Greetings, and welcome to the Alcon Fourth Quarter and 2024 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Cravens, VP of Investor Relations. Thank you. You may begin.

Welcome to Alcon's fourth quarter and full year 2024 earnings conference call. Yesterday, we issued a press release, interim financial report, annual report, and a supplemental slide presentation on our website to enhance today's call. You can find all these documents in the Investor Relations section of our website at investor.alcon.com. Joining me on today's call are David Endicott, our Chief Executive Officer, and Tim Stonesifer, our Chief Financial Officer. Please note that our press release, presentation and discussion will include forward-looking statements. We expressly disclaim any obligation to update forward-looking statements as a result of new information or future developments, except as required by law. Our actual results may differ materially from those expressed or implied in our forward-looking statements, and as such, you should not place undue reliance on any forward-looking statements. Important factors that could cause our actual results to differ from those in our forward-looking statements are included in our Form 20-F, earnings press release and interim financial report, which are all on file with the Securities and Exchange Commission and available on their website at sec.gov. Non-IFRS financial measures used by the company may be calculated differently from and may not be comparable to similar measures used at other companies. These non-IFRS financial measures should be considered along with, but not as alternatives to, the operating performance measures as prescribed per IFRS. Please see a reconciliation between our non-IFRS measures with directly comparable measures presented in accordance with IFRS in our public filings. For discussion purposes, our comments on growth are expressed in constant currency. In a moment, David will begin by recapping highlights from the fourth quarter. After his remarks, Tim will discuss our performance and outlook for 2025. Then, David will wrap up, and we will open the call for Q&A. With that, I will now turn the call over to our CEO, David Endicott.

Thanks, Dan, and thanks everyone for joining us today. 2024 was another solid year for Alcon. We ended the year with sales of $9.8 billion and above market sales growth of 6%. We grew core diluted EPS by 16% to $3.05, and generated a record $1.6 billion of free cash flow. In 2024, we also continued to live out our purpose of helping people see brilliantly. Concretely, we helped improve the vision of more than 1 million patients in low- and middle-income countries. Additionally, we screened over 31,000 children for refractive error and provided spectacles where required. None of these accomplishes would have been possible without the focus of our more than 25,000 associates who worked tirelessly to make a difference for our customers, their patients and the communities we serve. Equally important, we laid the groundwork in preparation to launch one of the richest product pipelines in Alcon's history. Additionally, we realigned our leadership team and organizational structure to increase our focus on innovation, operational excellence and speed to market. We'll talk about all of this and more at our upcoming Capital Markets Day. However, I'd like to share a bit of a preview with you now. In Surgical, we will show you our upcoming equipment launches, as well as our connected equipment ecosystem. We'll also provide an update on our IOL portfolio, including some insight on our accommodating programs. In Vision Care, we'll talk about our focus areas, including our innovation in specialty contact lenses. In ocular health, we'll discuss our strategy around accelerating growth with our over-the-counter assets such as SYSTANE, as well as our pharmaceutical pipeline. And finally, we'll provide more color on our long-term innovation as we attempt to tackle some of the most challenging problems in eye care. With all this coming in a…

Thanks, David. We're pleased to report fourth quarter sales of $2.5 billion, up 6% versus prior year. This growth was primarily driven by strength in our innovative contact lens portfolio and consumables. In our Surgical franchise, revenue was up 5% year-over-year to $1.4 billion. Implantable sales were $456 million in the quarter, up 2% year-over-year. International uptake of our advanced technology IOLs continues to drive growth. In the quarter, growth was partially offset by the slower market conditions in the US that David mentioned earlier, as well as competitive pressures. In consumables, our fourth quarter sales were up 7% to $738 million, driven by vitrect and cataract consumables, including price increases. In equipment, sales of $229 million were up 2% year-over-year, in line with our expectations. Turning to Vision Care, fourth quarter sales of $1.1 billion were up 7%. Contact lens sales were up 11% to $638 million in the quarter. This growth was driven by our innovative lenses, including toric and multifocal modalities which continue to win in the market. Additionally, we had another quarter with solid contribution from price which we expect to moderate going forward. In ocular health, fourth quarter sales of $416 million were up 2% year-over-year. We saw strong performance in our portfolio of eyedrops, including another quarter of solid growth from SYSTANE. This growth was partially offset by declines in contact lens care. We also saw approximately 1 point of pressure following this strategic transaction with OcuMension in China, which we expect to continue through the third quarter. Now, moving down the income statement. Fourth quarter core gross margin was 62.7%, up 70 basis points, reflecting favorable product mix and manufacturing efficiencies in Vision Care, partially offset by Surgical gross margin. Core operating margin was 20.1%, up 130 basis points year-over-year, driven by improved…

So, to wrap up, I'm proud of the significant progress we made in 2024. Our strong financial performance, bolstered by our strategic investments and operational efficiency, underscores the bold action, thoughtful planning and solid execution by our talented teams across the globe. Looking forward, 2025 will be a pivotal year for Alcon. We are launching a wave of new products across each franchise that will position us for durable long-term growth. We will continue to invest behind customer-driven innovation, drive operational excellence and create value for our shareholders. Once again, thank you for your support. We look forward to giving another update at our Capital Markets Day in March. With that, let's open it up for Q&A.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] The first question is from David Saxon from Needham & Company. Please go ahead.

Great. Good morning, David and Tim. Thanks for taking my questions, and congrats on the quarter. I wanted to start on the US ATIOL business and getting some questions there on just some recent competitive launches. So, can you talk about specifically how that business did in the quarter? Did it grow year-on-year? And then, what do you see in terms of impact from competitive trialing and kind of what are your expectations for how that extends into 2025 as you launch PanOptix Pro?

Well, look, the US ATIOL market, I think, was -- had some small growth in it, yes. I think directionally, though, there's a lot of noise in the data. And so, I think what people are finding is that there was a lot of competitive trialing. Some of that was sampled and so that affects some of the year-on-year change. If you look at our consumables business in the US, which is a pretty good indicator of procedural growth, we think it was a relatively normal quarter, maybe a little bit light, probably in the 2% to 3% range. So that said, I think, directionally we've been very comfortable with the progress we've been making against competition. I think our total share in foldables grew and our ATIOLs business grew. It's just that it grew principally outside the US, and in the US, we lost a little bit of share to competition, which is as we would have expected. So, I think we are in a very positive frame as we kind of move into this PanOptix Pro launch. We feel good about where we are and kind of as expected as we had said.

Okay, great. Thanks for that. And then, maybe for Tim, just on the margin. So, I heard the comments around operating margins should accelerate in the back half. If I look at the first half, I mean, do you expect to see expansion? I know the first quarter, it's kind of a tougher comp, but I mean, can you see expansion starting in the second quarter, or should we think about that really just a second-half dynamic? Thanks so much.

Yeah. I think we'd probably start to see a little bit of expansion in the back half of the first half, if that makes sense. To your point, Q1, we had a very strong Q1 in 2024. I wouldn't anticipate that expanding given the investments that we're making, but we should see expansion throughout the course of the year.

The next question is from Jeff Johnson from Baird. Please go ahead.

Thank you. David, maybe I can push you just a little bit on your US ATIOL comments there. I think in the past you've given market shares on the PCIOL side. Is there anything you could update there? I mean, I think we've all assumed you're going to lose a little bit of share or maybe even a little more than a little bit of share here over the next few quarters until Pro launches. But any updates there on where you think that share potentially could trend down to over the next couple of quarters until Pro launches?

Well, I think what you're seeing right now is a relatively stable share globally with the Chinese market, for example, doing quite well. We had a very significant share growth there. And an offset in the US, obviously. So, we continue to see competition pricing in a way that makes it very attractive for people to try. So, I think as that settles down, I think we'll see a return to stability in the market globally. And I do think that the challenge in the financial piece is, of course, that the price in the US is higher than the price in China. So, even though we're growing units globally, we are not getting as much price out of that. So that's really what I think most people are observing in the 2%. So, good quarter for us generally in this area, and I think as we launch Pro, people are going to be excited about what we can do with that.

All right. And then, maybe just on top of that or a similar follow-up, just that 2% implantables number, I guess maybe for you, Tim, should we expect that as maybe competitive trialing goes up in the US over the next quarter or two, does that 2% potentially soften a little bit from there before we see it reaccelerate in the back half, or do you think 2% is kind of the trough of growth in that segment? I know you don't guide by segment, but just generally speaking, how you think that segment could play out here over the next few quarters? Thanks.

Yeah. We are not really going to get into guiding by quarter or by segment. So, to David's point, we are very excited about PanOptix Pro, and I think as we launch that, you are going to see those results in the revenue growth line or revenue growth.

The next question is from Ryan Zimmerman from BTIG. Please go ahead.

Good morning. Thanks for taking the questions, David and Tim. I appreciate it. I'm going to avoid the ATIOL questions and talk a bit about price, if we could, in the quarter. And just a broader question for the industry, because I think price has been a meaningful driver on the top-line, but when you adjust for price dynamics, can you comment more from a volume perspective? How would you characterize the growth, particularly in the contact lens segment of the business where price has been a meaningful driver?

Yeah. Thanks, Ryan. And I think the quarter for us, I think directionally is pretty close to where the year was with about a third of our growth coming from price. So, it is meaningful and we have had pricing power for the last several years. So, I think if you cut it down into kind of segments, I would say the contact lens business has benefited a lot in the last year or so from price, but it always has. I mean, historically, you see about a third of the value coming from trade-up or mix, and a third of the value coming from price, and then a third coming from the unit growth. And so, typically, that's made a market of mid-single-digits. And so, we would just think that that continues going forward. I don't know that it will be nearly as substantial as it was last year or the year before. And I think if that's where you are going, I think we are not optimistic necessarily about big price increases. Given where we are right now, we think it's pretty well priced and priced appropriately for the consumer.

Okay. Very helpful. And then, Tim, in the presentation, I think you called out some higher inventory build as just a headwind to gross margins in the fourth quarter. Given the product cycle that you have this year, would that continue? I mean, can you elaborate just on kind of whether that may or may not prohibit gross margin expansion specifically in 2025 relative to maybe the core operating margin expectations that you're calling out in guidance?

Yeah. I think, gross margin for '25 versus '24, we might see a slight improvement. You still have a little bit of the higher cost inventory flowing through into 2025. The other thing to think about is, as we launch UNITY and sell more equipment, that's going to be a little bit -- put a little bit of pressure on the gross margins. But I would plan it as gross margins flattish, little bit of an improvement.

The next question is from Larry Biegelsen from Wells Fargo. Please go ahead.

Good morning. Thanks for taking the question. Tim, I wanted to ask about the key assumptions in the 6% to 8% constant currency guidance. You talked about the phasing, the acceleration through the year. Could -- similar to margins, do you expect first half to be within that range or towards the low-end or below it? And the second half of the year was about 6%. So, the midpoint of the guidance implies an acceleration. What segment -- is this basically driven by an acceleration in equipment? And I had one follow-up.

Yeah. I would say from a phasing, if I think about the P&L, Larry, I think about it first half, second half. So, if you look at revenue, a couple of things to think about. In Surgical, as an example, implantables, the market softness in the US, the competitive pressures that we've been talking about the last couple of quarters, we started to see those in kind of the May-June timeframe of '24. So, that's going to be a tougher comp. If you look at contact lenses, as an example, on the revenue front, in '24 in the first half, we had the benefit of a couple of price increases just due to the timing of when we went out with those increases. So, those won't repeat. You got a bit of a structural change with OcuMension, right? We announced that in the second half of '24. So, you had revenue last year that you don't have this year. But on the upside, if you think about China VBP, that came out in Q2 of '24. So, we'll get a little bit of a benefit there as you think about the first half. So, given all those dynamics, I would expect revenue to be around the low-end of that guide in the first half, and then I would expect it to be at the high-end of the guide as you think about all the launches that David talked about in his prepared remarks as we see the -- as we go through the rest of the year.

That's very helpful. I wanted to ask one on UNITY, David. Talk about the feedback so far, and how we should think about the growth cadence in the equipment business through the year? Should we -- we've seen years where equipment sales, even when you didn't have a major launch like this, at over 10%, even just two years ago, it was over 10%. So, should we think about equipment being outsized growth in that business? Thank you.

Well, look, it's certainly going to be an increase year-on-year, Larry. I think the thing that's been exciting about the equipment business is we've done very well with biometry, we've done very well with microscopes. When you add Voyager into it, we think that adds some benefit to it. And then, of course, we've got what is a generational change in phaco and vit. And so, we feel like the equipment business will be very strong for us this year. I think we're launching UNITY VCS really in May, let's say. So, think about that really as a back-half idea, because by the time we get it out there and get it trained into the ORs, you'll see a steady movement, but we're going to be patient with it. We don't see a huge need to be aggressive necessarily with that launch. What we want to do is make sure that the surgeons are trained efficiently to use and maximize the value of this. And if they do that -- if we do that right, we're going to see a lot of value that it moves into doing more cataracts in a day, doing more vitrect procedures in a day, which creates value for the ASC, creates value for the surgeon, and actually helps a lot of patients get to therapy faster. So, we're excited about the back half in particular.

Thank you.

The next question is from Anthony Petrone from Mizuho Group. Please go ahead. Anthony Petrone, your line is open. We'll move on to the next question. The next question is from Julien Ouaddour from Bank of America. Please go ahead.

Thanks a lot. Good morning, everyone. So, my first question is about China. Could you give us a bit more detail about the IOL market momentum you see in China? What kind of magnitude of share gains you will have at the moment and what do you expect for 2025? So, any -- I mean, any qualitative comment about China VBP for 2025 is super helpful. Thanks.

Yeah, obviously, we expect China to do quite well this year. We had about a half a year of impact last year as that took off in the middle part of the year. We had not participated in the program in the past. So, there was some inventory that was built in the second quarter, but I think in the first quarter wraparound, for example, and then even in the second quarter, you're going to see some benefit from China on the volume. I do think that the share has been very significant relative to where we were. You remember that I've said in the past, we were in the low -- the high-single-digits. I think originally, we're significantly higher than that at this point. And that was really with only about six months of effort. So, I hesitate to give a share number because it's probably got a lot of noise in it. That data is not super great, but we're doing quite well. And I would just say that PanOptix, in particular, has just kind of gotten its feet under it. And Vivity, which is really the one that's taken off in China for us, has been a very positive momentum gainer for us. I would just remind people, though, that the China pricing is European pricing. And so, even though we're gaining units globally and our share is relatively stable globally, I think the value that you're seeing that comes through is a little bit less because the IOLs in the US are very different price than they are in Europe and the rest of the world. So, expect that we're going to do well in China, but also expect that that's largely a front half and then a stabilizing piece in the back half.

Perfect, thanks. And I just have a follow-up that I'd like to squeeze in. Could you maybe comment about the margin for Surgical this year, given you're growing nicely in China and you have also like some product launches in equipment? I mean, do we expect margin expansion in Surgical as well?

Yeah, we'll see a little bit of expansion. I think one of the things that you have to take, and I think Larry hit on this, is there will be a little pressure given the fact that the equipment sales will be increasing. So, we're excited about that launch. That will drive a lot of revenue growth in the back half. But that does put a little pressure on the margins, but we'll continue to get some operating leverage as well. So, we feel very good about the Surgical margins.

Thank you very much.

The next question is from Patrick Wood from Morgan Stanley. Please go ahead.

Beautiful, thanks. I'll keep it to one and a slightly esoteric one. But I'm curious, is there any interest on your end within the IOL market to go for the kind of drug delivery side using the haptics? Obviously we've seen some on the private side going this pathway. And glaucoma management and a bunch of areas feels like it could add a lot of value to the franchise over time going that way. I'm just curious if that's something you guys have discussed internally or thought about partnerships there. Thanks.

Yeah, Patrick, we've looked at those technologies, we're aware of them and have explored them. But I would just say that we're probably a fast follower in that space. We'd like to see that market develop. And in particular, we'd like to see reimbursement stabilize in both of the -- I would say, the intraocular drug delivery even in glaucoma. I think it'll be interesting to see over time how that stabilizes. I would put that in the same category as the IOL delivery. So, we'll likely watch this one for a while and we certainly can get into it very quickly if we needed to. So, interesting idea for sure, but probably yet to be played out.

Super helpful. Thanks, guys.

The next question is from David Adlington from JPMorgan. Please go ahead.

Hi, guys. Thanks for the question. More or less a high-level one. So, revenue guide this year at 6% to 8%, is the same as it was this time last year, but you've got a number of new products launching and the Chinese VBP. I just wondered how we should be thinking about the offsets on the downside. Is that entirely down to the softness in the IOL market, or there are other things we should be thinking about? Thanks.

Well, I think the offsets to growth are really the legacy brands and to a certain degree what happens in the market will always be one of the main points of the range. I think in truth, if you look at the global markets, they were relatively stable last year. I mean, the difference was the US didn't have a great implantables year, but international really did. And so, when you look at the number globally, the unit volumes were solid for us. And really what it was is a difference in pricing that you see between the international markets and the US. That's really what made the difference in value. So I think, directionally, we would expect that to be continuing. I mean, I think the US is going to continue to be a little bit softer as it has been because there's a lot of new competitive activity expected this next year. And I think international will continue to be strong. But the only other offsets I can tell you that sit in this market are really the -- how does the contact lens market develop and what happens in the equipment market or the capital purchasing markets, which again, I don't think -- typically, we're not really been affected by those. But I would point you towards general market conditions more than anything else.

Perfect. And then, maybe one quick follow-up. As we get to this time next year when the exit rate in the second half and as all those products start to ramp, are you expecting a faster growth rate in 2026 than 2025?

Well, when we get through '25, we'll talk about '26. But it's -- the reason the range is a little bit wide, 6% to 8%, is because we're obviously very interested in how these new products take off. We're very optimistic about them. There's not a one of them that I'm not excited about actually. So, we're hoping that -- of course, your implied idea here is going to come true, but we don't know that. So, we'll see how these ramp and how the market picks them up and we'll see what the markets do, and we'll obviously comment on that as we get into late next year.

Perfect. Great. Thanks so much.

The next question is from Brett Fishbin from Keybanc Capital Markets. Please go ahead.

Hey guys, thank you very much for taking the questions. Maybe a little bit of a follow-up to the last one, just a little bit more specific in the contact lens side. You talked a little bit about the recent launch of PRECISION7 sphere and toric over the past two calls. I 'm curious if you can just expand a little bit on some of the optometrist reception to the launch. And, like how you're thinking -- I know you gave kind of a TAM opportunity, but maybe just like a little bit more on how you're thinking about, like, the ramp of that product and what it can contribute over the next couple of years? Thank you.

Yeah. It's an interesting one. And, Brett, it was a product that we have had for a while, and we've held partly because we had a lot of other stuff to sell and launch. And we were testing it. We actually tested that product for almost a year before we put it in the market. And I'll tell you, the reception has been really terrific. I just spoke with our US folks yesterday. And one of the things I heard which was exciting was that the -- we're getting more than half of our -- of this coming from the two-week and other reusable market. So, I think that's what we had hoped for. And I think that's exactly what we're looking at, which is -- the notion of a two-week replacement is not intuitive, right? Patients forget, docs worry about that. And what happens in truth, I think, is when their lenses get real gritty, they decide to replace them, instead of doing something that's a little bit healthier for them. When you get into a much more intuitive replacement schedule, every Monday, every Sunday, whatever it is, it becomes a much more reliable idea. And that is what they're reacting to because optometrists are principally concerned with the safety of these patients and how they handle the health of their eye. And so, if you can get them on a schedule that's, A, shorter, but B, still affordable, and C, then rememberable, if you will, that is a very appealing idea to most optometrists and I think that's what they're feeding back to us. So, with that said, I did comment on the size of the market. It's meaningful and we'll see how this takes shape. I mean, I am positively predisposed to believe this is a good product to launch and will give us a nice incremental contribution to the reusable space.

All right. Thank you very much. Appreciate it.

The next question is from Harry Shrives from Citi. Please go ahead.

Hi, guys, thanks for taking the question. Just back on the US dynamics in the ATIOLs market, on the competitive sampling, so how long do you see this lasting? And is there anything you can do about the competitive sampling, or do we just have to wait for the launch of the new PanOptix product?

Well, Harry, this has been going on for a while, right? I mean, we've known for some time that we weren't going to be the only ones in the ATIOL space in the US with meaningful products. So, we saw this coming from Europe and other markets. And so, as we said, I think, probably for the last 18 months or so, we expected to lose some share in the US to good products that people would try. And so, I think that's exactly what we expect to see again through this year. There are a number of products that we anticipate launching later this year. And I think the way that we believe this thing plays out is that when people are given the opportunity to try things, particularly if they're free or very inexpensive, they're going to try them to see how they work. It's responsible to do that. So, once they decide what they're going to do and decide to purchase it, that becomes a slightly different answer. So, I think things will stabilize, but it is going to be a full year of next -- of this year that we deal with a couple of new competitors, and more coming. So, I feel good about our ability to put that off then with PanOptix Pro. I think nobody really has the profile we have with PanOptix. And especially now that we squeeze out in front of it with this ability to really use 100% -- or not 100%, but high percentage of the 90%s of the light and limit the light scatter, that's a very different experience, I think, for patients than what you're going to see with some of the other products that are out there. So, we're feeling pretty good about that. And that product launch is only a couple of months away. So, we're building the product now. We've made the choice. We've kind of walked everybody through how we did that. We studied it with a lot of surgeons. We've got very good feedback on this particular design, and our teams have been trained on it. So, we're ready to go. We just need to make it and get it out there now.

Great. Thank you. And on your margin guidance of sort of 21% to 22% next year, could you just break that down for us into sort of effects from gross margin and OpEx, please?

Yeah. We don't really break it down that way. But again, I think if you look at the margin expansion, the point I'd make is it will be more back-half loaded just given the investments that we're making on these new product launches. But we expect to continue to see nice margin improvement.

Great. Thank you.

The next question is from Tom Stephan from Stifel. Please go ahead.

Great. Hey, guys, thanks for the questions. I'll start with Hydrus. David, can you remind us of the size of that business, maybe in 2024 and your outlook here in the US, just given the LCD noise that has surfaced of late? And then, where do we stand with OUS expansion of Hydrus as well? And then, I have a follow-up.

Yeah. We generally don't comment on the size of products. I'd just say it's a little under 100, but the product has done pretty well. And obviously, the LCD -- the combined use of products has been a preference of surgeons. We look to help them reverse that. We'll see if that happens, but we hope that, that is something that can take shape in the next couple of years. I don't know that it will. But even if it doesn't, I think what we're excited about with Hydrus is it has proven out, I think, for everybody who's used to be the most effective way of treating. If you're going to use a MIG, this is the one that really does work particularly well. And I think that's pretty well established with both the data, the long-term visual field data, and also the experience with docs has been. So, we feel like that if you're going to make a choice, that's the right choice to make. And so that's certainly where we're headed. Outside the US, we've got interesting opportunities in Japan, France, Spain and China. We'll see how that takes shape with reimbursement. So again, reimbursement is the main thing in these markets, and that will be -- is still to be determined in a number of markets, but we look forward to trying to build that brand outside the US as well.

Got it. That's great. And then, just on contact lenses to pivot a bit. For 2025 kind of end market growth, David, I think you talked about maybe price potentially moderating a bit. But can you just discuss your view on the trade-up aspect of market growth? Sort of what do you think that looks like in '25 versus '24? Maybe just kind of that DAILIES versus reusables growth dynamic? Thanks.

Yeah. It's really steady. I mean -- and if you look back over the years, it stays steady. And so, I don't really believe it's going to change. I think people prefer a daily, and I think the DAILIES have gotten a little bit less expensive and there are different price points now for people who want to get into DAILIES. So, we've got a value product in PRECISION1, which we get really excited about. It's probably the best value out there for a DAILIES brand. DAILIES TOTAL1, if you really are -- you want the best comfort out there, that's a little bit more expensive, but a great product. And both of those draw the reusable patients in because they are more convenient to wear once a day and toss them and they are a lot more comfortable, particularly at the end of the reusable wear cycle. So, you are just getting a better product if you can afford it. Now, we recognize not everybody can afford that and we make reusables as a consequence. And we have obviously slipped P7 in between the T30 and our DAILIES lenses. But we don't anticipate that the amount of energy we are putting on reusables, for example, is going to have any real effect on the DAILIES trade-up. In fact, we expect it to continue on while we take share in the reusables. So, I would say continued steady trade-up to DAILIES. And we'll still see some price in '25. I think it just won't be what it was in '24 or '23.

Great color. Thanks, David.

The next question is from Issie Kirby from Redburn Atlantic. Please go ahead.

Hi, guys. Thanks for taking my question. I just wanted to touch upon dry eye and some of the investments that you're making there. I was wondering if you could talk about the prescriber base here for dry eye and the extent to which you're already calling on that existing prescriber base with your broader product portfolio and how you can potentially leverage your broader over-the-counter offering to win here?

Yeah, it's a really interesting question. We spent a lot of time as of late thinking about the deployment for [AR-512] (ph), and I think there is a significant optometric audience here that we are intending to cover, and again, we will do that, but it is different than some of our other eye drops. So, for example, Rocklatan, much more of a traditional ophthalmology audience, some optometry, but not a lot. What you see with the high prescribers is there are some concentrated high prescribers in optometry that we will want to cover and we are expanding our sales force to do that. So, as I have said in the past, we were going to look at what's the optimum way to maximize the value here of our launch on 512, and we are adding a sales force to get coverage of not just ophthalmologists who are high prescribers, but also optometrists who will fit in that category as well. And that will give us room to continue to promote our glaucoma drops and some of our other eye drops that we have. And the leverage obviously comes from an ability to self-sustain preservative-free Pataday and a number of other OTC products. So, your point on OTC is well made. We do have a lot of opportunity to kind of leverage that and help build the demand coming from the surgeon side or the doc side of this, in addition to obviously continuing to build our consumer effort. So, good question and we are headed that way.

Great. Thanks for the color. And then, just as a follow-up on contact lenses and as it relates to CapEx, just wondering how you're feeling from a capacity standpoint at the moment and how we should think about contact lens margins over the next few years? Thanks.

Yeah. CapEx for us continues to be kind of a mid-single-digit idea. We are going to try and stay in that range. I think that's the right level of recap and the right level of expansion, and I think that is relatively steady and consistent with what we have said in the past. In terms of capacity on contact lenses, I would tell you that we have done a really great job. Our manufacturing guys -- we were just actually out in our German facility, and they have done a tremendous job of improving our outputs on these lines. And so, we are well past the original design speeds, which has contributed to a reduction in our need to add new lines. We are getting tremendous productivity. And our flexibility in those lines has given us a lot of room, so we can make things like P7. We don't have to create a new line to do that. T30, PRECISION7, PRECISION1, they all come off the same line. And as we are working forward, we are looking to create more products that come off those same lines because between the manufacturing and R&D teams, we figured out how to keep the capital really useful and repurpose lines if we need to. But generally, they are flexible enough to make different modalities, different finishes, different surfaces. So, that's been particularly effective for efficiency of capital.

Great. Thanks so much.

The next question is from Kavya Deshpande from UBS. Please go ahead.

Hi. This is Kavya from UBS. Thanks for taking my question. I was just wondering about the BELKIN Vision product and how significant you think this technology can be and how we should think about the ramp-up here? Thank you.

Yeah, it's a really great question. The ramp is the tricky part I think. I think -- we think this is probably in the kind of [75 to 150] (ph) range. I mean I put it a wide range like that because there is an emerging consensus that SLT is the right place to start with almost every glaucoma patient. The challenge has been, it's a difficult procedure to take on if you don't have something like Voyager. And so, the gap that we are filling is the need to use a gonio lens, the need to physically aim this thing. And if you do traditional SLT, those are not easy and they take time, and it's difficult for the patient and the doc to get that done. However, if you ask most ophthalmologists and most glaucoma specialists in particular, they will tell you that SLT is their preferred idea. They just typically don't do a lot of it. Now, the beauty of Voyager is we are making that a lot more friendly to the patient, a lot more friendly to the surgeon and the glaucomatologist who wants to do this, but I think has been reluctant. This makes it easier, and I think we will see how fast that moves up. So, I think the desire is there. The market is there. It's obviously a big TAM for us, but I would just say the ramp on this will be the question and we'll have to see. But we are fully going at this right now. We've got a glaucoma team that does Hydrus and is also now working on this. So, we are moving down a path of a what is we think the most current view of how you should be treating glaucoma patients, which is start with SLT, move into drops, think about MIGS, and work your way through the life of that glaucoma patient. Let's keep them seeing as long as we can.

Thank you.

The next question is from Jack Reynolds-Clark from RBC Capital Markets. Please go ahead.

Hi there. Thanks for taking the questions. I actually have another one on Voyager. I was just wondering -- kind of appreciate your ramping in the US first. Kind of how near-term do you see the opportunity to ramp elsewhere, for example, in Europe? And then, how should we think about the kind of the medium- to longer-term value prop here in terms of capital versus click fee?

Well, yeah, I mean, I think the idea, of course, would be long-term the click fee is the reusable element of this that we would see as the majority of the revenue. Once you buy one of these units, you should be able to use it quite some time. So, we expect to place as many as is appropriate, but I think the click fee will be the value over the long haul and frankly great margin for us relative to the capital. So, over the long haul, we think this becomes a profitable, very nice business for us. On the European ramp, I would just say that this will largely be a function of how fast we can build product. This was a company that we had been partnering with for some time out of Israel. We've been in the process of working with them to manage the difficult situation that exists over there and also move that manufacturing into one of our facilities and augment their efforts. So, as we get through that, we will bring more to Europe. But our primary objective right now is to launch in the US, and we'll send product as fast as we can into Europe. Europe has been approved for some time, has product available now. It just isn't going to be as aggressive a launch, I think, there as we'll see in the US, where we'll go first.

That's super clear. Thanks very much. And then, a very quick follow-up. So, my line dropped, so apologies if this question has already been asked. But just on international ATIOLs, can you give a bit of color on which geographies were the major drivers and which modalities there? Was that kind of basically a function of China or were there other things going on as well?

Well, we had a couple of very good markets. Southeast Asia, LATAM did really well, both of them. I think China was a standout by far, both by ATIOL penetration. It drove most of the global penetration gain, and also for us, it really held our unit share up in a very meaningful way. So, I would say, we like what's going on in China for us right now. It's pretty much as expected. I would say the US is also as expected and we are getting a little bit of a nice lift out of some, I would just call it, other markets. Latin America did pretty well. Japan has done pretty well recently, and we feel pretty good about all that.

That's great. Thanks very much.

The next question is from Chris Pasquale from Nephron Research LLC. Please go ahead.

Thanks. David, I wanted to follow-up on the comments about the contact lens market. If volume and trade-ups are steady and price moderates, that implies slower market growth. Our sense is that the incremental price tailwinds over the past few years has probably added about 2 points of market growth relative to pre-pandemic. So, is your expectation that the market decelerates by that magnitude in '25 versus '24?

Not really. No. I mean, our expectation is a mid-single-digit kind of growth, which is pretty much the normal growth we'd expect. So, I know there are other estimates out there that people talk about. We've been pretty consistent in the way we talk about the contact lens market and I would -- I think it's kind of a [4 points to 6 points] (ph) grower, which we call mid-single-digits. And so, we will see, but I think that's pretty much what it grew this year and pretty much what we expect to grow next year.

Okay. And I'm curious why now in terms of the price tailwind moderating, it's been strong over the last several years. It looks like this was another good quarter for both the market and your own business in 4Q. So, are you picking up signs of pushback from patients or softness in the consumer environment more broadly? Just what drives the thinking that '25 is different on that particular dynamic?

Well, I think what you're going to see right now is there's a great deal of competition, particularly in the US market. And when you look at what's happening with competitors, they are beginning to respond to the success that our new products have had, and they are responding with price, and they are responding with discounts. And so, when those discounts are available and there was significant amount of discounting that went on in the fourth quarter from some of our competitors, it makes it a little bit trickier to handle. So, I think we are not looking to raise price necessarily. We are looking to manage the consumer very carefully and we feel like that's the appropriate thing to do. I would also say that as we are coming off of '23 and '24, we were trying to catch up and a lot of people were to the inflation that had happened in our core cost of goods. And I think that was kind of a one-off, if you will, that most of us got through. The consumers largely accepted and I think we should be sensitive to the notion that we want continued trade-up and that's what we are getting. We think we have got it priced right.

Thanks.

Next question is from Anthony Petrone from Mizuho Group. Please go ahead.

Thanks. Sorry, just hopping between earnings calls. Apologies for that. So, one on, when we look ahead to the UNITY launch, just wondering, Dave, when we think about the path to acquisition for these systems, whether it's an upgrade or outright purchase, will the company pursue like bundled deals? In other words, if they purchase the capital, can you actually gain share in consumables and IOLs into those cycles? And then, really quickly on the follow-up, just a little bit on the US dry eye TAM, the latest numbers that you have there? And if you can, how 512 will be differentiated versus what's out there in the market? Thanks.

Yeah. I mean, look, the idea that we have with UNITY, in particular, is that this adds tremendous efficiency into the OR. And I think, it will be interesting to see what the upgrade and what the new machines do, because there is some real value I think in having a combined machine if you only have, let's say, you have a old constellation, which is really that's an aging fleet right now. Do you buy the joint unit? I think a lot of people will. And I do think that when we look at that, the consumables add a lot of value to that process. I think that's a standalone idea generally and I think directionally people will make choices at the ASC that really reflect how they see the value playing out, and that's what we are going to try and point to, which is, you can do more surgery in a week with our unit and our consumables, you can turn ORs faster with our unit and our consumables, and you got less footprint to worry about because you got one unit instead of two. So, I think there is a lot of value in just selling those things straight in and I think the customers are going to want it that way. On the dry eye TAM, I think the -- it is a good market for us and we are excited to see some of the other products that have been launched recently do well with reimbursement. We think that's a positive sign that a product that works faster makes a material difference to the corneal surface and shows really significant improvement in patient signs, I think is a really exciting idea. There aren't many products who have been able to demonstrate what we have been able to demonstrate. And so, we are encouraged about what the potential is for the product. And again, it will take us a little time. So, I am always cautious about -- we are talking -- we're in a mid-year launch cycle which will largely manifest in '26 revenue. So, I'd be careful not to put too much in it on '25, but I would just say that we've got the right energy and we're getting really good feedback from payers and we're getting really good feedback from the clinical trial sites that have fed back to us what's happened with these patients. So, we like this product and we're excited about it.

Thank you.

The next question is from Michael Sarcone from Jefferies. Please go ahead.

Hey, thanks for squeezing me in. Just one for me. Can you maybe talk about how you're thinking about potential tariff risk, and whether there is anything you call out on the risk side around supply chain?

Yeah, Michael, it's certainly a very pertinent question these days. And the dynamic is hard to read. So, I would just say that we are fortunate in many ways that we manufacture inside of the regions we deliver to mostly. That doesn't limit our supplier tariff risk. So, we do buy from markets all over the world supply for our products. We manufacture most of them in the markets. We manufacture most of US in the US. We manufacture most of Europe in Europe. We manufacture a lot of Asia product for us in Singapore. But I would just say that, we'll have to play that one out and just see what happens. I do think we have identified those risks and created plans around if we needed to move things, we could. We probably will wait and see how long these things last, and obviously, everybody is exposed to the same kind of deal, but maybe we're in a little bit better position than most because of the nature of the location of our facilities. I would also just say though that the beauty of one of our businesses is the diversity of markets and the diversity of products that we make. And so, when you kind of cut through the broad strokes of our business, we've got countries all over the world that we can benefit from. So, if one country increases tariffs, we may be able to make it up somewhere else. The same thing with our product lines. We've got a little bit of implantable pressure in the US, but we are doing really well in China. So, it is a matter of geographic diversity and category diversity that really drives our steady growth going forward.

All right. Thank you.

There are no further questions at this time. I would like to turn the floor back over to Dan Cravens for closing comments.

Thanks, everybody, again, for joining us this morning. For any follow-up questions, certainly reach out to either Allen Trang or myself in Investor Relations. For media questions, feel free to reach out to our Corporate Communications team. Thanks, again, and have a great rest of your day.

Thanks, everyone.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.