Abbott Laboratories (ABT) — Q3 2024 Earnings Call Transcript

Good morning, and thank you for joining us. With me today are Robert Ford, Chairman and Chief Executive Officer; and Phil Boudreau, Executive Vice President, Finance and Chief Financial Officer. Robert and Phil will provide opening remarks. Following their comments, we'll take your questions. Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2024. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, Risk Factors, to our annual report on Form 10-K for the year ended December 31, 2023. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott's ongoing business performance. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at abbott.com. Note that Abbott has not provided the GAAP financial measure for organic sales growth on a forward-looking basis because the Company is unable to predict future changes in foreign exchange rates, which could impact reported sales growth. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today. With that, I will now turn the call over to Robert.

Thanks, Mike. Good morning, everyone. Thank you for joining us. Today, we reported organic sales growth of more than 8%, excluding COVID testing sales, and adjusted earnings per share of $1.21. In addition to delivering another quarter of strong financial performance, we accomplished several key objectives this quarter, which included entering new strategic partnerships, launching new products and making several key advancements in our R&D pipeline. And I'll elaborate further on these accomplishments when discussing the performance of our businesses and summarize our third-quarter results in more detail before turning the call over to Phil. I'll start with Nutrition, where sales increased 3.5% in the quarter. Growth in the quarter was led by double-digit growth in the U.S., which included growth of 12% in U.S. Pediatric Nutrition driven by market share gains in the infant formula business and growth of 11.5% in U.S. Adult Nutrition led by our market-leading Ensure and Glucerna brands. As the market leader in adult nutrition, we continue to expand our portfolio to meet the growing global demand for products that offer a combination of high protein, low sugar to help people optimize their health and wellness. Moving to Diagnostics. Our sales in Core Laboratory Diagnostics increased 4.5%, excluding COVID testing sales. Growth in Core Lab was driven by global demand for routine diagnostic testing and continued adoption of our market-leading diagnostic systems and testing platforms, including recent large account wins that will help continue to sustain our growth into 2025. In our rapid and point-of-care diagnostics businesses, we continue to expand our test menus and capitalize on the growing demand for respiratory tests that can be performed at home or in more traditional healthcare settings. In September, we announced an exciting new partnership with the Big Ten conference to help boost the U.S. blood supply through a blood donation competition. Students, alumni and fans can donate blood for any of the 18 member universities at blood centers located across the country. Our goal with this competition is to help rebuild the nation's blood supply, which is currently at an extremely low level, while also helping to create a new generation of blood donors. Turning to EPE, where sales increased 7% in the quarter. Growth was well balanced across the markets and therapeutic areas in which we participate. Our performance this quarter was driven by double-digit growth in several countries across Latin America, Southeast Asia and the Middle East, where our broad product portfolios focused on addressing local market needs continue to enhance our unique position in these markets. From a portfolio perspective, we continue to deliver broad-based growth across our key therapeutic areas of focus, including strong growth in the quarter in the areas of gastroenterology, cardiometabolic, central nervous system and pain management. We also achieved several milestones this quarter as it relates to advancing our portfolio of biosimilars, which we built and continue to expand through collaboration agreements. The first of these biosimilars is on track to launch in emerging markets in late 2025. I’ll wrap up with our med tech portfolio, where sales grew more than 13%. In Diabetes Care, sales of continuous glucose monitors exceeded $1.6 billion in the quarter and grew 21%. In August, we announced that we had entered into a unique global partnership with Medtronic to connect Abbott's world-leading FreeStyle Libre CGM sensor with their automated insulin delivery systems. Abbott now has partnerships with five of the largest companies that offer automated insulin dosing pumps, allowing more people around the world to benefit from the connectivity with the Libre technology. In September, we announced the U.S. launch of Lingo, our new glucose monitoring sensor available for purchase without a prescription. The Lingo wearable sensor and app track real-time glucose data and provide personal insights and coaching based on your body's reaction to nutrition, exercise and other lifestyle choices to help create healthier habits and improve overall well-being. In Electrophysiology, growth of 14% was driven by double-digit growth in both the U.S. and international markets, and similar to previous quarters, the growth was broad-based across the portfolio, including double-digit growth in catheters and cardiac mapping related products. We also achieved several important milestones as it relates to our electrophysiology new product pipeline, including completing enrollment ahead of schedule in our VOLT-AF U.S. IDE trial and, after we complete the required patient follow-up phase, we expect to file for FDA approval next year. Earlier this month, we announced that we began enrolling patients in our focal FLEX clinical trial designed to assess our new TactiFlex DUO catheter, which offers physicians the option of using PFA and radiofrequency energy to treat atrial fibrillation. And finally, we received FDA approval and launched our new adviser HD Grid X mapping catheter, which further enhances the cardiac mapping process when using PFA or RF ablation catheters to treat AFib. In Structural Heart, growth of more than 16% was driven by growth across our market-leading comprehensive portfolio of surgical valves, structural interventions and transcatheter repair and replacement products. This quarter, we continue to capture market share in TAVR and saw accelerating adoption of Amulet and TriClip, which we launched in the U.S. earlier this year. Earlier this month, CMS began the process of evaluating TriClip for a national coverage determination, which, if approved, would help expand the addressable market through broader access in the U.S. for this first-of-its-kind technology. In Ribbon Management, growth of 7% was led by Aveir, our highly innovative leadless pacemaker, and Assert, our newest implantable cardiac monitor, which launched in the U.S. last year. In Heart Failure, growth of 14% was driven by our market-leading portfolio of heart assist devices, which offer treatment for chronic and temporary conditions. In Vascular, growth of 5% was led by double-digit growth in vessel closure and coronary imaging, along with Esprit, our below-the-knee resorbable stent that launched in the U.S. in the second quarter. Lastly, in Neuromodulation, sales grew 5%, driven by strong demand in international markets for our rechargeable spinal cord stimulation device. In summary, we delivered another quarter of strong top line growth with sales growing more than 8%. We continue to make good progress expanding our gross margin profile and remain on track to improve our profile by 75 basis points on a full year basis compared to last year. As you saw, we achieved several important new product pipeline milestones this quarter, and we're well positioned for a strong finish to the year and have great momentum heading into 2025. I'll now turn over the call to Phil.

Thanks, Robert. As Mike mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis. Turning to our third-quarter results, sales increased 7.6% on an organic basis and increased 8.2% when excluding COVID testing sales. Foreign exchange had an unfavorable year-over-year impact of 2.5% on third quarter sales. During the quarter, we saw the U.S. dollar weaken versus several currencies, which resulted in a favorable impact on sales compared to exchange rates at the time of our call in July. Regarding other aspects of the P&L, the adjusted gross margin ratio was 56.3% of sales. Adjusted R&D was 6.5% of sales, and adjusted SG&A was 27.2% of sales in the third quarter. Lastly, our third quarter adjusted tax rate was 15%. Turning to our outlook for the fourth quarter, we forecast adjusted earnings per share guidance of $1.31 to $1.37, and based on current rates, we expect exchange to have an unfavorable impact of less than 1% on fourth quarter reported sales. With that, we'll open the call for questions.

In Q3, devices were really strong, but Nutrition and Diagnostics came in below expectations, but you still maintain the full year guidance, which is implying a step up of 9.5 or more growth in Q4. So, I just want to understand what happened in those divisions in Q3? And what's giving you the confidence to still reiterate the full year revenue guidance?

Sure, Travis. Listen, we got multiple business units here. I think, by my count, it's close to like 17. We always want all 17 to beat and top your estimates here. The reality is sometimes some of them fall short. And then the question is, is there something more long term? Is it more of a one-time kind of challenge? I'd put that more in the second bucket here. I think one of the benefits that we do have in having a broad diversified portfolio is that when you do have situations like that, Travis, other businesses can overperform and kind of make up for that. And I think that's what you saw in this quarter. I mean, you opened your question with devices did really well, and that's what helped us deliver on our quarter. As you look forward to Q4, yes, we do have still very high confidence in the businesses. If I was at all concerned about it, I wouldn't have raised our guidance for the third time this year. So yes, we're still very confident in both the EPS forecast that we've got. I think this is a great quarter now as we're into Q4 and there's fewer COVID comparisons; we'll see our EPS grow double digits back to the growth model that we had during pre-COVID. And yes, revenue at that 9.5% to 10% still feels very good to me. The issues that you raised there are kind of one-time in nature. On nutrition, the entire business did really well with the exception of our international pediatric business. U.S. was up 12%; pediatric, U.S. adult was up almost 12%; and international adult was up high single digits. So, what ended up happening there is we saw some softness in the beginning of the quarter in some of our international markets for pediatric. The team quickly determined that it wasn't the market; it was actually us and it was our commercial execution or lack thereof that was leading to some share loss. So, the team took action pretty quickly in the quarter. We made some personnel changes; we calibrated our demand generation, and what ends up happening in the quarter there, as a result of that share loss, we didn't want to build excess inventory, so we shorted our sales to the distributors just to align that. But I feel good about what the team has put together. Early indications show that that was the right move to do, and we've seen good progress there. So yes, disappointed, but the team knows that, and they acted quickly. So, I expect to see international pediatric and overall nutrition growth step up in the quarter. It doesn't change my thinking about nutrition for the quarter or for next year, for the long-term aspect of it, just something that we had to address. I think you mentioned Core Lab also came a little bit shorter than expectations. I'd say there, really, the driver of that was just the VBP implementation in China. If you look at our Core Lab business, our International Core Lab business, excluding China, the international business was up double digits. So, the teams in those markets are doing really well. I mentioned this in January; we were going to see the VBP impact the Core Lab business. We originally forecasted in April; it got delayed and pushed out to Q3. If you look at our growth rate in the first half of this year, it was over 7%. Some of the favorability that we saw in the business, and we rolled into higher guidance as a result of a little bit of that delay here. So, we'll go through the VBP transition. We've done it in a lot of our businesses. There's the pricing impact going forward; there are some transition-related items that happen, whether you're making pricing accommodations for the inventory that's already in the channel, etc. So I still feel very good about the business we've got there. I feel good about China continuing to be a very attractive market for us. We'll just work our way through this. But to your question on the quarter, yes, we feel good about the quarter. I wouldn't have kept the guidance if we didn't. We've got great momentum in the business. We're meeting with the management team yesterday. They're very committed and feel good about the momentum. So, I think we'll have a very good year with a strong close in Q4.

Robert, I wanted to ask about Libre and just big picture. You had 21% growth in Libre in Q3, which was good, but your competitors obviously having some issues. So, it would be helpful to hear your view of the state of the CGM market, talk about your confidence in the overall CGM market outlook and your goal of $10 billion in sales by 2028, and maybe just give us some color on what you're seeing so far with Lingo?

Yes, Larry. I have always been very optimistic about this market and view it differently than the general med tech markets. This represents a significant market opportunity for us. We grew by 21%, with the U.S. increasing by 26%, and we feel confident about the market's fundamentals, which remain strong. Currently, there are about 10 million CGM users worldwide, while there are over 100 million diabetics in developed countries and more than half a billion globally. This indicates that the market has substantial potential. As long as we maintain our technological edge, scale effectively, and manage costs, these three factors will guide our strategy moving forward. I don't expect major shifts in a market valued between $12 billion and $13 billion, growing at 15%. While there will certainly be more players and competition, we are confident in our position and the strategy we've developed. We've thought about this not just for the next year; we've been thinking about what it’s going to look like a decade from now and how we've built our portfolio and our position. So, I feel very positive about this market. Libre will be a $6 billion-plus product. It will grow 20% this year. When we put out the $10 billion target, Larry, we talked about a compound annual growth rate of 15%. So, we're ahead of that, and we're going to work hard to ensure that we stay ahead of that, and we continue to gain share. We'll add $1 billion of revenue this year, and add a million users. You have opportunities in type 1s on the pump side, on the connectivity side with pens. You've got opportunities with type 2s and basal. I mean, I think there's still so much opportunity in those markets. So, I feel very good about it. And as we've talked about Libre, we always viewed it as a platform. You mentioned Lingo; we’re glad to see that launch. Just as a reminder, we're really focusing on a very different population with this technology, right? We're targeting people that don't have diabetes. So it's a little bit of a different kind of business model, sale model. So far, we've seen really good early interest. Great feedback from the users so far. The app, the data, the website, the Hello Lingo website, the delivery, the whole nonprescription stuff. That's working out very well. The two-sensor pack is the most popular version right now. And I think that's a good way to start. I was looking at some of the initial reorder rates that came in last night, and I was surprised at much higher reorder rates than what we saw in the U.K., and I thought that the team did a really good job adapting some of the learnings from the U.K. into that. Overall, over time, this will be a great opportunity to add to that $10 billion target as we build this user base out.

Congrats on a nice quarter. Robert, I wanted to ask, at this time of the year, we're all looking for fourth quarter, but we're also turning our focus to 2025. I see The Street sitting at about 7% on the top line, 10% on the bottom line. I wanted to see if you had any comments about how you feel about that or your view into next year, realizing it's still on the early side?

Yes, it's a little early to give real specific guidance there, Robbie. But similar to you, we're also looking at '25; we've been looking at '25 as part of our strategic planning process here too. This is the time of the season, right? I'd say, yes, similar to last year, I look at the analyst estimates going into 2025, high single-digit growth and 10% EPS. Like I said last year, that feels like a very reasonable starting point. The difference going into 2025 versus when we were coming into 2024 is that we don't have what I would call the COVID cloud at least for a couple of the quarters ahead of us. That kind of masked a little bit of our underlying base EPS kind of business growth. I'm looking forward, in a way, not having that be a comp issue. So, I am confident in the high single-digit, 10% EPS outlook. Yes, that sounds reasonable. But if I take a step back, we are a company that's $40 billion in revenue, and we've been driving high single to high single-digit top line growth. That's pretty unique for us. One of the reasons that is a combination of two factors. First of all, the markets that we're participating in are very attractive, whether it's their size, their growth outlook, whether their alignment to favorable demographic trends, our positions, and there are a couple of different types of markets that we're in. Some markets are slightly lower in growth, but we've got tremendous scale and positions in them, and that scale provides great financial stability to our business. Other markets are high-growth markets where our goal is to enter and capture share, whether it's TAVR or LAA or other markets we're building with first-of-their-kind products, whether it's Lingo that we talked about, TBI testing, leadless, biosimilars in emerging markets. It's a nice collection of markets that really allow us to set these high single-digit target growth rates. Then the other part is pipeline, which is fundamental. I think it's been highly productive. Recently launched products this year are going to contribute about $1 billion of revenue this year, and that's double what it was in 2023. I expect that to be the case again next year, right? It starts at the top line. We've made a lot of effort in expanding gross margin and delivering; that was a topic we talked about last year. I think our investments have been in areas that are high-growth, and we've still been able to generate over $1 billion of spending leverage over the last five years. As we go down the P&L, I think that's another opportunity as we look into 2025, our discipline in terms of how we make the investments and our focus on gross margin. The balance sheet is in great shape, so we have all the elements to go into 2025 with great momentum, markets, positions, and financial flexibility.

Robert, maybe if I could push a little bit more on the investment spending and help us think a little about the shape of the P&L on a go-forward basis. During the quarter, you did accelerate R&D and SG&A spending on a year-over-year growth basis. Maybe you could help us think through where some of those incremental dollars are going? How should we think about the trajectory of operating expenses in the context of gross margin expansion, and then with the announced share repurchase program, should we think about that as an effort to keep the share count flat or a view that this is an opportunity to return incremental capital to shareholders and reduce the share count?

Sure. Yes, I guess, on the investment side, if you look at what we've done with our expenses here, they've gone from 37% in 2019 down to about 34% this year. That’s where the $1 billion of spending leverage comes. If you look at our five-year CAGR, it's high single digits, and our operating expense CAGR is about 4%. It's not a cookie-cutter approach; we look at the businesses and their opportunities. R&D investments tend to be a little longer-term, so once you commit to R&D programs, they tend to be a little more long-term than making some SG&A decisions, where you could toggle up and down a little easier. You could see where the growth is coming from, and that's being supported by those investments. Obviously, our med tech portfolio has been getting investments, including EP, structural heart, diabetes care, and neuromodulation. All of the businesses come with a strategic plan, and we assess where it makes more sense to put investments in the field with sales force and clinical people, or make the investment in clinical trials. We have a good process about making investments knowing that R&D investments typically take longer than SG&A. We’ve been making investments in diagnostics, and soon we'll probably be talking about a new system that we’re going to be launching for a new segment of the diagnostic industry. That's a longer-term program that’s been a couple of years. We've been able to achieve our operating margin profile pre-pandemic, which I'm not sure a lot of companies can say. We haven’t driven our operating margin by expenses; we've been driving our top line effectively, too. Regarding share count and buybacks, we have a balanced approach about how we allocate capital. I've talked about the importance of the dividend and supporting that growing dividend, and we will continue to do that. Buybacks are part of our balanced capital allocation strategy. We announced a new $7 billion buyback program. We deployed around $8 billion towards buybacks over the last five years, and we thought it was a good time to put that in place. Q3, we did about $750 million. Given our strong performance outlook, we saw a disconnect between what we were doing in our PE ratio, and I still do. It makes sense to buy shares as part of our capital allocation strategy, providing an opportunity to correct that disconnect. If it reduces the share count, yes, then it will reduce the share count. However, we're not trying to drive our EPS through a lower share count; we’re driving our EPS through top line growth.

Robert, I wanted to ask about just structural heart markets. The TAVR market slowing down or decelerating, there's been some investor concerns about U.S. provider capacity and whether there's a bottleneck. I think Abbott is uniquely positioned because you do have offerings in transcatheter aortic, mitral, and tricuspid solutions, and left atrial appendage occlusion. We've got interventional heart failure interventions coming down the pike. Are you seeing any capacity constraints limiting growth? You had a strong structural heart quarter in 3Q? Or are you concerned about that? Is that on the horizon, or should we just think that hospitals are seeing this growth opportunity as well and building out capacity, adding cath labs, hybrid ORs, etc.? I'd love to get your view on the current situation and whether you're worried in the next 12, 24, or 36 months that we could run into a bottleneck in the U.S.?

Not seeing the bottleneck, not forecasting bottleneck, not concerned about capacity here. This is a growing area not only for those developing the technologies but also for healthcare systems delivering them. I've visited some large centers and small centers over the quarter. There are always challenges, but I put it as a challenge, not a specific technology limitation. I'm not hearing that the capacity is a limiting factor. If it starts to become one, I think history shows that investments will be made to accommodate demand. This has happened in structural heart over the last decade; investments will be made to meet that demand. I'm very optimistic about the prospects in our structural heart portfolio. I think our team has hit its stride right now. We've got new management, new products launching, and I'm very excited about what the teams are developing across the entire portfolio. We're one of the few companies that can see the full spectrum from surgical structural interventions to appendages and new categories like mitral, tricuspid, and aortic repair and replacement. We're really excited about it.

I had one on NEC infant formula. The FDA, CDC and NIH have put out a joint statement. It’s a pretty strong statement noting that there's perhaps no causative relationship between infant formula and NEC. So, I guess my question is, how does this change Abbott's position in these lawsuits? Does it matter? What else can we expect from the government? Could we expect more announcements similar to this? What could Abbott do to perhaps ring-fence liabilities related to these cases?

Yes, sure. As it relates to our position, it's great to see this statement, and I agree, it’s a strong statement. It doesn't change what I have been saying, which is that these products are medically necessary, they are considered the standard of care, and they are valuable tools for neonatologists in their decisions about how to feed premature infants. The labels, which are a component in all of this, have been reviewed by the regulators and have never called for a warning. This is a consensus statement made by these three prominent health agencies and regulators in the U.S. They're endorsing an expert panel with dozens of researchers that were convened by the Secretary of HHS, who issued a document looking at thousands of publications. In that joint statement, the agencies reiterated the importance of preterm formula as the standard of care, and they also clearly state there's no conclusive evidence that the formula causes NEC. This is one of a handful of times where the three significant regulators in the U.S. have come together and put out a joint statement. We saw that during the COVID pandemic and I believe before that during the HIV pandemic. I think the statement says a lot. At this point, the judge in our trial has not allowed the joint statement or the underlying report to be entered into evidence. I don't know the reasons there, but I believe that the joint statement, the report, and the expert testimony are important pieces of information for a jury. Regarding liability and next steps, I've thought about this quite a bit, and as healthcare innovators, we develop products based on problems we see. We run clinical trials, gather data, and review this data with the regulators to ensure the products are safe and effective. Regulators then determine the labeling. That's the process I want to be in—where products are evaluated through a well-established regulatory process by expert regulators. If that process is disregarded, adding indefinite liability is a concern for any company in the market. This issue is not present in other countries, and those products are available. We must prioritize preterm babies, those 370,000 every year that rely on these products, over those distorting and abusing this tort system for financial gains. I'm hoping it doesn’t come to that, but I've been clear that we stand behind the products, and if the process is disregarded, we’ll review how to manage additional liabilities. There’s a playbook for these cases that takes years—at least a decade—to litigate. I don’t intend to follow that playbook, and I'm focused on resolving this faster. Yes, there are ways to resolve this and conversations are taking place at all levels to express our concerns.

Congratulations on the earlier-than-expected completion of enrollment in your PFA catheter clinical trial. But I would love to get your view on the state of the electrophysiology market. What you're seeing in terms of PFA uptake and how that is impacting your mapping and navigation systems?

Sure, Joanne. This quarter was a continuation of the trend we've seen since the arrival of PFA. We're growing a little bit lower than the market, but generally, prior to PFA, we were actually growing faster now. There are a couple of factors driving this. I think you mentioned cardiac mapping, right? Currently, we're seeing over 90% of cases, at least in the U.S., being mapped. Before, we were mapping between 25% and 30% of RF cases, but now we're at 50% or more. This increase in volume is due to improvements in treatment guidelines and new technologies that are helping identify AFib patients. PFA is primarily being used for de novo procedures. Among all ablation procedures, about one-third are related to VT ablation and SVT ablation redos, where RF plays an essential role. We've initiated our focal FLEX trial to toggle between PFA and RF. Our team has successfully leveraged our open mapping system, using it as design input for our R&D program. This open system is allowing us to engage in more cases and collaborate with electrophysiologists. We're committed to bringing PFA to market and have completed the enrollment as you noted.

I'd like a follow-up on Libre in the diabetes business and some topics that have come up recently around the market and competition. First, can you comment on your share trends, in particular, in the DME channel? What are you doing differently? Any feedback on Lingo? Also, what’s the timing and plan for Rio, and how are you thinking about potential reimbursement for that non-insulin intensive type 2 community? Lastly, regarding gross margin, how do you see the expansion into OTC Libre fitting into your '24 gross margin plans and your plans for expansion going forward as you scale this business?

You have lined up a lot there, Matt; I'm going to ensure that Mike here helps me stay with all the questions that you laid out. I think regarding Libre and competitiveness, the team has done a really good job in the U.S., impacting endo offices and primary care channels. We grew 26% in the U.S. this quarter despite some temporary supply challenges with Libre 3. We haven't fully unleashed Libre 3 yet, and a lot of the share gains are coming from Libre 2. But that’s behind us now. We invested in a new manufacturing line, and we have a new facility coming up towards the end of the year which will be set for next year. Our position in the U.S. and globally is strengthened by our product portfolio and cost position. Pricing adjustments are needed as the market expands to basal and oral medications. We will have to make some adjustments to obtain reimbursement, and we need our cost structure aligned. Yes, we will begin seeing some pricing adjustments to facilitate reimbursement, but we aim to do that without eroding gross margins. Our gross margins have grown with Libre, as our manufacturing scale ramps up, which is aided by automation. I feel confident that we'll have strong growth in competitive positioning, technology, scale, costs, and take advantage of the mass market opportunity. Regarding Rio, our initial focus is on Lingo. Rio is another arrow in our quiver that we can pull out if we need to ahead of schedule. The focus is on Lingo right now, and we have the chance to build a new segment of biowearables for consumers.

Congrats on a really good quarter here. I just wanted to follow up on the structural heart component of the business. Robert, you talked about this earlier in response to Josh's question. But just digging a little deeper, as we look into 2025, you've got potential indication expansion for LAA closure, but you do have some competitive data coming on the tricuspid side of things at TCP on whether it shows a mortality benefit. So just curious about how you think about those two markets specifically and sustainable growth in those franchises. There are some puts and takes there, so I just wanted to get your sense of how to think about that as we head into next year?

Sure. To remind me again, Danielle, it was tricuspid and left atrial appendage closure, right? These are great areas for investment. As I said before, the Amulet team is hitting its stride—great growth globally, 25%, and over 40% in the U.S. We’re making investments, and our registry data shows good results with a 95% closure rate achievable and sustained after 45 days. Regarding the tricuspid side, there’s going to be a lot of data coming in the next 12 to 24 months. With a new category like this, you need to make the investments. Companies are developing technologies, and you'll see clinical readouts and clinical data supporting the use of these technologies. I expect to see more investment on our part, and TriClip plays a key role here. The NCD was opened, which is an opportunity for us in 2025. Overall, I believe there’s a great opportunity with our team and structure, and I am confident about the entire structural heart segment. I’m proud of the strong performance we’ve seen overall in the first three quarters, on track to finish the year at the high end of our initial guidance from January. Sales growth remains robust, gross margin continues to expand, and EPS growth is accelerating as we lap COVID comparisons. Our pipeline is richer than ever. I'm optimistic heading into next year, and I’ll wrap up by thanking all of you for joining us.

Thank you, operator, and thank you all for your questions. This concludes Abbott's conference call. A webcast replay of this call will be available after 11 a.m. Central Time today on Abbott's Investor Relations website at abbottinvestor.com. Thank you for joining us today.