Q4 2024 Amneal Pharmaceuticals Inc Earnings Call
[music].
Good morning, and welcome to the email Pharmaceuticals fourth quarter 'twenty 'twenty four earnings conference call I would now like to technical Eva Nils <unk> head of Investor Relations, Tony just my guess.
Go ahead.
Speaker Change: Good morning, and thank you for joining annual Pharmaceuticals fourth quarter 2024 earnings call.
Speaker Change: Today, we issued a press release reporting Q4 results the earnings press release and presentation are available and Youll Dot com.
Speaker Change: Certain statements made on this call regarding matters that are not historical facts.
Speaker Change: <unk>, but not limited to management's outlook or predictions are forward looking statements and are based solely on information that is now available to us.
Speaker Change: Please see the section entitled cautionary statements on forward looking statements.
Speaker Change: Factors that may impact future performance.
Speaker Change: We will also discuss non-GAAP measures.
Speaker Change: Information on use of these measures and reconciliations to GAAP are in the earnings release and presentation.
Sharon: On the call today are suraj in situ Patel co founders and co Ceos passed this is Tony Barrett CFO, our commercial leaders, Andy Boyer for Affordable medicines, Joe Randell for specialty and JC Daly Chief Legal officer, I will now hand, the call over to Sharon. Thank you Tony Good morning, everyone.
Sharon: And then Neal we're much more than another genetics company.
Sharon: Got it.
American Biopharmaceutical company with a track record of excellence in delivering high quality complex pharmaceuticals at speed and scale.
Sharon: We are a leader and an essential industry, providing millions of patients with access to affordable and innovative medicines.
Sharon: 2024 was an exceptional year.
There are many delivered stellar financial performance with double digit revenue and adjusted EBITDA growth and reducing net leverage below four times.
Sharon: All segments grew revenues double digits.
Sharon: This broad based performance reflects the strength of our diversified business.
Strong execution and continued investment in growth areas.
Sharon: Beyond financial results.
Sharon: Two major strategic steps in 2024.
Sharon: Enhance our long term growth profile and expand our future potential.
Including launching <unk>.
Sharon: Leasing <unk> collaboration.
Sharon: And adding to our Biosimilar pipeline.
Sharon: The first important milestone we achieved in 2024 was the successful launch of <unk> songs.
Sharon: We are so excited by the strong response from prescribers and inspiring patient testimonials.
Sharon: <unk> has exceeded expectations with market share, reaching about 1% in just four months and on track to exit the year at 8% plus.
Sharon: As a point of reference <unk> has 6% market share currently 10 years since its launch.
Sharon: We are very confident in achieving U S peak sales of three to 500 million for its excellent.
Sharon: Our specialty business grew 14% in 2024, and our goal is to grow specialty toward 500 million by 2027.
This growth will be driven by excellent unit steroid and genders and upcoming launch of <unk> and other branded products.
Sharon: Aimed to add more branded opportunities to our portfolio over time.
Sharon: Second in.
Sharon: In 2024, we entered the high growth weight loss and obesity space, a new category for them Neil.
Sharon: Through our strategic collaboration with my et cetera, a clinical stage biotech company developing next generation therapies. This unique collaboration that presents.
Sharon: New integrated business model to drive innovation at scale between two organization.
Sharon: It is a logical extension of our newest strategy that leverages our existing <unk>.
Sharon: But it is a complex manufacturing and track record of delivering high quality innovation at scale.
Speaker Change: And Neil as Matt said as preferred global supplier for the U S Euro and other markets. In addition, we look to commercialize <unk> products in 'twenty emerging markets, including India.
Speaker Change: To support this effort we will level.
Speaker Change: Rezone existing peptide capabilities and building two new high volume peptide manufacturing facilities.
With the global weight loss market projected to exceed 115 billion by 2030. This initiative is a powerful new long term growth driver for our meal overtime.
Speaker Change: See this as a very large opportunity for a meal.
Speaker Change: With three avenues for value creation.
Speaker Change: One the Mets collaboration which is our top priority to providing CMO offerings to other large companies three providing scale to deliver on genetics way plus type fees.
Speaker Change: Third.
Speaker Change: Our affordable Medicine segment, historically referred to as genetics.
Speaker Change: Includes retail products.
Speaker Change: The rapidly growing injectable and biosimilar products.
Speaker Change: The affordable Medicine segment generated revenues of $1 7 billion in 2024.
Speaker Change: <unk> growth accelerated to 14%.
Speaker Change: Fueled by new launches and then diversified complex portfolio of over three components of this segment.
Speaker Change: This is a massive business.
Speaker Change: That remains the foundation of revenue and we expect it will continue to grow tremendously going forward.
Speaker Change: Within this segment, our Injectables business is expanding quickly.
Speaker Change: We have a growing portfolio of over 40 injectable products and launch of a plus three 5% to injectables in 2024.
Speaker Change: These differentiated ready to use solutions improve hospital efficiency by eliminating medications isn't preparation steps and others.
Speaker Change: In addition, we see Biosimilars as the next major wave of affordable medicines.
Speaker Change: For patients Biosimilars improved affordability.
Speaker Change: <unk> and access to key patterns.
Speaker Change: For our new we see Biosimilars as a long term growth vector, where we are well positioned to lead.
Speaker Change: Three biosimilars generated 126 million that we knew in 2020 for just the second year on the market.
Speaker Change: We have built our pipeline with five additional biosimilar is expected to be filed this year and commercial launches planned for 2026 and 27.
Speaker Change: In 2024, we added our largest opportunity omalizumab, a biosimilar for Xolair targeting $2 8 billion U S market.
Speaker Change: By 2027, we expect to have six commercial biosimilars in the United States market.
Speaker Change: Looking forward.
Speaker Change: The global Biosimilar is projected to grow from about $33 billion today to 75 billion by 2030, given the cost complexity and development timelines, we see a relatively limited number of market participants.
Recent IQ report highlighted the significant white space opportunity in Biosimilars.
Speaker Change: There are over 100 biologic products with patents expiring over the next 10 years and only 10% currently have biosimilars and outlook.
Speaker Change: The report estimates that Biosimilars for the other 90% would save of American patients about $100 million per year.
Speaker Change: We believe success in Biosimilars will be doing byproducts selection speed to market R&D manufacturing and customer service.
Speaker Change: In order to complex generics, where our mill is a leader we are well positioned to be a major biosimilar player.
Speaker Change: Our strategic focus has been in licensing and initial portfolio.
Speaker Change: And building a commercial platform to start.
Speaker Change: Next our goal is to be vertically integrated and leverage our proven ability to develop manufacture and commercialize complex pharmaceuticals at scale.
Speaker Change: Finally, our <unk> segment as a highly durable business with long term contracts and recurring revenue streams across three channels distribution government and unit dose in 2024, Okay revenue grew 35% and we expect continued double digit growth.
Speaker Change: <unk> over $900 million in revenue by 2027.
Speaker Change: This business adds stability and diversification revenues portfolio.
Speaker Change: Overall, our mill is an essential player and an essential industry.
Speaker Change: Over 90% of prescriptions in the United States are quite affordable medicines, yet account for only 10% of commercial value.
Speaker Change: Meaningful sales or 162 million scripts for American patients each year.
Speaker Change: The largest U S manufacturer of portable medicines.
Speaker Change: Currently <unk> is number four in the U S retail market based on value and our goal is to become a top five.
Speaker Change: Hi.
Speaker Change: In the U S Injectables and U S Biosimilar market.
In coming years awarded our company's history.
Speaker Change: <unk> built a successful track record of innovation.
Speaker Change: <unk> and growth.
Neil: Neil is uniquely positioned in the pharmaceutical industry.
Speaker Change: Broad and differentiated portfolio of cross affordable medicines.
Speaker Change: That should be and distribution to drive.
Jim: Sustainable growth I'll now pass it to Jim.
Jim: Thank you Gerard and good morning, everyone.
Jim: And special thanks to our dedicated employees for making a meal a purpose driven company focused on execution and delivering value to our stakeholders today I will provide an update on our strategic priorities across operations innovation and our portfolio.
Jim: First our world class Global operations remain a key competitive advantage <unk> has its better quality track record and a world class operational infrastructure, we've done extensive manufacturing footprint in the United States, Ireland, and India or history. The ft has conducted over.
Jim: 105 successful inspections with either no or only minor observations.
Jim: We continue to invest in Digitization automation and operational efficiencies to drive innovation and growth across different brokerage firms. We are committed to enhancing our operational excellence and cost efficiencies across our global infrastructure Amy.
Jim: Amy Corning drug shortages and supply chain challenges in the U S and new stands out.
Jim: Industry, leading quality resilient supply chain and high customer footprint fulfillment rates.
Jim: A key highlight is our collaboration with much better in the DLP, one space, where our partners portfolio is moving swiftly to the drug development Crazy I mean already has the infrastructure and capabilities for peptide development and injectable manufacturing.
Jim: As part of this collaboration we will build two state of the art manufacturing facilities, one for peptide drug substance production and another for advanced sterile fill and finish manufacturing. These investments will enable large scale production positioning omni as Matt said.
Matt: Preferred global supplier, while leveraging our R&D expertise and quality leadership in this fast growing category.
Matt: <unk> innovation, we launched <unk>, which is <unk>.
Matt: The market with a new treatment for Parkinson's disease designed for rapid onset and extended efficacy Drexel and delivers more good on time with fewer doses. Our open label Phase four study is underway to generate additional real world evidence. We are pleased with the early adoption and <unk>.
Matt: Wonderful testimonials from pensions positioning <unk> to become the leading branded Parkinson's therapy.
Next in our specialty pipeline is the <unk> auto injector for migraine and cluster headache.
Matt: 18 presentation of van Lone molecule is intended to help patients avoid emergency room visits during this painful episodes. We project <unk> project peak sales of 50 to 100 million and look forward to launch later this year pending FDA approval.
Next I will touch on our complex generics portfolio.
Matt: We expect to launch 20 to 30, new products each year. This year. So far we have launched key complex products, such as mobile I mean, I would only mers and momentum Donuts opinion, which had 180 day exclusivity last week, we received approval for Leonardo.
Matt: <unk> reached re launching our late 2026, this cadence of approvals and new launches that reflects the breadth and depth of our R&D pipeline. Currently we have 76 products pending approval of 61% non oral solids and 56 in development.
Matt: 93% non oral solids, we continue to optimize our R&D portfolio.
Matt: Operating more resources towards Biosimilars and specialty over time.
Matt: 'twenty going before we launched 12, new injectable products, including over 4000 firefighters me too products.
Matt: But already foreseen was for oncology and production phosphate a ready to use IV bag.
Matt: The fourth firefighter between injectable Borruso for multiple myeloma is approved and set to launch in Q2 reached 10 to 12 additional fire department between Injectables and development.
Matt: We will meaningfully expand our injectable portfolio.
Matt: They're complex injectable programs micro sphere, leipold, rumors and drug device combinations are progressing as well.
Matt: Our R&D capabilities and infrastructure of <unk>.
Matt: One manufacturing lines in Injectables, Emil is well positioned to be a leader in the injectable space in the coming year.
Matt: In Biosimilar, we are strategically focused on expanding our portfolio. We are very excited about the biosimilar market given the upcoming vivo biologics eloise clarity on the regulatory pathway and continued adoption by clinicians building on the success of our first three commercial products.
Matt: We have in licensed private additional biosimilar pipeline candidates.
Matt: Filings for tool than other biosimilars versus the next.
Matt: The supplemental BLA filing for <unk> will be an auto injector is expected in Q2.
Matt: After that the BLA filing for Omalizumab, a biosimilar for Xolair is expected by the end of the year, we look to further expand our portfolio and be vertically integrated overtime to be a leader in the biosimilar industry.
Matt: In summary, we are focused on driving execution across development manufacturing and commercialization throughout our diversified and growing business with that I will hand, it over to <unk>.
Matt: Yeah.
Speaker Change: Thank you Tim and good morning, everyone 2024 was a very strong year.
Speaker Change: Execution across all our business units with excellent financial performance well ahead of our original guidance metrics.
Speaker Change: In addition, net leverage declined to three nine times compared to four eight times at the end of 2023.
Speaker Change: As we grew EBITDA and we paid down debt strategically tier I continue to highlight it who are driving the ongoing diversification of the business through new launches and pipeline expansion Biosimilars and <unk>, which provides a strong foundation for long term growth.
Speaker Change: In 2025, we expect continued top and bottom line growth, reflecting our ability to offset the rytary loss of exclusivity due to the breadth and depth of our commercial portfolio and strong pipeline.
Speaker Change: I'll review, our strong performance in Q4 Hudson on full year results and discuss guidance for 2025.
Speaker Change: In the fourth quarter revenues of $731 million grew 18% with double digit growth across all three segments.
Speaker Change: Our affordable Medicine segment.
Speaker Change: 91% to 479 million.
Speaker Change: New product launches added $54 million in Q4 revenue driven by recent complex lunches.
Speaker Change: Biosimilars generated 39 million in Q4 revenues and grew 49% versus the prior year.
Cindy: As Cindy mentioned <unk> continued success in R&D superb quality track record and supply consistency of competitive advantages driving sustainable growth.
Cindy: Portfolio diversification and value to customers providers and patients.
Cindy: Q4 specialty revenues grew 16% to $121 million driven by our branded products.
Cindy: Our <unk> franchise, which includes Craig some bright arena.
Cindy: <unk> generated $64 million in Q4 revenues included $3 million from Exxon.
Cindy: As we said, we're very pleased with the initial launch success of <unk> and it totally trajectory well I handle right our results.
Cindy: In Q4, our auto care segment grew 14% to $170 million, reflecting continued growth across the distribution and government channels.
Cindy: Product launches and continued strong execution of key drivers of <unk> strong performance.
Cindy: Moving down the P&L Q4, adjusted EBITDA of $155 million. This connects robust revenue growth consistent gross margins and some targeted R&D and sales and marketing investments in high growth areas.
Cindy: Q4, adjusted EPS of <unk> 12 cents declined two <unk> adjusted EBITDA was offset by interest expense.
Cindy: In summary, Q4, reflecting strong year over year revenue growth of 18% and adjusted EBITDA growth of 9%.
Cindy: Moving on to the full year of 2024 total revenues were $2 8 billion.
$400 million was 17% year over year.
Cindy: Was ahead of our original and revised guidance.
Cindy: $2 6 billion.
Cindy: Each segment grew double digits without fully move maybe sense of 15%.
Cindy: S&P up 14% and 25%.
Cindy: 24, adjusted gross margins were strong at 42, 4% without political maybe some gross margins expanding by 110 basis points, reflecting new product launches and operating efficiencies.
Cindy: Full year 2024, and adjusted EBITDA of $627 million was ahead of original guidance of $580 million to $620 million and grew 12%, which includes a substantial increase in R&D and sales and marketing to enhance our already strong pipeline and support new launches.
Cindy: From a customer perspective.
Cindy: Core operating cash flow was 348 million, excluding one time legal costs well ahead of our original guidance of $260 million to $300 million.
Cindy: Strong performance was driven by higher adjusted EBITDA and good work by our teams to drive substantial working capital improvements and some timing benefits.
Cindy: I'm also glad to report that as part of our efforts to reduce leverage we paid down 182 million of gross debt in 2024 and reduced net leverage to three nine times as compared to four eight times at the end of 2023 and.
Cindy: Going further back seven four times net leverage at the end of 2019.
Cindy: We achieved net leverage below four times one year ahead of our publicly stated target.
Cindy: In summary, very strong full year 2024 results with revenue growth of 18% adjusted EBITDA of 12% and substantial debt reduction while continuing to invest for long term growth.
Cindy: Let me now move on and discuss our full year guidance for 2025 on the top line. We expect 2025 total company net revenue of 3.3.
Cindy: $3 1 billion.
Cindy: Selecting strong growth of 7% to 11%.
Cindy: First in the Affordable Medicine segment, we expect continued double digit growth in 2025 due to the uptake of products throughout 2024.
Cindy: Some new launches expected in 2025.
Cindy: Continued biosimilar growth and Injectables expansion with a number of new fiber five btu products.
Second in our specialty segment.
Cindy: We expect 2025 revenue of approximately $400 million, which includes expected correct sense sales of approximately $15 billion and expected rytary sales between 120 to 140 million given the loss of exclusivity in the third quarter of 2025.
Cindy: Third <unk> segment, we expect continued double digit growth in 2025, driven by ongoing new launches from Emil and other suppliers across channels.
Cindy: Moving down the P&L, we expect 225, adjusted gross margins between 41%, 42% similar to 2024.
Cindy: We expect adjusted EBITDA.
Cindy: Between 650 and $675 million.
Cindy: Reflecting growth.
Cindy: Between 4% to 8% due to topline growth.
Cindy: Rytary loss of exclusivity.
Cindy: Well as incremental sales and marketing investments to maximize the substantial commercial opportunity ahead of us.
Cindy: This correction Biosimilars <unk> and Injectables.
Cindy: From an EPS perspective, we expect 2025 of adjusted EPS.
Cindy: $265 70.
Cindy: Which reflects adjusted EBITDA growth and lower interest expense.
Cindy: Debt levels have been reduced.
Cindy: Interest rates are beginning to come down.
Cindy: Moving to cash flow, we expect another strong year of cash generation 2025, which allows us to continue reducing gross debt and net leverage.
Cindy: For 2025, we expect operating cash flow, excluding potential legal settlement costs between 280 and $310 million.
Cindy: Depending on timing of settlements, who may include approximately $25 million of costs, which are substantially lower than prior years.
Cindy: From a capital allocation perspective, we continue to prioritize investments to further diversify our business and drive sustainable growth.
Cindy: Particularly high growth areas, such as specialty Biosimilars <unk> and <unk>.
Cindy: In 2025, we expect capital expenditures of approximately $100 million net of reimbursement related to these two facilities, we're building as part of our material collaborations.
Cindy: In addition, we continue to be laser focused to continue to reduce our debt levels.
Cindy: Looking to the balance sheet, our strong financial performance and disciplined capital allocation is driving higher cash generation and continued deleveraging.
Cindy: Recognizing our deleveraging progress and improved financial profile.
Cindy: <unk> received a one notch credit upgrades from S&P, and Moody's and a few months ago.
Cindy: Now that net.
Cindy: Leverage is below four times, our focus is on driving net leverage to below three times in the next few years let.
Speaker Change: Let me now turn the call back to <unk>. Thank.
Speaker Change: Thank you Tom so in.
Speaker Change: In summary, 2024 was a remarkable year for them Neil we delivered broad based double digit growth and took key strategic actions to further position.
Speaker Change: <unk> for sustainable long term growth.
Speaker Change: And Neil enters a new chapter of growth in 2025 with tremendous.
Speaker Change: Many of them across all of our business.
Speaker Change: And we are so excited for what's ahead.
Speaker Change: Let's now open the call for Q&A.
Speaker Change: Thank you to all.
Speaker Change: Ask a question. Please press star followed by one on your pass now.
Speaker Change: Change your mind, Please press star.
To ask a question. Please ensure your devices lately.
Speaker Change: Okay.
Chris Schott: The first question is from Chris Schott from J P. Morgan Your line is now.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, so much for the questions maybe.
Speaker Change: Maybe just to start off with I just had a couple on <unk>, maybe just give me off a little bit can you just elaborate on these first few months of the launch and it seems like the ramps going really nicely, but I'm. Just wondering is there any surprises from your perspective.
Speaker Change: Either where the patients are coming from or just any dynamics of how physicians are integrating this into their practices.
Speaker Change: And maybe just a second one on correct something while we're at it can you just give us the latest in terms of where formulary access stands and how youre seeing that trending.
Speaker Change: Okay.
Speaker Change: Thank you thank you Chris.
Speaker Change: So excited.
Speaker Change: Beyond our expectations.
Speaker Change: Testimonials patient testimonials that amazing this is where you feel so good that the patient that was anybody to walk networks, they're taking fewer capsules a day.
Lasting longer so it's arguably right now it's only four months.
Speaker Change: It's performing as the best <unk> LD formulation and absorption.
Speaker Change: As seen in this category and this is the straight from the.
Speaker Change: The most.
Speaker Change: Well known Kols, saying, it's the best absorption ESC and it's at a call. It a medical drug and were keep hearing back from.
Speaker Change: All across the Mds, even started from general neuro.
Speaker Change: We're going up the long term care. So we're covering all corners of the market now all 100% where dietary recovered only 20% of this is fluctuate as market.
Speaker Change: With Mds. So this is a real broaden our market reach and the teams are doing great. We're so excited this already thousand prescriptions per week just in four months.
Speaker Change: Right.
Taken two years to get there.
Speaker Change: So amazing feedback formulate policy.
Excess is awesome as well.
Speaker Change: And four to discuss that further I'll pass it on to Joe Randell ahead of.
Speaker Change: Our specialty business. Thanks, Charlie Thanks, Chris for the question and yet to show up so we're very pleased with.
Speaker Change: With the performance we've seen thus far the team has really executed well to plan. The response from the market has been remarkable.
Speaker Change: We continue to hear from physicians literally every day.
Speaker Change: Patient responses that Theyre getting you asked about formulary access and so far that we've been very pleased with the response from the payers right now we're somewhere in the neighborhood of about 30%.
Speaker Change: Coverage rate, we anticipate that to go up this year.
Speaker Change: In the neighborhood of 50% our goal has always been to <unk>.
Speaker Change: <unk> surpassed rytary coverage, which is around 70%.
Speaker Change: We anticipate bringing on at least one two maybe even three major commercial payers this year. So.
Speaker Change: So the coverage conversations have been very good the payers are also seeing the demand generation that's happening in the market. So that's further exciting them about bringing <unk> on formulary.
Speaker Change: And we're also getting great response from the advocacy organization. So we're partnering very closely with the advocacy organizations across the country. They are also held.
Speaker Change: <unk> spread the word of how favorable crack science has been so just to give you a point of illustration. When you look at the way <unk> has performed.
Speaker Change: In March versus Rytary, where 3% to five times, where rytary was at this point in large so very good uptake in the market very pleased and we look for more to come. Okay. Last thing I would add is this is we're making flex on the global product so creating global access so we have a partner in Canada.
Speaker Change: South America, Mexico, we have a partner in Europe.
Speaker Change: And Neil will market in India.
Speaker Change: And we're looking for a partner in China and Japan.
Speaker Change: So this will be a truly global product as you know he.
Speaker Change: He was nowhere available outside of the United States millions of Parkinson's patients across the globe.
Speaker Change: And this will be the best.
Speaker Change: Therapy that they will get.
Speaker Change: For their day to day.
Speaker Change: Living with Parkinson's.
Speaker Change: Excellent and maybe just one last question from me was just kind of bigger picture with the strong top line.
Speaker Change: Or are you thinking about either organic investment into the business or external BD any differently than the past I'm just trying to get a sense of how you're thinking about balancing kind of longer term investment in topline growth versus kind of maybe the drop through of that growth in terms of the near term margins. Thank you.
Speaker Change: Okay.
Speaker Change: Thanks, Chris So.
Speaker Change: We are.
Speaker Change: So fortunate to have a solid or getting pipeline.
Speaker Change: In affordable medicines.
Speaker Change: The low point of the medicines and the Intel Gx.
Speaker Change: Leading portfolio in inhalation subtitle makes.
Speaker Change: Mike <unk>.
Speaker Change: Drug device combination products. So one of the best portfolio we had.
Speaker Change: Net incomes too.
Speaker Change: The injectable, which we have.
Speaker Change: Well, our saw more firepower to injectables to come.
Speaker Change: Our ready to use.
Speaker Change: Good microspheres, so very excited biosimilars.
Speaker Change: In licensed that product as we have been.
Speaker Change: Terry.
Speaker Change: Upfront about it that this is.
Speaker Change: And we're a long term focus that this is the <unk>.
10 years business. It is and we've been investing for a long time.
Speaker Change: We need to become vertically integrated so have manufacturing with us R&D with us full pipeline global market.
Speaker Change: Sure.
Speaker Change: We are.
Speaker Change: Just lagging complex Gx, we were here to stay our mission is to become America's number one affordable medicines company. So modest similar expansion is less so we will allocate capital.
Speaker Change: <unk> Biosimilar.
Speaker Change: And then <unk>.
Speaker Change: Always looking for specialty portfolio of issue beyond <unk>, we're looking at either a couple of programs internally, which we are not ready to discuss yet.
Speaker Change: And.
Speaker Change: Working with few outside.
Speaker Change: Potential that we can either bring it in license or buy those products.
Speaker Change: Okay.
Speaker Change: Great. Thanks, so much.
Speaker Change: Okay.
Speaker Change: The next question is from David <unk> from Piper Sandler Your line is now.
Speaker Change: Yeah.
Speaker Change: <unk> got a couple so you sided <unk> peptide and in 2028 of those launches.
In.
Speaker Change: Ex U S slash in emerging markets.
Speaker Change: Is it <unk>.
Speaker Change: In the United States is a combination of those things I was just trying to get a sense of.
Speaker Change: What is your thinking regarding that 2028 number that that's on slide six.
Speaker Change: And then secondly.
Speaker Change: With the met Sarah collaboration you're constructing the new facilities, but you've also talked about beyond peptides vertically integrating your biosimilar business.
Speaker Change: And so I guess my question here is how should we think about growth in capex.
Speaker Change: Over the next several years and how that plays into your overall.
Speaker Change: Debt pay down strategy, because it sounds like there's significant expansion of your infrastructure.
Speaker Change: That's going to be happening. So just wanted to get your thoughts there and I'll leave it there. Thanks.
Speaker Change: Yeah.
David: Thank you David.
David: So first question on <unk> by 2028.
David: All of the above what you mentioned is the ex U S could have a product line to the city.
David: Could have others.
David: Contact manufacturing business, so that is what how we see.
David: The <unk> one through.
David: Through our partnership with <unk> et cetera.
David: The.
David: The growth in Capex as we had.
David: Laid out that Microsoft is contributing $100 million, we expect.
David: <unk>.
David: Incentives to be around $100 million, we're investing 100 $150 million of our capex over three years. So it's manageable capex as you would have noticed we increased our.
David: Our capex projection for this year at about $100 million.
David: We're not on the Biosimilars, we're not going to start building from scratch, we're going to do.
David: Certain M&A to bring the capacity already there.
David: And pipeline that is already there.
David: It will require incremental capex for those but we do not know exactly how much but you can see in the ballpark, we will continue to be so.
David: 70, <unk> hundred million ongoing on Capex, Margo any mid guys keep growing up our cash flow is improving our interest rates growing interest expenses coming down so no problem at all.
David: Interest here and.
David: Keep making we have to also infrastructure already.
David: Many things and this would be additional await infrastructure go ahead.
Speaker Change: If I may just ask a quick follow up regarding M&A do you think that.
Speaker Change: In terms of capacity help us understand how large it can go or what what youre thinking about aspirational in terms of sizing.
Speaker Change: Right.
David: Well David.
Speaker Change: We are focused as Tassos said, Greg we're not going to we will be four times leverage under four time and over time, we wanted to go to three times. So we would have to find it.
David: Creative deal May include.
David: The cash on hand, or limited cash equity, so theres multiple ways to do it.
David: Hey, David.
David: This stuff is.
David: Kind of be clear right continued deleverage continues to be an organic revenue growth continues to be our top two priorities number one.
David: Number two we're not a big M&A shop, where another big M&A is at the last deal, we did which was $307 million deal that was the <unk>.
David: <unk> five years ago.
David: Universally that has paid for itself.
David: <unk> silver.
David: And it's the strength of our organic pipeline that puts us in a position to kind of do the right deals that makes sense financially number one number two it has to be strategic in nature, such as Biosimilars and number three we have a high degree of confidence of executing well and I think.
David: The way the teams have executed in terms of growing our biosimilars essentially from nothing three years ago to something that probably 2025 years. This year is probably going to be $150 million business.
David: I think thats a remarkable so that's how we think about it.
David: So.
David: Hopefully that's helpful.
David: It is thanks.
David: Okay.
Speaker Change: The next question is from Lesniewski from maturing Securities. Your line is now open.
Lesniewski: Good morning. Thank you for taking my questions can you provide any latest commentary around naloxone.
Lesniewski: <unk> contracts that you signed with other states and then <unk>.
Lesniewski: Haven't really heard much commentary on units or maybe provide some puts and takes around long term opportunity there.
Lesniewski: And then lastly, I know you did comment on the Delevering.
Lesniewski: Deleverage faster than anticipated is there a new target.
Lesniewski: For 2025, thank you.
Lesniewski: Okay.
Lesniewski: So.
Lesniewski: Good morning.
Lesniewski: So today in the states are slowing moving so we have in California were close to with few state, but they haven't signed anything new beyond California, which was the largest state by far.
Lesniewski: Another 20 states get to California, and we're working through the distributors as well who already have the state contracts.
Lesniewski: Some naloxone is moving.
Lesniewski: <unk>.
Lesniewski: Three players market today, Tyler is not much in it so were emergent is well positioned in all these states in longer term contracts and it is frustrating process at the state level, but we have a team that is keep working on it and we expect to grow this business, but as it is what we have forecasted.
Should be able to provide about two and half million kits this year to the market and going up too.
Lesniewski: Four 4 million case in the next in 2026, so that's what we're working towards.
Lesniewski: Units or it is like sensory their patient two and shifts favors consistent therapy and that is what we provide it as a consistent growth profile over time.
Lesniewski: And going the same way.
Speaker Change: Good morning.
Speaker Change: From a deleveraging perspective, you can expect us to continue to pay down debt and reduce net debt to EBITDA in 2025, just depending on a number of scenarios.
Speaker Change: Around interest rates.
Speaker Change: The refinancing is et cetera, we're targeting about give or take between the $80 million to $100 million.
Speaker Change: Overall reduction in gross debt number one.
Speaker Change: This year in 2024, we've finished net debt to EBITDA three nine my gut feel is for targeting three six to three seven net debt to EBITDA. So another another.
Three.
123 reductions in net debt to EBITDA. So we're kind of continue going down in a reasonable manner reduction of leverage gross and net debt to EBITDA.
Speaker Change: Great Thanks for that color.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: The next question is from velocities Prasad from Barclays. Your line is now open.
Speaker Change: Yeah.
Velocities Prasad: Hi, good morning, everyone. So it's great to see the consistent progress in the healthy outlook I'll try to hit a couple of questions.
Speaker Change: On topics not on that but.
Velocities Prasad: So starting with you.
Velocities Prasad: Firstly on the guidance and EBITDA margins 2025, EBITDA range seems to be at around 29% to 22, 5%.
Speaker Change: I'm surprised to see that even at the higher end is limited expansion.
Speaker Change: How much of a drag as <unk> been on this and are there any other factors at play one.
Speaker Change: I'm sure everyone will be happy to say that it's not a big M&A sharpen the focus will be on continuing to deliver.
Speaker Change: So is this going to be more of a consistent deliver age yet over here or are you comfortable with with a bump up in net leverage on the back of any deals.
Speaker Change: Lastly, ching.
Speaker Change: I was just curious.
Speaker Change: Binding renewable rollout.
Speaker Change: And we address as issuers with indoor and that they can supply they evidently need a supplier do you see any scope for you to monetize your approval early and then in the pharma supply deal or an accelerated launch out of January 2026. Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Let me, let me take the first cut.
Speaker Change: Couple of them <unk> and good morning. So number one is I mean, you're you're correct. If you look at EBITDA as a percentage of revenue.
Speaker Change: And in 2024, we were at about 22, 5% you look at the guidance were more like 21%. So it looks a little bit of a deterioration.
Speaker Change: I wouldn't read anything into this this is driven by a couple of things number one is.
Speaker Change: It's a mix of business of care continued to grow faster than the rest of the business and then and then just simple fact is that.
Speaker Change: EBITDA of that business is slightly less profitable than the rest of the business.
Speaker Change: Frankly, we don't care, who are just looking at incremental dollars and incremental costs that can help us fund our business and growth. So that's number one and then obviously the combination of the Rytary a low right right. There is a 90% margin product right.
Speaker Change: They need to invest.
Speaker Change: In.
Speaker Change: Great.
Speaker Change: And kind of maximize the kind of the slope of growth for that for that for that product. So that's what I would say my gut feel is kind of we're barely.
Speaker Change: Turning to 2035, I think as we look at 2026 as we anniversary most of the Reits real OE.
Speaker Change: The incremental investments full year investments of.
Speaker Change: Cracks on begin to kind of level now I will expect to see EBITDA margin to begin increasing so that's kind of on that.
Speaker Change: Number two on deleveraging.
Speaker Change: The company is not on autopilot so.
Five years, we reduced leverage from 742.
Speaker Change: $3 nine probably in 2025 will get three six.
Speaker Change: We'd like to see in a perfect world a gliding path of reduction.
Speaker Change: If at any given point in time, there is a slight increase for for a few months for the year.
Speaker Change: I'm not seeing or.
Speaker Change: Our equity holders of our debt holders will be concerned because it will be the right decision that's going to begin kind of led into.
Speaker Change: Further delevering over the course of time.
Speaker Change: How do we think about that.
Speaker Change: <unk>.
Speaker Change: On the other questions I believe its IP subject to a settlement <unk> and thanks for the question <unk>, Jason Daily the Chief legal officer.
Speaker Change: Given the settlement dynamics I think we shouldnt be talking too much about what a little mind, but obviously, we're excited for all of the products that are in our portfolio and looking forward to launching the mall.
Speaker Change: No.
Speaker Change: Thank you.
Speaker Change: We have no further questions. So I'd like to hand back to Shamrock for any closing remarks.
Speaker Change: Well, thank you very much.
Speaker Change: Have a nice weekend.
Speaker Change: Thanks, Thank you everyone.
Speaker Change: This concludes today's call you may now disconnect from the call and enjoy the rest of your day.
Speaker Change: [music].
Speaker Change: Okay.