Koninklijke Philips NV (PHG) 2004 Q4 法說會逐字稿

Good day, everyone and welcome to Lifeline Systems Inc. fourth-quarter 2004 results conference call. Just a reminder, today's call is being recorded. With us the President and Chief Executive Officer, Mr. Ronald Feinstein and Vice President of Finance and Chief Financial Officer and Treasurer, Mr. Mark Beucler. At this time I would like to turn the call over to Mr. Mark Beucler.

Thanks, Jim, and thank you everyone for joining us this morning. We will begin with a review of our fourth-quarter and fiscal 2004 financial results and Ron will follow with an update on our business and operations during the quarter. Then we will be happy to take your questions. I would like to remind everyone that the matters we are discussing include predictions, estimates, expectations, and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially. You should refer to our recent SEC filings and public announcements for a detailed list of risk factors.

Lifeline's fourth-quarter and full-year financial results which we announced after the close of business yesterday continued our record of consistently generating double-digit increases in year-over-year revenue and net income.

Total fourth-quarter revenue grew 12 percent to $35 million as compared to 31.4 last year. Fourth-quarter 2004 net income grew 44 percent to $4.5 million or 31 cents per diluted share, up from $3.1 million or 22 cents per diluted share that we reported for the comparable quarter in 2003. Total revenue for the full year 2004 rose 12 percent to $130.5 million from $116.2 million for 2003.

Net income of $12.5 million or 88 cents per diluted share for the 12 months ended December 31, 2004 increased 22 percent from $10.3 million or 76 cents per diluted share for the full year of 2003.

Our recurring service revenue grew 13 percent to $27 million, up from $23.8 million in the fourth quarter of 2003. For the full year, recurring service revenue grew 14 percent to $103.2 million from $90.7 million a year ago. The year-over-year increase in service revenue was driven by organic subscriber growth and by an improving revenue profile for our new subscribers. Our year-over-year subscriber count increased by 10 percent to 423,000 at the end of 2004.

Product revenue in the 2004 fourth quarter of $7.8 million was up 8 percent from last year's fourth quarter. For the full year, product revenue was $26.5 million, up 10 percent from 24.2 million in 2003.

The year-over-year total gross margin increased to 56 percent in the fourth quarter, a 200 basis point improvement. For the full year total gross margin increased by 280 basis points to a 55 percent. Service gross margins, one of the key drivers of profitability at Lifeline, improved by nearly 500 basis points to 53 percent from 49 percent in Q4 last year.

The improvements in service gross margin reflects the benefits of productivity improvements, cost reduction initiatives, better infrastructure utilization, and the scalability of our systems in our core business. The desired result is an increase in the Lifetime value of our subscribers. Owing to these same factors, full year service margin in 2004 rose nearly 500 basis points from the comparable period in 2003.

Product gross margin decreased to 62 percent in the fourth quarter and for the full year to 65 percent primarily as a result of shifts in product mix between senior living and our traditional health-care equipment. As expected, our fourth-quarter SG&A expenses increased to $12.9 million from $11.1 million in the comparable quarter in 2003. For the full year, SG&A rose to $50.9 million from $42.9 million in 2003.

As a percentage of revenue, year-over-year SG&A increased to 39 percent and was driven by the following activities. First the incremental SG&A from our PROTECT acquisition in June and to a lesser degree a small personal emergency response service acquisition we made in January contributed almost $1.9 million to the increase.

Second, additional spending related to marketing initiatives contributed almost $2 million. These expenditures included our health-care direct marketing campaigns, e-commerce strategies, the launch of our new care partner 6700 communicator and the addition of three marketing managers. Next we spent over $700,000 for Sarbanes-Oxley compliance in additional legal and audit fees. We spent $600,000 on our previously announced holding company reorganization and we spent over $1 million on expanding the talents in our IT organization and promoting several managers to lead our senior living division.

Q4 was another good quarter for building our liquidity when measured by operating cash flow and balance sheet. The improvements reflect our continued focus on working capital drivers. Specifically during the quarter we took a number of significant actions that contributed to our strong results. We reorganized Lifeline intro holding company which strengthens our corporate infrastructure and permits greater flexibility in efficiency in the management and financing of existing operations, future businesses and acquisitions.

We also transformed our primary business into a Massachusetts business trust. This action was designed to create several potential benefits for shareholders including a better alignment of the Company's operations with certain tax law provisions.

Lifeline also benefited by lowering our effective tax rate to 27 percent for the fourth quarter of 2004 and 36 percent for the full year from 40 percent in the fourth quarter and full year of 2003. We expect our normalized effective tax rate to be approximately 39 percent in 2005 compared with 41 percent if we had not reorganized the Company.

Also as previously announced we assigned the remaining lease receivables on our balance sheet, $4 million, to a well-known leasing company under a private-label program called Lifeline Capital. This transaction produces several benefits for Lifeline. It takes us out of the long-term lease financing business, eliminates the need to support systems in personnel, allows us to offer a broader array of financing options to equipment purchasing customers and improves the liquidity of our balance sheet. Under this private-label program, Lifeline will realize a DSO of two or three days on leased equipment.

In addition we have continued to focus on migrating subscribers to credit card payments and strengthening our relationships with our channel partners, which has resulted in overall improvement in our DSOs in 2004 which fell to 33 days from 35 days in 2003. Our inventory turns also improved to 3.8 times as compared to 1.9 times in 2003.

Net cash provided by operating activities was $9.5 million as compared to 450,000 in the fourth quarter of 2003. Nearly half of the cash flow from operations resulted from growth in profitability indicative of our success at controlling operating expenses and improving gross margins and the remainder from improvements in working capital. Additions to property and equipment for the fourth quarter 2004 were $2.9 million and totaled 9.9 million for all of 2004.

We ended the fourth quarter with a cash position of $47.4 million, no debt, and working capital of $48 million. This compares with a cash position of $21.4 million in working capital of $33.5 million at the end of 2003. On a net basis, we added $26 million in cash in 2004 owing to strong cash flow from operations, assignment of the leased receivables, and other working capital improvements.

This concludes our financial review. With that, I will turn the call over to Ron.

Thanks Mark. This morning as I comment on our performance in 2004 and our outlook, I'm going to concentrate on three things, vision, focus, and execution. Those of you who have followed Lifeline for awhile know that for the past few years we have directed considerable resources and management attention to making process improvements, productivity gains, developing our infrastructure and investing in our technology. These steps were dictated by a vision of how the personal emergency response services industry is evolving and how it is likely to change during the next several years. They were designed to focus Lifeline on the growth opportunities it faces and enable us to maintain its position of leadership. Many of these efforts have taken hold and we have a platform in place to support outstanding implementation skills and organic growth.

Let me provide one example. After a period of focusing on how to increase the lifetime value of the subscriber, I can now point to the fact that in 2004 we added 37,000 net subscribers, which equates to nearly all of the subscribers we added in 2002 and '03 combined. The quality of revenue profile of a new subscriber is the best it has ever been. Having said that, our growth strategy has three key components. First, continuing to increase service profitability; second, achieving organic subscriber growth through our core hospital channel; and third, extending the breadth of our product lines and the scope of our services with complementary programs and channel strategies.

The first component, increasing service profitability, starts with improving lifetime value of subscribers by extending the length of time they stay on our service and increasing the average revenue per subscriber per month. The estimated average length of time new subscribers are on Lifeline rose to approximately 28 months in 2004. Average monthly revenue per subscriber exceeded $21 this year.

Extending the lifetime value of a subscriber needs to occur on two levels. It needs to be a priority of both our custom care organization and our health-care programs. We are making each enrollment call more productive by increasing the data accuracy and reducing the turnaround time. This helps shorten the time it takes to get us new subscriber activated.

Our consumer sales teams in both the U.S. and Canada are being developed to enable Lifeline to handle more inbound sales leads from caregivers and potential subscribers and close more orders faster. With our health care programs it means providing them with the resources, processes, and tools to assist them in sales and marketing activities and improve their productivity while maintaining excellent service.

Although our government services division is small relative to our overall business, representing less than 10 percent of revenue, it too made strong progress in increasing its service profitability and effectiveness as well and is making a difference. By segregating its activities from the rest of Lifeline, concentrating operations and developing our HIPAA compliant data entry billing and cash collection system that is integrated with our monitoring platform. We have the visibility to continue cutting costs and focus on growing the profitable areas of the Medicaid business.

Although we have made the progress in this area, in the fourth quarter alone we did not recognize several hundred thousand dollars of revenue because of the uncertainty of its collection. Because of the actions we have taken and the visibility we now have, we are able to comply with the complex HIPAA requirements of individual states and can be more selective in deciding in which states we want to grow this portion of our business. This division and its infrastructure will give us a key competitive advantage as we continue to identify and avoid doing business where we cannot realize reasonable profitability due to the unique characteristics of certain state Medicaid programs.

The second component of the strategy for growth is achieving increased organic growth within our core community hospital channel distribution. Organic growth begins with service excellence, which produces satisfied subscribers. At our customer care call centers this means achieving the highest customer satisfaction by providing the fastest, most accurate and caring responses.

To achieve increases in organic growth, we are also continuing to develop our marketing and distribution capabilities and leverage the success of our health-care direct marketing campaigns. Our channel initiatives are focused on our health-care partners. We support this channel with more than 200 Lifeline sales and marketing and customer service employees, our direct-mail campaigns and training and development seminars.

In addition, we provide our programs with marketing and channel automation tools designed to free up more time for local sales and marketing activities as well as provide faster, more accurate performance metrics and subscriber information to our program managers. One such example is our web-enabled channel automation tools care partners Connect, where we continue to increase the functionality allowing our programs virtual access to subscriber and program data. At the same time, if our programs choose to outsource components of the value chain to us due to operational complexity, we are well positioned to offer them our Lifeline OneSource model.

Because of our successful channel initiatives, more than half of our net new subscribers were Lifeline OneSource subscribers in 2004. The greater visibility and selection of OneSource is a significant benefit because this model captures a larger portion of the subscriber value chain. In other words it generates higher revenue per subscriber because it represents a complete package of our services. We handle everything from the initial inquiry, the installation, billing and collection. We are running the equipment as opposed to selling it and providing central monitoring directly to the subscribers.

When you consider that revenue from the OneSource offer is as much as three times that of our average existing subscriber, you can understand how integral this offering is to our recurring revenue business model as programs elect this option. To support our channel access we doubled the number of professionals taking inbound calls to our consumer sales call center and increased their closure rates from 38 percent at the end of 2002 to 54 percent by the end of 2004. In addition, we have added an inbound competency to this team -- an outbound competency to this team for when there is a consultative sale requirement and a follow-up call.

We also have refined our direct marketing campaigns so that we are able to more accurately track referrals, new subscribers, and service locations attributable to the campaigns. Direct marketing is another one of those initiatives where our work during the past three years has culminated in a valuable database and a growth platform that we can now leverage. In 2004 Lifeline added approximately 21,000 new direct marketing related subscribers.

Other important metrics by which we measure success of direct-mail include the size of the database of health-care referrals, which increased approximately 75 percent in 2004 to 270,000 names at year-end. This is out of a universe that we estimate to be almost a million names. Our direct-mail response rates continue to improve and compares favorably to industry standards. As we get more efficient at running campaigns we should be able to further leverage this investment and drive more organic subscriber growth.

Our run rate of spending on direct-mail is averaging over $2 million annually. Most importantly, our direct-mail database mining skills are becoming seasoned to the point where we are using our analytical tools to profile referral sources utilizing the intelligence from our prior campaigns. This is a much stronger value creator when we are mailing to a profile rather than just a name.

Clearly our direct marketing campaign is generating positive results. We are experiencing an important benefit when a proportionately higher number of new direct marketing subscribers are on our Lifeline OneSource service offering. The benefits of direct marketing campaigns were sufficient for it to be accretive in the fourth quarter. Direct marketing should make a solid contribution in 2005.

To complement our core marketing development activities in hospitals and Homecare, we are continuing to expand our distribution capabilities. We're building our market development coordinators or MDCs as we call them. This initiative is focusing on referral sources in key market areas. The role of the MDC is to complement our field sales force and local marketing activities and build relationships with health-care referrals sources, through planned telephonic contacts. The MDC effort also is integrated with our direct marketing campaigns in order to strategically cover these key market areas.

The growth of our national accounts program revenues and subscriber count in 2004 kept pace with our overall growth rates. Our roster of national accounts include such prestigious accounts as the American Red Cross, the Visiting Nurse Association of America, Home In-Stead Senior Care, Sunrise Senior Living, Ceridian, just to name a few.

Lastly we continue to evaluate new technology innovations and services that add value for our subscribers and health care partners such as the care partners 6700 communicator that was launched early in 2004. The 6700 combined with our other product and service enhancements provides increased customer satisfaction while helping to drive more opportunity for service margin improvement.

The third component of our growth strategy involves extending the breadth of our product lines and the scope of our services with complementary market and channel strategies. One example involves developing and growing our senior living business and later realizing the synergies between senior living and our core health care channel. For those of you who our new to Lifeline, we provide assisted living, independent living, continuing care retirement communities with Lifeline emergency call systems which utilizes our call button pendants, two-way voice as well as nonvoice communicators, software, all allowing the facility to locally monitor their residence. This system offers many cost and safety advantages over traditional full court systems.

During a second half of 2004 we made several important additions to our senior living team. These included a new VP of Sales, a Director of Technical Services and Operations, a Manager of Product Marketing, and a new Vice President and General Manager. I am pleased to say that all of these career opportunities were filled by experienced managers from within our Company. These organizational changes paid benefits for Lifeline as senior living revenue grew to the point that it is beginning to have a meaningful incremental effect on our core business. It accounted for a significant portion of total product revenue, more than offsetting the planned decline in traditional health care products sales. We also continue to make strides in integrating the recently acquired PROTECT product line of emergency call systems for senior living facilities with our own, which is allowing us to expand our addressable senior living market and successfully market our product offering in the new construction project category.

Our long-term strategy in senior living is offer the market a mix of products and monitoring services from a single source backed by a national support infrastructure and strong reputation for service, the benefits for both new construction and facility retrofit opportunities. We are pleased to be making inroads in many of the nation's largest senior living corporations.

Sales of emergency call systems achieved meaningful year-over-year increases and our equipment is now used by more than 100,000 senior living residents. This industry continues to grow and currently provides homes for more than 2 million residents in the United States alone.

We're also pleased to report that our Canadian subsidiary and its management team continues to maintain its leadership position with dominant market share, strong subscriber growth of 14 percent, and profitability metrics we are very proud of.

2004 marked our 30th year in business. As the Company enters its fourth decade, Lifeline is ideally positioned to take advantage of the very favorable trends in the demographics relating to the aging population and the pressures on the health care system. We are seeking new ways to reach the consumer directly whether the consumer is an elder or the baby boomer caregiver for an aging parent. This is significant because historically we have developed a lead generating competency through the partnership with our community hospitals and their health-care referrals sources. Our direct marketing experience in health care, if successfully broadened to the consumer, could not only complement our health care initiatives but also potentially accelerate penetration of the vastly underserved consumer segment.

This is a dynamic industry and we will continue to invest in technology including a Next Generation consumer sales telephony platform to accelerate our organic growth, expand our capacity to deliver outstanding customer service, and create the highest level of customer satisfaction for all of our stakeholders. We look forward to announcing these and further achievements later in 2005.

With that, Mark and I will take your questions.

Good morning. Just a few questions. First did some of the subscriber growth we saw in the fourth quarter -- I think it was the strongest we have seen in 11 quarters and I don't know if you could point to anything in particular in terms of what led to that? And maybe give us a sense of what we should expect for 2006 and beyond? Also in terms of the length of stay, you mentioned 28 months for 2004. Could you give us a sense in terms of how much that improved I guess if we had to look back in terms of 2003 or 2002?

Let me make a couple of comments. Kind of working backwards from the 28 months, we are tracking this metric in a way that perhaps historically some of the calculations may have been blended so that the numbers are not as reliable as we would like them to be, but if I wore to speculate because it is a blend of conversions and acquisitions and a variety of other numbers, I think we probably in 2004 improved our length of stay by perhaps as much as one month.

As far as organic growth is concerned, I don't think we forecast organic growth out in the '05/'06 category but as we said in our conference call, we feel very good about the impact that it had in '04 as a result of a group of initiatives of the direct marketing, the market development coordinators. There is a significant redeployment of our field sales force towards referral marketing versus program account management. There is the alignment of a lot of training and development of the program managers with growth plans and business plans that they perhaps haven't had before. We had perhaps our top 250 programs here last year in something called an academy.

We're beginning to generate true organic growth in the thousands of subscriber category on our new web initiative and if you visited our home page you would see that there has been significant re-engineering there. We have a specialist who is a director of e-commerce in the Company at this point. Those are some examples that have had a favorable impact as the year evolved and certainly stronger in the latter half than in the front half.

Okay and just one quick question on the senior living side that you talked about. Approximately how much was revenue from that business in the fourth quarter?

We are not separating the product revenue from the senior living initiative from the core health care product revenue at this point. And we may do that at some point in the future. What I would say to you is that we have some goals in 2005 to try and perhaps in aggregate exceed the $10 million mark.

Okay, thanks.

Marvin Loh of DE Investment Research.

Looking at two numbers, the gross margin from the service side of the business and I guess in a related manner the average revenue per sub, when I look at it from a sequential basis, the fourth quarter of this year was the first that we did not see an improvement on both of those lines. What does that represent? Is it greater performance on your wholesale core business or is there something else in that number?

I will take that question. It's Mark. We continued to see improvements in our average revenue per subscriber and you understand how that rolls its way through the financial statement as we transition LMS programs to our OneSource offering -- you know that triples the revenue. And we see a very full funnel there. So we see a continuous pace of those transitions. And when north of $21 million -- I mean $21 per month per subscriber on average so --.

But looking at it just from a sequential basis, really whether we are looking at it from the gross margin perspective on the service side or the average revenue per sub, it did slowdown? Does that represent a slowdown in the LOS side or just the hospital side? Did the wholesale side kind of stepping it up?

Internally to us it doesn't feel as though anything is slowing. And although the percentage decreased slightly for the quarter, we don't feel as though that is a slowing in momentum.

Okay, fair enough. You reported churn in the past quarters. Do you have a churn number for this quarter so that we are tracking it?

Our average churn rate is just less than 40 percent for the quarter, so it's around 39 percent and that's been improving slightly every quarter for the last several quarters, actually the last several years.

Okay and just one last question I will jump off here. Again looking for some expectations into '05, SG&A in the quarter was clearly strong. I would love to hear talk about any leverage that might be coming out of your model and what we can expect for '05 and beyond. What would that leverage?

We don't give the line item guidance but as you heard in my portion of the script, there's many items that drive the SG&A expense in '04 that could be somewhat non-recurring in '05. Certainly some of the Sarbanes expense, the reorganization expense, the launch of the 6700 communicator. So there could be a couple million dollars of non-recurring expense in the SG&A line. And as you know from Ron's discussion, there's many marketing initiatives that we hope to launch in '05 that could absorb some of that non-recurring '04 gain. So we will reinvest some of that into these new marketing initiatives in '05.

Okay and if I could ask just one quick thing and I promise to jump off. Any update on the direct to consumer initiative?

Well, we are in the process of hiring a senior executive. We have not secured that candidate yet, but we have a retained search that we expect to be concluded before the end of Q2 in terms of having that person on board. And while we have a number of opportunities that we are exploring, we are deliberately going gradually on any planning activities until we have the senior executive on board to take ownership in it. So you might begin to see some activity in Q3 and Q4.

So you wouldn't have spent any money on any big direct consumer push as of the first quarter then?

That is correct.

(OPERATOR INSTRUCTIONS) Fred Taylor (ph).

Nice quarter. Did you already say as far as the net adds and subs in the quarter -- it looks like about 12,000 what percentage of that came from OneSource?

Nearly two-thirds of the additions were in our OneSource programs.

Okay, thank you. That's all I had.

John Shubert (ph) of Granite Point (ph).

Congrats on a great quarter. A couple of quick questions on the cash flow. The amount of free cash flow you are already generating is starting to become quite significant. I am wondering first of all is there any reason given your working capital focus and your underutilized call center capacity that free cash flow should not continue to grow at least as fast earnings over the next few years?

And then secondly if that is the case, what are your plans for allocating that excess capital either for growth or returning it to shareholders?

Well, I will make a couple of quick comments on it. Working backwards, I don't think that we have any plans to declare a dividend. I do think that there is an opportunity for the cash flow to continue and potentially accelerate as the Company's performance accelerates. We have a history of making some acquisitions within our industry and have a dedicated effort on the M&A side so that it's possible that we may use some of the cash to try and increase our market share. We also have two areas of the business that continued to be reasonably capital intensive. One of them is the IT area where we not only have a very comprehensive computer telephony platform but that we constantly need to and want to stay current on but we are investing additional capital -- probably easily in the excess of $1 million this year on a new platform for the consumer call center getting ready for some increased hopeful volume on that side.

And the more we shift to the OneSource model, the more our balance sheet grows with inventory of equipment that historically had been purchased by the hospital. And that will continue to grow hopefully aggressively as subscriber growth grows. Anything else Mark on cash?

No. And as you look at what is driving perhaps DSOs, our terms to our commercial channel are 30 days. We have 30 day terms. Our OneSource programs we are beginning to implement more of the subscribers that pay on credit cards which gives us a one day DSO. Our leasing customers will now lease through Lifeline Capital, which gives us a couple day DSO. So there's lots of activities in the Company that continue to push forward and drive the free cash flow that we will have. So that was it.

Anything else, Mr. Shubert (ph)?

No. Thanks and keep up the good work.

Mark Cooper of Wells Capital.

It has been answered, thank you.

Jim Bartlett (ph) of Bartlett Investors.

Sorry, I missed the first part of the presentation. Did you give out the number as you have in the past of the number of subs that were added as a result of direct marketing forth quarter for the year?

Could you repeat that Jim, I didn't hear it?

Number of subs added by direct marketing? Or direct (technical difficulty) quarter and for the year?

Sure. I think we said 21,000 for the year. I'm not sure we gave any number for the quarter.

Given that 21,000 for the year --?

We had about 6900 subs in the quarter.

From direct marketing?

Right.

Also the 600,000 one-time relation to the formation of the holding company, where was that in the income statement?

That is part of SG&A.

That's all SG&A?

Right.

And the increase in product sales in the fourth quarter, was that primarily due to jumps in the senior living?

Senior living contributed and it is actually growing at a 50 to 60 percent rate, still less than $10 million and the remaining portion comes from our health-care channel. And as you know, as we stimulate organic growth within our LMS programs that energizes some demand for equipment purchasing. And the two of those combined created the 80 (ph) percent increase.

Okay, good. And just a couple more on the new platform for consumer marketing. Could you give us an idea a little more of what that entails?

It’s the replacement of a legacy system, Jim, that has been in place for longer than I care to remember and now as the scale and scope of that function is expanding to both in- and out-bound requirements and if our direct marketing and maybe later some of our new initiatives continue to show the degree of volume increases and our closure rates continue to go up, we need to get very moderate with a CRM, a customer relationship management system. There's lots of state-of-the-art products out there from the Who's Who of vendors that we will be taking a look at and ultimately specing out and hope to begin to turn on sometime in '06.

Okay, turn on in "06 meaning having a fully fleshed out working system in '06?

Correct.

All right, thanks and again congratulations on a great year and great quarter.

Mitra Ramgopal.

I just want to follow up on two questions. I don't know if it's possible at this point to comment maybe on any initiatives on the Medicaid side in terms of growing that business. And also secondly on a competitive side if you're seeing any new players or competitive products or service offerings or issues of pricing or so that is causing you any concern?

Well, working backwards, we are always concerned or paranoid is a better word. We've been paranoid as long as I can remember. So we watch our competitors carefully. We have a field of competitors that in general have been in the business for a very long time, so I would not say that any of them are new. Some of them are diversifying into the trend towards telehealth and telemedicine and disease management. Some of them are trending into medication dispensing. Some of them are trending into more synergy with the security industry.

There's a lot of trends. And we watch that and watch it very carefully. It isn't something that we don't watch carefully and gauge the accuracy of. Secondly and unrelated, the Medicaid business is a terrific opportunity for us because we have not only taken this -- it's a probably 35,000 plus or minus subscriber base and turned it from red ink to black ink. It is now profitable and attractively profitable even with the reserves we take against it.

But we have a lot of states out there that have approval and authorization systems that are not necessarily aligned from a payment perspective with how they run the case management side of the safe in terms of assigning services to indigent elderly. So we just need to continue to learn more about each state and gauge which ones we can be compatible with and of course if we make an acquisition and one of our competitors has Medicaid business as they frequently do, we now have a well-organized home to integrate it into.

So I am optimistic that it is first and foremost a profitable segment of our business and secondly, even though the states generally are strained from a Medicaid perspective, it is possible that they will continue to spend money on eldercare that applies to wavers like our services and maybe if we get lucky maybe even more dollars in that category as they find that they cannot spend money on Homecare to the degree that they have been. So we consider it a small but strategic part of the business.

Okay, thanks a lot.

And there are no names in the queue at this time. So I will turn the conference back to our host with any additional or closing remarks.

Thank you very much for the time you have given us and we look forward speaking with you in the next quarter.

And that concludes today's conference. Thank you for your participation.