Embecta Corp. Price & Performance (EMBC)

Good morning, everyone. And welcome to Embeca's fiscal first quarter twenty twenty five earnings conference call. The press release and slides to accompany today's call and webcast replay details are available on the Investor Relations section of the company's website at www.embecta.com Embecta. With me today are Dev President and Chief Executive Officer and Jake Elguise, Chief Financial Officer. Before we begin, I would like to remind you that some of the matters discussed in the conference call will contain forward looking statements regarding future events as outlined in our slides. We wish to caution you that such statements are, in fact, forward looking in nature and are subject to risks and uncertainties and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include but are not limited to factors referenced in our press release today as well as our filings with the SEC which can be accessed on our website. In addition, we will discuss certain non GAAP financial measures on this call which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non GAAP measures to the comparable GAAP measures is included in our press release and conference call presentation.

Our agenda for today's call is as follows: Deb will begin by providing some remarks on the overall performance of our business during the fiscal first quarter of twenty twenty five as well as an overview of our strategic priorities. Jake will then review our financial results for the fiscal first quarter of twenty twenty five as well as discuss the updated financial guidance of fiscal year twenty twenty five. Following these updates, we will open the call for questions. With that said, I would now like to turn the call over to our CEO, Good morning. And thank you for taking the time to join us. Having successfully delivered on our previous three year outlook, we have now pivoted to the next phase of IMVEXXY Embecta As we move forward, we are focused on three key priorities that will drive our growth and success. First, strengthening our core business. We are targeting to execute a seamless brand transition to ensure our identity resonates globally while maintaining the trust of our customers. At the same time, we are continuing to identify opportunities within our core portfolio that bolster our leadership position insulin injection devices.

Second, expanding our product portfolio. We believe we are well positioned to introduce market appropriate products that leverage our expertise in high volume manufacturing and the strength of our global commercial channel. Such initiatives potentially include utilize that already have a commercial channel as well as use our global commercial presence to sell products manufactured by others. And finally, increasing our financial flexibility. This began with our decision this past November to discontinue our insulin patch program initiated a restructuring plan intended to generate significant cost savings and prioritize debt reduction. Including the plan to pay down approximately $110,000,000 in debt during 2025. Importantly, given the free cash flow generation capabilities of the company, coupled with the fact that cash used towards separation activities is largely behind us, we expect to be able to materially reduce our outstanding debt during the next few years thereby enhancing our financial agility. The successful execution of these priorities will position us for stable success as we continue to evolve and transform IMVEXXA for the future.

Turning to some fiscal first quarter highlights. The first quarter marked a solid start to the fiscal year for IMVEXXTA. Slightly exceeding our internal expectations. We generated approximately $262,000,000 in revenue representing a 5.6% decline year over year on a reported basis and a 4.8% decline on an adjusted constant currency basis.

As we have mentioned before, quarterly year over year growth rate comparisons will be impacted by the Phase ERP implementations that occurred during fiscal twenty twenty four and the associated changes in distributor inventory in advance of these implementations. Turning to our brand transition program, I'm pleased to report that this important initiative remains on track. With a focus on executing a seamless transition that strengthens our identity ensuring it remains clear Consistent and resonates across our global markets. We are also making progress in securing external distribution agreements and partnerships. As part of our strategy, we are advancing our efforts to co package our pen needles with potential generic GLP-one drugs and in retail packaging enabling us to expand the use of our products into a fast growing market while leveraging our world class distribution network and commercial expertise. Execution of our restructuring plan announced in November 2024 related to the discontinuation of the insulin patch pump program remains on track. With completion expected by the end of the first half of fiscal year twenty twenty five. In line with our commitment to enhancing financial flexibility, we continue to reduce our debt making an aggregate principal payment of approximately $32,000,000 on our Term Loan B facility during the quarter.

Finally, based on our first quarter performance and outlook for the remainder of the year, we are updating our fiscal twenty twenty five financial guidance. This updated guidance reflects recent foreign exchange rates which are unfavorable as compared to the foreign exchange rates used when we set our initial guidance ranges. Importantly, our constant currency revenue guidance remains unchanged. Additionally, we raised our adjusted operating and EBITDA margin guidance ranges while maintaining our previously provided adjusted earnings per share guidance range despite having to absorb an incremental $0.1 headwind from the aforementioned foreign exchange pressure. Turning to Slide six, I'd like to provide an update on our upcoming brand transition plan and walk through the key elements of its execution. We have been planning this transition since spin and we intend to execute the program in phases starting in the second half of fiscal year twenty twenty five beginning with The U. S. And Canada. We expect we will be globally complete in the next couple of years. On the slide, you will see as an example the transition from our old BD nano packaging design to our new Embecca branded packaging. You will note that the product names and color associated with the packaging This is a conscious choice based on research we have conducted.

At the same time, we are providing a modern and refreshed look to the product packaging while maintaining visual cues that will enable our customers and people with diabetes to identify our products. We are focused on ensuring operational readiness throughout the supply chain, including inventory management, customer communications, and regulatory compliance. This thoughtful and phased approach is intended to ensure a seamless transition while maintaining the trust of healthcare providers and people with diabetes rely on our products daily.

Now let's review our revenue performance for the first quarter. During the first quarter of fiscal year twenty twenty five, Embeca generated $261,900,000 in revenue, reflecting a 5.6% decline year over year on an as reported basis or a 4.8% decline on an adjusted constant currency basis. [indiscernible] The year over year decline was expected was primarily driven by an unfavorable comparison as the prior year period benefited from the timing of certain orders in advance of our ERP system implementation in North America, and as mentioned in our prior call, the additional revenue generated in our fiscal twenty twenty four fourth quarter as distributors purchase product to mitigate potential disruptions from the then looming U. S. Ports strike. In regard to our prior expectations, our Q1 revenue came in slightly ahead primarily due to timing and we expect this to normalize during Q2. Within The U. S, revenue for the quarter totaled $141,700,000 reflecting a year over year decline of 4.6% on an adjusted constant currency basis. This decline was primarily driven by the same two factors A challenging comparison to the prior year period due to order timing related to the ERP implementation in The U. S, which benefited the year ago period.

And additional distributor orders which occurred during the fourth quarter of last year due to the then looming U. S. Port strike.

Turning to our international business, our Q1 revenue totaled $120,200,000 which equated to a 5.1% decline in an adjusted constant currency basis as compared to the prior year period. The year over year decline within our international business was primarily due to distributor rebalancing as well as a difficult comparison due to inventory purchases in advance of ERP While from a product family perspective, during the quarter, pen needle revenue declined approximately 8.5% syringe revenue declined approximately 4.2% safety products grew approximately 11.3% and contact manufacturing grew approximately 153%. The decline in pen needle revenue was primarily due to the additional revenue that occurred during the fourth quarter of twenty twenty four, associated with the potential U. S. Port strike, as well as revenue generated during 2024, as distributors procured incremental inventory in advance of ERP implementations. Turning to our Syringe products, while they declined during the quarter 4.2%, due to volume declines within The U. S, the rate of decline was lower than what we have experienced recently.

While our safety products grew 11.3% as compared to the prior year period, due to the annualization of share gains due to a competitor discontinuing their product and exiting the market. That completes my prepared remarks. And with that, let me turn the call over to Jake. He will review the other financial highlights as well as provide our updated financial guidance for fiscal year twenty twenty five. [indiscernible] Thank you, Deb, and good morning, everyone. Given the discussion that has already occurred regarding revenue, I will start my review of IMVEXXTA's first quarter financial performance at the gross profit line. GAAP gross profit and margin for the first quarter of fiscal twenty twenty five totaled $157,100,000 and 60% respectively. This compared to 185,900,000.0 and sixty seven percent in the prior year period. While on an adjusted basis, our Q1 twenty twenty five adjusted gross profit and margin totaled $164,200,000 dollars This compared to 186300000.067.2% in the prior year period.

The year over year decline in adjusted gross profit and margin was primarily driven by the lower year over year revenue that Dev mentioned earlier as well as from the impact of net changes in profit and inventory adjustments. These headwinds were partially offset by lower freight costs and our ability to drive year over year price increases. Turning to GAAP operating income and margin. During the first quarter, they were 28700000.011%. This compared to 45500000.016.4% in the prior year period.

While on an adjusted basis, our Q1 twenty twenty five adjusted operating income and margin totaled $80,500,000 and 30.7%. This compared to $77,500,000 and 27.9% in the prior year period. The year over year increase in adjusted operating income and margin is primarily due to lower R and D expenses associated with the discontinuation of our insulin patch pump program. As well as lower SG and A expenses primarily driven by lower TSA costs in addition to lower compensation and marketing expense recognized in the current period. This was offset by the adjusted gross profit changes I outlined above. Turning to the bottom line, GAAP net income and earnings per diluted share were both zero during the first quarter of fiscal twenty twenty five as compared to 20,100,000.0 and $0.35 in the prior year period.

While on an adjusted basis, during the first quarter of fiscal twenty twenty five, net income and earnings per share The increase in year over year adjusted net income and diluted earnings per share is primarily due to the adjusted operating profit drivers I just discussed as well as a reduction in our adjusted tax rate from approximately 26% in Q1 of twenty twenty four, to approximately 25% in Q1 of twenty twenty five. The lower year over year adjusted tax rate was due to tax planning initiatives partially offset by the impact of Pillar two. Lastly, from a P and L perspective, for the first quarter of twenty twenty five, our adjusted EBITDA and margin totaled approximately 97300000.037.2%. As compared to 90400000.032.6% in the prior year period. Turning to the balance sheet and cash flow. At the end of the first quarter, our cash balance totaled approximately $217,000,000 while our last twelve months net leverage as defined under our credit facility agreement stood at approximately 3.7 times. As a reminder, our net leverage covenant requires us to stay below 4.75 times. As Deb mentioned earlier, we continue to be focused on more aggressively delevering. And during the quarter, we paid down 32,400,000.0 of term loan B debt and we remain on track to achieve our goal of reducing our debt by $110,000,000 during fiscal year twenty twenty five.

That completes my prepared remarks on our first quarter twenty twenty five results. Next, I would like to discuss IMVEXXTA's updated 2025 financial guidance. And certain underlying assumptions. Before we begin, I want to acknowledge the evolving tariff landscape and provide some important context regarding our global operations. First, our updated financial guidance does not factor in any newly implemented or proposed tariffs following the recent administration change and as such remain consistent with those tariffs in place when we provided our initial fiscal year 2025 guidance, in late November of twenty twenty four. We manufacture our products across three facilities, Dunleary, Ireland Holteridge, Nebraska and Suzhou, China. We do not perform any manufacturing in either Canada or Mexico. We should note that the tariff regulations include other elements beyond manufacturing location and require analysis of the specific rules to determine impact. Regarding The U. S, most of the products that we sell in The United States are manufactured either in Ireland or domestically within The U. S. In fact, less than 1% of our global revenue is derived from products we manufacture in China and sell into The U. S. And those products are currently exempt. From tariffs. As it relates to China, most of our revenue in China is from products manufactured at our plant in China.

Less than 1% of our global revenue is derived from products we manufacture in The U. S. And sell into China, And those products are currently exempt from tariffs. Turning to Canada, approximately 1% of our global revenue is derived from products we manufacture in The U. S. And sell into Canada. And our products were not included in the recently published but delayed retaliatory tariffs, though this remains subject to change. Finally, as it relates to Mexico, approximately 3% of our global revenue is derived from products we manufacture in The United States and sell into Mexico. We continue to closely monitor these developments and remain committed to mitigating any potential impact where possible to both our customers and people living with diabetes who rely on our products. Now let me discuss our updated guidance. Beginning with revenue, On an adjusted constant currency basis, we are reaffirming our previously provided guidance range which called for revenue to be down between 12.5% as compared to 2024. At the high end of our constant currency revenue range, we continue to assume that volumes remain relatively flat and that price will be a headwind of approximately 1%. While at the low end, we continue to assume all the same factors impact our high end except for the potential of greater year over year headwinds associated with volumes.

Turning to our thoughts on FX. Since we provided our initial fiscal twenty twenty five financial guidance, in late November, the U. S. Dollar has continued to strengthen against most currencies. And as a result, we currently expect FX to be a headwind of about 2.2% versus the prior year. This compares to our prior guidance which called for FX to be a headwind of approximately 0.6%. This assumption is based on foreign exchange rates that were in existence around the late January timeframe. Including a euro to U. S. Dollar exchange rate of approximately 1.03 Somewhat offsetting FX, is the fact that our as reported 2025 GAAP revenue will not be impacted by the 2015 through 2023 amount that we needed to accrue associated with the Italian payback measure impacted our 2024 as reported GAAP revenue. This equates to a tailwind of approximately 0.4%. On a combined basis, our as reported revenue guidance now calls for a decline of between 2.8% and four point three percent resulting in an updated revenue guidance range of between $10,000,000,075,000,000,000 dollars and $1,992,000,000 dollars Turning to adjusted gross margin. We are reaffirming our previously provided guidance range of between 63.25% and sixty four point two five percent.

While from an adjusted operating margin standpoint, We are raising our guidance from a range of between 2930% to a new range of between 29.530.5%. This improvement is expected to be driven by our ongoing initiatives to improve operational efficiency and reduce our expense base. Moving to earnings. During Q1, we exceeded our internal expectations, for adjusted earnings per share by approximately $0.2 and this was due to two things that contributed almost equally. First, revenue came in better than we initially anticipated which we attribute to timing. And as Deb mentioned earlier, we expect the overperformance in Q3 revenue to reverse itself during Q2. While the second driver of our adjusted EPS over performance during Q1 was due to lower SG and A expenses. As such, we expect our ongoing cost containment efforts to absorb the impact of the incremental foreign exchange headwinds which negatively impacted us by approximately $0.1 thereby allowing us to reaffirm our previously provided adjusted diluted earnings per share guidance range of between $2.7 and $2.9 Our updated guidance range continues to assume that our annual net interest expense will be approximately $107,000,000 that our annual adjusted tax rate will be approximately 25% and that our weighted average diluted shares outstanding will be approximately 58,900,000.0.

Our guidance continues to assume that we will use between $50,000,000 and $60,000,000 of cash during fiscal twenty twenty five associated with separation costs, largely related to brand transition. Between $25,000,000 and $30,000,000 in cash usage associated with the discontinuation of our insulin patch pump program, and approximately $20,000,000 in capital expenditures. Lastly, like our adjusted operating margin range, we are also raising our adjusted EBITDA margin guidance from a range of between 35.536.5% to a new range of between 3637%. And before I turn the call over to the operator, I'd like to highlight some considerations regarding the cadence of quarterly revenue expectations during 2025. Moving forward, we may not provide any further comment Consistent with our initial guidance, our updated financial guidance continues to anticipate that we will generate a slightly lower percentage of our annual revenue during the first half of fiscal year twenty twenty five, approximately 48% as compared to the second half of the year in which we expect to generate approximately 52% Based on this outlook, second quarter implied revenue would be in the range of between $250,000,000 and $255,000,000 That completes my prepared remarks. At this time, I'd like to turn the call over to the operator Operator, Thank you.

Our first question is going to come from the line of Calum Tichmarch with Morgan Stanley. Your line is open. Please go ahead.

Thanks a lot guys for taking the question. Just a couple from me. First of all, it would be great if you could walk through each of the kind of three key product categories and kind of just calibrate us for how you expect these to perform through the year? Any pricing dynamics that are a bit more noticeable in one category over the other? I just appreciate given some of the ERP dynamics from last year, they've kind of thrown off some of the year over year numbers. So just any clarity for how you expect that to play out in 2025 would be appreciated. Good morning, Calum.

I'll start off and then ask Jake to augment. So first of all, as we think about the product category performance in Q1, It was as Embecta. Q1, if anything, was maybe slightly better, in general. Then our expectations from a few months ago In total revenue and obviously, Penn Needles comprise the majority So that's sort of point one. And point two, as you pointed out, we do expect growth rates in the quarters this year to be somewhat lumpy. Given all the phased implementations that we carried out really most of the world last year. Now talking specifically about Q1 before I talk about sort of future quarters, right, Q1 performance, particularly I would say [indiscernible] the other product categories as well. Was driven by two major factors. Number one, and probably the most sort of quantitatively important one was the pull forward that we had in Q4 FY 'twenty four In The U. S, in advance of the then looming port strike that I'm sure you remember, as distributors procured additional inventory to avoid or mitigate potential disruptions with supplies. So that's sort of first factor The second factor was indeed the ERP implementations and they sort of fell into time slots, if you will.

One, in Q1 of prior year and so that affected the growth rate year over year. And some in the later part of 2024 as the inventory sort of bled through in Q1 of this year. Those were the two primary factors. Now if you'll notice in the Syringe category, we did actually a little bit better than what historically the declines have been. And that's largely most of the declines, the volume declines in The U. S. And as that becomes a smaller factor, the decline rates actually improve. If you will, and that was probably the single largest factor. Safety products in fact grew and that's because we were able to win some share in the market as a competitor discontinued their product and exceeded certain markets. Those were the three factors that impacted The product categories in Q1 of twenty twenty five. Now as we go forward, We do expect this lumpiness to go through the year. Primarily due to the same factors I've talked about regarding ERP implementations. If I just step back, and look at overall sort of growth rates in each of our product categories Historically, we've seen slight increases in pen needles and decreases in syringes and some growth in our safety products as well.

There is nothing that we've seen in the market so far that would imply that there has been a change in those historical growth rates. So So we don't give guidance by product categories through the year. For fiscal twenty twenty five, you will see those rates reflected certainly in the Penn needle category given that it comprises the majority of our revenue. Jake, anything Yes, go ahead. Tal, maybe I'll just I'll quantify some of the items that that Dave talked about and maybe first off, even before I do that, I'd say that that everything that occurred here was certainly in line with what our original expectations were in fact, I think in Q1, we probably did about somewhere between $7,000,000 to $8,000,000 better in terms of revenue than what we had originally anticipated largely due to the timing item that Dev referred to And that really had to do with the fact that we were putting in place price increase that was going to go into effect on oneone of twenty twenty five. And we saw some revenue sort of get pulled forward into our fiscal first quarter as a result. But But during the first quarter, particularly impacting, I think, the Penn We talked about distributors placing orders in the fourth quarter of twenty twenty four because of the port strike.

That probably impacted our business by about $10,000,000 And then secondly, another item that impacted us was the ERP implementation in our North American business that occurred in the first quarter of twenty twenty four And we estimate that, that resulted in additional revenue in the prior year quarter by about $6,000,000 So largely those two factors To a lesser extent, we saw some distributors in China sort of rebalancing some inventory levels and we estimate that probably Embecta our business in the first quarter of twenty twenty five by about $3,000,000 So those three items really drove the Penn needle performance. But again, certainly actually probably a little bit better than what we had originally anticipated coming into the year. As we our implied guidance for the second quarter points to revenue somewhere between $250,000,000 to $255,000,000 and that would essentially [indiscernible] would be very, very similar to what we saw in the first quarter of of this year. So similar performance is expected there. And then as we go into the back half of the year, we would expect then improvements in terms of the Penn needle as well as the safety product category. So hopefully that provides you with a little bit more color regarding some of the drivers and then some of the the reasons why I think we think sequentially we're going to be a little bit better in the half of the year as compared to the first.

Yes, that's fantastic. I really appreciate the color of that. And then just one more on the GLP-one Pennneedle opportunity. Any sort of quantifications you can give us around Germany and the progress there? And then would love to hear a bit more progress on the outlook outside of Germany for the same program. Thank you. Yes. Hi, Calum.

Our progress in Germany sort of continues for our expectations. Obviously, we will follow how Munjaro and QuickPen gets adopted in Germany?

And what we are striving for over there is that making sure that our pen needles do get used for the out of pocket prescriptions that are going to be filled in Germany. It's going to take some time. We are not quantifying if you will, the revenue from GLP-one. And frankly, as you can imagine, as Munjaro equipment launches in other countries around the world, It is going to be hard for us to distinguish pen needle's use for GLP-one's via Munjaro and Kooten if they are going to be reimbursed, procurement channels as the penneal is used for diabetes It's only in markets where the GLP-1s are going to be out of pocket and patients might procure a three month prescription for a GLP-one where we can actually monitor the number of small packs So the point I do want to make is that while pen needles might be being used for GLP-one, that are administered via pens, we can certainly we cannot certainly distinguish between volume that's procured through our normal channels but we can certainly identify the small packs. Now that's going to take some time. Frankly, I think the bigger opportunity for the use of pen needles for GLP-one's is going to be In the discussions that we are having with generic GLP-one entrants, [indiscernible] we are certainly working towards being able to co package our pen needles [indiscernible] those generic GLP-1s We do think over the long term that that is a bigger opportunity And those discussions with 10 plus potential GLP-one generic entrants are going very, very well.

We certainly anticipate providing More color around this. At our Analyst Day plan for May 2025. So I'd request we wait until then to get a little bit more sort of at least a range of what this could mean for us over the next few years. Thanks, guys.

Thank you. One moment as we move on to our next question. Our next question comes from the line of Marie Thibault with BTIG. Your line is open. Please go ahead. Hey, good morning everyone. This is Sam Huang from Maury. Thanks for taking the questions. This morning. Congrats on a nice quarter.

I can start on a capital allocation question. Things progressing clearly on the debt pay down initiatives. But I'm wondering if there's a certain leverage ratio where maybe you become more comfortable looking at opportunistic M and A and more related to your comments about expanding product portfolio. I guess wondering if that's more of a near term opportunity or perhaps medium to longer term? [indiscernible] thanks for the question, Sam. So I I think from our standpoint, I think over this year certainly and I think into next year, we're really focused on continuing to try and create some additional financial flexibility.

We are our net leverage, our last twelve months net leverage as of the end of this quarter is around 3.7 times. Now our covenant allows us to go up to 4.7 to five times. Now obviously, we wouldn't want to go anywhere close to that. And I think by the end of this year, assuming that we pay down around 100 and and $10,000,000 in debt which we are well on our way to doing. We should be around a three times net levered mark by the end of fiscal twenty twenty five. And I think as we move then into 2026, it's probably more likely that we will continue to focus and allowing us to create some additional balance sheet flexibility. So I think it's probably a little bit more likely that we'll trend lower than three and somewhere into the 2s in terms of net leverage as we get into 2026. So from an M and A standpoint, obviously M and A is very, very opportunistic. Right? But I think for us, we only need an incremental $10,000,000 to $15,000,000 of revenue per year to drive our constant currency revenue growth rates up by about 1%. So don't think we need to necessarily do highly transformative M and A in order to create value here for shareholders.

But I think in the near term, our focus really is more about continuing finalize the separation programs which will allow us to really keep that free cash flow and use it towards debt repayment. Really helpful, Jake.

I appreciate all the color there. Maybe I can just use my follow-up here on on long term margin progressions and maybe how we should be thinking about any initiatives that you guys have going on in terms of either maintaining or even expanding margins perhaps beyond Sam, with respect to sort of long term margin progression, I mean that's certainly something that we'll be discussing in our May 2025 Analyst and Investor Day. So I'm going to reserve giving ranges for that at this time. But what I will say is that our priority is around expanding product portfolio are important to us. And I think as I said in the script, that comprises two potential vectors, right, where we manufacture products for companies that already have a commercial presence or frankly distribute products that can be manufactured by others Both of those, as you can imagine, are very are going to different margin profiles. And so as we work through the opportunities here, we need to net that out against the margin progression that we expect to see in our base business. But those are the puts and takes that we just need to work through we'll certainly provide more information during the Analyst Day.

Yes. And Sam, maybe just coming back to the quarter and I think our updated guidance. I think we had from an earnings standpoint, we ended up and we alluded to this in our prepared remarks, I think we ended up performing better than our internal expectations by about by about $0.2 really and that was really due to sort of two things almost impacting it equally. One, revenue being actually a little bit better in Q1, which going to reverse in Q2 and the associated drop through to earnings. But then two, and importantly, I think our SG and A in the quarter really drove around $0.1 of of an improvement as compared to our original internal expectations. And we would expect that to stay. For the entirety of the year and really allows us, if you will, to sort of absorb the incremental $0.1 headwind that we saw or expect to see because of FX rates working against us in relation to our original guidance. So So this year is really going to be like for the company, it's really going to be focused [indiscernible] finishing up and completing the discontinuation of the patch pump program, which the team has done an excellent job and we're well on track to having that complete by the first half of the year It's also going to be driven and focused on continuing to more aggressively delever And then third, it really is about trying to further optimize our cost base and take expenses out of the system.

If you recall when we spun from BD obviously a much larger organization And to a fair amount, there was sort of a lift and shift in terms of of how they did things and in terms of how we did things. And I think now really there's an opportunity as we go through 2025 and into the next few years to really just look at our cost base and try and find find ways to continue to take cost out and that's what we're doing.

Understood. Thanks for taking the questions and looking forward to the Investor Thank you. And one moment for our next question. Our next question comes from the line of Ryan Schiller with Wolfe Research. Your line is open. Please go ahead.

Good morning. Thank you for taking the questions. This is Ryan on for Mike Pollark. You talked about expanding your product portfolio by leveraging your commercial channel to distribute products from others Are there specific types of products that come to mind that could fit well into your model?

And one might this start, Larry, into your financial model? Yes. Good morning, Ryan.

The types of products that we would want are those that fit in reasonably cleanly through our commercial channel And given the breadth of our commercial channel across the world, those products might be different. So I'm going to give you some examples. [indiscernible] In China, for example, we do call on hospitals So we could add products to the portfolio that our sales team can actually be able to sell into hospitals. In The U. S. On the other side, as you know, we have a strong presence with retailers and strong payer relationships, So we might look for products that can fit through that channel and that retail pharmacy channel is present also in several countries in Europe. In Germany and Japan, we call on endocrinologists therefore, we might look for products that are served by that channel. So I think it's going to differ in every market, but I think the unifying team is going to be someplace where or products that can really leverage our commercial strength We certainly anticipate being able to speak more about that. At our upcoming Analyst Day. Where we're working hard to add these products to our portfolio and I look forward providing some examples at that time.

Thank you. And I'm showing no further questions at this time. And I would like to hand the conference back over to Dev Karukur for closing remarks.

As we close the call, I just want to express my sincere gratitude to my colleagues at IMVEXXTA around the world. Our global team remains focused on executing the priorities that we've laid out And finally, we look forward to engaging with all of you at our upcoming conferences and at our Investor Day in late May twenty twenty five We will certainly share more about some of the topics that we discussed today and our vision for Embedded [indiscernible] Thank you for calling in. And for your interest in our company.

Connect. Everyone have a great day.