We could look to get started here. Thanks, everybody, for joining us. I'm Patrick Donnelly, the Tools and Diagnostics Analyst here at Citi. Happy to have Joe Busky, the CFO at QuidelOrtho with us for this session. Again, if anyone has questions in the room, feel free to raise your hand. I can try to grab you. But Joe, obviously coming off 3Q, you guys had a good quarter, reinstated 2024, even gave some preliminary 2025 commentary. So maybe we can start there, particularly on the 2025 piece. A lot of focus, obviously, on the margins, which is your domain. You guys talked about that 100 to 200 basis points off of the 2024 level in terms of expansion. Maybe just talk about the key drivers there, the visibility, the confidence level, because again, I know the margins are an important piece for folks here.
Sure. And by the way, thanks for having us.
Yeah, of course.
It's a great conference. I appreciate the invite.
Yeah.
2025. So we didn't intend to give full granular 2025 guidance. We'll do that in February once we see how Q4 closes. But nonetheless, we felt it would be prudent to give the shareholders' buy and sell side some clues as to what we think 2025 is going to look like. We call them breadcrumbs internally. Give us some breadcrumbs on what 2025 is going to look like, given that there are so many moving pieces. And so if you think about the top line, it's actually pretty simple. We think that labs, which is about half of our business, is a solid mid-single digit growth business. We think that immunohematology, which is a legacy Ortho business, is a solid low single digit growth business. Donor screening, U.S. donor screening, we've been pretty public about the fact that we're winding down that business. So that will be a headwind.
That business will decline from roughly $120-ish million this year to probably $40-$50 million next year. And then for the respiratory side, for SARS, we do think that we've hit a level where the SARS revenue is becoming endemic, fully endemic. However, from 2024 to 2025, there is a government contract that we're serving this year that we won't have again next year. So that's about $20 million. And then on the respiratory revenue, we really need to see Q4 play out before we make any comments about what we think respiratory looks like in Q1 or even Q4 next year. So that's the revenue. On the margin side, as you said, yeah, a lot of moving pieces.
There is the second half of the $100 million annualized cost savings that we've already executed on midway through this year, 2024, which will hit in the first half of 2025, so that's a given that's going to happen. Those were mostly labor-related cuts, not fully, probably 80%-90% labor, and then there's other initiatives that we have in flight that we'll talk a little more about once we get on the February call. I think we just don't want to get ahead of ourselves, but nonetheless, we feel that the 100- to 200-basis-point margin improvement off of the full year 2024 adjusted EBITDA margin of, call it 19.5%, which is the midpoint of our guidance, we think that's a good place to be for modeling for 2025.
Okay. That's helpful. And then I guess you touched on the cost savings a little bit there. Maybe we can dive into those. You guys have laid out that $100 million, to your point, probably $50 million of it rolling in the first half of next year. Can you just talk about what you're seeing there on the cost savings side? Again, I think when people look at your P&L, and we can get into some of the longer-term margins as we go, but there's a lot of opportunity here, right? So I guess, what have you identified so far? Is that viewed as low-hanging fruit? And then we can dive into maybe a little bit of the longer term from there.
Yeah. So I look at it really in sort of three tranches. So if you look at the cost that we took out of the business immediately after the combination, it was about $120-$130 million of the synergies, if you will. Those were duplicate costs between the two companies: two CFOs, two CEOs, two audit fees, two sets of boards. And that's sort of low-hanging fruit of costs that we were able to take out immediately after the combination. And that was, again, largely done probably 18 months out after the combination date. The second tranche of cost savings is what we started midway through this year. And this is mainly, as I mentioned before, the $100 million of annualized cost reductions, mostly headcount. This was primarily a hierarchically-controlled delayering exercise, primarily in areas away from the customer, so we tried to stay away from commercial.
We wanted to do something quick, and we didn't want to damage the relationship with our customers. And so we kind of stayed away from that side of it. And so most of that $100 million is focused away from the customer if you are outside of commercial. And there will be more of these types of cost reductions. I think as an example, on the Q3 call, we mentioned that we were flattening the organization. We took out a couple of senior-level folks who reported to Brian Blaser, our CEO. We're going to consolidate some of the commercial regions from five to three. And so that's a good example of continuing headcount reductions that will continue into 2025. And again, we'll talk more about the size of those continued headcount reductions when we get on the February call.
And then I would say the third tranche of cost reductions really is in the area of procurement. As you think about how we were bringing together these two companies at a period of time when there's a lot of inflation going on in the business, and we were pretty focused on combining, harmonizing the businesses, shoring up the supply chain, not dropping the ball with revenue or customers. Unfortunately, inflation crept into the business. Our competitors, I think, have already taken these costs out largely. We haven't. That's what we're getting on to now. There are projects in flight now on both indirect and direct procurement that we're working on that will provide some benefit in 2025. I would say those are mostly the indirect procurement initiatives. Things like office supplies, IT, travel costs, things like that.
The direct procurement initiatives will take us into 2026. Those are a little more complex.
Yep. Yeah. And I guess when you think about the margin construct, obviously, the cost piece is a part of it. But you have your 2025 kind of breadcrumbs out there on the margin side. And then from there, there has been this discussion of getting back to the mid- to high-20s on the EBITDA margin side. I guess when you think about that longer-term bridge, the cost being, I'm sure, a big part of it, how do you think about just that walk to those types of numbers and the visibility that you guys have and confidence to get there?
Yeah. Great question. So Brian and I have been pretty consistent in indicating that this journey back to where we should be from a margin perspective of mid- to high-20s is a two- to three-year journey. And the reason for that is, one, these procurement savings that I just mentioned a minute ago, some of them, particularly on the direct side, are going to take some time. And so those will take us into 2026. As you think about direct procurement initiatives where you're swapping out, or I'm sorry, bringing in new suppliers, or you're swapping out parts or components of an existing product, you want to be careful with that. And that stuff takes a little time. That will definitely take us into 2026. The other aspect of the margin improvement journey is SAVANNA. SAVANNA right now is a headwind on margins.
I think everyone has heard me say that, and we still believe in this product. I'm sure you've got a couple of questions on SAVANNA. We'll get to that in a minute, but sticking with margin, it's a headwind right now, but at some point, when SAVANNA gets approved in the U.S. and we start to scale up the business, that business will turn accretive to margins, and at this point, it doesn't look to be 2025 because we do think that the revenue contribution from SAVANNA next year will be minimal. It looks to be a 2026 into 2027 event, and then the next piece is Donor Screening. Donor Screening, U.S. donor screening, is a business that we're winding down, and as I said a minute ago, we're still going to have some revenue next year from Donor Screening.
So you really don't get a margin improvement from the full donor screening wind down until 2026. So as you think about all these pieces, that's why it's a two- to three-year journey. But we do feel like if you take all those pieces and start to put them together, that's how you get into the minimum of the mid-20s.
Okay. That's helpful. And you kind of mentioned the CEO transition. Maybe we should have started there. But I guess you've been with the company. Obviously, you were with Ortho and then came on with Quidel. I think it's been about six months, maybe a little more, since the transition. What changes have you seen? Again, it seems like being very deliberate, taking the time, even on the guidance. Everyone wanted it two quarters ago. And kind of waited until you guys had a really good handle to reinstate that. What changes have you seen kind of internally, messaging-wise, with the change at the top there?
Yeah. Brian is really well suited for the job. He's got a fantastic background running Abbott Diagnostics for 12, 14 years, whatever it was. So he's been in the space a long time. He knows the products. He knows the players. Believe it or not, he worked at Ortho way back in the day. I think he ran a couple of our plants back in the 1990s as an operations guy. So trust me, he knows the business, which is really, really helpful. I think the other great thing about Brian is that he has brought in a prioritization initiative where maybe previously we were a little more shotgun approach in not only R&D and what we were looking to do in R&D, but in other areas of the business.
Brian's been very clear that we are going to focus on the priorities, call it two, three, maybe four priorities at the max. I think that is going to pay some nice dividends as you think about the R&D group and what we're trying to do there. Clearly, with R&D, for instance, we've brought in a new head of technology, Jonathan Siegrist, who has a fantastic background as well, having run Cepheid for 15 years. He, again, knows that space, particularly molecular. His focus is on menu expansion, SAVANNA, and improving R&D productivity. Those are his priorities. Those will all be big things, I think, for not only the company, but our shareholders. It's a focus. It's a prioritization of what we should be working on. I think that's one of the best things that Brian's brought to us.
Yep. Okay. And touched on SAVANNA a couple of times. Maybe we can just dive into that one. It's been long awaited, SAVANNA kind of getting to the market. To your point, expectations should be pretty minimal for next year. What's the right way to think about just the cadence going forward here on SAVANNA in terms of the panels coming out, when it contributes? And the commitment still seems like it's there from you guys on SAVANNA, but maybe just talk through that as well.
Yeah. So it's probably worth reviewing where we are with SAVANNA. We have CE Mark in Europe for the box and the respiratory panel. And that was always intended to be a limited launch to help us prepare for the U.S. launch. But it's doing well. It's several million of revenue last year and will double this year. So we're growing that business in Europe. And that's only with a respiratory panel, which is tough to do because you really need other panels to scale up. But nonetheless, we are selling in Europe and we're winning deals on the competitive advantages that we've talked about that will work in the U.S. So we have confidence that the product works well. It will sell. It does have competitive advantages that will allow us to scale up in the U.S.
In the U.S., we have a box approved and we have an HSV/VZV panel approved, and that's essentially a herpes shingles panel. Now, that panel is not a high runner, so it's not really allowing us to place a ton of boxes right now, but nonetheless, it does allow us to talk to customers about the box and about that specific panel. What is coming out in the U.S. to follow that HSV/VZV panel is the respiratory panel, which is honestly, it's table stakes. You just need to have that before we can do anything, and that's really the first thing we're focused on, and then there's an STI panel that'll come. There'll be syphilis being added to the HSV/VZV panel. There'll be a GI panel. There'll be a pharyngitis panel. All those are to come.
I guess the first two, as I said, are respiratory panel and the STI panel. We're looking to do clinical trials for those two panels in 2025. The respiratory panel, as everyone I'm sure knows, you have to do the clinical studies during the respiratory season here in the U.S. So those clinical studies will begin as this respiratory season really starts to pick up and peak as you move from December into January and February. STI panel will be in 2025 as well. We really haven't pinpointed a specific date for that, but it'll be in 2025. So given the timing of the clinical studies, the FDA reviews, and we're not going to get back into the game of sort of predicting when the FDA is going to approve things.
So we're just willing to say that we think we can get those two out in the later part of 2025, but again, probably won't generate significant revenue in 2025.
Okay. Yeah. And you mentioned kind of the competitive advantages seems to have good traction in Europe. Maybe just talk through the competitive advantages. Definitely a question we get is this market, I don't want to say it's saturated, but there's a lot of boxes out there, right? And where do you guys fit? And what's the feedback you hear in terms of why some customers go with SAVANNA over some of the other options?
Yeah. A lot of it, it's really centered on three things. It's turnaround time. As you think about where we intend to place these boxes in small, mid-sized hospitals, clinics, emergency rooms, turnaround time is pretty important, and so we do think that we've got an advantage on turnaround time versus what's out there now. We also firmly believe, and we've heard this from our customers, this isn't us just speculating. Again, we have customers in Europe who give us this feedback as well. Ease of use, ease of use of the product versus what's out there, and if any of you have ever seen a SAVANNA, we've had it showcased at some of the conferences or congresses around the U.S. and Europe. It's a small, almost like a toaster-sized box, very, very simple to use. Will definitely be CLIA-waived in the U.S.
Then the third thing is going to be cost. We do believe that we've got cost advantages versus our competitors as well. When I say that, I'm really talking about the panels and the cost of the panel itself and our ability to not give product away. That's not what I'm saying. We're not going to just give away price. My point is that our cost of producing the panels is less than what's out there now. So we believe that we can put them out there for a lower price. We believe with some of the products that have lower reimbursement rates that we can compete better. The customers will be more likely to use our product versus others out there.
Okay. And I guess SAVANNA, the impact on the P&L is also one that people are quite focused on. I guess what's the right way to think about whether it's some of the getting it onto the market, some of the trials, how that impacts margins, and then again, as it ramps in 2026, the margin profile of this as it becomes a real piece of revenue?
Yeah. I mean, there's a reason that Ortho when I was a CFO at Ortho we were looking to get into the molecular business. And Quidel, actually too, looking to ramp up more into the molecular business. It's typically a higher margin business. It does carry higher margins than clinical chemistry and immunohematology, for instance. And we believe we will achieve those higher margins, but it will take scale. So we've got a high-volume line, manufacturing line on the panels that will be up and running, call it second half of next year. And once we start placing boxes, and again, I would expect that to happen in the later part of next year and get that high-volume line up and running on the panels, we do believe that the margins on SAVANNA will be accretive to the overall company margins.
And that's just getting margins up to where typical molecular product margins are. So it's not like we're trying to do something that's Herculean and outside of what the market's doing already with molecular margins.
Yep. Okay. And then maybe we can circle back, started the conversation around the labs piece. Like you talked about good mid-single, pretty consistent growth. Maybe just talk through the key drivers on the Lab side, visibility there. Again, it feels pretty consistent, but maybe just talk through that business a bit.
Yeah. I think there's really two main things that drive the success of the Labs business for us. One is the customer segmentation that we did in that business probably six years ago, five, six years ago at this point, when it was legacy Ortho only, of course, and that created the focus on the small, mid-sized market, Hospitals and Labs, think 200-250-bed hospitals. That's where that product fits the best, and so that's the first thing. The second would be, again, this was a customer excellence initiative started probably in the same time period, probably six years ago, of the focus on leading with and shifting customers to integrated analyzers, which run both routine chemistry as well as immunoassays, and that has the effect of driving more immunoassay revenue for us.
Right now, our mix of immunoassay and clinical chemistry is inverted from the market. And so the more integrated boxes we place, the more we get in line with market by driving more immunoassay revenue in terms of the total. And so those are really the two key strategic decisions and tactics we're following right now to continue to drive that mid-single digit growth business in labs. Now, we still believe that leading with integrated analyzers has a long runway because right now, only about 30% of our total installed base is integrated. And that's a global number. So it varies different by geography, but globally, it's about 30%. So we believe we can continue to run that play for quite a while.
As far as visibility on the revenues, it does make things pretty easy for my finance team around the world because with five-to-seven-year contracts with customers and with fairly predictable reagent consumable flow-through in the boxes, it is a fairly predictable and stable business, so assuming we continue to keep up with the menu, which we have every intention of doing, we should be able to continue to ride in that mid-single-digit growth range for the foreseeable future.
Yeah. And I think it was the beginning of this year you guys still had kind of that elevated backlog dynamic. Where are we currently on the backlog? And are we kind of normal? What's the right way to think about just the backlog dynamic?
Yeah. Boy, those are painful times. So we, like everyone else in our space, had supply chain problems coming out of the pandemic. And a lot of those supply chain issues manifested themselves into an instrument backlog. We had one. At the height of it, I think our backlog was close to 600 units. And so we did drill down that instrument backlog in 2023. And so by the time we got into the end of Q3 2023, we had drilled that back to a more normalized level. And we've stayed at that normalized level since then. So as you think about some of the comps we've had, particularly early in the year, in the first half of this year, we had some difficult comps in the labs business in Q1 and Q2 of this year because we were drilling down that instrument backlog last year.
But now that we're in the second half of the year, largely those headwinds, the comp headwinds, are done. And so you probably won't see us as much talking about those instrument headwinds year over year as we did in the first half of the year.
Okay. And then kind of on the donor screening, you mentioned kind of the wind down there. Maybe just talk about the decision, kind of what went into that discussion, decision. I think you hit a little bit on the revenue impact. Maybe just talk about the overall profile of that business and the wind down.
Yeah. This U.S. Donor Screening business and the decision to wind it down is classic portfolio optimization theory. We looked at a business that is not a particularly large market. It's about $1 billion in size. It is a low single-digit growth business. Even though we were the number two player, it was really, really heavily dominated by the number one player in the space. The margins were lower than the overall, so it was diluted to the business. And so we knew that to compete, we were going to have to invest in that business. And it just didn't make sense to invest in a small market, which has low growth and lower margins. And so we decided to punt and move our resources elsewhere into larger markets, higher growth, higher margin businesses. We do have customers under contract.
And so that's why it's going to take almost three years to wind down the business. It's not till 2026 that we have basically zero revenue in that business. But we're working through it. And it'll lead to some margin improvement. And we've kind of sized that at probably 50-100 basis points of adjusted EBITDA margin improvement once you get into 2026.
Okay. And then respiratory, obviously a big variable for you guys, as you mentioned, always challenging to figure out where that's going to land. Maybe talk about what the respiratory season so far has looked like. Obviously, a lot of moving pieces for you guys these days with COVID being part of it and kind of winding down to a degree. And then again, just the right way to think about expectations as a range going forward as we're kind of endemic on COVID, but obviously respiratory season still moves around quite a bit.
Yeah. So let's talk about the COVID first because that's been a big focus for the last few years. Obviously, we've seen some big drops in COVID revenue over the last three years. We put an estimate out at the beginning of this year of $150 million of COVID revenue. And I'm happy to say that that is turning out to be a pretty good estimate. The latest number that we gave on the Q3 earnings call was we think it's going to be between $160 million and $170 million for the full year. So that turned out to be a good number. I do think that we are finally in a period where the COVID revenue has become truly endemic.
And I don't expect big drops from here. I think in 2025, we will see a drop because we have a government contract this year that won't recur next year.
That's probably $15 million-$20 million. Outside of that, the professional side of it should be pretty steady. In terms of the flu market, the flu season, I guess I should say, we put in after the miss in Q4 of 2023, we put in place a new way of looking at projecting, forecasting respiratory revenue that looks at three main variables. It's the size of the flu market. It's our market share. It is the mix of product, primarily the mix of combo versus standalone Flu A/B . I think so far, so good, that model is turning out to be fairly accurate for us. Despite Q3 overperforming expectations in terms of respiratory revenue, we still think that the full year respiratory season is going to be about what we called it to be earlier in the year.
And so that's why in the guidance, we essentially took that Q3 overperformance and took it out of Q4 to keep the full year respiratory season intact and what we expect it to be. So it's interesting. It does seem like that we are getting back to patterns that we saw pre-pandemic. And by that, I mean flu, for instance, spiking in December, which is typically what you would see if you went back pre-pandemic. During the pandemic and shortly after the pandemic, we saw flu spiking earlier. But this year, it seems like we're getting back to a more normal, typical pre-pandemic pattern of the ILI will start to spike in December after Thanksgiving. Once it gets cold around the country, which I know it is, and once everybody gets together for the holidays, it'll start to spike.
So I would say that this respiratory season at this point is shaping up pretty much how we thought it would. The other data point is the southern hemisphere flu season, which was an above-average flu season. So that's a good data point to keep in everyone's back pocket. It was fairly long in duration as well. So we'll be watching carefully how it unfolds over the next few months. And then once we see how Q4 respiratory fully unfolds, then we can, as I said, we can give more fulsome guidance for 2025 for the full year.
Yeah. And did you guys, you talked to a few players that felt like maybe there was a little bit of 3Q kind of pull forward, if you will, of ordering, kind of stocking up after some shortages in past years. Did you guys see any dynamic like that and any commentary there?
Yeah. I think there was a little bit of that, but I would also say that distributor inventories were lower than they were a year ago. So that's always a good sign.
Yep. Yep.
So yeah, we did think that the overperformance we saw in Q3 was mostly timing. And we pulled it out of Q4.
Yeah. And you mentioned some of the things you look at are the combo versus solo mix and then market share. Maybe we can talk about those two. Where do you feel like share has trended the last couple of years? Is there any shift towards maybe some of the more, obviously, again, there's a lot of boxes out there on the PCR side, the quick turnaround. Have you seen any share shift broadly in respiratory?
We have taken some share over the last couple of years, which is good. We hope to continue to see that. And again, I'm speaking about the rapid antigen share. The molecular is sort of its own market. And so we'll speak about rapid antigen only. So we have taken some share. And we'll talk more about that once we get through Q4 as to what happened in this respiratory season. But yeah, I mean, if you think about the overall flu RSV strep market compared to pre-pandemic, I mean, it's almost doubled in size in terms of the overall size of the market. So it's really amazing to see what's happened. The combo test, which we characterize as part of our flu revenue, not COVID revenue, has proven to be pretty stable and durable.
Again, for the last two-plus years, it's been greater than 50% of our overall flu revenue. So we feel like that's here to stay. And the pricing has been fairly stable as well.
Yep. And then always topical with you guys is the China piece. And I think one of the bigger questions we're getting lately, whether it's post-election, whatever it may be, but I think there's questions, VBP, anti-corruption. I guess where are we on that front? I mean, is there a risk of that continuing to escalate and how are you guys framing up the scenarios there?
Yeah. So China is a complex place to do business, for sure. We watch it closely. We'll continue to monitor it closely. We believe, though, that if you take each of the pieces that you just mentioned, the VBP, first of all, we don't think it's going to have significant impact to our revenues this year or next year. And the reason we have some confidence there is that a lot of the VBP has been focused on immunoassay, which for us, our immunoassay business in China is not as strong as some of our competitors. And so there would be less of an impact to us. There's also the dry slide technology aspect of it that right now, dry slide technology has been largely exempt from a lot of the VBP policies.
Based on what we see now, again, we feel pretty good through this year and next year. We'll continue to monitor it, and if things change, we'll certainly talk to the shareholders, to the investor base as quickly as possible about those changes. Anti-corruption has definitely slowed down some instrument purchases this year, and we think, though, that that impact's going to start to abate next year, and ultimately, the anti-corruption policies are a good thing for us and the other multinational companies doing business in China because we typically all have very strong anti-corruption policies and procedures in place. Reimbursement, I mentioned that on the Q3 call. We do expect there to be some reimbursement changes on cardiac products in some of the provinces in which we sell. Not a big impact, but I thought I'd call it out just to be fully inclusive of all the issues.
At most, it's probably 1% of the revenue in China that we expect an impact of, and then I guess the wildcard, if you will, would be tariffs. With President-elect Trump, it does seem like there's going to be tariffs. I don't think there's any denying that there's going to be some increase in tariffs at this point. Nobody knows how much, how big these tariffs would be. We don't import a ton of products in from China, so I don't think that's going to have a big impact on us, but if I could just stay on topic and extend it, if you think about tariffs, potentially increased tariffs on Canada or Mexico, for us, again, I don't think Canada would be a big impact. We don't import a lot from Canada. Mexico, there could be a little more significant impact because we do manufacture some instruments in Mexico.
But we've got some options in front of us that would mitigate that risk if it were able to get too significant.
Okay. And what is that exposure in terms of, is there a percentage you can throw around on the Mexico piece in terms of what's imported for you guys on the components and things like that?
I don't know that I can give you an exact percentage, but I will say we manufacture several of our instruments in Mexico. But we also manufacture in the U.S. So as you think about options to mitigate, we would be sort of shifting manufacturing between Mexico and the U.S. if the impacts were to be too significant for us.
Sure. Yeah. And then maybe just circling up on the China piece, what's the right way to think about just the growth in that region? You put all that together, right? A lot of variables for sure. But how are you guys thinking about that region overall as a growth outlook?
Yeah. I think this year, as in the past several years, we still think high single-digit growth for the full year is the right place to think about. As you move forward in the 2025, I would moderate to say between mid-single-digit and high single-digit, and that's really just giving some pause to some of the reimbursement issues that we're seeing there.
Okay. And then maybe just in the last few minutes here, we can talk a little on the balance sheet. Again, always a focus for investors. I think you guys are currently in the low four range on the leverage side. How are you thinking about just debt paydown? I know that's still a priority for you guys. What's the right way to think about that leverage ratio going forward? And yeah, maybe we can start there.
Yeah. Leverage is obviously an area of great focus for us. As you said, at the end of Q3, the leverage ratio looking at the financial statements was a tick over four. The pro forma leverage ratio under the credit agreement, which allows us to add back pro forma EBITDA adjustments for cost reduction initiatives, was 3.3. And I still believe that Q4 will be similar. We'll probably tick down a bit from Q3, but similar to Q3. As you move through 2025, we're not ready to give real precise numbers. But I can tell you that we do expect that the leverage ratio will begin with a three next year off the financials. How far we can drill that down, we'll talk more about that in February. But it's a focus. It's definitely number one capital allocation priority for us right now.
Not that we're not looking at the potential M&A or business development deals, but anything we would do in that area would likely be around the areas of distribution agreements, license agreements, nothing that would take the leverage ratio back up significantly. So it is a focus. We think that ultimately, as you think about the target of where we'd like to be for a leverage ratio, it's 2.5x-3.5x . And I would say that the journey to getting there is going to be the similar journey duration as the margin improvement because they kind of go hand in hand as you think about the margin improvement and the extra cash that kicks off. I would think that the leverage ratio will tick down as EBITDA grows and we continue to make those payments down on the debt.
I guess once you get into that range of two and a half, three and a half, to your point, M&A, I'm sure you guys at least keep an eye on things out there. Are there areas of the portfolio where you feel, hey, we're underserved, maybe inorganic makes sense in terms of bolstering there?
Yeah, there's always good opportunities out there. Price is always pretty important when you look at those types of things. But I would say any near adjacencies to existing business units that we have now would be an area of focus for us. I don't see us branching into new areas. I just don't see that happening. But if we could bolt on additional products within point of care, for instance, that would drive up the growth rates there, I think that would certainly be something we'd be interested in.
Okay. Maybe we'll leave it there, Joe. Thank you so much for coming out. Appreciate the conversation.
Thanks, Patrick.
Yeah, for sure.