ANI Pharmaceuticals, Inc.

ladies and gentlemen hello and welcome to the lemonade q3 2022 earnings call my name is maxine and i'll be coordinating the call today if you would like to ask a question during the presentation you may do so by pressing star followed by one on your telephone keypad i will now hand you to yael wisner levy vp communications at lemonade to begin please go ahead when you're ready

Good morning, and welcome to Lemonade's third quarter 2022 earnings call. My name is Yael Wissner-Levy, and I'm the VP Communications at Lemonade. Joining me today to discuss our results are Daniel Schreiber, co-CEO and co-founder, Shai Winninger, co-CEO and co-founder, and Tim Bixby, Chief Financial Officer. A letter to shareholders covering the company's third quarter 2022 financial results is available on our investor relations websites. investor.lemonade.com. Before we begin, I would like to remind you that management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of Reform 10-K filed with the SEC on March 1, 2022, and their other filings with the SEC. Any forward-looking statements made on this call represent our views only as of today, and we undertake no obligation to update them. We will be referring to certain non-GAAP financial measures on today's call, such as adjusted EBITDA and adjusted gross profit, which we believe may be important to investors to assess their operating performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our letter to shareholders. Our letter to shareholders also includes information about our key operating metrics, including in-force premium, premium per customer, gross loss ratio, and net loss ratio, and a definition of each metric, why each is useful to investors, and how we use each to monitor and manage our business. With that, I'll turn the call over to Daniel, who will begin with a few opening remarks. Daniel?

Good morning, and thanks for joining us to review our Q3 results and the outlook for the remainder of 2022. I'm happy to share that we had a strong quarter with our top and bottom lines coming in better than expected. Year on year, our IFP or in-force premium grew 76%. Our premium per customer grew 35% and at 65 million adjusted EBITDA loss, our bottom line also bested our expectations. Our loss ratio has been coming down in recent quarters and Q3 saw a reversal in that welcome trend. The spike in loss ratio, however, was not unexpected. We had cautioned that the Metro Mile deal would have an adverse effect on loss ratios in the short term, and Hurricane Ian added several points of loss ratio too. With that said, we do anticipate the overarching downward trend to continue in the coming quarters, notwithstanding the occasional bumps. Q3 is moving season and usually our most efficient time to acquire customers. COVID played a little havoc with seasonal patterns in recent years, but this year the familiar seasonality was back and on full display. Accordingly, we pulled in some of our marketing spend from Q4 to Q3. This helped boost our Q3 top line, but will come at the expense of growth in Q4. All told, we expect our second half of the year to be as guided, although the allocation between the quarters has been jiggered to optimize our spend. Much else has happened since the last call, but two highlights are a deal we announced with Chewy and a launch in the United Kingdom. Starting with Chewy, Chewy is the foremost destination for pet parents in the U.S., and in the spring they will start selling Lemonade Pet to their 20 million customers. Chewy's revenue share compensation consists of a few components, but will be paid out primarily in the form of Lemonade Equity. We're thrilled Chewy chose Lemonade, and we're thrilled they chose Lemonade stock. In addition to amounting to a huge vote of confidence in what we're building, this structure aligns our interests with TUI incentivized to drive sales of lemonade pet and deliver long-term growth at an extraordinarily low cash burn for lemonade. As for our launch in the UK, at the risk of sounding too sappy, this is a meaningful step for us. Insurance as we know it hails from the UK and on a personal note, so do I. So both professionally and personally, bringing lemonade to the UK is a homecoming of sorts. Beyond the sentimentality of it all, the UK is the largest insurance market in Europe, and so represents a material addition to our total available market. Finally, we're looking forward to next week's Investor Day, where myself and others on the leadership team will go deeper into our strategy, metrics, path to profitability, and how we're running the business. We'll be sharing more about our AI lines of business and our financial modeling than we've ever done before. and we very much look forward to seeing you there. If you haven't registered yet, please head over to our investor.lemonade.com site and sign up under the news section. And with that, let me hand over to Tim. Tim, over to you.

Great. Thanks, Daniel. I'll give a bit more color on our Q3 results, as well as expectations for the fourth quarter and the full year, and then we'll take your questions. We have another strong quarter of growth driven by additions of new customers, a portion of them related to the acquisition, as well as a continued increase in premium per customer. In-force premium grew 76% in Q3 as compared to the prior year to $609 million. We believe that this key operating metric is useful to understand the full scope of our top-line growth before the impact of reinsurance and regardless of the timing of customer acquisition during the quarter. Premium per customer increased 35% versus the prior year to $343, This increase was driven primarily by the metromile acquisition impact, and to a lesser extent, the combination of increased value of policies over time, as well as a continuing mix shift toward higher value homeowner, car, and pet policies. Gross earned premium in Q3 increased 71% as compared to the prior year to $136 million, roughly in line with the increase in enforced premium. Revenue in Q3 increased 107% from the prior year to $74 million. The growth in revenue is driven by the increase in gross earned premium as well as a reduction in the proportion of premium ceded to reinsurers to 55% in the quarter as compared to 70% in the prior year. Our gross loss ratio was 94% for Q3 as compared to 77% in Q3 2021 and 86% in Q2 2022. Operating expenses excluding loss and loss adjustment expense increased 33% to $110 million in Q3 as compared to the prior year. And this is primarily driven by increased personnel expense, stock-based compensation expense, and legal and professional fees, partially offset by lower sales and marketing expense. We also continue to add new limited team members in all areas of the company, though at the more modest pace we've seen for several quarters. in support of customer and premium growth and geographic expansion. Global headcount grew 36% versus the prior year to 1,371, primarily due to the impact of the closing of the Metromile acquisition in July. Net loss was $91.4 million in Q3, or $1.37 per share, as compared to the $66.4 million net loss we reported in the third quarter of 2021. While adjusted EBITDA loss was $65.7 million in Q3, as compared to $51.3 million in the third quarter of 2021. Our total cash, cash equivalents, and investments ended the quarter at approximately $1.1 billion, reflecting an increase of $164 million due to the Metromile acquisition, partially offset by use of cash for operations and capital expenditures of $131 million since year-end 2021. With these goals and metrics in mind, I'll outline our specific financial expectations for the fourth quarter and an updated full year 2022. For the fourth quarter of 2022, we expect in-force premium at December 31 of between $612 and $615 million, gross earned premium between $147 and $150 million, revenue between $77 and $80 million, and adjusted EBITDA loss between $65 and $62 million. stock-based compensation expense of approximately $16 million, capital expenditures of approximately $3 million, and a share count weighted for additional shares issued in connection with the Metromile acquisition, totaling approximately 70 million shares. And for the full year, we expect, again, in-force premium, December 31, between $612 and $615 million, gross earned premium between $486 and $489 million, revenue, between $245 and $248 million, an adjusted EBITDA loss between $238 and $235 million, stock-based compensation expense for the full year of approximately $60 million, capital expenditures of approximately $11 million, and a share count, again weighted for additional shares issued in connection with the Metromile acquisition, totaling approximately 65 million shares. And finally, a reminder, again, that our first Investor Day is happening next Tuesday, November 15th, starting at 9 a.m. Eastern Time in our New York offices and via webcast. Please RSVP, if you haven't already, using the link provided in our shareholder letter or join us via webcast during or following the event. And with that, I would like to turn the call back to Shai. Shai?

Thanks, Tim. We'll now turn to the top voted shareholders' questions. And the first one is coming from Darren, who's asking how much growth should we expect to see from the Chewy partnership, and will it include any alliance with PetSmart? So we're really excited about the Chewy partnership, and we believe that the deal can easily deliver significant growth and extraordinary low cash burn. Being able to offer Lemonade Pet to Chewy's 20 million customers and those they'll add in the coming years can easily become one of our primary growth channels for Lemonade Pet. By the way, this partnership relies heavily on the Lemonade API, which we continue to strengthen as we grow our partnership-based distribution channels. I believe that using our technological advantage to integrate with partners quickly is strategic for Lemonade. To the second part of your question, PetSmart was once owned by Chewy, but the two brands separated, I believe, in 2020, and so the deal does not include any alliance with them. The next question comes from Paperbag Investor, who wanted to get an update on the Metromile integration, and he also asked about a comment Daniel made of us waiting for regulators to approve rates before loss ratios can improve. Well, it's been just a few months since the Metromile deal closed, but the synergies between our teams, data, and tech stack are in full force. In fact, out of the Metromile employees offered a role at Lemonade, 100% have accepted it, and it's already impossible to tell who's a former Metromiler and who's not. Regarding Metromile's loss ratio, you're right. Some regulators take more time to approve rate changes than others. In California, where 65% of Metromile's business was, the regulators have taken an unusual position and resisted rate changes across the auto industry as a whole. Several major carriers have reported elevated loss ratios as a result, and many of them have effectively pulled out of that market until this impasse is resolved. Along with the rest of the industry, we look forward to bringing rates back in line with risk as soon as possible. In another question from Darren, he asked if we're concerned that prolonged inflation, a hardening reinsurance market, increased claim costs, limits on rate changes, and increases in reserve requirements could create the perfect storm and capsize lemonade. Darren, the short answer is no. I don't think these will culminate into a perfect storm or any capsizing. You've touched on several different risk dimensions, so let me address them one by one. Inflation means that prices keep going up, so the impact on the cost of claims is immediate, while the time it takes to change prices moves at the pace of regulators. There's a lagging window in which premiums collected are lower than what they should be to maintain a healthy loss ratio. We've made the changes so that some of our products auto-adjust for inflation, and for others, we're getting into a filing pace and rhythm that should keep pace with inflation. But it will take a while for all these changes to work their way through the system and for policies to earn into these new rates. As for your point about reinsurance hardening and the increase in reserve requirements, reinsurance companies had a rough several years. but this doesn't mean that they'll change their business model or stop providing reinsurance. We see this affecting mostly the cost of reinsurance and expect it to go up, but at the same time, we're becoming more diversified. With more products available in more regions, we believe that our reinsurance should play a different role in our business, optimizing on two primary needs, protection against rare catastrophic events and optimizing our surplus requirements. Tim will address this more fully in our investor day next week. Darren also wanted to know more about a comment that was made by Daniel in which he mentioned that the majority of our marketing tests are deemed failures. He wanted to know what was the actual total cost of these failures and going forward, how do we plan to course correct with winning strategies that don't result in further shareholder dilution? Darren, I think this point was misunderstood. When we say that a large part of our marketing campaigns are failures, it doesn't mean that they've brought in zero business or led to losses. Just like everything else we do, we approach advertising in a data-driven way. Unlike traditional marketing, where you'd have one campaign to bet your annual marketing budget on, we create thousands of different variations and test them with very small budgets. There are so many because we run ads for different products with different creatives, different audience segments, and different targeting. You can think about this as a sports tournament. We run many ads and put small budgets behind them to see which one works. We then take the winners, apply what we've learned to improve them, and then have them compete against each other. This process leaves you with the best performing ads while spending a fraction of the cost of a full campaign. You also learn a lot in process, so the next set of ads will perform better straight out of the gate. In another question, George wanted to know what is our top priority for 2023? Thanks for the question, George. Our primary focus for 2023 is our path to profitability, which translates into three main pillars, loss ratio, cross-sells, and efficiency. As a reminder, we are in the midst of making hundreds of changes in all of our product lines to adjust for inflation and accuracy based on our customers' lifetime value predictions. On our screens, we're starting to see encouraging signs of improvement, and our team will continue this focus throughout the year. On cross-sells, we're seeing continued improvement as our team focuses on bundling, upsell, and cross-sell initiatives through our newly created customer group. And on efficiency, we'll be focusing on further improvement of our APIs and our ability to integrate with distribution partners, as well as invest in Blender and our internal automation tools. We'll provide more insights on all three in our investor day next week, and I invite you to tune in. And with that, let me turn the call back to the operator for more questions from our friends on the street.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you do change your mind, please press star followed by two. When preparing to ask your question, please ensure that your line is unmuted. Our first question today comes from Michael Phillips from Morgan Stanley. Please go ahead, Michael. Your line is now open.

Thank you. Good morning, everybody. You mentioned there in the final comments reinsurance impacts of diversification of product, and I assume geography, too, to help offset the hardening market there. But anything else besides that? I guess specifically, would you be willing to take a higher cap limit retention on your business to kind of offset prices there?

Yeah, hey, Mike. The short answer is yes. So I think our view on reinsurance generally is optionality. So historically, I think we've taken advantage of good markets and good terms that fit with our overall goals, the size of the business, the risk profile. But generally, our bias is to lean toward reinsurance more as a benefit for surplus efficiency, capital efficiency, now that we are getting a really good grip around our loss ratio, our claims risk, different products. We're much more comfortable, I think, now than three or four years ago in terms of balancing that risk. And so, yeah, I think we'd be open to taking a little more risk balancing the terms, and we'll kind of see how the market plays out. Our next renewal is coming up not until mid-year next year, but we would be open to that.

Okay. Thank you, Tom. And then I don't know if you're willing to give kind of the mix of home versus renter today versus the prior period, but I guess I'm curious to hear your thoughts on the impact of inflation between those two sets of books, how inflation affects a renter policy differently than a home or a policy.

Yeah, so it definitely affects both, but more concentrated in homeowners just because of the more likely significance of reconstruction, remodeling, sort of the heavy-duty stuff that usually happens, whereas in renters, you're usually talking more about possessions. But the reality is inflation is really across the board, and so more concentrated in the home, but we're really looking at doing our best to offset and mitigate inflation in all of our products. There really is no product where it's untouched, but it's definitely a little more concentrated in home. You know, cars now, you know, for us with Metro Mile gone from quite small to a significant part of the business. And so those are, it's a little more concentrated in those products.

Right. Okay. Thank you. And just a quick numbers question. On the loss ratio, you mentioned, you know, the metronome impact and the E&M impact, but can you give us the exact dollar amount of planes paid on E&M? How much would impact the loss ratio?

So, yeah, it was fairly minimal, something on the order of less than $3 million to date.

E&M was not what you said. Is that correct? I'm sorry? You said Ian was minimal, is that correct? Just making sure I understood. Yeah, yeah, that's right.

Okay, okay, perfect. All right, thank you very much. Yeah, and maybe just as a reminder on that, you know, Florida in aggregate represents less than 1% of our business, so we're relatively unexposed there, and it's essentially a renter's book. So we had some impact, but relatively, you know, quite nominal versus folks who have a large homeowner's book in Florida, which we do not. Okay, thank you.

Yeah.

Thank you. And the next question comes from Tracy from Barclays. Please go ahead. Your line is now open.

Thank you. I'm just going to follow up actually on Mike's question about the loss ratio. So if Ian wasn't a huge contributor, if you could just walk through the sequential decline, which was worse than that three to five points that you had previously shared.

Yeah, so we obviously didn't guide to loss ratio, but we did have impact from metromyle, which has been running at a somewhat higher than historical loss ratio and certainly higher than our car and then home while we've made a healthy number of filings only about a quarter of the book of business or so has aged into those filings and so we're still seeing that benefit it'll take you know several quarters before the existing filings have an impact on that on that business but we'll continue to sort of work hard to keep up with inflation impact so i think of it as home, Metromile, and the other parts were more or less as expected.

Maybe on Metromile, I mean, auto is a tough market. What do you think specifically? I don't know if you can make any comments on bodily injury or physical damage, severity claims.

You know, we don't have much on that at hand on this prepared for this call today. But maybe that's something that we'll look to provide a little more detail, a little more disclosure going forward. But to the extent we are kind of looking at the specific parts, you know, it tends to be cars in general are more expensive to repair. And so from Our experience in our book of business, which we have a little bit longer experience versus Metro Mile, it tends to be more around the repair, replace, as opposed to the injury. But that's probably something where we'll think about maybe providing a little more color in the coming quarters.

Okay, so maybe this question you're more prepared to answer. How do you see your business mix shifting post-Chewy deal and Metro Mile amongst pet insurance, home renters, and auto?

So I wouldn't describe Chewy at this point because it's early, hasn't really launched next year formally. The benefit it really gives us is an ability to add significant pet policies potentially, but at a much lower cash cost. And so we'll have some optionality there. If we see nice incremental growth through the Chewy partnership, we can choose to let that flow through and increase the natural growth rate of pet, or we could also offset and grow some of our other lines of business, knowing that we'll achieve our pet goals through the Chewy channel versus through the direct channel. So we have kind of that choice. And we'll have to see how that plays out. We've got a healthy target in the first year, and it grows over time. And we think it's a really nice structure where it will give us significant pet policies if we achieve those targets at a much lower cost. In terms of overall share, at this point, I wouldn't expect a dramatic shift in share, but, you know, PET has continued to grow modestly. It's a pretty sizable share, 20% of the overall book, but I would assume it will continue to represent a healthy portion of the total book.

Thank you.

Thank you. Our next question comes from Tommy McJoint from KBW. Please go ahead, Tommy. Your line is now open.

Hey, good morning, guys. Thanks for taking my questions. The first one, could you talk a little bit about some of the math or at least some of the theory behind your reference to that optimal cash burn equating to 20% to 25% growth? And what sort of runway does that give you given your existing capital resources?

sure so you know a couple of the data points that we've shared obviously our our cash balance is there we'll we'll put out the queue today but think of it as roughly just under 1.1 billion uh in in cash investments equivalents uh we've set aside uh something less than 300 million in terms of supporting surplus that's within the insurance carriers themselves so um looking out over the coming years. And this is something we're going to get into a fair bit more detail on our investor day. And so we don't want to jump the gun on that. But we think about our growth rate as a primary lever of how much cash we burn. And it's really a growth rate of our choice. I think sometimes there's a misconception that if our growth is slowing, it's because the market demand is changing. That's not the case. It's us choosing to grow at a certain pace because our sort of our unit economics on acquiring new customers are quite healthy and quite predictable. So we've dialed back the growth rate. You saw it in Q3. You see it in the guidance for Q4. And you're exactly right. That sort of 20-plus percent growth rate gives us comfort that we've got not months or quarters of runway, but many years of runway before we have to be concerned about the ultimate availability of capital.

Got it. Thanks. And then switching over back to a question on the Chewy partnership, just want to clarify, is Chewy's compensation there solely driven by the top line number of policies and referrals rather than the underwriting profitability of those policies? And as a follow up, do you think that the concept of paying those partners with warrants or stock to be part of kind of a regular playbook as you explore new partnerships?

So on the first question, yes, the structure is on customer acquisition. We are very comfortable with what customers do once they enter the Lemonade funnel, and so it's really focused on giving us access to 20 million fairly happy Chewy customers and doing our best to leverage Chewy's capabilities there and bring them into the Lemonade family. But they will become true Lemonade customers in every sense of the word and go through our underwriting process. just as any other pet customer. In terms of the structure, I would look at our history. So this is the first time we've done this. The bar is very high, and there are structures that are much simpler, but this is one where the scope of their customer reach, the strength of their brand name, and the synergies with pet is really a core of our business, made everything sort of fit and come together where we're willing to to structure it with equity, there are very firm guardrails around that equity. So it must be earned. They must achieve targets in order to ultimately generate value from those warrants. And so we feel like it's a really nice balance of sort of risk and reward for both sides.

Got it. Thanks, Deb.

Thank you. Our next question comes from Andrew from Credit Suisse. Please go ahead. Your line is now open.

Hi. Good morning. Could you share with us some of the products and distribution channels which kind of incented you to spend a bit more on your marketing this quarter?

I think we've seen nice marketing efficiency, but we've actually been tempering the total marketing spend over time. Perhaps the comment that we made in the letter of pulling in spend from Q4 to Q3 are sort of behind your question, I'm guessing. So we have continued to see nice efficiency and seasonality is just something that we've seen be quite persistent, you know, even through the last few years where COVID had a lot of unpredictability. We've continued to see, you know, moving season, which is, you know, people relocating kids back to school, all the different changes that typically happen in the fall continue to drive better results. And so we saw that, you know, continue and even strengthen somewhat in Q3 and And that drove it. In terms of channels, I don't think – I wouldn't point out any major shifts in the channels. You know, two years ago, you didn't see many checks going up to TikTok. That obviously has changed. But that's not a surprise. So I think, you know, the channel that you would expect and see across other consumer customer acquisition efforts would be similar to us. We're very focused on direct acquisition. as opposed to brand marketing or some of those other ancillary spends. We do a little bit, but not too much. And we just continue to leverage our LTV to CAC models, which get better and better. And when those numbers improve, we're more comfortable turning it up. We did a little more of that in Q3. And from a capital management standpoint, guided to a Q4 that represents a bit of a pullback in Q4 and If we see more efficiency then, we obviously have the ability to adjust, but that was the major cause of the shift.

Got it. And then, unfortunately, my line was breaking up when I heard you talking about loss ratio and rate. So apologies if this was touched on, but in the auto insurance line, could you specify what your underlying loss ratio was, ex-CAT, ex-prior year development? Again, in the auto line. And then also in the auto line, what was your aggregate rate increase across the country in what you filed and received in the quarter?

So that is more detailed than we've disclosed, though very interesting, of course. We're going to get into a little more detail around that. car loss ratios and how we see it breaking down by product in our investor day again. So I'll punt until that. I think for a reasonable feel for how loss ratios in car generally have evolved, I would point to the public filings of Metro Mile previously, which were the loss ratios have been above 100% for some time. So over time, we expect to bring those in line with the rest of our product goals towards a much lower rate. But for now, those rates, you can assume, have persisted at an elevated level.

Okay, we'll look forward to hearing about it next week. Thanks.

Thank you. Our next question comes from Jason Helstein from Oppenheimer. Please go ahead. Your line is now open.

Hi, this is Steve on for Jason. So just two quick questions. One is, can you help us understand the impact on Metro Mile for third quarter gross profit? And then secondly, how do you think about scaling the auto insurance side of the business over the next 12 months and the impact on the P&L? Thank you very much.

So we don't break out Metromile. We're really reporting as one consolidated company at this point. I can give you some data points to get you in the right direction. So historically, if you look at Metromile's standalone premium levels, you would see numbers in the earlier this year, 117. tracking down to roughly 110. So it's fair to assume that if you isolate a metromile, it would still be above $100 million in IFP. And so with that combined with their historical loss ratios of above 100, you can kind of let that flow through and see that that would have a pretty material impact on the gross margin line, but we don't break out metromile specifically. The loss ratio in general, I think, is the primary driver of the gross profit change. And so as that loss ratio comes closer to our target, I would expect that the gross margin and the adjusted gross margin, as we report them, to come back in line with what we saw when our loss ratio a couple years ago was in the 70s. In terms of our second question, scaling cars, so We're with Lemonade Car before the merger of Metro Mile. I've launched so far three states. Metro Mile brought us up to a total of about 10 states in total. And then we have a plan. We haven't disclosed state by state, and we typically don't in advance because we're a little opportunistic about moving things around. It's not always in our control, the exact date of launch from a regulatory perspective. But you should expect additional launches, over the course of all of 2023. So by the end of the year, I'd expect several new states, but when we get closer to launching them or at the point of launch, then obviously we'll give more clarity on that. But we'll expect to continue to add new states consistently over the next couple of years.

Great. Thank you very much.

Thank you. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad now. Our next question comes from Josh Shanker from Bank of America. Please go ahead, Josh. Your line is now open.

Yeah, thank you for taking my question. My first question relates to the guidance for premium enforced in 4Q. It's very little higher than it is in 3Q. My guess is that you're going to be non-renewing to Metro Mile customers and growing in other places. And if that supposition is correct, I'm wondering if you can talk about that plan.

Yeah, that's a fair proxy. So again, Metro Mile is no longer viewed by us as a standalone business. It's part of Lemonade. Our car product is made up of Paper Mile, which historically was Metromile, as well as a fixed price product. But if you were to isolate it to exactly those customers acquired through Metromile, there's a typical attrition rate, and we're not investing heavily at this point to grow that business. And so that, in the Q4 guidance, you see that historical Metromile number coming down. It's actually been a pleasant surprise. The retention rate has been – solid and a bit actually better than our expectations, which is providing some benefit to the IFP growth. And then the remainder is really our reduction of spend in Q4, part of which we pulled into Q3. So you'll see a growth rate that increases the size of our overall business, excluding Metromile, and compensates for some of the natural attrition that's happening in that Metromile customer base.

Hi there. Sorry, I lost you for a second. And then on a Chewy deal, Trepanion already sells the pet insurance product through Chewy. I'm wondering if you think this marketplace becomes one where Lemonade is one of several brands sold on that website, and whether you're competing on product and price, or whether you're competing on exclusivity. And maybe, I don't know, you probably looked at Trapani and Success, though. They haven't really sold that much product on Chewy, so to speak. How might you approach differently?

Yeah, so we, you know, while we're aware of the competition, it's not really a primary focus. So we like the ability to be open to all channels, and therefore it's not an exclusive structure for either of us. We want to be open to other channels and working with other partners. So whether or not Trupanion is there, whether or not Trupanion does well, we really don't expect it to impact the lemonade trajectory. It's a very large market. Chewy has access to an extraordinary both large and dedicated customer base. So there's plenty of room for all of us. We'll obviously look to expand channel partnerships where it makes sense. This is one that we're really excited about both strategically and also just the sheer size of what they've done and what we think it can do for PET.

Robert, thank you for the answers.

Thank you. We have no further questions, so this concludes our call today. Ladies and gentlemen, thank you all for joining. You may now disconnect your lines.