Q1 2024 Bausch + Lomb Corp Earnings Call

Speaker Change: [music].

Operator: Good morning, and welcome to Bausch and Lomb's first quarter 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to George Gadkowski, Vice President of Investor Relations and Business Insights. Please go ahead.

Good morning, and welcome to the Boston <unk> first quarter 2024 earnings call.

All participants will be in listen only mode.

Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

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 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 get Koski, Vice President of Investor Relations and business insights. Please go ahead.

George Gadkowski: Thank you. Good morning, everyone, and welcome to our first quarter 2024 financial results conference call. Participating on today's call are Chairman and Chief Executive Officer, Mr. Brent Saunders, and Chief Financial Officer, Mr. Sam Eldessouky. 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.

George Gadkowski: Thank you good morning, everyone and welcome to our first quarter 2024 financial results Conference call participating on today's call are chairman and Chief Executive Officer, Mr. Brent Saunders and Chief Financial Officer, Mr. Sam oldest suki.

George Gadkowski: 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.

George Gadkowski: 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 1 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.

This is important information.

George Gadkowski: 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.

George Gadkowski: 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 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.

George Gadkowski: 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 Brent.

Brenton L. Saunders: Thank you, George, and thank you, everyone, for joining us. Today marks nearly one year since my first earnings call following my return to Bausch & Lomb. We've accomplished quite a bit in that time frame, which we'll cover as we review first quarter performance and highlight growth drivers for the remainder of the year. These areas of focus are familiar to you by now and continue to drive our strategy. Let's start with revenue. We saw 20% top line growth on a constant currency basis for the quarter, thanks to outperformance from each of our business units.

Brian: Thank you George and thank you everyone for joining us today marks nearly one year since my first earnings call. Following my return to Bausch and Lomb.

Brian: We've accomplished quite a bit in that timeframe, which we'll cover as we review <unk> first quarter performance and highlight growth drivers for the remainder of the year.

Brian: These areas of focus are familiar to you by now.

Brian: Can you do to drive our strategy.

Brian: Let's start with revenue.

Brian: We saw a 20% topline growth on a constant currency basis for the quarter. Thanks to outperformance from each of our business units.

Brenton L. Saunders: Our quality of growth isn't limited to reporting sectors, as we delivered solid results across geography. In other words, we're in an enviable position of not being reliant on one business or region as drivers of our performance.

Brian: Our quality of growth isn't limited to reporting segments as we delivered solid results across geographies.

Brian: In other words, where it is.

An enviable position of not being reliant on one business per region as drivers of our performance.

Brenton L. Saunders: Our methodical approach to improving how we make and sell things is bearing fruit. A renewed focus on launch excellence is reflected in early returns for BiBO and the ongoing expansion of our latest daily Sci-High contact lens offering. Operationally, we're making strides to improve service levels within our own network. And, while contract manufacturing continues to present a challenge, we have plans in motion to lessen our reliance on third parties over time. Finally, a relentless focus on returning to our roots by prioritizing innovation is producing tangible results. Our Invista Aspire ILO has made a strong market entry.

Brian: Our methodical approach to improving how we make and sell things is bearing fruit.

Our renewed focus on law tax loss is reflected in early returns for a Bible and ongoing expansion of our latest daily Si Hy contact lens offerings.

Brian: Operationally, we're making strides on our proven service levels within our own network.

And while contract manufacturing continues to present a challenge we have plans in motion to lessen our reliance on third party overtime.

Brian: Finally, our relentless focus on returning to our roots by prioritizing innovation is producing tangible results.

Brian: Our Investor Aspire, Iowa has made a strong market entry and.

Brenton L. Saunders: And we have a steady stream of premium IOL launches planned for 2026. Last quarter, I mentioned a talent infusion for our R&D team, and that hasn't slowed down.

Brian: And we have a steady stream of premium IOL launches planned for 2026.

Brian: Last quarter I mentioned, the talent infusion for our R&D team.

Brenton L. Saunders: We continue to make prominent hires throughout 2024. The scientific community recognizes our pivot, and people want to be part of what we're building. The main takeaway from our roadmap slide is the progress indicator. Why caution against assuming every phase one box has been checked.

Brian: And that hasn't let up.

Brian: We continue to make permanent hires throughout 2024.

Brian: The scientific community recognizes our pivot and people want to be part of what we're building.

The main takeaway from our roadmap slide is the progress indicator.

Brian: Well I'd caution against assuming every phase one box has been checked.

Brenton L. Saunders: After an exhaustive effort to rethink how we work, the rewiring process is largely complete. That means we're gearing up for phase two, innovate, and execute. I'd like to acknowledge the human aspect of an undertaking like this. Stating the obvious, roadmaps only work if people follow them.

Brian: After an exhaustive effort to rethink how we work the rewiring process is largely complete.

Brian: That means we're gearing up for phase to innovate and execute.

Brian: I'd like to acknowledge the human aspect of an undertaking like this.

Brian: Stating the obvious roadmaps only work if people follow them.

Brenton L. Saunders: When I rejoined Bausch and Lomb, I made it very clear that in order for the company to achieve its full potential, we needed to make some tough decisions while operating at a speed some weren't accustomed to, instead of shying away from a break with the status quo. Colleagues around the world embrace it. Under the direction of a refreshed leadership team, our workforce of 13,000 has met every challenge along the way and remained focused on the opportunity in front of us. I prefer always looking forward, but sometimes it's important to look back.

Brian: When I rejoined Bausch and Lomb I've made it very clear that in order for the company to achieve its full potential we needed to make some tough decisions while operating at a speed some werent accustomed to.

Brian: Instead of shying away from a break with the status quo.

Brian: Leagues around the world embraced it.

Brian: Under the direction of our refreshed leadership team our workforce of 13000 has met every challenge along the way and remain focused on the opportunity in front of us.

Speaker Change: I prefer always looking forward, but sometimes it's important to look back.

Brenton L. Saunders: Last May, in the same setting, I was clear about the challenges we faced. Underutilization was holding us back. We had a robust global commercial network and supply chain, but not enough product flow. That led to inefficiencies and jeopardized some of our customer relationships we'd built over decades. We needed to reinvent our company in a thoughtful but urgent way. I'm proud of what we've been able to accomplish in the 363 days since

Speaker Change: Last may in the same study I was clear about the challenges we face.

Speaker Change: Your utilization was holding us back.

Speaker Change: We had a robust global commercial network and supply chain.

Speaker Change: But not enough product flow.

Speaker Change: That led to inefficiencies and jeopardize some of our customer relationships, we've built over decades.

Speaker Change: He needed to reinvent our company in a thoughtful but urgent way.

Speaker Change: I'm proud of what we've been able to accomplish in the 363 days.

Brenton L. Saunders: We addressed our supply chain issues head-on with the understanding that turning our manufacturing and distribution network into a competitive advantage would take years, not months. As a result, we now have a more stable supply of products. We've also augmented our supply with the introduction of new, and, in the case of Zydra and Blink, acquired products. These offerings address some of the most pressing needs in eye health, demonstrate our commitment to innovation, and position us for sustained growth and category leadership.

Speaker Change: We addressed our supply chain issues head on with the understanding that turning our manufacturing or distribution network into a competitive advantage would take years not months.

Speaker Change: As a result, we now have a more stable supply of products.

Speaker Change: We've also augmented our supply with the introduction of new and in the case of <unk> acquired products.

Speaker Change: These offerings address some of the most glaring need denial demonstrate our commitment to innovation and position us for sustained growth and category leadership.

Brenton L. Saunders: Our reinvention is responding to our most important audience, the eye care professionals who use, prescribe, and recommend our products. On my listening and learning tour one year ago, supply concerns and lack of awareness around our priorities often came to the forefront. However, my experience at the recent American Society of Cataract and Refractive Surgery Annual Meeting was the exact opposite.

Speaker Change: Our reinvention is resonating with our most important audience the eye care professionals, who use prescribed and recommend our products.

On my listening and learning tour, one year ago supply concerns and lack of awareness around our priorities often came to the forefront.

Speaker Change: I experienced at the recent American Society of Cataract and refractive surgery annual meeting was the exact opposite.

Brenton L. Saunders: In nearly every interaction, customers shared an appreciation of our efforts to predictably deliver the products and services they've come to rely on and recognized our increasingly important role in bringing new solutions to market. And their excitement about what the future holds for Bausch and Lomb was clear. I'll give a brief overview of the financials before Sam gets into specifics. Our 20% constant currency revenue growth is shown here, which, as previously noted, was driven by our holistic strengths.

Speaker Change: In nearly every interaction customer shared an appreciation of our efforts to predictably deliver the products and services they've come to rely on and recognized are increasingly important role in bringing new solutions to market.

Their excitement about what the future holds for Bausch and Lomb was clear.

Speaker Change: I'll give a brief overview of the financials before Sam gets into specifics.

Sam: Our 20% constant currency revenue growth as shown here.

Sam: Which as previously noted was driven by our holistic strength.

Brenton L. Saunders: That's reflected in our business segment performance, with 8% constant currency revenue growth for surgical, 11% provision care, and 66% for pharmaceuticals. In the absence of Xyger revenue, pharmaceuticals still showed impressive organic revenue growth on a year-over-year basis at 18%. Our key franchises continue to outperform and drive home the holistic theme, given the spread across business. Infused one-day lenses are increasingly a preferred option for optometrists, and our VISTA family of IOLs has surgeons excited for expansion in that category. Brands that have demonstrated consistent growth in areas of ongoing opportunity, most notably Lumify and Prezavision, are high margin performers that bolster the top and bottom lines.

Sam: That's reflected in our business segment performance with 8% constant currency revenue growth for surgical <unk>.

Sam: 11% provision care and 66% for pharmaceuticals.

Sam: Absence, I drove revenue pharmaceutical still showed impressive organic revenue growth on a year over year basis at 18%.

Sam: Our key franchises continued to outperform and drive home the holistic thing given the spread across business units.

Sam: Infused one day lenders are increasingly a preferred option for optometrists and our Vista family of Biowaste as surgeons are excited for expansion in that category.

Sam: Brands that have demonstrated consistent growth in areas of ongoing opportunity, most notably Luma Fi Empress Division, our high margin performers that bolster the top and bottom line.

Osama A. Eldessouky: Now, let me turn it over to Sam.

Sale: Now, let me turn it over to sale.

Osama A. Eldessouky: Thank you, Brent. And good morning, everyone.

Thank you Brendan and good morning, everyone. Before we begin please note that most of my comments today will be focused on growth expressed in constant currency basis.

Osama A. Eldessouky: Before we begin, please note that most of my comments today will be focused on growth expressed in contract currency. Turning now to our financial results on slide 8. We're pleased to report another quarter of solid revenue growth across each of our segments and key product franchises. Our business has continued its momentum coming out of 2023, and we're off to a strong start in 2024. Total company revenue of $1.099 billion for the quarter reflects growth of 20% on a constant currency basis.

Sale: Turning now to our financial results on slide eight.

Sale: We're pleased to report another quarter of solid revenue growth across each of our segments and key product franchises.

Sale: Our business has continued the momentum coming out of 2023, and we're off to a strong start in 2024.

Sale: Total company revenue of 1.0 99 billion for the quarter reflects growth of 20% on a constant currency basis.

Osama A. Eldessouky: As I have previously discussed, and as Brent also mentioned, we're excited about the opportunity ahead of us in 2024 with the growth of recent launches and new and upcoming products. We're continuing to make improvements in our supply chain, and we remain focused on executing our strategy to drive revenue growth and sustainable margin expansion. For the first quarter, currency was a headwind of $20 million to revenue. However, despite the higher-than-expected currency headwinds, we delivered more than a billion dollars in revenue in the quarter. Now, let's discuss the results in each of our segments.

The previously discussed and as Brent also mentioned, we're excited about the opportunity ahead of us in 2024 with a growth of recent launches in new and upcoming products.

Sale: We're continuing to make improvements in our supply chain.

Sale: We remain focused on executing our strategy to drive revenue growth and sustainable margin expansion.

For the first quarter currency was a headwind of $20 million to revenue.

Sale: Despite the higher than expected currency headwinds, we delivered more than $2 billion in revenue in the quarter.

Sale: Now, let's discuss the results in each of our segments.

Osama A. Eldessouky: VisionCare First Score revenue of $635 million increased by 11% on a constant currency basis, driven by growth in both the consumer and contact plan portfolio. The consumer business again demonstrated strong performance both in the US and internationally, with growth of 15% on a constant currency basis in Q1. We continue to see growth across our key franchises, including iVitamins, which grew by 7% in the quarter, and Lumify, which grew by 16% in the quarter, both expressed in constant currency.

Sale: Vision care first quarter revenue of $635 million increased by 11% on constant currency basis.

Sale: Driven by growth in both the consumer and contact lens portfolios.

Sale: The consumer business again demonstrated strong performance both in the U S and internationally.

With growth of 15% on a constant currency basis in Q1.

Sale: We continue to see growth across our key franchises, including eye vitamins, which grew by 7% in the quarter and <unk>, which grew by 60% in the quarter.

Both expressed in constant currency.

Osama A. Eldessouky: Our consumer dry eye portfolio delivered $82 million in revenue in the quarter, representing 25% organic growth. The contact plan's constant currency revenue growth was 6%. Reported revenue from our daily SAHI lenders grew by 68% in the quarter and 73% on a constant currency basis. Our daily sight-height multifocal lens has now been launched in the U.S. and Japan and has added to the solid performance of the daily sight-height sphere.

Sale: Our consumer dry eye portfolio delivered 82 million in revenue in the quarter, representing 25% organic growth.

Sale: The contact lens of constant currency revenue growth was 6%.

Sale: Reported revenue for daily Si Hy lenders grew by 68% in the quarter and 73% on a constant currency basis.

Sale: Our daily Si Hy Multifocal lens has now been launched in the U S and Japan and has added to the solid performance of the dairy side sphere.

Osama A. Eldessouky: We're excited about the growth of this franchise as we continue the global rollout and further expand the family with the upcoming launch of the Deir Ezzat Haytow. Moving now to the surgical segment, first quarter revenue was $197 million, an increase of 8% on a constant currency basis. The consumables portfolio grew in the quarter by 9% on a cost of currency basis. The growth is mainly driven by surgical PACs, where we continue to see solid demand.

Sale: We're excited about the growth of this franchise as we continue the global rollout and further expand the etame with the upcoming launch of the <unk>.

Sale: Moving now to the surgical segment.

Sale: First quarter revenue was $197 million, an increase of 8% on a constant currency basis.

Sale: The consumables portfolio grew in the quarter by 9% on a constant currency basis.

Sale: The growth was mainly driven by surgical packs, where we continue to see solid demand.

Osama A. Eldessouky: Implantables grew 9% for the quarter on a constant currency basis, with our premium IOL portfolio up 30% in constant currency. The IWL portfolio continues to expand with the recent US launch of Invista Aspire, which has made a strong market entry, along with the growth of the Luxmark Edoff lens in Europe and the phased launch of ICH, which has been limited by supply constraints.

Sale: Implantables grew 9% for the quarter on a constant currency basis, with our premium I O portfolio up 30% in constant currency.

The Io portfolio continues to expand with the recent U S launch of enlist aspire, which has made a strong market entry along with the growth of the luck smart you'd offline in Europe, and the phased launch of IC age, which has been limited by supply constraints.

Osama A. Eldessouky: Revenue from equipment was up 5% on a constant currency basis, mainly driven by Solaris system sales. We'll continue to focus our strategy on recent and upcoming product launches and the higher margin premium category. We expect to see a steady stream of Viet launches over the next number of years, which we anticipate will drive revenue growth and sustainable margin expansion. Lastly, revenue of the pharma segment was $267 million for the quarter, which represents constant currency growth of 66%. My booth delivers 28 million in revenue in a quarter.

Sale: Revenue from equipment was up 5% on a constant currency basis, mainly driven by the large system sales.

Sale: We'll continue to focus our strategy on recent and upcoming product launches and higher margin premium categories. We expect to see a steady stream of these launches over the next number of years, which we anticipate will drive revenue growth and sustainable margin expansion.

Sale: Lastly revenue the pharma segment was 267 billion for the quarter, which represents constant currency growth was 66%.

Sale: Mike will deliver 28 million of revenue in the quarter.

Osama A. Eldessouky: The launch performance remains incredibly positive, and we're committed to making the investments to drive strong adoption. Zydra delivered $79 million in revenue in the first quarter. We continue to make progress in executing our strategy to re-establish Zydra as a market leader. The Zyder Field Force was realigned in the quarter, and we've turned the direct-to-consumer marketing investment back on. Although not material to the company's overall results, it's worth noting that the performance of ZYDRA was negatively impacted by the disruptions resulting from the cyber attack on Change Health.

Sale: The launch performance remains incredibly positive and we're committed to making the investments to drive that strong with adoption.

Sale: So either delivered $79 million in revenue in the first quarter.

Sale: We need to make progress in executing our strategy to reestablish side there is a market leader.

Sale: There's either a field force was realigned in the quarter and we have turned the direct to consumer marketing investment back on.

Sale: Although not material to the company's overall results, it's worth noting that the performance of <unk> was negatively impacted by the disruptions, resulting from the cyber attack at change healthcare. However.

Osama A. Eldessouky: However, we saw an improvement in scripts as we exited the quarter and transitioned to other vendors. Brent will elaborate on this, but I want to stress that Xydra and Maigu together position us as a leader in dry eye disease.

Sale: However, we saw an improvement in scripts as we exited the quarter and transitioning to other vendors.

Sale: To elaborate on this but I want to stress that I've.

Sale: I've learned migrate together position us as a leader in dry eye disease and.

Osama A. Eldessouky: And we're excited about delivering on their full potential. Beyond my one Zydra, we saw strong growth across other parts of the pharma portfolio. On a constant currency basis, the U.S. genomics business grew by 10%, and international pharma grew by 7%. As expected, ProLanza declined due to a generic entry into the market during the quarter.

Sale: And we're excited about delivering on their full potential.

Sale: Beyond <unk>, we saw strong growth across other parts of the pharma portfolio.

Sale: On a constant currency basis, the U S generics business grew by 10% and international pharma grew by 7%.

Sale: As expected relenza declined due to a generic entry into the market during the quarter.

Osama A. Eldessouky: Now, let me walk through some of the key non-gap line items. Adjusted gross margin for the first quarter was 63.2%, which was up 320 basis points compared to Q1'23. Digestive gross margin improvement was mainly driven by a favorable product mix, including Zydrox. However, this was balanced by pressure driven by higher inventory costs in our surgical business. In the first quarter, we invested $81 million in Adjusted R&D, for approximately 7% of revenue. In the first quarter, I adjusted EVA, that was $180 million, which represents 28% growth versus the first quarter of 2023. The net interest expense for the quarter was approximately $96 million.

Sale: Now, let me walk through some of the key non-GAAP line items.

Sale: Adjusted gross margin for the first quarter was 63, 2%.

Sale: Which was up 320 basis points compared to Q1 'twenty three.

Sale: The adjusted gross margin improvement was mainly driven by favorable product mix, including either.

Sale: This was balanced by pressure driven by the higher inventory costs in our surgical business.

Sale: In the first quarter.

Sale: We invested 81 million and adjusted R&D or approximately 7% of revenue.

Sale: First quarter, adjusted EBITDA was $180 million, which represents 28% growth versus the first quarter of 2023.

Sale: Net interest expense for the quarter was approximately $96 million.

Osama A. Eldessouky: Adjusted EPS for the quarter was $0.07. Adjusted cash flow from operations was $48 million in the first quarter, and CapEx with 67 minutes. The effective tax rate for the quarter was 15%.

Sale: Adjusted EPS for the quarter was seven cents.

Sale: Adjusted cash flow from operations was $48 million in the first quarter.

Sale: And Capex was $67 million.

Sale: The effective tax rate for the quarter was 15%.

Osama A. Eldessouky: Turning now to our 2024 guidance on slide 12, we are raising our full-year constant currency revenue growth guidance from a range of approximately 12 to 14 percent to a range of 30 to 15 percent. This race reflects the broad-based strength of our business and the momentum we have seen in the first quarter.

Sale: Turning now to our 2024 guidance on slide 12.

Sale: We are raising our full year constant currency revenue growth guidance from a range of approximately 12% to 14% to a range of 13% to 15%.

Sale: The range reflects the broad based strength of our business and the momentum we have seen in the first quarter.

Osama A. Eldessouky: Our 2024 revenue guidance remains in a range of $4.6 billion to $4.7 billion. This range now absorbs incremental currency headwinds of approximately $50 million relative to our previous guidance. For the full year, we estimate currency headwinds to be approximately $90 million.

Sale: Our 2020 for revenue guidance remains in the range of $4 6 billion to $4 7 billion.

Sale: This range now absorbed incremental currency headwinds of approximately $50 million relative to our previous guidance.

Sale: For the full year, we estimate currency headwinds to be approximately $90 million.

Osama A. Eldessouky: We are maintaining our guidance for ZYDRA to generate approximately $400 million in revenue. Our guidance for MIBO continues to be approximately $95 million in revenue in 2024, although shifting to just EBITDA.

Sale: We are maintaining our guidance for <unk> to generate approximately 400 million in revenue.

Sale: Our guidance for micro continues to be approximately $95 million of revenue in 2024.

Sale: Shifting to adjusted EBITDA.

Osama A. Eldessouky: We are maintaining our adjusted EBITDA guidance for 2024 in a range of $840 million to $819 million, while absorbing approximately $10 million of currency headwinds. Our focus continues to remain on sustainable margin expansion. We expect the expansion to be mainly driven by our strategy to shift the mix to high-margin products, our efforts to continue to drive operational excellence, and our focus on maintaining cost-efficiency, as we continue to make investments to fully capture the value potential ahead of us.

Sale: We are maintaining our adjusted EBITDA guidance for 'twenty, 'twenty, four and a range of 840 million to $819 million.

Sale: While absorbing approximately $10 million of currency headwinds.

Sale: Our focus continues to remain in a sustainable margin expansion, we expect the expansion to be mainly driven by our strategy to shift the mix to high margin products. Our efforts to continue to drive operational excellence and our focus on maintaining cost discipline.

Sale: As we continue to make investments to fully capture the value potential ahead of us we expect to sustainably built on the margin expansion in 2024 over multiple years with the growth of our recent and upcoming launches.

Osama A. Eldessouky: We expect to sustainably build on the margin expansion in 2024 over multiple years with the growth of our recent and upcoming launches. Our Q1 results reflect the challenges we noted during our last earnings call. And I would once again emphasize that there is natural seasonality in our business. We expect our business to build throughout the remainder of the year, with Q4 results expected to be the highest. As I mentioned during our last earnings poll, as we continue to drive pipeline innovation, we may enter into collaborations with external partners.

Sale: Our Q1 results reflects the phasing we noted during our last earnings call.

Sale: And I would once again emphasize that there's natural seasonality in our business we.

Sale: We expect our business to build throughout the remainder of the year with Q4 results expected to be the highest.

Sale: As I mentioned during our last earnings call.

Sale: As we continue to drive pipeline innovation, we may enter into collaborations with external partners.

Osama A. Eldessouky: It should be noted that our adjusted EBITDA guidance does not reflect any one-time upfront payments that may be made as part of such arrangements. In terms of other key assumptions underlying our guidance, as noted last quarter, we expect adjusted gross margin to be approximately 62%. We anticipate investment in R&D to be approximately 78% of revenue, and interest expense to be approximately $385 million for the full year. That said, we will continue to monitor Fed actions on interest rates for the remainder of 2024.

Sale: It should be noted that our adjusted EBITDA guidance does not reflect any onetime upfront payments that may be made as part of such arrangements.

Sale: In terms of other key assumptions underlying our guidance as noted last quarter.

Sale: We expect adjusted gross margin to be approximately 62%.

Sale: We anticipate investment in R&D to be approximately 78% of revenue.

And interest expense to be approximately $385 million for the full year.

Sale: That said, we will continue to monitor fed actions on interest rates for the remainder of 2024.

Osama A. Eldessouky: We continue to expect our adjusted tax rate to be roughly 15%, and full-year capex is expected to be approximately $250 million. To summarize, the business delivered solid results in the quarter, and we're off to a strong start in 2024. We remain committed to our strategy to drive growth and sustainable margin expansion. Now, I'll turn the call back to Brenton.

Sale: We continue to expect our adjusted tax rate to be roughly 15%.

Sale: Full year Capex is expected to be approximately $250 million.

Sale: To summarize the business delivered solid results in the quarter and we're off to a strong start in 2024, we remain committed to our strategy to drive growth and sustainable margin expansion and now I will turn the call back to Brent.

Brenton L. Saunders: Thanks, Sam. Let's highlight some 2024 growth drivers, including the upcoming launch of a new and differentiated OTC-Ox. As Sam mentioned, my vote has shown significant promise with Q1 revenues of $28 million. Just last week, we learned that two of the top three Medicare providers will begin covering MIBO, one starting today, and the other July 1st.

Brent Saunders: Thanks, Dan Let me highlight some 2024 growth drivers, including the upcoming launch of a new and differentiated OTC offering.

As Sam mentioned my vote is showing significant promise with Q1 revenues of $28 million.

Brent Saunders: Just last week, we learned that two of the top three Medicare providers will begin covering viable one starting today.

Brent Saunders: Other July one.

Brenton L. Saunders: That's approximately two quarters sooner than anticipated and means coverage will jump to roughly 50% by mid-year for this population. While we're in the early innings, excitement around this medication is real, and we expect MIBO will become a cornerstone of our dry eye franchise for years to come. Sam also touched on how to interpret Zeiger's performance in Q1, which I'll add some color. There are three contributing factors to consider. First, we realigned our entire field force with new territories established in early February.

Brent Saunders: That's approximately two quarters sooner than anticipated it means coverage will jump to roughly 50% by midyear for this population.

Brent Saunders: While we're in early innings excitement around this medication is real and we expect <unk> will become a cornerstone of our dry eye franchise for years to come.

Brent Saunders: Sam also touched on how to interpret xyrem performance in Q1.

Speaker Change: I'll add some color too.

Speaker Change: There are three contributing factors to consider first we realigned our entire field force with new territories established in early February.

Brenton L. Saunders: While most prescribers were seeing new faces, we expect the developing relationships will pay dividends going forward. Second, patients face the highest deductibles in the first quarter, which naturally results in fewer prescriptions, a cycle you're all familiar with.

Speaker Change: While most prescribed as we're seeing new faces, we expect the developing relationships will pay dividends going forward.

Speaker Change: Second patient space, the highest deductibles in the first quarter, which naturally results in fewer prescriptions as cycle Youre all familiar with.

Speaker Change: Third.

Brenton L. Saunders: While the incident involving changed healthcare did not have a material impact on Bausch and Lomb, there was a non-quantifiable effect given patient access to Zydra was disrupted. All that said, there are encouraging signs as we continue to rehabilitate and re-energize the brand. Our commitment to making Mibo and Zydrin the most prescribed options for evaporative and inflammatory triad disease has not wavered. We've made a significant investment in the comprehensive sales approach that will increase in prominence as the year progresses, and as more dry-eyed sufferers seek treatment for chronically underdiagnosed conditions.

Speaker Change: While the incident involving change healthcare did not have a material impact on bausch and lomb there wasn't non quantifiable effect given patient access to <unk> was disrupted.

Speaker Change: All that said there are encouraging signs as we continued to rehabilitate and Reenergize the brand.

Speaker Change: Our commitment to making my belt inside the most prescribed options for backward and inflammatory dry eye disease had the labor we.

We've made a significant investment in the comprehensive sales approach that will increase in prominence as the year progresses and as more dry eye sufferers seek treatment for chronically under diagnosed condition.

Brenton L. Saunders: For the millions suffering from dry eyes who might not require pharmaceutical intervention, we're excited to introduce a new and different treatment option: Blank Nutri-Tears, which is a daily nutritional supplement formulated to address the symptoms of dry eyes in as little as two to four weeks.

Speaker Change: For the millions suffering from dry eyes, who might not require pharmaceutical intervention, we're excited to introduce a new and different treatment option Blink neutral tiers, which is a daily nutritional supplement formulated to address the symptoms of dry eyes and as little as two to four weeks.

Brenton L. Saunders: For those averse to eye drops or already taking daily supplements, NutriTears could be a convenient solution. While supplements are often unproven, NutriTears is grounded in data. Last week, we announced the results of a clinical study evaluating the safety and efficacy of NutriTears. The study met both primary endpoints in addition to secondary endpoints, which shouldn't come as a surprise.

Speaker Change: But those are averse to eyedrops, we're already taking daily supplements neutral tiers could be a convenient solution.

Speaker Change: While supplements are often improve it neutral tiers is grounded in data.

Speaker Change: Last week, we announced the results of a clinical study evaluating the safety and efficacy of neutral tiers. The study met both primary endpoints. In addition to secondary endpoints, which shouldn't come as a surprise, we're a company that relies on science, when bringing new options to consumers Newt.

Brenton L. Saunders: We're a company that relies on science when bringing new options to consumers. Nutritears, which we anticipate will launch in the next few months, will be the latest addition to our growing nutraceutical franchise, which is anchored by Preserva. With the addition of Nutri-Tiers, we're clearly not resting on our laurels when considering the future of our industry-leading dry-ag platform; quite the opposite. Given the market potential, it bears repeating that we'll soon have something for everyone when it comes to treating a common but not commonly addressed issue. Simply put, our blend of prescription and OTC offerings separates us from the dry eye pack, and it's not even close.

Her tears, which we anticipate will launch in the next few months will be the latest addition to our growing nutraceutical franchise, which is anchored by preservation.

Speaker Change: With the addition of neutral tiers, we're clearly not resting on our laurels when considering the future of our industry, leading dry eye platform.

Speaker Change: The opposite.

Given the market potential it bears repeating that we'll still have something for everyone. When it comes to treating a common but not commonly addressed the issue.

Speaker Change: Simply put.

Speaker Change: Our blend of prescription and OTC offerings separates us from the dry ipads and it's not even close.

Brenton L. Saunders: Keeping with the theme of new products, we're on the precipice of a meaningful entry into premium IOL. We anticipate that these high-margin offerings will strengthen our surgical portfolio, which is increasingly focused on cutting-edge technology and responsive to the evolving needs of ophthalmic surgeons. Our Indista Envy trifocal is expected to be available in the U.S. later this year, and in Europe, we plan to launch the Lux Life brand in 2025. We have started enrolling a clinical study for INVISTA-BIOD, an extended depth of focus IOL, with an expected U.S. launch in 2026.

Speaker Change: Keeping with the theme of new products, we're on the precipice of a meaningful entry into premium iOS we.

Speaker Change: We anticipate that these high margin offerings will strengthen our surgical portfolio that is increasingly focused on cutting edge technology and responsive to the evolving needs of ophthalmic surgeons.

Speaker Change: Our and this that and the Tri focal is expected to be available in the U S. Later this year.

Speaker Change: And in Europe, we plan to launch blocks like Brad in 2025.

Speaker Change: We started enrolling a clinical study Brian this to be an extended depth of focus I O L with an expected U S launch in 2026.

Brenton L. Saunders: Our forthcoming premium IOL offerings are reflected in our familiar launch slide, which continues to widen as our renewed commitment to innovation takes hold. Just last week, we announced FDA approval for Lumify preservative-free, a prime example of harnessing a brand's momentum by extending its reach. The optimism around our future is warranted. We're heading in the right direction. Significant work remains, but the path we're on continues to be validated by our results, stakeholder feedback, and buy-in from 13,000 colleagues around the world. Operator, let's open the line for questions.

Speaker Change: Our forthcoming premium of I O L offerings are reflected on our familiar launched slide which continues to widen as our renewed commitment to innovation takes hold chess.

Speaker Change: Just last week, we announced FDA approval for Luma Pi preservative free.

Speaker Change: Example of harnessing our brands' momentum by extending its reach.

Speaker Change: The optimism around our future is warranted, we're heading in the right direction.

Speaker Change: Significant work remains but the path for Arctic continues to be validated by our results stakeholder feedback and buy in from 13000 colleagues around the world.

Speaker Change: Operator, let's open the line for questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Patrick Wood with Morgan Stanley.

Speaker Change: We will now begin the question and answer session.

Ask a question you May press Star then one on your Touchtone phone.

Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: The first question comes from Patrick Wood with Morgan Stanley.

Patrick Wood: Amazing. Thank you very much for taking the question. I just got a couple.

Patrick Wood: Amazing. Thank you very much taking the question.

Patrick Wood: I've just got a couple.

So I guess the thing that sort of has jumped out over the loss.

Patrick Wood: So I guess the thing that sort of has jumped out over the last certainly few quarters has been the breadth of the growth across all the different divisions rather than just one. I guess, is that a composition that you expect going forward, i.e., share gains kind of across the bulk of the different sub lines and geographies? That sounds like the message. Am I right in that?

Suddenly a few quarters has been the breadth of the growth across all the different divisions, rather than like one I guess is that a composition that you expect going forward I E share gains kind of across the bulk of the different sub lines and geographies that sounds like the message am I right in that.

Brenton L. Saunders: Yeah, so Patrick, it's Brent. Thank you and good morning. Yeah, I think you hit on a theme.

Patrick Wood: Yeah, So Patrick it's Bren, Thank you and good morning.

Bren: Yeah, I think you hit on on a theme I think when I joined you know over a year ago, and and and had our first earnings call about a year ago I talked about Reenergizing and refocusing the organization. While we also invest in innovation and got ready for probably the most robust new product launch cycle.

Brenton L. Saunders: I think when I joined, you know, over a year ago and had our first earnings call about a year ago, I talked about re-energizing and refocusing the organization while we also invested in innovation and got ready for probably the most robust new product launch cycle. And so, let me just give you some numbers if you look at the performance this quarter. Consumer, these are all constant currency. Consumer, plus 15. Contact lenses, plus 6, and surgical, plus 8. Pharma, plus 66. Excluding Zydra, plus 18.

Bren: And so let me just give you some numbers if you look at the performance. This quarter consumer. These are all constant currency consumer plus 15 contact lenses plus six surgical plus eight pharma plus 66, excluding the <unk> plus 18.

Brenton L. Saunders: Geographies, Asia plus 7, Europe plus 9, Latin America plus 17, and the U.S. plus 33. So I think, you know, that's pretty broad, high-quality growth across the world, right? Across all our businesses around the world. And the way you do that is by making the most of everything. You figure out how to reinvest in product and promotion, how to put the customer at the center of your universe, how to make your sales forces the most important people in the company, and really focus on execution. And so that's what we're doing in our reenergized company, and, you know, we expect that to continue.

Bren: Geographies Asia, plus seven Europe, plus nine Latin America, plus 17 in the U S. Plus 33. So I think you know that that's pretty broad high quality growth across the world right across all our businesses around the world and the way you do that is as you make the most of everything.

Bren: You can figure out how to to reinvest in product and promotion how to put the customer at the center of your universe, how to make your sales force is the most important people in the company and to really focus on execution and so that's that's what we're doing and our Reenergized company and and you know we expect that to continue.

Patrick Wood: And then just a second one, Maibo. I mean, a really strong start to the year.

Speaker Change: Amazing and then just a second one my Bo I mean really strong start to the year I'm. Just curious you know there's a lot of noise. When you. When you first launched the products between refill rates and things like that but I'm thinking at the start of the year relative to the guide is that a little bit of conservatism or is there any reason that we shouldn't see a continued pickup in.

Speaker Change: <unk> growth as you move through the quarters of this year for my back.

Speaker Change: Yeah, So I I, Patrick you're you're right look I just want to remind just you didn't ask it this way, but let me try to answer it.

Patrick Wood: I'm just curious, you know, there's a lot of noise when you first launch a product between refill rates and things like that. But I'm thinking at the start of the year relative to the guide, is there a little bit of conservatism? Or is there any reason that we shouldn't see a continued pickup and sequential growth as we move through the quarters of this year for Maibo?

Speaker Change: You know when you think about where we are with my Boeing and even XI dropped right. We've had about two quarters of both products in the market.

Brenton L. Saunders: Yes, Patrick, you're right. Look, I just want to remind you that you didn't ask it this way, but let me try to answer it.

Speaker Change: It's it's really early right where in the first quarter of the year as well.

Brenton L. Saunders: You know, when you think about where we are with Maibo and even Zydra, right? We've had about two quarters of both products in the market. So it's really early, right? We're in the first quarter of the year as well, and I think we're off to an amazing start with Maibo, while Zydra is still a work in progress.

And I think we're off to an amazing start with my Bo side, you're still work in progress.

Brenton L. Saunders: But, you know, I think as you look at our focus on execution, just by the numbers I just gave you, right, I think we have a lot of confidence that we can execute and we can deliver. And so maybe there's some conservatism there, but I think it's too early to call it up just yet. Right. It's just the first quarter. We have a brand new field for us. We have new technology. We have reps with new call patterns, and seeing new positions. So there's a lot to like, but there's a lot to focus on on an execution basis before you get too excited.

Speaker Change: But you know I think as you look at our focus on execution just by the numbers I. Just gave you right I think we have a lot of confidence that that we can execute and we can deliver and so maybe there's some conservatism there, but I think it's too early to call. It up just just yet right. It's just the first quarter, we have a brand new field force, we have new technology, we have.

Speaker Change: Reps with new call pattern seeing new physicians.

Speaker Change: So there's a lot to like but there's a lot to focus on on an execution basis before you get too excited.

Patrick Wood: Love it. Hope the shoulder feels better. Yeah, thank you. It is.

Speaker Change: Love It the shoulder feels better.

Brenton L. Saunders: Yeah, thank you. It is. It's much better. I appreciate it.

Speaker Change: Yeah think of it is it's much better I appreciate it.

Yeah.

Speaker Change: Okay.

Operator: The next question is from Larry Biegelsen with Wells Fargo.

Speaker Change: The next question is from Larry <unk> with Wells Fargo.

Lawrence H. Biegelsen: Hi, good morning. It's Lei calling in on behalf of Larry.

Speaker Change: Hi, Good morning, it's Lei, calling in for Larry Thanks for taking the question and congrats on start a good start to the year I just had two questions one on stride Rite and Brent touched on this just briefly you kept your guidance at 400 million and talked about kind of the pieces that affect Q1 SaaS.

Lawrence H. Biegelsen: Thanks for taking the question, and congrats on a good start to the year. Just two questions, one on Zydra, and Brent touched on this just briefly. You kept your guidance at $400 million and talked about some of the pieces that affect Q1 sales. What gives you the confidence that you will get to $400 million? How do you get there?

Brenton L. Saunders: And what should we look for in prescription trends? Previously, you talked about maybe stabilizing those prescription volumes in the first half and returning that to growth in the second half. How will that play out?

What gives you the confidence that you get to 490 <unk>, how do you get there and what should we look for in prescription trends I think previously you talked about maybe stabilizing those prescription volume in the first half.

Speaker Change: Turning now to growth in second half, how do we see that play out.

Brenton L. Saunders: I appreciate the question and, as I was just mentioning to Patrick, I think we're super excited about the MIBO performance in the first quarter and, as I said, ZYDRA is still a work in progress. Zydra was the only product, because of the TSAs with Novartis that were still in effect, that used Change Healthcare to manage co-pay cards and administration at the pharmacy. And as you know, Change went down, right? And if you look at the weeklies, as soon as Change went down, you see the significant impact on script trends for Zydra. My book does not use Change. We use Blink.

Speaker Change: Yes. So I appreciate the question and and you know as I was just mentioning the Patrick you know I think we're we're you know we're super excited about the micro performance in the first quarter.

Speaker Change: And you know as I said side, there is still work in progress and as I said in the in the script you know we had.

Speaker Change: <unk> is the only product because of the TSA is with with Novartis that were still in effect that huge change health care to manage copay cards and administration at pharmacy.

Speaker Change: And as you know change went down right.

Speaker Change: And if you look at the the weeklies as soon as change went down you see the significant impact on script trends.

Speaker Change: Preside euro.

My vote does not use change we use blank.

Brenton L. Saunders: We quickly moved. The team worked very hard to transition away from Change, but that took a few weeks. It frustrated doctors when patients went to the pharmacy and had to pay full load or full list price. And it was an administrative mess for patients and for physicians.

Speaker Change: We quickly moved to the team worked very hard to transition away from change, but that took a few weeks.

Speaker Change: Australia doctors when patients you know went to pharmacy and couldn't and had to pay you know for full load or full list price.

Speaker Change: Administrative.

Speaker Change: Mess for patients and for physicians and so you know couple that with a brand new field force with new territories, and new new call patterns.

Brenton L. Saunders: And so, coupled with a brand new field force, with new territories and new call patterns, and then first quarter seasonality, you know, Zydra had a difficult going in the first quarter. We do expect to see that come back in the second quarter. And so, yes, I guess you could look at the 400 million guidance and say, you know, that looks a little aggressive at this point, but we're not ready to call it down.

And then first quarter seasonality is either had a had.

Speaker Change: A difficult going in the first quarter, we do expect to see that come back in in the second quarter.

And so yes, I guess you could look at the 400 million guidance and say you know that that looks a little aggressive at this point, but we're not ready to call down I took our team is absolutely focused on meeting their commitments.

Brenton L. Saunders: I think our team is absolutely focused on meeting their commitment, and we want to continue to invest in doing that. So we have a lot of good things happening with Zydra in the second quarter, and I think you'll see sequential improvement as we go into the third and fourth quarters. So I get it. I understand why people may ask that question. But in the first quarter of the year, we're not willing to take Maiba up, and we don't want to take Zydra down.

Speaker Change: And we want we want to continue to invest to do that so we have a lot of good things happening with <unk> during the second quarter and I think you'll see a sequential improvement as we go into the third and fourth quarter. So.

Speaker Change: I get it I get I get why people may ask that question, but first quarter of the year, we're not willing to take my ball up and we don't want to excite her down we want to we want to hold our feet to the fire in and really focus on execution, but we'll update you in the next quarter and give you some better color. Once we've seen clean performance you know absent change in Salesforce.

Brenton L. Saunders: We want to hold our feet to the fire and really focus on execution. But we'll update you in the next quarter and give you some better color once we've seen clean performance, you know, absent Change and Salesforce realignment.

Speaker Change: Our realignment.

Lawrence H. Biegelsen: Okay, that's super helpful. My second question is about the guidance. Our math implies that in Q1, your organic sales growth was somewhere in the low double digits, and your guidance seems to imply that organic growth would slow a bit for the rest of the year, maybe closer to mid or mid to high single digits. So one, can you just confirm that math? And two, what slows from Q1 to the rest of the year? Thank you.

Speaker Change: Okay. That's super helpful. My second question is on the guidance.

Speaker Change: Then our math it implies that in Q1.

Our organic sales prep with somewhere in the low double digits and your guidance seems to imply that organic growth would slow a bit for the rest of the year, maybe closer to mid or mid to high single digits.

Speaker Change: One can you just confirm that math and tell them what slows from Q1 to the rest of the year. Thank you.

Osama A. Eldessouky: Good morning, it's Sam. And on organic growth, and really, I'm going to focus on Zydra here. So, as we said, Zydra was about $79 million. Brent already touched on that.

Speaker Change: Good morning, Sam on the organic growth and I'm going to focus inside right here. So as we said that there was about 79 million rental rates. That's shown up from a pharma business. When you think about constant currency growth of 66.

Osama A. Eldessouky: From a pharma business, when you think about constant currency growth of 66, that gets it about 18%. When you look at our overall performance for this quarter, we put up 20% constant currency. Zydra was about 800 basis points of contribution to that. So that gets you roughly 12% when you take Zydra out. And if you look at the full-year guidance, now with our increasing guidance of 13 to 15, if you take the midpoint of that guidance of 14% and you do the math on Zydra, that suggests roughly about 8% organic for the full year. So really, we're carrying the momentum forward throughout this year, but still early in the year, and we're carrying the momentum with us for the next three quarters.

Speaker Change: That gets us at about 18% when you look at our overall performance for this quarter, we put up 20% constant currency is that it was about 800 basis point contribution to that so that gets you about roughly about 12%.

Speaker Change: XI drought and if you look at the full year guidance now with our increase in guidance of 13 to 15, if you take the midpoint of that guidance of 14% and you do the math on that suggests roughly about 8% organically full year, so really seeing the momentum we're carrying that momentum forward throughout the theres puts in.

Lawrence H. Biegelsen: Okay, so it sounds like there's perhaps some conservatism going from 12% organic growth in Q1 to 8% for the full year.

Speaker Change: Is it a year, but we're still early in the year and where can that momentum with us for the next three quarters.

Speaker Change: Okay. So it sounds like there's some perhaps some conservatism going from 12% organic growth in Q1, two and 8% for the full year.

Osama A. Eldessouky: Well, as Brent said, we're excited about what we're seeing in the MIBO, and we're excited about what we're seeing in our base business. He went through how we see performance across all four businesses and the regions. But again, we're just really balanced here in terms of how we're thinking about the rest of the year given the fact we're still early in the year. Yeah, I think, you know. Stay tuned. Let's see where we are in the

Speaker Change: Well as Ben says like well that's the way we're excited about what we're seeing in the micro we're excited about what we're seeing in our base business. Just spent went through how we're seeing the performance across all four businesses and the regions.

But again, we're just really balanced here in terms of how we're thinking about the rest of the year given the fact, we're still early in the year.

Brenton L. Saunders: Yeah, I think, you know, stay tuned. Let's see where we are in the second quarter, and then we can, we may adjust, but let's execute first.

Yeah, I think stay tuned and that's where we are in the second quarter and then we can we may adjust but let's let's execute first.

Speaker Change: Thanks, so much.

Speaker Change: Yeah.

Xuyang Li: Your next question for today is from young Li with Jefferies.

Lawrence H. Biegelsen: All right, great. Thanks for taking our questions.

Xuyang Li: Alright, great. Thanks for taking our questions.

Xuyang Li: Maybe one more on pharma.

Xuyang Li: Good to see the early outperformance from Milo and her desire to comments is change.

Li: But you have an integrated sales force now between the two largest for dry eye.

Li: I wanted to hear a little bit about the potential cross sell in packs in 'twenty four.

Li: How much of that $495 million combined revenue number is coming from the benefits of the integrated sales force.

Brenton L. Saunders: Yeah, it's a great question. I think, you know, the integrated field force, and as you mentioned, the largest field force in the dry eye category by a long shot, is a key component of our strategy to win in the market. And when you look at, you know, how this market has evolved, it's really evaporative dry eye, where Maibo is the only option, and inflammatory dry eye, where ZYDRA versus a sea of cyclosporins, including Restasis and, and some branded reformulated. And the goal for us is to win. We have the best option for both types of patients for either type of dry eye.

Speaker Change: Yeah. It's a great question I think you know the integrated field force and and as you mentioned the largest field force in the dry eye category by a long shot is a key component of our strategy to win in the market and and when you look at.

Speaker Change: You know how this market.

Speaker Change: <unk> has evolved its really.

Speaker Change: Evaporative dry where my bow is the only option and inflammatory dry eye wear inside your versa, a sea of cyclosporin, including Restasis and <unk> and some branded reformulated and the goal for US is to when we had the best option for both types of patients for either EBITDA.

Brenton L. Saunders: And so ZYDRA really has to compete to win in the, in the inflammatory space. And the competition there is the cyclosporin, you know, sea of products. And I think we have the best product there. And then, and then we're the only game in town for inflammatory. And so our field reps were trained in late February; they've been in the field for just a few weeks. But early results are anecdotal, and some data are very promising. So I think we have to see it play out in the second, third, and fourth quarters of the year. But, But I'm very encouraged. I think we have a great strategy, and the team is executing it.

Speaker Change: Either type of dry eye, and so <unk> really has to compete in winning in the in the inflammatory space and the competition. There is the cyclosporin you know see a products.

Lawrence H. Biegelsen: All right, great. That's very helpful.

Speaker Change: And I think we have the best product there and then and then we're the only game in town for inflammatory and so our field reps were trained in late February and had been in in the field for just a few weeks.

Speaker Change: But early results are anecdotal some data.

Speaker Change: Our very promising so I think we have to see it play out in the second third and fourth quarter of the year, but but I'm very encouraged I think we have a great strategy and and the team is executing.

Speaker Change: Okay.

Lawrence H. Biegelsen: Maybe turning to compacts, are there still any lingering Lynchburg distribution impacts on contact lens growth in the first quarter? Any more impacts for the rest of the year? And, you know, if you can make some general comments on pricing and supply dynamics for contact lenses for the industry. You know, when does supply catch up relative to demand, especially for daily sigh highs?

Speaker Change: Alright, great that's very helpful.

Speaker Change: Turning to compact.

Speaker Change: There still any lingering lynchburg distribution impact.

Speaker Change: Contact lens growth in the first quarter.

Speaker Change: Any more impact for the rest of the year and if you can make some general comments on pricing and supply dynamics in contact lenses.

Speaker Change: For the industry and when does supply a catch up relative to demand, especially for daily Si Hy.

Brenton L. Saunders: Yeah, so thanks for the question. Look, I think, well, let me start with Lynchburg. Lynchburg is resolved. It is shipping all the orders.

Speaker Change: Yeah. So so thanks for the question look I think well, let me start with Lynchburg Lynchburg is resolved.

Brenton L. Saunders: Now, in fairness, you know, we're back to par on Lynchburg. Now, you know, we did make an investment in new technology there. We do need to get that efficiency, and hopefully, we will see that pull through in the remainder of the year. But Lynchburg is not a drag on supply at this point.

Speaker Change: It is it is a shipping all the orders now in fairness, we're back to par and Lynchburg now you know we did make an investment in new technology. There, we do need to get that efficiency them, hopefully, we see that pull through in the in the remainder of the year, but but Lynchburg is not a drag on on <unk>.

Brenton L. Saunders: So that's the good news there. You know, as we look at performance, on a constant currency basis, our dailies were up 73% in the quarter. So really impressive performance.

Speaker Change: Fly at this point.

Speaker Change: So that's the good news there.

Speaker Change: You know as we look at performance.

Speaker Change: On a constant currency basis, our dailies were up 73% in the quarter. So really impressive performance and we're seeing that really broad based wherever we launch in and to be fair. We're still launching modalities, we still have multifocal launches starting to spread across the world and we're gearing up for the tour.

Brenton L. Saunders: And we're seeing that really broad-based wherever we launch. And to be fair, we're still launching modalities. We still have multifocal launches, you know, starting to spread across the world. And we're gearing up for the TORIC launch in the U.S. and then the rest of the world. So there is a lot to like there, a lot of great performance, and a lot of launches still coming within that family of products. I think that the second thing I would, or the third thing I would say is, you know, that is probably the best lens in the category, particularly the multifocal.

Speaker Change: Eric launch in the U S. And then and then rest of world. So a lot a lot to like there are a lot of Oh great.

Speaker Change: Great performance at a lot of launches so coming within that family of products I think the second thing I would there is a third thing I would say is is that is probably the best ones in the category, particularly the multifocal, we're hearing tremendous positive feedback from both consumers and and they optometry.

Brenton L. Saunders: We are hearing tremendous positive feedback from both consumers and the optometry community. So I think we have a real winner in terms of the quality of that particular product. With respect to pricing, you know, I think as we look, we're trying to hold prices relatively stable, very modest price increases around the world. And that's because, you know, we have been in a supply-constraint environment. And so for us, it's about, it's not about taking a price on customers.

Speaker Change: Community so.

Speaker Change: I think we have a real winner in terms of the quality of that particular product with.

Speaker Change: With respect to pricing you know I think.

Speaker Change: As we look you know we're trying to hold pricing relatively stable very modest price increases around the world and that's because you know we have been in a supply constrained environment and so for US. It's about it's not about taking up price on customers, it's about winning accounts taking market share.

Brenton L. Saunders: It's about winning accounts and taking market share. I think we've seen some discounting by others, but that's because they have a lot of inventory in the trade. Unfortunately, because of Lynchburg, or for other reasons we don't like, we don't have a lot of inventory. So everything we can ship, we can sell. Everything we sell, we ship. And so, you know, I think we're in a pretty solid position and, you know, I'm excited to see what happens as we continue to take, share, and grow that part of our business.

Speaker Change: I think we've seen some discounting by others, but that's because they have a lot of inventory and and and and the trade.

Speaker Change: Unfortunately, because of Wensberg or not the reasons, we like we don't have a lot of inventory. So everything we can ship, we can sell everything we sell we ship and so you know I think we're in a pretty solid position and I'm excited to see what happens as we continue to take share and grow that part of our business.

Speaker Change: Thank you.

Operator: Your next question is from Robbie Marcus with J.P. Morgan.

Speaker Change: Your next question is from Robbie Marcus with JP Morgan.

Robbie Marcus: Oh great. Good morning, and thank you for taking the questions. I have two financial ones for you. Maybe first, I was hoping you could give us an inside look at how the Zydra integration is going. How did that compare versus your plan, and is there any way you could tease out what underlying versus reported margins are?

Robbie Marcus: Oh, great. Good morning, and thank you for taking the questions I had two financial ones for me maybe first.

Robbie Marcus: I was hoping you could give us the insight look at how this I dry integration is going how did that compare versus your plan in any.

Robbie Marcus: Any way you could tease out what underlying versus reported margins were.

Brenton L. Saunders: Yes, I'll take the first part, and maybe Sam can address the second. So, the integration is complete. We, as I mentioned earlier, fully integrated and realigned the field forces at the end of February. So they've been, you know, that happened just a few weeks ago. And that went incredibly well, and the team is energized and excited. I've met with many of them, and they are really happy to be in a dedicated eye care company and have, you know, multiple treatment options for physicians to treat patients.

Speaker Change: Yeah, So I'll take the first part and maybe Sam can address the second.

Sam: So the integration is complete.

We as I mentioned earlier, we fully integrated and realign the field forces at the end of February so they've been a you know that happened just a few weeks ago.

Sam: And that when I think incredibly well and the team is energized and excited I've met with many of them in and they are really happy to be in a dedicated eye care company in and have multiple.

Sam: Multiple treatment options for physicians to treat patients and so I think that that is well. We're now focused on improving our call points are technologies, we've got the DTC back online and and and moving we have a lot of speaker programs happening.

Brenton L. Saunders: And so I think that, as well, we are now, you know, focused on improving our call points, our technologies. We've got the DTC back online and moving. We have a lot of speaker programs happening. And so, you know, there's a lot of energy, a lot of focus, and a lot of excitement from Salesforce and from customers, I hear quite regularly. So I think, you know, we have to see how it performs because it's just a few weeks since it all happened.

Sam: And so you know theres a lot of energy a lot of focus and a lot of excitement from from the sales force and from customers I hear quite regularly so I think we have to.

Sam: We have to see how it performs because its just a few weeks since it's all happened, but but that's good but remember we were in <unk> with with Novartis and so you know we had to stick with change we had lots of things that perhaps if we didn't have those TSA as we remove more quickly or faster or with more sense of urgency, but that is now behind us. So we now control.

Brenton L. Saunders: But that's good. But remember, we were in the TSAs with Novartis. And so, you know, we had to stick with change. We had lots of things that perhaps if we didn't have those TSAs, we would move more quickly or faster or with more sense of urgency. But that is now behind us. So we now control our own destiny, and we can focus on execution.

Sam: Our own destiny, and we can focus on execution semi.

Osama A. Eldessouky: Sam, you want to? And, Robbie, on the second part of your question, when you think about Zydra, really, it was part of our overall strategy to start shifting the mix in our products to higher margins. So you see that play out in our financials this quarter with the gross margin beat of 63%, the 320 basis points that I referenced earlier. Almost half of that is coming out because of the Zydra mix.

Sam: And Ravi on your second part of your question. When you think about Dierdra was really it was part of our overall strategy to start shifting the mix of our products to higher margin. So you'll see that play out in our financials. This quarter with the with gross margin beat of the 63% a 320 basis points.

I referenced earlier almost half of that is coming out because of the Xyrem X. So you'll see that benefit the gross margin.

Osama A. Eldessouky: So you'll see that benefit here in the gross margin. In terms of our overall margins on Zydra, the way I think about it, I disclosed in the past that it's roughly about mid-30s. I think that's still the same number, and probably, as we progress throughout the year, that should expand to about high-30s.

Sam: In terms of our overall margins on our side or the way I think about we disclose it in the past that it's roughly about mid.

Speaker Change: Mid thirties.

Speaker Change: I think that still the same number and that will be probably as we progressed throughout the year that should expand to about high thirty's.

Robbie Marcus: Great, and just one more on free cash flow. It came in negative in the quarter.

Great and just one more on free cash flow. It came in negative in the quarter. How do we think about free cash flow generation throughout 'twenty four and then any guidance on full year free cash flow.

Robbie Marcus: How do we think about free cash flow generation throughout 24, and then any guidance on full-year free cash? Yeah, so cash for the core is roughly about 48 million. That's adjusted cash from

Osama A. Eldessouky: Yeah, so cash for the quarter was roughly about $48 million. That's adjusted cash from operations, so it was positive. I think there are a couple of things to keep in mind.

Yeah, so cash for the quarter was roughly about 48 million.

Speaker Change: Cash from operations. So it was positive I think a couple of things to keep in mind. One is the timing of our capital expenditure is a little bit tricky. So it's.

Osama A. Eldessouky: One is the timing of capital expenditure is a little bit tricky, so I will probably just guide you to think about it more of a full year when you think about capital expenditure. We spent roughly $67 or so in the quarter on CapEx, so there was a little bit heavier than our usual run rates in terms of CapEx for Q1. That being said, I think we started with a positive cash flow from operations in Q1.

Speaker Change: Probably you just guide you to probably think about it more of a full year. When you think about capital expenditure. We spent roughly about 67 or so in the quarter of Capex. So there was a little bit heavier than Oh.

Speaker Change: Our usual run rate in terms of Capex for Q1 that being said I think we started with a positive cash flow from our adjusted cash flow from operations. In Q1, we are continue to manage working capital, especially with the inventory right now were just over $1 billion to be specifics about a $1 billion 73.

Osama A. Eldessouky: We are continuing to manage working capital, especially with inventory. Right now, we're just over a billion dollars; to be specific, it's about $1,073,000,000 in terms of inventory. And just to keep in mind, there are two elements here. There's a strategic buildup of that inventory coming in terms of what we're doing in our surgical business. And we're going to see that come down as we wrap up 24 into 25. But there's also a step up in our inventory because of the acquisition of Zydrome.

Speaker Change: In terms of inventory and that's just to keep in mind, there's two elements here theres the strategic buildup of inventory coming in terms of what we're doing in our surgical business and we're going to see that come down as we wrap up 24 into 'twenty five but theres also step up in our inventory because of the acquisition et cetera.

Great. Thank you.

Joanne Karen Wuensch: Your next question is from Joanne Wuensch with Citi. Good morning, and thank you for joining us.

Speaker Change: Your next question is from Joanne Wuensch with Citi.

Joanne Karen Wuensch: Good morning, and thank you for taking the question.

Joanne Karen Wuensch: Could you please contact our IR I gave away what I wanted to ask the contact and.

Joanne Karen Wuensch: The contact lens market. How are you viewing that how are you viewing whereabouts mums market share maybe guy and.

Joanne Karen Wuensch: A state of the Union on the Silicon.

Joanne Karen Wuensch: One day lens market.

Joanne Karen Wuensch: Okay.

Speaker Change: Your products there. Thank you.

Brenton L. Saunders: Yeah, so you know, I think, as you look at our performance in the market, as I said earlier, you know, we are in a pretty strong spot with 73% constant currency growth in our daily sat high franchise. And as I mentioned, I think it's important to have a lot of momentum there because we have, we have, you know, the sphere has been launched globally now, but we have to continue to launch the multifocal around the world. And now we're preparing for the Twerk launch in the US.

Speaker Change: Yeah. So you know I think.

Speaker Change: As you look at our performance in the market as I said earlier.

Speaker Change: We are in a pretty strong spot with 73% in constant currency growth in our daily Si Hy franchise, and as I mentioned, I think important and there's a lot of momentum there because we have we have you know.

Speaker Change: The sphere is launched globally now, but we have to continue to launch the multifocal around the world and now we're preparing for the toric launch in the U S. So.

Joanne Karen Wuensch: So you know, as you look at the market, you're looking at mid single-digit growth, and I expect that we should be able to do better than that and gain share. And so we have a long way to go to gain share given our current market position. But you know, I think we have a great product. We have a great mix of products. We have great relationships with ECPs around the world.

Speaker Change: You know as you look at the market Youre looking at mid single digit growth.

Speaker Change: And I expect that we should be able to to do better than that and gain share and so.

Speaker Change: We have a long way to go to gain share given our current market position, but you know.

Speaker Change: I think we have a great product, we have a great mix of products, we have great relationships with the ECP is around the world we have a great brand ambassador alarm.

Joanne Karen Wuensch: We have a great brand in Bausch and Lomb and, you know, a lot of heritage. So, a lot to like, but a real focus on execution and, particularly, on launching the other modalities around our daily sat high, infused in the US, and ultra daily is how it's branded outside the US. And that's a real focus, and I'm proud in the first quarter to say the team delivered 73% growth. So let's hope they can stay focused on their customers and execution and continue to deliver that momentum.

Speaker Change: But you know a lot of heritage. So a lot to like put a real focus on execution and particularly on launching the other modalities around our daily Si Hy.

Speaker Change: And fuse and in the U S and ultra Sally is how it's branded outside the U S and that's a real focus and I'm proud in the first quarter to say the team delivered 73% growth. So so let's hope they they can stay focused on their customer and execution and continue to deliver that momentum.

Speaker Change: Okay.

Speaker Change: Thank you.

Vijay Muniyappa Kumar: The next question is from Vijay Kumar with Evercore ISI.

Speaker Change: The next question is from Vijay Kumar with Evercore ISI.

Vijay Muniyappa Kumar: Hey, guys. Thanks for taking my question. I guess I have two sort of margin-related questions. First, maybe, Sam, on GrossMartin's outperformance in Q1, the annual guidance implies a step down. Is that a function of the FX, or what causes the GrossMartin step down in the back half? I think you mentioned something about 10 million FX headwinds.

Vijay Muniyappa Kumar: Hey, guys. Thanks for taking my question.

Vijay Muniyappa Kumar: I guess two.

Vijay Muniyappa Kumar: Two.

Vijay Muniyappa Kumar: Of margin related questions.

Vijay Muniyappa Kumar: First up maybe Sam on the gross margins outperformance in Q1, I think the annual guidance implies a step down.

Vijay Muniyappa Kumar: Is that the.

Sam: Is that is that a function of the sexual what causes the gross margin step down in the back back half I think you mentioned something about $10 million of FX headwinds with an incremental gross margin impact.

Osama A. Eldessouky: So, good morning, Vijay. So, there are two parts to this. So, the first part is we're seeing an improvement in gross margin because of the product mix with higher margins, and we've seen that play out in Q1. One of the elements that you have to keep in mind as you think about the rest of the year is the inventory balance that I referred to earlier, but call it $1.75 billion that's sitting on inventory.

Sam: Good morning, Vijay So it's two parts. So the first part is that we're seeing.

Vijay Muniyappa Kumar: Improvement in gross margin because of their product mix with the higher margins all and we've seen that play out in Q1, one of the elements that you have to keep in mind as you think about the rest of the year is the inventory balance I referred to earlier, but call. It $1 billion 75, that's sitting on inventory that number.

Osama A. Eldessouky: That number has a component of it, same for surgical. So, if you recall in the last number, we've been talking about our spot buy, where we've been buying components to be able to ensure that we have sufficient supply in our surgical business. You're seeing that in the growth of 8%, but you're also seeing that in a higher cost of inventory, and that will take time to bleed through the P&L. So, that will be an element here that will be offsetting some of the benefits that we're seeing from the product mix. That's why we stayed around that 62% gross margin for the full year. Yeah.

Vijay Muniyappa Kumar: <unk> have a component of it is same for surgical so if you recall in the last number of quarters, we've been talking about our spot buy where we've been buying components to be able to ensure that we have sufficient supply on our surgical business youre seeing that endo and the growth of up to 8%, but also youre seeing that in a higher cost of the inventory and that will.

Vijay Muniyappa Kumar: Take time to bleed through the P&L, so that will be an element here there'll be offsetting some of the benefits that we're seeing from a product mix.

Vijay Muniyappa Kumar: That's why we stayed around that 62% gross margin for the full year and I would add if I catch it right.

Brenton L. Saunders: Yeah, and I would add, if I could, Sam, we made a very intentional decision here to build inventory specifically as it relates to product supply for surgical procedures. As you know, you can't leave a surgeon hanging before surgery.

Vijay Muniyappa Kumar: Made a very intentional decision here to build inventory specifically as it relates to product supply for surgical.

Vijay Muniyappa Kumar: As you know it is you can't leave a surgeon hanging before surgery and so one of the things that Sam and I decided when I arrived as we were going to prioritize customer relationships and supply to customers wherever possible to regain confidence in our surgical business that is.

Brenton L. Saunders: And so one of the things that Sam and I decided when I arrived is that we were going to prioritize customer relationships and supply to customers wherever possible to regain confidence in our surgical business. That is paying off with respect to sales and relationships, but it is hurting cash and margin. And so that is something we hope to resolve over time, but it was an intentional decision to prioritize customers.

Vijay Muniyappa Kumar: Paying off with respect to sales and relationships, but it is hurting cash and and margin and so that that that is something we hope to resolve over time, but it was in.

Vijay Muniyappa Kumar: An intentional decision to prioritize customers.

Osama A. Eldessouky: And Vijay, on the second part of your question, in terms of the currency headwind, we've seen improvement in our performance in EBITDA. That was offset by an incremental $10 million of currency headwind that was not in our initial guidance. So, in essence, really, we absorbed the strength and the performance in EBITDA with that $10 million headwind.

Vijay Muniyappa Kumar: On your second part of your question in terms of the currency headwind, we've seen improvement in our performance in EBITDA that was offset by a 10 and the incremental $10 million currency headwind that was nine our initial guidance. So in essence really we absorbed that performed the strengthen the performance of EBITDA would that $10 million headwind.

Vijay Muniyappa Kumar: That's helpful, Sam. Brent, one for you.

Speaker Change: That's helpful Sam, but Brent one for you I think.

Speaker Change: In the past you've set the spend on <unk> as well about the 95 million in revenue guidance how much of this is some sort.

Speaker Change: Sort of one time claim or marketing related adapting our launch related spend.

Brent Saunders: You know and and should we expect those spend levels to go down and then start seeing leverage.

Brent Saunders: And margin contribution in fiscal 'twenty five.

Brenton L. Saunders: Yeah, so great question. Look, I think it's too early to figure out how we're going to invest behind Maibo in 2025 until we see some more performance. That being said, traditionally, you do invest behind new drug launches for two or three years. We do expect to see improving margins around Maibo, and profitability around Maibo improve over time. And so 2024 is the low point. In 2025, we'll see improvement. And as we get into 2026 and 2027, you're going to see real margin contribution. And look, we have Maibo for a long time.

Brenton L. Saunders: I think in the past you've said the spend on MIBO is well above the $95 million revenue guidance. How much of this is sort of one-timer marketing-related, you know, launch-related spend? You know, and should we expect those spend levels to go down and start seeing leverage and margin contribution in fiscal 25? Yeah, so, great question. Look, I

Speaker Change: Yeah. So so a great question look I think it's too early to figure out how we're going to invest behind my bow and twenty-five until we see some more performance that being said traditionally you you do invest behind new drug launches for two or three years.

Speaker Change: We do expect to see improving margins around more about my bow and and profitability around my bow improve over time.

Speaker Change: So 24 2024 is the low point 2025, we will see improvement as we get into 'twenty six 'twenty seven youre going to see real margin contribution and look we have mimo for a long time and so it can become a really significant.

Brenton L. Saunders: And so it can become a really significant margin and profitability contributor to the company over the long term. And so that's what we're building towards. You only get one chance to launch a drug. You only get one chance to set a curve.

Speaker Change: Margin and profitability contributor to the company over the long term and so that's what we're building towards you only get one chance to launch a drug you only get one chance to set a curve.

Brenton L. Saunders: You know, you see the struggles that we have had in rehabilitating Zyra. We don't want to put MIEB in that position, ever, right? We want a very strong curve of adoption and profitability for Mival, and I think we're really up to a good start. than we had even hoped. And so, you know, sometimes in pharmaceutical launches, I've always said this before, and I'll say it again, when you see smoke on a fire, you pour gasoline on it, because that's how you build the biggest and highest peak sales and profitability over time. That's helpful. Thanks, guys.

Speaker Change: You see the struggles that we have in REIT REIT rehabilitating zebra, we don't want to put my bond that position ever right. We wanted to have.

Speaker Change: Very strong curve of adoption and profitability and in LIBOR in it.

Speaker Change: I think we're really off to a good start better than we had even hoped and so you know sometimes and in and pharmaceutical launches I always say I've said this before I'll say it again when when you you know you see smoke on a on a fire you pour gasoline on it because that's how you build the biggest and highest peak sales and profitability.

Speaker Change: <unk> overtime.

Speaker Change: That's helpful. Thanks, guys.

Speaker Change: Yes.

Speaker Change: Yes.

Vijay Muniyappa Kumar: Your next question is from Matt Miksic with Barclays. Hey Matt. Matt, your line is live.

Speaker Change: Your next question is from Matt <unk> with Barclays.

Matt: Hey, Matt.

Matt: Okay.

Matt: Matt Your line is live.

Matthew Stephan Miksic: Hi, thanks so much. Sorry about that.

Matt: Alright, thanks, so much sorry about that.

Matthew Stephan Miksic: Thanks for taking the questions. Just one on, maybe strategic investment, if you would. I know last year investing in Zydra and making the decision to kind of push out your plans for driving leverage lower post-spin was a kind of an important strategic decision that seems to be paying off. And, of course, there's lots of other things you could be investing in across the businesses that you have strategically. Just wondering what the appetite is at this time or in the next 12 or 18 months for that kind of activity? And I would have one follow-up, if I could.

Matt: Thanks for taking the questions just one on.

Matt: Maybe strategic <unk>.

Matt: Investment if you if you would I know last year.

Matt: Investing an insider in making the decision to kind of push outs.

Matt: Your plans for for driving leverage lower post the spin was it kind of an important strategic decision there seems to be paying off.

Matt: And of course, there's lots of other things you could be investing in across the businesses that you have strategically.

Matt: Just wondering what's the appetite at this time or in the next 12 or 18 months or is that kind of activity and I have one follow up if I could.

Brenton L. Saunders: Yeah, so you're right, Matt. We did make a big bet on Zydra. And I have to say, while we still have work to do on Zydra, the actual investment goes beyond just the product TRXs and sales; it goes to establishing our presence in Zydra. And things like Maibo have clearly benefited from having Zydra.

Matt: Yes, so youre right that we didn't make a big bet on <unk> and I have to say you know while we while we still have work to do on Zeiter. The actual investment goes beyond just the product <unk> and sales that goes to establishing our presence in <unk> and things like <unk> have clearly benefited from.

Matt: From having <unk> as we launch into more OTC options that will also benefit because of our our market position because of his either we have a very loud share of voice in the category and we want to be a driver of innovation and more solutions for patients. So strategically a lot of blocked alike.

Brenton L. Saunders: As we launch into more OTC options, that will also benefit because of our market position because of Zydra. We have a very loud share of voice in the category, and we want to be a driver of innovation and more solutions for patients. So, strategically, a lot to like. On execution with actual Zydra, a lot of work to do. That's how I think about it.

Matt: On execution with actuals, either a lot of work to do that's how I think about it.

Matt: You know I think as we look at and investing in the business. The top priority right now is investing behind the launches.

Matt: Really important launches and continuing to support our contact lens business as I've mentioned a few times.

Brenton L. Saunders: You know, I think as we look at investing in the business, the top priority right now is investing behind the launches. You know, really important launches that, you know, continue to support our contact lens business. As I mentioned a few times, we haven't spoken a lot about surgical IOLs, but surgical IOLs are really important. Aspire, Invista Aspire, which is our monofocal plus, which launched at the very end of last year, is really into full launch mode right now, and something we're investing in. We've got roughly 600 surgeons trained in implanting lenses, and the feedback has been tremendous.

Matt: We haven't spoken a lot, but surgical ILS.

Matt: Really important aspire and Vista aspire, which is our mono focal plus which launched at the very end of last year is really into full launch mode right now and something we're investing behind we've got roughly 600 surgeons trained and implanting lenses and the feedback has been tremendous.

Brenton L. Saunders: As we're doing that, we're getting ready to launch the Lux upgrades around Europe. We have the Trifocal, which is Aspire Envy, launching perhaps roughly close to the fourth quarter or thereabout. That is going to be a great lens, and we're investing in the studies for Invista beyond our extended depth of focus, so there is a lot to do there as well. All of our businesses, including consumer, contact lenses, pharma, and surgical, all have a really robust new product cycle coming over the next few years, and we want to have launch excellence and really have these products be the future of B&L.

Matt: We're doing that we're getting ready to launch the <unk>.

Matt: <unk> upgrades around Europe.

Matt: We have the Ah <unk>.

Matt: Tri focal which is aspire envy launching and then perhaps the roughly close to the fourth quarter or thereabout.

Matt: And so that that is going to be a great lens and we're investing in the study is for this to beyond our extended depth of focus so a lot of a lot to do there as well so all of our businesses, including consumer contact lenses pharma surgical all have a really robust new product cycle coming over the next few years and we want to.

Matt: We want to have launch excellence and really have these products be the future of P&L and by the way across the board, they're all higher margin products, which will continue to support our sustained margin improvement as a company for years to come.

Brenton L. Saunders: By the way, across the board, they're all higher-margin products, which will continue to support our sustained margin improvement as a company for years to come. That being said, what are we investing in? We're investing in innovation. We're doing relatively smaller partnerships, R&D collaborations, and technology investments to continue the stream of new product launches beyond the third quarter.

Matthew Stephan Miksic: [inaudible]

Matt: That being said what are we investing and we're investing in innovation we're doing.

Matt: Relatively smaller partnerships R&D collaborations technology investments took.

Matt: To continue the stream of invest a new product launches beyond the cycle, we have today and that is.

Matt: That is how you create organizational health than a company like Bausch and Lomb is to have a steady stream of innovation and launches year. After year decade. After decade, we see the results of taking a pause for 10 years and what we're dealing with them.

Matt: <unk>.

Matt: We have to look at the past to make sure we never repeat it and.

Matt: So that's our key focus and priority for the short term.

Speaker Change: That's super helpful and I had another question Matt Yes.

Matt: Yeah, you've touched on some of the follow up on some of the things at all.

Matt: So up on here just on the surgical side I.

Matt: I know that that is a.

Matt: Seems to be kind of a longer ramp to sort of get.

Matt: To move to move the needle to where you want it to be state in the surgical space competitively.

Matt: And I just had some launches you had some coming in the back half of this year.

Matthew Stephan Miksic: If you were to sort of give us a road map for the next 12-18 months...

Matt: If you were to sort of give us a roadmap for the next 12 to 18 months.

Matt: Should we start to think of that business meaningfully lifting as you exit this year.

Matt: Meaningfully lifting in the next couple of quarters or is that a bit more of a a 12 or 18 months builds to sort of show them. The results of the investments in the new products that you you talked about there. Thanks.

Brenton L. Saunders: Yeah, I think you're right. It's more of a 12, 18, 24 month build, particularly as we move to the offering, you know, more of the premium IOLs to complete the portfolio. But look, if you look in the quarter, you saw implants up 9%. These are constant currency numbers.

Speaker Change: Yeah, I think youre right, it's more of a 12 to 18 24 month build.

Matt: Particularly as as we move to the to the offering the more of the premium I allow us to complete the.

Matt: <unk> portfolio, but look if you look in the quarter you saw implants up 9%. These are constant currency numbers.

Brenton L. Saunders: Pax up 9%, and equipment up 5%. And so really nice tactical execution by our team. But that being said, you know, I think there are two things to consider as we look at, particularly margins and profitability of surgical. One is we're still working through expensive inventory, as Sam mentioned, and that will take some time to work through.

Matt: Uh huh packs up 9% and equipment up 5% and so really nice tactical execution by our team, but that being said you know I think there's two things to consider as we look at particularly margins in profitability of <unk>. One is we're still working through.

Matt: Expensive inventory as Sam mentioned and that will take some time to work through at.

Matt: At the same time, our supply chain team is working at improving.

Matt: Our manufacturing and distribution capabilities to get to better margins and then as I mentioned mix as we as we transition and offer a full range of ideologues, including premiums they come with a much higher margin and so.

Speaker Change: I think over the next you know as you said 18 24 months, you'll see a steady improvement in that business and we're going to become much more competitive over time. So I'm excited about it but it's not going to be an overnight sensation. It's a lot of hard work and a lot of dedication.

Brenton L. Saunders: And we're going to become much more competitive over time. So, I'm excited about it. But, it's not going to be an overnight sensation. It's a lot of hard work and a lot of dedication. But, I think we're on the right track. We're early, but we're on the right track.

Matt: But I think we're on the right trapper early but we're on the right track.

Speaker Change: That's great. Thank you.

Operator: We have time for one last question, and your question comes from Doug Miehm with RBC.

Matt: We have time for one last question and your question comes from Doug <unk> with RBC.

Douglas Miehm: Thanks very much. My question has to do with MIBO. Brent, you mentioned that the three top Medicare providers are going to be covering the drug, but I'm wondering, on the commercial side, how are things looking there in terms of getting on formularies and that sort of thing. And then, as a follow-up, just wondering, do you have the manufacturing capability to, you know, provide for what looks like it's going to be a very, very strong MIBO launch here, given the outperformance in Q1 Yeah,

Doug: Yeah. Thanks, very much my question has to do with Michael.

Doug: <unk>.

Doug: You mentioned that are I think two or three top Medicare.

Doug: Providers are going to be covering the drug but I'm wondering on the commercial side.

Doug: How are things looking there in terms of.

Doug: On formularies and that sort of thing and then as a follow up.

Doug: Just wondering do you have the manufacturing capability to them.

Doug: You know provide for it when it looks like it's going to be a very very strong mitral launch here given their performance in Q1. Thanks.

Brenton L. Saunders: Yeah, so great question. So just to correct you, two of the top Medicare plans will begin covering MIBO over the next month or so, and so that will give us about 50% Medicare coverage going into the second half of the year. That's not an over – just to clarify, that doesn't just flip a switch and change overnight.

Speaker Change: Yeah. So great question. So just to correct you two of the other top Medicare plans will begin covering by BOE over the next month or so.

Speaker Change: And so that will give us about 50% Medicare coverage.

Speaker Change: Going into the second half of the year, that's not an over just just to clarify that doesn't like flip a switch and change overnight. It takes some time to build his local carriers and policies get implemented but we're really ahead of schedule.

Brenton L. Saunders: It takes some time to build as local carriers and policies get implemented, but we're really ahead of schedule on getting Medicare coverage. The team did a great job there. And so, a lot to like there on commercial, we're about 50% as well, and that should continue to improve throughout the year. And so, you know, two quarters into a launch, that's – I don't want to say it's unprecedented, but it's really a great outcome to have that broad-based coverage.

Speaker Change: On on getting Medicare coverage the team did a great job there.

Speaker Change: And so a lot to like there on commercial we're about 50% as well and that should continue to improve throughout the year.

Speaker Change: And so you know two quarters into our launch that's that's.

Speaker Change: I don't want to say, it's unprecedented but it is really a.

Speaker Change: A great outcome to have that that broad based coverage, but we do want to see that get to 70% to 80% coverage in both categories to week until we feel good about it. So some work to do there, but a great start in terms of manufacturing capability from Milo LIBOR has made it a third party.

Brenton L. Saunders: But, you know, we do want to see that get to 70, 80 percent coverage in both categories till we feel good about it. So some work to do there, but a great start. In terms of manufacturing capability for Maibo, Maibo is made at a third-party supplier.

Speaker Change: Supplier.

Brenton L. Saunders: We have been working with them to improve coverage. We are going to transition to our own facilities. In fact, packaging is being transitioned as we speak to our Tampa facility. And over the next 12, 18 months, we'll start to ramp up our own ability to produce. So we'll have two sources of supply, which is really what you want to be for an important product like Maibo.

Speaker Change: <unk> been working with them to improve coverage, we are going to transition to our own facilities. In fact packaging is being transitioned as we speak to our Tampa facility and over the next 12 18 months it will start to ramp up our own ability to to produce so we'll have two sources of supply which is.

Speaker Change: Really what you want to be for a for an important product like Michael the other thing I would mention is we've been we've been I think the team has done a great job with the <unk> launch without a sample.

Brenton L. Saunders: I think the team did a great job with the MIBO launch without a sample. There was no sample planned prior to my arrival, and so we've been working hard to get a sample, and we should have that in the back half of the year as well. As I think about Maiba, it was... You know, the key success factors for us on an execution front were the sales force that was done in late February, and so they're off and running.

Speaker Change: There was no sample plan prior to my arrival and so we've been working hard to get a sample and we should have that in the back half of the year as well so.

Speaker Change: You know.

Speaker Change: As I think about my bow it was.

Speaker Change: The key success factors for us on an execution front, where the sales force that was done in late February and so theyre often running it was getting coverage. We've made good progress we have about 50 50 commercial Medicare going into the back half of the year still some work to do but big check there and then it was.

Brenton L. Saunders: It was getting coverage. We've made good progress. We have about 50-50 commercial Medicare going into the back of the year. Still some work to do, but a big check there. And then it was about getting the sample and getting the trial, and so that's coming, too.

Speaker Change: It was about getting the sample and getting trial and so that's coming too so.

Brenton L. Saunders: Great performance and $28 million in the first quarter, but a lot to like and get excited about as we continue to invest and build the franchise. So, Doug. So I'll just conclude by thanking everyone for joining us. We do feel really good about the first quarter performance and the broad-based nature of the performance, all businesses, all geographies. And we look forward to keeping you updated as we continue to stay absolutely focused on our customers and execution and driving our business forward. Thank you so much.

Speaker Change: Great performance.

Speaker Change: And you know a $28 million in the first quarter, but a lot to like and get excited about is as we continue to invest and build the franchise.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: So thanks, Doug So I'll just conclude by thanking everyone for joining us.

Speaker Change: We do feel really good about the first quarter performance and the broad based.

Speaker Change: Nature of the performance all businesses, all geographies and we look forward to staying Ah and keeping you updated as we continue to stay absolutely focused on our customers and execution in driving our business forward. Thank you so much.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.