Q4 2020 Accuray Inc Earnings Call
[music].
Good afternoon, welcome to I can report.
Fourth quarter and fiscal year 2020 financial results conference call.
All participants will be in listen only mode should you need assistance, please saying no conference specialist by pressing the star Okay, followed by zero.
Today's presentation, there will be an opportunity to ask questions.
Please note that this event is being recorded I would now like to turn the conference. We'll look to go deals from partners. Please go ahead.
Thank you Kate and good afternoon, everyone.
Welcome to Accuray's Conference call to review financial results for the fourth quarter fiscal year 2020, which ended on June 30 2020.
During our call the shop, no matter, who will review recent corporate development.
Joining us on todays call art, Josh Levine, Accuray's, President and Chief Executive Officer, and Shane I'm I'm, not sure Accuray Senior Vice President and Chief Financial Officer.
Before we begin I would like to remind you that our call today includes forward looking statements.
Actual results may differ materially from those contemplated or implied by these forward looking statements factors that could cause you to results to differ materially are set forth in the press release, we just issued after the close after the market close the shaft.
As well as in our filings with the Securities and Exchange Commission.
The forward looking statements on this call are based on information available to us as of today's Jay and we assume no obligation to update any forward looking statements as a result of new information or future events, except to the extent required by applicable Securities law.
Accordingly, you should not put undue reliance on any forward looking statements.
A few housekeeping items for today's call.
There will be a slide presentation accompanying today's call, which can be accessed on the link provided in todays earnings release or by going directly to the company's investor page [laughter] Accuray Dot com.
Also during the Q and a session we request that participants limit themselves to questions and then re queue with any follow ups. Finally, all references we make two specific quarter in the prepared remarks are two hours the school year.
For example.
Statements regarding our fourth quarter refer to our fiscal fourth quarter ended June 30, 20 Twond.
With that let me turn the call over to Accuray's, President and Chief Executive Officer, Josh Levine Josh.
Thanks, Joe and thank you everyone joining us today, joining chicken eye on today's call is also Suzanne winter, our chief commercial officer and head of R&D will be joining us during the Q1 day session.
Despite the challenging environment caused by corporate 19, we concluded the fiscal year on a strong no I feel good about our full year fiscal 2020 performance.
We generated 10% you're on your order growth.
Aggressively managed expenses in working capital and position the business for future growth.
With that said, it's clear that the macro environment is requiring our team to find new and creative ways to engage customers and manage the business.
The intensity of the Cobot 19 situation is highly variable that variable by region and local markets can Tony continuing travel and customer access restrictions in certain markets and the resulting logistics and bunker construction schedules related to installation project timelines have been impacted both our distributor and end user.
Levels.
As a result, we expect continued uncertainty of revenue conversion timing for at least the first half of fiscal 2021.
Despite these headwinds we're demonstrating a high degree of adaptability. Our commercial team continues to successfully respond the customer specific conditions and requirements.
Sales clinical application support and even some service related diagnostics in trouble shooting interactions are being conducted through video conference platforms that enable customer communication and support in real time.
On balance we believe we were operating very effectively within the constraints of the coating cobot environment and I'm proud of our commercial teams ability to adapt and the dedication of our entire organization. During these challenging times.
From an internal focus perspective, we've been taking actions across an array of operational and financial areas to help ensure the continuity of our business.
Operationally, we are continuing to work aggressively with critical supply chain and logistics partners to ensure that we can support our production and surface activities activities globally, while maintaining maximum flexibility related to production schedule changes tied to revenue conversion timing.
We exercise great financial discipline in fiscal 2020 and maintained our focus on cash flow management with minimal compromise to commercial activities and advancing future innovation.
Wash it will discuss our balance sheet position in greater detail in his prepared remarks. These actions allowed us to finished fiscal 2020 with a stronger cash position than our initial internal forecast anticipated.
As we exited the fourth quarter, we were able to prepay $10 million of our term loan and renegotiate the covenants related to the remaining debt with a lender in the first week of the fiscal 2021 first quarter.
Taking about our strategic growth opportunities, we're still awaiting final final completion of the tender process for the China type B licenses awarded to end user facilities for accuray devices.
While the timing of pipe is shipments remains uncertain. Our belief is that we will begin to see initial revenue went back sometime in the first half of fiscal 21.
Turning to the type B segment of the China market, we continue to advance our plan to produce a made in China product for the type B segment.
Operationally, we have made significant progress and readying our production capability in 10 Gen.
The JV manufacturing facility. There is now complete with manufacturing qualification and in country required testing, finishing sometime in the first calendar quarter of 2021.
Based on estimates of the product registration process timelines, we expect that we will begin shipping the tangent produced version of Radixact in the fourth quarter accounted for 21 or roughly 15 months from now.
Additionally, the tangent training center is also now complete and devices and equipment to support training are scheduled to be installed and in place by the end of this month in order to support a grand opening of that facility by mid September.
Turning to one of our more important R&D development projects during the fourth quarter of fiscal 20, we achieved full commercial release of the synchrony motion management upgrade on Radixact and we're very encouraged by the strong interest in synchrony from existing Radixact customers, who are treating complex SPR t. cases.
During fiscal Q4, we shipped a total of nine synchrony upgrades and installed three of these upgrades in the Japan market alone.
We now have five customer locations that are actively treating patients with sigrity equipped radixact and our expectation is that we will have an additional 10 customer sites going live by the end of our current quarter.
We believe the added clinical value that synchrony can bring to radixact will be a strong driver of trading trade up opportunities for existing tomo installed base replacement sales.
The importance of the synchrony introduction on Radixact cannot be overstated in terms of clinical impact.
In order to share with you have truly unique synchronize motion management capability is and the significance of the clinical impact it will have on the Radixact platform. We have some visuals to share with you as I walk through my prepared remarks.
As background Synchrony uses artificial intelligence employing predictive algorithms to automatically adapt to the known position of treatment targets as they move during the rhythmic motion associated with the patients respiratory cycle and adjust when necessary if the patients breeding pattern changes.
Secret. He also has the ability to adjust to targets that move intermittently as can often occurred during treatment of prostate cases.
This unique ability to adapt the treatment delivery beam in real time to a moving target enables clinicians to reduce margins, resulting in significantly less radiation dose the healthy tissue, which can lead to better outcomes when treating lesions in the long liver and other anatomical sites that move with respiration.
It also allows for improved clinical confidence and utilizing hypofractionated treatment plans to deliver SBR t. cases.
Going to our first slide.
We have provided a comparative example of a one case with and without synchrony.
Prior to synchrony the to conventional approaches of treating tumors are lesions that are affected by targeting motion, our gaming and the TV or internal target volume method, both of which require clinicians to utilize larger treatment margins engaging the radiation beam is turned off except when the target moves into a.
Narrowly defined target window.
Because beam off time associated with getting results in less efficiency and overall treatment time typically during gating the target window has widened but in doing so that means that more healthy tissue is exposed to unwanted dose.
With the I TV method, the being targets the entire envelope or range of target motion delivering a large amount of dose to healthy tissue.
While this approach is more time efficient than getting this met to create significantly greater radiation exposure to healthy tissue.
Looking at the highlight of treatment locations in the side by side comparison in the slide it striking to see how much smaller the treatment margins are on the left side of the slide utilizing synchrony versus the gating right TV approach.
Because synchrony enables clinicians to deliver larger doses with smaller treatment margins and faster treatment times clinicians experienced with synchrony report greater clinical confidence and using hyper fractionated treatment plans for their more challenging SPR t. cases.
Turning to our second slide.
We have provided a case study for a recent case perform at freighter Medical center in the medical College of Wisconsin of a 45 year old male patient with long metastasis.
This is a great example of how small changes in margins can have an overly large impact on the amount of healthy tissue receiving radiation.
This patient was treated for additional free utilizing SPR T in three fractions with 30% less treatment volume.
Beam on time for this case was only nine minutes.
Because the been synchronization takes place automatically and in real time treatment delivery remains highly efficient from a timing and workflows standpoint, with no need to ever paused the treatment beam mechanically restrain the patient to ensure proper positioning or acquiring the patient to hold their breath foreign comfortably long periods to interim.
The respiration cycle.
Customer sites in Japan, Italy, and the U.S. have successfully delivered producer free SBR t. treatments for lung patients using hypofractionated SPR t. treatment plans with beam on time of less than 10 minutes.
Synchrony on the Radixact platform is driving clinical confidence and expanding the universe of patients who historically might not have been treated with hypofractionated SP arty because of already compromised pulmonary or respiratory function.
Looking forward in fiscal 2001, we believe the covered environment will continue to be a catalyst for radiotherapy treatments utilizing high dose shorter duration treatment timelines.
Both of Accuray's treatment platforms are uniquely capable of supporting these requirements.
Going forward, we expect the accelerated use of hyper fractionator treatments driven first by changes in us based reimbursement with the proposed alternative payment model.
Second the growing body of clinical data that demonstrates clinical safety and efficacy of hyper fractionation versus conventional treatment and lastly, the benefit of shorter treatment regiments for both the patient and provider in terms of user experience.
Covering both short and longer term horizons, we believe accuray's portfolio is very well positioned to meet the clinical needs of our customers and their patients.
In closing all the cobot 19 environment continues to be challenging we are focused on managing activities that we can control ensuring the health and safety of our employees, ensuring continued support for our customers and their patients and focusing on those elements, both operationally and financially that will drive accuray's business continuity.
Now I'd like to turn the call over to ship for his review with the financial details shit.
Thank you, Josh and good afternoon, everyone.
I'll begin with some additional details on our financial performance for the fourth quarter as low as our fiscal year Twentytwenty and then focus on certain highlights for the period.
Gross orders for the fourth quarter were $94.3 million, which was down 3% from the prior year.
For the fiscal year Twentytwenty gross orders totaled $377.3 million, an increase of 10% over the prior year.
The Americas, and Japan lesions or the primary drivers of this year over year growth.
But the growth rates, 64% and 10% respectively.
From a product mix perspective, the tomotherapy platform accounted for approximately 70% gross orders for the fourth quarter and Cyberknife accounted for the remaining 30% for the full year Tomotherapy platform accounted for approximately 60%.
Well gross orders and Cyberknife accounted for 40%.
Which was consistent with the prior year.
Net Asia as for the quarter was $17 million.
Which was better than our expectation going into the quarter as we had approximately $5 million of aging activities during the quarter.
During the fourth quarter, we had a cancellations of approximately $4 million.
Which was offset by $1.8 million FX impact and other adjustments.
As a result on the net basis, we generated $75 million orders in the fourth quarter, which represented a 17% increase over the prior year.
For the full year net orders were $281 million, an increase of 29% over the five year.
We ended the fourth quarter with a backlog of $603 million, representing an increase of 22% from June 30 2019.
Although the team has done a great job in generating new orders and age ends in this challenging environment.
With that said as and Josh had indicated we continued to anticipate the cobot 19 disruption will adversely impact revenue convergent timing in the near term.
Although the depth and extend to which Kobin 19 will impact individual markets could vary on a number of factors, we expect to see higher than normal level of age outs in the coming quarters due to this disruption.
Turning now to income statement.
Total revenue for the fourth quarter was $95 million down 19% compared to the prior year.
On a full year basis total revenue was $382.9 million down 9% from the prior year.
On the regional basis for the full year, we saw year over year decline revenue decline in all regions, primarily due to the impact of the pandemic, except Japan, where revenue grew by 4%.
The growth in Japan came primarily from an increase in upgrade revenue related to synchrony on Radixact.
Product revenue for the quarter was $40.4 million decrease of 33% compared to the prior year.
On a full year basis political revenue was $167.3 million a decrease of 15% from the prior year.
From a product mix perspective, cyberknife accounted for approximately 25% of the quarter's revenue unit volume or the Tomotherapy platform accounted for the remaining 75%.
For the full year Cyberknife accounted for approximately four approximately 30% of total product revenue and Tomotherapy platform accounted for approximately 70%, which was consistent with the prior year.
Service revenue for the quarter was $54.6 million down 4% from the prior year.
On a full year basis service revenue was $216 million a decrease of 3% from the prior year, primarily due to fewer upgrades purchase through our service contracts.
Turning now to gross margin.
Although gross margin for the quarter was 42% compare that to 39.1% in the prior year.
On a full year basis, our overall gross margin was 39.1% compared to 38.8% in the prior year.
On a gross margin for the quarter was 45%.
By the 40.7% in the prior year.
The year over year increase in front of gross margin is due to better pricing within within a tomotherapy platform as well as stronger outweigh volume related to synchrony on Radixact.
Full year product gross margin was 42.7% compared to 40.7% in the prior year.
Service gross margin for the quarter was 39.8%.
About a 37.4% in the prior year.
Q4 service gross margin benefited from cash preservation actions, we implemented during the quarter as low as reductions in travel and other operating costs due to the pandemic on a full year basis service gross margin was 36.4%.
Compared to 37.2% in the prior year.
That year over year over year declining service gross margin was primarily due to higher than normal level parts consumption, we experienced in the first half of fiscal Twentytwenty.
Which has been reduced and began to stabilize in the second half.
Moving down the income statement.
Operating expenses, what a quarter or $35.3 million, a decrease of $7.3 million was 17%.
From the prior year.
The year over year decline operating expenses was primarily driven by cash preservation actions, we implemented in response to the pandemic, which included position eliminations and the company wide emanation, all the annual incentive bonus.
The spending in the fourth quarter also deflected curtailment of cost associated with the impact of cold in 19, particularly travel.
Marketing events and related expenses.
Operating expenses for the quarter included approximately $1 million of severance charge as part of the cost reduction actions mentioned earlier.
When a full year basis operating expenses were $138 million or down 15% from the prior year.
Operating income for the quarter was $4.6 million compared to $3.3 million in the prior year.
On the full year basis, while but an income was $11.9 million compared to zero point $6 million in the prior year.
While fiscal Twentytwenty operating income benefited partially from cash preservation actions taken is in response to the pandemic that year over year growth of $11 million demonstrates improvement operating leverage that positions us well in the post kobin environment.
Operating impact of the China JV for the quarter was a loss of zero point $4 million.
This item is being reported on our income statement as a single line item called gain or loss on equity investment.
Right below operating income line.
On a full year basis, the operating impact or the JV was a loss of zero point $1 million.
Adjusted EBITDA for the quarter was $9 million, which was consistent with the prior year and excludes $1 million of severance taken taken during the quarter.
On a full year basis, adjusted EBITDA was $26.8 million, an increase of 13% compared to $23.7 million in the prior year.
The adjustments between GAAP net income and adjusted EBIT EBITDA outline in quantified.
Press release issued today.
We ended the quarter with $109 million or cash and short term restricted cash, which was an increase of $17 million when the prior quarter.
We generated $19 million of operating cash flow during the quarter as we continue to focus on working capital management.
I was strong cash position exiting the fourth quarter allowed us to reduce the term loan balance by $10 million immediately after the fiscal fourth quarter.
And at the same time, we negotiate the key to comment on thresholds to a lower level that positions us well going into new fiscal year.
While we're pleased with a full without fourth quarter performance. We continue to expect on on certain near to midterm demand environment for future system orders and revenue.
As cold in 19 continues to put constraints on capital expenditures at hospitals.
Accordingly.
We anticipate our first half this call it 2021 orders and revenue to decline year over year.
As we manage the near term headwinds in revenue conversion, we will focus on operational efficiency.
Margin expansion in working capital management.
We are focused on inventory as supply chain management, and so far product availability has been strong. Thanks, great work of our supply chain in manufacturing teams and our partners, while ensuring a although inventory position is reduced to an up to an appropriate level in this uncertain environment.
We're also working closely with our customers and suppliers to ensure a healthy and appropriate balance about receivables and payables.
We believe the $19 million with operating cash flow, we generated in the fourth quarter demonstrates operational efficiency and our ability to manage working capital in this challenging environment.
And with that like hand, the call back to Josh.
Thanks.
Even with the uncertainties created by the corporate environment, we're encouraged by our Q4 and full fiscal year operating results. We're demonstrating daily that we have the ability to successfully adapt to this new external environment and we are excited about our future.
I want to thank all of our employees across the globe for their energy and contributions, they're making to support our customers and their patients. During these unprecedented times and with that Red are ready to open up the call for your questions.
We will now begin the question and answer session to ask a question you know press Star then one on your Touchtone phone, if you're using to speakerphone. Please pick up your handset before pressing the key to withdraw your question. Please press Star then too.
This time, we will pause momentarily to assemble a roster.
Our first question is from Josh Jennings from Cowen.
Go ahead.
Thanks, Good afternoon, and congratulations on such a strong new order results. Despite the.
The pandemic I was hoping to start off Josh just to hear your thoughts on the Siemens Varian combination.
That potentially does to the radiation oncology market from a competitive standpoint.
Do you do you expect any more consolidation between advanced imaging manufactures and radiation therapy companies and if you could remind is just about your relationship with Hitachi within exactly how that sits today and whether or not just help us understand what their radiation business looks like internationally outside of the proton therapy business.
Okay.
Yes, Josh there's a there's obviously a bunch of bunch of components to that question. Let me start with the just kind of Siemens Varian situation. The I mean, I think I think to some degree up there's there's an inflection point here I think that there will be undoubtedly.
During some period, taking place of integration you know, there's going to be some likely disruption or distraction factor. We certainly would expect that to occur and I think that we're going to be opportunistic and trying to take advantage during that period of time of of Ah you know just from a commercial perspective the competitive.
Dynamics and you know be opportunistic it to the degree that we can and taking advantage of it.
On you know the question the part of the question around you know is there is there more to occur in this regard I mean I think.
We believe strongly that theres that imaging and imaging capability is.
A a growing in importance area related to radiotherapy treatment. You know we have as you know we had a significant amount of activity taking place in our development roadmap around that kind of technology upgrade ourselves, but you know as you think about diagnostic imaging and you think about radiation.
But be it that the combination of.
Pieces together create a true end to end kind of of oncology care strategy oncology care services strategy related to what you know.
It's important to customers and their patients. So I mean, while it's difficult to predict a you know specifics or timing I I think that that the strategy or the potential value proposition that results is is you know would likely you know create some some tailwind for.
For more consideration of these types of combinations.
On the the question around Hitachi I talked she has been a distribution partner of ours in Japan for many years that relationship is now nonexclusive.
And Hitachi is actually.
Been in the process of of exiting their diagnostic imaging business. The deal hasn't closed yet, but that that business I believe is being purchased by Fuji film.
And.
We are we're we're strong in Japan, it's probably our strongest.
From a market penetration a region of the world, we're continuing to do well there.
We're considering and looking at a variety of options to us from a distribution standpoint at present.
We're still involved with the tachy, but obviously as they transition their business to Fuji It becomes a probably something that you know is a catalyst for us looking at other other other options or possible combinations. So I think I'll leave it at that.
Great and then just one follow up on hospital capital client budgets or spin on it concerns around.
Hello, they'll shape up in the in the back half here, but can you provide any color and what you're hearing from your hospital customers and anything on new order trends you experienced already in July and August thanks for taking all the questions sure.
You know look I think while while up procedure activity. Some of the other procedures that had been put on hold up by most hospitals, while the procedure activity in general is starting to come back I think it's safe to say are fair to say that most most hospitals right now or.
Our our in kind of a holding pattern on a large capital equipment.
[music].
You know capex spending on those those that are that are moving forward with those kind of decisions are places where either they are at their at capacity with their current current up a product and technology capability.
There are moving in a direction were up they need to be able to treat a different mix of patients.
Or there at the end of a useful you know lifecycle of the the equipment they've already had historically the legacy equipment and so again, it's hard to tip kind of put everyone. In the same a box with regards to one size fitting all but you know as as our spray coming through the fourth quarter.
Order showed there was still people, obviously, placing orders for equipment.
And you know we would expect that to continue I think it's more difficult to predict you know in the near term a you know and maybe an intermediate term what what you know what the trends look like but again I think that.
Any one of a number of those two or three up kind of variables I talked about are creating a catalyst for people to continue on with you know.
Capex investments in in this kind of equipment. So.
Which is encouraging.
Thanks, Josh.
Our next question is some Brooks Oneil from Lake Street Capital markets go ahead.
Oh, good afternoon, and congratulations on the terrific results in this environment.
I was hoping to maybe.
Thank you then brave a little bit in terms of.
How you guys see your hospital in clinic customers balancing three big things that are going on.
And out there in the World number one is obviously cobot 19.
Number two is this movement did you guys talked about towards adaptive.
Radio therapy.
It's something that's probably transforming cancer care.
Both here and around the World and then third.
The reality that at some point, our bread that CMS will get up there, but again as did the ATM.
And the reality that they need to that these hospitals need to prepare.
For that it'd be in a position where they can.
I'll play and deliver cancer care and there could be in their communities weather.
You know obviously, we're talking to you at that factor, but Suzanne what do you see it out there right now.
It Capex.
No I think you're absolutely right if the balance and now I think it's a real challenge for all of our customers and trying to make sure that they're providing that Medicare, but getting access to capital I would say here in the short term and I'd say the short term. The next couple of quarters for sure and there's just uncertainty and so.
Where we are focusing is exactly what Josh just talked about are those customers that can access capital because they lack capacity or it's going to be very clear that the aro ATM at some point is going to go into effect, but not only that I think the cold environment in general has.
To put on.
Yes, magnify the importance of shorter duration treatments and so having technology, that's going to allow them to do hypo fractionation and ultra hyper fractionation is going to be critically important for them to remain relevant and competitive within their own marketplace. So you know, we're working with our customers to be.
Well to build that kind of in our arguments that they can go and propose to their administration that being said still really hard as as the Covance continue they're everyone sort of holding back you know until the.
We ended the tunnel.
And then may really really additional capital equipment fun. So its official where a balance I think the only other area that we are being opportunistic are in underpenetrated market.
Again, we're radiation therapy is not available and where the government sees it as being strategically important.
So again, it just means being close to our customers as much as possible and helping them with lots of abilities to try and navigate this environment.
Great. That's that's fantastic I appreciate that and then maybe obviously there were some comments in the prepared remarks about China, but in my opinion, China's the huge opportunity for you guys in a huge a wildcard in terms of what we're actually going to see things start to move so any other color either Josh you shake or.
That could give about.
What you're seeing and hearing from people in China.
And and when we're going to break that log jam that would be extremely helpful.
Brooks again.
You for her to say this before.
We don't think this as a matter of if we think this is a matter when and there's no question that the Covance situation has you know impacted the timing of this but you know we still believe from.
Visibility and you know kind of Oh, and encouragement standpoint based on you know our people on the ground there in the things they're hearing that this is you know this is something from an activity standpoint in terms of the Taipei Act impact that we should start to see some you know beginnings of revenue up revenue impact on this.
Up you know between now and the end of this calendar year. So again.
Nothing nothing nothing definitive beyond what we've said before but but the the tendering process, which is really kind of the administrative aspect of what was the remaining work.
That needed to be done on the type a licenses from our understanding is now complete which means that you know there there should be some some news here sometime soon.
Okay.
Okay and type B are pretty excited about two I think right. We are type is we've made while its you know it really hasn't had the the visibility that the type a part of the discussion as we've made a lot of progress and up I think that we're going to be able to compete certainly for our fair share of of what is really.
By comparative context, the much bigger opportunity longer term in China on the type B side.
Okay. Thank you so much for taking my questions sure.
Again, if he has a question. Please press star then one.
Our next question is from Anthony put tone from Jefferies go ahead.
Hi, This is oh, okay. Thank you for keeping your question are we had to announce that upfront Paul Paul on so I was wondering if you have an update all rabobank volumes are centerstate volume back up to three corporate levels at this point regarding our old bundle.
Well Michael for example, like first 21 or will that be goal all along.
This is Josh so I got the first question regarding patient volumes the data that we get off of our installed base equipment suggest that from a patient volume a treatment volume standpoint, we're actually we're actually seeing.
Pretty stable numbers and numbers that would you don't be consistent with what we were driving or seeing coming through those are those devices from a throughput standpoint or in the pre cobot timeframe. So you know at the end of the day radiotherapy and radiation oncology is a revenue generating a.
Service line clinical service line for hospitals around the World and you know they while they're doing it and providing these services obviously under different protocols now from a patient in an employee safety standpoint, no. When no one really that I can identify are very very few people have ever at turned off if you will they are radio therapy.
He capability. During this time it was one of the only areas of the hospital that you know they they were consistently moving forward with so.
No real no real drop off in patient patient volume from a treatment perspective, and what's your second question related to two the up.
Jim discussion.
And yet the Aro bundle I was going to implement that in January January 1st 20 to 2021 or all be delayed no I I think I think the answer is that there's a reasonable degree of uncertainty. This point that it's going to be probably longer out than that in terms of timeframe, but sometime still in a you know it over.
All window that would be probably sometime in the first half of calendar 2021, so while not in January sometime you know not too far beyond that.
Okay. Thank you so much.
Our next question is from Hi, Good Peterson from JP Morgan go ahead.
Hi, guys. This is case after tyco a few my questions have been answered, but just one maybe on opex, how should we be thinking about that moving forward in terms of.
Anymore as sort of levers you can pull for more opex reductions and maybe the first have to 2021.
Sure Yeah, no problem. Thanks for question and a pharmacy given no guidance I can't be specific to the number in 21, but what I can do is kinda give you a sense a although our opex run rate in Q3 Q4 looking backwards here in 2020.
Because I know that in Q3 in Q4, there was some.
Noise in our Opex in terms of one offs here and there so.
If you look at Q3, all they fight 20, we reported $31 million Opex bad that included the benefit of about three and a half million dollars dollars related to elimination of bonus accruals. So.
Q3, you run a in true sense of about $35 million I would say looking backwards in Q4, we just reported Woody pointed about $35 million and I had a earlier remark.
In my section that had a $1 million of severance in there, which I consider a onetime and a few things although I didn't specify my prepared remarks, I would say, there's about one and a half to $2 million, including $1 million Sagarin stats in there in Q4, So I would say Q4 bought back.
<unk> run rate exiting the year was about $33 million so.
Hopefully that gives you a sense of what the run rate is on Opex added in the fiscal 2020.
Got you. Thank you.
Again, if he has a question. Please press star then one.
This concludes our question and answer session I would like to turn the conference back over to Joshua Levine for closing remarks.
I'd like thank everyone for joining the call. This afternoon, and we look forward speaking with you again in October when we host our annual Astro Investor event and report our fiscal 2021 first quarter results. Thanks very much.
The conference has now concluded. Thank you for attending todays presentation you may now disconnect.