Q1 2020 Earnings Call
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No Genesis Holdings Inc. at this time, all participants in place in listen only mode.
Please note that this conference call it being recorded in the recording will be available on the company's website for replay shortly.
Before I begin I'd like to remind everyone that our remarks today may contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including the risks and uncertainties, describing the company's filings with the Securities Exchange Commission, including I'm wondering risk factors.
The company's most recent annual and quarterly reports you are cautioned not to place undue reliance on any forward looking statements speak only as of the date made.
Although it may voluntarily to sell from time to time the company undertakes no commitment to update or revise the forward looking statements whether as a result of new information future events or otherwise, except as required by applicable security laws.
This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or G.A.P. generally refer to these known as non JP.
Natural measures reconciliations of those non-GAAP financial measures to that most comparable measures calculated presented in accordance with cats are available in the earnings press release on the Investor relations portion or let's say.
I'd now like to turn the call over to Mr., Gary asking me Senior Organogenesis Holdings, President and Chief Executive Officer. Please go ahead Sir.
Thank you and welcome everyone to Organogenesis holdings first quarter.
2020 earnings conference call.
I'm joined on the call today by Tim Cunningham, our Chief Financial Officer.
Let me start with a brief engender of what we will cover during our prepared remarks.
I'll start with an overview of our revenue performance in the first quarter, including some color on how our business trends have been impacted to date by the cobot 19 pandemic and how we're managing our business to keep us well positioned for growth when the rebound begins.
After my opening remarks, Tim will provide you with a more in depth review of our quarterly financial results as well as a summary of our balance sheet financial condition.
Then we'll open up for questions.
Beginning with a review of the first quarter revenue performance were reported total revenue growth of 8% year over year in the first quarter.
Driven by sales growth and our advanced wound care products of 7%.
And sales growth in our surgical and sports medicine products of 13% year over year.
We were pleased to deliver Q1 growth above the high end of the expected revenue range provided on our fourth quarter call as part of our full year 2020 revenue guidance discussion.
Our first quarter growth performance reflects the continuation of the key drivers of our growth that we've been discussing on each of our earnings calls over the last year.
Most important of which are the investments, we've made and expanding our salesforce over the last 24 month.
We had 275 direct reps at the end of Q1 up 10 reps a quarter over quarter and representing growth in our direct sales team of 45% since the end of 2017.
We also expanded the number of independent agencies, we are working with in the surgical and sports medicine market to approximately 165 at the end of Q1 20 compared to 160 at the end of 2019, which represents growth in our agency partners of more than 83% since the end of two.
2017.
Sales of our pure applied products were a key driver of total company revenue growth again, this quarter with sales of 32.5 million.
Compared to 25.4 million in Q1 last year, an increase of 7.1 million for 28% year over year.
We continue to leverage the strong demand for pure apply by growing the number of pure play customers by driving customer and clinician adoption deeper into our existing pure play accounts and we were pleased to see the early progress, we're making related to a pure apply office strategy as well.
Importantly, our reported growth in Q1 does not fully reflects the strong execution of our commercial strategy, which had resulted in strong momentum in our growth trends over the first two months of 2020.
Typically ourselves through February were up 13% year over year before slowing dramatically over the second half of March.
As the covert 19 pandemic spread throughout the U.S. in March in Federal and state restrictions were initiated we began to see significant disruptions in our business trends. This disruptions varied across our business given our commercial presence in different sites of care in different regions of the country, but by the end of March many of our custom.
Hearing a significant disruption in their activities, including shifting resources to emerging here restricting access to their clinicians and reducing patient treatments or announcing temporary closings as a result of cobot 19 pandemic.
After increasing 13% through February I sales increased 14% over the first half of March so the growth trend continue then declined 14%.
Year over year.
Over the second half of Mark resulting in flat growth.
For the month of March year over year.
This sales performance for the full month of March was driven by a 2% increase in sales of our advanced wound care products offset by 9% decrease in sales of our surgical and sports medicine products.
The negative trends, we experienced in the second half of March deteriorated further in April as sales declined 29% year over year.
Sales of our surgical and sports medicine products declined 52% year over year in April.
Given the higher exposure to elective surgical procedures, especially those that are conducted in the hospital setting and sales of our advanced wound care products, which were more resilient, but still experience.
A deterioration in the trend compared to late March which sales declining 24% year over year for the month of April.
Importantly, though in recent weeks, we have seen an improvement in trends as some healthcare facilities, depending upon the site of care and depending upon the region in the country have started to reopen and why we were pleased with the overall positive trends in states lifting restrictions and the gradual reopening of practices around the United States.
We remain very cautious given the high level of uncertainty with respect to the pace of the recovery going forward.
Yeah.
So how is the company responded to this challenge of cobot, 19th pandemic well we've acted quickly in response.
By implementing a number of measures designed to protect the health and safety of our employees and to support our customers and to ensure business continuity.
We've also identified cost saving measures helped mitigate the near term impact of our financial performance as a result of the slowdown in sale.
We are possible we've implemented effective work from home policies that curtailed all non essential travel our manufacturing facility and supply chains have experienced no disruption to date.
Throughout this pandemic, we have stayed in close contact with our customers and have continued to identify ways waste to help them navigate the many challenges they are facing during this global pandemic. We've conducted many virtual services and educational seminars to educate our health care providers on the benefits of our portfolio.
Our sales team remains engaged with customers and and is using and leveraging virtual technology support our customers that are not accessible in person due to the cobot related restriction.
Safety is our number one priority.
And we are doing all we can continue to provide our life saving products to the health care providers and patients who need.
Finally, I want to say Im proud of how organization has performed during this period of uncertainty.
The resilience and dedication of our team has demonstrated a.
Team has demonstrated over the last couple of months.
Is impressive and I want to thank them for their continued commitment to delivering on our mission to provide integrated healing solutions that substantially improve the metal medical outcomes, while lowering overall cost of care.
With that let me turn it over to Tim for a review of our financial results for the first quarter and our balance sheet.
Thank you thank you Gary.
I'll begin with your view of our first quarter financial results.
Unless otherwise specified.
All growth rates reference during my prepared remarks around a year over year basis.
Revenue for the first quarter, 2020, which 61.7 million.
Compared to 57.1 million for the first quarter of 29 achieved an increase of 4.6 million or eight 8%.
First quarter revenue results came in and came in above the high end of the revenue range provided as part of our full year 2020 guidance discussion on our fourth quarter earnings call as well as the preliminary revenue range. We provided on April eight.
Revenue for the advanced wound care products are the first quarter of 2020 was 51 point Threemillion.
Compared to revenue of 47.8 million for the first quarter of 2019 and increase of 3.4 million or 7%.
Revenue from an advanced wound care products represented 83% of total revenue the first quarter 2020, compared to 84% of total revenue the prior year period.
Revenue from surgical sports medicine products at the first quarter 2020 was 10.4 million.
That's a 9.3 million for the first quarter 2019, an increase of 1.2 million were 13%.
Revenue from search surgical sports medicine products represented 17% of total revenue in the first quarter 2020, compared to 60% of total revenue in the prior year period.
Revenue from care applied products are the first quarter 2020 was 32.5 million compared to 25.4 million for the first quarter 2019, an increase of 7.1 million for 28%.
Revenue from pure Clark from pure play products represented approximately 53% of total revenue in the first quarter 2020, compared to 45% of total revenue at first quarter 29 cheap.
As of March 31st 2020, we had approximately 275 direct sales reps compared to 265, a year end 2019 at approximately 165 independent agencies compared to 160 at yearend 2019.
Gross profit for the first quarter 2020 was 42.9 billion compared to 40.1 million for the first quarter 29 team.
Increase of 2.8 million or 7%.
Gross profit margin for the first quarter 2020 was 69.6% of revenue compared to 70.3% of revenue for the first quarter 2019.
The change in gross profit margin resulted primarily from changes in the revenue mix to the prior period.
Operating expenses for the first quarter 2020 were 58 million compared to 52.3 billion for the first quarter 2019, an increase of 5.8 million or 11%.
The increase in operating expenses in the first quarter 2020, as compared to the first quarter 2019 was driven primarily by higher selling general and administrative expenses, which increased to 52.6 million compared to 48.99 into first quarter 2019, an increase of 3.7 million or 8%.
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The increase in selling general and administrative expenses is primarily due to additional headcount mainly hiring in our direct salesforce.
Higher sales commissions as a result of higher revenue.
Additional royalties a portion of which was a cancellation fee for certain product development a consulting agreements.
And additional credit card processing fees due to increased collections.
The increase in SGN, a expenses was offset partially by.
A decrease in amortization expense Ics associated with intangible assets.
Hi, guys using the economic benefits method.
The decrease in legal consulting and other costs associated costs associated with the ongoing operations of our business.
R&D expenses for the first quarter of 20 25.4 million.
Compared to 3.4 million in the first quarter 2019, an increase of 2 million or 60%.
The increase was primarily primarily due to additional headcount and investment in clinical programs and our product pipeline.
First quarter 2020, R&D expenses were also impacted by additional process development costs associated with a new contract manager manufacturer for RF energy product line, which was reintroduce late in the first quarter Twentytwenty.
Total reported operating expenses for the first quarter 2020 included approximately 2 million of nonrecurring expense, which clouds. The strong expense control performance, we achieved in the period.
Specifically, the $2 million or nonrecurring expense is related to a fee for canceling multi year agreements that were inherited by the company as part of the New Tech Medical Aquas, New Tech medical acquisition.
Excluding the cancellation fee to growth in her as she they expenses this 4% year over year in the first quarter.
This gross interest expense reflects our proactive efforts to identify and implement cost saving measures as a result at the rapidly evolving rapidly evolving environment and continuing here and certainly uncertainty related from the impact of Kopec 19.
These cost saving measures were primarily attributed to discontinue all non essential services and programs.
Instituting controls on disk discretionary spending, including travel event marketing and temporary delays in clinical spend.
We expect the majority of these savings to continue to benefit our near term operating expense profile, which will help mitigate the financial impact of covert 19.
Specifically, we expect to realize savings of approximately five to 6 million in the second quarter 2020, compared to our expense operating expenses in the first quarter 2020.
Operating loss for the first quarter 2020, with 15.1 million compared to an operating loss of 12.1 million for the first quarter 2019, and increase of 3 million or 24%.
Excluding the nonrecurring cancellation fee discussed earlier operating expenses increased 7% year over year, reflecting modest leverage of our expenses relative to the 8% increase in revenue in the period.
Total other expenses net for the first quarter 2000 21.2 million.
Pat to 3.5 million for the first quarter 2019, a decrease of 2.3 million or 66%.
The change in total other expenses net for the first quarter 2020 was driven by a gain of 1.3 million related to the settlement of the deferred acquisition consideration dispute with the result, with the sell this of new Tech medical.
Offset partially by higher interest expense related to higher borrowings compared to the year earlier period.
The change in total other expenses net for the first quarter Twentytwenty, which also driven by 1.9 million noncash loss on extinguishment of debt, which impacted the prior period only.
As it related to the write off of on Amort on amortize debt discount upon repayment of the master lease agreement as well as early prepayment Carlos and 29 in March 2019.
Net loss for the first quarter 2020.
16.3 million or 16 cents per share compared to a net loss of 15.7 million were 17% per share for the first quarter 2019, and increase a point sixmillion or 4%.
Adjusted EBITDA loss for the first quarter of Twentytwenty.
13.1 million compared to an adjusted EBITDA loss of 9.4 million for the first quarter 2019.
We have provided a full reconciliation of adjusted EBITDA results.
Our earnings release form 8-K, and form 10-Q, all of which were filed with the Securities Exchange Commission. This afternoon.
Turning to the balance sheet.
That's a march 31st 2020.
The company had 46.9 million a cash.
56.6 million, a working capital and 110 billion of debt obligations of which 60.9 million were capital lease obligations.
Compared to 60.2 million, a cash and $100.6 million debt obligations of which 17.5 billion were capital lease obligations as of December 30, Onest 2019.
The net change in cash of approximately 13 million for the three months ended December 31st Sorry March 31st 2020 was driven by 8 million of cash provided by financing activities.
Offset by $17 million of cash used in operating activities and 4 million of cash used in investing activities during the period.
Cash from financing activities for the first quarter 2020 is driven by the Companys access and funding of the third tranche of its borrowing facility with Silicon Valley Bank, which brought a $10 million in cash on March 20th 2020.
As of March 31st 2020, we are in full compliance the financial covenants on the credit agreement with SBB.
At quarter end.
We had 60 million an outstanding bar borrowings under the term loan facility and 33.5 million of borrowings under the revolving facility.
The revolving credit facility has up to 6.5 million of additional borrowing capacity in the future subject to our continue compliance with financial can to covenants and the STB agreement.
We expect that our cash on hand as of March 30, Onest 2020.
Plus availability under our SCB credit agreement and cash flows for operations will be sufficient to fund our operating expenses capital expenditure requirements and debt service payments for at least the 12 month following our 10-Q filing.
Turning to review of our 2020 revenue guidance.
On April 8th Twentytwenty. The company withdrew its previously announced fiscal year 2020 revenue guidance originally issued on March nine 2020.
Due to the rapidly evolving environment uncertainty regarding resulting from the impact of to covert date team pandemic.
Given the continued uncertainty we're currently unable to fully predict the impact that the unprecedented covert 19 pandemic will have an accompanies financial position and operating results.
With that I'll turn the call back over to Gary Gary.
Thanks, Tim.
Despite the disruption in the business trends as a result, as the cobot 19 pandemic the long term outgrow.
Long term outlook for growth the market share gain remains compelling.
Fueled by the investments we've made in our commercial team new products line extension, including our recent relaunch of affinity and our growing portfolio of clinical evidence and we believe we have a strong commercial strategy and our continued success in executing this strategy will result in strong adoption and utilization of our product solutions.
For both the advanced wound care and surgical sports medicine markets as the broader economic and public health environment improves. So we look forward to speaking with the investment community in the future and appreciate your interest in organogenesis and with that operator, I'll turn it back to you.
Thank you Sir.
I'd like to ask your question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure your assumptions turned off to allow your signal to reach our equipment. We do ask that you limit yourself to one question and one follow up if you'd like to ask a day additional questions we'd like to add yourself you again by pressing star one our first question.
Will come from Matt Miksic from Credit Suisse. Your line is open.
And congrats on a on a pretty solid quarter, given the environment, especially.
Wanted to just maybe one of the things. We're we're all trying to do.
Including Navy folks that corporate and companies that we cover is trying to understand how.
Different companies and product lines in end markets are experiencing.
It seems to be the early stages of Oh.
Signs of a recovery, let's call it.
And I'm curious you mentioned, Gary and some of your remarks about a you know pockets of the country and types of centers that are starting to show some encouraging signs of improvement here after a tough April.
I love it if he could maybe give some examples.
Yes, your product lines, and maybe across different types or geographies, where you're seeing different things and I had one follow up.
Sure.
Well, we look at capacity as we all know this is not a demand issue with the capacity issue.
And capacity on the surgical sports medicine side.
Opened up.
Around 80, 82%.
Fortunately for us.
We have a lot of rural hospitals that we do business and so if you look at historically, where our surgical sports medicine sales have been.
For the states that are open now.
Covers about 96% of of our surgical sports medicine business. So we're seeing.
Some pockets.
Of the country, where it's almost business as usual and other areas and more metro areas.
Where we're seeing more of a constraint.
The other thing that's important for us is about 45% of our sales.
Our non elective so we were not as exposed.
As some other.
Surgical sports medicine companies.
And we have a fairly high concentration of sales almost 75% of our sales are in non metropolitan area.
So I think thats collectively why we've probably done a little better than what others have experienced.
Yes.
On the.
Yeah, well under wound care sorry go ahead go ahead Thats injure yeah. Yeah. We had you know it's about 70% of the wound care centers were open.
For business, but very few about less than 10% were accepting new patients were now seeing about 80% of the centers open.
And more than half of them are accepting new patients.
And we're also seeing about 30% of those centers now, allowing our our reps to cool to go into those centers and at the beginning of the pandemic. It was less than 10%. So we're seeing the centers opening up we're seeing our reps slowly.
Being able to enter those facilities.
As well as you know.
Non metropolitan areas.
Wrapping up much faster for us.
Hopefully that's helpful. Thats Super helpful. Yeah very helpful.
Any any sense of the you know the types of procedures types of wound care procedures, I know, it's kind of putting a fine point on it but.
But we had there's some other companies in this phase through the talked about.
Pushing some of these patients off to home care with sort of call it suboptimal or just sort of more traditional wound care.
Options for those patients who might have otherwise been given a sort of the more advance product in a setting you know given that given the persistence or their wound.
Any first of all of you have you seen at that pendulum swing, one way and it's a swing back and secondly is how to your products and to fit into that have to patients that are maybe being pushed out are asked to stay home or the type of patients that are that are actually being being recommended that they come and get treated.
Sure well, we're definitely seeing patients that really require and advance modality like ours being pushed off.
And I think in some in some areas.
Clinicians been allowed through reimbursement change at CMS to apply.
Skin substitutes in the home so we've seen a little bit of that to help offset the need for these folks to get a skin substitute and the wound care side. So.
Clearly we've seen the push off of patients that are requiring those those procedures were now seeing a backlog of those patients and wound care centers that are opening a now trying to schedule those patients in priority order, meaning those that have the that need the skin substitutes in advance modality are getting pushed into the centers.
More quickly than others.
So we expect.
To start seeing the results of that overtime.
That's very helpful. I'll jump back in queue. Thanks, very much for your the color.
Sure.
Again, if you'd like to ask your question. Please go by pressing star one of your telephone Keypad next question comes from the line of right some of them.
BTI King your line is open.
Thank you thanks for taking the questions, Gary and Tim a follow up to Matts question there.
In line with with what you're talking about in terms of pushing patients. How we've also heard from some of the competitors that.
This might result in more acute wounds being treated and so I'm just wondering kind of what that does for the product mix standpoint, if patients are being held off from from going in the clinic right now on their wounds due process and they become more acute.
How does that impact you guys when they do return number one and then the second question.
You talked a little bit about a pure apply office strategy and I was wondering if you can elaborate about that a little bit more what are your intention there and what that what the net result of S&P. Thank you.
Sure.
Let me start with appear apply office strategy.
We have mentioned on previous calls that we did have.
Unique procure apply offering in in the office, we've had an improvement in our ASP.
We have additional sizes.
So it's a unique office offering.
That's specifically designed for office type patients and to date, we've seen on actual doubling the number of offices.
That are utilizing your applied so that that strategy.
Has worked very very well for us.
And we continue to see growth.
Not only in the office as well as in the actual number of units that were selling fall within those offices.
Regarding the size and the delay of wounds.
You're absolutely right. What we're seeing now is that wounds how are bigger.
If you look at the average size of the products that we're selling particularly with pure apply and even with new she'll, they're larger sizes, which tells us that the wounds a larger kind of gotten worse.
Being aggressively applied and then followed by larger pieces of our product.
Thank you and then just one for 10 I just want to squeeze this and Tim if you called out credit card processing being up in the quarter I'm wondering if that's a change in behavior from historic patterns that clinics and was there any you know stocking up sort of speak ahead of maybe the pandemic.
From physicians.
And as the result of the increase in credit card processing that you saw.
No I mean, I don't think there's any real discernible trends right just the growth of the business, we haven't seen allotted to stress amongst our customer base and the ability to pay.
So.
I don't think this a discernible trend in that we just call it out.
Got it expand thanks.
Sure.
Your next question comes from line of Steven Lichtman from Oppenheimer. Your line is open.
Thank you hi, guys.
I can tell a lot of us they're trying to figure out the catch up effect of deferred procedures and so wondering if you can.
Ballpark first what percentage of your business you think is related to traumatic wounds such that you because the activity is not happening there was moved aren't happening. Therefore, obviously, we shouldn't be building that in that sort of catch up down. The line is that something that you're able to ballpark for us at all.
Yes, I can tell you that.
You know.
45% as I mentioned earlier or non elective procedures.
Yes, that's reasonable percentage of those that dramatic kind of acute.
Yes surgeries.
But we don't specifically.
Disclose exactly.
Types or procedures.
What percent of our businesses specific procedure related.
Okay, and so it's too as you're thinking about the the decline in the business here acutely near term.
Are you is should we assume that you know we don't know when of course, but over a period of time that most of that comes back or just qualitatively do you think that you know there's a portion we should not be expecting to come back simply because again activity is down overall.
And truck traumatic injuries, maybe down.
Oh.
I think our view is about 85% is that backlog will will get.
We'll eventually end up.
Getting taken care of.
We think.
Probably take four to five months for that backlog to work its way through the system.
So you know that implies about a 15% of that.
Lost revenue, perhaps would come back.
Got it thanks Kerry just quickly on.
You mentioned expenses data down due to clinical activity being down with that Easter proactive in terms of sort of cost savings offset or is it because you know centers are just obviously down and you can't do those clinical.
Does it have any impact on India. The pure play extensions that we've talked about.
Yeah.
What it really relates to its it is proactive for sure.
As well as you know not having access to clinical availability in a hospital, but primarily it's it's cost savings this proactive.
You know by slowing down.
The renewed trial.
The cost to save funding, that's a lot of upfront costs, they're not necessarily related to being in the hospital.
But we do have the new field trial as an example that we've had to put on hold because we do have.
Yes challenges of getting patients into the hospital and getting them treated as part of the trial. So it's a combination of both but the majority of the cost savings is being proactive.
Okay. Thanks to the thanks guys.
Again, if you'd like to asking question, we signaled by pressing star one on your telephone keypad.
Your next question comes on line of Richard Newitter from SVB Leerink. Your line is open.
Hi, Thanks for taking the questions I wanted to just start off with the I think Gary you had mentioned that.
30% of.
The sensors that are open for business now or at least the wound care centers that are open visits and accepting new patients that 30% of them are allowing reps and.
HM.
Well just wondering what are the criteria there how fast the that ramping and im kind of curious to know how important that is for you with some of the new product launches.
If affinity that type of product at once available.
Folks who are familiar with that product need to start ordering effort you need the rest in there.
Yeah.
A couple of things one is I think you'd it depends on the region of the country, obviously in the experience with co bid.
Cases is pretty much how.
The wound care centers are opening up so there's really no rhyme or reason to it.
It's it's different based on geography, it's that simple on the affinity side you know affinity is being launched right now in the office in many offices are open.
They need to be open it's their bread and butter. So yeah. You know reps are allowed to go in.
And talked to many of the office clinicians about affinity.
Our launch also is focused on.
Clinicians that have used DEFINITY in the past who were re launching with all our previous users. So that doesn't require a lot of education.
And the fact that we are in the office right now and haven't really attack the wound care centers with affinity makes a much easier for us. The other thing that I would say the credit to our commercial team is we've been in contact with over 95% of our customers virtually.
Or in person and multiple times, a month and doing educational programs Webinars speakers training.
Helping them manage their practice differently. So we.
We had a lot of time and a lot of connections with our customers, even though it's been virtual so that's that's been very very helpful and we expect that affect our ramp.
When those patients eventually start moving back in.
Great. Thank you for that color and maybe Tim anything you can provide for us in terms of the TNL.
Arjun and gross margin in particular as we.
For the model, what's really going to be a revenue declined in the second quarter can you give us any any you know helpful advice on.
The degree of de leveraging that take place thanks art gross margin impact rather.
Sure no we.
In Q1.
We had.
Bidder pressure on gross margin with some of the pre.
Really the.
Work on Infinity together, that's in the market.
And our Opex basis.
As we discussed in our prepared remarks, we have really affected some slowdown in spend and some cutting out of various different.
Areas. So we have.
Delayed some hiring gotten our salesforce for the most part across other parts of the company.
We effected marketing programs going from you know in person to online travel much much.
Restricted.
And some of the clinical programs Gary referenced that we've delayed.
Deferred for now.
Things that naturally change with the drop in revenue like commissions and royalties.
So we said at this current quarter Q2, we see that could be five to 6 million.
And Opex savings.
Your next question coastline, Matt Miksic from Credit Suisse London.
Hey, just wanted to circle back on a topic I know will still focused on covered.
18, and Q1 in Q2.
But I did want to sort of.
Check in just to get to get a sense of what what the steps are.
Key steps, which I'm sure you're all sort of focused and thinking about an addition to what's happening right. Now is is the transition into Q3 in Q4 on pure play and any key sort of milestones or activities that.
Might be affected by the current environment or you know maybe just an update as to how you. How you expect it to play out in terms of progression of new products or what steps that you are taking in preparation for the expiration of the pass through.
Sure well if you recall.
Part of our strategy with pure applied post pass through was to have a much larger office presence, having more sizes. So we can treat more wounds.
Many of those wounds, we didnt have sizes for the first time, we came out a pass through we have a higher reimbursement in the office, we expected that we've achieved.
So you know actually the the pandemic has pushed procedures from the outpatient setting into the office. So we've seen a significant increase in that move from the outpatient center to the office happening that's consistent to where we're going it's just seems to be it now.
I'll be happening faster.
Fortunately, we have the portfolio and that was part of our strategy is follow the patients.
Into the office and we think ultimately patients will also move more to homecare that seems to be the direction of health care. So it's kind of helped from that perspective.
And that's a big part of the strategy, we have the launching of other product.
We relaunched DEFINITY. So we're comfortable with that we've launched X T.
So that's moving forward and we expect MZ to be out in the second half I believe of 2020. So the product launches are going forward the only thing that really.
Concerns as a bit is we have a lot of clinical data.
For pure apply and we have a lot of.
Presentations that we were expecting CW C and other conferences and the fact that those conferences are not happening and we now have to do with virtually no. We wonder about the impact and we're gonna have to be more aggressive and making sure. We get that clinical data are out there to support the brands. So that would be the only thing right now that.
Is concerning to us as it relates to pure apply other than the overall economic impact of some of the hospitals as you know we pull out of this pandemic that.
There are significant reductions in capacity as a result of hospital closures or something like that but but actually the move to the office has been helpful.
But the ability to present and get our clinical data out there to support the brand is a bit of a concern.
Okay.
Got it thank you Gary.
Sure.
That does conclude our conference for today. Thank you for your participation.
Thank you everyone.