Merit Medical Systems Inc Q3 FY2020 Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the Third Quarter 2020 Earnings Conference Call for Merit Medical Systems, Inc. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly. I would now like to turn the call over to Mr. Fred Lampropoulos, Merit Medical Systems Founder, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you, Dalem, and welcome, everyone, to Merit Medical Systems' Third Quarter 2020 Earnings Conference Call. I am joined today on the call by Raul Parra, our Chief Financial Officer and Treasurer; and Brian Lloyd, our Chief Legal Officer and Corporate Secretary. Brian, I'd like you to go ahead and take us through our safe harbor provision.

Thank you, Fred. Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements that are based on current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A, risk factors of the company's most recent annual and quarterly reports. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. Although it may voluntarily do so from time to time, the company undertakes no commitment to update or revise the forward-looking statements, whether as a result of any new information, future events or otherwise, except as required by applicable securities laws. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles, or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website. I will now turn the call back to Fred.

Thank you, Brian. I will begin with a brief overview of our agenda for today. I will discuss our revenue performance in the third quarter, highlighting the positive business trends we observed, even amid a challenging operating environment. Following that, I will provide updates on our operational progress and key highlights from the quarter. After my remarks, Raul will dive deeper into our quarterly financial results and the formal financial guidance we reintroduced in our press release this afternoon, along with a summary of our balance sheet and financial health. Finally, we will open the call for your questions. Starting with our third quarter revenue performance, we saw total revenue growth of 0.4% year-over-year, primarily driven by a 1% increase in sales of cardiovascular products, which was partly offset by a 12% decline in endoscopy product sales compared to the previous year. Total sales on a constant currency basis remained mostly unchanged from the third quarter of 2019. We reported nearly 12% growth on a quarter-over-quarter basis, reflecting improvements in business trends in recent months. This sequential growth surpassed expectations and exceeded the upper end of our growth range discussed during our second quarter call. While we believe we are still in the early phases of a global recovery, we are encouraged by the positive trends we saw in the third quarter. Specifically, after a challenging April with a 20% year-over-year sales decline, we noticed slight improvements in May and significant recovery in June. Nevertheless, sales were still down in the low single digits year-over-year. July showed some fluctuations in our business trends, and we anticipated seasonal softness in overall procedure trends in August. Thus, total sales for the first two months of the third quarter were down 1% year-over-year. September marked a turnaround, as we experienced consistent improvement in sales trends throughout the month, with sales increasing in the low single digits year-over-year, despite facing tougher comparisons. I would like to explore the underlying trends of the third quarter, which may be beneficial for investors assessing the patient recovery in our business. We are seeing notable variations in recovery based on regional performance, and even within specific geographic areas. Approximately 60% of our total revenue is generated in the U.S., where sales decreased 0.6% year-over-year in the third quarter. Our U.S. business is predominantly direct, with about 80% of sales coming from direct operations and most of the remaining business focused on servicing OEM customers. It is essential to note that the recovery trends between these two sectors showed significant differences. The recovery in our U.S. direct business was more rapid, with a 5% increase in sales year-over-year this quarter, partly driven by our sample collection and transport kit, the Cultura system, which saw nearly $10 million in sales and contributed to a 29% growth in our U.S. custom procedural solutions business. However, our OEM business has shown a slower recovery due to inventory management adjustments in response to COVID-19, leading to a 21% decrease in sales to U.S. OEM customers and a 17% decline globally this quarter. Sales in our other U.S. business lines, such as peripheral and cardiac intervention, improved during the third quarter but remained below year-over-year levels, with sales down 1% and 3%, respectively. Looking at our international sales in the third quarter, total sales increased 2% on a reported basis and 0.6% on a constant currency basis. Our major regions outside the U.S., APAC and EMEA, accounted for about 50% and 43% of our international sales, respectively. The 0.6% growth in international constant currency sales was supported by a 3% increase in APAC sales, a 0.5% decline in EMEA sales, and a 4.5% decrease in sales elsewhere. All international regions have felt the impact of COVID-19 and are still in recovery, with ongoing changes in restrictions and lockdowns, especially in Europe, affecting sales contacts and demand for elective procedures. On the operational front during the third quarter, we are on track with our initiatives to move products to our facilities in Mexico and Texas, aiming for a complete transfer of all 14 product lines. Our PAC business in Australia will close by year-end, and we are in the process of securing a sub-tenant. We have closed our Temecula site, moving production to Texas, and we are continuing with our R&D efforts, expecting to maintain our track record of introducing new products. Lastly, I will provide an update on our clinical studies for the WRAPSODY Endovascular Stent Graft. We have had productive discussions with the FDA recently and received IDE approval for the WRAPSODY AV Access Efficacy Study, which we refer to as the WAVE study, and for a smaller study called the WRAPSODY Central Feasibility Study, or the Wave Central study. The WAVE study is a controlled multi-center study that compares the WRAPSODY Endovascular Stent Graft to percutaneous transluminal angioplasty for treating venous outflow circuit stenosis or occlusion in hemodialysis patients. This study will involve 357 patients, examining safety and efficacy among other criteria as listed on the study page on clinicaltrials.gov. Startup activities commenced in mid-October, with enrollment for initial patients expected by the end of the first quarter. The WAVE Central study, a 25-patient feasibility study, aims to collect additional safety data on central venous occlusions, running parallel to the WAVE IDE study. We are also targeting initial patient enrollment by the first quarter of 2021. Now, I will hand it over to Raul for a detailed review of our financial results and the financial guidance we reinstated in our press release today.

Thank you, Fred. Given Fred's detailed review of our revenue results, I will begin with a review of our financial performance across the rest of the P&L. For the avoidance of doubt, unless otherwise noted, my commentary will focus on the company's non-GAAP results during the third quarter and year-to-date period. We have included full reconciliations from our GAAP reported results to the related non-GAAP items in our press release this afternoon. Gross profit decreased approximately 2% year-over-year in the third quarter. Our gross margin was 47% compared to 48.1% in the prior year period. The 110 basis point decline in gross margin year-over-year was driven primarily by changes in product mix, an increase in inventory obsolescence expense, which was partially offset by improvements in manufacturing efficiencies. Third quarter operating expenses decreased 18% year-over-year. Our operating margin was 15% compared to 9.2% in the prior period. The year-over-year improvement in operating margin was driven by a 17% decrease in SG&A expense and, to a lesser extent, a 23% decrease in R&D expense compared to the prior year period. The reduction in SG&A expense was a result of cost-cutting initiatives and other cost management efforts related to the COVID-19 pandemic, including layoffs, targeted furloughs and temporary salary reductions, and lower discretionary spending as a result of reduced travel, training, shows, and conventions, among other items. The reduction in R&D expenses was largely due to lower compensation expenses, lower discretionary expenses as a result of cost-cutting initiatives and the COVID-19 pandemic, and more focused research and development program. Obviously, we are very proud of the operating expense performance in the third quarter as we continue to focus on driving costs out of the business in an effort to enhance our long-term profitability profile. Our third quarter GAAP operating expenses included two noncash expense items that I wanted to call out as well. The first is approximately $20.6 million of noncash intangible asset impairment expenses from certain acquisitions. Equity method investments and changes in revenue expectations associated with the related product lines and restructuring. The second noncash item impacted our GAAP operating expenses in the third quarter and was a contingent consideration benefit of $4.4 million from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions. Third quarter net income was $24 million or $0.42 per share compared to $15.7 million or $0.28 per share in the prior year period. We are very pleased with our profitability performance in the third quarter, where we reported growth in net income and diluted earnings per share of 53% and 50% year-over-year, respectively, in a quarter where our sales were essentially flat compared to the prior year period. Turning to a review of our balance sheet and financial condition as of September 30, 2020. Our strong profitability performance in the third quarter, combined with a strong working capital efficiency resulted in strong operating cash flow generation in the third quarter of more than $55 million. Our efforts to control our capital expenditures resulted in a sequential decrease in CapEx of roughly 17%, which fueled very strong free cash flow generation of more than $45 million in the third quarter. Our year-to-date free cash flow generation is a result of great execution from the team. And importantly, early evidence that we are clearly focused on enhancing the profitability and cash flow profile of our company going forward. We took advantage of the strong cash flow generation in the quarter and reduced our borrowings by $53 million. As of September 30, 2020, our cash on hand was approximately $44.6 million, long-term debt obligations of approximately $358 million and $327 million of available borrowing capacity compared to cash on hand of approximately $44.3 million, long-term debt obligations of approximately $440 million and available borrowing capacity of $134 million as of December 31, 2019. Our net leverage ratio as of September 30 was 1.96x on an adjusted basis. Turning to a review of our fiscal year 2020 financial guidance, which we reinstated in this afternoon's earnings release. For the 12 months ended December 31, 2020, the company now expects net revenue in the range of $950 million to $959 million, representing a decrease of approximately 3.5% to 4.5% year-over-year as compared to net revenue of $994.9 million for the 12 months ended December 31, 2019. The fiscal year 2020 revenue guidance range assumes net revenue from the cardiovascular segment of between $921 million to $930 million, representing a decrease of approximately 3% to 4% year-over-year as compared to net revenue of $961 million for the 12 months ended December 31, 2019. Net revenue from the endoscopy segment of between $28.6 million and $28.9 million, representing a decrease of approximately 14.5% to 15.5% year-over-year as compared to net revenue of $33.9 million for the 12 months ended December 31, 2019. GAAP net loss in the range of $11.8 million to $15 million or $0.21 to $0.27 per share compared to GAAP net income of $5.5 million or $0.10 per share for the 12 months ended December 31, 2019. Non-GAAP net income in the range of $85.5 million to $88.5 million or $1.52 to $1.57 per share compared to non-GAAP net income of $82.1 million or $1.46 per share for the 12 months ended December 31, 2019. For modeling purposes, our fiscal year 2020 financial guidance assumes Q4 non-GAAP gross margins of approximately 47% and modest increases in our non-GAAP operating expenses in Q4 as compared to Q3, largely driven by higher selling and marketing expenses related to the increase in sales as well as phasing out of temporary salary reductions, partially offset by prudent G&A expense management and approximately flattish other expenses, a 26% non-GAAP tax rate and similar diluted shares outstanding quarter-over-quarter. With that, I'll turn the call back to Fred.

Raul, thank you very much. That wraps up our prepared remarks, and we'd now like to turn the time over to our administrator, and we'll open up the line for questions. Thank you.

And our first question will come from Matthew O'Brien from Piper Sandler.

I guess for starters, nice Q3 results here. I'm curious about what you're seeing out in the field, especially in the U.S. as far as restocking of inventory that hospitals had versus what was used through. And then your Q4 implied guidance is roughly the same as what you just did here in Q3. So is that healthy level of conservatism? Is there something specifically that you're trying to call out here that we should be mindful of?

Thank you, Matt. We're not trying to highlight anything specific today. Our focus is on the third quarter, and we won't go into too much detail. In just 10 days, we will discuss various topics looking ahead. It seems there might have been some restocking in preparation. As you noted, in our COVID sales, we generated about $10 million in revenue, an increase from around $4 million to $5 million. However, I don't believe there is enough to comment on regarding inventory storage and preparation.

Got it. And then maybe for Raul, just the cost savings in the quarter were great to see. I'm curious, again, in this environment that we're in, how sustainable are some of those savings, be it not going to trade shows because they're not going on, or they're happening virtually versus in-person training, et cetera. So how much of this is sustainable versus, hey, some of these costs are going to come back in a more normalized environment sometime in '21?

Yes. And I think we started this discussion really in Q2 quite frankly, right, just talking about trending in that direction. And so as we said in our opening remarks, our operating expenses are going to increase and our Q4 guidance includes that description of increases. So we've got salary reductions that we did. We did some targeted furloughs. So some of those things are going to come back for sure, and we've planned for those coming back in the fourth quarter, Matt.

Okay. But Raul, do you have any way to quantify the return of those employees and the easing of salary reductions for us as we look at remodeling in Q4 and into '21?

Yes. I think we're going to stick with Q3 numbers. And then as we progress and give our guidance for 2021, we'll touch on that. But I would just say, for this year, this year's guidance, we do see an incremental increase, which we discussed in our opening remarks. And obviously, you saw the cadence from Q2 to Q3, already kind of increasing some of those expenses.

And our next question will come from the line of Larry Biegelsen from Wells Fargo.

This is actually Kevin on for Larry. Congrats on the impressive quarter. My question is actually sort of like Matt's question, but just asking a bit of a different way. I guess I was looking at the implied Q4 guidance, it's up only 2% sequentially, which would not be typical Q4 over Q3 for Merit given the seasonality in your business. I know you have an 8% organic growth comp from last year. I guess I'm just curious, do you have any incremental comments about your uncertainty on COVID flare-up? Something else baked into that outlook. Just curious on how you got to those numbers. And I just have one follow-up.

Yes, I think we're very confident about the guidance. There are many factors at play, and from our perspective, we've incorporated those into our projections. As we gather more information and prepare our guidance for next year, along with our growth strategy discussions, which will occur in 10 days, we'll provide additional details then. Raul?

Yes, I think in our Q4 expectations, we anticipate U.S. sales to decline by approximately 1% to 3% year-over-year. This reflects a modest improvement in trends compared to the previous quarter. It also accounts for a lower sales contribution from Cultura of about $5 million, compared to nearly $10 million in Q3. As you mentioned, Kevin, we face a tougher comparison for Q4 than we did in Q3. Regarding international sales, we are also aware of the challenges, which lead us to project a decrease of 3% to 8% year-over-year in Q4, or 5% to 10% on a constant currency basis. This largely stems from our cautious outlook for the OUS markets. As we noted earlier, all international regions continue to be affected by COVID-19 and are still in the recovery phase, with restrictions and lockdowns persisting in some areas, primarily Europe. We are trying to approach this situation with caution, as Fred mentioned, based on the information available to us at this time.

Makes sense. It's very helpful. Fred, I'm interested to know if you have any thoughts as we approach the upcoming foundations for growth meeting. How far do you see annual financial goals reaching? Is there anything on the pipeline? Any insights on what investors might expect?

Yes. Kevin, thank you very much. The answer is, we have none. We're here to talk about this quarter. We've upgraded our yearly guidance, and we're looking forward, and we hope that we've piqued your interest in that you'll tune in on that day. And I think we're looking forward to talking to you on the 10th. I think we'll leave it at that.

Our next question will come from the line of Jayson Bedford from Raymond James.

I'll keep it tight. The COVID, I was going to mispronounce the name of that product, but the COVID contribution going from $10 million to $5 million, just curious, what are you doing from a manufacturing standpoint to ramp that up in front of what I assume is increasing demand? And I assume that Q3 was a little bit of a forward buy-in. But anything you can offer on kind of the manufacturing capacity and where that's going?

Yes. Thanks, Jayson. First of all, we are fully integrated on our VTM, on our vial and on our swab. We make everything. We make some of it in Mexico. We make the rest of it here. And we have substantial opportunities for capacity based on our capabilities and facilities. So we have plenty of room if the demand is there.

And Fred, is that only being sold in the U.S.? Or is that something you take globally as well?

We are selling it globally, and we are cleared in essentially all of the major markets. So we have the capability to move it globally. There are processes, as you're well aware, Jayson, international companies, countries and tenders. That process is much slower than it is in the U.S., but we are engaged in all of those activities.

Okay. And my second question, and I don't want to be greedy, given all the information you provided. But what was the growth in China in the quarter?

Raul?

Essentially flattish.

I think it was flat for the quarter.

Yes. So it was part of the impact.

Is the expectation that you'll start to see some better growth than flat in China?

I think that our number is included in the guidance, the full year guidance that we've given. And Jayson, not to be evasive, but we'll cover this in our meeting that's coming up in 10 days. We'll give everybody a fair picture. Yes.

Our next question will come from the line of Mike Matson from Needham.

So the cash flow was pretty impressive. So you noted that your CapEx was down, I think, 17% sequentially. So I just wanted to ask about the sustainability of the pace of free cash flow and the CapEx kind of run rate that you were on in the quarter. Is that kind of due to temporary reductions? Or is that something that's more sustainable?

Yes. Listen, Mike. I think that we are looking at these things. R&D has always been important for us for organic growth. We continue on that. It is always a challenge when you have people and this kind of work that all businesses have been going through. But I think we're also very much committed, as we have said in our previous comments and today into R&D, but also the discipline on CapEx. I mean we've heard what investors have said and I think we are very much in tune with those needs without penalizing the company. I mean we think that we are balancing this, and we made a lot of previous investments. So I think I'm comfortable with where we are. And again, we're looking forward to talk to you further about this on the 10th.

Yes. Just to give you a little more color. Obviously, we hit $92.8 million in free cash flow for the year. I will point out that we do have an accrued expense in there for the DOJ settlement. So if you back that out, you're really sitting at $74.6 million for year-to-date on an adjusted basis. We did have strong operating cash flow generation, $128 million year-to-date versus the use of $51 million year-to-date in '19. A big component of that was working capital. We had a target for inventory that we came into the year trying to achieve. We've surpassed that. So sustainability, that one will eat into a little bit, quite frankly, as sales increase. Receivables actually was kind of the surprise for us in Q3, specifically. I think we were planning on maybe seeing some deferred payments as customers faced cash crunches. But the reality is, we continue to collect. And some of the initiatives with our sales force, working in tandem with them on collecting cash have really paid off. And so hats off to them for helping us with that. And then, again, driving the CapEx, essentially a $22 million delta there. And really the cost of the building, which is included in that, last year's number, a big chunk of that. So overall, super happy with the progress we've made. And I think some of the processes we have in place are to make this sustainable, quite frankly.

Okay. And then, the intangible asset impairment, what was that for? Which acquisition?

It was a mixed bag, quite frankly. So let me just pull it up here real quick. There's probably five of them, so there's a whole multitude of them as we kind of went through and reevaluated during our impairment testing.

Okay. So it wasn’t a complete reduction. It was just a partial result of the value of several of them?

Yes, there's probably ten or so that are part of that.

Our next question comes from the line of Steven Lichtman from Oppenheimer.

I know we'll get more details next month. But just on some of the recent operating progress and some of the facility moves. Have you seen any of that impact on the P&L? Or is that really to come as it flows through inventory more so in '21?

Yes. That's a great question. Outside of Temecula, which was closed earlier, and noting some impact in the R&D line, the rest is really from 2021. So when we mention being on track to close or that some lines have been transferred, we need to go through the inventory we had on hand. We won't see the full impact until 2021 for those.

Okay. Got it. And then, just secondly, Raul, obviously, tax rates are becoming an increasing discussion around the election here. You guys have run a little higher here, historically. Are you actually seeing opportunities to bring that down? I'm not sure if that's going to be a discussion point next month. But just curious on your views on tax rate looking forward.

I think that's a great question. I think we're always trying to find opportunities to lower our tax rate. I think it makes it really difficult when you don't know what's going to happen with the tax plan. And so I think we're kind of in a holding pattern, quite frankly, to see what we can do, what happens here over the next week with the election. And then subsequent to that, depending on who wins, where the direction on taxes goes. So I think it's hard to plan when there are so many dynamics in play.

And our next question will come from the line of Mike Petusky from Barrington Research.

I have a couple of questions, Fred. This is a broad one, so you can take it wherever you like. What do you think are the key things your team has done well? Is it the processes, the people, or something else? What has worked over the past six months that has helped you manage effectively in such a challenging environment?

Yes, we need to look back over a year. We developed a plan for product movement and some plant consolidations in research and development. Mike, we had a strategy and have been executing it while looking ahead to future updates. The Board provided incentives in compensation, emphasizing the areas we should concentrate on and addressing what investors were seeking. Our discussions included input from shareholders and concerns raised by you and others. We put this plan together prior to the COVID situation, which helped us be prepared. Our continued adaptation is crucial. There has been considerable discussion around sustainability, and we are eager to showcase our plans in the future. Our upcoming Investor Day is an opportunity to demonstrate that focus. It’s important to highlight that our approach to sustainability and trade shows has fundamentally shifted, and many of these changes will be lasting. We are examining aspects that will not revert to previous ways; they are becoming more cost-effective and efficient. In challenging times like these, we have the chance to reassess our practices and question established norms. Reflecting over the past year and where we are now, we challenged everything and set clear goals for the future. The teamwork here has been impressive; I've enjoyed observing the emergence of leadership across various areas, akin to a football team working cohesively. Everyone is contributing, executing their roles effectively, and it’s been rewarding and enjoyable. It may sound amusing, but that’s genuinely how we feel. Raul, would you like to add anything?

No. I would just say that I think the executive team has worked in. I would say that we've got a lot of transparency internally, and we're talking about things, and we're all kind of marching to the same beat. So it's really helpful, and we just want to execute. That's it.

Yes. And one final thing is our Board. I mean, I think we have a functional Board and we have the management team, and we're all on the same page. And we're being challenged. We're being questioned, but it's all done appropriately and without offending anybody. I think that's been the best part, is the way that we have come together as a Board and as a management team, all the way through the organization, Mike, all the way through. And that's a long answer, but that's all right from the heart. That's exactly what we're doing.

Sounds good. So Fred, can you just talk about, I guess, any concerns if you have any, around the recent COVID spikes and sort of the very negative trends, I guess, most states are seeing right now? And I guess, in combination with if there's sort of a shift in power in Washington and the Democrats were to sort of sweep everything, and just the idea that maybe lockdowns with COVID spikes and sort of maybe more sympathy towards lockdowns. Do you have any concerns around that? Or anything you're hearing from hospitals or anything else?

Yes. Listen, you hear lots of things from hospitals and a lot of these trends, but we do have some offsets there because we do have some COVID-type products. And I just think we're confident in the forecast that we have, based on all these factors built in. And as they change, when it's appropriate to do so, we'll report that. But I think for right now, we're confident with our forecast. And I think we've tried to measure in all of the factors, Mike, as we know them today.

Our next question will come from the line of Jim Sidoti from Sidoti & Company.

Can you hear me?

Yes, we sure can, Jim.

Fred, cash flow, $45 million in the quarter, that's two years for Merit a couple of years ago. That's just an incredible number. I'm looking, just based on June to September, sales were up about $20 million, yet your inventory was down about $10 million, and your accounts receivable up about $3 million. So I mean really, really good cash management there. Does that come back a little bit? Or are you able to sustain that level of efficiency?

Well, I'm going to let Raul, go ahead, Raul.

Yes. Yes, a great question, Jim. We're targeting $90 million in free cash flow for the full year, to be honest. If you look at the guidance that we put on, on net income loss for the year, we've got some working capital components that will go against us into Q4. Notable is the DOJ settlement. So we've already paid a portion of that here a few days ago. So that will go out. Your similar AR balances, I think, to what you're seeing in Q3, quite frankly, right? So we won't get as much leverage there. And then we did have a target on inventory reduction. Our operating team has done an outstanding job on delivering on that and then a little bit more. We will see some of that come back, though, as we build up inventory for the shutdown. So we expect to kind of eat into that number. So again, CapEx will be similar to what we did in Q3, at least that's what we've budgeted. Yet to see if we'll spend that. So that's what we're planning on. So kind of, the expectation is we end up somewhere around $90 million, which is a great year.

For the sake of clarity, Raul, when you're talking about the shutdown, you're talking about the Christmas and New Year.

Yes, Christmas and New Year. Yes, we usually build up inventory for that.

Make sure we have enough to cover that, and we don't have shortages going forward. So we build up a little bit during that period, and we've always done that.

Yes. And it has been a fantastic year, with respect to cash flow. And then the other question I had is, at the beginning of the year, you had about, I don't know, 10 or 15 new products that you were excited about launching. And I know those all got pushed back because of COVID and the fact that your salespeople aren't in the hospitals. Are they starting to contribute yet? Or do you think it will be another quarter or two before you can really roll out some of these new products that you have in the pipeline?

Yes. Jim, I don't mean to be evasive. But again, in our guidance, we have put the products that are released. But listen, let's just be pragmatic here in this environment. It's slower than it would be under normal conditions. But again, in terms of that pipeline and all these other things, we'll talk all about that in just a short 10 days from now.

And I am not showing any further questions at this time. I'd like to turn the call back over to Fred Lampropoulos for any closing remarks.

Thank you very much, everyone. We appreciate your time on this busy day. We aimed to keep this discussion brief, lasting about 45 minutes. We hope to see you on the 10th, and thank you for participating today. Good night from Salt Lake City. Good evening.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.