Jose Almeida: I didn’t comment on the details, and we usually don’t comment on anything that is with the FDA on behalf of the FDA. We can tell you that we answer all their questions. There’s no other questions to be answered. All the documentation was submitted. So as always, is at their side now to make a final decision on this. But as I said before and I said this about a month or so ago. I feel cautiously optimistic because there is nothing else for us to do. We answer all the questions. So there will be – if that happened in ‘24 will be a great thing. Nevertheless, we continue to gain market share for Sigma Spectrum. As I said before, we just got an award a best-in-class for that pump, and we’re very happy, and we continue to be very busy quoting new accounts and competitive accounts, which we are actually winning with that pump.
Unidentified Analyst: Got it. And my follow-up is just on your – what you said about expectations for the 2 segments in ‘24. So Baxter Ex-Reno, you expect 3% to 4% growth. Is that the right way to look at – is that the right way to look at it longer term? And similarly, in the renal business itself, you’re expecting 1% to 2% decline this year. But once you adjust for the exits in China VVP, does renal normalized to kind of low single-digit growth longer term? Thanks again for the question.
Clare Trachtman: Yes. So Lei, I’m going to go back to something that Joel mentioned earlier. We plan to have a Capital Markets Day later this year, where we will discuss our long-term expectations for the business. And – but I think that both Joe and Joel have said that, while we’re growing 3% to 4% through the introduction of new products, continued market expansion, our goal is to grow ahead of our weighted average market growth rate. So we do want to grow in advance of that. And so we’ll be unveiling kind of those longer term. But no, I would say our goal is to accelerate growth off of that. With respect to Kidney Care, again, yes, we made $150 million of exits to that business, all aligned with our goal of enhancing profitability for that business post separation.
So I think that what we want to ensure is that we’re setting this business up for success as a stand-alone entity. We also have the value-based procurement. There might be some follow-on to that in 2025. But I think the key is that the fundamentals for this business are improving. We’re seeing solid patient growth. We’re seeing a rebound in our Acute Therapies business. So I believe this business can accelerate off the levels – that will grow at the levels that we’re seeing once we make these adjustments.
Joel Grade: Yes. And I would just – the question you asked, the – we did again make purposeful decisions around exiting markets, exiting products. And so if you actually add that back from that $150 million we referred to earlier, I think, yes, you could find yourself in a place where there’s a – the growth is actually in the low single digits.
Operator: Matt Taylor of Jefferies is on the line with a question. Please state your question.
Matt Taylor: Hi, thanks for the question. I know you noticed noted some progress on pricing. I was wondering if you could comment on that in your expectations for pricing in ‘24. And any updates on some of those bigger contracts that you’ve talked about in the past and your opportunities to reprice solutions, dialysis, nutrition, et cetera.
Joel Grade: Yes. Sure. So we did make progress in pricing in 2023. And some of that was – were temporary in nature in the sense that we had some adds to pricing that will again fall off at the end of the year here. But we do have part of our growth and our margin expansion in 2024, that is continued progress in the areas of pricing. And I think one of the things that we’ve talked about is – just as a reminder, some of the contracts with the GPOs that we’ve signed, we’ve made continued progress on them. That actually doesn’t kick in until 2025. So just to remind you of that, that’s not part of what we’re talking about in terms of progress. But again, the team has made solid progress in terms of continuing to take pricing in 2024.
And the other thing I would say that we’ve done a good job of – are going to continue to do an even better job of is to give ourselves the opportunities to actually have indexes within our pricing that allow us more flexibility to pass along cost that are coming into our world that we have historically struggled to pass along to our customers. Again, we’re making progress in that area as well. So generally speaking, as Clare talked about, our expansion margins really is focused on some of the operational work that we’re doing, but also, again, our pricing progress continues in 2024, and we look to accelerate that further in 2025 and beyond.
Matt Taylor: So I just ask a follow-up. I mean when can we hear more about the bigger contracts? Are you going to talk about that throughout the year? And can you comment at all on the kind of opportunities you have with some of those contracts, what’s the order of magnitude of pricing you could get?
Jose Almeida: We are making great progress. We’re in the middle of doing it. Once these contracts are signed, the next steps for us to secure the IDNs underneath them. And back to do well on that. We are well poised to take that action. We are feeling quite comfortable where we are today in terms of signing these agreements. We’re not going to tell exactly the status of – where we are signing them for competitive reasons, neither the volume of dollars. So you need to think about this as value. Value is dropping profit to the bottom line is value. That will be achieved with pricing and volume. Volume is important to us, the size of our plants. So we’re getting a combination of both is the important thing for us. So our focus price is always important because the amount of headwind that we had in 2022, of course.
So we are considering that, but also expansion of market share is important to us as well because we have capacity. We’ve been serving the market very well. So think about our objective in 2024 into 2025 is to continue to add value and significant accretion potentially to the bottom line by getting those contracts signed, but we are in good position.
Joel Grade: And we’re not going to give specific details on the pricing or volume, as Joe referenced. So just think about that as guidance that we ultimately give on margins and volume growth will be inclusive of the progress we’ll make with those contracts.
Matt Taylor:
Thanks, Joe. Thanks, Joel.:
Joel Grade:
Thank you:
Operator: Danielle Antalffy of UBS is on the line with a question. Please state your question.
Danielle Antalffy: Thanks, everyone. Good morning. And just a quick question on sort of what the longer-term focus is post Kidney Care? I assume we’ll get some more color here once we have the pre-spin Analyst Day. But just at a high level, Joe and Joel, curious about where you see the most opportunities to improve whether organically or inorganically from an R&D perspective? And just longer term, i.e. over the next few years, where you think Baxter will be most focused and investing behind? Thanks so much.
Jose Almeida: So Danielle, we’re thinking about the strategy and the overarching imperative of this strategy is to advance and significantly improve the intrinsic value of the company. And we’re going to do that organically and eventually inorganically as well with some tuck-ins and strategic acquisitions that will supplement some of our business. But – so in the organic side to drive that, that intrinsic value multiplier is innovation, acceleration of innovation, expansion of our commercial footprint in areas that we currently don’t participate well, as well as doubling down in operations excellence in all of our – in all aspects of Baxter from the plants all the way to our back office. So creating value in all parts of the company.
So we can take some of that money, reinvest modestly in research and development and continue to accelerate the innovation. And the innovation, all of this is going to be done with a significant amount of importance to capital allocation, meaning where money goes inside of the company, how much is share buyback. So this is a post spin when we are looking at a different debt structure and a different company as that. So think about our strategy to accelerate innovation, accelerate penetration in commercial areas. We’re not like alternate sites of care, ASCs. Those are the drivers of our organic growth, and that should drive a request for a multiplier on our intrinsic value as a company.
Clare Trachtman: And Danielle, just to follow on and specific to kind of Kidney Care. What I would say is within Kidney Care, and obviously, Chris Toth will elaborate more on this. But they’re going to focus on continuing to increase PD penetration globally. Really focusing on how do they enhance this digitally as well and what digital capabilities are out there to really help both clinicians and patients advance that therapy. In addition, within the acute therapies business, I think they’ll continue to build upon the continued renal replacement therapy and broaden into more multi-organ support therapies as well. So I think that they have a strategy there that they’ll continue to build upon and execute as a stand-alone entity.
Joel Grade: Yes. And I just think what Joe said and what Clare has talked about is just reinforcement of the strategic rationale for the separation that then allows us and Kidney, frankly, to both focus their capital allocation on those areas that really accelerate their growth. And as Joe said, I see that one start debt is at a level that we’ve targeted to actually reinforce this idea that we’re going to have both organic and inorganic growth opportunities ahead of us.
Danielle Antalffy: Thank you so much.
Operator: Ladies and gentlemen, this concludes today’s conference call with Baxter International. Thank you for participating.
