Alphatec Holdings' CEO Discusses Q1 2013 Results - Earnings Call Transcript

| About: Alphatec Holdings, (ATEC)

Alphatec Holdings, Inc. (NASDAQ:ATEC)

Q1 2013 Earnings Call

April 30, 2013 05:00 pm ET


Les Cross – Chief Executive Officer

Mike O’Neill – Vice President & Chief Financial Officer

Tom McLeer – Senior Vice President of US Commercial Operations

Ebun Garner – General Counsel

Mark Francois – Senior Director, Investor Relations


Matt Miksic – Piper Jaffray

Matt Dolan – Roth Capital Partners

Mark Francois

Ladies and gentlemen, thank you for standing by. I’m Mark Francois, Senior Director of Investor Relations for Alphatec Spine. Thank you for joining us today for Alphatec Spine’s conference call to discuss our Q1 2013 financial and operating results.

Speaking today will be Les Cross, Alphatec’s Chairman and Chief Executive Officer; Tom McLeer, Senior Vice President of US Commercial Operations; and Mike O’Neill, Vice President and Chief Financial Officer. Also on the call today is Ebun Garner, our General Counsel.

(Operator instructions.) As a reminder, this call is being recorded today, April 30, 2013. A replay of the event will be made available later today on the website and will remain there for the next thirty days.

Before I turn the call over to Les I must remind you that today’s conference call contains forward-looking statements made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Such statements include statements related to the company’s revenue and adjusted EBITDA expectations for 2013, the success of the company’s initiative to drive global sales growth, the ability to achieve surgeon conversions in connection with our Phygen acquisition, contributions to the company’s revenue and earnings in 2013 from the introduction of new products and sales and marketing strategies, and the timing of US FDA and other foreign and domestic governmental agency decisions that impact commercialization and distribution of our products.

These forward-looking statements are based on the company’s current expectations and are subject to a number of risks, uncertainties and assumptions that could cause actual results to materially differ from those forward-looking statements. The company undertakes no obligation to update any forward-looking statements whether a result of new information, future events, or otherwise. Many of these risks, uncertainties, and assumptions are discussed in our 2012 Annual Report on Form 10(k) for the year ended December 31, 2012, which we filed on March 5, 2013, with the Securities and Exchange Commission as well as other filings on Form 10(q) and period filings on Form 8(k).

Our SEC documents are readily available on our website at With that I’ll hand the call over to Les.

Les Cross

Great, thank you, Mark. Good day, everyone, and welcome to Alphatec Spine’s conference call to discuss our Q1 financial and operating results. I’m pleased to report another great quarter for Alphatec Spine. Overall, our Q1 performance met most of our expectations and followed the excellent results we posted in Q4 of last year.

It is clear to me that the investments we made into Alphatec last year – into the leadership team, innovation, operations and business development activities – are paying dividends and they are enabling us to execute better in a challenging spine market. I’m extremely proud of the entire Alphatec Spine team for embracing our transformation last year and stepping up and delivering another excellent quarter in Q1. We are off to a great start for the new year.

Following the strong Q4, Alphatec’s revenue growth in Q1 continued to outpace the overall spine market which at best remains flat. Our consolidated Q1 revenue totaled $50.4 million, growing at 4.1% over prior year or 6.4% on a constant currency basis. We are extremely pleased to achieve this excellent result in spite of the continued headwinds in the global spine market. Adjusted EBITDA also came in strong at $6.1 million or 12.1% as a percentage of revenue. Mike will cover the financial details much greater in a few moments.

Our US revenues totaled $33.1 million, representing a growth of almost 2% over Q1 2012. This was driven by the company’s acquisition of Phygen. Excluding Phygen, US sales trailed last year’s Q1 by approximately $1 million on a same-day sales basis. Our US hospital business was impacted by an uptick in pricing pressure which Tom will discuss in greater detail shortly, but we did see an increase in units sold. Additionally, the loss of PureGen sales in Q1 2013 amounted to approximately $1 million.

I would like to provide an update on Phygen. While Phygen’s run rate is a little under our expectations at this point we are executing on our integration plan and have made excellent progress in reaching out to the many Phygen surgeons. We continue to believe that Phygen and its network of over 100 leading US spine surgeons represents a significant growth opportunity for Alphatec in 2013 and beyond.

I would like to provide a quick update on the status of PureGen, which remains on the shipping hold that we placed it in last quarter. As we mentioned last quarter, the FDA conducted site inspections at each of the two vendors who are collectively responsible for the procurement and processing, and storage and shipment of the PureGen product. They were issued several Form 483 observations as it related to PureGen.

Each of these vendors has filed their response to the observation with the FDA and are awaiting for the FDA to provide feedback on the response prior to us resuming shipment of PureGen. As mentioned last quarter our revenue guidance for 2013 assumed only a modest contribution through PureGen this year.

As it relates to our domestic business, I would like to address the recent OIG Special Fraud Alert that was issued in March regarding PODs, or physician-owned distributors. We are in complete agreement with the OIG’s position that all physician-owned distributors or PODs must be formed and act in compliance with all the applicable laws.

As we have stated many times in the past, Alphatec has worked with outside counsel to develop a stocking distribution policy that requires the very few PODs that we work with to be in compliance with the applicable laws. Following the issuance of the Special Fraud Alert, Alphatec once again worked with outside counsel to review our stocking distributor policy and as a result we have amended the policy to ensure that our policy addresses all of the concerns of the OIG that was raised in the Special Fraud Alert.

In light of the Special Fraud Alert, it’s likely that we’ll see a shift in some surgeons’ practices. Some will move back into a more traditional model utilizing our existing or employed sales force. Some entities may reach out to the OIG for an advisory opinion to determine whether their business structure or model is satisfactory in the eyes of the OIG, and we strongly are encouraging them to do this.

In addition, hospitals may drive change by only electing to buy and be billed directly from a manufacturer such as Alphatec. However, regardless of the changes Alphatec’s flexible distribution strategy should enable us to succeed in this changing, evolving environment.

Our international revenues totaled $17.4 million, representing a growth of [9.3%] over the first quarter of 2012 or approximately 16.4% on a constant currency basis. Our international business continues to represent more than a third of our total business. Our subsidiary in Japan once again performed very well but its growth in Q1 was significantly impacted by the steep devaluation of the Japanese yen against the US dollar. On a constant currency basis, our Japanese subsidiary posted a growth of 9.2%.

We continue to have high expectations for our new product pipeline this year and we are seeing a good initial traction with our first launches. These launches have been very exciting and very successful, and Tom will cover these in greater detail shortly.

In the cervical segment, our Pegasus anchored interbody device, a unique implant that offers a single step deployment of the anchors into the adjacent vertebrae has really been well received. Likewise, the Lumbar Spine, the recent FDA 510(k) market clearance of the Alphatec Solus has enabled us to get an early jump on the evaluation case of this product. We are very pleased to see the interest growing in the marketplace for these products. Both of them have incredible potential as we move forward.

Last, I’m pleased to announce that we just received FDA 510(k) market clearance for our new improved Epicage system. This represents the third consecutive product that has received market clearance from the FDA more quickly than we had anticipated. The team is doing a great job.

At this time I would like to invite Tom McLeer, our Senior VP of our US Commercial Operations, to provide some more color around the US commercial results and strategy.

Tom McLeer

Thanks, Les. We’re certainly pleased with the results from the US Commercial Group considering some of the hurdles we faced in Q1. Let me start with some of the fine market fundamentals that we are seeing in the field.

Insurance approvals remain a slow process as insurance companies continue to ask for extended periods of conservative care and this has slowed the case volumes for many of our key surgeons. We also continue to experience pricing pressure in some of our accounts.

Hospitals are looking to implement fixed pricing for each procedure or each construct to reduce costs, even ahead of contract expirations. In certain instances where it made sense we did make pricing concessions to protect existing business or to gain new business. In other cases we had to decline participation. While we continue to seek to maintain pricing, we anticipate pricing will remain a challenge as it has for the past two years.

We were able to offset a portion of the impact with an increase in unit volumes and products on contract. Another opportunity to mitigate pricing impacts in 2013 comes from our new project launch cadence that should strengthen our US implant and instrument business, which I will discuss next. In addition we continue to use our broad biologics portfolio to drive increases in our per procedure revenue.

With respect to field training, we had two very successful strike force training meetings for our sales people and distributors that were conducted in Chicago and Carlsbad. Training was conducted on Pegasus, Alphatec Solus, ILLICO Multi-Level and Zodiac Deformity DVR.

As Les mentioned, we have completed the first cases for our new Pegasus anchored cervical interbody device and all have gone well. The Pegasus anchor deployment is achieved through a unique insertion tool that is simple to operate. In contrast, competitive products deploy the anchors using a hammer to impact them. In addition, we believe Pegasus technology is superior in that surgeons have the ability to retract the anchors inter-operatively if needed to reposition the implant. Thus far cases have gone well and Pegasus has received positive initial feedback. We’re now working towards the full launch. There’s continued excitement in the field with this product.

Several Alphatec Solus cases have also been completed since its re-launch, all of them with excellent results and quick operative times relative to the competition. Alphatec Solus is an anchored ALIF device that provides four points of fixation from a single deployment step. Surgeon response has been very strong since the re-launch and all cases have gone very well. The final evaluation cases are being conducted and we’ll then be ready for a full launch. There is keen interest in the field and several new distributors have expressed interest in selling this product instead of competitive products.

The ILLICO Multi-Level and Zodiac Deformity DVR upgrades were received with great interest at the strike force meetings. These products will allow our surgeons to successfully complete longer-level MIS and deformity constructs. We believe that ILLICO MIS is now one of the most flexible MIS systems on the market while Zodiac DVR continues to expand our versatility in the deformity market.

As Les mentioned, we were pleased to receive FDA clearance for our new and improved Epicage System a couple of weeks ago. Epicage is a unique posterior interbody spacer that allows consistent midline anterior placement. Epicage is a crescent-shaped peak interbody device that is flexible, allowing it to be delivered through a small, straight tube. As Epicage exits the delivery tube and enters the disc space it flexes back to its original shape. This product will provide another option for surgeons focused on obtaining good anterior column support.

To complement our new product pipeline for 2013, we firmly believe that our mix of direct reps, independent commission agents and stocking distributors, as well as our direct-to-hospital sales efforts, provide us with a key competitive advantage in addressing our customers’ needs. As the market evolves Alphatec will continue to address the customer needs of our surgeons, hospital and distributor customers in a careful and thoughtful manner.

The integration of Phygen continues to move along. In addition to two very successful Phygen open houses we’ve had numerous other meetings and visits with these new customers. The surgeons have been exposed to Alphatec’s culture and comprehensive product offering, and much discussion is centered around the numerous synergies and opportunities created by this transaction.

Phygen’s surgeons have already been involved with the evaluation of many of our new products and are providing critical input into our new product development efforts. We believe that throughout the year we will continue to accelerate the synergies and revenues provided by this acquisition. With that I’d like to turn the call over to Mike for a discussion of our Q1 financial results.

Mike O’Neill

Thank you, Tom. The following remarks are related to our reported operating performance of Q1, ended March 31, 2013. Our Q1 was a solid beginning to 2013 and we are very pleased to see positive and consistent financial results for Alphatec after a year of transition in 2012 and within a spine market that continues to be challenging. Les already covered the discussion of global net revenues and growth rates for Q1 so I won’t repeat those figures.

Gross profit for Q1 2013 was $32.7 million or 64.9% of revenue compared to $31.8 million or 65.7% of revenue in Q1 2012. Gross margin in Q1 2013 held up very well considering the impacts of price and mix that we reworking against us.

As Les and Tom highlighted, US hospital pricing declines in Q1 2013 rose from the typically low- to mid-single digit declines that we experienced throughout 2012 to mid-single digits as some of our hospitals moved to construct pricing. We anticipate being able to offset any ongoing pricing declines with higher average selling prices for the new product introductions and increased revenue per procedure as Tom had indicated. Gross margin was also modestly impacted by regional and product mix in Q1.

Additionally, gross profit in Q1 2013 was reduced by $1 million for the amortization of a licensed intangible asset as part of the Cross Medical settlement which we have described in prior results calls. We’ve now reached the first anniversary of the settlement and while we have parity year-over-year we will still highlight the quarterly amortization charge and the impact it has on our gross margins. In Q1 2013, this represented approximately 200 basis points of margin.

US gross margin was 69.7% in Q1 2013 compared to 70.2% in Q1 2012 and was primarily driven by price and mix. International gross margin was 55.8% for Q1 2013 versus 56.4% in Q1 2012. Given the nature of our international distribution business, quarter to quarter fluctuations between regions and product mix influenced the overall gross margin profile and this accounts for the slight change in margins for the quarter. Q1 2013 margins for our international business improved sequentially from Q4 2012 by 470 basis points.

Total operating expenses for Q1 2013 were $34.1 million, an increase of $2.2 million compared to a prior year of $31.9 million. Q1 2013 expenses were significantly influenced by higher legal expenses for ongoing litigation matters of approximately $1.3 million, operating expenses related to Phygen’s business of $1.2 million, and a new medical device excise tax that amounted to $600,000.

Adjusted EBITDA, a measure we guide to, was $6.1 million in Q1 2013 or 12.1% of revenues compared to the $6.2 million or 12.8% of revenues reported for Q1 2012. Adjusted EBITDA was reduced by the $600,000 in conjunction with the new medical device excise tax. Adjusted EBITDA represents net income or loss excluding the effect of interest, taxes, depreciation, amortization, stock-based compensation, and other nonrecurring items such as restructuring expenses, IP R&D, and transaction-related expenses.

GAAP net loss for Q1 2013 was $2.6 million or negative $0.03 per share compared to a net loss of $1.3 million or negative $0.01 per share for Q1 2012. Cash and cash equivalents were $19.3 million at March 31, 2013, compared to $22.2 million reported December 31, 2012. The company’s cash position at March 31st reflects payments totaling $1.0 million to Cross Medical in Q1 2013 as part of the settlement discussed above and a payment of $1.7 million to the manufacturer of the Pegasus device.

As of March 31, 2013, our net inventory position was $50.5 million, an increase of approximately $600,000 versus Q4 2012, with such increase being primarily related to implants for our new product launches. Our net accounts receivable at the end of Q1 2013 was $40.7 million, an increase of $100,000 as compared to Q1 2012 and a decrease of $300,000 as compared to Q4 2012. Our AR performance has been a function of our continued diligence with respect to collections and we are not seeing any meaningful deterioration on our days outstanding on a global basis.

And now for our guidance for the remainder of 2013: the company continues to expect revenue for 2013 to be in a range of between $204 million and $210 million on a constant currency basis, or approximately 4% to 7% growth over 2012. The significant devaluation of the Japanese yen has impacted our Q1 business by over $1 million, and with the expectation that the yen’s exchange rate will not substantially improve in 2013 the aggregate revenue impact to the remainder of 2013 could potentially be as high as $4 million.

To provide a little more color on guidance: we hope to see a contribution from the new products this year, including Alphatec Solus and Pegasus. When combined with Phygen surgeon conversions and strong, ongoing commercial operations internationally we believe that we can offset some of the negative impacts on our business that we’ve discussed today. As a result of these expectations we are maintaining our guidance on a constant currency basis.

Similarly, we are maintaining our adjusted EBITDA guidance which should be in the range of $24 million to $27 million or approximately 21% to 36% growth over 2012 and representing approximately 12% to 13% of revenue. As previously stated, this guidance assumes only modest contributions from PureGen that had been realized earlier in the year. I’d now like to turn the call back over to Les.

Les Cross

Great, thank you Mike. As we entered 2013 our theme was “execution,” and we clearly have accomplished this in Q1. As we look at the remainder of 2013 we continue to expect that the global spine markets will remain choppy, and we expect to continue to receive price pressure and reimbursement pressure. However, with only a modest market share our strategy to deliver a continuous flow of new products, reduce costs, reduce our working capital and strengthen our global commercial operating team should enable Alphatec to deliver our planned results.

I would like to again thank all the Alphatec Spine stakeholders, especially our employees who are working incredibly hard to make Alphatec Spine a stronger company that delivers greater value to all stakeholders and a world-class experience to our customers. You have our commitment that Alphatec Spine will remain dedicated, conducting its business with a sense of urgency, accountability, and continuous improvements.

Thank you. With that said, I’d like to open the call up for questions please.

Question-and-Answer Session


Thank you. (Operator instructions.) The first question is from Matt Miksic of Piper Jaffray. Your line is open.

Matt Miksic – Piper Jaffray

Hi, so thanks for taking our questions. I wanted to follow up on one of the incremental headwinds you described which is pricing – a greater pricing impact. Can you give us a sense of… By most other companies’ accounts we’ve been living with this sort of mid-single digit pressure. And it sounds like you’re seeing something, if I understand it you’re seeing something incrementally worse in Q1 because of [kit] pricing. I’m wondering if you can drill down into maybe is it different types of products where you’re seeing more pressure, is it uniform across your business? Any additional color you can provide would be helpful.

Les Cross

Okay, Matt, thanks. I’ll go first and I think Tom may be able to come in with some comments as well. So I think what we’ve seen for the last number of quarters in our US hospital business is in the low- to single- mid digit pricing declines year over year. And in Q1 it was slightly different for us – we hit the mid-single digit number, and that was coming about from renewals of contracts earlier than anticipated, so contracts that we were essentially dealing with for renewals later this year. It was also dealing with construct pricing as we mentioned.

So there was an impact that we saw in Q1 that frankly, given the ramp of our new products that we’re anticipating launching in the remainder of the year, we weren’t able to have the offset that I talked about as part of the prepared remarks. Tom, do you have any additional comments?

Tom McLeer

Yeah, I’d just say that we have a variety of contract changes in Q4. A lot of these can take three to six months, sometimes longer, to work through as the hospitals move to construct pricing and try to sort all that out. So it’s a little difficult to say that this will continue through the whole year at least right now.

Matt Miksic – Piper Jaffray

And regionally, any color? Is this coming up everywhere? Is it east versus west, vice-versa?

Tom McLeer

No, I think it was fairly uniform – not one big GPO. It was pretty consistent all the way around.

Matt Miksic – Piper Jaffray

Okay, and then I guess on the new product side, can you give us a sense maybe of what kind of mix you were getting before in terms of… I’m assuming this low- to mid- was a pure pricing number and now that’s squarely mid- for you. What kind of mix were you getting before that was helping to potentially offset that and maybe how these new products will impact that over the next whatever it’s going to be – three or four quarters?

Les Cross

That’s a great question – this is Les. So you remember when we first started to reorganize the company. We talked about the fact that our flow of new products had really slowed to a trickle. Thanks to the focus of the team, you’ll remember we talked about the fact that we agreed to focus on six to eight major projects that have all now either hit the market or have FDA approval. So we’ll tell you what we have done – we’ve done without a lot of tailwind from new products and so we expect to see our new product index start to contribute a lot more than it has.

So what that means is the average price we’ll get per case will go up, and the reason we licensed NEXoss, the synthetic biologic – if you remember, why we did that was so these new products could be used with that and that will also take the price up. So the team has done a great job without significant new products for the last several months and now we have a rich pipeline of new products for Tom and his team to take to the market.

Matt Miksic – Piper Jaffray

And would you say maybe the opportunity there is to drive a low-single digit kind of positive mix benefit for you over time or is it potentially better?

Mike O’Neill

I think that at this point in time you’ve got to be thinking low-single digits. I wouldn’t want to get too ambitious early in the year.

Les Cross

Clearly as products like Pegasus and Solus, and ILLICO, DVR start to impact the marketplace our average selling prices are going to be higher for those products versus what’s there already.

Matt Miksic – Piper Jaffray

That’s great. And then on the dynamic, which is the last question here on the Fraud Alert, the OIG language around physician-owned distributorships – it’s early still, it’s only been about a month or so but can you give us any sense of what the market reaction’s been, the transition? Understanding there’ll be fewer new PODs but the folks who are invested in these structures, hospitals involved with these structures, are you getting a sense that they’re coming to you to sort of potentially structure a new arrangement? Are they waiting it out? Any color as to the market response that you’re seeing?

Les Cross

The answer to your question is yes on all those points. Some of the larger PODs have decided that they should move away from the business model and would want to get their membership of our physicians to zero. Some will just get out of the business because the hospitals don’t want to do business with them anymore, and some have actually gone to the OIG to ask for an opinion on their business model which they feel is in line.

So it’s a mixed bag, and I will tell you I heard last week a new POD started up last week so it’s a real mixed bag. I know what we’re doing is taking it very seriously and making sure we comply with the OIG Fraud Alert.

Matt Miksic – Piper Jaffray

Right, of course. And in a situation where a hospital doesn’t want to do business with a POD, I guess you’ve been doing business with the PODs – the hospital is sort of the end customer. What is your opportunity to sort of bridge that gap and continue the relationship with the operating surgeons and the hospital in the end?

Les Cross

Yeah, that’s exactly what’s happened in a couple of cases where the hospital has actually said “We only want invoices from Alphatec. We’ll pay Alphatec. We don’t want any invoices from any distributor, not just PODs.” A lot of hospitals are playing it very safe and saying “We’ll only do business with the manufacturers, not with distributors.” So it’s a mixed bag but the beauty of it is we’ve said all along we have a flexible distribution strategy. If a hospital wants to buy direct from us we’re happy to work with them. If the hospital’s trying to consolidate through a distributor to cut costs, we’ll work with the distributor if it’s an appropriate distributor. So I think we will benefit from our flexible distribution strategy.

Matt Miksic – Piper Jaffray

Great. Thanks, Les, for the color.


Thank you. The next question is from Matt Dolan of Roth Capital Partners. Your line is open.

Matt Dolan – Roth Capital Partners

Hi guys, good afternoon. So I wanted to start on the guidance and just kind of run through what’s assumed here. First maybe Mike, if you could just clarify that you used the word “constant currency guidance” versus I think reported last time, so what’s your reported guidance? Should we take $4 million off the high and low ends of the range?

Mike O’Neill

That’s what I would do if you’re factoring out the impact of the yen.

Matt Dolan – Roth Capital Partners

Okay, great. And then in terms of what your underlying assumptions are, can you walk us through the Phygen contribution versus how you expect to perform relative to the core spine market within that guidance?

Mike O’Neill

I think as we said in some of the prepared remarks, the Phygen conversion has not in Q1 gone as quickly as we would have hoped. Having said that, there’s been a significant amount of activity and effort from Tom’s part of the organization to really start driving some of the physician conversion as well as frankly get the physician input into the portfolio. So I think we’re gaining more traction than we had and we still have expectations that Phygen is going to be a significant contributor to our top line in 2013. And so that’s still fundamentally part of the guidance, and frankly it contributes to the growth in the overall portfolio of the business.

Matt Dolan – Roth Capital Partners

So where you’re not seeing Phygen contribute, are those accounts going somewhere else or are they converting to be direct Alphatec customers?

Les Cross

So in some cases they’ve converted to be direct Alphatec customers. What’s really happened is I don’t think we sent a really good, clear message to the Phygen physicians early in this integration and Tom and I are now talking directly to the physicians. And they really do understand the value of being part of a dynamic physician-led spine company. So we expect to see the conversions happen at a lot faster rate. The beauty of it is the physicians are still doing business the way they used to do it. The opportunity isn’t lost – we just had to reframe the message, who delivers the message, and spend time with these physicians. And based on my experience a lot of them are going to be excited to work with us.

Matt Dolan – Roth Capital Partners

Okay, great. And then on the EBITDA side, if I look at what you did in Q1 it doesn’t anticipate much improvement in the absolute number, even the margin for the remaining three quarters of the year. Can you just talk through some of the puts and takes on EBITDA?

Mike O’Neill

So obviously if you look at the guidance range on revenue and you look at the Q1 slip that we have there needs to be a clear acceleration. And all of the plans and activities that we have talked about are going to impact Q2, a softer Q3, and Q4 as that unfolds. We are continuing to experience, we’re looking to improve our gross margins as the year unfolds. We’ve also got to recognize that we’ve now got some additional bolt-on expenses as a result of Phygen but relative to the mix of the business that should be able to contribute. So I think that we still feel comfortable that we have an opportunity to expand our margins but that the guidance range is appropriate for where we are.

Matt Dolan – Roth Capital Partners

Okay. And then last one, Les, in your M&A strategy can you just give us the latest there? What are you thinking in terms of your ability to look at other deals, either licensing or outright acquisitions?

Les Cross

So we have nothing that we’re ready to announce but Tom and I have quite a shopping list that we’re working our way through. I think most people would agree we need to get the Phygen integration behind us and deliver the expected results, but as that happens I think you can expect to see us continue to look around both in the US and outside the US.

Matt Dolan – Roth Capital Partners

Thank you.


Thank you. (Operator instructions.)

Les Cross

Well it looks like we have no further questions, is that correct?


There are no further questions at this time.

Les Cross

Well great. Thank you for your help, and thank you to everyone who listened today. And we look forward to talking to you again and hopefully reporting another great quarter. Thank you!


Ladies and gentlemen, this concludes today’s program. You may now disconnect, good day.

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