AngioDynamics Inc (ANGO) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen, thank you for standing by. Welcome to the AngioDynamics first-quarter 2013 financial earnings conference call. During today's presentation all parties will be in a listen only mode. Following the presentation the conference will be opened for questions. (Operator Instructions).

The conference is being recorded today, October 8, 2012. I would now like to turn the conference over to Mr. Doug Sherk. Please go ahead, sir.

Thank you, Camille, and thank you everyone for joining us today for the AngioDynamics conference call to review the results for the fiscal 2013 first quarter, which ended on August 31, 2012. The news release announcing the results crossed the wire this afternoon after the market closed. In addition, a separate news release announcing the acquisition of Vortex Medical was also issued this afternoon. These press releases are available on the AngioDynamics website at www.AngioDynamics.com.

The call is being broadcast live with accompanying presentation slides, and is available on the AngioDynamics website. A replay of the call will also be archived on the AngioDynamics website. To access both the live webcast and the archived replay, including the presentation slides, go to the Investor section of the AngioDynamics website and click on Events and Presentations.

If you're listening by telephone, to view the slide presentation, navigate to the live webcast, as noted, and choose the no audio, slides only option to view the slides in conjunction with the live conference call.

Before we get started, during the course of this conference call the Company will make projections and forward-looking statements regarding future events, including statements about revenue and earnings for fiscal 2013. We encourage you to review the Company's past and future filings with the SEC, including without limitation the Company's Forms 10-K and 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in forward-looking statements.

Finally, during the question-and-answer period today we would like to request each caller to limit themselves to two questions, and encourage callers to requeue to ask additional questions. We appreciate everyone's cooperation with this procedure.

And now I would like to turn the call over to Joseph DeVivo, President and Chief Executive Officer of AngioDynamics.

Thank you, Doug, and thank you everyone for joining us today on a very successful first quarter, and thank you for joining us on this call.

Today we plan on providing you with an update on our results for the quarter, highlight key accomplishments and then do a review of our financials. After that we will review an exciting new acquisition of Vortex Medical, which will add a revolutionary new technology to our peripheral vascular product offering. Following a review of the Vortex Medical I will give you an outlook for the balance of fiscal year 2013.

So I'm pleased to announce very positive operating results for our first full quarter following the acquisition of Navilyst Medical. Our integration activities have all proceeded on schedule. We completed the integration of the US sales organizations mid-quarter, completed our international structure, our new corporate structure, integrated quality systems, management teams, our operations teams, financial organizations, HR and other functions.

We continue making progress on our longer-term efficiency projects, such as our Oracle and Agile implementations, as well as key cost reduction activities to improve vendor management.

Our worldwide Oncology business was well -- as well as our international sales, showed very strong revenue performance, posting consistent, double-digit gains of 15% and 18%, respectively. Our US sales organization for peripheral vascular and vascular access is finding its footing from a very significant reorganization. They have had new product to learn, new customers to serve and most likely new managers managing them. While the structure of the organization is sound and we clearly are committed to our strategy, the task at hand required significant change management and patience. None of this was unexpected, as in-line with our guidance.

Now after all this change our focus is on rebuilding revenue momentum for the second half of the year. As I mentioned on our last call, while it should take time to regain revenue momentum as with any acquisition of this magnitude, we should immediately demonstrate cost improvements, and we have delivered just that.

On a non-GAAP basis our EPS grew 25% year-over-year, making the acquisition on a non-GAAP basis accretive our first quarter out, driving greater value for our shareholders with far greater upside potential.

First quarter we won FDA clearance of BioFlo, a novel device that in laboratory tests showed to reduced thrombus formation by 87% over standard devices. BioFlo was launched on our PICC portfolio in combination with our passive valve technology, providing a competitive advantage over standard PICC technology. We are currently working on testing for BioFlo to be added to our port and dialysis portfolios, which we will be filing new 510(k) submissions for by the end of calendar 2012.

We hope by mid-calendar 2013 to have this advanced formulation throughout our vascular access product line. BioFlo PICCs with passive began shipping October 1, 2012. And while we continue to feel headwinds with the lack of a tip location device, it is our top priority, BioFlo will help us move the PICC needle. I look forward to a very positive announcement soon on tip location.

We also announced this quarter the contract award for vascular access products, specifically our dialysis catheter line with HPG, HealthTrust Purchasing Group. Through the Navilyst transaction we built greater critical mass and share to be a more relevant partner to our customers. We have increased our outreach to key, integrated delivery networks as well as GPOs introducing the new AngioDynamics, and have been very pleased with the receptiveness and response to our offerings.

Our corporate accounts team for the first time has seen real traction. A key tenet of our strategy in the Navilyst acquisition was to improve our corporate account competitiveness, and we are seeing early signs just of that. I would expect more announcements to come.

Several weeks ago the FDA conducted a visit of our Queensbury manufacturing facility for a follow-up audit. We are pleased with the significant progress the team has made since the last inspections. In addition to the positive accomplishments of QCTA, we have full confidence in our new quality leadership team. Following the inspection we received a Form 43 and most of the observations relate to items that arose prior to the date that we informed FDA our remediation activity would be complete. These issues have since been resolved on schedule to the commitments we made to the FDA.

We look forward to our continued benefits from our Quality Call to Action as it is winding down. While we are investing in our core quality infrastructure we will be reducing our spend on the QCTA program from $700,000 in the first quarter to about $200,000 in the second quarter as it successfully transitions from a project to a core part of our organization.

Regarding NanoKnife momentum has not let up. It is seemingly increasing. Procedure volumes look good, and as more data gets into publication our pipeline for new account activity is increasing. During the quarter our pivotal trial was not approved, as we announced, but I believe that we are continuing to make progress and remain steadfast on getting a pancreas trial approved. When we achieve our next milestone I will make sure to update you.

We also added two more senior executives to our team -- Louis Mazzarese, our new SVP and Chief Regulatory Officer; and John Soto, SVP of our Peripheral Vascular Franchise. We proudly welcome them to AngioDynamics. Our team today is very experienced and we are poised for future execution and growth.

So with that I will now forward the call over to Joe Gersuk, Chief Financial Officer. Joe.

Thank you, Joe, and good afternoon, ladies and gentlemen. Our 53% as reported growth rate in the first quarter net sales can be considered on a pro forma basis. Comparison of the year-over-year performance is adjusted to include Navilyst, which was acquired on May 22, and exclude LC Beads from last year's numbers.

The schedule on page 11 of the release provides this analysis at the product line level and shows the overall result is a 1% pro forma decrease as double-digit growth in oncology sales was offset by a single-digit decline in vascular sales.

We were very pleased with the performance of our Oncology business with growth in ablation sales driven by the new microwave products, as well as 31% growth in NanoKnife sales which were $3 million in the quarter. Seven NanoKnife generators were purchased this quarter and we now have a total of 64 commercial revenue sites, which we define as a hospital which has purchased NanoKnife products in the past six months.

On the vascular side we expected this would be a challenging quarter in the US from a sales perspective, as Joe mentioned, and our first-quarter sales guidance reflected this dynamic. As the sales reps move up learning curve on existing products we expect to see progressively improving comparisons in future quarters. We will also begin to see initial US sales in the second quarter of the new BioFlo PICC, as well as the newly acquired AngioVac product.

Meanwhile, our international business enjoyed another solid quarter with 18% constant currency pro forma sales growth. This reflects strong growth in Canada, where we now have a direct sales operation and a recent GPO contract win, as well as microwave product sales under our international distribution agreement with Microsulis.

Pricing pressure moderated somewhat this quarter as average selling prices across the Company declined by 1% compared to pro forma ASPs a year ago. This compares favorably to the 2% price erosion we have seen each quarter for the past few years.

Continuing down the income statement for the quarter, gross profit totaled $39.5 million or 47.3% of sales. As you see on our income statement we separated out the cost of advertising the step-up in basis of the Navilyst inventory, as well as the cost of the Quality Call to Action Program. The step-up in amortization is now complete. At $700,000 the Quality Call to Action Program was half of the prior quarter's expense level, and we expect this cost to continue to decline significantly in the next two quarters as this incremental remediation program winds down.

Excluding these two items, the gross margin would have been 52.3% compared to 51.5% last year on a pro forma basis. Operating expenses totaled $38.8 million in the first quarter. This includes $2.5 million of acquisition and restructuring items this quarter, of which $2.2 million is associated with the Navilyst acquisition and the resulting restructuring of the Company, while the remainder relates to the transfer of laser manufacturing from the UK to the US.

We are pleased to report that all of our targeted integration goals for the first quarter were achieved. Since the transaction closed we have reduced the headcount of the Company by a total of 65 employees and we have exceeded the $5 million to $7 million net synergy goal we indicated when we announced the acquisition in January.

The restructuring of the Company is broad and all of the operating expense areas have been affected, from the R&D group where we are in the process of closing our Fremont, California R&D office and moving most of our product development functions to Marlborough, Massachusetts to the restructuring of the US sales organization, to our G&A group where we are in the initial stages of implementing a new document management system and ERP system to bring worldwide operations onto an Oracle platform by the beginning of fiscal 2014.

Throughout this process and we are aggressively managing operating costs to drive profitability and improve operating margins. On a GAAP basis we reported a $0.02 loss per share. Non-GAAP earnings were $0.10 per share excluding our Quality Call to Action Program, the amortization of the Navilyst inventory step-up, and acquisition and restructuring costs, which reflects the true operating performance of the business, absent special items. The items are detailed in a GAAP to non-GAAP reconciliation schedule included in the release.

Turning to the other financial statements, cash used in operations was $5.6 million in the quarter compared with $3 million of cash generated last year. The use of cash this quarter includes payment of acquisition and restructuring costs as well as a $10 million increase in inventories. This growth in inventories reflects a concerted effort to build safety stock of products we were in short supply over the end of last fiscal year.

Additionally, there was a substantial increase in lasers built in advance of the closure of our UK facility, and an annual purchase commitment of Sotradecol. We have a plan in place to bring inventories down by the end of the fiscal year to the level we started the year, thereby fully recovering the $10 million first-quarter increase. We ended the quarter with $33 million in cash and investments and $149.6 million of debt outstanding.

Before turning to guidance I will provide an update on two legal developments in the quarter. The first is we settled IP litigation with Merit Medical, which Navilyst had initiated last fall. While the settlement had a minimal financial impact in the quarter, it will enable us to reduce legal costs going forward.

The second relates to a development in our ongoing case against Biolitec for failing to honor its indemnification obligations under a 2002 supply agreement. The $16.5 million judgment awarded AngioDynamics two weeks ago by a court order is an important step in our long pursuit of justice in this case. While we will continue to aggressively pursue this matter, we will not record the judgment as income until we see when and how much of it we are able to collect.

As for fiscal 2013 guidance, today we are updating guidance to reflect the pending acquisition of Vortex Medical and a slight change in the phasing of the annual sales guidance. While we affirm our full-year guidance of $360 million to $360 million (sic - see press release, "$360 million to $363 million") of net sales, we adjust our phasing to 24% in Q2, while adding an extra point in the fourth quarter at 28%.

With the Vortex acquisition we expect to add approximately $1 million in sales over the remainder of the current fiscal year. In addition, we expect operating income will be reduced by $5 million and EPS by $0.09 per share, which is entirely attributable to the non-cash charges associated with business combination accounting and specifically the amortization and charges relating to the changes in the fair value of contingent earnout payments. We expect the acquisition will have a negligible impact on fiscal 2013 EBITDA.

One other minor modification was to the gross margin. We have now updated the gross margin to include the pending medical device tax. We had previously reflected this new tax in our guidance as an operating expense. It is now our understanding that the acceptable accounting practice will be to treat the device tax as a cost of goods sold item.

You will note that we also have incorporated the amortization of the step-up in acquired Navilyst inventory and QCTA in the GAAP gross margin as well. With that I will turn the call back to Joe to discuss the exciting Vortex Medical opportunity. Joe.

Thank you, Joe. So today we announced in a separate press release issued this afternoon that we've entered into a definitive agreement to acquire Vortex Medical, a privately held company focused on the development and commercialization of innovative medical devices for venous drainage and the removal of thrombus, or blood clots, from occluded blood vessels.

As we detailed in our previous call, venous disease is a core focus of ours. And we believe the acquisition of Vortex significantly accelerates our market presence and solutions in this key target market.

Nearly 1 million people encounter venous thromboembolisms each year in the United States, leading to approximately 300,000 deaths, representing a significant unmet clinical need. Vortex is currently commercializing the AngioVac system, which we believe has the potential to be a real game changer. The AngioVac system is a patented, proprietary design that facilitates en bloc or whole removal of undesirable intravascular material.

Unlike some other options, AngioVac has the potential to minimize risk of complications associated with major surgery, internal bleeding and/or clot fragmentation. AngioVac is currently cleared by the FDA for venous drainage used during extracorporeal bypass up to six hours. An application for an expanded indication to include the removal of fresh and soft emboli and thrombi is currently pending approval for CE Mark, and Vortex is currently pursuing an additional 510(k) for the same expanded indications.

The product has generated considerable interest among the surgical and interventional communities, and more than 350 cases have been performed successfully in the US to date. Vortex, and now us, will also develop next-generation technology aimed at expanding the applications of the device.

So why are we so excited? Well, you really just have to see this product in action to believe it. First, I will give you a brief description. The AngioVac system incorporates a disposable circuit and cannula. If these components are combined with a standard hospital equipment such as a centrifugal pump and a filter and re-infusion cannula, they comprise an extracorporeal circuit that enables drainage, filtration and re-infusion of blood.

Unlike other currently available devices the AngioVac Cannula uses a proprietary balloon-actuated expandable funnel-shaped tip to enhance low and prevent clogging of the drainage cannula to facilitate en bloc removal of undesirable intravascular material.

This funnel device creates a vortex or a spiraling flow which facilitates large amounts of material through smaller cannula with the suction force provided by a centrifugal pump. The en bloc or whole removal of material is really key. Thrombolytics are not necessarily required for the use of this device, so the risk of major internal bleeding for many of these patients who have had prior operations can now be treated. There is also potential to minimize risks associated with fragmentation, as there is no mechanical maceration employed. And since the procedure is performed in a minimally invasive fashion, the risks associated with major surgery for this type of removal may also be minimized.

The outcome, which you can see in the image to the right side of the page, is simply amazing. In each procedure what is removed from the patient sits in the filter to give immediate feedback on what has been taken out. Other systems simply break up a clot and send it downstream. AngioVac has the possibility to take it out whole leg surgery, but in a minimally invasive manner.

By utilizing the AngioVac system, patients may avoid significant time recuperating from major surgery or enduring often suboptimal pharmacological therapies. Not only may this lead to significantly improved outcomes, it has the potential to materially reduce the cost of treatment.

With regard to our go to market strategy AngioVac will be carried by our peripheral vascular salesforce, which will be supported by a newly created group of clinical specialists. We expect limited sales of the product for the remainder of the fiscal year, while we build the dedicated channel and pursue expanded indications with the FDA.

The AngioVac system does not require us to sell any capital. It has an average per procedure selling price of $11,500; and gross margins are very accretive to AngioDynamics' margins.

On this slide you will see the terms of the transaction. We will pay $15 million upfront and then $8 million per year for five years in guaranteed payments, and then some possible additional payments thereafter for the next five years based on sales performance of the product.

We will prepare a launch of the technology during the third quarter and expect fiscal year 2013 revenue for Vortex, as Joe said, to be about $1 million. It has no impact on fiscal year 2013 EBITDA, and will reduce GAAP fiscal year 2013 earnings by $0.09.

For fiscal 2014 we expect revenues to be approximately $10 million in sales, and will be accretive to earnings on a GAAP basis in 2014 fiscal. It can, in my view, be a business of the value of $50 million in revenue in five years with very healthy accretive margins, driving earnings-per-share accretion as well.

All in all, the AngioVac will be a true game changer for AngioDynamics. It will help the Company power our topline and our bottom-line growth as it meets a very important clinical need during the global health care environment.

So looking forward throughout 2013, our management team is focused on executing the plan. We have a clear line of sight on longer integration activities, expense energy savings, as well as building momentum on revenues throughout the year. Our revenues came in as expected and as guided in the first quarter.

Where there was less disruption our global oncology and international sales were strong. As we look forward through the year we affirm our full-year guidance of $360 million to $363 million. We do wish to adjust the phasing to 24% in the second quarter, and add an extra point in the fourth quarter at 28%, allowing our revenue ramp to occur throughout the year. This has a revised phasing to 23% for the first quarter as we just executed, 24% for the second, 25% of the overall guidance revenue in the third quarter, and 28% for the fourth quarter for fiscal year 2013.

Moving forward our structure is clear. We have growth drivers in each major salesforce and franchise with NanoKnife for oncology, with BioFlo for vascular access and now AngioVac in our peripheral vascular business -- growth, growth, growth.

We have a strong core in our operations team. We have an experienced and proven management team. We look forward to later in the year adding microwave, as we have discussed before, in the US while we accelerate our international sales and continue to pursue a tip location solution, as we have mentioned in the past.

Now it is time to execute, to let our plans gel, to rebuild our US revenue momentum, and allow our strategies to work. We very much appreciate your support and attention today, and now open it up for questions.

(Operator Instructions). Matt Hewitt, Craig-Hallum Capital Group.

Good afternoon, gentlemen.

I am sorry, operator, who is it?

Matt Hewitt.

A couple of questions. First, I wasn't quite clear on the FDA inspection. They have come through, it sounds like. Did they give you a clean bill of health or was there a couple outstanding items that you're working on closing?

In my view the audit went well. They did issue us some new 483s, which were basically items that had been discussed in the past. The period of time for the audit was from February through the beginning of September when they came in. And we had a remediation schedule that we gave to the FDA as to items that we would be accomplishing to remediate through February, March, April, May, June all the way through to August.

There were several items that were found earlier in the process before the remediation took place so, of course, the inspector has to cite us for those. But they were all -- that they identified -- the ones that were repeat -- fixed within the end of that period of time.

The biggest challenge when you do not it is ensuring that you have everything -- that you not only have a process remediated, but then you have time to run the process to show it works. And some of these things that we -- were remediated on schedule were just so new that when they looked at some of the earlier findings she had to write us up. But I would say, in my view, I was very proud of the team. I think we have made amazing progress, and we thought we would put that all into writing to the FDA.

And when will they be back to check up on the outstanding items? Is that something they will be back by the end of this calendar year or next six months?

As I -- well, I don't really know. As I mentioned at the last audit that it is very typical for them to give their findings and then come back in six months. They did give their findings; they did come back in six months, and I believe we had a very positive dialogue.

So I don't know what their next step will be as to whether or not they would come back in six months and do another audit -- is that they have just done, so I would expect that to continue.

Then, I guess, one more and then I will jump back in the queue. First of all, congratulations on the BioFlo approval that you received during the quarter. What has been the initial response by customers here in the States? And I guess, how important is that tip location device and what can that mean to the BioFlo products as you roll those out?

Right now there is a very positive trend in the PICC market of procedures moving from the IR suite into bedside nursing. And I think our competitors have done a very good job building that market. So it has been a continuing headwind for us as we should have been in this earlier.

BioFlo, I personally believe that in the next -- within the next year many companies will have tip location devices that they will -- and many companies will have different things approved. And just like an ultrasound machine, a tip location device will not be some proprietary device that someone uses to bundle to drive their revenue. I think once that occurs BioFlo will be a significant differentiator for us.

But, today, I would be misleading you if I didn't tell you that not having a tip location device wasn't on the minds of our sales force and creating issues. We should have had one in the past and we don't today. But it has been our top priority, and we have several options in the works.

All right. Thanks, I will jump back in the queue.

Brooks West, Piper Jaffray.

A question, I wanted to tease out, if we could, the components of the revenue growth. You have in the release that net sales including Navilyst, excluding LC Beads, increased 1%. Can you give us any idea how core Angio did versus core Navilyst?

How Angio -- core Angio to core Navilyst. I don't think we have it broken out that way, and even if it was, it wouldn't be a fair comparison because we have taken all those product lines and put them into different sellers' bags.

I think the best way to look at it is the US versus international in oncology the way we have laid it out. We put these sales forces together, as we told you, in the middle of the first quarter. And they're just very much finding their way and learning and coming off a pretty strong fourth-quarter close for both companies in the prior year. So they are just getting their footing.

But it was also part of our guidance. We guided for our 23% or around $83 million of revenue. We expected it to -- in the US to be slow. But where the disruption was less they really did a great job.

Okay. And then, Joe, on the gross margins, is there anything product related in the gross margin guidance reduction or is it just the footnoted items?

Brooks?

Yes.

I'm sorry. You cut out. Would you say again, please?

Sorry. On the reduction of gross margins that you got in the release -- the guidance, so we went from 52% to 53% to 50% to 51%. Is there anything product related in that or is it just the footnoted items that are impacting that?

No, it is only the footnoted items. So the med device tax comes up, and it becomes a cost of goods sold item, and the acquisition item with regard to the step-up in basis also. So it is just the accounting adjustments that are being reflected there into costs of goods. So nothing at all on the product side impacted that guidance. And we were quite pleased to see about a 70 basis point improvement year-over-year in gross margins on a pro forma basis. So we're feeling pretty good about that progress we're making.

Thanks, and then one more if I could, Joe, I know that you have got a whole portfolio of BioFlo-related products. Can you just update us again on what is coming and the timing of the rest of the products?

Sure. What we have done is we now received our BioFlo approval for PICCs, and it was very -- and very, obviously, an important approval because the core technology now is approved, and then the ability of now showing that core technology in its different applications becomes our next set of challenges, not a revalidation of the core technology.

So we are currently working on new 510(k) submissions for both BioFlo on dialysis catheters, as well as BioFlo on our port lines. We are running testing. We have had the opportunity post approval to sit with the FDA and get their guidance on what we would need to do for those other approvals. We have listened diligently and are performing exactly what they're asking.

We hope to have all that testing and those applications in before the end of the calendar year. And then we would expect some time by the beginning of fiscal 2014, plus or minus a few months, to have those other products cleared if everything goes as planned. So that would allow us to go into fiscal 2014 with a complete vascular access product line, with codes that would have BioFlo.

Great, thanks guys.

(Operator Instructions). Jayson Bedford, Raymond James.

Just on the EVLT business, it looked like up 4%. Obviously, the business had been growing faster over the last few years. What happened in that market? Maybe can you comment on volumes, price and then your expectation for the year?

I don't think anything has really happened in the market per se. I think what has happened is that we have restructured our sales organization. Our sales organization who is holding EVLT has now had to learn a whole new business with fluid management and new customers and new territories. It is usually a product line that needs to be sold and managed.

And I think if you look all the way down the categories, there is no rhyme or reason from a marketplace standpoint as to where each one of them are. We think there are basically impacted by an organization at mid-quarter had their cheese moved.

I do think -- we did mention in our last call that we were a bit concerned that our two largest markets in Europe, both the Netherlands and the UK, have decided to not reimburse certain stages of the disease, which has moved it towards a private pay. And while we were transitioning to it there definitely have been some headwinds. But, in general, we are still very bullish on the business.

Some have believed that it was also a pretty hot summer, and usually when it is a very hot summer the EVLT procedures, which require patients to walk around with stockings for a couple weeks after, those procedure volumes go down.

ButBut, we think in general, and especially within the US, there was a lot of disruption to the US sales organization. We have given them a chance to breathe; we have given them a chance to catch their bearings; and things are moving again, which is great. But it is why, again, we set our guidance to where we set it knowing that the first quarter out, especially at the end of a reporting fiscal year, would be light. So everything is as planned.

Okay, and are you still expecting that business to grow in the high-teens for the year?

Yes, we are still expecting the business to grow. We also, Jayson, are going to calendarize some rough times we had last year, and that comes up in the end of the second quarter, beginning of the third, for what it's worth.

And just on the combination of the two businesses, certainly there is some overlapping categories, whether it be PICCs or ports. In the past I think you have talked about rationalizing some lines; have you started that? When do you expect to do it? And maybe if you can comment or quantiff the impact, if there was one in the quarter?

I think now with having a full quarter under our belt, we are getting more experience based upon the global selling environment, which products they think are the winners and which ones should be for phaseout. I think the biggest risk is we did want to get ahead of it. We didn't want to all of a sudden forcibly get rid of products and make a mistake that it might be something a customer wants to keep.

So I think as we get through the fiscal year and we get through the end of the fiscal year our marketing teams will start identifying natural phaseouts. A part of our ongoing cost initiative will be a reduction in SKUs, a reduction in inventory.

But it has not been our first priority, because our first priority has been able to have the entire offering for our customers and then learn how they see the combined offering, use that market information to determine which products we phaseout, and then do that when it is evident.

Okay, so those are more towards the back half of the (multiple speakers).

Yes, it is not something we would do right away.

Okay. And then just lastly, housekeeping. The supply-related revenue, is that continuing at this level? What should we look for for the full year?

We had it at a lower level, but we really don't know. It has been pretty consistent. We just don't want to depend on it, and we had it declining through the year. If it stays at this level, it stays at this level, but we intend to honor the agreements that we have had with our OEM customer, and to see where it goes, but we don't have any plans to increase it.

Okay, thanks. I will get back in queue.

(Operator Instructions). I am showing no further questions in the queue at this time. I would like to turn the call back over to management for closing remarks.

Okay, well, everyone, we very much appreciate your support and getting on on the Columbus Day holiday. We are very excited about how well the companies have come together, the cost that we have taken out, the accretion that we are creating and the value that we are creating for shareholders.

We are also, as we have mentioned, continuing to look at novel technology tuck-ins, and I believe we have just caught the tiger by the tail. I think this -- if you just go and learn more about AngioVac -- and I have even gone and Googled and seeing how many clinicians have used it and the type of stories and how it has helped patients; it is just so exciting.

We are getting incredibly high growth, incredibly novel technology to complete our peripheral vascular strategy, to be synergistic with the vascular surgeon community and interventional cardiology community that we are now serving in that segment, as well as our core interventional radiology customers.

So the Vortex transaction, I look forward to you learning more about that and more about the product and about the things that we think we can do with it in the future.

I am proud of my overall team for the performance that they have delivered, and I very much look forward to continuing to show our operating results as we drive our profitability and accelerate our top line. So, everyone, thank you so much for being on the call, and I look forward to updating you next quarter.

Ladies and gentlemen, this concludes the AngioDynamics first-quarter 2013 financial earnings conference call. You may now disconnect. Thank you for using ACT conferencing.