Embecta Corp.

Good day and thank you for standing by. Welcome, ladies and gentlemen, to the MVECTA Fiscal First Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1-1 again. Please note that today's conference is being recorded and a replay will be available on the company's website following the call. I would now like to hand the call over to your speaker, Mr. Purvesh Khandewal, Vice President of Investor

Relations. Please go ahead, sir. Thank you, operator.

Good morning, everyone, and welcome to MVECTA's Fiscal First Quarter 2025 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 .mvecta.gov. With me today are Def Kodaker, MVECTA's President and Chief Executive Officer, and Jake Elguise, our 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. Dev will begin by providing some remarks on the overall performance of our business during the fiscal first quarter of 2025, as well as an overview of our strategic priorities. Jake will then review our financial results for the fiscal first quarter of 2025, as well as discuss the updated financial guidance of fiscal year 2025. 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, Dev Kodikar.

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 Mbektar's transformation. As we move forward, we have 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 in 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 utilizing our capabilities to manufacture products for partners 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 pump program, initiate a restructuring plan intended to generate significant cost savings, and prioritize debt reduction, including the plan to pay down approximately $110 million in debt during 2025. Importantly, given the free cash flow generation capabilities of the company, coupled with the fact that cash use 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 sustainable success as and transform M-BECTA for the future. Turning to some fiscal first quarter highlights. The first quarter marked a solid start to the fiscal year for M-BECTA, slightly exceeding our internal expectations. We generated approximately $262 million in revenue, representing a .6% decline year over year on the reported basis, and a .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 phased ERP implementations that occurred during fiscal 2024, 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-1 drugs and 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 2025. In line with our commitment to enhancing financial flexibility, we continue to reduce our debt, making an aggregate principal payment of approximately $32 million 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 2025 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 10-cent headwind from the aforementioned foreign exchange pressure. Turning to slide 6, 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 2025, beginning with the US 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 M-Vecta branded packaging. You will note that the product names and color associated with the packaging is not changing. 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 who rely on our products daily. Now, let's review our revenue performance for the first quarter. During the first quarter of fiscal year 2025, M-Vecta generated $261.9 million in revenue, reflecting a .6% decline year over year on an as-reported basis or a .8% decline on an adjusted constant currency basis. The year over year decline was expected and 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 2024 fourth quarter as distributors purchased product to mitigate potential disruptions from the then looming US port 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 US, revenue for the quarter totaled $141.7 million, reflecting a year over year decline of .6% on an adjusted constant currency basis. This decline was primarily driven by the same two factors mentioned previously. A challenging comparison to the prior year period due to order timing related to the ERP implementation in the US which benefited the year-ago period and additional distributor orders which occurred during the fourth quarter of last year due to the then looming US port strike. Turning to our international business, our Q1 revenue totaled $120.2 million, which equated to a .1% decline on an adjusted constant currency basis as compared to the prior year period. The -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 implementation. While from a product family perspective, during the quarter, pen needle revenue declined approximately 8.5%, series revenue declined approximately 4.2%, safety products grew approximately 11.3%, and contract manufacturing grew approximately 153%. The decline in pen needle revenue was primarily due to the additional revenue that occurred during the fourth quarter of 2024 associated with the potential US port strike as well as revenue generated during 2024 as distributors procured incremental inventory in advance of ERP implementation. Turning to our syringe products, while they declined during the quarter of .2% due to volume declines within the US, the rate of decline was lower than what we have experienced recently. While our safety products grew .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 2025. Jake?

Thank you, Deb, and good morning everyone. Given the discussion that has already occurred regarding revenue, I will start my review of Mbeka's first quarter financial performance at the gross profit line. Gap gross profit and margin for the first quarter of fiscal 2025 totaled 157.1 million and 60% respectively. This compared to 185.9 million and 67% in the prior year period. While on an adjusted basis, our Q1 2025 adjusted gross profit and margin totaled 164.2 million and 62.7%. This compared to 186.3 million and .2% in the prior year period. The -over-year decline in adjusted gross profit and margin was primarily driven by the lower -over-year revenue that Deb 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 -over-year price increases. Turning the gap operating income and margin, during the first quarter they were 28.7 million and 11%. This compared to 45.5 million and .4% in the prior year period. While on an adjusted basis, our Q1 2025 adjusted operating income and margin totaled 80.5 million and 30.7%. This compared to 77.5 million and .9% in the prior year period. The -over-year increase in adjusted operating income and margin is primarily due to lower R&D expenses associated with the discontinuation of our insulin patch pump program, as well as lower SG&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, gap net income and earnings per diluted share were both zero during the first quarter of fiscal 2025, as compared to 20.1 million and 35 cents in the prior year period. While on an adjusted basis, during the first quarter of fiscal 2025, net income and earnings per share were 38.3 million and 65 cents, as compared to 35.3 million and 61 cents in the prior year period. The increase in -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 2024 to approximately 25% in Q1 of 2025. The lower -over-year adjusted tax rate was due to tax planning initiatives partially offset by the impact of Pillar 2. Lastly, from a P&L perspective, for the first quarter of 2025, our adjusted EBITDA and margin totaled approximately 97.3 million and 37.2%, as compared to 90.4 million and .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 million, while our last 12 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 pay down 32.4 million of term loan B debt, and we remain on track to achieve our goal of reducing our debt by 110 million during fiscal year 2025. That completes my prepared remarks on our first quarter 2025 results. Next, I would like to discuss EBITDA'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 2024. We manufacture our products across three facilities, Dunleary, Ireland, Holdridge, 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. So 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 1% and .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 impacting our high end, except for the potential of greater -over-year headwinds associated with volumes. Turning to our thoughts on FX. Since we provided our initial Cisco 2025 financial guidance in late November, the US dollar has continued to strengthen against most currencies. And as a result, we currently expect FX to be a headwind of about .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 US dollar exchange rate of approximately 1.03. Somewhat offsetting FX is the fact that our as-reported 2025 gap revenue will not be impacted by the 2015-2023 amount that we needed to accrue associated with the Italian Payback Measure, which impacted our 2024 as-reported gap 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 .8% and 4.3%, resulting in an updated revenue guidance range of between ,000,000 and ,000,000. Turning to adjusted gross margin, we are reaffirming our previously provided guidance range of between .25% and 64.25%. While from an adjusted operating margin standpoint, we are raising our guidance from a range of between 29% and 30% to a new range of between .5% and 30.5%. 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 20 cents, 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 Q1 revenue to reverse itself during Q2. While the second driver of our adjusted EPS overperformance during Q1 was due to lower SG&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 10 cents. Thereby allowing us to reaffirm our previously provided adjusted diluted earnings per share guidance range of between $2.70 and $2.90. Our updated guidance range continues to assume that our annual net interest expense will be approximately $107 million, that our annual adjusted tax rate will be approximately 25%, and that our weighted average diluted shares outstanding will be approximately $58.9 million. Our guidance continues to assume that we will use between $50 and $60 million of cash during fiscal 2025 associated with separation costs largely related to branch transition, between $25 million and $30 million in cash usage associated with the discontinuation of our insulin patch pump program, and approximately $20 million in capital expenditures. Lastly, and like our adjusted operating margin range, we are also raising our adjusted EBITDA margin guidance from a range of between .5% and .5% to a new range of between 36% and 37%. 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 commentary concerning the quarterly cadence of revenue on an ongoing basis. 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 2025, approximately 48%, as compared to the second half of the year, in which we expect to generate approximately 52% of our annual revenue. Based on this outlook, second quarter implied revenue would be in the range of between $250 million and $255 million. That completes my prepared remarks, and at this time, I'd like to turn the call over to the operator for questions. Operator?

Thank you. As a reminder to ask a question at this time, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment while we compile our Q&A roster.

Our first question

is going to come from the line of Callum Titchmarch 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 three key product categories and 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 -over-year numbers. So just any clarity for how you expect that to play out in 2025 would be appreciated.

Good morning, Callum. 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 expected. Q1, if anything, was maybe slightly better in general than our expectations from a few months ago in total revenue. 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, Q1 performance, particularly I would say in pen needles, though it affected the other product categories as well, was driven by two major factors. Number one, and probably the most quantitatively important one, was the pull forward that we had in Q4 FY24 in the US 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 in supplies. So that's sort of the first factor. The second factor was indeed the ERP implementations and they sort of fell into two 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 bleeped through in Q1 of this year. And 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, you know, most of the declines, the volume declines in the US. And as that becomes a smaller factor, the decline rates actually improve, if you will. And that was probably the single largest factor. Their 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. So those were the three factors that impacted, you know, the product categories in Q1 of 2025. 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. You know, if I just step back and look at overall sort of growth rates in each of our product categories, you know, 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, you know, we don't give guidance by product categories through the year. But I think it's fair to assume if you look at our overall revenue guidance of fiscal 2025, you know, you will see those rates reflected certainly in the pen needle category, given that it comprises the majority of our revenue. Jake, anything? Yeah, you

know, Helen, maybe I'll just quantify some of the items that that they have 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, you know, expectations were. In fact, I think in Q1, we probably did about somewhere between seven to eight million dollars 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 a price increase that was going to go into effect on 1-1 of 2025. And we saw some revenues sort of get pulled forward into our fiscal first quarter as a result. You know, but but during the during the first quarter, particularly impacting, I think the the pen needle category, you know, we talked about distributors placing orders in the fourth quarter of 2024 because of the port strike that probably impacted our business by about 10 million dollars. And then secondly, another item that impacted us was the ERP implementation in our North American business that occurred in the first quarter of 2024. And we estimate that that resulted in additional revenue in the prior year quarter by about six million. 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 impacted our business in the first quarter of 2025 by about three million dollars. So those three items really drove the the pen needle performance. But again, certainly actually probably a little bit better than what we had originally anticipated coming into the year. You know, as we are implied guidance for the for the second quarter points to revenue somewhere between 250 to 255 million. And that would essentially indicate that our pen needle performance in the second quarter would be very, very similar to what we saw in the first quarter of this year. So similar performance is expected there. And then as we go into the back half of the year, we would expect an improvement in terms of the pen 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 reasons why I think we think sequentially we're going to be a little bit better in the second half of the year as compared to the first. But.

Yeah, that's fantastic. I really appreciate the color there. And then just one more on the on the GLP one pen needle 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 for the same program. Thank you.

Yeah. Hi, Callum. You know, our progress in Germany sort of continues for our expectations. Obviously, we will follow how when Jarrow and Quickpen gets adopted in Germany. And what we are striving for over there is that making sure that our pen needles do get to use for the out of pocket prescriptions that that are going to be filled in Germany. It's going to take some time. You know, we are not quantifying, if you will, the revenue from GLP once. And frankly, as you can imagine, as Mungaro and Quickpen launches and other countries around the world. It is going to be hard for us to distinguish when needles use for GLP once via Mungaro and Quickpen. If they are going to be reimbursed because they're going to follow our same procurement channels as the pen needles use for diabetes. It's only in markets where the GLP ones 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 that are bought. So the point I do want to make is that while pen needles might be being used for GLP ones that are administered via pens, we can't certainly we cannot certainly distinguish between volume that's procured to 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 ones is going to be in the discussions that we are having with generic GLP one entrance where we are certainly working towards being able to co package our pen needles with those generic GLP ones. We do think over the long term that that is a bigger opportunity and those discussions with 10 plus potential GLP one generic entrance are going very, very well. You know, we certainly anticipate providing, you know, more more color around this at our analyst day plan for May 2025. So I 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 Tibault with BTIG. Your line is open. Please go ahead.

Hey, good morning everyone. This is Sam Wan from Marie. Thanks for taking the questions this morning and congrats on a nice quarter. Maybe I can start on a capital allocation question. Things progressing clearly on the debt pay down initiatives. But I guess I'm wondering if there's a certain leverage ratio where maybe you know you become more comfortable looking at opportunistic M&A and more related to your comments about expanding the product portfolio. I guess wondering if that's more of a near term opportunity or perhaps medium to longer term.

Yeah. So so thanks for the thanks for the question, Sam. So I think, you know, from from our standpoint, I think over this year, certainly, and I think into into next year, you know, we're really focused on continuing to try and create, you know, some additional financial flexibility. You know, we are our net leverage. Our last 12 months net leverage as of the end of this quarter is around three point seven times. You know, now our covenant allows us to go up to four point seven 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 one hundred and ten million in debt, which we are well on our way to to doing, you know, we should be around three times net levered mark by the end of fiscal 2025. And I think as we move then into 2026, it's probably more likely that we will continue to to focus on more aggressively, you know, paying down our debt and allowing us to create some additional balance sheet, you know, flexibility. So I think I think it's probably a little bit more likely that we'll trend lower than three and somewhere into the twos in terms of net leverage as we get into 2026. So, you know, from an M&A standpoint, obviously, M&A is very, very opportunistic. Right. You know, but I think, you know, for for us, you know, we only need, you know, an incremental 10 to 15 million dollars of revenue per year to drive our constant currency revenue growth rates up by about one percent. So I don't think we need to necessarily do highly transformative M&A in order to to create value here for for shareholders. But I think in the in the near term, our focus really is more about continuing to, you know, finalize the separation programs, which will allow us to to to really keep that free cash flow and use it towards that repayment.

Really awful, 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 fiscal 25.

Sam, with respect to sort of long term margin progression, I mean, that's certainly something that we'll be discussing in our May 20, 25 analyst and investor day. So I'm going to reserve giving ranges for that at this time. But what I will say is that. You know, our priorities around expanding product portfolio are are important to us. And and I think, as I said in the script that comprises of two potential vectors, right, where we manufacture products for companies that already have a commercial presence or frankly. Distributed products that can be manufactured by others, both of those, as you can imagine, are very are going to have 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 and will certainly provide more information during the analyst day.

Yeah, and Sam, maybe just coming back to the quarter and I think our updated guidance, you know, I think we had from from an earnings standpoint. You know, the 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, you know, by about 20 cents 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 is going to reverse in Q2 and the associated drop through to earnings. But then to and importantly, I think, you know, our S.G. and a in the quarter really drove around, you know, 10 cents of of an improvement as compared to our original internal expectations. And we would expect that to to stay for the entirety of the year and really allows us, if you will, to sort of absorb the incremental 10 cent headwind that we saw or expect to see because of effects rates, you know, working, working against us in relation to our to our original guidance. So, you know, this year is really going to be for the company. It's really going to be focused on, you know, finishing up and and 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, you know, the first half of the year. It's also going to be driven and focused on continuing to to more aggressively deliver. And then third, it really is about trying to further optimize our cost base and take expenses out of the system. You know, if you if you recall, when we when we spun from BD, you know, obviously a much larger organization and, you know, to a fair amount, you know, 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 is as we go through 2025 and into the next few years to to really just look at our cost base and try and find ways to continue to to take costs out. And that's what we're

doing. Understood. Thanks for taking the questions and looking forward to the investor.

Thank you. One moment and one moment for our next question. And if you would like to ask a question, please press star one one on your telephone. Our next question comes from the line of Ryan Schiller with Wolf Research. Your line is open. Please go ahead.

Good morning. Thank you for taking the questions. This is Ryan on from like Polark. 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 so well answer your model and when might the start layering into your financial model?

Yeah, 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 in 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 US on the other side. As you know, we have a strong presence with retailers and strong pair 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 and 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 theme is going to be someplace where our products that can really leverage our commercial strength. You know, 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 to providing some

examples of that type.

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

As we close the call, I just want to express my sincere gratitude to my colleagues at M-BECTA 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 2025, where we will certainly share more about some of the topics that we discussed today and our vision for M-BECTA. Thank you for calling in and for your interest in our company.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone have a great day.