Q1 2020 Earnings Call
Ladies and gentlemen, please standby conference call will be good momentarily once again, ladies and gentlemen police them along.
Ladies and gentlemen, thank you mr. anybody to welcome to the Q1 fiscal 2020 Accuray incorporated earnings call. At this time all participants are in listen only mode. After the speakers presentation there'll be a question answer session to ask the question during the session need a press star one on your telephone please be advised to todays conference is being recorded if you require further assistance.
Please press Star then zero I would now like to do is robust conference call introductions you may begin.
Thank you Kevin and good afternoon, everyone. Welcome to Accuray's Conference call to review financial results for the first quarter fiscal year 2020, which ended September Thirtyth 2019. In addition, during our call. This afternoon management will review recent corporate developments joining us today are Josh Levine, Accuray's, President and Chief Executive Officer, and Shake I'm.
Two accuray's senior Vice President and Chief Financial Officer, before we begin I'd like to remind you that our call. Today includes forward looking statements and involve risks and uncertainties, including statements regarding our fiscal 2020 guidance, including factors that could affect such guidance expectations regarding market conditions in China expectations related to new product shipments and.
Future business plans and strategies there are number of factors that could cause actual results to differ materially from our expectations, including but not limited to risk associated with the adoption of the Cyberknife and Tomotherapy Radixact systems commercial execution upper right I'm sorry.
Operationally the Operationalizing, the China joint venture and overall strategy in China, and timing of China user licenses issuances and tenders the company's ability to take advantage of the issuance of such licenses future order growth future revenue growth profitability and macro economic factors outside of the company's can.
For all.
These and other risk some more fully described the news release, we issued just after the market close this afternoon as well as in our filings with the Securities and Exchange Commission. The forward looking statements on this call. It based on information available to US as of today's date and we assume no obligation to update any forward looking statements to reflect actual performance or results changes at us.
Options or changes and other factors affected forward looking statements forward looking information except to the extent required by the applicable securities laws two housekeeping items for today's call first during the Q1 a session. We request that participants limit themselves to two questions and then re queue with any follow ups.
All references we make the specific quarters in the prepared remarks, our to our fiscal year quarters. For example statements regarding our first quarter refer to our fiscal first quarter ended September Thirtyth 2019, now I'd like to turn the call over to Accuray's, President and Chief Executive Officer, Josh Let me. Thank you Doug Good afternoon, everyone and thank you for joining.
So on today's call Accuray's Q1 performance represented a reasonably solid start to our fiscal 2020.
As we shared with you during our year end earnings release in late August we expected fiscal 2020 to be characterized by revenue growth primarily occurring in the second half of the year due to timing of trying to type a license issuance and revenue recognition and we believe that projected timing is still valid.
First quarter gross orders exceeded our internal plan and revenue was in line with our plan for the quarter.
Gross orders were $78.5 million, representing a 20% growth over prior year first quarter.
Order growth was primarily driven by our Cyberknife system, while radixact maintained strong momentum representing over 60% of the total orders for the quarter.
Geographically in fiscal Q1, our EMEA and HMS regions were meaningful contributors to gross orders and we continued to see strong order growth from China, which contributed 11, new systems nine type a and two type b.
On the revenue side revenue for the quarter was $89.6 million, which was in line with our internal plan expectations.
Turning to see significant highlights on October nine the China National Health Commission announced the first round of Taipei Radiotherapy license awards for hospitals, who at applications in the system for equipment.
58 licenses that were awarded 50 of them were for Accuray systems with Tomotherapy Slash Radixact systems, representing 60% of the awards and Cyberknife systems, the remaining 40% we.
We need to remember that the process identified by the Ministry of Health requires a tender process. Following the license awards for all participating end user hospitals prior to being able to take receipt of a type of device. This tender process has been put in place to define the transactional terms and conditions related to each hospitals equipment order and will not enough.
Sheet, a competitive bidding situation that would result in changes in the specific device that the hospital has received the type a license for.
We expect that based on the timelines required for this tendering process, we would not begin to see revenue impact related to the China Taipei Awards until sometime in our fiscal fourth quarter and we remain excited about the China market opportunity as a significant growth catalyst for our business.
Turning now to our product development roadmap, we introduced our synchrony motion compensation and correction technology on the Radixact platform at the annual Astro meeting last month in Chicago and received strong customer interest over the course of the show for this exciting technology.
As we indicated last quarter, we have our primary clinical product evaluation site for synchrony on Radixact currently underway at freight or hospital in Milwaukee over the course of the next two quarters, we expect to ramp up additional commercial commercial reference sites that will help drive.
Scale commercialization going forward.
Another highlight at the Astro meeting was the presentation of an abstract from the pace study that was subsequently published in the September 17th 2019 online issue of the Lancet oncology Journal.
Hey study is an international multi center phase three randomized controlled study that compares three different prostate cancer treatment regimens across multiple safety and effectiveness metrics. This is the first study that we are aware of that allows for head to head comparative device data among both competitive products in the radio therapy space.
And provides comparative data between radiotherapy and alternative treatment modality in this case robotically assisted prostatectomy.
The first on to reach target patient accrual and publish early toxicity results.
Please refer to as the pace be arm of the study the pace B trial is designed to determine whether all ultra hyper fractionated SP arty offers therapeutic benefit over prostatectomy or conventionally fractionated or moderately hyper fractionated radio therapy in the treatment of low and intermediate risk prostate cancer patients in this arm of the.
Hey study patients were randomized to one of two treatment regiments prostate SPR t. treatment in five fractions, utilizing accuray cyberknife and conventional index or I am Marty treatment involving conventional fractionation or moderate hyper fractionation in 20 or 39 fractions utilizing conventional Linux there.
Total of 845 patients enrolled in the pace be arm of the study.
431 of which were treated with us BRT and 414, who were treated with IAH Marty.
While these subsets, 41% of VSP RT group was treated on Cyberknife and roughly 59% was treated unconventional Linux the results of the patient reported and clinician confirmed outcomes reported in the online seven September 17th issue of Lancet oncology indicate two very important results first.
That there was no difference in acute toxicity between the SP Rtn control arms, indicating that patients can benefit from shorter treatment schedules without the risk of greater toxicity in the short term.
The second result was that SPR t. treatments on Cyberknife resulted in significantly fewer great too and higher acute urinary toxicity than treatments on conventional nx, 12.4% versus 30.6%, a two and a half full difference while maintaining equipment quote equivalent levels of GE.
Toxicity.
Cyberknife unique ability to deliver ultra hyper fractionated treatment allows patients to receive higher dose and shorter treatment regimens, we up without the risk of greater toxicity or incidents of side effects.
Before I turn the call over to Schick I'd like to welcome the newest member of our leadership team Suzanne Winter, who has joined US as senior Vice President and Chief Commercial Officer.
Then comes to us from Medtronic, where she most recently served as group Vice President for the Medtronic diabetes business, where she was responsible for annual revenues of $1.4 billion and over 2000 employees.
Suzanne previously served as general manager of GE, Healthcare's detection and guidance solutions business and has a strong and progressive track record of driving business growth across industry segments as diverse as radiology neurology and general surgery.
Im excited about having Suzanne on board and I'm confident you become a key key contributor to our future business growth.
Now I'd like to turn the call over to Schick.
Thank you, Josh and good afternoon, everyone.
I will start with some detail on a gross order performance for the first quarter and their focus on certain highlights what a period.
As Josh noted gross orders for the first quarter or $78.5 million up 28% over the prior period.
On a regional basis orders in the Americas, approximately doubled compared to the prior prior year with South America.
The America being the largest contributor.
In Japan, and APAC, each grew a healthy double digit rates over the prior period.
Within APAC orders in China were $24 million compared to $11 million during the first quarter last year.
Orders in EMEA or a meaningful contributor to our Q on gross orders, but down compared to the prior year period, due mostly to the customer timing.
From a product mix perspective, cyberknife contributed approximately 40% or the total gross orders in Q1, which was an increase from 15% gross orders in the first quarter last year.
Tomotherapy platform led by Radixact accounted for approximately 60% of the gross orders during the quarter.
Net Asia us, what a quarter or $35.9 million consistent with the forecast we provided during our fiscal 2019 fourth quarter call.
As we expected more than 40% of this total came from China.
We continue to believe that a meaningful number or the orders when China that aged out during the past two years will eventually convert to revenue.
The 50 Taipei licenses recently awarded to hospitals will Accuray systems included several systems that were aged out of backlog as of September 30 2019.
During the first quarter, we also recorded $3.6 million cancellations and other adjustments.
As a result on the net basis, we generated $39 million of orders in the first quarter.
We ended the first quarter with backlog of $495 million, representing an increase of 7% from September 32018.
Turning now to income statement.
Total revenue for the first quarter was $89.6 million down from $95.8 million in the prior year.
During fiscal 2019 fourth quarter earnings call in August we offered on the outlook for revenue during the first half of fiscal 2020 to be below fiscal 2019 levels and the 7% decline for the first quarter was in line with this expectation.
Product revenue of $37.6 million during the quarter declined 9% compared to prior year.
Service revenue in the first quarter was $52 million down 4% from the prior year due to lower revenue from upgrades purchasers service contracts, which as we discussed in prior calls can fluctuate from quarter to quarter.
From a product mix perspective, cyberknife accounted for approximately 40% over the quarters revenue, while the Tomotherapy platform accounted for the remaining 60%.
Radixact revenue represented approximately 75% over tomotherapy revenue during the quarter.
Turning now to gross margin.
Product gross margin was 42.6% up from 40.9% in the prior year period due to a higher mix of Cyberknife revenue.
Service gross margin in the quarter was 32.5% compared to 38.5% in the prior year.
There were two primary drivers of lower than planned service margin for the quarter.
First parts consumption was higher than normal, which we believe was an isolated incident related to specific high dollar parts second we experienced delays in the renewal of certain service contracts that we expect to execute in the near future.
Overall, we expect to see service margin be turned to near historical levels for the remainder of the this fiscal year as we work through these items.
Overall gross margin for the first quarter, plus 36.8% compared to 39.5% in the prior year.
Moving down the income statement operating expenses for the quarter were $37.2 million, a decrease of $5.4 million or 13% from the prior year.
The prior year operating expenses of $42.6 million included $3.7 million from a onetime accounts receivable impairment charge during the first quarter.
Excluding the impact of this charge operating expenses decreased by one point sentiment million dollars, while 4% during the quarter.
We did not record any China joint venture lost pickup during the first quarter due to the timing of accuray's contractual obligations related to our equity contributions.
We expect to report our share of the JV loss, starting in the third fiscal quarter.
Adjusted EBITDA was negative $1 million in the quarter compared to $4 million in the prior period.
The EBITDA decline was mainly the result of that year over year declining revenue and commence way decline on gross margin dollars during the quarter due to the lower service gross margin.
We ended the first quarter with $87 million of cash and short term restricted cash.
Turning now to our guidance for fiscal 2020 .
We are reiterating our guidance provided back in August with revenue expected to range between $410 million in $420 million.
We continue to believe ability to return to revenue growth during the second half of this fiscal year. While we continue to expect total first half revenue will be approximately 5% to 6% below fiscal 2019 levels.
Our revenue forecast for the full fiscal year reiterated today does not include any incremental contribution from the 50 Taipei licenses awarded in October because the hospital was awarded the licenses still need to complete the tender process before shipment date can be arranged.
Based on the timelines required for this tendering process, we do not expect to see revenue impact related to China type It awards until sometime.
Fiscal fourth quarter.
We are reaffirming our expectations for gross order growth in the mid single digit range during fiscal 2020.
With the Americas, EMEA in Japan regions, leading the way.
During last year's second quarter, we received 16 orders when China as the government published the long awaited quotas for type a and b licenses in that quarter.
While we expect solid gross orders when China joined the second quarter, we do not believe we will match the 16 orders from the five year period.
Although all of a total second quarter gross orders are expected to.
Expected to.
Approximately $10 million to $13 million below last years level of $100 million.
We continue to expect adjusted EBITDA for the full year to range between $19 million to $24 million.
Which includes approximately $2 million global share of law expected loss, while the China joint venture operations.
In terms of our gross margin outlook, we expect overall gross margin to be approximately flat to our fiscal 2019 levels of 39%.
We expect operating expenses for fiscal 2020 to be down approximately 4% year over year as we see the benefit of the cost reduction actions that we took in the prior year.
Turning to a Q2 net Asia forecast, we anticipate Q2 net Asia has to be in the $18 million to $20 million range, which is approximately 50% of less than the first quarter.
And with that I'd like to hand, the call back to Josh. Thank you should operator, we're now ready to open the lines for questions.
Ladies and gentlemen, you have a question or comment at this time, we from northern one key on your Touchtone telephone. If your question of finance reduce can we just saw from MCU. Please press the pound key.
We also assets you limit yourself to two question recalls our first question comes from Josh Jennings with Cowen.
Brian here for Josh Thanks for taking my question.
With respect to being named in 50 out of the FDA class a licenses can you share how that compares to the level of participation you originally assumed.
Our our reference point for.
Original assumptions really has to go back to where we were during the period of time roughly two now for three years ago. When the government was still actually.
Issuing licenses for pipe a radio therapy products and if you go back to that stage, we were operating at a place where.
We were.
We had a win rate of roughly low to mid eightys kind of.
Wins across both platforms. So this is very consistent with where we were in that prior period of time and.
And we're pleased very pleased with what ultimately now has become visible with regards to.
License awards starting to flow.
I think the other thing in just in addition to overall win rate. The fact that it's balanced across both platforms. We think is another good indication of how.
Important our products are to the.
The more academically oriented medical centers and the larger public hospitals, there in the local market.
Great. Thank you and with respect to the guidance can you clarify what percentage of the total opportunity associated with these 50 class a licensing that you expect to impact revenue in the mid fiscal fourth quarter.
Yes. This is share again.
I, obviously cant be very specific about it but I would characterize that as a modest amount all the Taipei revenue in the fourth quarter in that guidance number based on a awareness.
Back in August when we provided original guidance, how many license applications for our system have been turned and we obviously have a great news of the 50 license is one.
So we certainly higher than what we had expected by we have not really built and the any incremental units fund that.
Good news, though we see into the guidance at this point.
Because at attend the timing.
Which is still uncertain to you heard about.
So while we want to do a by now is we want to see the peso that tend to process play out before we make any any revenue forecast our vision.
Okay, Great and then just last one on the tender process itself. Just can you speak to accurate capacity to deal with multiple properties that one. Thank you for taking on my question.
When you when you were referring to multiple processes I'm not sure the tender process.
Is.
Up.
The interaction there is basically between the end user hospital and.
And Tom and I are our distributor who you know as Weve stated in prior discussions we've we've basically involved in a transition kind of a format.
As there they are winding down and the JV is winding up so the primary interactions for those the tender process will be tomo knife directly with those end user hospitals, but.
I think we stated on prior.
Yearend call in August we have.
Inventory staged we have a high degree of readiness relative to what's up once the tender process is complete in a given hospital situation once they're ready to take receipt, we have the ability to ship and be active at that.
I'll hit the ground running so to speak right from right from the beginning.
Excellent thanks for that.
Next question comes from Anthony Petrone with Jefferies.
Thanks, and congratulations on the traction in China, and maybe to start there was a few questions just on exactly how this process plays out and so in terms of.
A license award should we actually be looking at the license award as.
Essentially a precursor to a booking so is that a good way to look at it and then.
You mentioned last quarter, Josh interest in terms of class B licenses, that's going to take a bit longer and part of that had to do with just the infrastructure that.
It was in the process of essentially being put together to handle the tender process. If you can provide an update there that would be helpful.
Yup.
So Anthony I think that the the answer on.
That the tight be discussion is.
Essentially our our type b activity has been probably about 10% of the overall order activity that we've been generating in China and.
Again, as you've heard Vertis talk about in the past the primary focus for Tomosynthesis. They wind down the distribution relationship with US is really been on type a the primary focus for the type products.
We will be the distribution network that the JV has established and the product longer term.
The product that is going to be built and tangential. The facility that is now under construction with trying to isotope and radiation Corp. So.
The.
Again in the reported numbers for the quarter. There were nine orders on Taipei, there were two on type b and but I think ultimately.
We will start to see type b start to ramp up.
More significantly as we get deeper into this there are still if you go back to the number of orders or quotas that were established for type a and type b. You'll recognize that this is really just scratching the surface I mean, the orders or the awards that had been identified in the in this first round.
Of award or licenses in the first round of awards basically were.
A third of the total type a licenses that were identified in the quota and on the type B side. There was a total of almost 1300 licenses identified for type product. So we're really really at early stages here, but we're pleased with where we're at in general.
On.
On the first part of your question.
Yes, Josh I'm going to be a clarification so.
The.
Anthony the 50 licenses awarded for end users.
The vast majority of that as represented by the orders we had already booked into backlog I would say as of June 30 last year I mean excuse me this past fiscal year, so three four months ago.
Because you might recall that the.
50 licenses issued or related to the applications turn and then as at the end of July . This past July so vast majority of that 50 relates to the the orders we already had in our books.
Three four months ago.
Okay. That's helpful. And then one quick follow up if I May just America orders nearly doubled.
Obviously, there was concern on the CMS radiation oncology bundle it doesn't look like.
And at least from the reported results so far that there was any.
Hiccup or impact to orders so any update on what you would add curious hearing around the oral bundle and.
The lack of impact in the quarter or what the expectations are in terms of.
Okay implication for orders going forward. Thanks.
Anthony It's a great question I think you'll remember the conversation we had in Chicago during the IR event at Astro and our our view then and our view still today very consistently with what you heard from US already is that we actually think that we are from a portfolio standpoint, very very well positioned to deal with the alternative.
Payment model situation in general from a directional standpoint, we believe that what will happen over time as you will see people that have been more more predisposed to.
Look at IHOP, Marty with greater number of fractions historically.
They will be encouraged to move too.
SPR t. related treatments.
Probably using.
Other moderately or ultra.
Hyper fractionated treatment plants, and we think that favors our product portfolio. Both platforms really strongly so we've seen no no negative overhang, if you will or no negative feedback at all from customers relative to the.
PM announcement and.
We're still bullish on longer term on our positioning from a portfolio standpoint related to that.
Thanks, again I'll get back in Q.
Our next question comes from Brooks O'neil with Lake Street capital markets.
Good afternoon, guys today, I want to zone in on China, a little bit more.
Really two questions obviously, we've been talking about your disproportionate market share.
You know class a licenses so far for a number of years, but if you could just remind us.
Why your competitive position is so strong in China right now and then.
Obviously the next these is going to be this tendering process and I'm curious if you could share in shed any light on whether the joint venture you you expect that.
A positive force in getting through the tendering process successfully or how do you view that right now.
So.
Looks the pipe a discussion really goes back to.
The company's roots are the or that the early days of both product platforms.
Both on the Cyberknife side and on the Tomo side, both both platforms had been very.
Very distinct distinctly focused on larger academic medical centers. There was a significant amount of work in the early days done in building relationships with key opinion leaders across both both of the the technologies.
If you remember some earlier conversations we've had.
Essentially we add in addition to academic medical centers with strong KNL endorsement, we had a very strong position in the play military Hospital channel and the reason for that was that the if you go back up you know 10 12 years ago. Those hospitals were from a budgetary standpoint, essentially they add on.
And checkbooks they had the best equipment you could find in the best.
Technologies, you could find across all the categories and and they were rarely if ever constrained from a budgetary standpoint. So you found a disproportionate number of the most important military hospitals and academic hospitals.
With both Cyberknife and Tomotherapy devices really really well represented in both of those those customer profile types.
We did some market research early on after I got to Accuray and one of the interesting things that we found was that.
The for a company of our size given the market share we had the brand awareness step statistics and data from the market research that we did said that the awareness both at the.
On the clinical side of the of the World, but also in the in the.
In in a more general sense population wise was was disproportionate.
Awareness of our products and brands were disproportionate to our size relative to market share, which I thought was very interesting and I think that that has continued to play itself out when you think about where.
Hi, ranking government officials in China, where they go where where their families go for treatment. They end up in PLM military channel hospitals or the end up in the large academic centers and so there's a high level of awareness across the emo H.
And the healthcare side of the government from a from a public health policy standpoint high level awareness about our products to this every day that we think is an important.
Kind of a foundational aspect or foundational advantage for us given given.
Our positioning.
So that I think is kind of that the answer to the first part of your question.
The second part is is.
Really around the the tendering processes, you asked about and.
The JV.
The JV infrastructure will will be assisting in some of the tender process, but I'm not I'm not believing that they're going to take the primary lead and it I think that are.
Our our our existing distributor Tomana life is it because they have the relationships with the hospitals that have received the Taipei licenses. They actually assist those customers in application process getting themselves in the queue for type a licenses they have the strongest relate.
One ship and working background with those accounts and I think that that there as it as a consequence, they're better position to support.
The efficient negotiation, if you will or process management related to the tendering.
And I know, while it sounds like there's a lot if you look at 50.
50 different accounts it sounds like a lot, but the bottom line as I don't think we've got a big concern that there were going to be challenges to that tendering process in terms of of infrastructure support and focus I mean, the Tom on I've guys as you might imagine our.
110% focused on ensuring that those licenses get or the tenders get completed and so that they can put themselves in a a first the first first available position if you will to be able to receive a device.
It's great that sounds like there's a high probability you can get those things across the goal line, which is that debt.
I would agree with that assessment.
Thank you very much.
Again, ladies and gentlemen, if you have a question or comment at this time. Please press Star then one key on your Touchtone telephone.
Our next question comes from Tycho Peterson with JP Morgan.
Hi, Thanks. This is a plenty on for Tyco.
Going back to your question on China.
Can you maybe just talked about why your expectation on the timeline for the tendering process have changed.
Revenue recognition that pushed out to your fiscal fourth quarter and then what is the initial pacing and cadence we should expect given the pent up demand and how rapid. Please. Thank you respond once the tundra tendering process conclude.
So let me.
I would let me just kind of start by saying I don't think hour.
Our expectations or our view of the timing related to.
Revenue impact in this discussion I don't think they change really at all I think if you go back to our prepared remarks in some of what you heard from us in Q in a over the last couple of quarters. The one thing we've been pretty consistent about is that.
Every time, we've tried to make up grand predictions about timing related to China. We've been we've been wrong, we've been disappointed and so if anything we've we've taken a stance that says were and I think it's been consistent over the last several quarters, we're going to take the long view on this we're going to be conservative about it and if.
Things happen in a more rapid fashion thats terrific theres upside there, but so if you go back to again remarks from the prior prior earnings call.
We said that we expected.
We expected the up between the the timing of the license awards announcement and the tendering process. We were expecting that there was going to be no impact revenue impact late in our fiscal year it was difficult to predict.
Or near impossible to predict with any precision how much revenue impact and Thats. This stuff still kind of where we're where we're at this point. The good news is we have today prior to the end of the calendar year.
We've got license awards that say that we've been.
Disproportionate winter if you will in in the selection and type equipment. That's the good news the challenges that we still have some activities process wise it have to be worked through the tendering piece specifically.
Again, I don't we don't have any information already belief at this point that.
We will not.
That we won't get through that process.
No.
Reasonably quickly, but for us to say that we've got a defined view about down to the day are down to the week.
When that process will be complete I'm, just not prepared to the to put our put our credibility on the line at this point again and I think it's just best for us to say that.
We don't see any obstacles to getting the tendering process complete we believe that we will start to add some revenue impact sometime during our fiscal fourth quarter. If tendering goes faster than we would imagine then I would say the degree of revenue impact that could take place would be higher as just a matter of just serves.
A reminder.
Our current China backlog in round numbers is 59 units. So in round numbers about 60 devices or about $130 million in in backlog about 115 million is pipe a about $16 million type b. So there's.
A lot to work within that backlog once tendering is complete and.
Those those.
Accounts those unusual hospitals are who our earliest in the queue or ready to take receipt of a device as I mentioned in the last call. We've got inventory built we've got inventory staged and our ability to respond to.
The final completion of tendering and.
People ready to schedule installation and.
Take take delivery of equipment.
Our ability to support that is is is imminent, we're ready quite frankly now so I think that that's how I'd characterize it.
Okay. Thanks, and then can you talk about the given paid on guidance.
I believe you previously included.
Assumption for Karen.
Hi, Graham 50 basis points top line headwind and then also had no 50 basis points gross margin headwinds. So just wondering.
Your.
Assuming given the tariff.
Yes, so we had a.
Discussion and some review internally on this topic millennials and we we basically.
We put up a press release out I think in early to mid September you'll probably remember that we said that we expect to convert to benefit from the tariff exemption that has not changed we do expect it to benefit from the tire tire exemption, but we're waiting for final clarification from the Chinese government on.
Our exemption status I.
I think we've got a very high degree of confidence on the tomo Radixact products.
I think the again, because the cyberknife is a little bit different animal than a a conventional when act.
We wanted to make sure that we add confirmation full confirmation from the government that the Cyberknife has will achieve the same level of exemption status that we're expecting on.
On the total radixact products and until we have that that clarification in hand, we think it's premature to that to change the guidance.
The guidance situation your estimate though of about 150 basis points is is in the ZIP code range of what that that benefit should be once we have clarification.
Okay, great. Thank you.
No I'm not showing any further questions to start more turn the call back over to Josh Levine.
Okay.
Just want to thank everybody for.
Participating today.
We look forward speaking we began in January when we attend the JP Morgan annual Healthcare Conference and report our fiscal 2022nd quarter results later in that month, thanks very much for your participation.
Ladies and gentlemen. This concludes todays presentation you may now disconnect member wonderful day.