Elanco Animal Health - 1781782 - ELANCO ANIMAL HEALTH INC

So, good afternoon, everybody. I'm Andrea Alfonso. I am with the Healthcare Services team here at UBS, and it is my pleasure to introduce you to Bobby Modi, EVP of U.S. Pet Health, and Bob VanHembergen, who is the Chief Financial Officer of Elanco. So, just to kick things off, maybe, Bob, you'd like to give some introductory remarks recapping last week's earnings calls and maybe all the new and exciting things going on at Lonco right now. Yeah, great. Hey, thanks for having me and thanks for the time today. So, yeah, last Thursday, we did have our third quarter earnings release. And I think the message coming out of it is that momentum for the business continues from what we've seen the previous several quarters. Growth in the quarter was 9% organically, 11% reported, which included about a point of growth from AHV that we acquired here earlier this year. Pricing was a key topic going into the quarter, and pricing, we were pleased with the acceleration that we expected, so pricing in the quarter was 4%, a little bit higher on the pet side and a little lower than that on the farm side, but strong growth there. Overall, the business performed extremely well across all four quadrants. Our pet business grew 14%. Bobby's U.S. Pet Health grew 13%, internationally grew 17%, really on the backs of continued share gains of some of our newer products. Earnings came in strong as well. Our gross margin was up 300 basis points from the previous year, really led from our innovation, our innovative products, a continued focus on our manufacturing capabilities and really just continuous improvement processes throughout that. And then some favorable mix as we did grow stronger in the pet side. So earnings came in stronger than we expected. And then on the cash side and balance sheet, we did get levered below three times. That was a key milestone for us. We had originally expected that to be in 2027. And just with the stronger growth in earnings as well as continued fundamentals around trade work and capital, we were able to get leveraged at 2.9 times. So it was a major milestone for the company. Great. Great. So I guess last week, one thing that you didn't really talk about as much was the reaffirmation of mid-single-digit organic revenue growth and high single-digits EBITDA growth for 2027. So maybe, you know, as we think about 2027, how much of the earnings algorithm is supported, you know, by volume and then sort of share gains versus pricing mix? And then I have sort of an EBITTA follow-up to that. Yeah, great. So we highlighted last week, we have a tremendous amount of clarity around our 2027 business plan. And we'll be meeting with the board next week to present that. But just a high degree of confidence. What we did do is reiterate our algorithm that we shared at investor day in December last year, which we did say we expect to grow mid-single digits from 25 to 28. We expect EBITDA to grow at high single digits, and we expect earnings to grow at low double digits. And what we reiterated was that's not only over the course of three years, but that's individually at each year. And so we did highlight we expect that coming in 2027. And that's going to be a mix of both pricing. We do see pricing about that 2% to 3% at the historical rate that we've been at. We expect that in Q4, not to carry on into 2027, and we see volume picking up the rest with some great growth in our innovation and the products around that. Got it. And so just on the top line, one thing that we've certainly gotten questions on is the headwind that you flagged from the Costco non-renewal. So is there a way for you guys to frame how big of a risk that is? And is that sort of limited to just one quarter? Yeah, maybe I'll give you a couple of comments and then I'll let Bobby give a little bit more color. But as you think about just the impact of Costco, what's important for people to understand is we actually see retail growing in 2027 versus 26, even after considering the loss of the Costco business. Now, Costco for the year, it was less than a half point of growth for us. It was particularly stronger in Q1 in 26 just because of the launch of it. But Bobby and the team have done a great job of adding more customers. And so, again, retail should be a growth driver for us next year. Yeah, and it's not uncommon for us to see retailers make decisions on assortment. And Costco is a limited assortament environment. They carry only one SKU of flea and tick. And we had won that business from the incumbent for the first time in history. And they decided to make a different decision sort of going forward. This has happened to us before. We've lost major customers in the past. And we think it was largely driven by timing of execution. and missing some part of the season when we sort of got in. And so we're optimistic that the business will come back over time. And just to clarify, there's still a portion of your products that still is sold at Costco? Yeah, I want to be very clear. That's just a great follow-up question, Andrea. It's just our OTC business sold in the brick-and-mortar stores in Costco. So we still have our online OTC бизнес, and we have a very large RX business with Costco as well. Okay. And I guess when you think about, you know, you mentioned that these things do happen all the time. I guess, you know, maybe just a flavor for, like, you know, how long these contracts typically run and, you know, what are sort of, like – what sort of drives them back to you guys at the end of the day? Yeah. Typically, the contracts are on an annual cycle, and it's largely driven by performance. So, performance of something else that they put in there, whether that be another clean tech product or, frankly, a different category altogether, and it's all about meeting certain velocity hurdles for the dollars per store per club. So, Bob, just to touch on, you know, sort of the EBITDA expansion that, you know, you're looking at. So, you mentioned gross margin, improved 300 BIPs in Q3, and you also reiterated the 60% long-term target. How should investors think about sort of, the next leg of capture for 2027? You know, outline quite a number of tangible drivers for a long co-ascend. So maybe, you know, like, has the low-hanging fruit kind of been plucked, if you will, you know, for procurement, manufacturing, and operational efficiency? So if we could just maybe go through some of the buckets to that, that would be helpful. No, that's great. Yeah. So overall, with Alenco Ascend, we're still in the early stages of the benefit. We did see, obviously, we took a restructuring charge in December. And so what's been front-end loaded is just the G&A cost takeout. But what you've seen is in the last two quarters, we've talked about the acceleration of some of the programs and the projects under Elanco Ascend. And we've got over 5,000 projects that we're tracking. And this is truly a global initiative where many hands are focused on improving what we do better today than we did a week ago, a month ago, and a year ago. So we're just breaking down just some of those components. We do expect about 25% of the value of Elanco Ascend to be in G&A and 75% in margins. The overall program, we expect to get $200 to $250 million in EBITDA save by 2030. And as I think about just the G&E, I mean, it's going to be leveraging AI, but a lot of it is just process improvements. And again, the restructuring charge certainly gets us on the right footing moving forward. But as I Think about just The Impact's gross margin, It's going to be some pricing and some improvements in programs around gross to net and understanding which projects and programs are more effective than others. Within the four walls of manufacturing facilities globally, just a continued effort on Kaizen events and ensuring that we're bringing best practices to what we do and sharing best practices across facilities around the world. Then on the procurement side, I've highlighted even last December at Investor Day, I highlighted where the procurement team has negotiated new contracts. And what we've seen, and even this week on earnings call, we highlighted that we've had our first ever supplier day. And so we had our top 70 strategic suppliers come to the office. I sat in many of these meetings myself. And we're in just a different spot in Alenco than we were two years ago and three years ago. So we clearly see momentum sustaining, and we see an opportunity for partners to maybe partner a little bit differently and grow together. And our intent is to offset inflation as much as possible. And there was a great receptivity from our supply base. I think they recognize the trajectory we're on, both organically and the flexibility we have inorganically. So I think you'll continue to see, over the next several years, a continued improvement in gross margins, a continuing improvement in EBITDA margins as well. And, you know, we kind of talked about the algorithm we gave at Investor Day. If I think about the formula that we use internally, Q3 was a great example of that, where on the G&A front in the quarter, we were up 2%, okay, year over year. Now, if you back out higher incentive compensation costs because of the performance that we're having, we're actually down 2% year-over-year. That efficiency around link will ascend is then funding the growth. And so you saw us move up marketing and selling costs 18% in the quarter as we continue to grow that top line. And then you also saw us increase R&D expense 11% as we're focused on accelerating that pipeline. And so moving those products through that pipeline and investing more and strengthening that muscle. So that's the internal formula I want to keep having, where we beat on our commitments and then we continue to reinvest in the business. And Elankel Ascend is at the core of that. Got it. So just switching gears to Bifrena, which, you know, you mentioned would be the largest individual growth driver in U.S. pet health in 2027. I guess maybe, Bobby, if you could just sort of share, you know, how the Zinrelia launch experience, why or why should it not be like sort of the analog for how we think about the front end from sort of a commercialization vis-a-vis, you know, your pricing strategy? Yeah, I think, first of all, the aisle 31 MAB category is roughly a $450 million market in the U.S., and there's only one player in there today. So we think being number two with a differentiated asset on convenience, efficacy, and value is a huge competitive advantage. Maybe different than Zendralia, which was slowed a little bit in the U.S. from a ramp perspective, driven by the label. Not only will we have a differentiator asset, but we also have sort of a clean label. And very similar to Zenderalia and all of our innovation, we price the value, right? And we also have attractive launch pricing that allows us to drive faster adoption and penetration in the marketplace. And so, you know, on a list price basis, we're roughly parity to the current market incumbent, but with a differentiated asset. And so we think that's going to be beneficial for us for driving penetration inthe market at an accelerated rate once we fully release supply. Got it. And just maybe if you can sort of share, you know, in terms of kind of the real-world usage, like what is the, you know, longevity, if you will, of your competitor at this point? Yeah. You know, our competitor has a label efficacy of four to eight weeks. Our efficacy is on the six to eight-week side. So, you know, we believe they're operating historically more on the shorter end, and we hope they'll be operating at least the anecdotal information that we're getting from the market right now on the clinics that have adopted thus far. We're getting on sort of the longer side of use. So there'll be real value opportunity for either the pet parent or the vet clinic going forward. Got it. And I guess with a third injectable potentially coming into the market, just sort of as you think about like the TAM? Is the TAM really, is it sort of a ceiling, really just sort of the third of the market that is not seasonal, sort of more chronic? Could it be more than that? And then I had a follow-up question. Yeah, I think whenever you can drive value and convenience, you should be able to grow the market. And our expectation and what we see historically with innovation is that the market ultimately grows. And I think compliance ultimately drives dosage use, which ultimately creates growth in the TAM. What do you see the U.S. Derm and OUS Derm market for these products growing at the moment? Because I think we've also heard that, you know, Derm visits are down as are many of sort of the chronic slash therapeutic visits. Yeah. So I think OUS, we certainly see the Derm Market growing high single digits. I think on a revenue basis in the U.S., what we continue to see is, based on the data that we have, that doses are up, but you're seeing a little bit of shift in one product to another that may be trading dollars out of the category. So you're saying dollars may be more flat and slightly down in the U-S market, but doses up. So, you know, obviously with the third market coming in, it was third player rather coming in with, you knows, longer efficacy, if you will. I guess, you've spoken to lot of DERM specialists, and I think also sort of your experience having been in the space for a while. I mean, you know, I remember that at one point, you know, when we certainly had Jeff on the road in March, you know, that there was some hesitation on pet owners as well in terms of just kind of having a product that long in a pet's body. Do you think that that would kind of be the same for DERMs where, you know, there's sort of this natural feeling of like, well, I only want X number of this in my pet's body before I start to worry? Yeah, I think there's a couple of ways to think about it. First is roughly two-thirds of the pet patients are either acute or seasonal, which means they're using the product for less than three months, right? So they're really not a need for a long acting product. The Frenta is sort of perfect for that. The second thing is really about sort of real-world market performance, right, so if the Frentas performing even better than maybe what the labeled efficacy is, or consumers are able to stretch it, that also sort of gives us the ability to carry over to some longer-acting doses. And the third thing we know from recent experience is there's a subset of veterinarians and pet parents that have hesitancy about sort of long-lasting injectables and largely just concerns about safety, which also sort it creates an opportunity for a product like Bifrana. So this is a bit of a two-parter, which is also linked to Bifran. But, you know, Bob, marketing spend was up in the teens, you know, 9% organic growth. You know, you are going to be doing a pretty major launch, and I know that there are nuances there. But,you know, how do we sort of think about that pace versus organic growth? Does it narrow a little bit in 2027? And I guess just to circle back to Bufrana, you know, how do you think that the makeup of the spend, you know, could trend? Could it be similar to your prior, Durham? Yes, let me, I'll speak at the macro level. So as I think about moving forward, think about 2027, we absolutely expect to see more leverage coming through the P&L on the spend. But with that being said, we're going to continue to lean in and use data. All of our decisions around DTC are data-driven. And you've seen it in the share gains that we've had, not only in the U.S., but also internationally, and so, you know, we're going to continue to use data, and again, like I said, it plays heavy into this, but we use data to determine, you know, how much and the effectiveness of the DTC spend, but we continue to see that return on those investments, and, you know, until we see that peak out, we'll continue to, you know, to lean in there, but at least at 27, we do see some leverage coming through the P&O. And the way I think about the business is the two largest components of our spend are our media, direct-to-consumer advertising, and then our Salesforce sort of expenditure and our share voice. So, on the media side, what I would tell you is there are categories that are more vet-driven and categories that Are more consumer-driven. So categories that Ar more consumer driven, think parasiticide. On those categories, there's a significant amount of media or direct- to-consume investment. And categories that Are more vet driven, so think dermatology or other therapeutic categories, There's actually not that much direct-to-consumer advertising. Actually, we're spending very little on Zunreli, and we expect to spend very little on the front end going forward. On the flip side, share of voice is your voice with the customer. And as our portfolio grows and we continue to sort of extend our reach with more products, we are actually increasing in our share of Voice by actually adding sales reps in the marketplace to cover the vast growing portfolio that we have in the U.S. that's helpful just switching gears um to sort of the you know the topic du jour pricing exactly topic dujour topic of the year um i guess the um you know just obviously on pricing you know um jeff talked about time-based um activity um in the quarter so you know maybe if you could comment on you know sort of you've also mentioned it's rational maybe like what's different this time around? And, you know, is, you know, we're a little bit early and I guess in Q4, but, you Know, maybe if you can also comment on whether that's intensified or sort of been stable in Q3. Yeah, maybe I'll start off and then Bobby can talk more about what he's saying now. But, you know think about pricing. So think about where we landed in Q three really. I mean, we expected acceleration in price and we saw that a couple drivers to pricing, right? It's always going to be a matter of customer mix and product mix, the timing of corporate accounts and those sort of things lapping. But we had a high degree of confidence and clarity around that, and we saw that. What we're seeing pricing, you know, because the strength we're seen is because of the basket of innovation growing. So think about it as an Aurelian, a Quattro product. Last year, it didn't have pricing. Now it does because we're lapping, you Know, initial launches of all those programs. And so, you Now, we do see fluctuations quarter to quarter. You know, we're anticipating that coming back to the 2% to 3% in Q4, and that's the – you know, as we think about 27, you know we've committed that mid-single-digit growth. And I would consider that 2% or 3% of pricing and the rest being really volumes. Overall pricing, we are going to continue to price to the value that we bring to that end customer, and we think that's very high. We've been clear, you know, we haven't, nor do we expect to engage in a severe pricing dynamic. And we haven'T needed to, and we don'T anticipate doing that. And all those things are sort of short-term duration things that could shift, you know, purchases and sales, you know, by a month here or there. But ultimately, best medicine is going to win. And, you know, that's been really about the philosophy that we've been on, and we've seen that success. But maybe Bobby can add a little bit more color. Yeah, I would just say we think pricing in the market has been really responsible. At any given time, you'll see what I would call a competitor make time-bound or surgical investments at an account largely driven by gross to net investments. And actually what we're seeing is Q4 really isn't that different than Q3. And in some ways, Q4 is moderated a little bit from where Q3 was from a pricing perspective. So, you know, I Would just reiterate, it's been responsible for many years. It continues to be responsible, and we expect that to continue going forward. Got it. And so, you know, in cases like that, you know, do you react? Is it even matched from what you've seen so far, or do you just walk away from that volume? Yeah, I think, like, when it's surgical and time-bound, the way I would think about it is you think about our drivers of growth. It's continuing to add new clinics to our innovation, and the pace of adding new clinics, you know, was consistent with what we've always communicated, roughly 500 a month on Quattro and 500 a months on Venerelia. So we don't see clinics switch back from our products because we believe we have sort of best medicine out there. All it does is potentially move volume from one quarter to another quarter into a clinic that maybe delays our ability to convert that clinic. But eventually, you now, we'll come to them when their stock is low and hopefully convince them that we've got the best offering for their customers going forward. Got it. So just zooming in a little bit on, you know, some of your, you know, older products. So I guess, you have health through 13% Q3 is driven by Xenorelia and Quattro. Where do you see the greatest remaining opportunity? Is it still new clinics? Is it deeper utilization in the existing clinics? Or is it maybe, you know, sales outside the traditional vet channel? Yeah, I think about our growth in three ways, right? So, there's a growth of our existing big six innovation, right, and the growth of those products is going to be driven by new clinics, right. Cordelia Quattro is in roughly 55% of the clinics, so there's still ample opportunity to grow. Senrelia is in two-thirds of the clinic, so still ample opportunity to add more clinics. Second is getting increasing share in those clinics, and what you naturally we see is when you onboard a clinic later in the year, your share is lower in the clinic than what it will be if you get them during sort of peak season. Third is we participate in growing segments. We expect our products to grow as a result of those segments. And then the fourth is the price sort of benefit that we get. The other factor that will drive our business is obviously new innovation, right? Like Bifrena. And we think there's a significant portfolio benefit of Bifrenia. 20% of clinics that brought in Bifrena had never brought in Zanralia. And so that's an ample hunting ground for our clinics going forward. And then the third area is the effect of innovation on your base portfolio. And what we saw this year is 2,600 clinics that brought in Quattro bought another Elanco product for the first time ever, adding several millions of dollars of sales this year. When you're sort of thinking about, you know, the number or rather than maximum number of products, you know, in a shelf? You know, does it sort of vary across the board? And, you Know, how is that? How does para compare to Durham? Yeah, we generally see clinics carry fewer parasiticide products in clinic going forward. One, they're watching inventory. Two, they are watching sort of cash. And so they can utilize their home delivery platform for other pair of products if a consumer desires it. On DERM, because the disease state is tricky and complicated to treat, and usually there are multiple solutions needed depending on what the DERN needs are of the dog, we actually see clinics carrying multiple JAK inhibitors and other treatments like cyclosporine or monoclonal antibodies to treat the product. So, I really think it depends on the therapeutic category and what the vet needs to sort of deliver sort of care to the pet. Got it. I guess just on Quatro, you know, it was really interesting in September, you know, we saw a press release talking about the extended, you know, sick and flea season. And so, I guess, just, you know, drilling on that, just you know as you think about the ability to, you know, if a competitor were, you know, to intensify their efforts to take away share, you know, how do we think about the opportunity during non-peak season, which is, you know, kind of where we are, and, you know, and how effective can that strategy ultimately be? And then just on sort of this topic of an extended season, is this a structural change or is this one that might possibly present a tough comp, you know, at the same time next year? Yeah. I mean, look, the drivers of flea and tick, just from a weather perspective, tend to be moisture and warmer weather. And we see sort of warmer weather, generally speaking, and we're seeing a little bit more moisture right now. The season is extending. Now, it may not be extending in the vet clinic, because what we know is there's a slightly different shopping behavior for consumers, specifically as it relates to preventatives. It's more of an omni-channel behavior where they're buying more online, whether it be the Vets online pharmacy or in sort of the retail channel, which, again, is a win for the industry because it drives compliance up. Generally speaking, it is difficult to bring clinics on an off-season time period because they're unwilling to go through the change of management with pet parents now because then they've got to re-educate a whole slew of new consumers during sort of a peak season. So you generally see share gains slow down during this sort of off-peak sort of cycle, and then, you know, really pick back up in sort of call it the Fab March time frame of the season when it picks up through the late summer. Got it. So, if you think about just sort of the ability to convert, you have fairly compliant pet owners, hopefully, who are on it, so it should just sort of be sort of like the one-year point, or the pet just doesn't really like the taste and wants to go to chewable or some sort. Yeah, I think the way to think about it is we think about new starts, which is why we care about puppy index, which puppy index is a leading indicator of we're converting more puppies than our fair share, which means our share should ultimately catch up over time. And then, yeah, you look for a triggering event. And there are two ways that you can get a triggering events. There's obviously a pet parent comes in and says, my dog won't eat this or my dog doesn't like this. But there's also converting a clinic. And you can drive change management in a clinic and have the clinic sort of communicate the benefits of moving to Quattro, for example, because of the more comprehensive coverage that it offers versus other medicines in the marketplace. Got it. So, Bob, just obviously wanted to kind of pivot back to sort of some more finance questions. I think, you know, with all sort of the dynamics that were going on in the quarter, I think what was maybe not asked as much was about, you Know, the strides you've made in terms of cleaning up the balance sheet. So, you know, as you mentioned, net leverage now below three times. There was a line in there in the slides that said you have greater capital flexibility. What does that mean? Yeah. Yeah. Yeah, so great. Thanks for the question. Yeah, it really didn't get any airtime on the call. But first off, you Know, the global team has done a fantastic job of focusing on the fundamentals around great working capital and cash. And so you just continue to see those fundamentals improve. But as I think about what that means for us, our capital allocation strategy hasn't changed. Our first priority is going to continue to be paying down debt and investing in the business organically. And so that's going to continues to be investing in R&D capabilities and manufacturing capacity. M&A is going be a part of our growth strategy as well. But I'd say the size of those are generally going to be smaller, tuck under opportunities, really extending a pipeline or adding to the portfolio. but nothing that's going to be significant enough where it would move us away from our deleveraging target, where we expect to get to that two to two and a half times is kind of the end goal there. But if you go back to December of 2025 at Investor Day, I highlighted that when we get below three times, that unlocks the opportunity for shareholder return, okay? And we thought that was going to happen in 2027. You know, we've accelerated where we are in those expectations. So, you know, where we are today, as you can imagine, we're ahead of schedule there. And so we're having conversations with our board on that and, you know, looking forward to, you know, making sure that investors are aware of that status and we'll be transparent on those discussions. But really like the space of where we are, you know, we've accelerated that by a good amount of time. And then just on the potential for strategic M&A, you know, does that kind of figure into the calculus, like in what assets would be, you know, interesting or even additive to the business? Yeah, it's a great question. So the way we think about just M&A, if I think about my role, right, it has got to be accretive to the algorithm. It has got a great financial return. And so when I think about that, I always start with ROIC. Is it going to have an ROIC that's well above our weighted average cost of capital? It's got to accreted to the algorithm. So is it going grow mid-single digits? Is it profitability going to grow high single digits. It's going to support an LDD EPS. And then it can't skew us away from our RG leveraging target of getting to that two and a half times. But think of the spaces. It is going to be really the spaces that we are in today. It will be in the DERM portfolio. It can be in parasiticides. It could be in farm animal. HV was a fantastic acquisition that we did earlier this year, really growing our ruminant strategy that we have. And a couple months in, that acquisition has been fantastic. Integration has gone very well. We're growing at or even a little bit above what the business case had. The other thing that AHP brought for us, by the way, is it's added, it's doubled our share of voice with the farm business. So we've got an extra set of or doubled the size of our share voice. And so we didn't put into our business case any opportunity from cross-selling, but that certainly exists. So that's going to be sort of the profile. It's going to be something that's not going to do anything else from a cash perspective but got some good upside. Speaking of other things that didn't get attention in this conversation, but you know, farm obviously as we, I mean, is it still realistic to think that this is a low single-digit market and where do you think that you could continue to grow above the market and what really drives that as, you know. You were thinking about sort of maturing assets like like Xperia, for example. Yeah, so great. Yeah. So we think it's a low single digit to mid single digit industry, and we see a long runway over the next decade, and really three drivers as we think about what that would be. So, you know, the first one is just the U.S. dietary guidelines recommending more protein and diets. Number two would be the aging population, where by 2030, we do expect the aging generation population over 60 to grow by 25%, and then the need for protein, you that population is higher. And then the use of GLPs. And so we predict that by 2035, 20% of Americans will be on a GLP. And that population today eats 30 to 40% more protein than those that aren't on that. So those macro drivers, I think, continue to support that farm business. And our portfolio, we've got some differentiated assets with Xperia and Rumensin and opportunity to globalize Xperia over the next several years, get pricing as well. And so we feel great about the industry. We feel great About our portfolio on that. So I see us growing at or above the market. Great. So, Bobby, I just wanted to touch a little bit on innovation. You know, obviously, back at Analyst Day, you outlined quite a number of assets in the pipeline. I guess a lot of focus has been on CKD in a lot of ways because, you know, you do have a competitor that has an active asset there. Maybe can you talk about from a high level, like structural, you Know, like what's structurally different? I think we've all heard that there are certain challenges there. Do you think solutions range from just the need for diagnosis because it's not absent? Is it having to bring felines where it's more prevalent? So I just sort of love, you Now, your view there. Yeah, here's what I would say. At Investor Day, we outlined our innovation assets, and we committed to five to six products by 2031, and out of 15 projects, and fast forward 11 months, we've had zero attrition from the pipeline. So the R&D team led by Alan is doing a phenomenal job. And, yes, while we have assets in feline CKD and we think it's a robust space, you know, what I'm more excited about is that we have Assets in pain, germ, parasiticides that have the potential to be first-in-class and best-in class. And what I would tell you, having done this a couple times, is it's lot easier to enter existing large growing markets with differentiated Assets and try to go create a new market with a new asset. We'll do both, but I have a lot more confidence in sort of going in the established spaces and what that will bring going forward. Bobby, I'm a little disappointed you didn't bring up obesity, which I'm your favorite. We also have obesity. We do have obesity, which is also a very exciting space to be in. Great. Well, listen, with just the remaining time, maybe, you know, high level sort of what, you know, as you think about kind of the risks to that outlook for 2027, like what do you think the biggest risk is to achieving? And then conversely, what do you think has to happen to outperform it? Yeah. And so we had that question earlier today, Andrew. It's a great question, right? So, you Know, page 21 of our deck highlighted the initial thoughts on headwinds and tailwinds. And with that, with that balance, we firmly believe and have a high degree of confidence and clarity around what 2027 looks like. And that's why we were able to speak with such conviction on our 27 initial guide, if you will, be in line with the algorithm. But no, to me, I think Perfrenta launching and ramping up is probably the highest nail, if You will, but not something that we're overly concerned with. You know, Bobby and I talked earlier today with a group of investors and, you know, even like Costco, right? There's a great example where they got a lot of questions. We had a lot questions on Costco, but it was less and a half point of our growth, and we grew through it. I think we've got enough levers that we can absolutely hit the commitment that we gave. Wonderful. Well, thank you so much, you both, for your support here in UBS and making the trip. And to Tiffany Kanega, head of IR, and the audience as well. And, yeah, we'll wrap up here. Yeah, thankyou. Thanks for having us. Thankyou so much.