GeneDx Holdings Corp. Q3 FY2023 Earnings Call

Good day, and thank you for standing by. Welcome to the GeneDx Third Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Sabrina Dunbar at GeneDx. Please go ahead.

Thank you, operator, and thank you to everyone for joining us today. On the call, we have Katherine Stueland, President and Chief Executive Officer; and Kevin Feeley, Chief Financial Officer. Earlier today, GeneDx released financial results for the third quarter ended September 30, 2023. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today’s call, including about our business plans, guidance and outlook. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, October 30, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to our third quarter 2023 earnings release and slides available at ir.genedx.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. And with that, I’ll turn the call over to Katherine.

Thanks, Sabrina. We have a lot of news to cover on our call today, so I’m going to jump right in. Our third quarter results were strong with $53 million in revenue, gross margins of nearly 50% and a 52% year-over-year reduction in cash burn. We also saw the highest mix of exomes as a percentage of total volume coming in at nearly 30% in September. Our industry-leading exome and genome accounted for almost two-thirds of our revenue this quarter, and we continue to grow the market and offer clinical insights to more and more patients. At the same time, we are materially reducing our cost structure in effective and scalable ways. The fundamentals of our business have never been stronger. We have organized our entire team around three major efforts: one, increasing exome and genome volumes; two, reducing claim denial rates to increase revenue per test; and three, driving down our cash burn. Our exome-focused strategy is taking hold. Our goal is to transform the market from single gene tests, multi-gene panels, and microarrays to exomes and genomes. With exomes representing 63% of our revenue in September, we’re well on our way. This quarter, we saw a 12% increase in the number of clinicians ordering exomes in the outpatient setting with the fastest-growing clinician count coming from neurology, representing 18% quarter-over-quarter growth. Pediatric neurologists continue to make up the largest portion of our new ordering clinicians. Building markets takes time. This year, we had our sights on an aggressive growth trajectory in the second half of the year centered around a faster conversion of single and multi-gene tests to our exome business. With $50 million in core revenue in Q3, we expect continued growth in Q4 and full-year revenue now in the range of $187 million to $192 million. We have just completed the final stages of shutting down the former Sema4 business. That took longer than we anticipated but is officially complete. Excluding those final shutdown costs and one-time severance costs, our cash burn in Q3 from continuing operations was approximately $25 million. This is today’s steady-state burn rate from which we plan to improve moving forward. Today, we announced that we’ve effectuated a cost reduction plan of approximately $40 million from the Q3 base, which includes vendor spend as well as a reduction in force. We are prioritizing efforts that support exome and genome growth and increases in paid claims. We’ll continue to invest in the teams responsible for these efforts as we’re seeing that they are making tangible progress, thanks to the addition of some key leaders across commercial, operations, finance, and product and technology. Some of the efforts that have been deprioritized include R&D and other longer-term strategies that we’ll seek to invest in once we get closer to profitability. Today, we also announced that we have entered into a debt facility of $75 million with Perceptive Advisors, and we’re grateful to them for believing in our team and the strength of our business in the near and long term. This fortifies our balance sheet, and with the reduction in burn, that we have just implemented, provides balance sheet flexibility through 2025. Balancing our investment in growth while removing cash burn from the business is no easy task. But with the plan we’ve assembled, I’m confident we are making the right choices to ensure we grow our leadership position in the most cost-effective way possible. I know we’re not alone in navigating these waters. Other companies are facing similar challenges, but I’m proud of how our team has come together in close partnership with our Board on a clear-eyed view of the market we’re living in, a meticulously focused strategy that prioritizes growth of our exome and genome offering, and course correcting as we move forward. You have our commitment that we’ll continue to do so in order to drive shareholder value. I want to extend an immense thank you to our teammates and leaders past and present, who have invested their time and passion to get us to where we are today. I thank the incredible team who continued to stay committed to our mission despite the winding path we’ve been navigating. No path to profitability is easy nor straightforward, particularly when introducing a new technology to improve healthcare. But with the generous support and patience of our shareholders, we’re all grateful for the opportunity to make a meaningful impact on patients and are committed to delivering value for those shareholders who continue to trust us to realize that vision. Kevin?

So I’ll repeat what Katherine said; it was a strong quarter. Total revenues were $53.3 million for the third quarter of 2023. Revenues from continuing operations were $50.4 million compared to $47.2 million in the third quarter of 2022 and $45.2 million in the second quarter of 2023. Excluding a one-time appeal benefit in the third quarter of 2022, revenues increased 14% for this third quarter. Whole exome and genome volume this quarter was over 13,000 tests, which represents a 71% increase year-over-year, and an 11% increase compared to the second quarter of this year. We generated $34 million this quarter from exome and genome testing, a 42% increase year-over-year and 18% compared to the second quarter of this year. Adjusting for the same one-time appeal benefit in the third quarter of 2022, revenue specific to exome and genome increased 61% year-over-year. In the third quarter of 2023, adjusted gross margin from continuing operations was 48%, up from 37% in the second quarter. The margin expansion is coming from three places. The first is Test Mix. To level-set, our adjusted gross margin for exome remains over 60%. Exome and genome represented 23% of all tests in the third quarter with a high of 28% in the month of September. Total gross margins will continue to benefit as exome picks up more share of our overall test production volume, replacing lower margin and, in some cases, negative margin products. The second is on cost per test. We now have two lower cost per test Illumina X Plus machines live, and we will aim to replace the remainder of our APS legacy NovaSeq fleet at the right time over the next several quarters. We also have recently received our first PacBio Revio machine. Beyond our long-read sequencing collaboration, the team here is excited about the potential use of this technology to lower costs by replacing older orthogonal confirmation platforms. Additionally, we’ve now completed the consolidation of disparate library preparation platforms to a lower-cost solution offered by Tuas Biosciences. And while we are pleased with where exome costs are today, a number of initiatives are already underway or planned to further improve the cost base. Automation and AI across review analysis, report writing, and certain genetic accounting steps offer real near- and long-term cost reduction opportunities. The third was from average reimbursement rates. The fully loaded average reimbursement rate on the exome and genome portfolio was over $2,500 in the third quarter, slightly up from over $2,400 last quarter. The Exome portfolio operates at over 60% gross margin today despite a high denote that we know has the opportunity to be improved upon. As Katherine mentioned, new leaders have been brought into the company to lead billing, market access, sales, product and technology, and finance-related teams to bring enhanced experience and new perspectives specific to these efforts. The majority of our denials, we continue to believe are addressable. Let’s now move down to operating expense. Total adjusted operating expense was $49.4 million for the third quarter of 2023, down from $91.8 million in the third quarter of 2022 and $60.1 million in the second quarter of 2023. That’s a reduction of 46% year-over-year and 18% from last quarter. We’ve once again delivered reduced costs as we further separate from the legacy Sema4 business and search for efficiency. For awareness, this quarter includes a $1.8 million one-time benefit. This baseline will further reduce over the next couple of quarters with the cost rationalization plan implemented earlier today. On the bottom line, total company adjusted net loss for the third quarter of 2023 narrowed to $21.1 million compared to an adjusted net loss of $69.8 million in the third quarter of 2022 and $38.6 million in the second quarter of this year, improvements of 70% and 45%, respectively. Our third quarter cash burn of $42 million included nearly $17 million in final Sema4 payables and one-time costs and otherwise would have been approximately $25 million for the quarter. Our total cash, cash equivalents, marketable securities, and restricted cash were $115 million as of September 30, 2023. Today, we announced that we have entered into a new 5-year senior secured credit facility with Perceptive Advisors. This agreement provides for up to $75 million in capacity, consisting of an initial tranche of $50 million, which was drawn on October 27, 2023, and an optional second tranche of $25 million, which is committed through December 2024, subject to certain criteria. Interest is payable at a rate of SOFR plus 7.5%. Under the terms of the agreement, Perceptive will be issued warrants to purchase 800,000 Class A shares of the company’s stock at closing with an exercise price equal to the 10-day VWAP. That price is $3.17 a share. Upon the barring of the subsequent tranche, Perceptive would be issued warrants to purchase an additional 400,000 Class A shares. Personally, I want to thank the Perceptive team for the hard work involved in the transaction. We are excited to have yet another strong thought partner in the mix. In giving rise to the net proceeds of the initial tranche, our pro forma cash on hand at September 30, 2023, is $163.7 million. Now turning to guidance. We expect to end 2023 with full-year revenue from continuing operations in a range between $187 million to $192 million. We’re narrowing the expected cash burn guidance for the second half of 2023 to a range between $75 million to $79 million, inclusive of servicing obligations of the exited business activities. As a reminder, in December 2023, the next scheduled installment payment of $5 million will be made with respect to the legacy Sema4 payer settlement. As we have expressed, the outlook to turn profitable in 2025 remains unchanged. So while we’re not providing specific long-term guidance beyond 2023 at this point, I wanted to speak to how we view that path to profitability by the end of 2025. There are three primary drivers. The first is rationalizing the operating expense base. Our current adjusted operating expense is roughly $50 million a quarter or a run rate of $200 million annually. We’re taking out an additional $40 million in specifically identified costs to get down towards $160 million over the next several quarters. We firmly believe these cost reductions will not impact our ability to drive exome growth. The second is by expanding gross margin. We just reported Q3 adjusted gross margin of 48%. Remember, our blended exome gross margins are greater than 60% today. So as exome tests continue to make up more of our revenue, our total margin moves towards that 60-plus percent. We also believe exome margins can expand beyond their current level given COGS reductions and reimbursement work. The third is revenue growth. We just reported Q3 revenue of $50.4 million for continuing operations, or a $202 million run rate. Our future revenue growth is all exome and genome, and exome just grew 62% year-over-year this past quarter. If one were to assume even a much lower exome growth rate in the zone of 20% over the next two years, that generates a very reasonable breakeven level given the cost structure I just mentioned. That said, we certainly aim to achieve stronger exome revenue growth than that. So with the cost-saving initiatives announced today, margins continuing to trend towards our current exome margin, and revenue growth tracking to even moderate levels, we see a clear path to breakeven by the end of 2025. And finally, in terms of cash, our cash burn for continuing operations was approximately $25 million this quarter. On a go-forward basis, you should expect adjusted net loss and cash used to more closely conform to each other, except for the payer settlement severance and fairly minimal CapEx. I’d also point you to the liability section of our balance sheet, which will show huge structural improvement as we’ve now put substantially all Legacy Sema4 operating payables behind us. We, therefore, anticipate the new debt financing proceeds will primarily serve as balance sheet protection as we shift towards sustainable profit.

I’ll now turn the call back to Katherine for any closing remarks. Our commitment to turning to profitability in 2025 is our unquestionable focus. As we’ve commented today, that is possible with growth, efficiency, and cash management and our planned support to these three drivers. In managing the business to this goal, we are well positioned to lead the market to diagnosing all inheritable diseases with our exome and genome backbone and ultimately realize our vision of using genomic and clinical data to inform disease diagnosis, and treatment selection, and to accelerate drug discovery and development. For now, by focusing our business on exome and genome, we will drive value creation for our shareholders while continuing to serve more and more patients. Now we’ll turn it back to the operator for Q&A.

Thank you. Our first question comes from the line of Dan Brennan from Cowen; your line is open.

Hey this is Joe for Dan. It seems like the exome volume growth story and the mix shift are really playing out with 70% exome growth in the quarter and 28% mix in September. So what do you see changing in the fourth quarter that’s bringing down the implied Q4 guide?

Yes. Joe, look, I think the way we view it is we did add some new team members to the commercial field force, and that’s in large part what is driving the growth in the exome portfolio. We’re really happy with how the quarter played out. We’ve seen some pretty substantial growth in both Q2 and Q3. And so the guide is really reflective of what we see line of sight to. October is coming in strong. We’re pleased with the data thus far. We typically see a Q4 uplift in terms of ordering patterns. We would expect that. I have every confidence that we can hit the high end of that range. The previous guidance range that we provided, particularly at the higher ends of that, we just fell short in the first couple of quarters of this year. We’re really happy with how the second half of the year is progressing here. So the guide was just reflective of how the earlier part of the year played out.

Got it. And then on ASPs, it looks like they came down about 15% in Q3 on a blended basis. Do you see pricing generally stabilizing into ‘24? Or do you expect these kind of like 10% to 15%-ish year-over-year quarters to continue?

No, I think we view Q3 as a baseline from which to improve on. If you focus in on exome, we did see improvements in Q3 versus the second quarter with an average of just north of $2,500 versus the second quarter in the $2,400 range after all denials. We’d expect a similar progression in the fourth quarter with a slight uptick. As we mentioned in our remarks, we’ve got teams across the entirety of the company focused on improving front-end processes to bring down the denial rate and we would expect that over the next several quarters, you’d see incremental ASP improvements in exome. On the other product lines, we’ve identified some near-term opportunities in particular with chromosomal microarray in hereditary cancer. Those are two product lines that had not received as much focus in the past couple of years as they maybe should have. So the team is working on improving things in those two product lines, in particular. Outside of exome and CMA hereditary cancer, you might expect blended ASPs on the other panels to stay flat on a go-forward basis.

The only thing I would add to that, and I think the way that Kevin framed it in terms of finding opportunities beyond the exome since we saw a nice increase in exome. We are going to be retiring about 350 tests in early 2024. So again, continuing to really focus the business on the tests that differentiate us, that are best for patient care and that can have a positive impact on the P&L as well.

Got it. And then just last on the $40 million incremental cost out. Where are these coming from? And can you talk about where we’ll see this in the P&L?

Yes. About half is coming from employee reductions. We took some actions midway through the third quarter and then today, impacted another subset of employees with a sizable reduction in force throughout the day. The group impacted there, primarily research and development, some product and technology, and then other support functions as we’ve gotten further away from separating Sema4, the overall support necessary for the ongoing business is decreasing. We’re reacting quickly to right-size the cost base as we move further away from that shutdown. Those shutdown activities are now complete. As it relates to the remainder of the spend there, we’ve taken a focus on really earning our way to longer-term pursuits around research and development. Reductions with respect to projects that would have longer-term payoffs, I think 2026 and beyond. I feel confident that everything necessary to grow the top line to expand gross margins still remains intact, and it’s those longer-term pursuits with respect to R&D that have been trimmed down.

Thank you. One moment for our next question. Our next question comes from the line of Mark Massaro from BTIG; your line is open.

Hey guys, thank you for taking the questions. I know you addressed that most of the $40 million annualized cost reduction is coming from R&D and support functions. But were there any reductions to the sales force or MSL crew? I think based on my notes, I think you are planning to onboard 10 new reps in the second half of this year and finish somewhere in the 65% to 70% range. Can you just maybe update us on the size of the commercial organization?

Yes. The commercial organization is going to continue to be an area of investment for us. So for the most part, I would say the removal that we try to do surgically ensures that we are not eliminating any roles that will slow down growth or impact the integrity of the product. We feel really confident that the quality will remain high and ensure that we can continue to be the market leader and drive meaningful growth through the commercial organization. So no impact on the sales force, no impact on MSLs. Those two teams and the commercial functions supporting them are critically important and have been doing a fantastic job this year, as evidenced by the results of the quarter. The sales force, we’ve got about 62 of those roles filled right now, so close to capacity. We always expect that there’s going to be a handful of roles that are open from time to time. We do have our MSLs that are fully staffed; they were just gathered in Gaithersburg last week, and I had the chance to talk with them. They are continuing, as we look towards the future commercial strategy, to really hone in on working collaboratively as a team looking at overall account profitability while focused on ensuring that we can continue to drive exome and genome moving forward. Those MSLs are critically important to our ability to do that.

Okay, thank you for that. So I’m still not understanding why you lowered the full-year guidance. I mean I understand that you needed 60% of your revenue to come in, in the back half of this year. We were modeling below your guidance, but still, the implied Q4 is significantly below the Q4 consensus revenue estimate. Can you just walk us through what has changed? I understand that you have been onboarding new reps; I assume maybe their initial traction in Q3 wasn’t as high as you expected. What else is going on in terms of pricing and work with payers? I would assume that some of your prior guidance would have required more work from payers. So can you broaden that update on traction with commercial pay, the timing of some of the new plan coverage, and some of the one-time payments that you might have expected in your prior outlook?

Yes. I think Mark, it’s a little less around payers and pricing. In fact, we are fairly optimistic that we’re seeing improving data in the last two months and continuing through today, from a reimbursement and denial perspective. If you go back to the original guide, it anticipated that we would start to see a sizable ramp in conversion from chromosomal microarray into exome. We had previously talked about bringing some of those CMA tests in as stepping stones or seeds for future exome. As the commercial team has been executing, we’ve added the MSL teams to engage in conversations. What we’ve seen is that we should expect a more moderate conversion ramp from CMA into exome rather than a massive bolus of conversion or inflection point, which is really anchored on a few things. One, long-standing physician behavior. We’re encountering doctors who’ve been practicing genetics the same way for quite a long period of time, and we have education to do around misperceptions in the marketplace regarding turnaround times and pricing. We’ve got our rapid exome product down to a verbal report in three days, but old perceptions around delays and noise that may appear in reports with respect to significant variants are all things we’re finding have entrenched behaviors and mindsets among physicians. We’ve seen a flattening of that conversion ramp versus previous expectations. That said, the exome portfolio has grown rapidly, and we’d expect pretty similar growth rates going forward. The go-forward guide for the fourth quarter reflects a plus $5 million revenue quarter from Q2 to Q3, and we’d expect something similar in the fourth quarter as we’re starting to see a normalization of what we can expect in terms of the CMA to exome conversion.

Okay. That is helpful. So it looks like the midpoint of your guide would imply about 10% or 11% revenue growth for the full year. Recognizing that you are picking up a higher mix from exomes, is it reasonable as we think about our models for 2024 that greater than 10% should be readily achievable? Any granularity or commentary about the levers of growth in ‘24 would be helpful.

Yes. I mean, we’re not providing full year ‘24 guidance. We’ll do that in early January. But I’ve tried to outline for you in my prepared remarks, and there’s a page in our earnings materials that sketches out what we believe is an illustration of the path to profitability. We believe firmly we can get there to breakeven and beyond, even if you assumed year-over-year revenue growth of around 20%. All of our growth is going to come from the exome portfolio, which just grew well in excess of that mark. I really believe you should expect similar exome growth year-over-year moving forward. Recall that this year was impacted earlier from some price concessions we offered to the marketplace near the end of last year. That’s all worked through the system, and I believe at this point, you should expect sequential ASP improvements moving forward. So we might expect a greater growth rate year-over-year from 2023 to 2024 than what we posted this year.

Okay. That’s helpful. And if I can sneak one last one—the adjusted gross margin from continuing operations of 48%, that was strong and well above our modeling. Do you think that’s perhaps a level that you can build off from here? Or were there any one-timers in Q3?

Yes, we do think it’s a new level or a base to build off of. There were no meaningful one-time items in that number either in terms of ASPs, revenue, or COGS. To your point, we are seeing some efficiency initiatives take hold and provide results ahead of schedule. Yes, we’ve outperformed in the cost per test, particularly around exome, and think that those efficiency gains are here to stay.

Thank you. One moment for our next question. Our next question will come from the line of Brandon Couillard from Jefferies; your line is open.

Thanks. This is Matt on for Brandon. Maybe sticking with gross margin there. I appreciate all the color, Kevin. In terms of the three buckets you spiked out for the sequential improvement in gross margin, should we think about each one of those kind of having a similar contribution? Or is there one in there that kind of was an outsized driver to the improvement here we saw in 3Q?

It’s really the—take them in the relative order that I outlined, with cost per test leading the way there. Those are coming from a number of areas, both in the wet and dry side of the laboratory. Some are process-related, some are technology-related. The new machinery from Illumina is paying off as expected. What gives us the most comfort and conviction moving forward is we’ve got a large roadmap of additional efficiency items that are near-term and can be relied on. We’re only just getting started in driving down the cost per test of exome. That one probably leads the way, and you can take them in ranked order as I outlined.

That’s helpful. And then I appreciate all the color on the cost outs. I just wanted to ask, so $40 million of further cost outs reiterated your profitability target for 2025, so not pulling it forward on those or anything. Are we supposed to think about that when that profitability comes it could be more meaningful given the additional $40 million that’s coming out today or just trying to get a handle on your profitability target now pulling it forward but taking another $40 million out of the cost structure?

Yes, I think the marker of 2025 acknowledges that the revenue base came in a bit lower than expected for this full year. The $40 million is really meant to ensure we meet the commitment we made, which was to turn this company profitable by the end of 2025. We’re more convicted today in our ability to do that. Frankly, we found more efficiencies in our recent review than we thought we might at the outset of that analysis. I think any upside to pull profitability into 2024 would come from outsized revenue growth, which of course, we’re aiming to achieve but wanted to be careful not to overpromise.

I guess, last one maybe for Katherine. You guys have made a lot of changes on the commercial side, working on new territories, new outreach programs, things like that. Maybe just talk a little bit about what you need to hire for your Chief Growth Officer. Should we expect any kind of change or additional things there in the commercial side or more just a continuation of some of the moves you guys have made so far this year?

Certainly. So just added Melanie Duquette, who joined in September to lead the overall commercial strategy, working off of a strong foundation that we have in place, to take us to the 2.0 version of where we want to go in terms of commercial efficiency. We expect the cross-functional teams focusing on growth and account profitability to work more efficiently together. She has done a tremendous job at her prior company, really shifting the focus from volume to a focus on revenue, ASPs, and overall account profitability. That’s what we’re looking for in terms of shifts moving forward and continued improvement on overall efficiency to ensure that those teams we work with are collaborating effectively in support of account growth. We’ll continue to focus on opening up markets while aligning with our P&L and ensuring good patient care.

One moment for our next question. Our next question will come from the line of Prashant Kota from Goldman Sachs; your line is open.

This is Prashant Kota on for Matt. What split do you see between inpatient and outpatient exome testing? And do you see that evolving over time?

Hey Prashant. Yes, the vast majority, I think 97% to 98% is in the outpatient setting today, really predominantly focused on exome versus genome in outpatient settings. The rapid setting in the inpatient, which is primarily a utilization of our rapid genome product, is growing quickly but is a very small portion of the business. That being said, we just had a really nice win at a health system in Florida, where we've been able to get institutional contracts set up to drive utilization of our rapid genome in the NICU. I’m encouraged by some wins like that, which ensure that this product is being utilized. The vast majority of the inpatient is institutional pay, which is obviously one barrier we’ve removed for utilization, and we’re paid 100% of the time for those. We continue to view that as a longer pull in terms of driving utilization, as we need more time. As we think about the breakdown over the next several years, we’re still going to see it predominantly in that outpatient setting.

Got it. Thank you. Could you also just talk about your progress in reducing claim denials and specifically, what percent of claims are not approved if you have that number? And roughly how long is the appeals process?

Yes. As we discussed, we brought in several new folks really to examine our end-to-end processes, particularly on the front end of claims submission. A lot of work is ongoing. We did see an uptick in ASPs. That’s all driven by a slight reduction in the denial rate this quarter. We’re pleased with the initial findings; certainly, we have a long way to go. I think it’s critical to get fresh eyes on our processes. We feel confident that many of the denials are addressable. To your question, north of 60%. So low 60s is our denial rate today on the exome portfolio. That hasn’t changed in a while, although we improved by about one percentage point in the third quarter versus the second, which drove the incremental uptick in average ASPs. Longer term, you should expect us to take incremental bites out of that denial rate with each passing quarter as our ongoing efforts begin to take hold. The appeals process is lengthy, with us going back to payers to re-adjudicate claims based on medical necessity and unique circumstances of patients. We have an appeal process established, but I think more importantly, driving down denials and improving ASPs and thereby, revenue comes from avoiding denied claims, which is where all our efforts are at the moment.

Got it. That makes sense. If I could squeeze one last one in. How are you thinking about capital allocation given the new capital you’ve raised with the debt agreement?

Yes. We look at the new debt agreement as a means to couple it with the cost reduction actions we took today. The reductions really emphasize three main priorities for the company: How do we drive exome growth? How do we improve exome reimbursement by reducing denials? And how do we find cost efficiency and reduce costs elsewhere to improve the financial health of GeneDx to meet that commitment to become profitable sustainably in 2025 and beyond? So all our available capital is allocated to supporting those three pursuits alongside any capital dedicated to R&D and product and technology to help the company be more efficient in reducing exome costs.

Thank you. That will conclude Q&A for today. I would now like to turn the conference back to Katherine Stueland for any closing remarks.

Great. Thank you. We have a strong and growing business, a commitment from the management team to continue to do it as efficiently as possible. We are grateful for the continued support of our shareholders and look forward to seeing many of you at an upcoming conference. Thank you.

And this concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.