Good morning, ladies and gentlemen, and welcome to Baxter International’s Fourth Quarter 2023 Earnings Conference Call. Your lines will remain in a listen-only mode until the question-and-answer segment of today’s call. [Operator Instructions]. As a reminder, this call will be recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter’s permission. If you have any objections, please disconnect at this time. I would now like to turn the call over to Ms. Clare Trachtman, Senior Vice President, Chief Investor Relations Officer at Baxter International. Ms. Trachtman, you may begin.

Good morning, and welcome to our fourth quarter 2023 earnings conference call. Joining me today are Joe Almeida, Baxter’s Chairman and Chief Executive Officer; and Joel Grade, Baxter’s Executive Vice President and Chief Financial Officer. On the call this morning, we will be discussing Baxter’s fourth quarter and full year 2023 financial results along with our financial outlook for 2024. With that, let me start our prepared remarks by reminding everyone that this presentation, including comments regarding our financial outlook for the first quarter and full year 2024, new product development including the impact and status of pending regulatory approvals, the status and potential impact of our ongoing strategic and recent pricing actions, business development, regulatory matters, and the macroeconomic environment, including commentary on improving supply chain conditions and evolving customer capital spending trends contain forward-looking statements that involve risks and uncertainties. And of course, our actual results could differ materially from our current expectations. Please refer to today’s press release and our SEC filings for more detail concerning factors that could cause actual results to differ materially. In addition, on today’s call, non-GAAP financial measures will be used to help investors understand Baxter’s ongoing business performance. A reconciliation of the non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in the accompanying investor presentation, along with our earnings release issued this morning, which are both available on our website. Now I’d like to turn the call over to Joe. Joe?

Thank you, Clare, and good morning, everyone. We appreciate you taking the time to join us. I will begin with a brief overview of Baxter’s performance for the quarter and the year. After this, I will review our progress against the transformational actions we laid out for you just over a year ago, including the planned separation of our Kidney Care business. I will then turn it over to Joel Grade, who will walk through our results and outlook in more detail. Finally, we will open it up for your questions. As you saw this morning, Baxter reported strong performance for the fourth quarter of 2023 with top line sales exceeding our projections and bottom line results coming in at the high end of our guidance range. As a reminder, continuing operations exclude the impact of our biopharma solutions business, which we divested at the close of the third quarter. Sales from continuing operations rose 4% on a reported basis ahead of our outlook of 1% to 2% growth. On a constant currency basis, sales increased 3%, also ahead of our guidance, which projected growth of approximately 1%. Strength in the quarter was broad-based with year-over-year growth in the Healthcare Systems and Technologies, Medical Products and Therapies and Pharmaceuticals, which was slightly offset by an expected decline in Kidney Care. Relative to expectations, both of our chronic therapies and drug compounding divisions reported better-than-expected sales. On the bottom line, adjusted earnings per share from continuing operations came in at $0.88 at the top end of our prior guidance range of $0.85 to $0.88. Our fourth quarter results further reinforce our building momentum. In 2023, we focused on consistently meeting and/or exceeding our financial outlook, particularly in light of the significant supply chain and macro environmental challenges we encountered during 2022.…

Thanks, Joe and good morning, everyone. I’m happy to be joining the call this morning to provide some additional details on Baxter’s fourth quarter and full year 2023 financial performance as well as commentary on our financial outlook for 2024. As Joe mentioned, we are pleased with our fourth quarter results, which represented another step forward in our on-going business transformation. Fourth quarter 2023 global sales of $3.9 billion increased 4% on a reported basis and 3% on a constant currency basis and compared favorably to our previously issued guidance of 1% to 2% reported and approximately 1% constant currency. Outperformance in the quarter benefited from better than expected sales in many product categories and particularly in chronic therapies and drug compounding. As compared to the prior year period, we reported solid quarterly growth in health care systems and technologies, pharmaceuticals and medical products and therapies. And collectively, sales for these three businesses, which will comprise Baxter post the separation, increased approximately 5%. As expected, Kidney Care sales declined slightly in the quarter due to the factors Joe mentioned earlier. On the bottom line, adjusted earnings totalled $0.88 per share, increasing 13% versus the prior year period. These results reflect the ongoing operational improvements we are recognizing both commercially, as well as within our supply chain network as that team successfully executes on its margin improvement programs. Lower interest expense and a benefit from foreign exchange also contributed favorably to the quarter, partially offset by the impact of a higher tax rate compared to the prior year. Adjusted earnings per share for the quarter came in at the high end of our expected range of $0.85 to $0.88 per share, primarily driven by better sales and operational performance. Now I’ll walk through performance by our reportable segments. Commentary regarding sales…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. I would like to remind participants that this call is being recorded, and a digital replay will be available on the Baxter International website for 60 days at www.baxter.com. Our first question is from Travis Steed of Bank of America Securities. Your question, please.

Hi. Good morning, everybody, and thanks for taking the question. I’ll go ahead and ask both of mine upfront. One, on the revenue side, talked about sequential improvement every quarter and when you look at the 2024 revenue guidance to 2%, maybe think through like some of the areas that could improve over the course of the year, where there could be some conservatism built then to the ‘24 and how to think about the cadence of the year? And the second question really is on margins. If you think about the 50 basis point margin guidance. Curious what some of the underlying assumptions are on FX and inflationary pressures and stuff like that? Thanks a lot.

Hi, Travis. It’s Joel. Thanks for the call. So I guess I’d say a couple of things. First of all, we feel very good about the momentum in our business. I think we had a – we saw a solid fourth quarter. We are pleased with some of the results that we have heading into this year. And I think the revenue guidance that you see, if you think about overall, the business outside of Kidney is growing 3% to 4% that we have, as we’ve talked about our forecast. With Kidney itself, if you think about that, we actually have about – there’s about $150 million of purposeful business that we’re actually exiting products. We’re exiting markets. And so if you actually factor that into that equation, again, we’re up over that 3% number for the year, which I think is great. If you think about the full year guidance itself, a couple some of that strong sales performance with the fact that we’re actually expanding our margins by over 50 basis points – and we’re actually leading to double-digit EPS growth. I said we feel really good about that. Now on the margin side, what you asked the question you asked, I think the main puts and takes of that – the main part is the operational cost improvements in that. There’s a big piece of that from also pricing, from volume. And again, so I think some of the things that you have in there are some of the key assumptions on the margins. I think in all those areas, we feel good about the opportunities again to build on momentum we’ve had. If you remember in the last quarter, our HST business, we’re very pleased with the momentum we had from a sales perspective in Q4, and we do anticipate that heading into the year as well. So again, lots of good stuff there, but I’ll pause there for any other.

Yes, in that, I’ll just – I’ll add in a little – or sorry, Travis. I’ll add in a little bit here. That was my fault. So in terms of the cadence, I would say if we think about just the shape of the P&L, I think sales will be relatively – you’ll see some slight acceleration in the second half of the year. But in terms of margin expansion, you are going to see first half margin expansion more outsized than you will see in the second half, obviously, just given the comp and similarly, you’ll see that on earnings growth. So earnings growth in the first half of the year will be very strong. Your question on FX, Travis was FX is negative on margins for the year, about 40 basis points of an impact on our operating margins on a year-over-year basis.

Great. Thanks a lot, Clare, and everybody.

Great. Thank you.

Robbie Marcus of JPMorgan has a question. Please state your question.

Thanks. This is Allen on for Robbie. I had a question on some of the strength that we saw in the fourth quarter and a little bit of the softer first quarter guide. Was there any pull forward of sales into this quarter? You talked about how you recovered some of the backlogs. I expect some of that drove the outsized strength. But also just looking at first quarter, given what we view as an easy comp, why aren’t you able to put up a better growth number at the start of the year? How much of that is conservatism versus realism?

Yes. So what I would say is probably one of the biggest drivers in terms of the quarterly cadence is within our HST business, where sales do ramp over the course of the year. So very similar to what we saw in 2023. You will see our HST business have growth – accelerated growth in the second half of the year as compared to the first half of the year. So I think that’s probably one of the bigger drivers in terms of the first quarter guidance.

And also, we are continuing to see momentum from 2023 into 2024. So I feel cautiously optimistic about the momentum that we got in Q4 going into Q1. Of course, we look at many different factors when we are guiding. But I can tell you that based on the market growth, some of the demand that we’re seeing, we feel very comfortable with Q1. And also, we have always a crescendo throughout the year, whereas we have product launches. We have 10 molecules launching in pharmaceutical. They’re starting this quarter that we see ramping throughout Q2, Q3 and Q4. And also, there are some very important accounts that we – is still closing on for the rest of the year that we will also boost our ability to do well in 2024.

Got it. And then if I could slip in a quick one. You talked about the capital equipment environment continuing to improve some pockets of weakness. What are you assuming for 2024 in the guidance? Are you expecting continued – a little bit of pockets of weakness? Or are you having that basically normalized over the course of the year? Thank you.

Most of our assumptions are large system – medium to large systems continue to improve. We can see that, and we’re going to see that slightly in Q1, but going into Q2, Q3 and Q4. There are pockets of softness in capital like always are primarily smaller systems. Remember, interest rates are still very high and those affect the smaller systems. But for the majority of our customers, we’re starting to see a recovery in capital when we feel really comfortable in 2024 that is recovering completely from what we saw in the beginning of – end of ‘22 into ‘23.

Yes. And Allen, just to add on to that. Similarly, I think we will see sequential improvement for capital orders within our CCS business every quarter this year, leading to orders being up on a year-over-year basis. And as mentioned in our prepared remarks, we saw a very similar trend kind of in 2023 as well. And then in the fourth quarter, we did see our orders up on a year-over-year basis. So we’ve been seeing this steady sequential improvement. And so we’re going to build on that momentum as we go into 2024.

Matt Miksic of Barclays is on the line with a question. Please state your question.

Hi. Thanks so much for taking the question. Can you hear me okay?

Yes, we can.

Great. Thanks. So I had – congrats on the solid results here and the pickup in the Hill Rock business. So I just have a question on the seasonality of that business. And also if you could maybe just the – to the extent of recurring revenues in that business. And I think we’re used to a history there being capital driven, Q4 driven. But with some of the increase in sort of contracting around connected care and systems that – I’m wondering, is that a mix of recurring revenue that we should see over time? Or you’re starting to see a mix change in that business? Any color on that front would be super helpful. Thanks.

So we always have the seasonality. We see hospitals a little bit more cautious in the first quarter. And then as they get through the first quarter, they start spending the money that they have for the year and it culminates usually with a strong Q4 in terms of growth because a lot of spending gets done there. We try to, as much as possible, create more – a less seasonal less seasonality, but those things happen. And our focus are the – I think one important program we have in Baxter, as you noticed, strengthen our beds in the fourth quarter. We continue to go for some large accounts and conversions and we’re starting to get some success there. When we bring Baxter together, what Baxter can do as one company is incredible for hospitals. So we feel that, that momentum is starting to kick in with accounts that are partially penetrated, going full blow into a Baxter account. We saw that with the conversion that we get this kind of launch in early 2025 in Northern Cal that we have large accounts and other things that we can see. So this is a really good momentum for Baxter. We can see that going. But the first quarter is always a much lighter quarter than the rest of the year. The revenue in terms of Front Line Care is a business that has less seasonality than the CCS business under HST. The reason is that it’s more consistent with procurement in doctors’ offices and monitors into hospital med search floors. So that brings less seasonality. A business that is very predictable is our MPT business, which has been successfully growing, as you can see in 2023. 150 basis points above its market growth rate, driven tremendously by infusion systems as well as solutions, IV solutions. So that brings that business to a quite less seasonable, more repeatable. I hope I was able to answer your question.

Yes. Thank you. If I could just add one thing to that. I mean I think the way to think about that HSD business over the course of the year just a bit on what Joe said is that we’re going to see, I’d say, sequential ramp up over the course of the year in that business. So I think the – again, as Clare talked a little bit earlier. I mean there’s going to be somewhat of a ramp up in sales that you’re going to see, and that’s particularly going to be applicable to that segment. The other thing I would just say, you recall last year, Front Line Care had a fairly sizable amount of growth in 2023 as they work through some of the backlog. There’s a bit of an early headwind on that business during the first part of the year as well. So again, sequential ramp-up in that business is just one add I would make to that. So, thanks.

Vijay Kumar of Evercore ISI is on the line with a question. Please state your question.

Hey, guys. Thanks for taking my question. Joe, maybe my first one for you. High level when I just look at the business ex Kidney Care. 3% to 4%, that’s a reasonable number, but it’s still below MedTech, right? When I look at the utilization environment, what some of your peers are talking about? Like why is Baxter 3% to 4%? Are there any one-offs in that 3% to 4% ex-Kidney Care? When I look at the legacy Hillrom business, Q4 was really strong. Why should that business slowdown of capital order book is turning around in fiscal ‘24?

Vijay, let me give you a perspective on 3% to 4% for this business. It’s still growing above its market growth rate because we expect to be on the high end of that guidance. What breaks that business go 100 basis points above that? We have, first of all, this business has pharmaceutical in it. We still have price erosion there, but pharmaceutical is going to be punching 4% to 5%. Our NPT is going to be between 3% and 4% and probably with the opportunity to go above that. Now becomes HST. What is happening in HST? We have significant amount of launches going in, the end of ‘24 and ‘25. We have new monitors. We have new cardiology device and we continue to be successful on Progressa+. So a lot of that has to do with our – to get to the 4% to 5%, it has to be new product launches in 2025. Not for pharmaceutical because then you can see already is making a difference to their growth rate – is now for MPT, which is – continues to do extremely well in infusion systems. We’re going to have more than 40% growth between ‘24 and ‘23 in our infusion pumps. It’s going to be new products in HST primarily in Front Line Care and CCS with care communications, new versions of Voalte. There is the two new – three new versions will be launched this year as well as our new wireless communication device that we plan to launch in 2025. So monitors, wireless communication and cardiology, that is what’s going to drive that business to go above 4%. And if we execute well, you will do it.

I would also say too, if you think about the as we separate the Kidney business and we talk about later on in this year, having an Investor event. What you’re going to hear us talk about is how we think about capital allocation. How we think about the opportunity for, again, the portfolio ultimately to – because think about – we have a lot of products with very high market share businesses. And so the opportunity to accelerate that growth is something we’re going to talk about later on. But again, that’s part of the benefit of the kidney. Separation is the ability to actually really focus our capital allocation on accelerating the growth to the levels you’re thinking about there.

Understood. And then maybe one on the guidance question. What is – is inflation still a headwind to margins? What is price versus inflation and interest expense Q4? You didn’t note the sequential step down in debt payments. Is that a sustainable number? Thank you.

So you want me to –, I’ll start with interest. What I would say, Vijay, on interest is that in the first half of the year, it’s probably, I’d say, first quarter, probably similar. It steps up likely a little bit in the second quarter, and then we’ll step up in the second half of the year. We are planning to pay down some low coupon debt in the second quarter. And so right now, we’re earning some cash – or earning interest income on the cash that we have. And so that will go away in the second half of the year. So that’s why you’ll see a bit of a higher interest expense in the second half of the year as compared to the first half.

Yes. And on the debt paydown, I mean, again, we – of the $3.7 billion of proceeds after tax we got from the sale of EPS, we actually used $2.8 million of that to pay down debt in the fourth quarter. Again, we have some debt coming due that’s maturing in 2024 that will use some of the rest of that for, particularly the Euro bond as Clare talked about. And then obviously, we have some debt during later in the year that we’ll actually address at that point in time.

And then to your other question, kind of just on overall the inflationary environment and pricing. What I would say, and we referenced this earlier, is that our integrated supply chain team is executing on their margin improvement program. And so those programs and the savings we will generate this year will positively contribute to our margin expansion. So they will more than offset any sort of normalized inflation that we have. In addition, we are getting pricing will be a benefit this year as well. So we are getting pricing, particularly in markets outside the US as well, so we are going after all of those all of those – our businesses are targeting price in all of those markets as well. Still pricing will be positive for the year as well. In terms of kind of all of those pieces, what I would say on the non-op side is that you have a positive on interest, but you will see that our tax rate is increasing. We did comment on that because of the implementation of Pillar Two. FX – so we have some FX. I talked about it being kind of negative on the operating margin. So all in, our non-op is probably a couple of cents negative impact for us on the year.

Pito Chickering of Deutsche Bank Securities is on the line with a question. Please state your question.

Hey good morning guys. Joel, like you’ve been in that seat for very long, but I just think a fresh set of eyes on the operations of Baxter. Can you walk us where you think the most margin upside is over the next several years? And what you need to do to take those cost reductions in the areas that you want to hit like procurement or any other sort of low hanging fruit?

Sure. Absolutely. Thanks for asking the question. Yes, I think one of the biggest opportunities we have from a margin perspective is to continue the work that we’re doing in our independent supply chain group. I think the team has got a lot of really good margin improvement programs going that are designed specifically around things like automation. They’re designed around things like how do we enhance our procurement abilities. They’re around – continuing around things about how do we optimize our network and some of the logistics opportunities. I think some of the areas that are the most impactful over time sit in that space, again, and that’s – as the team has gotten off to, again, a really good start on that. You’ve heard Clare talk about the fact that as we continue to see some inflationary pressures coming out, I think the work that they’ve done has gotten us to a place where we have the ability to offset that. But to continue the expansion of the margins, to your point, fall into some of those categories that I just referred to. I think the other piece of some of you heard me say this already. We’re not going to SG&A ourselves to prosperity. But nonetheless, there are still opportunities in that space as well around things like again, how do we think about a shared services environment that actually allows for consistent execution of operations across the business. And I know this is not a margin question, but the other part of what we’re going to focus on heavily is our – is cash that we will continue to – how do we drive an improved use of working capital. How do we improve our cash conversion ratio again? I know that’s not specifically what you asked. But again, that’s going to be a – some in area I see the opportunity. And what that all leads to is then the opportunity for us to continue to reinvest some of that back into our business around innovation, around new product development. And back to the question that was asked earlier, how do we continue to accelerate growth. That’s what I call a flywheel that allows us to continue to grow, continue to invest and continue to grow, etcetera, etcetera, which is where we want to get to the company.

Great. And then for a follow-up, you opened Pandora’s box, a little bit here by providing segment level margins for 4Q in 2023. Now we’re going to be looking possibly to rebuild their models. Can you break out sort of the margins in each division for what you’re seeing for 2024? And then a quick pump question here, how is market share for pumps and 4Q as you compete against next-gen pumps and any update on Novum?

Let me start with the pumps and then Clare is going to answer the first part of your question. Yesterday, we just got awarded best-in-class KLA for our Sigma Spectrum pump, which is a great honour. That pump continues to do a great job nonetheless, we’re looking forward to get Novum approved. But in terms of market share, we continue to advance our market share. This year, we have 40%-plus growth in our pumps versus last year. That’s our forecast. So we continue to do well, and we look forward to continue to gain market share and now with a nice award to our pump is the seventh award that, that pump received since it was launched. So, back to Clare now to answer the first part of your question.

Yes. Pito, in terms of the 2024 operating margin guidance, we aren’t going to give that by segment. But obviously, all of our actions are aligned to improve both the segment and total Baxter margins. The one caveat I would point out is that within our Pharmaceuticals business. As you’re aware, we did divest our BioPharma Solutions business last year. And so as a result, we entered into some MSAs, which will have a negative impact on the pharmaceutical margins and obviously on total Baxter margins for the year as we’ve now entered into the MSA. So you will see that impact in the pharmaceuticals margins.

Great. Thanks so much.

Lei of Wells Fargo is on the line with a question. Please state your question.

Hi. It’s Lei calling in for Larry. Thanks for taking my question. I just want to make sure I didn’t miss it. Did you comment on the status of Novum IQ, the resubmission, and your thoughts on potential approval in ‘24? And I have a follow-up.

I didn’t comment on the details, and we usually don’t comment on anything that is with the FDA on behalf of the FDA. We can tell you that we answer all their questions. There’s no other questions to be answered. All the documentation was submitted. So as always, is at their side now to make a final decision on this. But as I said before and I said this about a month or so ago. I feel cautiously optimistic because there is nothing else for us to do. We answer all the questions. So there will be – if that happened in ‘24 will be a great thing. Nevertheless, we continue to gain market share for Sigma Spectrum. As I said before, we just got an award a best-in-class for that pump, and we’re very happy, and we continue to be very busy quoting new accounts and competitive accounts, which we are actually winning with that pump.

Got it. And my follow-up is just on your – what you said about expectations for the 2 segments in ‘24. So Baxter Ex-Reno, you expect 3% to 4% growth. Is that the right way to look at – is that the right way to look at it longer term? And similarly, in the renal business itself, you’re expecting 1% to 2% decline this year. But once you adjust for the exits in China VVP, does renal normalized to kind of low single-digit growth longer term? Thanks again for the question.

Yes. So Lei, I’m going to go back to something that Joel mentioned earlier. We plan to have a Capital Markets Day later this year, where we will discuss our long-term expectations for the business. And – but I think that both Joe and Joel have said that, while we’re growing 3% to 4% through the introduction of new products, continued market expansion, our goal is to grow ahead of our weighted average market growth rate. So we do want to grow in advance of that. And so we’ll be unveiling kind of those longer term. But no, I would say our goal is to accelerate growth off of that. With respect to Kidney Care, again, yes, we made $150 million of exits to that business, all aligned with our goal of enhancing profitability for that business post separation. So I think that what we want to ensure is that we’re setting this business up for success as a stand-alone entity. We also have the value-based procurement. There might be some follow-on to that in 2025. But I think the key is that the fundamentals for this business are improving. We’re seeing solid patient growth. We’re seeing a rebound in our Acute Therapies business. So I believe this business can accelerate off the levels – that will grow at the levels that we’re seeing once we make these adjustments.

Yes. And I would just – the question you asked, the – we did again make purposeful decisions around exiting markets, exiting products. And so if you actually add that back from that $150 million we referred to earlier, I think, yes, you could find yourself in a place where there’s a – the growth is actually in the low single digits.

Matt Taylor of Jefferies is on the line with a question. Please state your question.

Hi, thanks for the question. I know you noticed noted some progress on pricing. I was wondering if you could comment on that in your expectations for pricing in ‘24. And any updates on some of those bigger contracts that you’ve talked about in the past and your opportunities to reprice solutions, dialysis, nutrition, et cetera.

Yes. Sure. So we did make progress in pricing in 2023. And some of that was – were temporary in nature in the sense that we had some adds to pricing that will again fall off at the end of the year here. But we do have part of our growth and our margin expansion in 2024, that is continued progress in the areas of pricing. And I think one of the things that we’ve talked about is – just as a reminder, some of the contracts with the GPOs that we’ve signed, we’ve made continued progress on them. That actually doesn’t kick in until 2025. So just to remind you of that, that’s not part of what we’re talking about in terms of progress. But again, the team has made solid progress in terms of continuing to take pricing in 2024. And the other thing I would say that we’ve done a good job of – are going to continue to do an even better job of is to give ourselves the opportunities to actually have indexes within our pricing that allow us more flexibility to pass along cost that are coming into our world that we have historically struggled to pass along to our customers. Again, we’re making progress in that area as well. So generally speaking, as Clare talked about, our expansion margins really is focused on some of the operational work that we’re doing, but also, again, our pricing progress continues in 2024, and we look to accelerate that further in 2025 and beyond.

So I just ask a follow-up. I mean when can we hear more about the bigger contracts? Are you going to talk about that throughout the year? And can you comment at all on the kind of opportunities you have with some of those contracts, what’s the order of magnitude of pricing you could get?

We are making great progress. We’re in the middle of doing it. Once these contracts are signed, the next steps for us to secure the IDNs underneath them. And back to do well on that. We are well poised to take that action. We are feeling quite comfortable where we are today in terms of signing these agreements. We’re not going to tell exactly the status of – where we are signing them for competitive reasons, neither the volume of dollars. So you need to think about this as value. Value is dropping profit to the bottom line is value. That will be achieved with pricing and volume. Volume is important to us, the size of our plants. So we’re getting a combination of both is the important thing for us. So our focus price is always important because the amount of headwind that we had in 2022, of course. So we are considering that, but also expansion of market share is important to us as well because we have capacity. We’ve been serving the market very well. So think about our objective in 2024 into 2025 is to continue to add value and significant accretion potentially to the bottom line by getting those contracts signed, but we are in good position.

And we’re not going to give specific details on the pricing or volume, as Joe referenced. So just think about that as guidance that we ultimately give on margins and volume growth will be inclusive of the progress we’ll make with those contracts.

Danielle Antalffy of UBS is on the line with a question. Please state your question.

Thanks, everyone. Good morning. And just a quick question on sort of what the longer-term focus is post Kidney Care? I assume we’ll get some more color here once we have the pre-spin Analyst Day. But just at a high level, Joe and Joel, curious about where you see the most opportunities to improve whether organically or inorganically from an R&D perspective? And just longer term, i.e. over the next few years, where you think Baxter will be most focused and investing behind? Thanks so much.

So Danielle, we’re thinking about the strategy and the overarching imperative of this strategy is to advance and significantly improve the intrinsic value of the company. And we’re going to do that organically and eventually inorganically as well with some tuck-ins and strategic acquisitions that will supplement some of our business. But – so in the organic side to drive that, that intrinsic value multiplier is innovation, acceleration of innovation, expansion of our commercial footprint in areas that we currently don’t participate well, as well as doubling down in operations excellence in all of our – in all aspects of Baxter from the plants all the way to our back office. So creating value in all parts of the company. So we can take some of that money, reinvest modestly in research and development and continue to accelerate the innovation. And the innovation, all of this is going to be done with a significant amount of importance to capital allocation, meaning where money goes inside of the company, how much is share buyback. So this is a post spin when we are looking at a different debt structure and a different company as that. So think about our strategy to accelerate innovation, accelerate penetration in commercial areas. We’re not like alternate sites of care, ASCs. Those are the drivers of our organic growth, and that should drive a request for a multiplier on our intrinsic value as a company.

And Danielle, just to follow on and specific to kind of Kidney Care. What I would say is within Kidney Care, and obviously, Chris Toth will elaborate more on this. But they’re going to focus on continuing to increase PD penetration globally. Really focusing on how do they enhance this digitally as well and what digital capabilities are out there to really help both clinicians and patients advance that therapy. In addition, within the acute therapies business, I think they’ll continue to build upon the continued renal replacement therapy and broaden into more multi-organ support therapies as well. So I think that they have a strategy there that they’ll continue to build upon and execute as a stand-alone entity.

Yes. And I just think what Joe said and what Clare has talked about is just reinforcement of the strategic rationale for the separation that then allows us and Kidney, frankly, to both focus their capital allocation on those areas that really accelerate their growth. And as Joe said, I see that one start debt is at a level that we’ve targeted to actually reinforce this idea that we’re going to have both organic and inorganic growth opportunities ahead of us.

Thank you so much.