Greetings. Welcome to Alcon's Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Dan Cravens, Vice President and Global Head, Investor Relations. Mr. Cravens, you may now begin. Welcome to Alcon's Fourth Quarter 2023 Earnings Conference Call. Today we issued a press release, interim financial report, and annual report, and posted a supplemental slide presentation on our website to enhance today's call. You can find all these documents in the investor relations section of our website at investor.alcon.com. Joining me on today's call are David Endicott, our Chief Executive Officer, and Tim Stonesifer, our Chief Financial Officer. Our press release, presentation, and discussion will include forward-looking statements. We expressly disclaim any obligation to update forward-looking statements as a result of new information or future developments, except as required by law. Our actual results may differ materially from those expressed or implied in our forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements. Important factors that could cause our actual results to differ materially from those in our forward-looking statements are included in Alcon's Form 20-F and our earnings press release and interim financial report on file with the SEC and available on the SEC's website. Non-IFRS financial measures used by the company may be calculated differently from and therefore may not be comparable to similar measures used at other companies. These non-IFRS measures should be considered along with but not as alternatives to the operating performance measures as prescribed per IFRS. Please see a reconciliation between our non-IFRS measures with directly comparable measures presented in accordance with IFRS and our public filings. For discussion purposes, our comments on growth are expressed in constant currency. In a moment, David will begin by recapping highlights from the fourth quarter. After his remarks, Tim will discuss our performance and outlook for 2024. David will wrap up and we'll open the call for Q&A. With that, I will now turn the call over to our CEO, David Endicott. Thanks, Dan. Good morning and welcome to Alcon's Fourth Quarter 2023 Earnings Call. As I reflect on 2023, I'm extremely proud of what the team has accomplished. In a year of continued supply challenges, foreign exchange headwinds, high inflation, persistent competition, and geopolitical uncertainty, our team achieved some remarkable things. We outgrew our markets in almost every category with sales of $9.4 billion, double-digit sales growth of 10%. This was driven by our broad portfolio of innovative products, solid commercial execution, and robust markets. We grew quarterly earnings by 33% to $2.74 per share. We expanded core operating margin by 150 basis points to 19.7%, and when adjusting for foreign exchange, we grew core operating margin by 280 basis points to 21%. We generated more than $700 million of free cash flow, and we advanced our innovation and commercial agenda, particularly in our vision care franchise with the launch of TOTAL 30 for astigmatism and multifocal. We also expanded our ocular health business with the integration of ROCKLATAN and RHOPRESSA, and concluded Phase III trials for AR-15512, our dry eye pharmaceutical candidate. Now, based on these results, it's clear that our portfolio of products is winning. Our markets are growing and remain healthy. We're demonstrating our ability to execute commercially, and we're steadily advancing our pipeline. As I look forward into 2024, I'm excited about our product pipeline and our commercial agenda. Let me start with surgical. The most exciting near-term product launch is UNITY VCS, our next-generation phaco- vit device. This machine delivers unprecedented surgical performance that we expect will drive upgrades and capture market share. UNITY is a dual console with best-in-class phaco and vitreoretinal capabilities. This combination reduces the equipment footprint in the OR and streamlines the procedural setup and intraoperative workflows. In addition, it was designed to create near-physiological conditions during surgery, which is expected to improve performance and efficiency without compromising safety. Additionally, UNITY VCS represents an important opportunity to secure the next generation of consumables. As a reminder, consumables are a significant recurring revenue stream for us and contribute approximately half of our surgical revenue. We submitted for FDA authorization at the end of 2023 and expect approval in the coming months, with international markets to follow in early 2025. As we look to the anticipated rollout, we plan to gradually introduce VCS to the market in late 2024 and expect more meaningful revenue contributions starting in 2025. We're also working to increase surgical efficiency in the clinic through better diagnostics with the upcoming launch of our next-generation diagnostics device, UNITY DX. UNITY DX is a first-of-its-kind whole-eye analyzer that combines six separate devices into a single machine to deliver best-in-class performance at a lower price. This reduces the overall footprint in the clinic and reduces preoperative time. All of this is surrounded by the ability to seamlessly move data over to the cloud from the clinic into the OR and then back into the clinic postoperatively. Importantly, this technology will also leverage the data captured to improve outcomes through AI-driven algorithms. We're targeting to pilot UNITY DX and select international markets in the back half of 2024, with broader international and U.S. commercialization in 2025. We'll position UNITY DX as a premium diagnostic device that will complement our current offering, the ARGOS Biometer. We're very pleased with the performance of ARGOS, which continues to see very strong adoption. Now I'll turn to implantables, where we're combining best-in-class materials, delivery, and optics to drive premium penetration and share. In the fourth quarter, global AT-IOL penetration was up 170 basis points year-over-year, driven by international markets, notably China. In the U.S., AT-IOL penetration has remained stable in the high teens versus prior year, however it improved 50 basis points sequentially from the third quarter, and we continue to expect penetration to return to historical growth rates in the future. Based on our willingness to pay data, we continue to believe that there's significant headroom for penetration going forward. Turning to market share, I continue to be pleased by our leadership in IOLs. Globally, we are the market leader. Alcon has an enviable position with approximately one-third of the monofocal category and approximately 1/2 of the PC-IOL category as of the fourth quarter. Indeed, in the U.S., our PC-IOL share remains stable above 80%. I'm particularly excited about our opportunity to grow share in international markets. For example, in China, where we have historically been underindexed, our recent success in the national volume-based procurement tender will provide a great platform to expand our footprint in this large and growing market. Following the award, Alcon will hold the preferred position in the trifocal, extended depth of focus, and bifocal categories, as well as their toric modalities across each of those categories in China. With this tender, we expect to gradually increase our market share in the advanced technology category starting in the second half of the year. Now I'll turn to vision care, where our historical investments have created the strongest pipeline we've had in years. Starting with contact lenses, since Spin, we've launched a wave of new products into fast-growing markets. These include the daily SiHy category, as well as areas where we have opportunity to capture share, such as torics and reusables. Based on fourth quarter reported sales, it's clear that our strategic investments are working, and we're now one of the fastest-growing companies in contact lenses. In 2023, we launched two new specialty lenses, TOTAL30 for astigmatism and for multifocal. These launches expand our specialty portfolio, which also includes PRECISION1 Toric and DAILIES TOTAL1 Toric and its multifocal. I'm particularly pleased by the performance of our toric lenses. These lenses leverage our proven precision balance technology. This patented design features defined anchor points that deliver exceptional stability and a smooth fitting process. Additionally, with an expanded portfolio of specialty lenses, we're seeing an accelerated uptake of the spherical modalities. Now shifting to ocular health, as I mentioned earlier, we recently announced positive top-line results from Phase III trials for AR-15512, a novel dry eye candidate, which we estimate could have peak sales of between $250 million and $400 million. We're excited by 512 as it has the potential to address the limitations of current dry eye medications and provide dry eye sufferers with a new and effective therapy. While dry eye is one of the most common ocular disorders impacting approximately 38 million people in the U.S., less than 2 million patients are treated with a prescription product. The primary endpoint was met in both Phase III studies, supporting a path to seek full indication for the treatment of signs and symptoms of dry eye. The 512 product is effective as early as day one and persistent to day 90, which is an important differentiator versus other products currently in the market. As for timing, we intend to file the new drug application around the middle of 2024 and anticipate bringing the medication to the U.S. market around the middle of 2025. From there, we expect more meaningful revenue contribution beginning in 2026. 512 is the first product candidate in our emerging pharmaceutical portfolio, which also includes the glaucoma assets, ROCKLATAN and RHOPRESSA. I continue to be very pleased with the performance of these medications. For the full year 2023, total prescription growth was in the mid-single digits, ahead of the broader glaucoma market. Strategically, we will continue to focus on expanding its market access. Turning to our over-the-counter portfolio, our SYSTANE brand continues to perform exceptionally well with another year of double-digit growth. We continue to see strong demand for our multidose preservative-free formulations, which are helping expand the U.S. preservative-free category. And finally, we're pleased with the recovery of our contact lens care business. We're now in a situation of unconstrained supply and are happy to be able to restock this product in the U.S. and internationally. While contact lens care market is broadly flat, we do expect to see year-over-year growth in this category due to the supply chain challenges we faced in 2023. Now let me provide an update on our end markets. In surgical, we estimate that global cataract procedural volume growth was low single digits in the fourth quarter versus prior year. In contact lenses, we estimate that retail market value was up mid- to high-single digits. Similar to last quarter, we saw steady wearer trade-up and meaningful contribution from price. Now with that, I'll turn it over to Tim, who will take you through our financial results and provide more color on our outlook. Thanks, David. We're pleased to report fourth quarter sales of $2.3 billion, up 10% versus prior year, including favorable pricing. Our fourth quarter U.S. dollar sales growth included approximately 200 basis points of pressure from foreign currency. In our surgical franchise, revenue was up 8% year-over-year to $1.4 billion. Implantable sales were $438 million in the quarter, up 5% year-over-year, mainly driven by demand for our advanced technology intraocular lenses, including Vivity, PanOptix, and our monofocal torics in international markets. In consumables, our fourth quarter sales were up 9% to $688 million. In the quarter, we saw strong demand for cataract and Vit-Ret consumables, particularly in international markets. In equipment, sales of $226 million were up 14% year-over-year. Sales were driven by double-digit growth in international markets for cataract and Vit-Ret equipment due to the ongoing upgrade cycle. We also saw higher service revenues in the quarter. While we expect the international equipment upgrade cycle to continue into 2024, given the strong sales in 2023 and the future UNITY phaco launch, we expect equipment sales to be broadly in line with 2023. Turning to vision care, fourth quarter sales of $980 million were up 13%. Contact lens sales were up 10% to $579 million in the quarter. Our innovation, including sphere and toric product launches, continues to win in the market. This growth was partially offset by declines in our legacy lens brands. Additionally, we saw strong contribution from price in the quarter. In ocular health, fourth quarter sales of $401 million were up 17% year-over-year. This growth was driven by our portfolio of eyedrops, price increases, and recovery from supply chain challenges in contact lens care. Approximately four points of ocular health growth in the quarter was from products acquired in 2022. Now moving down the income statement. Fourth quarter core gross margin was 62.1%, up 120 basis points. This improvement was driven by higher sales, price, and manufacturing efficiencies from higher volumes and process improvements. This growth was partially offset by inflationary pressures. Core operating margin was 18.9%, up 360 basis points year-over-year, as we continue to see operating leverage from SG&A. Fourth quarter interest expense was $47 million, compared to $40 million last year, driven by higher debt following the funding of the Aerie acquisition and less favorable interest rates. The fourth quarter average core tax rate was 13.8%, compared to 30.6% last year. For the full year, the average core tax rate was 17.2%, compared to 18.6% in 2022. The current year benefited from the mix of pre-tax income across jurisdictions and discrete tax benefits. Core diluted earnings were $0.70 per share in the quarter, up 78% from last year. Now before I touch on our outlook for 2024, I'll discuss a few cash flow and other related items. Free cash flow for 2023 was $730 million, compared to $581 million in 2022. The improvement versus 2022 reflects an increase in cash flows from operations, partially offset by higher capital expenditures. For 2024, we expect a meaningful step up in free cash flow versus 2023. Finally, in 2023, we concluded our transformation program, on time and on budget. I'm proud of how well the team has executed this program. We exceeded our savings target, which has enabled us to invest in R&D, grow the top line, and expand margins through operating leverage. Now moving to the 2024 guidance. Our current outlook assumes that markets will grow in line with historical averages of mid-single digits and that exchange rates, as of the end of January, hold through year-end. Accordingly, we expect 2024 net sales of $9.9 billion-$10.1 billion, which corresponds to 6%-8% constant currency sales growth. This growth will be underpinned by our broad portfolio products, particularly in our vision care franchise. This growth is offset by approximately 60 basis points of foreign exchange impact. Moving to R&D expenses, the investments we've made are performing well, and we have one of the strongest pipelines in Alcon's history. Accordingly, we will continue to invest behind innovation and expect core R&D expense to be at the high end of our range of 7%-9% of sales. Moving to profitability, we continue to expect our core operating margin to expand through operating leverage. Despite continued currency headwinds into 2024, we currently forecast core operating margin of between 20.5% and 21.5%. This forecast reflects approximately 30 basis points of foreign exchange headwinds versus prior year. In terms of phasing, we expect both the first and second quarters to be pressured by approximately one percentage point, with recovery in the back half of the year. As we've said in the past, this is due to higher-cost inventory that was manufactured in 2023 and will be sold in 2024. Looking beyond 2024, we remain confident in our ability to achieve the goals we laid out at our most recent Capital Markets Day. Moving down the income statement, we expect interest and other financial expense to be between $190 million and $210 million. As we stated in the past, we expect our tax rate to increase due to the implementation of Pillar Two, with a core effective rate of approximately 20%. Based on all these factors, we project core diluted earnings in the range of $3-$3.10 per share, which corresponds to 13%-16% constant currency growth over 2023. This growth is offset by approximately $0.07 of foreign exchange headwind versus prior year. I'm also pleased to report that our board of directors is proposing an increase in our dividend to CHF 0.24 per share. This is in line with our payout policy of 10% of the previous year's core net income pending shareholder approval. Shareholders will vote on this proposal at our upcoming annual general meeting in May. Finally, I want to thank the entire Alcon team for another great year. With that, I'll turn it back over to David. Thanks, Tim. To conclude my remarks, I want to thank the team once again for a strong 2023. These results demonstrate the durability of our markets, the breadth of our growth drivers, and the expertise of our team. As we look to the future, we have a lot of momentum underpinned by a robust pipeline of products. We continue to expand our portfolio into high growth, high margin, and durable opportunities that will drive above-market sales, deliver operating leverage, and long-term shareholder value. Now with that, let's open up the line for Q&A. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question today, please press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. So that we may address questions from as many participants as possible, we ask you to please limit yourself to one question and one follow-up. One moment, please, while we pull for questions. Thank you. Thank you. And our first question today will be coming from the line of Veronika Dubajova with Citi. Please proceed with your questions. Hey, guys. Good morning. And thank you for taking my questions. I I have two, please. The first one is just looking at the IOL performance, and in particular in the U.S. David, there's been a lot of debate in the market about competitive pressures, new product launches. And so I'd love to understand from your guys' perspective what you are seeing in your U.S. premium IOL business, both kind of backwards-looking as you look at the fourth quarter, and also what your expectations are heading into 2024. Obviously, we have a number of new product launches coming up from some of your competitors and kind of what your assumptions are all around that. And I guess related to that, my follow-up is on the same topic, but slightly forward-looking as well. You mentioned in your prepared remarks that you're excited about the pipeline, including some new innovations in IOL. Can you maybe talk to what those look like and when you expect them to be commercial, and why they matter? Thanks so much. Yeah. Thanks, Veronika. Just a couple of things. On IOLs, look, we had strong growth internationally and a solid U.S. performance. The U.S. is really wrapping around competitive impacts at this point. So penetration in the U.S. grew about 10 basis points over prior year—sorry, 10 basis points over prior year, and about 50 basis points sequentially. So in terms of movement of penetration, we feel like it's normalizing. We think kind of long-term, this 50 basis points that we've talked about in the past is a good answer. Look, we have maintained our share in the U.S. on AT- IOLs for the PC category, but we've lost a little bit in toric. And again, I think that's to be expected. What we see right now, though, is that that sequentially seems to be moderating, and we're kind of normalizing around where we've been. I think in the long term, we feel pretty good about the U.S., and kind of as expected, I would say. The bigger story, though, is the global AT-IOL penetration. That was up 170 basis points and principally driven by China. We kind of look forward on this and say, "Where is the opportunity for share? Where is the opportunity for penetration growth?" Certainly, there's some in the U.S., but it's likely to be moderate. Internationally, we see China and the VBP there and that win as a very significant opportunity for us because we have a single-digit share in China. We've been under-indexed there for quite some time. We chose not to play in the last VBP. In this case, we have won the VBP kind of against most of the categories, I think seven of the eight. So Vivity, PanOptix, their torics, our whole line basically is going to be in play starting middle part of the year. And as you probably know, China is the second-largest AT- IOL market in the world. So from our point of view, we've got nice progress to be made internationally. The U.S. is normalizing. And there are going to be new products coming in. None of that is new to us. I think we've been talking about competitors coming in and seeing them internationally. And even the ones we kind of know are going to be first in the U.S., we're not terribly bothered about. A lot has been made, I think, out of the RxSight product. And I would just say that, again, I think it was 15,000-20,000 lenses in a 1 million-unit market. So it's just not going to be a big deal. I think directionally, we have a really good eye on our international growth and the penetration number in particular. That's helpful. And innovation? Oh, yeah. Look, I mean, we are working on a number of ideas. I mean, first of all, PanOptix is a patented trifocal that has set points that are unique. And I think it's very difficult to improve on it. So I think I recognize there are people who say they're coming in with trifocals. There are very few going to be competitive, as they are around the world, very few that are competing with PanOptix in that way. And Vivity has a very unique wavefront shaping idea. So these are very specific technologies which afford very specific benefits. And I think they are going to be very durable in the U.S. market as they have been around the world. We are working on a number of other ideas. Obviously, we've got some ideas around how we can improve contrast sensitivity, how we can improve intermediate vision. Those are going to be experimented with for the rest of this year and into next year. And if we find something we really get excited about, we'll bring that out, and we'll get you information around that when we do. The other big thing, of course, is our accommodating and adjustable program. And that program will read out in the middle part of the year on its first in-human trial, and we'll give you updates around that at that point. But again, I think we have what we think are really good ideas around both accommodation and adjustability. We think our adjustable mechanism is more durable, it's easier to do, and it's a little bit more predictable than what's currently available. So although it's a fairly far ways out, I would just say that in terms of long term, we feel very good about our competitiveness. That's great. Thanks, guys. Our next question is from the line of Ryan Zimmerman with BTIG. Please proceed with your questions. Good morning. Thanks for taking the questions, and congrats on the 2023. Two-part question on guidance first, and then one on ROCKLATAN and RHOPRESSA. On guidance, Tim, when you look at results over the past year, and I appreciate the commentary on pacing for margins, the top line doesn't follow, I guess, what I'd consider kind of normal seasonality, right? First quarter was above fourth quarter, second quarter grew, and then third quarter fell. Just help us on the top line maybe with pacing through the year. And then the second part on guidance is, I appreciate you're taking FX from the end of January, but if you look at the Japanese yen, for example, it's gone up, I think, 240 basis points the other way in February. And so just how might that impact the EPS guide? And then I have a follow-up on ROCKLATAN and RHOPRESSA. Yeah. Thanks, Ryan. Good question. Yeah. So from a top-line perspective, this year was a little bit different, or 2023 was a little bit different than prior years. But as I look back at historical growth rates, I think we will trend towards more of a common seasonality. So I would expect, from a revenue perspective, I would expect Q2 to be higher as we ramp up for allergy season. And then I would expect Q4 to also be a little bit higher given the fact that typically, equipment sales are stronger in Q4. So I'd go back to your kind of 2022, 2021 models, and I think we'll probably pace towards that. As far as FX, listen, our internal processes are really built around kind of locking down a budget at the end of January. It's just not really practical to finish our budget yesterday for today's call. So that's why we picked the end of January. To your point, the yen's up. If you look at the end of January, the yen was about 147. I think today, it's about 150. So there is a bit of a pressure point. But if you look at some of the other currencies and emerging markets, we've gotten some favorability there. So I would say overall, versus the end of January, FX has an immaterial rate as of today. We'll continue to monitor that going forward. And if there are any changes, we'll certainly let you know. Okay. And then ROCKLATAN and RHOPRESSA, David, if I think back, I think it was growing - and correct me if I'm wrong 20% a year, or at least it was on that pace before you guys acquired it. You guys grew mid-single digits. So what's the right way to think about those assets in your hands as you make them organic in 2024? Yeah. Look, we're very positive about where it is right now. I think you've got to remember there's a big push in the market to generics right now. And as a number of the glaucoma products have gone generic, there has been a lot of access pressure. So I think directionally, there has been a little bit of a slowing both in the market. I think at the market, it was net negative in value. And I think directionally, we grew in the high single digits on TRx. I think what we expect going forward is that we'll certainly outgrow the market and gain share. And I think we're kind of pleased with where we are at this point. But remember, too, that we had to consolidate two sales forces, put them together, get them out there, redeploy that group. So I think we're through that bit, and I expect kind of a, I would think, a very positive kind of teens kind of growth in that area. Thank you. Our next question is from the line of Susannah Ludwig with Bernstein. Please proceed with your questions. Hey. Thanks. Good afternoon. And thanks for taking my questions. I have one and one follow-up. So on AR-15512, can you provide some color as to what are the swing factors that you think get you from sort of the low end to the high end of your $250 million-$400 million peak sales? And just on this, also, this is a category that's quite sensitive to marketing spend. So how much investment do you think it will require to drive this sales range? Yeah. Good questions. I mean, I think what we're going to obviously be focused on is labeling and access in the early parts of the next kind of year and a half. So we'll submit in the middle part of the year. We'll have a good discussion. We feel good about what we've got in terms of labeling. I think as we get all of that detail out and we look at what the access point is and how fast we can get access, that will determine, I think, the early curve on this one. And access is obviously a big deal in a market like this. So I think those are the big variables if you kind of step back and say, "How do we move this product along?" Investment-wise, I think as we get closer to it, we'll have a better picture of how we want to how we see this. But I would say that we expect to have some significant leverage from our existing sales force. And obviously, depending on the size of the product, we may make considerable investments. But I think directionally, we believe this is kind of a we'll size it appropriately to wherever we end up with the revenue. Okay. Great. Thank you. Our next question is from the line of Anthony Petrone with Mizuho Group. Please proceed with your questions. Thanks for taking the questions. Congrats here on a good quarter. Maybe one, I'll start with on contact lenses and maybe talk a little bit about the sustainability of price in contact lenses. And maybe the flip side of that question is on the manufacturing side. We're hearing that there are still constraints, I think, for all of the suppliers. So maybe just talk a little bit about the manufacturing capacity just industry-wide and what needs to be done to get that level-setted. And I'll have one quick follow-up on glaucoma. Well, I think, look, the sustainability of price is a good question, and it will depend a lot on the consumer and what happens in the market. As of the last couple of years, much of it, well, I would say a significant part of the growth, let's say a 1/3 of the growth, was coming from price in the market. That's not different than the historical number. It's largely been mixed and price, mixed to dailies and then some price. But price used to be kind of 1%-2%, and probably more recently, it's been 2%-3% as part of that 6% kind of average growth if I was kind of giving you very broad strokes across the last several years. I think we'll see. What we're really concerned about is not pricing out the consumer from trading up to dailies because that's really where our principal interest is. From there, I think manufacturing, we're kind of unconstrained right now. We feel very good about our manufacturing capacity. We have plenty of room to make as much as we need. And if others are having a little bit of trouble making product, again, that's, I'm sure, a short-term problem for them. But we will certainly supply in an unconstrained fashion for the indefinite future. Quickly on glaucoma, just thoughts on drug-device combination solutions. You have a competitor out there with Glaukos, iDose. Just your thoughts on that category, and does Alcon have to be there? Thanks. Well, we'll see how reimbursement plays out there. I think it's a great idea. I think the real question is whether or not reimbursement will come around it and be permanent in a way that is helpful to advancing that product. And again, we'll have to see at a practical level whether people want to go back in and replace these things over I think over this two or three years. But I'm sure those guys are smart guys. They'll figure it out. So we'll see over time. There are a lot of good ideas in that space. So if they blaze a trail there, we'll certainly be interested. Thank you. Our next question is from the line of David Saxon with Needham & Company. Please proceed with your questions. Oh, great. Good morning. Thanks for taking my questions. Maybe one for Tim. So operating margin should be down around 1 point in the first half. That implies a fairly meaningful ramp into the second half. So outside of higher-cost inventory, what drives that ramp? And does that improvement continue into 2025? Yeah. Great question. I mean, the primary pressure point we're going to see in the first half is going to be that higher-cost inventory that's bleeding through the P&L. So you're absolutely right. That would carry forward if you look at the second-half run rate. As that sort of normalizes, we will have less gross margin pressure, and we'll have all the benefit of that operating leverage. So that should carry forward into the future years. And again, our whole financial thesis is around growing faster than the market. And when you do that and maintain your cost envelope, you should get nice operating leverage, and that's what we would expect to happen. Okay. Great. Thank you. Then my follow-up is in ocular health. You talked about pricing but would love to hear how much pricing benefit you saw specifically in ocular health. Is that kind of the primary driver of the vision care margin performance or other factors driving that? And then in 2024, where across the broader portfolio do you expect to take the most price? Thanks so much. Yeah. I mean, I think in terms of ocular health, I think it's probably fair to say about a 1/3 of the growth was price. I think you'll see a slightly less amount of that, I would suspect, this year. I would think a little bit less than that, particularly in contact lenses, is going to be achievable. But I would say in terms of margin progression, it was broadly a number of things. Actually, a mix in ocular health helps us quite a little bit. Our eyedrops are very profitable, and SYSTANE is quite a big brand at this point. And when you think about SYSTANE, it is a high-margin eyedrop that's over-the-counter that has really strong durability. So we expect that product to continue to contribute to ocular health and margins going forward. Then you layer on manufacturing productivity gains, of which there were significant amounts of that last year, and then the price. That obviously contributed to what was, I think, quite a substantial sector performance for us on a segment basis. So that was really part of the margin story there. And I think directionally, for next year, we see kind of similar but probably not quite as strong of a price move. Great. Thank you. Our next question is from the line of Larry Biegelsen with Wells Fargo. Please proceed with your questions. Good morning. Thanks for taking the question. One for Tim on 2025, one for David on AR-15512. Tim, can you just confirm that the 1% of margin pressure you meant, it's going to be down 100 basis points year-over-year in the first half? And that was my that's what I thought the person on the prior question asked. I wasn't sure if it was 100 basis points lower or 100 basis versus second half or down 100 basis points year-over-year. Sorry for that. And then for my question, just confirm you're still confident in your long-term margin goal for 2025 of the op margin guidance approaching mid-20s or at the time, I think it was 23%-24%. And can growth accelerate next year with the launches of UNITY and AR-15512? Yeah, Larry. Good clarification. The 100 basis points in the first half is down year-over-year. So that's how you should read that. And again, once that inventory it's kind of what I would consider a one-time phenomenon. Once that flows through the P&L, the gross margins will begin to continue to improve. As far as the Capital Markets Day, listen, we gave Capital Markets Day in March of last year. We gave you some guidelines for 2027. We feel very comfortable with that. If you're referring to the 2021 Capital Markets Day and that approaching mid-20s that we talked about, I think we said approaching mid-20s in 2025, if you take the midpoint of this guide and you translate it back at those foreign exchange rates, we actually beat it by a year. But obviously, we report in U.S. dollars, so that's more of a theoretical sort of credibility type of question. But yes, if you were to translate it, we would be a year ahead on that one. And Larry, on UNITY and 512, the real financial impact, I would say, for UNITY will be 2025 and I would think 2026 for 512 because just remember, we're going to get an approval this year. We're going to spend a good bit of time with a limited launch, making sure that that thing runs as pristinely as our current equipment does. And then we'll release it for broad revenue growth. And I think that's what's going to happen in UNITY. That'll happen probably late this year for full release, and then you'll really see revenue next year. And then on the 512, we won't even submit till middle of the year on 512. So then you'll have a year of submission. And so by the time we get access by the end of 2025, you're really talking about a 2026 impact. So that's a way to think about when those kind of play out. But I think the reason we point these out right now is because we're very confident in the pipeline, and we feel really good about our ability to kind of grow steadily over a broad portfolio of stuff. That's helpful. Hey, David, just one follow-up on 15512. Sorry. What was the symptom you showed a benefit on in the Phase III trials? And can you talk about tolerability? What we've heard is when you look at the Phase II paper, there was a rate there was burning or stinging about 40% of the time. How do you think that impacts adoption? Thank you. Yeah. We'll see over time. But I mean, like almost every eyedrop in this space, there is some burning and stinging. The discontinuation rate, I think, was inconsequential, like 1% or 2%. So I don't think we read that as a major problem. But what I would say is that directionally, the primary endpoint was a non-anesthetized Schirmer strip of 10 mm or more. And we did very, very well on that, very significant. And that was day one and consistent at day 90. So very important in terms of onset and very important in terms of its ability to create, through this TRPM8 mechanism, natural tears. So not supplementing tears but rather stimulating natural tear production. If that's true, as we kind of work our way through all these data, that's a very exciting thing because this is, I think, kind of a very different idea than trying to help the body by supplementing it. This is actually working with the body to kind of create more tears. We're excited about the mechanism. Thank you. Our next question is from the line of Brett Fishbin with KeyBanc Capital Markets. Please proceed with your questions. Hey, guys. Thanks so much for taking the questions. Just wanted to start off with a quick follow-up on the revenue growth guidance. Understand vision care definitely looks positioned to lead the way in terms of growth for 2024, but just curious on how you see the overall surgical segment progressing in context of the expected step down in equipment and if you think the rest of the segment can kind of be an offset and have the broader segment trend toward the low end of the overall constant currency range? Yeah. Look, I mean, clearly, surgical will lag vision care next year by a little bit but not a ton. I mean, it's in a pretty good place with consumables, right? And remember, maybe one of the underappreciated stories is how strong our consumables business is. It's half of our revenue in surgical, and it's been growing really, really well. So one of the surprises for us in equipment this year, for example, was our share growth. We expected, I think, in many ways to face more competitive pressure than we have. We've actually gained share in our equipment footprint, both internationally and in the U.S. And in addition to that, we've added equipment in. So ARGOS has done very well. Our microscopes have done well. Our refractive equipment has done well. We've really done across the board, we've had a really exciting year for equipment. Now, that makes it tough to grow on a comparable basis, but it creates a bunch of consumables for us to grow. So if half of our business can grow nicely with the consumables business, we're going to be in a pretty good place. And again, I think implantables, we should expect to grow with or ahead of the market. So directionally, we expect, as we've said, the equipment to be relatively flat year-on-year, principally because of the compare but also because we're going to stall the market a little bit with, it's like when you see the new car model from whatever your favorite brand is. A lot of people will wait six months, a year to get it before they buy a new one. So we expect some of that to happen. All right. Makes a ton of sense. And then just one quick follow-up from me. I think the operating margin guidance looks like it's implying about 80 basis points of year-over-year expansion at the midpoint. And definitely appreciate the first-half gross margin commentary. But just curious, on a full-year basis, if you think gross margins can generally trend in line with the previous year or if you're looking at that more as a full-year offset to the operating margin expansion? And thanks for taking the questions. Yeah. I would expect that we'll continue to get gross margin improvement in the second half of the year as we pass through that inventory. I would think about gross margins being relatively in line with what we saw last year. You obviously see continued operating leverage throughout the year, and that's what's driving the margin rate improvement for this year. Our next question is from the line of Tom Stephan with Stifel. Please proceed with your questions. Great. Hey, guys. Thanks for taking the questions. Maybe first one on the IOL business in China. David, can you level set us maybe on the 2023 base and then just talk about the assumptions of the outlook for your China IOL sales in 2024, particularly, I guess, as we think about VBP this year? And then I have a follow-up. Yeah. Tom, let me try to give you some kind of directional help with that one. China now is the second-largest country for AT-IOLs in the world. It's about half of the size of the United States in terms of volume. And I'll just read that as units. We have a single-digit share in that market, which is very unusual. So most markets around the world, we probably in AT-IOLs have somewhere between 30 and 80. So pick a share number you like and then kind of halve the U.S. market and apply whatever you think the trajectory ought to be. That's probably the best way to model it. We try not to give individual products and country guidance, but I recognize it's an interesting topic, and we've been thinking about how to explain it. That's probably the best we can do with that one. But I do think that going forward, it'll be back half-loaded this year and then kind of full-year loaded the following year. So as you probably know, the award signs up in really this next quarter, the second quarter. So we should have most of it done by kind of April, May, maybe a little into June, and then start to sell it selling in principally in the back half. So that's kind of the pattern. Got it. That's helpful. And then my follow-up is just on Hydrus. I guess directionally, David, can you discuss a bit how that product performed in 2023 and, again, directional expectations for 2024? Thanks. Yeah. Look, I mean, we were pleased with Hydrus, especially given all the noise around the reimbursement challenges. So the reimbursement hiccups with some of the other products caused some stalling, I think, in the market. The market was a little bit softer than normal, than we would have expected. But we grew nicely with Hydrus, continue to grow nicely with Hydrus, and expect to kind of grow share in that market. We did grow share in 2023, and we will continue to do that in 2024 against that MIGS market. The MIGS market didn't grow as fast as we would have expected, but overall, we did quite well. I think what you're seeing right now with Hydrus is a lot of people have come to an understanding of if you're going to do a stent, this one has some of the most compelling data for efficacy of anything out there. So I think we feel like people have come to the understanding that if this is glaucoma and you want to treat this, you want to get ahead of it, Hydrus is your best chance to do that. And so that with the medication reduction over the time horizon has been really a positive impact on folks. So that's probably where we are now. And I think directionally in 2024, we see the same thing, kind of a very positive ahead-of-market growth performance. That's great. Thanks again. Our next question is from the line of Issie Kirby with Redburn Partners. Please proceed with your questions. Hi. Thanks for taking my question, everyone. I just wanted to touch on some of the market dynamics there. I noticed within your guide, you see markets sort of growing in line with historic levels, but I think for 2023, you were talking to markets sort of at or above. Is there anything you're seeing within your underlying markets, particularly in surgical, that influenced this? And then related, would love to hear about some of the dynamics you're seeing in cataract surgery in the U.S., perhaps any color you could give us on volumes in the fourth quarter and for 2024. And then I have a follow-up on China. Yeah. Look, markets mid-single digits probably was high for 2023 because of the compare. So you had China wrapping around. You had some other of the Asian markets that were wrapping around. So we should have expected to see a better-than-historical rate in 2023, and we did. I think going forward, we see that really normalizing. And typically, the U.S. market is 2%-3% growth. Internationally, it's kind of that 4%, maybe 5%. And so between those two, you get kind of that I would say kind of 3%-4% is the cataract market. So that's really what we've been talking about. Now, I'm not sure you were interested in the vision care market, but I'll throw it in. The vision care market, again, we see kind of growing in that mid-single digits, which is really the historical rate. That's pretty much what it grew. Grew a little faster than that, but I think principally because price was a little bit more aggressive in this year than in prior years. So that's kind of where we see the market. And I would just characterize that as very normalized growth and what we should expect. In the cataract, the U.S. dynamic was, again, very normal for us. We look at our consumables as the proxy for what's going on in the market. We grew nicely in consumables. We know what the unit growth in the U.S. was. And that's a pretty good proxy given our share of what happened in the U.S. And so we kind of know that it was in that 2%-3%. And as we said, it's kind of the low single digits was a pretty reasonable number in the fourth quarter. Okay. No, that's helpful. Thank you. And then just on China, I'd love to hear your thoughts on why you decided to sort of participate and lean into the VBP this time around. What has changed in that market to make you interested in participating? Well, I mean, at the core of it, it's the volume. At the time that we if you go back several years when we decided not to do it, there were two reasons for it. One is we had a very strong position in the private market, and we were unclear on whether the public market was ever going to get into AT-IOLs. And that has obviously changed our view quite substantially as about a third of that market is now in the public sector. And so that plus what has happened historically is when you go into the VBP the first time, you get a very good price. The second round is a very substantial cut. And so I think on a year-on-year basis, it's very difficult to absorb that. Most everybody else who's seen these things, I think, advised us around that. So our calculus was we'd get through it on the private market and then evaluate it the second round. That's exactly what we did. And I think in this way, our prices are better than our floor prices around the world. So pretty good pricing, not great pricing, but very European, I would say, based pricing. So from our perspective, we see a lot more reasonable growth with a lot of volume. And this is a very big market now. So a lot of things have changed since our original decision not to participate. And we're very pleased with the reception, I think, to Vivity and PanOptix. I think the Chinese have a very high interest in what the best products in the world look like. Great. That's helpful. Thank you. Thank you. Our next question is from the line of Jeff Johnson with Baird. Please proceed with your questions. Thank you. Good morning, guys. Maybe one question on cataract and one on contact lenses. So David, you were talking about UNITY launching maybe later this year and really scaling throughout 2025. Have you talked yet about what kind of price premium you'd expect to get maybe on the system itself, but more importantly, on the consumables that will go with UNITY? We haven't really yet, Jeff, but I think you're right to assume that there'll be a premium. I think what we believe is that this the whole premise, really, of the UNITY VCS system is that you're getting two units in one. So you don't have to buy a Constellation and a Centurion. You get both of them, only really better versions of a Vit-Ret machine and a cataract machine in a single unit, which on a capital basis should save you some money. On a footprint basis, saves you space. And importantly, on a procedural time basis, we believe it will be more efficient. So what we're looking to do is establish that principle and then share that value back with the surgeons and the ASCs that buy this equipment. So our consumable will be a little bit more expensive, and we'll ask for some of that value. But if you can do more surgeries in a day, you're going to make more as an ASC, and you should be willing to share that back with us. And so I think that's directionally how we see this thing playing out, which is a reasonably premium equipment capital, but really importantly, a nice, steady consumable over a long stretch of time. Remember, this is typically a 10-year cycle. So if we can get our consumables really launched at a premium, we feel really good about that. All right. That's helpful. Then just on the contact lens side, should we think about anything gating this year in the contact lens business? It feels like we're picking up some signals. You may be looking to take DACP off the market in the U.S. and kind of force that up conversion to P1. I think when you did that with Focus a few quarters ago, we haven't seen it in the numbers. Focus, though, an older, smaller product line. DACP priced, I think, relatively close to P1. As you force some of that up conversion but maybe lose some fits to competitors out of DACP, anything we should just think about over the next few quarters? Is that just kind of noise, at least at our level, looking into your company? Thanks. Yeah. Look, I mean, I think our contact lens business right now is going on all cylinders. We're doing really, really well. I would say, in particular, our toric lenses have gained a ton of share. I think that's the design. Honestly, I think our designs are very stable. They're easy to fit, and they settle quickly. That is a really exciting phenomenon to see. As we look at the new portfolio in the U.S., PRECISION1 has been so successful, I think, that we are not going to sample DACP anymore, but we are not taking it off the market. It'll be available to anybody who's wearing it. Really, there isn't a ton of new starts on our DACP product in the U.S. We're going to decrease the sampling on that. That's really maybe what you're picking up. So again, our fit sets, we aren't really deploying any new ones so that we can concentrate really on PRECISION1 as our kind of mainstream product. And then obviously, DAILIES TOTAL1 is our premium brand. And then obviously, we have TOTAL30, which we're excited about for reusable. And before too long, we'll be talking about P7 as the next alternative into that kind of, I would say, cost-sensitive market but still wanting a replaceable lens at a little more frequent interval. So we've got a lot of choices in new products, and it's just kind of natural for us to phase out some of our resourcing on some of the older products. And again, those will be available, but they may not be promoted. All right. Helpful. Thank you. Our next question is from the line of David Adlington with JP Morgan. Please proceed with your question. Hey, guys. Thanks for the question. First one on surgical and on China again, I'm afraid. I just wondered, of that 6%-8% growth guidance, I just wondered if you could sort of give us some sort of idea in terms of what sort of tailwind you're seeing from China VBP on that. And in addition to that, just wondered if those sales are likely to be accretive or dilutive to your margins. And the second one, just on equipment, you've pointed towards flat for the year, but obviously, the new launch being H2-weighted. Do you think there's a quarter, either first quarter, second quarter, possibly, where we could see equipment sales down year on year? Thanks. I was trying to get most of that. I'm not sure I got all of it. So let me make an attempt at it, and then please jump in here and correct me if I didn't get the question right. On China, I wouldn't try to put a lot into the 6-8 per se for next year. I think directionally, we've kind of given you some help on how to size it, but we really don't know what the rate of pickup is going to be. We'll have a better sense by the end of the year what it looks like for 2025, and maybe we'll be able to guide a little better the following year for 2025 when we get a full-year impact. I would say it is accretive, obviously, because it's AT-IOLs, and that's a high margin. That's one of our highest margin products. Whatever that revenue is, it's very, very positive on a margin basis. I'm not sure what the other part of that question was. Did I get that question right? Equipment. That's right. Oh, equipment. On any equipment, yeah. Yeah. I mean, the equipment directionally really isn't going to impact anything until 2025. So I think in the rest of this year, I mean, I think you should expect a pretty steady year-over-year, relatively flat. It could be up. It could be down a little bit. But I would think about the year as relatively flat on the equipment front. We could be surprised. I've been surprised before. We called it a little bit soft this year, and we were wrong. But we've been a little bit surprised at how successful we've been taking share. I think as we introduce our own upgrade, we're likely to see some stalling of equipment. So that's kind of the theory that we have right now for why we should see most of the year relatively stable in equipment. That's great. Thanks very much. Thank you. Our final question is from the line of Sophie Osner with HSBC. Please proceed with your question. Hi. Thanks for squeezing me in, and congrats on the results. One question on China and one on the mix, please. In China VBP, as we understand, there'll be a monofocal and part of it. I would believe that you're more on the advanced part, but exactly which category do you think you would be taking a larger share? And would you then, down the line, consider any production onshore? And my second question relates to the mix. You had quite high equipment sale that came above estimates. And with UNITY, it will probably come higher. Will this have downward impact, downward weight on the margins on the surgical side? So on China, on the VBP, we won all but the monofocal business. So I think there were eight categories. I think we got seven of the eight where we were in the primary position. But they're all advanced technology lenses. It's torics. It's multifocals. It's bifocals. It's extended depth of focus lens. So those are all our highest margin products. And so yes, that's a positive. We are not looking at production at this moment. We're not looking at production in China. We have very strong production facilities in the U.S. and in Ireland for our AT-IOLs. And the scale that we have there is really important in terms of keeping our costs down. In terms of mix, the equipment will always have a downward mix for us because it is a lower margin relative to the rest of our lines. But I wouldn't expect that to really hit this year. It would really be a 2025 impact to the extent that we convert to selling the new equipment. But the new equipment itself is not lower margin than our old equipment. It's just a matter of what the total equipment mix to the rest of our business is. So keep that in mind. Our new equipment will be about the same margin as our old equipment. Perfect. Thanks very much. Thank you. At this time, we've reached the end of the question and answer session. I'll turn the call over to Dan Cravens for closing remarks. Thanks, everybody, for joining us this morning. If you have any other questions from the analyst community, certainly reach out to Allen Trang and myself or reach out to our Corp Comm people for media. Thanks again for joining. Thanks. Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.