Convatec Group PLC (CTEC) Earnings Call Transcript & Summary

Good morning to everybody, and great to be with all of you here. I'm delighted really to be here this morning, and we can talk more about that over the break. But it's really great because we're going to have an opportunity today to spend some quality time to review ConvaTec's performance, both from a strategic perspective and from a financial perspective. And you're probably familiar with our disclaimer, so I just want to go ahead and put it up there. What we're going to try to do though is Jonny and I are going to have a little bit of a duo here and we're going to try to facilitate really a discussion with all of you here today. And if you say, hey, what are the key takeaways you'd like to share with us. There really are 4 key takeaways I'd like to share with you today. The first one is when you look at 2022, fundamentally, we had a strong financial performance. And that was despite a challenging context, right? The level of inflation, geopolitical situation, it was a challenging context. If you then go on and say, well, what about your competitive position as a business, what happened there? And fundamentally, what I'm trying to share with you is that we really strengthened our competitive position. across all 4 categories and across the entire value chain. Third thing you might be saying is, well, Karim, Jonny, what are the prospects for 2023? And fundamentally, what we're hearing to share with you is that we're going to continue to deliver sustainable and profitable growth in 2023. And then if you're posing the question and saying, well, what about medium term? What's the medium-term outlook? You're going to get a sense that fundamentally, it's very attractive, both from a strategic perspective, and from a financial perspective. But at this point, why don't we jump on in. I'm going to pass the baton to Jonny and let's talk about the financials. How did we do in 2022? Jon, it's all yours.

Thanks, Karim. Good morning, everybody. So this was a strong set of financial results for 2022. And I want to make 3 points about them, which we'll go through in more detail in the following slides. First of all, good sales growth. So nearly 7% on a constant currency basis and 5.6% organic, which is in the top quartile of our medium-term guidance range. Second was operating margin, expansion of 180 basis points despite a very substantial inflation headwind. And third is strong cash flow. So we delivered adjusted EBITDA of $500 million, and that enabled us to invest in the business for future growth, whilst maintaining a strong balance sheet with leverage of 2.1x. Let's look first at sales. And this slide, which is Page 7, for those dialing in, shows our good revenue growth across the categories. And you can see on the top row there, total growth, 12.7% for Wound Care on the left and 10.2% for Infusion Care on the right. Those were the 2 categories that led the way. And there was a substantial FX headwind, you can see that, too, on the far right, 5.2%. The second row shows you the organic sales growth, and I'm going to go through that by category next. On the bottom left of the slide, you see there the contribution from the acquisition of Triad now called ATT, $35 million in its first part year and Karim is going to talk about that more later. For the other 3 categories, the differences between the total sales growth and the organic sales growth, relatively small mostly relate to the exit from the hospital care business, which was delivered ahead of plan on both timing and cost. So let's look at sales by category, starting on Page 8 at the top with Wound Care. Organic growth of 6.8% in a relatively normal year. 2020 and 2021, the growth rates were distorted by COVID. 2022 was mostly through that. Now in North America, sales were close to flat with good growth in many areas, but moderated by our weaker position in foam. And in 2023, we're pleased that we've started launching our new better product, ConvaFoam, which Karim will talk about later. In Europe, there was good growth across most regions and in GEM, growth was strong, mid-teens percentages. And that benefited from strategic initiatives in key focus markets, such as rolling out CRM, increased account penetration and enhanced professional education. Going forward, in Advanced Wound Care, we expect to continue to deliver mid- to high single-digit growth rates. And in 2023, that will be slightly weighted towards the second half because of the strong comparatives in H1 in '22. At the bottom of the page is continence and critical care. Organic growth rate of 3.6%, but 2 very different components. Continence grew at 5%, with HSG gaining more new patient starts and good customer retention in the U.S.A. and with good performance across the portfolio of cure and GentleCath products. Critical Care was down 1.3%. And that was as hospital care was excluded after the end of May, following the closure of the Belarus factory, and [ FMS ] was double-digit decline because of a very strong COVID impacted comparative. Now going forward, this category will just be Continence Care and we expect to continue to deliver mid-single-digit growth rates in Continence Care. Moving on to Page 10 (sic) [Page 9]. At the top is Ostomy Care, organic growth of 3.4%, about double what it's been in recent years. In the U.S., new patient starts have been stabilized. There and in Europe, the growth in 2022 was moderated by our SKU rationalization program, which was good for margin, and we'll see that in a moment. But going forward, this rationalization is going to be much less of a headwind. In GEM, growth was strong, mid-teens percentages there, too, and benefiting from the same improvements in commercial execution as in Advanced Wound Care. Overall, in Ostomy, it's worth noting that ConvaTec product was up over 5%. And going forward, we expect mid-single digits growth from this category, which is much better than it has been in the past. And then at the bottom of the page is Infusion Care with organic growth rate of 9.8%. Strong growth arising from the increasing penetration of automated insulin delivery in type 1 and type 2 diabetics. The market for durable pumps, grew about mid-single digits. And then our revenue benefits in addition to that from improving product mix. Now we expect to continue to deliver mid-single -- sorry, high single-digit growth in Infusion Care because of growing market and improved product launches, product innovation and mix. In 2023, that growth will be weighted much more to the second half because in 2022, it was a very sharp comparative in the first half, but high single digits going forward. Now let me move on to operating margin, where we increased by 180 basis points, and that's the first time ConvaTec has increased its margin in 4 years. It was despite COGS inflation of 8.6%, which was as we had expected, and that led to a headwind of 320 basis points. And it was also despite further investments in research and development and in sales and marketing of 80 basis points. Now this improvement was achieved in 3 different areas. In mix and price, we added 170 basis points to gross margin. And that was benefiting from the SKU rationalization and the increasing ConvaTec product that I mentioned in the category sales. It was also benefiting from the exit of hospital care and the entry to AT&T. And it was benefiting from better commercial execution in the business units in collaboration with our centers of excellence in sales force and in pricing. And then there were 70 basis points in operations as we improved productivity through continuous improvement as the simplification agenda gets started there. And then in G&A, there was 260 basis points of improvement where we really gained traction. We're leveraging the global business services platforms that have been established in Lisbon, and now in Bogota as well. Standardizing processes and simplifying led to significant improvements in productivity, particularly in finance and in IT. And a big part of the savings was also removal of expensive external spend. We've built in-house capability to deliver our transformation programs, which is much more efficient. Now this improvement in G&A was a bit ahead of schedule. It will continue, but not at the same rate. Nevertheless, we're on track for our target of 7% of sales within a few years. So adding all that lot up together and with an 80 basis point tailwind from FX, we delivered an operating margin of 19.5%. Now on Page 11, we're showing the bottom half of the P&L with the adjusted numbers. Operating profit grew double digit at 11.6%, which is the first time ConvaTec has achieved that. PBT grew a bit slower at 9.1% because of increases in market rates for financing and FX hedging. And the net profit and EPS declined by about 3%, because of a big increase in the book tax rate. Now that was as expected and as we announced last half year, it was because of the recognition of deferred tax assets in the U.S.A. It's accounting, not tax -- not cash, excuse me, it is tax, not cash. The cash tax rate remained at about 15%, similar to the year before. And then finally, on this slide, the Board has decided to recommend an increase in dividend of 3%, which is intended to reflect the improvement in the underlying performance of the business and confidence in its future growth prospects. Moving on to cash flow then. This bridge, on Page 12, shows our net debt from the beginning of the year to the end of the year. And you can see very strong cash generation with adjusted EBITDA of $500 million, up nearly 8% year-on-year. In the middle of the chart, we invested around $400 million in making the business stronger for the future in 3 areas. First of all, inventory increased by $58 million. Now this was a mix of raw materials and finished products to improve the resilience in our supply chain, and it took our days in stock from 140 to 170 on average. Secondly, we stepped up CapEx and I'm going to talk about that next. And then we invested $204 million in M&A, which was the ATT acquisition, I've already mentioned and also a minority stake in BlueWind Medical, which is an exciting technology in the continence space. So we ended the year with net debt just over $1 billion and leverage at 2.1x as guided and close to our target of 2x. So CapEx, we increased investment by $50 million in the year to drive future profitability and growth. On the left, you can see the CapEx by category. And if I work up from the bottom of that graph, we added capacity mostly in Infusion Care, and that was to support the strong sales growth. We increased innovation to support the new product pipeline. We added automation, mostly in our wound care facility at Deeside, and this is to drive productivity. And then we continued to invest in digital in CRM and in omnichannel customer platforms. Now this CapEx was a bit ahead of where we had guided. It included a small acquisition element of $10 million but mostly, it was accelerated delivery of projects in -- to improve capacity and automation in operations. So really good progress. Now for 2023, we expect to make continued progress in sales growth and improving profitability. But before I talk about that, let me just describe the inflationary outlook we see, which is set out here on Page 14. On the left is the breakdown of our cost of goods and OpEx. And on the right are the indications of where we see the inflationary pressures year-on-year. So in 2022, COGS inflation finished at 8.6%, which was bang in the middle of the range we had guided. So as expected, and labor was just a bit over 3%. Going into 2023, some of the price pressures are abating in COGS and in particular, in resins and in freight. So we do expect inflation in 2023 to be lower than '22, but still very high by historic standards at between 5% and 7%. Conversely, the inflation in labor, which impacts OpEx is increasing. And we think that also will be 5% to 7% range, which is about double the year before. So when taken together, that inflation represents a headwind going into 2023 on our EBIT margin of about 3 points. So a little bit less than we suffered in 2022, but not much less. So our guidance for 2023 is set out on Page 15. We expect to deliver organic sales growth of 4.5% to 6%, which is consistent with the range of medium-term guidance that we shared in November at the Capital Markets event. This guidance will be -- this growth, excuse me, will be weighted to the second half because in the first half, the comparables are much higher, especially in infusion care -- and ATT will be added to organic sales growth from mid-March and will be included completely in the second half of the year. So second half weighting. And on EBIT margin, we expect to make further progress. We do expect to be able to offset that substantial inflation headwind that I've just described, albeit only modestly. So we're pointing to an increase of about 20 basis points in EBIT margin on a constant currency basis, which would mean a margin of no less than 19.7%. And it will be another year of investment. We anticipate between $120 million and $140 million of CapEx in categories very similar to where they were invested in 2022. And a bit more inventory, about $20 million to secure that supply chain. This can all be managed whilst maintaining a strong balance sheet with leverage approximately flat on 2022 and close to our target level of 2x. And then I'll just finish with a word on outlook beyond 2023. And this is similar to a slide I shared at the Capital Markets event in November. We are still confident of delivering a mid-20% margin on operating profit. We finished 2022 a bit ahead of expectations. The building blocks to get to mid-20s are still the same. And the 3 big bricks of simplification and productivity, mix and price and operating leverage are within our control, and we will continue to deliver on those. Inflation is a macro uncertainty, and that's why we don't want to be precise about the timing of when we will get to this target of mid-20s. But we will make progress every year. So thanks very much for listening. I'll now hand back to Karim.

Super. Thanks, Jonny. That was really very, very helpful. So what I'm going to try to do now is really focus on what's driving the strong financial performance and what are the prospects moving forward. So the first thing I want to highlight to you is that fundamentally, we've strengthened our competitive position. We've strengthened our competitive position across the entire value chain, and we've done that across all 4 categories. And FISBE should be pretty familiar to you. So this is really our corporate strategy, where we fundamentally say we need to focus. We need to innovate. We need to simplify. We need to build capabilities and execute. So let's just take each one and try to understand how much progress have we actually made? If you think about focus, what we basically said is we want to focus and win in 4 categories and in 12 geographies, right? So what did we do? We looked at businesses like hospital care. We didn't have scale. They weren't really growing. Profitability was quite modest. We didn't think we could win. So we exited that business. That was a deliberate strategic move. On the other hand, we said, you know what, wound care, that's a core business of ours. We want to win. And we've always said the U.S.A. and China are uber important. So what do we do? We acquired Triad Life Sciences, which we now call ATT. We enter the Wound Biologics segment. And all of a sudden, we have a stronger competitive position in Advanced Wound Care, and you'll see us continue to do that. What that translates into is fundamentally over 90% of our revenues come from chronic care markets. Why is that relevant? Two reasons. Number one, all these chronic care markets are fundamentally growing 4% to 8%. And second, when you're working in chronic care, that creates for a much more of a recurring revenue business model. So now all of a sudden, that is consistent and coherent with being a defensive growth stock. And I think you're seeing that here even in our numbers. The second thing is innovation. We've more than doubled our investment in R&D. So are we starting to see some of the fruits of our hard labor. And I think the short answer is absolutely yes. In 2021, we launched 1 new product. In 2022, we launched 3 new products. In fact, we went ahead and launched InnovaMatrix in the whole area of biologics wound treatment. We went ahead and launched GC Air, GentleCath Air for Men, okay, leveraging our proprietary GentleCath technology. We've launched that in the U.K. and in France. And we went ahead and made sure to launch MioAdvance Extended wear an infusion set that lasts a whole week, has clinical benefits, has environmental benefits, also in the United States. So clearly, we're driving that innovation agenda. And we'll talk more about '23, where we'll be launching 4 new products this year, right? So there's a clear acceleration. Simplification and productivity. This is a key driver of being able to expand the margin. While I think you've seen proof in the pudding now. We are increasing our operating margin. I know it's an N equal to 1. I tend to believe need at least an N equal to 3 to be able to draw the conclusion. But fair enough, you can't get to 3 without the first data point. right? So guess what? G&A got knocked down from approximately 11% of sales, down to 8.9%. That's significant improvement. No other way to describe it. If you think about commercial productivity, I'll call frequency. Our calls per day of all of our commercial organization increased in 2022 by 13%. On a cumulative basis during the course of the last 3 years, we've increased our commercial productivity by approximately 38%. What about the whole area of building capabilities? Well, in this area, we put in place a marketing center of excellence. We launched a refreshed brand: Forever Caring. This refresh brand has been really well received by health care providers, by consumers. And we're leveraging it across a whole series of platforms, numerous digital media platforms in our packaging, and so we're getting a positive response. The second thing you'll notice is that when it comes to our pricing center of excellence, we're also leveraging it in the sense that we're much more disciplined between the Center of Excellence and the 4 business units and having discipline around strategic pricing and tactical pricing. And we were able to increase our revenues by about 130 basis points as a result of price in 2022. And what about execution. At the end of the day, you can have all the most beautiful strategies, but you got to get it done. And so we're very, very focused about consistently increasing our do-say ratio. And as we think about increasing that do-say ratio across the value chain, all the categories, we made a decision to embed ESG. We didn't want it just to be an acronym, something you just add on, right? So we are very conscientious about 4 key stakeholders, 1 being the community or the planet, 2 being customers, 3 being colleagues, 4 being commerce, how do we operate. And I'm going to give you a lot more color as to how are we actually embedding that and executing against them. Bottom line, ConvaTec today is in a much stronger competitive position than it was several years ago. Let's look at the 4 categories and understand what did we actually achieve in 2022? And what do we plan on getting done in 2023? When you look at the wound care business, the first thing you'll note is that the gold standard is actually AQUACEL. AQUACEL AG+ Extra. And in fact, we grew that franchise double digit in 2022. Above and beyond that, we decided to enter the rapidly growing and very large wound biologics segment. It's a $2.2 billion segment growing at approximately 7%. And InnovaMatrix, guess what? That dog hunts. Clinically, we're getting a very positive response from clinicians in the United States. Now beyond that, historically, there's another segment which is very large. It's called the foam segment, about a $1.8 billion segment, growing at approximately 6%. Our product offering hasn't been as competitive as we would have liked. So we developed a new product. We received clearance from the FDA last year. And right now, in the United States, we're in the midst of launching it. So that's a key priority to have a successful ConvaFoam launch in 2023. And what's better about it? Two key things. First of all, its absorption rate has been increased by 60%, okay? That's a significant increase. Its adhesion properties have been significantly improved. And you might say, well, what does that mean practically Karim? What it means practically is that when you're using our wound dressing because it adheres better, you can actually use it for a longer period of time. And as a clinician, guess what? That translates into dollars and cents. But also as someone who uses it, guess what? I'm paraphrasing, but one of the reactions we got was, "Wow, it adheres really well. But it's not sticky." So just try to imagine if you're using that kind of a wound dressing. It sounds very simple. But guess what? When you think about retention and want to use that kind of a wound dressing, it's a big plus. So the initial reactions, very early days, okay? From the evaluations we're getting in the United States, I would say are positive and encouraging. Now beyond that, what we said is we want to grow InnovaMatrix to treat very difficult or hard-to-treat wounds, things like diabetic foot ulcers. How are we going to do that? We're going to do that in the hospital channel. We're going to do that in the outpatient wound clinic channel. We're going to go ahead and do that in surgeons' offices. But as we do that, we're adding new indications, new indications such as a burn indication, new formulations, a powder formulation, and we're looking to go ahead and develop a InnovaMatrix and launch it outside the United States. We do see opportunities both in Europe and in global and emerging markets. Thirdly and lastly, there's another segment where we're not, frankly, taking full advantage of the opportunity. That's a single-use negative pressure wound therapy. We're not satisfied with the level of competitiveness of our current offering. So what are we doing? We're developing ConvaVac. And ConvaVac is in development, and we're very committed to wanting to participate in a $400 million segment that's growing at about 20%. So hopefully you're getting a sense that the Wound Care business, a really good business, roughly 7% organic revenue growth in 2022, and you should expect this business to deliver mid- to high single-digit growth moving forward. What about Ostomy Care? An encouraging picture. Jonny commented on the 5.5% growth in ConvaTec product, where is that happening primarily? In global emerging markets in places like Colombia, Brazil, China, we're growing share. It's a positive story. We're also growing our business in some key and important markets in Europe, such as in Italy, such as in Poland. In the U.S., where we'd been bleeding for a long time, new patient starts where they had been decreasing. They're flat now. I'm not saying we're doing great. I'm just trying to tell you, there was an improvement. And beyond that, there's a segment of Ostomy Care, which we call accessories. I frankly don't like the term accessories all that much because these are actually essential products. And what they are. There are products, for example, when you're applying the barrier which then you apply the pouch to, right, directly onto the stoma, guess what? These products avoid skin irritation and can avoid skin infections. And you apply it before you apply the barrier and when you're taking it off. And so here, we've got a formidable offering with our ESENTA line, and it's also growing double digit. What about moving forward? What is it that you need to fundamentally do to ensure you're growing Ostomy Care? Well, fundamentally, what we need to do is to make sure that we're executing commercially in a consistent manner across the continuum of care. And you say, what do you mean by the continuum of care. But when you're dealing with a patient that had bladder cancer, colon cancer, et cetera. And unfortunately, because I don't wish this upon anybody, they have to have a stoma. You're basically, frankly, puncturing the abdomen, okay? Guess what? That happens in a hospital. We call that the acute setting. Then typically, you've got the post-acute setting. And then you've got the community setting. We need to be able to follow through that patient with the relevant health care providers and the relevant consumer. In some countries, we do that incredibly well. I was recently in Colombia and Brazil, and I was able to observe how we were doing that with our clinics and all of our commercial team. Frankly, in some countries, we don't do that all the well. That's why there's too much variance. So therefore, the word, we need to consistently execute commercially across the continuum of care, okay? The second thing is we need to refresh our portfolio. We've not refreshed our portfolio. It's been too long. So we're in the midst of developing a Esteem 2.0, which is a one-piece [ convex ] soft offering, we're very excited about it. We are on track to go ahead and launch it. And so we're going to make all of our preparations in '23 and the plan is to launch in the first half of 2024. But again, this is a good business. It's growing. We need to go ahead and drive that growth. Continence Care. Again, another terrific business. We lead in North America. So this business, again, if you just look at Continence Care, was growing mid-single digit at about 5%. We have amazing service levels with a home service group in the U.S., and now we've been able to establish comparable or very good service levels also in the U.K. They've taken charge of that. And so now all of a sudden, when it comes to new patient starts, we're driving new patient starts. Beyond that, we've expanded our portfolio and have both a Cure product portfolio. This was an acquisition we made a couple of years ago, along with the ConvaTec product portfolio. And lastly, where we've had a modest presence Europe, we're going ahead and building our commercial infrastructure in places like the U.K. and France and launching new products in new segments such as the compact or discrete area, and that's where we've launched GentleCath Air for Men. What do we need to do in 2023? We need to sustain our leadership position in the U.S.A. That's absolutely imperative, okay, from a service perspective and keep on broadening our portfolio. So taking our compact offerings and introducing it in the United States. We need to keep on growing in Europe and, frankly, also in global emerging markets. We see opportunities in places such as Korea to go ahead and grow in places such as Colombia. And then lastly, we plan to launch a compact formulation, again, of our GentleCath offering, but for women, right? And so that launch, again, is on track, and we would anticipate being able to go ahead and do that in late 2023, possibly early 2024, okay? Again, a good growing business, recurring revenue. What about intermittent? What about infusion care. In the infusion care area, what you see us basically doing is that last year, we produced and we sold 110 million infusion sets. That was to treat critical patients, right, in about 1 million patients worldwide. And as you think about that, frankly, we've not been able to keep up with demand. We've been capacity constrained. Jonny commented about the CapEx. So guess what we're doing. We doubled the capacity production in 1 of our 2 major sites in Octet in Denmark. And we launched extended wear infusion sets in the U.S.A., very strong demand for this, right? Again, this dog really hunts. And so now all of a sudden, we find ourselves in a situation where we need to scale up the production of our extended wear infusion sets in 2023. And at the same time, we're pursuing a strategy of diversifying the applications. We're very intrigued by diabetes, but on the other hand, we want to expand and diversify. So we're working with AbbVie. AbbVie has gone ahead and submitted its regulatory dossier in the U.S.A., in Europe and Japan for an L-dopa carbidopa dual suspension to treat severe Parkinson's disease. We would anticipate that they'll receive regulatory approval in the second half of '23, and this creates a good opportunity for us to further grow our Infusion Care business. In the area of diabetes, we've been collaborating with Tandem, Tandem is anticipating in the second half of '23 to launch what they're calling their Mobi offering. This is a hybrid pump system, much smaller. You would use a smartphone to go ahead and run it or operate it and there's an opportunity for us, again, there to potentially drive some growth. But you ought to expect this business to grow in high single digits. What about execution? I was alluding to the fact that execution is absolutely critical, and we're doing this across the value chain and that we're embedding ESG across all 4 stakeholders, right? Community, customers, employees and commerce, meaning how we run the business. I want to share with you now a video to give you a little bit more of an inside look as to how we're going about to go ahead and do that. It's about a 3-minute video. [Presentation]

Super. Hope you got a little bit of a qualitative feel of how we're approaching ESG. One of the things I'm particularly sensitive about is that whenever you're approaching these thematics that there actually be real substance behind it, right? And so I wanted to go ahead and share with you really quickly, 3 key statistics just to kind of give you some sense of substance. The first one really relates to the whole area of community and what are we doing about the planet? What I can tell you is that in 2022, we went ahead and reduced our greenhouse gas emissions by 32%. But I can also tell you is that in 2023, 100% of the energy used in all of our factories will be renewable energy. You might say, well, what are you doing with customers? What I can tell you with customers is that we're improving the quality of our products. And again, there, what I'll share with you is that we reduced the complaints per million by 13% last year. During the course of the last 3 years, we've actually reduced the complaints per million by about 40%, okay? So we're improving the quality of our products. We're being more environmentally friendly. And when we talk about DEI, diversity, equity, inclusion and wellness for us is not just an acronym. We really are committed to creating a diverse and inclusive environment because fundamentally, we believe that, that's going to allow us to win in the marketplace. So we've absolutely committed to having at least 40% of senior leaders at ConvaTec be women. In 2022, we're already at 38%, and I'm confident that we'll go ahead and achieve that goal. So hopefully you're getting a sense that we're embedding ESG as part of execution and there's real substance to what we're actually trying to do. But let's go back to what is it that we've been trying to achieve. We've been trying to achieve sustainable and profitable growth. And I think this graph does a really good job of illustrating to you that if you go back to 2018, our revenues were basically flat as a pancake. You clearly see an acceleration in revenue growth, right? I mean that's hard data. If you look at our operating margin, it came down. We communicated to you and said, "Hey, we're going to invest more in R&D. We're going to invest more in commercial, and we're going to knock down G&A. We're going to rebalance the P&L." That's what we're doing, right? That's exactly what we're doing. And so what that's translated into is that when you look at operating profits, right? I think a really good sign of how the company is performing, we see an acceleration in operating profit. And for the first time, we achieved double-digit operating profit growth in 2022. What about medium term? What's going to happen medium term? I think what you're going to see us do medium term is very consistent with what we shared in November. We're going to consistently deliver 4% to 6% organic revenue growth year in and year out. In terms of margin, we're going to progressively grow our operating margin. We're going to work at it year in and year out. To ultimately achieve mid-20s operating margin. And we're going to actively pursue bolt-on acquisitions that can strengthen our competitive position in the 4 categories and the 12 geographies that can be technology-oriented, geographically oriented or capability oriented. And what that means to you fundamentally is you ought to be anticipating and expecting us to deliver double-digit compound annual growth rate in terms of earnings per share and free cash flow. So let's try to summarize. What have Jonny and I tried to share with you here today. The first thing we've tried to share with you is that we had strong financial performance in 2022. Organic revenue growth, 5.6%. Operating profit growth, double digit. So when you look at that, I think that's a positive and encouraging picture. In terms of guidance, we said 4.5% to 6% on the top line, growing the margin in a modest manner to at least 19%, 19.7%. And when you think about what about the medium-term prospects, hope you've gotten a sense this is a stronger business. The competitive position has really strengthened of our business, and it's a chronic care business, I think, recurring revenues; b, hopefully, you got a sense that there's a stream of new products that are coming across all 4 categories, right? That bodes well, and that ought to translate in terms of medium-term prospects for double-digit EPS growth and free cash flow growth on a compounded annual growth rate basis. I hope that was helpful. And so thanks to everybody and we'll open it up for Q&A.

[Operator Instructions]

Hassan Al-Wakeel, Barclays. I have a couple, please. Karim, in late summer last year, I think you commented that the share in U.S. Ostomy was stabilizing. So I wonder if you're starting to see any share gains at all given stronger growth in the business that you talked about and what you consider to be the realistic share opportunity in this business given your expectation of mid-single-digit growth? And then secondly, you narrowed the top line guidance, and I'd love to know what is giving you the incremental confidence here compared to when we all got together at the CMD last year. How has the year started? And I'd love to get some color on your expectations around the different segments.

Yes. So maybe we'll do a little bit of a double act. I'll tackle the first one on Ostomy Care U.S., what's happening there and potential share trends? And then why the sort of tighter range and maybe Jonny and I can be a little bit of a double act on that? Look, I think in Ostomy Care, I think what's fair to say, Hassan, is that we've stabilized new patient starts. That's real positive. So in the acute setting, we're getting our fair share there, right? I think it's premature and too early, frankly, to say that we're actually growing share, right? Because as I was saying, you need to make sure that not only are you getting new patient starts in the acute phase, but you need to do that in the post-acute phase and in the community side. I'd say on the community side, I feel very good because we're collaborating very closely with the home service group 180 Medical. This is a group of several hundred people that does an amazing job with the intermittent catheters, right? And we created a pilot several years ago and said, "Well, could you do the same thing in Ostomy Care and provide this wonderful service to consumers." And we've been doing that, and that's doing also very, very well. So I'm a little reticent at this point to say we're going to grow share, Hassan. What I'd prefer to say is we're going to at a minimum hold our own. I think in terms of significant growth opportunities clearly emerging markets. There are significant growth opportunities there. And I think we're just starting to scratch the surface there in terms of seizing opportunity is what I would say. Why the higher confidence or why the 4.5% or narrower range. Fundamentally, I think it's just a reflection of the fact that we are in the midst of launching newer products. And frankly, we're just executing better, whether it be in commercial, whether being quality in operations. And so that bodes well in terms of your ability to drive the top line. But maybe, Jonny, you'd like to add to that?

Yes, just to the other points in your question sales as well. We set out how the categories would grow back in November. And for the year ahead, it's entirely consistent with that. So Ostomy, Continence in mid-single digits, wound care mid to high. Infusion Care, the fastest high single digits. That hasn't changed. The year has started fine, but I would like to just remind people that the first half will grow slower than the second half because of the infusion care comps. It was very high growth last year. That won't be repeated. And then the only other thing I'd add in terms of increased confidence was of course, we're going to get AT&T this year, adding into organic growth from mid-March, and that will help.

Just a follow up on the phasing. Outside of Infusion Care, would you expect a normal phasing for the other segments?

There'll be a little bit in wound care. If you look at the comps from last year, Wound Care was faster in the first half than in the second, but it's not very marked. The big one is infusion care that's where you make the difference.

Graham.

Graham from UBS. Maybe just a follow-up to Hassan's question. So AT&T, you sort of got there for me. If I work that through, that's at least a 50 bps tailwind on organic growth, I think, for 2023. So given you've got these launches, you're executing better, is 4.5% to 6%, not a little bit conservative? And then just on the margin side of things, it'd be useful to note that 19.7% is sort of the bottom end of the range. Does that assume you're at the 7% rather than 5% for the inflation. So if you think about the COGS and the labor inflation. Basically what I'm trying to say is you did 19.5% on a 19% guide last year. Are you being too conservative again this year deliberately?

I'll pass that on to Jonny.

Okay. Well, there's 2 parts to it. Same theme, sales and margin. Look, it's early in the year for sales, and there's a lot of uncertainty in the world. So we have bumped up the bottom of the range compared to the medium-term targets, and that's partly for the reasons we just said to reflect the fact that you're right, AT&T will add a little bit. But that's a good range 4.5% to 6%. And it feels like the right way to be starting the year. Let's see how it goes. There's a long way to go. On margin, yes, you would expect us to be calculating. It's not a precise art this inflation. Last year, we estimated 8% to 9%, we ended up at 8.6%. So bang in the middle. This year, we're starting the year with 5% to 7%. The most likely outcome, we think, is in the middle of the range. And so delivering a improvement in margin, no matter it's only modest, but an improvement in margin against the headwind of inflation of 3 points. We think that's a big job. And that's why we just want to be -- we want to be sensible. We don't want to be promising things that we don't deliver on.

Ed Ridley-Day, Redburn. First one is on Infusion Care. Can you just give us some color around the assumptions you're making, first of all, if you can, around the AbbVie business? And secondly, obviously, positive to hear confirmation on Tandem Mobi, Tandem talked about a second half probable approval there. If you can give some color on the assumptions you're making for that business as well in the IC guidance, that would be helpful. And the second question, a sort of broader question. As you helpfully highlighted you are making progress and very strong progress on your own products. You still have third-party products as part of your portfolio. How should we think about the opportunity to reduce that business over time and further accelerate that mix shift?

Yes. Look, what I would say with the AbbVie launch, I think it's difficult to say. I think even just for AbbVie to figure out what is the scale of the opportunity. They've highlighted, well I shouldn't say they, analysts have highlighted and to some degree, they have to be fair, that they view this as a blockbuster, meaning a $1 billion-plus opportunity, right? So I would say that that's significant. Then you guys sort of translate and say, well, what does that actually mean for your business, right? So I think it's kind of early days. Let's first of all, knock on wood, I hope this is good that they receive their approvals, right? And I think if they do, I think there is a significant unmet need when you look at late-stage Parkinson's frankly, right? There's a whole series of treatments that you could be using oral forms of dopamine, but after why they don't work, then you go to apomorphine. You look at some of the surgical interventions today. They are very, very heavy. I mean expensive, tens of thousands very invasive. So I think, frankly, if their offering works clinically, I think, could be a very interesting opportunity, but there's a fair amount of uncertainty. So I think it would be premature Ed for at this point to say, this is exactly how much it's going to be. On Mobi, again, look, I think the concept makes a ton of sense, sort of a hybrid version. So now the pump is much smaller. I may be going ahead and using my smartphone to be able to say how many units of insulin do I need, yada, yada, yada. So I think the concept is very intriguing, particularly as you see automated insulin delivery growing, more usage of continuous glucose monitoring. Again, I think it's really in Tandem's hands for them to be able to go ahead and secure that approval. So we're following all the public information that we all are aware of. And then in regards to the third-party products, I would say, fundamentally, what we want to do is provide patients and health care providers with the very best solution, right? Our view is we've got some formidable offerings ourselves. And so guess what, I would anticipate that a result of the needs of the customers and us continuing to strengthen our offering that the proportion of the product offering coming from third parties would continue diminishing [ in fact ].

Just a quick follow-up on the Infusion Care. So is it fair to say then that the contribution from those 2 would be incremental, very much incremental in terms of the guidance you've given today.

I'm not sure I would say, incremental. I would say that their contribution would be modest. Veronika, sorry.

Veronika Dubajova from Citi. I have 3 questions, if that's okay. The first one, I just wanted to understand the 130 basis points of positive price that you achieved in 2022, which parts of the business it was most pronounced in? And just help us understand maybe divisional contribution there, that would be helpful. Second question, Karim, you've spent a lot of time talking about some of the new products this morning, one of the ones that was notably absent with the catheter launch. Just curious how you feel that's progressing in U.K. and France. And should we read anything into the sort of absence in the slide deck this morning. And then my third question, which is a bigger picture question. From a portfolio perspective, you've done a tremendous amount of work of cleaning out the business. There is also some reshuffling of where parts of the business sit that you talked about in the press release. Are we done? Or is there anything left that you are thinking about from the shape of the portfolio and what's left in the company that might not maybe make sense and that you'd like to address in the short term.

Sure. So maybe I'll let Jonny handle the price question around 130 basis points. And I'll take the question around catheter launch and portfolio.

Sure. Look, on price, it was spread across all categories. And we have been spreading best practice from our centers of excellence across everywhere. Geographically, we did see some benefit in global emerging markets. It's fair to say. But all categories. And remember that 130 basis points in revenue. That translates into about 50 of gross margin. And that was what we were expecting and kind of what we guided to in November, and we're expecting roughly similar in the year ahead. So I wouldn't want to call out that being more predominant in any one category than another to be completely honest.

So Veronika, because your question on catheters, so just to clarify, in case there's confusion, definitely have it on there. It's doing well. That's the short answer. But let me expand on that. So you'll note just where it says 2022 progress, GentleCath Air for Men in France and the U.K. Again, these are relatively smaller opportunities for us. It's the 1.0 version that we've introduced. So what we've taken is we've taken our gentle cath technology, right, where, in essence, when you think about the whole aspect of friction, if you're having to use a catheter, friction would be bad, right? You don't want to do that. You don't want to harm your urethra. What's interesting about our technology, in fact, is we've actually now received a superiority claim in the United States by the FDA for superior comfort, frankly, and that fundamentally, we do less damage to the urethra, right? So for us, it's much more about we think that the gentle cath technology is really, really good. The male formulation or form factor is competitive. You can kind of see it it's left of cure. It's competitive. We're already developing 2.0. So this is just an entry. So again, we've entered the discrete or compact area. We'll be launching it also in the United States. But when you see, for example, GC Air for Women, that's actually a 2.0 version that will be coming about. And so that form factor is even further developed, right? So I think the bottom line is it's early days, the 1.0 version is just being introduced. But I think that fundamentally, there's a real opportunity for us there is what I would say. On the portfolio question, I think we've identified the 4 key categories that we want to pursue, and they're the ones. Those are core. Advanced Wound Care, Ostomy Care, Continence Care and Fusion Care. You can keep on saying that. We just want to make them stronger and better, et cetera, et cetera. So fundamentally, I'd say maybe at the margin customers or maybe certain product lines, but fundamentally, I'd say, I think we have pretty good clarity as to what are the categories and what are the geographies that we really want to win.

And can I just quickly follow up on the superior claim that you're getting in the U.S. Is that going to give you better reimbursement? Is there a new code that you're getting on the back of that?

So the short answer is no. I think the reimbursement codes will stay the same in essence, and fundamentally just ought to help us in terms of our ability to share what it is that we're offering with health care providers, which are typically nurses who are working in the urology center. I'm going to go to the gentleman here because I passed before, and we'll try.

It's Kane Slutzkin from Numis. Just a question as you've mentioned sort of GEM, quite a few times in terms of mid-teen growth. I'm just wondering sort of what it's, 15% of revenue? Yes. How do you get, where do you see that going in terms of the mix? And to what extent is that in your sort of guidance, the 4% to 6% as long term, i.e., is that a bit of potential upside? And then just on the Vitality Index, which you guys haven't really brought up today. Where are we on that? Or is that just the case if you just got 3 new products and it's a bit too early, but to be giving that number. But just wondering where we are relative to the 30% target. And then just maybe finally following on from the gentleman's question on infusion. Just sort of any additional color you can give us on sort of some of the dynamics playing out in the pump market, whether there be opportunity or threat, patch versus durable, et cetera, and maybe a little bit on your [ model ] tech platform and the opportunities you see there?

Yes. So look, what I would say on global emerging markets, very significant opportunity, clearly. 85% of the world population, right? All these chronic diseases, diabetes, cancer, autoimmune diseases. They're just growing in a very significant manner. So a lot of it, frankly, is about providing access here, right? So frankly, we're investing in a very significant manner. I mean, so let's just a place like China, which oftentimes is described and talked about. We're continuing to invest. We believe that there is going to be significant growth there. Brazil, we're going to keep on investing in growing. Colombia, we're going to keep on doing the same. To your very specific question, which is, hey, so this is your upside to the 4% to 6%. I think back in November, someone said to me, "Hey, Karim, could you do better than 4% to 6%?" Look, at the end of the day, absolutely, we're going to strive to do better than 4% to 6%, right? But at the end of the day, I think it's also important to say what you're going to do and do what you're going to say, right? So that's the way I'd answer that question. The Vitality Index, we made good progress. '21, we're about 25 points, '22, we're about 26 points. We're going to keep on driving that and our ambition is to get to 30%. So I think that's happening. Dynamics in the automated insulin delivery area, durable pumps versus patch pumps. Look, what is fundamentally happening is that continuous glucose monitoring is really helping revolutionize the way you take care of type 1 and type 2 diabetes patients because you no longer have to do the finger pricking anymore. Every 5 minutes, you can have a reading, you can use the DexCom tool, you can use the Abbott tool you connect it into your pump, and now they have these amazing algorithms so they call them control IQ. They're smart. And so if I have some ice cream, I happen to like ice cream a lot, all of a sudden, it just knows what to do, right, which is pretty awesome, frankly. So we think that automated insulin delivery is going to continue to grow significantly, both in type 1, which, for example, in the U.S., maybe 1/4, no more than 1/3 of folks are using today, the whole idea of an automated insulin delivery system. And certainly less than 5% in type 2. So I think that that segment is going to continue growing. Now will it be a durable pump or will it be a patch pump? I think the reality is there's space for both, right? So I think this idea that one is going to do better than the other, no. Now sure, there are some companies in the patch pump areas such as Insulet. They're doing very well. They have a really interesting product offering. From our vantage point, we are agnostic. Because when you look at our infusion set technology, we have the inserter, right? That inserter can be used with a durable pump, a patch pump and a continuous glucose monitor. I did say that. Durable pump, patch pump, continuous glucose monitor, okay? Just to give you a sense. So it's not just the tube, so to speak. I was commenting on the inserter. And then you think about, for example, the whole idea of the cannula with the adhesive, right? That's where it's actually is going under your subcutaneous tissue. Well, that's really cool technology. Guess who knows a lot about skin irritation. Guess who knows a ton about infections. Think about our Wound Care business, think about our Ostomy Care business. So now that we run R&D on a global basis, we can take that know-how and leverage it, frankly, there also. So it's a long answer to basically say, I think that the automated insulin delivery segment, whether it's patch or durable creates opportunities for us, we want to grow there, but we also want to grow above and beyond that in areas like pain, in areas like Parkinson's. Yes. Charles.

Charles Weston from RBC. Standing in for Jack Reynolds-Clark. Three questions, please. The first is on the margin improvements that you've been making to offset that 300 basis points of inflation. You provide a bridge on Page 10 for 2022. You're looking at sort of 320 basis points or more of offsetting of the inflation. So roughly speaking, how will that bridge look in a year's time looking back? What are the key drivers there? The second question is on pricing and your positive pricing and those contract negotiations you have. How delayed are those negotiations after inflation, i.e., sort of how long after inflation are you able to negotiate the price increase? And how quickly do they kick in. And therefore, once inflation declines at some point in the future, do we have a sort of a kicker of a year or 2 afterwards where we get some pricing increases? And then just lastly, can you give us some modeling guidance on nonoperating costs like interest and tax for '23, please?

Should I get going with ...

Yes. Do you want to take the margin and the guidance on?

Yes.

Then I'll see the middle one.

Yes. The last slide we showed in the pack was the medium-term guidance on margin and identified 3 buckets. In 2022, the G&A bucket was bigger than the others. In 2023, I'd expect it to be more balanced. So we would expect to see progress on all 3 of the buckets, mix and price, operations productivity and G&A. And I don't want to go into specifically how much, but they'll all be contributing significantly to overcoming the 3 points. And if I had -- if I had to indicate, I think mix and price will be a good one in 2023. Because we've got a tailwind of mix effects coming through from the rationalization of SKUs that we've done from the increase in ConvaTec products and also from the flip from hospital care to ATT. Those are all strong mix factors that will help our margin in 2023. And then you asked about modeling guidance. I think we've got it in the slides in the appendix somewhere. But on tax, first of all, we're expecting the book tax rate now to stay pretty stable, a bit shy of 25% going forward. but the cash tax rate will be lower, more like 18%, 19% going forward and then ticking up eventually towards the book tax rate, but not for a while. And then on financing costs, we're indicating $70 million to $80 million, which is a reflection of the higher market interest rates flowing through, obviously, to some of our debt being floating rate.

You want me to comment on the price? Or you good? No problem. I want to make sure we're thorough. So on the pricing side, what I would say is our ability to manage strategic and tactical pricing varies by category, right? So in the infusion care situation, it's much more of a business-to-business relationship, right? And so there, you're trying to go ahead and share in the value. So I would say that you feel the inflationary pressures immediately, whether it's on labor or resins or utilities. And you've got some degree of freedom there depending upon if you're being able to provide value. And I would say maybe typically there to see the full impact anywhere between maybe 12 to 24 months roughly, right? So just as it flows through, depending upon how much increase you have, et cetera, et cetera. The other categories are more reimbursement-driven. And so typically, if you're in the U.S., you're talking about private payers. If you happen to be in Europe, it's typically national health authorities. In emerging markets, it tends to be a mixture of cash, private insurance, national health care systems. So I think there your degrees of freedom at the reimbursement level, are frankly more modest. But then you need to think that we're the manufacturer and then you've got the reimbursement agency, and there's a whole bunch of folks in the middle. And how do you manage that proactively, right? So there, I would say, again, there's probably a little bit of a lag effect of about 12 months, roughly, give or take. So I don't think it's a significant lag, but certainly, there is a lag of sorts is what I would say.

Sebastien Jantet with Liberum. Two questions, if I may. First of all, just going back on to pricing and picking up on Veronika's question about the 130 basis points on the on the revenue. And I think you kind of said that, that would give us about 50 basis points on the gross margin this year. I'm just wondering how that kind of breaks down. A lot of what you're doing in the past was taking areas where there were discounts that were being applied inconsistently across the board, and putting those through are things that are much more in your control versus seeing some underlying kind of price increases and whether those are actually coming through. So just trying to get a sense of how much of that improvement is coming from a continuation of what you did last year? Or how much of it is coming from actual underlying price increases? And the second question was just around the labor cost guidance. So you've given a 5% to 7% guidance for the increase in labor cost. I'm just trying to get a sense of how much, if any of that, is annualization of last year's increases versus how much is actually an underlying assumption for the increases for this year?

Yes. I'll take maybe the first one, then Jonny, you'd like to take the second one. I think on the first one, look, I mean, there's obviously low-hanging fruit around pricing discipline, right? So simple concepts like we will have a floor price period. There's one Chief Operating Officer, he or she runs the category, and that's the way it works, okay? We did not have that before. It was a highly decentralized model. Every geography did what it wanted. I think we're getting more astute as to when do you need to apply a discount. And if you are going to apply a discount, then you need to perform, right, which is, well, if you purchase more then you get the discount, not [indiscernible]. So I think there's still a fair amount there to be done. I think then there is also the aspect of strategic pricing, which maybe gets into a little bit more of are we capturing fair value for our product and service offering. And I think there we're starting to, frankly, just scratch the surface there. So look, I don't think it's going to be an area where you're going to fundamentally drive the margin hundreds of basis points per annum. But I think it's an area you've got to stay focused on as you think about your portfolio. And so we're continuing to invest in the pricing center of excellence. And I think it's going to continue to bear fruit here during the course of the next several years.

And on the labor point, most of it is the increases to come. So there is a bit of flow over from last year. But what we are seeing is that the cost of living pressures are weighing on our colleagues and pay awards will be higher in the year ahead than they were last year.

A couple of questions for me. Jens Lindqvist at Investec. Both on ConvaFoam. First of all, what you see as a realistic target market penetration in the U.S., I guess, for that product over time. I guess what I'm asking, really, if you believe you could in any way replicate the dominance that you had with AQUACEL Silver? Or if it compares to positioning simply will not allow that. And second also on the pricing of that product, to what extent you are achieving a premium pricing for that or if there is a period of promotional pricing initially? And the final question on that is just that of curiosity really, whether the work that you've done on the [indiscernible] qualities of that product, excuse me. Is any way related to the progress you're making in [indiscernible] ?

I'm just writing down here. So in terms of share of market, I think it's a good question. Historically, in the foam segment, we probably hovered on a worldwide basis at approximately 5%, right? So pretty modest. So what do you expect of ConvaFoam? I think I'll answer it by saying 2 things. One, my expectation is that, at a minimum, we need to achieve double-digit share of market, okay? How much beyond that, Jens I think it's too early to say. Let's see how we do, how the product performs. But equally, I think it's a lot about commercial execution because fundamentally, we're leveraging our relationships and our know-how and our knowledge because we have a very strong commercial presence in wound care on a global basis. How do we leverage it beyond AQUACEL with foam and our other product offerings, right? So that's the way I'd answer that one. On pricing, fundamentally, we're trying to be competitive, right? We think we've got a really good offering which has significantly improved above and beyond what we had historically. And then to your technical question in terms of knowledge, what I would tell you is that as we developed ConvaFoam, we do tend to leverage competencies across all 4 categories. So for example, when we think about design for manufacturing, right, that leader will think about it for Ostomy Care, for wound care, continence care, et cetera. So when we think about adhesive technology and know-how, there is a knowledge element that is utilized across all 4 categories, and we're doing that more and more so because we think it's a really good opportunity.

Christian Glennie with Stifel. Just one on the pipeline and then one on M&A. Just to pick up on the ConvaVac versus Avelle 2.0. Is that -- has there been -- is it more than just a brand there change? And so any update on there and also on timing of that particular program. And then on M&A, obviously, you're at 2.1x today, you've said you'd be happy to go to 2.5. But I was just teasing out the nuance of that, is it 2.5 to then as long as you can get it quickly back down to the 2 or would you then go to 2.5 on more of a stable basis? And what is the sort of pipeline of opportunities, how active are you -- can you give any sort of context around that?

Maybe I'll take the ConvaVac question Jonny, let you take the how active are we? And what about this 2.5 number, how do we think about it? Look, on ConvaVac, what it is, it's a reflection that fundamentally, we felt that Avelle 2.0 did not reflect the significant improvement we're going to make. It's that simple. So the brand, in essence, is signaling to you, this is truly a new platform we're developing. So we're making good progress there. I would say in terms of timing, I would anticipate '24 and beyond as you think about all the various geographies. So this is clearly something that we're very committed to, but it's in development at this point is what I'd say.

And on the M&A, look, we are -- we remain vigilant. We've managed to secure some really nice additions to the portfolio, which have increased our competitive strength in our focus areas. And to the extent those -- there are more of them out there, we'll look to do the same. On the leverage point, yes, we've said 2.5x we'll be comfortable up to. This is flexible, but the target is 2. So we will always be looking for a clear way back to 2. Now you said quickly, I don't know, we haven't specified a timeline on it, but this business generates strong cash flow. And so knocking 0.5 point off leverage does come around quite quickly, absent M&A.

[indiscernible] question. Any other questions? Do you want to [indiscernible] ?

Sam England from Berenberg. You called out a strong performance in GEM in Ostomy, including China, which seems a little odd with what some of your peers have been saying. So could you just elaborate a bit on the drivers there? And then you touched on the commercial execution point in Colombia and Brazil. And I was just wondering to what extent you think you can take the learnings in that market maybe apply them to other GEM markets or even sort of some of the developed markets as well to drive growth?

Yes. It's a good question. I would say, look, that on the China question, we've been investing there for several years. And fundamentally, we really strengthened our commercial presence. So what it really starts with is there's probably about 10,000 hospitals, actually. But there probably are about 1,000 that really, really count, right? And so our level of penetration historically been very, very modest, right? So let's just say, hovering around the 100 approximately. So we have much more what I'll call a export mindset. There's this thing China out there. In our view no, this is the second largest health care market in the world. It's going to grow. There's a lot of unmet needs. We need to actually actively compete there. So we need to build out our presence. And the way we're thinking about it is that presence, of course, needs to start with a commercial presence, but frankly, could expand to other parts of the value chain, right? And then how are we winning there? Well, fundamentally, it's about focusing on the right health care providers, but in Ostomy Care, also being able to provide services directly to consumers. And I think what's basically happening there is that everybody, all the various players are just having to work a little harder. And that's a good thing because I think that historically, maybe as a company, we'd scored a few own goals if that makes sense. And you're not going to win if you're scoring own goals. It's important to put them on the other side of the equation. So -- or on the other side of the field. So anyway, I can get more into it if you'd like, but fundamentally, I would say, there's a real opportunity to grow in GEM. Can we take the learnings? Absolutely. There is no doubt. There is huge learnings that we can take from our operations in Latin America. I mean, these folks have been -- they grow their business in mid- to high teens, right? And the way they work with health care providers, the way they work with, frankly, consumers is amazing. Like in Colombia, we actually have our own home care service. We literally -- I was visiting with one of our nurses, a patient who, frankly, had bladder cancer, colon cancer and a fistula, 3 [ stillness ]. And we were visiting the patient literally in their home, right? And so you can just see how there is this element that we're fundamentally focused on caring, helping that individual, educating the clinicians. And so I think there's a lot of learnings that can be taken from what we do in Colombia, what we do in Brazil. And it's one of the reasons why we appointed Bruno Pinheiro, who ran Latin America very successfully for many years to run Ostomy Care. And so that's how you start doing that. So I can keep on going on, but I think good opportunities to do both. We may have exhausted all the questions. It looks like it may have stopped raining also, guys. Super. Look, just thank you very, very much. Really appreciate everybody's time, and we look forward to staying in touch.