Executives
Tony Bihl - Chief Executive Officer
Ross Longhini - Chief Operating Officer
Mark Heggestad - Chief Financial Officer
Analysts
Thomas Gunderson - Piper Jaffray
David Lewis - Morgan Stanley
Jonathan Block - SunTrust Robinson Humphrey
Tycho Peterson - JPMorgan Americas
Jayson Bedford - Raymond James
Bruce Jackson - RBC Capital Markets
Thomas Kouchoukos - Northland Securities
Greg Simpson - Stifel Nicolaus
James Sidoti
American Medical Systems Holdings, Inc. (AMMD) Q2 2008 Earnings Call July 29, 2008 5:00 PM ET
Operator
Good afternoon my name is Josh and I will be your conference operator today. At this time I would like to welcome to the American Medical Systems Second Quarter 2008 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. (Operator Instructions). Thank you. Mr. Bihl, you may begin your conference.
Tony Bihl – Chief Executive Officer
Well good afternoon everyone, this is Tony Bihl CEO of American Medical Systems thank you for joining us on todays call to discuss American Medical Systems second quarter results. With me this afternoon are Ross Longhini, our Chief Operating Officer and Mark Heggestad, our Chief Financial Officer.
Now before continuing I must preface all comments with the Safe Harbor Statement. Some of the statements made today will be forward-looking and are made under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Those risks and uncertainties are referenced in today’s press release and described in our most recent Form 10-K and other recent filings we have made with the Securities and Exchange Commission.
With that statement we can move forward with reviewing the AMS business as covered in our press release issued earlier today. American Medical Systems posted a strong second quarter continuing several promising trends we saw on the first quarter. Total second quarter revenues were $129.8 million, an increase of 11.5% over comparable period of 2007 and at the top end of our guidance of 123 to $129 million. Earnings per share for the second quarter were $0.19 for an increase of 90% over the second quarter of 2007 and above our guidance of $0.13 to $0.15. Notably, these favorable results combined with improving operating leverage and strong cash management enable us to generate 39 million in cash from operations and to reduce our debt by $46 million. With three quarters of delivering on expectations, we believe these results are indicative of the predictability that AMS is committed to at the start of the year. Mark will provide more color on these figures in a few minutes.
Before we go into the formal business -- into review of the business, I would like to give you my observations after three months on the job. Since joining AMS in April 29, I have met with employees throughout the organization, visited our sites in Europe and San Jose, California, talked with numerous customers, many doctors, and some of our mobile providers. I have attended American Urology Association Meeting and in particular I have spent considerable time with our team evaluating the laser therapy business.
This process was confirmed to me what I believe when joining the company that American Medical Systems business is solid with significant growth opportunities. AMS has a diversified portfolio of several high performing product lines, which hold leading physicians in attractive markets, all focused on part of medical. Specifically four of our businesses have annual sales of around $100 million, three of which men's continence, women's continence and erectile restoration are growing at above or significantly above expectations. Like most portfolios, the performance of different businesses can vary over time for a variety of reasons. In our portfolio, the laser therapy business is currently underperforming and it's an importantly earlier focus for us. This balanced portfolio was clear in our sales performance. Total revenues grew 11.5% led by a very robust 19% in the base business, offset by disappointing decline in the laser therapy business.
We believe in the value of this portfolio to bring stability and to our growth and performance over time. Our fundamental challenge is to effectively execute two somewhat different business models in our portfolio. One an implantable devices business comprised of our continence, erectile restoration and prolapse repair product lines, and two, our capital and trailing disposables business including our Laser Therapy, Her Option and per matrix product lines. Now AMS has mastered the business model for implantable devices through 35 years of technology leadership, close connections to physicians and profitable growth. AMS is relatively new to the business of capital equipment and disposables and we must master the differences required in operating the business and addressing those market while leveraging the strength of the AMS brand of physicians.
Looking at the portfolio in these ways helping to guide us in our strategic planning business and in formulating the plan for our capital equipment and disposable business. We have taken a number of actions in the past year to build our laser therapy business. We have implemented effective patient outreach and awareness programs, which have begun to show promise. We have made some positive steps forward to strengthen our relationships with our mobile providers. We have also undertaken extensive reviews to better understand the dynamics of the BPH therapy market and physician practice. We remain confident that GreenLight has retained its position as market leader in laser therapy for BPH because it offers clearly beneficial clinical outcomes. We acknowledge however that we have not fully capitalized on the potential of this business and we are committed to make the fundamental changes required to master this capital and disposable business model. We will be developing and implementing changes over the coming three to six months and we are confident that we will be successful.
We will outline more of these plans for laser therapy on our third quarter conference call. While we focus our efforts on the laser therapy business, it's important to make very clear that we will not compromise the investment and the management effort needed to support our implantables businesses. We understand the value of the portfolio and the need for balanced optimize all aspects of our business. Let me also make clear that this is a great business today. Our implantables business grew 22% in Q2 and our men's and women's continence and prolapse product lines all achieved record quarters.
Based on the strength we are seeing in many of our product lines and a comprehensive review of our business, I want to reaffirm our annual guidance that was provided at the beginning of this year.
While Mark will provide you the details of our guidance. I want to make clear that I have participated in mid year forecasting and I am committed too and fully supportive of the guidance that Mark will present surely.
Our objective for the remainder of today’s call includes the following. First, Mark will provide details on our chief financial results for the second quarter and guidance for the third quarter. Then Ross will provide an update on our operational performance. Finally, I will return to wrap up and our regular question and answer session will follow on to allow you time for further review of our quarter.
I will now turn the call over to Mark.
Mark Heggestad - Chief Financial Officer
Thank you, Tony. As we reported earlier today our second quarter 2008 revenue was $129.8 million representing an 11.5% increase over $116.5 million in the comparable quarter of 2007. Our second quarter revenue profile was very similar to what we experienced in recent quarters. We had strong growth in our erectile restoration and female continence products, an unprecedented growth in our male continence product line. Prolapsed repair in uterine health rebounded from first quarter’s performance, but the growth rate in these product lines are still not at expectations. And finally, as Tony already noted the laser therapy product line continues to perform below expectations.
Second quarter men’s health revenue of $84.9 million to 8.5% over the comparable period last year. Excluding laser therapy from mens health result in growth of 19.8% over the second quarter last year. This strong revenue performance was driven by continued success from the 700 MS product line for Erectile Restoration and the Artificial Urinary Sphincter and Advanced Sling System used to treat male incontinence. The laser therapy product line declined 11.4% in the same quarter last year.
Second quarter last year was a strong quarter so comparable to the prior year difficult. However, with that said, laser therapy was well below over expectations. The shortfall came from continued weakness in US as well as the stiffening in select markets in Europe. The Green light Technology continues to be the most highly recognized innovative solution for BPH. And when decisions are based on clinical outcomes we have a high success rate. However, competitive pressures are certainly impacting the market as competitors focus on price as differentiator.
At a minimum competition has slowdown the decision making process with the trailing of alternative systems. We believe the economy may also be impacting capital purchases in inventory management. This appears to be particularly true in certain European countries and may be impacting the US Mobile provider buying behaviors. As Tony noted in his comments and Ross will elaborate on later, we continue to address this market and our plans to returning growth in laser therapy.
Women’s health return to double digit growth with second quarter revenue of $44.9 million growing 17.5% over the comparable period last year. Driven by continued momentum from the MiniArc sling system used to treat female incontinence. So let's repaired bounce back to high single digit and uterine health grew slightly year-over-year.
From the geographic perspective total US second quarter revenue grew 5.5% over the prior year to $89.8 million. Total international second quarter revenue grew 27.7% to $40 million. Favorable foreign exchange rate comparison between years at a $3.9 million to the international growth. International revenues now consistently represent more than 30% of our total worldwide revenue and represent the biggest growth vehicle for AMS.
The company recorded second quarter net income of $14 million or $0.19 per share. Thus compares to net income from continuing operations for the same period last year of $7.3 million or $0.10 per share. This represents a 91% increase in earnings growth over the prior year and on a year-to-date basis net income of $22.2 million has doubled over the prior year.
As noted in prior conference call we are emphasizing the cash earnings per share metrics in 2008. Due to the significant impact of certain impacts of certain items reflected in net income that do not impact cash. Cash earnings per share for the first six months of 2008 was $0.43 compared to the cents generated in the same period last year and represent significant progress towards the 2008 guided EPS, cash EPS of $0.89 to $0.99. The second quarter 2008 gross margin percentage was 77.5%. This is a gross percentage of 76.7% reported in the comparable period of 2007. The 2008 second quarter gross margin represents the continued high margins we have historically experienced with the base business combined with relatively lower laser therapy margin. Although we continue to experience improvements in laser therapy margins driven by several initiatives to improve the reliability of the laser therapy product line as well as manufacturing efficiencies, a portio of the margin improvement realized thus far has been offset by decreased production volume as a result of the sale of the Aesthetics in the recent expiration of the related supply agreement. Also impacting manufacturing volumes are carefully plan reductions and inventory levels which I will highlight again later. 2008 second quarter operating income margin came in at 21.6% versus a comparable margin a year ago of 18.2%. Throughout 2008 we will leverage the investments we made in selling, marketing and G&A in 2007. As we move through 2008 we anticipate total spending in the second quarter in terms of absolute dollar will be relatively similar to the spending in the first half of the year.
2008 second quarter interest expense and amortization of financing cost of $8.2 million compared favorably to $10.3 million incurred in the second quarter of 2007. This decreased interest expense is driven a combination of reduced debt, we have now paid off $42 million of our debt in the first half of 2008, as well as a reduction in the floating interest in our senior secured debt.
In early 2008 we guided that total debt pay down in 2008 would be approximately $50 million. The ensure success in managing working capital and leveraging operation we are confident in moving that guidance up to $70 million. Included in the second quarter royalty income was a onetime royalty payment related to licensing of our RF Technology, this will not be a recurring royalty stream, however, it does represent continued effort to maximize value from our extensive intellectual property portfolio. The 2008 year-to-date tax rate is 39.5%, up from the full year 2007 non-GAAP adjusted rate of 38.2%.
The primary item impacting comparability between years is the loss of the federal R&D tax credit in 2008. We continue to project our 2008 full year tax rate will be slightly under 40%. We ended the second quarter with a cash and short term investment pounds of $42.4 million. Cash generated form operating activities in the second quarter of 2008 was $39.1 million compared to $5.1 million in the same period last year. Contributing this increase in cash provided by operations was a $8 million reduction in inventory during the second quarter. The company has put in place several initiatives to optimize our inventory level. We saw noticeable improvement in all manufacturing locations, and our second quarter inventory management performance represents a continued improvement coming off the significant gains already made in the first quarter. We also experienced well improvement in our account receivable management in the second quarter. DSOs have improved six days since the same quarter 2007. We saw noticeable improvement in our US and Europe DSOs. These improvements were partially offset by an increased proportion of our revenue coming from international market which has significantly larger payment term, longer payment term than US.
Despite this trend and shifting revenue we continue to make improvement in individual geographies and we are confident we will achieve our DSO improvement of decreasing DSOs across all geographies by the end of 2008.
In addition to the significant progress and working capital management also contributing the cash provided by operations was continued leveraging of the 2007 investments in the sales, marketing and G&A infrastructure. As we continue to drive initiative to optimize our investment in these areas. We anticipate continued momentum in our cash generation and debt pay-down. The company paid $35.9 million on our senior secured debt in the second quarter, bringing the quarter end down to $272 million. These prepayments will provide for improvement against future financial covenants and reduced interest expense.
In fact, our current projections indicate our total leverage to EBITDA of ratio will be under followed by the end of 2008. A significant milestone as we endeavor to gain financial flexibility in our capital structure. This will represent significant progress since the closing of the LaserScope acquisition when our total leverage ration was 6.3 time.
Capital expenditures during the first six months of 2008 were $3.1 million compared to $12.5 million in the same period last year when we were completing the expansion of corporate headquarters in upgrading our ERP system. We continue to expect 2008 full year capital expenditures to be less than $15 million.
I would now like to look to the future, as Tony mentioned and Ross will elaborate we have a lot of work ahead about in maximizing our opportunities in our laser therapy business. However, with that said, we are inbound by the continues success of our other key business, the significant leverage we are building of our operating structure, and the moment in our balance sheet and cash-flow.
Accordingly, we remain confident in our previously provided guidance of 2008 revenue in the range of $500 to $520 million, and we are increasing the bottom end of our earnings per share guidance from the original guidance of $0.57 to $0.72 up to $0.62 to $0.72. Similarly, we are increasing the bottom end of our 2008 projected cash earnings per share to the range of $0.89 to $0.99. This guidance excludes the impact of any unusual non-recurring type charges such as IPRD and milestone payment related to the prior acquisition.
To that end, we anticipate making in milestone payment of approximately $7 million in the second half 2008 related to the 2006 acquisition of a BioControl. This payment represents continue progress towards the milestone laid out in the development of the excess electrical stimulation devise. Ross will elaborate more on our progress in this area later in the call. The entire amount of this payment will be accounted for as IPRD. As it relates to the third quarter of 2008, we are guiding revenue in the range of 114 million to $120 million, and earnings per share in the range of $0.11 to $0.14. Again, this EPS guidance excludes the impact of the approximately $7 million milestone payment which will be recorded as IPRD. The above third quarter guidance reflects the seasonality we consistently experience in our third quarter.
Finally, I bring to your attention a recent development that will impact our 2009 net income and earnings per share. As most of you know the FASB recently finalized new rules on accounting for certain convertible note. This will impact how we account for our $374 million convertible note. This new accounting will become effective for us at the beginning of 2009 and will require retroactive restatement of our financial statement beginning with the year we obtained in note.
Although, we have not completely analyze the entire expense of the accounting change, our initial estimate indicate that these new requirement will impact our 2009 reported GAAP EPS by approximately $0.13. It is important similar that this accounting change will have absolutely no impact on our cash flow. I will now turn the call over to Ross.
Ross Longhini – Chief Operating Officer
Thanks Mark. I would like to take few minutes to review key operational topics related to each of our product line. I will start it, our Erectile Restoration product line continues to meet our revenues expectation. The700 MS is the main se of this product line and fuels most of the growth. The new malleable female prosthesis will be launched in this current quarter, the third quarter. This product combines the best feature of our three product lines, earlier this year we launched new surgical tools that are intended to improve ease of implantation for all of our penile practices and additional surgical improvements will be released during the fourth quarter.
We continue to utilize community health talks to drive awareness of our erectile restoration products are also adding male incontinence and BPH discussions to these events. And in case you missed it, Johns Hopkins a physician featured our 700MS penile prosthesis on the day time television program The View recently when I did segment on men's health and erectile dysfunctions.
A particular note a male continence products continue do spectacularly well in the market. This product line accounted for the biggest portion of AMS's revenue in the second quarter. We posted record sales for AdVance during the quarter up 26% from the previous high water mark which was set in the first quarter.
We have been extremely pleased with the publicity that AdVance has been receiving lately including the five abstracts that were presented at AUA and the two articles that have been published in the Urology Times. We are also very pleased that our artificial urinary sphincters set a quarterly record in both, in terms of revenues and units as the AUS with InhibiZone is rapidly replacing the standard AUS.
In contrast and as previously discussed on this call our prostate health business has not met our revenue expectations. In order to better understand how to grow this business we have completed several market research studies and we are now in the process of developing action plans based upon this data.
I would like to share a few of the key insights from the latest US study with you. This anonymous study which included 300 randomly selected urologists from the US found that GreenLight has a very strong presence with urologist and holds dominant market share amongst urologists. With these 300 urologists about their anticipated usage of 10 different BPH procedures during the next 12 months, they told us that the fastest growing procedure is expected to be GreenLight and that the fastest declining procedure is expected to determine. Further the physician’s preference for GreenLight is driven by its efficacy, new spaces, ease of use and its ability to be delivered as an outpatient procedure.
Nearly three out of four urologist preferred to administer laser BPH procedure in either an ambulatory surgery center or the hospital. One of the primary reasons the GreenLight is not used more often; however, has to do with the perception that trough procedures are better for larger gland, which may represent about a third of the total BPH procedures.
This survey also indicated that competition is heating up. We believe that price has been used as the primary basis of differentiation by our competitors. In order to provide more access to GreenLight we have began to place more councils on mental and fiber based programs.
As I mentioned this data will be utilized to support the changes we plan to make within the laser therapy business. Regarding clinical data on GreenLight we continue to be quite pleased with the data that has been published about it. In fact we have 21 presentations at the AUA this year, including the presentation of the first ever five year clinical outcomes data with GreenLight. This study concluded that GreenLight is as effective as (Churg) it has an improved adverse event profile. We are currently developing GreenLight HPS abstract that will be published at the world congress urology in November.
We continue to implement both patient outreach and physician refill program for GreenLight. In Q2 alone we have 38 community health talks for BPH and placed patient information in 300 urology offices. While the information is yet anecdotal we are finding that many of these have resulted in patients being treated with GreenLight. We will continue to measure the success of these programs and then determine which methods are most effective and should be increased.
Our laser engineering team continues to make progress on the enhanced GreenLight fiber and expects to launch this product later this year. This new fiber has been developed for a longer useful working life. In addition, I have been very impressed with the work our engineering and service teams have done to improve the reliability of the HPS system. Specifically our installed global base of HPS consoles are now nearly 10 times as reliable as when we first made the Laserscope acquisition. In addition, HPS console and fiber cost continues to improve although much of this improvement has amassed by the increased overhead absorption due to lower than expected production volume as Mark had earlier indicated. With that said, we do expect gradual improvement throughout the remainder of the year with regards to production cost.
Finally, we continue to work together to strengthen our business relationships with the mobile providers such as by collaboration through patient and physician outreach. Additionally, we have implement additional training for the clinical reps affiliated with our mobile providers.
Let me now turn to our development stage products for use in the prostate cancer surgery continuing. Continuum, which is used to reduce the time required for an anastomosis of the urethra and bladder in a radical prostatectomy procedure has recently undergone a few minor changes. Incorporating these changes, we will continue our clinical experience this quarter outside the US. Continuum does have a CE mark and we plan to conduct a phased rollout outside the US and we will begin the US IDE for this product next year.
Turning our Women's Health business. Our female continence product line continues to perform above expectation especially MiniArc, which continues to accelerate with the second quarter sales setting a new record, up 41% from the previous high. This product is still early in its rollout both domestically and internationally, so we are encouraged by the result and particularly optimistic that additional regulatory approvals and reimbursement coverage will further bolster uptake of MiniArc outside the US.
We continue to make progress with Accessa, our neuromuscular stimulation device with application in interstitial cystitis and female urge incontinence. Based upon recent clinical data, we made a few minor improvements to the device and technique and plan to launch Accessa for interstitial cystitis outside the United States during the first quarter of next year. The study for US regulatory approval of female urge incontinence application is slated to begin in 2009 as well.
The Prolapse Repair business rebounded in the quarter after a somewhat soft first quarter. While we still believe that growth is moderating as the market for mesh augmented repairs matures, we expect that our new Prolapse product, Elevate, will reaccelerate growth. The Elevate posterior product has been in clinical evaluation for several months now with over 100 patients enrolled and the results are very encouraging. We will begin physician training this week and plan a phased launch later this quarter. The Elevate anterior prolapse product will begin clinical evaluation later this year with an anticipated rollout in the first quarter of 2009.
Within Uterine Health, Her Option, our cryoablation treatment for abnormal uterine bleeding rebounded from the first quarter and was up slightly year-over-year. As we noted in the last call, we realigned Her Option's sales force during the first quarter and have changed the focus from counsel placement to probe utilization. As we have discussed before, Her Option does require market development to educate both physicians and patients about the benefits of in-office endometrial ablation procedure over traditional hospital based treatments. Therefore, growth will be continued to be moderate. Finally, our colorectal product line is comprised of our artificial bowel centre and the development stage product Topaz a less invasive device intended to treat mild-to-moderate echo incontinent.
As mentioned previously we are conducting feasibility studies and we will have more information regarding the Topaz clinical results in our third quarter earnings call. With that summary of each of our product lines I will now turn the call back over to Tony. Tony, back to you.
Tony Bihl – Chief Executive Officer
Thank you, Mark and Ross for your commentaries. In summary we are very pleased with the second quarter and the breadth of our financial performance across several of our product portfolio businesses. While we acknowledge that our capital equipment in term disposable business requires a different strategy, the growth instability in the rest of our product family gives new confidence in our outlook for the balance of the year, and laser therapy status as an underperformer is we believe temporary, we have the resources and the technology necessary to execute a turnaround that what we know is a compelling technology addressing a meaningful market opportunity. We will continue to focus on driving both our portfolio businesses, leveraging our cost structure, generating cash flow and paying down debt.
So now before opening up our call to the question and answer session, in order to allow as many analysts to ask question as possible, please absorb our request that you ask two questions, one leading question and one followup and then return to the queue. Thank you for the consideration, operator, please provide the instructions for questions in the line.
Question-and-Answer Session
Operator
Thank you. (Operator Instructions). And your question comes from the line of Tom Gunderson.
Tom Gunderson
Alright, and I will see if I can riddle these 14 questions down to one closer followup. The – I think what I would like to do Tony is focus on the impact of the economy and maybe tie that in not across the board unless you want to, but to the BPH business. We’ve been a little concerned about elective procedures things that can be deferred in a tough economy, $4 gas high food cost et cetera, and high co-pays that are overlapping on this even in a Medicare situation, have you guys seen anything from our mobile providers or other that would lead you to believe that the number of men going on for surgical, our classy surgical procedure is down across the board in the US?
Tony Bihl
Thanks Tom for the question. As Mark commented earlier on the potential that economic conditions maybe having some impact on capital equipment purchases that effect the ways of therapy business and we don’t have a lot of more than anecdotal data at this point about that, other than that we have seen limited factual evidence because it had any specific impact on others of our businesses, we’ve heard some indications that some procedures were delayed, but follow on tells us that those procedures weren’t permanently delayed. So, no clear indication that other than in potential invasive therapy business that the economy is having much of an impact.
Tom Gunderson
Okay. But just to clarify…
Ross Longhini
Tom just to add on to that, on the international market side we took -- I had mentioned that there was an impact in the few selected areas in Spain or in Europe and now if you watch the Spain economy that’s been on our world of even more selling hours and if you – our HPS business has been primarily in the private pay area Spain which is really hurting us from a economy related standpoint, but even as we try and make enrolls into the public sector given Spain’s national economy that’s talking those problems. So those is no doubt impacting those, certainly we know that some evidence in some of the international market.
Tom Gunderson
Okay. And then I will stick with the followup on how do you pay for these procedures by asking with the recent CMS release for outpatient procedure codes proposed, did you guys any of your codes, anything that was particularly higher than you expected or particularly lower, was it all within our range?
Tony Bihl
Well the courage, at this point as you know there are proposed weights at this point in time and I don’t think we have seen any big surprise as we have seen for example outpatient hospitals with some very favorable reimbursement, some procedures increasing between 5 and 18% in the outpatient hospital, we invite about 5% AMSA 100 and 707% and 18%of advance in other product such as that. We are also seeing life increases in the ambulatory surgery center which as you probably know on sort of U2 of this full year inclined and we see in terms of procedures we declined 7 and 32% growth in those areas. Again no big surprises but we are pleased with the information and proposal that are coming at CMS right now.
Tom Gunderson
Okay, that’s my two, thank you.
Tony Bihl
Thanks.
Operator
And your next question comes from the line of David Lewis.
David Lewis
Good afternoon guys.
Tony Bihl
Hi David.
David Lewis
Two quick questions, the first is, I think the Laserscope issue is pretty well embedded here. So Ross or Tony shipping the margin you’ve had some pretty aggressive margin plans relates to Laserscope where are we on that sort of 500 to 600 bips expansion that was possible are we 100 to 200 bips in or is this all going to be sort of back half of the year?
Mark Heggestad
David this is Mark I will into that one, we you know, quite honestly we’ve made progress such that we are well there on the improvement that we anticipate, and as I mentioned that we are dealing with right now are the volumes that are going through the factory, you know, we are dealing with Aesthetics business which we no longer have, which quite honestly accounted around 25% to 30% of our volume last year. We have been taking down inventory, we will get that inventory to an appropriate level, so that wont be impacting as quite as much. And then obviously we are having a shortfall in revenue and so, that’s having an impact on our volumes as well. But we do anticipate in the second half of the year that some of those negatives would go away, but we’ve already, I mean, if you take a look at our gross margin, its been improving between half a point and a percentage point now for, I think we are on six quarters in a row. So we are seeing those gain, we are seeing them slowly and we will continue to see slight margin improvements as we go through the second half of the year. We may not be excited..
David Lewis
Are getting worse…
Mark Heggestad
GM still looking at getting worse.
Tony Bihl
Correct.
David Lewis
On a go forward basis. Okay. And then second question, your international is now emerging as, it’s been emerging as a significant driver growth of 30% of sales. From an infrastructure have we fully loaded that’s been to support this infrastructure, we’re going to have to rebate in the back half of this year, and related to that Mark maybe this is a dual question, you’ve got 30% of your business overseas, you’ve got a 40% of tax rate and what can we do about that? Thank you.
Mark Heggestad
Yeah, good point on that. You know, as we go through the remainder of this year we fee that we certainly have the infrastructure in place to support the revenue we have. In effort this year has been all about, as you know we made significant investment through 2007 and to certain degree we’re going to catch up by driving efficiencies through our operating expenses here in 2008. So we don’t anticipate any need to increase the infrastructure, to support the revenue in 2008. As we move into 2009, yes, we’re going to have to continue to build on our international, especially given the significant amount of growth that we anticipate coming out of international going forward. Good point on the tax rate, you’re right, we operate at 40% that is – that is a tax rate that none of us can except, we are putting a level of urgency around looking to international manufacturing and we will be doing that. We’re really taking advantage of that and we will probably be taking advantage of it in (Inaudible).
Operator
And your next question is from the line (Inaudible).
Unidentified Analyst
Hi good afternoon guys.
Tony Bihl
Good afternoon.
Unidentified Analyst
I guess I would start with the question that is on everyone’s mind which is, can you outline first a little bit just what happened in Laserscope this quarter and if you can kind of break it down into United States versus international and maybe you can talk about the trends in boxes separately from fibers of contributors to the growth?
Mark Heggestad
This is Mark. First of all, as I noted in the commentary, US, which as well know has been down slightly, quarter-after-quarter was down even more so this quarter. So that trend has continued and it was probably a little bit exaggerated from what it's been in prior quarters. And by the same token, international, which has just had significant growth each quarter definitely softened here in this quarter. So it continue to have growth but certainly not to the degree that it had been and that was again primarily driven by to certain countries within Europe, it wasn't across the board from an international perspective, but it was some of our larger countries, Spain and UK specifically.
As it relates to just a little bit more color around laser therapy, first of all, we have mentioned that we are seeing a lot of price pressure on the competitive front. With that said, we have not dropped prices. In fact, our pricing was as strong as ever. There was no trend downward from a pricing perspective. From a -- both a consoles and a fiber utilization standpoint especially in the US, we saw decline in both of those areas.
Unidentified Analyst
Okay. And last quarter you gave us a split between the growth rates in US and international GreenLight businesses. Can you do that for us again this quarter?
Mark Heggestad
We are going to get away from that level of granularity.
Unidentified Analyst
Fine. Fair enough. And I guess for Tony, just maybe a little bit bigger picture. You outlined you had a few months to work on learning the business. Just wondering, I know it's still early days, but what are maybe the one, two kind of key initiatives you are looking to sink your keys into specifically in the Laserscope business since everything else seems to be going great, they are going to get growth again in that business.
Tony Bihl
Well, thanks for the question. Yeah, I think when I began I said my focus would be in this laser therapy area and it certainly has been that for the last three months and clearly that’s the area we are I think with my background experience in capital equipment business and add some value here. We work together as team but look at what we can do to go forward and I think the first piece has been as we mentioned here this recognition that the implantables business is one business and with this capital and disposables business is another complete business model and perhaps it's important that we understand the need for different processes in terms of how we run those businesses. We are looking at -- we mentioned some fundamental changes in how we operate those businesses and we are looking everywhere from the range of structure to process and how we organize ourselves to go forward in the laser business. We are boarding off a very strong foundation we have got. As we have mentioned here in the call, our market leading product with solid clinical outcomes clearly a lot of evidence to point to why this procedure could clearly replace some more invasive procedures in the marketplace and so we think that there is some market dynamics but also some execution internally that we can do more effectively and I think we talk about various is the focus on the selling process in this business where you really have two selling processes, one for the capital equipment and one for the ongoing management of the consumable. And what I think we intend to do over the next 30 to 90 days is put together specific plans for how we will address that. So that is clearly in our sites and again I want to reinforce that there is clearly a sense of urgency on our part about it, but we want to make sure that we have captured all of the inputs and collective experience of this team as we put our plan together in the near term, but I think we are beginning to get it be on this.
Unidentified Analyst
Okay. Thank you.
Operator
And your next question comes from the line of Jonathan Block.
Jonathan Block
Hey guys, good afternoon.
Ross Longhini
Good afternoon.
Jonathan Block
I think first question I will just jolt in on Laserscope, the way that I look at, the initiative seem to be taking a while to take hold and you guys alluded to some pricing pressure this quarter. So I am just wondering and this is more I think a big picture question. You made the acquisition maybe about two years ago. Can you talk to how you view this market in terms of the size at the time of the acquisition and then what you know now, how you view the size of that market and how it's changed, is it more a function of just a smaller addressable market or has this become a lot more competitive than you thought and smaller in terms of from a pricing perspective?
Mark Heggestad
Sure Jonathan. When we first look at this acquisition a couple of years ago, over two years ago now, you know, we looked at the entire global market as surgical BPH procedures to be roughly in that 1 million patient range per year. We still believe that that number is a valid number, we still believe that that opportunity of patients that are currently either getting Cherubs or you know, microwave treatment of laser treatment. We also believe that part of all addressable market or all those guys that are out there on drug therapies and again we believe that that market is significantly larger than the number of surgical procedures maybe 8 to 10 times as large and probably growing rapidly now with all the advertising that you see for some of the drug that are out there. So we believe that all of those basic market fundamentals remain the same. However, having said that, do believe that it’s been a little bit more difficult to convert physicians from Cherubs to laser. Yes definitely, I mean we expected that that would ramp up more quickly. You know, having said that, you know, the market research that we done recently indicates that -- that strongly indicates that physicians will tend to use more lasers and specifically GreenLight in the coming months and years and probably -- mostly they expect to do less Cherubs. So that’s encouraging, but the rate with which that conversion happens is probably is slower than what we had anticipated.
Secondly, frankly we didn’t anticipate some of the other laser competitors that are out there when we are looking at this two years ago, we certainly new that there are other laser competitors out there we expected that our primary competition at that time will be with the homely in lasers specifically in this country Prince since Boston Scientific distribution of luminous product. Having looked back we don’t expect -- we don’t think that they have been the one that created the most stir in the market, in fact its primarily been people that have resorted to prices key differentiator by BioLitec and (Revoltec) laser specially and they are in the market. I mean, when we looked at those other laser procedures, the encouraging news is when we got our sales reps and we asked you know, when you go to an account and this is on somewhere on a global basis. When you go to an account and they are evaluating multiple lasers, but the GreenLight versus via BioLitec a GreenLight versus Revoltec and after we have done evaluating if they do both you know, what's our hit rate and it sounds like our hit rate is very high, if they try both. If they simply make a financial decision, we are typically not going to be the one that comes out ahead on that. We still have a ways to go in order to be able to sell the overall class of procedure. So maybe I will add some more, when I answer, when you are asking your question, but that’s an overview of how we see the market and how we have seen a change over the last two years.
Jonathan Block
So very helpful. I appreciate the color. And just to shift gears, certainly to move over to what was working very well. On the male incontinence side the numbers were huge and sort of two part question, one, what do you think maybe a more sustainable level of growth is on that side of the business and then where is this growth coming from? I think in the past you used to give us some more some physician metrics, is it current docs, is it new docs and you know, lastly would be how are you getting the awareness out there, are you guys taking any initiatives or is that coming from the physician? Thank you.
Ross Longhini
Let me first start with a little bit about where what we are giving in a market and awareness and you know, then I will turn it over to Mark to talk a little bit about what our expectations for the future growth in this area. As everybody I mean the growth in this area has been just phenomenal and the fact it catapults at all the way upto be our #1 revenue generating line is just remarkable. We are doing a lot more to drive awareness in this space as I briefly alluded to earlier is that you know, we have included the discussion of male continence more and more in the community health talks outreach programs that we do. We are out there. We do a fair amount of advertising with physicians in this area, we train quite a number of physicians. I believe on our male continence products this -- just this year we have already trained 300 new doctors on male continence products. So it’s a pretty big numbers on physician training. And so we do have a number of outreach programs advertising programs some of the doctors do some of their advertising and then go for communities. So that’s been a key area for us especially since the introduction of AdVance, because now we feel likely have a product that can be done my more physicians in the AUS, its not quite as technically challenging, and certainly is a product that is more likely to be acceptable to the patient. So we think it will continue to grow and Mark you can give some color on what we think those lower growth rates might be?
Mark Heggestad
I don’t know that I will put our actual growth rate, I mean, forward growth rate at this decision again. On our long term basis as Ross just talked about, we introduced a real game changer when we brought AdVance out, and when you do something like that you’re picking a whole new segment that you didn’t previously have, and so, we’ve got a lot growth being driven by that, in AdVance where we weren’t – where we didn’t have a therapy for mild moderate incontinence, when we introduced AdVance that’s now been about six quarters ago, we started to develop a market that just hadn’t been addressed before, and that’s certainly allowing us to continue to provide these very high growth rate.
With that said, I think the good news is I think someone concerned when we anniverseried on this a couple of quarters year we wouldn’t continue to see the growth, ad if anything the growth has been accelerating as the news that has got out there and we have been able to develop the market further and make people aware of it. The other good news is there was certainly a concern that there would be a little bit of cannibalization on our AUS system which continues to demand very high ASCs and high profit margin. And the good news on that is we haven’t seen the client either and in fact, we continue to increases on the AUS as well. So it’s all good news, we certainly don’t anticipate that the segment is going to continue at 40% plus. Before we introduce AdVance, now we are growing this, you are growing the entire continence business, it was balancing around somewhere around a high single digit to low teen, I don’t know that we’re going to see a drop already back down of that anytime in the near future either. So you will get quite a big range, but it’s just hard to predict when you are developing a brand new market.
Jonathan Block
Okay, great fair enough thanks guys.
Operator
And your next question comes from the line of Tycho Peterson
Tycho Peterson
Hi, thanks for taking the call. Ross, in your comment you talked a little bit about shifting the sales program related to the emphasis on fiber based programs, can you just give us a sense to what percentage of the business comes from those today and where you think the business model could go?
Ross Longhini
Yeah, I will probably not take – I think for the question, I would probably not going to give you an exact percentage, it surprises to say that it’s a meaningful percentage, it was a meaningful percentage in Q2 and certainly has a impact of lying some of the revenues as you place those doctors in the upward on the rental program in future quarters and/or higher fiber pricing. So you know, they ship to that, its on area that to intent to actively promote and you will use when we have to, it’s not a preferred way to address the market. But it certainly is a way that helps us remain competitive with some of the other ledges that maybe in place, the boxes be in place with most of the income coming from the private.
Tycho Peterson
You talked last quarter about some retreatment studies being done, can you just comment on that?
Ross Longhini
Yeah sure, there was a study, maybe there was two studies and I don’t know I will recall right now coming out of Europe that looks specifically at the 980 nanometer wavelength lasers versus GreenLight the 980 as a remainder at BioLitec’s, I am not sure that BioLitec was used exclusively or not in this study, but anyway the 980 versus the 532 is basically what the study was, and that rather that study show that retreatment rate was the 980 nanometer wavelength laser within the first six month were again from memory and I think that are allowing 12%or so which was significantly higher and you know treatment in the first six months GreenLight are very, very, very low. So there is – and there is a physiological reason why we and that happens and so, we think that physician that are using the GreenLight laser, the way that they will intent to use that remove a fair amount of prosthetic material and they don’t get a lot of further tissue damage, whereas when you are using a 980 nanometer length physiologically you end up with quite a bit of tissue damage beyond the vaporization zone which causes sloughing of that tissue and further urinary bleeding problem. So we do believe that – we still believe very strong that in evidence that is available, is very much in support of GreenLight and clinical evidence that will become available we will continue to support GreenLight.
Tycho Peterson
And as we think, in terms of the elevate launch and how you are looking at the market growth going forward, can you give us a sense as to where you’re seeing areas strength and prolapsed in particular?
Ross Longhini
Yeah, sure right now on our current base of business of Apogee and Perigee we have actually continue to see very nice growth rates albeit the market so much small parts outside the United States. Market in the United States are seeing not very significant growth rate at all. We do believe however that there is a pretty competitive marketplace out there for Prolapse products particularly in the US and Elevate I strongly believe will be very nice job competitive share once in advance based on our initial indication. Now just to caution everybody a little bit as I mentioned the first product we’re going to Elevate is actually a Elevate posterior product. The posterior product is about a third of the market where the anterior is about two-thirds. And so that posterior we’re going to launch first may have not been what we would have like to do from a business standpoint but I was telling it seems to one that happen t come through the pipeline first, and on that we’re going to be doing training this week and get launching in a faced approach throughout the remainder of the year, whereas, we’re about roughly two quarters behind that in type of rollout with the anterior product. So we are confident about the ability of that product that #1, its all against competition and take share and then we also believe that the product has certain features in it that make it more similar to what a lot of gynecologist and urologist do in this cases of posture, primarily gynecologist the one that procedures they do that are traditional procedures, this product is more similar to those. So they are currently on advance with less augmented players we do believe that this might help grow the market somewhat.
Tycho Peterson
Okay, thank you congratulation.
Operator
Next question comes from the line of Jayson Bedford.
Jayson Bedford
Hi, good afternoon, just couple of quick question for you. First, just looking at the different segments of meaning implant versus capital equipment, I am wondering if you’re considering splitting up this of course and I guess how hard or easy would that be to do?
Tony Bihl
Thanks for the question Jason, we already do have a fairly focus sales force certainly in the laser business in the US who had dedicated to certainly GreenLight product and so, that wouldn’t be a task for us, and I think it’s a matter of – well that group is take a look at how we execute sales in the marketplace, but we will stop short of making any indications of what we’re going to next in terms, how to report the market, I think its important just to recognize that there is a different approach that capital equipment sales does something slightly different then again reinforcing the ongoing utilization that requires of day-by-day follow up and resettled process, and so, our focus would be to make sure we execute our process. We have to remember though that we have to leverage these great relationships that our base business reps have with he doctors out there. And so, we need to do this point away to attack a different selling process to still leverage the base of business that we have more broadly in the AMS brand.
Jayson Bedford
Okay. And then just quickly for Mark, your guidance in the past you’ve talked about assumed growth rate in your laser therapy businesses that relates to the overall kind of growth rate for fiscal ‘08 do you care to update that?
Mark Heggestad
Yeah, I mean, back to the growth rate when we put the 2008 guidance out, we think -- we indicated that we would be able to hit our guidance based on growth rates that are relatively similar to what we saw in 2007 even though we had -- we were certainly working on initiatives to try and drive that growth rate higher. Obviously in the third quarter we had a little over 3% growth and now in the second quarter and 11.5% decline. As we put our guidance together for the remainder of the year, we are still obviously very confident in our total year guidance, but the mix is that we are certainly not anticipating the mix will be what we were originally anticipating when we put the full year guidance together. We will get higher growth rate out of the implantables business and we won't get nearly the growth we were anticipating here at least in 2008 and as we look at laser therapy business, we had about little over 3% growth in the fourth quarter, we had about 3% growth in the first quarter. We do feel that the second quarter was an anomaly, two reasons, not the least of which the comparable to last year was a difficult comparable. And as we look to the second half of the year, we are not building into our guidance growth rates that are any more than somewhere in the flat to low single digits until we are going to assure ourselves that we can really accelerate the growth in this business.
Jayson Bedford
Okay, that's helpful. Thank you.
Operator
And your next question comes from the line of Bruce Jackson.
Bruce Jackson
Hi guys. First a question for Mark on the impacts from the convertible, you said $0.13 in 2009. Do you have a similar impact calculation for 2008?
Mark Heggestad
Yeah, I think this is really rough, but I think as you go backwards, it's about a penny. So I think 2008, it's $0.12. Quite honestly, when you look at 2010, it will be about $0.14 and then remember in 2006, we only had to convert for about half a year. So when we have to say 2006, it will be $0.06.
Bruce Jackson
Okay. And then the other question is about this change in the Laserscope strategy that you are going to outline next quarter, is it going to have any impact you think to the 2008 financial guidance and are you contemplating any kind of programs that might have any kind of financial impact, for example, direct consumer advertising or promotions, anything like that?
Ross Longhini
Let me take that one. Clearly, we are same behind the guidance that we replaced including all the plans that we are thinking about in terms of how we approach the laser therapy business. And just to make sure it's clear, in the next three to six months, it's our intention to begin rolling out what our plans would be to address these issues and we will be taking action along the way there. So I want to make it – I want to create any expectations that in the next call you will hear some clear set of definitive plans. There will be plans that will rollout over time rather than one single big announcement, but all of the plans we have at this point for 2008 are dialed into the guidance that we provided.
Bruce Jackson
All right, thank you.
Operator
And your next question comes from the line of James Sidoti.
James Sidoti
Good afternoon, Mark. Can you hear me?
Mark Heggestad
I sure can. Good afternoon to you.
James Sidoti
Just I want to make sure it's clear, this change that FASB is pushing through, this sounds similar to the options change that pushed through a while back. It will change the GAAP numbers and have no impact on cash flow, is that correct?
Mark Heggestad
Yeah, you are absolutely right. I mean, the difference is as you know the options number impacted almost every company out there whereas there is a limited number of people that have the types of converts that get impacted by this. They don’t hear as much noise about it, but you are absolutely right in how it flows through the financials.
James Sidoti
Okay. And then can you just give us an update on the size of the sales force for the core products? It sounds like those products both men's and women's have been growing very well first half of the year. Are you adding sales people as a result?
Ross Longhini
Jim, we are not actually adding sales people. I mean we went into this year, we have ramped up our sales force across a number of different product lines last year, notably the laser therapy area and at the size of the sales force where we ended 2007 has remained very very stable, a very constant and by plans throughout 2008. So somewhat impressive with that team is that team has been able to drive all of that growth with the same number of reps in the products. So a lot of efficiency gains. Keep in mind a lot of those reps that we grew last year in the corporate were relatively new for instance and they weren't up, so they were just coming into their zone, if you will. So we've been very impressed with the leverage we've been able to get out of the sales force.
James Sidoti
All right. Thank you.
Operator
And your next question comes from the line of Thomas Kouchoukos.
Thomas Kouchoukos
Hi, good afternoon guys.
Ross Longhini
Hey Tom.
Mark Heggestad
Hey Tom, good afternoon.
Thomas Kouchoukos
Good afternoon guys. A quick question. I don't know if you will split this one out anymore either, but I think last quarter you provided us with what the gross margin was for Laserscope versus the score business. Will you be willing to do that?
Mark Heggestad
Yeah, I don’t want to get into quite as much granularity as we have in the past, but you know, the core business again this quarter was almost was very close to 85% again and the laser business was down under 50% and so as we have discussed we certainly continue to have opportunity in the laser business and its going to be difficult to improve on the margin we are getting out of the implantable business.
Thomas Kouchoukos
Okay. And then looking back at the bigger picture BPH market as a whole I know some of the mobile players that we have talked to AUA had commented and it wasn’t with respect to GreenLight or heating therapies, but more of that just laser BPH procedures were down just from the number they did per month was steadily coming down overtime. Keeping that in mind I am not sure if that’s across the board or just a small and that we were able to talk to, are you seeing in contraction of the market or I know you still have the dominant share, but are you losing share to some of these competitors that are out there?
Ross Longhini
Based on the data that we have Tom, we see some mobile providers are actually growing and some mobile providers are declining. So I think it is somewhat dependent on which mobile providers you are talking to. Overall our business with mobile providers has not been growing near what our expectations are. So we are not exactly sure that you know, because there are simply doing fewer procedures. We do know certainly in the last two year as I've mentioned earlier, we do know that two years ago we weren’t seeing Revoltec in the marketplace, we weren’t seeing Biolitec in the marketplace. So certainly there is no doubt that some of the share has gone to those two competitors.
Thomas Kouchoukos
Okay. And then I will just speak one more here. Can you comment a real quick on the TherMatrx business and what that did this quarter? Thanks a lot guys.
Ross Longhini
TherMatrx business was very much inline with our expectation and our expectations for that business was that it was going to be slightly down from last year. I think we have mentioned on our previous earnings calls that TherMatrx have kind of found only a basis points and it has done at that level of sales or couple of quarter now in a row. And it’s still performing in the Q2 at that level.
Thomas Kouchoukos
Thank you very much.
Ross Longhini
Okay.
Operator
And you next question comes from the line of Greg Simpson.
Greg Simpson
Great, thanks. Good afternoon guys. First of all a little housekeeping, can I double check, you guys said on the male continence business the strong growth we saw this quarter that was the biggest, did I understand right, it was the biggest revenue item in the quarter, I can't make that number work?
Ross Longhini
Yeah that is correct. If you look at our -- the way you get there is you have to account business in 7 different product lines no six, it depends on how you are doing prostate health and prostate helps improve laser therapies or not. When we specifically look at the four biggest business we have, those four being male continence was our #1 business in terms of revenue in the quarter. I won’t necessarily give the rest in order, but the other three are the erectile restoration, female continence and laser therapy. If you look at those four as business product lines I would say the four biggest and male continence was the largest revenue generator in the quarter for the first time probably since 1972 when all we had with the AUS.
Greg Simpson
Okay, that’s helpful. So male continence was bigger than erectile restoration?
Ross Longhini
Yeah, which is just sort I said, I am just absolutely thrilled by that. I mean not -- you don’t like to feel them all grow, but its just phenomenal, how much that has grown.
Greg Simpson
Okay. Okay, and then you do overturn my moment to next question and Ross you just talked about the mobile providers, you guys obviously have changed your tact on that front here in the last quarter. So can you – and obviously it didn’t impact the business in the second quarter to settle these, but can you at least give us some detail as to – are you having the lock on that front, are you making any progress on kind of repairing those damage relations?
Ross Longhini
Yean, I will initially answer part of that question Greg and then I would led Tony to take in with some of the activities that we have going on frankly even this week. We believe that we continue to make progress in this area, we’re out there training for instance their mobile provider clinical rep so that they are more able to know ins and outs of the picture, more able to understand the benefits associated with GreenLight and that would be help to be extension of our sales force. Having said that, when you look at a year-over-year comparison and I hate doing this, because it seems like I am trying to make its uses, but the fact of the matter is our mobile provider fiber business in Q2 of '07 was an outlayer, it was a big number. They pulled in a lot of fibers in that quarter a year ago and so, our comparable of mobile providers in year-over-year basis is a very difficulty one, and specifically with regards to fibers with US mobile provider. And so, that business can be a bit lumpy, you got a mobile provider and they decide a order of bunch of fibers in one quarter or not and there can be pretty swings in revenue. So, it’s a little bit hard to tell what exactly is happening with their business, I know some of them are mobile providers, we’re then quite pleased with the way the relationship is growing and where they’re growing their business and other one, we still have work to do.
Tony Bihl
Yeah, it did have everything as Ross said, maybe just trying to deal, kind of take the – clearly we want to restate that the mobile providers are an important part of our strategy to get this quick technology I think to the market place and provided to the physician. So they play a key role in the market place, there is some tough history and what I think our team has been doing a very fine job but I want to continue, is to rebuilt some of those relationship and we had some great examples of bringing new mobile provider back on to the old and having them bring in the marketplace, I hope it will continue their efforts in that area, as well as there is some who are up and some who are town and our intension to meet with them and talk about how we together share a common objective and that is how to grow this business and its important that we have common objective because we have to work side by side in the marketplace. We have met with some of them we intend even this week to meet another one of those providers, another important one, and I think whatever we do to take this business forward in the strategy going forward they have to be a key part of helping us to find solution. So I am looking forward to working with us obviously.
Greg Simpson
Okay thanks, I can sneak one more and Tony I am putting thus far here a little bit and if you defer answer for 3-6 months I understand that, the margin improvement at LaserScope has obviously been slow to accrue and what that has to do with volume, but can you implement the changes that you are alluding and still see meaningful margin improvement in that business as you go forward?
Tony Bihl
Yeah I think what we are doing at this point in time is building the financial models for what this go forward need to look like, and clearly I am convinced that there is a way to make it work, a way to make – to put together a growth plan and a cost plan that makes this business in this model work. Clearly utilization or fibers that part of our program needs to see improvement, and so, I think we see some queries and we can make real good progress and build a successful model. A good progresses has been made on reducing the cost of those fibers and the consult and I am quite sure we don’t need to make more progresses as we go forward in the market place, but we got a good team working on it and we are trying to get in the market they now had, where after the market we have some cost of the option to address we will address it in non-optimistic result that are workable.
Greg Simpson
Okay, thanks so much.
Operator
And there no more questions at this time.
Tony Bihl
Very good. Let me again close by again thanking all of you for joining us on the call today and for your continued interest in American Medical Systems. Our portfolio products focused on (Inaudible) combined our technology leadership. It was a very robust base to build on over the long time. I look forward to talking to you again in the next quarter. Thank you very much.
Operator
And this concludes today’s conference call. You may now disconnect.
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