Solventum Corporation

All right, good afternoon, everyone. I think this is the last. This session sits between now and cocktail hour, so hopefully this is very engaging for folks to keep everyone attentive. But I'll just remind everyone that these presentations are not open to the press. And with that, a welcome. I'm managing from Solventum. Very happy to have Wade McMillan, Chief Financial Officer, and Kareem Ansour, President of the Dental Solutions business. I think this is one of the first times you've been out at an investor conference, so a great opportunity to dive into one of the more significant businesses here at the company. Looking forward to that and appreciate your making the time. This presentation is being webcast. Happy to take questions from the audience to the extent to which there are any just Raise your hand and either we'll get a mic over to you or I'm happy to repeat questions so those participating virtually can hear as well. So maybe we just kind of start at a higher level. You had an analyst meeting in March at about, you know, a few months since then you've had an earnings call. Maybe just kind of give us your reflections on what are some of the messages that you think are resonating in your investor conversations and What are some of the things that people, you know, maybe present company included are, you know, might be missing from your perspective?

Yeah, sure. Great place to start, David, and good to see everybody here, and thanks for those joining online. I think the investor day went a long ways for us. You know, we've done a lot of work over the last year in hiring the leadership team. You know, at our first investor day, many were either new, including myself and Brian, new to the company or have been hired since the investor day. So we've been doing a lot of work on our strategy, and it was great to have our second Investor Day here recently to articulate that strategy. And I think it's becoming clearer and clearer to investors what the value creation story is, and the Investor Day went a long ways for that. And it's really prioritizing growth for us is a big change in the metrics, and we've articulated our growth driver strategy where 80% of our growth is going to come behind five growth drivers, and hopefully we'll get a chance to talk about some of those today. We've got Kareem here as well. And then we're going to pair that with an exciting operating margin expansion story, which we think will be something that people are interested in as we look for efficiencies across the business, and we think we've got a lot of levers to do that as well. And then we're focused on free cash flow and improvements there as well. So we've got a lot of opportunity, you know, coming out of a separation, we had a great foundation, we've got great brands, got a great business, but we had a lot of work to do, and we've got a three-phase transformation, which we could probably talk about today as well. We've made great progress on the first phase, which is really resetting the mission, the talent, the structure for the company, and then getting into the second phase now around commercial productivity and innovation. I'm sure we'll probably get into that a little bit today as well. And then with the P&F divestiture that we announced, we're pretty excited about being able to de-lever a balance sheet faster than we had originally expected, and just to go on offense for M&A, which might be something else we might want to talk about today. We certainly have a lot going on.

Yeah, so a lot to dive into here. I think as we reflect on your period of time as a public company, even if we start with the analyst meeting in March of last year to 2024, to where we are today, There's been sort of an evolution in ebb and flow about how you and Brian have sort of talked about the business. We started with this sort of really dire sky is falling. We've got this spin, lots of complexity. Things go a lot better in 2024. Come into this year, start of the year, similar sort of like cautious tone, get to the analyst meeting, positive. Q1, good quarter, but it's transient. How do you think about it? Are you... focused on just trying to keep expectations in check and execute a beat and raise, or is your impression of the business really evolving at a pretty rapid pace?

You know, there's a lot there. If I think about the first year, maybe I'll start there, 2024, when we started in our first investor day, we guided zero to minus two, and that certainly contemplated the newness of the business. I don't think I'd articulated as sky is falling because the business had been declining volumes for a couple years before that. So we really guided consistent with the volume that we were seeing, but we were happy to then eventually report a 1.2% growth rate. So I guess we beat our original guide by 1%, which I think is pretty reasonable given that our original guide was set so early in the company's separation and spin. But even having said that, shortly after we got into the year when we realized the SKU rationalization program really wouldn't have an impact until this year, until 2025, that was one of the reasons, along with some of the strong business performance or stronger business performance, we raised our guide to the high end of 1% midway through the year, which would be by 20 basis points. So 2024, somewhere between basis points and a percent I think is a pretty tight to our original guide range and obviously good to be on the on the beat side of that here in 2025 you know we felt we were leaning into the guidance frankly as I mentioned we grew 1.2 percent in 24 some of that was still benefiting in the first half of last year from some price carryover and benefit so when we set the At 1 to 2, if you take X skew, it's 1.5 to 2.5. So at the high end, it was more than double the growth rate we saw last year. And we did have a very strong first quarter this year. We wanted to make sure people understood some of the unique volume benefits tied to some of the skew rationalization and the ERPs and DC moves that we're making. There's no doubt we benefited in the first quarter from volume. But even with that normalized, the 2.5% growth rate was even better than we expected. So the good news, the read-through there is the stronger pickup of the commercial execution, and it's all volume-driven improvements and turnaround. We're seeing some strong contract wins out of our new team already. We've hired some really experienced people who are versed in how to manage, especially in the U.S., turnaround in the business. So we're very happy to see it, and we raised 50 basis points. So at this point, we're 50 basis points up in 2025. I'd articulate it as a reasonable guide that we beat by just over 1% last year, and so far this year we're 50 basis points ahead. So I don't know what your other companies do, but I think that's pretty tight.

Okay. I want to come back to some of the quarterly phasing in a second, but one of the areas that we've also talked about is just the WAMGR that you had put out at the time of the analyst meeting, the 4% to 5%. Maybe just remind people about how you think the difference between current market growth and WAMGR and what the respective time horizons are that you're contemplating in that presentation?

Yeah, it's a great question, David, because that's the key to the story here really is when we, I could say can we, but when we get our internal growth rates up to our WAMGR, and that's our goal is to get our growth rate up to our market growth rates, which we call 4% to 5%, and that's right in line with MedSurge, which is a 4% to 5% market pretty tried-and-true market out there in diversified medtech, and we've got good momentum and we've got a lot of opportunity to improve our growth rate to hit that, particularly around our growth drivers and negative pressure wound therapy, IV site management, and sterilization assurance. We can talk about those if you want to get into those, but we've got three really strong growth drivers that are going to drive most of the growth in MedSurg. I'll just touch on HIS quickly and then hand it to Kareem, who's with us here on the dental side. For HIS, we think this is a great business, software business with a really strong moat in revenue cycle management. We do have one challenged area in clinician productivity solutions that's been declining double digits, and we think it will continue to do that. The good news is becoming a smaller and smaller piece of our business as we grow revenue cycle management. So we're actually the closest to our market growth rates already in HIS in that revenue cycle management. If you take CPS out, it's already close to market growth rates. So one of the reasons we have Kareem here today, I think, is helping investors understand why we think we have the ability for our dental business to grow mid-single digits, and why we think the dental market will get back to a 3% to 5% market growth rate. But Karim, it's probably good to hear.

So I can speak about that for sure. So again, my name is Karim Mansour, leading dental solution, and happy to be here. Thank you for the invitation. So dental has obviously been a challenging market over the last few quarters. Reason for that level of low growth in the market is is as you see economic pressure, it does impact consumer confidence. It's a reality in the dental market. Important caveat to share with everybody is that it does impact furthermore elective dentistry, think about aesthetics, that it does impact essential dentistry. So that's something to keep in mind. And I would say also that as it put pressure on dental clinic revenue, Also, ability and willingness for dentists and orthodontists to invest in capital, in equipment, is also under pressure. So that is hard to say when the market will recover. But that being said, there are trends and dynamics in this market that are no different from any medtech industry. If you think about aging population as people get older, I mean, dental services will be a key requirement, and they will repeat over time. Another reason is that the rising demand for dental services is a reality why all of us, as much as healthcare authorities and government around the world, do feel the need to better take care of dentistry as it does impact overall health. And so we see even incentives around the world starting popping up, more coverage towards dental care. And last but not least, we see definitely significant technology advancement in this market. And those dentists and orthodontists are looking for those efficient solutions. So all in all, even if it's hard to say by when the market will recover, the 3% to 5% over time will be there, and we are confident that it's going to rebound.

And I think it's probably worth going into dental in a little bit more detail. Yeah. We have you here. And also, I think as you look at market growth today versus that 4% to 5%, probably one of the biggest issues variances is dental and what that market today probably is closer to flattish. True. And then moving that up to 3% to 5% represents an important driver.

But I think it's important there to also speak a little bit about who we are. I talked about the difference between essential dentistry and elective dentistry. Those are important factors. A significant portion of what we do is towards tooth restoration. much more biased to essential care. So as we keep and we made co-restorative the growth driver number one for dental. We have some leadership position, but there is much more that we can do. And so as we think about this one, this is our level of confidence in being in the lower range of the three to five. For sure, we are extremely confident about getting to the three. And as the market rebounds, we'll get the full leverage of that growth. Okay.

And I think your bid is roughly 80-20 essential care. dentistry, and then 20%.

One way to say it is as we shared during investor day, if you were to look at the pie chart, a significant portion of what we do is tooth restoration, co-restorative. You're right. Okay. And more biased, essentially.

Yeah, okay. I want to get into the five key growth drivers, but maybe we can sort of cover off just some of the dynamics that I think are specific to 2025. You started the year at a little over 4% organic growth rate. you talked about, I think, relatively similar expectations for Q2 and then a deceleration in the back half of the year. And if I remember correctly, one of the factors influencing the better performance in Q1 was higher inventory in the channels in advance of an ERP changeover, which I think is the second time you've done this, right? You did that right before. You did, I think, the third quarter of 23. There was a dynamic there as well before you did the cutover. So maybe just update us First, help us understand why, if that was just channel fill in Q1, you wouldn't see the deceleration in Q2.

Yeah. I'm glad you brought that one up as well, David. We've got a few questions throughout the day on ERP as well. So maybe just a quick update on ERP and then can talk about some of the dynamics in the quarter. So we've given a rule of thumb when doing an ERP implementation that there's a checkpoint at three days, three weeks, and three months. And we gave the three-day checkup at the last conference we were at a few weeks ago. It's really a week and a half that things were going well, not perfect, but well, and we're making good progress there. And the good news is we have the same update here. the ERP implementation and cutover continues to go well. Our DC cutovers continue to be planned and continue to be on track. So all on track, all good, of course not perfect. I want to say thank you to our teams out there, our hypercare teams who are working through the challenges, sometimes working with our customers through the night and days and making sure that wherever we do see some challenges, they're helping work through it. But at this point, we don't see any significant challenges to the ERP impacting our quarter. So that's great news, getting through three days and three weeks, and then we'll continue to progress through three months where we start to get a real sense for where things settle in. But couldn't be happier with the performance on ERP right now. And so with that, what we talked about in the first quarter was what we knew could happen but ended up being even a little larger than we expected. was we saw some volume increases in Q1 that were really timing-related. And some of the bigger impacts were that were related to the ERP and DC cutover, where we had customers buying volume ahead. And we saw this mostly in the categories where we sell through distribution, where the distributor stocked up, and more the higher-flow, higher-in-demand disposable products, a lot in our IPSS business. And so they did that. We also saw some customers buying ahead of when we've talked to them about skew reductions or skew rationalization. So where we talked about eliminating skews down the road, they went ahead and started stocking up. And so we've talked about the timing of that. We think we'll give, actually just to put numbers to it, as you mentioned, we grew 4.3% in the quarter, but we normalized for those volume trends, and we think the normalized growth rate was closer to 2.5% in Q1, which is still a great growth rate. still more than double what we did in 2024, and an improvement, importantly, across all four segments. And all volume-driven, unlike previous years. Almost all volume-driven, yeah, very small pricing in the quarter. And so you could say almost volume-driven across four segments, which for us is a really great sign that all four segments continuing to improve. even on a normalized basis. And then we said, well, when will the timing start to come back? And we said at some time between Q2 and Q4, we think it's this year with the majority or mostly in Q3. Of course, we don't know exactly when that's going to happen. The reason we expect that is talking to our customers and distributors and expectation for them to bleed those inventories back down. And that's really because we're going through the ERP implementation here in Q2. and we get to the other side of it, it would make sense to start bleeding some of those inventories down.

So right now, on the ERP cutover, people can still buy through the old, you can still transact on the old ERP system?

No, we're cutting over in Europe. In Europe. This is where we're cutting over the regional ERPs, and through distribution centers, we're progressing through the ERP implementation now, and we're flowing orders through the new ERP system. Okay, so where would the outside inventory buys come from? this quarter? So for the ERPs and distribution centers, be in Europe, and for the skew rationalization in the U.S. But if you've cut over... And some of the outside the U.S. regions.

I get the Q1 piece, like pre the cutover, but once you've cut over, why would you see continued pre-buying?

Oh, I don't think we will, meaning we'll give back the inventory in Q3, meaning customers will order less. In Q3, in Q2. It just depends when they slow down the orders and burn down the inventory that they have. Okay. So you've not seen a slowdown in orders?

No, and we're just cutting over the ERPs now, so I wouldn't expect it. You wouldn't expect it. So customers were able to order under the old ERP in April, for example? Yeah, through April, exactly. And as we cut over in May, now they're ordering through the new system. Okay. So the underlying growth rate in some ways will sort of surface in the back half of the year.

You're disclosing it, but yes. Yeah, our anticipation is that that'll happen. Now, could some customer, you know, ERP goes really well here in May and June, and they slow down their orders at the end of June, that's possible, but we're not expecting that at this point.

Okay, and our customer is carrying, like, really disproportionate levels of inventory, or is it possible they just keep buying on this run rate?

Yeah, it... In some cases, it's much easier to read because they're telling us how much they're buying, and we can see it in the distributor order patterns. Some of it is more quantitative where we're assessing it across, you know, we can't talk to everybody, so we're assessing it across multiple distributors. So it is somewhat of an analysis versus specific.

Okay. I want to go to one sort of other kind of very short-term question and then go back to the growth drivers tariffs. Yeah. I think within... very short order of your first quarter results. There was a significant update on tariffs, especially as it relates to China. And I know you provided some perspective at the last conference where you gave some incremental updates. So maybe here we are. It's almost like there are no tariffs relative to what we thought six weeks ago. What framework should people use to recalibrate their expectations around tariffs now?

I wish there was a framework for calculating tariffs at this point. It's certainly a fluid situation. As you mentioned, it changes almost daily and weekly here. So the approach we're taking is we're going to update on a quarterly basis. Just given the ups and downs and the fluidity of it, we're not going to update inch or quarter other than, as you said, the ink was almost just dry on Q1. And at the time, China was with the U.S. 125% and 145%. Of course, our assumptions for Europe were at the lower end, 10%. And so since then, there's at least been a 90-day pause on the China side of things with significantly lower percentages, but the European... percentages are higher and so when you put that together what we said at the last conference is there's potential for earnings per share upside for us but to keep in mind it's not a one-for-one drop through on the 80 to 100 million that we put out there because some of the mitigation strategies go away if don't come through the tariffs but we do feel like we've had a real strong start to the year and the good business performance that we think could drive better performance for us if it weren't for tariffs and And so we're going to continue to monitor it. We'll update quantitatively once a quarter to try to just manage through the ever-changing tariff landscape here.

Okay, great.

The good news is I would just say it does look better than it did in Q1.

Okay, excellent. Let's go back to the five growth drivers. I want to make sure we leave a little bit of time for P&L and M&A. So maybe just sort of tick through them and give us kind of the latest updates.

Yeah, sounds good. Why don't I hit MedSurge and HIS quickly, and we've got Kareem here who can talk about that before us. So as you said, five growth drivers, and it's more than just picking growth drivers to grow the business. This is part of our overarching strategy to really optimize where we're going to put resources and our capital resource planning and where we want to grow and invest in the business. So the idea was to come to settle on what are the growth drivers, and again, it would get over 80% of the growth behind this. It's not that we can't change growth drivers over time. In the past, we have. We've added growth drivers. We've taken some out. But these are the areas that we want to grow the business. So if you want to understand and if you want to try to decide if you think we're going to get to 4.5%, 4%, 5% growth rate or better over time, it's in these five areas. And so in med-surg, I mentioned negative pressure wound therapy. which is a business that we are the rightful owners of. We have the majority of the share in traditional, and then the faster-growing, double-digit-growing part of the market, which is the single-user disposable, we're the largest. We have the most revenue in that area as well. We're growing double digits there too, but we also have a competitor in that space. The majority of their business is on the disposable single-use side of it. But we think this is a great market, even the traditional side. So single-use, disposable, it's growing great. There's a great lower acuity setting opportunity for that market. Traditional negative pressure wound therapy we also think is a great opportunity. And because we're the majority of the market, it's really on us to develop that market. It's a significantly under-penetrated market. It is unfortunate how many people have problems with wounds today and hard to treat wounds. And it's really because the market hasn't evolved with our technology and we think that's part of the just lack of investment in developing that market and so we're going to double down here behind our growth drivers we're going to shift a lot of our resources into all five of these but in particular negative pressure wound therapy we think with all the clinical data out there that we will be able to develop this market and get it growing faster so it's not a share take opportunity in traditional it's more us developing and getting the penetration and getting more of these hard-to-heal wounds treated with our technology. If we move then to IPSS, we've got two growth drivers there, one around sterilization assurance, and this is a unique area within MedTech focused on the sterilization department. We've actually had two recent new product launches, call them singles, but it's nice to see innovation coming to this area. We think, again, we're a natural owner in this space, and there's so much opportunity We've been talking to key opinion leaders in this area, and when you think about hospital-acquired infections and where they originate, a lot of it is in the sterility of the products. And we are the majority leader and a natural owner to win in that space. So we're pretty excited about the growth driver there. And then IV therapy as well. So we've got an opportunity with the products that we have, with Tegaderm, with the brand name, and our new product, CHG, which is a price uplift opportunity, a better performance of the product. So we've got some innovation behind that one. So we're pretty excited what we have in MedSurge. And then for HIS, we've decided to double down again on revenue cycle management, the area where we have significant moat, significant capability. And there it's really autonomous coding. It's an opportunity to leverage some of the newer technologies. So that team has been building talent and building partnerships with AI, machine learning companies to try to augment what we do today and have such a significant moat in. So we're pretty excited about what we can do with that growth driver as well.

And then, Karim, I'll turn it to you. In dental, we've made co-restorative our growth drivers. Again, back to the domain knowledge and science we have in tooth restoration. And not only because it's a more resilient portion of the markets, but there is significant opportunity ahead of us. And so as we start from a position of strength with significant brand equity, we have the right commercial reach. I mean, more than 60 countries, we have presence in more than 60 countries. And we've started the journey on beefing up our commercial engine, bringing more efficiency in the way we commercialize our product. What needed to happen was bringing new product to market. We have what it takes to bring new product to market. We just needed new product to bring to market. As I said during Investor Day, unfortunately, in 2022 and 2023, we had no new product to bring to market. Believe it or not, despite the level of investment and the science we had, We are not efficient at bringing new products to market. In 2024, at the end of 2024, as I said, during Investor Day again, we brought four new products to market, and we have now a very significant pipeline that we feel extremely strong that we're going to win in this space. One last update on what I shared during Investor Day. We spoke about a clean, pro-clear, a new varnish, feel-right treatment. Happy to report that nine months after the launch, we became number one market share in the U.S. So kind of a proof point of If we are on point with the right level of innovation, we can win because we have access and we have credibility in the eyes of dentists and orthodontists.

Excellent. It's a good opportunity for the business senior president here to ask this question. Our R&D spending has been pretty flattish at $145 million a quarter. It's actually a pretty decent-sized number as a percentage. of sales. I already get him without you. What would you say about the level of R&D investment? You know what?

The way I would answer to this is I don't think we can complain about the level of R&D investment we have in Dental Solutions. It's the use of it. And so now that we became clear about what is our focus portfolio strategy and that we also brought rigor and discipline into the R&D processes, there was a some kind of a lot of ways despite the talent we had and we needed to challenge that talent through to the right project so we we stopped some key projects we maintain some and we are bringing additional new projects and so making sure that this this efficiency in the r d is is back and pvi will be the way to measure that in the future it was it is it is as you can imagine with no new product launch it's very low as we speak but but this is the focus it's more channeling the organization and our investment towards the growth drivers and making sure we take good decisions there.

And then maybe on the SG&A side, we've seen pretty progressive increases in SG&A, which would be fully expected as you transition to being an independent public company. Are all of those investments behind you in terms of stand-up costs, and are we at a point now where we can – when can you start just the kind of normal SG&A leverage?

Yeah, that's right, David. We think we've made the critical investments. And, you know, as you mentioned, we've made investments as part of standing up as a public company. Clearly, you have to have a board and CEO and leadership team and all those types of investments. But beyond that, we made investments in cybersecurity and quality and compliance and control areas that, you know, we just felt were necessary as a business. And so we have annualized those. And so those are now in our P&L. And Obviously, a lot of work going on in the TSA's side of things as well, so we've had to ramp up a lot of resources to manage through that. But having said that, I think we're in a position now where we've leveled off with the investment side of things. from a stand-up public company. From a growth side of things, that's what we're going to be balancing over time with our margin expansion. So we've got a lot of efficiency projects that we're teeing up. Some we're executing, some we're keeping in queue, just because we've got a lot going on across the business right now with the separation and the divestiture. But we do think we've got good opportunities to drive leverage. Paul Harrington, our leader of supply chain, talked about the cost and cog side of things, where we think we've got significant opportunity all through the COGS lines. Our segment leaders are working on their segment mix strategies and pricing excellence strategies, but then focused on your question down in SG&A, we're working on projects to think about how we can get more efficient over time. And part of that is around the stranded cost work that we're doing as part of the P&F divestiture, which are always a challenge whenever you're divesting a business. So we do think we're queuing up a good amount of levers to start to drive efficiencies here. But we just have to, we actually have a whole project team. We've hired a new leadership team member actually managing the transition management office for us given that we've got so many major projects happening at the same time. So we'll be queuing those up. But I did just want to touch on that balance between investing for growth and operating margin expansion. The first lever of our growth, revenue growth improvement is around commercial productivity. And we're working off the investment that we have today, but if we see opportunities to further invest for commercial support of our growth, we'll do that. But we're going to balance that with our operating margin expansion here over time.

And as you think about just growth rates at SG&A, if you assume flathead count, shouldn't SG&A grow at 2% to 3% a year, just merit increase alone and other natural inflation?

Yeah, that might be a... It might be a reasonable estimate just as you think about merit. It's a different number depending on the countries around the world, but it's a reasonable estimate. If you weren't driving efficiencies, you would expect to see something like that.

Okay, so driving efficiencies is what allows you to get SG&A leverage even with the top line growth rate in this 2.5 to 3.5. Top line growth rate hopefully is the biggest driver for us.

Okay. You know, it's an opportunity for us to not just drive leverage but also more volume, and that volume helps the cog side of things as well.

So is the right way to think about it that the solventum way restructuring that you've talked about as well as the efficiencies, that helps drive SG&A leverage sort of in this transitionary period to the top line, when you get the top line back to 4% to 5% top line growth, you get more natural scale leverage? Like, is that the right way to think about the SG&A leverage direction?

Yeah, it certainly helps. What I would say the primary objective of Solventum Way, the origination of the project, was to think about What is the new structure that we want? And we've got a new culture that we're deploying. We want to be able to move faster. We want to be able to make decisions quicker. We want to drive authority to make those decisions down further into the business and have the businesses really accountable to those decisions so we can move quicker. What we inherited was a more command and control type structure where a lot of most decisions were bubbled up to the top of the organization. And so we're trying to reverse that to pick up the speed and pick up the accountability in the organization So as we do that we needed a new structure and so we thought through that structure as a part of it became some efficiencies and we saw opportunities to drive efficiency. I guess on the surface it looks like a restructuring for efficiency but it was really to get the structure that we wanted and think about as a first wave because we're still learning and we're still going to iterate and improve our structure over time but that was one to get us both the right structure as well as efficiencies and In our first investor day, we talked about low 20s operating margins, and that's where we wanted the business to be. That was kind of the new reset bar. And so the restructuring also helped us stay in that low 20s range and offset some of the investments that we were making.

And based on kind of where we are with tariffs, let's see what happens. It would seem like within the 23% to 25% that you've communicated, even if tariffs were to stay where they are, there's enough levers in the business to stay in that range.

Yeah, you know, we're not going to commit to numbers at this point, but what I would say is we're very committed to the 23% to 25% operating margin. Tariffs obviously can change a lot over time, but we do have, we think, significant levers. I mentioned in the COGS line, the supply chain team, even though they're very busy with the separation and they're very busy with the P&F divestiture, they're already teeing up a queue of projects, you know, behind... supplier management. We have way too many suppliers. It's really interesting, actually, when you get into the business that, you know, as mature as the business was, our team still feel there's like a lot of opportunity to get after, especially in the supplier consolidation areas. We've significantly increased the resources behind our lean or continuous improvement areas and OPEX throughout the business. In fact, we focused in manufacturing supply chain first. We're starting to bring those lean tools and processes to the rest of the organization. And then network optimization, too. We think we've got a lot of opportunity there. This is how we move product between manufacturing plants and how we leverage our distribution center. So we are building up a decent queue of levers, so we'll see where tariffs shake out over time, but to your point, we do see a lot of opportunity to drive leverage. Again, the key for us, and one of the platforms for us to push for more efficiencies is we want to invest more for growth over time. And so, again, we want to achieve operating margin expansion as we work through our long-range plan, but we want to be able to invest more for growth as well.

And maybe last, I know we only have a little over a minute left here to touch on M&A, but it clearly is going to be part of the story. Do we have to wait for the sequencing of P&S Investor to be complete, you to complete a debt tender or then for there to be M&A, or what can happen in the interim here?

Yeah, that's the plan. However, if we see something small that we want to execute on and the teams are ramping up, Kareem could talk about the corporate-led strategy team that's really implementing processes at each of our segments to build a funnel of opportunities for us. And we do think this is a really exciting lever for us. You know, the playbook that a lot of us in the leadership team have deployed before and a lot of others in MedTech deploy is I think what's uniquely exciting about our business is there just has not been a lot of acquisitions in this business over the years. So there's a lot of tuck-in opportunities across our product categories that we could benefit from the faster growing parts of these markets if those right acquisition opportunities were out there. So we're pretty excited about that. It could start as early as end of 25. We're really thinking about it starting in earnest in 2026. which would be on the other side of the P&F closure, which we are expecting by the end of this year.

Excellent. Well, I think with that, we are just about at time. Kareem and Wade, thank you very much for your participation. I look forward to getting the next update, I guess, in early August. You bet. Thank you for having us.

Thank you. Thanks, everybody.