Bovie Medical Corporation (NYSEMKT:BVX)
Q2 2016 Earnings Conference Call
August 1, 2016 4:30 pm ET
Robert L. Gershon - CEO
Jay Ewers - CFO
Jack McCarthy - Chief Commercialization Officer
David Turkaly - JMP Securities
Charles Haff - Craig-Hallum
Paul Nouri - Noble Equity
Russell Cleveland - RENN Capital
Bill Chapman - Private investor
Good afternoon and welcome to the Bovie Medical Corporation Second Quarter 2016 Earnings Conference Call. All participants will be in a listen-only mode. Hosting today's call will be Mr. Robert Gershon, Chief Executive Officer at Bovie Medical Corporation. After today's presentation, there will be an opportunity to ask questions. Please also note this event is being recorded. [Operator Instructions]
Before we begin, I would like to make the following Safe Harbor statement. Today's call will relate to Bovie's second quarter 2016 earnings results and will contain forward-looking statements regarding predictions about future events. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected.
Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. The Company assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events or otherwise.
With that, I would like to turn the call over to Rob Gershon. Please go ahead, sir.
Robert L. Gershon
Thank you, [Tanisha] [ph], and good afternoon everyone and thank you for joining us to review our second quarter 2016 results and discuss our business outlook. With me today are Jay Ewers, our CFO, and Jack McCarthy, our Chief Commercialization Officer. At the conclusion of our prepared remarks, all three of us will be available to answer questions.
This was a strong performance quarter for Bovie Medical, demonstrating the early success of the initiatives we put in place to scale this business and build upon the solid foundation we laid in 2015. Second quarter was a period of excellent execution across all of our product categories and year-to-date performance puts us firmly on track to meet or exceed our target of 20% sales growth for the full year.
Second quarter sales were up 27.8% year on year, driven by double-digit growth in our OEM business and a four-fold increase in J-Plasma sales. This substantial growth was supported by another quarter of steady sales gains in our Core products, which benefited from higher volumes in generators, electrodes, lighting and animal health products.
We see continued market opportunity to expand our Core business at a mid-single-digit rate, and have dedicated a portion of our R&D program to developing and acquiring new products that are complementary to our existing portfolio where we could leverage the Bovie brand and reputation.
As we discussed in the first quarter call, we are experiencing strong inbound demand for our OEM expertise through which we are producing generators for some of the largest medical device companies in the world under the brands powered by Bovie. Our second quarter performance benefited from purchase orders signed last year and several new contracts were signed in the second quarter that should contribute to revenue growth over the next several quarters.
Last, but certainly by no means least, we saw very positive results for J-Plasma with record revenue that more than doubled from first quarter levels and represented a 4x increase from the comparable period last year.
A key element of our successful second quarter performance was the significant reduction in operating expenses as a percentage of sales. Jay will provide the details in a moment, but in short, the strength of our Core and OEM businesses, the positive sales momentum we are seeing in J-Plasma and the focus on cost efficiency throughout the organization are enabling us to increasingly mitigate J-Plasma commercialization expenses.
Over the last two years, we have invested in critical areas including sales, manufacturing and R&D to both drive sales and improve efficiency. Additionally, we acquired Bovie Bulgaria in October of last year, giving us complete control over a crucial part of our supply chain. As a result, in the first half of this year, we have been able to leverage economics of scale across our business and reducing operating expenses as a percentage of sales. We were able to substantially narrow our operating loss in the second quarter to $510,000.
Also, we had excellent cash management, reducing our cash burn to less than $200,000, which supports our guidance for becoming cash flow neutral in this year's fourth quarter. We are pleased with the success in driving growth and expanding our margins, which positions us very well for the remainder of 2016.
Now, turning to J-Plasma, J-Plasma's strong second quarter sales performance was driven by an improved balance between generator and hand piece sales, reflecting both our ongoing sales efforts in gynecology and our recent initiative to more aggressively target the plastic surgery market. Several important hospital networks that approved J-Plasma last year purchased both generators and hand pieces in this year's second quarter. J-Plasma is an ideal tool for the GYN surgeon and continued positive operating metrics support our confidence that we are beginning to turn that potential into meaningful recurring sales.
At the same time, we are seeing early and accelerating traction from our increased focus on the plastic surgery target market. J-Plasma's precision and limited thermal spread makes it uniquely well-suited for many plastic surgery procedures, including breast reconstruction and wound management as well as many other procedures.
In February, we completed additional training of our sales team and launched a campaign to more fully address this market, which is largely office space. One of the cornerstones of our strategy to scale this business and accelerate J-Plasma sales has been to form select sales channel partnerships that can provide immediate scale via an existing sales force and put J-Plasma along a broad range of complementary products in specific specialties.
In July, we announced an agreement with Hologic, a highly respected developer, manufacturer and supplier of premium diagnostic and surgical products. The initial agreement calls for J-Plasma product line to be added to Hologic's world-class solution in GYN and GYN oncology surgery in three U.S. regions and includes the option to extend the agreement into a worldwide distribution pact that would involve Hologic's entire surgical sales force. I am pleased to report that earlier today we announced – we signed an amendment to our initial agreement expanding the partnership with Hologic to cover two international regions, the U.K. and Ireland.
The GYN surgery division is a fast-growing business for Hologic with revenues just for this segment of more than $300 million in their last fiscal year, and both we and Hologic see J-Plasma as a potentially important addition to their portfolio of products as it aligns with their strategy of providing innovative technologies that makes a real difference in patients' lives. We will begin training in the domestic pilot regions in late August and internationally in mid-September.
Earlier in June, we also announced a sales channel partnership with Arteriocyte to market J-Plasma to its network of plastic surgeons nationwide. Arteriocyte is a medical device company specializing in products that help patients heal faster and has an excellent reputation in selling innovative cellular therapy based products. We completed the first phase of training their salespeople and participated together at the Las Vegas Aesthetic Show in early July. Training for Arterio sales reps is ongoing and will be completed in August.
Combined, these channel partnerships significantly expand J-Plasma's sales footprint and puts it in the hands of experienced salespeople in our targeted specialties of OB/GYN, GYN oncology and plastic surgery, and are complementary to our own sales force efforts. In addition to the expected positive impact on J-Plasma sales, they will be accretive at the operating margin level and will serve to build J-Plasma's reputation and awareness among surgeons in general and the marketplace as a whole.
As you know, expanding the range of specialties where J-Plasma has the potential to help surgeons achieve improved patient outcomes is an important part of our growth strategy and we continue to have meaningful discussions with other potential partners that could help us achieve our objective. Additionally, we are working closely with our Medical Advisory Board in this regard and there is a lot of clinical research, studies and white papers in progress to determine those procedures where J-Plasma has the potential to become the standard of care.
Also, as we mentioned last quarter, we are developing a J-Plasma product extension that can be integrated with a robotic surgical system. This product will be ready for launch in 2017, and in anticipation, we are exploring the potential of signing agreements with developers and manufacturers of existing and emerging surgical robotic systems.
To sum up, this was an excellent quarter for Bovie Medical performance in terms of the sales results we reported across our business units, our improved financial position and the partnership agreements that support future growth. Now, I will turn the call over to Jay Ewers, our Chief Financial Officer, to provide a financial review. Jay?
Thank you, Rob. Bovie second quarter results demonstrate our ability to leverage increasing demand for our products while minimizing expense growth. This dynamic and our solid foundation put us firmly on track to meet our target of achieving cash flow neutrality in this year's fourth quarter.
Revenue for the quarter was $9.3 million, up 27.8% from $7.3 million in the second quarter of 2015. The performance was driven by sales growth across all categories of the Core business except cauteries, while OEM and J-Plasma continued to increase their share of the overall sales mix. For the six months ended June 30, Bovie achieved year-on-year growth across all product categories.
Gross margin was 50.6%, up from 43.2% in the prior year quarter due to an increased proportion of sales from the OEM businesses and J-Plasma. Longer term, we do expect to see a trend of margins in the mid to high 40s as OEM and J-Plasma continue to account for a larger portion of net sales.
Operating expenses declined as a percent of revenue over the period. Our operating expenses totaled $5.2 million in the second quarter representing 56.1% of sales, compared to $4.7 million or 64.4% of sales in the prior year quarter. In order of the contribution to expenses, salaries and related costs rose nearly 18% as we invested to promote J-Plasma's adoption, while SG&A was broadly flat at just over $2 million. R&D investment grew 17%, reflecting new product launches over the past year. Professional service fees rose more than 26% to $396,000 due to consulting services related to business development.
Our operating loss narrowed to $500,000 from an operating loss of $1.5 million in the second quarter of 2015. As mentioned previously, our expense base is largely established for the year, so higher sales and gross margin should translate into narrower operating losses as we proceed to the remainder of 2016. Net loss attributable to common shareholders was $500,000 or $0.02 per diluted share, down from a net loss of $1.5 million or $0.06 per diluted share in the second quarter of 2015.
Our balance sheet remained strong. We ended the quarter with $9.3 million in cash compared with $9.5 million at the beginning of the period, with no debt other than our mortgage. Aside from investments in a solid business foundation, the bulk of which has now been completed, our low cash burn rate this quarter also benefited from increased cash received and lower spending on raw material inventory and in CapEx. In addition, we successfully renegotiated our mortgage loan related to our Clearwater facility which extended our initial maturity date and allowed us to reclassify the debt as a long-term liability. Our balance sheet remains otherwise uneventful.
We remain confident that we are on pace to achieve cash flow neutrality in the fourth quarter of 2016 and begin to generate positive cash flow in 2017. Our investments in a comprehensive business foundation coupled with expense discipline throughout the Company places us in an advantageous position as we ramp up sales in the period ahead,
I'll now turn the call back to Rob for closing comments.
Robert L. Gershon
Thank you, Jay. First half results firmly put us on track for substantial growth in 2016 due to last year's investment in sales, R&D and manufacturing, which have enabled us to scale the business this year. Looking ahead, we are confident in our ability to continue to post positive comparisons in our Core and OEM businesses and a further acceleration of J-Plasma sales in the second half of the year.
Tanisha, I would like to now open the call to questions.
[Operator Instructions] We'll go ahead and take our first question from Dave Turkaly with JMP Securities. Please go ahead. Your line is open.
Thanks for the detail on the call. Just one thing I just wanted to try to get a little more color on was these relationships and sort of the scale that you're talking about, obviously now what Hologic is doing in revenue, but can you maybe just comment on feet on the street, sort of what you think these two deals do in terms of number of people that are actually selling J-Plasma today?
Robert L. Gershon
Sure. With respect to feet on the street, certainly both Arteriocyte and Hologic will significantly expand the number of feet on the street. For competitive reasons, we're not going to provide specific numbers broken down, but as you might expect, it will be certainly a multiple of what we have been able to put on the street as a standalone sales organization. And it will build over time, I might add. As indicated, the following, the first six months of the Hologic agreement, we would expand to their worldwide sales force, which would occur in February.
And then could you just remind us sort of where your direct efforts and Bovie's current kind of distribution looks like for J-Plasma today?
Robert L. Gershon
Yes. So we remain consistent with our direct sales force with 16 sales professionals and we also maintain relationships with about 30 independent sales reps.
And then just one on the Medical Board, I think you added another member. I guess is that four now and what is your ultimate goal there, how many is the right number and should we still expect there to be more ahead?
Robert L. Gershon
Yes, exactly right. There are four today. We added Craig McCoy. That was part of today's press release, so we are thrilled. Craig is a GYN surgeon who has very, very deep experience with J-Plasma, he is one of our early adopters, and certainly is a local key opinion leader and just a perfect fit as a high-volume J-Plasma surgeon to our Medical Advisory Board. That makes four. We have our vision set on a Board between six and nine members and we will likely add another member or two in this year. And we will have these members, by the way, represent different specialties. So what you will not see is overlap in specialty.
Thank you. I appreciate it.
Our next question comes from Charles Haff with Craig-Hallum. Please go ahead. Your line is open.
Congratulations on the success this quarter. Had a few questions regarding J-Plasma. You mentioned that you had a few accounts in the second quarter that ordered generators and hand pieces that were approved last year. I know that you've seen the sales cycle extend beyond where you originally thought it was going to be. Can you just talk about, I don't know if backlog is the right term, but just kind of talk about how many other types of hospitals like this that have approved but not yet ordered?
Robert L. Gershon
We can comment in general, and you're exactly right that we have a pipeline of hospitals – IDNs are a big part of our strategy. So what we were alluding to in our prepared remarks were some of the IDNs that have approved the product and have now purchased both the capital piece and continued purchasing hand pieces and in fact purchased even more hand pieces.
The key here is the sales are coming-in in the timeframe in which we expect them to. In other words, what is in our pipeline is coming out of our pipeline, especially from an IDN perspective and especially from an acute care setting perspective, exactly when we expect them to now that we have over a year of commercialization experience.
So yes, the sales cycle is elongated, but it's become more predictable and now we are working through our pipeline. So without divulging specifically what is in our pipeline and what we expect to come out, what we can say is nothing is dropping out of our pipeline. So now it's starting to hit.
Okay. And just remind us, how long is the sales cycle from I guess approval to ordering, and then maybe how long before you start calling on the people, the IDNs, before you usually get approval?
Robert L. Gershon
So I'll comment in general with respect to the sales cycle by specialty, and then I'll ask Jack to comment on the IDN sales cycle because that one is a little bit more dynamic. So in general, for the acute care setting, when the focus is GYN, the capital piece, soup to nuts of the sales process, the capital piece takes about seven months. Now that doesn't mean we're not generating revenue prior to that because we are when it comes to our scrub POs and selling hand pieces for generators on a pay-per-use basis. But soup to nuts, acute care is about seven months. On the plastic surgery side, the sales cycle is considerably shorter. In some cases it's measured literally in days. On average, it's measured in just a few weeks, typicality less than one month. And I'll ask Jack to chime in and comment on the IDNs and what we're experiencing now.
Thank you, Rob. As far as the IDNs go, it is the same sales cycle as acute care. What we typically do is focus on one of the larger situations within the IDN to drive interest and usage, then contract along that same sales cycle. And then what typically happens is after we secure the first generator sale, as Rob noted, then we start to go deep and wide into the different accounts within the IDN. So we've seen examples recently where we're starting to pull other accounts from the IDN. So we'll contract with the IDN and then we'll from there on target specific accounts based on usage, based on specialty to extend our portfolio and usage within the accounts.
Okay, thank you. And then Rob, just to clarify, on the plastic side you said within days. Are you talking about a capital sale within days or are you talking about the hand pieces?
Robert L. Gershon
We're actually referring to both. So back in February, per our last earnings call, we did create more of an emphasis within our sales organization to focus on plastics, and we did this to diversify the sales cycle. And now that we have even more focus on plastics, we're learning more about that sales cycle, and in some cases the sales cycle is very, very short and in most cases it's certainly measured in weeks.
Okay, great. And then shifting gears on J-Plasma to Hologic, very exciting that you signed an interim step with them, the three regions for six months, and I heard you say that you added an amendment for the U.K. and Ireland today. Just wondering, why was that? I mean you just put that other press release out a short while ago. Was there a reason why the U.K. and the Ireland piece were left out of the original agreement and had to be put in an amendment or some issues there with distributors or whatnot?
Robert L. Gershon
No, no issues with distributors at all, and this was simply part of the process of the commercial teams from Bovie and Hologic meeting and planning and opportunistically identifying an opportunity to look at some key markets OUS. We have every intention in the world, both Bovie and Hologic, to make this six-month process as successful as it possibly can be, learn as much as we can so that we then [indiscernible] and the opportunity to add two international markets to learn some OUS nuances was just one that we didn't want to pass up because it is every intention to roll it out throughout Europe especially.
Okay. And then I'm sure you don't want to get into specifics on the different regions of the United States, but I'm just wondering, why those regions were chosen, I mean what was the thought process when you all went through selecting those three regions?
Robert L. Gershon
So the thought process, so the three regions include a region in the Northwest, a region in the mid-country and a region in the Southeast, so all of these kind of general to those geographies. And the rationale was to create three very different regions so that we could test and learn different approaches to different markets around the country, so that when we get to February, we could take those lessons and apply them throughout the rest of the country. So that was really the thought process.
And we're not limiting ourselves to those three regions exclusively. In other words, opportunistically as sales reps identify certain situations that would have us veer a little outside the defined regions, we are keeping that flexibility to do that. So really it's all in the spirit of learning and making the permanent agreement or the multiyear agreement as effective as possible, as quickly as possible.
Okay, great. And then Jay, you mentioned on the operating margins, if I heard you say it correctly, you said that the operating margins would be accretive for Bovie. Can you get any more granular there or how should we think about this because this clearly seems to be a big revenue opportunity? I'm just wondering, on the margin side how accretive it is?
So we do expect the margins, the gross profit margins, to be in the mid to high 40s as Plasma and OEM contributed a bigger piece of the mix, and OpEx will continue to decline as a percentage of sales because we've now built out the infrastructure, we are done largely with filling the gaps and building that foundation for sustained growth. So we would expect those numbers to improve over the next few quarters.
Okay. I'm sorry, maybe I misunderstood, but I thought you were talking specifically about the Hologic partnered operating margins would be accretive for Bovie. Did I misunderstand that?
Robert L. Gershon
Yes, you know what I'll start and then I'll invite Jay to add some more color. So it was actually in my prepared remarks where we indicated that this is an efficient model that we are entering into. So we do view it as accretive in the current structure. So we're not going to elaborate specifically on the economic relationship but it will be accretive as we ramp up our sales.
Okay, great. Thanks for taking my questions.
Our next question comes from Paul Nouri with Noble Equity. Please go ahead. Your line is open.
Can you talk about the uniqueness of the Hologic agreement? Do they enter into a fair amount of these sales partnerships or did they find the J-Plasma uniquely suited to their sales channel?
Robert L. Gershon
I don't know that we could answer that question. It sounds like one that might be better fit for Hologic to respond to. So if you have another question that we could respond to, we're certainly happy to provide our perspective, but we can't really speak for Hologic from a strategic perspective beyond what we indicated in our prepared comments.
Okay. What is the expected commitment level and are you going to train their sales force in these regions over a number of days, or are you guys just kind of saying, here's the product, here's another product for you to sell?
Robert L. Gershon
Very, very good question. The commitment level, so let me just take a step back for a moment and describe why Hologic is just a wonderful fit, Hologic and Bovie together. A perfect sales channel partnership, and I think Hologic fits this category, is one in which the manufacturer, in this case Hologic, has a gap in their product portfolio that J-Plasma fills nicely. And for us what that translates to is this is a product that would very much, J-Plasma that is, would be very much on the front burner for Hologic, and I think that commitment is inherent in our agreement.
With respect to training, this is not a product you can just turn over and expect someone to sell. They must go through the requisite training, which is fairly rigorous. That training, as I indicated in our prepared comments, will take place in person over several days in August, this month, for the three regions that we mentioned. So those dates are on the calendar and we'll be meeting and taking those reps through a fairly rigorous multi-day program. We will then take the reps in the U.K. and Ireland through a similar training program in mid-September, and again, that program will be over multiple days.
And it is worth mentioning that after the program, after the training program, it's critically important that Bovie Medical does everything to ensure the success of both of these channel partnerships. And to that end, we have committed our own sales reps to help augment the efforts of our new channel partners, in other words, help shorten the learning curve and speed up the speed to peak sales of these sales reps. So, our sales reps are certainly incented accordingly to fully support ramping up these sales channel partnerships as quickly as possible.
Okay, great. And then shifting to a more general question, did you say what percent of sales this quarter were OEM?
Robert L. Gershon
We didn't say what percentage of sales, but we can. I'll leave it to Jay.
Sure. This quarter OEM sales represented 17.7% of total sales.
Okay, thanks a lot.
We'll go ahead and take our next question from Russell Cleveland with RENN Capital. Please go ahead. Your line is open.
First of all, congratulations on a good quarter, you are appearing to really be executing now as you said and it's very good for those of us who have been watching the Company. The main question I have is, these sales agreements seem to be very, very positive. There is of course lots of specialties that we haven't made agreements with, that are as big or anything that we're looking at. Do we have a goal for this year to add others, other sales agreements, and give me some color on how that is going and what are the thoughts there?
Robert L. Gershon
Sure. For some reason, we're getting an echo. I don't know if everyone else is. With respect to expanding to other sales channel partnerships, we certainly are not done in terms of expanding our sales channel partnerships. We are going through a process that is very deliberate and very thoughtful as we add additional partnerships into the mix. So we have our minds open to that, we have a process in place and we do have some ongoing discussions.
We have not set a definitive timetable for when those partnerships would come into the fold, and part of the reason for that is we have to look at things holistically in terms of timing. And we also have an interesting dilemma on our hands because now that we have shifted from what I commented on last quarter of building a foundation for substantial and sustainable growth to now scaling the business, we have to balance the generation of demand in the marketplace with our ability to meet that demand. And in doing that, there is an [indiscernible] we have to go through. So we will be very mindful of doing that.
One of our fundamental commitments to our customers and to the industry is that when we sell this product, J-Plasma, it will work as expected when used as indicated and it will be available when our customers order it, and in order to meet that commitment, we do have to balance that whole demand generation challenge. And it's a good challenge, it's our worries have shifted to these growth worries, but we do have to take those responsibilities very seriously and stagger them accordingly, and there are a few unknowns as how quickly will these sales channel partnerships result in more and more sales, and we have to balance the whole meeting those commitments accordingly. So kind of a long-winded answer to your question, but hopefully I answered it.
Yes. That's the only question I have. Again, congratulations and we'll look forward to the third quarter.
We'll go ahead and take a follow-up question from Charles Haff with Craig-Hallum. Please go ahead. Your line is open.
Thanks for taking my follow-up questions, guys. So when you think about the visibility that you have in your OEM and your electrosurgical business, how much visibility do you typically have on those businesses?
Robert L. Gershon
When you ask visibility, are you thinking of predictability of sales growth?
Yes, exactly. And where I'm going with this is, you said that you expect to meet or exceed your 2016 revenue goal of 20%, and obviously you have a lot of strength right now going in OEM and to a lesser extent in electrosurgical. So I'm just wondering, how far in advance you usually get these orders, are these firm orders that you already have in place for the remainder of the year and how far in advance do you get these firm orders?
Robert L. Gershon
Excellent question. So I'll break it down. The electrosurgical business, which does make up the largest percentage of our overall business, is quite steady and predictable and this segment of the industry is really flat to low-single-digit growth. As we indicated, we're going to grow this business to the mid-single-digit, and we certainly delivered on that in the first six months of the year and we expect that to continue in the back half of the year.
With respect to OEM, we're experiencing some significant growth that we expected, and we expected this growth because typically these agreements are multiyear agreements where the front-end of the agreement is a development contract and then we move into an OEM production contract. And one of the changes that we made since 2014, we started in 2014, continued it in 2015 and continue it still in 2016, is to stagger the expiration date of these multiyear contracts so that we can try to smooth the lumpiness that is inherent in the OEM business, and we've had an awful lot of success in not only smoothening the lumpiness but also growing that business.
And now with J-Plasma and shifting into this mode of scaling the business, we now see an acceleration of sales in J-Plasma. Collectively, those three read to us having confidence that we will meet or exceed the 20% year-over-year number.
And then in terms of the manufacturing piece of OEM, the firm orders that you have right now, are those usually 90 days out, is that when you have to receive the firm orders or is it some other different timeframe?
Robert L. Gershon
It's fairly dynamic and it varies by manufacture. The good news is, the forecasting is done quite frequently and we have our arms around it. So for some customers the lead time is longer than others, but for most, we really map it out on an annual basis. So we have pretty good visibility of what our revenues will look like throughout the year. So for example, in the first six months of the year, there is an awful lot of revenue growth in OEM. We don't expect the same level of revenue growth in the back half of the year just based upon how the contracts are structured. However, the year-over-year growth in OEM will be quite significant in totality.
Okay. And then, Jay, just quickly on operating expenses, you guys did a great job this quarter on that, and I think when you were talking about ramping up the Hologic's arrangement and so forth, do you feel pretty comfortable that you've modelled these numbers appropriately? You made this amendment today that includes the U.K. and Ireland, maybe you're going to have other amendments, and Rob mentioned that there might be other circumstances where Hologic's reps might want to sell J-Plasma product outside of these three U.S. territories. I mean do you feel like you've given yourself enough wiggle-room in terms of the operating expenses to kind of draw a line in the sand that you expect to be cash flow neutral in the fourth quarter?
Yes, exactly. We have modelled out the impact on the Hologic and the Arteriocyte deals, and we're comfortable that we have adequate OpEx expenses without expanding them significantly to cover those agreements and their impact.
Okay, great. Thanks for taking my follow-up questions. Nice quarter, guys.
[Operator Instructions] We'll go ahead and take our first question from [Bill Chapman] [ph], who is a private investor. Please go ahead. Your line is open.
Congratulations on the quarter. Sure it was good to see. Just real quick on Dr. Patel's clinical that he is working on, you mentioned a six to nine-month time period for this. Is there going to be a lengthy follow-up with the patients before he can publish the results of this clinical?
Robert L. Gershon
Sure. I'll take the question, and while I don't have the information in front of me, the protocol for Dr. Patel's study is on ClinicalTrials.gov, and in that protocol, so forgive me if I don't recall this exactly right, but within that protocol it does mention follow-up ultrasounds that must be performed, I just don't recall the exact interval, I think it might be six weeks but I could be a little off on that, to see if there were any lymphocele postoperative complications developing.
So after the last patient is done – and as a reminder, this is a 100 patient study – after the last patient is completed, it would be whatever the time horizon it is, I think it's six weeks, before the final results are in and then of course you must document and write the conclusions of this study and publish it accordingly.
So I would conclude you're hopeful about the first half of next year to have that published?
Robert L. Gershon
Yes, we would expect. It's Dr. Patel who is publishing it, so it's hard to speak on his behalf, but it certainly seems reasonable that the study would be completed and fully published and presented within the first half of next year, if not sooner.
Okay, that sounds great. And one last thing, real good to see Dr. McCoy joining your Medical Advisory Board. That's a real good move on your part. So I'm glad to see it. Thank you.
Robert L. Gershon
Thank you. It's important as we populate the Medical Advisory Board that we have a good cross-section of surgeons, not only the diversity of different specialties but it's very important that you have very high volume community surgeons who are local thought leaders like Dr. McCoy as they exemplify the type of surgeon that we expect to broadly adopt the technology. So we knew it would resonate with some of the global speaking circuit key opinion leaders and thought leaders at the academic medical centers, but the real penetration to be had is with the community surgeons, and I think that's what Dr. McCoy represents.
Okay, good. Thank you very much.
[Operator Instructions] It does appear we have no further questions at this time. I will now hand the program back over to Mr. Gershon for any additional or closing remarks.
Robert L. Gershon
Okay. Thank you, Tanisha, and thank you everyone for participating in today's call. We look forward to keeping you informed on a go-forward basis on our growth. Have a great night.
That does conclude today's program. We'd like to thank you for your participation. Have a wonderful day and you may disconnect at any time.
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