Embecta Corp. (EMBC) Earnings Call Transcript & Summary

Everybody, thank you so much for joining us during our Annual Diabetes Day. It's Matt O'Brien from Piper's Medtech research team on here with you, really excited to have Embecta participating with us today. From the company are Devdatt Kurdikar, I am so focused on saying his last name right I got his first name wrong, who is the CEO of the company; and then Jake Elguicze, who is the Chief Financial Officer; Mike from [indiscernible] as well. So format of the call here is going to be a bunch of questions from me. It's an interactive session. Please do ask questions if you have them. Use the Q&A feature at the bottom of the Zoom or just go ahead and e-mail me at [email protected], and I'm happy to pose those questions on your behalf. Call shouldn't be more than 45 minutes. And again, I appreciate both Dev and Jake for taking the time today. So with that out of the way, let's go ahead and get started.

So maybe talk a little bit about Embecta for those that are new on the call here today, I mean, we know it's a BD spin, but just maybe the history of the -- of the franchise and then where you're at today and what you're thinking about going forward.

Okay. Maybe I can kick it off. Matt, thanks for having us, and hello to everybody. It's an interesting story. Insulin has been used to treat diabetes, as you guys know, for 100 years. For most of these 100 years, our business has been making injection devices. So today, Embecta as a stand-alone pure-play diabetes company, is clearly the largest injection devices producer in the world. We make about 8 billion units a year in 3 automated plants, our products are available in over 100 countries. They're used by, we estimate, 30 million people annually. And one of the things we are very proud of is the fact that we have solid emerging markets infrastructure, which, as you know, is pretty unique for a company of our size. The reason this is important is, certainly, as the number of people with diabetes grows, we expect that growth will be disproportionate in emerging markets. That is, we also believe likely it will remain an injection devices market, and we are well positioned there. As an independent company now, we have the financial, strategic and operational capability to really invest in this business and get that top line growing again. As you know, it's been flattish over the last several years. The financial profile that we launched as an independent company with, I think, allows us the capability to invest for growth. Certainly, as an independent company, we are able to attract a different caliber of talent, if you will, and certainly relevant to what we want to do and on the single-minded mission of our company. And frankly, we can run much faster with a far more streamlined operating model, make decisions faster and closer to the customer. Over the long run, we are focused on getting that top line growing on a sustainable basis. And we'll do that by pursuing 3 paths. Number 1 is continue to optimize our current business. We can talk more about how we do that in the Q&A, if you'd like. But certainly, as you've heard, we are investing in a patch pump that allows us to enter a segment of the diabetes Medtech market where we don't currently play, but it's in the natural adjacency to us in insulin delivery. And frankly, we'll pursue M&A and partnership opportunities. Again, with our scale and scope and the manufacturing and distribution capabilities that we have, there are a lot of smaller companies that are innovating -- and certainly, we think we'll be a good partner to bring some of these innovations to market. So I don't want to filibuster you, Matt. Let me stop here. Let me see if Jake wants to add something.

No, nothing to add from my standpoint, Dev. I think you covered.

I'll get to some questions for Jake in a sec. But Dev, I'm going to get into the Q1 commentary here in a second, but the thing you said about emerging markets makes a ton of sense to me, right? They're not going to be able to afford some of the more advanced technologies that are out there. Can you quantify what kind of opportunity you're thinking about in emerging markets? And are there specific geographies we should really be paying attention to, I don't know if it's India or China or other areas, but just any kind of commentary around the emerging markets opportunity be great.

Yes. I mean, historically, emerging markets -- even now in emerging markets is under 20% of our total revenue, even though almost 50% of our revenue comes from out in the United States. But it's growing, has been growing at a much faster clip than our corporate average, and we expect that will continue. In terms of geographies, I said we have 3 plants, 1 of them is in China that I think affords us a competitive advantage because we make products there. We sell them locally there, both in China as well as other countries around the world. Some of the big areas of focus for us, certainly, India, China, just given the population size and given the rising access to care makes sense. But there are other geographies broadly in the Asia Pacific area, in the Latin American -- in Latin America, some in Eastern Europe that are of interest to us as well, Matt.

Okay. Okay. And how quickly can you really -- you said 20% of sales are emerging markets. How quickly can you really use that? I know, I mean, spinning off is a lot of different factors to tend to. But how quickly can you really start to push into those geographies?

I think you're right. I mean spinning off and establishing our own infrastructure [indiscernible] I think. You know we have TSAs that we're planning to exit over the next 24 months. So there's a lot of standup work to be on there, Matt. I don't want to downplay the hard work that has to go on setting up an independent company. But certainly, we are beginning already to look at investments we want to make on the commercial side in emerging markets, including it's not just people on the street, but it's also in thinking about from an M&A and partnership perspective on the products we can add to the back quickly. Are there investments that we can make in e-commerce. E-commerce is a growing way certainly in those areas where people acquire products, including ours, and all the investments we can make. So we are looking at a range of investments. I don't want to get ahead of myself and sort of pinpoint to a specific year where you'll be -- you see the impact of that. But certainly, we'll keep you informed as we progress in that area.

Okay. And then last question just on the spin side of things, Dev, for now anyway. Just what kind of opportunity, what areas did you want to maybe be more aggressive in terms of investments when you were under the BD umbrella now as a stand-alone, where can you be more aggressive?

I'll take -- I'll start with the latter question. I mean, at this point, honestly, our future is sort of wide open. The way I think about it is -- people with diabetes have a host of comorbidities. People with diabetes go to a pharmacy and not only acquire products to treat directly the diabetes, but also associated ailments that they might have. The pharmacy channel is one that we are very strong in our products and we deliver to pharmacies around the world. Our distribution network is very strong. As I mentioned before, we can get into 100 countries in the world, and we have great high-volume manufacturing expertise. So as I said, we have a wide picture right now because we are trying to figure out what is the best way to leverage the strengths that we have, certainly from an M&A and partnership perspective. From an internal R&D and new product development perspective, we are focused on insulin delivery, as you know, just with our core injection products and the patch pump, which I know you have questions of later. And then the commercial investments, I mean, besides e-commerce investments that I talked about, Matt, we are also looking at how do we, if you will, decrease the reusage. I mean our products are chronic use, but they are single use. What we've observed is that it's certainly all geographies, including developed ones and including the United States, there is some reuse that goes on. And so we are thinking about how do we use investments in digital marketing and patient education to try to impact that reuse rate because that can provide tailwind for growth as well.

Okay. Appreciate all that. I think there's a lot ahead of the company. In the near term, though, during the call, there was a lot of commentary about the impact of COVID on the business. What did you see specifically in Q1?

Yes. So the impact of COVID has been interesting for us. It's had a different impact in different geographies in different times. We've seen everything from -- in certain geographies where patients would often acquire their products through a hospital pharmacy, where they get diagnosed in hospital to -- at a hospital clinic. Where you couldn't get access to hospitals, certainly the business have slowed down over there. In other parts, we saw a little bit of sort of the stocking of behavior, if you will, where people were afraid to go back to the pharmacy again and again. So they sort of bought and stored product at home. So it's been really hard to the sort of deconvolute these different effects at different times. What we have seen more recently and sort of we included in our guidance, and I'll turn it over to Jake here to comment more specifically in the second is, COVID has certainly as we think about the back half of this year, is a bit of a headwind in 2 regards. The lockdown in China are impacting us. It's an important market for us. And secondly, at about this period last year, we had a little bit of a bounce back in some of our developed markets. And so that created sort of an unfavorable comparison. So it's really hard to give you one common thread of what happened with COVID because of just the [waiting] levels of impact quarter-by-quarter.

Okay. Yes. And maybe just to jump in as it relates to maybe the last 3 months. First of all, we're a fiscal [indiscernible] year-end. So the months of January through March were actually our second fiscal quarter. But during the last 3 months, it's obviously -- it's difficult to pinpoint exactly the impact that COVID related items would have had on our business. But if we sort of look back at what our monthly trends were during the month of January, Embecta's constant currency revenue decline by an amount that exceeded -- our constant currency revenue decline for the entire quarter. While in the month of February, I would say our constant currency revenue declined around that same rate that it would have been for the entirety of the quarter. While in the month of March, our constant currency revenues returned to positive low single-digit growth. So as sort of Omicron kind of swept through, obviously, it had more of an impact -- seem to have more of an impact in the months of January, less so in February. And then at least for our business globally, we ended up returning to positive year-over-year growth in the month of March.

Jake, was that a -- it seemed like the domestic performance was pretty soft, did domestic impact the growth in March?

Yes. So for the second quarter. If we look at our U.S. business, I would say, on a monthly basis, our U.S. revenue trends largely followed what I just mentioned for our overall total company. Meaning that during the months of January and February, U.S. revenue would have declined year-over-year and obviously, at a faster pace than what the U.S. performance was for the entirety of the quarter, while during the month of March, U.S. revenue returned to a positive year-over-year revenue growth.

Okay. And did you -- you commented at all about, I don't remember seeing it in the transcript about April.

So we haven't said anything about sort of intra-quarter April. But obviously, our guidance for the second half of the year calls for a decline of about 3.5% on a constant currency basis. Dev mentioned one of the factors that we're at least anticipating being a headwind in the second half of the year being COVID, right? And the fact that we had purchases last year, this year, we're anticipating there to be some headwinds. The other sort of factors are even though we don't necessarily have a material amount of revenue in Russia and the Ukraine, we do about, let's call it, $6 million a year or so in annual revenue there. And right now, for the second half of the year, we're really factoring in nothing. So that's going to have somewhat of a temporary impact. And then on our call, we also mentioned how in the latter part of 2021, the management team -- new management team, in fact, obviously, we're doing some deeper dives into reviewing our business in anticipation of spin. And there were just certain customer -- legacy customer relationships that we decided to step back from. So that has proved to be a headwind throughout 2022. But -- and we'll continue to anticipate -- it will continue to be a headwind in the second half of the year. But we certainly think it was certainly the right thing to do to step away from some of these legacy relationships because it really creates a healthier Embecta as we move forward and a better ability to grow then thereafter.

Okay. And Jake, you mentioned -- I don't know if this is for you or Dev, but you mentioned Ukraine impact. You have 3 manufacturing facilities, one of this in China. What kind of impact are you seeing as far as your ability to manufacture and get products out of China?

I can take that. Matt, the lockdowns are -- besides the factors that are affecting everybody's material inflation, shipping costs, shipping delays, the lockdowns are obviously impacting us, just being able to get staff, staff having to sort of live in the plant and then using the local distribution centers to get the product out. We are obviously hopeful that these lockdowns have begun to ease and the easing up will continue. But what we are all proud of is through all of this, we've been able to keep manufacturing going and operational. And yes, we've sometimes had to incur additional shipping costs to be able to get product generally globally into customers' hands. But for the most part, we've been able to maintain continuity of supply. And so we view just the ability to do that as a competitive advantage. And in spite of all the challenges, I think our operations team is doing a spectacular job of doing so.

Is there a point, Dev, where it needs to really start to ease as far as the lockdowns go? Is it 3 months? Is it 6 months? I mean how do you think about that?

Certainly, 3 months would be or even shorter than that would be good, Matt. Listen, I mean, I think the shutdowns impacted -- the lockdown impact us and probably others in 2 separate ways. Number 1 is just the ability to go get new business is impacted, if you can't leave your home, if you can't move to hospitals, right? So that's one. Second is that I was mentioning before is sort of on the manufacturing and supply side. Now manufacturing, we've been able to keep running, and I expect we will be able to do so. The distribution, you often use partners for distribution and their ability to get them in and out of distribution centers can get impacted. So certainly, our hope is that the lockdowns will ease here in the coming months and that's sort of what we're planning for.

Okay. Got it. Moving over to -- well, I guess, sticking on supply chain for effect, your spin-off. Are there -- so you're still kind of getting things in place, although, again, you were under-effected for a while. Are there any other supply chain issues that you should call out for folks as we think about remainder of this calendar year that you may see versus others across Medtech?

I wouldn't know if they're going to be different for others across Medtech. And nothing I would say or point out right now unique to the spin, right? We still have TSAs, we're still using some of the services over there. I mean -- and it's going to be some of the same things, Matt, you've heard from other companies, right? I mean 2 key inputs to just our products -- just given the nature of our products are stainless steel and resin. And then you sort of know what's happening with pricing over there. So nothing I would say unique. I would call out the shipping delays also, I'm sure, have been felt by people across industries, not just in Medtech, the cost factors, inflationary cost factors are also being felt by others as well.

Okay. So let's go look at the top line for a little bit here. Talk about the market dynamics for syringes and pens, where you sit within there and then how to grow that business.

Yes. The way I think about it is really trying to separate the world into developed markets and emerging markets, right? And let me start with emerging markets, first. As we talked about before, we certainly expect growth in the number of people with diabetes to be disproportionate in emerging markets, that we also expect it's going to be sort of bread and butter glucose BGM and injection devices for insulin delivery market. And we certainly are very well positioned there to certainly grow with the top of the funnel, if you will, there's a number of people who are needing to use our products, as well as I think we have some opportunity to continue to increase our share position. Even though we are already the leader, I think we have an opportunity to increase our share in category over there. In developed markets sort of, I think, fit into 2 sub buckets, if you will, the United States and other developed markets, right? So if I go to the other extreme now, we talked about emerging, if I go to the U.S., I mean, U.S. also, you do have a growth, but there are 2 sort of headwinds to injection devices. One is the adoption of pumps -- infusion pumps for insulin delivery. The other is the advent of novel therapy in introduction of new drugs that delay the onset of insulin. In spite of that, our U.S. business has managed to stay stable for the past several years as well. So what we've shown is even when these headwinds, we can provide stability to a very important part of the business. It contributes more than 50% of our revenue. The other developed markets somewhere sort of fit in between, they don't have as generous reimbursement scheme as the United States does. And so I would say that sort of sits in between the emerging markets and the United States. So in the developed markets, this is where -- certainly, the patch pump project that we are working on is an important part of how do we grow because, as you know, that segment of the market is where the growth is certainly in terms of revenue. And we want to participate in that growth through the introduction of our patch pump. So that's generally how I think about things we control that are in our hands already. And obviously, opportunistically thinking about M&A and partnerships, like where can we add products to our bag so that we can better serve both the emerging and the developed markets, and we're very open to all kinds of arrangements that will allow us to do that.

Okay. Appreciate that. Now I'll get to the patch pump here in just a second. But speaking of the pump market, how does the core syringe business and pen business, how does it grow as patch pump -- as patch pumps and insulin pumps become a bigger part of the overall market and even some of these nontraditional pumps like Secure and Modular hit the market out, although Modular is more of a traditional pump. How do you grow in the face of that kind of expansion in terms of higher-end technology utilization?

Yes. So talking a bit, let me talk about pumps a little bit first, right? Because pumps, as you know, are mostly in Type 1. There is some adoption in Type 2, but primarily in Type 1. As we think about people who use insulin, clearly a lot more people with Type 2 than Type 1. And so where we are seeing some headwind in terms of people using our products, migrating to pumps, certainly the Type 2 population is growing as well. The second thing I would say is one of the ways where we think we can actually continue to grow in a market like this is investment efforts to try to decrease the reuse rate. So our products are single use -- chronic use with single use. And what we've noticed is that even in economies where there is solid reimbursement, people will often reuse the same needles. And that reuse rate can be certainly high in the upper single digits in emerging markets, but it is sort of low single-digit range even in the developed markets, including in the U.S. So some of the investments we want to make, Matt, are trying to focus on largely through digital means, educating patients on the fact that each needle should be used once. I mean that can have a dramatic impact. Even with the reuse rate of 2, you can think about sort of the addressable market and the size changes dramatically if you can make even fractional dents in that use rate.

Okay. And then I don't know -- this maybe I missed this at some. Are you working on a smart pen.

We are not working on a smart pen, but it's an area we are following closely, Matt. Because, again, you can imagine that with the scale and scope that we have, with the right pen in our hands, we could make solid progress with it. It's an area we're watching very closely.

Okay. All right. So let's talk about patch pumps then. Can you talk a little bit about -- I don't recall when Embecta, I know they were working on something here. When do they start working on their patch pump?

Yes. So it's difficult for me to give you an exact date, Matt. I mean, first of all, I wasn't here for most of it. There have been references to working on patch path that go back several years. Maybe the most recent iteration, probably the most pertinent was in the '18, '19 time frame, where I think BD talked publicly about the patch pump and then suspended the project once it ran into some regulatory sort of feedback that they got. And so maybe I can talk a little bit about what happens then because I think things are quite different today than they were in that time frame. So number one is we got breakthrough device designation because we focus the effort on our Type 2 closed-loop insulin pump. That is a huge advantage because even through the pandemic period where the FDA was so busy with the EUAs, we were able to have interactive discussions with the FDA that really guided our development efforts on the patch pump. The second thing is, as an independent company, we were -- we are able to attract talent. So for example, our Head of Medical Affairs now is an endocrinologist, that was not the case. We got a new Head of R&D, who has some experience in wearable devices, our Chief Technology Officer is new. And what we've been able to do is really take the 4 groups that are so key to working together: R&D, regulatory, quality and medical and put them under a common umbrella, under common leadership to drive sort of that cross- functional collaboration. And so thanks to all of those efforts, I mean, our patch pump program. We haven't specifically talked about time line, and I don't intend to do so today, either. But that program is developing well. We intend to have an open loop version of the product as well as closed loop. The open loop will come first. We expect that will be a traditional 510(k) submission using a predicate device and then engage in a clinical trial before we can launch and get approval for a closed loop. So that's a little bit about sort of where we are with the patch pump today.

Okay. And is it a one-piece patch pump? Is it a two-piece patch pump?

Yes. Yes, it is a 1-piece patch pump. So to think about it as a completely disposable wearable device. Some of the features we are designing in to a call for a higher reservoir capacity for insulin as compared to the currently available patch pump. This is important because you're designing this product for Type 2. And as you and your audience might know Type 2 need, on average, more insulin today than Type 1. Also, we are taking into account the fact that Type 2s are often seen by primary care physicians, not necessarily only by endocrinologists. And the fact that Type 2 is a progressive disease, right, you may need more insulin over time. However, for right adoption, the complexity we think needs to be far reduced. So even thinking about how many basal rate settings do you have, how easy is it going to be to administer a bolus whether you can tailor the rounds, how easy setup and training is going to be. We are taking all of those factors into account, Matt. So while the form factor will be a wearable device, certainly, the user experience that goes beyond the form factor, the hardware itself, we think is going to be an important part of how we differentiate ourselves from some of the other product at least with one of the products there, but other products that might come in the marketplace.

Okay. And is it going to both provide a basal rate of insulin and a bolus rate of as well?

Correct.

Okay. Got it. And then just sorry, last one, is it going to be one where you can disconnect from it for a while, if you need to? Or is it going to be kind of -- once you put it on, it's -- you need to keep it on.

When you say disconnect, I mean, once you put it on for the number of days that it's indicated for, you either use it or if you take it off if you're going to be using for whatever reason, you're going to be traveling, going on a camping trip, some people will often take their pump off and go back to an injection device. Certainly, if you were to do that, you would have to come back to a new pump.

Okay. Got it. And then I think you said publicly that you plan to give us more of an update next year as far as approval pathway and timing. Is that fair?

Yes. Correct.

Okay. Look forward to that. It's definitely an area for you. Maybe if it's okay, I'll flip over to Jake just for a few minutes. Jake, talk about the financial profile of Embecta and specifically, how do we think about EBITDA? There's a lot of it. Is that a metric that's going to see some pressure maybe over the next couple of years as you're making some of these investments and then as we transition off the TSAs.

Yes. So Matt, historically, this business, while under BD has been a very profitable cash-generative business, albeit a business that has been a bit underinvested in for several years. And as a result, I think, has historically achieved a very low single-digit constant currency revenue growth profile over the last several years from 2019 through 2021. On average, our constant currency revenues have grown about 2%. Moving forward, this is going to be an invest for growth story. And we are focused on finding ways to accelerate that constant currency revenue growth profile. And that is going to take some significant investments, and it's going to take time for that to occur as well. Additionally, we're going to need to stand up the company as our own independent entity. And that is going to take time, and it's also going to cause us to incur some additional expenses as we move forward here. Now through, I would say, 2024, right now, we see the constant currency revenue growth profile of Embecta as one that could generate a relatively flat constant currency revenue growth rate, and an adjusted EBITDA margin of approximately 30% by 2024, which if you step back and you think about that from an adjusted EBITDA perspective, despite some pretty significant costs that we're going to need to incur in order to stand up the company as well as the investments that we intend to make, a 30% adjusted EBITDA number is still a very, very highly profitable, cash-generative business profile. And that's what we're sort of targeting as the financial profile through 2024.

Okay. Okay. It makes sense. A little bit of pressure for those investments that I think everybody wants to see how this spins.

So Yes. even in the second half of this year, Matt, I think we were obviously very limited as to what we could say previously prior to spin. But the investment community should sort of think of a step function down from sort of the EBITDA margins that existed prior to spin to what we recently guided a few weeks ago to calling for essentially adjusted EBITDA margin in the low 30s. And then from the low 30s to say 30% by 2024 is really largely going to come from continued increased investment in R&D.

Okay. Okay. Appreciate that. Question did just come through, Jake, on the financial side of things. A follow-up on the EBITDA question, can you please discuss free cash flow conversion?

Yes. So sure. So I'll -- maybe I'll reference going back to say -- our thoughts through 2024. Just for simple math purposes, if we were at somewhere in that kind of $1.1 billion to $1.2 billion in revenue range, we're calling for adjusted EBITDA margin of roughly 30% by that 2024 time frame. So roughly kind of in that $350 million of EBITDA, if you will. From now through 2024, I would say that we continue to want to make sure that we actually increase inventory levels a little bit. We certainly as a new public company, I want to make sure that we avoid any type of potential disruptions. So I think it's probably more likely that inventory at least in terms of cash is maybe a bit of a modest headwind for free cash flow. And then for CapEx purposes, over the next 5 years, we could very easily spend somewhere between, let's call it, $250 million to maybe $300 million cumulatively over a 5-year period of time in terms of CapEx, largely as it relates to sort of building out our own IT and ERP infrastructure. And then there's also some things that we would like to do in terms of potential capacity expansion and then some other growth initiatives. But that should give you a general sense as to sort of what the CapEx requirements would be. And then lastly, we're very cognizant of our current financial profile being very cash generative, highly profitable, but relatively a lower grower. And as a result, we also have a dividend in our capital structure, and that's going to be about a 20% payout ratio of GAAP net income. So we're trying to be mindful of shareholder returns as well as we need to make the investments necessary in order to try and accelerate revenue growth moving forward.

Okay. So Jake, 20% dividend payout is about the number we should expect going forward?

Yes, of the GAAP net income, and we'll begin paying that out in conjunction with our third quarter -- our fiscal third quarter earnings call.

Okay. A few more questions coming through here, which is great to see. How quickly, Jake, can you delever?

Yes. So I think one of the nice things about the spin was that -- from a capital structure standpoint, we have financial flexibility out of the gate. Our net leverage levels right now are slightly under 3x as of the most recent quarter. I think we obviously -- we can take leverage levels up to, let's call it, 4.75x under our revolving credit facility. I don't think we would ever necessarily get close to those types of levels, maybe for different -- for M&A, we may be willing to take it into the net leverage levels up into the upper 3s. But there has obviously have to be a path back down closer to like a 3x mark in the future through additional EBITDA growth. And for us, I think our capital allocation approach moving forward is largely going to be focused on investments into the business to try and accelerate that top line revenue growth. Second, obviously, we're committed to a dividend as well, and we think that our current financial profile allows us to do that while still making those investments. But I think we're also uniquely positioned with our leverage levels out of the gate to also do different types of M&A to try and use M&A and partnerships as inorganic growth accelerator as well.

So Jake, and that's another question that's come through. I appreciate that [indiscernible]. When can M&A be part of the story? Is it this year? Or is it more likely, in my mind, next year?

Yes. So maybe I'll throw that to Dev. He can certainly comment on M&A. I think from a financial capacity standpoint, obviously, it would depend on what the M&A was, right? And obviously, M&A is opportunistic. It's hard for me to necessarily comment on M&A specifically, obviously, it's going to be dependent on the acquisition or partnership opportunity itself. But I think right now at around 3x net leverage, even with an expectation that EBITDA dollars will go down a little in the future. I think that's largely going to be continue to get offset by free cash flow generation. So I still think even through 2024 from a financial standpoint, we'll have the ability to do different types of M&A.

Yes, Matt, the only thing I'd add to that is, I mean, as Jake said, it's opportunistic, right? But we have a team of people that's sort of actively prospecting. It's got something that you just waiting back and waiting for something to happen.

And Dev, you guys are really good at delivering insulin. So we think about it within that framework? Or would go outside of that within the diabetes industry.

I think we'd go outside as long as we can leverage something that we have, Matt, right? So the ability to get into the retail pharmacy channels around the world, right, leveraging our emerging market infrastructure and just thinking about the needs of the current patients as well as future patients, can we leverage our high-volume manufacturing and distribution expertise. So it's got to be something that we can leverage what we have, and serve people with diabetes, but recognizing that they have needs far greater than just insulin delivery.

Got it. Okay. All right. Well, that is all the questions that I have all the questions that I see coming through from investors and for some reason, my competitors are on the call, too. So I think we'll go ahead and wrap up there. thanks so much for the time here today. I really do appreciate it.

Thank you, Matt. Thanks for having us.

Thanks for having us.

All right. Thank you, everyone.

Yes. Bye-bye.