Heartbeam Inc (BEAT) 2013 Q4 法說會逐字稿

Good afternoon, thank you for joining us for the BioTelemetry fourth-quarter 2013 earnings conference call. Certain statements during the conference call and question-and-answer period to follow may relate to future events and expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Act of 1995.

Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company in the future to be materially different from the statements that the Company's executives may make today. These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q.

We assume no duty to update these statements. At this time all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation.

It is now my pleasure to turn the floor over to your host Mr. Joseph Capper. Sir, you may begin.

Thank you, operator, and good afternoon, everyone.

I'm Joe Capper, President and CEO of BioTelemetry. Also with me on the call today is our Chief Financial Officer, Heather Getz.

I will provide commentary on our fourth-quarter performance. Heather will take you through a more detailed review of our operating results, and we will then open the call to your questions. I'm excited to be with you this afternoon to report on another highly successful and productive quarter during which we made considerable progress executing against our strategic objectives and delivering our sixth consecutive quarter of year-over-year growth, capping off an excellent 2013.

In the fourth quarter 2014 we experienced year-over-year revenue growth of 11% to $33 million, our best quarter of the year. EBITDA was $4.4 million, $5.2 million with stock comp added back. Highest quarterly EBITDA in over four years.

Total volume was up 16% compared to last year, with MCOT volume up 14%. Volume in the period was our highest quarterly volume in the Company's history, and we ended the quarter with over $22 million in cash.

In addition to these excellent financials, the quarter was filled with considerable operational success despite a few challenges. Those of you who have followed us have heard me outline our Company's strategic objectives on previous calls, so the investment community can better understand how we manage the business.

I would like to do that again today so you can measure just how successful we were this quarter executing on those objectives which are as follows: First, we seek to solidify our leadership position in cardiac monitoring. Second, we want to establish a leading Research Services business around the cardio corp brand and platform. Third, we look to identify diagnostic markets that would benefit from the application of our wireless platform and proprietary technology.

I am pleased to report this quarter we have made progress towards all of these objectives. As you will hear, we further expanded our leadership position in patient services, improved operations at Cardiocore and furthered our progress on leveraging our wireless technology platform.

Let's start with patient services. You may recall back in November Medicare announced the final coverage rules for 2014, resulting in an approximate 14% rate reduction, or roughly $5 million. After the cut was announced we communicated that we expected to offset nearly half of the decrease to expense reductions and that we remain focused on our growth-oriented agenda.

I am pleased to report that our goal on the cost side has been achieved and we have made tangible progress on our growth plan as evidenced by the recently announced acquisition of Mednet. At the end of January the patent litigation we had been pursuing against Mednet culminated with a structured settlement, including an admission of infringement and the sale of Mednet to BioTelemetry.

As I said in the press release at the time of closing, this was a rather unorthodox way of getting to a merger of this kind. Nonetheless, the result was an extremely positive one.

Not only does the outcome validate the value and strength of our patent portfolio, we expect the acquisition to generate an additional $25 million in annual revenue and approximately $4 million to $5 million in EBITDA, in addition to being in line with our strategic intent to strengthen our leadership position in cardiac monitoring. Consolidation of similar businesses becomes more relevant in a tight reimbursement environment.

As we integrate Mednet and BioTelemetry patient services, our primary objective is customer retention. As such, we must keep in mind that Mednet was able to build a fairly sizeable business with a product that is clearly not as technologically advanced as MCOT. They did this by providing excellent customer service and adhering to a set of principles built around patient needs. This presents a rare opportunity to fuse superior customer service values with market-leading technology and build a far more formidable organization in the process, an opportunity that will not be missed.

We see roll-up acquisitions like the Mednet deal as a great way to accelerate our growth plan, and we have the capacity to do more. Furthermore, market share expansion in advance of launching the next generation mobile telemetry system will help drive rapid market acceptance when the product clears the development and regulatory processes. Additionally, this increased share will allow for quicker penetration as insurance companies expand coverage for MCOT.

I was very pleased with the resilience of the Company to work through the impact of the Medicare reproduction. We maintained our focus on the day-to-day operations and we didn't miss a beat, which speaks volumes about the depth and strength of our patient services business. Specifically the patient services business was buoyed during the quarter by pull-through of the United agreement and implementation of a Kaiser contract.

We also continue to make progress communicating the clear cost-saving benefits of our remote monitoring services, particularly MCOT, throughout the rest of the third-party payor market. This effort was enhanced with the publication of the claims data analysis we have spoken about in the past.

During the quarter we entered into 14 new payor agreements and amendments, adding new and existing services, including INR. This is consistent with our strategy to provide a complete solution for cardiac monitoring and related services. I am pleased to report that Blue Cross/Blue Shield of Arizona and Blue Cross/Blue Shield of Louisiana now cover our MCOT service for all of their members, strengthening our position within the Blues network.

Also, we made excellent progress in our plan to launch our 14-day Holter, which received FDA clearance last quarter, and our next-generation telemetry product currently in development with our partner IMEC, a world-wide leader in nano-electronics. In recent years you've noticed that BioTelemetry has diversified, both within patient services, driven by the comprehensive CardioNet initiative, and into other sectors like research services. We have recently put increased emphasis on completing the strategic initiatives for research services, which are: to enhance our position outside of the US, particularly in Europe and Japan; add services to compliment the current core lab offering; and create a competitive advantage in terms of equipment costs and differentiations.

On the first two points, we expect to soon to be completing a few projects and moving them into an operational status. These are welcomed advancements that will improve our competitiveness in this large and growing market.

We remain excited about the business and expect research services to be a positive contributor to our growth in 2014. I will update you are on our third strategic objective, to develop new market opportunities for our wireless platform in my closing comments.

With that, I will now turn the call over to Heather for a detailed financial review of the quarter. Heather?

Thank you, Joe, and good afternoon, everyone.

As Joe mentioned, 2013 was a great year for BioTelemetry. We posted revenue of $130 million for the full year and capped off 2013 with fourth-quarter revenue of $33 million, an 11% increase over the fourth quarter of 2012.

This was due to a $4 million increase in our patient services business resulting from 16% higher volumes, largely driven by MCOT and wEvent. The additional volume can be attributed to the United Healthcare contract and the growing success of our 2:1 and wireless event devices. Partially offsetting this increase was lower Q4 revenue in our product and research segments.

Fourth quarter gross margin came in at 63 percentage points compared to 57% in the prior-year quarter. The increase in gross margin was primarily due to a higher percentage of our revenue coming from our patient services segment, which carried a higher margin. Also contributing to the increase were efficiencies gained in the patient services business, as well as leverage from the increased revenue.

For the fourth quarter our adjusted operating expense decreased slightly to $19.2 million, while our bad debt expense decreased $1 million. This was partially offset by higher research and development expense due to the work being done by IMEC on our next-generation device and increased depreciation.

With the increased margin dollars stemming from the higher revenue and lower operating expense, we generated positive adjusted EBITDA of $5.2 million for the fourth quarter 2013, a 15.8% return compared to $1.7 million in Q4 2012. Our fourth-quarter EBITDA increased sequentially and is the highest EBITDA in four years.

Also worth noting, on an adjusted basis, we were operating income positive for the third consecutive quarter and on a year-to-date basis. Again, this has not occurred since 2009. In Q4 we also generated positive GAAP operating income for the first time since 2008.

Now turning to the balance sheet, we ended the quarter with $22.2 million in cash, which was up $3.9 million compared to 2012. For the full year we generated $11.3 million in cash from operations, which was partially used to invest in new devices as well as our new operating system, bringing us to free cash flow positive of $3.1 million. We continued to make progress on reducing our accounts receivable, causing our consolidated DSO to decline to 47 days, a 14-day decline from year-end 2012.

Finally, before I turn the call back to Joe, I'd like to touch on the coming year. Coming off a strong 2013, we expect to see continued momentum in our overall business led by volume growth in patient service segment, which will be bolstered by the acquisition offer Mednet.

Offsetting the impact of this volume growth will be the previously-announced Medicare rate reduction, which we expect to have a $5 million negative impact to our top and bottom lines. As Joe mentioned, we believe that we will be able to make up this negative impact through certain cost reductions and with the addition of Mednet.

On the other side of our business, research services did not grow as we had expected in 2013. As a result, we have made several operational changes and have accelerated our efforts to add additional service lines and establish a greater presence in Europe, which we believe will enable us to reignite our growth in this very attractive market.

For the overall Company, we are looking at top-line growth of 20%-plus for 2014. And an EBITDA with a slightly lower percentage return than we realized in 2013, due to the Medicare reduction. But higher than 2013 in terms of absolute dollars.

Now, to focus specifically on Q1, as is typical, our expenses tend to be higher in Q1 in part due to the timing of certain sales meetings and payroll taxes. This year our results will also be negatively impacted by the Medicare reduction that went into effect on January 1.

The addition of Mednet in the quarter will offset the impact of the rate reduction on revenue in Q1. However, on the EBITDA side, despite the addition of Mednet and the measures that we put in place to mitigate the cut, we expect to see a reduction as compared to Q4, which is, again, not atypical in our business. In addition, our cash balance typically declines due to the higher expenses, as well as payment of management incentive bonuses and prepayment of other expenses.

To reiterate, for 2014, on a consolidated basis, we expect top-line growth of 20%-plus, EBITDA to increase in terms of absolute dollars for the full year, and to generate cash from operations. And with that, I will now turn the call back over to Joe.

Thanks, Heather. As you have heard, there have been considerable activity and progress in our business over the last year. I want to focus a bit more now on how we plan to build on this momentum.

Given our overarching vision of being the worldwide leader in wireless medicine and the delivery of health information in order to improve quality of life and reduce cost of care, we ask ourselves how we can best leverage our technology in order to create new revenue opportunities. The justification for remote monitoring solutions could not be more evident.

The pressure on healthcare systems to lower overall cost of care continues to mount. Given the proven effectiveness of remote monitoring and, in particular, remote cardiac monitoring, we believe we are in some of the most attractive markets today.

In terms of other remote monitoring markets to enter or develop, we have had a few internal projects that are now starting to mature. On our last earnings call I was asked about our activity with at-home monitoring of INR testing which is the primary diagnostic measurement used to help regulate anticoagulation medications.

While it is too soon to make revenue predictions, we are coming out of a pilot phase and beginning to deploy this service offering nationwide. In entering the INR market, we are able to leverage a good portion of our current infrastructure, including sales and marketing.

During the quarter we also entered into an alliance with Wellbridge Health, a care management company focused on reducing unnecessary hospital re-admissions and emergency room visits resulting from congestive heart failure. CHF currently affects approximately 5.8 million adults in the United States, costs the nation an estimated $32 billion each year and accounts for highest hospital re-admission rate, 75% of which are potentially avoidable according to the Medicare payment advisory commission. As such, it makes sense for us to invest time and resources to help commercialize Wellbridge's rather unique approach to this healthcare challenge.

What can you expect to see from us in 2014? We will continue to build on the comprehensive approach to the market in patient services by adding additional products and services. We will seek to maximize our opportunity with expanded payor coverage, continue to consolidate lifetime assets where appropriate, add service lines to our research services business and establish a European footprint.

To summarize, we have never been better positioned to compete and have an outstanding team in place to execute on our goals. Expect us to develop exciting new technologies and uses for remote monitoring. We believe we are just scratching the surface in advanced opportunity to bring down costs and improve patient care through the use of telemetry.

Finally, I would again like to thank all of those at the Company who helped deliver our highest EBITDA in over four years, and year-over-year revenue growth of 11% during the fourth quarter, to close out an excellent year. I would also like to welcome all of the people from the Mednet organization to the BioTelemetry team. Let's all do what we need to do to ensure another spectacular year in 2014.

With that, we will now pause and open the call to questions. Operator, we are ready for our first question.

(Operator Instructions)

Brooks O'Neil, Dougherty & Company.

Congratulations on a terrific quarter. I have a couple questions.

The first I'd like to ask you a little bit about Mednet. It looks to me, if I'm doing the math correctly, like they might have had higher, let's call it, EBITDA margins, than your Company had, Joe.

So, A, is that true? B, what impact do you think that could have on your results in 2014? And is there anything you can learn from their operation that you think will be helpful to you going forward?

Yes, Heather, you can expand more on the margins if you want. But as I recall, we have higher gross margins, say it's slightly higher EBITDA margins. And obviously they aren't carrying some of the burdens that we were carrying.

What can we learn? Brooks, the number $4 million to $5 million we're comfortable with, and that's an annualized number. Obviously there might be some more opportunity there but that is the number we're most comfortable with today.

And about $25 million of revenue, is that right?

Yes, that's about right. Now, that's about what their run rate was. That number -- you got to expect when you do like-kind integrations like this you might have a little bit of customer attrition.

We're wildly focussed on maintaining as many customers as possible, and we think we're going to be successful at that. But these like-kind acquisitions and integrations I've done in the past, you tend to have a little bit of customer attrition.

That number is still probably a pretty good number though, because we may have some upside in terms of optimizing payor contracts and things like that. So we're pretty comfortable with that number as well.

Great. Let me ask you a different question.

Could you give us a little update on how things are going with some of the new payors you signed up in 2013? I'm thinking most specifically about United and Kaiser.

And then I'm just curious if you have any comments about the outlook for some of the payors that we know are still out there that have yet to make a positive coverage decision?

United was pulling through quite well. That was the big one, if you recall, the number of covered lives.

I think they're either the largest or second largest in the country. They might be slightly lower than WellPoint now.

That was the big one for us. We're doing a really good job pulling that through. That is helping drive the volume growth that we're talking about.

The Kaiser agreement was much smaller and we implemented that in November. That's going okay for us, as well. It is just not as big a deal. It is not going to move the needle nearly as much as United is moving the needle.

The other big one that we still would like to get out there obviously is WellPoint. WellPoint Anthem is the largest Blue in the Blues network. I think there's 39 members. We probably have 10 or 11 of them.

So we still have a lot of opportunity to expand within the Blues network. Obviously if we can get the 800-pound gorilla, it would be tremendous.

Outside of the Blues, we've done a pretty good job in terms of payor coverage. Again, that's probably -- If you look at what could drive growth near term, low hanging fruit if you will, additional payor coverage is where it is at. Obviously the one big one is still left out there.

The new contracts that we got, we always sign and renew contracts. We don't talk about them all the time. The fact we signed two more Blues, we thought was significant enough to mention because of our strategy to surround that network.

They're not the biggest ones. We probably picked up about 2 million lives in the process, 2 million covered lives. So when you compare that to 70 million to 100 million at United, depending what number you use, it is relatively small, but it is progress.

Sure. That's great.

And then lastly, I'm curious. Obviously Heather mentioned the changes in research services. Can you say anything about what you think you might be able to do to revitalize the sales process over there? Or what's going on now?

Yes. It's a healthy business, Brooks. It just didn't grow. We expected $3 million to $4 million of growth out of business the first year we had it.

In hindsight that was probably a little too optimistic for the first year of owning a new company like that. And it ended up to be more flattish than we anticipated.

A couple of dynamics in the industry. There is some of the larger pharmaceutical companies are contracting with fewer and fewer providers. If you have more services, it tends to position you better.

Our win rate is still as good as it used to be. We probably bid on slightly fewer pieces of business in 2013 than we did in 2012, and that's something that we're rectifying. A lot of it is basic salesmanship and leadership, things that we've made some modifications to.

I think strategically, the most important thing for us to do is get more competitive in the marketplace. One of those things is to add some additional service lines. You'll hear us talk about that hopefully in the near future.

And establish a better footprint from a logistics and project-management business development standpoint, primarily in Europe, but also in Asia. But Europe is where you really got to have a better presence.

Great. Thanks again. And again, congratulations.

Thanks, Brooks.

Alex Silverman, Special Situations Fund.

I think you mentioned in your prepared remarks about new agreements signed during the quarter that at least one of them was an INR contract. Can you give us a little bit of info around what was signed? Even if you can't name names, what it looks like?

Yes, what we're doing is just -- well, first of all, INR was part of the United agreement. What we're doing is whenever we sign new agreements, we're attempting more so than in the past, to list all of the services that we offer. And INR being one of those services. That's part of it.

The other thing we're trying to do is modify as many existing ones as possible to add INR. On all of our new contracts, we include it.

So as we roll it out, in any healthcare services or healthcare products business, one of the biggest challenges you're going to have is, do you have payor coverage. That is always the first pushback you get from your sales organization.

We just don't have INR on this particular contract. We have a lot of payor contracts in the institution. We just need to go back and amend them to add this product, which takes some time. But, so far it's going pretty well.

How many, rough ballpark, lives do you have covered of those that you had covered for cardiac?

Alex, I couldn't tell you that. I apologize. We'll get you that information.

That's fine. To dig in for a minute on your 2014 guidance, 20% growth is roughly $155 million, which would be roughly what Mednet should add. I can assume that is a baseline with growth on top of it from United and other patient services, plus your research service business?

Yes, we're trying to give you guys some guidance, because we know we haven't given you much in the past. And we debated that number a lot. We were going to give you a range. If I give you a number, I want to hit it.

If you correct our 2013 number and Mednet's 2013 number for the Medicare cut, you have to pull back off of that 130. So the 20% already has some mid to high single-digit growth built into it. You have my word we'll move heaven and earth to try to get more.

Okay. And then the EBITDA margin that you think you'll be slightly below the 2013 EBITDA margin. Heather, last year was 13%?

Yes, that's correct. That's really as a result of the Medicare reduction. Again, that drops right to the bottom line.

Totally get it. I just want to make sure we're talking about the same thing.

Yes, same thing.

Great. Thank you, guys. Congrats.

Thanks, Alex.

Jan Wald, Benchmark.

Good afternoon, everyone, and congratulations on the quarter. You surprised us.

One of the things that I wanted to ask about was in patient management you said services is higher margins. In the past you thought maybe about a couple of (technical difficulty) What other services might you add besides INR?

There is a lot, Jan, to present well, when you look at them in terms of being able to eliminate costs and drive better care with the application of remote monitoring technology. You could brainstorm about those.

The areas that we've invested time and money in are INR and now CHF. Because we can see a meaningful business opportunity in terms of there is a reimbursement set for INR, there is a market for it. We're not coming in and reinventing the wheel.

We think we have some intriguing ideas on how to create competitive advantage in that market. And translate that into cost advantage for customers, and other types of advantage.

And then CHF obviously has been such a hot topic with Medicare's recent change in how they'll reimburse for re-admissions, specifically not reimbursing for re-admissions within 30 days of discharge for patients with congestive heart failure. So there's been a demand for that as well.

We have some great partnerships in the marketplace that we think we can capitalize on to take advantage of that. Some of the other products that we like are around sleep, diabetes. You can go on and on.

You tend to focus on the chronic conditions, because they're the ones that are really costing the most money in the marketplace. If you can create ways to introduce the type of monitoring technology that we have to improve the service level and eliminate costs, we'll do that.

But they're a little bit more difficult because now you're talking about more market creation, more business development work that takes longer and longer to do. We're not that big, yet.

So really my approach to this is, is there a benefit to the market? Is it sellable? And can we create some revenue and margin opportunity for the Company?

So going forward for the next 1 to 2 years, we should see you more or less focus on INR, on CHF. And seeing what you do with those businesses, with the other opportunities, like diabetes, further out and waiting for a bit. Is that the right way to think about this?

I would. But we're also doing some development work in other product areas. Maybe even closer to cardiac monitoring, different uses of cardiac monitoring that we're just not prepared to talk about today.

I can't tell you everything we're doing, Jan. (laughter) I like to surprise you today because I'm assuming it was a good surprise.

Yes, it was. And in terms of the INR, I was going to ask how you were going to roll that out. But I guess the way to think about that is that you are going to try to get the current customers you have to use it.

And as you go through the customers, you're going to try to get them to sign the contracts. There is not a marketing effort outside of those two kinds of things. Is that true?

No, not today there's not. It gives us ability, again, to leverage a spend that we've already made on our sales and marketing infrastructure. It is something that we can add to their bag.

Possibly cross-sell opportunity to consumers, but that is yet to be developed. We'll see. But right now the primary go-to-market is you get physicians to recommend the service to their patients.

Okay. And in terms of research services, you've said in the past that you have to get into Europe. You've said that there are research lines that you want to add.

Where do you see that business going? Do you see it continuing to grow? Is that cardiac core lab where you're adding different imaging capabilities and different analytical tools to that? Or do you see yourself expanding into data management and those kind of things?

Yes, I think you just hit the nail on the head, Jan. Probably in order of priority, imaging would be first. Other ePRO or eCOA type of technologies are hot properties right now, as well, for data management.

They're a little too hot for my taste. But they are good service lines that compliment what we're doing. A little bit further afield, I think, is respiratory but it is not uncommon to see respiratory and cardiac core labs partner together as well. Imaging would probably be at the top of my list.

Okay, thank you very much. Again, great quarter.

Thank you, Jan.

Bruce Jackson, Lake Street Capital.

First, I wanted to focus in on the CardioKey products. So if I heard you properly, this is a patch form factor and it's going to launch in Q2. Is that right?

Yes. Well, I hope to launch it somewhere around Q2. That is the timetable today.

Great.

Let me explain a little bit more about that. We're doing an awful lot of things in the Company right now. The acquisition of Mednet was a little bit more opportunistic than it may have seemed.

There's some things that you have to -- you have to divert your technology teams to integration which may cause slippage in projects like CardioKey. We're going to try to keep them on schedule as best as possible. But if I'm making a choice between maximizing my opportunity integrating an acquisition that's made, and bringing a new product to market, you know logically where I'm going to end up.

That is the way we're managing internal resources right now. If we can get external resources to help, we'll do it.

But CardioKey is one that we need some of the internal folks to work on. While it's an attractive market for us, it's going to be a product line addition or expansion. It is not going to change the world.

Okay, got it. And then the first version is going to be a Holter and then the IMEC enhanced version would follow after that. Is that correct?

Yes, sir, that's correct. And that's a telemetry product.

Right. Are you still anticipating getting some gross margin advantage with this new form factor?

Yes.

Okay. Would you care to quantify that?

No.

Not at this point.

Not right now. It's going to come in more toward the end of the year, Bruce, so it is really not going to impact 2014. So as we get closer we'll be able to give you more info on it. But it will definitely have an impact.

Okay. Then did Mednet contribute any revenue in this quarter?

In 2013, no. It will in the first quarter of 2014.

Okay. And then the $25 million that you estimate that you put out there, does that include the Medicare haircut?

Yes.

Okay. Did INR contribute anything in the quarter?

De minimus, very small.

Very small. Okay.

And then finally with the Wellbridge collaboration that you've got going, how would you see that unfolding over the course of 2014? Talk to us a little bit about your relationship, your involvement with that company, and what are some of the milestones that you will be looking for in terms of deciding whether or not to take this thing out to a broader audience?

Yes, it's a relatively early stage. They're in beginning of pilot phases with a few large healthcare systems, and reputable healthcare systems who are very intrigued by their technology, as are we.

We need those pilots to unfold and look at the findings from them before we talk about next milestones. Our initial relationship was in the form of investment. It converts to equity, based on certain things. I don't want to elaborate on all of that right now, but that is the way we set it up.

There is not as much that we can add to them, yet, until the pilot phase is over. As soon as the pilot phase is over, there is a lot of inherent capabilities in BioTelemetry that will help accelerate their plan.

Okay, great. Thank you very much.

Sure, thanks, Bruce.

Dan Trang, Stonegate Securities.

Congrats on a great quarter. I was wondering if you could provide some color behind, I think, Joe, you mentioned that the remote monitoring industry was consolidating. With everything going on with the Mednet acquisition, are you guys talking with anybody else? Is there anything else going on regarding acquisitions?

Well, if there was I wouldn't be able to elaborate much on them anyhow, Dan. I would say that in general I think that there remains opportunities to do more consolidating in the industry.

It started to get a little dispersed over the last few years. And now it's starting to consolidate a little bit more.

Obviously when you have reimbursement reductions, it is going to help to be a bigger Company where you can offset some of that with scale through diversification. Some of the other guys are probably a little more challenged by it. But I think there is a decent amount of opportunity.

Regarding the big elephant you're hunting, WellPoint, can you give any color behind any discussions or progress, if any, that you've had pursuing WellPoint?

I can not, Dan. I can only tell you that we're about as annoying as we can be. We're constantly providing updates, trying to keep them informed of what is going on.

I think most people in the industry are fairly moved by the sizeable return on investment as evidenced by the claims data analysis, which was recently published in a peer review journal. That has all been provided to them. They keep things close to the vest.

So, again, we stay on top of them as much as possible and try to push the thing forward. I don't want to give you a forecast or a prognosis, other than we're working as hard as we can. Sometimes it defies logic that people aren't paying for things that actually save them money, but these are large bureaucracies.

Okay. All right. Thank you.

You're welcome.

Alex Silverman, Special Situations Fund.

Can you help us think about litigation expenses? Where you stand with Scottcare and whatever else you might have on your plate?

Yes, I think the majority of the patent litigation expenses are behind us.

Yes, most of them in Q1.

We'll have some in Q1. But the majority of them are behind us.

Scottcare, I would say that our position in the Scottcare case was powerfully enhanced by the resolution with Mednet. We'll see how that one goes. But I don't anticipate racking up a lot of legal expenses there. That's most of it.

Okay. That's helpful. Thank you very much.

Sure.

Thank you. At this time I'd like to turn the call back over to Mr. Capper for any closing remarks.

Thanks, operator. Thank you, everybody, for your continued support and interest in the Company. We're going to close the call and we will speak to you at the end of next quarter. Have a great evening. Operator, that concludes the call.

Thank you, sir. Ladies and gentlemen, that does conclude your program. You may disconnect your lines at this time. Have a great day.

If you joined the conference late today you may listen to the conference call via digital replay, which will be available through the investor information section of the BioTelemetry website at www.biotelinc.com until Wednesday, March 12, 2014. Have a great day, ladies and gentlemen.