Morning. Welcome to the first day of the Morgan Stanley Healthcare Conference. It's exciting. For important disclosures, please see MorganStanley.com/researchdisclosures. I'm thrilled, obviously, to have Brent and Sam as CEO and CFO of Bausch + Lomb, respectively. I know you guys don't actually do a lot of these conferences, so massively appreciate you taking the time to come here. First question I have is, your lawyers must be pretty big, because we have to read a whole thing. Yeah, I think we just pointed off on the outside. It's actually my home page. I mean, why don't we just jump right in? You know, you guys have been on quite a journey over the last few years since becoming, I guess, your own thing, independent in that way. How are you feeling about where you are now, I guess, both strategically but also the cultural side of things? Yeah, it's a great question. Thanks, Patrick. Look, I guess we spun out in 2022. I joined in early 2023. My frame of reference really is 2023 and beyond because 2022 wasn't a full year as a public company. When I joined, it was very clear, I think, in the first few earnings calls that we had some work to do. I prioritized and I created what we call a roadmap. I prioritized in early phases three things, right? It was selling excellence, operational excellence, and innovation. Those have been the primary focus of our company or our team for the last two and a half years or thereabout. If you kind of step back and look since 2023 on selling excellence, you know we really did focus on building our capabilities and our sales forces across the world. Since 2023, our growth has been about 24%, about 24% top line growth. I think you know I'd give us a pretty good check on accomplishing that. On top of that, we launched probably the most robust launch cycle of products that this company has had in 170 plus years of existence. Operational excellence, you know, when I joined, we had a lot of back orders. We couldn't supply a lot of products. Some of our businesses, particularly surgical, was hit pretty hard by that through post-pandemic supply chain disruptions and other things like that. We brought in some really great new leadership into our supply chain. I would say we've stabilized the supply chain. I'll talk about where we go next from here. On innovation, you know we spent a lot of time building our pipeline so that we could replicate the cycle we're going through of launches in a few years from now. I think we've done a really nice job building that pipeline. We have an investor day here in New York on November 13th. We'll take a deep dive to share with investors all the work we've done there and why we're excited about the pipeline. You know I feel like we're now ready to think about the next phase of growth and culture, right? You asked about culture too. I think one of the things we've really focused on over the last two and a half years is creating this culture. The best way I would describe it is individual accountability and grit. What I mean by that is reducing bureaucracy, reducing meetings, reducing committees, and really getting colleagues that want to actually roll up their sleeves, do the work, be accountable, make decisions, get work done, and do it with grit. A great proof point of that is, sometimes you have to have an unfortunate incident to see how resilient your company is or how gritty your company is. The surgical recall that we had with the Invista platform at the end of the first quarter was a pretty important situation. We saw some quality signals. We saw some early signs of issues with the Invista platform across the world. We made the decision to voluntarily recall it. It was an important decision, one that I would make every time the same way to put patient safety first. The old Bausch + Lomb would have been out of Invista for a year or more. The new Bausch + Lomb, because we worked so hard together, we had hundreds of colleagues from all over the organization, not just surgical, but pharma, R&D, quality operations, customer service. We brought in outside KOLs, outside task experts. We just scoured the universe of thousands and thousands of different potential contributions, and we figured it out. Even the FDA said to us, in most cases of these tasks, you never find the answer. You just never. It's like looking for a needle in the haystack. The fact that we could figure it out and get back onto the market shows that resiliency, that grit, culturally, that's starting to really embed. Culture doesn't change in two years. It takes longer than that. I'm pretty proud of how we reacted. All in all, I think we're exactly where I had hoped we'd be. We still have some work to do. Exactly. On the finance side of things in the organization, how have you felt like the controls are? How's it changed? You know, how are you feeling about things at the moment? I think just building on what Brent sort of went through, I think we've been really, the financials have been reflecting the steps that Brent went through. If you see the performance of the company since 2023 and you see sort of the top line growth that we've been putting on the board, it's been quite meaningful and significant. It's reflecting the commercial excellence work and the work that we've been doing. We've also been putting in also our support behind how we can position our assets to maximize the value of those assets. Right? We've seen that with our launches that we've done within our pharma business. We're seeing with the lunch business, consumer business, really putting in our effort behind how you can get the commercial aspect of it. Now it's the second phase for us in terms of pulling that third through, looking in terms of the margin and the margin expansion as we shift into our next phase. Makes sense. The results of some of your peers and generally the economy as a whole have caused people to wonder about the health of the consumer. I guess, what are you seeing on the consumer side, big picture? You touch the consumer in a lot of different ways. Any sort of comments currently on what you're seeing? Yeah, so I think it feels like a pretty typical consumer still, at least in healthcare. I would say a couple of dynamics in the market. First, retailers have been reducing inventory, and so consumption and sales don't quite match up. We still see very strong consumption. We have seen large retailers, the drug chains, Walmart, Costco, others, Amazon even, reduce inventory. That does put a little damper on actual sales, but consumption remains quite strong. Brands like Lumify have, in the second quarter, hit all-time highs and continue to. Blink has been a great performer for us. I think it's good. When you look at the health of the consumer data across the board, there is a bit of a bifurcation. Most of our brands do tend to stay in the top part of that bifurcation. You do see it a little bit in the vitamins where people are opting for private label, but nothing, I think, to be concerned about. Particularly for us, I think next year when we launch AREDS3, I think there's another big leg of growth for us in vitamins, which is probably the only area that's seen a little bit of an impact. Yeah, I definitely want to circle back to that. Maybe on the pharma side of things, you know, Miebo's been a massive success for you guys. I think certainly versus where everyone's expectations were. How have you felt about that asset? You know, there was a tremendous amount of AMP that went behind it, really promoting it. How do you feel about that and what's the long-term journey here? Yeah, so Miebo is something I'm very proud of. We launched that in the back half of 2023. When you look at that launch for an eye drop, it's probably the best launch in the history of the space. I think we just continue to see more growth, more prescribers, more adoption. We just published a phase 4 study that shows it works immediately, and patients self-describe it as silky and smooth. When you have something like Miebo, which is just great medicine for dry eye, that's really the only treatment for evaporative dry eye, but the risk-benefit is so tilted towards benefit. It's such a well-tolerated product and instant gratification for the patient. That's what ECPs want. They want the patient to feel good immediately and move on. They don't want to keep coming back and talking about dry eyes. It's really a nice product, and I think it's got a long runway of growth for us. In terms of investment, you asked about, like most pharmaceuticals, the first two years, you're in heavy launch investment mode. That's pretty typical. I don't think it's, I don't, I've never seen a successful drug launch that doesn't do that. My whole career, that's how we've done it. I think year three, as you look at 2026, we kind of start to transition from launch mode to growth mode. You'll see it particularly as a percentage, but as an absolute, you'll start to see investment taper. Then you'll see it really, you know, the profitability of that drug really starts to take off in 2027, 2028. We have it for a long time, right? That's the way you invest in a successful drug launch. I wish anyone would call me silky and smooth. I'm happy. Yeah, please. Why do you think, like, dry eyes are a funny category? Why do you think there's been so much less cannibalization than you might expect? Like, Xyzal and Miebo did not cannibalize each other at all. You saw similar dynamics with, like, the spaces. Why do you think that is? Because it's a huge untapped market. Right now, most people, there's various numbers of how many people that say, let's just use the United States, maybe 60 million people with symptoms or types of dry eye. Some treat in the OTC market. Obviously, we like to meet them there as well with our Blink franchise and other drops. You only have about, what is it, a million, six million, seven treating with prescription therapy. You really have, you haven't even reached any kind of maturity of prescription intervention. When new competitors launch, when I ran Allergan and we had Restasis, I remember people sitting in your chair used to say to me all the time, when Xyzal launched, Restasis is done, it's over. I used to say it's not a fight of death between the two of us. This market will expand to cover both. It did. Miebo launched, it expanded to cover that. You're probably going to go to Tripteer from Alcon. It's going to expand to cover that. This is a market that still is in early stages of pharmaceutical intervention. Do you want to see out a long history on the therapeutic side? Should we expect over time, you know, Bausch + Lomb to move a little bit increasingly more in the therapeutic direction? Are there any areas or assets that you think are interesting where the company doesn't play in the game? This wasn't the plan by our M&A bankers. No, I mean, I think that the strength of Bausch + Lomb for 170 years has been to be a comprehensive eye care company. I think when you come to Investor Day in November, you'll see this isn't about doubling or tripling down on pharmaceuticals. It's about building all of our businesses. They really do support one another. An example, we built the largest dry eye field force in the United States for Miebo and Xyzal. They also sample Blink NutraTears for consumer, right? The optometry, the contact lens force also does. They all work together. That's a unique strength of a company like Bausch + Lomb to really make sure that we have surround sound in the ECP office, whether it's an optometrist, ophthalmologist, a retina surgeon, cataract surgeon, to really make sure that we can bring them a comprehensive suite of solutions regardless of their doing surgery, recommending an OTC, or writing a prescription. You also, you guys are working on a dual-action product on that side of things. Is it too early to talk about that, or do we have to wait for November? I think it's probably best to wait for November. We hope to have it in clinical studies this year, so soon. I'm super excited about that. I think when you look at the etiology of the disease, the vast majority of the people who suffer from dry eye have first evaporative, and then, of course, they have inflammatory disease. As I was mentioning earlier, ECPs really do want the easy button. They want to write one script that is well tolerated and solves the symptoms of dry eye for the patient. Right? Because patients feel symptoms. Right? They don't see signs, they feel symptoms. A combo of the best evaporative with the best anti-inflammatory is the easy button for ECPs. As you think about life cycle strategy for us, Xyzal has a mid-2032 patent to get us a new innovation this decade that really can satisfy patients and ECPs in the way they want to treat their patients, with hopefully a drug that's incredibly well tolerated and very effective is really the right path for us. Think about asthma. There are so many other conditions that treat with combination therapy. Dry eye and multifactorial disease should have combination therapy. Could that be something that eventually opens up the EMEA market? Because coverage there has always been difficult to combine. Yeah, it could, it potentially could, and that's our current plan. Although, you know, we have to look at pricing. Pricing is getting more complicated in the OECD nations, right? We just have to be thoughtful of how we do that. Good point. I'd love to quickly pivot into the contact side of things. I mean, there's a lot going on. The one that's like initially topical and sort of top of mind is there's really been one player, I would argue, on the private label side, predominantly on the contact side. You guys actually had a fairly decent win fairly recently on the private label side. Is that something you're looking to explore more? Anything you can give us on that? Yeah, I mean, for us, in our success, if you think about it, right, since last year, since 2024, and in the first half of this year, we are the fastest growing contact lens company in the space. 10% growth last year, 7% growth second quarter. What I'm most proud about that growth is it's obviously being driven by the daily CI, right, with this exceptional growth. What, 75% growth last year, 36% this second quarter. Really nice growth there. More important to me in the second quarter was Ultra 12%, biometry 2%. What you see is no leaky bucket, right? We're continuing to grow by not cannibalizing our own products. That's really, I think, it was a mandate to the team and our leadership there. Yang, who runs that group, I'm very impressed with how her team responded because being able to grow your new products, it's hard, but it's an easier thing. To keep your older products growing while you grow your new products is a real sales excellence. That's what we're looking for. Yes, private label will always play a role, but it's more of a niche role for us. It's not where we want to lead with innovation and the best products and the premium price products. Sure, with our older technology, absolutely, you want to keep those growing. The other topic that you guys have hinted at over the last year or two is the biomimetic side of things. You know, if you're in our shoes, is that something you think is a loaded question, iterative, or something that could really change competition? The hope is that it really changes. That being said, it goes into its full clinical in October, so in a few weeks. We have to see the results of the study, right? The intention is it is a breakthrough material. We will provide a lot of details on November 13th around the material. You really don't know. It's like anything else. You need the data. I'm super excited about it. The team's super excited. Most importantly, just for history, when I joined the company, actually, it was my second or third day. I was up in Rochester with our R&D group. We did a bunch of presentations. They set up like a science fair. They had the team, small teams, junior people with posters. I walked around and I spent five, ten minutes. I got to the biomimetic material group, right? They had the poster of what it was. I stayed there for 30 minutes. I was so excited by reading what they had. I called the head of R&D and I said, do you think this is real? He said, they're pretty smart. I think it's probably real. I said, how about this? There were two of them that I liked. I said, let's get the two groups together. I'll meet with them every Friday. Let's have them compete. One requirement, whatever they come up with has to be made on existing capital equipment. We are not going to spend another $1 billion on capital requirements. We're just doing that. We're at the end of that cycle for the daily. We don't want to do that again. He said, now you're making it really hard. I said, that's the game, right? We're going to only do this if we can make it on existing equipment. To be fair, both of them are going to work. The biomimetic for sure. They also had a low-cost CI high. I just had the Friday update. It looks pretty promising. It's not quite as mature as the biomimetic. I think both of these teams are going to win. It really, really rewards watching them. Given the investment cycle that always happens on the CapEx side and contacts, to a point, do you have some of the adjacent space capacity? I know it's very difficult to work out. If the demand comes through, how are you going to deal with that? On the new? Yeah. On the new, on the biomimetic, we do have the capacity. Even if we had to add the capacity, those lines aren't nearly the cost of the lines. If it's super, super, super successful, maybe we'd have to invest a little bit, but not magnitude-wise, it's not even close. Right? A little bit on surgical as well, because I have an unhealthy obsession with IOLs. The NV was doing unbelievably well. The recall was dealt with, I think, faster than you or anybody really expected. It seems to be coming back. How are you finding that product's reintroduction to the market? Yeah, so I'm actually quite pleased with the reintroduction to the market. Clearly, it was a step backwards, not something you ever want to go through and probably took a few years off of my life along the way. That being said, you know, I think you see KOLs really coming back to it. You see really good results from outcomes from patients that get the MD. Our biggest challenge right now is just building up the supply to do full consignment. There are still many surgery centers that won't implant the lines unless they have a full consignment. We are very close to being able to do that. We had to build a lot. You remember, we had to put all the other ones aside and start over again. The manufacturing team has been working seven days a week, three shifts a day. We're very close to getting to full consignment. Net-net, I would say our goal was by Q1 to be back where we were in Q1, and I think we're on track for that. What do you think is going on in the U.S. IOL market? Because there's just been a massive divergence of performance between different players and a lot of confusing data. Do you, like, is this just noise? Is it a consumer thing? Is there anything you would add? Yeah, I mean, I think in fairness, the market has become more competitive. Some of the newer technologies are showing better outcomes than the older technologies, which is what you would expect to have happen. I don't think that's too hard to understand. I think that's really it. I think that the market seems fairly stable. Demand feels fairly stable. You know, there was obviously a boom after COVID, but if you normalize for that, it really hasn't changed in a long time, good or bad. It feels very typical to me. Within the surgical market, I guess I could go broader than that, but it's been really evident private equity has basically been hoovering up massive amounts of clinics kind of everywhere. Have you noticed any change in the discussion with the customer base in terms of like equipment budgets or like anything at all, any implications from that move? Not really. I mean, I think most surgeons were always looking for the best deals. Private equity is like-minded that way. I don't see it too different. Obviously, when you see more scale to a customer, winning that customer becomes increasingly more important. If you can, there's not many organizations with the full service infrastructure that perhaps the bigger guys have. Sometimes having a full service infrastructure is critical to winning those accounts. To your point, there's only really two of you that have quite a lot of breadth in terms of category areas, right, kind of you and Alcon really. Do you think that helps in that customer group then? Absolutely, it does. Yeah, I mean, if the capital equipment didn't support the IOLs, you could argue why would you be in the capital equipment? That is another part of the business that doesn't get a lot of questions all the time, but you know, how are you feeling about the equipment side of things? It's a control that's either one of your peers, but for you guys, less so. Yeah, I mean, I think the long-term trend, I feel very good about it. I think you're going to see some variability, given, you know, Alcon has a new unit. They're doing a lot of demos. When they do the demos, even if the clinic doesn't buy it, it takes, you know, two or three weeks of consumables and other things away from us. It just creates a little bit of noise, but nothing I'm overly concerned about. Stellaris is still probably one of the best phaco units out there. It's incredibly stable, incredibly reliable. That's what surgeons want. You haven't noticed any change in, like, you know, people always worry about the investment rate in general because of, like, CapEx budgets and things like that. In totality, it sounds like it's pretty stable. No, I don't see that. I think you're going to see variability in the surgical market based off of reimbursement. The UK just had some shifts in how they're reimbursing premium cat, or they want it all to go through the NHS versus private clinics. Those types of things are always going to be part of a global business when you're selling in 100+ countries. I don't see anything on a mega trend basis that I'm concerned about. Did not know that about the UK. I'm glad I live here now. I mean, like we talk about the breadth of the business, all the different areas. How do you guys, and like Sam, how do you think about how to allocate capital? You guys have often said that you don't love any of your children more than the others, which is different to me. I massively prefer them. How do you think about the, do you get pitched internally with the ideas and you have to kind of rank order? How does it work? Yeah, there's a lot of discussions that take place internally. It becomes even harder when you have all your businesses performing too, right? It's really a debate that Brent and I have with the leadership team all the time. What we really focus on is really how can you maximize the ROI and the return on the investment that you're doing. I think we use that as our North Star in terms of how we allocate those capital. You've seen it in the pattern that we've done with investments behind the daily CI and the growth that we're seeing. We're seeing it behind what we did with the dry eye category as a whole, not only just in the pharma, but also on the consumer side. You see the ROI metrics for us play a big factor in our thinking because of our capital allocations. You know, Sam's point, we wanted to create a beachhead in dry eye. Obviously, we acquired Xyzal. We acquired Blink, but we also bought Tricare for surgical. Dry eye transition, the strategy wasn't just about building pharma. It was about the whole comprehensive business. Because I remember, you know, the time you guys came out, it was obviously pretty OC, but there was a sense that there was a massive distribution network and all these things, but just not enough product going through it. That's true. Yeah, hence the dry eye push in the surgical. That's right. Remember, dry eye for us is also Europe. Artilac is a star performer, around, what was it, 30%, high 30% growth in the second quarter, which is our OTC dry eye drug product in 40 countries outside the U.S. I definitely want to touch on the OTC. That's another part of the market that gets kind of ignored. You walk around a CVS or whatever, and you can see all the products, you see the competitive environment, the shelf space, the relative allocation. How is that looking? You mentioned a little bit of, for the low-end consumer, down trading in the private label, but it sounds like the high-end consumer is pretty sticky. Yes, that's exactly right. You see it in Lumify and Blink, right? This is maybe a niche question. Are the customers, in terms of retailers coming to you guys, like shrink for them has gone up massively? Are they coming to you asking for more like promotional work or stuff like that to help it out, or is it fairly sticky? No, not out of the normal course. You know, they always do want that. I'm right. We stay very disciplined there, but you do see them working, as I mentioned earlier. They have worked two weeks of inventory out of almost every part of the channel. We brought up Blink. Thanks to you guys, I've got some on my desk, actually, back in the office. How's that introduction gone? How's things working? What's the demand looking like? Yeah, so Blink has been a very strong performer since we acquired it from J&J. I think what we really, we did two things that I think are really important. We changed the way we promote it. I think the DTC is probably one of the best DTC pieces. We're really targeting a different demographic than typical dry eye, right? We're targeting younger gamers, people who are staring at screens. That has resonated. I always say the best way to prove if an ad works is if sales really grow, right? Sales is the best KPI. I don't care about winning awards or whatever creative award. Can you drive sales? You see that with the Blink spot. When we run it, sales go up. It's very, very correlated. You know, obviously you guys, because of that category, you do a fair amount of DTC work. The cost of doing the DTC work at the moment is fairly stable. I'm thinking of like. It is, you know, but it's changing rapidly. We are now moving to, you know, the AI world of consumerism. We are launching very different ways of promoting products like Blink and Lumify, using AI, using very hyper-personalization of ads on social media. In fact, now Lumify and I believe Blink are available on the TikTok shop. That was a big breakthrough this summer. We've been working on that for a year. TikTok had a rule against eyedrops, but we worked with them to convince them it was safe and OK. Now you're starting to see, you know, one click buy, one click, your ad that you'll get will be different than the one I get, will be different than the one Allison gets. I do think I've seen a chunk more on like my Instagram doomscrolling reels, like of stuff popping up. That's really interesting. Yeah, it's getting really, the technology is really cool. On the investment rate, you know, how are you guys thinking about little bits of tuck-in, bolt-on M&A relative to the base business? I know you've deprioritized large Rex bundle M&A, but as a concept, how do you think about allocating that? Yeah, I mean, obviously one of our top priorities is to deliver. We're very thoughtful about spending cash. I'll be honest, I think after November 13th, they'll see that we don't need to do anything. Even if you risk adjust the pipeline, there's enough shots on goal, I think, to keep us very fresh and innovative. That being said, if we see things that make a huge strategic sense and a great financial profile for us and ROI, as Sam said, you know, of course we look at it. The best position to be in is not to have to do it. We're not going to overpay. We're going to stay very disciplined. We'll look for things that, you know, really help us, most likely intellectual property, whether it be in surgical, contact lenses, pharmaceuticals, you name it. It will be intellectual property. Not to steal the thunder from November, but you know, how do you think about investing in the base business relative to growth? You can deliver by paying back debt, of course, but you can also grow farther. Both are an important part of the strategy. Just to tease out November 13th a bit, one of the things that we're going to do, obviously the priority is to show our investors our pipeline. The second is to also lay out some long-term financial metrics. Earlier this year, we started a program called Vision 27. It's got a couple of really important goals to Vision 27. Some of them are cultural, some of them the way we work, how we organized talent. The ones that are probably most important for investors are financial metrics. Sam and I have spent a lot of time thinking about what is our financial metric entitlement. Where should a great, if you want to be a great company, where should a great company look at, you know, gross margin, EBITDA margin, top line growth? We started this project in January. Obviously, it was a PowerPoint in January. Now it's turning into actions. We are really excited to walk you through that on November 13th to show you how that will impact long-term performance, particularly margins. I know this is always a tricky question, but I always like to end on it, which is, you know, you guys are probably looking at a lot of questions from investors, people like me. What are you surprised, to both of you, that you don't get asked about? Or what are you surprised there's such a focus on relative to your internal focus? I mean, obviously, we have self-inflicted, but I never thought I would spend any time talking about generics at Bausch + Lomb. I spent a lot of time the first six months talking about generics, self-inflicted, but it's what, 3%, 4% of our business. It's a nice business for us to be in. We utilize our capacity in our Tampa manufacturing plant. It can be very profitable. Obviously, we had a fall off in the beginning of the year because of new competition coming in. I used to run Actavis. I feel like I know the generic space quite well. Unfortunately, you can see some of that. We feel good about its recovery. You saw sequential improvement Q1 to Q2. You'll see more improvement Q2 to Q3 and then Q3 to Q4. That business will always be a $45 to $50 million business. Could it swing a million or two one way or another? Of course. Hopefully, we don't have to talk about it too much more after this year. I keep saying to the team, we got to deliver because I don't ever want to talk about this again. Sam, what are you surprised to get asked about or not asked about? I think when you look at the business and the top line performance that we've seen, it's been just amazing. I think it's really the strategy working, and I think we're getting to an inflection point. I think there will be more discussion on November 13th as we start talking about the next phase. That's the excitement that we would love to share with everyone on their Investor Day. Look, we need to improve margins. It's not going to happen overnight, but it's going to happen in time. It's just to really claim, I believe we're the best eye health company. For all of you to believe it, we have to have better margins. Looking forward to November. Thank you so much, guys. Thanks. Thank you.