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

All right. Good morning, everyone. Very happy to start our -- I think our next session, which features management from Baxter, Joel Grade, Executive Vice President and Chief Financial Officer; and Clare Trachtman, Senior Vice President and Chief Investor Relations Officer. As I said in all these sessions, I'm happy to open it up to questions from those participating in the audience. [Operator Instructions]

Maybe we'll start with -- I think we've done a lot of questions about CEO search. Maybe give us an update on how that's progressing? And any clarity that you're able to provide with respect to time lines?

Yes. So first of all, good morning, everyone. Thanks for your interest in Baxter. Yes, David, nothing really new to report other than I would say we're continuing to make good progress on the search. I think the Board is doing a very diligent process in balancing both being expeditious retirement standpoint, but also making sure they're taking the right amount of time to get the right person. And so I -- nothing really new to report other than, again, I feel comfortable with the progress they're making. And I look forward to reporting something one we can report.

I think the only other question I ask is on the fourth quarter call, when Brent participated, I think you made a comment that was really what we're looking for is consistent, reliable, strong performance. I think maybe that's at least close enough to I think what his outline was for what some of the objectives were with respect to the starts. Like -- any thoughts on like just the profile of individual that you're seeking or maybe any further interpretation of those comments that you made on the call?

I would say this. I mean, I think it really comes down to a few things. I mean, obviously, as we've talked about as a company, we're looking to accelerate growth over what we have had historically that we talked about this 4% to 5% growth target, and that obviously is going to come in part from innovation and from the opportunity to drive R&D investment in those areas that are going to drive growth. So I think that's certainly part of the profile as well. I think you talk about execution. This is -- we have an opportunity as a company to become even more streamlined and operationally effective and consistent in terms of how we perform. So I think there's that element of the profile. I do think that part of our growth story over time is also going to be -- again, in a fold-in tuck-in way, inorganic opportunities that supplement our existing portfolio. And I think all wrapped up in someone who really can drive culture and the elements of all that through really into the DNA of the organization.

And I want to jump into the business in a second. But if I kind of reflect on the past couple of years at Baxter, a lot of the focus has been for lack of a better way to put a cleaning up the balance sheet, streamlining the business. You had the BPS sale. You had the Vantive sale, and you haven't really had an opportunity to sort of lay out what post-Vantive Baxter is going to look like. And admittedly, this will probably change when -- or evolve as a new -- as a new CEO comes into the picture. But like, how would you kind of just quickly frame like the identity of the company now post-Vantive, post-BPS, post-paying down debt? Like, are we at a reset foundation? And then give us a flavor of where we are just in the overall strategic evolution.

I'd say a few things. Number one, I would say the words looking to be more agile and nimble would be one word. I think the -- again, I wouldn't go all the way to simple, but simplified based on the -- again, there is a lot of complexity that brought into our company, having a lot of the intertwine manufacturing, a lot of things. And so the other part I'd add is the verticalization of the business, and again, back to this nimble and agile point, now really allows a very clean set of verticals in the organization. I think that's one thing. I think the second thing is more innovation. I think over the last number of years, obviously, since the transformative acquisition we did, but then also the work that was done, again, you said it, BPS verticalization, sale of Vantive, and some of the supply chain challenges we had, the innovation levels were not necessarily that what we would like to aspire to be. And so I think as a company today is really focusing our capital allocation efforts, focusing on those things and driving innovation, and again, accelerated growth, expansion of margins, generating more cash that then gets reinvested back into the business as well as a balanced return to our shareholders.

Okay. Maybe using that as kind of context here to talk about the business, one came in better than I think most had expected, including relative to your guidance. Maybe just sort of help us understand the underlying trends that materialize throughout the quarter that supported the 5-plus percent growth?

Yes. Yes, I'd say there's a couple of things. I mean, one of the good news story is that I haven't had a chance to say for a while, it was really led by HST. We had -- obviously, there was some good favorable comps, but also some positives from an order book standpoint and CCS in particular. Again, that business grew at a 7% rate and our Front Line Care grew 5%. So we had a very balanced view across our HST portfolio. That was nice to see. MPT was really driven by a few things. Certainly, continued progress from Novum. We've had strong growth in our pump sales, and so that continues to be a driver. We also had a -- I get, say, a larger-than-expected restocking from our distributors, which is probably a little bit where we came in ahead of where people expected. There was some offset to that, though, based on some of the conservation that's happening that had happened in the first quarter, and we expect to continue to some degree in the second quarter and, of course, throughout the -- some degree throughout the year. But those are, again, some of the key drivers, MPT as well, strong advanced surgery, strong nutrition. And then from a pharma perspective, we had injectables as strong outside the U.S., but not so much in the U.S. and our compounding business was softer. But those are a few puts and takes. Overall, was -- again, it was a strong quarter. We came -- as I said, we came out hot. And I think overall, some positive trends there.

Yes. But then you popped the balloon here with this Q2 guidance. So like what happened here. It's like you had a good Q1. Everyone took a few weeks off, so you guide 1% to 2% for Q2. Like what -- help us understand the guidance for Q2.

Yes. First of all, I wouldn't go all the way to pop the balloon. But what I would say is that the -- if you actually look at H1 and H2 for the year, we came in a little better in Q1 than we anticipated based on, as I mentioned, the distributor restocking, which we had actually projected internally within -- in Q2 more than it was. And so I think -- but if you look at the first half of the year and the second half of the year, it's pretty consistent with what we had anticipated happening. So that's one thing I would say. Number two, part of the impact in the second quarter that we're seeing, and by the way, the second quarter is always going to be our softest quarter. And the reasons were primarily driven by some of the conservation that we're seeing in MPT, and we anticipated some of that happening. And then the third thing really is just, I guess, again, I'll say a little bit of conservatism around the results from HST. And that sort of factors into the quarter, but also some of the guidance for the year. I think it's -- I think you'd probably forgive us for being a little conservative on that front. But we haven't seen impacts from the capital spend at this point, but again, factoring a little bit of conservatism.

So it wasn't like you came off the first quarter. And then in May, you saw the business -- or April, excuse me, you saw the business really deteriorate...

Not...

And you wanted to reflect that in the outlook?

Not at all. And again, I would just go back to the point earlier, it's an H1, H2 thing. And again, some of the conservation that we anticipated seeing in Q2, we have seen, and we do expect that. And one of the other things I would just keep in mind is that we had continued to have hospitals on allocation, really through -- for the most part, through the end of May. And so we've only recently released that allocation. And so I would say, it's still a little bit to be determined how that's going to play out because obviously, prior to that, a hospital would only be able to order up to their allocation, if they tried ordering more, they couldn't. So that's now been released in full. And again, we're going to see how that kind of plays out. But we haven't necessarily contemplated anything on upside wise related to that.

And how do you kind of contrast conservation efforts with now having full supply? Like why wouldn't a hospital say, "Hey, we've survived this long, let's just keep doing what we're doing"?

Yes. I mean I'll start and then Clare can chime in.

Yes.

I think the way I would phrase that is there's -- they get out of regular habits, and get into new habits and it takes some time to get back to old habits. And I think back even in 2017, 2018, when Hurricane Maria hit, it took the better part of a year for hospitals to get back to kind of what would be a normal buying pattern. Now that's a generalization. Obviously, every system is a little bit different. But I would say, generally speaking, that's probably why. And in fact, they're just some of the things that they got used to doing. There's just -- it takes a little bit of time to evolve back to their normal patterns. Anything you'd add to that?

Yes. The only thing I would add is that one of the things we can do, too, now that we're off allocation is have our sales reps and medical affairs work with the hospitals because some of the methods that they were using for oral rehydration are actually going to end up being more expensive than using an IV bag. But when you're on allocation, we're not going to have those discussions. And so now that gives us the opportunity to kind of go back, have those discussions, remind them that we now have adequate supply. So I think that's piece number one. And -- well, obviously, these are volume-based commitments. So if they don't order up to their volume, they don't really earn the same price that what they think they're getting at. So that's just -- those conversations will now start happening. And so I think to Joel's point, unfortunately, we have had experience with this before. We know it does take time to get back there, but our reps will be out there having those discussions now. I think the key is, for the second quarter, kind of to circle back to where you're at. One, Joel referenced this, but Q2 was going to always be our most difficult comp as well. We had the highest growth Q2 of last year. So it was going to be -- the key is, as he said, the first half is in line with what we thought. And we basically pulled through that same level of conservation. And we have access to that because we get end user data. So that's what we're looking at when we do this is on the end user data. So we see that, and we basically said, we're not going to assume it gets any better in the second quarter as to what we saw, but we won't have that benefit of the inventory rebuild at the distributor level. So now there are off allocation, we're -- we think we'll see a gradual improvement going forward. So I think that's the key. Like we just -- we said it's going to take some time. Eventually, it will get back, and we'll start the education. But let's not assume that all of a sudden, we lose this and hospitals go back to historical practices.

Okay. Then you kind of wrap this together on IVs. Where does pricing fall into all this? Are you seeing the benefit of the GPO price rolls? Like how long does it take to go from like winning the GPO contract, the IDN level to the hospital level? And then to what extent did price contribute in Q1? And how should we reflect that through the balance of the year?

Yes. I mean we are seeing that benefit, although it started -- in Q1, it started, I'd say, more in February than it did -- it wasn't right in the exactly in the beginning of the year. And so I would say, to some extent, that phased in, if you will, in the first quarter, we do anticipate seeing a full benefit of that as we had anticipated. If you recall, last year, we called out as an enterprise, about 100 basis points of improvement from a pricing standpoint, that was primarily driven by the GPOs. And again, that's on track again, but phased in starting in February this first quarter.

Okay. So we should see a full impact starting in Q2? Or...

Yes.

So the 100 basis points for the full year, but you saw less than that in Q1?

Yes, correct.

Okay. So that would -- so I was just -- by ways again, look at the Q1 to Q2 or first -- even first half to second half, that, that does imply some volume worsening?

But yes, again, but anticipated volume worsening was what we anticipated at the consumer [indiscernible].

Yes. It's really the IV. I mean, it's basically just conservation not offset by the rebuild at the inventory. So that's the volume. So you're exactly right, there is a volume impact.

Okay. And I guess a lot of -- I don't want to belabor Q2 too much. But just on the philosophy of guidance, one of the things that go back and reflect on Brent's comments from the fourth quarter call about consistent, durable, reliable performance. How are you thinking about just the philosophy of setting guidance both on a quarterly and annual basis now?

Well, I think in general, certainly, the -- some of the best words in the English language, beat and raise is something that's always been part of the philosophy that I've had and that we've had.

Yes.

And I think the reality of it is that we're going to have some fluctuations on a quarterly basis. I think we obviously set our annual guidance to a point we feel confident in both on our top line. And obviously, we had an adjustment on the bottom line on the 16 to the 16.5. But certainly, in all those areas, again, in a place that we -- despite some quarterly fluctuations. Again, we feel confident in our guidance for the year.

And then if I just kind of take a step back and look at the 2025 outlook of 4% to 5%, that does include 2 quarters where you have pretty easy comparisons, 1Q on HST and 4Q on the IV business within MPT. So how do we kind of think about the normalized growth rate versus the comp benefit growth rate of the business?

I'd say a couple of things. We also, though, recall, as we just talked about, have a conservative conservation element in there. That's obviously a headwind. And so I mean, I think there's always going to be -- I look at this, there's always puts and takes in a given year. We certainly view ourselves as this 4% to 5% is a good way to think about our company in terms of annual growth. And I think the -- that will play out as we anticipate this year. And as we've talked about going forward that somewhere is a good basis to think about the organic view of our company.

And what -- maybe going into some of the individual segments that I think if you look at MPT, you talked about Novum, you talked about Nutrition. You talked about advanced surgery. I mean the IV dynamics; I think we understand. Any other the product lines or businesses you want to highlight within MPT and then we'll talk -- then we'll go to HST.

I think that's the main stuff. Maybe the only thing I would add is just a couple of builds on a couple of those points. And again, from a Novum perspective, we certainly again, that launch has gone really well. The product is performing really well. We are in an upgrade cycle that is causing lots of customers to be able to have conversations about those things. And we've had a lot of opportunities for both competitive wins and obviously changing out the spectrum, but both. And I think we've talked about the fact that we -- our share gains, with Novum, we believe have doubled from where we were in the past. We're adding about 1% a year. And then we think that's healthy is at about 2% a year in terms of that. So that's one point I'd make. On the Nutrition piece, one of the areas that we've had some success in now is in the alternative space. And I think this is one of those things where we've had some focus on and investments in the ASC space, and Nutrition has been one of those areas we've had some nice success. So that mid-single-digit growth you're seeing there is in part due to our presence and our penetration into that space. And I guess the other thing I would just say, the demand in our advanced surgery, in particular, U.S., but in general, has been quite strong. And so I think the -- all really across those areas, I mean, we've had some good performance. And so that's maybe the one couple of adds I'd just make to that point for MPT.

Okay. And then within HST, I mean this is a business that actually has a lot of parts to it, but I think very frequently, we -- think for myself, maybe think about it as you got beds in CCS, and you got Welch Allyn stuff in FLC. But I think there's probably more moving parts to that franchise. And maybe help us think about how things are progressing within maybe a little bit more detail under the hood within those subsegments in HST and kind of how -- what are the drivers of getting that to more sustained and consistent growth.

Sure. Yes. I'm going to start and if anything Clare would like to add, she certainly can here. I think -- so I would start with the CCS and then specifically the U.S. PSS business. What you often hear us talk about is the U.S. PSS business. That's where we have really good visibility in terms of the order books. That's where we talk about the fact that a lot of those -- we had 14% growth on that in the first quarter, and that's where, again, we've seen even in the second half of last year, we started to see really consistent ordering patterns. And so again, our business in the U.S. and PSS has been really strong. We've had some challenges OUS in that space, in particular, in China and in parts of Western Europe. Those things are starting to stabilize, but those are a couple of pieces, again, in the PSS business. A GSS, think about those things as like operating tables and some of the larger equipment in an operating room. That's another part. We've actually had some pretty strong performance in that business as well in recent times. And then -- so those are a couple of the larger capital. You've got other areas that include the respiratory and cardiology spaces, both in theirs. And they've actually had really solid growth in both of those and particularly in cardiology. And then the FLC part, as you said, is the Front Line Care, which is primarily -- again, Welch Allyn is the most obvious part of that. But it is really around the -- some of the stabilization in the primary care markets. In the prior year, we had a lot of just, I guess, I'll say, bad stuff happened from a headwind perspective. And to some extent, we're expecting less bad stuff to happen in this year relative to Front Line Care. And I guess the other thing I would just broadly say about that portfolio, though, is it's one of the areas that when we talked about the whole -- the connectedness piece, but also new product launches in that area over the next number of years is really going to be a key element of growth in that space. Anything do you want to add there?

I think that's great.

And then how about some of the sort of the high growth but smaller piece of the business like Bardy, for example, how is that progressing? And is that an area that's seeing increased investment? And does it get enough focus within the portfolio?

Yes. I mean that investment is actually going well, and there's -- they've had a pretty substantial growth in that area in our cardiology business in general. It's still a relatively small business, but it's one that -- I personally believe is one that we have a right to win in. It's, again, a very good margin profile and a good growth profile. And so again, maybe more to come in that area.

Okay. And then maybe lastly, in pharma, you talked about OUS injectables being strong with the U.S. facing some challenges. The U.S. -- I mean, the U.S. -- this business is a good one, but it's kind of a hamster wheel, right, where you got to keep launching new products continuously. And if you don't do that, you kind of ratchet back to market growth. Like was that -- is it just a timing of product gaps in Q1? Like what were some of the factors that influenced the U.S. business?

Yes. Some of it was phasing. Some of it was just, again, the new product launch, again, it's -- there's a little bit of choppiness in terms of timing as and when all these things roll out, we've talked about the fact that in our injectables business, there's 10 products a year that we're planning to roll out in any given time. And so the timing of that is sometimes variable. So in terms of the launches, both in the U.S. and outside it. So I'd say it's more timing and phasing than anything else.

And then compounding, I think this is an issue. You had a great year last year. I think you're bumping up against capacity here. It's not a great margin business relative to the injectables and anesthesia piece. Should we think about compounding trending at a lower growth rate on the forward or...

Yes. I would say maybe a couple of things on that. Number one, as we even entered this year and we gave our kind of guidance by segment, one of the things we talked about is the fact that we anticipated a more balanced view between our injectables and anesthesia, and the compounding business. And so from a mix perspective, there's, I would say, some conscious view on having some of that be a little more leveled out versus last year, where compounding was in the teens in terms from a growth standpoint. I will say this again, it is a lower margin business, but it's a fairly large business. And so there is a fair amount of absorption that happens from a leverage and fixed cost standpoint there. And so -- but I will agree to your point, it's something we have looked to balance out some. I anticipate -- it was softer in the first quarter than it will likely be the rest of the year. We do anticipate that leveling out some. The other thing I would just say, too, is from an anesthesia standpoint, I know you didn't ask this, but just to add to that. Again, that's a business that we've had some -- certainly some tail or some headwinds on over the last couple of years. That business is starting to stabilize. And again, it's also a good margin profile in that business. We do anticipate that continuing.

Okay. That's very helpful. Maybe let's turn over to the P&L here and we were miss not to touch on tariffs. A lot has changed since you issued guidance, and it continues to be an evolving dynamic. But how should we -- maybe just remind us within the $60 million to $70 million, like I think how big was China as a percentage of that? And what's the impact of this recent deescalation?

Yes. I mean China was actually ended up being about half of it. And the interesting part of that is that when -- what seems like forever ago, we started the tariff conversation our original commentary was that China is not a really significant part of our business. And we had anticipated at that time, it was more in Canada, Mexico. And obviously, a lot's evolved since then. The reality of it is that China became a larger issue for us just because of the sheer magnitude of the tariff. The net effect of the $60 million to $70 million we've talked about is really the net effect of tariff risk and in addition to the offset by some of the things we're doing, both from a supply chain standpoint and I'll call it, targeted pricing standpoint to offset that. And so, yes, there was this kind of a 90 days, if you will, hold pattern on what's happening with the whole thing with China. We're holding where we are right now in the $60 million to $70 million because obviously, as the tariffs go down, some of the mitigation activities go down as it related to that specific business. But I would just say this, this thing is constantly evolving. We're comfortable with where we are as of today and we've got 5 minutes from now, something else might change, I'm not sure, but we're going to continue to adapt. And the good news is a lot of the things that we are doing in terms of reevaluating our shipping lanes, reevaluating some of the things that are both kind of short and medium-term opportunities, something we're certainly continue to be focused on as this thing evolves.

So maybe talk about the overall -- the 16 to 16.5. I think we all understand why the adjustment from the approximately 16.5 that you had issued previously. But I look at Q1, there's a pretty big ramp from your Q1 gross and operating margin to meet the full year targets. What are some of the drivers on both gross margin and then operating margins that get you from where you started the year to average out to where your guidance now sits?

Yes. So I mean, really a few things. I mean, one, we already talked about the pricing. There's kind of a partial impact, if you will, in Q1 relative to the GPO pricing. I'd say another thing is really related to the impact of our TSA income and stranded cost implications. You'll recall, in Q4 of last year, there is a large, stranded cost number that was included as part of the 13.9 that we ended the year at. As we now head into this year, we've obviously -- we've talked about the fact that our TSA income, which, again, is ramping. And again, the deal closed January 31. And so some of those same effects were in Q1 with the stranded cost. But obviously, now the TSA income and some of the cost mitigation activities are starting to kick in. So that's also certainly a sizable part of that as we go into the year. And just generally, there's some seasonality to our business where our margin profile, as volume goes up, we do get more leverage out of that. And so our year does increase that way. So I think -- obviously, I think we feel like we're in a pretty good place there, but those are key -- a few of the key drivers there. Is there anything you'd add to that?

Yes. I think the key is the cost initiatives ramp over the course of the year. We normally -- our margin progression normally just improves every quarter just as our sales volume, and we get better leverage. So I'd say those are the 2 big drivers.

And were there any hangover effects on the gross margin line in Q1 from North Cove in Q4, whether that was -- I don't know, capitalized inventory or under -- or any dynamics in Q1 that were sort of in the P&L in Q1, but a reflection of things that happened in prior periods?

So gross margin...

Yes, gross margin.

I mean there's probably a little bit of that. And again, as I mentioned, the pricing didn't kick in, in Q1. The other thing I would just remind you of, though, is on the gross margin line in general, our TSA income. The way the accounting works for this is that our TSA expenses some sit in COGS, some sit in SG&A and the income itself sits on a separate line, if you will, over and above our operating income line. And so as we've talked about the fact that our TSA income is going up from where we had originally anticipated, that's not just a, hey, that sounds like a good news story. That also means the expenses are going up that are being covered by the TSA income. And so therefore, some of those end up sitting in the gross margin line, again, as -- again where the TSA income sits below. So that's some of -- a little bit of what you're seeing is a dilutive effect on gross margin as well.

Yes. I think in particular, in the first quarter, we had some higher planning and logistics costs that impacted COGS, which impacted our gross margin. And so obviously, TSA income was higher than we had anticipated. So it was just an offset, but it did impact that gross margin line because of those planning and logistics [indiscernible]...

The planning and forecasting piece was part of the -- what hit the COGS line and that was related to North Cove.

Okay. And then if I look at your guidance for Q2 and revenue dollars, like it actually looks pretty similar to Q4 of last year when -- and you did have a gross margin in the 44% to 45% range, like why wouldn't you get back to that level?

I think we just included the tariffs, the tariff we would have, but we reflected the impact of the tariffs.

So you started to see tariffs impact you in Q2 of...

In Q2 of this year?

Yes.

We should slightly -- it's more of a second half of the year, but no, not as much tariff in the second quarter.

But again, the gross margin impact, though, is a couple of different things. On the positive side is the pricing. On the other side of it, the MSA income has a dilutive effect on our gross margin.

That's like 10% gross margin.

Yes.

Yes. And so with the $310 million or so-ish, that, that actually has a dilutive effect on margins as due, again, this -- the TSA expenses that are going through there. So that's -- there's a number of those lines.

So you would say operating margins are better vehicle to sort of value of overall profit?

It is because the TSA income all sits in this other...

In that other line. Okay. So we kind of just like wrap this together, Q1, you had basically 3 months of full stranded costs, only 2 months of TSA income. So there was a mismatch there between your cost...

Yes.

And the TSC income, which depressed margins, and I don't know if the costs are ratably 1/3, 1/3, 1/3, but over the course of the quarter, but that did have a significant impact. As you roll into Q2, you kind of have more [ mismatched ] TSA income and...

Stranded cost.

Well, your stranded cost should start going down.

Yes.

And your TSA income should go up on -- at least on a quarterly basis sequentially?

The TSA income kind of remains a flat-ish over the course of the year, but our stranded costs come down.

Yes, but the 2 months to 3 months. So it should go up?

Right. That's going to go up relative to Q1. Like our TSA income go up relatively.

Yes, yes. It might stay a little bit same just because we had elevated expenses to support Vantive in that -- it's all dependent on what Vantive needs from us. So like that is the key. It's all dependent on what Vantive needs for us. So yes, to Joel's point, it likely will go up when you have the full 3 months. And it could be even higher if Vantive requires more services for us.

And you charge them a markup?

A slight markup. Slight.

Okay.

Yes.

Got it. And then as we -- obviously, the tariff dynamic did throw off what seemed to be a pretty linear opportunity to expand your margins here. But still 16% to 16.5% versus 13.9% represents significant improvement year-over-year. But I've asked you in the past, like do you think normalized margins from this business can be in the high teens? I guess that's still an achievable number.

Yes. I think I always like to rephrase that question slightly, and the answer is -- the question is, is there something structural that would prevent us from getting to that point over time? And the answer is there's not. I think this is -- let's say, it's something -- again, I'm not putting a time frame on that, but as a company, certainly, we are committed to continue to expand our margins. And I don't think there's not something structural that would prevent us from getting to that point. And I just want to say one thing you already added, I think it is very constructive to look at us on an operating margin basis this year with some of that noise in between the lines on the TSA income. So just to reiterate that point.

Okay. Very helpful. And then maybe we'll just kind of close with the balance sheet and use of cash. You're obviously paying down debt was a priority post-Vantive sale. Kind of where are we in sort of like your leverage ratio? And when do you think you'll be at a point where you can start buying back stock beyond offsetting the dilutive impact of options?

Sure. Yes. So I -- we are on target to hit our 3x net debt-to-EBITDA by the end of this year. So I'm very much looking forward to that too. So I cannot have to tell you, I'm just focused on paying down debt. We have this opportunity once we achieve that target leverage to reinstate a buyback program. That includes both the offsetting dilution, but as well as, again, a consistent buyback program over the years. And then -- and I think the other part of that then is that as we talked about the opportunity for fold-in tuck-in M&A again; to be very clear, it is not large M&A deals. It is a fold-in tuck-in opportunities that supplement our product categories, and that allow us to accelerate our growth rates. But those are the types of things we look forward to doing in addition to the organic R&D investments and things we've talked about as a company.

Excellent. Well, I think with that, we're at time. Joel and Clare, thank you for your participation, and we look forward to seeing you later today.

All right. Thanks, everyone. Appreciate it.