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Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Jeff Johnson with Baird. Jeffrey Johnson : So Al, I know when we look at like the GSK data that sell-out data, you guys and everybody else kind of report sell-in data. So it's never apples-to-apples in that, but I think it's pretty clear January was a very strong month for contact lenses. It really was across all of medtech. April, obviously, a weaker month. So just maybe help us understand kind of the gating throughout the period of the quarter you just reported February, March, April and then maybe any updates on what you've been seeing so far in May? And just kind of the range of implied guidance for CVI now kind of 6% to 10% in the back half, just how you're feeling about the low end versus the high end of that range? Albert White : Yes. And you're right, January was a really strong month. As we work through the quarter, it was okay. I mean, February is a good month, March. April was a weaker month for us. You can kind of see that if you look at the calendar quarter compared to the fiscal quarter for us because we grew in the calendar quarter 14% and then grew 10% in the fiscal quarter. So when you trade those months up. So you're right, April was a little weaker. May has been a good month. We did have a little -- some stuff moved kind of from April into May, but May has been a good month for us. So we've seen the contact lens marketplace at least for our business rebound in the month of May. So that's been a positive. Jeffrey Johnson : Okay. And then maybe just as a follow-up, if you can address that CVI guidance, implied in the back half to 6% to 10%, just kind of high and low end where your confidence is there. But the real follow-up question I wanted to ask was on pricing. It seems talking to Alcon and some of your other competitors looking at some of the pricing data we have for your lenses, there's a good price tailwind this year for, I mean, probably 2 to 3 points, something like that. Is that about the ballpark you're expecting? And then secularly or longer term, how comfortable are you if we stay in a persistent inflationary environment that you can maybe keep up 2%, 3% pricing a year for the next few years? Albert White : Sure. Yes, I think you're spot on. I think that 2% to 3% net pricing, I'm talking about net pricing is the way to look at it. The actual pricing that we've seen out there has been higher. The actual price increases has been higher. But if you look at the rebates and everything else, 2% to 3% is probably a good way to look at it right now. I think that's going to continue. I think that we're probably a little bit behind our competitors in that because we do have a lot of large contracts, especially some of the bigger store brand contracts that are multiyear contracts. So as those renew, we'll look at opportunities to adjust pricing on those. But I think that you're seeing that now. And frankly, I think you're going to see that for the next several years given supply constraints within the industry in general. If I look at our performance in the kind of back half of the year, the 6% to 10% you're talking about for CooperVision, I expect to be at the higher end of that range unless something happens to derail that. It'd have to be something unexpected, right? Some economic event or something out there. I mean we spent some time even this past week, it's been a little bit of a tough time for us coming up with some of the guidance and so forth with the debt ceiling and all the other activity that has been going on here recently. But no, we have good momentum. I feel optimistic that we'll continue to put up strong revenue numbers. Operator: Your next question comes from the line of Larry Biegel with Wells Fargo. Lawrence Biegelsen : Yes, I guess I'll ask the question on the guidance first here. The top line, you raised the top line and the bottom line by the amount of the beat in the quarter. I guess I would think FX was a little more favorable, particularly on EPS. Brian, maybe you could help us with that bridge how much currency changed from last quarter to this quarter for fiscal '23? And I guess the question is why not raise by a little more than the beat? And I had one follow-up. Brian Andrews : Larry, I'll take the currency question. Currency is kind of starting to move in our favor as we were working through the quarter and then they retraced. I mean there was a little bit of positive -- very little positive sort of to the P&L from revenues down to OI. But really, the impact that we saw in the quarter was a negative tied to our FX losses below the line. So we had -- as we talked about before, we're hedging some of our material currencies but we still have several currencies and smaller exposures that we're not hedging. And so we had a loss below the line that took our earnings down to $3.08, would have been a little bit better. But we basically adjusted for the currency in the quarter, but the impact for the second half of the year for currency strangely or interestingly enough, kind of all netted to being sort of the same. So we're still looking at a 2.5% or roughly 2.5% headwind to revenues for the year and kind of a weaker 1% tailwind to EPS for the year. . Lawrence Biegelsen : And why not raised by more than the beat? Brian Andrews : On EPS? Lawrence Biegelsen : Yes. Brian Andrews : Well, we raised by the operational -- the net beat. But with everything, as Al just said, with the macro uncertainty, Fed, FX, recession, we just decided -- look, we're exercising prudent in setting guidance. The good news is that we're not seeing demand or behavior shifts. And since gross and operating margins fall in as expected and things are progressing, we're just exercising some caution in light of the macro. Lawrence Biegelsen : That's helpful. Just, Al, on my follow-up here. Asia Pac, plus 19%, really strong. And myopia management, if I heard correctly, the $30 million up 5% -- $5 million, I'm sorry, sequentially. That was one of the strongest sequential growth with absolute growth increases we've seen in a while. Just talk about the drivers in Asia Pac and myopia management and the sustainability. Albert White : Yes. Interestingly on myopia management, it was a good quarter, and we're gaining some traction in our MiSight, finally. We talked about it for a long time. It’s great to finally be gaining some real traction. And interestingly, it was not China. We actually struggled in China with MiSight this quarter until the very end of the quarter. So the MiSight was being driven by success here in the U.S. and throughout Europe were big drivers, in some of the markets in Asia Pac. So I think we're in good shape with our myopia management business, and I'm expecting Q3 to be a good quarter, Q4 to be a good quarter. As I was saying, I mean, we're certainly in good shape to hit, if not beat our $120 million to $130 million "guidance" range for myopia management. Asia Pac, we're in good shape. I would say Asia Pac, China being a little bit different if I look at our regular lenses and that it was more of a contributor in terms of our regular sales. But no, Kathy is doing a great job running that business, and we finally have some momentum going in Asia Pac, and I think we're going to continue to put up good quarters as we move through the back half of this year. Operator: Your next question comes from the line of Joanne Wuensch with Citi. Joanne Wuensch : Can we pick up part PARAGARD a little bit because I want to make sure that I understand what's going on there? Is this another setup where you've got 4 quarters of pricing headwinds and then you start to grow again? Or how do I think about that? Albert White : No. It’s a great question. No, it won't be that way. I would expect PARAGARD to grow here in Q3 and Q4. And for us, it kind of put up low single-digit growth probably for this year. We did have the tough quarter here in Q2, obviously. But some of that was tied to kind of inventory in the channel, some of that kind of movement around the price increase. So I wouldn't necessarily read too much into that. I would kind of restate what I've said on some of the prior quarters. We're not envisioning unit growth there, but I still think we'll post an okay Q3, okay Q4 and post growth for the full year. Joanne Wuensch : Excluding PARAGARD, is there a way to describe how the rest of that business is doing because that was pretty much really the weak link in the quarter? Albert White : Yes. Well, obviously, fertility really strong. Just -- that team is doing an amazing job, just consistent strong performance and it’s really diversified around the world and by product so -- or product family. So fertility in good shape, we should continue to do well in fertility. Our med device business is doing really well, kind of our traditional OB/GYN Medical Devices. We've seen some strength there in the labor and delivery side and some of our surgical products doing really well. So yes, I mean, outside of PARAGARD, it was -- that was a pretty good quarter. I mean, Holly's got that business humming over at CooperSurgical. So expecting them to continue to put up good results. Operator: Your next question comes from the line of Anthony Petrone with Mizuho. Anthony Petrone : And maybe just a couple of clarifying on PARAGARD. Can you remind us, Al, just the price increase that was put in earlier in the year and the extent of the volume declines, I guess, through the first two quarters of the year? So that would be my first question. And then maybe just in terms of overall share in contact lenses, at least according to our numbers, it looked like certainly, there was gains for Cooper in torics as well as multifocals but perhaps maybe a little bit of slippage in dailies, Again, just looking at the fiscal at plus 8%, and it looked like competitor data for dailies was a little bit higher than that. So just an overview on the share trends through May in lenses? Albert White : Sure. Sure, Anthony. The PARAGARD price increase, I think, was 6% that we put in place. Yes, from a volume perspective, I don't know if I would highlight necessarily too much on volume. What you're seeing here in Q1 and the quarter we just had, and frankly, you'll see a little bit here in kind of Q3 is tied more to channel inventory, whether it's through the distributor or down actually into the physician's office, you're seeing some fluctuations and not driving our as-reported results. So I think if you look through that, which I try to do, right, and say, regardless of inventory, how are we looking at actual volume? That's where volume has been flat, like we just haven't really seen those increases. And I'm not anticipating that we're going to here in the near term. So again, I said it last quarter, I'd say it again, I hope I'm wrong on that and being conservative. But as it as of right now, I think that's where we stand with PARAGARD. But again, a lot of movement tied to inventory. So I do think that we'll get growth in Q3 and Q4 to be clear. And that I do think we'll post some low single-digit growth in PARAGARD for the full year. On contact lenses, yes, I mean this was a great quarter. Now if you look at it and you kind of step back and you say Biofinity and Avaira grew 5%. You can see our non-single-use sphere other grew 2%. So that's what you're getting to, Anthony, right, which is kind of the sphere side of things. We did have some -- a couple of larger Biofinity orders that fell from April into May. And you had quite a bit of Biofinity Sphere activity there. So I wouldn't read too much into that. I mean if you're thinking about quarter end, yes, that number came in a little bit lighter, but we'll pick that up as we started off Q3 with a good quarter from a good perspective when you look at that part of our business. Operator: Your next question comes from the line of Robbie Marcus with JPMorgan. Robbie Marcus : I wanted to start with free cash flow and cash flow generation in general. It's been a little low the past few quarters. Maybe speak to the reasons behind it? And how you're thinking about cash flow generation going forward? Brian Andrews : Robbie, yes, sure. So operating cash flow continues to drive higher. We do have some things that are driving free cash flow a little lower. One of them, obviously, is CapEx. It's quite higher than in years past. Some other larger components that are driving it, that are having an impact downwards are frankly, interest. I mean our interest expense is going from doubling from $53 million to $110 million last year to this year. Taxes over the course of -- depending on what time horizon you're looking at, our tax rates keep going up. Our inventory levels from last year to this year also are going higher. So that's having an impact as well. But overall, I mean, our operating cash flow continues to be strong and expect to deliver still a strong free cash flow for this year. Just offsetting, obviously, the operating cash flow, it's just the higher CapEx which we've been talking about around $400 million this year. Robbie Marcus : Great. And then maybe on new fits. You talked about strong global new fits. Are you seeing any divergence in different regions? Just trying to get a sense of the future of the business and the trends there. Albert White : From a new fit perspective, no, not really. In terms of regional, we're seeing pretty good activity there. There's still a lot of demand on optometrists for appointments and so forth and the new fit activity is pretty strong. And our CooperVision new fit activity is looking really good right now. We're winning certainly our fair share when it comes to new fit. So I'm pretty optimistic from that perspective. Operator: Your next question comes from the line of Matthew Mishan with KeyBanc. Brett Fishbin : This is Brett on today for Matt. Just wanted to ask a little bit about the trends in Europe given how robust several of the historical quarters looked a little bit of a deceleration here. Just wondering if there was anything driving that step down? . Albert White : Brett, we have -- we're #1 in Europe when it comes to contact lenses. We've got a fantastic franchise there that -- team has done a great job not only building up our infrastructure, if you will, around a lot of the independent optometrists but also with some of the key accounts where we're especially strong. So no, I think that the European market is doing well. We have not seen a pullback in that market tied to any economic concerns or anything. The contact lens market is strong there, and we're kind of leading the charge, if you will. And I think we'll continue to do that. Brett Fishbin : All right. And then just turning to MiSight. It sounded like trends in Americas in retailing fee accounts was actually the driver of the step up this quarter. So is there -- do you see a potential maybe to drive some upside to that guidance range given China is now -- it seems like it's starting to recover and might actually be an incremental driver to the positivity you're seeing in the Americas? Albert White : I guess, short answer to that would be yes. Yes, we're in a better spot when it comes to MiSight today than we were six months ago when we initiated that 120 to 130. So I think we've got a good shot to be at the higher end of that range or even push above it. Brett Fishbin : All right. Awesome. And then last question for me. I think you touched on some of the continued supply chains in the industry being a positive driver for pricing growth. So I was wondering if there are any pockets of particular issues from other companies that might be benefiting Cooper given the investments you've been making in your own production? Albert White : Yes, that's a tough one. I don't think there's too much there in terms of disruption from others. There are supply chain challenges, I think that we all have right now. Our competitors do and we do, too, in terms of just being able to produce enough product. I mean, in a lot of cases, I think a lot of us are selling everything that we can make right now. So not only are we dealing with whatever supply chain issues you could have associated with distribution and everything else and all those are certainly lightening up. But we're also dealing with demand. I mean I'll talk about ourselves, right? We're a business that's been healthy for a long time, growing around 7%. And now we pushed up what our ninth straight quarter of double-digit growth. That puts pressure on the business in terms of having to make more product and run more products through your distribution channels. So there's just a natural challenge on that from a supply chain perspective. I think it's industry-wide, and we're all going to continue to deal with it because I think we're all increasing our production capabilities and kind of expanding our capabilities throughout our logistics networks. But it takes time, it takes effort, and the demand is there, right? So we're going to continue to see strength in the contact lens industry. I don't think you're seeing too much in terms of one person struggling so much as someone else is picking up business, as much as you're seeing supply chain issues or challenges just because of the global demand of the contact lens industry. Operator: Your next question comes from the line of Jason Bednar with Piper Sandler. Jason Bednar : Al, I wanted to ask on Biofinity toric. We've been hearing some greater channel inventory shift from a competing toric lens to Biofinity toric. I know it's been going on for a while, but are you able to quantify or do you have any metrics around maybe what kind of share you've picked up with Biofinity toric? How much of this is maybe adding to the toric revenue growth was pretty impressive in the quarter? And then sorry to pack a few into here, but how much tail is left from this conversion to toric and whether or not you're seeing any again, channel inventory shift with toric or even more broadly? Albert White : Yes, there's probably something there, but I just don't put too much weight on it, honestly. I mean we've had some competitors pull back a little bit on some of their SKU ranges and we have those SKU ranges. As a matter of fact, our Biofinity toric family is the widest toric offering out there. And when you roll in things like the tort multifocal and so forth, I mean, it's just an amazing franchise right now. We've been building that franchise out for a number of years. We spent a lot of time and a lot of money on the manufacturing side and also on our distribution network to be able to manufacture and distribute all those products in a wide SKU range. So do I think that we're maybe getting a little bit of help because some competitors or a competitor has pulled back on some of their SKU ranges? Yes, probably. But this isn't coming because of like one quarter or an action as somebody took. This is coming because of a multiyear strategy that CooperVision is deployed to drive growth in our torics. I mean, Jerry Warner runs that business for us does a fantastic job. He's just laid out a great strategy there in terms of torics and multifocals, appreciating that the market is growing. That portion of the market is growing faster than the sphere market, and it's a really sticky and great market. So I mean, we've, again, invested a lot of time and money for a lot of years to be in the position we're in. And I give the team a lot more credit around that activity than I do saying that a small movement by a competitor is allowing us to take a lot of share. Jason Bednar : Okay. That's helpful. And then maybe if you can just follow up your comment on whether or not you're seeing any share shift or -- sorry, not share shift but inventory shift in the channel at all? But then separate follow-up. I actually wanted to ask another one on PARAGARD here. I think you've probably tried every which way to get this product line to grow. We've seen different advertising sales recondition, greater commercial focus the effect here has been tough. Does there come a point where you'd look to evaluate different options for PARAGARD or maybe better said in the strategic and financial fit still make some good asset for Cooper? Albert White : Yes. On the channel inventory side, I'd say we probably ended our fiscal quarter a little light on channel inventory. I kind of referenced that a little bit with some of the Biofinity shipments. But I'd say we were probably a little lighter from a channel inventory perspective, nothing to go crazy about but since you're asking. On PARAGARD, yes, boy, we bought that. We put some money into it. I think we've gotten a great return on that asset. But having said that, we put some money into it. We put some TV advertising out there and a lot of different marketing campaigns and so forth to really try to energize the non-hormonal IUD market. We had some success on that, not a ton, you kind of get to where you're at today. There's some fundamental shifts in the market that are causing challenges for us. You're not seeing women go into their gynecologists as much as they were pre-COVID for kind of annual wellness exams and so forth. And as that's happened, combined with the fact that a lot of birth control options, especially birth control pills, the availability has increased or the ease, if you will, to get that first control has improved. It's hurt the IUD market, and it's hurt PARAGARD. So we're evaluating that like we always do right now. I mean that's a good product. It does okay in the marketplace, right? It's a decent fit in terms of our women's healthcare franchise. But we'll always evaluate that just like we do everything else in terms of kind of our long-term strategic planning. Operator: Your next question comes from the line of Jon Block with Stifel. Jonathan Block : Great. Really good quarter, but just despite the top line beat, you have in a little bit hot on OpEx as a percent of sales relative to our estimate. And if I look at sort of fiscal '23, I think OpEx as a percent of sales, you might be up roughly 100 bps from last year. Brian, I think you mentioned some investments. Is that CVI, is that CSI? Where are those investments being made? And does that sort of remain front and center for the next couple of quarters until sort of you lap them, call it, exiting fiscal '23, we can think about recapturing the leverage into fiscal '24? Brian Andrews : Yes. Good question. Thanks, Jon. Yes. I mean I'd say our OpEx kind of -- the total OpEx dollars came in kind of where we expected along with our gross and operating margin results. We continue to invest in commercial activities, including sales and marketing tied to the product launches and the rollouts that I mentioned in his prepared remarks. We had also continued fertility investments, and that includes kind of building out more of our competencies in various regions like Asia Pac. And then lastly, I mean, we still have inefficiencies that we expected in distribution that were higher year-over-year, and I'll just mention sort of the challenges that we have when revenues continue to drive higher, and the strain it puts on distribution. But we're working through those challenges. And I'd say total OpEx, again, landed where we expected, but our real focus is on driving operating margin expansion. And like I've said before in the last call, and I'll say it again here, our operating margin at the midpoint of our constant currency revenue guide, we're expecting constant currency OI growth of around 11%. So as long as we're driving that operating margin expansion, and that's in this year, driven in large part from gross margin expansion, then we're putting up a leveraged P&L. And so that's the goal for this year. Jonathan Block : Got it. Fair enough. And maybe just to shift gears and this one might be with you -- for you. But within APAC, I know you're overweighted to Japan, but I sort of want to take the opportunity to ask what you're seeing in China, the slope of the business of late. I just think there's been a lot of headline noise, news. And so just love to get your thoughts on what you're seeing on the ground in the sort of April and to May timeframe? Albert White : Sure. Yes. We've seen some improvements in China, but I mean, China kind of even now comes and goes a little bit. When you look at it from our perspective, it's probably two different stories, right? Because you have our regular contact lens business there, the retail side, if you will, which we've seen some traction on and we've seen some improving results. And then you have the myopia management side, which is MiSight but also a lot of Ortho-K that gets sold through the hospital. That's a different channel. So I do think that we're seeing some improvements in that channel, in the hospital channel, which is actually going to help us a little bit on Ortho-K and MiSight. The other side, the retail, the general population, if you will, kind of comes and goes a little bit. Now having said that, Jon, remember, that's a pretty small market for us. I mean, some of our competitors are -- have much bigger shares in China than what we have. Operator: Your next question comes from the line of Steven Lichtman with Oppenheimer. Unidentified Analyst: This is Ron on for Steve. I wanted to ask you guys about SightGlass a little bit. What is your estimate for the approval timing? And with MiSight being in the field for a bit now, how are you thinking about how SightGlass will be positioned in the field versus it? Albert White : Yes. So no real update on SightGlass when it comes to regulatory approval here, waiting to receive the final four-year data and compile that and then take next step. So nothing really to add from that perspective. As you know, we've got a great partnership with EssilorLuxottica on that product. And the product has been launched in many markets around the world, and it's selling and it's doing well. That's within the joint venture itself. So I continue to be really optimistic about that product long term. But that is within that joint venture, not in our P&L other than the investment activity, gains or losses below the line. When it comes to MiSight and how that looks, I mean, to me, glasses are going to do nothing but be a positive for the myopia control market. We want people getting into myopia control. They need to be wearing the product. So children need to be wearing those glasses. Compliance is really important as children get into myopia control, let's say they do that a lot at 5, 6, 7, 8, 9 10. Certainly, as they get to become teenagers, and certainly anyone who has compliance as an issue, you're going to want to be moving to contact lenses. So anything that we can do to drive the myopia control market forward and increase, it is a positive for us, positive for MiSight, positive for the industry. Unidentified Analyst: That's really helpful. And I guess I have a follow-up on that. You guys mentioned that the headwinds on myopia in China are kind of abating towards the end of the quarter. Can you say what changed like towards the end? What was the shift because China has been a headwind on myopia for a little bit? Albert White : Yes. It's really those products are sold through the hospital channel. So you need the hospitals to kind of open up and have more kind of, if you will, availability for children and so forth. You need to transition back to a more traditional, normal hospital environment within China. So I think that's what we're seeing right now, right? As COVID starts to get in the rear view mirror and you're getting patients going back into the hospital for more traditional needs and so forth, you're opening up some space for optometry and that's helping with the fittings. Operator: Your next question comes from the line of Patrick Wood with Morgan Stanley. Patrick Wood : Amazing. Two left for me, please. I guess the first one is on the fertility side, maybe just zooming out, if we just hypothetically say Cook doesn't close, how committed are you to APAC as a region? You hinted by saying maybe some accelerated pathway to growing that. I'm just curious if you could put a little bit of meat on the bone to how you feel about the region, how critical that is for you and fertility going forward? Albert White : Yes. That's a really good question. That is an important region, and we are going to invest in that region. So we are right now -- we're going to continue to invest there. One of the primary reasons we were doing the Cook transaction was for growth in that region. There's a number of markets there that are really, really strong fertility markets, I mean with really strong growth rates. So we have a solid presence, I think, in parts of that region, like Australia and so forth, but there's a number of countries where we don't have a presence or the presence is pretty small. We need to hire some people, build out some infrastructure there. So we're evaluating that activity right now. Because when you look at our business as a leader in the space, right, and as well as we do with our broad portfolio in the Americas and throughout Europe and in parts of Asia Pac, there's no reason we shouldn't be able to build out infrastructure and continue to drive growth there. So that's a matter of the typical thing we do as a company, which is evaluate those opportunities, look at the return metrics associated with them because you do have inefficiencies anytime you're building out infrastructure in a new region like that. So we're going through the process and evaluating all that activity right now. Patrick Wood : Amazing. And then one more, which is I was really interested around MiSight and the positive halo effect of selling in the rest of your offering. I mean is that more a function of MiSight opening the door in the first place, where there isn't a relationship because it's such a unique offering and then being able to sell more in? Or is it more about incremental depth with accounts where you already have that relationship? Albert White : Yes. That's a really good -- it's a really good point because you're right. There's a lot of optometry offices where they're much stronger with some of our competitors to the point where they might just use competitor products and not our products. And MiSight has cracked open the door in a number of those accounts. And it's gotten our people in there, and all of a sudden, we're able to have conversations about products like MyDay as an example and about our extended toric ranges and so forth. It's opened the door and it's continuing to open the door into more new opportunities for us. So I do think there are some in terms of existing accounts where we're going in with an innovative product, right, and they can kind of see the technology advancements and they get more comfortable with Cooper. But you're spot on, I would not discount the importance of kind of virgin Cooper stores, if you will, where we can go in there and finally start selling some of our core products. Operator: Your next question comes from the line of David Saxon with Needham. David Saxon : Maybe I'll ask two on CooperSurgical, starting with PARAGARD. I mean I heard the comments about flat volume growth, and you talked about some of the market dynamics, do you think PARAGARD can return to seeing volume growth over time? Or is this flat volume growth more of a longer-term expectation and kind of pricing is really the key driver over the long term? Albert White : My gut tells me depending upon how you define long term, but certainly for the coming years here that volume is going to be flat. I think when you look at the availability of other offerings, the ease of availability and the additional offerings that are out there -- now those are on the hormonal side. But when you look at the birth control market out there, I think the volumes for IUDs and PARAGARD are going to be flat for a little while here. David Saxon : Okay. Got it. And then on -- in fertility, I just wanted to hear what you you're seeing in terms of new fertility clinic openings, trends there? And any way to size how much of fertility growth is driven by like de novo clinics opening up and kind of how big of an opportunity that is for you guys? Albert White : Yes. The new fertility clinics is kind of a phenomena outside of the U.S., if you will. You're definitely seeing more of that activity in some of Asia Pac and some parts of Europe. You're seeing kind of consistent opening of new fertility clinics. The numbers aren't that huge in the end of the day, but they're big enough to continue to drive growth because we see some of that in our capital equipment sales. And obviously, that's a great part of our business. Anytime you can get capital equipment in. You've got the consumables following afterwards. So I'm not sure I've looked at it in terms of quantifying it because it hasn't been a spike or anything. It's been consistent here for probably the last four or five years, even through COVID, we were seeing new clinics continuing to open up. So I guess I would probably answer that by saying the fertility industry, I keep talking about like 5% to 10%, but obviously, it's grown more towards the upper end of that, certainly. Embedded within that is new fertility clinics opening. And I would envision the number of new clinics that we've been seeing open over the last five years or something to continue at a very similar pace probably for the next five years. Operator: Your last question today comes from the line of Anthony Petrone with Mizuho. Anthony Petrone : Just wanted a follow-up on Cook. Apologies if I missed it, just had another call there. But maybe just -- it sounds like it's certainly the probability is lower but there's still efforts to find a resolution. So maybe a little bit on just where the process sits and probability for close. And under a scenario where it does not close, there was an $875 million commitment and maybe just thoughts on where CooperSurgical M&A activity can go from here if this deal does not close? Albert White : Sure. So yes, just a quick recap on Cook. We did take the $45 million hit to the P&L we accrued for it this quarter because the original transaction that we discussed is frankly, it's probably not going to happen. That $45 million would get paid under that scenario at the beginning of August. So that's where we sit with that transaction today. You're exactly right. We are talking with Cook. We have a great relationship or a great group of people there. So we continue to have conversations with them to see if there's some transaction that we could still do. But I would certainly say with respect to that transaction, the likelihood is that we'll pay that $45 million. You're right, it was a big number, $875 million that we committed on that transaction. Right now, the focus -- the kind of capital focus, if you will, is very similar to what it's been over the last couple of years. We're going to look at paying down debt. We're going to look at acquisitions if they make sense. They got to be strategic, accretive acquisitions that fit well into what we want to accomplish at CooperSurgical or CooperVision, and that will probably continue, right? But there's nothing wrong with paying down some debt either. Operator: This concludes the question-and-answer session for today. I'll turn the call back to Al for closing remarks. Albert White : Great. Thank you, and thank you, everyone, for joining today. We appreciate the time. As I mentioned, we're pretty proud of where we're at. We had a good quarter and things are starting off well this quarter, so we're well positioned. And we look forward to getting together again in three months and updating everyone after our next quarter. So thanks again. Operator: This concludes today's conference call. You may now disconnect.