Bausch Health Companies Inc. ($BHC)

Well, good morning, and thank you for joining us for our best fireside chat. My name is Scott Grabine, and I'm a health care analyst at Barclays, participating from Bausch today. We have Will Woodward and Garen Sarafian. Thanks so much guys for joining us, and great to see you down in Austin again.

Yes. Thanks for having us. It's a pleasure to be here.

Yes. So with 12 consecutive quarters now with growth in revenue and EBITDA, maybe we can start by just talking about what's worked so well for the company in general and more recently in particular.

Yes. Happy to talk about that. So we are extremely proud of our record of 12 quarters in a row of top line and bottom line growth, and we hope to continue that streak moving forward. We have been really focused on top line growth, even better bottom line growth and even better cash flow. That's the -- that's how we view the company. And so a large part of that has been to do with the performance, especially in our Salix and XIFAXAN business as well as our Solta business and also international. And so we can get into all of those when we talk today. I would start with Salix, especially. Salix has been also on a streak where it's been 9 quarters now with this quarter behind us of organic revenue growth, largely driven by XIFAXAN. XIFAXAN itself grew 21% this past quarter, which is fantastic, and we'll appeal that in a second. Salix as a whole grew 18% this quarter. I thought we were sitting here this time last year, 6% sales growth, I thought that was pretty good. 18%.

Yes. No, it's fantastic, and we should get into that a little bit because it's higher than normal, obviously, and there's a number of reasons why that should be. So XIFAXAN was 21% growth. And I would ascribe that to 3 factors. First of all, the volume growth in our remaining channels that we're in, which is Medicare, commercial managed care, not Medicaid, where we grew very solidly, about 6% on a TRx basis on volume and demand, which for us is the most important thing of all. Second is the usual year-over-year list price increases that you would expect to see, of course, every quarter, and then I mentioned that we were not in Medicaid anymore. As most of you know, we exited Medicaid and 340B in October of last year. And we expected sales to go to 0. They've actually hung around a little bit in a much lower basis. And those sales are higher quality in terms of the net realized price that is subscribed to them because we're not paying the rebates on the Medicaid anymore. So there's still a hunk of sales in Medicaid that have been hanging around for this quarter. When you combine those 3 factors, you get the 21% growth. We don't expect, again, that Medicaid piece to continue into the future.

Got it. Well, I'm sure we'll have a little bit more to say about XIFAXAN later in the program. I think Solta continues to also grow rapidly, right? I mean maybe we can unpack what's been driving that strength, particularly in Asia.

Yes, sure. Well, actually, I'd like to say a little bit more about XIFAXAN because it's just it's worth exploring a little bit more why it's been growing so well for 9 quarters at this past. And so certainly, the volume is and the demand is what it's all about. And why has that been doing so well? One is our consumer insights engine, which we've been talking about for a while. This is -- has been AI generated we've been using it since 2023. And like I said, since 2024, we've seen an unbroken streak of growth for Salix. And that allows us to surgically target prescribers for the product. We've also been focused for a little while now on new-to-brand prescriptions like new patients that are using XIFAXAN for their first time. That's been KPI for us has been very important. And in fact, our sales force is compensated on the amount of take-up we get on the new to brand prescriptions. It was 3% this quarter when you take when you exclude the value of Medicaid. And so we think that's great, and that's very important to us. And in fact, since we've been focused on new-to-brand prescriptions, we've generated over 700,000 of such prescriptions. And between that and the Consumer Insight Engine and just our continued focus on direct-to-consumer advertising into physician targeting, we think that's allowed that consistent growth inside facing that we hope to continue for the rest of the year.

It's amazing that such a mature product and maintain that growth trajectory?

Yes. No, we're very proud of it.

Awesome. And so pivoting on to Solta. Another pretty spectacular grower. That market is a little bit different for some folks, myself included, and it would be great to get your perspective on how that business operates and the stability and the sustainability of the Asian markets?

Yes. So absolutely, it's Solta, I would say, is 1 of our pillars of long-term growth for the company. It's unlike Salix and XIFAXAN, there's no notable LOEs. We expect it to continue to grow strongly for the foreseeable future. We do think it's capable of growing double digits for a while now. And obviously, with a lot of growth in Asia, certainly, but we also have white space in North America, the U.S. EMEA that we continue to see growth in and we want to expand that further and take more space in those areas. So obviously, a big part of what happened this quarter was our Cibo acquisition, right? And so it's worth spending some time on that. So as you know, in Q4 of last year, we acquired our Chinese distributor of Thermage and other treatments in China, which was Chiba, we acquired it on December 1, and we've been integrating it ever since to good effect. And you saw that in Q1 numbers where I believe it is over 120% growth in China, 52% volume growth in China. APAC as a whole was 22% organic growth. And a lot of that did have to do with the Chibo acquisition. So why did we do Shiva? There are several reasons. Number one, in acquiring a distributor, it gave us an important area of control over a part of our value chain, which is the distribution piece of it. And now we can interact directly with our customers, and it can be a 2-way street of knowledge sharing and communication promotion, things like that. That's number one. Number 2 is the fact that because now we effectively eliminated the middleman, we can take the economics of that middleman and incorporate them in our pricing effectively. So we're now selling at the retail price to our to our consumers and keeping that margin less, of course, the cost to operate the distribution.

That makes sense. I mean we get a lot of questions on how should we value Salt. This is a -- it's a device company, but it's thetics has a large concentration in Asia. I mean how should we think about valuation of that business?

Yes. And then that's very important, again, considering as you think about what this company will be like when we lose XIFAXAN at some point, Salt will be 1 of the pillars along with international, which we'll talk about later. Solta, I would say, again, it's very durable, low LOE, not a lot of investment needed. We are putting in the investment, but it's not incredibly CapEx heavy. It doesn't have a lot of investment we're appropriately investing in sales, advertising and promotion as a R&D to keep the pipeline fresh and we're also considering, of course, any business development that might make sense for us as well. So when you factor those things in, let's start at the top line, top line. We are about 80% in Asia. It's a little higher this quarter because of the onetime Shiba benefits. But strong presence in Asia. Korea has done well, it was 17% growth in Q1. China was massive. We do expect that to continue to grow for the reasons I said, beyond for Shiba. And then we expect a lot of white space, like I said, in North America and EMEA, among other areas. And so as we continue to promote the product and invest in improved product offerings that that should continue to grow, like I said, we're hoping for double-digit growth on the top line. And again, without the LOEs. You have the appropriate promotion, the advertising, the selling and the R&D, but -- and when you're left, you still -- you have a very profitable business. And you find profit -- you have profitable margins, both on the capital piece of it, which are the machines that are installed at the customers. And then those machines we used to sell through -- or those customers, in turn, sell our consumable products to the ultimate patients as treatments. And they're highly incentivized to do that. So you have these profitable installed base of machines, and then you have the profitable tips, which are used in each of the procedures by customers. So it's a razor-razor blade model where the actual razor is also profitable and the raise of ways are very profitable. You have about 75% split on the consumables, 25% on the machines. And once you install the machines that are just going to have recurring revenue through each of those machines with hopefully more and more tips to more and more customers. And so that's the basis for like the recurring nature of the revenue and the profitability that drops, so we saw 40% operating income last year. Hopefully, that will stay in that ZIP code as we grow with more profitability, but at the same time, we invest appropriately. And then I mentioned the CapEx is quite low. And so when you combine those together, you have a lot of cash flow generated from this business. And so when you take that out and you apply all of that, we think it's a good multiple people should be thinking of for this business. We've said mid-teens on an EBITDA basis could be appropriate even.

That's really helpful. I mean, I know back when the company had filed an orotate ethene go the multiples were pretty robust. And if anything, the cash flows have been been stable and growing. So the performance has certainly been impressive.

Thank you. And since then, I would just like to add that we -- that ThermagFLX received regulatory approval in China, which it didn't right at the time in the S-1. And then we -- of course, we acquired Shiba. That's another step function of of improved profitability and growth as well.

Light of control your own destiny in China.

Correct.

Excellent. So maybe we mentioned organic. Sales were flat there, but there's probably a little bit more to impact than just the flat organic sales there.

Yes, for international?

For international, yes.

Yes. So international, like I said, along with Salt is 1 of our pillars of growth and value in a post-SIFI world. And so we love our international business. It's profitable. It's extremely diverse. It's diverse in terms of geographic areas, customers, brands, therapeutic areas, and they are all areas where we think we have a lot of value already. We're in highly growing areas of the world in Eastern Europe, Latin America. We have branded generics, which means there are products that are don't have LOE exclusivity on them. There's not the patent clips associate. They are available in generic versions. But the teams in those markets have built brands around these products. They promote these products. They have sales forces -- they have marketing and they're able to price accordingly for that. So we find it's a great business for the long term. We expect it to grow mid-single digits generally as a basis. And even though we saw puts and takes this time around, we overall, we do see lots of future in this business. I'm happy to go through the different components of it because -- Yes, if there are a couple -- I think Canada was an area where there was some movement this quarter. So if you could -- anything you want to call out there would be helpful.

So Canada is is something that we called out last year even as having a benefit that we had in Q1 of 2025 in terms of we sold more of our Wellbutrin product there, thanks to competitors having stocked out back in Q1 of 2025, we aren't able to lap that. We just didn't have the same competitor stockout situation we had this quarter in Canada that we had last year in Canada. Our promoted portfolio did grow 18% and we won't have those types of headwinds from prior year growth, onetime growth in the future. So we do expect growth to return to Canada going forward.And then just to round out the segment on the Europe side, on the EMEA side, we love the EMEA business. It's -- like I said, it's Eastern Europe. It's across multiple geographies and product areas -- it grew 3% on an organic basis, and that was across our 3 largest markets, which were Poland, which were Servian Montenegro and which were Russia, and it did very well. It was our 13th quarter of uninterrupted growth. for that business. And we expect to see further growth for the rest of this year going forward with about 30 new products that are coming online. And again, that's another important part about this international business. It does not require a lot of R&D or a lot of BD to add incremental products into it that will grow over time, when you start to stack them up the way we're starting to do so this year.

Awesome. And we'll touch on the Beauty in a second, but...

Can I just finish with Lat Am? So LatAm is -- it was flat from an organic perspective. On the 1 hand, especially in Mexico, we have a very strong, I would say, commercially available suite of products led by -- what's the name of the product -- that's done very well for the quarter. On the other hand, we did have a timing miss -- on the government side, when a tender we had 1 did not -- was not realized in Q1, we expect that tender to realize itself later in the year, and we'll see a benefit from that. And we're also rolling out cardiometabolic products this year starting last year, we continue to roll out this year, which will be another source of growth. So we expect to see growth in LatAm for the rest of the year and going forward as well.

Okay. Maybe we could just round out the business line with Diversified. I know diversified saw some organic declines based on the volumes in neuroscience. I like neuroscience is an area you recall that you've actually highlighted as a core competency for the company. So I don't know, is there anything you want to call out there? And maybe as a segue, talk a little bit about some of the business development initiatives that the company has been undertaking.

Sure, absolutely so neuroscience is a big part of our diversified portfolio. It makes up about 60% of the revenue of that segment. We do expect it to decline over time without any business development or pipeline products? And why is that? Because because wellbutrin, which is our flagship product, has been off-patent for many, many years and has already significant competition. It's hung around very, very well, but it does -- it has declined every year, and it did decline in Q1, which is part of the reason why you're seeing the volume decline. We've had Aplenzin, which is our second largest product in that space. That plane has done well However, we do expect to lose its exclusivity in July of this year, and that's factored into our guidance, of course. But that will be another downdraft for the back half of the year and going forward. And then we have a lot of other products which have lost their exclusivity and are facing downward pressure. Again, that's driving the volume decrease. And then I would just be remiss not to point out that we exited again, Medicaid last year that means that we're not selling through that channel, and that's further volume decrease. So that's why you saw the results you did in neuroscience. But to go to your question about why we think that could be a good opportunity for business development. We own the Wellbutrin space. It's performed way better than it should have considering losing its exclusivity. We have been promoting very well, we think Wellbutrin as well as the plans. And so we have a sales force in place. We know the space very well. We've done the regulatory work around keeping those products online. And so that's something where we could see some good opportunities in the area of BD in terms of neurology, where or it could be the right fit for a product or a business that we could take either from the near-term R&D perspective or for the commercial perspective, and that would lend itself very well to our neuroscience franchise. I think to the same logic could be applied to GI, again, with the knowledge that we have from -- certainly from Salix, from large ecosterol, which is now in Phase III trials. That's a prime example of the type of BD, we could certainly consider where it's a tuck-in. And it's near term, and we can guide -- we shepherd it through the remaining R&D processes and then launch it in the medium term, near to medium term. That's sica good template for the type of BD deal. We could certainly do dermatology and Solta could also be areas where we're focused on those indications. And again, we have the expertise in the R&D side and the commercialization side.

What's the market opportunity for loocostorol?

We haven't really talked too much about that. We just think it fits in very well into the space that we know about and we think the AH market could be good. But I appreciate the question on 2029. Fair enough. Well, I'm sure that people are going to be excited to talk about the next list of topics here. And a lot of these topics are somewhat in our swine, but -- maybe we can shift gears to Belco, my personal favorite topic. You can imagine we get all sorts of questions about BELCO, operations, valuation M&A monetization. Now I realize not the management team that runs that company, but as owners of that business, I would think you would have a very good perspective that you could share with us and with me. So high-level thoughts in terms of some of these matters would be really helpful for us.

Yes, absolutely. And we love the B&L business, and we are very excited by the management team we have in place and the good work that they're doing, where we fully stand behind their Investor Day projections that they made in November of last year. And we -- 1 of our corporate goals is to make sure that we give them every opportunity to realize that those projections and to help them along any way we can. I didn't want to go through a blow by blow of their different segments and performance.

Yes. No, just high-level observations because there are a lot of facets of the business for sure. So I know that like, for example, your business, like you put up $1 billion of cash flow I think are we at the precipice of seeing some real cash flow and some operating leverage at BELCO?

Yes. I think we are seeing definitely good progress from them, as you saw from Q1. And certainly, the goals that they put out there, we think we think are entirely realizable in terms of their -- certainly their top line, they've already shown that, and we've started to see already some margin expansion, and we look forward to seeing more of that. And I think by the time we get into '27, '28, we expect to be at those projections they put out there. And we think at that point, that's when we can start thinking about starting to monetize our investment in them. We've said all along, we expect in order to address our cap structure to get it to a somewhat more normalized level, we have to monetize assets and that the asset most likely to be monetized as our 87% stake in B&L, which, as of today, adds a lot of value to our balance sheet, but we're not getting necessarily the cash permit. They're keeping the cash to themselves, and which is absolutely fine because they're investing in their business. But our goal is to give ourselves the runway to monetize later rather than sooner that B&L stake when those objectives from their Investor Day last year are more fully realized when hopefully, the market will be giving them the credit they deserve for that performance and that at which point they -- we expect them to be substantially more value than they are today in terms of their share price. And then the -- the shares that are backstopping the debt we raised last year with you guys and the uncommitted shares that we still have of theirs, that will be worth more. And so it will be a win for us and all of our debt and shareholders when we do realize it.

Yes. I mean, I guess, again, bigger picture-wise, when you think about that ultimate realization event, do you think about that in like 1 fell swoop, do you think about that as like there are a number of different businesses operating surgical products, pharma and each of them has their own sort of nuances and growth opportunities and then as we think about the potential buyers of those businesses, competitors, private equity firms, I mean how do you guys think about the ultimate monetization? Is it like sort of 1 sort of target? Is it a moving -- a variety of different options? I mean any kind of high-level thoughts in that area would be helpful.

Sure. And the short answer is, we are open to lots of different options here. I don't think there's 1 size fits all. I think we'll see how things progress over the next few years and see what makes the most sense given the situation ahead and the opportunities at hand. The good news is, thanks again to the series of refis we did last year with some folks in the room. We're able to give ourselves that operating flexibility to get through 2028, assuming a 28 LOE on XIFAXAN, we can get through our 28 maturities, we believe between the over $1 billion of cash we have on hand the several billion dollars of cash flow we expect to generate in '26, '27 going into '28. We expect to get to our '28 maturities and then only '29 would we need to do something extra beyond just apply cash to our debt but all of that will give us time to -- time for B&L to perform immediate goals and time for us to figure out what's the best way to monetize, whether it's any of those options, whether it's an auction like what what we looked at a couple of years ago versus selling into the market over time versus some combination thereof.

Yes. It sounds like you want to keep your options open, which makes sense. Good segue into Sivan -- so in the most recent earnings call, I think the company largely maintained the party line about the LOE in January of 2028. That said, I know there are some potential wrinkles that could possibly change that timetable. And again, RECONNECT without going into too many nuances of the different changes that could take place, high-level thoughts on maybe what we could expect to see reasonably unfolding in 2026. And some of the things that may give you pause in terms of possibly adjusting that timetable to summary.

Sure. So it could go -- and so we're going to stick to the kind of high-level facts on the ground. And without going into too much speculation. But as it stands now, we have settled with 4 generic competitors, and that settlement involves the first generic of Xifaxan going out on the 1st of January 2028. So that's a fact. Secondly, we believe, as does the FDA and as does Teva, that Teva has the first filer rights that would granted 180 days of exclusivity as the -- after launching their transaction. And that was challenged by Norwich when Norwich sued the FDA for failing to grant Teva full approval or yes, filing because -- to not grant Norwich full approval because Teva should have forfeited its first pilot right. That case was dismissed and so Norwich appealed and now it's in appeal court, and we're waiting to see what the answer is. We check every Tuesday and Friday, nothing today. So -- but it could happen any time. But basically, the situation is that the FDA believes that Teva has retained its first to file. Teva has and so do we. And in fact, this few months ago, Teva did receive a full approval -- final approval on its version of rifaximin, which we think further strengthens the case.

I mean, so the base case assumes that there's no changes or that if that, for some reason, decision perhaps was remanded back to FDA, obviously, like that time frame could effectively be like 2048 maturity. So again, I know there are different possibilities, but your base case is that...

Well, without going into cases, I would say that -- the original court found in favor of the FDA and we're waiting to see what happens here. There's also the 30-month stay component of it, which we think also should apply in this situation since Norwich did its second and its skinny -- the Norwich scenario. And that would delay anything until later this year anyway. And then there's steps after that, that would have to happen as well.

And then the IP litigation that we expect end of summer, that's separate, that's still out there with no case date yet. Right. Understood. So...

You're talking about the annual.. That's the end of the summer. Well, there's no trial date. summer.

Makes sense. So again, it just seems like flexibility probably around these matters makes a lot of sense. And that's exactly what I think the company said in the most recent earnings call. So I think you discussed in conjunction with some of these -- again, you can't predict the future entirely. You pointed to some aspects that were a little bit different in terms of exercising certain options of flexibility. And maybe we can talk about a couple of the things that you mentioned in your most recent earnings call.

Sure. So I mean, if things were to go against us for whatever reason, then I think it's the same strategy that we just laid out, but we would have to accelerate it just for the fact that we would lose cash flow earlier than we otherwise would have. This is the 1/128 LOE case. And so in that case, we -- it would be harder to get through our 2028 maturities. And we would have to monetize B&L and/or other assets earlier than we otherwise would need to.

All right. So in terms of like the earlier monetization of assets, I mean, we just like dig in there for just a second. Are you talking about maybe Belco shares or would Belco in general or any other assets? Any perspective there would be great.

I mean we're always evaluating everything and everything is for sale at the right price, of course. TheelCo shares, as we've said, are not granting BHC parent cash flow or any other benefit other than just the value of those shares. So those would be the logical target for monetization. We would -- but also we also have these other valuable assets that we've talked about, whether it's Solta or International, we would certainly not want to sell those unless it's at a great price, but considering the long-term value that they would continue to accrete for the company. But we just have to make sure that whatever situation we were in, we'd find the most appropriate answer. But certainly, the BL the shares would be the logical kind of area to approach this in those situations.

Great. No, that makes sense. Just kind of going back to the other sort of possibilities in terms of maintaining flexibility, the company mentioned potential business development initiatives, also mentioned refinancing of maturities through 2028. So we could just kind of talk about those 2 things in terms of like exercising what those options might be and how you might address those matters?

Sure. So I think that there could be a connection between those 2 issues as well, certainly. So we've got a lot of liquidity right now. We have over $1 billion of cash on hand. We're generating lots of cash flow, as you've seen and as you've seen in our guidance, we expect that to continue through the LOE of XIFAXAN certainly. And that gives us firepower should we choose to pursue BD. And we talked a little bit about BD, what that could look like, whether it's things like larsucosterol or slightly bigger or larger targets that would again fit into our wheelhouses in those areas. I think in terms of the debt refinancing side, we obviously did a lot of great work with people in this room last year. We'd like to do more. Certainly, we can cover our '27s with cash that we have today, we can cover our '28. But if we're able to refinance some of those maturities that are coming up in the next few years, that would just give us more firepower that we could potentially use even more for business development, for example, or getting -- or not using our B&L shares as early in terms of selling them and then letting that value accrete for when we do eventually monetize them later rather than earlier, which again would be a win. So that's how we think about it.

Right. So I guess that's probably a good segue into capital structure. I know we've been sort of building towards this and touching on it a bit. But I was just looking back at my notes since the last time we were here. And in the last 12 months, you guys have generated at theLco, $1 billion of cash flow. You pushed out $10.8 billion of maturities through 2028. Boy, what a difference a year makes, yes. So maybe as it relates to those numbers, right, you have $700 million of debt maturing through 2027, $3 billion through 2028 and about $1.5 billion worth of liquidity today. So again, I know you kind of touched on it a bit, but let's talk about how we sort of bridge those 2 numbers.

Absolutely. So again, very, very happy with how things went last year, and we're happy with where we are today. And like I said, we can cover the 27s with cash on hand that we actually have sitting on our balance sheet today. '28, we can get through with that plus the cash on hand. And then when you're looking at the '29 and later, we do have the B&L shares that are currently uncommitted to anything. That's about 28% of all of B&L shares, and it's about 98 million shares -- actual shares. And so in a base case scenario where we don't do a refi, we don't do business development, that can be applied to the 2029 maturities, 2030 early 2030 maturities. And then before you get to your term loan in October. And then, of course, you've got 60% of the BLCo shares supporting that term loan and the 2032 notes. And so on a base case scenario, we would expect to start using the uncommitted B&L shares to help address the 29s and early 30s.

Right. I mean, has the company given any thoughts at all to more of like a global refi? I mean I know you have like a lot of smaller bonds trading at discounts. And I mean, is there any type of like global refinancing that the company might be considering?

Yes. We think when the time comes, a global refi will be appropriate. And that's going to be, I think, when the confluence of several things happens. And the first would be, of course, the B&L share price being at a level that we think is appropriate to monetize. And at which point then, of course, we could then monetize the 60% of the shares that are backstopping the 2030 term loan and 2032 notes, which that will pay off a lot of debt. And at which point our leverage will drop significantly, and we think that would be a good impetus to do a global refi, hopefully, for a more normalized capital structure. That would be the target. So it would be the B&O shares being at a good place and/or getting to 2030, whichever happens first.

Great. So maybe with the couple of minutes that we have left, I mean, we've kind of touched on business. We touched on your big assets. We touched on the capital structure. Maybe we could just discuss recent events within the world and see how maybe those matters affect the way you're operating your business today, the way you're planning for your business tomorrow. I know that like tariffs has been something that has driven a lot of conversation in the past, maybe not so much more recently. But any perspective in terms of some of the kind of the recent developments in the world and it's more expensive to ship products from point A to point B. Like how do these things affect the way you plan your business and your potential profitability going forward?

Sure. So when we had our earnings call a couple of weeks ago for Q1, and we reiterated our guidance, we did call out, I believe, that we were taking into account the latest tariff developments, and there were some in that in the Q1, there were some new tariff developments. We factored those in. Some of those are later in the year. And regardless, I would not call them material to our business. We are fortunate as a largely pharma company or as a medical aesthetics company with good margins that even though there are certainly costs added to our cost of goods sold and our manufacturing, our margins are such that we can absorb them without too much problem. So it's not been, by any means, a major drawback for us as we manage our business. I would say -- so the energy crisis has largely not affected us. The tariffs have largely not affected us. I think we're seeing very good growth in China. People have been very focused on China's economy and what's going on there. It seems like we've hit the sweet spot of consumers who haven't been too affected by the property situation going on there. And we've seen robust demand from them, as you can tell from our numbers, and we hope to continue to see that going forward.

And you've already kind of baked in the IRA impact in Q4 to what is ultimately going to affect the price of Xifaxan going forward?

That's right. And just as a public service announcement, and we've talked about this a little bit, and I'm glad you brought that up. Yes, we've baked in the 2027 IRA impact for Xifaxan. Just again, the public safety announcement is that we expect to have a hit at the very end of Q4 as we adjust what's in the wholesaler pipeline that's going to be sold to Medicare. We have to adjust the gross to net value of what's -- of the higher rebate that's going to happen on January 1, 2027. That's going to impact our results on the last day of 2026, and that will be a bad guy. We had kind of had a separate opposite situation when we exited Medicaid on October 1. We had to make an accrual true-up in September 30 of last year to reflect the fact that we were no longer selling into that channel with those rebates. And we got a onetime benefit. This time at the end of 2026, we're going to see a onetime detriment, but we factored that all into our guidance.

And also for 2027, we also gave implied EBITDA guidance when we said that 2026 and the average of 2026 and 2027 EBITDA would be approximate to 2025, so that you have guidance for '27 as well.

Correct. That also includes a full year of IRA, obviously. Right.

Thank you very much. Well, I think that pretty much wraps it up. Thanks very much. Enjoy the rest of the conference, and we as always appreciate your participation. Thank you for having. Will. Thanks...

Thanks everyone. Thanks for all of you this morning.