Good day, and welcome to the ICU Medical, Inc.'s second quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask questions, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to John Mills with ICR. Please go ahead. Good afternoon, everyone. Thank you for joining us to discuss ICU Medical's financial results for the second quarter of 2022. On the call today representing ICU Medical is Vivek Jain, Chief Executive Officer and Chairman, and Brian Bonnell, Chief Financial Officer. We wanted to let everyone know that we have a presentation accompanying today's prepared remarks. To view the presentation, please go to our investor page and click on Events Calendar, and it'll be under the second quarter 2022 events. Before we start our prepared remarks, I wanna touch upon any forward-looking statements made during the call, including beliefs and expectations about the company's future results. Please be aware they are based on the best available information to management and assumptions that are reasonable. Such statements are not intended to be a representation of future results and are subject to risk and uncertainties. Future results may differ materially from management's current expectations. We refer all of you to the company's SEC filings for more detailed information on the risk and uncertainties that have a direct bearing on operating results and financial position. Please note that during today's call, we will also discuss non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into ICU Medical's ongoing results of operations, particularly when comparing underlying results from period to period. We've also included a reconciliation of these non-GAAP measures in today's release and provided as much detail as possible on any addendums that are added back. With that, it is my pleasure to turn the call over to Vivek. Thanks, John. Good afternoon, everybody, and we hope you are well. It's been a quick 90 or so days since the last call, and our legacy ICU business unit revenues are on track in 2022, and we have now seen weekly improvements over the last eight to 10 weeks through today in our operational performance for the businesses that came with Smiths Medical. The external economic volatility in the supply chain around freight and fuel that we've been describing for a while hit its highest peak in Q2 for any time our team has been in the industry. However, the issues around raw material availability are narrowing but still remain volatile. From a customer perspective, we felt hospital census was stable and underlying demand was good in all geographies. Like everyone in our industry, we wanna first start by thanking all of our customers and their frontline workers for trusting us to serve you during these times. While Q2 revenues were generally in line with our previous comments for legacy ICU Medical, our results for Smiths Medical were again different from our original expectations, so we wanted to use the time on the call today to, first, comment on the year-over-year drivers of the three main legacy ICU businesses, give an update of the current inflation in the market and how it has negatively impacted legacy ICU profits, which is really just about fuel, explain the Smiths Medical revenues we achieved in Q2 and bridge to how that fits with our comments on the last call, provide status update on the Smiths Medical businesses' current challenges and opportunities in the two buckets we've highlighted on the last two calls. Begin to talk about Smiths Medical revenues sequentially and describe what we think the next few quarters could look like in the individual segments to try to narrow the range of outcomes for the balance of this year. Lastly, to illustrate how we see revenue and profitability in the short and medium term, and how we think about value. Q2 2022 is our second quarter of joint reporting, and given some of the challenges on the Smiths Medical businesses and the current environment, it continues to be a bit of a longer story. I'll quickly summarize the whole company results and then discuss each segment of the business. We finished the quarter with $547 million in adjusted revenues. Adjusted EBITDA came in at $85 million, and adjusted EPS was $1.37. We again had a heavy quarter of investment into the business with inventory builds, et cetera, that Brian will describe. It was a less clean quarter as we're spending at a very high rate to improve the service levels of Smiths Medical, and we had restructuring and integration costs, and we are focused on reducing those costs next year as they impact cash flow. The strong dollar and currency have also been a bit challenging. Let me start with legacy ICU Medical, which is a relatively straightforward story, a good story. In Q2, legacy ICU had $324 million in revenue, which was growth of 6% on a constant currency basis and 4% reported. We again had good year-over-year growth in our most differentiated businesses with negligible COVID impact, and as previously discussed, have been normalizing our operations on a more predictable basis. There's nothing dramatically different on underlying demand from previous comments on a macro level. The public hospital companies validated our view on their recent calls that acuity was decreasing in at least U.S. hospitals and electives were okay. Specifically, the legacy ICU businesses grew at 7% in the U.S. and at 6% constant currency in international markets. Let's go through the businesses quickly and then come back to discuss the current environment. Starting as usual with Infusion Consumables, which is our largest business. Infusion Consumables had revenues of $144 million, which was a 9% increase year-over-year on a constant currency basis, and 6% reported. Growth was most driven specifically by core IV therapy and some specialty items in the U.S. again. In oncology, we've been a bit constrained due to some of the remaining raw material challenges that should abate by the end of this year. We have talked on the previous calls about feeling positive in the U.S. market, and our growth products setting up well, as the rest of the world opened, which is what happened. There's nothing new on our outlook here. Just to mention, the base and Infusion Consumables did materially step up in Q3 2021 due to pandemic ordering, and it is our largest ICU OUS business, so currency impact is meaningful. Moving to Infusion Systems, which is primarily our LVP pumps and associated dedicated sets. This segment did $87 million in adjusted revenue, which is an increase of 5% on a constant currency basis or 3% reported. We did have a decent level of installs in Q2, and do expect a better back half of installs globally than we had in the back half of last year. It's still a bit bumpy on dedicated set utilization that's been inconsistent, but we're focusing on installing a larger amount of hardware. It feels that the customer attention is back with bandwidth to have real discussions and some of the fatigue from COVID is passing and the acceptance of inflation and future costs of nursing, et cetera, are being internalized. We still believe relative to our size, there's solid competitive opportunity, and we're focused on commercial execution here as of no change to any previous commentary on this segment. Finishing the segment discussion with Infusion Solutions. We had $80 million in adjusted revenues or an increase of 3% on a year-over-year basis, both constant currency and reported. Capacity constraints here are easing. No additional comments on the revenue side here. The biggest issue for us is this segment has disproportionately absorbed the majority of inflation at legacy ICU, which dovetails with our comments on legacy ICU profits. The vast majority of unexpected inflation and earnings pressure relative to our view on 2022 legacy ICU profits is primarily about fuel and shipping costs, and to a lesser degree, currency. Labor has been much more consistent this year, and we budgeted those items properly. Yes, there's been some raw material surge pricing, but as we highlighted on the last few calls, these items are not so much more inherently valuable over the long term, particularly with aggregate demand below historical levels. We've talked about believing in the markets and with capacity increasing, when capacity increases, pricing should rationalize. For us, it's about trying to run a stable and predictable operation in a normal environment to get price improvements where we can, to try to illustrate to our customers the need to have some of these costs indexed, and to ultimately just ride it out, serve customers with a belief that supply and demand will balance over time. There is a longer-term tactical element to this in some of the businesses. We listen to the comments on price actions from the larger players in the industry, and we obviously support that. We are also focused in the next round of contracting on how to separate the costing of some of these items. For example, where transportation and logistics costs should be separate items, no different than airline seat and baggage fees or next day delivery. Given the historical margin structure of the healthcare industry and its historical negligible inflation, suppliers have never had to think this way. Okay, let me move to the Smiths Medical businesses. First talking about aggregate revenues and then how that fits broadly with the two buckets of issues we led on the last call, which did lead to a wider range of outcomes and on even a monthly basis in the first two quarters. That has to be incorporated into the full year now. Then I'll give some updates on progress on the issues, et cetera. Starting with revenues, the Smiths Medical businesses contributed $223 million, with Vascular Access at $77 million, Infusion Systems at $78 million, and Vital Care at $68 million. To try to make sense of this, we need to go back and compare this to our comments on the previous call and then talk about each of the segments individually. To make it extremely clear, while we did pick up a number of shipping days, we also had a number of setbacks in the first half of Q2, which caused us to have to make more distinct fulfillment choices based on customer need and availability. Specifically, we had a number of down days due to reasons that are too detailed for this call, but at a generic level about the intersection of IT, product availability, and operations. The net result of this was a fulfillment environment that was actually worse in the first half of Q2 versus even Q1, and so we did not get the full benefit of the additional days or clawback into the backorders. As a result, we had to prioritize fulfillments on the most critical and clinical items, which are dedicated pump sets, which explains the sequential improvement in Smiths Medical Infusion Systems. In the earlier part of the quarter, it came at the expense of the other segments. What obviously matters is where we are right now, and I'll get to that in a moment as it relates to the status of the challenges we've described, with the short story being it's better. We spent a lot of airtime on the last two calls explaining these two buckets of issues, how we wound up here, and how we're trying to solve them. We'd rather just cut to the status of each. The first bucket of issues are around production and fulfillment operations. With regard to production, with the exception of a few items related to silicone availability, it can generally be said that the entire Smiths production network is producing at acceptable demand levels. We continue to work on securing the base of supply and insourcing the key high-margin disposable components with proper factory staffing levels. The fulfillment process, while still challenging, and as we said on the last call, was quickly becoming our main focal point, has made progress since mid-May, with June better than May, July better than June, et cetera. We still have bumps, but on certain key IT systems issues, et cetera, it has been recently more stable. From an expense perspective, we've been spending carte blanche to improve customer service levels with an ICU mindset. With factories only getting to scale recently, there continues to be a huge hit to gross margin in the short term. There's plenty of demand. None of this really has to do with product features. This is about cleaning up the self-inflicted harm and the basics of blocking and tackling with a good focus on operations. The second bucket of items we talked about were quality-related interruptions, and again, we previously described how we got here. Since the last call, we've made significant progress with communication to both customers and regulators on our view of a path forward and have made some significant decisions. Those decisions, such as stopping sales for certain older generation products and committing to a deliberate and timely remediation plan, have allowed us to begin supporting existing Medfusion syringe pump customers in early Q3. We've also made progress in addressing the root causes of the warning letter received in late 2021. This part feels very similar to Hospira and our previous experience, and we have the right people who have been through the exact same experiences, and our team is now fully embedded into the operation. As we said on the last call, the existence of a warning letter, while undesirable, is the regulatory agency trying to move the ball forward, and we talked about how these regulations give us the right to participate. We're making progress in solidifying the foundation and hope to be in a position where we can demonstrate further progress as soon as possible. Again, regardless of where it appears on the P&L, we are spending heavily, so making progress here is extremely important. Now having updated the main two issues, let me come back to the segments and tie this back to short-term and longer-term profits and value. It's important to start describing the Smiths segments sequentially as they will get folded into the legacy ICU segments in 2023. Given better production and fulfillment on Smiths's dedicated pump sets and some of the other items, we can now see continued sequential growth for the foreseeable future in Smiths' Infusion Systems segment. Smiths' Vascular Access is now getting more attention, and again, we would expect to see sequential growth here in the near term, but we need to commercially execute as Smiths lost the focus on its market positions here. Lastly, material improvements in Smiths' Vital Care probably will not be seen until Q4 after the other two segments. Vital Care is the most international segment of Smiths on a percentage basis, and probably was the most neglected, but there are some valuable sub-segments in there going back to our previous comments on the original portfolio construction. If we add up what we think the Smiths businesses will do over the second half of 2022 and combine those with legacy ICU, we believe we'll be very close to exiting 2022 at the original $2.4 billion annual revenue run rate after taking some large pressure on currency. Operational performance is improving, but we're choosing to spend now in order to be healthier and more stable next year to improve profits. We believe we can earn $180 million-$200 million in Adjusted EBITDA over the back half of 2022, and that probably is a bit more Q4-weighted. Obviously, that implies a full year that is different than our original expectations, and that weighs heavily on us. We did try to say after Q1 that the steeper ramp for the back half was tougher. There was a wider range of outcomes, and after what the situation was through mid-May, we knew we needed to be realistic. We also said that we were very focused on material sequential improvements to the year as each month goes by to make sure we have the right exit run rate heading into next year. To talk about revenue and profitability in the medium term and to simplify the numbers a bit, if we said we could have around $600 million in revenues in Q4 and approaching $100 million in EBITDA, that is basically where we thought we would've been towards the end of Q1 or early 2Q this year. We have gotten knocked down a few quarters, which has been tough to deal with, and everyone competes in the same environment. To that run rate, and to be clear, we're not making a call on exact timing of these items. We know that there are positives that exist. The biggest item is obviously revenue growth. There are also spots, just like with the Hospira transaction, where we have negative margin situations, and while not huge, they do make an impact. In addition to those two items which we control, there are other things we control, like the operational performance leading to all this expedited fulfillment. We are realistically spending over $25 million in 2022 on expedited fulfillment above base fuel rate increases through the year, and we need to bring this number down. We control the remainder of our synergies, which don't come as quickly as the year one items, but we know we're out there. While we don't technically control fuel costs, though we need to address the tactical item and how it should be incorporated to certain products over time, fuel increases and currency have probably been between $40 million-$50 million above our starting budget this year. I'm sure there'll be offsets to synergies and other negatives in the future that we'll find, but there is a large self-help list that as we get more stable, we can start to work down. We'll skip the bookends feature today, but a number of those items are independent of revenue growth. To close with tying that desired income statement back to value a bit, we have not talked about the aggregate positioning of the combined portfolio and its relevance for customers and their reactions. Yes, the situation's harder than we expected, but the customer logic continues to make sense. Like Hospira, we need to change the conversation from the historical perception to demonstrating our value through innovation and service. These portfolios make sense together, and we're working on how to integrate them either literally or economically when sensible. We do believe more doors are being opened as a result of having a broader set of items that are mandatory for care. We get that this needs to show up on the P&L to prove that value. For legacy ICU, our most differentiated businesses will end 2022 larger than ever with appropriate profitability levels. The core premise of the Smiths transaction is to enhance the product offerings for these exact categories that drive our returns, as well as add logical adjacencies predicated on the same characteristics of sticky categories, low capital intensity, single-use disposables, opportunities to innovate, and participation in a logical industry structure. Even though we're consumed with basic operations, we still believe this is to be the strategic case, and the big opportunity over the long term is using the combined portfolio to improve in existing markets and also move as value shifts into new spaces. The construction of the Smiths portfolio was logical and frankly why it survived over the years. The other part of value is maximizing the opportunity with each piece of the portfolio. We believe as we clean up and stabilize the operations, we could be presented with more opportunities here. There's no change from the previous call in our near-term priorities or in our usual bookend speech. While the pandemic introduced substantial volatility, strategically, we do think the weaknesses it has exposed in the healthcare supply chain add to the argument for all participants to be healthy and stable, which has been our commentary since we became a full line supplier. Smiths Medical also produces essential items that require significant clinical training, hold manufacturing barriers, and in general are items that customers do not want to switch unless they have to. The market needs Smiths Medical to be a reliable supplier, and the combination positions us better. Our company has emerged stronger from all the events of the last few years. We've gotten knocked down a bit, but we see the hill to run up again together with our new colleagues to drive value out of the combination. Thank you to all the customers, suppliers, and frontline healthcare workers as we improve each day. Our company appreciates the role each of us has had to play. With that, I'll turn it over to Brian. Thanks, Vivek, and good afternoon, everyone. To begin, I'll first walk down the P&L and discuss our results for the second quarter, and then move on to cash flow and the balance sheet. Along the way, I'll provide our updated outlook for the full year for each of these areas. Starting with the revenue line, our second quarter 2022 GAAP revenue was $561 million, compared to $322 million last year, which is up 74% on a reported basis, reflecting the impact of the Smiths Medical acquisition, along with growth in the legacy ICU business. For your reference, the 2021 and 2022 adjusted revenue figures by business unit can be found on slide three of the presentation. For the legacy ICU Medical business, our adjusted revenue for the quarter was $324 million, compared to $311 million last year, which is up 6% on a constant currency basis and 4% reported. Infusion Consumables was up 9% constant currency and 6% reported. Infusion Systems was up 6% constant currency and 3% reported, and IV Solutions was up 3% on both a constant currency and reported basis. Overall, we were pleased with the results of the legacy ICU Medical businesses. The second quarter was the first full quarter of Smiths Medical under our ownership, and the business contributed $223 million in revenue. As Vivek mentioned, this was less than we expected, as the operational challenges we discussed on our last call have taken longer to address. However, over the course of the second quarter, revenue per billing day improved from April to May and May to June, and we expect this trend to continue for July as we finalize those results. The June revenues, when annualized, were still not back to historical levels, but we have now seen multiple months of sequential improvement since the closing of the transaction. As you can see from the GAAP to non-GAAP reconciliation in the press release, for the second quarter, our adjusted gross margin for the combined company was 36%. This was lower than we had expected due to the impact of several specific items which fall into a few distinct categories. The first category is operational inefficiencies being driven by the current supply chain environment. Here, we saw a 2 percentage point impact to gross margin from a combination of the continued effect of lower manufacturing absorption from reduced volumes, plus additional expenses related to air freight and other forms of expedited shipping to customers. Most of this expense relates to the legacy Smiths Medical operations. The second category is higher market prices for freight and diesel, as well as certain categories of raw materials. The higher freight rates were disproportionately driven by the legacy ICU solutions business, while the higher raw material prices were spread more broadly. These higher freight and raw material costs reduced adjusted gross margin by approximately 3 percentage points. The final category is foreign exchange, which had a 1 percentage point negative impact to adjusted gross margin for the quarter as a result of the strengthening U.S. dollar. As we consider the outlook for the remainder of the year, we believe we have the opportunity to improve on the first category of operational items as we continue to increase manufacturing output and improve customer fulfillment. Given our willingness to expedite shipments to ensure product availability for customers, along with the lag between manufacturing improvements and the cost recognition in the P&L, we don't expect a meaningful improvement to adjusted gross margin this year. As it relates to the categories of freight and raw material cost increases, as well as FX, the outlook we have assumes current levels for the remainder of the year. Therefore, we expect second half as well as the full year adjusted gross margins to be in the range of 36%-37%. Adjusted SG&A expense was $114 million in Q2, and adjusted R&D was $22 million. After adjusting the first quarter closed timing of Smiths Medical, total operating expenses in Q2 declined compared to Q1 by approximately $7 million from a combination of cost synergies and lower personnel costs. Moving forward, we expect total adjusted operating expenses as a percentage of revenue to remain around Q2 levels for the remainder of the year. Restructuring, integration, and strategic transaction expenses were $14 million in the second quarter and related primarily to integration of the Smiths Medical acquisition. Going forward, we expect restructuring integration and strategic transaction expenses in each of Q3 and Q4 to be around the same level as Q2. Adjusted diluted earnings per share for the second quarter was $1.37, compared to $1.88 last year. The prior year results were favorably impacted by a lower tax rate, due mostly to excess benefits from equity compensation, which contributed approximately $0.10. Basic and diluted shares outstanding for the quarter were 23.9 million. Finally, Adjusted EBITDA for Q2 increased 27% to $85 million, compared to $67 million last year. Now, moving on to cash flow and the balance sheet. For the quarter, free cash flow was a net outflow of $86 million, as there were a number of discrete items. During our last two quarterly earnings calls, we said we would invest heavily this year into three key areas. The first was higher levels of inventory to bolster safety stock and allow for onboarding of new customers. Here, we invested $64 million in additional raw materials and finished goods inventory, most of which was related to the Smiths Medical product lines, in order to protect our manufacturing operations from supply disruptions and to better serve customers. The second area was the integration of the Smiths Medical business, and as previously mentioned, we spent $14 million on restructuring and integration. The third was quality improvement initiatives for Smiths Medical, and during the quarter we spent $17 million on quality system and product-related remediation work. Additionally, we spent $24 million on CapEx for general maintenance and capacity expansion at our facilities, as well as placement of revenue-generating infusion pumps with customers outside of the U.S. We continue to expect total CapEx spending in 2022 of approximately $100 million. In future quarters, we don't expect this same aggregate level of spending as inventory levels will stabilize. We also don't anticipate meaningful cash flow generation for the remainder of 2022, as we will continue to invest in the Smiths Medical integration and quality system improvements. Just to wrap up on the balance sheet, we finished the quarter with $1.7 billion of debt and $271 million of cash and investments. Given the results for the first half of the year, along with recent changes in the macro environment for freight expense, foreign exchange, and interest rates, we are updating our full year guidance for Adjusted EBITDA and adjusted EPS. For full year Adjusted EBITDA, we are updating our previous guidance range of $450 million-$500 million to a range of $350 million-$370 million. For full year adjusted EPS, we are revising our prior guidance range of $9-$10.50 per share to $6.20-$6.80 per share. For modeling purposes, for the back half of the year, the adjusted EPS guidance assumes interest expense of $40 million, a non-GAAP tax rate of approximately 23%, and diluted shares outstanding of 24.2 million. In summary, addressing the operational challenges of the Smiths Medical business and the current operating environment have knocked us back a few quarters. However, for the operational challenges, we saw a meaningful improvement in the back half of the second quarter. As Vivek mentioned, this improvement gives us line of sight to exiting 2022 at a total company revenue run rate of close to $2.4 billion annually, which is consistent with our original pre-closing assumptions. The profitability of the business will remain constrained as we invest to repair the legacy Smiths Medical business and fulfillment to our customers and deal with the current macroeconomic pressures. We remain convinced of the longer term opportunity to improve the financial performance of the combined organization with the list of items under our control. Strategically, we have broadened our available markets, and we're working to get all portions of the business on the same trajectory as legacy ICU. We look forward to providing updates on our progress during next quarter's earnings call. With that, I'd like to turn the call over for any questions. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your headset before pressing the keys. If at any time your question has been addressed, you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our host. Our first question comes from Jayson Bedford with Raymond James. Good afternoon. I guess a few questions here. Did the backorder increase in 2Q versus 1Q? It did. Hey, Jayson, how are you? You were a little bit choppy in there. Different answer for different regions. The U.S. back order actually has started to come down now. It's been longer to get the products OUS. OUS back orders went up a little bit. Med Net, probably holding in the same place. I think you described it, but just can you walk through the sequential decline in Smiths' sales if I just normalize for a full 1 Q? If I said it right, Smiths infusion systems went up Q2 over Q1. Vascular Access went down, I think $2 million sequentially. Brian, do you have the Vital Care number? I just don't have it from memory. Vital Care was down, I think, About the same amount. About the same. I thought it was four. Four. Up in Infusion Systems, down in the other two. Minimally down in Vascular Access. I'm just waiting for Brian to confirm the Vital Care number. Is that demand or supply related? We didn't ship as Vital Care was too also. We didn't ship as much, Jason. We were focused on getting the dedicated pump sets out for the infusion business in legacy Smiths, the first essentially four or five weeks of the quarter. We paid the price on those two items. That's what I was saying, sequentially now with the things that have happened, we can see, you know, and it still feels early to us, but I think we could say it, I think we feel like we can show consistent growth sequentially for a while now in the Smiths pump segment. We could see that in kind of the medium term in Vascular Access, but we still got to execute better. I think you won't see meaningful improvement in sequentials on the third segment of Vital Care till the end of this year, right? It's sort of lasting a bit less. Okay. I think early on in the year, you talked about the potential contribution from the legacy business and the Smiths business. I'm just curious, within the $350-$370 in the 2022 EBITDA guide, what is the expected contribution from Smith? Jason, it's hard, you know, now that we're almost six months into the integration to really break that out between the two businesses on the earnings line. Clearly the majority of the shortfall for the full year is related to the legacy Smiths Medical business. I mean, I think Brian tried to directionally say, Jayson, where he said there was 3 points on increased freight and raw material purchases. The majority of that, not all, but the majority was on solutions. You know, you just took that percentage against the legacy ICU business, you can make some extrapolation. I don't want to paint the picture that it's 100% all on Smiths, right? Some of the inflation hit us in Infusion Solutions business. Okay. Maybe last one, and then I'll give someone else a shot. You mentioned Medfusion and kind of the reintroduction of that product. I think you also mentioned you're serving current customers. Are there any restrictions in terms of your ability to fulfill demand there? No, I mean, I think again, we've reached the point where we feel solid and reliable on the testing that we've done. It's sort of our choice how we bring things into the market. I think we feel like the vast majority of, given the history of the product, a huge portion of the market is holding the product. Plenty for us to keep ourselves busy with and where people have experience with the technology, et cetera, we can remediate some of the stuff that's out there on a timely basis. I think it's more we're starting there than anything else. Okay. Thank you. Thanks, Jayson. Our next question comes from Matthew Mishan with KeyBanc. Hi. Good afternoon. Back to Brian. Yeah. Just the first question is for me to get you to, like, the low end of your guidance. It would imply very little improvement, you know, here. Would something need to happen, you know, that was beyond your control for you to get to the low end? Or is that a real outcome, you know, from your current levels of manufacturing? I don't actually think right now, Matt, it's the manufacturing piece so much for the back half. It's all about fulfillment costs. You know, I think we've gotten burned currently from January 6th to mid-April to mid-May. We felt like we really got burned, and we don't want to overestimate any rate of improvement here, right? Yes, it's great. We've had 10 weeks that have gotten a lot better. It's still expensive, and 10 weeks doesn't make a long-term trend. I think we're just trying to be mindful of the journey we've put everybody through, ourselves. I think that makes sense. Last quarter, you bucketed the quality issues that are around, like, $16 million a quarter in revenue. What does it mean, like, in relation to that $16 million to be back to supporting existing customers? It means a portion of that $15. I think we feel like we can participate in now. Not all of that was related to just the Medfusion syringe. There are some other products in Vital Care, some other self-inflicted European quality holds, et cetera. But there is a portion of it that comes back online. Yeah. That's where we're going. Oh. Just if things do continue to get better, is there, like, a hangover from, like, manufacturing absorption of the inventory that still needs to be worked through the P&L? Or if things continue on a trajectory and you can actually see a, you know, better sequential improvement. I mean, I'll go first and let Brian go. I mean, the pain we're feeling right now is, right, if you make a product today and your factory is not as productive, you feel that pain later when you sell that product. Right now, we're feeling the pain of unproductive factories, you know, in Q1 and in part of Q2 and if to the extent product wasn't moving even from the fall of last year. Those factories are much more productive today, and those products are just starting to make their way into the market. We would, you know, minus whatever inflation, labor, raw materials, cost increases that have come through, we would certainly. We're trying to be more efficient going forward, but I'll pause there and let Brian add to that. Matt, maybe to your question, there is a little bit of a lag in between the actual operational improvements from a manufacturing standpoint and when you see those benefits come through the P&L, and that's, you know, can be one and a half quarters or so before you see it. Okay. I asked the question last quarter, this will be the last one, around have you lost any customers? Or do you get a sense that, like, if they're now happier with, you know, the overall, you know, process of remediation and moving forward with ICU and Smiths? I think, you know, to give a very, you know, market-oriented answer would be where there was lots of multiple choice in the market. I think we do believe we've lost some share, and we need to turn that back, very similar to some of the analogies we lived through in Hospira. Where the products were maybe a little bit more limited into the market, or where there were heavy capital outlays and people have equipment that's running fine, where they just need a predictable disposable to show up, they've hung in there. It's a little bit of a different answer if it's, if it's not related to a piece of capital equipment, it's truly a single-use disposable that has lots of choice in the market. At some point, brand matters less if you can't supply. There are spots where brand matters a lot, safety matters a lot, quality matters a lot, and if it's correlated to hardware, it's even more sticky. I think that my story, my opinion on this stuff for all participants, you know, these products last and are a lot longer than anybody expects and are stickier than a lot longer than anybody expects, right? We've seen that in multiple versions of this story. Sure. Thank you, guys. Thanks, Matt. Excuse me, ladies and gentlemen. If you would like to pose a question, please press star one. Our next question comes from Larry Solow with CJS Securities. Thank you, and good afternoon. In fact, just a couple of quick follow-up questions maybe asked a different way. I know it's hard to break out the legacy from Smiths these days. The sort of $45 million-$50 million incremental impact of inflation from the start of the year that you guys called out, that's across the company, I assume, not just legacy. Is that correct? Yeah. Okay. That's across the company, Larry. Sorry. That's what I was trying to say. Yeah, yeah. I didn't want- that 20- I didn't feel like. Yeah, that's okay. It was all- Right, that $25 million of expedited freight would mostly be Smiths, right? Is that fair? Correct. That's what Brian said. Correct. Yeah. That $25 million, the $45 million-$50 million, well, you know, could eventually come down if inflation comes down. That's a number that's, you know, we can talk about in a second, but I have a follow-up question on that. The $25 million, inevitably, if you've, you know, if your fulfillment and production is optimized, then that number should really go to zero inevitably, right? There's always some. We always have. There's something happening somewhere, right? Right. A few million maybe. Under 10, certainly, right? Even in leg- Yeah. Even in legacy ICU, you had little bits of that here and there. I don't wanna say it doesn't happen, but none of us ever experienced a percentage like this. Basically, just to be super blunt, if stuff can get on the water again. Yeah. The forward networks get fully replenished. We're spending money now to try to get the forward networks fully replenished so stuff can stop going in the air and can go on boats. Right. Right. Right. The full range is opening up as we speak. Right. Yeah, absolutely. Then what about. I know you mentioned, you know, you think you can get back. You can exit the year kind of getting back to that sort of run rate on revenue or close to FX currency. Obviously, the margins will be lower, you know, for one, just because of expedited freight costs and whatnot. Then what about, you know, do you feel like, you've, you know, taking a step back from when you bought Smiths Medical to today, anything has really, you know, there are structural things that you didn't realize were there, or is it just more gonna take longer time and obviously you're gonna have this higher inflation, other costs that maybe, you know, which is impacting not just Smiths Medical, but your legacy business and many others too. Yeah. I mean, that there's a lot in that statement, Larry. Right. I- Yeah, my question is, has anything really changed significantly or is it just, you know, more blocking and tackling? You know, there are some, you know, are there some broken tackles here or, you know. You know, I'm just trying to figure out because it seems like, you know, you talk about the business moving, you know, this is a business that moves kinda slow and whatnot, but you're cutting guidance pretty dramatically and, you know, from, you know, when we spoke in mid-May, right? Yeah. Yeah. I think one, as it relates to, you know, we look back on the transaction. Yes, we think it starts with revenues. Getting- Right. The revenues. That's after currency, which has been really rough. If you don't have the revenues in order, you can't get the profits. We think the revenues are getting in order here, and each day and each week is getting better. We think we'll be at Q4, where we should have been revenue-wise, not out of the box, but soon thereof. From a profit perspective. Right. Similar where we thought we'd be three or four months into this. Yes, we got knocked down seven or eight months in this thing. Mm-hmm. On the other hand, we have a much bigger book of business and many more synergy opportunities together across the network, where if we were standalone dealing with some of this inflation on ourselves, I think it would have been tough to find an equivalent amount of things to lay that off on our solutions to, mitigate that. There are merits over time to being bigger here with a coherent portfolio. In terms of, like, the guidance thing, again, back to the previous question, I think there's no reason to try to squeeze blood and marginally disappoint a customer here for the next two or three or four or five months, right? That is holding the share, serving people well, and showing that we can fix this is more valuable than anything. Show that we can get the revenues there, serve the customers, run good factories. Sure. The costs, et cetera, will stabilize and, you know, then we'll have a long list of self-help items that we tried to schedule out there in a lot of detail that add up to a big number if we can get after all of them, right? As long as the customers are right. Absolutely. No, fully understood. Just lastly, I mean, you never wanna squeeze your customer and obviously, there are certain situations where you can't. Just in terms of pricing, and you've touched on it for several calls, but you know, big question when, and you know, you see many industries, companies with, you know, large market shares or, you know, such as yours are able to get price. I realize your businesses are, you know, mostly contracted, but so you spoke about, you know, contract talks and renegotiations for future contracts. Do you feel like you'll be able to get more price? You know, why can't you have some kind of a surcharge in there that covers fuel and other things like many other healthcare companies do that have contracted businesses that sort of helps you in periods like this? Thanks. Yeah. I think I would say, Larry, we are exploring all options. There's no renegotiation of anything going on. I think we were trying to lay out at least our thinking about the way we believe the industry should maybe deconstruct value on some of these items because the historic way of doing business doesn't necessarily apply. In the short term, certainly we will, we're paying attention to what the competitive set is out there, and we'll follow the lead if given the opportunities. Okay. Fair enough. Appreciate it. Thanks. This concludes our question and answer session. I would like to turn the conference back over to Vivek Jain for any closing remarks. Please go ahead. Thanks, folks. It's obviously been an interesting six months. We really appreciate everybody's interest in ICU, your patience. The situation is improving, and we look forward to updating you on our next call. The conference- Thanks, Sharon. Has now concluded. Thank you for attending today's presentation. You may now disconnect.