Amneal Pharmaceuticals, Inc

Good morning, and welcome to the Amniel Pharmaceuticals second quarter 2025 earnings call. I will now turn the call over to Amniel's head of investor relations, Tony DiMeo.

Good morning, and thank you for joining Amniel Pharmaceuticals second quarter 2025 earnings call. Today, we issued a press release supporting Q2 results. The earnings press release and presentation are available at amniel.com. Certain statements made on this call regarding matters that are not historical facts, including but not limited to management outlook or predictions are forward-looking statements that are based solely on information that is now available to us. Please see the section entitled cautionary statements on forward-looking statements for factors that may impact future performance. We also discussed non-GAAP measures. Information on use of these measures and reconciliations to GAAP are in the earnings release and presentation. On the call today are Chirag and Shintu Patel, co-founders and co-CEOs, Casos Conideras, CFO, our commercial leaders, Andy Boyer for affordable medicines, Joe Renda for specialty, and Jason Daly, chief legal officer. I will now hand the call over to Chirag.

Thank you, Tony. Good morning, everyone. The second quarter was another consecutive quarter of strong performance and growth. with revenues of $720 million and adjusted EBITDA of $184 million. At the halfway point of the year, and with confidence in our outlook, we are pleased to raise 2025 guidance. I'm so excited to walk you through the multiple growth drivers that are shaping the future of MNIL. At MNIL, we focus each day on delivering innovative and affordable medicines that are essential for patients. Since our founding in 2002, we have methodically diversified beyond generics to build a broad and differentiated portfolio of branded and complex products. MNIL has stood out from the pack by generating consistent growth in each of the last six years, and we expect growth will continue in the years ahead. In the process, we have transformed MNIL and have entered the most exciting chapter yet. In this new chapter, there are a number of new growth drivers, including Crexon for Parkinson's disease, Brachial Autoinjector for severe migraine, new biosimilars such as biosimilar of Zolaire, our continued cadence of 20, 30 new generic launches each year, particularly complex products, including unique 55B2 injectables for hospitals, and our GLP-1 opportunity with Medcera. These new medicines and new opportunities are designed to create substantial value by, one, advancing the standard of care and increasing access to medicines for patients, two, further expanding and differentiating our portfolio for providers, and three, adding to our growth story for investors. Over time, MNIL has strategically evolved from generics to innovative and complex medicines. And we are entering our new next phase of growth with strong momentum and clear confidence in growth ahead. First, in our specialty segment, the launch of Crexon for Parkinson's disease continues to exceed our expectations in the first year of the launch. uptake has been very strong, with U.S. market share about at 2% and on track for over 3% by the end of the year. Notably, about 80% of cracks on scripts are coming from IR patients, which is a strong indicator of our successful strategy to pursue the broader Parkinson's market. The patient testimonials have been inspiring, and we have highlighted a few in our earnings presentations. We are highly confident that Crexon will achieve US peak sales of $300 million to $500 million. Let me now turn to our newest specialty branded product, Brachia Auto Injector, which received USFT approval in May. Brachia is the first and only auto-injector form of DHE, a therapy that has been trusted for over 70 years for the acute treatment of migraine and cluster headaches in adults. In the migraine treatment landscape, there is significant unmet need for patients who do not respond to existing therapies. This new product gives patients sustained headache relief when they need it the most. and eliminates the need for time-consuming hospital visits. We are excited to launch Brachia with a commercial rollout in October. We continue to see this as a 50 to 100 million peak sales opportunity. Second, in GLP-1s, we are advancing our partnership with MedSERA to help deliver innovative therapies at scale. MNIL is Medcera's preferred global supplier for developed markets, including the US and Europe. We will also commercialize their products in 20 emerging markets, including India. We see GLP-1s as a long-term opportunity, and we look forward to sharing more on this key catalyst over time. Third, in our affordable medicine segment, growth continues to be fueled by our diversified portfolio of complex products and addition of new differentiated offerings. Broadly, we continue to see favorable macro trends across all three pillars, retail generics, injectables, and biosimilars, and remain confident in our ability to execute advanced new innovations and drive sustainable growth long-term. Within biosimilars specifically, we see a favorable long-term outlook for the US market. Over the next decade, the number of biologic pattern expirations is expected to double compared to the past 10 years, creating significant opportunity as approximately 90% of these products do not have biosimilars in development. At the same time, Development timelines and costs are trending lower with fewer Phase III study requirements and generally less competition per molecule, excluding some of the largest biologics such as Humira and Stellara. Against this backdrop, our biosimilars in-licensing strategy has enabled us to build an initial portfolio with three biosimilars already commercialized and five more in development We anticipate having six marketed biosimilars across eight presentations by 2027. Specifically, biosimilar Zola represents our largest biosimilar opportunity to date. As we have said in the past, our strategic intention is to be vertically integrated in biosimilars over time. Finally, performance in the healthcare segment continues to be driven by a broad portfolio of products and new launches delivered across three distinct channels, government distribution and unit dose. This business, which adds stability and diversification to MNIL's portfolio, is expected to drive revenue of over $900 million by 2027. In summary, MNIL has a diverse array of growth drivers that build upon our distinct market position, drive sustainable value creation, and improve access and care for patients. Our strategic goal is to be America's number one affordable medicines company, and we are well on our way.

I'll now turn it over to Chintu. Thank you, Chirag, and good morning, everyone. Let me begin by expressing my deep appreciation to our MNIL team. Your passion, resiliency, and unwavering commitment continues to drive MNIL forward as a deeply purpose-driven company. This morning, I will provide an update on our strategic priorities innovation and expanding portfolio and how these are translating into strong execution and sustained performance in 2025. First in operations, global high-quality manufacturing infrastructure remains a key competitive advantage and will continue to be recognized for its quality track record and industry-leading reliability. Each year, we make targeted investments in digitization and automation across our network to improve efficiency and scalability. We also stay focused on our cost structure through various operational excellence programs. These capabilities enable us to launch new complex products, help address drug shortages, and meet the needs of our customers and the patients we serve. MNIL has built one of the largest and most advanced U.S. pharmaceutical manufacturing footprints anchored in New York and New Jersey with broad capabilities across water solids, liquids, topicals, trans-thermals, and complex formulations, making Made in America a core strategic advantage. In the second quarter, we announced our collaboration with EpiJet to start U.S. injectable manufacturing, leveraging their technology capabilities. This partnership strengthens our ability to serve both commercial and government markets with large production capacity while supporting U.S. emergency preparedness and national health security. This expansion extends our leading U.S. pharmaceutical manufacturing footprint and expands our domestic capabilities in sterile dosage forms. Turning to innovation, we are very pleased with the continued strong performance of KRAXONT in the first year of launch. KRAXONT is uniquely designed to deliver rapid onset and sustained efficacy, giving Parkinson's patients more good on time with fewer daily doses. Our phase four study remains on track and we expect the real world data to further reinforce KRAXONT screening Next in our specialty business is Brachia, the now approved DHE auto-injector for migraine and cluster headaches. This is the first and only auto-injector formulation of this well-established therapy. This paves the way for us to develop other drug-device combination products that are clinically relevant for providers and can help patients in other branded therapeutic areas. Once our strategic partnership with Medcera is advancing, we are building two state-of-the-art manufacturing facilities, one for high-value peptide drug substance production and the other for advanced sterile fill finish capabilities. Medcera's lead programs are progressing well through development with impressive efficacy and strong product profiles and timelines that are not too far out. positioning us to participate meaningfully in this high growth market. This collaboration draws on our core strengths in complex pharmaceutical R&D and manufacturing. Through our differentiated, integrated business model, we believe we can drive innovation at scale and deliver new, impactful obesity therapies for patients. In our affordable medicine portfolio, We expect to launch 20 to 30 new products each year. We have launched 15 new products so far in 2025. In Q2, we were pleased to receive approval for our generic version of Pratt Forte, a complex ophthalmic product. Among upcoming key launches this year, there is respirator injection for schizophrenia, a generic version of Restress is for dry eye, and many more. Overall, our affordable medicine pipeline remains key and robust, capable of producing new products for years. We are very pleased with our continued progress in developing complex products across key categories such as microspheres, liposomals, and 505 injectables. We are also making strong, strong progress in inhalation, which will become a new vector of growth beginning next year. with two commercial innovation product launches expected in 2026. As of Q2, there are 76 ANDS pending approval, out of which 67% are non-oral solids, and 47 products in development, out of which 96% are non-oral solids. We continue to prioritize our R&D portfolio and allocate investment towards higher growth areas like specialty brands, injectables and biosimilars. In biosimilar, we see an opportunity for MLE to establish a leadership position in the space. This year, we are filing five biosimilar pipeline candidates with launches targeted for 2026 and 2027. The BLA filings for two Danazumab biosimilars were submitted with goal dates in quarter four. Next, we look to submit the supplemental BLA for our PEC filgrasting OBI and auto-injector in Q4, followed by the BLA filing for biosimilar Xolair in Q4. We are pleased that our PEC filgrasting OBI and auto-injector product, as well as our biosimilar to Xolair, will be made in America. underscoring our commitment to high quality us-based manufacturing and supply chain reliability recently we shared positive phase three data for biosimilar solar positioning us to be among the first entrants in the three billion dollar market we are focused on advancing these programs and continuously adding new programs to expand our biosimilar portfolio In summary, we have continued our strong operational momentum and execution in 2025. Our strategic focus on innovation, quality, and manufacturing excellence sets the ground for sustainable growth and category leadership across our business over time. Thank you. And with that, I will hand it over to Kassus.

Thank you, Chintu, and good morning, everyone. We're very pleased with our second quarter financial performance as the resiliency of our diversified business model, strong growth in our specialty business, and focus on efficiency delivered revenue growth of 3%, adjusted EBITDA growth of 13%, and adjusted EPS growth of 56%. Furthermore, we reduced net leverage to 3.7 times versus 3.9 times adjusted EBITDA in December 2024, and fully refinanced our debt, which will reduce interest costs substantially and extend maturities to 2032. From a top-line perspective, Q2 was another quarter of growth with total net revenues up 3%. Our affordable medicines revenue of $433 million grew 1% on top of last year's exceptional growth of 14%. Our current quarter growth was driven by new products, where 2024 and 2025 launches added 33 million. It is important to note that during the second quarter, our commercial teams built strong foundation with our clients across a number of new 505 B2 products, while our global supply teams completed a few production facility upgrades. The combination of multiple highly innovative products and enhanced manufacturing supply to meet market demand gives us confidence for even higher revenues in subsequent quarters. Q2 specialty revenue was also very strong at $128 million as it grew 23% year over year. This growth was driven by our three main branded products with Crexan adding $11 million, Rydari adding $9 million, up 19%, and Unitroid adding $4 million, up 12%. We continue to be very pleased by the market acceptance of Craxon and expect full year 2025 revenue in excess of our initial estimate of $15 million. In the second quarter, after revenues of 163 million declined 4%, while gross margin increased by 540 basis points and operating income increased by 44%. As we discussed in the first quarter, we're very pleased by the financial performance of OutCare and the team's focus on higher profitability by maximizing the unique value we provide to the VA and DOD compared to the lower margin distribution channel. Let me now move down the P&L, where Q2 adjusted gross margins were very strong at 45.6%. up 470 basis points year over year. Desired gross margins were driven by favorable product mix in each of the three segments and ongoing operating efficiencies. Notably, Q2 adjusted gross margins of affordable medicines grew 270 basis points to 44.3%. Our second quarter adjusted EBITDA of 184 million grew 13% driven by top line growth, higher gross margins, and higher investments in R&D and sales and marketing to ensure future growth. Finally, we were extremely pleased by the 56% growth in adjusted earnings per share driven by the higher adjusted EBITDA, favorable foreign exchange, and lower interest expense. Looking at our first half financial performance, our total company revenues grew 4%, our adjusted EBITDA of 354 million grew 12%, and our adjusted EPS of 45 cents is up 50%. We're also very pleased by the increased level of profitability as adjusted gross margin of 24.3% grew 290 basis points, and adjusted EBITDA of 25% grew 180 basis points. Before I conclude with our updated 2025 financial guidance, I'll just touch on four important topics. First, we're excited about our multiple growth drivers ensuring robust upline growth. These include over 20 new product launches annually, strong uptake of CREXAN, the upcoming launch of Brachia for migraine and cluster headaches, multiple new biosimilar launches next year, and large new product opportunities available to the VA and DOD. Second, from a TARICS perspective, and while we don't have full clarity, we have multiple levers to mitigate any potential negative impacts. As we have discussed, we have one of the largest US manufacturing footprints in our industry. We have extensive experience with tech transfers. We have no meaningful exposure to Mexico, Canada, China, or Europe. And finally, no exposure to any most favored nation pricing action. Third, from a balancing perspective, we're extremely pleased by the full refinancing we opportunistically completed last week. In summary, we refinanced 2.7 billion of debt by issuing 2.1 billion in a new seven-year term loan and a brand new 600 million seven-year senior secure note. The refinancing was extremely well received and oversubscribed many times over and achieved long-term interest cost reduction of more than $33 million annually and extended maturity to 2032 versus 2028. Four points worth mentioning is that because of the new federal tax legislation, we expect about 46 million in cash tax savings, most of which will occur in 2026, improving our cash flow. This benefit is primarily driven by the immediate expensing of R&D and upfront depreciation of assets. The strength of our first half performance in the multiple levels of growth drivers and solid execution were pleased to update our 2025 financial guidance. For revenues, we continue to expect 3 to 3.1 billion We're increasing adjusted EBITDA by about $15 million in the range of $665 and $685 million. We're increasing our adjusted EPS by about $0.05 between $0.70 and $0.75. And we're also raising our operating cash flow guidance excluding discrete items by about $20 million in the range of 300 and 330 million. With that, I'll turn the call back to Shirat.

Thank you, Tasos. Q2 results and increased 2025 guidance reflects the continued strength of our diverse business. We are confident in our ability to continue advancing in this new chapter of growth towards our goal of being America's number one affordable medicines company. Let's now open the Call for question and answers.

Thank you. We will now begin our Q&A session. When preparing to ask a question, please ensure your device is unmuted locally. Our first question comes from David Anselm from Piper Sandler. Your line is now open. Please go ahead.

Thanks. Just a couple from me. First on Crexant and Ritonari and the overall Parkinson's franchise. As we move through 25 and into 26, with the LOE of Reitari, how should we think about when the Parkinson's franchise reaches a trough and when you think you'll be in a position to return that business to growth once you've absorbed the full impact of the LOE? Just help us understand that, particularly as we move into next year. That's number one. And then number two, on the Metzera collaboration, Notice that you talked about commercial manufacturing for at cost plus a margin. Just wondering how profitable that is going to be and the extent to which that those economics ultimately will expand your overall profitability.

Thanks. Hey, David. Good morning. This is Tasso. So let me take the first one. So just to directly answer your question in terms of the troth of the business, just from a context perspective. So last year, Raitari did about $210 million worth of revenue, and obviously we had no correction. My gut feel is this year, as you know, even though the LOE of Raitari was on July 31st, there has been no approval for a generic Raitari. that's kind of helping us this year and it's also i think it's going to help us in the in the short term uh next year whenever uh generics become available our gut feel is this year with probably correction doing let's say 55 million dollars or so maybe right now it does about 150 So essentially the combined portfolio is essentially kind of flat to last year from a revenue perspective. EBITDA is a bit of a drag this year, which we're obviously able to overcome because of the growth of the rest of the business and just reflects the investments we need to make to grow Craig Sampley. The trough we believe comes next year. right from the revenue perspective because next next year uh right it probably will have obviously more of a generic competition than this year but at the same time correction is growing very very rapidly so i think the trough comes next year from a revenue perspective okay But I believe from an EBITDA perspective, TROP is probably, I don't expect much of dilution than this year from an EBITDA perspective, because this year we already observed a substantial headwind to EBITDA because of the investments of Craigson. But nevertheless, even if there is a bit of a headwind next year from an EBITDA perspective as well, we'll feel confident we will be able to overcome this as the rest of the business will more than offset that. So at the end of the day, TROP comes next year, highly confident we will be overcoming, because, you know, we're trying to drive the total business to continue to grow top line and bottom line. So hopefully that works for you. Let me turn to Shiraz Al-Matera.

Yeah. So, David, good morning. MedCenter collaborations moving forward very awesomely. We have So many scientists, engineers that at work, my brother, everybody's and we work with Clive and with team over there. Great progress and we could not be even more happier than this about our partnership. It is very properly structured as we have taken a lot of risk of current building the sites, so we would expect more margins than typical CMO or CDMO because we have taken up front risk. So we are not sizing up the margins at this point, but they're higher than obviously the genetics margins, much higher. And second point is international markets, which we control the marketing. We do not know yet exactly what price it would be sold at, but give you the reference Lilly launched Manzaro in India at $160 a month. So, of course, there will be some Zempic genetics competition, and we hear they could be launching at $60, $80 a month for monthly treatment. So you can see it's a substantial opportunity for us, and we have rights to 20 countries. And India will be setting the prices for most of the countries. And I don't think it will be lower than India's prices in any of those countries. And significant number of patients that could be on this therapy. It's the India number at this price, somewhere between 60 to 160. I mean, the product is in shortage already. It's some 50 million patients, 5-0. So these are large numbers of patients. Volume will drive. margins and higher penetration we could do would be driving significant revenue. We will be sizing all these starting from beginning of 2026. I would say these are very significant opportunities for us for supplying Metcera as well as for our own international marketing. So that's for Metcera.

helpful. Thank you.

Thank you. Our next question comes from a sec. So let's keep from tourist securities. Your line is now open. Please go ahead.

Good morning. Thank you for taking our questions. First on the Parkinson's franchise, maybe just provide a latest status of the right Terry generic launches. And also, can you maybe provide some additional commentary on where you stand with the reimbursement and uh separately uh what's the update on the regulatory approval process across some of the other uh partners internationally that you've disclosed before and maybe um provide any additional timelines uh that you'd expect on your international or your launch in india on the product maybe how do you think about the size of that opportunity um and then separately you know maybe just kind of a longer view as you're capturing some of the uptake from these partnerships, including Metzera and others, and lean more into innovative products, you know, how are you thinking about the overall gross margin profile for the enterprise kind of moving into 27 and beyond? Thank you.

Yeah, so let me take, I'll take the, right, very generic question, then I'll pass it over to Joe who heads up commercial operations, commercial business for specialty, then I'll turn it over to Chirag and Chintu for some of the partnerships and I'll tackle the margin profile. So in terms of generic, so far, so, you know, Deva has 180 day exclusivity on the generic RIDARI. They currently have not been approved. And frankly, I know as much as you do on when that may happen. So that's as much as I can tell you and so forth. Our view is it's a sizable opportunity. We expected in our planning that generics were going to become available August 1st. Obviously, this kind of what I will call short-term delay kind of helps us from a financial perspective. It allows us to reinvest in the business. It allows us to increase our guidance. But at some point in time, there'll be generics maybe later on this year, sometime next year, and we'll be in a great position to overcome any headwind that may come out of that. So I think that's the answer to your first question. So let me turn it over to Joe to give you an update on the reimbursement on Crexon.

Yeah, thanks. Yeah, thanks for the question. We've been really pleased with coverage so far with Crexon on the market. Actually, it's above our expectations. We were anticipating around 50% coverage or so far this year. We've garnered now over 60% commercial coverage, which includes some of the biggest payers in the market, United, CVS, VA, DOD, So really pleased with coverage and we anticipate that to continue because we're in good dialogue with the payers related to some of the Part D plans. So we're looking to land those. So our goal was always around 70% coverage. We're well on our way there and the feedback for the market continues to be really strong from our key prescribers. So we're anticipating that the growth we're seeing is going to continue and it's partly because of that great access that we've created so far.

Let me take a crack also at some of the question more about regulatory progress on some of the ex-US business or kind of the margin profile with those partnerships. So what we have said, right, is that over the course of time, 99.9% of our revenue is US based, right? So that leaves a lot of white space call it ex-US. So we have made the strategic choice that the best way for us from a capital allocation perspective is instead of trying to build the infrastructures in those markets, right, which has a very long-term payback period, to develop the partnership model for all markets except India. And obviously there's a lot of our own heritage in India. We have 6,000 employees already over there. And more importantly, if you think about India, the standard of living is growing substantially. The size of the pharmaceutical market there is supposed to grow, is expected to grow dramatically. So combination of our heritage, combination of our existing infrastructure in India, a relevant product portfolio, and a very large market, it's only made sense to extend to kind of for us to launch our own MNL brand in those, in that market. and the uptake is growing very nicely. We have a few hundred people. We've established a commercial team based in Mumbai. We have a few hundred commercial teams. We're building it out. Early days of the product portfolio launching there, and that's going to build over the course of time. You shouldn't expect anything drastic over the next couple of years, but that's going to build over the course of time. In the rest of the markets, we out-licensed Crexham in Europe. So that regulatory process is in process. So that's going to come over the next couple of years with product approval and slowly building that revenue portfolio. So that's a little bit. I think those are the two main kind of what I will call drivers of growth of our international business. over the next few years. From a margin perspective, listen, we are not in the business of diluting margins. So what you should expect from us is kind of continue to drive gross margin increases steadily over the course of time. Our adjusted EBITDA to revenue has been hovering at about 22.5%. You should expect this over the course of time to increase. And we're not doing anything to do anything dramatic because we want to continue to invest in the business because we see tremendous amount of growth, whether or not it's in the injectables, biosimilars, international, I just mentioned it. But we're not in the business of diluting margins or diluting our cash flow. So with that, let me turn it over to Chintan or Chirag to see if they have anything else to add.

Thank you, Das. I just wanted to add on an international partnership. First of all, we are very happy and pleased with Crexon and how all the testimonial information and our partners in Europe and Latam are very pleased and we are very excited. And we hope to launch these products in Europe by late 2026 and India late 2026 to early 2027. So, our regulatory applications are moving well, and we are excited. Plus, to have a diversified manufacturing footprint and a cost advantage, we are also qualifying our India site for cracks on to improve our margins. Just wanted to add that.

Very helpful. Thank you.

Thank you. Our next question comes from Chris from JP Morgan. Your line is now open. Please go ahead. Thank you so much.

This is Katerina on for Chris. So first question is just around guidance. I think the revenue range does imply a bit of a step up as we kind of think about revenues in the second half versus the first half of the year. Can you maybe elaborate what are the main drivers of this? I'm assuming some of this is the timing of new launches and perhaps the delay in but just anything else to kind of keep in mind. And second question is just around tariffs. thoughts on what these could mean for the industry and Emil, and I think specifically, what are you hearing out of Washington on how generic products and API could be treated as we think about the 150 or 250% tariffs that are kind of being thrown around? Thank you.

Hey, Catherine, I can take the first one. We expect a stronger second half from a revenue perspective than the first half. And as you said, there is nothing fundamentally different other than the typical, what I would call, cadence of new product introductions. So products that we launched late in 2024, early 2025, they keep building momentum over the course of time. That's number one. number two is even though vast majority the majority of the products we were expecting to launch in 2025 have already launched but there are just a few more that are supposed to be coming in q3 and q4 so those will add to to the revenue growth um and the third point is really we're looking at as i mentioned in my script in q in q1 q2 we completed the number of Facility upgrades that kind of prevented us from meeting market demand primarily on our rejectable portfolio. Now with those essentially behind us, it just frees up capacity and just improves our global supply ability to meet market demand. So all of those things will play into the second half of the year to have kind of stronger revenue performance than the first half. And then, obviously, we're looking for growth from a top-line perspective, kind of going into 2026 and 2027 with a strong tailwind behind us. I'll turn it over to Chirag and Chido to maybe tell us a little bit about all their adventures coming out of Washington, D.C.

Great. That's the hardest job to do. So we've been meeting and giving our perspective. which is rightfully focused on two things, what is driving these pharma investigations. The one is national security. So heavily over-reliance in antibiotics would be like 95% of key starting material coming from China. And we hardly make anything in the United States. Even British goods, it's less than 2%. So if you're take each of these critical categories, we have virtually no manufacturing in the United States. Second thing is socioeconomics, obviously, that it creates American jobs and more factories, more plants in the United States. So with that, we've been not negotiating, but we've been putting new solutions, because if you put a 150%, she said, or 200% tariffs, it's going to be chaotic because nobody knows how long the tariffs would stay. So if there are such a large tariffs, obviously the pricing would have to go up to our customers because we have to keep supplying the products and we have to keep making money. And this is not us alone. It's all the companies. We are least impacted because almost two-thirds of manufacturing values in the United States. But they could create shortages as well. It may not be the solution what administration is trying to do, which we fully support, is for the national security, bringing the production of critical products in the United States from the key starting material API to finished goods, by creating a demand for American-made products, because it will be obviously expensive products to make in America compared to coming out of China and India. So with all that, it's still unknown. We'll see what happens. It's still under investigation. As of now, pharma is exempted from all tariffs. We'll stay tuned.

Thank you so much. I appreciate all the clarity.

Thank you, Katarina. Next question.

Our next question is from Matt Delatorre from Goldman Sachs. Your line is now open. Please go ahead.

Hey, guys. Good morning, and thanks for the question, and congrats on the continued progress. Maybe first, just to follow up on the prior question on the revenue guide, should we expect the generics and distribution segments to inflect or catch up in second half? And then second question, Post the recent debt refinancing, what are your latest thoughts on the potential vertical integration of your biosimilars business in terms of timing or likelihood? And then maybe more broadly, how does this increased flexibility that you now have impact your broader capital allocation strategy? Thank you.

Hey, Matt. This is Tasos. Good morning. First of all, we expect growth in the second half, substantial more growth in the second half. And that's really driven by what I call stability on the distribution channel. So at this point in time, point number one. And number two is we expect our government business to accelerate the growth that we have already seen this year because there is a number of large product launches that I don't want to one or two large product opportunities that will become available in Q3, and NAPCA will be in a position to capitalize on that opportunity. That's kind of number one. From a refinancing perspective, before I turn it over to Shirat to talk about, So from a refinancing perspective, as I mentioned before, that was just incredibly successful, substantially reduces our interest expense. You know, depending what month we use, it decreases our interest expense between 16% and 20% per year. So that's a dramatic improvement. Number one, extends maturities by four years to 2032. And we don't expect this to change our capital allocation policy. So over the course of time, what we have said is we want to make sure that we fund our business appropriately and kind of capitalize on the opportunities that we have, number one. And also the leveraging over the course of time is really important to us. And, you know, that doesn't need to be linear. right, every single quarter, every single year. But over the course of time, I think we've done a really good job essentially cutting leverage by half in the last four or five years. So that's kind of our area of focus.

Surak, anything else? Yeah, thank you, Tas. And your second question, Matt, on when do we look to integrate? So first of all, biosimilar is the entire market. It's a race right now. How fast? we can execute. FDA has been very cooperative along with MHRA, EMA, entire world obviously for obvious reasons. Tremendous cost savings, but most importantly, it creates more access, more patient. We have seen two and a half times more volume because of more access because of lower prices. So how many new patients are getting this product? So total support from all of the regulatory agencies, government agencies. I know we had a bad start with Humira in the market, but now there are 100 biologics. Only 20 are being worked on. 80 are not being worked on. So our goal is we have done this so well with complex genetics products and we have invested so much in this. We could do this. We could have a pipeline of 30 products, 35. We can keep going and make a lot of products in the United States and India. and have this combination which allows us a global supply and global cost position and much faster execution on number of products. So we look to, since it's a race, we look to do it as soon as possible. But we'll be very disciplined and obviously do the deal, which doesn't blow any of the We have worked hard to get our debt to EBITDA ratio down. We would like to maintain or have some flexibility there and then set up a deal which we can afford and provides tremendous growth to NEO going forward. We see this as a great business for next 10 years.

Great. Thank you both.

Thank you. This concludes our Q&A session, so I'll hand back to Chirag for closing remarks.

Oh, thank you very much, everybody. Have a great day today. Thank you. Thank you. Thanks, everyone.

Thank you. This concludes today's call. Thank you for joining. You may now disconnect your lines.