Greetings. Welcome to Bausch Health First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to Mark Maico, Investor Relations. You may begin.

Thank you, Holly. Good morning, and welcome to Bausch Health's first quarter 2023 earnings conference call. This is Mark Maico, Investor Relations for Bausch Health. Participating in today's call are Thomas Appio, Chief Executive Officer of Bausch Health; and Tom Vadaketh, Chief Financial Officer. Before we begin, I'd like to remind you that our presentation today contains forward-looking information. We would ask you to take a moment to read the forward-looking statements at the beginning of the slides that accompany this presentation, as they contain important information. Our actual results may vary materially from those expressed or implied in our forward-looking statements, and you should not place undue reliance on any forward-looking statements. Please refer to our SEC filings and filings with the Canadian securities administrators for a list of some of the factors that could cause our actual results to differ materially from our expectations. We use non-GAAP financial measures to help investors understand our ongoing business performance. Non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should be considered along with, but not as an alternative to, measures calculated in accordance with GAAP. You will find reconciliations to our non-GAAP measures in the appendix of the slides that accompany this presentation which is available on Bausch Health's Investor Relations website. Finally, the financial guidance in this presentation is effective as of today only. We do not undertake any obligation to update guidance. Our discussion today will focus on Bausch Health, excluding B+L. However, we will briefly comment on Bausch + Lomb's results announced yesterday. We will refer to year-over-year comparisons with the same period last year, unless otherwise noted. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on May 4, 2023. With that, it is my pleasure to turn the call over to our CEO, Thomas Appio. Tom?

Thank you, Mark. Welcome to those joining the call this morning. It's been almost a year since I assumed the role of CEO at Bausch Health. Although we face some challenges, we have strong brands and are working to balance a difficult financial position while continuing to invest in and grow the business and our pipeline. Following the IPO of Bausch + Lomb in May of last year, we built a resilient executive leadership team known for hard work, dedication, and accountability. Despite some obstacles, we have achieved a lot over the past year and are both hopeful and realistic about the future, as we aim to enhance our potential and build a great healthcare company. Our team is focused on improving the remaining Bausch Health operations through operational excellence and targeted investments in promising areas like Salix, Solta, Dentistry, and our International business. Starting in the latter half of 2022 and continuing this year, we are ramping up investments in sales, marketing, and R&D to drive growth in Salix. I will provide more details on this shortly when we review the business segments' performance. Our International business includes a branded generic segment in EMEA and Latin America, alongside a branded segment in Canada. Collectively, this segment is both profitable and experiencing growth. To ensure sustainable long-term growth, we need to keep introducing new products into our portfolio, as we have historically done through business development and licensing deals that are generally not capital intensive. Our neurology, dermatology, and generics segments are facing significant challenges, with over 70% of the revenue from these areas coming from products that have lost exclusivity and are now facing generic competition, which is impacting both volume and pricing. We manage these businesses with a focus on optimizing profits and cash flow, and we will continue to explore opportunities to expand our portfolio. We have also intensified our focus on R&D and business development, which are crucial for our company's success. We are accelerating certain parts of our R&D efforts, and Tom Vadaketh will provide more insights on this soon. Let me highlight some key developments in our pipeline. For amiselimod, the Phase 2 trial is progressing and is expected to conclude in the second half of this year. This is a new oral S1P receptor modulator aimed at treating mild to moderate ulcerative colitis. Regarding rifaximin, we are working on developing new formulations to meet unmet medical needs. We are increasing our investments in the RED-C program, which aims to prevent the first occurrence of hepatic encephalopathy in patients with early decompensation cirrhosis. Two global Phase 3 studies are currently ongoing, and we expect to open clinical trial sites in over 15 countries by the end of Q3, with enrollment on track. We have held scientific advisory meetings with regulatory bodies in the Netherlands and Canada, and we plan to meet with authorities in Japan and China later this year. In Solta, we are on track for FDA submission of the next-generation Fraxel skin resurfacing device later this year, which we anticipate will be well-received. Clear and Brilliant Touch submissions are planned in Canada and Europe in 2024, with Asia Pacific submissions set for 2025. We are also developing the next-generation VASERlipo system for late 2024 release and enhancing security measures to prevent counterfeit products. In dermatology, we are expanding our acne portfolio as FDA has accepted our New Drug Application for IDP-126, which has a PDUFA date of October 20, 2023. If approved, IDP-126 would be a first-in-class treatment for acne vulgaris. Our submission in Canada is also set for Q2 this year. We are actively seeking business development opportunities that align with our current capabilities and exploring new therapeutic areas. We are proud of our R&D team's efforts to advance our pipeline and will continue to focus on obtaining approvals for these products. Now, turning to the first quarter, I am pleased with our performance. We achieved solid results that met our expectations. Total reported revenues declined by 2%, with organic revenues flat compared to the prior quarter for Bausch Health, excluding B+L. I'm happy to report that three of our four business segments, Salix, International, and Solta, showed growth compared to last year, both reported and organic. Let's delve into each segment's performance. Salix saw reported and organic revenue growth of 7% in the first quarter, driven by increased demand and positive trends in XIFAXAN prescriptions across all channels. We are thrilled with Salix's performance this quarter. XIFAXAN is an excellent treatment option for healthcare providers, and we've increased our marketing investments for its approved indications. Our targeted consumer activation strategies are being deployed across various media channels to foster consumer engagement. Additionally, we expanded our institutional sales force by 40%, allowing us to reach new networks and educate more healthcare providers on therapy initiation for patients. We are implementing AI-driven solutions to enhance our commercial engagement, utilizing artificial intelligence and machine learning to optimize our interactions with physicians. This initiative aims to significantly improve our customer interactions and broaden access to appropriate treatments. We are also adopting a data-driven approach in our medical strategy to better serve HE and IBS-D patients, expanding our specialized medical field team to close significant patient care gaps. In the International segment, sales grew by 5% organically and 1% reported, with all three regions showing organic growth. Key markets like Poland and Canada recorded double-digit growth. Our sales and marketing teams in Europe are driving growth through healthcare provider education, while in Canada, we are focusing on promoting RYALTRIS. Solta achieved 6% organic growth this quarter, mainly driven by strong demand in Asia Pacific, excluding China. We're cautiously optimistic about recovery in China following lifted COVID restrictions. In the U.S., our efforts will focus on expanding direct-to-consumer campaigns and enhancing our sales and marketing teams, as Solta presents a significant opportunity for Bausch Health. In the Dentistry segment, we reported 4% organic growth for the quarter, as we concentrated our commercial efforts on ARESTIN, an antibiotic for treating adult periodontitis. The periodontal treatment market is projected to grow significantly by 2031, and we are targeting both private practices and corporate dental service organizations in our approach. In the Diversified segment, however, we experienced a 21% decline in sales, both on an organic and reported basis, particularly within neurology, dermatology, and generics. We aim to stabilize our performance in this segment by investing in marketing for APLENZIN and expanding awareness for JUBLIA, both of which have shown increasing prescription numbers. Overall, I am pleased with our first-quarter results, which align with our expectations. We are maintaining our guidance for Bausch Health excluding B+L this year and are committed to delivering long-term value for our stakeholders. Regarding key priorities, we are ongoing with our efforts to reduce debt. In the first quarter of 2023 for Bausch Health excluding B+L, we reduced our debt by about $100 million, including repayments on our revolver. Since the B+L IPO, we have achieved a significant reduction of $3.3 billion in debt and will continue to manage our capital structure effectively. We reached a tentative settlement with the IRS concerning the Granite Trust and anticipate final resolution by the end of the year. As for the XIFAXAN proceedings, the current court decision delays Norwich's ANDA from final FDA approval until October 2029. Norwich has sought to amend its ANDA but we are opposing this motion and are waiting for the court's decision. Finally, we believe that separating Bausch + Lomb will position us strategically, allowing both companies to operate independently and stably. I will now hand the call over to Tom Vadaketh, who will elaborate on our quarterly performance. Tom?

Thanks, Tom. Hello, everyone, and thanks for joining us. My comments today will refer to organic growth and adjusted results. We closed the quarter with consolidated first quarter revenues for Bausch Health of $1.9 billion, up 4% on an organic basis over the same quarter last year. First quarter revenues for Bausch Health excluding B+L were $1 billion and flat on an organic basis, with growth in our Salix, International, and Solta businesses. Let me discuss each segment in greater detail as shown on Slide 11. First quarter, Salix revenues increased 7% to $496 million. This increase was largely due to higher demand for XIFAXAN 550, TRULANCE, and RELISTOR, coupled with relatively favorable changes in channel inventory this quarter for XIFAXAN 550 and TRULANCE in comparison with the channel inventory changes in the prior year. XIFAXAN revenue grew 7% in the quarter and overall demand grew 4%. In the first quarter, we continued to see an uptick in non-retail demand at institutions, such as hospitals and outpatient clinics, increasing our market share. We also saw a slight increase in demand from long-term care facilities, but we believe the shift in the HE patient journey post-COVID with patients going directly home from the hospital rather than to long-term care or step-down facilities is ongoing, and we are keeping a close eye on this trend. As Tom said, we have increased our investments in Salix during the quarter, and we plan to invest further in the remainder of 2023. We are also pleased with the sales performance of RELISTOR and TRULANCE, which posted increases of 29% and 19%, driven by total script growth of 22% and 10% respectively in the first quarter versus the prior year. International revenues were $247 million, an increase of 5% on an organic basis during the first quarter, led by strong growth in Canada and Poland of 11% and 15% respectively. We also saw double-digit growth in a number of key brands. Solta Medical revenues of $73 million increased 6% on an organic basis in the first quarter. Our Asia Pacific business grew 7% with strong demand despite a sales decline in China due to the effects of COVID-related government restrictions in the early part of the first quarter, immediately following the opening up of the market from COVID. Excluding China, the region grew 35%. In the U.S., sales were slightly down driven by lower volumes. We are continuing the expansion of our DTC campaign in the U.S. and the expansion of sales teams in Europe. Diversified revenues were $197 million, down 21% on an organic basis in the first quarter. For neurology, lower sales were mainly driven by lower demand for WELLBUTRIN, as well as net pricing pressure on APLENZIN, although APLENZIN script growth remained positive at 4%. In dermatology, JUBLIA sales were impacted in part by a shift in patient coverage mix, which reduced net pricing, the effect of which is higher in Q1, as patient deductibles reset at the beginning of the year. JUBLIA scripts grew 17%. These decreases were partially offset by our Dentistry product ARESTIN, which had sales growth of 5% in the quarter. We continue to expect challenging market conditions in the neurology, dermatology, and generic businesses for the balance of the year, and remain focused on stabilizing this part of our portfolio. Lastly on Slide 12, Bausch + Lomb revenues were $931 million, up 8% on an organic basis in the first quarter, with strong organic growth across all B+L segments. Turning to the P&L for the quarter on Slide 15, I'll first refer to results on a consolidated basis and also provide some additional color for the performance of Bausch Health excluding B+L. The first quarter consolidated adjusted gross margin was 70.1%, 120 basis points lower compared with the prior year. At Bausch Health, excluding B+L, the adjusted gross margin for the first quarter was approximately 79.3%, 90 basis points lower than last year. The decrease was mainly driven by favorable net pricing adjustments in the prior year. On the B+L side, the unfavorable change in gross margin was mainly driven by higher costs of inventory, product mix, and pockets of supply challenges. Consolidated adjusted operating expenses for the first quarter were $834 million, an increase of $129 million or 18% with higher SG&A and R&D expenses. For Bausch Health excluding B+L, operating expenses increased by approximately $76 million while B+L reported an increase of $53 million in operating expenses. Selling and marketing increased for Bausch Health excluding B+L due to the investments we are making in the Salix sales force, go-to-market channels, and increased advertising and promotional activity. The increase in consolidated adjusted G&A costs reflects the impact of the separation and the costs to stand up two public companies. Adjusted G&A for Bausch Health excluding B+L increased by $29 million driven by the favorable impact in the prior year of a settlement we received relating to a contractual dispute and TSA fees received from B+L in Q1 2022. We're in the process of separating B+L's IT infrastructure from the rest of the company and continue to make significant progress reducing our reliance on transition services. Also of note, in our pharma business, we successfully migrated our U.S. and Ireland operations to a new Enterprise Resource Planning or ERP platform, meaning that all major markets are on dedicated systems. The consolidated R&D expense increased 13% and represented 7% of net sales, flat compared with the first quarter of last year. For Bausch Health excluding B+L, R&D expenses increased by approximately $16 million, primarily for Salix, due to the focus on our clinical programs and regulatory activities to support our mid and late stage product development. First quarter consolidated adjusted EBITDA was $605 million, which includes $17 million of adjusted EBITDA attributable to the B+L minority interest. This was a decrease of 18% versus last year. For Bausch Health excluding B+L, adjusted EBITDA was $462 million, a decrease of 18% from last year, reflecting the factors previously described. On a consolidated basis, the first quarter adjusted EBITDA margin was 30.2%, compared with 38.2% last year. Adjusted EBITDA margin for Bausch Health excluding B+L was 46% and for Bausch + Lomb was 15%. Let me briefly touch on the GAAP interest expense we are reporting in the quarter. The accounting required for the debt exchange last year significantly impacted our GAAP interest expense, lowering it by $74 million this quarter. As you may recall, a substantial portion of the interest on the newly issued debt has been recorded on the balance sheet as a premium, which will be reduced as interest payments are made. Contractual interest costs for the quarter based on principal balances was approximately $381 million on a consolidated basis and $330 million for Bausch Health excluding B+L. Turning to cash flow, adjusted cash flow from operations on a consolidated basis in the first quarter was $70 million versus $325 million last year. For Bausch Health excluding B+L, the adjusted cash flow from operations was $94 million, which was in line with our expectations. Adjusted cash flow includes adjustments for the payment of separation costs, business transformation costs, and also includes payments of the full contractual interest. This quarter's cash flow was affected by the unfavorable timing of certain working capital movements, as well as higher interest payments due to the lumpiness of interest coupon payments. Now let's turn to our balance sheet on Slide 16. As Tom mentioned earlier, the process of deleveraging our balance sheet is ongoing. And in the first quarter of 2023, we have reduced our debt for Bausch Health excluding B+L by $105 million, including revolver repayments. As slides 17 and 18 show, total debt for Bausch Health excluding Bausch + Lomb at the end of the quarter was $16.5 billion, which consisted of $15.5 billion of restricted debt issued by Bausch Health excluding B+L, and $1 billion of senior secured notes issued by the unrestricted subsidiary created in the third quarter of last year. Excluding B+L debt, approximately 85% of our debt is fixed. Approximately 70% of the company's debt on a consolidated basis is fixed. Our 2023 guidance for Bausch Health excluding B+L is unchanged, and can be viewed on Slide 20. For Bausch Health excluding B+L, we continue to expect revenues in the range of $4.45 billion to $4.6 billion, representing growth of 2% to 5% on an organic basis. Full year adjusted EBITDA for Bausch Health excluding B+L is still expected to be $2.3 billion to $2.4 billion. As a reminder, our EBITDA expectations reflect increased investments versus last year. We continue to invest in sales and marketing activities to drive growth in our key brands in our Salix, International, and Solta Medical segments. These investments include expanding our Salix institutional sales force footprint, the first DTC marketing campaign for HE, and exciting campaigns as we launch products like RELISTOR and UCERIS in Canada. We expect to see the benefit of this spending later in 2023 and into 2024. As Tom mentioned earlier, we are pleased with the progress we are making on our product pipeline, and our EBITDA expectations also reflect increased R&D spending to maintain this progress through the rest of the year. The performance for Bausch Health excluding B+L in the first quarter was in line with our expectations. As I mentioned in our call last quarter, the first quarter of the year is typically weaker than the subsequent three quarters, due to the annual resetting of health insurance deductibles in the United States, which impacts the patient out-of-pocket cost. While we don't provide guidance by quarter, our expectations are for stronger growth in quarters two through four, relative to the first quarter, when we also anticipate the benefits from our sales and marketing investments will start to materialize. Moving below EBITDA, our full year effective non-GAAP tax rate is expected to be approximately 15%. We expect our contractual interest cost to remain unchanged at approximately $1.3 billion. Lastly, we continue to expect Bausch Health excluding B+L to generate approximately $625 million in adjusted operating cash flow. As I said earlier, adjusted cash flow includes adjustments for the payment of separation costs, the payment of the full contractual interest, and also includes estimated cash tax payments inclusive of a tentative Granite Trust settlement. I'll now hand the call back to Tom.

Thank you, Tom. In summary, we are building on the momentum from the second half of 2022, as we continue to focus on our core businesses, driving growth through operational excellence and our new high-performance, results-oriented culture. We will make investments in key businesses that have growth opportunities such as Salix, Solta, Dentistry, and the International business. We continue to invest in our R&D pipeline, including our global development programs for RED-C, as well as the continued development of amiselimod. Our mid and late-stage R&D pipeline is active and exciting, and we are looking forward to sharing more details. When I took over as CEO, I told you I wanted to create a fit-for-purpose company, and we will continue on that journey, looking to simplify our business, invest wisely, and grow profitably. We will also improve our capital structure, and I've already made significant progress in deleveraging the balance sheet. Together with this gives us the ability to better focus and invest in our core business. I want to thank the global Bausch Health team for all their resilience and motivation, working each day to build our special company, driving performance through hard work and accountability, powering up our potential, and elevating people's lives each and every day that use our great products. On behalf of the entire BHC team, I thank you all today for your interest in and support of Bausch Health. With that, we will now take questions. Operator, please open the line for Q&A.

Certainly. Your first question for today is coming from Glen Santangelo at Jefferies.

Yes. Thanks and good morning. Thanks for taking the question. Hey, Tom, I just want to follow-up on your comments regarding the separation of Bausch + Lomb. You seem to suggest it still makes sense. Could you maybe give us a sense of what are the big hurdles that you need to climb over in order to be able to execute the spin? And in particular, there have been a lot of questions around the XIFAXAN litigation, if that's sort of a gating factor to ultimately get a solvency opinion, which will pave the way for the spin? So if you could just let us know what pieces need to be in place, given that the leverage seems to already be in the acceptable range?

Sure, Glen. Thanks for the question. So as you know, we continue to evaluate potential options to maximize stakeholder value. As I said in my prepared remarks, we believe the separation of Bausch + Lomb makes strategic sense, and we remain focused on creating two strong companies. What I would say is that we are evaluating all the relevant factors and considerations regarding the distribution as we assess the potential impacts of Norwich in terms of the XIFAXAN litigation. We are looking at each and all the alternatives that we can, as we look at some of the things that need to come together for us. But I would say, I'll turn it over to Tom who can discuss what are some of the things that we still need to do.

Yes. Thanks, Tom. I don't know if I have much to add. We have committed to creating two financially strong, viable companies. We continue to work on the balance sheet on the BHC side. Both management teams you heard yesterday from Brent and Sam, and today from Tom and I, remain focused on driving these businesses, improving performance, and growing revenue. We have not given a timeframe as you know, Glen, and that remains the case. We are not going to put a forecast out there. But at the right time, we will separate both teams, and both boards believe that the right thing to do is to separate. It will allow the two management teams to focus on running pure play companies. And so we will move towards that goal.

Okay. Please continue, Tom. My apologies.

Yes. We are continuing to carefully and thoughtfully evaluate all such strategies and we will proceed with evaluating these strategies in the best interest of all stakeholders.

Okay. Thanks. Tom, maybe if I could just ask a quick follow-up question. A lot of focus on the 1Q EBITDA sort of coming in a little bit lower-than-expected. And in your comments, you sort of mentioned that 1Q is typically weaker because of the reset of the deductibles. If you look at the past couple of years, right, EBITDA also stepped down in the second quarter. And so in your remarks, you seem to suggest that this should be the low point of the year. But given your guidance, it looks like the ramp is pretty steep in the back half of the year as a result of that. I'm just curious if there is anything else that I'm missing? Thanks.

Yes. We have reiterated our guidance, Glen, as you noted, and feel pretty good about it. Q1 is typically lower on the top-line. I'll mention a couple of things. Last year, we had a number of net pricing adjustments. So basically not the pricing that we were taking in the market, but net pricing adjustments in the gross-to-net area, that perhaps sort of exaggerates the year-on-year performance delta. And then in addition to that, we are making investments, as you noted, in the first quarter that we didn't have last year as we are lapping a quarter with pretty low investments. So we feel pretty good. We think these investments will drive the growth that we are expecting in quarters two through four. And yes, I don't want to give you specific guidance per quarter, but we obviously do expect an uplifting of performance in order to get back to revenue going up 2% to 5% and EBITDA growing 2% year-on-year.

Okay. Operator, next question.

Your next question for today is coming from Douglas Miehm at RBC Capital Markets.

Thank you. Tom, what I'd like to start off with is just XIFAXAN. After last year of flat prescriptions, we are starting to see some growth. And perhaps you can tell us what's working there? And if you think there is going to be an acceleration in the year-over-year growth that you are seeing, or is it the 2% growth figure, the one to use on the growth?

Okay, Doug. Thanks. So clearly, we are really happy about the performance of our Salix business and XIFAXAN growth. And as I said in my prepared remarks, 7% growth in the quarter, overall demand increase of 4%, increases in non-retail demand at institutions, growing hospitals and outpatient clinics. So really, all good signs encouraging XIFAXAN script growth in all the channels. This is really something that we have been looking at and following very closely. What I would say is, we are investing in our field force, as I talked about artificial intelligence and machine learning, we think we can really accelerate as we launch that project. I talked about the institutional sales increase, which will have a nice benefit for us. And clearly, the investments we are making in our medical affairs team, we think there is a large unmet need. XIFAXAN is a great product in two indications for IBS-D and HE and we think there is a great unmet need, and with the investments that we are making in our medical team to go out and talk to doctors and educate them on these diseases, will really provide great care to patients for the future. So we are really looking forward as we launch these programs, we started some of it in the back half of last year, and really the ramp-up is why you see especially on the SG&A line, the investments that are going in there. So we really think that we will have a really good opportunity to continue to grow this franchise and we are really excited about it.

Okay. Good. And just related to that, of course, I think I'm just curious, the timing of the court's decision as it relates to the skinny label. Do you have any better information on that? I know at one point you were thinking it could be back in Q4, and that obviously changed. But is everyone still thinking it could come this quarter, or do you have some revised information?

As I said in my prepared remarks, we are still waiting for the court's decision on the motion. I don't have anything, no changes or updates at this time, other than what I had in my prepared remarks.

Your next question is coming from David Amsellem at Piper Sandler.

Thanks. So wanted to ask about the longer-term picture and solvency. And that's I guess in context of a lot of maturities in the later part of the decade. And the fact that in generic competition for XIFAXAN in '28 and beyond. So I just wondered if you could frame how you think about solvency and ultimately how you can get the capital structure to a more stable place? Thank you.

Yes. David. Let me take that. Tom Vadaketh here, David. Obviously, I'm sure you don't expect us to issue long-term projections here. We would not talk about any year past this year. But I would just maybe comment on it in a couple of ways. One, Tom has reiterated today that when we are thinking about separating the companies, one of our focus areas is to create two strong, financially viable companies, and hopefully that speaks for itself. You have seen us in action for about a year on both sides with both companies. We have improved operating performance. We are making investments in growth that will go towards assuring the long-term viability of the company. And we have been fairly agile, I would say, in dealing with our balance sheet. We have reduced debt since the IPO for this company by $3.3 billion. And so we are going to continue to work on all of those fronts and keep improving the prospects of this company. I mean that's why Tom and I are here, and we are excited for the future.

If I may sneak in a follow-up, I guess maybe drilling down. I mean, how do you address debt pay when you have got $4.5 billion due in '27 and $5 billion due in '28 and your biggest selling drug is going to lose exclusivity?

Yes. I mean, I can't comment on details. Of course, the company is highly cash generative as we go forward. And then as you know and this applies to all companies, you don't expect to pay every single dollar of your debt down, you will at some point refinance. What we have to make sure is that our company has the right financial position at the time. Also, we look at the future prospects of the company. We look at the pipeline that we are investing heavily in, and we are investing in future growth, and that will all go into the mix when the time comes to deal with those maturities.

Yes, David. Just to add to that, that's why in my prepared remarks I went through the R&D pipeline. As I said, we are excited about it. We are looking forward to getting more data as things come through. But we have some really interesting projects ongoing in R&D that will help us for our long-term growth. Okay. Operator, next question.

Your next question for today is coming from Jason Gerberry at Bank of America.

Good morning, guys. This is Qi on for Jason. Thanks for taking our questions. So thank you for providing an update on the current litigation matters. You've discussed the Granite Trust. You have discussed the recent motions. I didn't hear anything about the recent proceedings in fraudulent transfer in New Jersey, pardon me. Can you talk about what's the implications there in that case update? And how does that impact the timeline for company separation? And I follow-up after that. Thank you.

Okay, Qi. I'll take that question. So we are pleased that the significant portion of the claims were dismissed at this early stage. So that's firstly. Second, we remain confident in our position in this litigation with respect to the remaining allegations. Beyond this, we do not intend to comment on any ongoing litigation at this time. All right? At the end, we want to again reemphasize to two strong companies. That is our goal. You had a follow-up?

Yes, thanks. So I guess the second question is, what is your understanding of whether the fiduciary duty of the Board is governed by U.S. or Canadian law? I'm curious if it is Canada, does it mean that the duty isn't clearly to shareholders like in the case in the U.S., and how does that factor into the separation process if at all? Thanks.

Okay. Let me take a look at that. I want to clarify that we cannot provide legal advice during this call, so I can't comment further on that. Operator, please move to the next question.

We have reached the end of the question-and-answer session. And I will now turn the call over to Tom Appio for closing remarks.

Okay. What I would say is, as I said, I am really pleased with the performance in the first quarter, and we are looking forward to powering up our potential and delivering long-term value for stakeholders. I would like to thank everybody for joining today, and we look forward to having future discussions on our company. So have a great day and we will talk to you soon. Thank you.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.