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Abaxis Inc. (NASDAQ:ABAX)

F3Q08 (Qtr End 12/31/07) Earnings Call

January 31 2008 4:15 pm ET

Executives

Joe Dorame - Lytham Partners

Clint Severson - Chairman, President and CEO

Al Santa Ines - VP, Finance and CFO

Donald Wood - VP of Operation

Martin Mulroy - VP, Veterinary Sales and Marketing, North America

Christopher Bernard - VP Sales and Marketing, Domestic Medical Market

Analysts

James Sidoti - Sidoti & Company

Ross Taylor - C.L King

Jonathan Block - SunTrust Robinson Humphrey

Ron Stevens - The Ruby Fund

Amy Stevens - Susquehanna Financial

David Bayer - Northland Securities

Todd Bailey - KM Anderson

Thomas Henwood – OMT Capital

Tulsan Gartner - Mutual Securities

David Bayer - Northland Securities

Operator

Good afternoon. My name is Haile and I will be your conference operator today. At this time I would like to welcome everyone to the ABAXIS third quarter 2008 financial results conference call. (Operator Instructions)

I would now like to turn the conference over to Mr. Joe Dorame. Mr. Dorame, you may begin your conference.

Joe Dorame

Good afternoon. Thank you for joining us today to review the financial results of ABAXIS for the third quarter of fiscal year 2008, ended September 31, 2007. As halie indicated, my name is Joe Dorame. I'm with Lytham Partners and we are the Financial Relations Consulting firm for ABAXIS. With us today representing the company are Mr. Clint Severson, Chairman and Chief Executive Officer, Mr. Al Santa Ines, Chief Financial Officer; Mr. Donald Wood, Vice President of Operations, Mr. Martin Mulroy,

Vice President, Sales and Marketing, Veterinary Market, and Mr. Christopher Bernard, Vice President, Sales and marketing, Medical Market.

At the conclusion of today's prepared remarks we will open the call for Q&A session. Before we begin we submit for the record the following statements. I would like to remind everyone this conference call includes statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. ABAXIS claims the protection of the Safe Harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms may, believes, projects, expects or anticipates and do not reflect historical facts.

Specific forward-looking statements contained in this conference include but are not limited to risks and uncertainties related to fluctuation in the company's share price, the market acceptance of the company's products and continuing development of its products, required FDA clearance, and other government approvals, risks associated with manufacturing and distributing its products on a commercial scale free of defects, risks related to the introduction of new instruments manufactured by third parties, risks associated with entering the human diagnostic market on a larger scale, risks related to the protection of the company's intellectual property or claims of infringement of intellectual property asserted by third parties, risks involved in carrying of inventory, risks associated with the ability to attract, train, and retain competent sales personnel, general market condition, competition and other risks detailed from time to time in the company's periodic reports filed with the SEC. Forward-looking statements speak only as of the date this statement was made. ABAXIS does not undertake and specifically disclaims any obligation to update any forward-looking statements.

With that having being said, I'd like to turn the call over to Mr. Clint Severson, Chairman and Chief Executive Officer of ABAXIS. Clint?

Clint Severson

Thank you, Joe and good afternoon everybody. This afternoon I’ll review the accomplishments and the challenge for Q3 FY'08 and some of our some of our goals for Q4. After my short presentation, I will ask Martin Mulroy, our VP of North American Vet Sales and Marketing, and Chris Bernard our VP of North American, Medical Sales and Marketing to give an update on their respective business and then we will take questions.

The challenges for Q3 mostly involved timing and mix. The biggest of these was the timing of getting the Japanese approval and license for our new distributor, because the final approval was not received last quarter, we were not able to ship product to our new distributor in Q3. This led to a 35% decrease in sales to the Pac Rim or about $351,000 fewer sales than Q3 of last year. With the approval we should be able to make this up over the next couple of quarters. The Japanese authorities have completed their inspection of our facility this month and we expect the license to be issued this quarter.

Second, we sold fewer VetScan's Q3 '08 than Q3 '07 down about 37%. However, we sold more hematology instruments in Q3 '08 and Q3 '07 up 44%. The HM5 was just introduced in September and the rest we're still focused on the launch of this great new product.

While the margin on the HM5 is less than the VS2's or VetScan's, because we buy them in euros margin on future hematology consumable reagents is in the 70% range. Piccolo disc sale units in Q3 were up about a 11% year-over-year in this seasonally slower quarter. But, that was after a Q2 increase of 43% year-over-year and 24% quarter-on-quarter.

Excluding the government, Piccolo disc sales were about 18% year-over-year for Q3 after increasing 54% year-over-year and 24% quarter-over-quarter in Q2. Even though, we had some timing and mix issues, we still posted record sales finishing at $25.7 million up 17% year-over-year and up 2% quarter over quarter. Piccolo instrument sales of 238 units were up 45% were 74 placements year-over-year and up 34% or 60 placements quarter-over-quarter. Clearly the CLIA-Waived status on electrolytes helped us achieve this quarter and that was definitely a benefit.

Record medical sales of $6 million were 29% year-over-year and 6% quarter-over-quarter due to strong instruments sales in placements. Ex the government sales worldwide medical sales were 34% year-over-year. The strength on the vet side of the business was in disc sales, finishing over a $11 million up 30% year-over-year in this seasonally slower quarter. In units we sold 896,000 vet discs up a 175,000 units or up about 24% year-over-year, a mix of higher price disc lead to the higher $1 percentage growth.

Changes in the domestic sales process started in Q1 ’08 with the focus on both consumables, as well as instruments appears to be working. Strong European sales of $3.4 million up 22% year-over-year and up 7% quarter-over-quarter kept the international sales growth in positive territory. Despite our inability to ship products to our new Japanese distributor international sales finished at $4.1 million up 7% year-over-year.

We sold about 17 fuel instruments in Europe year-over-year. This was due to a very strong Q3 in ’07. At that time the shipments of Q2 '07 instruments were delayed until Q3 '07 due to the grey screen problems identified in Q2 '07. In Asia we shipped 45 fewer instruments due to the Japanese licensing issue discussed earlier. International sales made up about 16% of the total while domestic 84% this compares with 1783 Q3 last year and 1684 last quarter.

North American sales of $21.628 million were up 19% year over year and 3% quarter-over-quarter despite the seasonally slower quarter for consumables. Government sales at $913,000 were up 5% year-over-year, but down 18% quarter-over-quarter. Government sales are generally stronger in Q2, because the end of their fiscal year.

Total worldwide vet sales of $18 million up 11% year-over-year were impacted by slower international instrument sales, which were down 31% mostly due to fewer sales in the background. Total disc sales of $14.258 million were up 26% year-over-year with a total of 1.212 million units shipped in Q3 up 21% in units versus Q3 last year.

The average selling price on the disc was 1176 up 4.3% or $0.50 year-over-year were down 10% quarter-over-quarter due to mix. The disc cost of $4.34 was down year-over-year by $0.03 and quarter-over-quarter down by $0.08. We sold a total of 880 instruments in Q3, up 14% quarter-over-quarter or 109 instruments, but down 32 instruments or 4% year-over-year mostly due to fewer instruments sold outside the US. In dollar total instruments sales of $8.4 million were flat year-over-year, but up 12% quarter-over-quarter. We sold 341 VetScans up 44 units from Q2 '08 but down 198 units from our record 539 VetScans in Q3 last year. The focus on hematology in the U.S and fewer international sales were the main reasons for the shortfall.

We sold 301 hematology instruments versus 209 in Q3 last year, up 92 units or 44% and up units versus last quarters 296. As I mentioned before we sold 238 Piccolos, up 74 units from Q3 last year, years total of 164. Quarter-over-quarter, Piccolo instruments sales were up 60 units. And this is with one month of mostly CLIA-Waived test in the US.

On the operation side of the business we made excellent progress in instrument manufacturing department. Because of the problems with the past four quarters we entered Q3 with a backlog of customer repairs, loan repairs and rework. In addition, operations had to meet the demand for 880 new units, up a 100 units quarter-over-quarter. We also had a goal of building additional inventory of new chemistry instruments to meet the anticipated demands of Q4. To address this challenge the team worked seven days a week and processed over 3000 instruments, and met the goals with higher quality units.

Infant mortality problems continued to decline with the new processes in place, however overtime expenses did have a negative impact on the gross margins for Q3. On a side note, with the change in operations managements under the leadership of Don Wood, we have not only improved the throughput of instruments, improved the quality, but have also identified efficiency improvements and could lead to cost reductions in the million of dollars over the next 12 to 24 months.

Capital sales made up 33% of the total for Q3 while consumables sales were 67%.This compares with 38.62, Q3 last year and 30.70 last quarter. Medical sales made up 23% of the total, vet 70% and 7% other. This compares with 2174 or 5 Q3 of last year and 22726 last quarter. Even though, instrument gross margins were negatively impacted by higher sales of hematology instruments, which are purchased with expensive euros and higher factory cost for chemistry instruments due to more overtime, we still finished Q3, with the second best gross profit ever at $13.6 million up 18% year-over-year and down only 2% quarter-over-quarter or 53% of sales up 4 basis points on the Q3 last year.

Operating expenses of $9.3 million or 36% of sales were slightly down compared to Q3 '07 expenses up 36.6% of sales and down from last quarters expenses of 38.7% of sales. R&D expenses of $1,629,000 or 6.3% of sales were down from 7.2% sales in Q2 and down from 6.8% of sales in Q3 last year.

Sales of marketing expenses of $656,000 or 23.6% of sales were also down quarter-over-quarter from 25.3% of sales and down compared to Q3 last years 24% of sales. Admin expenses of $1,571,000 or 6.1% sales were flat compared to last quarter, but up slightly compared to 5.7% of sales in Q3 last year.

Operating income of $4,353,000 was our second best quarter ever finishing up 24% at 16.9% of sales compared to 16.3% of sales last quarter and 16% of Q3 last year sales. Operating earnings finished at about $0.19 per share versus 16 last year.

Pre-tax earnings of $4,905,000 was up 22% year-over-year or about $0.22 of share versus $0.18 Q3 last year and $0.21 last quarter. Net income of $3,205,000 was up 15% year-over-year or about $0.14 a share versus $0.13 a share Q3 last year.

The focus in R&D for Q3 was completing the last four CLIA waivers and the development of our heartworm test. Three of the four waivers were submitted in October and the last one [D-belly] will go in the week of February 11. The hospital that was doing the reference method testing on D-belly was slower than expected in completing this project. The heartworm project is in the final stages of completion and we’re working on the regulatory requirements in the process to get it cleared.

Goals for Q4 include the expansion of our medical sales team in the US, developing a sales strategy for this new CLIA waived environment, scaling up additional vendors for chemistry instruments parts and continue to make progress in meeting our goal of $1 share an earning.

Now before I introduce Chris and Marty I want to let everybody know that I have a 70,000 share option expiring in the next 11 months. So I may be selling some stock over the next three quarters as I deal with this.

Now with that I'd like to introduce Chris Bernard, our VP of North America in Medical Sales and Marketing. Chris, you are on.

Chris Bernard

Thanks Clint. One of the record quarter on the medical side is quarterly US medical sales minus the military were up 25% of $4.2 million year-over-year and approximately 8% quarter-over-quarter. The medical disc sales minus military were about 235,000 of 18% year-over-year, slightly down quarter-over-quarter. In the US we had records across the country. We sold a 165 Piccolos and a total placement of 194 systems. The 194 systems surpass the previous record of a 114 placements, which took place this same quarter last year.

Top segments for us again this quarter were [FPGP] at 81 placements, 39 imaging centers and 23 urgent cares. PSS led the distribution ranks with 84 placements fall closely by Henry Schein with 56 and through our strong continued internal marketing; we continue to close direct units at pace of 16 this past quarter.

Our sales team took advantage of a perfect storm and outperformed in placement this quarter, averaging approximately 18 units per headcount, PSS [Lab Zone] and Henry Schein lab program were key store success in Q3, wave status sitting in mid November served as a powerful explanations point to the quarter, 108 of the 194 placements closed in December alone.

Our sales force is two weeks away from the full 14 headcount. We will take that number to 15 this quarter and will further expand that number in FY ’09. We saw strong focus closes in the imaging arena through marketing efforts and distributed partnerships, our URL program is starting in October is 39 imaging closes are direct results of the segmentation marketing that we continue to perform. We will launch an urgent care program in the next week that will focus sales here in Q4 and in to Q1.

It’s important to point out that our largest reagent trail segments continue to be hematology and oncology. We continue to focus this arena in conjunction with all the waived opportunities that have now become available. Oncology practices as a majority will remain moderately complex. Challenges in Q3 were few but worth mentioning. We continued our maze on some of the first generation Piccolo xpress has caused increased cost and time to do some reinstalls and slow the road of growth in those earlier accounts. Kernel reorganization is at the corporate level causes slowdown in the historical placement pattern that we've seen over the last four quarters.

As Q3 is historically been one of our strongest capital quarters the performance of this quarter by sales force exceeded many expectations. While it is difficult to ascertain the long-term impact of [Wave] status the strength of the sales pipeline was revealed in -- certainly in the month of December. While the initial excitement and momentum continues into Q4, it is Abaxis significant challenges. As you may be aware FDA approval is half of the equation. In the words of a CMS regulator, Abaxis is in un-chartered waters with Wave, CNP, DNP and electrolyte panels. The process by which these new panels get loaded as wave in the CMSB Schedule is cumbersome at best.

As this call takes place CMS is in the process of loading these codes, however the first available billable date for a Wave, CMP, DNP and Electrolyte panel will be April 1st of this year. Customers will have the ability to retroactively bill however for any test performed after January 16th, 2008. And we are in the process of communicating and educating our current, as well as prospective customers the logistics involves with this first of it's kind testing procedure.

With that I'll toss it back to you, Clint.

Clint Severson

Okay, great. Thank you, Chris. Okay now, Marty, our VP in North America in Vet Sales and Marketing, you are on.

Martin Mulroy

Thank you, Clint. The US and Canada veterinary business contribute $14.7 million in revenue in Q3, up 15% or $1.9 million year-over-year and up 4% or $500,000 quarter-over-quarter. Rotor sales at $9.4 million were up 32% versus Q3 last year and up 3% quarter-over-quarter. Hematology reagent sales through quarter at $1 million were up 21% year-over-year and up 17% from the prior quarter.

Instruments unit's sales were up 48 units quarter-over-quarter and down only 16 units year-over-year despite the changes in the sales and marketing focus from an instrument-only emphasis to an instrument and reagent sales emphasis. The launch of the HM5 and our sales in marketing efforts on this new product resulted in hematology unit sales up considerably 40% year-over-year.

Moving forward, we are again emphasizing chemistry unit sales and early results was good. For example, the North American Veterinary conference just last week, the sales team working in that booth took orders for a record 32 instruments, 20% higher than the previous record for instruments sales at this or any conference. Of these, 15 or almost 50% were Abaxis VetScan VS2 instruments.

Additionally, the refocus of the sales team to include day-to-days account managements and selling applications and increase utilization of errors, instruments are ready in place, has had impacted reagent sales and a strategy all in all appears to be working.

We are beginning our Q4 with 41 field sales representatives and now 7 from 6 Area Sales Managers. This quarter the sales and marketing team is focused on completing the ramp up of the new hires that began their field work in Q3 and we will be doing no additional expansion for the balance of the fiscal year. But, we do plan additional expansion likely begin in Q1 and into Q2 FY '09.

The North American Veterinary business unit besides heading two field sales managers, one promoted from within the sales organization and one recruited from outside the organization has filled as well a director level position charged with customer care, managing all aspect of customer satisfaction, retention and organic growth.

We have also added a Director of Business development focused on both internal product development opportunities and external synergistic partnerships, in order to continue to strengthen our veterinary business and maintain, if not accelerate our growth.

The infrastructure is in place and the organization is solid and we all look forward to a strong Q4 and FY '2009.

And with that I will turn it back over to Clint.

Clint Severson

Thank, you Marty. So, now we're open for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of James Sidoti - Sidoti & Company.

James Sidoti - Sidoti & Company

Good afternoon Clint.

Clint Severson

Good afternoon.

James Sidoti - Sidoti & Company

Lets start with the quality issues. Is it safe to say that those are result at this point or you still have a few to work out?

Clint Severson

Yeah, I think the quality of the instrument is improved a lot and the infant mortality was the real issue we had out there, where machine would get installed, then go down within the first 30 to 90 days, and we have seen a huge reduction in that. We're in the process now of scaling up additional vendors for internal parts and we believe that some these vendors will be able to provide not only the quantity we need, but buy them with the quality we need as well.

So, that project continues. I think the fact that we were able to process 3000 instrument through our factory and reduce the problems in the field at the same time is a good indicator that we are on right path.

James Sidoti - Sidoti & Company

And with the factor at the current levels now: what do you think your capacity for instruments is?

Clint Severson

Well, I think the capacity without working a bunch overtime is over a 1000 instruments a quarter and so, I think we are in good shape. I think after we add the additional vendors that within two or three quarters the capacity will be unlimited.

James Sidoti - Sidoti & Company

And then on the distribution front, you mentioned, your distributor in Japan was not able to get approved. Can you quantify that in dollars what you think the impact with that was?

Clint Severson

Compare to Q3 last year it was $351,000.

James Sidoti - Sidoti & Company

Alright, on Piccolo shipments that number is quite a bit above where I thought it was going to be: did you see that ramp up in December after the waiver?

Clint Severson

Yep. I think, Chris mentioned that 105 Piccolos were sold in domestic marketplace in December.

James Sidoti - Sidoti & Company

And: do you know what their number was in December of 2006?

Chris Bernard

I don’t have the December 2006, because we had no reason to keep track of December 2006.

James Sidoti - Sidoti & Company

Right.

Chris Bernard

Certainly it was a lot less than that.

Clint Severson

Yeah, Jim, the placements for last Q3 were a 114, this quarter they were 194. I have to look and see specifically what the placement was on December of last year.

James Sidoti - Sidoti & Company

Okay. But I assume that hockey stick was much more pronounce this year that was raise to?

Clint Severson

There is no question between that the distributor program, the tax benefits why is that sitting in the middle of November. It was a great opportunity for our folks to hit our entire sales pipeline and go back to those accounts and going forward. So they did an outstanding job building that pipeline, waiver status has a tremendous inspect certainly in closing out the calendar year.

James Sidoti - Sidoti & Company

I am sure in the first month of year and this quarter you are busy placing or training starting up some of those units, but: do you see that momentum continuing? Can you give us any indication on that?

Clint Severson

Yeah certainly, hats off to my folks who were able to get all, but I believe two of those instruments installed by January 15.So they work very, very hard including weekends to get all those instruments installed by the cutoff deadline and as we move into January and February, while in the same fiscal calendar as PSS is which is a good thing, Henry Schein starts up their new calendar year this quarter, and so we are basically regrouping with everybody looking at the overall pipeline and looking at the forecast it looks fairly strong.

James Sidoti - Sidoti & Company

Now is that installed products are shorter, because of the CLIA waivers?

Clint Severson

It's a little bit shorter. Waivers were moderately complex physical chemistry. So, we are still spending a considerable amount of time with the customers. If you think about waived today and some of the customers we are going to be selling to tomorrow, this is still new, whether you need a certificate this is moderate or a certificate that says waived. So we are going to do the due diligence to make sure these folks are trained correctly and the installations are done appropriately.

James Sidoti - Sidoti & Company

And then Marty on the VetScan side of the business: have you seen any impact yet from the competitive launch?

Martin Mulroy

The Catalyst?

James Sidoti - Sidoti & Company

Right.

Martin Mulroy

Not this point. No.

James Sidoti - Sidoti & Company

It sounds like that Catalyst won't start shipping until March. Are you getting customers telling you that they are holding off on making a decision until that point?

Martin Mulroy

I have not heard that, no. And yes, I as well understand it going to be March.

James Sidoti - Sidoti & Company

Okay. And then on the heartworm: what's your best guess as to when you'll be able to start shipping that product?

Clint Severson

Yeah, we have -- the development side of this thing should be completed probably in the next 60 days and then we have the regulatory part of it, which we are still working through. And yeah: that I can't predict, because we never worked with USDA before, but we have some consulting help and yeah, we are making sure that we do it all the right way.

James Sidoti - Sidoti & Company

Alright, thank you.

Clint Severson

Great. Thank you.

Operator

Your next question comes from the line of Ross Taylor, C.L King.

Ross Taylor - C.L King

Questions. May be just following up on the Vet side of the business first, I missed the number of VetScan instruments you placed during the quarter. I am just wondering: if you could repeat that?

Clint Severson

Yeah. Just a second here. 341 VetScans

Ross Taylor - C.L. King & Associates

Okay. And I know I did said a strong quarter for instruments placements and may be I will just ask for same question or similar question it was, just to ask, but: do you think selling much competitive activity in the quarter in terms of VetScan replacement with IDEXX pretty aggressive in the market and may be hindered you performance in the quarter some?

Clint Severson

Ross, from what I said. The Catalyst launch I believe absolutely well stir up the marketplace, with the long reach of IDEXX distribution and the resources IDEXX has. It will stir up the marketplace, but I also believe that, as a result there is going to be a lot of veterinary clinics this country rethinking their current net is laboratory work be it in-house or send out.

And I also believe very strongly that, as a result of all this Abaxis could potentially benefit a great deal.

Ross Taylor - C.L. King & Associates

Okay. And turning to the Piccolo I think Clint has mentioned during his prepared remarks that you all did spend some effort building inventory for anticipated demand here in the March quarter and I don’t know I don’t know if you can talk it all about: how strong do you see the momentum continuing into the current quarter? And now that you have the waived status on 9 of the 12 rotors: if you have seen a pick up in demand from any particular market segments on the medical side?

Clint Severson

Hey Chris: you want to handle that one?

Chris Bernard

Absolutely! So once, once we waived status certainly if you think of the numbers there is are 0.5 million physician’s offices in United States. Currently right now about a 160,000 of those offices carry a clear CLIA certificate of some sort that’s either waived or moderately complex.

Those were all accounts that we were calling on previous to our waived status, and now that this has come through on the FDA, part of our job and big part of our job is going to be working through distribution to help qualify all these accounts, because in essence everybody became a target on November 15. So, I think that the real key here is going to be able to qualify these accounts, down to a point where chemistry is a short-term need in a particular situation. And really start building the pipeline with accounts that we may have not been calling on prior to November 15.

So I certainly see a lot of momentum continuing into FY '09. We certainly have this challenge with the CMS loading of the code, which we’re working overtime right now to make sure that all of our current customers, as well as perspective customers have all the correct data and all the correct information to know what's going to happen on April 1st. So we'll work through that this quarter, but certainly FY '09 is going to be very very exciting year for us.

Ross Taylor - C.L. King & Associates

Okay. Alright, that’s helpful. Thank you.

Operator

Your next question does come from the line of Jonathan Block, SunTrust Robinson Humphrey.

Jonathan Block - SunTrust Robinson Humphrey

Just, may be three or four questions. Clint, just to start, you mentioned the overtime that occurred in the quarter, I think I lost you. Is that something that going to drag on into the March quarter or does that go way this quarter?

Clint Severson

Goes away, we caught up.

Jonathan Block - SunTrust Robinson Humphrey

Okay. You caught up and so without overtime you mention capacity, you believe it will about a thousand instruments per quarter, is that correct?

Clint Severson

That's correct.

Jonathan Block - SunTrust Robinson Humphrey

Okay. And then you entered pretty quickly Clint. Can you just may be take a set back in detail what exactly needs to get done for Japan approval and again is that a March event? And then, I think you mentioned certain, I know you quantified 350,000 impact, but: what was the actual number of the instruments?

Clint Severson

45 instruments was the between Q3 this year and Q3 last year and Asia. And it might have even been more in Japan, I didn’t calculate that. I just took the Asia, but we had pretty good quarter Q3 last year in Japan.

Chris Bernard

So yeah, when these two get down there is a bureaucratic process over there for transporting the license from one distributor to another and that’s where what [Glatzmayer] would like to do now as we actually do a subsidiary over there put the license in the passes name. And so we have to make a change like this again we don’t have to go through to all this stuff. But certainly there was a process where they inspected our factory and the optimum they have to meet certain requirements over there, this distributor sells other medical products so I don’t see that an issue of getting an license its just a timing issue, and Glatzmayer expects the licensee to be issued in February. So of course we can't guarantee anything because we don’t know, but our distributor also thinks it will be issued February.

Jonathan Block - SunTrust Robinson Humphrey

Okay great. And then Chris this is one for you, you mentioned obliviously a very impressive Piccolo number for the quarter or may be even a more impressive number, exceeding December. Here we are electrolytes waived is that a good number: is that a run rate here? As we begin to look into the first half of calendar year away, or may be was there a look of a bullish on people just waiting for the electrolytes: any comments there would be helpful?

Chris Bernard

Yeah certainly there was a bullish, the CMP and Lipid combination are 90% of what is order in the US today. So certainly the comprehensive metabolic panel was the key to the waived status for us. So as we look moving forward certainly, establishing a foundation versus very, very good sales reps which we have done, we will continue to expand on that going into FY '09, working with distribution as I mentioned earlier, it’s a really qualified target because this is really all about which target we are spending our time on whether we were 15 or 20 direct reps its very, very important, their time is money. So we are going to spend a lot of time doing that in January and February. The pipeline is already [scaling] back up, because of the waived status. Now it's a just a matter of segmenting those out and building a common denominator and make sure we are spending time in the right places.

Jonathan Block - SunTrust Robinson Humphrey

Okay. And then last one I guess, Chris for you again. You mentioned some of the issues just surrounding getting the electrolytes loaded in to the correct codes, if you would, and I think you said that that’s supposed to come online in April 1st. Even though these guys can build on a retroactive basis: are you seeing them a little hesitant to do so? I think you guys certainly came in north of my placement number on the medical side, but on the consumable end, maybe inline to just slightly shy. So, are people taking your word for it and going ahead and running the consumables or: are they taking a wait and see your approach until April?

Chris Bernard

Well, I think it's a little bit of both, one of the challenges is each office does things differently, so you've got folks that build daily, weekly, monthly and so what we are starting to see now is, we are starting to see some of the denials come back on the original submissions, and we are handling all of these customers very personally. We are calling number of them all the way back from November 15th. So, certainly there has been some delay and as we move forward, we want to put a plan of strategy in place that does not have prospective customers waiting until April to come on board with the Piccolo's. So, I think we have a pretty good plan in place to make that happen. Now we got to make sure we take care of those customers in December, they have brought the Piccolo just for that reason, and not for the waived status. So, documentation from CMS link; the Internet is a wonderful tool to help get information out rather quickly.

Jonathan Block - SunTrust Robinson Humphrey

Okay and last one I promise. Clint, I've got to ask the question, I guess here we are with lot of the retail clinics staring to pop up and I think maybe even more notably on the imaging side of things, some of the Black Box warnings that went our earlier on in '07. Have there been discussions maybe in the shape of partnerships on the imaging side or even partnerships on the retail walking clinics side that may lead to a big event down the road?

Clint Severson

Yeah, Chris I'll let you take that one.

Chris Bernard

Yeah sure. Certainly the Black Box warnings were basically the foundation for us to move forward to create the kidney check rotor. That hit full stride in the October timeframe. The numbers reflect from last quarter. The number of imaging centers that we brought on board as customers, so at the street level we absolutely are spending a good deal of focus on calling all those imaging centers. Because there is no question that there is a need.

At a corporate level, certainly some of the larger imaging companies that are out there, positioning their products and this is mostly from a contract standpoint, not so much from a capital standpoint up to providing gadolinium-based contrast agents are looking for solutions. So, we are heavily engage with conversations with the four major players out there that are looking to provide their customers with a solution. We will continue to do that through the next couple of quarters at the very least and work towards -- this is finite universe, there are about 5,600 free standing radiology clinics in the U.S today. If you add the hospital base clinics it gets closer to 11,000. So, it's a very small window that we are working on to theses Black Boxes and the solution we believe we can provide.

Jonathan Block - SunTrust Robinson Humphrey

Okay great thanks gentleman.

Clint Severson

Thank you.

Operator

Your next question comes from the line of Ron Stevens, [The Ruby Fund].

Ron Stevens - The Ruby Fund

My question was answered. I just wanted to say hello, and good luck.

Clint Severson

Yes, thank you.

Operator

Your next question comes from the line of Amy Stevens, Susquehanna Financial.

Amy Stevens - Susquehanna Financial

I just wanted to -- most of mine have been answered as well. But I wanted to follow-up about a couple of things that you said. One was you said that as a part of the resolutions of the quality control issues, that you have also during that process identified some potential operating cost reductions, I wanted to just know: if you could give a little more detail? And: how we may think about that in terms of modeling out '09?

Clint Severson

Right, well I can tell you the (inaudible). I’ll give you an example. So, we had a wiring harness that was not meeting our quality standards, so we did an audit of the factory, and we reviewed the process, and we decided we needed maybe a second source. So, we went out to look for a second source, we identified somebody, and they came back with a quote that actually would save us about, this is approximate number, $200,000 a year. And we figured, man that looks really good, maybe we have to find a third one. So, we took a look at a potential third one. And we can probably even say more than that. So, this is a process that we’re going through as we review all this quality issues. And review the vendors that we’re doing business with, with the focus on the quality. But the side effect of that is we’re getting much better pricing as well. So, I think its preliminary.

But certainly, we were pleased to find that you had all this little things up and it comes up to million of dollars. So, millions of dollars translates to higher margin on the instruments. And right now we finished last quarter. With gross margin of mid-60s on the rotors [or the disks]. And if we can get to the high 50s low 60s on the instrument, you can imagine what that does to our gross margin. So, this usually quality and costs go hand-in-hand. Then as you improve your quality, you end up with a better cost picture as well. So, this is all part of the process here that will be ongoing for the next quarters, and once we get it pinned down, so we know exactly what it is. We’ll be able to give you more specific per instrument numbers.

Amy Stevens - Susquehanna Financial

Thank you, very helpful. The other question sort of related -- you talked about that if you were to add some additional vendors your capacity about (inaudible) would be essentially unlimited: what’s the bottleneck from a vendor perspective, if you will?

Clint Severson

There are some vendors out there that have certain capacities. And then over and above that they struggle. And so, our objective is to identify companies that have more capacity, more ability to move with more flexibility, and are large enough to be able to add capacity with a 90 to 220 day notice. And so, that’s been one of the criteria of selecting these new vendors, is that ability to be able to scale up quickly, so.

Amy Stevens - Susquehanna Financial

But, is there a particular component that’s been the most challenging?

Clint Severson

Yeah I mean there are components that are more challenging than others. And certainly the component in the VS2 and the Piccolo Xpress are all custom; they are all custom, we design them here. And so, when you go to a vendor to get an agreement on manufacturing these kinds of these products, you have specifications you set and deliveries you are looking for. And certainly it's a very attractive contract with Abaxis, because we have such a predictable growth rate round here, we pay our bills on time. And yeah so, then ones you have a relationship with the vendor your tendency is to want to stick with them, because you have been doing business with them for a long time. And then you find out latter that well these were good guys when you are doing hundreds of instruments a quarter, but you know they are not going to be very good when you doing thousands a quarter. So, that’s when you have to look outside and look at second sources and that kind of thing.

Amy Stevens - Susquehanna Financial

Okay. Alright, and then in terms of your R&D trend that we saw this quarter, and I guess reaching this stage of getting the waived status now on these final electrolytes. Where do you go from here and how does that impact your R&D going forward? You are addressing I guess about 90% of what is sold in the U.S today now, but: what's the future I guess for it?

Clint Severson

Yeah, so our R&D focus as the last clear waivers come through, and we get the heartworm on the road or over the desk; that gets completed. The whole scale up of the instruments, which are kind of winding down now as we qualify these new vendors. When all of this stuff is completed, and focus of R&D will be on developing specialty tests. So, right now we sell our Piccolo and VetScan for doing the routine tests. The tests that physicians order are most of their patients, most of the time. And that’s why they buy our VetScan or Piccolo to bring in their high volume stuff in-house, quicker turnaround time, patients are happier, everybody is happier. Now, what we want to do is add specialty test to the chemistry rotors as well. So, if a physician wants to do a PFA test along with the basic metabolic panel, he'll be able to do that with the Abaxis product. That’s kind of the next level.

Amy Stevens - Susquehanna Financial

Okay.

Clint Severson

So that's where R&D focus is going to be.

Amy Stevens - Susquehanna Financial

And so, you don’t see addressing surgical centers that’s kind of in that next mix you are doing like some [PT, PTP] type?

Clint Severson

Certainly data on the coagulation is also on the list and that would be considered a specialty test, yeah?

Amy Stevens - Susquehanna Financial

Yeah. Okay. Alright, thank you very much. I appreciate it.

Clint Severson

Great, thank you.

Operator

Your next question comes from the line of David Bayer, Northland Securities. Mr. Bayer your line is open.

David Bayer - Northland Securities

Can you hear me?

Clint Severson

Yes, now we can.

David Bayer - Northland Securities

Okay. For some reason it wasn't picking on the speakerphone, sorry about that. Couple of questions for you, first on the vet business, I guess this is for Marty. I was wondering: if you could take us through the timeline of what caused you to potentially switch vendors? And then: some of the benefits that the new vendor might have? And then: maybe help us understand a little bit more about the approval process? And: help us sort of gauge as to roughly how long that could take once we get a reliable test concluded in the R&D facility?

Martin Mulroy

Okay. So I assume you're talking about vendors for instrument manufacturing, is that correct?

David Bayer - Northland Securities

Excuse me. I think it got lost when I was on the speakerphone. I was referencing to the heartworm specifically.

Martin Mulroy

The heartworm. So the process for the heartworm is first thing we have is to complete the development process. And so, we are very close to getting all that completed, the clinical trails, we're getting ready to start. We have a second-source antibody that actually worked better than the first-source antibody. And once that's completed, then we have the regulatory piece of it.

So the USDA regulates heartworm test. And Abaxis has never worked with USDA before, so this is a new experience for us. So we are in the process of working with them to identify what we need to do, what needs to be done, if there are any issues we need to deal with regarding our heartworm, because obviously it's different than the heartworms that are out there today.

And so, we don't know for sure how that will take. Normally, when you deal with the FDA, it's about 90 days. But the USDA, we do not have any experience with. So we'll just have to work through it. It takes time to get it done.

David Bayer - Northland Securities

Sure. Would you rethink the resulting test will be more sensitive than those are available from competitors, such as IDEXX, will pick the disease earlier stage or any other benefits along those lines?

Martin Mulroy

Yeah. Our goal was to meet the performance characteristics of the products that were out there. And that's always the first goal when you're introducing a new product. You want to make sure that you could meet the performance requirements that are out there with existing products. Then as you do that then you identify ways of even improving the sensitivity and specificity to maybe even do it better.

So the first stage is to meet, the second stage is better and, of course, you don't know for sure whether you meet or you're better until after all the clinical trials are done, but always have a very good indicator in the research lab because they are always testing those samples that have very, very low burdens to seek when they come up.

David Bayer - Northland Securities

Okay. And then my sense of it is that the current thinking is that this would be a test that would be additive to the panel that has the highest ASP and the most benefit to the patient and to the veterinarian. Is there a better thinking or a bit more clarification from the company in terms of what the incremental pricing might be? I know that's something that you've been sort of having internal dialogue about.

Clint Severson

Yeah. I mean we're still debating that. Certainly it will go for a heartworm test all the way from free to maybe a little bit. So Marty and his team are debating those issues and they will make a final decision based on the market.

David Bayer - Northland Securities

Okay. And then with regards to the veterinary instrument placements, my sense of it is that maybe the channel partners and the drug sales force got focused on placing the new hematology capabilities and perhaps a little less focused on the VetScan II opportunity. I'm just sort of wondering: is that a temporary phenomenon do you think? Or: do you think that maybe they're going to continue focus maybe a little more on hematology quarter? Just gives us a little bit of color there.

Chris Bernard

Sure. Hi, David. There was a lot of pent-up demand for the Abaxis five-part hematology instruments, and we have some catching up to do. We had a lot of people waiting for the product, a lot of people who wanted to see demonstrations, a lot of people that wanted to test it, run it side by side with the some competitive products. So we were very busy with that particular product line and that particular instrument.

Moving forward, no, chemistry is our bread and butter and rotor sales are very, very important here. And we are and will be putting more emphasis here forward on chemistry, getting that back to where we need it to be and getting that growth rate back to where it should be.

David Bayer - Northland Securities

Okay. My last question and then I'll get back into the queue. With regards to the CMS, just maybe a little bit more color on your thinking as to: to what degree that did impact sales of rotors? I mean: obviously, it was good sales, but: to a degree it might have held back from what the demand otherwise might have been? And: how you see that playing out during this transition quarter that we're in now?

Clint Severson

I think initially it impacted it very little. I'll be quite honest with you. If you look at Christmas falling in the middle of the week, you've got Thanksgiving, you look at Q3 which is historically a slower rotor quarter because of the holidays, particularly this quarter, timing has had a lot to do with it. Our distributors on the medical side are ordering product on 30-day PO. So, they're planning ahead, and when they know that there is going to be a washout week, I think we saw a little bit of that as well.

So we'll will get into February, the rotor trail has already started to come back, and I think which is a function of timing, holidays in Q3, which is always heavy capital and a little bit slow on the rotor.

David Bayer - Northland Securities

Okay. Very helpful. Thank you very much.

Clint Severson

Thank you.

Operator

Your next question comes from the line of [Todd Bailey, KM Anderson].

Todd Bailey - KM Anderson

Can you hear me?

Clint Severson

Yes, Todd, go ahead.

Todd Bailey - KM Anderson

Terrific. I just wanted to understand a little bit better the translation between the strong Piccolo instrument sales that you had versus the medical market revenue growth? It's seems like the instruments sales were very strong there. Was there something that did not translate into revenues?

Clint Severson

Yeah, I think the Piccolo disc sales in Q3 were up 11% year-over-year in this seasonally slower quarter, but that was after Q2. Remember in Q2, the Piccolo rotor sales were 24% quarter-over-quarter. So, it slowed down a little bit because it's seasonally slower. And of course, excluding the military, the Piccolo disc sales were up, up 18% year-over-year. So, it was just seasonally slower rotor sales in the quarter, but certainly the total medical sales were up.

Todd Bailey - KM Anderson

Clint, what was the Piccolo instrument revenue growth figure? Do you have that?

Clint Severson

You have that, Al?

Todd Bailey - KM Anderson

Or the growth?

Al Santa Ines

Our Piccolo instrument revenue growth or Piccolo instrument unit growth.

Todd Bailey - KM Anderson

Piccolo instrument revenue dollars and growth?

Clint Severson

Okay. So; Al will figure this out here real quickly for us.

Al Santa Ines

The Piccolo sales for the third quarter is $2.929 million against last year of $1.921 million. That is a pickup of perhaps maybe $1 million year-over-year.

Clint Severson

Up $1 million year-over-year.

Todd Bailey - KM Anderson

Got you. Thank you.

Clint Severson

Thank you.

Operator

Your next question comes from the line of Thomas Henwood, OMT Capital.

Thomas Henwood – OMT Capital

Between direct and distribution.

Clint Severson

Pardon me?

Thomas Henwood – OMT Capital

Direct sales versus distribution sales

Clint Severson

On the vet side or the medical side?

Thomas Henwood – OMT Capital

Of each one.

Clint Severson

Okay. So, Chris, you want to cover the medical direct versus distributor.

Chris Bernard

Yeah. We were 94% distribution, about 6% direct.

Thomas Henwood – OMT Capital

Okay.

Clint Severson

And Marty?

Marty Mulroy

Instruments were 69% direct and the balance distribution.

Thomas Henwood – OMT Capital

Okay. And can you indicate how much of a change it was from the second quarter?

Clint Severson

Yeah, Chris.

Chris Bernard

Yeah. We continue to grow quarter-over-quarter on direct sales. I think there are a couple of reasons for that. Certainly we don't have a dedicated sales force calling on hospitals. But certainly, the awareness piece, the marketing that we are doing, there is becoming more and more of a need in hospitals for backup units in [niku] units and [piku] units.

In OSHA walk-in type clinics where distribution, at least the distribution we're partnered with, historically, has not spent any time. So I think we'll continue to see a nudge up in that arena and continue to work for both of our business through distribution.

Thomas Henwood – OMT Capital

Got it. thanks.

Clint Severson

Marty?

Marty Mulroy

And for the vet side versus prior quarter, I don't recall the exact number but direct instrument sales quarter-over-quarter is up slightly.

Thomas Henwood – OMT Capital

Okay. And you expect that trend to continue? I mean: that's the goal wasn't it?

Marty Mulroy

Yes, I do.

Thomas Henwood – OMT Capital

All right. Is it a bigger increase if we look at it relative to last year, year-over-year?

Marty Mulroy

Yes, it is.

Thomas Henwood – OMT Capital

All right. And can you comment on what turnover may have been into sales force?

Marty Mulroy

In the vet side, roughly 5%, which is industry standard for cap equipment.

Thomas Henwood – OMT Capital

Okay. And lastly: can you comment on what your marketing strategy is going to be against the IDEXX product?

Clint Severson

Against the IDEXX Catalyst, again I think that the launch of a catalyst is going to open up some doors and we will absolutely increase somewhat our marketing expenditure to make sure that we are present to the opportunity and that's what the key is. We have to be present to the opportunity. So our field sales force, my marketing team, we are going to make sure that the word is out.

If you're thinking about making the change make sure you look at everything that's on the market and if you believe as we do that Abaxis has a better products, the disruption in the market plays catalyst potentially could cause, again could potentially, significantly help Abaxis.

Thomas Henwood – OMT Capital

So the market -- the strategy that therefore would be to that’s a little bit of money make sure you are in as many opportunities as possible. Once you get into an opportunity the pictures is we have a better machine?

Clint Severson

Absolutely.

Thomas Henwood – OMT Capital

And how do you….. do you have a kind of a slide show or whatever that shows why the machines are better? Or: what's the basic? Here’s why the machines is better.

Clint Severson

Yes, I think one of the problems we have is, we haven't seen a catalyst machine. The machine was introduced in a trade show in Orlando, but we never had an opportunity to see a demo. We got mixed reviews on it, from people that have seen it.

Thomas Henwood – OMT Capital

Okay. So to be determined.

Clint Severson

Until it is launched, until we have some performance data, it's very difficult to do side-by-side, but what we do know is that the Piccolo machine is about a third size type of the IDEXX machines so its smaller. We know it runs the Piccolo machine runs or the through the VetScan runs electrolytes. And we are not sure about where the catalyst machine got the electrolyte or not. So until the product is introduced, its very difficult to gauge what effect its going to have.

Thomas Henwood – OMT Capital

Any view to on the pricing Clint?

Clint Severson

Yeah, the pricing the only thing we know about the pricing is what’s some of the analyst have published and that is what I’ve seen any way is between $15,000 and $20,000. So suddenly if veterinaries going to be spending that kind of money on a piece of catalyst equipment, many of them are going to want to look at everything that’s up and before they buy that. So we believe that that will give us the opportunity to present the VetScan. And of course, we have been competing with the company ten times bigger than us for the last of 11 years now and growing at compound annual growth rate over the last 10 years of 36%.

So we are confident that we are up to the challenge and then as we had specially test to the rotor makes it even more advantages for the customer to buy our products. So we are going to continue where expanding the market coverage so we are present for all opportunities and continue to add innovative products that are much more cost effective than the competitor to make it in the Vet self interest to do business with us.

Thomas Henwood – OMT Capital

Thank you.

Clint Severson

Thank you.

Chris Bernard

If I can add one thing: There are two components, you got the reagent system and you have the rotor. Our reagent system is a very, very sophisticated device, and our reagent system is where we have significant advantages, we believe over, for example the slide. According to IDEXX the new catalyst will read the exact same slide. So, although IDEXX is introducing a new reader we are still competing against the same exact slide and this is where on a head-to-head basis, we believe we have a very significant list of features, benefits and advantages.

Thomas Henwood – OMT Capital

How about the reagents change there?

Clint Severson

As far as we know IDEXX is the same slide they buy from Johnson & Johnson.

Unidentified Analyst

Okay. Thank you.

Operator

You have a follow up question from the line of James Sidoti with Sidoti & Company.

James Sidoti with Sidoti & Company

Well a quick follow ups for Al and Don. Al, if you look historically the third quarter is typically your weakest quarter on gross margin because of the mix shift towards instruments. Is there any reason to think that this trend won't continue this year and that you see the margins pick up again in the fourth quarter?

Al Santa Ines

The fourth quarter, and this is we don’t say, I said we don’t give guidance, but based on the improvements that we are putting in pace in operations and the opportunities that Don has identified, it's should improved. If everything works well it should improve by margin.

James Sidoti with Sidoti & Company

And Don: can you just give us a sense, now that you've been there a whole three months. I know when you first started Cholestech there were a lot of issues that you've dealt with right at the beginning to improve the margins and improve the yields. How does this compare to when you walked into when you stared Cholestech?

Donald Wood

Jim, that’s a good question. First of all, I think the company's they were two different companies, but there are very, almost uncanny things that are similar. When I walked into Abaxis, some of the things were almost the same as the day I walked into Cholestech. There were extreme opportunities that I could see right from the get go. I see the same opportunities here. Some of the same issues that we addressed there are issues I need to address here. So, there should be a pretty straight line to success.

You have visited my former company and you know that we have a continuous improvement environment and that's not going to be any different here. There wasn't a lot of finish good, matter of fact very little finished goods the day I walked into building and we now have finished goods, back orders and things like that may have come up previously or not going to happen now, because we are at much better position. We worked hard we spent a little extra overtime, but we are in a position that, we are growth company. The CLIA waiver is building momentum and we should have, we should be able to react to that demand immediately, because everyday we don't have that box is means rotors will not be run and it's all about utilization in our gain.

So, I don't want to miss one day of those rotors. I have seen very much opportunities when it comes down under very short-term in purchasing where we have gone through new supplies already, came up with some very favorable bottom-line impacts that Clint, had mentioned in his opening statement and we will capitalize our math.

Some of them, because again, most of time you are buying, your future is several months out until your first delivery. So, you will have some impact in Q4 and a lot of impact in fiscal year '09.

So that's probably enough to show what I can say about the first eight weeks that affected this quarter that I was in the business and now we are working on this quarter.

James Sidoti with Sidoti & Company

Alright, well. You improved margins over there 400, 500 basis points in couple of years. So you set the bar down.

Donald Wood

Well, Jim. I assume, you are wishing me luck.

James Sidoti with Sidoti & Company

That's what I am saying.

Clint Severson

Great! Any more questions?

Operator

Yes, your next question does come from the line of [Tulsan Gartner] [Mutual Securities].

Tulsan Gartner - Mutual Securities

Interesting quarter there. See I just wondered: if Schein coming in sort of last on the sales chart there was devoting as many sales people to the job as you think they should?

Clint Severson

Yes Chris.

Chris Bernard

Yeah sure. Actually Schein had a very, very, good quarter. This is your second best quarter of placement, only bested by the first quarter that Abaxis had signed them up just prior to my joining of the company. So they had a very, very, strong quarter. They are fairly strong in the radiology arena and that showed through in this quarter. So concerted marketing efforts on our part, teamed up with them we did a very, very, nice job in radiology. So I know when we listed out to PSS and Henry Schein there by far away our two biggest distributors that we work with and 56 units from Henry Schein is a very good showing.

Tulsan Gartner - Mutual Securities

How many people do they have out there versus PSS?

Chris Bernard

Roughly and I have gone done this math previously, but if you look at distributors PSS about 750, Henry Schein about 600, but if you actually look at the number of folks that actually sell capital equipment will get involved in the lab business about somewhere between 4% and 6% of that total number. So they are little bit short of what PSS is at as far as total numbers go and will be short on the capital side as well.

Tulsan Gartner - Mutual Securities

Okay. Thanks a lot.

Operator

(Operator Instructions) Your next question does come from the line of David Bayer, Northland Securities.

David Bayer - Northland Securities

Hi gentlemen. One sort of clarification question, with regards to the radiology market which you actually you had some nice in roads into and congratulations on that. I just want to know: to what degree you are seeing any penetration or any competitive threats from the i-STAT? And then: if they, any thought going on there too, perhaps serving the version of the product with automatically turning off none wanted test for that segment?

Chris Bernard

Way back in August, we were less into to the marketplace and that was the main reason that we moved our [chem 6] panel down through a kidney check rotors. The kidney check rotors contains just the BUN and Creatinine. If you look at the i-STAT product they are able to offer a wave Creatinine only test, that’s probably the start of the differences, it’s a two technology and as you look through radiology and general these folks are not used to running any type of equipment, certainly not lab equipment at this level. So they need keep it really, really simple. We certainly believe that the Piccolo as we like to say that our marketing material that could run a CD player, you can a Piccolo. So we certainly believe we have the edge based on simplicity from the communication standpoint with the USB ports in the back, hook it up to LIS and practice management systems has been a plus portion in radiology. So, there are some similarities, but for the most part it really comes down to the need and the logistics and the flow of the given radiology practice, is what particularly determines the decision we make at the street level.

David Bayer - Northland Securities

Great. Thank you.

Clint Severson

Thank you.

Operator

At this time, there are no further questions. I would like to turn the conference back over to Mr. Clint Severson for closing remarks.

Clint Severson

Great. I want to thank everybody for participating in the conference call here for our Q3 and I look forward to talking with all of you in April on a great Q4 that’s coming up. So thank you very much.

Operator

Thank you. This does concludes today's conference call. You may now disconnect. Speakers, please hold the line.

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Source: Abaxis Inc. F3Q08 (Qtr End 12/31/07) Earnings Call Transcript
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