Colgate-Palmolive Company (CL) Earnings Call Transcript & Summary

Great. Good morning, everyone. I'm Dara Mohsenian, Morgan Stanley's household products and beverage analyst. Just before we get started, a quick disclosure. Please see the Morgan Stanley research website at www.morgan Stanley for important research disclosures and contact your Morgan Stanley representative if you have any questions. And with that, I'm very pleased to welcome Colgate back to our Global Consumer and Retail Conference. With us here today are Stan Sutula, Colgate's CFO; and John Hazlin, Colgate's Chief Growth Officer. Thank you both for joining us today.

So John, you recently moved from Hill's Division President to Chief Growth Officer. Can you discuss your new role, what your biggest priorities are, where you see the most room for driving growth going forward in the organization incrementally?

Yes. Thanks, Dara, and good morning, everybody. I did join as the Chief Growth Officer in July after having been at over at Hill's for a couple of years. The fundamental role that I'm occupying now is leading our 2030 strat plan and building capabilities that we can scale and drive across the company. Noel often talks about our purpose, and that really headlines the way we think about the business, which is that we are an innovative growth company, reimagining a healthier future for all people, their pets and the planet. And so the priorities then stem from that. And I would articulate the first priority is always about having strong brands. Strong brands are what underpin our growth, brands that people trust, brands that people are ready to passionately advocate for, brands that serve real people needs and are based on real human insights and intentions. Number two is what we're calling omni demand generation. This is demand generation. It's something that consumer products companies have been doing forever, but now in a very different world in a nonlinear world, in a world where shopping is online, offline, et cetera. And third is innovation. Again, lifeblood of the company. We've been doing innovation for 2 centuries now. But as we think about the world evolving faster than ever and meeting different consumer needs, doing that across the globe with very different geographies, very different socioeconomic standards, very different channel environments, all of that will be key to where we're going with plan.

Great. That's helpful. You talked about the 2030 strategy plans. 2025, obviously successful. But what are the differences as you look at the 2 plans versus each other going forward?

Yes. We're very happy and pleased with the outcomes of 2025. We feel that the business results were strong and that we were able to really build the capabilities in the organization that set us up for future growth. So you'll see 2030, there will be a lot of evolution, things that are working well that we'll double down on and then a couple of new things. So if I give you a couple of examples, things that have been hallmarks of our success forever are our science-led growth, our science-driven brands. That will persist, but we're doubling down on perceivable superiority. So how we think about making sure that the brand outcomes that we're delivering are precisely focused on what consumer needs are. So where are the points of difference, what really makes meaning for people. Professional engagement and advocacy. This is something that we've had, again, as a strong suit, especially in our Oral Pet and skin care businesses. That will continue, but we're putting more resource against this, more in terms of people calling on doctors in their offices, more on the tech that's going to help us to deliver messages and target them differently. One of the important step-ups in 2025 was our investment and focus behind data, digital analytics, et cetera. And we've made some really important progress there, rolling out advanced analytic tools, for example, to drive revenue growth management, to drive promotional efficiencies, to drive marketing mix modeling. As we go forward into the future, we're going to see a lot of that being stitched together even more tightly. So you get to cross-channel advanced analytics. Some things that we see that are going to be a little bit more transformational. ODG, I just mentioned. We think that this changes the way that we work internally, changes the way we communicate with our consumers, changes the way we interact with customers. And innovation. We've been very pleased with the innovation progress that we've had. But we believe that there's more to be done, especially as we look to more incremental innovation and targeting more premium price points on the innovation ladder.

Okay. Great. Omni demand generation seems like a particular focus. What are the key enablers in you succeeding on that front? And can you highlight its importance within the organization?

Yes. So we're commonly calling it ODG, a little acronym. But fundamentally, demand generation is at the heart of it. Demand generation, again, is something we've been doing as a company for years. What's different is the consumer path to purchase and discovery journey is different. The modern media landscape is different. The channel environments are different. What we see is people who are discovering products and shopping for products offline and online and often at the same time. So you have to meet them in a very different way. With the ability to capture data and deploy data, we're able to target audiences more distinctly, provide more customized and personalized messages. So the keys to success really here are reorganizing and reimagining the workflow between marketing and sales so that we are delivering one consistent brand experience for our consumers and shoppers. We have shared KPIs that we are measuring and able to have one common view of performance and then ultimately getting to one common tech stack, which has that ability to do cross-channel analytics so you can do scenarios and measure outcomes together. And it's all in the service of getting the right message to the right person at the right time.

Great. And then, Stan, on the call, you discussed the new SGPP, strategic growth and productivity program, SGPP acronym as an enabler for organizational change as well as a driver of investment and bottom line growth. How is it maybe different from a standard cost savings program? And how do you think you stack up sort of relative to peers? And does it -- does this program give you earnings flexibility as you look out just in a tepid top line environment in terms of category growth being fairly muted here?

First of all, SGPP will roll off your tongue the more you say it. So it is, in essence, a productivity program. But the thing that's a little different about what we've done with this one is this one is front foot. So we've looked at where we were in the strategy. We knew that we had strategic investments we want to make. And then as we look backwards, we grew over $5 billion over the previous years as a company. Inherently, it just becomes inefficient when you add on that kind of growth over time. So we took step back and we said, look, we're going to do a structural type of program. We're going to use that for 2 components. First is to make investments into the business. So we've laid out strategic investment areas that we will go fund with part of the productivity generated savings. And then secondly, we're going to take some to the bottom line. So we're going to take some to the bottom line to contribute to profitable, compounded dollar earnings base growth. Now when we look at the program, it's over a multiyear program. It has multiple components as we look to drive core productivity through structure. We have supply chain efficiencies as well baked in there. A lot of planning in the essence now. We'll see that start to deliver as we go through the year and '26. Obviously, more back-end loaded as you go through that, but there'll also be deliverables in the out years. As we look at competition, everybody sees the same macro environment that we do. They operate in the same categories. They see that softness. And I think that's why you see a number of productivity programs out there. The other component of this is things like AI are going to help drive productivity and enablement. We're no different. We're going to take advantage of that and look to improve our efficiency over time. So we're confident in our ability to execute this. We think the priority of investing in the business and taking some to the bottom line is the right balance, and that will give us the flexibility in a tougher environment.

Okay. And maybe a bit more detail on investing behind the business. You've increased marketing spend a lot over the last few years. Where do you stand today in a difficult industry top line environment? Do you think you need to spend more to drive greater top line yield going forward? Can you do it more through efficiency and things like AI, et cetera? How do you think about that high level?

I think we look at the bifurcation between -- so top line growth is tougher in the current environment. The categories have slowed. And while we think long term, the categories return to kind of that 2% to 4% in the categories we participate, in the short term, we think it's going to take time for them to recover back. So now as we look at that, we've made investments in advertising, in particular, investing back in our brands over the '25 horizon, adding over $1 billion and kind of going from sub 10% of sales to 13.5% last year. There's no perfect opportunity. I think first and foremost, our ROIs on that investment back in the business continue to improve. And as we see those investments continue to improve, we'll continue to make those investments to get that return. Now the advertising under the covers has changed over time fairly significantly. How we do it, where we do it, using AI for content generation, our approach to market, we continue to evolve that through time. Now investments in the business. We spend a lot of time with my friend, John and his predecessor, and we look at what are the areas that we think will bring benefit but need some step change investment in them. We used our last 2025 framework, and we're applying it now in 2030. So previously, we looked at data, analytics, AI, fixing a couple of key brands. That worked really well. We carved out funding from our budgeting process. We invested it into the business and that yield and that return has played off well. Now we sit with John and his team, and we look at what are those key areas that we need to incubate and drive and omni demand gen is a really good example of one of those. So we have spent a lot of time looking at this building out the model, how we want to apply it, but that requires investment. And we don't want to slow it down in order because we see that potential. So we've carved out the money in order to be able to go do that, make the upfront investment, and that will evolve as we go through time. So this piece of investing back into the business, part of it's functional capabilities with John's team and then part of it is also driving through innovation, right, where we see that innovation in market, we want to incubate some of that around the globe, given we're mostly international and then give it time to take root. So pretty pleased with the overall balance.

Okay. Great. And maybe both of you could touch on resource allocation to tie all those questions together, right? Part of the 2030 plan is where to invest resources in this new environment we're in. So maybe just discuss the evolution of the company in terms of thinking about where you're investing looking out to 2030.

Why don't I start at a macro level. Our 2030 strategy at its root is really a resource allocation exercise. So as we look at the resource allocation, it starts with dollars and people. Where are we going to put our resources, where do we see the growth opportunities for the business. But in order to be able to do that, you have to have confidence in that model. So our 3% to 5% long-term algorithm, we also need to drive margin expansion. We need to control our overhead spending and get productivity in there. That creates the funding mechanism to go do this. So one of the things we look at in our long-term strategy is the cash component. So we model out the entire income statement, all the way down to cash, dividend policy, share buybacks to return to shareholders, and we want to make sure we have the wherewithal to make those investments. So in resource allocation, when we go through our strategic plan and then our operational plan for 2026 as an example, we don't just do it division by division and call it a day, we go through all of our divisions, all the innovation, all the functions. And then the senior team steps back, reviews all of it, and then we do make resource allocation decisions. So we rebalance to areas that we see the growth and to areas that we see the long-term potential. Now sometimes that means saying no to very good ideas, so we can say yes to some great ones. And at its core, it's making decisions. And I think that's something we've gotten much better at, and we have the framework with which to do it. John?

Yes. I mean just to add a little bit, we've been more diligent about looking at category country combinations, making sure that we're putting the money really into the right sales there. We've been looking at brand, sub-brand, subsegment allocations to make sure that you're following where the growth is. We have -- for example, you see whitening as a subcategory in Oral Care still has meaningful growth potential. Cats in Pet Nutrition, meaningful growth potential. So trying to allocate dollars where we think the growth is really going to come.

And how do you think about that geographically in terms of resources?

Well, look, geographically, I think because we're international and over 2/3 international, that becomes a big component of our resource allocation. Our market share differs around the world. Our portfolio differs around the world. But we look for those areas of opportunity and to play the hot hand as well. And so areas like Purple toothpaste in Asia and the purple combines with the yellow on your teeth and it creates white, works extraordinarily well. And it's really done a great job on innovation. Things like e-commerce and our ability to go to market, we're particularly advanced in China. So we take that best practice. We invest in that core capability and then we bring it back to the rest of the business. So right now, as the U.S. has been a tougher market over 2025, we look for those growth opportunities. Our exposure to emerging markets plays well, and we have the ability to invest for the long term in those markets.

And Stan, obviously, it's a pretty subdued top line environment. As we look to next year, it seems like that will linger to some extent. Clearly, we just discussed the SGPP savings...

Yes, I told you it gets easier.

There we go. And in theory, FX is favorable, thinking of the emerging markets you just discussed. So just can you speak conceptually to some of the key puts and takes as you think about earnings growth in 2026 and how you balance driving earnings growth versus reinvesting and that resource allocation you talked about earlier?

So let's step back at our macro level. When we look long term, we think that our categories grow 2% to 4% long term. Clearly, the market has not been at that level. We saw softening categories through the year. We're kind of seeing a 1-ish percent. I don't think that gets better quickly. So I think we're going to operate in this environment for a period of time yet, but that is not the same across the globe. So in certain areas around the world, we see better opportunity. We're going to go after that opportunity. So the long-term algorithm of kind of 2% to 4% category growth, we think we can grow faster than that. So our long-term algorithm is 3% to 5%. We still think that makes sense overall. So we're going to make the investments around those areas to drive that. So now when we operate in this type of environment, obviously, we're not going to give 2026 guidance here, but the macro pieces everybody sees. FX has been a little bit easier right now. But if I look at the last 10 years, FX has been favorable to us twice. So we're used to operating in that environment. We don't count on FX to give us a lift. We certainly don't want to spend into a favorable environment there. We'll take the tailwind if it maintains itself. And then there's obviously the worldwide economy. GDPs are slowing a bit around the globe. We see that impact going through. We see commodities still elevated. Hopefully, we'll see some balance on that come back through. But what we stay focused on is what we can control. So productivity, the reason why we're doing this program is we see the slower environment. We have a program called Funding the Growth, which is just core day-to-day projects to drive that productivity. We spend more time on that in down environments. We rebalance those resources across the globe and our exposure to emerging markets is a benefit to us, and we take that help and leverage that. So kind of headwinds and tailwinds. We've been around for nearly 220 years. We've operated in every economic environment. We have to operate in this one. And while it's slower in the developing markets, we think emerging market and our exposure there is actually a benefit to us going forward, and we're going to play that hand.

Okay. And maybe that's a good segue to just talk about the consumer environment in general. A lot of commentary on the Q3 call and the state of the consumer as you look market by market around the world, given volatility. Can you just highlight what you're seeing from a consumer perspective in your key regions? And also perhaps give us an update on the reformulation from Q3? And has anything changed on that front?

Yes. Let me start with the last part. So there's no update there. I think that's largely behind us on the reformulation. As we look kind of consumer around the globe, we'll start with North America, been a tougher environment. You've seen us making some progress here in North America. That's going to take some time. Things like the SNAP issue here that didn't help, right? So it puts more pressure on the category. But we're going to continue to operate and invest in the business for that. So we've reallocated. We're doing more investment in the brand in North America, focus on innovation. In Latin America, we see pressure on the consumer. We're performing well there. I think the hiccup on the formulation, again, I think, is behind and now that headwind will be less so here going forward. We go into Europe. Europe, we're performing well in Europe, I think, in particular, versus our peer set. Europe is slowing, but I think we continue to perform well because we have a great portfolio there. We have great therapeutic brands. Elmex in particular stands out. Our whitening stands out there and has done quite well in Europe. Africa-Eurasia, a smaller piece of the overall business, but maybe one of the more challenging regions continues to perform great, mid-single-digit growth, dynamic environment, a war in the region, always a daily issue in that, and John ran that region for a period of time, so he can give the real-life examples. But I think we continue to perform really well there. And then in Asia Pacific, we have a little bit of tale of 2 cities with our current performance. So in India, we've had a little bit of a challenge in India. The GST issue didn't help that, but we see an improving path. And as India, as you know, is a public company for us, and they've guided to an improving performance as they head into the future. In China, we have our Colgate business, which has done quite well. We spent a lot of time there, probably our leading geography in terms of innovation on the go-to-market in an e-commerce world. But our H&H joint venture has struggled a bit. We've talked about that on our calls. We think that the core China market will continue to grow here, and particularly through the middle class. So our exposure to emerging markets, I think, is a help to us overall. In our developed markets, I think we're performing well in Europe and improving in North America.

Great. And your full year guidance implies Q4 performance on org sales as well as gross margins improved sequentially. What gives you confidence in that level of improvement that's implied?

Look, when we put out -- Q3 was a tougher quarter. But as we looked at the year and we gave our guidance, we said, look, we see improvements for the year. So as we looked at the year, we said top line would grow roughly in line with the year-to-date growth for organic. And if you look at that, that suggests an improvement in Q4, and we're confident that, that will occur. Now we get some things that go behind us. So we finished the private label in Hill's midyear. So that's no longer -- it does -- it used to contribute to top line, certainly not to margin and bottom line, but we no longer have private label. The issue we had on a formulation in Latin America, we think, is behind us, so that becomes not a headwind. Europe continues to perform. We think India will get better. And then the balance of the portfolio, we think, is solid. So as we look at both top line and then margin, we said margin will be roughly in line with the year-to-date. That gives us confidence that we'll be able to deliver our low single-digit earnings per share growth.

Great. Okay. Maybe we can turn to AI and technological advancements. How is AI changing the way you operate? And is it more of an unlock on productivity or potentially driving top line growth? Maybe you can also touch on agentic commerce. In theory, it could be more of a threat to brands that have been built up in consumers' minds over time. But when you're using a prompt or have an agent, it may -- the brands may not translate as much. So how do you guys think about that and prospering with the agentic consumer?

Good. Well, I'll take the growth view of AI and maybe Stan can tackle the productivity view. AI, I think we all see is a transformative technology. We've been trying to get ahead of this. In the 2025 plan, we allocated resources to start to build out platforms. We have an internal proprietary tool we call AI Hub, which we've made available to the organization at large so they can start to experiment with generative AI. We are a Google company in terms of using all of their Google suite of tools and all the AI advancement that they're bringing. We're trying to democratize that as much as possible so that people get comfortable with the tools. They see them as an adjunct to growth to a way to augment what their own -- what they're doing themselves. We've been using AI, both generative and machine learning for a number of years in our RGM, in our demand planning cycles. So it's going across the company that way. There are a couple of specific areas that I'll call out, and they reference the things I've spoken about earlier, which is the first one is ODG. In an ODG world, what we see is you need 3 Vs. You need volume, variety and velocity. So in order to meet the modern marketing needs of personalization, multiplicity of marketing platforms, the ability to get messages far and wide, AI can be a great enabler of getting those 3 Vs. And so we're working both internally and with our agency partner to develop a global content supply chain where you can create modular creative and then iterate in however many number of thousands -- tens of thousands of iterations on what that looks like. The other is on innovation. We've built a proprietary tool to do innovation from discovery where you can propose concepts, generate images, generate copy, do synthetic testing -- do testing with a synthetic consumer, get a probability score of likelihood of success and ultimately be able to use this as an ROI management tool and to be able to measure the effectiveness of your innovation. Agentic is new. You can see it's just evolving. We see just like anything out there, we're going to have to pivot. You have to create the brand content that's going to be readable by machines that is going to be -- it may not be an image in the future, it might be text. It might be meta tagging of content. So we'll have to pivot with that as it goes forward. But fundamentally, it's a new way of shopping, and we'll have to move forward just as we have with all other different new iterations of shopping.

Yes. CFO always gets stuck with the [ private equity ] side. I actually didn't grow up in CPG. I grew up in tech. So I have -- I love CPG, by the way. So I really enjoy my time here so at Colgate. But what I see here is kind of that next evolution. I do think we're still in very early stages. While it feels like it's in a press every single day and you read all about how it's going to change the world, I still think we're very early stages. I do think we've done a good job on educating our teams on how to apply it, how to use it, encouraged it. But the interesting part is you can't lock yourself to one ecosystem here. Some of the models are much better at certain things than others. So we offer a variety of them to our employees for use. But I do see opportunity here. Right now, I see mostly enablement on the productivity side. I do think we'll get to true productivity. And let me give a couple of examples. One, so I don't see yet that this goes and takes out a whole bunch of resource doing things. What we do use it for is to make our teams more efficient. So we take all of our policies and procedures for finance and for accounting and put them into an agent. And now people instead of calling in looking for an answer and they have to wait for time zones, literally can go to the agent, they get the right answer. That's important. They get the right answer and they get it quickly. We've gained a lot of efficiency. It's actually our second most popularly used agent in the company, ironically enough. Now agentic, I think, is going to be the unlock on productivity. So things like where we use RPA today, robotic process automation, been a great productivity tool, has helped us automate. I think agentic is going to take this to the next level. However, the pricing models are all over the floor on it right now. A lot of them are consumption-based. And just recently, we looked at an agent, which technically was really good, like really good. And I said, okay, this would be great. Until we ran the math on the model and so it's actually going to cost us more to use the agent than it was to use our shared service center. That will eventually balance out. And right now, we're looking more at the tools to enable ourselves to write the agents than we are to actually have a partner come in and do them. So I think that's going to continue to evolve. I do see an unlock on productivity. I think we use this a lot on analyzing competitors on looking at the volume price/mix area, do predictive forecasting. And I think that will help us get more and more productive over time. But I think the agentic side will be a bigger unlock for us. I'm excited about the future for the opportunity for that.

And when we think about the dollar bucket of opportunity on productivity from AI and technological advancements, could this push you above the historical trend you've delivered on productivity for funding the growth? How do you think about it over time? Is it more -- you've realized some early wins in some areas and this sort of makes up for them over time? How do you just think about it from an overall standpoint...

I'll give you that question because Noel asked me a question, my boss.

He did but...

So look, I do think it's going to be an unlock on productivity over time. What we've demonstrated here is that balance, right? We'll use this to invest back into the business and to get more efficient on a global scale. It allow us to do more with less. And I think that's the real value. I do think this will help contribute to our bottom line, just like RPA did, just like hedging options do and driving real productivity. So I do think it's an unlock for the business going forward. All our competitors are going to do it, too. So I think one of the key aspects here is enabling the Colgate people, the Colgate team to truly use it day-to-day. And I think that's going to help us drive and get a competitive edge. But it's going to be another tool just like the other ones that we use.

Great. And then, John, Noel's talked a lot about improving your innovation process over the last few years, particularly the premiumization piece of it, which you mentioned earlier. What's different about your innovation process, both over the last few years and going forward? Detailing both the changes that have been put in place and if that's driving a sustained pickup in innovation contribution as we look going forward, again, particularly touching on the premiumization side of it.

Yes, good. Our innovation contribution has actually been quite good, about 45% of incrementality to the top line over the last 4 years. And it fundamentally starts with deep consumer insights. We spend a lot of time around the world in shops, in homes, working with the consumer, using online panels, as I said, starting to use synthetic consumer panels to try to understand really what's going to work. There's a lot of evidence of success of what is working. The Colgate Total Active Prevention regimen has actually been very successful around the world. We've been innovating in new fragrance technologies that underpin some of our fragrance-driven Home Care brands. On Hill's, we're inventing new subcategories. One of our most recent launches is what we call Multi-Organ. This is a product under the Prescription Diet brand for pets that have conflicting conditions. So the vet in the past has had to make a choice, prioritize one condition over the other. This lets them do that balance. Stan referenced Elmex in Europe. We have fantastic innovation, both on the sensitivity side, on the caries side, for adults, for kids, all at premium price points that are making Elmex the fastest-growing toothpaste brand in Europe. And if you look back in the U.S., the Hello brand, which has a high preponderance of users in the Gen Z community, we have some really interesting innovation that's coming. So the innovation plan is already working, we believe. But how are we going to supercharge it for the future? We are putting more resources in discovery, which is the important element of trying to find new ideas based on real people-centric insights. Discovery is the numbers game, if you will, right? You want a lot of discovery ideas coming into your funnel so that you can get some of them to turn and convert into commercialization. We've -- I mentioned before, the proprietary AI tool that we're using, which accelerates the ability to go through the discovery process, go through some of the validation process. Stan mentioned that in part of our strategic, our SGPP funds, we're allocating funds for incubation to make sure that we're bringing new-to-the-world ideas. These are things that they don't necessarily fit the current channel or the current consumer construct. So you want to spend some time understanding them in a live circumstance, either in a test market or in a digital environment, making sure that you've got the value proposition really locked down and going forward. And then, of course, it all takes people and how we are now organized between our central category groups and our divisions on the ground, making sure that we're working in a more collaborative and fluid manner so that we're getting the best innovation and being able to scale it across the world, we think, will really be able to help us accelerate in this area.

Great. That's helpful. And John, let's take advantage of you being here and your historical leadership at Hill's. It's been a nice growth area for Colgate for a number of years where you've really expanded the household penetration, but we've seen category weakness more recently. So a, maybe you can put those things in perspective some of the category weakness we've seen; and b, Hill's' ability to prosper within that from a market share standpoint. And just last, the incremental capacity at Hill's, what does that enable you to do going forward incrementally?

Right. Terrific. So we fundamentally believe that the long-term profile for Pet Nutrition is strong. Pets have become more than just the pet, they're companions. You've probably heard it before. They've gone from the backyard to the bedroom. We don't see that humanization of pets slowing down. So if you look over the long term, we expect this category to have underlying strength. If you look at certain pockets of the world, you don't even have full penetration of commercial pet food. So there's opportunity to bring more people into the category. When you look at therapeutic nutrition, which is something that we specialize in, there are many more pets that should be using a therapeutic nutrition product than who are using a therapeutic nutrition product. That's our job working with our vet partners to help educate people on the science of nutrition and why nutrition can be a better option often than other treatment modalities. Now the short-term category has been challenged. We've seen slowdowns, especially as inflation has taken hold. Pet got hit a bit harder than some of the other consumer staples goods. We've seen household formation a little slower with a high mortgage rate environment. There's a correlation between household formation and pet adoption. As affordability has been more challenging, we've also seen a difference in the type of pets. So more cats than dogs. And you see a difference in the category. The category itself is soft. The cat segment is actually growing. The dog segment is what's declining and dog has a bit more volume attached to it, as you can imagine. The good news is that at Hill's, we've got a lot of growth opportunities ahead of us. We still have relatively low brand awareness, relatively low household penetration and relative underdevelopment in some growth segments. And we had -- I guess, you want to call it the foresight to see these coming. We put some bets on growing cat faster, on growing small dogs faster, on growing wet pet food faster. And we built out capacity to deliver against that, and that's proving to be a prescient strategy, we are growing market share in all of those spaces. We're growing market share among specialized formulas. So people who are looking for unique benefits, especially therapeutic nutrition, where you have a sick pet and you want to give them the best nutrition to help improve their health outcomes. So we see the long-term horizon is positive but short-term challenges.

Great. Well, we'll end things there. Thank you so much for being here, both of you.

Thank you very much.

Thank you.