Q4 2024 Baxter International Inc Earnings Call
Speaker Change: Good morning ladies and gentlemen, and welcome to Baxter International's 4th Quarter 2024 Earnings Conference Call.
Speaker Change: Your lines will remain in a listen-only mode until the question-and-answer segment of today's call.
Speaker Change: At that time, if you have a question, you will need to press the star 1 on your touchtone phone. If anyone should require assistance during the conference, please press star then 0 on your touchtone phone.
Speaker Change: As a reminder, this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter's permission. If you have any objections, please disconnect at this time. I would now like to turn the call over to Ms. Clare Trachtman, Senior Vice President, Chief Investor Relations Officer at Baxter International. Ms. Trachtman, you may begin.
Clare Trachtman: Good morning, and welcome to our fourth quarter 2024 earnings conference call.
Speaker Change: Joining me today are Bren Schaefer, Baxter's Chair and Interim Chief Executive Officer, Joel Grade, Baxter's Executive Vice President and Chief Financial Officer, and Heather Knight, Baxter's newly appointed Chief Operating Officer.
Speaker Change: On the call this morning, we will be discussing Baxter's fourth quarter and full year 2024 results, along with our financial outlook for the first quarter and full year 2025.
Speaker Change: With that, let me start our prepared remarks by reminding everyone that this presentation, including comments regarding our financial outlook for the first quarter and full year of 2025,
Speaker Change: The anticipated impact of our strategic actions, the potential impact of various regulatory and operational matters, and the macroeconomic environment on our results of operations contain forward-looking statements that involve risks and uncertainties, and of course, our actual results could differ materially from our current expectations.
Speaker Change: Please refer to today's press release and our SEC filings for more detail concerning factors that could cause actual results to differ materially.
Speaker Change: A reconciliation of certain non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in the accompanying investor presentation and available in our earnings release issued this morning, which are both available on our website.
Speaker Change: As a reminder, continuing operations excludes Baptist kidney care business and back to its former Biopharma solutions business, which are both reported as discontinued operations.
Speaker Change: During the Q&A session. This morning, breath, Heather Joe and I will be available to address questions.
Speaker Change: On our results and outlook will be addressed by me and Joe now I'd like to turn the call over to Bryan Bryan. Thank you Claire and good morning, everyone. I. Appreciate you joining us as you know I recently stepped into the role of chair and interim CEO at Baxter, Joe Almeida led business through a period of significant evolution over at <unk>.
One year tenure, and we are sincerely grateful for his dedication to the company.
Speaker Change: One of the Board's top priorities of course is the identification of a permanent CEO.
The board is actively engaged in the search process with the support of a leading firm evaluating both internal and external candidates.
Speaker Change: We're moving expeditiously, but most importantly, we're taking a rigorous approach to ensure we identify the right candidate to lead Baxter into the future.
Speaker Change: During the transition period I'm committed to helping ensure we remain focused on our crisp execution of our priorities and delivering strong consistent results.
Speaker Change: I am pleased to be working with the entire leadership team on these shared goals, we're continuing to move the company forward into a new era and as recently announced we closed the sale of Vantiv on January 31, 2025 <unk>.
Speaker Change: This significant milestone with the final step of three strategic actions outlined in January of 2023 to transform the business.
Speaker Change: Youll recall. These actions included the implementation of a new vertical is the operating model.
Speaker Change: As a director and in my role as interim CEO I can confirm that this segment driven approach has created increased focus and execution related benefits, bringing greater clarity and agility to how we pursue opportunities globally and.
Speaker Change: And as part of our transformation efforts, we completed the divestiture of factors noncore Biopharma solutions business in 2023.
Speaker Change: Since joining <unk> board in 2022 I've observed it supported these shifts in the company's strategic direction.
Speaker Change: And I am extremely proud of the hard work and dedication of our teams to reach this stage.
Speaker Change: These actions have positioned Baxter to accelerate innovation for patients and customers and to drive profitable growth for our shareholders.
Speaker Change: Later in this call Joe will provide details on our quarterly and full year performance as well as our outlook for 2025.
Speaker Change: You have seen in this morning's release, we finished 2024 on a high note, beating our fourth quarter guidance for continuing operations on both the top and bottom lines and we are starting 2025 building on this positive momentum.
Speaker Change: During this interim period I'll be working closely with Heather Joel and the rest of the Baxter strong leadership team to ensure we maintain that momentum.
Speaker Change: I've been very impressed by what I've experienced in the last few weeks and engaged talented highly motivated team that is squarely focused on baxter's mission to save and sustain lives.
Speaker Change: A truly collaborative spirit and an intense focus on delivering on our commitments.
Speaker Change: This includes initiatives focused on innovation and profitable growth to enhance performance deliver increased value and to better serve the needs of our patients and customers.
Speaker Change: To support these efforts and as we've shared earlier this month, we've instituted a new chief operating officer position as a next step in leveraging the potential of our vertical operating model.
Speaker Change: We're fortunate to have Heather Knight stepped into this role as COO.
Speaker Change: Heather brings extensive experience and a proven track record to this position. After a successful tenure as head of our largest segment medical products and therapies. Among other key leadership roles at Baxter and prior large healthcare companies should.
Speaker Change: She'll be leading day to day operations across our three segments encompassing global commercial operations R&D supply chain medical and regulatory affairs.
Speaker Change: Her leadership will be critical as we navigate the next phase of growth now I would like to turn it over to Heather to share his perspectives.
Sure.
Heather: Thank you, Brian and good morning, everyone I'm very pleased to be joining today's call I look forward to building upon what we've achieved to date and helping to launch a new chapter as accelerated performance for the company.
Speaker Change: As Brent mentioned over the last two years I've had the privilege of leading medical products and therapies or MPT, which is Baxter is the largest segment with over $5 billion in sales and operations spanning the globe.
Speaker Change: During this time I spearheaded numerous vital initiatives with the support of my talented colleagues, including the recent successful launch of our Novum IQ infusion pump platform and the United States as the leader of MPT I also helped oversee the north Cove recovery effort.
Speaker Change: Following hurricane Helene.
Speaker Change: Given the essential nature of the products that are manufactured in North Cove, we spared no expense and our efforts to help address the product supply for patients and customers, including importing products from Baxter sites globally.
Speaker Change: The incredible dedication and resilience of the North Cove and broader Baxter team, we were able to restart production on eight of the sites 10 manufacturing lines in the fourth quarter.
Speaker Change: Our final two manufacturing lines came on line in January and I'm very proud to report that we are now producing at pre hurricane levels.
Speaker Change: This is just another critical milestone in our recovery as we continue to work to replenish inventory and support our customers and patients needs.
Speaker Change: Additionally, I have served as the lead interface to many of our key customers and have been deeply involved and successfully renegotiating. The recent renewals of select U S. GPO contracts, helping to ensure we continue to meet our customers' needs while also delivering positive.
Speaker Change: <unk> movement in pricing.
Speaker Change: As CFO I'm excited to build upon my deep knowledge and understanding of our markets and operations to enhance collaboration across our segments and create a more holistic baxter experience for our customers and the patients they serve.
Speaker Change: I'm confident that by harnessing our combined strengths and expertise, we can unlock significant value and accelerate our efforts to drive customer inspired innovation for all of our stakeholders.
Speaker Change: I look forward to partnering with Brent Joel and the entire Baxter team as we work to achieve our strategic objectives and deliver exceptional results.
Speaker Change: I'll now turn it over to Joel to discuss our financial performance in more detail Joe.
Joel Grade: Thanks, Heather and good morning, everyone.
Joel Grade: I'm happy to be joining the call. This morning to provide some additional details on baxter's fourth quarter and full year 2024 financial performance as well as commentary on our financial outlook for 2025.
Joel Grade: As Brent mentioned, we're very pleased with our fourth quarter results and how we ended the year.
Joel Grade: Our results came in ahead of our prior guidance on both the top and bottom lines driven by better than expected sales and solid operational performance fourth quarter 2024 global sales from continuing operations of $2 75 billion.
Joel Grade: <unk> increased 1% on a reported basis and 2% on a constant currency basis and.
Joel Grade: And compared favorably to our previous guidance, which called for sales to decline in low single digits.
Joel Grade: Our performance in the quarter was broad based and reflected positive sales across most of our product divisions as expected during the fourth quarter Hurricane Helene that negatively impacted our sales by approximately $110 million.
Joel Grade: Were approximately 400 basis points.
Joel Grade: Although the overall magnitude of less than the previously anticipated approximately $150 million given the company's swift recovery efforts.
Joel Grade: For the full year reported sales from continued operations of $10 6 billion.
Joel Grade: Increasing 3% on both a reported and constant currency basis.
Joel Grade: Hurricanes negatively impacted growth for the full year by just over 100 basis points.
Joel Grade: On the bottom line fourth quarter adjusted earnings per share from continuing operations were 58.
Joel Grade: It came in ahead of our prior guidance of 50 to $53 <unk> per share driven by the favorable top line results.
Joel Grade: Solid operational performance.
Joel Grade: In addition, our tax rate came in favorable to our expectations, which offset a negative impact from foreign exchange.
Joel Grade: On a year over year basis adjusted earnings per share from continuing operations has declined 11% in the quarter, primarily due to the negative impact of hurricane and that our results.
Joel Grade: For the full year adjusted earnings per share from continuing operations totaled $1 87 per.
Joel Grade: Sure.
Joel Grade: Increased 11% over the prior year, reflecting solid underlying operational performance and a benefit from non operational items, including lower interest expense and tax rate.
Joel Grade: Now I'll walk through our results by reportable segments.
Joel Grade: Commentary regarding sales growth will reflect growth at constant currency rates.
Joel Grade: Our medical products and therapies or MPT segment were $1 3 billion.
Joel Grade: Increasing 1% in the quarter and coming in favorable to expectations.
Joel Grade: Full year 2024 sales totaled $5 2 billion.
Joel Grade: Advancing 5% and ahead of the prior guidance of 2% to 3% growth.
Joel Grade: Adjusting for the impact of helium MPC sales growth in the quarter would've been approximately 9% at approximately 7% for the full year within MPT fourth quarter sales from our infusion therapies and technologies Division totaled 1.0 billion.
Joel Grade: It decreased 1%.
Joel Grade: Sales in the quarter benefited from significant growth for our U S infusion systems portfolio as the rollout of our Novum IQ pump platform continues to build momentum with orders coming in from both new and existing customers.
Joel Grade: Nutrition sales in the quarter at double digits globally protecting the strength in the U S. As we continue to build out our alternative types of portfolio.
Joel Grade: Finally, as anticipated IV solutions declined in the quarter two the impact of Hurricane Alley.
Joel Grade: Q4 sales in advanced surgery totaled $292 million.
Joel Grade: <unk> grew 6% globally.
Joel Grade: Results for the quarter reflected solid demand and positive pricing for our portfolio. If we can establish <unk> and sealants across the globe.
Joel Grade: <unk> adjusted operating margin for the quarter was 16, 5% coming in better than expected due to the sales outperformance.
Joel Grade: Margins declined year over year, primarily reflecting the impact of the hurricane.
Joel Grade: And health care systems and technologies are HFC.
Joel Grade: Sales in the quarter were in line with expectations at totaled $784 million.
Joel Grade: Decreasing 1%.
Joel Grade: <unk> full year 2024 sales totaled $3 billion and.
Joel Grade: And declined 2%.
Joel Grade: Within the HFC segment sales in the quarter for our carrier connectivity solutions or Ccs division were $504 million.
Joel Grade: Advancing 3% globally.
Joel Grade: Performance in the quarter was driven by 9% growth in the U S for Ccs due to continued momentum in our patient support systems, our PSS business.
Joel Grade: <unk> once again delivered strong growth and reflected a benefit from competitive wins in both our best search and ICU product lines.
Joel Grade: As well as upgrades for existing customers.
Joel Grade: Total U S capital orders for Ccs rose, 9% in the quarter and increased 15% for the full year.
Joel Grade: We are exiting the year with a healthy backlog and strong funnel and look to build upon this momentum over the course of 2025.
Performance for this division was partially offset by weaker sales outside the U S.
Joel Grade: Reflecting a difficult comparison to the prior year period, which saw growth of 12% as well as softness in both China and France in the current year.
Joel Grade: Frontline care sales in the quarter were $280 million and declined 8%.
Joel Grade: Consistent with commentary over the course of this year performance in the quarter was impacted by the backlog reductions, which positively contributed to the sales in the prior year period.
Joel Grade: Results in the quarter also reflected the impact of certain market exits of supply constraints, which collectively impacted sales by approximately $15 million in the quarter.
Joel Grade: We expect the supply constraints that impacted the fourth quarter to be largely resolved for most products in the first quarter of 2025.
Joel Grade: We believe that performance for this division will also benefit from stabilization of the primary care market over the course of 2025 as well as the launch of several new products in the second half of this year that are expected to contribute to positive performance for FMC in 2025 and beyond.
Joel Grade: HFC fourth quarter, adjusted operating margins of 18, 5% increase sequentially.
Joel Grade: Today, the trend of sequential margin improvements.
Joel Grade: <unk> declined year over year, primarily reflecting higher investments moving on to our pharmaceutical segment sales in the quarter came in favorable to expectations.
Joel Grade: <unk> totaled $643 million.
Joel Grade: Increasing 8%.
Joel Grade: <unk> full year 2024 sales were $2 4 billion advancing at 7%.
Joel Grade: Fourth quarter sales within Injectables in anesthesia Av $383 million grew 8%.
Joel Grade: <unk> for the quarter, reflecting mid teens growth in our specialty injectables portfolio.
Joel Grade: Anticipated rebound from the third quarter, which was impacted by the timing of some orders growth.
Joel Grade: Growth was driven by strong demand for U S premix products and the continued rollout of new products as well as the benefit from targeted sales and marketing initiatives that have been implemented.
Joel Grade: As expected lower sales of inhaled anesthesia, which declined mid single digits slightly tempered overall performance for the Injectables in anesthesia.
Joel Grade: With a drug Cup housing continued demand for services resulted in strong growth of 9% for the quarter.
Joel Grade: Pharmaceuticals, adjusted operating margins were 15, 9% for the quarter.
Increasing 600 basis points sequentially.
Joel Grade: Adjusted operating margins decreased 370 basis points compared to the prior year, reflecting the impact from the MSA entered into following the <unk> sale.
Joel Grade: And increased operating expenses to support the new and upcoming launches.
Joel Grade: The pharmaceutical team remains focused on expanding margins through improved mix stabilizing the anesthesia business driving cost improvements composite business and executed on margin improvement initiatives and integrated supply chain.
Joel Grade: Other sales, which represent sales that allocated to the segments.
Joel Grade: And primarily include sales of products and services provided directly into certain of our manufacturing facilities were $12 million in the quarter and totaled $67 million.
Joel Grade: For full year 2024.
Joel Grade: Before moving onto the rest of the P&L results I wanted to make some comments regarding our continuing operations reporting going forward.
Joel Grade: As mentioned last quarter due to the change of moving kidney care business results to discontinued operations.
Joel Grade: Corporate costs that had previously been allocated to the kidney care segment that would not convey what the kidney care business and the sale are now reported in unallocated corporate costs.
Joel Grade: As we previously commented we plan to offset a large portion of these expenses in 2025 through income we received from Vantiv under the transition services agreements or PSA is as well as cost containment initiatives. The company is already in the process of undertaking.
Joel Grade: Our goal remains to fully offset the impact of the stranded costs.
Joel Grade: Loss of TSA income by the end of 2027.
Joel Grade: Fourth quarter adjusted gross margin from continuing operations was 44, 5%.
Joel Grade: We have the favorable to expectations and reflecting a sequential improvement of 80 basis points.
Joel Grade: On a year over year basis, adjusted gross margins declined slightly by 10 basis points.
Joel Grade: Driven primarily by the impact from Hurricane Dorian.
Joel Grade: Here said with effective manufacturing plants to support product growth.
Joel Grade: As well as the impact of the manufacturing supply agreements following the sale of bps.
Joel Grade: Positive contributors to margin in the quarter were ongoing benefits from our margin improvement programs within our integrated supply chain network as well as favorable product mix and pricing initiatives in select markets.
Joel Grade: Adjusted gross margin from continuing operations for the year totaled 43, 5%.
Joel Grade: Fourth quarter, adjusted SG&A from continuing operations totaled $679 million or $24 seven as a percentage of sales.
Joel Grade: An increase of 190 basis points from the prior year period, as we continue to make select investments to support our growth objectives and new product launches.
Joel Grade: This increase also included approximately $30 million of select discrete items that are not expected to repeat including increased employee healthcare expenses due to high cost medical claims incurred during the quarter.
Joel Grade: Fees associated with our cost optimization program.
Joel Grade: And phasing of stock compensation expenses.
Joel Grade: These higher expenses were offset by benefits from lower stranded costs.
Joel Grade: Full year 2024, adjusted SG&A totaled $2 6 billion.
Joel Grade: That represented 25% of sales.
Joel Grade: Adjusted R&D spending from continued operations in the quarter totaled $131 million.
Joel Grade: It represented $4 eight as a percentage of sales an increase of 10 basis points comparative prior year period and reflects our continued investments in advance of new products across the portfolio and bring innovation to patients across our segments.
Joel Grade: 2020 for full year, adjusted R&D totaled $510 million.
Joel Grade: Our $4 eight as a percent of sales.
Joel Grade: These factors resulted in an adjusted operating margin of 15, 2% on a continuing operations basis covenant favorable to expectations and improving 70 basis points sequentially.
Joel Grade: Compared to the prior year adjusted operating margins from continued operations decreased to 190 basis points driven by the factors I've just discussed.
Joel Grade: As well as the unfavorable impact from foreign exchange.
Joel Grade: Full year 2024, adjusted operating margin from continuing operations was approximately a $1 5 billion or.
Joel Grade: Or 13, 9% of sales.
Joel Grade: Net interest expense from continuing operations totaled $91 million in the quarter, an increase of $18 million versus the prior year period, reflecting lower interest income.
Joel Grade: For the full year net interest expense totaled $341 million.
Joel Grade: Decreasing $98 million.
Joel Grade: And reflected the benefit of our debt repayment initiatives.
Joel Grade: Adjusted other non operating income totaled $4 million in the quarter compared to income of $10 million in the prior year period.
Joel Grade: For the full year adjusted other non operating income totaled $38 million.
Joel Grade: Compared to $5 million of income in the prior year period, primarily reflecting lower foreign exchange losses.
Joel Grade: The continuing operations adjusted tax rate for the quarter was 10, 8% and came in lower than expected.
Joel Grade: For the full year continuing operations tax rate was 17, 5%.
Joel Grade: Both the full year and fourth quarter tax rate reflects the benefit of initiatives, we have undertaken to optimize our global tax rate.
Joel Grade: And as previously mentioned adjusted earnings from continuing operations were 58 per share for the quarter and decreased 11% versus the prior year.
Joel Grade: Positive contributions to earnings included improved commercial performance from new product launches and positive pricing.
Joel Grade: In the quarter. These drivers were offset by the negative impact of hurricane and lean, which we estimate impacted our results by approximately <unk> 10 per share and an unfavorable impact from foreign exchange and interest expense of approximately <unk> <unk> per share.
Joel Grade: Full year 2024 adjusted earnings per share from continued operations totaled $1 89 per share an increase of 11%.
Joel Grade: Due to the prior year period.
Joel Grade: Let me conclude my remarks by discussing our outlook for the full year 2025 in the first quarter of 2025, including some key assumptions underpinning the guidance.
Joel Grade: All guidance provided excludes the impact of kidney care in discontinued operations.
Joel Grade: For full year 2025, Baxter expects total sales growth of 5% to 6% on a reported basis.
Joel Grade: This guidance includes an approximate 200 basis points negative impact from foreign exchange based on current rates as well as approximately $345 million.
Joel Grade: Anticipated MSA revenues from Vantiv.
Joel Grade: Operationally factor expect sales to grow 4% to 5%.
Joel Grade: This guidance excludes the impact of foreign exchange MSA revenues and the planned exit of IV solutions in China as the company continues to focus on driving profitable growth.
Joel Grade: The negative impact from exiting the IV solutions business in China is approximately 60 basis points to growth.
Joel Grade: Operational sales guidance for the full year by reportable segment is as follows.
Joel Grade: For MPT, we expect sales to increase approximately 5% driven by continued momentum with our logo LDP launch the benefit of positive pricing in the U S and other underlying business momentum.
Joel Grade: This guidance excludes the impact of exiting the IV solutions market in China, which is estimated to impact sales growth by 120 basis points.
Joel Grade: Sales of our HFC segments are expected to increase approximately 3% and is expected to be balanced across both Ccs NFL team.
We expect pharmaceuticals to increase approximately 5% to 6% driven by mid single digit growth in both specialty Injectables and Joe Cup pumping.
Joel Grade: Now I will turn into our outlook for other P&L line items.
Joel Grade: As previously shared we expect full year adjusted operating margin from continuing operations to total approximately 16, 5% and includes TSA income of approximately $125 million.
Joel Grade: We expect our non operating expenses, which include net interest expense and other income and expense to total between $250 million to $270 million.
Joel Grade: On a continuing operations basis, we anticipate a full year tax rate of approximately 19, 5%.
Joel Grade: We expect our diluted share count to average approximately 515 million shares for the year, which does that contemplate any share repurchases.
Joel Grade: Based on all these factors, we now anticipate full year adjusted earnings on a continuing operations basis of $2 45.
Joel Grade: To $2 55 per diluted share.
Joel Grade: This outlook includes an estimated negative impact of approximately <unk> <unk> per share from foreign exchange based on current rates.
Joel Grade: A couple of other quick comments I'd like to make regarding our outlook for 2025.
Joel Grade: First I would point out that our current guidance includes a slight impact from tariffs enacted in China, but does that reflect any impact for potential tariffs that are contemplated for Mexico, and Canada, given the fluidity of the situation and potential for further delays of implementation and possible redemptions.
Joel Grade: Second in 2024 costs that had previously been allocated a kidney care that did not convey what the discontinued operations presentation.
Joel Grade: Ported in other allocated corporate costs.
Joel Grade: Starting 2025 these costs will be allocated to the three segments along with related TSA income.
Joel Grade: Specific to the first quarter of 2025, we expect continued operational sales growth of approximately 3% to 4% on a reported basis and approximately 4% on an operational basis.
Joel Grade: So the first quarter foreign exchange is expected to negatively impact the top line by more than 200 basis points and MSA revenues are expected to total approximately $60 million.
Joel Grade: The China IV solutions exit is expected to impact topline growth by approximately 60 basis points in the first quarter.
Joel Grade: On a continuing operations basis, we expect adjusted earnings per share of <unk> 47 to <unk> 50 per share. This guidance reflects the impact of closing <unk> of January 31, which negatively impacted earnings per share by approximately <unk> <unk> in the quarter as compared to the closing the sale on December 31 have you been able to.
Joel Grade: Those of that data.
Joel Grade: With that we can now open up the call for Q&A.
Speaker Change: Thank you we will now begin our question and answer session. If you have dialed in and would like to ask a question. Please press star followed by the number one on your telephone keypad. If you would like to withdraw your question simply press Star. One again, if you are called upon to ask a question in our listening via loud speaker on your device. Please speak up your handset and <unk>.
Joel Grade: Sorry that your phone is not on mute when asking your question.
Joel Grade: So that we may be respectful of everyone's time, please limit yourselves to one question with one follow up question if necessary. We appreciate everyone's patience and would like to provide a many of you as possible the opportunity to ask a question, we'll pause for a moment, although this is being compiled.
Joel Grade: I'd like to remind the participants that this call is being recorded and a digital replay will be available on the Baxter International website for 60 days at Www Baxter com. Thank you.
Joel Grade: Your first question comes from the line of Robbie Marcus with Jpmorgan. Please go ahead.
Robbie Marcus: Oh, great. Good morning, and thank you for taking the questions two from me.
Speaker Change: First Joe how should we think about with all the moving pieces on the top and bottom line that cadence for 2025.
Speaker Change: Sure Good morning, Ravi Thanks for the question.
Speaker Change: So I'll start on the sales line.
Speaker Change: As you know we normally have some ramp up of our business over the course of the year, but there is a couple of things I'd call out this year.
Speaker Change: Typically our first and foremost is.
Speaker Change: I'd say the first quarter, you were taking somewhat more conservative approach in the sense that we're still.
Speaker Change: We are recovering from the hurricanes. So we've given ourselves a little bit of I would say conservatism to see how that all plays out.
Speaker Change: I would say despite.
Speaker Change: What should be a relatively easier comp with HFC.
Speaker Change: Certainly there is going to be an element of that that's built into the first quarter.
Speaker Change: Conservative standpoint.
Speaker Change: I would say the other thing I would call out over the course of the year is that in the fourth quarter, we do anticipate that being a larger quarter in the sense that obviously group compared up against the impact from Helene. So.
Speaker Change: A couple of things I'd, probably a follow up from a cadence perspective on the top.
Speaker Change: From an earnings perspective.
Speaker Change: Yes, I think the debate look I'd call out there is that we do anticipate.
Speaker Change: We continue to ramp.
Speaker Change: And of course of the year, mostly driven by the <unk>.
Speaker Change: Impact of our Australia cost that.
Speaker Change: That will be kicking in.
Speaker Change: Continued improvements over the course of the year. So obviously this we've already started to do but obviously that will continue to build over the course of the year and so therefore, you can expect some ramp for both earnings perspective.
Speaker Change: That reserve.
Speaker Change: Great maybe a quick follow up.
Speaker Change: <unk> business, especially frontline care.
Speaker Change: It was still negative growth this quarter.
Speaker Change: What's the latest you're seeing there the confidence you could turn it around in 2025 and your level of visibility to it.
Speaker Change: Yes, so I'd say a couple of things there I mean first of all yes, we are anticipating.
Speaker Change: Stabilization of the primary care markets.
Speaker Change: Yes.
Speaker Change: Certainly <unk> seen some that are starting to see that as we head into the first quarter. So I think that you obviously had a substantial decline in 2024.
Speaker Change: So from that perspective, it is the stabilization of that market and important piece of this.
Speaker Change: Secondly, as you know, we do anniversary some difficult comps over the course of the year for example, things like.
Speaker Change: From a number of orders.
Speaker Change: Things that were again.
Speaker Change: So the stimulus packages and those spending things in the backlog we are up against.
Speaker Change: <unk> 24 versus 23, we don't have those headwinds to the extent that we did is obviously as we head into 'twenty five.
Speaker Change: I think thats another.
Speaker Change: Piece of this.
Speaker Change: Some of the things that we've called out in the prepared remarks.
Speaker Change: Some of them.
Speaker Change: The supply constraints.
Speaker Change: We're looking to resolve that.
Speaker Change: By Q1 of this year and so I think generally speaking some of the impact that we had.
Speaker Change: Last year, we won't be up against is the same way this year.
Speaker Change: Sure.
Speaker Change: And a little bit of a longer term perspective, we did have some interesting new product launches that are coming out with that will impact us certainly more later over there to the 2006.
Speaker Change: We feel confident as Adam I know you asked about <unk>, but just from the perspective of those Tcs as well one of the other differences this year versus last year was as you may recall, we entered into last year with.
Speaker Change: With an order book.
Speaker Change: Thanks.
Speaker Change: Quite a bit of softness in it it has an impact of the early part of the last year as we've talked about the second half of this year. Our order booking Ccs has remained quite strong, particularly PSS U S.
Speaker Change: So we head into this year was certainly a lot better.
Speaker Change: Is that business as well so I think the combination of those things, you'll probably give us a perspective on hotwire.
Speaker Change: While we think there's a good opportunity for some recovery this year.
Speaker Change: Just the overall.
Speaker Change: I appreciate it thanks a lot.
Speaker Change: Yes.
David Roman: Your next question comes from the line of David Roman with Goldman Sachs. Please go ahead.
David Roman: Thank you good morning, everybody congratulations on the new role and looking forward to working with you in this capacity and clear. Thank you and the finance team for the extensive financial information here at Super helpful. As we look at the company pose Vantiv I answered my first question.
David Roman: The past several years for Baxter have been characterized by exogenous events like hurricane Helene elevated inflationary pressures that transition with the Hill ROM deal on the strategic actions, you've taken with Bts and Vantiv.
David Roman: Can you help us think about the direction of the company from here and how Youre thinking about strategic priorities, maybe as at the same time give us a flavor for how that fits into the profiling characteristics. If you go to the CEO search.
Speaker Change: Absolutely I'll start on the Brent can add anything if he'd like to add the second piece of that.
David Roman: David Youre right Theres, certainly hasn't been a lot going on here faster, but what I would say first of all we this company has done an amazing job of working through these transformational efforts here over the last couple of years and it really sets us up in a good place for this company moving forward.
So how do I think about priorities for the company.
David Roman: Certainly will rule on that.
David Roman: The capital markets day sometime after our new CEO has been.
David Roman: But we're starting obviously with.
David Roman: So customer inspired innovation. These are the things that we as a company we want to make sure that we are driving innovative products opportunities obviously inspired.
David Roman: By our customers.
David Roman: Certainly you'll have a focus on targeted markets I would say is it's one of the kind of grow with the growers how do we find those opportunities where we can actually invest our capital in places is ultimately going to drive growth for the organization.
David Roman: I'd say the third thing really I would think about it is how do we optimize the structure of our company obviously with these with the sale of the kidney business.
David Roman: Optimizing both our cost structure from a standard stripping cost perspective.
David Roman: Also optimizing our supply chain and some of the things that allow us to take advantage of the subsidy.
David Roman: More simple supply chain opportunities without having to add our home deliveries and activity levels.
David Roman: That's the third day.
David Roman: I'd say there is really around this concept of <unk>.
David Roman: <unk>, how do we drive consistent execution as a company.
David Roman: If you are a key focus of ours.
David Roman: The last I would say is it is really around disciplined capital allocation those students that allow us to vote, you will focus on driving growth.
David Roman: Organically and again folding tuck it away Inorganically, but then also balanced with returning value to shareholders and so.
David Roman: I would call those things really.
David Roman: How to think about our company moving forward.
Speaker Change: And again I'll turn it over to Brett in terms of just how does that fit into the funds the CEO search.
Brett: Well, Jeff I'd just add.
David Roman: In this transition period certainly.
David Roman: I'm looking for stability predictable consistent strong results and by Joel I give tremendous credit to this organization for all of the things that have worked through many of them very complex projects time consuming et cetera. So.
David Roman: Directionally starting to move the organization to more.
David Roman: More of an emphasis on growth.
David Roman: Both through innovation and through commercial execution is.
David Roman: In the short term moves we can make that accelerate progress in the company.
David Roman: And as far as CEO search.
How we're looking at that at the board level.
David Roman: That work is already underway and as you can imagine there is a pretty good profile of Baxter vaccines portfolio Folio, where we are at this point in time so.
David Roman: The <unk>.
David Roman: Experienced said, we're looking for is would be appropriate with the company's situation and opportunities in front of us so the back of that.
David Roman: Candidates need to have that experience and envision that can lead the company forward to its next chapter and having been here now been on the board and just working with his management team.
David Roman: I think there is.
Speaker Change: Domino opportunity here, because so much heavy lifting has been done over the last few years to streamline and to put this new vertical organization in place, which I think is a real winner honestly.
David Roman: It's a great opportunity.
Robbie Marcus: Thank you and then maybe just a quick follow up on the financial side Joel can you walk us through the post vantiv.
Robbie Marcus: Capital structure of the company and maybe update us on target leverage ratios in that timeframe.
Robbie Marcus: That.
Speaker Change: Yeah, absolutely so maybe I'll start with the leverage ratio is certainly what we have.
Robbie Marcus: <unk> talked about we will continue to be committed to us.
Robbie Marcus: Total leverage ratio of around three times.
Robbie Marcus: Debt to EBITDA I think that is a.
Robbie Marcus: Level that gives us that gives us the opportunity to both balanced strategic investments of the company as well.
Robbie Marcus: We returned value to shareholders in a way that we think about our capital structure.
Robbie Marcus: We anticipate being able to achieve that targeted leverage by the end of 2025, we will certainly happen sometime in the later part of the second half of the year.
Feel good about that obviously since the deal closed.
Robbie Marcus: We paid down.
Robbie Marcus: $3 billion.
Robbie Marcus: The first part of that was taking out our delayed draw term loan.
Robbie Marcus: Taken earlier in 2024, and then we also paid off a portion of about $1 billion.
Robbie Marcus: With 2026 term loan that was actually our highest coupon debt.
Robbie Marcus: So.
Robbie Marcus: I would say to that work.
Robbie Marcus: Our continued efforts in terms of driving free cash flow.
Robbie Marcus: The organization I feel comfortable with that.
Robbie Marcus: Heading towards that target and that will allow us then to get really the.
Robbie Marcus: So just our capital allocation priorities from what's been mostly paid down debt to those areas.
Robbie Marcus: <unk> will allow us to get to.
Robbie Marcus: Due to the investments in driving organic growth continued opportunities for folding tuck in opportunities where that makes sense.
Robbie Marcus: And the attitude of the restart of buyback programs, certainly initially to offset option dilution, but I would say opportunistically from there.
Robbie Marcus: Terrific. Thanks, so much.
Dennis: Thanks Dennis.
Speaker Change: Your next question comes from the line of Matt mixed with Barclays. Please go ahead.
Matt: Alright, thanks, so much for taking the questions and congrats on a nice end to that.
Speaker Change: So this is a busy year.
Speaker Change: So I wanted to.
Speaker Change: Follow up on some of the comments you've made on new product investment product pipeline.
Speaker Change: If you could talk a little bit about.
Speaker Change: Which business lines.
Speaker Change: Those which you would highlight.
Speaker Change: Maybe timing as to when we might start to see.
Speaker Change: Some of the benefits of these investments and then I had one follow up.
Speaker Change: Sure.
Speaker Change: So really the let me start with the fact that it's really across our portfolio, where we actually have.
Speaker Change: Yes.
Speaker Change: So the innovation happen certainly I would start with others business in FCC.
Speaker Change: The old pump.
Speaker Change: But a resounding success.
Speaker Change: The differentiated products that again, we've got a great customer response to the launch has gone extremely well obviously, we got.
Speaker Change: A partial year of that.
Speaker Change: Last year in 2024 below the full year of that growth heading forward here in 2025, So certainly nobody knew that was a huge.
Speaker Change: A key part of our innovation is getting really really a great success story.
Speaker Change: Certainly in pharma.
Speaker Change: As you've heard from US talk about is the our.
Speaker Change: Our need and our opportunity to continue to have accelerated with new product launches in pharma.
Speaker Change: Patents.
We've launched.
Speaker Change: No.
Speaker Change: Tablet and we anticipate another double digit year heading into 2025.
Speaker Change: It's something you should expect from us to continue to do as well.
Speaker Change: Certainly one large.
Speaker Change: A molecule that you can tie it to that level of activity is something that we're committed to.
Speaker Change: Great pipeline of opportunities ahead of US I would tell you that the impact of that do you see that the growth that we've had in our pharma business and so you see the impact of some of that has already happened and we anticipate as we head into next year again, another solid year from pharma in terms of their innovation as well.
Speaker Change: From an HFC perspective.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Super helpful.
Speaker Change: The one other comment I wanted to maybe a follow up on Robin's on HSE and Jeff.
Speaker Change: The environment for our.
Speaker Change: Capital.
Speaker Change: Some of the.
Speaker Change: Patient support devices and other things that youre selling recent beds et cetera that you are selling in hospitals, just maybe a general comment on.
Speaker Change: That that environment demand cycles.
Speaker Change: Sector secular trends anything that can help us gauge.
Speaker Change: Where that business is going thanks, so much.
Speaker Change: Yeah, absolutely. Thanks for the question, yes, So I would say generally speaking the capital environment is quite good.
Speaker Change: I think.
Speaker Change: As we've talked about this year, our capital orders, particularly in PSS in the U S.
Speaker Change: Especially the second half of the year has actually been very consistent.
Speaker Change: Over a year over year, we've added.
50% growth.
Speaker Change: Those orders, which obviously there is a timing element in terms of when the orders turn into cash and turn into a sale, but we've.
Speaker Change: We certainly heading into this next year with some good momentum and we expect to continue to build on that momentum as we head into 2025. So I would say generally speaking the capital environment is quite good.
Speaker Change: I would say the monitoring and patient monitoring devices as well as from.
Speaker Change: Our beds perspective, obviously, we've had continued success with our progressive plus model as well so.
Speaker Change: I think overall the environment is healthy.
We're encouraged by some of the competitive wins that we've had in those areas.
Speaker Change: As I've said, we're anticipating.
Speaker Change: New products coming out that will benefit us as we as particular to that area as we head into 'twenty and maybe Joe This is Brent.
Speaker Change: A comment here I believe from what I've seen there has been a significant improvement in the commercial organization in the U S, particularly.
Speaker Change: In those categories and so I think we're seeing the benefit of upgrades made in that area and real rigor around the commercial processes. There so credit to those skus.
Speaker Change: Excellent I appreciate the color.
Speaker Change: You bet.
Speaker Change: Your next question comes from the line of Vijay Kumar with Evercore ISI. Please go ahead.
Speaker Change: Hi, guys. Good morning, and thank you for taking my question Joel maybe my first question on Allison that margins here I know the optics diesel.
Speaker Change: Apples to oranges comparison right.
Speaker Change: But the year on year it does look.
Speaker Change: Margins were up 250 basis points. So if you can just.
Speaker Change: Break that down rate witnessed TSA, how much of this was.
Speaker Change: Stranded costs, which were down.
Speaker Change: In fiscal 'twenty, four and Thats going away and.
Speaker Change: What is a pricing element here.
Speaker Change: China IV fluid exit is that a headwind or tailwind to margins.
Speaker Change: Okay. Thanks.
Speaker Change: Thanks for the question Vijay Let me start with the August two I think the easiest way to bridge our.
Speaker Change: We ended the year at a $13 nine.
Speaker Change: Two our target, we talked about and guided to a 65%.
Speaker Change: The way to think about that is that if you take the 13, 9%.
Speaker Change: And you add about 40 basis points for the 2024 impact of Helene.
Speaker Change: And then you add about 220 basis points.
Speaker Change: What would be the <unk>.
Speaker Change: <unk> cost impact.
Speaker Change: And then if you take about 100 basis points to what I would call operational improvements.
Speaker Change: As we head into 2025 those are things like.
Speaker Change: Like pricing, particularly in the U S.
Speaker Change: Our MTBE business although.
Speaker Change: Those are things like product mix, one of the things that we talked about is the improvement of our injectables portfolio the higher growth in our advanced surgery. The improvement in HST. All those are mixed elements that add to the are a positive there.
Speaker Change: We've talked about some of the leverage from that we get from volume growth.
Speaker Change: So I think and obviously some of the things we've talked about new product launches, that's where you get that 100 towards the benefit and obviously, we are reinvesting some of that but thats a key element of it.
Speaker Change: And then Theres two over to Australia cost in the Msas that are the opposite direction. So there's 40 basis points I'll call. The net impact of stranded cost that haven't been addressed in 2025.
Speaker Change: And about a 60 basis point impact of dilution from MSA revenues that are obviously generate a lower margin low single digit margins from a gross profit perspective, so that really is the bridge and so that takes you from the 39 to <unk>.
Speaker Change: 16 five.
Speaker Change: So so hopefully that gives you some perspective.
Speaker Change: Could you repeat your second question.
Joel Grade: That was extremely helpful. Joel My second one was on.
Speaker Change: No.
Look at the performance in the quarter.
Speaker Change: It looks like the beat was this was just more than.
The headwinds from Hurricane Helene.
Speaker Change: Coming in slightly better than expectations right at can you quantify what the headwind from Helene was in the quarter and.
Speaker Change: What drove the beat ex the hurricane impact looks like pumps was very strong so maybe some commentary around pump performance.
Speaker Change: Yes.
Speaker Change: I'll start.
The quarter then ill.
Speaker Change: I'll pass it over to Heather to talk a little bit about the performance of the IV pumps.
Speaker Change: Yeah. So so obviously the headwinds from <unk>.
Speaker Change: The top.
Speaker Change: 100 basis.
Speaker Change: Basis points in the quarter.
Speaker Change: Yes.
Speaker Change: $10 million on the topline and 10 on the bottom line.
Speaker Change: And then but obviously the great news on that is that we actually we had we over performed in terms of the recovery time.
Speaker Change: In terms of offsetting some of that so I don't know maybe Heather I'll give you.
Heather: Over to you to talk a little bit about some of that sure Hi P. J. Good morning, nice to hear from you. So we did better in Q4 with a swift recovery, our northcote, citing that thanks to the great work of our teams so about $45 million better on IV solutions as a result of the Swift recovery that we had out of that location.
Heather: We did see strength across our infusion therapy business and the infusion pump platform and particular in the fourth quarter. So I'll say, we're very happy with the launch of Novum, IQ and where we are and the teams are doing a great job driving a SKU platform.
Heather: Can you recall Baxter place, a pretty big bet to internally develop a brand new to market and novel infusion pump platform, both with the hardware software and digital platform and we're seeing in payoffs. So our infusion business grew 50% last year in 2024, and we're expecting another great year this year and <unk>.
Heather: 25, and it's not only important because we get the revenue from the hardware and software.
Heather: Because we get to pulp through very consistent revenue over the life of that pump. So share capture competitive gains are really important in customer satisfaction right now it's very high both on the implementation of the pump as well as the EMR integration with the new platform and this was developed in collaboration with our.
Heather: Customers. So again, we're starting to see the benefit of that we took multiple points of market share last year in 2024, and we're expecting to see more of the same more competitive gains in 2025, and then we have some new complementary digital suites that are now launching that will be a great complement to this launch mid year in 2024.
Heather: That we released so I'll tell you I'm pretty excited about where we are in this new chapter that you pace momentum that we're building around the <unk> platform and ivs are stable with conquer the GPO refined and are in line with our expectations, if not slightly better than we expected. So we're expecting a great rebound.
Brent Joel: In 2025, and certainly really appreciate our customer support during the recovery of Hurricane Helene and hats off to the Baxter team for the fast recovery. Thanks for the question today, Yes. This is Brent I'd just like you.
Heather: Just to add on.
Heather: Yes, I'd, just like to recognize Heather and her team and really all of the folks who worked on North Cove recovery, it's hard to explain it.
Heather: In a financial setting, but the work to deal with a disaster situation to work through that effectively bring the plant back up.
Heather: And really look after the community at the same time it is just.
Heather: World World Class response by by the folks who are involved in this personally want to thank them all.
Speaker Change: Especially Heather Thank you Ian.
Heather: Thank you very helpful answers.
Speaker Change: Thank you Jamie.
Travis Steed: Your next question comes from the line of Travis Steed Bank of America Securities. Please go ahead.
Travis Steed: Hey, Thanks, I'll follow up a question on the ceiling side, and obviously great job on the fast recovery that thinking went better than most expected.
Travis Steed: Just thinking about how you think about the book of stealing business kind of before and after the Hurricane did you see customers add a second source and how youre kind of thinking about the sharing of that and then I had a follow up question on free cash flow.
Travis Steed: Yes, thanks for the question Travis.
Speaker Change: As I mentioned to Vijay I mean, our expectations are in line or even slightly better I think because of the flat tax recovery that we had clean honestly out of North Cove. So we're not seeing as many customers take on a second source, particularly because as we've mentioned we are back to pre hurricane levels. At this point. So these new UFC.
Travis Steed: <unk> contract in particular started on January one.
Travis Steed: And February one so now that we've fully recovered most customers are still committed to their remaining compliance at minimum committed volumes that they've given to Baxter.
Travis Steed: We're pleased with our response and our customers sticking with Baxter. During this time, we know this fourth quarter wasn't easy for them, but we proved to them. The resiliency that we have and the investments quite honestly that we've made over the last few years and our global network and activating that during has certainly helped and release some of the press.
Travis Steed: So we think that that is pretty unique to baxter in the hundreds of millions that we've invested in our in our platform in IV solutions due to the critical nature I think play in health care. So again in line or slightly better and working closely with our customers to make sure that they can resume normal clinical practice as they've had in patients can get the crude.
Travis Steed: <unk> solutions that they need.
Speaker Change: Great. That's helpful. And then I did want to ask on free cash flow generation and I know, there's a lot of adjustments this quarter, how should we think about some of these adjustments going forward. When do you think you can kind of get back to that 80% free cash flow conversion I don't think you gave a guidance for free cash flow next year I'm curious how are you thinking about that and then the frontline care right.
Travis Steed: Any more color on that.
Speaker Change: If that's.
Speaker Change: Kind of a change in the growth expectations for that business long term.
Travis Steed: Yes, Thanks Travis.
Speaker Change: Free cash flow the way I was.
Speaker Change: Think about that is that we have talked about the fact that we will have an 80% conversion of net earnings free cash flow.
Speaker Change: I expect that to be generally speaking what we'll do in the course of the year with one caveat to that and that is in the first quarter. We are anticipating some negative impacts from the I would think about it this way.
Speaker Change: Two things are working capital perspective number one is some of the expenses we incurred in Q4 related to protein a leaner actually going to be paid in Q1.
Speaker Change: And then secondly, there is going to be some level of restock from an inventory perspective.
Speaker Change: Okay.
Speaker Change: Our cash cycle.
Speaker Change: I was thinking about that number for this year is somewhere more like in the low seventies.
Speaker Change: But that is mostly get impacted by.
Speaker Change: First quarter and anticipate much more durable cash conversion.
Speaker Change: Two quarters of the year, and obviously going forward.
Speaker Change: Hopefully continue to improve that as we go forward.
Speaker Change: Regarding the write down of a frontline care, yes, the way I would look at that as we do it once a year.
Speaker Change: A review of the.
Speaker Change: Goodwill and other.
Speaker Change: Intangibles as it relates to those assets in 2024 was obviously impactful year for us from an efficacy perspective.
Speaker Change: I guess I'd characterize it more.
Speaker Change: The impact in 2024 out of the bottle.
Speaker Change: Yes, any time overarching concern about the growth prospects going forward.
Speaker Change: Okay, great. Thanks, Sam Thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Lawrence <unk> with Wells Fargo. Please go ahead.
Speaker Change: Good morning, Thanks for taking the questions and congrats on a nice day.
Speaker Change: Initiated the year, Brent I was hoping to ask you too to.
Speaker Change: Two questions.
Speaker Change: First.
Speaker Change: David earlier in the call talked about the challenges Baxter has had over recent years, how do you think about the pros and cons of external versus internal.
Speaker Change: To date.
Speaker Change: As CEO, bringing in fresh perspective versus someone who kind of already knows Baxter and I had one follow up for you.
Speaker Change: Well I mean, that's the big question I guess and the board is very focused on that because there are pros and cons to either solution. Obviously, an internal candidate knows all the details of the business how it runs and how it operates and external one can bring a fresh perspective, but they have to ramp up quickly.
Speaker Change: To try to catch that that same level of knowledge, which takes a while.
Especially in a complex business. So I can just tell you that it is a full board activity. The board is very focused on this.
Speaker Change: <unk>.
Speaker Change: Those.
Speaker Change: Would like to move as quickly as possible.
Speaker Change: The general sense is it's more important to get the right fit for the Q4. The company at this point in time, then it has to necessarily be quick so I hope that gives you a little flavor for it.
Speaker Change: That does thank you and secondly, Brent how did you evaluate the guidance as interim CEO and how do you think about the process for the permanent CEO to reevaluate it you know that.
Speaker Change: Just to be candid right.
Speaker Change: Investors typically think a new CEO will come in and want to put his or her stamp on the guidance, maybe you want to change.
Speaker Change: Investment priorities and things like that so how did you think about that thanks for taking the question how.
Speaker Change: How do I think it's coming in as an interim you mean.
Speaker Change: Yes, well, yes, I mean is there a risk the new CEO comes in and says Hey, we need to invest more in changes to guidance.
Speaker Change: Yeah, well I think.
Speaker Change: We've seen.
Speaker Change: At a board level seen the three year look at the business.
Speaker Change: Or.
Speaker Change: But where the details and the drivers and being onboard now and in the business Phil feel good I feel like there is solid plans in place.
Speaker Change: Of course, when you have another person at the helm and I'm interim leader. So my focus is really on executing the plans that are in place.
Speaker Change: Another person may put a different filter on it but.
Speaker Change: There are the the general situation around our markets our offerings are known very well in the business. So.
Speaker Change: Anything anyone coming in would be building on that.
Speaker Change: I guess I can assume it's kind of it's kind of a hard question to answer because it depends.
Speaker Change: I think the one thing I will just give up the opportunity that you've talked about it I would just reiterate the fact that this is a great opportunity for someone to come in and they give breakdowns of perspective on that and maybe you can share that as well but.
Speaker Change: I think as we've talked about some of the key strategic initiatives.
Speaker Change: Don over these last three years I guess Theres really a last couple of years. There is a really nice opportunity for some of it coming here.
Speaker Change: Take a company that really I think is actually set up well for success and so I don't know.
Speaker Change: Yes, my comment a little bit about that I mean, the organization as you know has been consumed with a lot of project were very tough detailed work working through these separations that spins.
Speaker Change: There is a real energy in the organization to turn now to growth and innovation and so.
Speaker Change: You can feel it.
Speaker Change: You really can't.
Speaker Change: That is a real opportunity here.
Speaker Change: There is there are good leaders ready to move it forward and I think <unk>.
Speaker Change: Ever comes into the role that is the key pieces to drive that profitable growth.
Speaker Change: From the base that has been done now because a.
Speaker Change: A lot of cleanup has been done.
Speaker Change: All right very helpful. Thank you for taking the questions.
Speaker Change: Thank you.
Speaker Change: The next question comes from the line of Daniel <unk> with UBS. Please go ahead.
Speaker Change: Hey, good morning, everyone. Thank you so much for taking the question and are excited to work with you.
Speaker Change: Just a quick question on actually Larry's question is a good segue into Bret and Joel and Heather just as we look to 2025 and sort of some of the.
Speaker Change: Pipeline drivers specific to 2025, and maybe even 2026 I know you guys talked about like 10 product launches in pharma for example, but any color you can give on that.
Speaker Change: And what we have.
Speaker Change: Analysts and investors can look forward to over the next 12 to 24 months and Thats all thanks, so much sure.
Sure I'll start and others can chime in as as they like so I guess I'll start with what I would call a few of the key drivers as we think about our.
Speaker Change: Our guidance in 2025, a year ahead of US you know number one.
Speaker Change: Do they have strong growth in MPT I think.
Speaker Change: As we mentioned a bit earlier, the full year of the Novo launches again, we're really excited about that.
Speaker Change: <unk> surgery, we're anticipating two new build mid single digit growth there, Eric political nutrition business, which actually kind of an interesting notice has started.
Speaker Change: <unk> into the ASC space. So we've seen some nice growth there and anticipate that continuing over the.
Speaker Change: Next year as well as the impact the GPO pricing.
Speaker Change: So that's a struggle within that business, we've talked about earlier about the recovery of HST.
Speaker Change: The continued momentum on the capital side in particular, the PSS and the U S.
Speaker Change: The stabilization stabilization excuse me.
Speaker Change: LLC.
Speaker Change: We penciled far miles sort of the tedium.
Speaker Change: Innovation and new product launches.
Speaker Change: Mix improvement there.
Speaker Change: <unk>.
Speaker Change: <unk> relative to <unk>.
Speaker Change: Stabilization on the anesthesia side.
Speaker Change: So again I think that's really of a top line and then the drivers of the alliance So I talked about the area.
Speaker Change: GPO pricing the new product launches the mix continued improvements in our IFC.
Speaker Change: Our supply chain with our margin improvement programs.
Speaker Change: Volume leverage and then over the course of the year.
Speaker Change: The impact from driving out some of the.
Speaker Change: Australia costs.
Speaker Change: We've talked about here. So I think those are those are really the things to look forward to even have a new product launch perspective, just in general again.
Speaker Change: A renewed focused.
Speaker Change: That is an accelerated focus there so perhaps in the ways I've talked about the 25, but also sets up for some impact.
Speaker Change: Beyond that.
Speaker Change: Yes.
Speaker Change: Yes, Im looking forward to working with you too. This is heather so some things that I'm excited about I mean, the pump platform as I mentioned is something that we will continue to build on and we have additional launches to support Novum IQ in our gateway now that can work across our entire portfolio. So really excited about that and our connected <unk>.
Speaker Change: System in the hospital, which is going to help clinical decision support and more personalized patient care I mean, that's something that was the original thesis of the Hill ROM acquisition, and we're starting to really see good pilots and momentum with our customers on that.
Speaker Change: He is going to be introducing some new products takeout launches coming out throughout 2025 and early 'twenty six.
Speaker Change: <unk> seen great momentum on <unk>, so that continues to pay good dividends and taking market share there and then pharma is hitting a really exciting cadence.
Speaker Change: New product launches getting into more complex molecules, 10% to 12 launches. The ear that are really helped buoy and as Joel mentioned that margins in that business are really focused on that and when they hit this innovation cycle that theyre on right. Now. So those are some of the things that I'm personally excited about and then you mentioned alternative site we made it.
Speaker Change: <unk> two years ago in alternate site in the United States and we are starting to see dividends paid there in the nutrition portfolio and some small tuck in licensing and distribution deals that we did in MPT and those are starting to bear fruit so that momentum in the U S. Well continue so those are just a few things that I'm personally excited about.
Speaker Change: When I talked about our new brands, new pace and momentum that is building, we're definitely starting to see that across the portfolio in those investments that we made bearing fruit now moving into 'twenty five 'twenty six.
Brent Joel: Yes. Thanks, Heather this is Brent I'll just add today.
Brent Joel: <unk> to it but really starting right now we're putting the emphasis on accelerating time to market innovation development. So that's that is an area of very strong focus right now is how to speed up.
Brent Joel: Innovation cycle and get product solutions to market faster so.
Brent Joel: That will be ongoing work.
Brent Joel: Thanks.
Brent Joel: Thank you.
Brent Joel: Okay.
Speaker Change: Ladies and gentlemen, those are all the questions that time allows us to take therefore that concludes today's question and answer session. In today's conference call. We thank you for your participation you may now disconnect.
Please wait the conference will begin shortly.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: No.
Speaker Change: <unk>.
Speaker Change: [music].
Speaker Change: No.
Speaker Change: <unk>.
Yes.
Speaker Change: Yeah.
Speaker Change: [music].
<unk>.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: No.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: Yes.