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Operator: Good day, and thank you for standing by. Welcome to the Q1 2026 Pacira BioSciences, Inc. Earnings Conference Call. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Susan Mesco, Head of Investor Relations. Please go ahead. Susan Mesco: Thank you. Good afternoon, everyone. Welcome to today's conference call to discuss our first quarter 2026 financial results. Joining me are Frank Lee, Chief Executive Officer; Brendan P. Teehan, Chief Commercial Officer; and Shawn M. Cross, Chief Financial Officer. Kristin Williams, Chief Administrative Officer and Secretary; Tony Malloy, Chief Legal Officer; and Jonathan Slonin, Chief Medical Officer are also here for today's question-and-answer session. Before we begin, let me remind you that this call will include forward-looking statements subject to the safe harbor provisions of federal securities laws. Such statements represent our judgment as of today and may involve risks and uncertainties that could cause our actual results, performance, or achievements to differ materially. For information concerning risk factors that could affect the company, please refer to our filings with the SEC or the Pacira BioSciences, Inc. website. Lastly, as a reminder, we will be discussing non-GAAP financial measures on today's call. A description of these metrics, along with our reconciliation to GAAP, can be found in the news release issued this afternoon. With that, I will now turn the call over to Frank Lee. Thank you. Frank Lee: Good afternoon to everyone joining today's call. Just over a year ago, we introduced our Five by 30 strategy. This plan was designed to accelerate performance and position the company for sustainable growth and shareholder value creation. To remind you, Five by 30 was built to deliver measurable progress around five key goals: patients served, product revenue, profitability, pipeline, and partnerships. Collectively, we believe advancing these five goals will drive shareholder value into and well beyond 2030. Let me start by saying that I am pleased with our first quarter results and I would like to recognize our team for their remarkable efforts. Our solid first quarter results reinforce our confidence that Five by 30 is delivering its intended business results. We are on the right strategic path. One year into execution, our progress across all five goals is clear. This is reflected in our commercial performance, financial results, and pipeline advancements. I will start with our flagship product, EXPAREL. Since our founding, EXPAREL has been the cornerstone of Pacira BioSciences, Inc.’s leadership in opioid-sparing innovation for postsurgical pain. Thanks to the dedicated efforts of our team, EXPAREL is demonstrating renewed growth more than a decade after its initial launch. This is a rarity in the pharmaceutical industry and a clear testament to the strength of our commercial, medical, and market access organizations. The accelerating volume growth we delivered in 2025 has continued into 2026. This momentum reflects a combination of fundamental improvements that are strengthening the long-term durability of our franchise, including expanding coverage outside the surgical bundle for Medicare patients following implementation of the NOPAIN Act in 2025; a new product-specific J-code enabling streamlined billing and reimbursement; growing commercial payer coverage outside the surgical bundle, which Brendan will discuss in more detail shortly; increased awareness and adoption of non-opioid stewardship programs, as evidenced by encouraging market research results; and enhanced intellectual property protection providing greater long-term visibility for the franchise. We now have 21 Orange Book-listed patents across two families protecting EXPAREL from generic challengers. This is a dramatic evolution from the single patent previously litigated and supported a favorable volume-limited settlement in 2025. This multiyear EXPAREL patent infringement litigation began in 2021 and extended through 2024. In addition to EXPAREL’s leadership in postsurgical pain control, our ZILRETTA and ioverao positions in early interventional pain management are expanding. For ZILRETTA, the year is off to a strong start, with a 15% year-over-year increase in sales. We believe the growth initiatives we put in place last year are beginning to deliver results. These include our dedicated ZILRETTA sales force, expanded patient access programs, and extended promotional reach through our Johnson & Johnson MedTech collaboration. From a lifecycle management perspective, we are pleased to report enrollment has concluded for a Phase 3 registrational study in shoulder OA. Top-line results are on track for later this year. The unmet need for shoulder OA is significant. There are approximately 1 million injections for shoulder OA administered annually in the U.S. despite the absence of FDA-approved products. If this Phase 3 trial meets its objectives, ZILRETTA could become the first product with a labeled indication for shoulder OA. ioverao also had a strong start to 2026, with first quarter sales increasing 21% over 2025, as we are starting to see the benefits from last year's rollout of a product-specific reimbursement code and a dedicated sales force staffed with experienced medical device account managers. From a lifecycle management perspective, our registrational study in spasticity is on track, with top-line results expected by year-end. Here, the unmet need remains high with 6.3 million patients with spasticity seeking treatment each year in the U.S. Together, we believe our strong commercial performance and advancing lifecycle management will support durable top-line growth. Importantly, this momentum further strengthens our leadership in postsurgical pain control and early-intervention OA pain management. In tandem with the momentum across our commercial portfolio, through our Five by 30 strategy, we are now advancing an innovative clinical-stage pipeline. Here, we are prioritizing mechanistically de-risked assets with the potential to drive shareholder value well beyond 2030. In addition to clinical data readouts for our commercial products, our clinical-stage assets are entering a catalyst-rich period. Key upcoming milestones include PCRX201, our locally administered gene therapy for knee OA, which remains on track for top-line data later this year. With approximately 15 million people in the U.S. affected by knee OA and limited durable treatment options, the unmet need remains high. I will talk in greater detail about PCRX201 shortly. PCRX2002, our novel hydrogel formulation of the non-opioid analgesic ropivacaine for postsurgical pain, was designed to deliver rapid-onset and long-acting analgesia from a single application at the time of surgery. We expect to begin Phase 2 development later this year. This asset has the potential to complement EXPAREL as an easy-to-use, longer-acting therapy with patent protection extending to 2042. Additionally, our gene therapy platform continues to generate promising preclinical candidates to advance our Five by 30 pipeline goal. These include PCRX1003 for degenerative disc disease, PCRX1002 for dry eye disease, and PCRX1001 for can90A, which we believe has significant out-licensing potential. Let me briefly highlight PCRX201, our lead HCAG program, which represents a potential paradigm shift in the treatment of knee OA. Building on the encouraging durability we observed in our Phase 1 study, our two-part Phase 2 ASCEND study is on track. Part A is fully enrolled with 49 patients, and as previously mentioned, we will have top-line results from this 52-week study later this year. Like most Phase 2 studies, ASCEND is not powered for efficacy. The primary objective is safety, but we will also be looking for efficacy trends. Key secondary endpoints include changes in pain and function from baseline, as measured by numerical rating scale, WOMAC, and CUSS scores. In parallel, we are advancing a commercially viable manufacturing process for PCRX201. This work is critical to enabling the initiation of Part B around midyear. We expect Part B to enroll roughly 90 additional patients across three arms: two different doses of PCRX201 and an active steroid comparator. While it is premature to quantify the commercial opportunity, we believe PCRX201 has three key attributes that underscore its market potential. First is durability. We believe that demonstrating a treatment effect lasting one year would represent a transformational advance in knee OA. This would be significantly longer than currently available OA treatments, which generally provide durability of approximately three to six months. Second is cost of goods. PCRX201 is locally delivered. This differs from systemic approaches requiring much higher dosing to achieve the desired effect. Lower dose levels, coupled with efficient manufacturing, support a favorable and commercially viable cost-of-goods profile. This is an important consideration for any therapy intended for chronic high-prevalence conditions like osteoarthritis. Third is health economic value. If the durability we are targeting is borne out clinically, we believe PCRX201 could offer attractive value to the health care system. As a reminder, PCRX201 is an IL-1 receptor antagonist. IL-1 is a well-validated, de-risked target for reducing inflammation. There are currently two FDA-approved drugs that block the IL-1 pathway in other inflammatory joint conditions. Neither one is practical for early OA intervention because their short half-life would require very high systemic doses or daily knee injections. PCRX201 is complementary to ZILRETTA and ioverao and could expand our leadership in early-intervention OA pain management. Briefly turning to partnerships, which remain a key pillar of our Five by 30 strategy, we are taking a disciplined, targeted approach to business development. We are prioritizing strategically aligned assets that are financially accretive and leverage our commercial infrastructure. In parallel, we are utilizing strategic partnerships to access new sources of revenue by expanding our commercial reach into untapped U.S. and international markets. Our strategic collaboration with market leaders Johnson & Johnson MedTech and LG Chem are both excellent examples of our strategy in motion. These partnerships advance our goal of five partnerships by 2030 and efficiently expand our commercial coverage and geographic reach. In summary, we are pleased with our first quarter results and the momentum behind our Five by 30 strategy. With clear progress across every Five by 30 goal, we remain confident we will deliver stable growth and value creation into and well beyond 2030. With that, I would like to turn the call over to Brendan to share more details on our first quarter commercial performance. Brendan? Brendan P. Teehan: Thank you, Frank, and good afternoon to all joining us today. I am pleased to report that the upward momentum we observed in the second half of 2025 has continued into 2026. Our commercial execution is on point, demand trends are strong across the complete portfolio, and we are delivering top-line growth consistent with what we previewed in February. I will start with our flagship product, EXPAREL, where we are outperforming last year's first quarter volume growth and continuing to expand patient and provider access. We continue to see excellent momentum in hospital outpatient and ASC settings, where an increasing number of EXPAREL-assisted procedures are taking place and where our customers are seeing favorable reimbursement. Our focus, beyond sharing excellent clinical outcomes, is demonstrating the enhanced economic value of EXPAREL. To support this, we recently presented data from real-world studies highlighting EXPAREL's compelling value proposition, along with several health economics and outcomes studies at key congresses that include the Orthopedic Research Society, the American Academy of Orthopaedic Surgeons, and the Academy of Managed Care Pharmacy. These real-world data demonstrate both the clinical and economic value EXPAREL delivers. We look forward to reporting additional data readouts as the year progresses. Our initiatives include the comprehensive real-world IGORD registry, which now has more than 3,500 OA patients enrolled and is providing valuable information for EXPAREL, ZILRETTA, ioverao, as well as other treatments. These data are helping guide best practices for knee OA patients across their treatment journey. Importantly, commercial payers continue to recognize the EXPAREL value proposition and implement NOPAIN-like policies that reimburse outside the surgical bundle. We have now surpassed 110 million covered lives with reimbursement outside of the bundle for EXPAREL. With a growing critical mass of coverage, we expect accelerating change in the market throughout the remainder of the year. In short, we are extremely encouraged by the progress made in the first quarter. Building on the momentum from 2025, demand is being driven by a powerful combination of expanding reimbursement, growing protocol adoption, and compelling real-world evidence, all supporting each other and growing our business. With a strong finish to 2025 and a solid start to 2026, EXPAREL continues to gain share as institutions commit to best-practice opioid-sparing care. We remain confident in our ability to deliver durable, sustainable growth for EXPAREL as access widens and best practices evolve. Turning to ZILRETTA and ioverao, both products are off to a strong start to 2026, as valuable commercial investments we made last year begin to bear fruit. As you know, last year we rolled out a dedicated Pacira BioSciences, Inc. sales force for ZILRETTA to ensure a focused promotional impact. In addition, we essentially tripled our U.S. commercial reach for ZILRETTA through a strategic collaboration with Johnson & Johnson MedTech. For ioverao, we are benefiting similarly from a dedicated sales force onboarded last year. Looking ahead, we believe both ZILRETTA and ioverao have significant upside potential to become more meaningful sources of revenue. In summary, we are pleased with the strong start to 2026 across our three commercial products, and we believe we are well positioned to deliver a successful year of sustainable top-line growth. With that, I will turn the call over to Shawn for his financial review. Shawn M. Cross: Thank you, Brendan. I will start with an update on sales and margin trends. First quarter EXPAREL net sales increased to $143.3 million versus $136.5 million in 2025. Volume growth of approximately 7% was partially offset by a shift in vial mix and discounting from our third GPO going live last year. In addition, first quarter sales were also impacted by winter storms disrupting shipping and triggering returns. As we move forward in 2026, we expect the delta between volume and revenue growth for the second quarter to be similar to 2025 and then narrow as we anniversary our third GPO agreement midyear. For ZILRETTA, first quarter sales improved by 15% to $26.8 million versus the $23.3 million we reported in 2025. As Brendan mentioned, this was largely attributable to the growth initiatives implemented last year, including our dedicated ZILRETTA sales force. For ioverao, sales increased 21% to $6.2 million compared to $5.1 million in 2025. Again, as Brendan mentioned earlier, this was largely attributable to the growth initiatives implemented last year, including our dedicated ioverao sales force. Turning to gross margins, on a consolidated basis, our first quarter non-GAAP gross margin was 80% versus 81% for last year. Gross margins continue to benefit from the improved costs and efficiencies of our enhanced larger-scale EXPAREL manufacturing process and continuous improvement initiatives at both of our manufacturing facilities. Non-GAAP R&D expense for the first quarter increased to $25.4 million from $23.1 million reported last year. This increase relates to our advancing Phase 2 study of PCRX201 as well as our label expansion studies, all of which have anticipated top-line readouts later this year. In addition, we are supporting three promising HCAG-based preclinical programs. Non-GAAP SG&A expense came in at $83.9 million for the first quarter versus $76.2 million last year. You may recall that last year's SG&A expense was positively impacted by a favorable outcome to litigation and subsequent recovery of $5.2 million in legal fees. Taking this into account, we are largely in line with last year. As we discussed last quarter, we are now leveraging our existing commercial infrastructure, which is well equipped to support top-line growth. All this resulted in another quarter of significant adjusted EBITDA of approximately $40.2 million for the first quarter. As for the balance sheet, we continue to be in a position of strength and ended the quarter with $[inaudible] in cash and investments. With a strong balance sheet and a business that is producing significant operating cash flow, we believe we are well equipped to advance our Five by 30 growth strategy and create shareholder value. With respect to capital deployment, we will continue to maintain a disciplined and strategic approach focusing on three key areas. First, driving top-line growth by leveraging our existing commercial infrastructure. Second, advancing an innovative pipeline and becoming a leader in musculoskeletal pain and adjacencies. We are prioritizing accretive in-market assets to leverage our established commercial footprint and de-risked clinical-stage programs. Third, opportunistically returning capital to shareholders. During the first quarter, we executed another $50 million in share repurchases. As a result, we retired approximately 2.2 million shares of common stock. Since last year's start of the plan, we have decreased our share count by a total of approximately 9 million shares and reduced our outstanding common shares to 39.3 million. As of March 31, we had $100 million remaining under our share buyback authorization, which runs through the end of this year. Going forward, we remain committed to maintaining favorable operating margins while advancing our Five by 30 strategy. This brings us to our full-year financial guidance for 2026, which we are reiterating today as follows: total revenues of $745 million to $770 million; for EXPAREL, net product sales of $600 million to $620 million. With respect to quarterly trends, we anticipate the remainder of 2026 will largely follow historical patterns. For ZILRETTA and ioverao, our guidance assumes 2026 will be largely in line with 2025. While we are encouraged by both products' start to the year, we will wait to gain more visibility before updating our assumptions. The final component of our 2026 revenue guidance relates to $7 million in expected revenue from our licensing agreement for the veterinary market. Non-GAAP gross margins of 77% to 79%. With respect to quarterly cadence, we expect the next two quarters to continue to benefit from the sale of lower-cost EXPAREL inventory; for the fourth quarter, we expect margins to be slightly below our full-year guidance range due to the sale of higher-cost inventory as well as shutdown-related costs and other expenses. Non-GAAP R&D expense of $105 million to $115 million. As we prepare to initiate Part B of our Phase 2 ASCEND study of PCRX201 and certain EXPAREL and ZILRETTA product development efforts, we expect an uptick in R&D expense during the second quarter followed by a slight decline in quarterly spend in the back half of the year. Non-GAAP SG&A expense of $320 million to $340 million. With respect to the timing of SG&A spending, we expect the first half of the year to be higher than the second half as a result of proxy-related activities. Stock-based compensation of $54 million to $62 million. Lastly, for those modeling adjusted EBITDA, we expect our 2026 depreciation expense to be approximately $30 million. With that, I will turn the call back over to Frank. Frank Lee: Thank you, Shawn. In closing, 2026 is off to a strong start. Pacira BioSciences, Inc. is operating with momentum, clarity, and discipline. Our Five by 30 strategy is driving strong execution and reinforcing our leadership in postsurgical pain and early-intervention OA pain management. We look forward to building on this momentum and positioning the company for sustainable growth and value creation through and beyond 2030. Thank you again for joining us today and for your continued support and confidence in our mission. We will now open the call for questions. Operator? Operator: To withdraw your question, please press 11 again. Our first question will come from the line of Douglas Tsao of H.C. Wainwright. Your line is open, Douglas. Douglas Tsao: Hi, good afternoon. Thanks for taking the questions. I have two questions. Maybe, Shawn, just as a starting point, if you could help us walk through a little bit about the cadence for R&D spend through the rest of the year. Just to confirm, it sounds like we are going to have a step up in 2Q followed by then sort of a step down in the third quarter, just as we see 201 ramp up. Should we think then more spend in 2027? Thank you. Frank Lee: Hey, Doug. Frank here. Thanks for the question. Let me turn it over to Shawn, and he can walk us through that a little bit here. Shawn M. Cross: Thanks, Frank, and thanks for the question, Doug. Happy to provide a bit more detail on the R&D cadence this year. As mentioned in our remarks a few minutes ago, we are preparing for initiation of Part B of the ASCEND study for PCRX201, which we are excited about, and certain EXPAREL product development efforts. From the $25.4 million in Q1 that we spent, we do expect an uptick in Q2. To provide a little more detail, we expect it to be in the low $30 million range, and then we will come back down closer to the Q1 levels in Q3 and Q4. That is how we see it playing out, and we will obviously provide more updates as we get through the year. Douglas Tsao: Okay. Great. That is very helpful with that specificity. And then just at a macro level, one thing that I have been curious about is the expiration of the Obamacare subsidies, and we have started to see some decline in terms of enrollments. I think if we look at results for some of the medtech companies in the first quarter and even some of the hospital names, it has not shown anything dramatic. But I am just curious what you are hearing from the hospital channel in terms of how they are thinking about the rest of the year playing out? Thank you. Frank Lee: Thanks, Doug. We stay close to this. Let me turn this one over to Brendan to give his perspective. Brendan P. Teehan: Doug, thanks so much for the question. Obviously, we are always looking at the broader macro environment, and I am sure people are taking a look at what those changes will mean to them individually. We will keep a close eye on those procedures where EXPAREL is favored, and we will continue to provide updates as we see it play out. I think it is just too early to say. Douglas Tsao: Okay. Great. Thank you very much, and I will jump out for now. Operator: Our next question will be coming from the line of Dennis Ding of Jefferies. Your line is open, Dennis. Analyst: Hi. This is Cynthia on for Dennis. Thanks for taking our question. Earlier this week, we saw data from a cell-free regenerative therapy for knee OA with a headline efficacy of 93% of patients demonstrating clinically meaningful improvements in mobility and pain reduction. There is not a lot of information on that trial, so I am curious how you are framing that data and how 201 will differentiate from that product. And then any additional color on what promising efficacy trends would look like for PCRX201's readout would be helpful as well. Thank you. Frank Lee: Thanks for the question. I did not get the name of the company you mentioned. What was that? Analyst: I think Creative Medical Technology. Frank Lee: Okay. There are a lot of different cell and regenerative therapy companies out there, with various studies of differing rigor. Let me turn it over to Jonathan to see if he has any perspective on that. Jonathan Slonin: Thanks, Frank. Not commenting on any specific company, we are confident that the HCAG platform is the right modality for sustained relief of knee osteoarthritis. We have made tremendous progress in scaling up and are finalizing our commercial-scale manufacturing for Part B, as we have articulated before. Our anticipated enrollment is right on time. To answer your second question, we are expecting the top-line data from Part A to read out at the end of the year. Just to remind you, the primary endpoint is safety, and we will be looking at the totality of the data to understand how PCRX201 performs in a randomized controlled trial with an active comparator. We will also be looking at the secondary endpoints around efficacy, including pain and function measures. We will review those data and assess where we are, but the trends we are looking for are trends consistent with durability and efficacy from our Phase 1 trial. Analyst: Okay. Thank you. Operator: Thank you. And our next question will be coming from Truist Securities. Your line is open. Analyst: Hey. This is Jeevan on for Les. Thanks for taking our questions. How would you characterize elective procedure trends exiting March? Any lasting impact from the winter storms? And then, separately, how should we think about potential upside from ex-U.S. partnerships across the portfolio? Thank you. Frank Lee: Thanks for the question. I will ask Brendan to comment on what we are seeing now. He mentioned it a little earlier. Then I will comment on ex-U.S. partnerships. Brendan? Brendan P. Teehan: Jeevan, thank you for the question. If we look at the moving annual total for procedures where EXPAREL would assist, that is largely flat year-over-year, despite EXPAREL being up over 7%. If we look specifically at the first quarter, market procedures are up in the mid-single digits, I would say 4% to 5%, as opposed to EXPAREL, if that gives you some sense. We will look to see how that progresses here in the second quarter. Frank Lee: On ex-U.S. partnerships, this is an important part of our Five by 30 strategy in terms of signing five partnerships both in the U.S. and ex-U.S. As you know, ex-U.S. we have signed a partnership with LG Chem. They are a leading company in Asia-Pacific, and we have plans to sign similar partnerships in other major geographies. It is premature to provide guidance on these partnerships and top-line impact, but I would say it is not insignificant. These will be important partnerships that will drive revenue not only through 2030, but well beyond 2030. The first partnership’s intention is to file in the not-too-distant future, and we will be updating you on guidance around that starting in 2027. Operator: Our next question will be coming from the line of Serge Belanger of Needham. Your line is open. Serge Belanger: Hi. Good afternoon. Thanks for taking the questions. The first one is a follow-up to the previous question around the impact of winter storms. I think you were expecting a potential softer 1Q because of those storms. It looks like all three of your products had some pretty solid year-over-year growth. Did you see any impact, or were you able to recapture it over the remainder of the quarter? And then my second question regarding NOPAIN: if I remember correctly, the NOPAIN Act has a three-year term ending in 2027. Is there any legislation in development to extend or modify that term? Thanks. Frank Lee: Thanks for your questions, Serge. Regarding the winter storms, we can provide a bit more color. I will turn to Brendan for that, and then I will speak to NOPAIN. Brendan P. Teehan: Thank you, Serge. The winter storms did have an impact. They affected both the ability to ship and, as you would expect in those geographies, the surgeries did not happen, which led to rescheduling not necessarily within the quarter. There is some carryover as patients look to be rescheduled for those procedures. Despite that, we are very pleased with the performance of EXPAREL volume vis-à-vis the total available market. We believe we are past that and are looking forward to the second quarter. Frank Lee: And Serge, with regard to your question about NOPAIN, initially it is scheduled to expire in 2027. We have been staying very close to CMS and other stakeholders. We are very encouraged by not only the uptake of NOPAIN, but also the expansion of coverage to commercial lives. As Brendan mentioned earlier, we now have a total of 110 million covered lives outside the bundle, and growing. As you know, NOPAIN primarily covers Medicare lives. We are encouraged by the discussions we have had and the uptake we are seeing. We will confirm a lot of what we are seeing through claims analysis. NOPAIN is doing what it is intended to do, and commercial payers are also coming on board, which is highly encouraging. Operator: Thank you. And our next question will be coming from the line of Hardik Parikh of JPMorgan. Your line is open. Hardik Parikh: Hey, everybody. Thanks for taking my question. I just want to ask about SG&A. I think I heard you say you expect SG&A to be lower in the second half. Can you talk to the magnitude of the step down you are expecting in the second half? And then, SG&A seems to have been elevated the past five quarters relative to 2024. I am trying to get a sense of what the normalized run rate is going forward. Frank Lee: Thanks for that, Hardik. Let me turn it to Shawn. Shawn M. Cross: Thanks for the question. We reported $83.9 million in SG&A this quarter. Without providing super specific detail, you can look at the information we filed in our proxy this week that provides some magnitude of what we anticipate spending during the proxy season that would be above the typical course of events. We anticipate coming back down in Q3 and Q4 to perhaps a little bit below where we spent in this quarter. That is generally directionally correct for the second-half step down and normalized run rate. Operator: I would now like to turn the conference back to Susan for closing remarks. Susan Mesco: Thank you, operator, and thanks to all on the call for your questions and time today. We are excited about the opportunities ahead and remain focused on executing our Five by 30 growth strategy with discipline and purpose. As we look to the remainder of 2026, we are confident in our ability to build on our momentum and position Pacira BioSciences, Inc. for long-term success. Thank you again for your continued support. Good night. Operator: This concludes today's program. Thank you for participating. You may now disconnect.
Operator: Good day, and welcome to the Trupanion, Inc. First Quarter 2026 Earnings Conference Call. All participants will be in 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 a question. To ask a question, you will press star, then one, on a touch-tone 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 Gil Melchior, Director of Investor Relations. Please go ahead. Gil Melchior: Good afternoon, and welcome to Trupanion, Inc.'s First Quarter 2026 Financial Results Conference Call. Participating on today's call are Margi Tooth, Chief Executive Officer and President, and Fawwad Qureshi, Chief Financial Officer. Before we begin, please be advised that remarks today will contain forward-looking statements. All statements other than statements of historical facts are forward-looking statements. These include, but are not limited to, statements regarding our future operations, key operating metrics, opportunities and financial performance, pricing, and veterinary industry inflation. These statements involve a high degree of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed. A detailed discussion of these and other risks and uncertainties are included in today's earnings release as well as the company's most recent reports, including Forms 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission. Today's presentation contains references to non-GAAP financial measures that management uses to evaluate the company's performance, including without limitation, cost of paying veterinary invoices, variable expenses, fixed expenses, adjusted operating income, acquisition costs, internal rate of return, adjusted EBITDA, and free cash flow. When we use the term adjusted operating income or margin, it is intended to refer to a non-GAAP operating income or margin before new pet acquisition and development expenses. Unless otherwise noted, all margins and expenses will be presented on a non-GAAP basis and excluding stock-based compensation expense and depreciation expense. These non-GAAP measures are in addition to and not a substitute for measures of financial performance prepared in accordance with U.S. GAAP. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the most directly comparable GAAP results, which can be found in today's press release. Lastly, I would like to remind everyone that today's conference call is also available via webcast on Trupanion, Inc.'s Investor Relations website. A replay will also be available on the site. I will now hand over the call to Margi. Margi Tooth: Good afternoon, everyone, and thank you for joining us today. In the first quarter, we generated over $40 million of adjusted operating income, up 29% year over year, and remain on track to deliver $180 million for the full year. In my shareholder letter published early this week, I highlighted the importance of adjusted operating income, which provides the flexibility to invest in growth and serves as a proxy for our core earnings power. As we enter a highly compelling period in the pet insurance industry, that flexibility presented by strong performance against this metric is increasingly important. The human-animal bond continues to strengthen, which means pet care once considered discretionary is now viewed by many as an essential. Alongside this trend, the cost of veterinary support has increased significantly, limiting access to care for a growing number of uninsured pets. These dynamics create a meaningful and expanding opportunity for Trupanion, Inc. To fully capture what is ahead, we intend to embolden our messaging, broaden our existing product, introduce a brand-new product, and continue to invest to grow the business. To do this, we will leverage our adjusted operating income which, as I noted in my shareholder letter, has compounded annually at 35% in the last two years and 45% over the last ten. The same growth of this nature requires discipline across pricing, retention, and new member acquisition. Simply put, to expand meaningfully, we must be priced accurately, maintain or improve retention, and add new members at our target value proposition, ultimately expanding our pet count and the number of pets we protect. Our track record demonstrates the ability to do this for more than two decades. Today, we provide coverage for nearly 1 million pets under the Trupanion, Inc. brand. Last year, more than a quarter of a million pet parents chose us because they wanted high-quality coverage for their pet. Yet, there are many more that did not, and we need to be sharper in how we communicate what makes us different and why it matters. Beyond that, we also recognize the opportunity of expanding the options available for our existing product to offer greater choice, as well as innovating pet insurance once again with a modern digital-first lens with plans to bring a new solution to market later this year. The new product will carry the mark of Trupanion, Inc. to enable us to better leverage our brand reputation, direct payment, pet acquisition investments, and to create room for upsell or cross-sell where appropriate, to reach a broader customer segment. As these initiatives come to life, we must also plan to operate with improving efficiency and cohesion. With that in mind, we are reorganizing our approach to growth to unify under a single leader and to create a consistent, bold, and clear pet parent experience in support of this mandate from lead generation through to conversion and retention. That said, our overall expectations for the year remain unchanged, with adjusted operating income continuing to propel growth and investment in the business, as we benefit from the scale achieved across our operations, retention, and the accuracy of our pricing. With that, I will briefly turn to some notable developments and results from the quarter. At the beginning of this call, I mentioned our increase in total AOI to over $40 million. Our subscription business generated the majority of this, contributing $38 million, which directly translates to a record lifetime value per pet, up 29% year over year, giving us ongoing confidence to compound the business by investing at continuously higher levels. The pet acquisition investment in the quarter, which was 53% of our total AOI, fuels a growth plan expected to deliver returns across multiple time horizons, with benefits accruing beyond the current quarter, all while continuing to generate strong free cash flow. We added approximately 64,700 pets into our ecosystem in Q1. We recognize there is still work to do in order to fully capitalize on the opportunity in front of us, yet we are encouraged by the mix of pets onboarded that continue to demonstrate strong and durable per-pet economics. At the end of the quarter, we began the early rollout of the first of our strategic initiatives under our new strategic plan, adding flexibility to our core Trupanion, Inc. product for pet parents wanting Trupanion, Inc. at a lower entry point. Initially available in Canada, we have expanded to a handful of U.S. states and intend to expand broadly throughout the year. Early results are encouraging with improved web conversion rates relative to prior periods, an indication that offering greater choice is resonating with pet parents. Worth noting, when presented with a broader set of options, pet parents are consistently selecting coverage levels that are somewhat in line with our core offering, suggesting increased flexibility is expanding access without materially shifting selection toward lower coverage. As we move through the year, we remain focused on executing against these priorities with discipline, while continuing to build on a strong foundation. With that, I will turn it over to Fawwad to walk through our Q1 financial results in more detail. Fawwad Qureshi: Thanks, Margi, and good afternoon, everyone. Today, I will share additional details around our first quarter performance as well as provide our outlook for the second quarter and full year 2026. Total revenue for the quarter was $384 million, up 12% year over year. Within our subscription business, revenue was $269.5 million, up 16% year over year and exceeding the high end of our expectations. Total monthly average revenue per pet for the quarter was $85.79, up 11% over the prior year period. Total subscription pets increased 5% year over year to 1.106 million pets as of March 31. This includes approximately 64,000 pets in Europe. Average monthly retention for the trailing twelve months was 98.35%, up versus the first quarter last year, which was 98.28%. The subscription business cost of paying veterinary invoices was $190.9 million, resulting in a value proposition of 70.8% versus 71.8% in the prior year period. This improvement came in light of an adverse development from prior periods of $3.1 million, or approximately 120 basis points of subscription revenue, showcasing the strong performance in the quarter. As a percentage of subscription revenue, variable expenses were 9.1%, in line with the first quarter of last year. Fixed expenses as a percentage of revenue were 5.8%, down from 6.2% in the prior year period. Combined, we saw fixed and variable spending at 14.9% of revenue in Q1, an improvement from 15.3% in the prior year period. Our subscription business delivered adjusted operating income of $38.4 million, an increase of 28% from last year, and contributed 96% of our total AOI for the quarter. Subscription adjusted operating margin was 14.2%, the highest Q1 margin in our history, and up from 12.9% in the prior year, representing approximately 130 basis points of margin expansion. Now I will turn to our other business segment, which is comprised of revenue from other products and services that have a lower margin profile than our subscription business. Our other business revenue was $114.6 million for the quarter, an increase of 5% year over year. We expect growth for this segment to continue to decelerate as we are no longer enrolling new pets in the majority of U.S. states for our largest partner in the segment. Adjusted operating income for this segment was $1.8 million, or 1.6% of revenue. In total, adjusted operating income was $40.2 million in Q1, up 29% from Q1 last year and in line with our expectations. We deployed $21.2 million of this AOI to acquire approximately 64,700 new subscription pets. Excluding the pets that are underwritten through an MGA structure, this translated into an average pet acquisition cost of $315 per pet in the quarter, up from $267 in the prior year period. We invested $1.7 million in the quarter in development costs. Stock-based compensation expense was $8.8 million. As a result, net income for the quarter improved to $4.9 million, or $0.11 per basic and diluted share, as compared to a net loss of $1.5 million, or $0.03 per basic and diluted share, in the prior year period. This marks our fourth consecutive quarter of positive net income. In terms of cash flow, operating cash flow was $14.6 million in the quarter, compared to $16 million in the prior year period. Capital expenditures totaled $0.8 million, down from $1.9 million in Q1 of last year. As a result, free cash flow was $13.7 million, approximately in line with last year. This quarter, we continued to execute on the investments that Margi outlined in the shareholder letter and that I talked about last quarter. In addition to opportunities to accelerate growth in our core business in North America and international, these include Lands’ Path, our food initiative, investments in technology to strengthen our competitive advantage in areas like claims automation and improved member experience, and financial investments such as paying down debt. Turning to the balance sheet, we ended the quarter with $383.7 million in cash and short-term investments, and a total debt balance of $109.3 million, a reduction of $19.5 million versus Q1 of last year. Now I will turn to our outlook. For the full year of 2026, we now expect total revenue in the range of $1.556 billion to $1.581 billion. We are narrowing the range for subscription revenue, which is now expected to be between $1.119 billion and $1.135 billion, continuing to expect approximately 14% year-over-year growth at the midpoint. We also continue to expect total adjusted operating income to be in the range of $173 million to $187 million, or 19% year-over-year growth at the midpoint. For the second quarter of 2026, total revenue is expected to be in the range of $386 million to $392 million. Subscription revenue is expected to be between $274 million and $277 million, representing approximately 14% year-over-year growth at the midpoint. Total adjusted operating income is expected to be in the range of $40 million to $43 million. This represents approximately 19% growth year over year at the midpoint. As a reminder, our revenue projections are subject to conversion rate movements, predominantly between the U.S. and Canadian currencies. For our second quarter and full-year guidance, we used a 73% conversion rate in our projections. Let me now pass it back to Margi. Thanks, Fawwad. Margi Tooth: We enter our new strategic plan from a position of strength, with a clear strategy and disciplined focus on the highest return priorities to drive durable growth and long-term shareholder value. Speaking of which, This weekend, we will host our annual Q&A following the Berkshire Hathaway shareholder meeting in Omaha. Each year, this presents us with a rather unique opportunity to hold an open dialogue with a community of long-term, like-minded investors. We hope to see many of you there. We will now open the call for questions. Operator: Thank you. We will now begin the question-and-answer session. We request that you limit your questions to one, then rejoin the queue for follow-up. 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 handset before pressing the keys. If you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Wilma Burdis with Raymond James. Wilma Burdis: Hey, good evening, and looking forward to seeing you guys in Omaha. In the shareholder letter, we noticed that the number of hospitals with Trupanion, Inc. software increased 30% in 2025 year over year, and I think you noted in there that the productivity has come down a little bit, so seeing fewer new pets per those new hospitals. Can you talk about why that pet count growth has not kept pace, and is that a good leading indicator? Thanks. Margi Tooth: Yeah. Hi, Wilma. It is a great question. As I mentioned in the shareholder letter, typically, when we think about gross adds, we know that the higher that number goes, usually, you get an increase in same-store sales, and actually, if hospital numbers go up. What we have seen over the last year is the change in same-store sales has come down. That means consistency of introducing the concept of insurance has come down. However, the footprint has widened, and that has led to more software. This is a direct result of the teams, the territory partners really leaning into the solution we provide for people, in a sense, to leverage our software as a hospital team to help pet parents deal with the invoice when it comes through. It is the start of what typically becomes an active hospital, then a same-store sale. We would expect to see same-store sales down when pet count is lower. We expect to see it build over time, and it is the constant juggling the territory partners have to do with going wide and going deep. I think they have done a fantastic job to see that growth in our software usage because what that does is it really supports the core value proposition that we have. It means that we are helping more members by paying them directly, which we can see in the scale and efficiency across the business. I would expect to see the number of active hospitals grow over time as we continue with that pet count. Wilma Burdis: And as a bit of a follow-up on that, maybe you could talk about whether there is a time frame for some of that to flow through. I would also just really like to hear a little bit more about the new product, and maybe you could explain the coinsurance and the deductible changes that you outlined in the shareholder letter. Just talk a little bit more about price point, maybe give us some additional details on how that is going to work. Thanks. Margi Tooth: Yeah, sure. I will try to remember that. Starting with the time frame, the hospital channel is always a very, very strong channel for us. We would expect that you get active hospitals go up and same-store sales will come down, then the team has to go back in and manage that. It is a constant of the territory partners, and that is really where we have that moat. It will build over time, and it tends to correlate with our overall gross add numbers, so we will update you as we go with that one. In terms of the new product and what we can say more about, I would really stick to the details in the shareholder letter, but at the highest level, the intention behind the two big initiatives we have for North America this year, to recap, one is expanding on our core product. It is the first time in 25 years that we will be expanding the coverage levels to offer broader price points, and we do that through the flexibility of increasing deductibles as well as adjusting into different levels of coinsurance, which really does expand those price points quite significantly. We started to roll this out very late in Q1, and the early signs have been encouraging. As I mentioned in my opening remarks, we have actually seen very little change in terms of the overall options selected by pet parents when they get to see and play around with different copay and different deductible levels. It gives people more of an understanding of what is involved in the value proposition, which is great—that was our intention—but also gives more optionality. The third part of your question was around the brand-new product. As I shared, it is really designed to appeal to new audiences that have been coming into the category. As pricing has risen from a cost-of-care perspective, we have seen a new generation of pet parents, the Millennials and Gen Zs, who are looking to come into the space. They want to protect their pets—it is treated as part of the family—but sometimes that entry-level price point for any product out there can be too high. They are looking for quality, they are looking for transparency, they are looking for vet direct pay, but they want a different solution to the one that many offer today. We are leaning into the brand equity we have built over the 25 years, the trust in the vet clinics, the territory partners that enable that high retention rate, to create something that is leveraging our data and leveraging the roots of the business but creating something very unique. I am not going to give too much away, but it is going to be a digital-first product in the sense that everything will happen online. We are going to make it the product that people want it to be for them in the right space—meaning, we are not going to direct them to a specific communication channel. It will be where they want to communicate, how they want to communicate, and it will be built in a manner that will allow them to have a lot more optionality than we have today, even with the new price points. We are very excited about it. We have the teams working on it, and we will update you over the next few months as we go. Wilma Burdis: Great. Thank you. Looking forward to hearing more about it this weekend. Operator: Thank you. The next question comes from Josh Shanker with Bank of America. Josh Shanker: Yes, thank you for taking my question. In the shareholder letter, you talked about, going forward, that the IRR disclosure no longer is meaningful because there are so many products and it means something different depending on the mix of products. So two questions. How should we think about the internal rate of return on various proxies if you have taken that away, and it probably was a garbage number anyway that did not help us? But, two, maybe it is worthwhile thinking about what the IRR is on the Trupanion, Inc. flagship product as a way of understanding what incremental dollars of marketing are doing. Margi Tooth: Yeah, thanks, Josh. I am glad you brought this up. There are a couple of reasons for us making this change. First and foremost, as you mentioned, and as I said in the shareholder letter, the blended IRR metric is no longer as relevant as it was at the beginning of when we first started sharing it, given the size and maturity of the core business today. That is because we have multiple products in multiple geographies that all create very different ARPUs and very different returns, with the same intention to get to the same guardrails, but it takes time to do that. We are moving away from it to improve the clarity and focus on metrics that we believe more accurately represent the economics and the value of the business today, the most important one of those being AOI—adjusted operating income. As I outlined in the shareholder letter, IRR, for example, assumes that newly enrolled pets that we get today behave the same way as the existing book of business, and when you have over 1 million pets on the book, that becomes increasingly more complex. It becomes, therefore, less accurate as the business scales and the market penetrates more heavily. Similarly, as I mentioned, you have got the products and the geographies which create further confusion. Just to give you a little bit more context around that, when we first started sharing IRR metrics, our adjusted operating income at the time was $5 million. It was the total the team had to deploy. Today, it is over $155 million, which naturally becomes far more dynamic and complex and is therefore significantly less suited to a single blended metric. It is also competitively sensitive. To take the second part of your question, when we think about the core Trupanion, Inc. product, from our perspective, we do not want to share the level of insight into what we are spending and where we are spending because of the competitive sensitivity. But we are still adhering to those guardrails internally. We have not changed how we operate, and the AOI that we are generating will demonstrate that we are enrolling pets that continue to have that higher margin—the right margin—when priced appropriately. We are retaining them, and we remain committed to leveraging that internally, as I said. Fawwad Qureshi: Yeah, I will just say that, with our IRR performance this quarter, it did improve sequentially, and we feel like this is the right step to give clarity to our audience. Josh Shanker: Thank you for that. Dovetailing away from that, when you start a new business, you have to spend to make it work, and you do have a number of new businesses. What tools should give us confidence about Lands’ Path and Sainsbury’s Pet Insurance and PHI Direct? Early on, it was very hard for you to figure out whether or not those businesses could leave Canada even because they were still incubating. From what is still there, we know that Trupanion, Inc., the core product, works. What sort of signs can we look at that the newer, younger products are worth putting money behind them to get them to grow? Margi Tooth: Yeah, it is a great question. We are going to continue to provide the visibility, as we have done today, on AOI. As we deploy more of that, and we will be sharing how much we are deploying, we would expect to see that AOI grow commensurate with the investment we are making. I would say the transparency we have had, to your point, with early doors PHI, Perkin, any of the new products and channels we have introduced, it is not necessary for us to share the details on every single test we are doing or every single product. What we are trying to do is orient people to the metric that we believe best captures all of those products and their performance over time, because we want to get to a place where we are continuously investing that adjusted operating income with high levels of return, which you will see as that compounds. We have shown for the last couple of years that the rate of compounding has increased with AOI. Our goal is to continue to do that. As I mentioned in the shareholder letter, we expect to generate well in excess of $500 million, and the reason we made that comment in the letter is to demonstrate there is a lot of fuel for us to continue to grow this business. We will do that with a variety of products and the landscape. One of them—we will not disclose how much we are putting into one versus the other, but we will continue to compound the AOI. That is our goal, that is our intention. Fawwad, would you add anything to that? Fawwad Qureshi: Yeah, I think the only thing I would add is something we have been talking about—I mentioned it last time—is just the versatility of AOI. It is a pool of capital that, to Margi’s point, gives us optionality to invest in a variety of things. When we think about how we will get to mid-teens growth in subscription AOI over the next three years, I think we have proven there are multiple ways to drive AOI. Clearly, we have seen pricing out of necessity, but it has become something that we have honed and become proficient at over the last couple of years. Retention continues to be resilient. It was up 9 points in 2025 from a full-year basis. It was up quarter on quarter. It was also up year over year about 7 points. Then, of course, adding members—you know, we added over a quarter of a million gross adds last year. We added, as Margi mentioned, 64,700 gross pets this quarter. And then operational efficiencies—I think one of the things that we are very excited about is just the ability to leverage technology, and the company was well ahead of the curve when it came to leveraging innovative technologies. In those days, it was machine learning. Now it is AI. Our automation rate in the quarter jumped to 62%, up from 56% last year, and that is great for everyone. It is a better experience for members, it costs us less in terms of the actual processing cost of the claim. Seeing that in the loss ratio at 70.8% to start the year, I think, is a strong position for us to be in, particularly given the first-half/second-half seasonality that we have seen. So I think when you look at AOI, that is the thing that I would pay attention to in terms of whether we are being judicious in deploying it. Josh Shanker: Thank you for all the answers. Operator: Thank you. The next question comes from David Wesselberg with Piper Sandler. Analyst: Good afternoon. This is Skye on for David. Just on the macro side, as it relates to pet adoption trends, how are you thinking about the growth in puppies and kittens? Are you seeing a shift in portfolio to cats? If so, how are you targeting cats, and does this have an impact on the timing of payout? Thanks. I will leave it there. Margi Tooth: Thank you, Skye. We have definitely seen a shift in overall lead volume coming from the vet channel. We have heard across the industry and we are seeing the downturn in terms of vet visits and wellness visits. From a lead volume perspective for us, we still see a healthy lead volume. It was flattish in Q1. It has actually shown an uptick in Q2, which is great. Yes, we are seeing more cats. We noticed that two years ago when we started to see more kittens coming into the category. Overall, in terms of the opportunity, it remains at least 1 million to 1.2 million pets approximately that are entered into practice management systems every month. We have a lot of market still to capitalize on. In terms of the opportunity there, we are not talking to all of those puppies and kittens at this point. Adoption trends do appear to be slowing, which is part of the pressure being put into the vet industry. From our perspective, that still gives us a long runway ahead of us. Our channels tend to be breeder, vet, shelter, as well as our members referring their friends and adding pets. We are still seeing a healthy portion of that population doing that. It still remains one of our second-biggest channels. We will continue to work with the veterinary industry to help them. We have helped show that through our costs, as you can see, that people are still taking their pets into the vet when they have Trupanion, Inc. It is a solution to the barrier that veterinarians are seeing preventing people from coming into the hospital. We know that there is a long runway ahead of us. Overall, we added 64,700 pets in the quarter, as Fawwad just mentioned and as I mentioned earlier, and I think the margin of those pets is where it needs to be. From a cat point of view, we love all pets. We are not trying to target one over the other. We have a lot of cat activity going on. We also have a lot of dog activity going on. The goal is to continue to build on that number over time. Analyst: Great. Thank you very much. Margi Tooth: Thank you. Josh Shanker: Thank you. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Margi Tooth for any closing remarks. Margi Tooth: Thank you. I would just like to say a big thanks to everyone for the questions today and your participation. Hopefully, we have come across to show that we are excited about the long-term opportunity ahead, which remains as significant as it has ever been. With demand continuing to grow, we are absolutely committed to executing with discipline against this, which means leveraging our strong adjusted operating income to invest where we see the highest returns and to help more pets access the care they need, as I just mentioned. With that, we appreciate your time today and look forward to updating you on our progress in the next quarter. Thank you. Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.
Operator: Good day, and thank you for standing by. Welcome to the LendingTree, Inc. first quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Andrew Wessel, Head of Investor Relations. Please go ahead. Andrew Wessel: Thank you, Kelly, and hello to everyone joining us on the call to discuss our first quarter 2026 financial results. With us today are Scott Peyree, our President and CEO, and Jason Bengel, our CFO. This afternoon, we posted a detailed letter to shareholders on our Investor Relations website. We have also posted a new investor presentation that we would encourage everyone to look at on our website. For the purposes of today's discussion, we will assume that listeners have gone through those materials and will focus on Q&A. Before I hand over the call to Scott for his remarks, I will remind everyone that during this call, we may discuss LendingTree, Inc.'s expectations for future performance. Any forward-looking statements that we make are subject to risks and uncertainties, and actual results could differ materially from the views expressed today. Many, but not all, of the risks we face are described in our periodic reports filed with the SEC. We will also discuss a variety of non-GAAP measures on the call, and I refer you to today's press release and shareholder letter, both available on our website, for comparable GAAP definitions and full reconciliations of non-GAAP measures to GAAP. And with that, Scott, please go ahead. Scott Peyree: Thanks, Andrew, and I appreciate everyone joining us on the call today. I am going to start with some highlights from our first quarter results and then spend a few minutes on how we are executing on our strategy before opening up the line for questions. We have posted an updated presentation on our Investor Relations site that goes deeper on some of the remarks I have today. We had an exceptional start to the year. Adjusted EBITDA grew 71% year over year on a 37% increase in revenue, driven by a very strong performance in our insurance segment and a healthy contribution from consumer. We had a record revenue quarter, and it was the highest quarterly adjusted EBITDA we have had in years. Just as importantly, we continue to strengthen our financial position. Net leverage declined to 2.1 times from 3.4 times a year ago, and we are pleased to receive a credit upgrade from S&P to B+ with a stable outlook. Stepping back, what these results reinforce is the strength of our model. We operate a high-margin, asset-light marketplace with a scalable cost structure, and we are demonstrating meaningful operating leverage as we grow. That combination—strong growth and expanding margin—is core to our investment proposition. Turning to our segments, insurance continues to lead the way. Revenue and segment profit both achieved new records in the quarter, growing [inaudible], respectively, year over year. We are now the largest marketplace for consumers to shop for their insurance needs, be that auto, home, health, or other products. Our scale with our largest carriers, combined with growing demand from midsize insurers competing for market share, provides our network with unparalleled depth and breadth. That translates into better outcomes for consumers and optimizes our monetization. Looking ahead, we expect price decreases in auto insurance across select states to further stimulate shopping activity and competition amongst carriers, which should support continued momentum. It is becoming clearer and clearer that the P&C industry has entered into a period of strong health and stability. In consumer, we delivered another quarter of healthy growth led by small business lending; revenue increased 49% year over year. As the quarter progressed, we did begin to see some softening in consumer demand for loans. We believe this is tied to broader macro dynamics, including elevated refunds earlier in the year and, more recently, a decline in consumer sentiment, which reached historically low levels in April. We are seeing similar patterns from small business borrowers as well. We are mindful of these near-term headwinds, but we remain confident in the long-term growth opportunity in consumer. As broader macro uncertainty begins to normalize, we expect demand to recover and credit supply to be ample. In the meantime, we continue to invest in our small business concierge capabilities, which remain a key differentiator in driving conversion and customer satisfaction. Home remains pressured by elevated mortgage rates. We continue to believe that the current level of revenue and profit are cyclical lows, and we have meaningful upside as rates normalize and transaction volumes recover. After making a dedicated marketing investment during the first quarter, we expect revenue growth will continue and margins should expand in Q2. Unlike most of our competitors that over-index to specific verticals, we lead with our diverse platform. Each of our operating segments has unique macroeconomic drivers. Insurance cycles tend to be uncorrelated with changes in interest rates and benefit from a long-term secular shift toward digital acquisition. Our consumer segment is most closely tied to credit availability, while home is most highly tied to rates and interest rates in terms of the mortgage cycles. This diversification enables us to navigate varying market and economic cycles while still offering a clear path to growth. At the midpoint of our updated 2026 outlook, adjusted EBITDA is running at a three-year compound annual growth rate of 26%. We believe this growth profile, combined with our advantaged margin structure and capital efficiency, are uniquely valuable components of our business model. Now I would like to provide an update on execution against our strategy. As a reminder, our North Star is to be the number one destination to shop for financial products. Everything we do is anchored in that objective, which is focused on four pillars: accelerating the core business, improving the consumer experience, expanding our product offerings, and rebuilding our brand. At the heart of this strategy is a simple idea. If we deliver a better experience and build stronger brand awareness, we increase organic traffic, improve conversion, and drive better unit economics across the platform. On the consumer side, a compelling brand promise brings users into our ecosystem. We deliver an easy and memorable experience that helps them accomplish what they came to do, which improves satisfaction, repeat usage, and referrals. That increases lifetime value while reducing customer acquisition costs. On the partner side, more high-intent traffic leads to more monetization opportunities. As partners see better outcomes, they deepen integrations, increase spend, and compete more aggressively within our marketplace, which further improves pricing and selection for our consumers. One of the clearest opportunities that we see is shifting more of our traffic mix toward organic channels. Every five-point increase in organic revenue mix represents about $40 million of incremental segment profit and roughly 400 basis points of uplift in our variable marketing margin. This is the economic opportunity we are actively investing into through improvements in consumer experience that drive repeat visits and brand initiatives that increase unaided awareness. AI is a critical enabler across all of these efforts. We understand investor focus on AI and its potential impact to our business. Our view is very clear: AI is a tailwind, not a disruptor. AI is changing how consumers discover information, but it is not changing how financial products are ultimately purchased. These are complex, highly regulated transactions that require trust, compliance, identity verification, and deep integration with providers. In that context, marketplaces like ours become even more important. AI can guide consumers; it cannot complete the transaction. It cannot underwrite a loan, bind an insurance policy, or securely handle sensitive financial data across multiple providers. That is where our platform plays a critical role. We are leaning into this shift. We are using AI to improve every stage of the consumer journey, from personalized engagement and financial guidance to smarter matching and more efficient application handoff. At the same time, we are deploying AI internally to drive efficiency across marketing, sales, and operations. During the quarter, we launched an internally developed AI agent for our search marketing teams that provides real-time optimization insights. Based on early success, we are expanding this capability across additional channels and into our sales organization. We are also continuing to see strong results from AI-powered voice tools in our call centers and are extending those capabilities into outbound and SMS engagement as well. Taken together, these initiatives are improving conversion, reducing costs, and reinforcing our role as the transaction layer in the financial ecosystem. To wrap up, we believe our investment proposition is compelling. We are a high-margin, asset-light marketplace with proven operating leverage. We have multiple growth engines with embedded upside across insurance, consumer, and home. We have a strengthened balance sheet that provides flexibility and resilience. And we are leveraging AI to enhance our platform. We are encouraged by our strong results to start the year and remain confident in both our strategy and our ability to execute. While we are mindful of near-term macro headwinds, we believe we are well positioned to deliver durable growth and increased profitability over time. With that, I will pause here and open the line for questions. Operator: Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ryan Tomasello from KBW. Your line is now open. Ryan Tomasello: Hi, everyone. Congrats on the strong start to the year. I guess just to maybe start on the slowdown that you are highlighting in consumer loan demand—not all that surprising given the geopolitical backdrop—but I just wanted to put a finer point around that. Is it also being accompanied by tightening credit boxes at your partners? And is there any way to quantify the impact that you are baking into the guidance incorporating this new backdrop? Thank you. Scott Peyree: Yes, I mean, maybe I will have Jason talk to the exact quantifying, which is kind of hard during these wild geopolitical times we are in right now. But I would say, just on the credit availability side, we have not seen as much impact on credit availability, especially, for example, in the personal loan business. It has more been around consumer shopping behavior. With consumer sentiment at all-time lows, gas prices at all-time highs, and a bunch of consumers getting tax refunds in the February–March time frame, we just saw demand drop off for personal loans for many of those reasons. We have seen it start to increase again in April, which is good, but it is still below what we would expect seasonal shopping behavior to be in Q2 at this point in time. But it is definitely off of the March lows. When the war started in March and gas prices went way up, that was a shock to the system in that month specifically. Now, on the small business lending side, I would say we are seeing a little bit of both—fewer small merchants looking for loans and smaller loan sizes than normal. On the lender side, credit is still available, but they are typically offering lower loan amounts at higher interest rates. When you have a cautious merchant to begin with, and then they are not getting the exact loan they want and at a higher interest rate, the sense we are getting is they are just not as urgently looking for money right now because of macro geopolitical stuff that is going on. I still think this is a short-term thing that will go away. Once consumer sentiment comes back up and, hopefully, things settle down geopolitically, I think we will be right back off to the races. Jason Bengel: Just with respect to the guide, like Scott said, January and February were very strong, but then March and April, we did see headwinds. With SMB, like Scott said, we did see a decline in appetite from both merchants and lenders. That resulted in a decrease in close rate, which has the effect of decreasing our RPLs. So coming out of Q1, we did see a downward trend. Normally, what we expect to see is Q2 and Q3 as the strongest in consumer—that is typical seasonality—but where consumer sentiment is now, at record lows, and with elevated gas prices, what we are assuming in the guide is conservative. We are assuming very, very muted seasonality, with the possibility of further credit tightening out there. We are being very conservative. We are not hearing anything from our partners that would indicate tightening, but we are assuming much more muted seasonality than we otherwise would. Ryan Tomasello: Great, thanks for all that color. And then, turning to insurance, can you elaborate on what you are seeing for run-rate trends there and your expectations for the balance of the year? In particular, last quarter you called out some nice stats around the diversification of the carrier spend on the platform and the growth you were seeing from the partners on the marketplace. Any updated stats there would be helpful. Thanks. Jason Bengel: Yes, we had great performance in Q1. Our prior record in Q4 was $48 million of VMD. You can see we beat that by a large margin—up about $10 million, or roughly 20%. We did see that normalize a bit coming out of Q1, which we expected. But going forward, we still expect to be materially ahead of that prior record. This really goes to the benefit of having a diversified product portfolio. Where we are seeing some headwinds in consumer that we hope will abate, insurance’s backdrop is still very strong. Insurance carrier profitability is very high, and competition seems to be increasing at a rapid pace. So Q1 will normalize a bit, but we still expect very strong levels. Scott Peyree: And just to add, carrier demand remains extremely strong. Even toward the end of the quarter heading into Q2, a carrier that had not worked with us in a long time came back on the network spending a decent amount of money. Another carrier that historically spends a small amount increased their budget pretty dramatically. Another carrier that typically just buys one of our products—lead, click, or call—expanded and started buying another product to access a higher overall quantity of our consumers. It is a very healthy, competitive marketplace in insurance right now, which improves consumer choice and helps drive further shopping. Another thing I would throw in is that health insurance was a very pleasant surprise for us in Q1. We attribute a lot of that to COVID-era health insurance subsidies coming to an end in Q1, which drove a surprising number of consumers to shop for health insurance through our network. Heading in, as Jason said, we dramatically outperformed our forecast and expectations for Q1. Q2 we are not expecting to be at those same levels, and some of that is typical seasonality—consumer shopping behavior for insurance products comes down a bit in Q2. Big picture, it is a very healthy marketplace, and we continue to expect insurance to grow year over year for the indefinite future. Operator: Thank you. One moment for our next question. Our next question comes from the line of Mike Grondahl from Northland Capital Markets. Your line is now open. Analyst: Hey, guys. This is Owen on for Mike. In the home segment, you mentioned investing more aggressively in higher-quality traffic despite elevated mortgage rates and competitive marketing conditions. How should we think about the balance between protecting margins versus investing through this weaker housing backdrop? And then lastly for me, the homepage redesign results you disclosed were pretty impressive. How early are these results, and where do you still see the biggest opportunities to improve funnel conversion and personalization across the marketplace? Scott Peyree: Yes, this really speaks to the advantage of having a diversified product set. Consumer demand for home loan products is at historically low levels for obvious reasons—interest rates are a lot higher than they were a few years ago—so everyone in the industry is fighting over a smaller number of consumers shopping. The advantage of us being diversified into insurance and consumer lending, which are doing very well, means we can invest and fight extra hard for that high-quality traffic. Bottom line, we are continuing to grow our lender network. One of our strategic focuses is to really grow our small and medium-sized brokers in the mortgage world, and that means being able to deliver as much high-quality consumer volume as we can. They are out there, and we tested into a few areas that now give us a clear idea heading into Q2 and beyond about what it is going to take to win in those areas. Long term, some of them are sustainable—that is why you are seeing revenue continue to go up with margins going up—and for some we had to step back. But we now have a lot of knowledge on what it will take to grow. We need to be prepared with a big distribution and client network when the mortgage industry turns around, so we can have revenue grow rapidly. On the homepage, we are extremely excited. The new homepage launched not even a month ago—about three weeks—and it was important for us, as part of the brand rebuild process, to redo the homepage and our messaging, moving away from an SEO/lead-gen-oriented homepage to a true branded homepage with our value proposition and useful information and data for consumers. We were not necessarily expecting metrics to increase when we rolled it out, but we were pleasantly surprised by the improvement in performance, and that is sustaining. Now, after the homepage, we are revamping all of our specific product pages. In our research in the LLM world, this is a better approach that will help us win organic traffic long term and create a stickier consumer experience—delivering valuable information versus immediately pushing through a funnel. We are very excited with how well that has performed, and as we look to proactively do some brand advertising in the second half of the year, it is exciting to see how this messaging on the homepage has landed so well with consumers. Operator: Thank you. I am seeing no further questions at this time. I would like to turn it back to Scott Peyree for closing remarks. Scott Peyree: Alright. That was pretty short and sweet. Thank you, everyone, for joining. Just to reiterate, we are very excited about the results of the first quarter and all the strategic areas we are focusing on, and how that is going to help this company continue to grow at a high rate over the next few years. With that, have a good day, everyone. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Welcome to the Ardelyx First Quarter 2026 Earnings Call. All participants will be in a listen-only mode. I would now like to turn the conference over to Unknown Speaker, Senior Vice President of Corporate Communications and Investor Relations. Unknown Speaker, you may begin. Thank you, Ross. Unknown Speaker: Good afternoon, everyone, and welcome to our first quarter 2026 financial results and business update call. Earlier today, we issued our earnings release, which can be found on the Investors section of our website at ardelyx.com. Slides that accompany today's call can also be found on our website. On today's call, I am joined by Michael Raab, President and CEO of Ardelyx, who will share our Q1 progress towards our 2026 priorities. Eric Foster, Chief Commercial Officer, will provide an update on the performance of Ibsrela and Exposa. And Sue Hohenleitner, our Chief Financial Officer, will provide some key highlights from our financial results. Before we begin, I would like to remind that some of the statements made during the call today are forward-looking statements, which are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in our Annual Report on Form 10-K, our Quarterly Report on Form 10-Q, which was filed today, and from time to time in our other documents filed with the SEC. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligations to do so, even if our views change. I will now pass the call over to Michael Raab. Michael? Michael Raab: Thank you. Good afternoon, everyone. It is great to be with all of you today. Before we dive in, I want to take a moment to welcome Lisa to the team. We are excited to have her on board leading our IR efforts as our new head of investor relations. 2026 is poised to be another significant year of growth for our company, and we are already off to a great start. At Ardelyx, we are building an innovative pipeline of medicines for patients with unmet medical needs. Our first quarter performance reinforces our confidence in the strategy we have laid out and in our ability to capture the opportunities ahead to create long-term value. As we build on this momentum, our focus is on executing on our four key priorities: accelerating the growth of Ibsrela, maintaining the Exposa momentum, building and expanding our pipeline, and delivering strong financial results. Starting with Ibsrela. In the first quarter, our disciplined commercial execution drove 58% year-over-year revenue growth. With more than 7 million prescriptions written for IBS-C-indicated medicines last year, Ibsrela is well positioned as a differentiated mechanism for patients who continue to experience symptoms despite treatment with a secretagogue. Our strategy continues to positively impact demand drivers and today, Ibsrela is helping tens of thousands of patients with IBS-C, and we remain on track to deliver at least $1 billion in annual revenue in 2029. With Exposa, our patient-first strategy continues to guide our execution with demand growing. Today, more patients have access to Exposa than ever before, and we remain committed to supporting patients irrespective of payer coverage. Next, our pipeline. As a result of our performance and execution, we are at a stage where we have the financial flexibility to further invest in our pipeline, positioning our company for durable long-term growth. Earlier this year, we initiated the EXCEL trial, a Phase 3 clinical trial evaluating Ibsrela for chronic idiopathic constipation, or CIC, as part of our efforts to expand our label and to reach more patients. This trial has rapidly gained attention from clinicians and patients alike, and all pre-identified sites have been initiated in under four months and are engaged in patient recruitment activities. We remain on track to complete enrollment by year-end and to announce topline data in 2027. If EXCEL reads positive, Ibsrela will expand treatment options for more patients. In addition, we have a strategy to expand the use of Ibsrela which may help pediatric patients with IBS-C and has potential to extend SNDA-related patent life for an additional six months. Our ongoing pediatric program consists of several studies evaluating Ibsrela in patients with IBS-C and functional constipation, the pediatric equivalent to adult CIC. This effort is an example of our ongoing strategy to extend tenapanor, which includes our recently announced Orange Book-listed 2099 patent covering the commercial formulations of Ibsrela and Exposa, building additional value for these franchises. Also included in our pipeline is our development program for our next-generation NHE3 inhibitor, 531, which continues to progress through IND-enabling studies, building on our foundational experience in NHE3 inhibition. 531 may extend our reach into other therapeutic areas, which would drive additional value for shareholders. We are excited for this next phase of Ardelyx’s evolution as we execute on our pipeline and explore various external opportunities that align with our mission and core capabilities and meet our disciplined capital allocation approach. We have been growing our team at Ardelyx and now have a deep bench of talent at the executive level. I am excited with the two newest additions who have joined the executive team: Felicia Attenberg, our Chief Legal Officer, and Dr. Rajani Dharavahi, our Chief Medical Officer. Felicia’s broad legal training and experience as a business partner, as well as Rajani’s experience advancing innovative therapies from development to patients, will be beneficial to Ardelyx as we build upon our commercial foundation, invest in our pipeline, and focus on delivering meaningful outcomes for patients. I would also like to take a moment to thank Dr. Laura Williams, our Chief Patient Officer, who has been serving the dual role of CMO and CPO while helping to guide us on this journey and has done an outstanding job advancing our clinical programs. Thank you, Laura. Finally, we remain in a position of financial strength. Our Q1 revenue performance positions us to reiterate our previously communicated full-year 2026 revenue guidance for Ibsrela and Exposa. We have the flexibility to allocate capital to both near-term commercial execution and investments that would expand our pipeline to drive long-term growth and value for the company, our patients, and our shareholders. I am confident in our strategy and our team’s ability to deliver on our key priorities. Together, we are advancing a growing, differentiated, innovative pipeline of medicines that address unmet patient needs. With that, I am pleased to turn the call over to Eric to walk you through our commercial success. Eric? Eric Foster: Thank you, Michael. It is great to be with you all again. In Q1, we continued to build upon the incredible commercial momentum and execution and performance from last year. Ibsrela grew in total writers, new and refill prescriptions, and total prescriptions year over year. For Exposa, we continue to ensure patient access regardless of payer coverage, which drove an increase in total expenses and paid prescriptions year over year. Our commercial team remains focused on expanding adoption among HCPs, creating greater brand awareness for patients, and ensuring the fulfillment of written prescriptions. Our investments to improve the HCP and patient journey and expand access to our medicines have turned into consistent year-over-year growth for both Ibsrela and Exposa. Let me start with Ibsrela. Ibsrela continues to be our main revenue driver and our commercial execution generated 58% product revenue growth year over year. During the quarter, we saw robust demand trends, notwithstanding expected first-quarter market dynamics and temporary disruption from two severe winter storms. Our growth in demand is a result of our efforts to capture more of the IBS-C market in 2026 by driving Ibsrela as the first-line therapy following a secretagogue failure. Ibsrela is a first-in-class innovative medicine with a winning and sustainable position in a growing market with nearly 7 million prescriptions written last year. Through research, we know that as many as 77% of patients on a secretagogue continue to experience symptoms despite treatment, demonstrating a high unmet medical need for additional options. I will now walk you through our key demand drivers which include growing both breadth and depth of writing, increasing patient activation, and lastly, improving prescription pull-through and fulfillment. Beginning with growing breadth and depth of writing. We are focusing on high-writing health care providers who are responsible for approximately 50% of the IBS-C total prescriptions, and our field sales team is driving greater reach across those targets. These efforts resulted in an increase in the number of writers in Q1, underscoring the effectiveness of our commercial activities. We are also seeing deeper prescribing within existing accounts. When an HCP is familiar with the access path and sees positive patient experiences, they are more likely to prescribe Ibsrela more broadly. Our end-market messaging focused on Ibsrela’s differentiated mechanism of action and its established safety and efficacy profile is resonating and continuing to drive HCPs to prescribe Ibsrela. With respect to patients, the IBS-C population is highly engaged in managing their condition. As awareness of Ibsrela’s effectiveness and safety increases, patients are more likely to initiate conversations with their physicians, which in most cases results in a prescription. We continue to focus on identifying and reaching patients through multifaceted marketing efforts. We are currently seeing robust engagement across digital and social channels while we continue to explore new channels to reach and engage with the sizable IBS-C patient population looking for something different. One such initiative is through our partnership with the LPGA, where we will educate, empower, and mobilize patients to take control of their IBS-C by seeking new information and talking to their doctor about their symptoms and the treatment options that are available. We chose to partner with the LPGA due to their clear strategic alignment between the LPGA’s legacy of empowering women and Ardelyx’s mission to empower patients to proactively manage their health. Patients deserve open dialogue about their symptoms and their options, and we are excited to partner with the LPGA to accomplish this goal. Lastly, our full commercial organization is focused on driving prescription pull-through to help ensure that all patients prescribed Ibsrela get on treatment. Based on prior success, we are increasing the presence of our field reimbursement managers who support patient access. This team is talking directly to prescribers and supporting them with account education and patient pull-through to improve patient access. To drive further adoption, we are continuing to encourage HCPs to send prescriptions to the Ibsrela Pharmacy Network, a limited group of specialty pharmacies that offer a patient-centric, high-touch experience and who are best equipped to handle prior authorizations and the payer hurdles that can restrict patient access. As prescriptions go through our specialty pharmacy network, fulfillment rates are higher, and we see on average an additional refill per year for patients. This is a high-value opportunity that we will continue to help achieve our projected revenue growth. We are united in our purpose to make a meaningful difference to patients impacted by IBS-C, and we are moving with urgency to capture the opportunities ahead and realize our full potential. Moving on to Exposa. Our high-performing, patient-focused Exposa team is committed to achieving the full potential of Exposa and bringing this important medicine to patients in need. I continue to be proud of the team’s ability to improve patient access and drive growth. As a result, we saw an increase in total expenses by 32% and paid prescriptions by 19% compared to the same quarter in 2025, which is important as the overall prescription market declined by 10% over the same time period. We are broadening our reach by employing targeted sales initiatives and a cross-channel strategy to increase HCP and patient engagement. We saw solid growth across key metrics in Q1, with notable increases in total writers, new and refill prescriptions, and total prescriptions across the non-Medicare segments compared to the same time period last year. This growth shows progress against our key strategic initiatives, which includes optimized HCP targeting and enhanced access messaging to support pull-through. Exposa continues to be an important contributor for Ardelyx, and we remain focused on supporting and ensuring access for all patients regardless of payer coverage. With the majority of patients treated with binders not having fully controlled phosphorus, the high unmet need is clear. I am confident in the team’s ability to deliver on our priorities for both Ibsrela and Exposa this year. The entire organization is executing incredibly well at a high level in a fast-paced environment, consistently achieving our shared goals as a result. At the same time, we are making prudent investments across the commercial organization to strengthen our position in the market, support patients along their journey, and accelerate long-term growth. I will now turn it over to Sue. Sue? Sue Hohenleitner: Thank you, Eric. As you heard from Michael and Eric, we are continuing to advance our commercial momentum to drive significant value creation. We are leveraging disciplined capital allocation into a clear strategic advantage by investing with purpose in commercial growth and building our pipeline. We are driving towards profitability and meaningful cash generation, allowing us to strengthen our balance sheet, invest in growth, and build long-term shareholder value. Now let me walk you through the financials. Our quarter-over-quarter total product revenues were $93.4 million compared to $67.8 million in the same period last year, representing 38% growth. That growth was driven by a significant increase in Ibsrela demand with Q1 2026 revenues of $70.1 million, an increase of 58% compared to 2025. The Q1 2026 demand for Ibsrela increased despite the expected Q1 seasonal dynamics that were further exacerbated by the winter storms. We continue to expect Ibsrela revenues to grow quarter over quarter for the remainder of the year. Revenue for Exposa during the quarter was $23.3 million and, on an as-reported basis, remained consistent with the prior year revenue. However, it is important to understand the underlying business results we are seeing. As you may recall, in Q1 2025, we recorded a $3.8 million favorable adjustment related to product returns. Taking that adjustment into account, our paid prescriptions of Exposa actually grew 19% year over year. Now turning to expenses. R&D expenses for 2026 were $20.2 million compared to $14.9 million for the same period in 2025. This increase primarily reflects development activities for the EXCEL Phase 3 trial for CIC. SG&A expenses were $102.3 million for 2026 compared to $83.2 million for the same period in 2025. This increase was reflective of the ongoing investments to drive commercialization, demand, and adoption of Ibsrela. Our net loss for 2026 was $37.6 million, or a loss of $0.15 per share, compared to a net loss of $41.1 million, or $0.17 per share, for the same period in 2025. The net loss for Q1 2026 included $14.2 million for non-cash expenses from share-based compensation, compared to $12.1 million for the same period in 2025. We are in a position of financial strength with $238.1 million in total cash, cash equivalents, and short-term investments as of the end of the first quarter. To capitalize on the favorable market conditions, we recently refinanced our existing debt with SLR. You may recall we entered into a loan agreement with SLR in 2022 that provided a total of $300 million of cash, of which $200 million has been drawn down. The remaining $100 million of cash is available for drawdown this year. We are pleased with the positive outcome of this refinancing with SLR, which extended the maturity and interest-only period of our loan by two years and lowered our overall cost of capital and annual interest expenses throughout the term of the loan. Now turning to guidance for 2026. We are reiterating our 2026 revenue guidance for Ibsrela between $410 million and $430 million. That represents 50% to 57% year-over-year growth. We expect the growth to be driven by quarter-over-quarter increases in demand along with improved prescription pull-through. Our long-term growth expectation for Ibsrela remains to reach at least $1 billion in 2029, representing a 38% CAGR. Now turning to Exposa. We are reiterating our revenue guidance between $110 million and $120 million in 2026. We continue to invest at an appropriate level to ensure that Exposa remains a contributor of financial growth for Ardelyx. Our full-year product revenues are expected to grow between 38% and 46%, outpacing our operational expenses, which will grow by approximately 25%, consistent with prior guidance. We are at a stage in our development where it is necessary for us to prudently invest in our growth accelerators: our commercial operations and our pipeline, all of which require high-impact investments in R&D and SG&A. In 2025, we grew our cash balance year over year even as we increased investment in both commercial execution and pipeline development. As we transition into more steady and measurable cash flow in the near future, I think it is important to begin to share our capital allocation priorities as we head into this new era. Our priorities include: one, accelerating Ibsrela growth, as this is our highest ROI use of capital today; two, investing in our current pipeline to create additional growth drivers and expand with external business development opportunities; and three, maintaining our financial strength. Importantly, we are funding current operations and pipeline from our revenue base, which demonstrates the growing financial maturity of Ardelyx. In addition, as I stated previously, we have proactively refinanced our debt and reduced our cost of capital while preserving optionality for BD partnerships or other future opportunities. Ultimately, all of this builds towards sustainable profitability. We hope this view of our capital allocation priorities is helpful as you continue to support the strategic value of our now and as we evolve into the future. With that, I will hand it back to Michael. Michael Raab: Thank you, Sue. As you heard, we are focused on executing our priorities: significantly grow Ibsrela, maintain Exposa momentum, further advance our pipeline, and continue delivering strong financial results. We are moving with purpose, urgency, and discipline against these priorities, and we look forward to demonstrating continued progress as the year unfolds. To our investors, employees, and especially the patients, thank you for your continued engagement and support. We are encouraged by the progress we have made and excited about the opportunities ahead. We remain focused on disciplined execution and long-term value creation, and we appreciate your continued confidence as we move forward. We will now open the call for questions. Operator? Operator: If you would like to ask a question, you will be placed into the queue in the order received. Please be prepared to ask your question when prompted. Once again, if you would like to ask a question, please press 1 on your phone now. Our first question comes from Roanna Ruiz from Leerink Partners. Please go ahead, Roanna. Roanna Ruiz: Yep. Thanks. A couple from me. First one, thought it was interesting you mentioned the Ibsrela demand increased despite the storms and seasonality. How should that flow through to the next quarters and in light of your current guidance? Michael Raab: Sure. I will ask Eric to comment a bit on it. For us, seeing what we all went through in the first quarter, which is normal seasonality and those two storms, seeing that continued growth in demand only strengthens our conviction in terms of where we are seeing this business grow, and we are very, very pleased with those results. Eric, anything to add? Eric Foster: Yeah. Thanks, Roanna, for the question. Very pleased with what we saw in terms of demand in Q1 and very similar to the patterns that we have seen in the past. We expect to continue to see quarter-over-quarter growth as we move forward. I feel very confident with the team that we have in place and continuing to invest in access and making sure that all patients that are written a prescription can get fulfillment. So I feel very comfortable about the strategy that we have in place and our ability to be able to continue the strong execution, and you should see that continue to grow as we move through the year. Roanna Ruiz: Great. And the other question I had, I was curious about any color you could share about OpEx throughout 2026. How should we think about this with the Phase 3 CIC study ramping up as well? Sue Hohenleitner: Sure. Yeah. Thanks, Roanna. Yeah. I would say that we have said before we are going to guide, and we are up to about $520 million in total OpEx, and that would be consistent throughout the quarter. So you saw in first quarter that we recorded about $122 million of that OpEx expense. So what I would see is a bit of a ramp up as we move through. As we continue to enroll the patients in the study, you will see more of those expenses come through the rest of the year. Michael Raab: And to be clear, that was all factored into the guidance that we gave, the expectation of the spend that we would have for CIC. Roanna Ruiz: Understood. Thanks a lot. Operator: Thanks, Roanna. Our next question comes from Joohwan Kim from Citi. Please go ahead. Joohwan Kim: Hi. This is Joohwan Kim on for Yigal. Congrats on the progress and thanks for taking our question. Maybe just a quick one from us. Have you tracked towards your December enrollment completion target for the Phase 3 CIC trial? Can you provide any color on the pace of enrollment relative to internal expectations so far? And are there any learnings from the IBS-C TEMPO enrollment experience that are helping you optimize recruitment? Thanks. Oh, interesting question in regards to TEMPO. Michael Raab: As I stated in my comments, we have all the pre-identified sites up and running, and that pace of enrollment of the sites was wonderful to see, and it was on par with what we expected out of the TEMPO program. As I also noted, the enthusiasm both by treating physicians and patients is evident, and that enrollment continues at pace. So we are very confident with the timeframe that we have shared where we would be able to expect both for it to be completed and the data to be shared. Joohwan Kim: Great. Appreciate it. Eric Foster: Thank you. Operator: Our next question comes from Dennis Ding from Jefferies. Please go ahead, Dennis. Dennis Ding: Hey, guys. Thanks for taking my questions. I had several questions around Ibsrela. So number one, Q1 had some seasonality, and on a quarter-over-quarter basis, it was a bigger step down relative to last year, which is totally fine because it is a bigger base. But in terms of the recovery, should we also expect a bigger recovery than what we saw last year as well? I believe consensus for Q2 assumes about a $30 million quarter-over-quarter recovery for Q2. Question number two, just specifically around the specialty pharmacy dynamic. Can you share if that shift away from retail is working out in terms of better fill and reauthorization rates relative to last year? The channel is about 30% of the mix, but how much higher can that go? And then I have one more. Michael Raab: Let me just quickly address some of those and I will ask Eric to comment. I think the Q2 recovery—rather than recovery, it is just a normal course of business. I think that term is an important one to think about. It is what we expect and what we plan for given the predictable dynamics that everyone sees in Q1. Now the surprise was the storms—the two storms, both the Mid-Atlantic one and the one in the Northeast—and that clearly had a meaningful impact in that sector of the country. And if you think about where many distribution centers are, they were smack dab in the middle of the Ohio River Valley where much of that was hit. So one cannot predict—we are not weather people, and they are wrong 50% of the time at least. So we do not try to predict storms, but it is one thing that is notable. I am very confident with the data that you see every week, that we are on the path to what we expected out of Q2. I do think, again, just to reemphasize, it is not a recovery, rather just a pattern of the business. I will ask Eric to comment a little bit more on that in terms of what they saw in the field. But the IPN, the Ibsrela Pharmacy Network, is a fundamentally important part of our strategy moving forward, given Eric’s comments in his opening statements. It is better for patients, and I will let him talk about the dynamics in terms of the shift. At this point, it is early for us to say what we think the ultimate potential percentage of the business that would go through that is. It is probably a little bit too much detail that will become evident through the data. That we know is imperfect, but it will become evident over time. Eric Foster: Yes. Thanks, Michael. And thanks for the question, Dennis. As far as Q1 goes, we had talked about the seasonality, and as Michael said, for us, we have the experience and the knowledge to know most of that is coming. What we were not aware of, obviously, were the storms. So we feel like the team planned accordingly. We were able to push through the temporary disruption there and, just like we saw last year, we really started to see the acceleration in the back half of the quarter, and we certainly see that, which gives us great confidence as we moved into Q2. With regards to the Ibsrela Pharmacy Network, we continue to be very excited about that opportunity and really to bring Ibsrela to patients that are prescribed Ibsrela. If we think about the fulfillment rate and your question around is there better fulfillment—absolutely there is when it goes to the Ibsrela Pharmacy Network. That is really the driver for us to make sure that patients that are prescribed Ibsrela can get on therapy. We will continue to work on moving business into the Ibsrela Pharmacy Network. We expect that to continue through the year. It is also important to note when that happens, there is an additional, on average, prescription or refill in that year. So it is really great for patients. You get a higher fulfillment rate, you get a better refill rate as those prescriptions go through the Ibsrela Pharmacy Network. Sue Hohenleitner: Yeah, and one thing I would add, Dennis—you kind of talked about the guidance—we were pretty overt about Q1 with kind of a soft guide, but that was all factored into our full year, and that is all factored into our year guidance. We are not going to provide similar color going forward. We felt like that was appropriate for Q1 just given the storms and some of the volatility, but I think as we go forward, as we said, we are going to continue to grow quarter over quarter. Dennis Ding: Okay. Perfect. And then as my follow-up. Lilly is running a Phase 2 with its GLP-1 agonist for IBS-C. Data might be in 2027. So I am curious how you are thinking about that study and the durability of the Ibsrela franchise over the long term in the 2030s, and you will be well north of $1 billion in revenue. Thanks so much. Michael Raab: Yeah. I mean, I think for us, what we need to do is follow the data, and anything that helps patients is a good thing. I think that is just a fundamental way that we—and I—look at this business. Anything that is going to help patients is the right thing to do. The realities are, if you look at the potential patients that could, should, or might be taking GLP-1s, it is a relatively small percentage who actually are versus those who would benefit from it. So I would not imagine there is going to be a massive degradation of the market, given the positioning that we have for Ibsrela in that market. I do not see that as a massive threat on the horizon. Is it better for patients if it works? Of course it is, and that is something we should all cheer. Dennis Ding: Perfect. Thanks so much. Michael Raab: Thanks, Dennis. Operator: Our next question comes from Christopher Raymond from Raymond James. Please go ahead, Chris. Christopher Raymond: Hey, yes, thanks. We have talked to some KOLs who indicate they are already using Ibsrela to some extent in CIC. Michael, I know you are not going to want to give too much color here, but just maybe in broad strokes, can you talk about what kind of CIC use you are seeing in the field? I mean, LINZESS, TRULANCE, Amitiza—they all have CIC on their labels already. Maybe second part of that question is would the competitive dynamic in this indication be maybe similar to what we have seen with IBS-C, or are you thinking something different? Thanks. Michael Raab: So yes. What is important about what you said is all the others have dual indications. Clearly, we have heard and understand what you have described as volunteer in your KOL clinician discussions. As you know, physicians, in the art of what they practice, can prescribe things off label. We cannot promote things off label, and we will not and do not. That is a fundamental part of this business, as everyone understands. If a physician feels it is appropriate for CIC, they should. What is really interesting—if you have not looked at Rome V, which was just published—the changing definition of CIC, functional constipation, IBS-C, which we know, given our experiences on the front lines, is a continuum of care. Understanding how the Rome Foundation has evolved its definitions is one of the fundamental reasons why we moved into the CIC program. It is a natural course. As we have spoken over the years, would we have loved to have both indications at launch? Of course. But as you know, I am cheap, and we did not have the money to invest in both indications. Now that we are in a place that we can, we are, to provide those benefits and try to eliminate some of the barriers in the way that physicians think about this and the further hurdles that the prior authorizations will put them through if it is an off-label indication. I agree with everything that is the genesis of your question, and what we are doing with the CIC program is specifically designed to address that, coupled with what has happened with Rome V. Christopher Raymond: Thank you. Michael Raab: Thanks, Chris. Operator: Our next question comes from Ashley Marie Aloupis from Piper Sandler. Please go ahead, Ashley. Ashley Marie Aloupis: Hi. This is Ashley on for Ali. Congrats on the quarter and all the progress made. Just two questions from us. You talked about this in your prepared remarks, but could you talk a little more about the Ibsrela pediatric trials and the workings of the potential six months of additional patent life and how meaningful those additional six months could be for Ibsrela? And then also, just wondering once the IND is filed, do you have any line of sight into timelines around getting 531 into the clinic and how quickly you plan to move if the IND studies are positive? Thank you. Michael Raab: We will work at pace if those studies are positive because it is the right thing to do. Fundamental again to what we do is we follow the data, and all this pre-IND work is really critical for us to understand. Let me remind you that when we created tenapanor back in 2009, it was based upon a huge amount of preclinical work that we had done to understand all aspects of where this molecule engages, certainly with animal models and ultimately into man. So we have good experience in this, and there are very tried-and-true approaches that one takes in order to make the decision to file or not to file an IND. The data tell us what the right thing is to do. With regards to the pediatric indication, this is tried-and-true practice that everyone does in the industry. One of the things that the FDA put in place was the Pediatric Research Equity Act to encourage companies to develop drugs for the pediatric population. Now, it is pretty hard—IBS-C—given different age groups, the inability or challenge to describe pain. It is subjective. So it is a harder population; it is a smaller population. But the mere operational effort to put this in place, primarily to show safety—one of the fundamental tenets of pediatric development—allows you flexibility to treat the younger patients if you demonstrate the safety that we expect to demonstrate, given our long history of utility of this molecule. So the benefit of that six months—you look at whatever peak it is that you have modeled, just look at each incremental month of value that that will generate, and that will tell you the value in your modeling of what those six months are worth. It is significant. Ashley Marie Aloupis: Got it. Thank you for the color. Operator: Our next question comes from Joseph Thome from TD Cowen. Please go ahead, Joseph. Joseph Thome: Hi there. Good afternoon, and thank you for taking my questions. Maybe a little bit of an extension of a prior question, but can you walk through the physician-type point differences between CIC and IBS constipation? If you are successful in CIC, would you need to go a little bit more into a primary care segment with your sales force? Or by the time they are presenting to a level where they may be in the GI office? Anything around that would be helpful. And then you mentioned about it a couple times, obviously, on the call. Can you talk a little bit about the company's willingness to maybe lever up the balance sheet, given what your expectations are for the growth of Ibsrela, to do something maybe a little bit larger in size? Michael Raab: Sure. Let me address the first one and ask Eric to comment too. As we said when we announced the EXCEL program, the CIC market is significantly larger than the IBS-C market. However, the vast majority of those patients are effectively treated with over-the-counter medications. So I think that is an important distinction as you look at the epidemiology in these populations as to what the differences are and not get over your skis in terms of what that market sizing might be. It is an important distinction that those who are not served by OTC meds are the ones that end up going and being referred to other offices. Eric, do you want to comment a little bit on what we would do in the field, if anything? Eric Foster: Yeah. Thanks, Joe, for the question. As you know, today we focus on high-writing GIs, APPs, and high-writing non-GI. That does put us in more of the primary care setting. I feel really confident about the targeting that we have right now for IBS-C, and you can see a lot of the great momentum that we have. With regards to CIC, I do think you are correct. As Michael mentioned, it is a bit of a larger patient population, and we do see and expect more patients to be going to their primary care. At some point, as we are continuing to look at that patient population and making sure that we have the right reach, we will make that decision at that time. Certainly, I can see that there is more utilization in the primary care market. That is something that we definitely will consider as we look at the right-sizing of the team as we get closer to product being approved. Michael Raab: And, Joe, a fundamental part of that is—as Eric has talked about in the past—we call on 50% of the HCPs today that write for IBS-C and, frankly, CIC-indicated drugs alike. That is the 14 thousand HCPs. The other 50% is about 182 thousand HCPs, and we are not going to cover them all. So it is going to be an optimization of those who might be writing a disproportionate amount for CIC, which you can find through the data. A little bit of a cautionary note not to take this as though we are going to double or triple the size of the organization, but rather an optimization as you have seen us do this year. With regards to levering the balance sheet, we are at such an incredible, pivotal time for the evolution of the company, where—not really reading between the lines—Sue has said explicitly we are going to generate more top line than expense. So that journey that we are on, that horizon, is not that far away. What we are trying to do—I will ask Sue to comment. I am not sure how much leverage is needed versus execution in the way we are doing, but certainly, we are not afraid of doing the right thing for opportunities that present themselves. Sue Hohenleitner: Yep. And as you heard, we already did do a refinance of our debt. We still have access to an extra $100 million of that loan. So we have got that. We have got plenty of options to do that if and when it is necessary or a great opportunity presents itself. Joseph Thome: Great. Thank you. Michael Raab: Thanks, Joe. Operator: Our next question comes from Laura Kathryn Chico from Wedbush Securities. Please go ahead, Laura. Laura Kathryn Chico: Thank you very much for taking the question. Three for me. First, I thought I heard Eric mention an expansion of the field manager level, and I am just trying to understand if that is more impactful on the depth of prescribing or the breadth of prescribing. Which of those two levers impacts hitting the upper range of guidance or kind of impacts the guidance swing there? I have two quick follow-ups. Eric Foster: Yes. Thanks for the question, Laura. I hate to say it, but both, actually. It is very hard getting the physician to write that first prescription, and so we want to make sure when they write the prescription that they have confidence that it will be filled. That is what the field reimbursement manager does. They work with the physician’s office to ensure, as they navigate the payer dynamics, that they are able to pull through and get that prescription filled. With regards to physicians as they continue to increase their depth of prescribing, that same confidence is important that not just the first one goes through, but subsequent ones. That team is really focused on helping prescriptions get pulled through, whether it is the first prescription or subsequent ones. I think you heard me say in my prepared remarks we saw an increase in writers as well as an increase in depth of prescribing as well. So we are having impact across both of them. That is why I go to both of them to say that it is important to make it happen across both. Michael Raab: Laura, when Eric first started talking about hiring this skill set, one of the things that really opened my eyes is a very simple example. If I am the salesperson, I worry that that script is going to be filled—that is the way you are going to compensate me. So if I am spending my time looking at Dr. Foster and whether or not that script is actually getting filled, I am not calling on Dr. Raab, because I am worried about that. Bringing on the field access managers allows the account-based directors to have confidence that they can drive the top of the funnel and that there will be those there to help pull through at the bottom of the funnel, resulting in compensation ultimately in incentive comp. I do not think I would ever imagine not having both in the launch of a drug going forward. Laura Kathryn Chico: Okay. Two quick follow-ups and kind of related to that. I think in the prepared remarks, I heard that the Exposa paid rate was also up. Just curious if you could quantify that. And then with respect to EXCEL, the site activation on the pre-identified sites has moved really rapidly. How are you monitoring—any conversation around quality checks that you can do to ensure you are getting sites to adhere to protocols and recruiting the right patients would be helpful—but also what are your assumptions around discontinuation rates? Michael Raab: Once the site is up and running—do we not pay any attention to it? No. You are right. The quality of the patients is really, really important. As you get the enthusiasm of startup, there is training and reminding people of why you started, and any clinical trial has screen failures that happen. Then the sites get better and better at identifying the patients. That is just a natural progression of clinical development and recruitment. Rajani— a couple weeks now onto the job—is into this with both feet and both arms, and we all feel very good about both the quality of the sites as well as, as those sites learn and get better at enrollment, that we see those failure rates begin to taper, which is something you factor into your projections of how you enroll. We all feel very good about what we have said, and ultimately the quality of the patients is going to be there, defined by our inclusion and exclusion criteria. So we feel very good about that quality that Rajani’s team and our CRO are following through with. In regards to your first question, what is important is, on a GAAP basis, of course, the year-over-year quarters look similar. It is so important—what Sue reminded everyone of—that $3.8 million return reserve reversal that we did in Q1 2025 should be excluded as you look at the base business that we have defined, which is a non-Medicare business, which grew by 19%. If you look at our sequential growth, even since we started this effort to not participate in TDAPA, because we believed what we are now seeing is ultimately what was going to be true, it is proving out. The growth that we are seeing in that non-Medicare segment, with all the challenges dialysis organizations are facing, further emphasizes the value of this program and the product for patients who need phosphorus management. It is an opaque and difficult business that we have chosen to partake in in the way that we have, but the numbers are showing that we are helping the patients that we anticipated that we would. Laura Kathryn Chico: Thanks very much. Michael Raab: Thanks, Laura. Operator: Our next question comes from Prakhar Agrawal from Cantor Fitzgerald. Please go ahead, Prakhar. Prakhar Agrawal: Hi. Thank you for taking my questions. Congrats on the quarter as well. Firstly on Exposa, maybe I missed this, but I did not hear you reiterate the long-term guide of $750 million. I know the speed is a little bit more conservative, but just wanted to check if you are reiterating that. You talked about investing in high-value opportunities as well. Has there been a change in the level of investment for Exposa this year and maybe in the future too? Secondly, maybe if you can talk about the gross-to-net for both products for Q1 and trends for rest of the year. And last question, given the investments you are making both on the R&D and SG&A, how should we think about the cash flow profitability? Thank you. Sue Hohenleitner: Thanks, Prakhar. That is a lot for me, so let us see if I can hit it all. In terms of the high-value opportunities with Exposa, yes, we ensure that Exposa continues to be a contributor. We do not necessarily tease out separate product P&Ls, but rest assured, we continue to ensure that all of the spending that is done—any investments we make behind those patients and that growth—makes it a financial contributor. In terms of the gross-to-net, you probably saw in what we filed we are a little over 36.4% GTN, and that is a blend. We do not necessarily split that out. What I would say is first quarter is going to be your highest quarter in terms of GTN, just given all the dynamics with copays and deductibles, etc. What we have always said before is it is about low-30s when you think about a blended total GTN rate for the year. You will see that high in Q1 and then taper off as we go into further quarters. Before I leave Exposa, yes, we will reiterate the $750 million, and I am reiterating that. So within the guidance, we have given the $1 billion for Ibsrela and the $750 million for Exposa. In terms of R&D and SG&A and cash flow, it is something that we are continuing to monitor. As you can see with the top-line guide being $520 million to $550 million and our OpEx only $520 million, there is a possibility we will get to cash flow positivity. But certainly, we want to continue to see how the year unfolds and make sure that we are hitting on all cylinders, and then we will likely come back with an update if it is appropriate on cash. Michael Raab: We appreciate the question of wanting to traject quarter to quarter, but we are not going to get into the practice of quarter guidance. I think the yearly guidance that Sue just went through is really important. Prakhar Agrawal: Thank you so much. Operator: Our next question comes from Matthew Caufield from H.C. Wainwright. Please go ahead, Matthew. Matthew Caufield: Hi. Thank you, guys. With the investor focus on sales execution, is there further granularity that you could share on Ibsrela growth between the new patient starts versus refill persistence trends? And then where things may stand presently for the total penetration among target prescribers there? Thanks for any color on execution overall. Michael Raab: I think that is getting into detail that we probably would not get into specifics on. You can begin to look through your script data in terms of NRx and TRx and tease that out to some extent with what you do. I recognize that it is going to be imperfect data. Suffice it to say, with Eric’s prepared remarks, that we are seeing both— with the other question that was asked—breadth and depth. We are seeing great refills, and we are seeing lots of new prescriptions coming through as well. Eric, anything to add? Eric Foster: [inaudible] Matthew Caufield: Thank you. Operator: Our next question comes from Julian Harrison from BTIG. Please go ahead, Julian. Julian Harrison: Hi. This is Andrew on for Julian. Congratulations on the results this quarter, and thanks for taking our question. On Ibsrela, which of the growth drivers would you say you believe still has the most room to grow: writers, new prescriptions, refill, or pull-through? Thank you. Michael Raab: I think Eric will probably say yes to all of the above. What is interesting is, for the 7 million prescriptions for IBS-C-indicated products that I referenced in my opening remarks, it is a very small percentage of the market one needs to penetrate in order to get to our guidance of peak. There is massive opportunity out there. Eric, any granularity around the specifics would be great. Eric Foster: Sure. I am very excited about all of them, as you list them. As we think about the Ibsrela opportunity, as Michael said, there are 7 million prescriptions written for IBS-C on an annual basis, and we continue to see that market grow. We feel very confident in the position that we have—winning position, sustainable over time—that we have had for the past three years. We continue to see an increase in writers, total writers, new writers, as well as depth of prescribing, and that is really important. What that tells you is physicians continue to have confidence in Ibsrela and look at it as a viable option for their patients that are in need. Of those patients, we know that 77% continue to have symptoms despite treatment with a secretagogue. Very healthy market, strong position for Ibsrela, continuing to grow writers as well as depth of prescribing, and we feel really good about the opportunity we have moving forward. When you think about the Ibsrela Pharmacy Network and being able to improve the fulfillment rate as well as the number of refills for patients, it really leads to success across the business in those important drivers. That is what gives us that confidence to the $1 billion in 2029 and beyond. Operator: There are no further questions at this time. This now concludes today’s conference call. Thank you for joining. You may now disconnect.