Q4 2019 Earnings Call

Dead dead dead dead dead.

Dead dead dead dead.

Greetings and welcome to hangers fourth quarter 2019 earnings call as a reminder. This conference is being recorded today. We will have prepared remarks followed by a Q&A. Instructions for questions and answers will be provided after the formal presentation is now my pleasure to introduce your host Seth Frank vice president of Treasury and investor relations.

Good morning, and thank you. Welcome to hangers fourth quarter and year-end 2019 earnings conference call with us today are been an officer hangers president and chief executive officer and Thomas Crawley Executive Vice President and Chief Financial Officer. Some of the information discussed today will include forward-looking statements in the meaning of the private Securities litigation a format of nineteen ninety-five. These statements are subject to risks and uncertainties that could cause hangers actual results to materially differ from those we discussed today took risks include among others matters. We have identified in the forward-looking statements portion of our latest release and in our filings with the sec hanger disclaims any obligation to update forward-looking statements discussed on this call, and with that let's hand the call over to that.

Thank you, Seth and good morning everyone. Thank you for joining hangers, fourth-quarter and full-year 2019 earnings call in my prepared remarks. I will summarize our financial results and provide an update on our business and the industry Tom will then provide details on the numbers after which we will take questions.

For 2019 Hangar reported net revenues of just under one point 1 billion dollars and adjusted ebitda of 124.2 million. These results are in line with the 2015 Outlook. We had provided at the start of the Year adjusted earnings-per-share for 2019 were ninety cents a 15.3% increase over 2018.

For 2019 we had set a goal to grow at or above market growth rates and patient care and were successful in this front Revenue growth was 4.7% for 2019 with patient care segment growth of 5.6% driven by same Clinic growth of 2.1% a meaningful improvement from 9% in 2018.

We cheap strong organic growth and Prosthetics for the year, totaling 3.2% in Orthotics growth of 9% These results demonstrate the benefits of our multi-year investments and Hangers core differentiators. All of which are intended to Drive Superior patient outcomes and a best-in-class patient experience.

Segment profitability in patient care has been masked for the last few years by a decline Within products and services segment specifically therapeutic Solutions. And this was the case in 2019 a factor. We had anticipated and included in our 2019 Outlook.

products and

This is net revenues were consistent with the prior-year led by a 5.4% growth in own P distribution offset by the therapeutic Solutions business our own distribution bang screw on the heels of strong leadership and expanding catalog allowing us to enhance our position as a One-Stop full-service only distributor and providing excellence and service levels to our independent owned Clinic customers.

Looking at the fourth quarter highlights. We finished the urine a strong growth footing as many of, you know, given the seasonal nature of our business. The fourth quarter is our most important of the year in terms of financial contribution total Q4 net revenue was 300.9 million dollars reflecting 5.6% year-over-year growth from a business segment perspective page again performed. Well helped by a very healthy underlying same Clinic growth rate and the positive impact of o&p Clinic Acquisitions completed in late 2018 and during June nineteen.

During the quarter Patient Care Net revenues grew 6.9% with a notable same Clinic Revenue growth of 2.9% Prosthetics, excluding Acquisitions. Grew 4.4%. During the quarter a peak level during 2019. We remain encouraged with a multi-tier strategies. We have put in place to drive organic Prosthetics growth.

Total Orthotics Revenue grew by 1.3% during the quarter on the same Planet basis. We are seeing success in custom orthotics with slower growth and shoes and inserts partially offsetting gains strength in custom categories as a reminder. We provide a full service approach in our clinics and continue to work closely with our clinicians and referral sources to drive programs that create a platform for growth in customer thotics.

At the clinic level are focused on service Excellence continues to show results our net promoter score through December of 2019 is 84 for Hanger Clinic a 200 basis-point improvement from the back end of 2018.

Turning to the products and services segment revenues declined by 316000 or just under 1% in the fourth quarter.

Within the segment o&p distribution growth moderated during Q4 to 1.7% in line with industry growth rates and closer to the more normalized rates. We have anticipated for some time.

Underlying fundamentals within our Core Business of distribution of componentry to Independent providers remains positive looking ahead as part of our ongoing analysis of our business. We have made a strategic decision beginning in 2022 exit the distribution of certain off-the-shelf Orthotics Goods into third-party channels such as Podiatry that are non-core and unprofitable.

Tom will discuss the impact of this in 2020 essentially a small negative effect on o&p distribution revenue for the year, but even to a neutral as we shed non-core low-margin offerings off.

Within

Reputed Solutions. We saw moderation and revenue declines and we exited 2019 with therapeutic Solutions Revenue declining by $911,000 for the quarter looking forward. We believe therapeutic Solutions declines will narrow meaningfully in twenty-twenty. The reason for this is that we are beginning to see installations that new client locations exceeding cancellations at some existing Club locations. This is a positive sign after seeing several years of stress in the sniff industry. We have pivoted our offerings to align with new Skilled Nursing Facility pdpm payment model off our investments now allow sniff providers to provide high-quality Rehabilitation care and improve compliance by creating efficiencies through the use of technology and evidence-based treatment pathways.

These changes along with more flexible pricing packages in our offerings align well with new PDP and model and has contributed to the recent success in the new sales front which has helped close the electrician guy as a result. We see therapeutic Solutions as a more mild headwind on segment and Consolidated results for hanger and 2020.

On the m&a front 2019 was a successful year. We recognized approximately 28.9 million of net revenue as a result of small and mid-sized own businesses dead tired at the end of 2018 and during 2019. This was consistent with the acquisition Revenue. We had built into our financial outlook for the full year 2019.

The purpose of our m&a strategy is to identify independent on P Clinic businesses and local markets that add high-quality clinicians to our team and expand hangers Geographic footprint.

Our business development team and integration processes have been strengthened during 2019. And as a result, we enter 2020 in the best position. We have been to continue to add and integrate attractive o&p businesses at prudent valuations.

We strongly believe prudent appropriate Acquisitions provide amongst the highest Returns on invested Capital. We can achieve for shareholders.

With multiple successful Integrations completed to date and Hangers strong clinical reputation Rising our pipeline of opportunities continues to strengthen.

I want to briefly touch on our supply chain initiative which we discussed in detail last quarter.

We are on track with this important initiative which has both operational and Technology components. We are underway preparing for the automation that will occur within our distribution facility environment off at the corporate level. We have begun our journey to a cloud-based Financial system, which we expect to complete in 2021.

We were optimistic about the cost savings and enhanced efficiency. This initiative will bring hanger in just two years the two key areas for savings include lower freight costs a significant contributor to our indirect cost of materials as well as increased automation.

We've also begun to implement Consignment based inventory in our distribution centres, and the program has been well received by our manufacturing Partners. This lowers inventory working capital and wage costs and helps ensure proper stocking of high demand componentry.

Looking ahead to 2020. We have a considerable foundation in place to build upon. We recently held our National Education meeting hang or live in Nashville, and it was attended by approximately 1,400 people from across the country mainly our clinicians as well as vendors partners and patience. This is one of the largest domestic owenby industry events held in the United States wage.

This annual event is focused primarily on educational and clinical training sessions supplemented with business strategy meetings and inspirational Talks by our patients regarding their limb loss and limb difference Journeys. We were very pleased with the success of the event this year.

2019 demonstrated that our strategy of differentiation is driving growth.

If you consider, the unique assets hanger has within this industry. They are notable our clinical leadership team likely viewed as the best in the world and the infrastructure we've invested in during the last few years in the communities. We serve we also have invaluable relationships our Partnerships with hospitals Physicians and Allied health professionals across the country club well as manufacturing partners and pair relationships.

Our growth going forward would be the product of the Synergy of these various external relationships combined with our internal assets. The reality is that historically o&p been outside looking into the mainstream of Medical Science and Healthcare practice ours is a small and somewhat Niche industry with a history and reputation that is just as much about art as it is science.

Hangar is striving to bring the only profession to the broader Healthcare table as a trusted partner that promotes access to increased Mobility better health status and lower costs over the long term. We are driving a narrative not just about Prosthetics Orthotics, but about access access to care and access to a quality of life. This is value and our club and pair partners are beginning to better understand it and as you can imagine our patients appreciate it.

Let me know wrap up with some observations in the industry like other Health Care Service Industries. The only industry demands the utmost rigour and documentation for services prior to submission of claims to payers.

Hangar is well-positioned for this with the revenue cycle Investments. We have made over the last few years. There is also an increased need for demonstrating clear patient outcomes to our referral sources and our parents anger is in an excellent position on outcomes because today we have the largest outcomes database of lower extremity prosthetic patience and are beginning to build a similar database of old comes for upper extremity prosthetic patience as well. As our customers products patients, the primary beneficiary of our focus on outcomes are our patients who benefit from the appropriate money, they received from our clinicians.

our Mantra a hanger is that we will be

Defined by the outcomes we generate and not by the devices we fit and it in itself is a strong differentiator at the end of the day. We have a highly differentiated value proposition and an enviable leadership position in the industry both clinically and strategically.

Before I turn the call over to Tom, let me comment about the covet nineteen situation and how we're dealing with it. As a reminder. All our patient care clinics are within the United States a hanger. We've established in nineteen task force that is monitoring the situation through the CDC and who information channels as it relates to our approach to Patient Care as well as other operational elements of the business. As of this time. We have not seen a Slowdown in patient floor within our clinics. However, the busiest time in our clinics in q1 is generally these last few weeks in March month and we will be monitoring the situation closely.

In closing I want to state that we are pleased with our overall performance in 2019 and well positioned for long-term success based on the Investments. We have made and the momentum. We are building. Thank you for your attention and interest in Hangar and now Tom will take you through the numbers and details Tom. Good morning. It's been it's shared. We are pleased with the company's fourth-quarter and full-year 2019 performance for the year hangers overall results compared favorably to the midpoint of the Outlook. We provided at this time last year net revenue of 1.098 billion reflected a growth of 49.3 million / 2018 and our adjusted ebitda of 124.2 million reflected a growth of 3.2 million over the prior-year.

What is perhaps the most important takeaway regarding our 2019 revenue and earnings performance is that the underlying growth of our largest operating segments patient care drove those results and the strength of this divisions performance was partially offset by the results of our small air products and services segment.

Within the patient care segment during the fourth quarter same Clinic Revenue growth of 2.9% coupled with the benefit of Acquisitions drove a 6.9% increase in net revenue net revenue growth was the key contributor to this segment's adjusted ebitda increase of 5.2 million or 10.7% for a four-year patient care achieved the same Clinic growth rate of 2.1% which was an underlying driver of the overall segments net revenue increase of 48.3 million or 5.6%

This lad to adjusted ebitda growth of 13.7 million or 9.1% for the full year.

Segment margins increased by sixty basis points over 2018 expanding from 17.6% in the prior year to 18.2% This segment is by far the largest of our two operating segments during 2019 patient care revenue of 905.7 million constituted eighty 2% of the company's net revenue and it's an adjustment of 164.6 million reflected 85% of hangers pre corporate adjusted ebitda.

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FedEx growth of 3.2% for the full year was generally consistent with the rate of growth. We reported in each of the prior two years and reflects a premium to what we believe to be the market rate of growth off as a result the increase in our overall same Clinic growth rate during 2019 came from an improvement in the growth Trend in Orthotics during the course of the year due in part to our focus on custom devices Orthotics growth increased 2.9 in 2019 is compared with a decline of 1.3% in 2018.

We believe these favorable Financial results have validated the Investments. We met during the past several years is building an industry-leading clinical focus on patient outcomes and satisfaction when coupled with our differentiating capabilities, we believe that hanger is now beginning to reflect the benefits of its ability to leverage its patient care infrastructure.

In 2019 as anticipated growth in our patient care revenue and earnings were moderated by the results of the products or Services segment for the year due to an expansion in the size of the product off the addition of key accounts revenue from distribution increased by seven point four million or 5.4% This growth was almost fully offset by a 6.4 million dollar declining revenue from therapeutic Solutions, which was right in the middle of the 5 million to $7 range. We forecasted at the start of 2019.

The effects of this decline in therapeutic Solutions Revenue when coupled with increases in our support costs within distribution services led to a decrease of 7.3 million and adjusted ebitda wage products and services segment during 2019.

As we enter 2020 there are several important trends that emerge within the products and services segment during the fourth quarter that we believe will have a bearing on the coming years results.

First as we anticipated in our third quarter conference call Revenue increases from distribution moderated to a market rate of growth of 1.7% during the fourth quarter off accordingly our plan for 2020 envisions a more normalized rate of underlying distribution growth. However has been it's shared. We have recently chosen to exit from the selling price low margin off-the-shelf Orthotics products to podiatrist. We anticipate that this will cause distribution Revenue to decrease by approximately 5 million and twenty twenty but due to their low margin do not believe this will have an adverse effect on earnings.

Secondly during the fourth quarter the rate of decline in revenue from therapeutic Solutions slowed 2.9 Million, which was significantly less than the decline in Prior quarters. We are hopeful that this is indicative of the onset of a gradual slowing of the revenue declines in this portion of our business during 2020. We currently anticipate that the revenue decreased birth services for the full year will be approximately 2 million, which should lead to a more modest decline in segment earnings than what we experienced in 2019 in Prior years. In other words. We're cautiously optimistic that we will see the onset of a stabilization and therapeutic Solutions during the course of the year in a more modest decline in products and services adjusted ebitda during 2012-13 than what we experienced in 2019.

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Spencer's increased by three point two million during 2019 and two point five million of this increased related to the costs associated with the implementation of the supply chain and financial systems project.

In twenty-twenty we estimate that we will recognize five million and then technology related expenses in connection with this project.

Now I'll provide you a bit more background on the company's cash flows for the fourth quarter and for 2020.

The last three months of 2019 hanger produced 38.9 million in operating cash flow, which was in line with the Forty one point four million in operating cash flow produced in the fourth quarter of 2018 the slight decrease in operating cash flow of relates in part to a 1.7 million dollar deferral of implementation costs incurred in connection with a supply chain and financial systems project during the fourth quarter.

He's seasonally strong operating cash flows contributed to a twenty four point five million dollar increase in our cash and investment balances and a growth and Hangers overall liquidity to 169.2 million as we look forward to 20 20 as discussed in Prior calls to supply chain and financial systems project will utilize a portion of our available Capital during incoming year for both the cloud systems implementation as well as the reconfiguration of certain of our distribution and Fabrication centers. We believe these initiatives will position hanger to expand our service capabilities and it supply-chain efficiencies commencing in 2022.

During twenty-twenty in accordance with the recent accounting rules regarding cloud computing implementations. We currently anticipate that we will defer approximately 7 million to 10 a.m. And implementation expenditures related to the project and that those expenditures will be recognized as expense in future years over the useful life of the underlying systems. Additionally, we anticipate incurring 13 million to 15 million in capital expenditures associated with our build-out of distribution of fabrication facilities and off position of a related equipment, which will bring our 2020 Capital expenditures up to approximately $45 million.

On a net basis hangers overall leverage profile remain consistent with the prior year end at three point five times.

As we look forward to 20 20 our plans are to continue to balance our management of the company's leverage profile with our desire to deploy capital for our systems implementation projects and towards mom positions that have provided us with attractive Returns what we believe these investments will drive and expansion of long-term shareholder value. We nevertheless remain sensitive to the needs a manager debt profile.

Now I'll spend the final portion of my comments discussing your outlook for 2020.

Hangar currently anticipates net revenue in the range of 1.1 to $5 billion the 1.15 billion and adjusted ebitda in the range of 129 million to 134 million.

We perceive that revenue and adjusted ebitda increases will be driven by the patient care segment as I discussed earlier due primarily to the discontinuous of low-margin off-the-shelf orthotics wage to podiatrist. We believe that products and services revenues will decrease modestly.

And that win coupled with the therapeutic Solutions trans be adjusted ebitda for the segment will do the same.

Corporate expenses are anticipated to increase and this is due primarily to the implementation expenses associated with the supply chain and financial systems project other technology-related expect an increase is an incentive compensation this Outlook includes $27 million of Revenue growth related to the full-year effect of Acquisitions completed in 2019 and Acquisitions for which we had a definitive purchase agreement signed as a March 5th of this year.

Additionally this Outlook does not reflect any potential adverse consequences of the code 19 virus on our operations.

And looking at the quarterly spread of our adjusted ebit are as you may recall from the swings and results last year. Our business is highly seasonal and subject to inherent quarterly volatility off the fixed nature of our cost structure causes our earnings to be inherently sensitive to Natural changes in our Revenue growth from one quarter to the next.

Last year due to several timing factors, we experienced a weak first-quarter and a strong second-quarter is some Prosthetics delivery slipped from the first quarter into the second this year while I first quarter will be our seasonally lowest quarter. It should benefit from a relatively easy comparison to 2019 the second quarter and the other hand will have a difficult comparison to the prior-year quarter off.

Due to our natural seasonality in twenty-twenty as was the case in 2019 more than 60% of our adjusted. Ebitda will likely come in the second half of the year off the last six months of 2020 will be the most critical to our achievement of and your results.

From a cash flow perspective, please. Also bear in mind that well the fourth quarters our seasonally strongest due to operating seasonality and the payment of annual incentive compensation. The first quarters are name is cash flow quarter when coupled with the increased Capital expenditures of our supply chain project. We currently estimate that we will finish the first quarter of 2020 with total liquidity of approximately $155 million and closing. We're pleased with our 2019 financial performance and believe that hanger is well positioned to capitalize on that underlying momentum in twenty-twenty with that. I turn the call back over to the operator to open it up for questions.

We will now.

Again, the question and answer session to ask you a question. You may press * then 1 on your touchtone phone for using a speaker phone. Please pick up your handset before pressing the keys to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster.

The first question comes from Larry solo from CJ s Securities, please go ahead Greg. Good morning guys from a if I do the math. It looks like just on the off on the revenue growth that 1.5 to 3% Is your outlook on same-store growth. So sorry about that. Same star growth in patient care. Is that I guess is that question one is that about I am I in the approximate area and can you kind of help us parts that out. The midpoint of that is sort of similar to what you did in nineteen. Would you be hopeful made it for a little bit of an increase in a relative to last year or some of your initiatives continue to hopefully take a better shape and then you know, how does price impact Outlook, you know, nineteen twenty verses nineteen.

Hilary this is Tom. First of all you are correct. If you look at the lower end of the guidance, it's right around what we would consider to be the market rate of growth in twenty-twenty and the upper range of a guidance, you know would go ahead and presume some expansion of hangers underlying market share, you know pace of growth. Now the reason you're not seeing that in the midpoint of the guidance is that you know, there is a light pricing decrease that we will be uh having in 2020 it relates to CMS CMS is reimbursement is going to be about 9% in twenty G20 as compared to 2.3 and 2019 and that affected us in a as a decrease from 1.4% pricing in 2019 to about an average melted rate of 2.7% pricing in 2020. Now we're offsetting that pricing decrease because we believe that will have a good stabilization wage.

The patient non-payment part of the company's overall growth and those factors lead us to believe that it's reasonable that 2.1% 2.2% could be a good base line for for me that growth but we're hopeful obviously we can pick the pace up and and try to achieve the higher rent and how about just plus that maybe a little bit between Prosthetics and Orthotics obviously projects continue to sort of grow and that three to four percent range very solid quarter and Q4 in Orthotics Superior of stabilized, you know ecsta in a year exiting a small piece of the business, but little excluding that do you expect sort of similar, you know, three or four percent and Prosthetics and maybe a little bit of growth in orthotics in 2020.

We do when you look at it, the the Baseline is similar to the 2019 Baseline. We're we're up in about the 3% range for Prosthetics and that where you know around the 1% range or so off, you know for Orthotics. Our agenda is to try to increase the rate of orthotics growth. And if we do that would give us some you know upward potential on the rate of growth and then just last question on just on the the coronavirus. I fully got you guys. You know, first of all hopefully would be a you know, not some reoccurs every year and I thought they get that the certainly has limited discretion. But if there is some possibility at some stuff is pushed out and I don't know how you know some parts of the country are and I I do live fifteen minutes from the containment Zone if you will up here in Westchester County, but you know that no one on the roads, you know stores are empty restaurants around three people are just are staying in when they can it seems like and hopefully that, you know will subside eventually but you know in the short-term could that you know wage?

push some

Some stuff out a little bit until you know future quarters.

Hi Larry. Yeah, I think it you know, there's a possibility it could it's going to depend on what parts of the country what happens, you know patients decide to stay home and not step out of their homes, right you canceled appointments. We could sneak some of that, you know from a care perspective, you know patients could push off their replacement devices Maybe by a few weeks waiting for things to settle so far for the first, you know month or two months or so this year. We haven't seen that slow down, right but as I mentioned in my comments, you know, the busiest time for us is here in the next few weeks. So we're watching that closely, right? Okay fair enough great. Thanks. I appreciate it. Thanks, Larry.

The next question comes from Brian tanquilut from Jefferies, please go ahead.

Hey, good morning, guys congrats and a good 2019. I guess my first question. So, you know as we exit 2929 go into twenty-twenty. I think was the last few times the United spoken we talked about how this company's Focus was stabilized the business prepare for growth and now or should we be thinking about that the fact that you're done with those and we should be in the growth phase right now for the business and how do you think about you know the opportunities out there? I know you've got some deals taking your guidance, but don't just walk you through how you're viewing growth and opportunity for acceleration.

Yes, thanks Brian. You're right. You know I think over the last two years our focus and attention was more on the stabilization and preparation for growth, you know, stabilizing the infrastructure and preparing the actual infrastructure allow for the growth. So we believe we've done a lot of that and then Tom in my comments and this call in the previous call. We've talked about the investment that we've made and we're pleased with how we set the company up and at this at this time in our growth plans are under patient care side to make sure that all these Investments we've made in the focus on outcomes and on patient satisfaction have set us up to get good healthy Organic Grown. Now, I've seen plenty of growth that, you know allows us to expand market share organically and supplementing that with you know, key tuck-in Acquisitions that we believe will be in to us and in a good for shareholders and and our focus on on the Acquisitions is on high-quality clinical clinically driven assets, and you know, we're pleased with the interest we're getting off.

To join hanger as well. So on the m&a side, you know leading into the second part of your question, you know, we're really pleased with the pipeline that we have. It appears that we are attracting those businesses that are focusing on outcomes and on patient satisfaction really high quality businesses. So that's you know, we're pleased with the pipeline and we're pleased with the folks that have joined us and we expect that caliber of business businesses to be joining us.

I guess to follow up with that VIN is that the case I mean in a way there should be some expectation of above Market Grille. We were seeing that obviously in the prosthetic side of your business. I guess two questions in that point long. Do you think that the prosthetic business growing faster than the rest of the the company is a good thing for a margin perspective and then as I think about your ability to grasp of Market, you know, there have been Rumblings from some manufacturers recently about you know, how the Prosthetics Market globally is slowing down. So just want to hear your thoughts of that and what you're seeing here in the US in a market, you know is the market going to continue to grow for onp going forward.

we don't expect we haven't seen any slowdown of the

Aesthetics Market here in the US. I can't speak for outside the US obviously but in the US, you know, we haven't seen that, you know, we had our strongest quarter with 4.4.4 percent growth in in Q4 and 2019. But even if you think and if you look at the numbers over the last couple of years, you know, we've consistently grown Prosthetics at about 3.3% in 2018 in similar number in 2019. So, you know what, we haven't seen that slow down and Prosthetics growth, you know, obviously we'll monitor it but right now we're really pleased with at least our performance and we believe we're probably picking up some market share on the prosthetic side. So I consider that above market growth on the prosthetic side month.

So yeah, it sounds like that's more company specific to that manufacture. I guess my question for Tom, you know over the last five years that you've gone through a lot of accounting issues or Accounting Office heavy lifting to address the accounting issues in the past. Where do you stand out? There's like, you know your audit your controls, you know, and and anything else that you want to call out on the accounting office in infrastructure front. I mean Brian good question as a December 31st of 2019. We had a fully effective control environment. We had no outstanding weaknesses in wage roles that were reporting and so really we see that as something very indicative of the of the past and not certainly not the hanger of the present or the future.

2 time do you think that the accounting infrastructure and then the cost associated with that? We should be at that level at the right level of this point, right? Yeah. I mean, I believe the cost structure is pretty stable and will be stable going forward. We are continuing to obviously make systems enhancements which our operations benefit from and the accounting team will benefit from so, you know, we're hoping that we can drive some further efficiencies years to come.

Got it. I guess my last question just to follow up on Larry's question on if I take a step back on a more fundamental basis, right? Like what percentage of your revenues are recurring a number one and then I guess the second part of that as I think about the key drivers of your referral flows outside of the recurring, you know, the the renewals or the what you call it up and people devices. What's the main driver that I mean is it? You know, where should you be looking at? Is it the diabetes cardiovascular disease, you know and then they said like how do you think about the selective nature of the underlying growth drivers for the industry?

Yeah, great question. So in terms of recurring revenues, when you think of, you know, our patient care segment or Prosthetics business about 70% of our revenues are of a recurring nature in the prosthetic side off, you know in the balance our new patients coming in and they're generally coming in primarily as a result of either vascular disease or trauma. Those are the two big areas that they're coming in as a result of in terms of an elective nature and you know, tying it back to your question around Copa 19. Look, I think the patients that are coming back to us on a recurring basis for the replacement devices or adjustments those factions could possibly delay things if they have to so if you know if you're in a containment Zone et cetera, and if you're not stepping out of your home, they could delay by week two weeks or something like that those applications that are just new patients getting their amputations. My guess is they would be Keen to come in and get their first prosthetic device. So that's how we're thinking about it. But as you and I both know, you know, this is Jeff.

A fluid situation, you know.

A job right now is to monitor it and do the best we can to provide the best health care and be as available as possible to those patients that need the care.

I appreciate I appreciate that. All right. Thank you.

Thanks. Thanks Brian. Again. If you have a question, please press * then 1.

There are no more questions in the queue. This concludes our question-and-answer session. I'd like to turn the conference back over to the seller for any closing remarks.

Great. Thank you. Jason look and closing. I just like to emphasize that we're pleased with our with our 2019 performance, and we believe we're well-positioned for 2020. So we look forward to speaking you suck speaking with you all again in May for our first quarter earnings call. Thanks very much.

The conference has now concluded thank you for attending today's presentation. You may now disconnect.

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