Cardinal Health, Inc. (CAH) Earnings Call Transcript & Summary

Hi. Good morning, everyone. My name is Erin Wright. I'm the head health care services analyst at Morgan Stanley, and we're happy to have with us this morning Cardinal Health in a very kind of dynamic morning for drug distribution. And with us today, we have Aaron Alt, CFO; as well as Matt Sims, who heads up the IR for the Cardinal. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you do have any questions, please reach out to your Morgan Stanley sales representative. And with that disclosure, I'll hand it over to Matt for more disclosure.

Perfect. Well, thanks for hosting us today, Erin. It's great to be here, as you mentioned, just some quick housekeeping before we get started. So we will be making forward-looking statements today, which are subject to risks and uncertainties that could cause our actual results to differ materially from those projected or implied. For a description of these factors, please review our SEC filings, which can be found on our Investor Relations website at ir.cardinalhealth.com.

So we'll get started with some Q&A. This is kind of a bigger picture question on the long-term view and vision, but you're targeting 4% to 6% Pharma and Specialty Solutions EBIT growth over the longer term. I guess, more broadly, what are some of those key underlying segment drivers? What's sustainable right now in terms of the strength that we've been seeing in underlying utilization trends and just underlying performance across that core pharma business.

Sure. Thank you for the question. And before I go there, just thank you for having us, both on behalf of myself and our entire team and certainly Jason Hollar, our leader. We are entering our new fiscal year. We are 1.5 months into it, coming off of a strong fiscal '24 and a strong Q4, which give us momentum coming into the year. And indeed, we have a fair bit of confidence relative to the business that we're helping to transform and drive in the guide that we provided, which I know we're about to touch on. And so for us, it's about staying consistent with the strategy that's already out there and executing every day against the operational improvements. As you called out, we guide pharma 4% to 6% long-term growth. We adjusted that for this year given a large contract nonrenewal, which I think we're all aware of to 1% to 3% growth. And so what should be notable is we're able to still guide profit up notwithstanding a large contract nonrenewal. And the reason we're able to do that is to strengthen resiliency of the portfolio, indeed, the underlying business that we're building. There are a couple of things that are true. Our core pharma business is in a good position. We expect that business to grow low single digits this year. We also expect Specialty to play a continuing contributor to the business. Before I can really describe the profit drivers further, I need to go back and touch on revenue for a second as well. Revenue is down -- will be down for the year in the pharma business, 4% to 6%. But if you take out that large customer nonrenewal, it's actually up 15% to 18%, right? And what that should tell you is that key parts of our portfolio are growing rapidly. There's an underlying organic growth revenue assumption within the rest of the portfolio of 10% -- pharma portfolio of 10% and there's a guide of $10 billion of new customer and expanded business with existing customers beyond just growing the business that we have. That certainly contributes to our profit growth. And while we don't comment on the margin profile of new customers, I will observe that we have commented on the margin profile of customers who are no longer with us being quite modest. And so we're -- it is certainly helping us that we're growing and we're growing with more sustainable margin customers as we carry forward. Now stepping back on the pharma business as well, what else is going on? Why are we -- why do we have the confidence to give the guide we did on the 1% to 3% growth. The first is, we are seeing, and we expect a strong pharmaceutical demand environment. And so we're operating in a stable environment, a strong environment in that way. It's also the case that we're assuming within our core pharma business that we have, what we like to refer to as consistent market dynamics in our generic portfolio. We operate at scale. We have best access. We have low cost. We're able to manage generics as a portfolio. And so we look at consistent market dynamics, meaning that we can manage the profitability so long as we have good volume, and we anticipate that as part of our guide as well. And then more broadly, as we think about the specialty part of the portfolio, we've been investing in that part of the portfolio now for some time. And again, notwithstanding the contract nonrenewal, we expect to grow our specialty portfolio, which is growing, as I said, at a double-digit margin perspective in an attractive way as we carry forward.

Okay. And then just because it was out this morning from Cencora, you embedded the dynamic in terms of the year-over-year comp from a COVID perspective, but COVID wasn't as meaningful from a vaccine perspective for you, right?

Yes. We have embedded our expectations on COVID into the guide that we provided a couple of weeks ago. It's a modest impact for us. It probably touches Q2 more than any other part of the year given last year. But we have nothing new to announce today around COVID or any other matters.

And I think it's impressive in terms of what you're seeing in terms of the offsets from Optum. And is there any surprises though with the Optum roll off in terms of stranded costs or anything like that to call out? And in terms of some of those offsets, whether it's Advanced or otherwise, Publix is another new one for you, how are those ramping in terms of those relationships?

Yes. For those of you who are relatively new to the story or for those of you that are not, let me give you a little bit of a primer on this. When the contract nonrenewal was, first when it was decided, we were ready for it. We had been doing scenario planning up until the last minute as to what will we do? Until we walked into that final decision by them prepared for where this would go. And so we were able to quickly pivot and pursue 3 things. First, we've been working on additional customers, which will be largely, Publix is certainly one of them. The additional business with BioPlus is another one. That's an expansion of existing business that is largely back-half loaded for us from a year perspective. We also had been working on how do we optimize our cost portfolio. We were very pleased with the SG&A delivery. The optimization that happened was in fiscal '24, and we took aggressive action and plans, while supporting our customers to set us up for success in '25 that will ramp over the year as well, but those actions are already in flight, and many of them have been acted. And then, of course, we have the Specialty Networks acquisition, which we did in the back half of last year, which is in obviously specialty where that is a nice profit contributor. It was in Q4, and that profit grows over the course of this year as well. Those were things we talked about when we gave our initial guide. What I'm here today to tell you is that we had a plan, we're executing against it. We've got the momentum. We've got the confidence, we can hit that plan. And indeed, as you saw in our Q4 earnings call when we raised the guide from at least 1% to 1% to 3% that's a signal of the comments we have an executed against, but also that we're leaving no stone unturned to ensure that we're both supported in the customer and able to optimize our overall margin profile.

Okay. And then this is kind of a broader question just on the pharmacy landscape in general, but there's a lot going on. You have an independent pharmacy channel that's not new that it's under pressure. But Rite Aid coming out of bankruptcy, you have Walgreens and commotion there. But you do seem to be aligning yourself like you're saying in terms of with growing customers. And customers that seem to be better positioned, I guess how are you navigating this, though? And how do you kind of play a role in that?

Yes. A couple of thoughts. One, we like to talk about our strategy is to win with the winners. And certainly, we have a long-standing partnership with CVS that we continue to reinforce every day. We may talk about some elements of that later today. We also have a very strong presence with retail independents, right? And our view is that we are going to stay focused on the key customers and partners that we have. We continue every day to think about how can we better support them from a core distribution services perspective, from an other services within the portfolio, particularly with respect to the retail independence. And so we believe we're well situated to both maintain and grow our business with those customers while adding in ways which are not at all challenging for our existing customers, great new customers like Publix, like expanding the business with BioPlus, Advanced, et cetera.

And then in terms of the core base pharma business, the drug pricing environment, you mentioned kind of generics and efficiencies there. But can you talk a little bit about what you're seeing from a drug pricing perspective? And then also just the impact from IRA and general visibility on the drug pricing environment?

Sure. We don't have a lot new to say about the drug pricing environment. And there are occasional new stories about what the latest thing coming down the pipe. But as we think about our generics portfolio, one of the nice things about our business is because of our scale, because of our partnership with Red Oak, with CVS, we do believe we have industry-leading access. We also believe we have industry-leading cost. And because of that, we're able to manage the portfolio. And so if there is a particular drug or class of drugs where there is a perception of inflation or deflation. We're able to manage through that. We're focused on how do we continue to drive that volume in a strong prescription environment. Within the branded side of the portfolio, of course, it is a fact that there is manufacturer inflation over the course of the year. And the signals we're reading is just that the inflation -- the branded inflation will be generally consistent this year as it's been for the last several years. And so we're not expecting there to be a significant put or take in our portfolio and our expectations are built into the guidance that we provided already. With respect to the IRA, it's a complicated topic that a lot of the story still to be written. What we continue to come back to is, look, our role in this industry is to safely, securely and efficiently ensure that ultimately, the patient can get the pharmaceuticals they need or the medical supplies. And we will continue to bob and weave as we have, and our business model has evolved from time to time. But look, we're running a 1% margin business here, which is relatively capital intensive and will need to be compensated for the services we're providing, and we believe the ecosystem in which we're operating understands that.

Okay. And then shifting to specialty. I guess Cardinal speciality business has experienced robust growth or growing 14%, I think, CAGR over the past 3 years. How should we be thinking about the growth over the longer term? You've done some recent transaction there? Where is the focus in terms of the key drivers over the next few years?

Yes. We're really pleased with the performance of our specialty portfolio. If you had a chance to read the transcript or listen to our Investor Day from a year ago, June, what you would have heard is Jason Hollar, talking about how we are relentlessly focused on how do we improve our specialty focus, our specialty service and indeed, our specialty penetration. It's a $36 billion business for us or it was a $36 billion business for us. Last year, it was growing at 14% last year. It grew at 14% from a CAGR perspective. And even with the contract nonrenewal, which will take $3 billion or $4 billion of the revenue line there, right? We're still going to grow it in fiscal '25. And so that's a sign of the -- again, the resiliency and strength of that part of our portfolio. We are investing organically, both upstream and downstream from how are we pursuing the specialty area. We are -- as you've heard us talk, I imagine about our organic efforts with Navista and further into the oncology space. Certainly, we did an inorganic acquisition recently called Specialty Networks, which gave us additional access exposure and importantly, technological capabilities in urology, gastroenterology and rheumatology. And so we're excited to continue to leverage that as well. And much of where we are looking both internally from an organic perspective and externally from an inorganic perspective is how do we continue to reinforce that portfolio. And so we're pleased with the results so far, but certainly always more to do.

Can you talk about specialty networks a little bit more in terms of what that kind of brings for you and in other acquisitions you could do in this space?

Yes, absolutely. I would describe it as exposure to therapeutic areas, certainly team and talent and then technology as well. As I referenced, Specialty Networks is a multi-specialty GPO plus. It's not an MSO organization. And what it did is it expanded our exposure in urology, gastroenterology and rheumatology. Areas where we already had a presence, but now we have an even stronger presence than we did before. Certainly expanded our customer base across those areas as well. From a team and talent perspective, what's been interesting is we like to laugh a little bit about it internally, where we bought the company, but we've given them the reins to key parts of our organization where we like what they were doing from an operation perspective, and they are already not even yet 2 full quarters in, making us better because they are -- not only are they continuing to accelerate the business they were running. They are making our core traditional business better as well by taking ownership of elements of what we were already doing. And so we're making the pie bigger as a result. From a technology perspective, a key attribute of what we were buying is the PPS Analytics platform, which is reading 42 EMR systems across the providers that are ultimately receiving the pharmaceuticals distributed through the platform. They recommend -- the data is being aggregated, data is being sent to the ultimate drug manufacturers, but more importantly, the data and the specific therapeutic recommendations actually then going back down to the providers. And so as you can imagine, from a practitioner perspective, if you have a specific case in neurology, rheumatology or gastroenterology. And, by the way, increasingly oncology. If you have a specific -- if you have recommendations coming in, here's what other patients have experienced with specific sets of facts that can be incredibly valuable insights and information to the provider. And so we're excited about that. Now I alluded to it, we did not buy Specialty Networks to turn it into our oncology platform, but one of the nice -- the pleasant findings post transaction is just how much of an impact it is having on our technology build for oncology, on our practice approach for oncology. And so we see continued synergies beyond our original business case in that acquisition.

And speaking more of oncology Navista, can you give us an update there? And how are we -- how are you thinking about kind of community oncology in general and as an earnings driver going forward?

It's a great question. Indeed, there was a recent transaction in the space as well, for someone else. And what I would tell you is this, is we have -- we laid out last Investor Day a differentiated strategy for oncology. It wasn't be all -- be everything to everyone. It was how do we support the 2,000-plus individual oncologists who are fiercely independent, who want to remain independent, but who are looking around at the larger practices going, well, I want some of that. I want access to better data services. I want better revenue cycle management capabilities. I want someone to manage the back office. I want better access to drug discounts. I want -- they're looking for that without having to give up their independence. And what we have been focused on for the last year is the foundational technology build, which we are making great progress on. We've been focused on building up the team, which we are largely done on from an experts who have done this before, who know oncology in their DNA. We're really pleased with that. We've been focused on refining, defining and rolling out our business model, which we have now done as well. And we've been focused on our customer pipeline where the team is making great progress on that as well. And we'll have more to say on that in coming quarters.

Okay. And then I think you commented a little bit about your relationship with CVS, and you have a recent JV there, too. Averon is I can see correctly. And so can you talk a little bit about the rationale, the economics for you, the financial implications? And how is this different maybe than like the generic purchasing consortium or other opportunities like that?

Yes. zooming out for a second, we have a long-term relationship with CVS, which covers a lot of ground, we distribute to their stores. We have the Red Oak generic sourcing agreement, a number of other arrangements given the key partnerships between the 2 firms. And so we're really pleased with that relationship. And indeed, we continue to look for opportunities with CVS about how can we do more together because it's in service of all of our customers, right, not just the Cardinal CVS relationship. The latest announcement was the Averon partnership, which is biosimilars related and not dissimilar from Red Oak, although they are completely different joint ventures, Averon is really focused on building the infrastructure for a -- how do we ensure best-in-class access and best-in-class costs relative to biosimilars, right? And we started with a small number of categories and biosimilars, and that will ramp up over time. But I want to emphasize it's in service. CVS is certainly servicing their own portfolio. We are servicing our entire portfolio through that joint venture, but it is completely distinct from Red Oak.

And then this is one more question on kind of pharma before we get into medical, but this is more of a broader question of pharma in pharmacy models, I guess. And I think there's some misconceptions about some of the DTC relationships that some of the pharma companies that are launching like with Lilly and Pfizer more recently. I guess, how do you participate in those because I think you do and/or at least drug distributors do? And does this really change the model meaningfully from that perspective?

It's always interesting, sticking with paper and reading what the next innovation is in the marketplace. And I say that somewhat glibly, but look, here's the point, underlying virtually all of these models, underlying what you're reading about there, you typically have 2 things: a distributor in the background and a pharmacy in the background. And so we or our peers, I won't claim to answer all the questions about all -- this question, but you find a distributor like us and you certainly find a pharmacy like our customers on underlying those environments. And so we support industry innovation overall. We are big fans of ensuring that ultimately, health care consumers have access to that which they need. We want to be helpful in that way, and we believe we are helpful in that way as one of those background distributors servicing, background pharmacies and part of where we're investing as well is you heard me reference, upstream and downstream investments really part of where we are investing as well as to ensure that whether it's Lilly or Pfizer or others, who are making the changes, we want them coming to us because we have thought ahead, we have the capabilities they need to explore their own sets of innovation.

And I want to make sure we get to medical. I mean it's been a big area in terms of focus for investors in terms of the turnaround story. You've laid out plans to reach that $300 million in EBIT by fiscal '26 under the new segmentation. How is that goal progressing and what inning are we in, in terms of that transformation?

Yes. Medical was a big win for us in fiscal '24. As we entered the year, I think there may have been a little bit of skepticism that we could accomplish that, which we had laid out relative to hitting the plan. And so we were very pleased on our Q4 earnings call to be able to describe the success that Steve Mason and his team had relative to driving almost a $240 million profit increase year-over-year from fiscal '23 into fiscal '24. It was driven by 3 consistent elements of our first medical improvement plan. Now our GMPD improvement plan, which continue to drive against inflation mitigation, continue to drive the turnaround and growth of the Cardinal Health brand and then just simplification and cost optimization of the overall portfolio. If you ask how they made the $240 million profit improvement, that's how by executing against that. But there's more to do. And so as part of our guide, we did guide fiscal '25, which we're now a month into at $175 million that's consistent with our previous guidance. We guided fiscal '26 to $300 million, and we are going to keep doing what we've been doing, which is staying loyal to our strategy, benefiting from the continued opportunity on the inflation mitigation in '25, even though we got to run rate 100% at the end of '24, we've still got more opportunity there in '25. We're obviously focused on how do we drive the Cardinal Health brand growth, it's a more profitable part of our portfolio, certainly, and then continued simplification and cost optimization everywhere we can.

And then part of an element tied to that longer-term growth target is normalizing kind of just general operating environment. And how would you characterize, I guess, medical growth generally speaking across the industry now? And then longer term, how do we think about growth across that segment?

Part of our guide is an assumption of low single-digit utilization growth over time. We've guided revenue up 3% to 5% for this coming year. And it's really us achieving that. And we have a couple of customer wins that are built into our guide as well, but that's how we're thinking about the overall environment.

And then the profit opportunity associated with private label and the Cardinal brand products, I guess, it represents roughly 1/3, I think, of your profit today. Where does that go over time and what needs to take place on that front?

We haven't specifically guided the relative profitability other than to comment that as an owned brand or private label product, we have, it is a more profitable part of our portfolio, and that's why we -- that's why it's 1 of the 3 pillars of our brand. So we need to continue to grow that. We've guided revenue growth for Cardinal Health brand also 3% to 5% in the year. But over the long term, what we've also said is that from an overall GMPD improvement plan perspective, that's an upward trending line over the 3 years. And so that the impact of Cardinal Health brand on our profitability will certainly grow over the year but then also into '26. Part of why our medical or GMPD guide is back half loaded again is just the impact of the various puts and takes of the 3 drivers of our business and Cardinal Health brand is a good example of something that grows with time.

And then your cost mitigation efforts, where does that stand now? I mean, you've made a lot of progress on that front, and you talked a little bit about that across medical, but your ability to continue to implement those?

There continues to be opportunity everywhere we look from a cost optimization and simplification perspective. We recently announced -- I hope we announced a manufacturing change in our international portfolio, in the last week or so, which is, again, a good example of us continuing to assess where can we simplify our portfolio, where can we do things more efficiently either by optimizing our manufacturing network because we are both a manufacturer and a distributor or by optimizing our sourcing network or by optimizing how we operate within our sales teams or more broadly across the enterprise because it's not just about GMPD per se. We are an enterprise and we all have to contribute to the continued simplification and optimization, and we're watching every part of our team step up and assist the GMPD team in driving towards those tropicals.

And then any sort of update on freight trends, input costs, I guess just across your entire business, but the ability to pass those on to customers and also touch on tariffs as well?

Yes. Why don't I take freight, and you take tariffs. My voice is about to crack. There has been some concern around freight costs recently. Indeed, we have seen as compared to a year ago where we were getting to effective low points, we have been tracking some increases in freight. And the good news is that much of what we have been seeing even before starting to move the other direction was already built into our guidance. And so we had already planned for what we were seeing before we issued our final guidance. It was in the 175. Now it's also the case that, as we've talked about inflation mitigation over time, our ability to both monitor, see it coming and do something about it, either with our suppliers through our negotiations, through the lanes we use or being able to pass the cost on has also been, you keep on our effort, and we are much better positioned today than we were a year ago or 2 years ago to be able to manage that. So -- what I want you to take away on the freight is that we're watching it carefully. We believe it's built into our guidance. There hasn't been anything more material, which would cause us to raise concern around that for GMPD for fiscal '25 yet. Do you want to hit tariffs?

Yes. So on tariffs, the good news is our exposure to China is fairly modest. And so we do now self-manufacturing in the country. We only source less than 10% of our Cardinal Health brand revenue from China. And so as Aaron indicated, we have a highly diversified global supply chain. That includes the Central America region. We have some domestic manufacturing capabilities, and we did touch on, on our Q4 call that syringes is an example of a category where there is some industry-wide disruption that we have the ability to domestically manufacture that. And so we're making some investments to expand those capabilities. And so the point you should take away is that we're highly diversified, and we're managing through it.

That's a great point. And you should take away that we are investing for the long term in the business about how do we continue to optimize the efficiency of that business by doing the overall network analysis.

And then in terms of this other segment as well, you've said you're committed to nuclear, for instance, I guess, can you talk about where your focus is though within the other segment? Is it on nuclear? Is it the at-home segment? Is it all of the above? And where does that kind of go over time as we think about?

Yes. We are very excited about that, which we call other. And we wouldn't call it other if we had another choice, but the accountants -- not accountants, the accounts made me do it. We have 3 businesses that roll up into other from a financial perspective, it's our Nuclear and Precision Health business. It is our at-Home business, and it is our OptiFreight business. They are very different businesses from the rest of our portfolio and indeed very different businesses from each other. . Part of our change this past January was to recognize the revenue and profit growth opportunities those 3 smaller businesses present to us. And so we are doubling down on those businesses. Each of them now reports directly to Jason Hollar, our CEO, with the direct line to the CEO also comes direct accountability for hitting their plans and also comes access to additional resources. And so we are committed to investing in all 3 businesses, certainly from an organic capital perspective and expense perspective to drive what we have guided to be significant growth within the portfolio. They're going to -- we've guided them to do 10% profit growth as an other within the year, but we have high expectations for all 3 of the business. Now they will contribute in different ways at different times. As I said, we are investing in the technology in OptiFreight. We've talked about we're investing in automation and new distribution points for the at-home business to drive the efficiency. And within the nuclear business, we're investing in the Theranostics capabilities. That was -- that business grew 20% for us in fiscal '24. We have similar expectations as we carry forward. And so while the investment profiles of each of them is a little bit different, we are investing in all of them, and they will all continue to contribute to that 10% profit growth as we carry forward.

In terms of investments, I guess most of that's organic, but what about inorganic investments and where the focus is now? Is it on other segment and bolstering some of those capabilities or what you're seeing in specialty, but where is the focus? And do you see kind of a robust M&A pipeline? Or is it more focused on buybacks at this point?

Yes. Well, there's a lot to cover there. First, we think about investment through a disciplined capital allocation framework, where we first start with what -- given the strong cash flow we have had and no doubt will have as we carry forward. First, where should we -- can we invest in the business organically, and we'll spend about -- between $500 million and $550 million of capital investment in fiscal year '25 in support of all of our businesses, and there's -- and we have built some competition for resources internally within the business. After that, we protect the balance sheet. But there, again, we -- the team has made such great progress for the last couple of years. We don't have to do much to protect the balance sheet and the business as it is because we are below our leverage ratios in support of our rating indeed with 3 positive outlook upgrades during fiscal year '24. That then takes us to our baseline share repurchase, and we committed on our Q4 earnings call that we are going to buy back $750 million of shares in fiscal '25. That's $250 million increase from prior year, but we have the cash and the cash flow to be able to do that. So we're committed to doing that. And that then leaves really to the point of your question, well, what about M&A, right? And we are certainly paying very careful attention to the marketplace, but we are even more aggressive in identifying from a strategy perspective of what do we want? What do we need? What can we go get versus waiting for the -- some of the knock on the door and say, oh, by the way, something is for sale by a strategic or a sponsor. And so our team is being very focused strategically on where can we grow our business inorganically. Now that comes in 2 flavors. Until recently, that flavor it was all about specialty all of the time. We were only going to invest in M&A in specialty assets, and that's partly why the Specialty Networks acquisition was so attractive to us. We went and found the asset and got the deal done. Jason has broadened the aperture for us our willingness to consider inorganic opportunities to also include the growth businesses. And so for the right asset at the right time, but importantly, done in a very disciplined manner, we will consider inorganic investments in all of at-home, Opti and Nuclear. But I want to emphasize, it is while we've opened the aperture our primary focus remains on specialty and we will be very focused on any deals we do being disciplined in how we go about doing them.

Great. And then a shorter-term question for you in terms of how we think about the year and the quarterly progression, I guess, anything to call out as we're modeling out kind of the next quarter as well as, I guess, subsequent quarters as we think about it.

Yes, it's a great question. We've got a lot going on. As you can probably tell from my comments, if you know our story, there's a lot of moving pieces underway. With respect to the pharma business, what we have guided is that we're working through the contract on renewal. We've got these specific things we're doing to offset that profit impact. Much of that is more impactful in the back half of the year. And so we guided pharma for the first half of the year to be slightly down to flat. The second half of the year is where we'll see the growth. And we've also said that -- on an absolute dollar basis, Q3 historically has been and will be this year our highest absolute dollar profit quarter within the pharma business, largely because that's the quarter in which most -- not all but most manufacturers take their price increases. So that's where we see the impact of the inflation. On the med business, what we said is that like pharma, it's also more back-half loaded because we continue to execute against the medical improvement plan entirely consistent with how we displayed our financials in fiscal year '24. We were specific that when calling out in fiscal -- sorry, the first quarter of fiscal '25 because of seasonality, Q4 to Q1 because of incurred manufacturing variances, which are -- which we typically incur there are 6 or 7 months after and end of the calendar years when we start to see those. Q1 is down as a result of that and because of what Matt alluded to, some investments we're making to promote flexibility in our domestic supply chain in key areas. Q1 will be the lowest profit quarter for GMPD within the year, and we guided up to $20 million versus the revised $12 million for fiscal '24 that we saw there. That's really the sense of the relative timing I can give you.

Great. Thanks so much. I appreciate the time, and hope you have a great conference. Thank you.

Thank you. Thanks for having us.