QuidelOrtho Corp (QDEL) 2014 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Quidel Corporation first quarter 2014 earnings conference call. (Operator Instructions). I would now like to turn the call over to Mr. Randy Steward, Quidel's Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Good afternoon everyone, and thank you for joiningtoday's call. With me today is our President and Chief Executive Officer Doug Bryant, and Ruben Argueta, Director of Investor Relations.

Please note that this conference call will include forward-looking statements within the meaning of Federal Securities Laws. It is possible that actual results and performance could differ significantly from these stated expectations. For a discussion of risk factors, please review Quidel’s Annual Report on Form 10-K, registration statements and subsequent quarterly reports on Form 10-Q as filed with the SEC.

Furthermore this conference call contains time sensitive information that is accurate only as of the date of the live broadcast today April 23, 2014. Quidel undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call except as required by law.

Today Quidel released financial results for the three months ended March 31, 2014. If you have not received our news release or if you would like to be added to the Company's distribution list, please call Ruben at (858)-646-8023.

For today's call, Doug will report on the highlights of the first quarter and provide updates on our product development pipeline. I will then briefly discuss our financial results and then we will open the call for your questions.

I will now hand the call over to Doug for his comments.

Thank you, Randy. For the call today I will comment on three topics. First, the latest influenza season; second, progress with new products and product development; and third, a summary of where we stand with respect to our aspirational goals and targets.

Let me start first with a characterization of the flu season generally. The predominate circulating strain this season was the 2009 H1N1 subtype. This virus disproportionately affected persons age 18 to 64 versus last year's predominate H3N2 strain which disproportionately affected persons that were 65 years of age. The current flu season was characterized by a lower and narrower IOI peak than last year's IOI peak suggesting lower influenza prevalence, at least in term of influenza illness as a of physician office visits and shorter duration of the season. Another characteristic of this flu season was its relative mildness in terms of morbidity. According to the CDC there was a 27% decrease in the number laboratory confirmed influenza associated hospitalization this season from last year, and the number of pediatric deaths was roughly half the number that occurred in the 2012/2013 season. Through April 5 the CDC Sentinel sites had reported 19% fewer IOI vistas for this season versus the prior season.

Overall it was a very mild and shorter respiratory season. Consequently, demand for respiratory disease products declined versus the prior year's first quarter partially offset by Sofia and molecular revenues. Total revenues for the first quarter 2014 were $46.7 million a 25% decrease from revenues in the first quarter of 2013. Despite the weakness in the season, we continued to make progress with the launch of Sofia, our next generation automated immunoassay analyzer. Sofia revenues for Q1 were up 57% over the prior year and on a trailing 12-month basis sales of instruments and cartridges exceeded $20 million. Our pricing and margins have held steady, and the number of placements in the quarter was consistent with the number of placements in Q1 2013. Our cannibalization rate ticked up slightly to approximately 35%, and Sofia placements in the quarter were about evenly split between hospital and physician office lab accounts. Sofia We solid traction with our Sofia RSV product and believe we picked up some share with this product as well as with our Sofia Influenza A+ B product. With regard to Sofia development activities, two (Inaudible) labor packages have been submitted with one more remaining to be submitted. And we are on track to complete the development of our first two quantitative assays as scheduled.

We also saw progress with our molecular products particularly with AmpliVue our handheld disposable molecular device. We have recently seen an increase in the size of our average contractual commitment to purchase AmpliVue C. difficile as several large customers have completed evaluations. In addition, we recently launched AmpliVue HSV 1+2, and we have completed clinical trials for our fourth AmpliVue product. Closing our list of accomplishments with AmpliVue, we are in clinical trial for two additional AmpliVue products at this time. Assuming all goes well, we could exit 2014 with an AmpliVue menu of six infectious disease assays.

We have also made great progress with Lyra the brand name for our realtime PCR assays that are specifically developed to run on a laboratories existing thermocycling equipment. We recently received FDA clearance for our latest molecular assay for pyogenic Strep A and C or G. The assays follows the FDA's De Novo pathway, which means it is the first of its kind in the market place and is now available for sale in the United States. One other De Novo Lyra assays is under review by the FDA as well and two other Lyra assays are currently in clinical trials.

And finally a word about Savannah formerly known as project Wildcat, which is a highly robust cartridge based fully integrated diagnostic system intended initially as a low cost HIV viral (Inaudible) testing solution for the developing world. We are on track with our previously disclosed time line, and in fact because of a number of technical hurdles that are now behind us have made the decision to increase our R&D spend on the project this year as we now believe that with this spend we can start clinical trials in Africa earlier and can accelerate many developments for the developed markets. Randy will talk about this and the impactto our overall R&D spend in a few minutes.

In summary while the weak flu season had a dampening affect on our financial performance, we never the less had a highly productive quarter accomplishing a number of tasks and objectives we believe will contribute ultimately to the achievement of aspirational targets we first unveiled at our Analyst Day in 2011. At that time we said that while it would be technically challenging we intended to become a broader base diagnostic Company and we have the assets and capabilities to expand well beyond our existing rapid point of care business. We said that with the recent FDA clearance to market Sofia in the United States we would stabilize our existing business and would develop quantitative assays that would give us access to larger markets. We also said we would enter the molecular diagnostic segment, and that we could create brands through introduction of unique instrument and assay solutions. We noted of course, that R&D and product development by their nature were always somewhat uncertain and fluid subject to change in terms of content and timing. While uncertainty around development activities, clinical trials and clearances by regulatory agencies is part of the new product development process, I am very pleased for the most part with our about to do what we said we would do and make significant progress towards our goal of becoming a broader base diagnostic Company.

In 2011 we said the achievement of the vision of becoming a broader base diagnostic Company could occur at the point when we had recorded $100 million in annualized incremental revenues from new products and that we aspired to accomplish this by 2015. As we noted at that time among other factors critical to our ability to achieve this incremental revenue was success with Sofia, and our objective was to have 10,000 Sofia analyzers online and operational each doing about 10,000 per year. While timing is subject to change as I said before due to the risks, which I will talk about in a minute, based on our experience thus far with current Sofia placement and where we are with menu development, we still believe that goals for the number of analyzers placed and the billings for placement are achievable. At our current cannibalization rate incremental revenue would be $65 million. We also said that our target for revenues for AmpliVue and Lyra customers was $25 million. Currently our annual run rate for molecular assays is approximately $4 million. Therefore based on our experience with our current molecular products and customer contracts and what we believe will be the demand for the products we expect to launch in the near term we still believe this target is achievable.

But clearly in 2014 there is work to be done and milestones that need to be accomplished, activities and events that could affect the timing of the achievement of our goals. To be specific our outlook for the following year assumes we have (Inaudible) labor for all current Sofia products marketed in the United States. While we are confident that this will be accomplished, it is not done yet. We also assume we complete the development of quantitative assays this year in time to realize some level of revenue in 2015. Further we assume that acceptance of the AmpliVue work flow creates collateral benefit across a broader menu and the size of our customer base accelerates. And finally, we expect to see evaluations of our Lyra products that are expected to be conducted by a smaller number of very large customers will be successfully completed before year end and that we will have a base of business as we begin 2015.

So although Q1 was very productive for us, we have more to do this year. The good news however is that we have the skills and capabilities to get things done, and much of what we need to happen is well under our control. Our well documented history of execution gives me confidence to say we are well on our way to the achievement of our goal of becoming a broader base diagnostic Company. Randy?

Thank you, Doug. As Doug mentioned in his opening remarks, total revenue for the first quarter of 2014 was $46.7 million as compared to $62 million in the first quarter of 2013. Domestic revenues declined by 27%, to $39.6 million while International revenues declined by 5% to $7.1 million. Global infectious disease revenues which include QuickVue, Sofia and molecular products were $35.8 million in the first quarter as compared to $49.4 million in the first quarter of 2013. The decrease was primarily due to reduce demand for (Inaudible) influenza and Strep A products.

Flu sales in the in the quarter were $18.3 million a 37% decline from the first quarter of last year. In the quarter. we did realize a 50% increase in total Sofia revenue versus last year, which partially offset the decline in total influenza revenue. Our DHI respiratory product sales realized a decrease in sales of 6% in the quarter.

Revenue for Women's Health category declined by 6%, to $8.1 million led by a 10% decline in our pregnancy business the result of one International customer not repeating a Q1 2013 order. This decline was partially offset by a 24% in our autoimmune complement and thyroid product line. Our gastrointestinal product category revenues were $1.6 million compared to $1.5 million in the first quarter last year driven by increased AmpliVue C. difficile revenue.

Gross margin in the first quarter of 2014 was 57% compared to 68% last year. The decrease in gross margin was mostly impacted by product mix and lower influenza test volume this year as compared to last year. Also affecting the margin negatively was the additional absorption cost expensed in the quarter due to lower production volume versus last year. Excluded the impact of the Alere Royalty amortization that will expire in February 2015 gross margins would have increased by approximately 5 percentage points to 62% in 2014 and 73% in 2013.

Total operating expenses were $28.6 million in the first quarter of 2014 compared to $25.3 million last year. Research and development costs in the first quarter were $9.1 million compared to $7.5 million last year. The incremental spend was mostly the result of two items. First included in research and development expenses for 2013 was a $1.1 million expense reimbursement from Life Technologies related to our previously disclosed assay development collaboration agreement. There is no expense reimbursement realized from this agreement in the first quarter of this year. Second R&D increased by approximately $500,000 due to the acquisition of BioHelix in May last year and AnDiaTec in August of last year.

Sales and marketing expenses in the first quarter were $9.9 million compared to $8.4 million in the first quarter of 2013. The increase in sales and marketing is due to an increase in personnel in excess of 20% as compared to last year. As we have stated previously we believe this increase in personnel will help support the introduction of new products we have commercialized to date as well as the new products we plan on introducing going forward. Expenses for G&A were $7.4 million in the first quarter compared to $7.5 million last year. Included in operating expenses for the quarter was stock-based compensation expense of $2.2 million and amortization of intangibles of $4.8 million.

Our tax rate for the quarter was 36%, as compared to 27% last year. In the first quarter 2013 we realized a full year benefit of the 2012 Federal Research and Development credit of approximately $500,000, as well as the first quarter of 2013 benefit relating to the full year 2013 research activities. Since the Federal Research and Development tax credit for 2014 has not yet been approved by Congress, there is no such credit for the first quarter of 2014.

Net loss for the first quarter was $1.5 million or $0.04 per share as compared to a net income of $12.4 million or $0.30 per diluted share for the first quarter of 2013. On a non-GAAP basis excluding amortization of intangibles and stock-based compensation expense and including the benefit of the Research and Development tax credit in 2013 net income for the quarter of 2014 was $2.9 million or $0.08 per diluted share compared to net income of $17 million or $0.49 per diluted share for the same period in 2013. In the first quarter the Company generated cash from operating activities of $22.2 million and incurred $4 million in capital expenditures. As of the end of March, the Company had no debt outstanding under its senior credit facility and had $25.7 million in total cash.

As Doug mention ed in his comments we are pleased with the progress we have made with Savannah to date, and are accelerating our investment in this project this year. We now anticipate our current full year spend in 2014 for research and development to be in the range of $33 million to $35 million of which the second quarter will be the most significant spend estimated to be slightly higher than our first quarter spend. For sales and marketing we are currently projecting total expenses in the range of $38 million to $40 million slightly higher than previous comments due to the increased size of our direct sales organization. As we move forward, we will continue to review the size of our direct sales organization in order to take advantage and market opportunities.

And with that, we conclude our formal comments for today. Operator, we are now ready to open the call for questions.

(Operator Instructions). Your first question comes from the line of Shaun Rodriguez with Cowen and Company. Please proceed.

Hi, guys. Good afternoon. Thanks for taking the question. My first one is really relative to the performance and expectations. It looks like flu came in $7 million below your base case scenario,but at least relative to where consensus was the total revenue number was about $17 million below. So I would like to understand the pieces a bit better. And clearly there are implications of a weaker flu season outside of the influenza line, but you do not break out some of the other product lines where there is a correlation with flu. So can you give us a better since for what growth was within and outside the respiratory disease category?

Well, Shaun, we can't really speak on behalf of what consensus was. We did give guidance previously relating to the flu that is was at a lower end was approximately $20 million, I think $25 million mid case and a high case. As we indicated, we did see a fall off of the flu volume certainly by the mid February, late February time period. Relating to the other products certainly on the DHI side it also had implications from the respiratory season. We did see a slight increase there although that was offset by what we saw was good growth in our (Inaudible) business. We did see slight growth in hCG other than a loss of one order on the International side, and as we mentioned Strep was down slightly from a year ago as well. So I think those are the pieces.

Okay. Thank you. Next on AmpliVue just a couple of questions related to that. Can you give us a since for how you are tracking on the placements towards the 1,000 placement goal you laid earlier? I apologize if you mentioned that, but I will just rattle through the follow ups here as well. Any notable impact from the recent Group B Strep approval on the placement rate or any commentary you could provide on the proportionate of sites that are planning to do more than one test using in the AmpliVue format, and lastly any commentary on average utilization specifically really within AmpliVue C Diff customers? Really just trying to get a sense for what the average volume is for one of your AmpliVue customers. Thank you.

First, we are still in the low 100s in terms of number of customers, and they are mainly C difficile customers. I do know that we have a very small number of Group B Strep customers. The average size of the customer is in that 600 test per year. That is likely to change in the next few months as some of these larger customers come online however. So we are seeing a little bit of a difference in the type of customer we are engaged with. Originally we were focused very highly on the small customer and now we are focused more on a hospital system that would incorporate both hospitals and clinics. Those are the type of closes that we are seeing more recently.

In terms of how we are going to approach the number of customers as we go through the next couple of quarters. We still think 1,000 customers or so is a good target for us. We are very interested in understanding how we were do with the product we believe is our first unique product offering and that is AmpliVue HSV 1+2, and we are just launching that product this quarter. None of the competitors at least in the decentralized form factors that has a product for HSV 1+2 at this time. So the question we look to answer soon is how leveragable those newly created customer relationships will be going forward. But the short answer to your question, Shaun, on the 1,000 is still a very viable target for us over the next few quarters.

Thank you.

And your next question comes from the line of Bill Quirk with Piper Jaffray. Please proceed.

Thanks, and good afternoon everybody. Doug, I just wanted to build on Shaun's question regarding the flu season. Specific to that, the season started fairly slow but in part because of the share gains from Sofia and some of the associated minimums, I think put up a much better number than many of us have been looking for in the fourth quarter and perhaps incorrectly so got the sense that Sofia would allow Quidel to smooth out some of the seasonal effects of respiratory. Can you talk to the underlying assumptions there regarding inventory customers take on when they purchase Sofia, and then also in general where inventory is in the channel? Thanks.

Sure. As we exited Q4 inventory in the channel were low, so as we went into the first couple of weeks in January we actually had very large orders. Normally we would expect a replenishment of that moving forward and as Randy stated as we went into February it become apparent we were in a fairly mild a influenza season and our distribution partners as you would expect, from that point to the end of the quarter have managed their inventories down quite low. Maybe, Randy, you want to comment on what is out there right now at distribution.

Sure. As we look at the period of July through March last year versus this year, we look at our sell-in and sell-through we get from our sales report and they are very identical. So the inventory is pretty consistent as we entered the quarter and as we existed the quarter compared to last year.

Okay. Given the magnitude of the impact from flu why not preannounce the quarter guys?

We published and disclosed at least three different opportunities that we had a low, a mid and a high case. Relative to the low case, we were reasonably close and therefore made a decision that pre announcing was not necessary.

Okay. Got it. And then a question for, Randy. I am sorry, I may have missed of your G&A comments. What was the big sequential there in G&A, Randy?

You mean versus last year or you are saying Q4?

Sorry. Versus 4Q. We have seen step up a little bit here over the past couple of quarters. I was hoping you could add a little bit of color there and help us think about is this the right run rate to think about, should this come in with your seasonally light quarters, et cetera? Thanks.

I think probably the biggest difference is from stock compensation expense. We did in the fourth quarter had a slight increase there, but I think as you look at Q1 I would assume that is very consistent with the run rate for the rest of the year. From a salary, FTE or anything there is no changes between 2013 and 2014 assumption assumptions. (Inaudible)

Got it. Thanks guys.

And your next question comes from the line of Tycho Peterson JPMorgan. Please proceed.

This is for (Inaudible) for Tycho. Thanks for taking the question. I wanted to get an update in terms of your Savannah timelines. I know you said last quarter you were thinking of introducing it in,maybe,early 3Q; is that still correct?

There are a couple of key development milestones for this year. First this summer we expect to demonstrates that HSV performs well on a fully integrated platform, fully integrated Savannah. And to complete the phase of development that we call feasibility. And second, we will build the first set of instruments that we expect to ship to Africa in the fourth quarter. And we are building the initial lower volume cartridge assembly line , and plan to transfer that to our molecular manufacturing facility in Ohio in the next few months. And we also said before we expect to unveil the product at this years AACC which will be in July in Chicago and that is still true.

Okay, great. Thanks.

And your next question comes from the line of Bill Bonello with Craig-Hallum. Please proceed.

Thanks. Good afternoon guys. I am also going to back track to Shaun's questioning but phrased a slightly different way. If we back out the flu revenue that you report for this quarter and prior quarters, revenue was down both year-over-year and sequentially. So I am trying to figure out how much of that is because of other respiratory that is not in that flu business and if you can give us any sense of the underlying growth of the businesses that are not so seasonably variable?

Sure, Bill. Before I answer though, I wanted to say to you and I see Matt is on the line as well, that I was very sorry to hear about Steve, and on behalf of Quidel I would like to pass along our condolences.

Thank you very much. That is very kind of you.

Sure. With the exception of Thyretain, there is very little that would drive growth in our core business. What we have seen there is a little of ranges in a couple percent to 4% or 5% across several quarters depending on the point you want to look at. I would add though with the planned acceleration of molecular assuming no lift from Sofia Strep A, we estimate growth on a trailing 12-month in Q3 would be about 7%, and we expect that same analysis for Q4 to yield a growth rate of about 13%. Depend ing on the timing of clear waiver for Sofia Strep obviously our growth rate would be slightly higher. I do understand you are asking about the underlying business and are there issues there, there are no issues but it is reasonably low growth.

Sure. That is extraordinarily helpful. And then the second piece and just to have you clarify something you said, Doug, I just wasn't sure if I was following your math on the new revenue expectations. All in are you maintaining the total guidance for new revenue expectations or was there a change when we add everything up?

There is no change. Obviously we are expecting several things to happen in order for that timing to still hold true. But we still see a very clear path of where we would like to be in terms of new incremental revenue.

Okay. The final question there is a number of different microbiology conferences coming up over the next couple of months. Anything interesting from your stand point we should be looking for at those conferences?

We will be at ASM which is coming up reasonably soon. From this weekend we will be at CVS, so there will be a number of papers presented there as we have in years past. Next after that, there is the CVS meeting in Daytona and then there is the ASM in Boston and then the next major show we would be at would be the AACC in Chicago.

But do look for presentations or posters or something at some of those?

Yes, sir.

Okay. Thank you so much.

And your next question comes from the line of Matt Larew with William Blair. Please proceed.

Thanks for taking the question. Just one from me here. Is there any additional commentary you can provide on the clear wavier progress, bothwhen you expect to submit that third clear waiver and if there have been any hurdles or anything you have had to go back and work with the agency on that has led to increased delays? Thanks.

The status of the clear wavier, we have three products as I mentioned awhile ago two of which has been submitted, one we expect eminently. The other will fall shortly and we plan to submit the data on the last product which is Strep in the next few months. So there is no concern that we have at this time based on the data that we have collected. So I would say we are reasonably confident it will happen, but of course, the timing, time is what we don't have control of.

Thanks, Doug.

Sure, Matt.

Your next question comes from Zarak Khurshid with Wedbush Securities. Please proceed.

Good afternoon. Thanks for taking the questions. Doug , first could you provide your updated thoughts and clarity on the emerging market strategy given (Inaudible) large and growing footprint there globally, just curious how you are thinking about the menu and cartridge pricing, and are you planning ongoing head to head with them in that geography?

What I can say first is that this program was initially driven by our collaboration with Northwestern, which has clear (Inaudible) program. Further we are funded by Bill and Melinda Gates Foundation to develop a low cost fully integrated platform. So I assume based on both Northwestern's desire and the Bill and Melinda Gates Foundation that there is some need that we will be fulfilling by developing a low cost integrated analyzer. I don't know about the head to head aspect. What I would say is that our cost to goods sold is likely to be significantly less than what we see out there by competitors including (Inaudible). We committed to not only that low cost to goods sold but then a margin that is reasonably attractive from their perspective. So again I don't know about the head to head part but we believe that we will have completed the program in the reasonably near term and we will have a fairly competitive offering HIV viral load initially and then potentially TB beyond that.

Great, Thank you for that. And then maybe a follow for, Randy. In terms of the Life Tech expense reimbursement, how should we be thinking about that potentially coming back in the future?

We have one last assays that we are getting (Inaudible) approval and we estimate that will occur in Q2, and that will be approximately $400,000 benefit to us and that will then complete the initial phase of the agreement with Life Technologies. technology.

Great, thanks for that color. And then you mentioned the molecular revenues, just curious if you could break out AmpliVue versus Lyra, is one significantly more than the other? Thanks.

We will certainly take that in consideration. I know we don't really give guidance on the top line, but certainly as it becomes more significant as we break out infectious disease in Women's Health we can certainly provide more color on what is driving (Inaudible).

Thanks.

And your next question comes from the line of Nicholas Jansen with Raymond James & Associates. Please proceed.

Quick question regarding your outlook for margins it looks likes 2014 is going to be a more transition year as you accelerate R&D spend and you do not have all (Inaudible) new products to leverage on S&M, so how should we think about 2015 and beyond cap gross margins as you roll off the Alere Royalty and then benefit from some of these new products? I am just trying to get a sense has anything changed relative to prior comments on let's say 25% or so of GAAP operating margins? Thanks.

I don't think there is a significant change. Of course if we do have ongoing increases with R&D that could affect it. But in terms of gross margin we pick up about 2 to 3 percentage points across the entirety of the business, right. For example, Randy, in this quarter the difference with and without the amortization is from 57% to 62%, right?

Yes.

Okay. But --

I think , Nick, we are very confident going into 2015 our gross margins with the new products are certainly accretive to our existing gross margin, so that gives us confidence in our 65% gross margin target , and then as we said on the operating expense line we will invest in our sales organization as we continue to look at market opportunities.

What I would add to that, Randy, is with the expectations of Sofia hCG and Strep A all the new product gross margins are expected to be flu like or better.

Okay. That is helpful. That is it from me. Thanks.

And your next question comes from the line of Jeff Frelick with Canaccord. Please proceed.

Good afternoon, folks. On the patient declines with respect to the office visits any sense was that impacted by weather, by reluctance with co-pays, any color you can shed their, Doug or Randy ?

Each of those that you suggest, Jeff, is a possibility. It would be difficult for us to speculate. I have seen the transcripts of other calls in which people describe issues as being weather related. Certainly it is true that fewer people visited physicians in the quarter period. It is also true that hospitalizations as result of flu which is not specifically related to the number of office visits was down by 27%. So I think it is a combination of both patient visits and milder flu period.

Okay. And then with respect to, Randy, you called out maybe a sales and marketing increase as you expand the sales force. Will that sales force, will that organization be more focused and the ads be more directed towards the POL marketplace or hospital setting?

We are looking really, Jeff, in two areas one is on the molecular side as we expand that product line, and then as well as in the POL and the moderately complex section is also another area we want to focus on.

Okay. And last question Sofia placements in the quarter I know the patient (Inaudible) fell of the back half of the quarter but were placements for Sofia were they in line with your target or expectations for the first quarter?

They were approximately what they were first quarter 2013 and they were evenly split between POL and the hospital. So I would say we would have expected more POL placements than we had and fewer hospital. I don't know how to read that but that is how the mix fell out. I would say the answer is, it is impossible to tell the exist to which the placement rate was affected by the low prevalence of flu. I would guess it had some dampening effect, but it is very hard to gauge and certainly was not significantly different, again, from Q1 2013.

Okay. Thanks guys.

Thanks, Jeff.

And your next question comes from the line of Bill Bonello with Craig-Hallum. Please proceed.

Thanks for taking a follow up call. I just wanted to revisit the little bit of color that you gave on how you are thinking about growth over the rest of the year and just to make sure I understood your comments right, and I know it is not formal guidance or guidance at all. But when you talk about trailing 12 being potentially being up 7% by Q3 13% by Q4 is that even including the fact revenue was down meaningfully this quarter? In other words, you are thinking of pretty meaningful year-over-year growth with the new customer additions or is that backing out a flu impact?

That is without flu.

Without the flu. Okay, great. Thank you. That is really helpful.

That is all the time we have today. Please proceed with your presentation or any closing remarks.

This concludes the call for today. Thanks everybody for your time this afternoon and for your continued support.

Ladies and gentlemen, we thank you for your participation and ask you please disconnect your lines. Goodbye.