The Cigna Group (CI) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the Morgan Stanley Healthcare Conference. I'm Erin Wright, a health care services analyst at Morgan Stanley. We're very happy to have with us a very timely conversation with Cigna today. We have the CEO and Chairman -- Chairman and CEO, David Cordani, with us today. Thank you so much for taking the time with us. For some quick disclosures here -- for important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you do have any questions, please reach out to your Morgan Stanley sales representative. And with that, I'm going to hand it over to David for some opening remarks.

Sure. Thank you Erin. Good morning, everyone. I appreciate you investing some of your time to talk about Cigna. I'll just make a few macro comments and then we'll get into Erin's Q&A. First and foremost, framing our enterprise strategy more broadly. The Cigna enterprise strategy that has 2 large operating platforms, the Cigna Health care benefits platform and the Evernorth service platform is a strategic portfolio of businesses that are designed to thrive, grow and continue to deliver differentiated value in a dynamic marketplace in an evolving dynamic marketplace. And that's best underscored with our sustained track record of our EPS growth, which is aided by our top line growth, obviously, where we've been able to grow in excess of 13% EPS CAGR over the last decade, demonstrating durability and ongoing innovation and evolution of our business model that serves corporations, obviously, through employers, health plans, governmental agencies, increasingly integrated delivery systems and for certain lines of business direct to consumers. Within that portfolio, I'll just tease out the 3 major business units that drive our organization. First and foremost, our Specialty and Care business. That's 30% of the entire company. So in that, you can think about the specialty pharmacy is the largest driving subset of that portfolio. We have a proven track record to drive leadership largely in the chronic space, but more broadly in the space to deliver differentiated value to patients directly, overall affordability and clinical quality for the benefit of those we serve. That is a large addressable market. That addressable market in aggregate is $400 billion. It's growing at a high single-digit growth rate, and we expect to grow a bit above that because of the nature of our competitive capabilities. Ongoing innovation is important in that space, underscoring that is the biosimilar trend and our disciplined approach to the biosimilar trend. We took a unique approach to the market, and we're able to deliver HUMIRA biosimilar that takes incentives all the way down to the consumer level, delivering a 0 out of pocket for a consumer saving on average [ $3,500 ] a year. And today, we announced a posture relative Stelara where, again, we'll be able to have an interchangeable biosimilar delivery, which benefits all stakeholders along the equation, including, importantly, the patient saving in this case, on average of $4,000 a year. Second business is our pharmacy benefit service business. Our large diversified pharmacy benefit service business that serves a variety of stakeholders, both employers, health plans, governmental agencies. In that business, core fundamentals are important, ongoing innovation is also important. And just to touch the tip of the way there, you could take the GLP-1 space that everybody is familiar with. We were able to innovate and evolve a solution known as EncircleRx for the benefit of the clients we serve to provide access, care coordination, lifestyle management programs and peace of mind around overall affordability. Already, that program has 2 million lives in terms of rapid adoption, and it's one of the kind in the marketplace. And then lastly, while Specialty and Care is 30% of the company. Pharmacy Benefit Services is 30% of the company. The other 40% of the company is our benefits portfolio and our Cigna health care benefit portfolio, led by our employer-sponsored marketplace. In that business portfolio, we continue to be able to grow on a disciplined basis. We've been able to deliver over a decade of sustained growth, for example, in the Select segment, small- to medium-sized clients with different innovation and sophistication of services. And in the recent time frame, we've been able to continue to demonstrate good predictable overall MCR and cost delivery from an affordability standpoint, harnessing all our capabilities. So you put it all together, we remain on track to deliver on our long-term capital commitments and shareholder EPS growth commitment going forward. Our EPS growth algorithm is 10% to 14% plus an attractive dividend. And as I noted in my opening initial comment, our goals are not aspirational goals we episodically talked to. We have a track record of achieving them, having delivered at or above our previous objective of 10% to 13% over the last decade. We now have a 10% to 14% growth algorithm out plus that attractive dividend. Erin, I'll hand it back to you.

Okay. Great. So in your second quarter call, you did highlight that utilization remained broadly in line with your expectations. And you did be convinced with MLR in the quarter. Can you talk about some of the nuances there, but also could you provide an update on what you're currently seeing from a utilization standpoint to address this kind of upfront and what your expectations are for the second half?

So in the context of this question, we come back to that third business, the benefits portfolio. And largely my comments are going to come at it through an employer book of business or the commercial book of business. Stepping back, remind investors, we delivered strong results throughout the totality of 2023. We expected in 2023 some elevation in medical cost trend. We planned for it, we price for it. We executed against that. We delivered a very attractive result in 2023. We expected the, if you will, elevated cost pressure to continue on in 2024 within our pricing and planning approach, obviously, our clinical programs and contracting programs abate some of that, and we continue to deliver overall competitive costs through the first half of the year. By and large, the medical cost trend is in line with our expectations. And as we step into the third quarter, we see that continuing on.

Okay. And then in terms of your broader thoughts on the most recent quarter and also the second half and the other moving pieces and the key drivers, what should we be thinking about as we're modeling out kind of the third quarter, fourth quarter here?

Yes. The quarterly patterns obviously bounce around year-to-year, and otherwise, Q3 is an interesting quarter. And Brian, our CFO, gave a little additional guidance on the second quarter call relative to our second half of the year expectations and the pattern of those expectations. I think the 2 highlights I would ask you to think about, first fundamentally, broadly speaking, in line with our expectations. Q3 has a bit more days than it than last year's Q3. So there's a little bit of a year-over-year when you look at the trend, you're dealing with year-over-year. Q4, we'd expect normal seasonality. We have a comparator versus our Q4 of 2023, where we had an outsized favorability in our stop loss results that are, as we said, our planning projections for 2024, we were very clear. We expected that to be more in line with our broader expectations. So underlying pattern and similar seasonality tends to because of the nature of the way the MLR works in high deductible plans have an upward trajectory in the MLR. And then Q3 and Q4, the 2 nuances I called out are either more days, Q3 of '24 versus Q3 of '23 and then Q4 moderation of stop loss more in line with our expectations versus an outperformance to the positive in 2023.

And most of your commentary on the utilization dynamic was on the commercial side, I guess, any commentary on the other subsegments in terms of MA?

So when you click it down in terms of within our portfolio, we have our MA portfolio that fits in our benefit portfolio. As investors know, that is on track to be sold and closed by the first quarter of 2025. I want to be very clear on the employer sponsored. The Medicare MLR is in line with our expectations and the basic conversation that Brian delivered in Q1 and Q2, broadly speaking, in line with our expectations and nothing unique to call out on the individual exchanges either.

Okay. Okay. Just want to make sure that's clear. And then on -- let's switch gears a little bit to Evernorth, because I really want to talk about kind of Specialty and Care services, and we'll get back to kind of the Health Benefits business as well as PBM. But I guess, how would you characterize the long-term growth prospects? You talked a little bit about it more broadly, but tying into sort of the biosimilar opportunity, biosimilar HUMIRA, you mentioned STELARA as well. How significant of a driver is that for you? And how would you characterize the opportunity?

So maybe just a quick table setting since we're going -- now shifting into Evernorth. So Evernorth, the services portfolio we have, it encompasses the first 2 businesses I articulated, the Specialty and Care and the Pharmacy Benefit services business. Just by way of reminder for investors, over the last 5-plus years, we've taken that business from a pre-acquisition of Express Scripts growth from 2% to 4% to 3% to 5% to 4% to 6% to 5% to 8% algorithms. And the base is significantly larger today. So some of the items we're going to talk about here are inherent contributors to that as we've continued to be able to grow now a much larger service platform. First and foremost is expanding distribution access. As I noted, Evernorth is a service business, that is designed to be open architected. The vast majority of Evernorth's revenue is outside market revenue, not correlated to the benefits business. That's on strategy for us. Corporations, stand-alone relationships, health plans or large servicer of other health plans in America, we see that partnership opportunities continuing to grow, governmental relationships and then increasingly, integrated hospital delivery systems and multi-specialty provider groups that are taking risk. So think about distribution access in a large addressable market. The specialty business, Erin, we came back to is a meaningful contributor to that. The specialty market, as I noted, is a $400 billion market. It's growing at high single digit. We have market leadership posture in many dimensions of how you evaluate that, whether it's in orphan drugs, limited distribution drugs, our clinical acumen, our data acumen and our ability to manage overall patient care, handling of medications and clinical outcomes is quite positive. We have a nurse, a colleague nurse and employed nurse within a 1-hour drive of 90% of all Americans to go into homes and facilitate infusions and care coordination plans, et cetera. So that continues to track very well. And then the biosimilar component is additive to this as we go forward. We've been quite disciplined. Our HUMIRA strategy was quite clear. We did not deem it to be a nice switch. We have had an evolutionary environment from early '23 to where we sit here right now in mid to the second half of '24, evolving and always maintaining choice, improving affordability and improving additional services as more interchangeables come forward. Importantly, Erin as well, we have a portfolio of capabilities, including our CuraScript distribution asset, which distributes and coordinate services for physicians and delivery system partners. Our Quallent pharmacy services asset, which comes into effect as we're dealing with biosimilars, especially where we're able to have for HUMIRA, all dosage levels, interchangeability and be able to coordinate services. And obviously, we're pleased to continue that on with the store position and beyond. So significant growth, positive trajectory and track record, broad distribution capabilities to multiple addressable markets and clinical leadership in the case of specialty pharmaceuticals for both the existing model and the evolving model.

Okay. I want to get back to STELARA and HUMIRA in a second. But since you did mention CuraScript and you recently also re-upped your contract this morning or at least it was announced from [ Cencora ] with your Evernorth business and the distribution relationship there. Can you describe a little bit of the detail any sort of major changes in terms of that relationship? I know you were making an effort to take more of the specialty business in-house getting to closer to 50% from the 20% today that's in-sourced. Where does that stand today? What's embedded in this contract? And what sort of flexibility do you have in this contract now?

So I'm not going to publicly go through details of a contract, but let me give you a bit of color and insight. First, CuraScript. CuraScript is a part of the Evernorth portfolio. CuraScript is a pharmaceutical distribution asset that largely faces off against physicians, multi-specialty physician groups and care delivery systems. It is well in excess of a $10 billion infrastructure of stand-alone revenue today and growing rapidly. That's in addition to the kind of in-sourcing relationship that exists between CuraScripts and Accredo. So large scale significant asset that continues to grow well within our portfolio and an important part of the breadth of capabilities within Evernorth, especially underscoring our ability to partner with and work with physicians and delivery system partners in a different way. Our relationship with [ Cencora ] is a long-term relationship. We're a partner-based organization, one of our strategic imperatives as we seek to be the undisputed partner of choice. We're pleased to have extended that relationship. And I would simply just highlight, we have ample growth opportunity off of our [ Cencora ] capability as well as ample flexibility within the structured relationship we have had and have extended with [ Cencora ] today.

Okay. And then understanding the adoption of biosimilar HUMIRA took time and was a ramping sort of process in terms of how it was embedded in formularies in your adoption kind of curve, how would you characterize that then for STELARA and other biosimilars? Do they follow a similar path? Or what is some of the lessons learned in terms of how that's transpired?

Yes. So when you step back, as we looked at the biosimilar opportunity, and we were quite bullish and excited because at the most macro level, our society needs the rapid evolution of biosimilars to create more affordability capacity for additional medications that are coming down the pipe. Gene therapy, cell therapies, personalized medications, et cetera, there is significant value creation opportunity from a societal standpoint. In some cases, early biosimilars were not interchangeable, that creates more complexity than interchangeability. You have existing patients, you have new patients. So the ability to manage choice lead with clinical quality and have the overall value is mission-critical, and our HUMIRA strategy, I think, is a perfect underscoring of it. As we carried it through 2023 throughout chapters of additional choice, additional flexibility, et cetera. We now sit in an environment where we have a multi supplier sourcing model as opposed to a mono supplier sourcing model. That's positive in a variety of ways, supply chain continuity. All dosage levels, derisking in a variety of ways. Incentive alignment, as I noted, having a $0 co-pay saving model that exists. We took our interchange bill program forward as articulated in our second quarter call just before the end of the second quarter. As we sit here today, we're a bit in excess of 25% of eligibles adopting which is a very positive outcome, given that it started in the late part of June in terms of interchangeable path. And we see very positive traction in terms of the way we're interacting and delivering choice and incentivized choice to the patient and coordinating with the physicians. Will that be the exact adoption rate with STELARA will say but we see the ability to manage these curves and having additional curves now come with additional biosimilars over time being a very attractive sustained opportunity for us.

Okay. And then can you also expand upon kind of other areas of specialty that you see as kind of attractive to you, whether it's cell and gene therapy and what the growth prospects are across that segment?

So again, when you come back today, as I noted, the size of the segment is significant, a $400 billion addressable market, growing upper single digits, we believe will grow in the lower double digit because of our capabilities. You have core specialty capabilities. You have the limited distribution drugs. You have the biosimilar class of drugs, and then you have unique gene therapies where there's 21 in the marketplace today, they're just shy of 1,000 in the pipeline. Our capabilities for everything from the unique handling aspects of some of the most complex drugs to the data coordination to the clinical coordination for the benefit of the patient in coordination with the physician. And importantly, for some of the most complex medications back to the pharmaceutical manufacturer remains differentiated in the marketplace. So we see attractive growth opportunity across all of the above and both continue to invest in innovation, infrastructure and resources within our specialty capabilities.

Do you see value in bolstering your specialty infusion capabilities at the moment? And you did mention this as an area potentially from an acquisition standpoint or inorganic growth opportunities just across specialty in general. But yes. What are the opportunities? Or how would you characterize it?

I kind of hold on the inorganic side of the equation for a moment. Maybe we'll talk about that a little bit more broadly. Not a negative message, but I don't want to say that specialty is the only space that's of interest to us. Back to -- if you think about infusions, you can think about chronic and acute, right, the marketplace has multiple segments. We have leadership position relative to the chronic capabilities. Breadth of drugs, clinical coordination, supply chain management, care delivery infrastructure, employed clinicians, 1-hour drive of 90% of all Americans, et cetera. Acute. We continue to expand our acute capabilities. We see that as a continued ability to grow. I noted in terms of Evernorth's addressable market being physicians, multispecialty physician groups and integrated delivery systems as for the acute piece of the equation exists. Our CuraScript asset plays there in conjunction with our broader specialty capabilities as well as some of our additional assets. So we'll continue to move forward with our leadership in chronic and then we'll seek opportunities in the acute space to further expand our reach and impact. It may have inorganic contribution. We are driving that today largely organically and complementing it inorganically.

Okay. Okay. And then let's shift gears to the PBM, if that works? And just any sort of update on the selling season and how that is shaping up?

So if you go back and look at the scale of our pharmacy benefit services infrastructure, we've continued to [indiscernible] would successfully grow that from day 1 of acquiring Express Scripts, demonstrating we could deliver strong continued value through service execution, affordability, clinical quality and then new innovations on a go-forward basis. And the aggregate size of throughput of that business today is about 2x what it was day 1 of the acquisition, if you just measure the throughput of that business. Our retention outlook for 2025, pause because we got to remember what year I'm in. When we talk about the growth algorithm, our retention outlook is quite strong. As we sit here today and new business opportunities continue. And obviously, that comes off the back of a tremendous growth year in 2024. So strong service delivery, overall affordability. Importantly, the continued innovations we're able to bring forward through our SafeGuard programs, through our value-based care programs or EnCircleRx programs, through our Embarc programs, et cetera, continue to resonate in the market. So we see another positive year ahead.

Okay. And then PBM regulation, obviously, has been something that we dealt with over the years. In terms of scrutiny of the model, but I think there's a lot of misconceptions on the model as well in terms of the value that you provide and the savings that you achieved for your customers. And so how do you -- where do you see that coming in the near term in terms of regulation that could come into the fold either this year or next year? And how kind of policy and regulatory dynamics are evolving in your view?

Sure. There's no doubt that our industry has been, is and will continue to operate in an active legislative and regulatory environment. It's the nature of our industry. And the pharmacy benefit services exist within the context of that. So we accept that as a part of being a well-governed organization. Our responsibility is to be actively engaged in that regulatory process and cycle and be able to be actively engaged on a fact-based principal orientation, not in a partisan orientation. A piece of our belief state around that is ensuring that any regulation or legislation that evolves continues to maintain choice because the marketplace embraces choice. We've continued to evolve our model. We embrace transparency. We embrace continued evolution of products, programs and services. We have full pass-through programs. We have point-of-service rebate adjudication programs. We have a variety of choice. We'll expand transparency further. We do not see any one regulatory environment as a derailer of our business model. Important, we have to continue to innovate and drive broad earning of capabilities and value creations for the benefit of those we serve. Be it the federal government, state government, employers, other health plans and integrated delivery systems. And we've proven that so long as we do that, our business model continues to grow and yield value on a go-forward basis. So an active environment, there's no doubt about it. We're embracing and engaging in the environment very directly, fact-based, but maintaining choice for the benefit of the benefit decision-makers remains mission-critical here.

And then some of the changes in the retail pharmacy models that are out there. I guess, could you outline your understanding of some of your peers kind of proposed retail reimbursement models and how you view that from a PBM perspective and how that plays a role in terms of your relationship with retail pharmacy?

So the retail pharmacy dynamic in America is quite interesting in terms of -- if you step back just for a moment, the U.S. has an imbalance in terms of the retail access footprint. In some cases, there's not enough access in some rural geographies, in some urban dense geographies. If you looked at it in a fresh set of eyes, there's an oversaturation of access. So when you have the conversation relative to here, clients are looking for the right balance access profile for their employees or members or otherwise and an overall value equation. The value equation as a clinical equation, which we don't often talk about in terms of fill coordination has a clinical dimension that comes across from a safety standpoint. It has an information protection standpoint and has an overall value standpoint. Now to the core of your question, we manage a variety of network or access provisions for the benefit of those we serve and have and will continue to do so. We'll engage in evolution of business models to be able to get that right access and affordability. We've rolled out our own cost plus network as a choice for clients. There's exploration of that today, not heavy adoption of it today, but exploration in a choice-based environment because we believe in affording more choice in a consultative way. And that environment continues to move forward. Putting a circle around this no matter who the client is, an employer, a health plan, a governmental agency, they are all looking for more value. They're looking for more value because of the overall pressure that exists in the ecosystem. So we'll continue to innovate our own solutions, partner with others, bring more precision to access profiles and provide choice of access provisions on a go-forward basis.

Okay. And can we talk a little bit about GLP-1 adoption coverage overall, I think, above the 50% mark. But how do you get coverage even beyond that? How is traction for EnCircleRx? It may be still somewhat early, but some of the financial guarantee programs that you have with that with employers, I guess, how do you think about the economics for you as well as broader kind of adoption?

So with the GLP-1 space, first, I step back for a moment, about 1.5 weeks ago, I was for a couple of days in one of our markets, which is a normal part of how we operate them, are spending a lot of time in the markets. One of my visits was a couple hour breakfast meeting with about 15 clients. Another was a lunch meeting with about 15 brokers, several were with delivery system partners. This topic is front of mind for everybody. So not just investors, it's front of mind for everybody because on one hand, it presents an example of pharmacological innovation that brings new services, new programs, life benefiting services. On the other hand, it hits just what we talk about an affordability challenge and how to get the right matching to come forward. Today, in Evernorth, about 50% of clients are offering GLP-1s in some way, shape or form, in addition to diabetes management programs. The percentage in the Cigna Health care benefits portfolio is lower because the average client size in the Cigna healthcare portfolio is smaller than it is in Evernorth. Evernorth serves the biggest of the big versus Cigna Health care servicing a variety of sizes of clients. Two, the trajectory has continued to tick up, it hasn't nice switched up. So it continues to grow in single-digit percentages, not in tens of percentage points going forward. Three, the interest in and engagement in what I referenced briefly before our EnCircleRx program is through the roof. Because clients are looking for how do you balance expanding access but in a more sustainable way, for outside of or in addition to diabetes. And what the EnCircleRx program does is it wraps a population and lines of incentives. It coordinates lifestyle management and care delivery programs with access to the medications in an incentivized approach. And then we have guarantees, they're fee-based guarantees, they wrap around it because we're aligned in the program, along with the employer as well as with their employees. And as I mentioned, we already have just in excess of 2 million lives in that program. So continued evolution in the space. But as you're monitoring, you're seeing a little choppiness in the space. One large state, not our client had it fully accessed and dropped it based on affordability. On a final note, like any innovation curve, you're seeing more manufacturers bring more solutions to market. That's a net positive from an affordability standpoint as well.

Okay. I want to switch gears to the health benefits segment and particularly on the commercial product and the mix there. But based on the conversations with your commercial clients, I guess, how do you see the employment market now? At the moment, what are you assuming in terms of what continues throughout 2024? Membership growth, I guess, in '24, impacted by some of the ASO contracts, the dynamics. But -- but can you remind us of the long-term growth profile across the commercial business for you and the key drivers for Cigna, particularly in that select segment as well?

So a big picture in the employer commercial business. So I pause to make sure we're slicing the segment correctly. We see this as a sustained mid-single-digit growth business for us. We, at times, have grown at a faster rate. That's essentially about a 1% secular tailwind plus inflation or rate execution plus net share taking. We've expanded our profile in terms of markets that we have high concentration of intensity of go-to-market resources and overall competitiveness of our offering, about 2x from 2019 to today. So we look at this market in terms of not at the state level, not at the city level. We look at it at an SMSA level. You slice it down in terms of continue to drive precision to the overall market. With that approach, we've been a net share taker and we've grown this asset very nicely over time through intense focus, consultative benefit decisions that we help our clients deliver. A heavy orientation relative to integration of programs, specifically medical, pharmacy and behavioral and the overall medical cost trend and value we're able to deliver relative to that. That shows up best in Erin's comment relative to the select segment. Think about those as largely employers with 100 to 500 employees, therefore, 200 to 1,000 covered lives, fully integrated offering only. It doesn't get sliced up. Greater than 50% of those are ASO with stop loss. Less than 50% of those are guaranteed costs. We like ASO with stop-loss because it's fully transparent. We sit with our clients every month and you're able to modify designs of the benefits on a micro basis throughout the course of the year. communication strategies, incentive strategies, clinical programs, et cetera, and it results in a very positive outcome. That algorithm and that resource base continues to perform very well. And importantly, we have a dedicated subunit in our organization that focuses only on that segment. So we don't cross pollinate because there's a specialization that exists there. So we see continued positive growth in this marketplace, led by that segment over time.

Okay. And then just switching to the exchanges. I guess, how are you thinking about the growth trajectory there, long term margin profile for the exchange business as well as likelihood of enhanced subsidies remaining intact, I guess, beyond 2025 and that potential impact to long-term growth?

We're getting up to 5-part question from 3-part questions. So exchanges for our company have continued to be a complementary part of our business, not a lead part of the business. What I mean by that is you go all way back to the initiation of the exchanges, because we weren't a small employer player, we didn't have to enter the exchanges to protect the book. We chose to enter them selectively in 5 states to learn, and we expected the market to be smaller than projected, choppy and lose money in aggregate for the space. It did 14, 15, 16, we stayed, we learned, and we slowly expanded our market profile over time, picking markets and submarkets within states. The last year was a little bit of a choppy year for us. We had 2 states that had out-of-market growth and other market performance. We rectified that stepping into 2024. We shrunk those states to improve the overall profitability. And broadly speaking, our exchange business is performing in line with our expectations for 2024. We continue to dynamically manage the portfolio looking market by market based on our value-based care relationships we have with our provider partners to determine what markets make sense to position ourselves in, what submarkets make sense for us to position ourselves in and how we do it in an aligned basis with the -- with our care delivery partners in those MSAs that we participate in. Obviously, a lot of focus on the subsidy extension, stay tuned for more. There's a lot of effort and energy around that. Clearly, the enhanced subsidies expanded the market. It's indisputable. You can look at the data. So one might project that absent or sunsetting of that would have a rebasing of the marketplace in terms of the volumes that we take through. That will not be a big driver for us given the size and shape and scope of this. It doesn't mean we're immune to it if the market changes, but it is not a large driver of our enterprise portfolio.

And then I want to spend the last few minutes here talking about M&A, capital deployment. Obviously, that's been a key focus for investors here as we think about kind of the Cigna story from buybacks to potential M&A and larger transactions as well. Where is the focus? And where does your commitment buy today from a capital deployment standpoint?

Yes. Important topic. So to address this topic, you have to go back for a moment and say, you have to generate the operating cash flow and the free cash flow available for deployment. Important just for a moment to ground in that. Our business portfolio is designed to have a high conversion rate of our operating earnings to deployable cash flow. Our service-based infrastructure as an illustration of that enables a significant conversion of operating earnings to deployable cash. Our track record has demonstrated that we are good stewards of operating cash flow. We don't let operating cash flows sit idle. We put that cash flow to work. First and foremost, we have a commitment to a sustained attractive dividend. We deploy back into the organization, a CapEx portfolio for ongoing R&D on a more sustained basis. The residual part of our operating cash flow gets pushed back to our shareholders in one of 2 ways, either strategically attractive, accretive M&A or share repurchase. We've been pretty disciplined over the recent past in terms of share repurchase. We noted as we were entering this year, we expected to repurchase at least $5 billion of our stock in the first half of fiscal year 2024. We accomplished that and return the $5 billion. And if you track us back to $23 million. And prior to that, we have a very disciplined track record of share repurchase. On a go-forward basis, we see M&A is nice to have, not a must have. We see M&A as having to pass first strategic hurdles and then categories, strategic hurdles. Obviously, it needs to be complementary to our strategy. Second, it needs to be financially attractive with line of sight to an accretion model that we are pleased with, which means durability of and the ability to gather with tangible nature, the value creators you hypothesize are in a potential acquisition. And importantly, the ability to get across the finish line, i.e., close it. Assets we would contemplate would either extend our reach or extend their capabilities. We talked about earlier, an example of an area that would extend our capabilities in our accelerate business more specifically in our specialty portfolio. So discipline around cash generation, discipline around the capital deployment biased in our past track record towards share repurchase, given the asset portfolio of the company, maintain a very attractive growth outlook and cash flow generative outlook, and we'll be disciplined from an M&A standpoint.

Okay. Great. Thank you so much. I appreciate the time today. Unfortunately, that's all we have time for.

Thank you for being with you. I appreciate your time today.