ABT
#Okay.
Thanks, <UNK>.
Good morning.
Today we reported ongoing earnings per share of $0.48, exceeding our previous guidance range.
Sales increased 3% in the quarter, which is at the upper end of our expectations.
Our full year 2017 adjusted earnings per share guidance, $2.40 to $2.50 remains unchanged and reflects double-digit growth at the midpoint.
As you know, we completed several important strategic steps during the quarter to shape our company for sustainable long-term growth, including the acquisition of St.
Jude Medical, which establishes Abbott as a leader in the medical device arena.
The combination with St.
Jude positions Abbott with one of the strongest new product pipelines in the industry, including several recently launched products that are setting new treatment standards and contributing growth today.
The combined portfolio has the depth, breadth and innovation to help patients restore their health and deliver greater value to customers and payers.
In terms of the integration of St.
Jude into Abbott, the team has made tremendous progress over the first few months of the year and we're on track to meet our objectives.
The newly formed leadership team reflects a blend of Abbott and St.
Jude leaders, and importantly, the team has remained focused on achieving its new product milestones, synergy targets and financial objectives for the year.
Additionally, last week, Abbott and Alere announced that the companies have agreed to amend the existing terms of our agreement to acquire Alere.
Point of care testing remains an attractive growth segment within the in vitro diagnostics market, and the acquisition of Alere will significantly expand our diagnostics presence and leadership in that space.
I'll now summarize our first quarter results before turning the call over to <UNK>.
And I'll start with Diagnostics, where we achieved sales growth of nearly 5% in the quarter, in line with expectations.
Growth in the quarter was led by continued above-market performance in core laboratory and Point of Care Diagnostics.
During the quarter, we initiated the launch of our new Alinity systems in Europe with the ongoing rollout of 4 new instruments in the areas of immunoassay, clinical chemistry, blood screening and point of care.
Later this year, we plan to launch 2 additional Alinity instruments in Europe in the areas of hematology and molecular diagnostics, which will be followed by the initial rollout of the Alinity suite of instruments in the U.S. during 2018.
In Nutrition, sales declined 1% in the quarter.
As expected, challenging market conditions in China impacted the results of our international pediatric business.
As we'd previously discussed, we expect these market challenges to persist throughout the year, but continue to hold a favorable outlook on the Chinese infant formula market on a longer-term basis.
With the pending new regulations in China, we remain confident that our supply chain and product portfolio is well positioned to meet evolving customer preferences and purchasing channels.
In the U.S., we continue to achieve above-market performance in Pediatric Nutrition with the portfolio of innovative product offerings for infants and toddlers.
And in Adult Nutrition, where Abbott is the global leader, high single-digit international growth in the quarter was led by continued expansion of Abbott's market-leading brand, Ensure, across many international markets.
In Established Pharmaceuticals, or EPD, sales growth of roughly 6% was led by double-digit growth in key emerging markets, including above-market growth in Latin America, China and several markets in Southeast Asia.
Our continued focus on enhancing local capabilities and expanding our product portfolio within core therapeutic areas targeted specifically to address local market needs continues to strengthen Abbott's unique position in these markets.
And in Medical Devices, which comprises our new cardiovascular and neuromodulation business, along with our Diabetes Care business, sales grew 4.5% in the quarter.
Sales growth in cardiovascular and neuromodulation was led by double-digit growth in electrophysiology, structural heart and neuromodulation.
In electrophysiology, we initiated the U.S. launch of our EnSite Precision cardiac mapping system, which provides physicians with improved automation and 3-dimensional images to better treat irregular heartbeats.
Growth in structural heart was led by continued double-digit growth of MitraClip, our market-leading device for the repair of mitral regurgitation.
And in neuromodulation, growth was led by recently launched products, including Burst for the treatment of chronic pain, and deep brain stimulation for the treatment of movement disorders such as Parkinson's disease.
During the first part of the year, we also achieved several important new product milestones across the business, including U.S. FDA approval for our MRI-compatible pacemaker, the European launch of our confirmed implantable cardiac monitor and submission of our MRI-compatible ICD device for FDA review.
In Diabetes Care, international sales growth of 29% was driven by FreeStyle Libre, our innovative, sensor-based glucose monitoring system that eliminates the need for routine finger sticks.
Now available in more than 30 countries outside the U.S., we continue to see strong demand as consumers, health care professionals and payers recognize the cost, comfort and convenience advantages that Libre offers.
So in summary, our first quarter results reflect a strong start to the year.
The integration of St.
Jude is going well, and we're on track to achieve our projected synergy targets.
And as we continue to execute on our key business priorities, we expect to deliver on our double-digit ongoing EPS growth target for the full year.
I'll now turn the call over to <UNK> to discuss our results and our outlook for the year in more detail.
<UNK>.
Okay.
Thanks, <UNK>.
As <UNK> mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on a comparable basis, which is consistent with the guidance we provided back in January.
Turning to our results.
Sales for the first quarter increased 3.2% on an operational basis.
Exchange had an unfavorable impact of 0.6% on sales, resulting in reported sales growth of 2.6% in the quarter.
Regarding other aspects of the P&L, the adjusted gross margin ratio was 59.2% of sales, adjusted R&D investment was 8% of sales, and adjusted SG&A expense was 32.5% of sales.
The over delivery in the first quarter EPS compared to our guidance was primarily due to timing of spending and certain nonoperating items.
I'd note that while exchange rates eased somewhat since our call in January, the follow-through impact on our first quarter results was fairly modest, taking into account our hedging program and the lag time that it takes for rate changes to work through our product costs.
Before I review our financial outlook, I'd note that our sales and adjusted EPS forecast do not include any contribution associated with the Alere acquisition, which is expected to close by the end of the third quarter 2017, subject to certain closing conditions.
We will provide an update regarding the expected financial impact of this transaction at a later date.
So turning to our outlook for the full year 2017.
We continue to forecast operational sales growth in the mid-single digits.
And based on current exchange rates, exchange would have a negative impact of around 1% on our full year reported sales.
We continue to forecast an adjusted gross margin ratio of around 60% of sales for the full year, which reflects the profitability mix of Abbott and St.
Jude as well as underlying gross margin improvement across our businesses.
We continue to forecast adjusted R&D investment of somewhat above 7.5% of sales and adjusted SG&A expense of approximately 30% of sales, which includes expense synergies associated with the addition of St.
Jude.
Turning to our outlook for the second quarter 2017.
We forecast an adjusted EPS of $0.59 to $0.61.
We forecast operational sales growth in the low to mid-single digits and at current rates, expect exchange would have a negative impact of around 1.5%.
We forecast an adjusted gross margin ratio around 60% of sales, adjusted R&D investment of around 7.5% of sales and adjusted SG&A expense of approximately 30.5% of sales.
Finally, we project specified items of $0.55 in the second quarter, primarily reflecting intangible amortization and expenses associated with acquisitions.
Before we open the call for questions, I'll now provide a quick overview of our second quarter comparable operational sales growth outlook by business.
For Established Pharmaceuticals, we forecast high single-digit sales growth.
In Nutrition, we now forecast low single-digit sales growth for both the second quarter and the full year.
In Diagnostics, we forecast sales to increase mid-single digits.
Turning to Medical Devices.
In Diabetes Care, we forecast double-digit sales growth.
And lastly, in our cardiovascular and neuromodulation business, we forecast relatively flat comparable sales growth for the second quarter, which includes a difficult comparison versus last year when sales were favorably impacted by the resolution of a third-party royalty agreement in our vascular business.
Excluding this third-party royalty comparison, underlying sales growth in the second quarter would be low single digits.
With that, we will now open the call for questions.
Well, I don't think I'm prepared today to give you a lot of detail on that, Mike, but I can say this.
Look, the companies had some challenges.
We all know that.
And it's a bit of a fixer-upper, and we know that.
I'd say we're pleased to have the resolution of this matter behind us.
We want to go forward and close this deal.
We want to close it in the next few months.
It's going to be a little unpredictable because they've still got to file their 10-K, and they need that in order to do a proxy statement to do a shareholder vote and so forth.
So there's some steps to get through here before we can close, and we've got to finish the divestiture of a couple of businesses that we'll have to divest because of the regulatory approvals or antitrust approvals.
And I ---+ what I would say is we're committed, all of us, to get all of that done in the next coming months here.
So I'm looking to close this hopefully ---+ and I'm ---+ and this is just a guesstimate, by end of summer, allowing for enough time for what Alere's got to do with shareholders and so forth.
But I'd say, look, it remains on strategy.
We really like the space.
We like this point of care space.
We like the expansion to our Diagnostics business.
We like the businesses.
We will divest a couple of pieces.
When we first announced the signing of the deal, that wasn't clear and wasn't known.
So and they had issues with a couple of pieces of businesses, as we know.
So I wouldn't say that the same sales will be there.
Obviously, the businesses that have had problems will either be gone or smaller, and the ones we divest won't be in the portfolio.
So the amount of sales and profits that we add to our models will change.
As far as earnings power and all that sort of stuff, I'm just not prepared to give at this point.
I'd tell you that I think that the resolution of the matter between us is fair, and it's behind us and we move forward.
And beyond that, I think we're going to have to wait until, first of all, we're in possession of the company.
And obviously, it's going to take us a bit to get our hands around that.
So I'd say, we're not going to really be in a good position to give a lot of detailed guidance until minimum fourth quarter and probably normal guidance time.
And I know you're going to ---+ all of our analysts and investors are going to want guidance before that at some level.
And I think we'll be able to give it at some level within ranges, but I can't do much detail today.
Well, I want to be careful not to make assumptions about things that the FDA gets to decide.
I would say this.
First, the warning letter, clearly a disappointment, but not unanticipated.
We've been aware of the circumstances here for some time, and we've been working with our St.
Jude colleagues for some time even before close on GMP matters at the site.
So we got a pretty good head start here on the issues and a fair amount of dialogue with the FDA about the issues.
So having said that and being clearly disappointed in the outcome, I'd say the impact will depend a lot on our response, how thorough, how effective that response is.
And I can tell you, we've got an excellent team of people on that.
We've basically taken everybody that is expert in the field in our company, and we have a lot of very good people in the area focused on and working on not only Somar, but we're doing a full evaluation across all the sites and make sure that we understand everything here in detail.
We've got a very strong track record ourselves in GMP performance, et cetera.
The FDA is aware of that.
So I'd say the effectiveness of our response, the thoroughness and so forth will determine a lot of this.
Now in the meantime, how fast to resolve, can't really predict.
But I'd say we've gotten a pretty good-sized head start on this.
It's not like we received the letter and said go.
We've had a pretty good visibility to all issues and matters at the site starting last year, and so I think we're well along here.
And with regard to the timing of approvals, the new products that we have under review with the FDA remain under review.
We know that they're continuing to review those submissions.
So that's a good thing, and so I don't think we can draw any conclusions from that, that are negative or positive.
I think that it's going to depend on the quality of our response here, and I'm very, very confident in our team.
So at this point, I'm not going to change our launch dates or our assumptions on approval dates and so forth because I don't see a reason to do that yet or a direction to do it in.
And so I think right now, I'm just going to leave it where it is.
And we know that there's some uncertainty around that.
We know that this will depend on our actions at the site.
And we'll see how that progresses, and then I'll have a stronger position or point of view about that probably later this year.
But right now, we're focused on what needs to be done in terms of corrective actions and improvements at our site, and that's where the focus ought to be.
And then was ---+ if that makes clear progress and shows clear effectiveness, then I'll ---+ I think it'll be time to try to figure out what impact it's going to have on launch dates of new products.
I think the quality of the portfolio today is clearly strong and improved and better.
I think that's an easy one.
Geez, did you tee that up on purpose.
If I look back 2 to 3 years ago at ---+ I'll just run through the portfolio.
I love the Nutrition business.
Yes, it has its ups and downs occasionally, but it is a strong, solid grower driven today, obviously, by emerging markets in a lot of cases, but it's been a great profit and cash flow generator, solid business, et cetera, challenges occasionally in China notwithstanding.
The pharma business, our branded generic business, I think is in a much stronger position than it was several years ago.
We're focused on the markets where high double-digit growth exists.
We're seeing it.
We're seeing the execution of that strategy being, I'd say, beautifully executed by our team.
The only headwind we've seen in that is exchange.
And when I can control exchange and predict it for you, we'll do even better.
But I think the EPD business has been a true gem among branded generic pharma companies, and it's proving it with its growth rates and its performance.
We just keep expanding the product lines, expanding our footprint in countries, and we keep growing it strong single or low double digits there.
I got nothing but good things to say about that business.
Diagnostics is in the process of launching the biggest range of new systems and new products that's ever been done in the entire space in history.
I used to run the R&D in that business years ago, and I know the challenges and the complexity of developing big mainframe systems for diagnostic laboratories, and this team has just launched 4 of them in the market at the same time.
These are new systems with full menus, and it'll be a rolling rollout.
But I think when you look at 2 more systems coming, 6 systems across the board, a complete redo of the entire product line, I think the strength of that to drive the growth of our Diagnostics business, gosh, for the next decade, is unprecedented, absolutely unprecedented.
And designed not only for their size, their efficiency, their cost.
I think there's nothing but good there, and nobody's done that.
So I'm extremely enthusiastic about that.
And then, Mike, you yourself have challenged us on the breadth of our Medical Device business for a number of years.
And I think that the addition of St.
Jude here is powerful.
I mean, arguably, we've got the best stent in the world, and it's challenging for everybody in this space to incrementally improve on the efficacy and quality of stents today.
We have a lead position in the stent business, and now we've broadened that across 6 other major cardiovascular categories.
And I look back at the last few years in the Medical Optics business, which, frankly, I think J&J has acquired at a particularly opportune time because it's taking share in the intraocular lens space at a pretty nice clip.
They've got leading technology, and that business had its own struggles when we first acquired it.
So if I look at Alere and St.
Jude or even parts of Abbott that need improvements or whatever, I think we've got a very strong track record of improving performance in businesses that need some improvement.
And I look at AMO, I mean, we're very proud of how AMO has performed over these last 6 years.
And I think that was proven in the sale and value and so forth that J&J saw in it, and I think they're very happy to have that business.
We're very proud of it.
We wish it well because we're pretty happy with how well it did.
So I look back 3, 4 years and I think we are much stronger today and have a much more robust and strong portfolio across the board.
You can say, now aren't there challenges to fix in the business.
I think any large company with diverse set of businesses is always going to have something to fix.
We're always going to have something that's not up to our standards or that we want to improve on.
And then there's always going to be currency or something going on somewhere in the world.
If you're in 130 countries, there's always going to be somewhere and something.
So I look at it, and I think yes, I'm very pleased with how we've done.
And I think that the growth prospects going forward are stronger than they've ever been.
And to be honest, we start every year with a target of double-digit earnings growth.
We ---+ I mean, I \xe2\x80\x93 there have been, actually in the last 10 or 11 years, maybe 2 years that were high-single digit.
But otherwise, we target double-digit earnings every year, almost without exception, and that's unusual in our space, and I think you know that.
So at some point, I'd say we're the same company but with a much better portfolio.
And we live to the investment identity that we've been and created, and that's our intent.
That's why we've made the moves we did with both St.
Jude and Alere.
And even though that we've got to put some time and investment into these businesses to help achieve the growth aspirations we have, you just look at the strength of the portfolios across the board.
I don't think we've ever had rich new product portfolios coming like we see across these businesses today.
So thanks for the question.
That was kind of an easy one.
Yes, no problem.
Look, I can say we're pretty excited about FreeStyle Libre.
It's doing very well, doing really well across Europe.
As I mentioned, I think, in my opening remarks, we're in about 30 countries now.
The expansion within those countries is going well.
I think we're at about 300,000 patients.
I mean, you can compare that to a like competitor, and I think that stacks up really favorably.
We're getting reimbursement across European countries.
That's unprecedented.
And even within Germany and other countries, the reimbursement is expanding.
That's helping.
In some cases where it's patient pay, we're still growing very well, patients accepting it.
So we've got both great patient acceptance, great value proposition.
And then as we said, payers, governments, sick funds and so forth, all giving a lot of support to the product because of the ---+ not only what it does, but the value proposition it represents relative to what patients can do today.
And it makes a heck of a difference in the care and treatment of diabetic patients and their care for themselves.
So I think we're pretty excited about this product and the pace at which it's growing and expanding, nothing but good.
As far as the U.S. goes, still working with the FDA to get approval in the U.S., and submitted, waiting, excited, anticipating, impatient.
Well, pacemaker launch is going fine.
We got about 75% of our accounts are contracted, about 25% to go.
And because it's a new product, new leads, there's a little bit of training and re-contracting involved because it's not the same old product.
So yes, I'd say that rollout is going well.
It's interesting, you always want it to be instantaneous, and it takes a little time to roll it in.
So I actually expect to see improving sequential quarters in terms of its growth or decline, where comparing to last year, when it ---+ as you know, it lost some share while it waited for approval.
So I expect to see that improve steadily through the year.
Obviously, it'll be helped when our high-voltage is approved.
But as I said earlier, I can't make predictions about that right now.
We're hopeful that we'll be able to resolve matters sufficiently or show enough progress with the FDA that we can stay on track with that.
But I can't predict that just yet, but I think that will make a difference as well.
But I'd say everything is going very well with low voltage.
Well, I don't know.
I don't want to speak for Alere because that's ---+ right now, they and their auditors are working on their 10-K and so forth.
I can tell you, they're just as anxious to get finished as we are.
So that aside, I think we just arbitrarily sort of say end of 3Q, or third quarter, but it's kind of an arbitrary date.
Do I think it'll take longer than that.
No.
And I would tell you that both companies will get there as soon as they can.
We got a couple of basic items.
I mean, obviously, we've got our divestitures to finish up, but they will not, I don't think, be the long pole in the tent here.
I think it'll be the shareholder vote, but I don't know that.
I just think that we both got actions to finish up here in parallel, and we're going as fast as I think we practically can.
Yes.
I'm thinking of how to characterize that because we're talking about one of the most dynamic markets of any market I've ever seen in the world.
We do have new management, like the management a lot, very impressed with the experience, the background, the understanding of the markets, the actions taken, et cetera.
I'm pleased with the actions that we've identified.
We're not completely in control of what happens in China, as you might guess.
So we know that there's a lot of inventory in that market.
We know there's a lot of channel shift happening in that market.
That takes time to play through.
We believe we've refocused on the appropriate channels.
The digital channel, in particular, has exploded and sucked a lot of the activity and energy out of traditional modern trade channels and so forth, and that's been a pretty big shift to us because we have historically been heavy modern trade.
But we have reacted to that, I think, now well.
I wish we'd been quicker, but we weren't.
So I think that the team there is making all the right adjustments in terms of where we promote, how we promote, where we ship, how we ship, product benefits and value propositions.
I mean, literally across the board, I think our Nutrition business has put a lot of attention on adjusting to what is, frankly, a fascinatingly dynamic, changing market.
We still like the long-term prospects of China.
We look at the growth rates and so forth, and there's not any big underlying detriments to how strong that market's been.
It's been a lot more the reaction of competitors and all of us to pending regulation, changes in what the government will allow in terms of number of SKUs, competitors in the market and so forth.
We're actually in a very strong position for that, given the number of different plants we have, different products and so forth.
But we're focused on only a few very strong products.
And we're focused on the, let's say, the differentiation that moms in China want in their product.
Some of them want European products.
Some of them want New Zealand products.
Some of them want American products.
Some of them want a local product, and we actually have that and all of that.
So I think it's an adjustment to a lot of channel, a lot of digital and a lot of product and then on top of that, a lot of government regulation.
And so in this particular case, there are so many competitors in China.
A lot of them have pushed a lot of inventory into that market in anticipation of a lot of that, and we have to see that play through.
So it's made this year hard to predict.
We think we're in a good position thus far.
I mean, I hate to be superstitious.
I'll knock on wood and say right now, China has not been a surprise or an issue for '17, but I felt that way last year at about this time, too.
So I want to see a lot more this year play out before I can predict how the year is going to finish or even how '18 will be.
But I think we feel pretty good about China for the long term.
But as the government transitions through these new regulations, I think that's going to be a little bumpy, and it has been.
Otherwise, I like the management team and the actions we're taking right now, and that's about all I can tell you.
Well, I may have to phone a friend for that last part, but let me address the first part.
You'll recall ---+ well, first of all, we set our target for the year at healthy double digits.
Now we've got St.
Jude in the mix there, so there's extra healthy double digits.
But even on top of just last year on a comparable basis, there's a double-digit earnings growth target here, which, again, I would point out, is not typical across our peer group or competitors, et cetera, or even the companies that our investors compare us to, many of which are not health care.
And so we start the year with healthy double-digit target and guidance, and then the gating of that guidance over the quarters.
As you may recall in the first quarter, the issue was, gee, it looks back-end loaded.
And our fourth quarter is always strong, and our first quarter is always the low quarter of the year.
And so when you look at that and you say, okay, the investor tends to think that last quarter, gosh, that looks like such a big hill.
So we have a strong first quarter, that tends to be the case.
We tend to have lower guidance then, and we tend to beat it each year.
It tends to be a pattern.
And then there's ---+ I look at each year a little superstitiously.
I guess if you've been around long enough, you get to see this.
But every year, exchange or something happens later in the year, where there's a change, there's a political change, there's an exchange adjustment of some kind or whatever.
So I'm reluctant to adjust guidance in the first quarter for almost anything and ---+ because I'd like to see the year play out a little more first because I don't like to whip around the shareholders, particularly when we're already looking at a double-digit growth target, which is annual for us.
And so I look at it and say, okay, we're off to a nice strong start.
We have had a bit of favorable exchange.
We do know there's some timing in there, and there's also some strength in there.
And I'd like to see that strength sustained, and I'd like to see the exchange sustained.
I'd like to see more than 3 months play out here.
So in the meantime, my view would be, let's take some of the gating off the back part of the year.
Let's re-gate this a little bit more gently, call it a little smoother, and let's wait to see another card played in the second quarter.
I just don't think it's prudent at this early point in the year to make adjustments to earnings that are already double-digit targets until we see more cards played.
I mean, that's basically my thought process, Rick.
I mean, you can second-guess me all you want, but that's how I thought about it.
<UNK>'s going to ---+ or <UNK> is going to help you with your second question on the quarter.
Yes.
The question going from Q1 to Q2, and we talked a little bit about this on our first call.
I mean, as <UNK> talked about China, while we anticipate pressures to be there through the year, we're expecting some relief as we move through the year, not a lot.
But obviously, that comp becomes a little bit easier for us as we move through the year.
That's one area in Nutrition.
One area, Rick, and we talked about this, we expected a lower branded generics sales in Q1, and some of that was around the anticipation around what they were going through with the process known as demonetization.
Established Pharma, and also, it was our last quarter of sales in Venezuela, it just so happens, and we talked a little bit about that, too.
This is their last quarter.
Established Pharma would have grown 11% to 12% this quarter had we adjusted for that comparable on Venezuela.
So we expect that to flow through in Q2.
You also saw it in Diagnostics, whereas Diagnostics came in the 4% range, they'd be closer to 6.5% but for Venezuela.
So we anticipated all these moves when we projected our Q2 earnings.
And also, I'd note, too, we expected a very modest contribution from St.
Jude in Q1.
You have the dilution from the shares, but it takes time to ramp the synergies.
And so as we move into Q2, you're going to start to see those synergies ramp in St.
Jude as we move through the year.
And that's really the bridge to take you from what you saw, the $0.48 to $0.60.
This is just a stab in the dark.
But I would tell you, I'd probably for right now forecast it at mid-single.
I think we're going to have to see some ---+ it's a big number.
I mean, first of all, China is a big market, so we're talking about growth on top of a big number.
And so you got the law of big numbers working against us there.
But I'd say mid-single for now is a safe assumption.
And beyond that, I think we're going to have to kind of see how it goes.
Yes, Larry, we see a path to the 3.5 for 2018 in closing Alere.
I think something to keep in mind and remember is we divested a couple businesses, and we received full and fair value there.
And so that gives us some optionality such that the debt we would take on under Alere is less than what you might have originally modeled in your deal model.
So at a later point in time, we'll come back and help you reconcile that.
And as you know, and we talked about this, cash flow has been a focus for us.
We projected very strong operating cash flow and free cash flow as a percent of net income for this year, and that remains on track.
I'd say, in the first quarter, let's wait until the Q comes out.
But we may even be a little bit ahead here in terms of our efforts here to make improvements on our working capital process and also to just further strengthen what was already a strong process around our capital expenditures.
So we feel good about that.
Our priority is to go back to strategic flexibility, and nothing changes about those commitments we made some time ago.
I think it's important to stress, though, hard to predict what distributors will do to manage inventories and so forth based on this, but they will at some level.
And so we could see some less predictable numbers in the second ---+ between the second and third quarter if the timing is what <UNK> said, but I don't think it's going to affect our overall business.
And it's going to affect all players in the market, all manufacturers or all retailers, et cetera.
And at the end of the day, I think it'll stabilize, but we're just going to go through a lumpy start.
And then I think it also depends on whether or not people recover this tax with price or other things, so we'll just have to see.
Okay.
Well, I don't have any comments about Plano.
I mean, I don't have any update for you there.
I would say, any time you get a warning letter or even observations ---+ 43 observations on GMP at any facility or any plant, it behooves us to go back and look not only at that plant, but all of our plants across the board so that the corrective actions we take, whatever they may be, are consistent.
And our systems and processes are consistent across all facilities.
So anytime you get an observation like this or any observation at a single facility, our practice is to go back and look at all facilities.
And I'm comfortable that we're not sitting here at risk in our other facilities.
But that said, we always go back proactively and preemptively and look at every facility to make sure that whatever we're correcting in one is something that we've looked at, checked out, assessed, evaluated, whatever you want to call it, in all of them.
So that's standard practice.
And frankly, I think that's one of the reasons we have the track record we have in GMP in our facilities and the reputation we have with the FD<UNK>
So I think that's a good thing.
So I don't ---+ I'm not sitting here with a lot of nervousness about other facilities.
We've had a chance to look at all of St.
Jude's facilities.
We've had a chance to assess that.
Right now, I don't see an indication of something like this elsewhere.
So but that said, we're all over everything in this ---+ with this warning letter everywhere.
I can't remember what I missed in the question because it was a long question.
It's a decent paraphrase over the coming year.
Once we bring this business under us, that's a fair assessment, <UNK>.
