Thank you all for everyone in person who could join us today and everyone on the webcast. It's my pleasure to host Sarah London, the CEO of Centene, and Drew Asher, the CFO. For those of you who don't know, they're a managed care company, which in the U.S. is our term for health insurance. And Centene is one of the largest managed care organizations focused specifically on the low-income population. But I'll give you a chance to kind of level set for us, like, why is Medicaid or sorry, why is Centene focused on the low-income population? What is the opportunity in that market, and what gives Centene the right to win? Sure. So, as Adam said, we're one of the largest MCOs in the U.S., serving roughly 28 million Americans, and we are solely focused on government programs. So we're the leader in providing Medicaid insurance, which it really is a support system for the poorest, sickest members of our communities. But we also are the leader in supporting the individual market, so those who seek out health insurance, as part of what was established through the Affordable Care Act. And then we have a unique focus in our Medicare book, so supporting seniors 65 and over. Really, again, looking at the lower income, more complex seniors as kind of a larger portion of our book than our peer set. And to your point, it really goes back to the roots of the company growing up as a Medicaid organization, taking a uniquely local approach to that market, and deeply understanding what it means to serve underserved communities. And I think that has allowed us to become the leader in Medicaid. We hire folks on the team who live and work in the communities we serve. We build out networks that are beyond sort of traditional provider networks, but think about who are those community providers, those social services, the resources, the drivers of health beyond traditional medical services that actually yield health outcomes for our members. Those routes allowed us to, again, build a base in Medicaid, and then as the marketplace came into being over the last decade, it actually allowed Centene to succeed in that market segment in a way that our peers were at least initially unsuccessful in. Because we recognized that the marketplace, the individual market, as it has grown up, is really a sister population to Medicaid. It's largely the working poor, and so we leveraged the Medicaid network and chassis and that know-how to, I think, serve that population in a way that has created a durable connection and, you know, continued to yield market-leading results in the marketplace. And then if you look at where the senior population in the U.S. is heading, how that aligns with our strength, and what we're seeing from a policy standpoint in the U.S. in terms of increasingly linking Medicaid and Medicare for what we call dual-eligible members, who are both over sixty-five and low income. We're seeing policy actually more formally require that in order to serve that dual-eligible population, you have to have the Medicaid background. So that was a bet we made two years ago in terms of continuing to focus that book on low income. Ultimately, it is where the growth is in the market. And so we think that provides both a compelling long-term prospect, but then a compelling mission, because we are a very mission-driven organization. Okay, great. And I think prior to this year, more of the story was kind of revolved around the turnaround plan that really started, like, two years ago. And can you give a brief summary of, like, how you got to the point of needing a turnaround plan, or how the company got to that point, and, like, what needs fixing, and what is the line of sight to kind of get to target margins? Sure. So this management team has been in place for roughly two and a half years, and to your point, I've been on a journey of a bit of a turnaround for the organization, recognizing that the footprint that we had in the three core markets we thought was unique and powerful for the long term, but there was focus needed and investment needed, and to really fortify that base to be a foundation for growth. We got there, I think with actually unbelievable growth and. Yeah ... good intention around the fact that being able to lead in government programs, you get great benefit from scale. And so the growth of the organization over the 25 years before this management team stepped in, I think was impressive. The last 10 years of that growth was largely driven through inorganic growth and acquisition. And so on balance, not the level of investment in, you know, rationalizing the technology portfolio, modernizing underlying operations, making sure that we were where we wanted to be, relative to leveraging data. And so, you know, really saying, "Let's focus on the core." We've divested 11 businesses that were subscale and not core over the last 2 years. We've invested in data and technology. We've invested in quality performance across all three lines of business. We've invested in talent and underlying operations. And I think what you're seeing, not just in things like improvement in SG&A, which you're seeing this year as a result of two years of, you know, continued focus on that, but also the fact that we've been able to weather some pretty significant industry dynamics over the last year or two, is a result of a lot of that work that we've done in the last two and a half years. So we're not done yet. There's still opportunity ahead of us. I think there's, frankly, operating margin opportunity in terms of where we see additional efficiencies that we can drive in the business, but we've instilled that now as a discipline. So instead of talking about the Value Creation Plan, we just talk about how Centene does business, in terms of being focused on the basics, focused on quality, and leveraging that incumbent status we have in those three lines of business to drive growth. ... Okay, great. And yeah, one last big picture question before we get a little more in the weeds. So one of the big themes in managed care, at least over the last couple of years, has been vertical integration. But as part of your turnaround, you've been exiting kind of like the more vertical assets. And so does this put you at a strategic disadvantage over time? Like, how are you thinking about kind of like vertical integration overall? So we believe in the power of focus and the fact that embedded in the three lines of business that we are in, there is tremendous organic growth. So I'm sure we'll get into this, but you know, in Medicaid, there's still roughly 45% of the dollars that are not in managed Medicaid. Medicare still has 50% of the market penetration in Medicare Advantage, and that doesn't even get into sort of market share opportunity relative to duals. And we think there's really interesting opportunity in the individual market. So the idea that we have that sitting in our base, and you know, focusing on that and really harvesting that organic opportunity was priority one. The other piece of it is that you know, our view is it's not the highest and best use of capital- Yeah to go out and try to diversify. Can you diversify at scale? We've got, I think, individual views on the degree to which, you know, you can run those assets to be best in class, and really, we are stewards largely in our business of taxpayer dollars, and so we have to make sure that we're leveraging the purchasing power of the organization. So a good example of that was our PBM contract. We've got what was $40 billion, now $50 billion in pharmacy spend. We can get the economics that we need by virtue of being the largest out in the market and leveraging that purchasing power and then really executing on the focus relative to the long-term growth algorithm. Great. So I wouldn't be doing my job if I didn't ask about cost trend. And so, you know, so far this year, it seems like with Medicaid in particular, not just you guys, but like the whole industry has seen kind of like underperformance relative to initial expectations. And there were a couple of moving pieces that you called out. So, like, the PBM contract renegotiation was a positive, but then Medicaid redeterminations had an acuity shift, which was a negative. And then I think most recently you mentioned, like, home health or, like, other areas of cost pressure. And so could you bridge for us those pieces and level set, like what the new Medicaid MLR expectation is and how those individual pieces contribute? Yeah. So at a high level, the pressure that we're seeing in Medicaid is driven by redeterminations. But maybe you want to go into sort of the subcomponents. Yeah. So, Sarah, you're right. Redeterminations, think of that as the umbrella over Medicaid this year, pressuring the HBR. So the acuity of the stayers versus the leavers, and then we have rejoiners, those that left maybe largely from administrative terminations by the states that realize they're still eligible and they seek healthcare, so they're called rejoiners. And we can isolate those cohorts and look at the variation in HBRs by those cohorts and conclude that really the pressure on the HBR this year, which by the way, we've been able to manage as the portfolio of the enterprise as a whole. We just reaffirmed this morning and you know, a couple of weeks ago. But underneath that reaffirmation, as we said two weeks ago at a conference, there's still that as we exit the Medicaid redetermination process, sort of pegging that medical expense PMPM, you know, as we exit in terms of what's redetermination driven. We look at. If you look at the stayers, you can go deeper into the stayers, so, and look for continuous members over the last two years as we look for trend pressure, like, you know, just systemic trend pressure. And quite frankly, we don't see a whole lot there other than behavioral health, which we've called out for the last year and a half, exiting the pandemic. Little bit of an uptick in behavioral health. That continues to be the case. Sometimes that's driven by program changes at states where they ask the payers to back off on prior authorization, or they're inviting more access and more providers into the state to serve members that seek behavioral health care. So there's a little bit there and then home health we mentioned also. Really just as a matter to demonstrate that we can isolate the impact of redeterminations, and that's really what's pressuring the HBR. It's the- Yeah ... basically, the med expense PMPM run rate of what's left in the post redetermination environment with the 13, approximately 13 million members, that now that has stabilized as we look ahead and try to get the rate to match that acuity. If I could ask it sort of another way. In Q2, you know, you had an expectation for what MLR would be in Medicaid, and then it sounds like it came in a little bit worse in the last few weeks. And at the time in Q2, you said that in the second half of the year, the states were giving you, like, a roughly 4% composite rate update, and then things came in a little worse. So does that mean that in the first half of next year, we would need to see better than 4% in order to feel like we would get MLR improvement, or does it not necessarily bridge that way? Yeah. So we're continuing to get the 4% plus in the back half of the year- Yeah ... so that hasn't changed. Really, it's our view of, okay, what's that exit medical expense PMPM gonna be? And we think we've gotten that settled as we reaffirm this whole year, company as a whole, and yes, 4% plus is a good step forward. Yeah ... for the cohort of rates that came due. And about just under half of our rates come, you know, would be the normal process between seven one and ten one each year. And then when you get to the one-one rates, which we'll start getting visibility on shortly here, that's about 30% to 35% of our portfolio, and four one would be the cohort that's about a little over 15%. And so think about taking the data that we now have, you know, every month that goes by has more complete run out on those incurred months towards the end of redeterminations, and working with our state partners, in conjunction with our peers also, we're not doing this in a vacuum, with our peers through associations, to get the data in front of the states. The states have been very receptive to those conversations, examining the data and making adjustments in the rates. We just need to get to the point where they're sufficient relative to where redeterminations ended, and, you know, that will take place. You know, each of those rate cycles will make more progress, and we expect, you know, as we get through 2025 and maybe into 2026, you know, the goal is to get back to that ballpark, 90% Medicaid HBR. As you know, we're sitting in Q2 at 92.8. We expect that to be a little bit higher in Q3 and then subside from that point going forward. The only thing I would add, just as more emphasis than anything is, as you said, the degree to which the states are really being constructive. They are being open to the data that we're able to share, you know, almost in real time, and while we're obviously focused on gearing up for the rate cycle, we're not sort of just relying on the rate cycle in terms of advocating for retro rates, for retro acuity adjustments, for in-year program changes to the extent that we can, and again, the level of attention and acknowledgement from the states that we are in sort of an unprecedented time, and it is very important for them from a program integrity standpoint, to make sure that rates match acuity for the sustainability and performance of the program. So again, constructive dialogue, and we're, you know, we're pushing all of that backed by data as aggressively as we can. Okay, the last Medicaid MLR question I'll ask, is one of your competitors, has been a little bit more insulated, from Medicaid trend, it seems, because that they claim that they're in risk corridors that have been protecting them. And so that they have seen absolute margin compression, but that it doesn't flow through to the bottom line because they have so many risk corridors. Do you have any states left where you're still in a risk corridor position? And just, I guess, how much of a buffer does that provide? Yeah, we're expecting this year probably to be just under $500 million in payback position. Now, it's program-specific- Yeah ... not just state specific, but program specific. So to your point, to the extent you have some trend pressure or redetermination fallout, particularly in those programs where you're in a payback, you chew into that payback, that run rate payback position. But, the states have largely, you know, they calibrate that into the rates, pretty quickly, actually. So as, as you think about the future, you know, we would expect to be we were $2 billion-ish into those paybacks during the COVID era, when the disruption of access occurred, and we would expect to sort of continue that in the normal course. Okay, great, and then you kind of touched on this before about the leavers versus rejoiners, but you lowered the Medicaid enrollment guidance recently, very slightly, as I guess fewer people rejoined than expected, so if you could just break down how many members so far have disenrolled from, you know, what you think is attributed to Medicaid redeterminations, and how many have returned, and how many of the people who are still disenrolled do you expect to return, and over what period? Yeah, so the membership drop is really driven more by states, certain states going deeper into redetermination, so moving more members off- Yeah ... than necessarily an expectation about the rejoining. Partly because I think the degree to which their, this rejoiner dynamic is a thing. And- Yeah ... you know, we started off, so a year ago, we started seeing the rejoiner dynamic in the high teens, low twenties. Sure. We're now in the low 30% of members who were deemed ineligible or, you know, largely for administrative reasons. So think about, you know, Medicaid. The state sends out paperwork and wants a member to fill out that paperwork. They're not paying attention to that. It's not, they may not get the paperwork, so they're deemed ineligible even though they are technically eligible. And there are a lot of system issues that states had that sort of, you know, moved more members off the rolls than, you know, were actually eligible. So some of those process issues, I think, have led to this larger rejoiner dynamic. But then for certain states, they went deeper at the tail end of redeterminations. Mm-hmm. is really what drove that sort of, you know, July, August membership dynamic that we were seeing. In those states, we're now seeing as we come through August, sort of more stability in the membership. So a belief that we've now hit that trough at, call it 12.9, 13 million members. And then watching the rejoiners, which are creating some of the MLR dynamic because of the fact that they, when they were. Again, a year ago, we saw 80% of those members would come back within 60 to 90 days, and at that point, they are automatically the premiums are retroactively applied. As that, the rejoiner timeframe, which is also expanding, comes into play, then you have a gap in premium. When the rejoiners come back, it's largely because they are seeking care. Mm-hmm. They either fulfilling a prescription, or they've come into a doctor's office or the ER, and so you have this sort of artificial view of their utilization pattern. If you smooth that out, which goes back actually to your trend question, because that's another cohort that we can isolate, and if you smooth out that rejoiner cohort as if they had been we've been getting premiums for them the whole time, there isn't any inherent trend. Right ... in that population. So it is just this breakage in what is sort of a fundamental insurance model that you, you know, you don't just get premium for months where there's utilization. So that's another thing that we're talking to the states about, is sort of making us whole on that. But, you know, again, we feel like we've sort of hit the tail of the administrative process. We're starting to see stability in membership. That should start to return to growth. We do still have rejoiners that will come back in, and so that, you know, that may be seen as sort of normal growth as we get to the end of the year, but we feel like the big focus now is just getting rates and acuity to match, and there isn't as much movement expected in the underlying membership. Okay, great, and then if we could shift to the exchanges. There were sort of a lot of moving pieces with this, with you know, because Medicaid redetermination sort of fueled the exchange growth as people looked for other coverage, and then there's the enhanced subsidies, and so it's kind of unclear what the twenty twenty-five market looks like because redeterminations are over, but do you have a view of what the exchange market as a whole grows in twenty twenty-five? Because one of your competitors is saying something like 15% premium growth, but there's not necessarily a clear catalyst as to what drives that. Yeah. So to your point, we saw outsized growth in Marketplace, partially driven by redeterminations over the last year. I would say we saw strong growth in the marketplace over the last three years, also driven by the subsidies and by intentional investment by this administration in building awareness for the program, as well as kind of the hardening of the distribution infrastructure. So brokers really coming into the space in a way that we had seen early on, but I think is much more robust now, and I think that'll actually be durable to support long-term market growth. So we wouldn't expect the outsized growth that we've seen due to redeterminations, but we do expect market growth. I think one of the things that will create sort of a dampening of that growth are certain program integrity factors or initiatives that CMS is putting in place this year that I think will naturally create some downward pressure on growth. So one of those is this agent of record lock that CMS has put in place. We actually pioneered that back in January of this year, and CMS implemented it at an industry level, I think, in August. And then maybe do you want to talk about kind of failure to reconcile, and- Yeah, so failure to reconcile and periodic data matching are two other program integrity elements that CMS and the IRS, in terms of the failure to match or failure to reconcile. Other programs that, once again, we think there'll still be net growth in the marketplace, but you just have to think about that, those counterbalancing forces before you get too excited about the gross potential market growth. And that's making sure that people who are getting enhanced subsidies are qualified for them. Is that what you mean by program integrity? Yeah, exactly. Okay. Whether it's their income level or the periodic data matching, where they make sure that there's no other available coverage under other government programs. Okay, and then in terms of 2026, now we're getting a little far out, but there is a catalyst for this one. The enhanced subsidies under current law are set to expire at the end of 2025, and there are, like, some government estimates that suggest, like, 20% to 30% of enrollment could go away. Those are, like, rough estimates. I think they're kind of just assuming that things go back to pre-COVID. But do you have an expectation in your long-term plan of, like, what happens to the exchange market in 2026 if subsidies were to go away? A little early to give 2026 experience. Yeah, yeah, for sure. But I think philosophically, what we see is, that there is a lot of support for the subsidies that is bipartisan. Many of our members and sort of market members who are receiving those subsidies are Republican voters. There is huge support from... Think about the states that have not expanded Medicaid, who really rely on the private infrastructure and those subsidies to provide healthcare for their base. So we've got a lot of support, sort of natural support out of the Democratic base. And then more, I think more support than people realize, because, again, the rural Republican communities have benefited significantly from having continuous access to healthcare and coverage for the last couple of years. So lots of different scenarios that we have put forward and are planning around everything from sort of capping the subsidies at 400% of the federal poverty level- Yeah ... which, as we've said, is roughly impacts sort of mid-single-digit% of our membership base as they sit today. So that's without adjustments made to product design or pricing strategy. And then there's also the opportunity, again, if you think about reverting some of that subsidy dynamic down to the state-based exchanges. So in a worst-case scenario, if the subsidies were to go away, I think you would see state-based exchanges actually pick up the product concept, because, again, there would be an entire base of Americans who had this covered and relied on it. So those are all things that we can actually step in and help with, in addition to sort of, again, base product and pricing innovation. But the other piece of this that I think is really important is that the stabilization of the marketplace has also created a different level of awareness around the individual market as a whole, and the idea that as small groups are struggling to afford insurance for their employees, the marketplace has become an alternative. So you've heard us and others talk about this idea of ICRA, and a disruption to employer-sponsored insurance in the U.S., particularly in either small groups or low-wage worker segments of larger companies. And for that ICRA market to be as robust as, you know, we all want it to be, and frankly, you know, I think it's a kind of an anchor tenant in some of the Republican dialogue. You need to have a robust core marketplace, so that you have the level of participation, competition, you know, product choice, and sort of sophisticated offerings, so that employers feel like that is a viable alternative. Right ... than what they're doing today. ... Yeah, fair. And then turning to like margins, you've long had like a 5% to 7.5% pre-tax margin target on the exchanges. And I think last year you said you were near the higher end of that. But then this year you had positive development in 2023, related to risk adjustment. So if you could just give us an understanding of, like, where you sit versus that margin target in 2023, when accounting for prior period development, and then what you expect margins are today. Yeah. For 2023, we were around the low end of that- Okay. Sorry. To start with. Yeah. But you're right, the $600 million that we benefited from in 2024, which was, by the way, hard work and great execution- Yeah Related to 2023 dates of service, so we've called that out as a sort of mechanical headwind as we think about 2025. But there's a number of tailwinds we could discuss also, so well into the 5% to 7.5% Yeah -range this year, excluding that $600 million. And as we thought about pricing strategy, which hasn't completely been unveiled yet, through the equivalent of the landscape file process and the marketplace business, that'll happen over the next month or two. We thought about driving margin as we thought about our diversified company and some of the variability as we exited redeterminations, though unrelated in Medicaid, thinking about the portfolio as a whole and sort of leaning a little bit more into pricing than seeking outsized growth. So that was the posture we attempted to take in our pricing- Yeah that we filed throughout the summer. So far, that's holding true with the limited information we have about what our peers did, but feel like that's a, you know, gonna be a good, productive position to sit in as we look at 2025. Do you think 5% to 7.5% is sustainable if, because you've had that target for a long time, but the things that have changed in the meantime is that the market itself has gotten a lot more rational and stable, and that a lot of new, not new competitors, but new competitors to the exchanges have gotten a lot bigger, like Oscar and, and even United and CVS, who have, like, rejoined the market in a big way. So does that, like, increase competition and stability, kind of like imply that there could be more competition on price, or have you not really seen that? The five to seven and a half used to be five to ten. Okay. But we knew that drove you guys crazy. Yeah. such a wide range. And so we, we, you know, we think that's a sustainable range and a little bit of disruption with the smaller players that I think thought they could trade off a revenue multiple. Yeah. Those two are gone now. And the entry of the larger players back in, actually, I think it's a net positive, and I've been at one of those before and been around the commercial underwriters and pricing a lot of my career. I believe the thought process is gonna be for those large carriers: Hey, my small group business is getting chipped away at, because either small groups are displacing their employees and encouraging them to go into the exchanges. That's already happening. Yeah. And then, as we talked about ICRA a minute ago, the opportunity to sort of work our way up small group and into mid-sized group, the margins, the margins on those businesses often were higher than five to seven and a half. So I think if I was sitting here with a portfolio that included, I'm glad I'm not, but that included a large commercial group business, I'd be thinking about, all right, if the outlet here is gonna be growth in the exchanges in ICRA- Yeah How do I preserve some or all of that margin as I think about participating and running a diversified company that included commercial groups? So we like our position of being exposed to these growth areas, but not having to protect- Yeah A large commercial group business. Yeah. If we could shift to Medicare Advantage. I think there's been a lot of focus on Stars in the last few weeks around some of the cut point changes, and I think you've sounded a little bit more positive in terms of what your expectations are from the October Stars release, while some of your peers have sounded more negative. And so just wondering what your thoughts are in the upcoming cycle and what your expectations would be, and if any of the changes CMS are making around cut points would impact that. Yeah, I mean, I think, nothing's final until Plan Preview three- Yeah comes out in a couple of weeks, so we don't tend to get into the weeds on commenting. What we have said is that, you know, we have been working with an internal range that represents that meaningful step for us between last year's results and then our ultimate goal of next October, getting to 85% of members in three and a half Stars or better, and just that we continue to feel good about that range that we had internally, and obviously, you know, a lot of work that's gone into that over the last two years and continuing this year as well, because these Stars that we're in in 2024 are gonna influence next October's results, and the nice thing is that, you know, the work is really, it's really more of the same. So as you think about layering in initiatives, you know, you get better at those, you sort of, they start to build on one another, and so while you wouldn't necessarily expect sort of linear progress, you do expect a nice, meaningful step, and then kind of the building momentum of those initiatives from here into next year. So that's really sort of been the band of our commentary, and then once we get plan pre-preview three and things are final- Okay We can get more specific about the results. Okay, but then on Medicare Advantage in general, there's been a lot of moving pieces just for the whole industry, and you guys have had a PDR in multiple years. And so if you could just let us understand, like, what is roughly the Medicare margin versus target margin today and last year, and what do you think the progression could look like over the next few years? And like, how important are Stars in that? ... So if you look at, you know, we originally guided, and by the way, the PDR is a premium deficiency reserve. It's essentially the same concept as entering into a loss contract. So we thank investors for letting us spend that money so that we can invest in the part of the Medicare portfolio that we think is going to have a lot of value in the long run. You know, going back to the convergence, as Sarah talked about earlier, of Medicaid and Medicare, and having that Medicaid footprint to leverage the potential opportunities in 2027 and then in 2030 for the duals population. So as we think about the portfolio of Medicare, we're investing in those businesses while we improve Stars to backfill the absence of the Stars' revenue, and therefore, we're in a loss position in Medicare. And the goal is to first get to break even, and that will be commensurate with the improvement in Stars. About two-thirds of the lever we need to sort of get to break even and then start making a positive margin and returning to growth. And the other third would be SG&A initiatives. I've said a couple of times, we've got to take probably a couple of hundred basis points more out of Medicare, and that's just not the Medicare business itself. It's the improvements that we're making to the company as a whole that then accrue to all of our businesses, as well as clinical initiatives, and maturing of those clinical initiatives in the Medicare business. So like the long-term prospects of that business, but yes, working our way out of a loss position, and as many of you know, the execution on Stars, you get the revenue three years later. So what gets published this October, and more importantly, next October of 2025, where we're targeting 85% in three and a half Stars, that will be revenue in the 2027 sort of calendar and policy year, that then we can use to basically backfill the economics that are missing in today's calendar year and sort of work towards that break-even goal. So you mentioned SG&A and Stars, but you didn't mention benefit design. So do you feel like the benefit design level that you have currently is sustainable, or do you need to still cut kind of in the face of the rate cuts that CMS is proposing, and then does like potential membership losses kind of counteract SG&A improvement? Yeah, the benefits, that's a lever. You know, once again, we thought about which cohorts of product as we exited six states going into 2025. We took action on simplifying the H Contract structure. Those are the contracts between the payer and CMS, so that we could get a better bang for the buck on the Stars' investments as well. So, you know, those are levers, but there's parts of that business we want to preserve for the long run, and that's where we've chosen to sort of underwrite them at a temporary loss until we can backfill that business with Stars revenue. Okay, great. And we've kind of touched on a lot of these building blocks, but, you know, a couple of years ago, you laid out the 12% to 15% EPS growth target over the long term. And so as you think about those, like, how would you rank order, kind of like the building blocks you would need to achieve that over, like, a 2-3-year time period? In terms of- Like, if you had to- Just breaking down what they are. Stars or like, you know, Medicare margin recovery or Medicaid margin recovery, like, how would you rank order them? Yeah, so certainly for Medicaid, getting to parity in terms of acuity and rate, but embedded in the Medicaid assumption is really back to this concept of the organic growth that is available in that business. So looking at, you know, states that have not moved to managed care, states that are in managed care, that Centene is not in, states that, you know, are still eligible for Medicaid expansion, like North Carolina just went through that. Then the biggest bolus of opportunity are states moving more complex populations into managed care. So continuing to execute on growth, and we didn't touch on it, but I'll ring the bell for our BD team that's done a tremendous job, I think, with reprocurements, and that is a critical foundation. Increasingly, Centene is in competing as an incumbent and making sure that, you know, we not only keep the base and the foundation of what we have, but then add new programs on top of that. So we've seen great results in Michigan, Kansas, Iowa, Florida, New Hampshire. You know, the last 12 months, I think, has showed great momentum from that perspective. From a Medicare standpoint, I think Drew hit on it. Stars is, you know, two-thirds of that, of that lever. And then again, I think the upside there is actually this convergence of Medicaid and Medicare and really focusing on the duals population and the opportunity to take market share there, in addition to get to, you know, getting to breakeven profitability and then, sort of more normal growth. And then from a marketplace standpoint, I think it's continued execution of growth and, you know, hitting our target margins. So that's a big piece of it. We've got baked in, so that's, you know, sort of 7% to 8% of that 12% to 15%. And then we've got 1% to 2% of kind of margin expansion, leverage on growth, and then 4% to 5% capital deployment. And so thinking about leveraging the cash that we generate in the business, whether that's for, you know, right down the fairway, M&A, tuck-ins and add-ons, you know, share buybacks, which is a portion - a big portion of what we'll do in the back half of this year. So just thinking about that portfolio, we still feel great about the long-term prospects of the business. And obviously, you know, what's gonna contribute in the short term is a little bit different than what we see- Yeah ... in the long term, but we are still a margin and growth story, and we actually think that's pretty unique. ... Okay, great. And we have time for one more question. But you kind of touched on it. You mentioned capital deployment as a part of your long-term growth algorithm, and there's kind of a lot of cash that freed up from Medicaid redeterminations because you no longer have to hold, like, statutory capital for those members. I'm not sure if that's, like, fully allocated in your 2024 guidance. And so first, on the statutory cash, is that allocated, and if not, what would you use it towards? And second, on M&A, how do you think about balancing M&A versus share repo? And when you do buy something, what is kind of like the profile of the thing you're looking at? Yes, I'll hit the second one and then let Drew talk about statutory capital. So we think about. We've rebuilt the M&A sort of surveillance capability over the last two years, and really, as I said, thinking about things that are right down the fairway for the core business, more add-ons and tuck-ins, if there's a, you know, a critical capability that we think is important to support the business. But I think you would probably see more kind of health plan acquisition. And then to your question, you know, we would always look at that on a relative basis. Yeah. Sort of what's the highest and best use of the capital that we have, both short term, but also keeping the long term in mind. So I think really healthy dialogue on that. The nice thing I would say is, you know, if you asked the question two years ago, there was a bigger operational hurdle in terms of, you know, we've got a lot that we want to fortify in the core business. Do we have the bandwidth for an acquisition? I think the progress we've made over the last two and a half years allows us to think differently about that bandwidth as we look at, you know, different targets that might be out in the market. And then do you want to talk about...? Yeah, on statutory capital, you're right. If we were a Medicaid-only company, we would have shrunk. But the good news is, with a diversified platform, we've got businesses growing. And so net-net, despite a three million member drop in Medicaid, if you look at our premium service, we've actually grown this year, and we expect to grow next year as well. So that just reallocates that excess statutory capital to where we would otherwise had to backfill growth. Okay, great. I think that's all we have time for. Thanks for speaking with us today, and really appreciate you coming. Thank you. Thanks, everyone. Thanks, everyone. ... Thank you for attending our Global Healthcare Conference. Today, I have the pleasure to host Joe Romanelli, President of Human Health International, and Peter Dannenbaum, Head of Investor Relations. My name is Charlie Yang. I'm one of the Bio Pharma analysts here at BofA. So, Joe- Yeah. I know it's been several years since we last kind of met in New York City. I think it was five years ago in 2019, when Merck had the last analyst day. So maybe just talk about like, you know, what has changed, you know, for Merck, especially from an international, from like what has been the expansion, the commercial presence here? Yeah. So first, Charlie, it's great to see you again. I would say first, I'll talk about just how we're doing this year before I talk about our international business and how we compare to twenty nineteen. I think we're off to a really strong start, this year, and certainly I think that's both from an operations perspective and from our pipeline perspective. If you look at where we are today compared to where we gave guidance back in February, we've made steady progress. In fact, in the second quarter, we grew 11% year over year ex exchange, and because of that, we've narrowed and raised our guidance for the full year to hit 8% to 10% on the top line. Now, what's more exciting is the progress we've made in our pipeline, and I think the work that Rob and Dean have done to really transform our pipeline has been quite profound. We sit here today, we probably have one of the best phase three pipelines we've had at our companies, certainly our recent history. We have 21 assets in phase three. Eight of those assets have come from partners outside, so the BD work that Dean and Rob have been driving. If we compare that back to 2021, that's almost a tripling of the number of assets that we have. And so from a commercial perspective, the reason I get excited is because the impact we can have on society is, you know, profound. And when I look at the next five years compared to the last 10, we have almost as many assets to launch in the next five years compared to the number of assets that we've launched in the past 10 years. So as a company, whether it's in the US or international, we've made great progress. Then I would think to address your question, going back to New York City in 2019, we certainly made steady progress internationally over that period. My number one benchmark is patients, and we've doubled the number of patients that we reach over that time. Because of that, we've been able to drive growth from about $17 billion on the top line in 2019. To last year, we were just under $27 billion, so 12% CAGR during that period. Now, because of that, we've risen in the ranks in terms of international. So we're now number 3, globally of the international business. We've done very well in the emerging markets, both China, outside of China. So I think that's also helped us grow. And certainly, our two key growth drivers have been Keytruda and Gardasil. And when I look at Keytruda back in 2019, internationally, we only had 12 indications. So over that time, the clinical development work and the regulatory teams at MSD have done a fantastic job. We're now at 28 indications. Still not quite where we are in the US with 40, but 28 indications, and a lot of our progress over that time is transitioning from, you know, back in 2019 was all metastatic business to transition to both metastatic and early stage with some of the more recent launches, and that's driven a lot of our growth. If I go back to 2019 for Keytruda, we're about a $5 billion business in that period, and now we're at, you know, last year, $11 billion. So doubling of the impact we're having on patients in the company. And then for Gardasil, you know, that again, once is a doubling of the volume. So where we were in 2019, there was some capacity constraints on our manufacturing supply. The team, under the direction of Sanat and MMD, have done a fantastic job to build more supply so that we can reach more patients. We've almost doubled the number of national immunization programs. We're up to 189 now. Half of those are gender-neutral, so a really great job of going after the public market as well as expanding in the private market. And that's really driven our revenue growth. Back then, we're about $2 billion for Gardasil, and then last year for international, just under $7 billion. You know, almost a four-fold increase of where we were back in 2019. Making steady progress, but what I'm also equally excited about is the expansion and diversification. We launched Vaxneuvance, V114, last year. We're now in 31 markets, competing really well in the marketplace for patients with pneumococcal disease, and likewise, we just recently received approval for sotatercept, so getting back into cardiovascular space, which is a place where we built back in the 1980s with Mevacor, so really excited with sotatercept. Winrevair is its brand name. We've received the approval. We're launching in Germany and Austria as we speak. We just had the first patient receive a script in Hamburg this week, so very exciting for us. Fantastic data with the stellar data that achieved this approval, so excited about the opportunity for diversification. I think we will look a lot different even the next five years compared to we were the last five years. Perfect, and I do want to follow on that. So maybe just talk about kind of like the international front, you know, the markets are kind of the biggest Merck's contributor right now and versus kind of where you see in the next kind of five years. How will that kind of change? Yeah, I think it depends on the therapeutic area. So if I look at where we are today, the two products we just talked about are very different. So if I think through Keytruda, roughly around 60% of my business is from the EU. And then as you expand into the emerging markets and Japan, you sort of get the bulk of the rest of the 40% of that business. Regardless, it's actually flipped, where you see a lot more of the business is coming from outside of the EU. It's more of a 60/40 in terms of volume, so it's almost the exact opposite. So I really it really depends on the therapeutic area. Mm-hmm. What I think we have done really well is, irrespective of that therapeutic area, finding the right payer solutions, working with our customers, so the healthcare providers, the hospitals, to make sure that we have the right value proposition in the marketplace. Got it. And how about, like, the kind of, down the road, in the next five years? Yeah. Do you think that see that ratio kind of change over time, or? We always we tend to launch in Europe first, and I think this is what you're seeing with sotatercept or Winrevair. And when I look at that CV space, you know, if you look globally, the number of diagnosed patients around the world is just about between 150 and 200 thousand. What's great about this market and the opportunity with sotatercept is we know exactly where those customers are. So if we're sitting here in the U.K., we know it's a very centralized system. I have seven COEs with 35 customers that operate in those COEs. So a very small team that can work with those healthcare providers. You know, having the patients who are already diagnosed, getting them on triple therapy or moving them up the continuum as we do more studies, is something that we work on. In Germany, as I just referenced, we have about 71 centers- Yeah. Around 220 physicians that we're working with. So very different than a traditional primary care launch. You know, so as I look at sotatercept, I would say the bulk of the revenue early on is gonna be coming from Europe, and then we'll expand into the emerging markets. Yeah. I think the one thing that the emerging markets have going for them, and why I get very excited, is the demographics. So you think about the number of infants that are born every year, and if you're playing the long game, you know, the bulk of the 120 million that are born every year, you know, 110 of them are coming from the emerging markets. Mm-hmm. It's not only where we are today, but where we're going the next five, 10, 15, 20 years as a company. We have to, we have to do well both. Got it. Okay, perfect. And we'll talk about Winrevair just, you know, slightly later, but let's talk about Keytruda. Yeah. Right. So coming out of, you know, WCLC and ESMO, right, there's a lot of talks on bispecific. So maybe just, you know, walk us through, like, how Merck is thinking about, based on that data set, you know- Yeah ... how is that gonna potentially compete with Keytruda? Yeah. and is that something that, you know, Merck have, kind of, looked at in terms of that type of approach before? Yeah. So I think, first of all, we've made tremendous progress, and I said earlier about expanding into new indications. And if we look at our second quarter performance, just in the international markets, we sold $3 billion. It was 19% growth year over year, ex exchange. As we think about what's driving that growth, a lot of that is coming from the early-stage business. So triple-negative breast, yes, triple-negative breast, you referenced, well, you said WCLC, but ESMO, we just had 5-year overall survival data published. I think it was in NEJM with 0.67 hazard ratio. So again, another validating factor for payers and clinicians who are looking for the right solution for their patients with triple-negative breast. Adjuvant RCC is another one that has really helped us to drive growth in the near term. You know, if you look at the overall profile of our business, about 50% of it is still lung, first-line lung, whether I'm in Europe or ex, you know, Europe and other markets. But we've expanded in the metastatic space to include RCC and head and neck, and that has been a key driver for our metastatic business. Likewise, we're also expanding into the early stage with triple-negative breast, adjuvant RCC, as well as melanoma, and in some cases like Japan, esophageal and metastatic, as well as cervical. We also saw data from KEYNOTE-018 at ESMO that has a ratio of, like, 66, which is fantastic as we think about taking that to payers. So I think we have a breadth, a wall of data that really allows us to go out and, you know, continue to push around those 28 indications to try to do more in international. We're also trying to push the science, so, you know, we applaud anyone that is trying to push the boundaries of science. I think you asked specifically about the Akeso data. I would say encouraging for them to then start a phase III study. We'll see what happens. Typically, our experience, an anti-PD-1 combined with an anti-VEGF, generally, there are disparities between regions, and we've seen that with an anti-VEGF. Certainly, it seems to work better in East Asian population, and we, this was one country, it was in China, where they had the study. Again, can you replicate that study internationally, do multinational clinical studies, do the phase III? And what's important, particularly for payers, for where we are in the world right now, is you need overall survival. And so making sure that you set up the studies, you know, do you prove overall survival? The other issue is KEYNOTE-189, our combination of Keytruda and chemo, creates a very high bar, and I know that in this particular study, it was just Keytruda. So KEYNOTE-189, whether it's for them, so anyone that's trying to develop combinations of bispecific, or if it's us using Keytruda with one of the ADCs that we've partnered with, whether it's Kelun or Daiichi Sankyo. We're very excited about our entire portfolio, ex Keytruda, so the products that not only have we partnered and brought in, but also we're developing through our own pipeline. In fact, we've said that we look at, you know, the outlook and the guidance that we provided is that that'll add additional $20 billion to the top line by the mid-2030s. We're also looking to do the same to expand upon the impact that Keytruda is having on patients. Got it. What's your view on the Keytruda, like, health profile heading into the LOE, well, exiting out the LOE, you know, the end of this decade and maybe into the twenty thirty, like, what is that gonna look like maybe in terms of as proportional of Merck's health revenue? Yeah, we haven't given guidance, but I would say obviously, we look at experiences of other competitors around the world, how they've transitioned from pre-LOE to post-LOE, learning from that. And what I'd say, we also have our own experience, maybe not in oncology, but in other therapeutic areas like immunology, around how do you, You know, what's your go-to-market strategy when you have biosimilars? And we have a lot of experience here in Europe with that. The other issue we, you know, we talked a lot about as a company is transitioning from not just an IV solution, but also a subQ, and that's in combination. So I think when we look at the addressable market, we think that's about 50% of the addressable market could be converted to a subQ formulation. Likewise, we also look at how can we add on to Keytruda, and while Keytruda is the backbone, and then you can add on, an ADC, Trop2, et cetera, to improve the efficacy or the response rates and potentially the overall survival of patients. Typically, that's come with a biomarker strategy, and so we think through how can we develop the right, you know, experiments to get there. And then lastly, I would say, is that making sure that we have the right type of manufacturing footprint to, you know, reduce COGS to make sure that we can be competitive in that environment. And again, not all countries are gonna go at the same time. Tremendous focus on the U.S., but we sit here in Europe and, you know, we think of the LOE kind of timing of twenty thirty-one. Mm-hmm. So I don't think it's a one-size-fits-all in any market. Got it. So you mentioned how ADC, right? So we've seen how recent data ADCs from comparison to second line lung cancers. Obviously, you know, those probably haven't done as well as what people thought that could be, and Merck is now running the ADC in that space. I'm just wondering, like, what's your view of the Trop2 ADC in the second line? And perhaps more importantly, like, what is those data set from the competitors kind of potentially read through to your kind of first line strategy and thinking about the differentiation versus the existing results? Yeah. So when you look at what we've done in partnership with Kelun-Biotech out of Chengdu, so we've been working with them for a very long time. We felt they had great capabilities around building the right type of ADCs, particularly around Trop2. And we know that Trop2 is expressed across many tumor types. Probably what impressed us the most was, you know, kind of data in lung and potentially in triple-negative breast. Need to run those experiments. Likewise, KEYNOTE-189 sets a very high bar, so how can we find the right type of patient, thinking about biomarker testing, genotyping, et cetera, to make sure that we find the patient. So as we go to the payer, we can define who's gonna benefit beyond what we've already done. So a lot of opportunity. I can't speak to other data from other companies, but I think we're pretty excited about the Trop2 opportunity. Got it. And you mentioned about the biomarker, right? But Trop2, I guess so far the data hasn't shown, you know, the expression level to be any meaningful correlation with the efficacy. But does Merck have a slightly different view on that, or is there any way to potentially, you know, stratify on that note for the phase three results? We've stratified quite a bit, and we have upwards of 10 studies, right? So we have- 10 phase threes. 10 phase threes that we're looking at. So I think we'll get the answer there. Mm-hmm. Okay, great. Then on subQ, the other one that you mentioned earlier. So subQ formulation, I think there's some thoughts maybe that there was delay in terms of the readout. Maybe just talk us through like, was that really the case where like, you know... And if so, like, when can we expect the data? Is it like early next year still? And then if what's your kind of view on the probability of success on that, and is there any other alternative kind of strategy if that doesn't work out? I know I'm throwing a lot of questions here, but if we could- No, I would say I think, you know, kind of as we look at ClinicalTrials.gov, that study is ending soon. Yeah. And I think what we've said is, you know, kind of a readout in, you know, kind of the first half of next year. But I think we'll wait to see the data. There's nothing to suggest that, you know, there's anything that would tell you that that wouldn't happen. So I think that we'll wait to see what we get from the data. Okay. That does not represent any delay. Just to be clear, there's no delay in the readout of those trials. We've always said primary completion date is September of 2024. It would take time to get the data analyzed and ready for a release to all of you. Okay. And sorry, just to clarify, is that early next year, or is that- We said in the early part of next year. Early next year. Yeah. Perfect. Maybe switching gears to Gardasil. I mean, this is- Okay. I mean, you're the head of our China market there, so- Not anymore. Well, you were, but I'm sure you're still, like, very familiar with the market still, right? I mean- Yeah. So just walk us through, right, like this confusion around the contracting with Zhifei. Maybe just kind of let's set the record straight on how is this contract binding or is it non-binding, and what's the expected delivery, you know, for this year and through the end of the contracting period? Yeah. So thanks for the question. I would say, first and foremost, we had another great quarter with Gardasil, $2.5 billion in revenue, $2 billion of that comes from international, and we continue to look out into 2030 and anticipate $11 billion in revenue. So a lot of work to do irrespective of China. We have a lot of work to do here in Europe, in the emerging markets, Japan, where we launched, both on the public side as well on the private side. Now, specifically to China, I think Rob clearly laid out during our second quarter call the impact of CDC buying patterns that we're having on the market. We saw a compression of all the HPV vaccines in the second quarter, and there were, you know, three things highlighted. The one thing that, you know, I, we can focus on really is Zhifei so you asked about Zhifei so yes, it's a binding contract. What we did see is, you know, if we go back to 2017 and 2018, when we launched our four-valent in China, and then nine-valent Gardasil in 2018, is we, we saw tremendous growth. The only thing that really limited that growth was supply. And as more supply came on, available through our partners in MMD, we were able to ship more into the market, and largely, we were able to ship more than even the contractual volumes because there's so much demand. During that time, Zhifei had the opportunity to also partner with another multinational company, GSK, for Shingrix. They launched that this year. They had, you know, kind of admitted to in their earnings release that they were distracted. So we saw that distraction in the form of a shift of our sales reps. So the FTEs in the market that went from kind of the Gardasil line over to Shingrix. So we've worked very closely with Chairman Jiang. We have a great relationship with Chairman Jiang. Worked closely to make sure that we improve the reach in the marketplace, both FTEs or sales reps in the market. We've now made progress probably 10 points above where we were back in the second quarter, but still more work to do. It does take time. You have to hire the reps, you have to train the reps, get them in the market, and they have to be effective. Likewise, we have to go out to a broader set of customers. Historically, we've gone to about 20,000 POVs. These are points of vaccination centers. Think of them as a small clinic where they treat primary care disease, and they also do vaccinations, primarily for pediatrics, but they also do adult vaccinations. So going from 20,000 up to 30,000 by the end of the year, so reaching more customers. And then lastly, what we would like to see is Zhifei to work through some of their inventory before we ship more inventory into the marketplace. So what Caroline shared in on the earnings call is that based on the shipments from the first half of the year, it's likely that the shipments in the second half of the year will be lower as we look for them to lower their inventory through shipments to the POVs. Now, irrespective of that, we have said that, you know, that number is in line with the midpoint of our guidance for twenty twenty-four. So I would say from a Zhifei perspective, we've been working hand in hand. We have weekly meetings with Chairman Zhang and his team. We have a new business unit director in the market, working with my managing director in the market, to make sure that we're all on the same page and going after the same solution. Now, to take it up a level, we still have 1,000 women in the world that die of cervical cancer every day. They're about 100 per day in China, so we have a lot of work to do, not just in China, but also outside of China. We had a great quarter. Ex-China grew 16% year over year, and so I think we have opportunity both in the public sector as well as the private sector. The other things that give us confidence in China is that we have the male indication coming. So we filed the male indication, and that will help to differentiate us compared to some of the local competition. Today, we have the 2-valent and the 4-valent. Eventually, we'll have a 9-valent competitor. We've expanded our indication, 9 to 45. We also have a narrower indication on number of doses for nine to fourteen, so you only need two doses for that cohort. So we feel really good about the differentiation we have in the market, but certainly, we wanna see the demand kick back in. The other thing we look very closely at is the volume in the CDCs and the POVs. And so today, what we see is that the CDC POV inventory is very similar to where it was last year. So again, I think we still have a lot of work to do with Zhifei, but you know, it is a very close partnership, and we feel good about that partnership. Got it. You mentioned about the 10 points improvement versus last quarter. Like, what does that 10 points mean? In terms of they were about 75% coverage, they've gone up to about 85% coverage. Got it. Okay. And so obviously, like, you know, Caroline has communicated that by the expected lower Gardasil shipment in the second half, that's within the midpoint of the guidance. Like, what would drive the kind of upside to that or maybe even downside to that? I don't want to get into speculation, but we have a range, obviously, and I would say that what I would go back to is we wanna see the inventory of Zhifei. We want to see them utilize that inventory. Okay. Yeah. Then how about in 2025 and 2026? Mm-hmm. That's so does that mean, like, by, like, next year, they will have to ship more, or is that, does that mean it's just, regardless of the... I guess what I'm trying to ask is, the total volume will be essentially the same. So if there's a smaller shipment this year, then those will be pushed out to next year or the, or twenty twenty-six. Is that how this works? So we always look at demand- Yeah ... first and foremost, because if I think about the recipe for Gardasil in China, it's very similar to the recipe in other markets, so I can ship those doses to other markets. So we wanna make sure that all the doses that we make- Mm-hmm through our manufacturing facilities are utilized in patients. So number one, we wanna make sure that the inventory levels for Zhifei come down, and we think about how we forecast 2025 and 2026. We've always anticipated that, from 2024, we would have a reduction in the shipments based on the contractual volume or contractual dollars that were put into that contract out to 2026. Now, with that, I think we'll, you know, again, going back to, we have a lot of work to do in, not just in tier one, tier two cities, but tier three, tier four, and tier five. We've done really well in driving vaccine conversion rates in the tier one and tier two cities. What we wanna do is continue to drive further vaccination conversion rates in the tier three, tier four, and tier five cities. Overall, we're about 35% higher in the Tier one and Tier two, about 40, a bit lower in the Tier four and five. Mm-hmm. We're looking at that very closely. How can we activate those consumers? Again, they're paying out of pocket. Activate the consumers to go to the POV, be vaccinated, come back for an additional vaccination. We'll look at a few different KPIs to determine how we move forward with Gardasil, but we won't give guidance for 2025 at this point. Got it. Then maybe just kind of looking back at kind of, Pfizer's Prevnar 13, right? Yeah. We saw, you know, they lost quite a bit of shares after the Chinese local 13-valent, you know, came into the market. Yeah. Is that how you think the market will shift in that similar direction? Or do you think the differentiation that you mentioned before will allow the market to keep the majority of the shares in the, you know, next couple of years? Yeah, so great question. If you look at the past few years, we've already been competing with locals with a 2- valent and a 4- valent. And the differentiation we have, very broad indication, nine to forty-five, two dose regimen, nine to fourteen, potentially a male indication in, you know, kind of the first half midpoint of twenty twenty-five. I think those points are all great points of differentiation. Likewise, this is a multinational vaccine, so there's tremendous trust there around vaccine, vaccinating, patients in China with a multinational vaccine. We do think that we have, a lot of great experience, the safety, the quality, the real-world evidence, a lot of the work that we've been doing in China to make sure that patients understand the value proposition for Gardasil Nine. Got it. Is there a view on the male indication on how much, like a, you know, high level, how we view on what portion of that would be as part of the future of Gardasil in China or ex-US? Yeah. So I think we've had a lot of great experience of gender-neutral vaccination around the world, particularly with NIPs, and I've referenced that we have half our NIPs are gender-neutral. For adult males, there's certainly, if you look at China, similar to the funnel for females, it's about two hundred million that we go after in terms of the top of that funnel and how we drive to them to points of vaccination. If we look at males, it's roughly the same, two hundred. Obviously, they need to be activated differently. They're not going for a pap smear. They're not going to see an OBGYN. So we have to use different points of engagement to identify, you know, where males would go. We have great experience from other Asian markets, particularly South Korea, where we have a lot of experience using influencers like BTS, Seventeen, these are all K-pop groups, to get to help males identify the value and need of not just preventing cervical cancer, but also Gardasil prevents other cancers, and depending on the label, you know, head and neck and other male cancers that can help us differentiate versus competition. Okay. That's very interesting. Maybe shifting gear to Winrevair. You, I mean, you already talked about some like the EU kind of launch strategy and how the first patient has been dosed in Germany already. Yeah, first group. First group. Okay. Yeah. Maybe just talk about, like, the cadence, right, of how, in terms of different country activation, how that will kind of ramp over the, for the remaining of the year and- Yeah into kind of next year. Yeah, I think for this year in Europe, it's really Germany, Austria. I think we'll wait to see what happens with Swissmedic, but it's a very small n. I think as we look out to 2025, you know, we're submitting the dossiers with all of the payers in each one of these markets. That takes time. Roughly, it takes anywhere from 12-18 months. So as you think about in your models, the forecast for where Winrevair is in Europe, I would say you kinda have to think through those stages of reimbursement. Then once it's reimbursed, going to those centers, getting patients on therapy. So I would say for this year and next year, the real gating factor is reimbursement. Mm-hmm. How big of the market do you think the Winrevair can be in the more of an emerging market, like reimbursement and cost-wise? Yeah, I think when you look at what we see in markets like China, where we have 30,000 patients that have been identified, when I talk about the 150 to 200, a bulk of those patients are coming from the emerging markets. The one thing, what we've learned with Keytruda is how to provide the right innovative access solutions. I was just in India. We have a great access solution for Keytruda, where we're working with two third parties to really find the right affordability- Mm-hmm For each individual patient. So we're in a private market in India, and we work with... And I was at Tata Memorial Center in Mumbai, and we work very closely with them and the other two third parties to ensure that if a patient needs it, they can get access to it at different price points, basically what they can bear. So finding those innovative access solutions, having this experience over the past, you know, eight to 10 years with Keytruda has really helped us. We've kind of leapfrogged- Mm-hmm where we would have been if we hadn't had Keytruda. So I do think that, number one, you need a product with unambiguous promotable advantages. You need a very good experience of building the right types of contracts to make sure that, you know, healthcare providers, hospitals, administrators, understand the impact and the value proposition of the product. And then lastly, as we think about the field force and the opportunity, we have strong infrastructure in the emerging markets. In 2023, it was about 25%. Mm-hmm of our business. So we've done a great job of building teams in each one, whether it's Latin America, EMEA, AP. Got it. So, I guess private markets will be probably how your main kind of target, at least in the emerging markets, in the near term? ... It depends. It depends. It depends. There could be markets where we would go for reimbursement. When you think about bigger markets, there's certainly areas of opportunity there. Some markets like Brazil, it's private insurance. Yeah. So I think, depending on the market, we'll use different strategies. Okay, great. V116, Vaxneuvance, right? I mean, there's recent comparative data with, you know, 31- valent, came out. It's phase two, but- Yeah ... I think a lot of people think that it may kind of work in the phase three as well. What's the, I guess, Merck strategy to help potentially compete on that front over the long term? Yeah. We have a different. Number one, I think, you know, again, goes back to congratulating any company that's pushing the envelope on science, and I think in this case, we've developed a very different strategy. We have a bifurcated strategy, a pediatric and an adult strategy. We launched Vaxneuvance this past year or in 2023. We're now in 31 markets, and we've performed well compared to what's currently on the market today. Capvaxive, we just have gone through ACIP. We got the recommendation for 65+. There'll be another ACIP coming up, and so we look forward to those discussions. As we think about the Vaxcyte data, you know, what I like about Capvaxive compared to what's currently on the market today or what's coming, is that compared to PCV20, we have 85% coverage of, you know, what causes disease in adults, pneumococcal disease. And then if we compare that to PCV20, it's about 30% difference, and we have 8 unique serotypes that we target. If, you know, when we look at the experience we just had with the ACIP, that 30% delta did not drive them to make a different decision on recommendation. If I recall correctly, the only time ACIP has made a decision to give a preferential recommendation to a vaccine was with Shingrix compared to Zostavax many years ago. We'd have to see if the delta between the 30% to 85%, 85% to 90% or north of that, if that's enough to drive a differentiated recommendation. Then we would think differently about the adult strategy and what we would need to do to then, you know, add more serotypes into our adult program. Mm-hmm. Is there anything in development for the adults with higher value than right now? We have, it's phase one or phase two for V117. Phase one. That's phase. That's peds. That's peds. Okay, got it. But I guess, are there any prior example of where, you know... I guess internal prior example of where, no preferential recommendation or I guess a parity, like is there a case where one account gained a more dominant market share because of some other account factors? Is that really driven more by the commercial- I think it's commercial. I think. Okay. You're on a level playing field, so commercial contracting, commercial know-how, commercial experience. So I think... And then again, not forgetting the fact that, you know, you're unambiguous promotable advantages, so how do you differ? How about your differentiation versus the competitor? Mm-hmm. I think that's, you know, that's kind of where we are today at Vaxiv. Okay. I do want to talk a little bit more about the pipeline. Yeah. There's a recent co agreement with Daiichi, with their account, you know, HER3 partnership. I'm just wondering, like, what account drove that, you know, in terms of the co commercialization? Yeah. Like, is that something that Daiichi has the option to do for all the ADCs? If it's something to do with the Merck's, you know, molecule in combination for any indication, or like, what was the reason for that? I think I... going after small cell lung cancer- Yeah ... which is a challenge. Mm-hmm. So, you know, there's a lot of scientific data that suggests that combining an antibody-drug conjugate with a T-cell engager could have a better outcome. And so the science really drove that strategy. And, you know, again, trying to make sure that, you know, we can reach all tumor types- Mm-hmm ... is what's driving it. We're happy with the Daiichi partnership. We just had HER3 data yesterday. That was top line. So I think that, you know, we look to these ADCs, and again, it goes back to why we believe that we have potentially the outlook of a 20 billion dollar plus business- Mm-hmm ... in mid-2030, non-risk adjusted, of course. Yeah. And maybe just to follow on that, right? So, I guess, do you need, actually need Daiichi's oncology partnership to do that? 'Cause you already have a partnership, right, for the ADC part, but do you need? But I guess the contract also allow them to co-commercialize the, the DXd engager. Is that part of the? Is that something that Daiichi can do for all the ADC program, you know, or something that with, in combination with Merck's oncology molecules? I'd have to look at the contract and- Yeah ... circle back. Okay. Yeah. And maybe just the last four minutes, I want to talk about the business development front, right? Yeah. I think, you know, Merck has certainly done a, you know, some deal with the, you know, Chinese molecules- Mm-hmm ... same as other kind of large pharma as well. I'm just wondering, like, what do you see in the China market or in terms of their, the molecules are developing, you know, versus picking the ones that's, you know, from the US already? Yeah, I think the first and foremost, I would say, you know, I think we're agnostic to territory. Yeah. Right? So we're looking for great science. What we think is science and innovation drive value creation. So that's, that's, that's paramount. As we look across all the stages of clinical development, again, we're not looking for a specific stage, and even as we think about commercialization, we would be, we would be open to commercial deals, as long as those deals meet an unmet need, have scientific value, and we can add some value to either that partnership or that acquisition. So that's first. Second would be, we've had great experience with Kelun. We've worked with them, we value their expertise, so our experience has been very positive. And I would say that, you know, there's a lot of science happening in China. There are a lot of. It's fast, it's moving quickly. A lot of other companies are also looking at in China for rest of world. So we're not alone in that regard, and I would say that we look at every asset and every company on an individualized basis. So I would say, you know, yes, we would evaluate partnerships or deals in China like we have. Likewise, we also look outside, and I think we have some great examples with EyeBio, Prometheus, Acceleron. Really, Dean and Rob deserve a tremendous amount of credit because we wouldn't be able to give that guidance of $20 billion for oncology, $15 billion for cardiovascular disease, and multi-billion for immunology with TL1A without all the business development deals that we've done over the past three to four years. Yeah. Got it. I do want to kind of zone in on the kind of like the data from China, right? Versus kind of how that kind of translate to global. I know you mentioned that a little bit earlier, but is there something that has changed kind of in the more recent years in terms of how the investigators run the trials in China, like, you know, give Merck or other companies more conviction that the data is essentially truly translatable to the global population? Like, what has changed versus, you know, five plus years ago versus now? I don't think anything's really changed in the U.S. Mm-hmm. I think you still need, for the FDA, you still need to run a multinational clinical study. It can't just be in Chinese patients only. That's. You see a difference in EMA with BeiGene and their PD-1 antibody. So I do think there are some regional differences that you would have to look at to see how quickly you could move through different regions. But for us, again, we follow the science. If you know, if we find and we, you know, do the due diligence on the science and we take that abroad. Because ultimately, in order for me to launch something in Europe, I'm gonna need overall survival. Yeah. Right? So I'm gonna need broader data, data that is more mature than single center or single country and with, without OS. So I would say nothing's changed relative to what we're looking at. It's always science and innovation. We have to take into account the, you know, regional differences and how we think through how would you launch and how would you build a study around those regional differences. Okay. Last question. So just talk about the overall acquisition. I know this, I'll talk about obesity and, you know, mesh and the other kind of indication that Merck could potentially diversify away from the Keytruda. Yeah. What's the kind of latest thinking here, and how is the market help? Yeah, I think absolutely the work we've done, we are diversifying. And if you look at where we're gonna be in the mid part of the next decade, we will have a very diversified business, whether it's Winrevair, MK-0616, oral PCSK9, other cardiovascular assets that we have, EyeBio and Restoret, you know, certainly being in the wet AMD DME space. Likewise, if you think about immunology and TL1A, I mean, just right there, that's three, and we also have our own internal pipeline in HIV. So just those four therapeutic areas providing diversification beyond Keytruda, and in vaccines, broadening beyond Gardasil, pneumococcal disease, RSV, and dengue. So I think we continue to push around diversification in individual therapeutic areas, not just in all of our portfolio. So, we're science-driven and, you know, kind of, portfolio allows us to look for assets, but we're not beholden to those therapeutic areas. So we look for the best science. Science and innovation create value for us. Okay, great. Thank you. Thanks. Thanks, Charlie. I I appreciate it.