Q3 2023 Bausch + Lomb Corp Earnings Call
[music].
Good morning, and welcome to the Bausch and Lomb third quarter 2023 earnings call.
Participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the stocky followed by Zia right. After.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to.
To withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to George got Koski, Vice President of Investor Relations and business insights. Please go ahead.
Thank you good morning, everyone and welcome to our third quarter 2023 financial results Conference call participating on today's call are chairman and Chief Executive Officer, Mr. Brent Saunders and Chief Financial Officer, Mr. Sam Elder Suki.
In addition to this live webcast a copy of today's slide presentation and a replay of this conference call will be available on our website under the Investor Relations section.
Before we begin I would like to remind you that our presentation. Today contains forward looking information we would ask that you take a moment to read the forward looking legend at the beginning of our presentation as it contains important information.
This presentation contains non-GAAP financial measures and ratios for more information about these measures and ratios. Please refer to slide one of the presentation.
non-GAAP reconciliations can be found in the appendix to the presentation posted on our website.
The financial guidance in this presentation is effective as of today only it is our policy to generally not update guidance until the following quarter unless required by law and not to update or affirm guidance other than through broadly disseminated public disclosure.
With that it's my pleasure to turn the call over to Brian.
Thank you George and thank you everyone for joining us today.
I'll start by providing highlights from the quarter.
Sam does a deeper dive on financials and updated guidance I'll share how it will continue to drive profitable growth for the remainder of 2023 and beyond.
I'm going to start with three things that define the quarter, which we expect will be familiar themes going forward.
We are growing revenue at or above market. Thanks to the strength of established and emerging brands that cover the entire spectrum of IHOP.
We're excited about our trajectory as we enter 2024, which we expect will be one of the most active launch years and the 170 year history of our company.
Second we're equipping ourselves work with the tools training and the product portfolio, they need to turn our market leadership potential into reality.
Look no further than our powerhouse dry eye disease portfolio and the outsized opportunity in that area.
Bringing my vote to market and reinvigorating desired her bread comes at a crucial time as 96% of estimated U S population suffering from dry eye disease is not treated with a prescription product.
Finally, we're focused on addressing the supply chain challenges we faced.
We're nearing the finish line on upgrades to our Lynchburg distribution facility and our new chief supply chain and operations officer is establishing a multiyear blueprint returning our scale and global manufacturing footprint into a competitive advantage.
It was made clear when I introduced the roadmap to accelerate growth on my first earnings call. This met.
This is a multiyear journey that will fundamentally change how we operate.
Rewiring the company is now easy lift, but I'm proud of our ongoing progress in phase one.
Our leadership team, which has been almost entirely remade since my arrival earlier this year has.
Is largely completed the process of flattening their respective organization to improve efficiency.
But rethinking how we work goes much deeper for making life easier for our sales representatives to strategically investing in digital capabilities.
We're maximizing our potential by focusing on what matters most and.
And critically we have buying from approximately 13000 colleagues around the world, who want to see Bausch and lomb back on top.
While early in the process changing how we operate is already helping improve our performance we.
We had another quarter of solid revenue growth up 8% year over year on a constant currency basis.
I don't know.
That growth is being driven across key franchises, which speaks to our holistic strength.
Performance from consumer brands like Loma Fi continues to exceed expectations, while premium I O L offerings and surgical represents a high growth high margin opportunity.
Promoted pharmaceutical products like by Solta, which saw revenue growth of 54% year over year on a constant currency basis helped offset issues with contract manufacturers for two mature non promoted products.
Dynamics in the fourth quarter and beyond will obviously change with the focus on my boat and <unk>.
Before turning things over to Stan I'd like to acknowledge his teams work and securing favorable financing terms for the zydeco transaction one of the biggest in our history.
Our focus in his in particular now turns to deleverage it Sam.
Operator: [inaudible] We would ask that you take a moment to read the forward-looking legend at the beginning of our presentation as it contains important information. This presentation contains non-gap financial measures and ratios. For more information about these measures and ratios, please refer to slide one of the presentations. Non-Gap reconciliation can be found in the appendix to the presentation posted on our website.
Thank you Brent and good morning, everyone before we begin as I noted in our last earnings call. Most of my comments today will be focused on growth expressed on a constant currency basis.
Turning now to our financial results on slide seven.
In the third quarter, we saw strong revenue growth across our key product franchises.
Company revenue 1.007 billion for the quarter reflects growth of 8% on a constant currency basis, and 7% on a reported basis compared to the prior year.
Market demand remains strong and our strategic focus continues to be on investing in the business to drive growth.
We're committed to executing this strategy as we look forward to launching more new products in 2023, and 'twenty 'twenty four.
In the quarter.
We achieved two major milestones with the launch of Michael and the closing of the <unk> acquisition.
It is still early.
Leave we have a significant opportunity with these products.
Which combined with our OTT offering gives us a leading position in the dry eye disease category.
Well, we have mid cause progress in the quarter and market demand remains healthy we fully recognize there's more work to be done.
Supply remains a work in progress as I will discuss further we are implementing mitigating steps and have seen improvements, but it will take time to reach a point, where we are fully confident we can supply products to meet our business demand when a consistent basis.
Volatility in our currency mix, including the strength of the U S. Dollar led to foreign currency headwinds of approximately $10 million to revenue.
And approximately 14 million to adjusted EBITDA in the third quarter.
While the currency headwinds are not as sizable as we saw last year.
The impact on our results continued to be driven by our geographic footprint and currency mix.
Our China business was down 1% on a constant currency basis relative to a strong comp in the prior year quarter.
Operator: Finally, the financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter unless required by law and not to update or affirm guidance other than through broadly disseminated public disclosure.
As a reminder, the market in China saw a recovery in the second half of 2022 after the shutdown in last year's second quarter.
As we lap the 2022 stop N go progression, we remain confident that our business in China were returned to stable and consistent growth over time.
Brenton Saunders: With that, it's my pleasure to turn the call over to Brent. Thank you George and thank you everyone for joining us. I'll start by providing highlights from the quarter and after Sam does a deeper dive on financials and updates guidance. I'll share how we'll continue to drive profitable growth for the remainder of 2023 and beyond. I'm going to start with three things that define the quarter which we expect will be familiar themes going forward.
Notably year to date constant currency growth in China has been 6%.
Now, let's discuss the results in each of our segments.
Vision care revenue of 648 million increased by 11% on a constant currency basis, driven by growth in both the consumer and contact lens portfolios.
Consumer business grew by 14% on a constant currency basis led by our <unk> eye vitamin and arts elect franchises.
Brenton Saunders: First, we are growing revenue at or above market thanks to the strength of established and emerging brands that cover the entire spectrum of IHO. We're excited about our trajectory as we enter 2024, which we expect will be one of the most active launchers in the 170 year history of our company. Second, we're equipping ourselves with the tools training and the product portfolio they need to turn our market leadership potential into reality.
<unk> revenue grew by 47% globally compared to the prior year.
And achieved a record $44 million of revenue in the third quarter.
<unk> has continued its strong momentum in the U S where it has a leading market share of approximately 50% and has built substantial brand equity.
In the quarter, we launched the luma, if I I illumina issues to leverage the brand platform and expand into the eye beauty category.
Revenue from our eye vitamin franchise preservation occupied grew by 6% on a constant currency basis.
Brenton Saunders: Look no further than our powerhouse dry eye disease portfolio and the outsized opportunity in that area. Bringing my vote to market and reinvigorating the side of brand comes at a crucial time as 96% of estimated US population suffering from dry eye disease is not treated with a prescription product. Finally, we're focused on addressing the supply chain challenges we faced. We're nearing the finish line on upgrades toward Lynchburg distribution facility. And our new chief supply chain and operations officer is establishing a multi year blueprint for turning our scale on global manufacturing footprint into a competitive advantage.
Present vision continues to be the market leader with 90% plus market share in the U S.
The launch of <unk> has helped expand the franchise and preservation and continues to demonstrate the ability to drive growth in the AMD market.
In our international consumer business.
Arthur lack has continued to perform well and grew by 11% on a constant currency basis in the quarter.
<unk> is one of the brands are good humoured dry eye portfolio.
The dry eye portfolio is continuing to expand and reached approximately $78 million of revenue in the quarter with 9% organic growth.
Finally, our lens care portfolio grew 8% on a constant currency basis.
We have continued to see strong demand in our consumer business. Our strategy is to maintain focus on our key franchises and continue investing in product launches.
Brenton Saunders: As made clear when I introduced the roadmap to accelerate growth on my first earnings call this May, this is a multi year journey that will fundamentally change how we operate. Rewiring the company is no easy left, but I'm proud of our ongoing progress in phase one. Our leadership team, which has been almost entirely remade since my arrival earlier this year has largely completed the process of flattening the respective organization to improve efficiency.
In the lens business, we saw 5% constant currency growth in the third quarter.
We reported revenue from our Davis I had lenders grew by 79% in the quarter.
We recently extended the <unk> family with the launch of the multifocal in the U S.
We've also recently rolled out the day these are high in China.
We continue to see strong demand in the daily Si Hy category.
As Brent discussed revenue in the <unk> portfolio was negatively impacted by disruptions at our Lynchburg distribution facility.
Brenton Saunders: But rethinking how we work goes much deeper from making life easier for our sales representatives to strategically investing in digital capabilities. We're maximizing our potential by focusing on what matters most. And critically, we have buy in from approximately 13,000 colleagues around the world who want to see Balschalum back on top. Well, early in the process, changing how we operate is already helping improve our performance. We had another quarter of solid revenue growth of 8% year-to-year on a constant currency base.
We have made progress in the quarter and we expect to reach an optimized level of order processing at Lynchburg in Q1, 'twenty 'twenty four.
Excluding the impact of the disruptions.
Global <unk> constant currency revenue growth was 7% in the quarter on.
On a constant currency basis, our value oriented daily as brand soft lines grew by 9% in the quarter.
<unk> was down 3% and ultra is up 10%.
Moving now to the surgical segment.
Third quarter revenue was $185 million, an increase of 6% on a constant currency basis.
Brenton Saunders: Thaq Growth is being driven across key franchises, which speaks to our holistic strength. Performance from consumer brands like Lumify continues to exceed expectations, while premium IOL offerings and surgical represent a high growth, high margin opportunity. Promoted pharmaceutical products like Bissolta, which saw revenue growth at 54% year-over-year on a constant currency basis, health offset issues with contract manufacturers for two mature, non-promoted products. Dynamics in the fourth quarter and beyond will obviously change with the focus on mybo and Zyder.
Our consumables portfolio, our largest category in the surgical business grew by 8% on a constant currency basis, mainly driven by cataract packs.
Implantables declined by 2% on a constant currency basis.
Our premium I O portfolio continues to expand and was up 33% in constant currency in the quarter.
As I mentioned last quarter, our standard <unk> continues to be impacted by the product hold issued by our partner who did this year, which offset the strong growth in our premium eyewear portfolio in the third quarter.
Excluding the impact of ICU won the Implantables portfolio grew 10% in constant currency.
Brenton Saunders: Before turning things over to Sam, I'd like to acknowledge his team's work in securing favorable finance in terms for the Zyder transaction, one of the biggest in our history. Our focus and his in particular now turns to deleverage.
We anticipate the ICU want to impact the remainder of the year.
We're focused on expanding our implantables portfolio and have recently announced the launch of our inverter aspire lines we.
We expect to invest up platform to continues to expand with future launches of them Vista, NV trifocal and to invest up ease off lenses.
Sam: Sam, thank you Brent and good morning everyone. Before we begin, as I noted in our last earnings call, most of my comments today will be focused on growth expressed on a constant currency basis.
Our surgical business has a number of new product launches scheduled 2020 for especially in the premium end of the market.
Sam: Turning now to our financial results on slide 7. In the third quarter, we saw strong revenue growth across our key product franchises. Total company revenue 1.007 billion for the quarter reflects growth of 8% on a constant currency basis and 7% on a reported basis compared to the prior year. Market demand remains strong and our strategic focus continues to be on investing in the business to drive growth. We're committed to executing the strategy as we look forward to launching more new products in 2023 and 2024.
We intend to invest behind these launches as we see this as an important area to drive future margin expansion.
Revenue from equipment was up 10% versus Q3 22 on a constant currency basis.
Many driven by solar system sales.
We continue to see strong market demand, our surgical business and we're taking steps to improve our ability to consistently supply products to our customers.
We're implementing various mitigating measures, including strategic spot buying of components.
In securing multiple supply sources.
Sam: In the quarter, we achieved two major milestones with the launch of mybo and the closing of the Zyder acquisition. It is still early, but we believe we have a significant opportunity with these products, which combined with our OTC offering, give us a leading position in the dry eye disease category. While we have made solid progress in the quarter and market demand remains healthy, we fully recognize there's more work to be done.
As we progress through the remainder of the year, we anticipate that supply will remain volatile and that supply constraints will continue to lead to a buildup of higher cost of inventory and pressure on margins.
Lastly revenue in the pharma segment was 174 million, which represents constant currency growth of 1%.
But he's also grew by 54% in the quarter on a constant currency basis with your Xs in the U S up 19%.
Sam: Supply remains are working progress. As I will discuss further, we're implementing mitigating steps and have seen improvements, but it will take time to reach a point where we are fully confident we can supply products to meet our business demand on a consistent basis. Val 13, our currency mix, including the strength of the US dollar, led to foreign currency headwinds of approximately 10 million to revenue, and approximately 14 million to adjust the EBITDA in the third order.
We also saw growth in our international pharma business offset by supply impact on non promoted but your brands in the U S.
We are pleased to have recently launched <unk>.
The early performance and feedback from eye care professionals have been strong, which Brent will talk about more.
In the quarter, we made investments in the micro launch and we're committed to continuing to invest over the next 18 to 24 months to position Michael for success.
Our acquisition of a desire to close at the end of September and we're excited to bring zebra and micro together in one portfolio.
Sam: While the currency headwinds are not as sizable as we saw last year, the impact on our results continue to be driven by our geographic footprint and currency mix. Our China business was down 1% on a constant currency basis relative to strong come in the prior year of order. As I reminder, the market in China saw a recovery in the second half of 2022 after the shutdown in last year's second quarter. As we left the 2022 stop and go progression, we remain confident our business in China will return to stable and consistent growth over time. Notably, year-to-date Conflict currency growth in China has been 6%.
This closing date was earlier than our initial estimate for the end of the year.
We expect the remainder of the year to be a transition period for <unk> as we continue our efforts to successfully integrated into our portfolio.
We believe our investment in the relaunch of <unk> is an important step in unlocking <unk> full potential.
The acquisition of Zeigler as transformative to our pharma business and data and my vote together provide us with the leadership in dry eye disease.
Now that we have covered revenues for each of the segments. Let me walk through some of the key non-GAAP line items on slide eight.
Sam: Now let's discuss the results in each of our segments. Vision care revenue of 648 million increased by 11% on a Conflict currency basis, driven by growth in both the consumer and contact lens portfolios. The consumer business grew by 14% on a Conflict currency basis, led by our Lumofi, I-Vitamin, and Art Select franchises. Lumofi revenue grew by 47% globally compared to the prior year, and achieved a record 44 million of revenue in the third quarter.
Adjusted gross margin for the quarter was 61, 3%, which was up 80 basis points compared to Q3 2022.
The gross margin improvement reflects a mix of factors.
Product mix was favorable driven by higher growth in our consumer business. This.
This is bounds by pressure on the gross margin driven by the higher inventory costs in our surgical business.
In the third quarter, we invested 81 million R&D for approximately 8% of revenue.
Sam: Lumofi has continued its strong momentum in the US, where it has a leading market share of approximately 50% and has built substantial brand equity. In the quarter, we launched a Lumofi I-O-Lumination to leverage the brand platform and expand into the I-Budy category. Revenue from our I-Vitamin franchise, Preservation and Occupy, grew by 6% on a Conflict currency basis. Preservation continues to be the market leader with 90% plus market share in the US.
Our spend in the third quarter reflects our investments behind key products, including the micro lunch.
We're committed to investing in our product launches in the remainder of this year and in 2024.
Third quarter, adjusted EBITDA was $187 million.
It was negatively impacted by currency headwinds of approximately $14 million in Lynchburg related disruptions of $7 billion <unk>.
Excluding the impact of currency adjusted EBITDA grew 7% compared to last year.
Sam: The launch of Occupy has helped expand the franchise, and Preservation continues to demonstrate that the ability to drive growth in the AMD market. In our international consumer business, Art Select has continued to perform well and grew by 11% on a Conflict currency basis in the quarter. Art Select is one of the brands of our consumer drive I-Perfolio. The drive I-Perfolio is continuing to expand and reach approximately 78 million of revenue in the quarter with 9% organic growth.
Net interest expense run rate for the quarter was approximately $56 million, excluding a onetime upfront financing commitment cost of $16 million related to the <unk> acquisition.
The adjusted tax rate in the telco was 6% which is in line with our expectation for the full year 2023.
Adjusted EPS for the quarter was 22 <unk>.
Adjusted cash flow from operations was 66 million in the third quarter and Capex was $33 million.
Sam: Finally, our lens care portfolio grew 8% on a Conflict currency basis. We have continued to see strong demand in our consumer business, our strategies to maintain focus on our key franchises and continue investing in product launches. In the lens business, we saw 5% constant currency growth in the third quarter. The quarter revenue from our Dead East I-Hide lens grew by 79% in the quarter. We recently expanded the Dead East I-Hide family with the launch of the multifocal in the US.
Year to date cash flow from operations include a strategic inventory build of approximately $150 million.
Media related to the surgical business. It also includes an investment in working capital to support new launches and growing sales.
As part of the <unk> transaction.
We raised $1 9 billion financing at the end of the quarter.
This consists of a 500 million term loan and $1 4 billion unsecured notes.
<unk> is a highly cash generative asset and we believe that we have a path to delevering over the next 24 months.
Sam: We've also recently rolled out the Dead East I-Hide in China. We continue to see strong demand in the Dead East I-Hide category. As brand discussed, revenue in the lens portfolio was negatively impacted by disruptions at our Lensberg distribution facility. We have made progress in the quarter and we expect to reach an optimized level of order processing at Lensberg in Q1, 2024. Excluding the impacts of the disruptions, global lens constant currency revenue growth was 7% in the quarter. On a Conflict currency basis, our value-oriented daily brand soft lens grew by 9% in the quarter, by 3% with down 3% and altars up 10%.
Turning now to our 2023 guidance on slide 11.
We're raising our revenue guidance for 2023 to a range of four point of view three 5 billion to $4 085 billion.
This reflects constant currency growth rate of approximately 95% to 10, 5%.
Which represents an increase of 300 basis points from our previous guidance.
Based on current exchange rates, we expect currency headwinds to have a negative impact on revenue of approximately $85 million for the full year.
Which is about 35 million unfavorable from our previous estimate.
Sam: Moving now to the surgical segment, third core revenue was 185 million and increase of 6% on a Conflict currency basis. The consumables portfolio, our largest category in the surgical business grew by 8% on a constant currency basis, mainly driven by cataract tax. Implantables declined by 2% on a constant currency basis. Our premium IOL portfolio continues to expand and was up 33% in constant currency in the quarter. As I mentioned last quarter, our standard ICE1 IOL continues to be impacted by the product hold issues by our partners for this year, which offset the strong growth in our premium IOL portfolio in the third quarter.
In the fourth quarter, we expect direct to generate $80 million to $90 million of revenue.
Our constant currency revenue guidance range of 300 basis points takes into consideration the 225 basis points contribution from <unk>.
With the remainder of the 75 basis points threes or $30 million, reflecting the strong performance in our base business.
We're increasing our adjusted EBITDA guidance for 2023 to a range of $710 million to $760 million.
This includes full year currency headwinds of approximately $55 million, which is about $20 million unfavorable from our previous estimate.
Sam: Error. Excluding the impact of IC-1, the implantables portfolio grew 10% in constant currency. We anticipate IC-1 to impact the remainder of the year. We're focused on expanding our implantables portfolio and have recently announced a launch of our Envita Aspire Lens. We expect the Envita platforms to continue to expand with future launches of the Envita-NV tri-focal and the Envita-Eel Offlenses. Our surgical business has a number of new product launches scheduled on 2024, especially in the premium end of the market.
Offset by the contribution from XI drove approximately $30 million.
While the market demand remains healthy we're bouncing our performance with the investments and launches, including Michael the transition required to integrate it re launched IRA.
And the work in progress in supply chain.
Also our adjusted EBITDA guidance includes the negative impact related to Lynchburg, which has been approximately $20 million year to date.
We expect our 2023 adjusted gross margin to increase by approximately 50 basis points to 65%.
Sam: We intend to invest behind these launches as we see this as an important area to drive future of margin expansion. Review from equipment was up 10% versus Q322 on a constant currency basis, mainly driven by solar system sales. We continue to see strong market demand our surgical business, and we're taking steps to improve our ability to consistently supply products to our customers. We're implementing various mitigating measures, including strategic spot buying of components, and securing multiple supply sources. As we progress through the remainder of the year, we anticipate that supply will remain vital, and that supply constraints will continue to lead to a build-up of higher cost of inventory and pressure on margins.
In terms of the other key assumptions underlying our guidance.
We anticipate the investments R&D to be approximately 8% of revenue.
And interest expense to be approximately $270 million for the full year.
The increase in the interest expense to reflect the recent financing rates of the zebra acquisition.
Our adjusted tax rate is expected to be roughly 6% and full year Capex is approximately $175 million.
As a reminder, keep in mind that the comparability between 2022.
In 2023 results for the full year will be impacted by the May 2022 timing of our IPO.
I recognize that many of you are currently focusing on updating your models for next year looking forward I want to provide some initial considerations for 2024.
Sam: Lastly, revenue in the Farmer segment was 174 million, which represents constant currency growth of 1%. By Zolta grew by 54% the core on a constant currency basis, with TRX is in the U.S, up 19%. We also saw growth in our international farmer business offset by supply impact on non-promoted mature brands in the U.S. We are pleased to have recently launched MIBO. The early performance and feedback from eye care professions have been strong, which Brent will talk about more.
We expect the fundamentals of the eye care market to remain strong and the overall market growth to be about mid single digits. We.
We anticipate 2024 to be one of the most active launch years in our company's history.
We expect to launch products across our entire portfolio, including in high margin fast growing areas of the market.
Sam: In the quarter, we made investments in the MIBO launch, and were committed to continuing to invest over the next 18 to 24 months to position MIBO for success. Our acquisition of Zyder closed at the end of September, and we're excited to bring Zyder and MIBO together in one portfolio. This closing date was earlier than our initial estimate for the end of the year. We expect that in the end of the year to be a transition period for Zyder, as we continue our efforts to successfully integrate it into our portfolio.
We also expect to strengthen our leadership in dry eye disease with the recent launch of Michael and a full year contribution from <unk>.
We're excited about the xyrem market opportunity under our ownership and our holistic approach to dry eye disease treatment.
As we have previously mentioned once we launched we believe zebra has the potential to be a mid single digit growth asset.
We expect to have an opportunity for margin improvement.
Driven by the addition of Zebra and the performance of our base business.
While also recognizing the need to invest in all of our launches including Michael.
As we invest June goods, either re launch period, we expect a zero contribution to margin to increase as we progress throughout the year.
Sam: We believe our investment in the relaunch of Zyder is an important step in unlocking Zyder's full potential. The acquisition of Zyder's transforms are Farmer business, and Zyder and MIBO together provide us with the leadership and dry eye disease.
The relaunch is a key priority and we are encouraged by the recent <unk> trends in the past few weeks.
But we anticipate that it will take some time for us to see the full benefit of our investments.
Sam: Now that we have covered ravages for each of the segments, let me walk through some of the key non-gap line items in Slide 8. I just eGros margin for the core was 61.3%, which was up 80 basis points compared to Q3 2022. The gross margin improvement reflects a mix of factors. Product mix was favorable driven by higher growth in our consumer business. This is balanced by pressure on the gross margin driven by the higher inventory costs in our surgical business.
And our base business, we believe our supply chain will continue to strengthen but we recognize there's more work to be done.
Pressure on margins related to supply challenges and the mitigation efforts I mentioned earlier, such as spot buying will continue to be a factor in the short term.
To be clear our priority will remain to invest in our product launches.
While it's still early my was off to a great start we will monitor the micro performance over the coming months and evaluate the need to accelerate investment to maximize the strong performance trajectory.
Sam: In the third quarter, we invested 81 million R&D for approximately 8% of revenue. Thank you. Our spending in the third quarter reflects our investments behind key products, including the Bible launch. We're committed to investing in our product launches in the remainder of this year and in 2024. Now interest expense run raised for the quarter was approximately 56 million, excluding a one-time upfront financing commitment cost of 60 million related to the Zajar acquisition.
Based on current rates, we estimate currency headwinds to revenue of approximately $100 million in 2024. This.
This is our current estimate and we will continue to monitor and update it as we approach the end of this year.
We expect to elevate our brand per ledger to occur in Q4 of this year.
We estimate relenza to be approximately $15 million revenue.
We don't expect the <unk> to have a material impact on our 2023 results, but we do expect to see the full year impact in 2024.
We anticipate investments in R&D will continue to be a focus as we advance our product pipeline.
New products to market.
Sam: The adjusted tax rate in the third quarter was 6%, which is in line with our expectation for the full year 2023. At just the EPS for the quarter of 22 cents, adjusted cash flow from operations 66 million to third quarter and capex was 33 million. Years to date, cash flow from operations include a strategic inventory built of approximately 150 million, mediated to the surgical business. It also includes an investment in working caps of the support new launches and growing sales.
Our tax rate is expected to be approximately 15%.
As previously mentioned this is in line with our expectation.
It takes into consideration an estimate of the impact of the OECD is pillar two minimum tax rules.
Which are expected to be implemented in certain EU countries and Canada in 2024.
We expect interest expense to increase in 2024 due to incremental debt related to the xyrem financing.
And the higher interest rate environment for the variable rate portion of our debt.
Sam: As part of the Zajar transaction, we raised 1.9 billion financing at the end of the quarter. This consists of a 500 million term loan and 1.4 billion secured notes. Zajar is a highly cash-generative asset, and we believe that we have a path to delivering over the next 24 months.
As we continue the momentum in our current portfolio and launch new products, we have an opportunity to continue to deliver at or above market growth.
And leverage our platform for longer term margin expansion.
And now I'll turn the call back to Brent.
Thanks, Sam I'd like to spend some time talking more about where we are investing to drive growth.
Sam: Turning now to our 2023 guidance on slide 11, we're raising our revenue guidance for 2023 to a range of 4.035 billion to 4.085 billion. This reflects the constant currency growth rate of approximately 9.5% to 10.5%, which represents an increase of 300 basis points from our previous guidance. Based on current exchange rates, we expect currency headwinds to have a negative impact on revenue of approximately 85 million for the full year, which is about 35 million unfavorable from our previous estimate.
Months ago, I described our second quarter as being defined by performance and progress there.
The same holds true for Q3, but I'd like to introduce a third descriptor when it comes to our supply chain.
<unk>.
We have a significant global manufacturing and distribution network that really lives on thousands and thousands of inputs.
No further than surgical where some equipment has more than a thousand components.
With any operation of this size. If you don't have a consistent supply of those components and dependability when it comes to pushing your products out the door.
Sam: In the fourth quarter, we expect Zajar to generate 80 to 90 million of revenue. Our constant currency revenue guidance raised of 300 basis points takes into consideration the 225 basis points contribution from Zajar, with the remainder of the 75 basis points raised for 30 million, reflecting the strong performance in our base business. We're increasing our adjusted EBA diet guidance for 2023 to a range of 710 million to 760 million. This includes full year currency headwinds of approximately 55 million, which is about 20 million unfavorable from our previous estimate, offset by the contribution from Zajar of approximately 30 million.
We're going to realize their full potential.
There is no quick fix when it comes to addressing supply chain issues.
It's not a question of just throwing money at a problem, we've made nearly $900 billion in capital investments toward improving and expanding our facilities over just the past five years.
Instead, we are taking a practical approach to supply chain.
We started by bringing in a respected industry veteran.
<unk> been making complex systems run smoothly for more than 25 years.
He has taken the reins on addressing our Lynchburg issues and is systematically working to improve surgical component availability.
Sam: While the market demand remains healthy, we're bouncing our performance with the investments in launches including my book, the transition required to integrate at re-launch Zajar and the work in progress in supply chain. Also, our adjusted EBA diet guidance includes the negative impact related to Lynchburg, which has been approximately 20 million years. We expect our 2023 adjusted gross margin to increase by approximately 50 basis points to 60.5%. In terms of the other key assumptions underlying our guidance, we anticipate investments R&D to be approximately 8% of revenue and interest expense to be approximately 270 million for the full year.
Bigger picture he is creating a thoughtful and stage game plan for supply chain success that will keep up with demand for new and existing products.
In practical requires patients with the understanding that we're going to do it right.
Let's turn to one of the biggest events of the quarter and a serious source of pride for our employees the launch of Milo.
We'll launch that is just one input when it comes to our product success in the case of my vote early returns are truly impressive.
T Rx performance since our mid September launch shows a steady rise in prescription volume.
What's driving that uptake.
Sam: The increase in the interest expense reflect the recent financing rate to the Zidra acquisition. Our adjusted tax rate is expected to be roughly 6%, and full year capex is approximately 175 million. As a reminder, keep in mind that the comparability between 2022 and 2023 results for the full year will be impacted by the May 2022 timing of our IPO.
Two six.
First our sales force.
It tended to my bulk kickoff meeting in early September and was immediately impressed by the team.
They believe in what they are solid and we're making it easier for them to do their jobs.
They recognize the promise of Michael both medically and commercially.
Second excitement among eye care professionals.
We brought my go to market because there was a real need for a medicine that targets tier of operation.
Sam: I recognize that many of you are currently focusing on updating your models for next year. Looking forward, I want to provide some initial considerations for 2024. We expect the fundamentals of the I care market to remain strong, and the overall market growth to be about mid-single digits. We anticipate 2024 to be one of the most active launch years in our company's history. We expect to launch products across our entire portfolio, including in high margin fast growing areas of the market.
Physicians believe in what they're prescribing and are thrilled to have a new and differentiated treatment option for millions of patients suffering from dry eye disease.
Enthusiasm among the my boss Salesforce is shared by design team that we on boarded just two weeks ago.
When I met with them that orientation. It was clear that they felt reinvigorated.
It's not all had never been part of a company solely dedicated to IHOP.
Sam: We also expect to strengthen our leadership in dry eye disease with the recent launch of my boom and the full year contribution from Zidra. We're excited with the Zidra market opportunity under our ownership and our holistic approach to dry eye disease treatment. As we have previously mentioned, once relaunched, we believe Zidra has the potential to be a mid-single digit growth asset. We expect to have an opportunity for margin improvement, driven by the addition of Zidra and the performance of our base business, while also recognizing the need to invest in all of our launches, including my blog.
Why does that matter because we have the existing infrastructure to hit the ground running and its mission critical we make cyber central to our strategy.
Recent lack of investment in cyber sales arms now.
Team, we brought over what consumer medication that wasn't deemed a priority by its former owner to reference I think the biggest product in our portfolio by revenue.
It's time for a rebirth as we leverage <unk> brand equity and increasing importance in the dry eye category.
My ball on its own represents a significant opportunity for passion law.
Sam: As we invest during the Zidra relaunch period, we expect the Zidra contribution to margin to increase as we could grasp throughout the year. The relaunch is a key priority, and we are encouraged by the recent TRX trends in the past few weeks. But we anticipate that it will take some time for us to see the full benefit of our investments. In our base business, we believe our supply chain will continue to strengthen, but we recognize there's more work to be done.
But the acquisition of <unk> gives us a formidable one two punch.
As made clear when we first announced our acquisition of <unk>. These are complementary medications that target distinct elements of dry eye disease.
Being able to offer both means we can treat the disease holistically and more fully address a staggering unmet need.
How do our products become the primary option for approximately 36 million Americans suffering from dry eye disease, not currently on prescription medication.
Sam: Pressure on margins relates to supply challenges and the mitigation efforts I mentioned earlier, such as spot buying, will continue to be a factor in the short term. To be clear, our priority will remain to invest in our product launches. While still early, mybos off to a great start, we will monitor the mybos performance over the coming months and evaluate the need to accelerate investment to maximize the strong performance trajectory. Based on current rates, we estimate currency has went to revenue of approximately 100 million in 2024.
It starts with raising disease awareness for consumers and positions for the latter will rely heavily on our combined sales force that will be the largest in the dry eye category and one of the most impressive and IHOP.
What we spent a fair amount of time, highlighting my boss zebra over the past few quarters.
According to understand the pharmaceuticals account for roughly a quarter of our revenue.
Other words were much more than a handful of prescription medications or single category.
Sam: This is our current estimate and we will continue to monitor and update it as we approach the end of this year. We expect the LWE for our brand ProLenza to occur in Q4 of this year. We estimate ProLenza to be approximately 50 million revenue. We don't expect the LWE to have a mature impact on our 2023 results, but we do expect to see the full year impact in 2020. We anticipate investments R&D will continue to be a focus as we advance our product pipeline and bring new products to market.
Highlights from other areas include Luma Fi, which continues total crest with exponential revenue growth.
We built on that success through the upcoming full launch of Blue Mackay I eliminations in the U S.
Perfect example of capitalizing on a product that has quickly built a significant and loyal following.
Daily Si Hy continues to be an emerging force in our contact lens business with third quarter revenue growth of nearly 80% year over year.
Ongoing brand extensions mean, even more opportunity on a global scale.
Sam: Our tax rate is expected to be approximately 15%. As previously mentioned, this is in line with our expectation, and it takes into consideration an estimate of the impact of the OECD spillers to minimum tax rules, which are expected to be implemented in certain EU countries and Canada in 2024. We expect interest expense to increase in 2024 due to incremental debt related to the desire of financing, and a higher interest rate environment for the variable rate portion of our debt. As we continue to momentum in our current portfolio and launch new products, we have an opportunity to continue to deliver as we are above market growth and leverage our platform for longer-term margin expansion.
In surgical high margin premium <unk> continued to outperform.
After debut in ICA up there earlier this year, we soft launched in Vista Aspire, just weeks ago, and expanded and Vista offerings are planned for 2024 and beyond.
This slide may look familiar but that doesn't make it any less impressed with so many launches across our businesses on the horizon you can see why we're focused on selling excellence and improving our supply chain.
Getting those right means getting more products to people who need them.
The key to everything for us.
I returned to fashion law, because I saw a company with incredible potential.
Brenton Saunders: And now, I'll turn on the call back to Brent. Thanks, Sam. I'd like to spend some time talking more about where we are investing to drive growth.
Eight months in I can tell you that I sold are short.
The opportunity we have is even more transformative than I initially thought.
Brenton Saunders: Months ago, I described our second quarter as being defined by performance and progress. The same holds true for Q3, but I'd like to introduce a third descriptor when it comes to our supply chain, practicality. We have a significant global manufacturing and distribution network that relies on thousands and thousands of inputs. Look no further than surgical, where some equipment has more than a thousand components. With any operation of this size, if you don't have a consistent supply of those components, and dependability when it comes to pushing your products out the door, you're not going to realize your full potential.
We have the products people and plan to shakeup in the industry that continues to evolve and grow.
This Friday is the official anniversary of our founding.
When John Bausch and Henry law embrace a startup mentality to build a 170 year legacy.
Were rekindling that entrepreneurial spirit as we redefine the company and create lasting value in the process.
Greater let's open the line for questions.
Thank you very much we will now begin the question and answer session.
Brenton Saunders: There's no quick fix when it comes to addressing supply chain issues, and it's not a question of just throwing money on a problem. We've made nearly $900 million in capital investments toward improving and expanding our facilities over just the past five years. Instead, we are taking a practical approach to supply chain. We started by bringing in a respected industry veteran who has been making complex systems run smoothly for more than 25 years.
You asked a question you May press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up the handset before pressing the keys to withdraw your question. Please press Star then K.
At this time, we will pause momentarily to assemble our roster.
Thank you. The first question comes from Patrick Wood of Morgan Stanley Patrick Your line is open.
Amazing. Thank you very much for taking the question I'll keep it to one.
Brenton Saunders: He has taken the reins on addressing our Lynchburg issues and is systematically working to improve surgical component availability. Bigger picture, he is creating a thoughtful and stage game plan for supply chain success that will keep up with demand for new and existing products. Being practical requires patience with the understanding that we're going to do it right.
Love to drill down a little bit into <unk> given.
Given the launch I'm, just curious how youre getting the feedback how it's coming through from the talks a little bit prescription trends rather than the numbers, but the <unk>.
Lines of patients that you think typically being treated at this stage and how you feel about I think it was a $350 million.
Opportunity longer term I know, it's very early days, but really curious to see how you're feeling about that longer time, giving given the launch thanks.
Brenton Saunders: Let's turn to one of the biggest events of the quarter and a serious source of pride for our employees, the launch of MIBO. We'll launch that as just one input when it comes to a product success. In the case of MIBO, early returns are truly impressive. TRX performance, since our mid-Septemberer launch, shows a steady rise in prescription volume. What's driving that update? Two things. First, our Salesforce. I attended the MIBO kickoff meeting in early September and was immediately impressed by the team.
Yes, great. Thanks, Patrick Great question, obviously, <unk> is a big focus of mine and of our teams.
You know.
As you said early days, so early feedback I don't want to overstate.
The meaning of a few weeks of data, but that being said I feel really really good about where we are the the market reaction.
The market being physicians are ecp's is incredibly strong.
Brenton Saunders: They believe in what they're selling and we're making it easier for them to do their jobs. They recognize the promise of my vote both medically and commercially. Second, excitement among eye care professionals. We brought my vote to market because it was a real need for medicine that targets tier of operation. Physicians believe in what they're prescribing and are thrilled to have a new and differentiated treatment option for millions of patients suffering from dry eye disease.
In fact, when you look at the data and Ikea.
It's significantly underreported, Cuba will be.
Doing an update I think November 17th.
And then you'll you'll get to see the real data. So there were some reporting issues.
But.
Suffice it to say, it's doing much better than than perhaps you guys, even think or the outside world Thanksgiving the reporting issues.
What we're hearing from what I'm hearing from ECP is I'm actually going to the American Academy of Ophthalmology. This weekend in San Francisco, we're going to be doing a lot of <unk> that some programming there as well, but is incredible enthusiasm there they're seeing great patient response.
Brenton Saunders: Enthusiasm among the MIBO Salesforce is shared by the Zyder team that we onboarded just two weeks ago. When I met with them in orientation, it was clear that they felt reinvigorated. Most, if not all, have never been part of a company solely dedicated to eye health.
We're starting to see refills already so.
Brenton Saunders: Why does that matter? Because we have the existing infrastructure to hit the ground running. And it's mission critical, we make Zyder central to our strategy. Recent lack of investment in Zyder sales ends now. The team we brought over went from Selma medication that wasn't deemed a priority by its former owner to representing the biggest product in our portfolio by revenue. It's time for a rebirth as we leverage Zyder's brand equity and increasing importance in the dry eye category.
Knock on wood everything is going better than expectations.
Patients and expectations at least for me were pretty hard.
And they're doing better than that but again I want to caution us early days early data.
Feel much more confident when we have several months of data but.
The team is doing a great job.
Thanks for taking the question.
Yes.
Thank you very much. Your next question is coming from Larry <unk> of Wells Fargo. Larry Your line is live.
Brenton Saunders: MIBO on its own represents a significant opportunity for bachelors. But the acquisition of Zyder gives us a formidable one-two punch. As made clear when we first announced our acquisition of Zyder, these are complimentary medications that target distinct elements of dry eye disease. Being able to offer both means we can treat the disease holistically and more fully address a staggering unmet need.
Good morning, Thanks for taking the question congrats on a nice print here.
I'll try to get two in here one for Sam on margins next year. If you sum all this up I think at our conference Brent talked about 200 basis point margin benefit from <unk> plus some underlying margin expansion does that still hold and I had one follow up.
Sure Good morning, Larry.
We.
When you step back and you look at sort of what we've done in 2000, and how we're thinking about 'twenty four.
Brenton Saunders: How do our products become the primary option for approximately 36 million Americans suffering from dry eye disease, not currently on prescription medication? It starts with raising disease awareness for consumers and physicians. For the latter, we'll rely heavily on a combined sales worse that will be the largest in the dry eye category and one of the most impressive in eye health. What we spent a fair amount of time highlighting MIBO and Zyder over the past three quarters, it's important to understand the pharmaceuticals account for roughly a quarter of our revenue.
We do expect to see margin improvement came from our base business and also the additional xetra.
But you also have to balance this with a couple of factors here one is.
The level of investment that we would need to make and Zara Brent talked about.
So our expectation is especially now that in our hands and we've previously talked about that this brand and not only it is run by the dry eye market in general is very responsive to promotional investment to need to be able to allow and allocate the right level of investment to get either to the level of it.
Brenton Saunders: In other words, we're much more than a handful of prescription medications or single category. Highlights from other areas include Lumify, which continues to impress with exponential revenue growth. We built on that success through the upcoming full launch of Lumify eye illuminations in the U.S. A perfect example of capitalizing on a product that has quickly built a significant and loyal following. Daily Syhigh continues to be an emerging force in our contact lines business, with third quarter revenue growth of nearly 80% year-over-year, ongoing brand extensions mean even more opportunity on a global scale.
Expectation that we would like it to be and really recognize the value of that so there'll be an element of investment going behind behind zeidler going into starting from Q4 and going into the early part of next year and carrying forward into 2000 and for the.
The other part, which I would want to also talk about would be the early reads that were seeing from <unk>.
<unk>.
Very positive.
We're excited about it and we're very encouraged.
<unk>.
But it's still early and I think what you will need to see a couple more data points to be able to make that trend solid for us and this is I think we will be thinking about a decision in terms of do you accelerate investment behind Michael to be able to.
Brenton Saunders: Insurgable, high margin premium IOLs continue to outperform. After debuting ICA up there, earlier this year, we saw launched an Amvista Aspire just weeks ago, an expanded Amvista offerings or plan for 2024 and beyond. This slide may look familiar, but that doesn't make it any less impressive. With so many launches across our businesses on the horizon, you can see why we're focused on selling excellence and improving our supply chain. Getting those right means getting more products to people who need them.
Incremental investment to be able to accelerate growth.
Into the future years, so again, Michael for US is not just a one year.
Our brands were thinking but this is a long game here. So we're thinking about it not only 24 by $24 25 and beyond so that's going to be a very critical decision, but we will need to see a little bit more data points.
To be able to see that positive trend that we've seen in the last couple of weeks continue with us for a little bit longer.
That's helpful. Just one follow up on I drive my boss sales next year, so I draw.
The guidance they've declined 40% in Q3 revenue guidance here that you gave implies another 40% declines of $3 35 for the year at the midpoint, what's your expectation for 'twenty four and my bottle. The prescription data you gave us today implies it's annualizing at over 100 million at sales already.
Brenton Saunders: It's the key to everything for us. I returned to Fashion Lomb because I saw a company with incredible potential. Eight months in, I can tell you that I sold us short. The opportunity we have is even more transformative than I initially thought. We have the products, people, and plan to shake up an industry that continues to evolve and grow.
Do you think it could be $100 million product in 24. Thank you.
Yes, so maybe I'll just start and then Sam.
Brenton Saunders: This Friday is the official anniversary of our founding when John Bausch and Henry Lomb embrace a startup mentality to build a hundred and seventy year legacy. We're rekindling that entrepreneurial spirit as we redefine the company and create lasting value in the process.
Jump in.
I think the sales number for Novartis in Q3 is not an accurate picture of performance of the brand there were some accounting charges that Novartis program.
Look there and so I think thats distorted and probably not a true picture clearly it was under invested in their hands.
Operator: Operator, let's open the line for questions. Thank you very much.
And we saw that we've had for essentially two weeks it actually was with the Novartis team, 97% of the team sales team came over.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up the handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.
Operator: Thank you.
Joined us we're super excited to have them I spent some time with them two weeks ago here in New Jersey.
They are super motivated and.
Again, very early data, but we're starting to see stabilization in the script trends, which is which is really important I do think the fourth quarter here, it's about clearly about stabilizing and then.
Patrick Wood: The first question comes from Patrick Wood of Morgan Stanley. Patrick, your line is live. Amazing. Thank you very much for taking the question. I'll keep it to one. I'd love to drill down a little bit into my bow given the launch. I'm just curious how you're getting the feedback, how it's coming through from the docs a little bit, prescription trends rather than the numbers. But, you know, the kinds of patients that you think are typically being treated this stage and how you feel about it.
Jim mentioned in his remarks, the first quarter and going into the second quarter or is it going to be about.
<unk> re recharging that brand and Reenergizing that brand given that we have roughly 910 years of exclusivity.
To.
To stand behind that Brad So super excited.
About that I think I think when you look at AD sales for <unk>.
Patrick Wood: I think it was a 350 million opportunity longer term. I know it's very early days but really curious to see how you're feeling about that longer term giving the launch. Thanks. Yeah. Great. Thanks, Patrick. Great question.
Next for 'twenty, four we're not giving guidance for 'twenty four we're just trying to give you some direction.
Certainly provide that in due course, but Sam and anything else you want to.
You want to add to this.
And I think.
Brenton Saunders: Obviously my bow is a big focus of mine and of our teams. As you said, early days is so early feedback. I don't want to overstate the meaning of a few weeks of data, but that being said, I feel really, really good about where we are the market reaction. The market being physicians or ECPs is incredibly strong. And in fact, when you look at the data in IQVIA, it's significantly under reported IQVIA will be doing an update.
As we think about that is based on the remarks, we've made thus far we want to make sure we invest behind their brands.
The comments I made in my prepared remarks was as we think about diet oriented.
Brenton Saunders: I think November 17th. And then you'll get to see the real data. So there were some reporting issues in IQVIA, but suffice it to say it's doing much better than then perhaps you guys even think or the outside world thinks given the reporting issues. You know, what we're hearing from when I'm hearing from ECPs, I'm actually going to the American Academy of Ophthalmology this weekend in San Francisco. We're going to be doing a lot of my bow and Zyder events and programming there as well, but is incredible enthusiasm there.
Balances out probably will be still a five.
Mid single digit.
Growth asset and Thats been our thinking around either.
Thank you.
Thank you very much. Your next question is coming from young Li of Jefferies. Your line of life.
Alright, great. Thanks, so much for taking our questions.
Maybe pivoting a little bit to contact lenses.
Wanted to hear a little bit on the health of the U S consumer.
Is there still a lot more demand than capacity for the industry.
So the daily Si Hy adoption trends things vary.
The favorable and very strong growth.
But are you seeing any signs of.
Consumers trading down or extending their ware.
Any high level thoughts on that and might happening in 2024.
Brenton Saunders: They're seeing great patient response. We're starting to see refills already. So everything got, you know, knock on wood, everything is going better than expectations and expectations, at least for me, we're pretty high. And they're doing better than that. But again, I want to caution us early days, early data. I'll feel much more confident when we have several months of data, but the team's doing a great job. Love it. Thanks for taking the question. Thank you very much.
Yes, great question and thank you for that.
Across cross our businesses.
Globally.
We don't see any any pullback from the consumer whether it be in lenses are in our consumer business and in fact, some some interesting data perhaps out of the consumer does not not exactly what you asked was was we are seeing strong driver of consumption.
In our consumer products. So another data point that that shows that the consumer in the U S and <unk>.
Larry Biegelsen: Your next question is coming from Larry Beaglefin of Wells Fargo. Larry, your line is live. Good morning. Thanks for taking the question. Congrats on a nice print here. I'll try to get two in here. One for Sam, I'm margins next year. If you sum all this up, I think at our conference, Brent talked about 200 basis point, a margin benefit from Zyra plus some underlying margin expansion. Does that still hold? Can I add one follow up?
Frankly globally is still pretty poor.
Pretty active and in fact, when you look at GDP data I think we saw consumer drive most of the GDP growth in the U S. In the third quarter. So.
The consumer.
Our lens business in the U S. The market was up around.
Around seven 8%.
Can you give us the exact number but but I think we're seeing really healthy trend daily Si Hy for op was up about 80% growth in the quarter.
Sam: Good morning, Larry. When you step back and you look at sort of what we've done in 20G and how we're thinking about 24, we do expect to see margin improvements came from our base business and also the addition of Zyra. But you also have to balance this with couple factors. The level of investment that we need to make in Zyra, Brent talked about Zyra and sort of our expectation, especially now that in our hands.
No.
I think our issues there have been just distribution and being about a ship that is solving itself this quarter and we're starting to move into a good spot, but overall the market I think is robust it's big it's growing.
We finally have a good product portfolio, we just need to be able to ship to customers on a more consistent basis.
Alright, great very helpful and.
Sam: And we've previously talked about that this brand and not only is ran by the dry iron market in general is very responsive to promotion investment. So we need to be able to allow and allocate the right level of investment to get Zyra to the level of expectation that we would like it to be and re-recognize that value. So there will be an element of investment going beyond Zyra, behind Zyra going into a term from Q4 and going into the early part of next year and getting forward in 24.
I guess for my follow up.
So.
China business.
Minus 1% due to tough comps.
Year to date, 6%.
I guess.
I was wondering.
Maybe you can comment a little bit about what youre seeing on the ground currently.
High single digit percentage of your business, we read all the macroeconomic and consumer consumption headlines.
Sam: The other parts which I would want to also talk about would be the early read that we're seeing from MIBO. We're very positive, we're excited about it and we're very encouraged. But it's still early and I think we will need to see a couple more data points to be able to make that trend solid for us. And this and I think we will be thinking about the decision in terms of do you accelerate investment behind MIBO to be able and to increment investment to be able to accelerate growth into the future years.
There's also some anti corruption campaign color that doesn't contact lenses as much as in the background.
What's your view on the health of the Chinese consumer.
Sam: So again, MIBO for us is not just a one year brand we're thinking about this a long game here, so we're thinking about not only 24 but 24, 25 and beyond. So that's going to be a very critical decision, but we will need to see a little bit more data points to be able to see that positive trend that was seen in the last couple weeks continue with us for a little bit longer. That's helpful.
Contact lens business in the near term.
What indicators are you more closely tracking are there noticeable differences.
Different tier cities.
Yes, it's a great question so.
First I would just.
Take a step back and look at the opportunity in China, It's a massive market.
We have a tremendous opportunity to grow into that market.
Unlike perhaps one of our competitors that has has more market share.
Our opportunity is.
To take share in a growing market is pretty strong and we're just we're just really getting started there with the daily Si Hy.
Brenton Saunders: Just one follow up on Zydra and MIBO sales next year. Zydra, you know, the guidance it declined 40% in Q3 revenue, you know, the guidance here that you gave implies another 40% decline. So 335 for the year at the midpoint. What's your expectation for 24 and on MIBO the prescription data gave us today implies it's annualizing it over 100 million it fails already. Do you think it could be a hundred million dollar product in 24?
Launched just happened a quarter ago. So we still have to bring the multifocal and other modalities into China. The other thing is our team in China I was over there.
Not that long ago.
We have a really strong team I was very impressed by the P&L colleagues in China and in fact this quarter they stood up a DTC model.
That was quite impressive so we'll see how that works out but they did a lot of really.
Brenton Saunders: Thank you. Yeah, so maybe I'll just start and then Sam can jump in. Look, I think the sales number for Novartis in Q3 is not an accurate picture of performance of the brand. There were some accounting charges that Novartis took there and so I think that's distorted and probably not a true picture. Clearly, you know, it was under-invested in their hands and we saw that, you know, we've had it for essentially two weeks and actually was with the Novartis team, 97% of the sales team came over and joined us.
Good work with with a strong entrepreneurial spirit. So I'm excited about China I think when we look at the consumer in China. They are resilient.
Perhaps a little less resilient in the tier two or three cities versus the one but still strong.
I think our opportunity is clearly in this tier one and two cities. So.
We're in.
We're participating in the market, where the consumer is strong.
And again I think I think we're we're going to be less focused on the on the macro environment versus the opportunity we have to grow within a massive market, let's say or any color you'd want to add yes, I think when you think about this year I think when you look at the year to date data is probably more meaningful than looking at any specific.
Brenton Saunders: We're super excited to have them. I spent some time with them two weeks ago here in New Jersey and they are super motivated and you know, again, very early data, but we're starting to see, you know, stabilization in the script trends, which is which is really important. I do think the fourth quarter here is about clearly about stabilizing and then, you know, as Sam mentioned in his remarks, the first quarter and going into the second quarter is it's going to be about re-charging that brand and re-energizing that brand given that, you know, we have roughly, you know, nine-ten years of exclusivity to stand behind that brand.
Quarter so.
Usually for 6% constant currency. If you remember last year, we had the first half was pretty much shut down so you've seen that comps are sort of not really a good proxy. So project last quarter, we reported a 25% constant currency growth in China. So that flows down to a minus one this quarter just reflecting.
The rebound that happened last year with a stronger comp and people just sort of coming out of a shutdown. So.
For this year I will encourage you to.
Brenton Saunders: So super excited about that. You know, I think when you look at sales for, you know, next for 24, we're not giving guidance for 24. We were just trying to give you some direction. We'll certainly provide that and do course, but Sam, anything else you want to add to this? Yeah, you know, and I think, like, as we think about Zyder's based on the remarks we've made as far, we want to make sure we invest behind the brand.
Probably look more of a year to date on China data, that's probably will be more meaningful.
Alright, Thank you very much.
Just a reminder, if you do have any questions. Please press star one on your pass now.
Your next question is coming from Craig Bijou of Bank of America. Your line is live.
Brenton Saunders: I think the comment I made in my prepared remarks was, as we think about Zyder, I want to balance it out, it probably would be still a five-hour call for mid-single-digit growth to asset, and that's been our thinking around Zyder. Thank you.
Hey, good morning, guys and congrats on a strong quarter in closing the <unk> deal.
Operator: Thank you very much.
Wanted to start with a follow up on a follow up to Larry's question on <unk> EBITDA. So if I look at your implied guidance or your guidance for the year.
EBIT margin for <unk> is about 35% so given your comments on investment in XI draw wanted to understand is is that 35% margin a jumping off point.
Jung Lee: Your next question is coming from Jung Lee of Jeffries. Jung, your line of life. Adoption trends seems very favorable and very strong growth. But, you know, are you seeing any signs of consumers trading down or extending their wear? And, you know, any high-level thoughts on that might happen in 2024? Great question and thank you for that. You know, across our businesses globally, we don't see any pullback from the consumer, whether that be in lenses or in our consumer business.
So should we think about you can improve upon that throughout sequentially throughout 'twenty, four or how else should we think about that.
Hey, good morning, Craig So I would think about it as 35 as a baseline when you think about coated pipe for Q4 and as you start now progressing into 2024, we should expect that 35% in terms of a margin continued to expand as you go forward. So my comments re was highlighting on the fact of.
The investment in <unk>, we're starting Q4, we do expect that we will take a couple of quarters to be able to get to the level that we will meet our expectations. So that will be just a phasing as you go into 2024.
Got it that's helpful. Sam and then just as a follow up wanted to ask on the Lynchburg facility. So it looked like the revenue impact.
Was less in Q3 than it was in Q2 I. Appreciate your comments that you expect to be back to a more normal normalization.
Jung Lee: And in fact, some interesting data perhaps out of the consumer business, not exactly what you asked was, you know, we're seeing strong drive of consumption. In our consumer product. So, another data point that shows that the consumer in the US and frankly, globally is still pretty active. In fact, when you look at GDP data, I think we saw consumer drive most of the GDP growth in the US in the third quarter.
Q1, but wanted to understand how should we think about any revenue and EBITDA impact in Q4, and even Q1.
Year to date, where we're having roughly about $20 million impact and thats on the EBITDA.
I missed that comment as we will talk about the guidance showing that the guidance that we have ability to this quarter absorbed about $20 million year to date.
Jung Lee: So, a healthy consumer. You know, our lens business in the US, the market was up around, was up around 70%. Sam can give us the exact number. But, but I think we're seeing really healthy trend daily, high high for up was up about 80% growth in the quarter. So, you know, I think our issues there have been just distribution and being able to ship. And that is solving itself this quarter. And we're starting to move into a good spot.
We do expect to see some of that coming into Q4, but we will.
More of that coming into Q4, but that's already factored into our guidance ranges that we provided.
Or do you think about next year.
Is it too early to be able to talk about any impact of Lynchburg for next year about what I can tell you is.
We're making progress and we are actually.
Looking as we get to Q1 of 24, we believe this will be getting to a level that reaching a level of optimization.
Jung Lee: But overall the market, I think, is robust. It's big. It's growing. And we finally have a good product portfolio. We just need to be able to shift to customers on a more consistent basis. All right. Great. Very helpful. And I guess for my follow-up. So, you know, China business, you know, minus 1% due to tough comps year to 6%. I guess it was wondering, maybe you can comment a little bit about, you know, what you're seeing on the ground currently, you know, it's high single digit percent of your business.
Now we will be expecting from that facility with all the upgrades that we put in.
Yeah look I mean, Greg yes.
Go ahead, we're good.
Okay.
Okay. Thank you very much. Your next question is coming from Joanne Wuensch from.
Joanne Your line is live.
Good morning, and thank you for the question and nice quarter.
No no problem with that upfront.
The Rx portfolio grew about 1% off of a somewhat tougher comp. Obviously this is before it really layering in Dierdra amigo.
Jung Lee: We read all the macro economic and consumer consumption headlines. There's also some anti corruption campaign color that doesn't really impact lenses as much, but it's in background. You know, what's your view on the health of the Chinese consumer for the contact lens business in the near term? You know, what indicators are you more closely tracking? Are there noticeable differences in the different tiered cities? Yeah, it's a great question. So, you know, the first I just talk, take a step back and look at the opportunity in China.
To make sure that I understand if there were any one time headwinds et cetera that I need to think about and then my second question is.
The lay press the FDA warned against certain eyedrops.
It wasn't on that list, but I was curious if you have a view on how that might create market opportunity for him.
Yes.
Yeah sure so with respect to Rx.
Jung Lee: It's a massive market. We have a tremendous opportunity to grow into that market. Unlike perhaps one of our competitors that has has more market share. I think our opportunity is to take share in a growing market is pretty strong and would just we're just really getting started there with the daily side high launch just happened a quarter ago. So, you know, we still have to bring the multifocal and other modalities into China.
In the quarter, 1%.
The.
The key metric I track, there is the promoted products, which which was anchored by by Solta.
Which was up 50, 54% I think in the quarter.
And so the sales team and what we focus on saw good growth in the quarter. We did have two older non promoted products that had supply constraints in the quarter. If you took those out pharma would have been up around 4% versus the one.
But I think the dynamics in the reporting there what changed dramatically in the next quarter when we have <unk> in there.
Jung Lee: The other thing is our team in China was over there, not that long ago. We have a really strong team. I was very impressed by the B&L colleagues in China. And in fact, this quarter they they stood up a DTC model that was was quite impressive. So we'll see how that works out, but they did a lot of really good work with with a strong entrepreneurial spirit. So, I'm excited about China.
As you look to next year, we have a proenza low.
And we've talked about that quite a bit.
But outside of that that's the only puts and takes in there and I think theres more puts was I drive my Bo going and then then Takeouts Joanne.
Hopefully that clarifies that for you.
Jung Lee: I think when we look at the consumer in China, they're resilient. Perhaps a little less resilient in the tier two or three cities versus the one that's still strong. I think, you know, our opportunity is clearly in this tier one and two cities. So, we're in we're we're participating in the market where the consumers strong. And, you know, again, I think I think we're we're going to be less focused on the on the macro environments versus the opportunity we have to grow within a massive market.
On the FDA recall.
It doesn't in and of itself present, any kind of specific opportunity for us, but I think that underscores the importance of quality control.
In manufacturing and supply I think it is it what I've seen from the ECP is there's a lot of promotion on staying with.
With the branded companies.
In this category, whether it be us or our competitors being.
Being mentioned.
Jung Lee: It's have any color you'd want to add. Yeah, I think with when you think about this year, I think that when you look at the year today, it's probably more meaningful than looking at a specific quarter. So usually for six percent concept currency, if you remember last year, we had the first half was pretty much shut down. So you've seen the cons are sort of not really a good proxy. So for example, last quarter, we reported 25 percent concept currency growth in China.
As alternatives and then I think lastly, it shows how hard it is to make these products and.
Jung Lee: So that flows down to a minus one. The score is just reflecting the rebound that happened last year with a stronger company. And people just sort of coming up shut down. So for this year, I will encourage you to probably look more of a year to date on China data. That's probably more meaningful. Thank you very much. Thank you. Just a reminder, if you do have any questions, please press star one on your phone. Keep that now.
In a sterile environment and provide high quality supply. So all in all our focus on our our absolute commitment is to supply high quality products.
To the extent there is an opportunity perhaps retailers take some of these drops off the shelf and give us more shelf space for our products, whether it be luma fire blinker and any of the other products.
And the reset that will happen as a result of these skus coming off shelf, so small opportunity, but I think more importantly, underscoring the importance of high quality supply.
Thank you.
Thank you very much your next question.
Is coming from Vijay Kumar from Evercore ISI P. J your line is live.
Hey, guys. Thanks for taking my question.
Craig Bijou: Your next question is coming from Craig Bijou of Bank of America. Craig, your line is live. Good morning guys, and congrats on strong quarter and closing the Zydra deal. I want to start with a follow-up on, follow-up to Larry's question on Zydra EBDA. So, if I look at your employee guidance or your guidance for the year and the EBDA margin for Zydra is about 35 percent. So, give in your comment on investment in Zydra. What I understand is, is that 35 percent margin jumping off point, right? So, should we think about, you can improve upon that, sequentially throughout 24, or how else should we think about that?
And I had two questions maybe first one for you on revenues here are some of the comments you make sure that fiscal 'twenty four were helpful.
Yes.
Lynchburg disruption App can you quantify the revenue impact in fiscal 'twenty and see are they lost revenue should they come back in fiscal 'twenty four.
And I think you did touch upon consumer trends.
How should we think about consumer business in a recessionary environment.
Yes, so on Lynchburg.
We've made a lot of progress in the last month or two.
And in Lynchburg, and this quarter the fourth quarter.
It's starting to shift, particularly domestically on time, and so we're getting pretty close clearly we need a little bit more time to get the optimization out of Lynchburg, but we're making progress we still have some pickups in international orders, but all in all it's big improvement in the fourth quarter.
Sam: Good morning, Craig. So, I would think about it as 35 as a base line, when you think about 35 or Q4, and as you start now progressing into 2024, we should expect that 35 percent in terms of margin to continue to expand as you go forward. So, my comment review was highlighting on the fact of the investment in Zydra, we're starting Q4. We do expect that we'll take a couple of course to be able to get to the level that will meet our expectations. So, that will be just the phasing as you go into 2024. Got it. That's helpful Sam.
The revenues and 23 of roughly $20 million.
Impact and to be fair that that's revenue lost.
The patients who get fit with with lenses.
Got it with other lenders versus the ones we could it.
Provide so.
It's more or less revenue lost we will come back there is good demand for our products. So we will see a high return.
Sam: And then, just as a follow-up, wanted to ask on the Lynchburg facility. So, it looked like the revenue impact was less in Q3 than it was in Q2. Appreciate your comments that you expect to be back to a more normalization in Q1, but wanted to understand, how should we think about any revenue and EBITDA impact in Q4 and even Q1? So, yesterday, we're having roughly about 20 million impact and that's on the EBITDA, and I made that comment as we were talking about the guys showing that the guidance that we have updated to support or absorbs that 20 million years today.
To our to our product line and we're seeing that happening, we're seeing green shoots of that right now in the fourth quarter.
But thats.
It's an unfortunate situation and why I continuously talk about the need for.
Strategic and thoughtful leadership and our global supply operations because.
At the end of the day, what matters, most is getting your products to patients and consumers.
That's how you actually create a robust businesses.
Practically as that sounds.
The consumer business in a recessionary environment I think clearly if there was that it.
If we saw consumer recession, we would have to be thoughtful about that and we would feel some impact but at the end of the day people don't.
Sam: We do expect to see some of that coming into Q4, but we will, or more of that coming into Q4, but that's already factored our guidance ranges that we provided. When you think about next year, I think Ryan asked too early to be able to talk about any impact of Lynchburg for next year about what I can tell you is we're making progress and we're actually looking as we get to Q1 of 24.
<unk>.
Don't stop treating their eyes in a consumer recession. So I think we have.
Somewhat of a protection in our business from that with people trade down perhaps but.
We just talked about with Joanne.
Some of the lower cost per providers of eyedrops as an example have quality issues. So.
Sam: We believe this will be getting to a level that reaching a level of optimization, so we'll be expecting from that facility with all the upgrades that we put in. Yeah, look, I think that's great. Yeah, go ahead, we're good.
It's a tough thing to trade down on price for treating <unk> is not that some won't do it but but we have I think some immunity from from a potential consumer reception that being said, we don't see that we don't see that in any of our businesses anywhere in the world and we don't see that in any of the data we track as well.
Operator: Okay, thank you very much.
So.
Joanne Wuensch: Your next question is coming from Joanne Winch from City. Joanne, your line is live. Good morning, and thank you for this question and nice quarter.
Brenton Saunders: Q1, I'm going to put them both out at front. The RX portfolio grew about 1% off of a really layering in Zidra and Maibo, but I want to make sure that I understand if there are any one-time headwinds, et cetera, that I need to to think about. And then my second question is in the lay press, the FDA warned against certain eyedrops. Bouch wasn't on that list, but I was curious if you have a view on how that might create market opportunities, for you.
Brenton Saunders: Thank you. Yeah, sure. So with respect to Rx growth in the quarter 1%, you know, the key metric I tracked there is the promoted products, which was anchored by Visalta, which was up 54% I think in the quarter. And so, you know, the sales team and what we focused on, you know, saw good growth in the quarter. We did have two folder, non promoted products that had supply constraints in the quarter.
This is our largest number of launches that we have in a single year.
Brenton Saunders: If you have kept those out, you know, pharma would have been up around 4% versus the one. But, you know, I think the dynamics and the reporting there will change dramatically in the next quarter when we have my bones, Idra in there. I think as you look to next year, we have a pro lens, a LOE, and we've talked about that quite a bit. But outside of that, that's the only puts and takes in there.
Companies history, as we recall, so that's definitely going to be an investment that we will have to think about and we will be able to.
Make sure we dedicate the right resources behind it I called that mindless, specifically, because they think it's a large.
Asset for US are large brand when you think about the early data that we're seeing on my Bill, it's very encouraging encouraging and very positive. We wanted to see that trend to continue and as that trend continues I think we will have the decision to be able to do we want to.
Brenton Saunders: And I think there's more puts with Idra and my bow going in than take outs. Hopefully that clarifies that for you. On the FDA recall, you know, it doesn't in and of itself present any kind of specific opportunity for us. But I think it underscores the importance of quality, control, and manufacturing and supply. I think it is what I've seen from the ECPs is a lot of promotion on staying with with the branded companies in this category, whether it be us or our competitors being mentioned as as alternatives.
Spend and invest incremental dollars behind it and accelerate growth.
<unk>, it's a long game for us and.
That decision will have to come in and we'll update Moreover, as we give us a full year guidance for 2024, <unk> or perhaps at another another way or.
We have a we have a big opportunity with my <unk>.
Other launches across portfolio and 24.
Many of those launches lead us to higher margin product mix for the long term and so being successful and those are really.
Brenton Saunders: And I think lastly, it shows how hard it is to to make these products in a sterile environment and provide high quality supply. So all in all, you know, our focus and our our absolute commitment is just by high quality products. And, you know, to the extent there's an opportunity perhaps retailers take some of these drops off the shelf and give us more shelf space for our products, whether it be lumify or blinker, any of the other products in the reset that will happen as a result of these skews coming off shelf. So small opportunity, but I think more importantly underscoring the importance of high quality supply. Thank you. Thank you very much.
<unk> and improving margins that being said, making that investment impacts margins to the negative in 24 and so.
What we Wanna do is be thoughtful about that we are committed to margin improvement.
But we want to make data driven decisions. When we look at early data on my Bill and you will see a clearer picture when <unk> comes out and you'll see what we're seeing on November 17th.
You'll understand why we're we're pausing and saying could we do more with my vote could it be more than $350 million peak sales could we steep and the curb and get there faster and so we're going to make you know we're gonna make investments based on data on based on on on Kpis.
Vijay Kumar: Your next question is coming from VJ Kumar from Evercore ISI. VJ, your line is live. Hey guys, thanks for taking my question. You know, I had two questions. Maybe bring first one for you on revenues here, some of the comments you may share on fiscal 24 were helpful. The Lynchburg disruption can you quantify the revenue impact in fiscal 2048? Are they lost revenue should they come back in fiscal 24? And I think you did touch upon consumer strength.
And so what we're gonna do that being said, we are absolutely committed to margin improvement, but we want it to be sustainable and we wanted margin improvement for the long term and so that's the balancing act that we would normally make these decisions.
Helpful comments, thanks, guys.
Thank you very much.
Question is coming from that mean from P C capital markets.
Your line is life.
Alright, thank you.
Two questions number one with respect to side drive.
Given the importance of the drug to the company now.
Vijay Kumar: How should we think about consumer business in a recessionary environment? Yeah, so on Lynchburg, you know, we've made a lot of progress in the last month or two. And and Lynchburg in this quarter, the fourth quarter, I think it's starting to ship particularly domestically on time. And so we're getting pretty close. Clearly, we need a little bit more time to get the optimization out of Lynchburg, but we're making progress. We still have some pickups in international orders, but all in all it's big improvement in the fourth quarter.
Do you believe it's going to get to that mid single digits growth profile.
And then my second question just has to do with the success of a lumify.
Maybe you could dominion.
Little bit created detail.
Had the number of launches, but what seems to be resonating with people and.
How soon can we expect.
Alex within that.
Pipeline.
To market. Thank you.
Sure so.
Vijay Kumar: You know, the revenues in 23 are roughly $20 million impact. And to be fair, that's revenue lost. You know, the patience to get fit with with lenses, got fit with other lenses versus the ones we couldn't provide. So, you know, it's more or less revenue lost. We will come back. There's good demand, you know, for our products. So we've we've we'll see a return to our to our product line. And we're saying that happening. We're seeing green shoots for that right now in the fourth quarter.
<unk>.
We assumed it would have been what happened at the.
But prior owner's hands, but but it happens a bit more severely right.
They really did neglect this drug and you know.
As I said to the sales reps that came over two weeks ago.
Zeiders finally home it's in a company that has a dedicated eyecare company it becomes.
Among our most if not most important product and they become arguably our most important salesforce.
Versus an afterthought.
Brenton Saunders: But that's, you know, it's an unfortunate situation and why I continuously talk about the need for strategic and thoughtful leadership in our global supply operations because At the end of the day, what matters most is getting your products to patients and consumers and that's how you actually create a robust business as practically as that sounds. Don't stop treating their eyes in a consumer recession. So I think we have somewhat of a protection in our business from that.
And the company they were at and Thats highly motivating to them. The other thing I would point out is the dry category is incredibly promotionally sensitive.
And and I know that I remember when <unk> launched and I was at algorithm we had restasis.
Many on the sell side thought that <unk> would go into decline and it did it the market expanded to adapt as <unk> because of the increased promotion from <unk> at the time, we saw.
Tremendous market growth and both brands grew through the launch and beyond and so I think that dynamic sets up well for US we will have a very strong share a voice.
Between <unk>, but we really do have a one two punch to treat the disease holistically.
And we have an opportunity to really work with the ECP community to to drive more of the untreated rough.
Brenton Saunders: Would people trade down perhaps, but as we just talked about with Joanne, some of the lower cost providers of eye drops as an example have quality issues. So it's a tough thing to trade down on price for treating your eyes, not that some won't do it, but we have some immunity from a potential consumer recession. That being said, we don't see that. We don't see that in any of our businesses anywhere in the world, and we don't see that in any of the data we track as well.
Roughly 38 million patients in for treatment.
And with a better option to treat whichever aspect of the disease, they have with with <unk> and and my boss So huge opportunity that being said I drove comes in a little wounded right a little neglected as.
As I said in the earlier fourth quarters about stabilization in 24 is about restoring it to growth.
Brenton Saunders: Yeah, and certain helpful comments friend Sam, one for you on that margins here, I think you mentioned FX 100 million had when I'm with it, a revenue impact. What's the drop down here on EBITDA should that be at similar to 5023 rates and it sounds like there's some income early investments to support new product launches. Should we be thinking of that as incremental versus, you know, where we were two months ago.
I can't I can't give you the exact date that will happen, but I do expect that to happen to the back half of 2004.
I do think I think you will see that growth start to really Cup group.
Confident I think we have the right team the right setup the right market.
And now we just have to execute.
With Lumify.
Really great performance, 47% growth.
Compared to prior year record I think <unk> his remarks record revenue of $44 million in the quarter, So real exciting.
Brenton Saunders: So VJ, I would think about let me take the currency first. It's hard to predict currency, right? So I'm giving the 100 million as of today based on the rates of today, probably the best of a call direction. I'll provide would be you can use a proxy of what we see in 23 as sort of a flow through that will give you a directional of how we're thinking about the currency. As we said, but this is something I'll have to come back to an update as we end this year and we give guys for full 24 days on the currency and sort of truly the flow through.
To see that that brand continued to drive growth.
Right now we're in the the retail launch of Iowa Emanations.
And you will see the consumer launch in the first quarter and other launch twenty-four as we keep talking about so you start to see the consumer campaign in advertising and promotion in the first quarter.
On that product, but a real opportunity for us.
The interest on line an area I have a lot of experience and.
We need to position Lumify less as a as a OTC drug it more as a beauty products.
Brenton Saunders: In terms of the investment, the launches, I think I'll break up into two parts. I think Brent should slide that should all the launches that are coming into 2024. This is our largest number of launches that we have in a single year in the company's history as we recall. So that's definitely going to be an investment that we will have to think about and we will be able to make sure we dedicate the right resources behind it.
When you could make your eyes beautiful your face looks more beautiful and I know there are trends from my days in the aesthetics world.
Around around.
The importance of facial aesthetics, and having brands like botox and Jupiter them in the past <unk> is a really important part of that that regiment and so we're we're still just breaking through that market I don't know where the top is because we just keep putting up record growth, but we're going to keep investing behind it and I think we have the best product to make your Iowa.
Brenton Saunders: I called out Michael specifically because I think it's a large asset for us, a large brand. When you think about the early days that we're seeing on my bill, it's very encouraging and very positive. We want to see that trend continue and as that trend continues, I think we will have the decision to be able to do. We want to spend an invest incremental dollars behind it and accelerate growth. Again, it's a long game for us and that decision will have to come in and we'll update more of it as we give the full year guidance for 2024.
Beautiful, we're now going to surround that with other products. We have we have the preservative free and coming next to then we're looking at some combinations as well as improvements in the formulation. So we have a nice pipeline and we view this as a long term investment.
Q.
So I think that was our last question or we have one more.
Nope.
Brenton Saunders: The perhaps said in another way or we have a big opportunity with my bow and Zydra and other launches across portfolio 24. Many of those launches lead us to higher margin product mix for the long term. And so being successful in those are really an investment in improving margins. That being said, making that investment impacts margins to the negative in 24. And so what we want to do is be thoughtful about that.
By the end of the question.
Yeah. Thank you operator will again, thanks to everyone for joining us this morning.
We remained very committed to focusing on on driving a roadmap to accelerate growth.
The quarter was another great great.
Testament to our teams around the world focused on execution and driving growth and we look forward to keeping you updated as we progress and.
And and certainly excited for our future thanks for joining us.
Thank you very much.
Brenton Saunders: We are committed to margin improvement, but we want to make data driven decisions when we look at early data on my bow. And you'll see a clearer picture when I QVF comes out and you'll see what we're seeing on November 17th. You'll understand why we're pausing and saying, could we do more with my bow? Could it be more than $350 million in peak sales? Could we steep in the curb and get there faster?
The conference has now concluded thank you for attending today's presentation.
Disconnect.
Brenton Saunders: And so we're going to make investments based on data, based on KPIs, and so we're going to do that being said, we're absolutely committed to margin improvement. But we want it to be sustainable and we want to margin improvement for the long term. And so that's the balancing act that we would normally make in these decisions. Thank you very much.
Doug Miehm: The next question is coming from Doug Miehm from RBC Capital Markets. Doug, your line is live. And then my second question just has to do with the success of lumbify.
Brenton Saunders: Maybe you could delineate in a little bit greater detail. You know, we've had a number of launches, but what seems to be resonating with people and how soon can we expect the other products within that lumbify pipeline to come to market. Thank you.
Brenton Saunders: Sure. So, Zyderick, you know, we assumed it would happen what happened in the prior owner's hands, but it happened a bit more severely, right? They really didn't neglect this drug.
Brenton Saunders: And, you know, as I said to the sales reps that came over two weeks ago, you know, Zyderick is finally home. It's in a company that's a dedicated I care company. It becomes among our most, if not most important product. And they become, you know, arguably our most important field force versus an afterthought in a, you know, in the company they were at. And that's highly motivating to them.
Brenton Saunders: The other thing I would point out is the dry eye category is incredibly emotionally sensitive. And, and I know that I remember when Zyderick launched and, you know, I was at Allergan, we had Rastasis. Many on the sell side thought that Rastasis would go into the client, and it didn't. The market expanded to adapt to Zyderick because of the increased promotion from Zyderick and Rastasis at the time. We saw tremendous market growth and both brands grew through the launch and beyond.
Brenton Saunders: And so I think that dynamic sets up well for us. You know, we will have a very strong share of voice between Zyder and my bow. We really do have a one to punch to treat the disease holistically. And we have an opportunity to really work with the ECP community to drive more of the untreated, you know, roughly 38 million patients. And with a better option to treat whichever aspect of the disease they have with Zyderick and my bow.
Brenton Saunders: So huge opportunity. That being said, you know, Zyderick comes in a little wounded, right, a little neglected. As I said in the earlier, you know, fourth quarter is about stabilization and 24 is about restoring it to growth. I can't give you the exact date that will happen, but I do expect that to happen at the back half of 24. I do think I think you'll see that growth start to really come through. I'm very confident. I think we have the right team, the right setup, the right market, and now we just have to execute.
Brenton Saunders: You know, with with LUMIFI, you know, really great performance, 47% growth. Hair to prior year record. I think we're Sam said in his remarks record revenue 44 million in the quarter. So real exciting. To see that that brand continue to drive growth right now.
Brenton Saunders: We're in the retail launch of eye illuminations. And you'll see the consumer launch in the first quarter and other launch into 24 as we keep talking about. So you start to see the consumer campaign and advertising and promotion in the first quarter on that product.
Brenton Saunders: But a real opportunity for us, you know, the interesting line in an area I have a lot of experience in. You know, we need to position Lumify less as an OTC drug and more as a beauty product. And when you can make your eye well beautiful your face looks more beautiful and I know they're trends from my days in the aesthetics world around around the importance of facial aesthetics and you know having brands like Botox and Jupiter in the past.
Brenton Saunders: Lumify is a really important part of that that measurement and so we're still just breaking through that market. I don't know where the top is because we just keep putting up record growth, but we're going to keep investing behind it and I think we have the best product to make your eye look beautiful.
Brenton Saunders: We're now going to surround that with other products. We have we have the preservative free and in coming next to then, you know, we're looking at some combinations as well as improvements in the formulation. So we have a nice pipeline and we view this as a long term investment.
Operator: So I think that was our last question or we have one more. No, that appears to be the end of the question, not session. Yeah, thank you operator.
Brenton Saunders: Well, again, thanks everyone for joining us this morning. We remain very committed to focusing on on driving our roadmap to accelerate growth. The quarter was another great, great testament to our teams around the world focused on execution and driving growth. And we look forward to keeping you updated as we progress and certainly excited for our future.
Operator: Thanks for joining us. Thank you very much, everyone.
Operator: The conference has now concluded. Thank you for attending today's presentation. You now may disconnect.