Q4 2020 BIOLASE Inc Earnings Call
Yeah.
Good day, and welcome to the BIOLASE, 2024th quarter and full year financial results Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Todd currently of the E. P. C Group. Please go ahead Sir.
Thank you operator, good afternoon, everyone and thank you for joining us today to discuss BIOLASE financial results for the fourth quarter and full year ended December 31 2020.
On the call today from BIOLASE as John Beaver, President and Chief Executive Officer, John will review the company's operating performance for the fourth quarter and full year before opening the call for questions before.
Before we begin I'd like to remind everyone that a number of forward looking statements, which are statements that are not historical facts will be made during this presentation, including forward looking statements regarding the company's strategic initiatives and financial performance.
Forward looking statements are based on BIOLASE as current expectations and are subject to a variety of risks and uncertainties that could cause the company's actual results to differ materially from the statements contained in this presentation.
Such forward looking statements only represent the company's view as of today March 'twenty 2021.
These risks are discussed of the company's filings with the Securities and Exchange Commission.
A replay of the conference call will be available on the BIOLASE website. Shortly after the completion of today's call when listening to this call. Please refer to the news release issued earlier today announcing the company's 2024th quarter and full year results.
If you do not have a copy of the news release. It is available in the investors section of the BIOLASE website at Www Dot BIOLASE Dotcom BIOLASE.
BIOLASE financial results can also be found in the company's report on form 10-K, which will be filed with the FCC.
The tables, we provided in today's news release offer additional financial information. So we encourage you to review that the tables include the reconciliation of unaudited GAAP net loss and net loss per share to non-GAAP adjusted EBITDA loss.
So the EBITDA loss per share as well as the details of the company's non-GAAP.
Closures with that said I'll now turn the call over to BIOLASE, President and Chief Executive Officer, John Beaver Chops.
Thanks, Todd and thank you everyone for joining us. This afternoon. We appreciate your continued support and interest in BIOLASE.
Before reviewing our quarterly performance I want to address the recent management change how honored I am the board has interest in me to get BIOLASE as President and CEO of during this next growth phase.
Joining in 2017 as CFO of my goal has always been to position the company to succeed.
Worked closely with our customers our team and our board to help of write the next chapter of the BIOLASE narrative as we focus on driving profitable growth through the commercialization of our industry, leading dental lasers.
As president and CEO of my vision for what BIOLASE can be has not changed and will continue to be at the forefront to ensure we have the resources to achieve our goals. This is made easier because of our industry leading products provide the new improved better standard of care for dental procedures all of them.
Sure in a safer environment for dental practitioners and patients by reducing aerosolization to mitigate the spread of infectious pathogens such as COVID-19.
I'm, especially pleased with our efforts, particularly during this past year when in person meetings were restricted to educate and train dentists and dental specialist on the benefits of laser dentistry, which is driving the increase the adoption of our dental lasers.
Our strong fourth quarter performance demonstrates the business momentum and traction we are gaining in our continued success of navigating this challenging business climate, we delivered.
Total revenue of $8 5 million, representing a sequential quarterly increase of 31% and our second consecutive quarter of sequential revenue growth.
Mother operating highlights for the fourth quarter include U S revenue exceeded the prior year's fourth quarter. Despite COVID-19 headwinds signaling the resumption of some of the pre COVID-19 momentum we were experiencing as a result of our growth plan.
78% of our fourth quarter U S. Laser sales came from new customers continuing a positive trend we have seen takes shape over the past couple of years.
The average selling price in the U S for our Waterlase plus increased 22% in the fourth quarter versus the prior year.
Several of dental service organizations or Dsos purchase BIOLASE products in the fourth quarter, reflecting the early success with our strategy to penetrate those large <unk>.
Institutional organizations, and lastly, 40% of our U S. Laser sales came from dental specialists during the quarter, representing a significant increase over prior periods.
Over the past six months, we've made several improvements to our go to market strategy, including forming specialists academies focus on expanding the reach of our dental lasers into the dental specialist communities.
As a result during the fourth quarter, we launched the Waterlase Indo Academy and exclusive community of leading into dawn is dedicated to improving patient outcomes and profitability with new technology. The Academy opened all water. Ladies Endodontist was created to foster peered led learning best practice sharing an optimal integration of Waterlase technology into.
Their clinical practice as Endodontist continue to seek more advanced solutions. The Academy's serves as the resource for disseminating best practices for integrating advanced technology like our water lays down of laser.
The Waterlase dental laser offers various benefits standard honest from faster procedures to new treatment options. In addition to improving the efficiency of the Waterlase. It also provides improved patient reported outcomes.
Waterlase unique approach allows for success and conservative window treatment, while the overall technology delivers more predictability reduced patient discomfort and improve patient care.
Top thought leadership has quickly established from water legs as the new standard of care and endodontics.
Approximately 5000 <unk> in the U S. If an additional 10% of these end of the adopted our laser we believe the to be equal to an additional 25 million of laser sales for BIOLASE and drive follow on consumable sales.
Leveraging the same recipe for success, we recently launched the innovative and first of its kind of program and the periodontal community to foster peer led learning with the ongoing mentorship from leading clinicians featuring the online meetings in case of reviews by experts from the field. The Waterlase pair of academies open to all of Paradise utilizing the Waterlase technology.
Watching the academy devoted to supporting the growth and timely needs of Paradise directly of lives with BIOLASE as mission of advancing dentistry.
<unk> seen a significant increase in Paraguay and plant disease due to the significant number of new dental implants being place each year and the existing aging dental implants currently found of millions of patients.
Paragon is also.
We're actively seeking ways to manage both parodontal and implant diseases at the end of the incidents of gum disease with bone loss has increased in the adult population.
There are approximately 5000 paradise in the U S and 65 million Americans are suffering from Paragon of disease at the end of 2020 of the journal of parent ontology publish of landmark study performed by the Mcguire Institute on the clinical efficacy and patient reported outcomes of Waterlase assisted treatment of paradigm tightest Mcgee.
The Mcguire study unequivocally confirmed the patient reported outcomes were significantly better than later after of laser procedures.
This was the first of its kind of study designed to meet the stringent American Association of parent ontology best evidenced the consensus standards. We believe this study of establishes new protocols per payroll surgery and will drive further adoption of water legs of our target markets.
Also the international Journal of Perry of Restorative Dentistry recently published the study that evaluated the re establishment of bone the implant contact the uninfected dental services following decontamination using water lays and reconstructive therapy, which highlighted the ability of Waterlase dentists laser excuse me to detoxify surface and assist in savings.
Plants.
We are equally excited about the pinion release of another claim of claim paying Todd as management study involving 32 patients has been completed by the by the Periodontics Department at Columbia University and is being submitted for publication.
Preliminary data demonstrates incorporating waterlase treat membrane plan Todd of involving single implants, as the statistical and clinical improvement over conventional mechanical debridement with so many Americans suffering from <unk> disease. The study's findings are significant in determining the best course of treatment for these patients.
The studies continued suggests it periodontal health is the central overall health and specifically as it relates to the susceptibility to infection, including COVID-19.
Putting this opportunity in dollars if only of an additional 20 per cent of Periodontist adopted our laser in the U S that would generate $50 million in laser revenue for BIOLASE not including the follow on consumable revenue that would follow.
We are experiencing high demand for our products from the dental specialists as they look for safer more advanced alternatives to grow their practices and our advanced dental lasers provide them this opportunity our laser safety benefits.
Puts us in a perfect position to advance the industry and treat patients in the safest way possible.
In addition to creating the specialists academies, we bolstered our go to market strategy during the quarter with an exclusive collaboration with BMW as part of a Waterlase exclusive trial program Dennis of participate in this exclusive trial program receive a free two day training that provides an in depth understanding of dental lasers there the enable.
The use of Waterlase in their office for up to 45 days at no charge with an experienced water lights clinician available to help participating dentists, who purchase of Waterlase. During the trial period are invited to a complimentary waterlase weekend, which is exclusive of exclusive four hour even at the BMW performance Center West here in California.
In addition to participate and Dennis will be entered into windows and the into a sweepstakes to win of one year lease of BMW M. Five.
The Waterlase weekend promotion kicked off at the end of 2020 with the first Waterlase exclusive trial program training event being held in October 2020.
We anticipate hosting eight to 10 such events per quarter through 2021 with between four and eight Dennis participating each of them.
As I noted earlier another highlight from our fourth quarter was our progress in penetrating the DSO market. There are approximately 1300 dsos in the United States represented about 16% of the total U S dental market.
During the quarter, we saw BIOLASE lasers from four different dsos include the Heartland dental dental care Alliance, Aspen, dental and Virginia family Dentistry.
At the end of the fourth quarter, we signed a significant collaboration with dental care Alliance one of the largest dsos in the U S with more than 320 affiliated practices in 20 States. This collaboration of excludes the expanding their laser adoption, including our hands on training programs into target the targeted geographies in the next few quarters.
We expect this collaboration to lead to a rollout to D. C offices by the end of 2021. We also continue to have active trials with heartland the largest DSO in the U S. Aspen, the second largest D S L and clear choice as the largest.
Last but not least there are approximately 200000 hygienist in the United States with our epic hygiene laser BIOLASE allows hygienist to perform gentler highly effective treatments for bacterial reduction of managing periodontal disease without use of water.
The new BIOLASE laser system has the only FDA approved preventative Perry of treatment protocol and has an ROI of only three months.
I think hygiene also meets guidance from the CDC, which recommends not using ultrasonic scaler so as to prevent the transmission of COVID-19, if our market penetration of the hygiene margin increased by only 5% that would increase in debt that would equal an increase of an additional $70 million in system sales per BIOLASE, which again does not include the similar.
<unk> sales that would follow.
During the pandemic, we continue to make adjustments to our go to market strength strategy and we're starting to see the benefits of these changes the positive.
<unk> growth, we have seen over the past two quarters and the continued momentum we are experiencing in our current 2021 first fiscal quarter gives us greater confidence you were nearing of resumption of pre COVID-19 momentum.
And our growth strategy the.
<unk> in the Indo Pernio hygiene DSO markets highlight of our path for growth in the years to come to gate today. The all the tissue market penetration in the U S. Dental market is only about 7%, but every 1% increase in the adoption of laser technology in the U S equates to approximately $50 million from revenue opportunity for BIOLASE.
With the clinically proven product portfolio that reduces the potential risk of infectious pathogens. Alice is the significant growth opportunity ahead is dental professionals seek safer technologies to treat their patients.
The ongoing impact of the pandemic, we expect to report total revenue growth of approximately 65% for the current first quarter compared to the year ago period.
Before we open the call up for questions. Let me update you on our significantly improved balance sheet.
At the end of the fourth quarter, our cash and cash equivalents totaled almost $18 million. However, as of today, our cash and cash equivalents have increased approximately $40 million due to the exercise of warrants associated with the rights offering in July of 2020, and the completion of of $14 $4 million bought deal in February of 2021.
Today, our balance sheet is as strong as ever been and gives us the confidence to fully execute our growth strategy. Despite the current environment.
We all continue to deal with the the impact of COVID-19, we are confident of their actions to strengthen BIOLASE of working.
With the many positive changes we made over the past year, we've created a healthier company. We now have the commercial infrastructure in place to capitalize on the growth opportunities in front of US and we are confident of our business plan and continuation of the progress, we're making towards returning to growth.
Our long term prospects for growth are of significant as dentists and patients worldwide and look for solutions that allow them to provide and receive dental treatment of the safest way possible. We believe our laser safety pin the pause it put us in perfect position to help them achieve the skull.
I am proud of the BIOLASE team, who have rallied without question total delivered the technology products and services, our customers need and value. During these very unusual times the.
This concludes our prepared remarks, I'll turn the call back to the operator to open the call for questions.
Thank you.
If you would like to ask a question. Please signal by pressing star one on your telephone keypad. If you were using a speaker phone. Please make sure that your mute function is turned off to allow your signal to reach our equipment.
Please press star one to ask a question.
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Yeah.
Our first question will come from Kyle Bowser with call your security.
Hey, good afternoon, John and thanks, probably updates here.
Maybe first just wondering how your efforts are going to educate and train specialists on waterlase for repairing implants, we learned from it.
Several kols, there's there's really nothing else out there like waterlase and saving implants.
How has growing adoption of the syndication gain some traction.
Right. So as you know.
I think Hal is Youll hear me say this a lot as say.
A surround sound approach to this right.
For us to really increase the adoption and this goes beyond periodontist in treating implants to everything else. We do yeah, I think Dennis the public have the here more than once.
So we're doing a number of things on the on the implant side. One is the <unk> CAD me very much talks about per implant Titus and how to treat that so the things that we're doing the academy getting key opinion leaders, having constant webinars around that sharing cases of doing things on social media too.
The message out as well all leads to that and certainly with our U S. Field sales team. They are very focused on you know not only specialists as a whole but in particular.
Periodontist.
Got it.
I appreciate that and in terms of the number of sales territories.
I know the kind of ratchet it back a little bad through Covid, how do you envision that evolving do you think it stays flat for a while till we get back to the baseline.
Any color there would be helpful.
Sure.
Pre COVID-19.
We had.
Roughly 30 sales territories.
In the U S.
As Covid hit we reduce that and today, we have of 24 field field.
Field sales territories.
We are adding a couple of more now that we're seen geographies the open up allowing us to actually talk to the dentist face to face. So I think overall, we'll be at probably 'twenty six 'twenty seven territories and I think that's a constant state as we look ahead right now I will say that.
At the free up for a number of reasons I know that you know the.
The Covid situation had an impact probably a positive impact on this for us as well, but we have had less turnover in the sales group in the account manager sales group in 2020 than any time since I've been here, which is the thing is a testament to the training that we're giving.
We revamped the comp package to be more competitive and the fact that they believe that they're really working for a company that is about ready to take off.
Sure.
Great.
And it's nice to see a lot of new users.
And so we saw the significant.
The significant increase in installed base of systems, how should we think about gross margins kind of going forward I know that the.
The us mix.
It was trending higher.
But maybe if you could provide a little color on kind of the difference in gross margin for consumables versus laser systems, maybe just an updated ballpark number it would be helpful. Thank you.
Yeah, Kyle so I won't talk specifically about product lines helped by I will give you. Some some general guidelines as you know traditionally R. R.
Our sales revenue had been split about 60% U S. 40% of international I think we can get back to that though it will take a few quarters to do that.
Certainly from a COVID-19 situation the recovery in the U S as being quicker than many other countries around the world and so as I mentioned in my prepared remarks, we actually had higher U S. Laser sales in Q4 of 2020 than we did in 2019, which is pretty remarkable.
We would have hit I think the the you know the the total revenue number for 2019, if it wasn't for the slow down in the international markets. So.
With with.
With today in the next couple of quarters U S, making a higher percentage of our component of our laser sales than you would tend to have margins higher because of the direct sales model. We have in the U S vs. The distributor model we have internationally.
Longer term.
Our goal is to get the EBITDA positive and we have really put in place a lot of the cost savings and I think discipline in the organization over the last year or so debt are going to allow us to get that you know easier than it would've been four years ago.
Having said that now we have to focus on revenue.
And you know our revenue needs to be around $45 million to get us the EBITDA breakeven that's a significant decrease over the 75 million debt. It was three years ago.
And to do that gross margins need to be around 50% and of $45 million level with typical 65, 35, let's say split U S International we can achieve the 50%.
Those margins given our current cost structure.
Got it really helpful. I appreciate that and then just lastly.
On guidance I appreciate the Q1.
And I know you.
I can talk about full year guidance, but I'm, just trying to get a sense. If I look back historically, maybe with the exception of the last couple of years.
The Q, we tend to see of sequential uptick in Q2.
Q1.
Can you talk about seasonality at all.
Any sort of projections here and maybe how much pull through from Q4, we might see into Q1, I'm just trying to get a sense of how things might shake out from a cadence standpoint this year.
Youre right on 90 day give a guidance pass would already said from Q1, but and the reason for that is there are still unknowns, yeah. The large international market, which is the big deal for US we don't know really what that looks like even next quarter, because there's a lot of moving pieces moving very fast.
<unk> said that historically, you're right we did have the seasonal business.
Q4 was our best quarter, followed by Q2, followed by Q3, followed by Q1 of.
Obviously, if you do the math on our Q1 guidance Youll see that.
Q1, <unk> compared in comparison to Q4 of 2020 is going to be relatively similar.
And so I'm kind of the way I look at this call I'm, a little bit off of the.
The seasonality and looking at prior year's because coming back all of Covid is such a big factor and how quickly you know our guys can get in front of the dentist and those are all moving so.
You know what.
What I am optimistic about is the sequential growth that we had in Q4 I would've expected that because Q4 is instead of our strongest quarter is too early to tell what Q2 and Q3 and Q4 will do.
For 2022, I am once again optimistic, but I'm not going to give guidance simply because of the uncertainties.
Understood and the guidance for Q1 is certainly higher than expectation so.
Thanks for all of the updates that's it from me.
Thank you Carl.
Once again, if you'd like to ask a question. Please press star one on your telephone keypad.
We'll take our next question this will come from Anthony Vendetti with Maxim Group.
Thanks, John just a little a little more follow up on the international side.
<unk> has obviously recovered faster.
As best you can tell at this point.
You see the international side.
It is a few months behind or is it hard to gauge in terms of the recovery there and what particular countries or are you seeing the most impact.
So I would say, we're about six months behind internationally versus what we've seen in the U S.
It's interesting that you know, it's a different market strategy internationally for us than it is in the U S.
The international sales in large part are driven by events.
And you know large events that we get a lot of the sales from that where you get a bunch of international Dennis together at some annual event.
And that really drives a lot of leads for us and a lot of sales for distributors.
I don't expect that to happen until the second half of 2021 and so that's that's holding us back somewhat I mean, we're trying to mitigate that with zoom webinars and different things, but they're just not as effective internationally for.
For whatever reason as they are and in the U S.
Okay and then.
You mentioned the number of Dsos in the fourth quarter press release from today can you talk about.
Sort of their their purchase patterns. During during this this fourth quarter is there any any one of these particular dsos that have stood out as being more aggressive in terms of of purchasing.
The BIOLASE products.
Yes, I think in terms of level of aggressiveness of Virginia family Dental.
DCA probably had that.
With heartlands somewhat behind and that May have to do with just the size of the organization.
Hartland, we're still very excited about the opportunity there, but yeah.
I was excited two years ago and things did not go as quickly as I had hoped and a lot of it was COVID-19 related I understand that.
But with Hartland it seems like every time that we.
The step up and meet their expectations they throw another challenge to us.
Which is fine and we're happy to meet that but it just takes longer to go through that process and it does with some of the smaller dsos.
And then because of that we're really focused on some of the.
The call of micro Dsos, if you will but the.
The five to 10 dental offices that may not necessitate or or really a b to the level of of press release, but we're getting some traction there and from a strategy standpoint, we certainly spend a lot of time in that area.
Okay, and Heartland dental is the largest.
Central service organization Youre working with right now correct.
Correct.
Okay and then.
You mentioned the academies.
It seems like the.
A great way other other industries in the device area I follow the.
When they put together these academies they noticed the adoption.
Improve.
Sometimes dramatically.
Can you talk about the expectation there for how that's going to roll out.
And the.
Opportunity in terms of growth, what's your expectation for how many of these.
Particular specialist can can get enrolled in these academies and see see exactly what it is BIOLASE has to offer.
So what we're trying to do the academies is create that.
That learning group.
Muratori.
Almost cult like I don't I don't want to use the word call but.
Following of what we're doing and give them opportunities for education, and learning and bettering their practice.
The reason it is important to us is as we look at.
Just the overall number of specialists I mentioned 5000, Donna's from 5000 paradigms in the U S.
Just a.
Fairly small adele.
Adoption rate increase adoption rate of that means big numbers to us as I mentioned in my in my remarks, but in addition that Anthony as we get more and more specialists to to embrace and adopt this technology. We believe there will be a trickle down effect on the general practitioners one sales.
See that a lot of specialist are adopted.
That will get their attention as well so I see the opportunity not only the reason we did the academy's wasn't only to promote.
Our technology to the specialists, but also the the.
The ability to get that message and attention of the of the.
General dentist.
Okay excellent and then last question is just on the on the gross margin side.
It looks like there was say inventory obsolescence expense, which obviously impacted it.
The gross margin this particular quarter.
Was that related to any particular product.
And do you think that Thats debt charge is now.
All encompassed here in this in this fourth quarter or is it really going to be any.
Spillover here into the first quarter.
As you May recall, we moved.
<unk> offices and manufacturing facilities in the middle of the year.
And what we found was with that move and we've been in that facility for I believe 12 or 13 years, you can imagine when you live in a house of you've lived there that long of mood you found a lot of stuff that you may have known you had but you no longer need it I think most of the stuff that we.
Wrote off or reserve force fell into that category. There was really no no surprises other than we just had to do the work to date through it after the move and figure out what it was and I am very comfortable that we got everything taken care of in Q4.
Excellent alright, Sean Thanks, very much of.
Pass it back thank you.
Thank you.
We can take our next question this will come from Bruce Jackson with the benchmark company.
Hi, good afternoon, and thank you for taking my questions.
Just looking at the <unk> Hey.
Uh Huh, John if we could start off with the second part of the Mcguire study.
Any idea when that might be public.
Published and then.
The second part of the question is is that can be used to seek guideline inclusion is that still something that the company is working on.
So as far as the timing goes.
We are getting close.
Certainly expect it to be this year for it to be published.
I think it could actually be.
Publish online as early as the summer.
But I feel comfortable that it could be this year one thing we learned with the first Mcguire study we kept on.
Thank you and we knew when it was going to be published but it's out of our control until we were wrong right. It took probably three or four quarters over what we thought.
But feel good about that being published this year and I didn't I didn't catch your second question Bruce.
So with the the.
Positive data that you've been able to generate so far is that something that you can use to get included in some of the society guidelines.
Well, we certainly would have been trying and will continue to try.
That is not easy let me just say that.
It really needs to not be.
Driven by the manufacturer of the equipment like us needs to be driven by <unk>.
Clinicians practitioners and the leaders in those societies, we hope that one of the reasons, we love having the the.
The <unk> Academy is that gives us a forum for having those discussions.
Okay.
And then if we could just.
Talked about the the DSO of valuations a little bit more.
I know that it sounds like the accounts.
The ongoing activity, but.
How far along with the sales some of these organizations are in their evaluations and the.
Is this something potentially where you could have a broader contract.
The next quarter or sometime this year or is it just something where you can't really predict what's going to happen.
So you cannot predict it once again.
We can move as fast as as we want and can and it still may not mean that the DSO run in the side of the table is moving at the same pace we are.
Having said that I do.
Don't expect any significant incremental change on the DSO side in Q2.
But I'm hopeful that in the second half of 2021, we'll we'll see more and more.
The dsos, there coming out of Covid too and right now, they're they're seeing about 85 per cent of the patient load, they're having more money that they're spending on P. P steel and so there they are a little bit.
They're trying to figure out what their model is going forward as well and what their financials are I think they will figure that out over the first half of 2021 and be in position to we will be in position of hopefully they will be too.
To accelerate some of this stuff.
Okay then.
Last question on gross margins.
So you've got some some overhead absorption that's going to have to take place before the gross margins sort of expand a little bit but.
If you could just give us the maybe a rough idea of where.
The the pivot point might be on the the gross margin improvement from a revenue standpoint.
And then.
Are you still contemplating any sort of cost improvement.
On the list themselves for example by moving to the sub assemblies.
And so some of the cost savings are occurring and did occur late in Q1 on the sub assemblies that you mentioned and so we will see some of that benefit from a full quarter in Q2.
In terms of margin the way I look at it is if you take.
$45 million as our revenue needed to be EBITDA breakeven.
And I mentioned that the margin add of 45 million annual number.
It's going to be about 50% to achieve that.
And then you can extrapolate between.
$12 5 million of quarter and whatever other number you expect for the quarter kind of there is a is not a linear as you said because of the fixed cost dilution is not a linear formula but 50% gets you to 12 5 million gets you the EBITDA positive or neutral.
Alright, that's the that's perfect. Thank you very much and congratulations on all of the progress.
Thank you Bruce.
We can take our next question this will come from Ed Woo with the Cindy into capital.
Yes. Thank you for taking my question. My question is as revenue ramps up as you know.
Business stabilizes back at the dental office.
You guys did a very good job of managing our costs, how much of that cost in the book has gone up.
I'll come back once you the revenue generated back up.
Yes, so from a fixed cost standpoint, very little in fact, I just had a a <unk>.
Meeting with our operations group this morning.
And we feel very comfortable that with the the resources that we have today.
We can.
We can generate about $50 million of revenue a year.
So that's kind of of the demarcation for us as we see revenue start increasing over that $50 million, we will have to add some cost.
But that certainly will be a good thing right in.
In terms of operating cost were in pretty good position now about the only thing that will move with increase revenue is <unk>.
Sales and marketing, which will be reflective of the variable component of our sales team in and.
Variable comp commissions.
Great going forward obviously.
The Tradeshows and conventions were pretty big parts of your line items now that people are talking about low maybe there is a new normal.
Do you anticipate.
Travel and collections come back that you guys will actively participate when do you think we're kind of are comfortable at this new normal and be able to cut a lot of costs out of your fixed costs.
Yes, so all of that one I'll say it depends.
Let me explain that.
We have spent a lot more effort and resources on <unk>.
The clubs for instance, Webinars that's generated a tremendous amount of leads for us over the last six to nine months.
<unk> said that what we found historically is that in the large.
<unk> shows conventions that we do extremely well when we have podium presence. So we have somebody on the podium speaking about lasers and the benefits of our technology I would say that we will be opportunistic and supporting and participating in those events, but it really would mean.
That we need to have that podium presence or it's in my view of waste of money.
Sounds great. Thank you for the color and I wish you guys. Good luck.
Thank you Ed.
And once again, if you'd like to ask a question. Please press star one on your telephone keypad now.
We can take our next question this will come from Tony Mark dollar with the stock.
Stockholder.
Well you got me.
Hi, Tony.
Hi.
I was just curious.
Has there been any pursuance or any interest gains from sales of U S military.
The government facilities given the.
Of the VA hospitals across the country.
Service.
Guys like me.
The.
There are some interest.
We consider that part of our DSO strategy and so we're certainly focused on it that.
That includes anything from the Dsos that we've mentioned before too.
The native American reservation and tribes to the prison system to VA.
Once again most of those moved very slowly, but we do have engagement with some of those.
The communities.
Okay. Thank you.
You're welcome.
As a reminder, if you would like to ask a question. Please press star one now.
Okay.
Okay.
I would now like to turn the conference back over to the speakers for closing remarks.
Thank you operator.
We look forward to updating you again on our continued progress when we report first quarter results in May.
Thanks again, everyone for joining our call today. This concludes our call have a great day.
This concludes today's call. Thank you for your participation you may now disconnect.
Okay.
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