the company posted a 70% revenue increase in its parks, experiences and products division, rising to close to $7.4 billion. An earlier version misstated the percentage and mischaracterized the dollar figure.

WATCH: CNBC’s full interview with Disney CEO Bob Chapek

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Disney streaming subscriber growth blows past estimates, as company beats on top and bottom line

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A performer dressed as Mickey Mouse entertains guests during the reopening of the Disneyland theme park in Anaheim, California, U.S., on Friday, April 30, 2021.

Bloomberg | Bloomberg | Getty Images

If Disney+’s subscriber growth is any indication, the rumors that the global streaming market is nearing saturation have been proven untrue.

On Wednesday, the Walt Disney Company reported that total Disney+ subscriptions rose to 152.1 million during the fiscal third quarter, higher than the 147 million analysts had forecast, according to StreetAccount.

At the end of the fiscal third quarter, Hulu had 46.2 million subscribers and ESPN+ had 22.8 million. Combined, Hulu, ESPN+ and Disney+ have over 221 million streaming subscribers. Netflix, long the leader in the streaming space, had 220 million subscribers, according to the most recent tally.

Disney shares rose more than 6% after the closing bell.

The streaming space has been in a state of upheaval in recent weeks, as Netflix disclosed another drop in subscribers and Warner Bros. Discovery announced a shift in content strategy. While Netflix expects subscriber growth to rebound, uncertainty has left analysts and investors wondering what the future holds for the wider industry.

Also Wednesday, the company unveiled a new pricing structure that incorporates an advertising-supported Disney+ as part of an effort to make its streaming business profitable.

During the fiscal third quarter Disney+, Hulu and ESPN+ combined to lose $1.1 billion, reflecting the higher cost of content on the services. Disney’s average revenue per user for Disney+ also decreased by 5% in the quarter in the U.S. and Canada due to more customers taking cheaper multiproduct offerings.

Starting Dec. 8 in the U.S., Disney+ with commercials will be $7.99 per month — currently the price of Disney+ without ads. The price of ad-free Disney+ will rise 38% to $10.99 — a $3 per month increase.

In addition, Disney lowered its 2024 forecast for Disney+ to 215 million to 245 million subscribers, down 15 million on both the low end and high end of the company’s previous guidance.

Disney had previously set its Disney+ guidance in December 2020 at 230 million to 260 million by the end of fiscal 2024. The company reaffirmed its expectation that Disney+ will become profitable by the end of its fiscal 2024 year.

Overall, Disney posted better-than-expected earnings on both the top and bottom line, bolstered by increased spending at its domestic theme parks.

Here are the results:

  • Earnings per share: $1.09 per share vs. 96 cents expected, according to a Refinitiv survey of analysts
  • Revenue: $21.5 billions vs. $20.96 billion expected, according to Refinitiv
  • Disney+ total subscriptions: 152.1 million vs 147.76 million expected, according to StreetAccount

Big quarter for parks

Disney’s parks, experiences and products division saw revenue increase 72% to $7.4 billion during the quarter, up from $4.3 billion during the same period last year. The company said it saw increases in attendance, occupied room nights and cruise ship sailings.

It also touted that its new Genie+ and Lightning Lane products helped boost average per capita ticket revenue during the quarter. These new digital features were introduced to curate guest experience and allow parkgoers to bypass lines for major attractions.

The company said it has been able to bring back in-park experiences such as character meet-and-greets, theatrical performances and nighttime events at Disneyland, which has allowed it to increase capacity at its parks, CEO Bob Chapek said during the company’s earnings call Wednesday. Disney has placed caps on attendance since it reopened after the initial round of pandemic closures in early 2020 and instituted a new online reservation system to control crowds.

“As it relates to demand, we have not yet seen demand abate at all and we still have many days when people cannot get reservations,” Christine McCarthy, Disney’s chief financial officer, said during the company’s earnings call. “So, we’re still seeing demand in excess of the reservations that we are making available for our guests.”

Per capita spending at domestic parks increased 10% during the most recent quarter, compared to the same quarter last year and is more than 40% higher than fiscal 2019, the company said. Occupancy at domestic hotels in the third quarter was 90%.

Chapek pointed to EPCOT’s new Guardians of the Galaxy Cosmic Rewind, the launch of the Disney Wish and the opening of Avenges Campus in Paris Disneyland as enhanced offerings for guests that have driven traffic and revenue to this division.

McCarthy noted that international visitors to domestic parks have continued to be slow to return. Traditionally, those parkgoers account for around 17% to 20% of total guests.

“We expect international visitation when its fully back to actually be additive to margins, because those guests tend to stay longer at the parks and they spend more money when they’re there, as well,” she said.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. Comcast owns a stake in Hulu.

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Serena Williams announces her retirement from tennis

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Tennis legend Serena Williams announced her retirement in a Vogue article published Tuesday.

“I have never liked the word ‘retirement,'” Williams wrote. “Maybe the best word to describe what I’m up to is ‘evolution.’ I’m here to tell you that I’m evolving away from tennis, toward other things that are important to me.”

Williams, who turns 41 next month, has 73 career singles titles, 23 career doubles titles and over $94 million in career winnings.

Williams is widely hailed as one of the greatest athletes of all time. In her Vogue piece, she noted that some of her detractors point out that she hasn’t won the most Grand Slam titles in women’s tennis history, however. 

“There are people who say I’m not the GOAT because I didn’t pass Margaret Court’s record of 24 grand slam titles, which she achieved before the ‘open era’ that began in 1968,” Williams wrote. “I’d be lying if I said I didn’t want that record.”

She said she will retire after the U.S. Open, which will run from late August into September. A victory there would tie her with Court’s Grand Slam record.

“I don’t know if I will be ready to win New York. But I’m going to try,” Williams wrote about the tournament, which is played in Queens.

She has counted sponsorships from companies including Nike, Audemars Piguet, Away, Beats, Bumble, Gatorade, Gucci, Lincoln, Michelob, Nintendo, Wilson Sporting Goods, and Procter and Gamble.

“I never wanted to have to choose between tennis and a family. I don’t think it’s fair,” Williams wrote. “If I were a guy, I wouldn’t be writing this because I’d be out there playing and winning while my wife was doing the physical labor of expanding our family.”

Williams focused on her family in the announcement, writing that her nearly five-year-old daughter wants to be an older sister. Williams is married to Reddit founder Alexis Ohanian.

“I have to focus on being a mom, my spiritual goals and finally discovering a different, but just exciting Serena. I’m gonna relish these next few weeks,” Williams wrote in an Instagram post Tuesday.

Professionally, she looks to expand Serena Ventures, a small investment firm of six people that was one of the first investors in MasterClass. Her firm raised $111 million in outside financing this year.

Williams wrote that only 2% of venture capital goes to women and that “in order for us to change that, more people who look like me need to be in that position, giving money back to themselves.”

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