Baxter International Inc. (BAX) Earnings Call Transcript & Summary

Welcome, everyone. I'm Robbie Marcus, the medtech analyst at JPMorgan. I'm happy to have Baxter for our next presentation here at the JPMorgan Healthcare Conference. I have Joe Almeida, the CEO of Baxter. I'm going to hand it over to him in a second, but just first, a few reminders. One, Joe is going to be talking to a slide deck. So go ahead on the conference website and grab that slide deck and follow along. And also, feel free to go online and submit questions for the Q&A portion. Just hit submit a question. It goes directly to me and no one else. And also, feel free to send me an e-mail or Bloomberg chat, and I can ask your questions during the breakout session. So with that, Joe, I'm going to hand it over to you, and I'll join you for some Q&A afterwards.

Thank you, Robbie, and good morning, everyone. As Robbie mentioned, I may carry you through the presentation. I'll tell you the slide number that I'm presenting right now. So right now, I'm on the safe harbor statement. Please take a careful read of all our considerations when it comes to safe harbor as well as the next page, which we have the use of non-GAAP financial measures based on the 8-K that we released this morning. Thank you, Robbie, and good morning, everyone. As Robbie mentioned, I may carry you through the presentation. I'll tell you the slide number then present right now. So right now, I'm in a safe harbor statement. Please take a careful read of all our considerations when it comes to safe harbor as well as the next page, which we have the use of non-GAAP financial measures based on the 8-K that we released this morning. So a quick overview of Baxter on Page 4. Baxter is a global diversified and market-leading portfolio company. We have 6 businesses, which are spread across the world with more than 100 countries that we serve and 75 million-plus patients that we touch every single year. Our mission is save and sustain lives, and this makes our employees very proud. We are in Renal Care, which is end-stage renal disease, that's ESRD, in 2 different modalities, home hemodialysis and peritoneal dialysis. Medication Delivery with solutions such as Saline and Dextrose as well as our pump and sets business, the Pharmaceuticals business, which is our generic injectable portfolio with products ranging from Myxredlin, which is our premix insulin, to dexmed and many others that make this a rich portfolio of injectables. Clinical Nutrition, which is administrated through IV. The Clinical Nutrition business, it spans all continents as well as Advanced Surgery, which is in the business of hemostasis and sealants and adhesion barrier. And lastly, Acute Therapies, which was so important during the pandemic. So on Slide 5, we, as a company, took a significant pride -- we take significant pride in our reaction in our support of our patients and our customers to COVID in this past year. Our CRT business was extremely important in many ICUs across the world. We maximized our production of any product that was needed at a time. We also build significant inventories in solutions because not only we had COVID coming in, but also we had the hurricane season settling in -- from May onwards in 2020. We put our #1 priority to protect our employees, who are making products in our 50-plus facilities across the globe, to make sure that they are safe so they could safely make products for our patients. We also expedited shipments across the globe. We create our own airbridge between Europe and U.S., transporting products where it was needed the most. We changed our allocation process and policies to make sure we're serving people who needed the most, not everyone at the same time, so we could serve the communities and hot spots at the moment they needed our product. We also, in our philanthropy, donated more than $2 million in global relief to our partners. So how did the COVID-19 affect Baxter? In many different ways, if you go through the next page, we had 75% of U.S. hospitals -- the Hospital Products business is linked to admissions. So admissions going down, it impacts our Medication Delivery business. At the same time, we saw a decline in elective procedures across the year. We've been telling this to folks since May onwards that we had seen and it was in the earnings release in July, that we started to see a reduction in hospital admissions as well as procedures even though there was a spike in the end of the second quarter, a little bit into the third quarter, but the hot sports were creating difficult situations in several hospitals that impact our Advanced Surgery business. We also saw a significant increase in demand for acute therapies. If you think about the meta-analysis showed 46% of prevalence of AKI, which is acute kidney injury, which is usually followed by sepsis in the ICU setting, and 19% of the patients requiring some kind of renal replacement therapy. Our sales reps were not allowed to go in many hospital settings. There was a significant shift in the home-based dialysis treatments to patients. So all of this created a difficult 2020, but a lot of lessons learned. And I tell you, those never took us away from our top quartile goals. If you think about the 4 things that were very truthful to our mission of save and sustain lives was always patient safety and quality, best place to work, growth through innovation and industry-leading performance in delivering a strategy of strengthening our portfolio, our impact through transformative innovation that spans prevention to recovery. So if I go back to 2016, in my first meeting at JPMorgan in January of '16 as a brand new CEO, I had 4 pillars that I had established with the team at Baxter to transform the company. And I want to cover very quickly where we are with them. So culture and talent, innovation ecosystem, strategic capital deployment and financial strength, those are the 4 things that we said that we need to accomplish, and we need to transform -- to be able to transform the company. So if you think about the culture and talent, we brought a lot of new people into Baxter. We created an environment where we don't have performance reviews anymore. We give feedback all the time. We have an environment where ethics and compliance is in everything we do. We look at efficiency of our meetings. We look at everything that brings a culture of inclusion and diversity to the workplace. Our manager scorecard has been the highest since we start measuring. Today, it's over 80% of people recommending their managers. And our Net Promoter Score, which is a reflection of how we deal with our customers, is all-time high. So we have accomplished, but this is a journey, and I say to our employees, we're still far away from our final goal while we're making significant strides and progress towards our culture. If you think about where -- what have we accomplished, our ESG efforts have yielded tremendous progress. We are top 4% in the Dow Jones' Sustainability Index for health care equipment and supplies industry sector; 10% -- top 10% in disability equality and diversity best practice; #30 on Newsweek's list of America's 400 most responsible companies as well as #40 on JUST 100 list of America's most just companies. It's all about serving our communities worldwide, reducing our environmental footprint, expanding access to care and focusing on inclusion and diversity. So we will shift a little bit now to innovation ecosystem because this was something that was missing at Baxter. Our innovation was very low, and our effectiveness in innovating was very low. Right now, we have doubled the effectiveness of our research and development. We realigned our efforts and cultivated diversity in how we do things. We adopted a biodesign -- Stanford Biodesign process that is needed for our innovation. We also are deploying significant amount of digital tools in process automation. So let me give you a couple of examples on Page 12. The momentum in PD therapies supported by current market dynamics is very good. If you think about ESRD, end-stage renal disease, you have 1 in 10 adults globally having an issue, 4.8 million people today are affected by this disease, 800 alone in the United States. It's a global initiative where we say safer at home for PD. And the United States, as you know, approved Advanced American Kidney Health Initiative, that mandate is in place, HHS put this out a few months ago, and we are looking at penetrations that today being 12%, advancing to 20%. We are part of this. We're seeing the growth, and it's a great thing for the patients. On another product that we have worked so hard since the company had this business 20 years ago is we just revamped completely our portfolio of pumps and sets. We today have 3 platforms being on the market as we evolve brand new one NOVUM IQ, already approved in Canada, approved in Latin America -- I'm sorry, not in Latin America, but approved in Europe had CE marked as well as Canada. We have Evo IQ as a platform that we use in Latin America and Asia Pacific. And the NOVUM IQ will be in the U.S. in the second half of 2021. We're very excited about this platform. It's coming together with DoseIQ and IQ Enterprise, and we have more innovation coming just behind that in terms of software created to enhance safety of delivery of medications to patients in hospitals. We strengthened our competitive position with new pump offerings built on our award-winning drug library and leading IT connectivity. When you look at the other innovations that we've seen in the company, premix injectables has been a success story. We just launched Clinimix HP. We took the Seprafilm acquisition from Sanofi and just launched an adhesion barrier added to our product offers. And more importantly, the PrisMax II, which was so important to our response to the pandemic. But if you think about our investment in R&D has not grown as a percentage of sales. This has to do with the effectiveness that Baxter had taken into how to produce innovation because innovation is an ecosystem and Baxter had transformed itself. It continues to transform as I'm saying that we are not there yet. We're making great progress and continue to make progress, but this all plays into the capital strength of the company, how we deploy capital for research and development. If you think about how we will continue to deploy capital, we're going to continue to reinvest in the business through research and development and capital deployment. We are investing capital in more solutions. As the PD business continues to grow in more sets, we are producing pumps in -- we're going to be producing pumps in-house above and beyond what we already produce. We're making sure that we have the infrastructure in Baxter to support our growth. We're going to continue to pay dividends. And now Baxter has increased its dividends for the longest time, and we're continuing on the path of paying dividends and continue thinking through the process of increase on a yearly basis. We will continue to buy shares. And as you know, we just got an authorization recently to continue to buy shares, but more importantly is we're going to balance that with very thoughtful M&A. M&A, that will make a difference in the company's weighted average market growth rate as well as our ability to grow through adjacencies. If you think about M&A, we didn't drop our criteria, which has been very stringent in terms of financial returns, but we want to make sure that the company has an opportunity to deploy its capital. Company has a lot of cash in hand, and we're not going to let the cash burn a hole in our pocket. If we don't find something strategic for the company that makes sense financially, clearly, we will continue to return money to our shareholders. If you think about how the financial strength plays in the strategy of the company, we're going to continue to deploy that for strategic growth. We're going to operationalize our optimization right now, continue to move products to places that make more sense. We continue to invest in our infrastructure. We have undertaken a significant digital transformation of the company. Baxter has embarked 6 months ago, in a deep transformation of the company digitally. And we think there is great opportunity to continue to leverage that. So sometimes I get the question from a lot of you, what else is to be done? No, we took a lot of cost out of the system. So what is to be done is always in operations optimization, is the gross margin of the company through leverage in operations, manufacturing, distribution, logistics as well as the change of products by creation of opportunities in M&A by expanding margins through M&A as well as new product development. Digital transformation replaces the business transformation that we have. We will find more opportunities in G&A as we're finding right now as well as opportunities to optimize supply chain, how we also deal with our customers. Digital transformation has been led by a very senior executive in our company, Andy Frye, and we're going to continue to be very focused in delivering that to our shareholders in terms of savings. We have a laser-focused attention to the financial discipline, and that has been a model that we have carried since 2016. I want to discuss very briefly where we are with our quarter. We just released -- pre-released this morning the sales of the company. We had reported 5% growth for the quarter with operational growth of 2%. Full year for 2020, even in a very, very difficult year, we're able to report 3% growth with operational growth of 2%. I want just to remind you before we close of Baxter's importance in the health care space and how Baxter is doing -- is transforming itself. We're playing a significant role in the pandemic. Today, we just had another company announced that we're partnering -- that they're partnering with us. We're going to be fill/finishing vaccines. This is the second company that we have announced. Executing on new product launches is everything to us. We're hopeful that in the second half of this year, we're going to have new product launches such as NOVUM IQ. We continue to evaluate and will think very seriously about M&A. But if we don't find the right opportunity with the right returns, the money goes back to the shareholders and share buyback. We're committed to delivering enhanced operating margin. We are committed to that, not only coming from the gross margin line but also by reduction and better utilization of G&A. And the plan now, as you all know, we're going to come together, hopefully, everybody with some level of immunity coming to -- from COVID, we're going to come together in September, probably second half of this year 2021 in our investor conference. I'd like to thank you, all, but more than anything, I'd like to thank the employees of Baxter, who have done a wonderful job serving our patients and customers in such a difficult time from delivering products to their home, which are needed every single day to keep them alive, all the way to delivering the services and products to hospitals across the globe, our people did a wonderful job. So 2020 was the year that the Baxter employees really exceeded every measure of success, not only I'm speaking financially, but also in serving the most important people to us, which are patients and customers. Thank you very much. And Robbie, back to you.

All right. Well, thanks, Joe. And I believe we're going to have some other peep, there they are. We've got Jay Saccaro, the CFO; and Clare Trachtman in Investor Relations. So thanks for joining. Joe or Jay, whoever wants to take it, I want to kick off with the quarter, which you just preannounced, which -- you've been probably the most, I would call it, honest and pragmatic company throughout 2020. You never overpromised or guessed at what could come or hope could come later in the year. And so you have such a good pulse on inpatient admissions at the hospital just given the nature of your products, and you ended up with a really, I'll call it, relatively, and on an absolute basis, nice fourth quarter, all things considered. So maybe you could walk us through some of the biggest outperformers in the quarter? And one of the questions from the audience, Jay, is was there any stocking in Medication Delivery as that was one that surprised a lot of people to the outside?

Sure. Maybe I'll start, Joe, and then if you'd like to enhance the answer at any point, feel free to do so. And Robbie, thanks for the invitation to the conference, as always, Happy New year. As we look at the fourth quarter, we were definitely pleased with the result. And if you think about the 2 key drivers, and I'm talking principally about the U.S., admissions and procedures, admissions was broadly speaking, in line with our expectations and procedures at down -- procedures, which were flat, were a little bit better than our expectations. In admissions, we expect -- we anticipate it was like roughly a 10% decline as we tracked it in the fourth quarter of the year. But against that backdrop, we were really pleased with how our business performed running through the different areas. Our renal business, essentially in line with our expectations, maybe slightly better. You're right, Medication Delivery did outperform. We saw a lot of strength in Mini-Bag Plus, which is a -- it's a great product that's used in a variety of settings. It's also used to treat COVID patients. And in addition to that, we do believe there was some stockpiling that took place in the Medication Delivery business. The exact quantum of that is hard to say at this point, but there certainly was some level of benefit. From a Pharmaceuticals standpoint, this was off a little bit. We had anticipated certain orders to take place late in the quarter, some government orders, which did not materialize. Our Advanced Surgery business on an adjusted basis, down 2%, excluding the benefit of the Seprafilm acquisition. That benefited from some of the stronger procedure volumes that we anticipated. Obviously, our acute business, one that clearly benefits from the COVID environment, we were so pleased to be able to deliver that amount of product -- that amount of life-saving product in a pandemic. So it's clearly that was a positive relative to our expectations. And then our other business also did well. Some of it was just general performance of our BPS business. Some of it was pre manufacturing. So overall, I would say, largely in line with our expectations as far as the key drivers, but it was nice to see some enhanced performance on the sales line against that backdrop. Joe, I don't know if you would add anything to that?

Well said, Jay. Thank you.

So you didn't give 2021 guidance here like you did last year. I'm assuming, since you've been guiding the last few quarters, we're going to have to wait for the fourth quarter earnings call. But maybe I could just ask it this way, was there any trends exiting the quarter that make these things differently going into next year or anything that stands out with where The Street is next year, there's such a huge range of estimates, particularly on EPS? Jay, I know you've made a lot of public comments throughout the past few months here. Anything that stands out that you wanted to just make sure it gets on the record for investors as they think about their models and the trends exiting 2020 here?

I think one of the things we've concluded coming out of last year is the COVID environment has been really challenging for us to provide reliable and solid forecast. And so for us, we're going to take as much time as we possibly can to really put together guidance that makes as much sense as possible against this setting, which is very volatile. As we sit here today, what we anticipate is on a full year basis, procedures and admissions are going to be down roughly mid-single digits. And our expectation is, by Q4, admissions will be down a little bit and procedures should be in line. That's our current thinking as we model out the overall year. And what that means is there's a larger impact relative to 2019 levels in the first half of the year than in the second half. And the second half, we expect to be much more normal. Now, of course, we'll have the benefit of an easy comp in Q2, but a very challenging one in Q1. So that's some context from sales standpoint. From a cost standpoint, we've talked about COVID costs in the past. We've also talked about some manufacturing challenges related to operating in this volatile environment, where accurate forecasts are so important to efficient production schedules and, thus, efficient manufacturing costs. That's been a real challenge for us. And so as we think about the manufacturing cost impacts, we do think that the second half of the year will be meaningfully better. There may be some rollout of variations into the third quarter. But as we get, again, better line of sight to predictability and also we start to see fewer and fewer COVID costs, on the second half of the year, we expect to have better margins than the first half, in large part, driven by some of these manufacturing costs, which we expect to recoup in the second half. That's essentially what I think we can say at this point in time. We're eager to share some more information. But right now, we're dissecting the quarter performance. We were pleased, but I don't think anything fundamentally changes our standpoint at this stage. Joe, anything from your perspective?

No. We have a -- we had a good quarter, and I think it shows some momentum going into the first quarter, tough comp there. And I think the vaccine rollout would play a role. And I think hospitals are getting smarter about how they segregate COVID wards and procedures, evidently. The U.S. right now is in tough shape in terms of some states. They have hot spots really overflowing hospitals. But I think through the first quarter, we're going to see that, hopefully, some herd immunity created by vaccination as well as precautionary measures. So going into Q2, we're starting to see some relief of that throughout the year. We just want to make sure that we're not seen as overcautious, but we tend to be very realistic when we look at this data. We have data from hospitals, and we know what drives our business.

And Jay, maybe just to add on to your answer there. I want to make sure I understand it. A lot of companies took period cost in second or even third quarter as manufacturing production volumes fell below a certain threshold, it's different for every company, but Baxter was pretty steady throughout the pandemic. So should I be thinking about some of your higher cost inventory being worked through in first quarter, and maybe even second quarter that as you exit and enter 2021, rather than the -- I think it was $130 million, $140 million of COVID expenses, that pretty much goes away in 2021, correct?

Yes. So as we think about the sequencing, our expectation is the vast majority of that $150 million on a run rate basis leaves us at some point in Q3 or Q4. There is some residual amount related to PP&E, which we expect to incur on an ongoing basis frankly. Some of our manufacturing processes will change, every employee will wear a mask in a manufacturing facility for the foreseeable future. And so that will be an ongoing cost, but it's not large. So as the pandemic subsides, we do expect the vast majority of that $150 million to go away. We didn't really have many instances where we fell below requisite thresholds in terms of period cost. I mean, really, that speaks to the durability of the sales line of our business. If you think about it to be able to grow against a pandemic backdrop with several hundred, probably 300 basis points of sales impact, we were really happy about that. But what it led to is not a lot of instances where we were running manufacturing facilities at well below certain levels that are required for period expensing. There was perhaps some of that, but it was not a broad widespread phenomenon. And so what that means is, there will be certain costs that roll out in Q1 and Q2. And then as things normalize, Q3 and Q4, we'll expect to see, again, higher margins as we benefit from both of the factors that I've just described.

Great. Actually, I've gotten several questions from the audience here. One of them is just sticking on 2021, again, I know you haven't given formal guidance here. But as we think about trends, CRRT is one that benefited significantly in 2020 from COVID and the elevated rate of hospitalizations. What's your view on how this should flow through the next year? I know a lot of it is consumables, is this a line item that we should be prepared for a pretty sharp downturn in growth as we enter '21?

Well, it's going to -- it's a really challenging comp, okay, in the sense that if we look at full year growth, I think our Acute Therapies business grew close to 40%. And that is not a normalized or sustainable level, and there was quite a substantial amount related to the essential nature that this product provided in helping COVID patients. I'm going to tell you, as we think about the mission of the company, never were we more excited about a product line than I think perhaps this one. But 40%, we've said that this is normally a high single, low double-digit grower on a sustainable basis. And we don't have any reason to believe there will be departures to that over the long term. But as we look at 2021, sure, there will be perhaps some continued sales into Q1. But again, as we move through Q2 to Q4, a number of areas of our portfolio will benefit from subsiding COVID impact, but this is not one of them. This will be a very difficult comp for us on a year-over-year basis.

Got it. Just moving down some of these other questions from the audience. I have a feeling, Jay, you're probably not going to answer this, but I'm going to ask it anyway because it's one of the most important questions to underpinning the thesis here when I have discussions with investors. But we have this long-term guidance range from you on margins out to 2023, and you've said a number of times publicly that not that don't rely on it, but we plan to update it. It was supposed to be updated in 2020, and now we're going to get it in, it sounds like, September in 2021. But what are some of the big puts and takes that have changed to the Baxter business since you put out that guidance range as people try and get a handle on where margins can go over the next few years?

Sure. And Robbie, we did take the long-term guidance off the table. And we did that because we were planning on updating it in September a few months ago and then we left it off the table. We officially took it off in the COVID environment because, again, forecasting next quarter incredibly difficult looking out several years, just too challenging for us to give you a guidance that is sort of reliable enough at a tight enough range that is a benefit to you. And so -- but we did it reluctantly because both Joe and I and our entire management team are very committed to enhancing margin over time. And we very much look forward to sharing updated margin guidance at our Investor Day in September. And as we look forward, there are a number of areas. And I think Joe highlighted several of them during the presentation that will contribute to margin expansion. I mean, a lot of it, by the way, will be coming from gross margin in the coming years. First, we're going to focus incredibly on the effective launch of new products, and that will have a positive mix impact that we'll see for years to come, and we're really excited about the progress of the innovation pipeline. And so more to come here. From a manufacturing cost standpoint, we have experienced some incremental costs, but this is another area with our leader in this particular function, Jim Borzi, very committed to taking cost out of this area and optimizing for efficient manufacturing production, we expect to see that. And then finally, we'll benefit both from -- on the COGS line and also on the SG&A line from the digital transformation that Joe referenced. We have a real opportunity. We're at early stages in terms of digital transformation. And I think what's opened all of our eyes is the substantial impact that we think this can have on our overall business. So a lot of good drivers going forward. As we think about what's changed, I would say that there are a few really good things, right? We have withstood a pandemic and the durability of our portfolio is something that, to us, has been a really solid feature and aspect of the Baxter business. The second thing is the renal AAKHI. That's a really positive dynamic over long term, which I think not only is it great for patients, it's also just great for the overall system, and we're happy to be part of that. Furthermore, the pump, which is coming soon, we expect to launch in 2021, that's an important catalyst for us, and we're advancing that as swiftly as we possibly can. Now a few other items, though, to consider, we assumed a stable macro environment, right? And it's hard to say at this point what is the pay for coming out of all of the COVID pandemic, but that's something that we'll have to watch. Also, foreign exchange has been a bit of a headwind here. And we'll have to understand a little bit better how sustained that headwind will be. Furthermore, we don't yet know what the impact of COVID will be on long-term dynamics in health care. What I think has surprised us a little bit is the slower pace of recovery of admissions. And so the question is, what does this recover to? And how swiftly? Those are questions that will play into our guidance certainly in 2021, but perhaps even beyond, and that's something that we have to understand a little bit better. And then finally, we've experienced incremental manufacturing costs in the short term, both related to COVID, related to absorption, a number of different areas. The gross margin, I pointed out on the third quarter call was -- it's a lower number than we're historically used to. We have work to do to address this. And so we're optimistic about our ability to get after this particular area, but it represents an area that we'll need to focus on. So without getting into any specific guidance because our guidance is off the table, I can reiterate our commitment to improving margins, our optimism about the long-term business prospects, those are some features for us to consider as we look at the various business elements.

Got it. And Jay, I just want to clarify when you talk about currency, that's versus when you gave the loan range planned, not as we sit here today, which answers it...

Correct. Because we have said a stable currency, stable pricing environment. We've seen a little bit of pricing in our Medication Delivery business and a stable macro environment, those were the 3 key elements. We have to reassess all of that in the coming months and sort of judge it relative to 2018, but I think more important, judge it relative to where we think it's going to be going. So that's the work that we have to do, which we're very excited to do. And as I said, eager to share some of these plans when we sit down in September.

And the product launches also have puts and takes, things that didn't not launch on time and things that have changed. So there is -- the conversation on the guidance is off the table. We will come back with what we think is the best estimate that we're going to have based on all the considerations that Jay just spoke about, our product pipeline, our initiatives in gross margin, G&A, digital transformation, but those are things that we are considering at the moment before we go in front of the investors with the new guidance, long-term guidance.

Well, I'm hoping we can all see each other live in September after we all get our vaccines. So we have about 5 minutes left. There's 2 more topics I certainly want to touch on, the first is the pump, the timing and the platform and the second is capital allocation in M&A. So maybe first on the pump. You're talking in the slides about a second half of '21 launch, where do you stand with the FDA now? Has the pump been resubmitted? If not, when should we expect a resubmission? And how confident are you in the second half launch for NOVUM IQ?

Robbie, it is presumptuous for -- it would be presumptuous for me to tell exactly what the FDA is going to do. I don't have that ability. What I have the ability to tell you is that the areas that we needed to work on for submitting the pump again has been worked very hard. Throughout the holidays, we continue to have contact with the FDA consistently and often to be able to get a submission that is acceptable and creates a market for a new pump that will be the newest pump on the market at that moment. So we will be submitting as long as we have everything ready in the next few months. And we hope that the second half of this year is when we launch -- get approved and launch the pump. As I said in the preface, I can't speak on behalf of the FDA. I can tell you that this is our plan. This is subject to be affected by how the FDA receives this submission. But we are very confident internally that we are in the right path to provide, hopefully, by the time we have our earnings call, we may have a little bit more details. But nevertheless, we're working very hard to have this submitted in the next few months and hopefully, to have approved in the second half.

Great. And maybe last, Joe, I think it was your first few days on the job, correct me if I'm wrong, I think it was January 2017 at the JPMorgan Conference...

'16.

'16. Time flies. 2016, and you came in, you talked about how you wanted to do M&A. And so is 2020 the year for M&A for Baxter -- 2021, sorry?

Every year is M&A year. We've been buying companies to small businesses and molecules and being very successful for the most part, acquiring them. I am not in a position to tell you affirmatively that the 2021 is the year of M&A. Never do that because you can't promise anything when it comes to M&A. M&A is particularly difficult when you have stringent criteria for financials -- financial returns and second, it's very opportunistic. I also want to say that coming to Baxter, Baxter is a different company than where I worked before. It is a mistake to think that I have the same playbook that I used before in Baxter. Baxter requires significant transformation in many, many, many things, including for infrastructure and culture. And those are very important things to execute M&A well. So we are very focused in expanding the company's [indiscernible] through acquisitions of adjacencies, but we will do that when we feel that we can deliver both the returns and the integration that proper executes that acquisition.

Well, great. Unfortunately, we're out of time. So I think we're going to have to leave it there. But Joe, Jay, Clare, thank you so much for joining and look forward to a great 2021.

Thanks, Robbie.

Guys, Happy New Year to you and all the best in 2021. Thank you, Robbie.

Thank you.