Health Grades Inc. Q3 2009 Earnings Call Transcript

Oct.28.09 | About: Health Grades (HGRD)

Health Grades Inc. (HGRD) Q3 2009 Earnings Call October 28, 2009 11:00 AM ET

Executives

Kerry Hicks - Chairman & Chief Executive Officer

Allen Dodge - Chief Financial Officer

Analysts

Mitra Ramgopal - Sidoti & Company

Jackson Spears - Garlet [ph]

Debra Fiakas - Crystal Equity Research

Operator

Good day, ladies and gentlemen. Welcome to the third quarter 2009 Health Grades Incorporated earnings conference call. My name is Leticia, and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference (Operator Instructions).

I would now like to turn the call over to Mr. Allen Dodge, Health Grade Chief Financial Officer. Please proceed sir.

Allen Dodge

Good morning. Thank you for participating in today’s call with us. Before we begin the prepared remarks, I’d like to remind you that this conference call will include forward-looking comments. All statements, other than statements of historical fact may constitute forward-looking statements.

Although, we believe the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from our expectations are disclosed in the risk factors contained in our filings with the Securities and Exchange Commission, which are available at www.sec.gov. All forward-looking statements are qualified in their entirety by these factors.

Furthermore, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, October 28, 2009. This call is being recorded on behalf of Health Grades and is copyrighted material. It cannot be recorded or rebroadcast without the company’s permission. Your participation in this call implies consent to our taping.

On today’s call, Health Grades’ Chairman and CEO, Kerry Hicks will provide a company update and discuss business highlights and I will review the financial results. Following our prepared remarks, we will open the call for questions.

With that said, I’d like to turn the call over to Kerry Hicks. Kerry.

Kerry Hicks

Thank you, Allen. I’d also like to extend my welcome to everyone on the call today. I am pleased to have the opportunity to discuss the strong quarter for Health Grade, and also talk about how and why we see continued growth and success going forward. Allen will then provide detail on the third quarter results.

I’d like to begin by highlighting some key metrics for the third quarter. Allen and I will also give more color on each of these points during our remarks. One; top-line revenue growth of 33% over the third quarter of 2008 and 34% year-to-date over 2008, two; 22% operating margin for the quarter, and 21% year-to-date, three; 80% retention rate with respect to our provider services contract with first or second year anniversary dates for the first nine months of the year.

This strong performance comes as a result of our efforts against three of our top areas of focus as a company, which are specifically one, building to Health Grade brand with consumers and the industry; two, developing and optimizing the advertising and sponsorship revenue; three, expanding our core provider services business. I’m pleased to report that during the third quarter, we continued to make meaningful strides in each one of these areas.

We measure the strength of the Health Grade brand based upon our relevance, to both the consumer and the industry, the latter of which we defined as both professional services that means hospitals, single specialty providers etc, and the advertising industry; meaning pharma, Medtech agencies, etc.

To measure the strength of our brand, our website traffic continues to be very strong. In September 2009, our combined web properties of healthgrade.com and wrongdiagnosis.com attracted nearly 17 million unique users maintaining our position as one of the top 10 most attracted healthcare properties as reported by ComScore.

A significant design of our website traffic, it is the type of consumer, specifically patients, which we attract that set healthgrade.com apart in the eyes of those advertisers, providers as well as all of our partners.

Based upon a recent survey of patients using healthgrade.com 82% will visit a doctor within 30 days, and 91% will visit a doctor within 60 days. Quite narrowly, the individuals coming to healthgrade.com are pre-visit patients.

The significance of this population for advertisers and sponsors, as well as for hospitals is that they are more engaged and empowered to take action as well as influence others as opposed to simply being passive viewers of healthcare information. Strategically, our position we described as empowering and enabling patient decisions, and that’s key and semantical obviously with the pre-visit patients.

Our relevance to consumers was also recently validated by an analysis of web traffic by Compete a TNX media company which we recently reported healthgrade.com is the number one doctor rating site. In another milestone regarding the ratings of doctors that patient submit on healthgrade.com, next week we will receive our one million doctor ratings, by far and way, it our belief exceeds any other web property today.

Finally, on October 13, we released our 12 annual Health Grade Hospital Quality in American study, got a media attention on CNN and other major media across the country. With the launch of this study, our 2010 ratings for individual hospitals are now available at www.healthgrade.com. Our findings continue to show the significant gap and quality between the nation’s best hospitals and all others.

Patients at highly rated hospitals have a 52% lower chance of dying compared with the U.S. hospital average. Quite literally, there’s a quality chasm that has persisted for the last decade even as mortality rates in general have declined.

Now more than ever, our mission of guiding America to better healthcare is not only timely, but it’s critical from a patient decision standpoint. Developing and optimizing, and advertising and sponsorship revenue model is the second strategic imperative for Health Grade.

Allen will talk to the specific of our third quarter results that have been, but clearly a substantial portion of our revenue growth this year has come from our internet business group. In addition to significant growth in the unique users, for both healthgrade.com and wrongdiagnosis.com and continue improvement in advertising sales which has coincidentally led strong results in our display advertising. We continue to work diligently on a number of projects to expand our offerings in this area.

We now have a number of products that we can offer advertisers such as, condition content page sponsorship, specialty or condition exclusivity and expandable and rich media formats amongst other items. We have also been piloting an evolution of our connecting point products which more directly connects the patients coming to our sites directly to the hospitals, so far from the results from these pilots have been very encouraging.

In summary, all of our product offerings in this business unit have performed very well this year. Expanding our core provider services business also continues to be an important to our continued growth. A major factor in our ability to continue to expand this business is to maintain high rates of retention with our existing client base.

For the first month of 2009, I am pleased to know that we’ve retained contracts or have signed new contracts representing approximately 80% of the annual contract value of the hospitals whose contract had first or second anniversary dates.

Our strong retention rate continues to be a good gain to the value we bring to our clients. That being said, there certainly is a challenging economic environment to sell any new business into, particularly as it relates to hospitals.

In a recent study published by the American Hospital Association, 55% of all hospitals are seeing a moderate to severe decrease in inpatient admissions and 59% are experiencing moderate to severe decrease in elected procedures.

The challenges that hospitals are facing continues to manifest itself in Health Grades through a lengthening of the sales cycle and some follow-up in the end of our sales cycle in terms of clients that once were typically close and now some are falling off. As we excepted, we’ve begun to see an acceleration in our new sales with the recent launch of our 2010 ratings.

From a positioning standpoint which we certainly feel that the challenging environment, it is our hope in what we are seeing or the indication of is that abates and hospitals, hospital executives are needed to invest back into their business as the economy turns and we are certainly seeing early indications of that. Once again, I am very pleased with our third quarter results across all areas of our business.

With that, I would like to turn the call over to our Chief Financial Officer, Allen Dodge, who will discuss our financial results as well as our guidance updates.

Allen Dodge

Thank you Kerry. I would like to give a bit more color to each area in terms of our results in addition to reaffirming some important points from our press release at this morning. The principal growth drivers for our 33% revenue growth in the third quarter 2009 over the same period of 2008 were our internet business group and provider services businesses.

Our provider services revenue was $7.8 million, an increase of 6% over the same period of 2008. For the nine months ended, September 30, 2009 and 2008 we retained contractor signed new contracts representing approximately 80% and 78% respectively of the annual contract values of hospitals, new contracts had first or second year anniversary dates. We are very pleased with our current retention rates.

With our recent annual ratings launch, as Kerry mentioned we’ve seen a significant increase in new sales. We believe we continue to be well positioned to provide substantial and strategic value to our clients. However, given the weakness in new sales throughout the year, our revenue increase in this area has been less than we expected at a 10% for the year.

In the Internet business group, we saw a strong growth from all of our product areas. The most significant growth drivers for third quarter revenue, with the performances of advertising on both, wrongdiagnosis.com and the healthgrade.com websites as well as our consumer business. The wrongdiagnosis website contributed approximately $1.3 million for the quarter.

For the third quarter of 2008 there was no associated revenue recorded in our financial statements for wrongdiagnosis.com as that acquisition happened in the fourth quarter of 2008. Our operating margin for the third quarter of 2009 was 22% compared with an operating margin of 20% in the third quarter of 2008.

The operating margin improvement is principally the result of our strong revenue growth. In addition, we continue to work diligently to manage our expenses. We are continued to hire in a number of areas such as technology and product development as well as sales. Our net income for the third quarter was $1.8 million or $0.06 per fully diluted share and this compares with net income of $1.3 million or $0.04 per fully diluted share in the third quarter of 2008.

As of September 30, 2009 our cash and cash equivalents were $14.2 million compared with cash and cash equivalents of $11.3 million at the close of 2008. During the first nine months of 2009 we generated $4 million in cash flow from operations.

Today, we are raising our financial guidance for 2009 specifically we are forecasting revenue to increase by approximately 30% over 2008. This is an increase from prior guidance of approximately 25% growth over 2008. We are maintaining our forecast for operating margin in 2009 of between 17% and 21%. We do expect to complete the 2009 fiscal year toward the higher end of this range. In addition we expect to release guidance for the 2010 fiscal year in December.

With that, I would like to turn the call over to Kerry for some closing remarks.

Kerry Hicks

Thanks Allen. In summary, we are very pleased with our operating results for the first nine months of the year. We have made substantial progress against our top strategic imperatives as I discussed earlier. We also have a number of projects underway for the fourth quarter. For example, we expect to begin lounging condition specific micro channel sites late in the fourth quarter.

In addition, we are completing a substantial redesign of our physician profile to improve usability and search functionality for the tumors that will be launched shortly as well. We all continued to work diligently to expand. both the depth and breaths of our position in hospital data sets and integrate to Health Grade’s and wrongdiagnosis content.

Although, we are pleased with some of our recent accolades that I have discussed and described previously, we are focused on continuing to further our industry leading position.

It is an excited time here at Health Grade with 33% year-over-year revenue growth, increasing margins, 80% retention rates in our current provider services contracts, but even with all of this growth we still see 2009 as another year of investment as we lay more of the ground work to build our brand, increase our advertising revenue and sponsorships revenue and expand our core provider services business in the coming year.

As always, we thank all of our shareholders for your continued support. This concludes our prepared remarks operator we are now ready to questions.

Question-And-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Mitra Ramgopal of Sidoti. Please proceed.

Mitra Ramgopal - Sidoti & Co.

Hi, good morning guys, just a few questions. Starting with the provider service segment, I know you had mentioned your expectations coming into this year was certainly for a high growth and what you have seen thus far, and encouragingly at least you have seen a pick up in business in the fourth quarter. As we go forward, looking out a little into 2010 do you sort of remain pretty optimistic that you probably can get back to that 15% rate you are looking at initially?

Allen Dodge

Yes, Mitra thank you, it’s a good question. I mean, as Kerry said we are certainly seeing indications that some of that is changing, I think as we look into next year we would still say that, targeting say that 10% to 15% range in that business unit make sense, and keep in mind that even though things are changing now, obviously the lack of sales in business this year certainly has an impact in 2010.

So although, we do see the trends changing and we do really expect to see that acceleration continue over the coming month. At the same time we also know that, although that will have some impact in 2010, we think it will have even a bigger impact in 2011. So, whereas that we would expect to see in the range of say 10% to 15% in 2010. We do believe that we should be able to get back to that growth rate overtime, say specifically in 2011.

Mitra Ramgopal - Sidoti & Co.

Okay, and again you mentioned you are looking for a mix, the sort of change where it becomes more or like 50-50, certainly the growth we are seeing from the internet business -- you should probably get there if not 2010 certainly by 2011, is that fair?

Allen Dodge

Yes, in terms of the revenue mix, absolutely Mitra. We have seen that accelerating, and that certainly has been a very pleasing development for us this year. We did make a lot of investments in 2008, we’ll continue that trend in 2009 to really revamp the site and then invest in a number of initiatives to improve the usability, get advertisers to be interested in the site.

So, short answer or I guess maybe a long answer to your question is, yes you are right, we do expect to see that trend continue in 2010.

Mitra Ramgopal - Sidoti & Co.

Right, and just a follow-up again on the internet space, a couple of things. Clearly the wrong diagnosis, acquisition sort of exceeded your expectations or would you like it to be even more aggressive on the acquisition front, given you have the sort of balance sheet and cash flow to support that?

Kerry Hicks

Well certainly yes, I would say active, maybe somewhat of an overstatement. We are probably monitoring and surveilling roughly 10 businesses in all that we have an interest in, but we are not essentially going down the road in terms of finalizing anything right now, but we certainly see that there is a falloff and there maybe a moderation and evaluation which, I would think it’s probably going to take another three to six months to have it fully baked in from a private company standpoint.

Mitra Ramgopal - Sidoti & Co.

Okay, and maybe if you could just comment how early you think you are in sort of the Google, Yahoo relationships etc in terms of sort of being able to leverage that going forward?

Kerry Hicks

Well certainly, I think we have leveraged our Google relationship. We still a maintain a strategic relationship on one of their nine named partners within Google health, that obviously has an impact in terms of the entire enterprise at Google. We do have a relationship with Microsoft who now is, as anyone’s following search, right is now going to be powering all of Yahoo search.

So to some degree we get a two for one kind of benefit there. The other advantage, and we will speak more to Microsoft probably towards the end of this year, and the first quarter when we have more visibility into the effect on Health Grades, but that is also a enterprise wide solution, it’s not only helpful which is there, essentially there health category, but it’s across their properties including MSN and search and the like.

Mitra Ramgopal - Sidoti & Co.

Okay, and then finally, if you can just comment again on the competitive landscape. Certainly we are seeing a lot more, he’d written about health care providers in terms of ratings, information, pricing etc., anything that is sort of troubling you from that standpoint?

Allen Dodge

Again, I don’t want to be dismissive about we have to work everyday to maintain our leadership position. We still have to accepting all that were controversial, that means that we’re frankly more relevant. So, we have to continue to push the envelope but we are not essentially resting on our morals.

I will say just in general, with Healthcare reform there are three benefits at least from our advantage point of general Healthcare reform from a policy standpoint. One, we are active in the political process with some of key decision makers within congress from a policy formulation standpoint, I probably just leave it at that, I don’t want to get into any of the specifics.

Second, anytime again there is broad discussion about Healthcare from a policy standpoint and certainly being pushed out to consumers into patients, that’s invariably very much positive for Health Grades.

Lastly, from a structural standpoint no matter what’s done within the Healthcare reform, we are think that we can play a critical position really in the locus of the patient and the provider that we sit right in the middle of both of those. We think it’s a pretty critical position, we think both the industry will begin to I think, appreciate and frankly understand that more as well as the decision makers from a policy standpoint. So I would point those three.

Mitra Ramgopal - Sidoti & Co.

Okay. Thanks again guys. I’ll get back in queue.

Kerry Hicks

Thanks

Operator

Your next question comes from the line of Jackson Spears of Garlet [ph]. Please proceed.

Jackson Spears - Garlet

Kerry and Allen and the team congratulations on the numbers, they were traffic. Could you give us a handle on what the unique visitors are both for wrongdiagnosis and Health Grades?

Allen Dodge

Yes. I mean Jack, every month it can trend a little bit different. In general, if you look through the year it’s been roughly equivalent. I mean there are times where wrongdiagnosis will have more, but in general I would say they are roughly equivalent?

Jackson Spears - Garlet

So where are we now, about 17 million combined?

Allen Dodge

Yes. September we are combined, we were at 17 million.

Jackson Spears - Garlet

And, you’ve seemed to have some traffic numbers in wrongdiagnosis. Could you give us some flavor for the kinds of customers you are getting, the number of customers and what kind of pipeline you have there?

Allen Dodge

Yes. I mean look, if you refer to wrongdiagnosis, a lot of that that is encouraging to us is a lot of the traction and a lot of the increase that we have seen this year, is really doing what a much better focus, better job on getting some of that traffic to the vertical networks. So instead of having that, we sold two more of remnant basis which was a lot of the way that site was monetized prior to Health Grades. So we’ve really started to move up that continuum and sell more of that inventory on the vertical side.

Now that being said, we think there is a lot more opportunity to begin to get more of that business up from, even the vertical networks up into the agencies and then obviously overtime the investment that we’ve spoken about is trying to get directly to Pharma, Med Device and the like and that’s an area that we are focused on.

You would expect us to continue to make some investments in personnel in that area, they had some of that expertise, but again I think really what we’ve seen this year we continue to focus on is really that changing, that evolution of the revenue mix from remnant to vertical and than again the next step would be more in agency and we are very pleased with how that’s trended both in timing and then in the amount of the revenue.

Jackson Spears - Garlet

With people having a lot of experience with you with wrongdiagnosis and Health Grades could that lead to some sponsorship deals sometime in 2010 with the drug or medical device company?

Allen Dodge

That’s certainly our expectation. As we look at both of the sites I mean, we think have a very good and unique combination between Health Grades and as Kerry articulated the pre-visit patient concept and the fact that Health Grades visitors are really patients, looking to make Healthcare decisions, and then dove tailed on top of that with the integration with wrongdiagnosis.

Given the ability to have advertisers Pharma, Med Device, Med Tech, have the ability to kind of follow that patient through the continuum, we think should be pretty powerful and that will certainly be a focus of our as we head into 2010 and beyond.

Jackson Spears - Garlet

Kerry talked about hospitals getting a squeeze and everything. I see is hospitals are screwed under the Healthcare reform because of cuts in Medicare, and they don’t make a whole lot of money Medicare and Medicaid. Do we see a real push when hospitals looking to get more work with you and get more sponsorship for a dependent or a citizen? Is there a pipeline there, is that increasing as well?

Kerry Hicks

We do get from a global standpoint, I think you pointed out from a policy standpoint, but again it’s hard for anyone to make a determination of what could come out of Healthcare reform today. Certainly I think we have been consistent in our messaging and in our positioning that the competition amongst providers for commercially insured patients is going be unlike anything the industry has ever seen. We think again, the characteristics of our patient population puts us foursquare right at the center of that activity. So for the next couple of years I think that augers well for us.

Jackson Spears - Garlet

What kind of an opportunity could that be? I was looking, you have 25,000 doctors I think roughly and $4.5 million in revenues and there is 800,000 physicians out there, I should think the opportunity could be fairly large, can you quantify that at all for us?

Allen Dodge

Well again, there would be enormous assumptions in that. As we are running a number of pilots as I indicated in my prepared remarks, of making that conversion of actually influencing patients to call, and I guess interface directly with individual physician practices. Our new view of that is, our evolved view of that is, we are putting those through say a hospital, call centers which we are able to track all the down stream activity.

We like what we are seeing there. It’s too early for us to give any general results from that in the form of conclusions, as it relate to how big that business may become. It’s just too early, and frankly any number at all that I would give or forecast would be so much arbitrary and speculative at this point.

Jackson Spears - Garlet

But it’s potentially large.

Allen Dodge

It’s potentially very large.

Jackson Spears - Garlet

Stock based compensations seem unusually high in the third quarter. Could you give us a flavor of what it will be in the fourth quarter and did you accelerate in any stock based compensation in the third quarter?

Kerry Hicks

Yes Jack, as we had put into the press release, what happened in the third quarter is there were actually some restricted shares that were granted back in 2006, that were tied to certain performance metrics.

There were actually four different targets, the first target was based on a total revenue number, and in the end of the third quarter, management, we deemed that it was probable that that target would actually be achieved, and without belaboring everyone in the call with all the accounting nuances as I would love to do, what happens was, it does become probable. You have to actually record expense on that date, as if the shares were granted back in 2006.

So it’s a long way of saying, “Yes, we had about $600,000 in comp expense that’s hitting the third quarter.” That really was a catch up for that vesting period from 2006 to 2009. Going forward it will be much smaller in terms of the amount with respect to what we’ll record on each quarter.

Jackson Spears - Garlet

Thank you guys.

Kerry Hicks

Thanks.

Allen Dodge

Thanks Jack.

Operator

Your next question comes from the line of Debra Fiakas of Crystal Equity Research. Please proceed.

Debra Fiakas - Crystal Equity Research

Thank you. I just wondered if you could catch us up on a couple of significant relationships that was tenant and Fresenius, and indicate whether or not you have any additional relationships of that magnitude or what the business pipeline might look to be for additional relationships like those?

Allen Dodge

Yes Debra, in terms of relationships with the size of those, you can certainly expect us to announce via an 8-K or press release. If we have something of that significance, obviously keep in mind as I know you are aware, but for everyone on the call, there is certainly only a relatively small set of very large national providers that would do that scope.

That being said, I would say a focus of our effort right now is on large treasury centers, regional systems and those frankly would not be something that we would announce, but as you begin to look at our results, forequarter and moving into 2010, those are the types of relationships that we would expect to see beginning to contribute at even a higher level.

We have had large hospitals that have had relationship with us, so I want to be clear that that does continue to trend in a positive direction. It’s just again the size of the large national agreement, or something that, yes we work on, but our real effort is going to be on the bread and butter of giving those large hospitals as well as some of those regional systems, if that make sense?

Debra Fiakas - Crystal Equity Research

Okay, and as far as Tenant and Fresenius are concerned, are they continuing to contribute to revenues at the pace that we saw in 2008?

Allen Dodge

Yes, that’s a good question. I mean those relationships, those amounts have been consistent. Keep in mind that both Tenant and Fresenius chose to sponsor all of the physicians in their relevant category, meaning, it’s not as their phase starting with a small number and you would expect to see a very large uptick, but the point is they have sponsored very large number of physicians and they have maintained that sponsorship levels.

Debra Fiakas - Crystal Equity Research

Okay, excellent. Then just to follow-up on previous discussion about the pace of visitors to the websites. I wondered if you also had looked at the number of page views and the time stamp; whether or not there is any kind of trend and the amount of time that your visitors were spending on your site.

Allen Dodge

Yes, I mean it’s a good question Debra and it’s not a metric that we have given out. We give out our metrics really based on total users. I would say as an investment standpoint, as an expectation for the company, that page views and really engagement, even as measured by both attracting unique visitors, as well as the length of time on the site, how many pages they consume.

I mean those are all going to be areas of focus for us, and as you have seen in the numbers this year, we obviously had positive trends in our revenue numbers. I would expect you to see us again continue to roll out things that would enhance that user experience as Kerry alluded to in the fourth quarter, as we go into 2010, and we think all of those things have a meaningful impact on new users and the engagement of users.

Debra Fiakas - Crystal Equity Research

Okay, and these so all called micro channel sites, I was a little confused by that terminology, what you were referring to?

Allen Dodge

Yes, micro channel sites would mean sites that are specific to a specific condition, so that could be a heart condition, it could be allergy I’m just giving you examples, but it would be specific to a condition such that a user or someone could land on that page and then have all of that content and/or physicians aggregated it in one central location or at least in the landing page for that condition.

That’s something that we know that certainly advertisers have an appetite for. They like the idea of sponsoring a condition. So giving a different path for consumers to go into we think is meaningful and it could lead to again more unique users, as well as consumption of more inventory and a better experience for the users as well.

Debra Fiakas - Crystal Equity Research

Okay, and then just to catch us up, I know at the time that you acquired wrongdiagnosis, there was also another site that you had cureresearch.com, and I’m wondering if you could just comment on what has happened with that and what the plans might be.

Allen Dodge

Yes, another good question Debra. I mean, that site quite frankly we have not invested much in to-date since the acquisition. As you can imagine, when we acquired wrongdiagnosis or I should say we acquired Adviware, wrong diagnosis by far had the most traffic and now it’s certainly where we put our initial investment and where I would continue to see us put the most substantial part of our investment towards that asset.

At the same time, there are some things that we are interested in, in terms of the expansion of the cure research site. It’s a little premature for me to get into those right now, but I do think that as we look into 2010 and beyond, there are some unique ways we think we can leverage that and may be open up additional opportunities for that acquisition, but again for now, I would say the principal investment is on the wrongdiagnosis site.

Debra Fiakas - Crystal Equity Research

Okay, and then another question just to catch up on something that’s been discussed in the past, the life rewards credit card, what kind of progress have we seen so far, I guess it’s like an affinity program?

Allen Dodge

Yes, I mean as we announced our last quarter call, we do have our first couple of clients. So we have started to see some initial indications from that business. At the same time, we will report out as we see any meaningful metrics there, whether it’s cards enforced, a large number of clients, we’ll certainly report back to our investors.

At this point I would say that it’s still certainly a work in progress. It’s not contributing in a significant way into our operating results, but at the same time we remain optimistic that we could see some results in that business, we continue to work on the implementation around these clients that we’ve received, or I should say that we’ve attracted as well as getting more clients on board. So for that project right now, I would say stay tuned and expect to continue to hear from us, but that’s kind of the high level update at this point.

Debra Fiakas - Crystal Equity Research

Okay, great and then the final question regarding your headcount. At the end of September how many employees did you have?

Allen Dodge

We have a little over 200. We have about 205 employees today.

Debra Fiakas - Crystal Equity Research

Excellent. Thank you so much.

Operator

At this time, there are no further questions. I would now like to turn the call over to Mr. Kerry Hicks for any additional closing remarks.

Kerry Hicks

Again, I just want to thank everyone for their time. We’ll be talking to you at the early part of next year to announce our fourth quarter. For many of you we’ll be talking I’m sure between now and then. For those we don’t speak to, hope you have happy holidays and I appreciate your continued support. Thank you.

Operator

Thank you for joining today’s conference. This concludes the presentation. You may now disconnect. Good day.

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