Q4 2021 Avanos Medical Inc Earnings Call
Hello, well cause dominoes fourth quarter 2021 earnings call all participants will be in listen only mode.
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Okay.
Good morning, everyone. Thanks for joining us it's my pleasure to welcome you to the Avenova 2021 fourth quarter earnings conference call presenting.
Presenting today will be Joe Woody CEO , and Michael Greiner, Senior Vice President and CFO .
Joe will begin with an update on our quarter and our current business environment as well as recap progress made against our 2021 priorities and key objectives for 2022.
Then Michael will review, our fourth quarter and full year results and share our 2022 planning assumptions inclusive of our acquisition of Ortho <unk>, which closed on January 20th.
We will finish the call with Q&A.
A presentation for today's call is available on the investors section of our website <unk> com.
As a reminder, our comments today contain forward looking statements related to the company our expected performance economic conditions and our industry no assurance can be given as to future financial results actual results could differ materially from those in the forward looking statements for more information about forward looking statements and the risk factors that.
Could influence future results. Please see today's press release and risk factors described in our filings with the SEC. Additionally.
Additionally, we will be referring to adjusted results and outlook. The press release has information on these adjustments and reconciliations to comparable GAAP financial measures now I'll turn the call over to Joe.
Thanks, Scott Good morning, everyone and thank you for joining us to review, our operational and financial results for the fourth quarter and full year 2021.
While we continue to see the impacts of the pandemic as it relates to elective surgeries hospital staff shortages and supply chain. We are very pleased with how our operational and commercial teams have responded to the challenging dynamics brought on by the pandemic.
Across our enterprise, we remain focused on getting patients back to the things that matter as we meet the needs of our customers.
I will begin with a brief review of our results for the quarter before discussing the current environment and summarize the outcomes from our 2021 priorities.
We achieved sales of over $193 million for the quarter and earned <unk> 46 cents of adjusted diluted earnings per share.
Our chronic care portfolio delivered strong results growing over 8% with our digester franchise growing double digits in the fourth quarter in our North American respiratory business holding flat versus a tough comparison to last year's fourth quarter.
Our pain portfolio overall declined by less than 2% with our interventional pain franchise growing over 6%.
All set by our acute pain product portfolio declining by a little less than 7%.
The decline in the acute pain portfolio was primarily driven by the timing of the return of elective procedures.
Okay.
For the full year, our digestive health acute pain and interventional pain franchises grew by approximately 10%.
3% and almost 19% respectively with.
With respiratory health expectedly declining by just over 11%.
As we noted last quarter, we anticipate a continued improvement in our gross margin profile for the fourth quarter versus the third quarter.
Unfortunately headwinds related to raw material availability inflation in shipping costs persisted and our fourth quarter gross margins only improved 40 basis points versus the third quarter.
We remain confident in our assessment that most of these headwinds are ultimately transitory.
Primarily pandemic driven being seen across industries and do not indicate a permanent change to our operating structure.
Michael will share some details on our view of gross margin improvement opportunities throughout 2022 in a few minutes.
We anticipate gross margins inclusive of our ortho <unk> acquisition to be between 55% and 57% for the full year 2022.
While our gross margin did not progress as much as we had planned in the fourth quarter. The team continued its spending discipline across our controllable expenses as we ended the year with SG&A as a percentage of revenue of 37, 9%.
Although we have a range of expenses that will negatively impact our SG&A margin profile in the first half of 2022 we remain confident and committed to maintaining SG&A as a percentage of revenue to be less than 40% for the full year 2022.
With that as a background, let's move to a discussion on the current market environment and provide an update on our progress against our 2021 priorities as mentioned earlier, we delivered solid revenue outcomes across most of our product portfolio.
Although most of the volume of electric procedures being performed remains depressed mostly impacting our on Q franchise. Many product families grew double digits in 2020 one.
As Michael will discuss in more detail in a minute, we anticipate organic growth for 2022 to be between 3% and 6% with our pain portfolio, leading the way from a growth perspective, as we start to see market tailwind from elective procedures turn in our favor.
We anticipate our digestive and respiratory franchises will return to historical growth rates in 2022.
Throughout 2021, we continue to enhance our product offerings to improve the efficacy and ease of use for our carrier partners for cool leaf. We successfully launched our next generation cooled radio frequency probe kits and Q4 combined with the launch of our new generator last year, our new upgraded offerings will strengthen our cool RF leadership.
<unk> in 2022 and beyond.
Within our <unk> business, we have started to see benefits from paying block pro the user friendly App and data collection solution that we released earlier. This year. This tool will continue to be an important differentiator that will help us drive growth. In 2022. We are also seeing success with our ambit products align utilizing the ambit plus reusable program.
In particular as it relates to capturing procedures in the ASC or ambulatory surgical center setting.
Shifting to chronic care the positive trend across our digestive health franchise continues we maintained double digit growth across our near mid portfolio, which we anticipate continuing into 2022.
Separately, our standard of care strategy for core pack is accelerating sales of our courtright hardware to record levels.
As I stated earlier, our respiratory health sales were basically flat given the prior year pandemic tailwind and we anticipate our respiratory health business, reflecting historical growth rates during 2022.
Although we did not meet our internal objectives for gross and operating margin improvement in 2021, we were very pleased with our ability to meet our customers' needs for product availability.
And exceed our revenue targets for the year.
Additionally, we.
Contained cost throughout the year with a focus towards spending only on those initiatives with the highest ROI outcomes.
We remain focused and confident that we can attain high 50% gross margins, coupled with EBITDA margins greater than 17% during back half of 2022.
Our third priority for 2021 was to demonstrate our ability to generate consistent repeatable cash flow, we generated $47 million of free cash flow in the fourth quarter and $66 million for the full year inclusive of a range of one time tax and legal settlements.
Excluding those items, we generated $26 million.
Of normalized free cash flow.
Proved operating results will support this priority of generating consistent and repeatable free cash flow in 2022, which should exceed $90 million.
Our last priority for 2021 focused on capital deployment, our M&A pipeline remains healthy and we are engaged in active dialogue with a number of potential tuck in targets, which would leverage our existing footprint generate synergies enhance our top line growth and meaningfully improve our margin profile.
In addition, we closed our acquisition of Ortho <unk> on January 20th and anticipate achieving $70 million of revenue for 2022 related to this acquisition.
This acquisition enhances our pain portfolio by providing a continuum of care treatment options for patients living with knee OA.
Fourth of Gen. <unk> has a clear strategic fit for Avenova and.
And one that will further strengthen our relationship with health care providers.
Summarized 2021 was a critical year for us as we move towards our longer term financial objectives, our product portfolio showed resilience, we stabilize our supply chain and operations challenges with meaningful improvements planned in 2022.
We also demonstrated our ability to begin leveraging our fixed cost operating expenses.
Additionally, we have resolved all remaining material litigation. This includes the Doj investigation, the indemnification dispute with Kimberly Clark as well as a positive outcome with regards to our IP infringement case with Medtronic.
Our primary objectives in 2020 to center around solid organic growth delivering on our ortho generic strategy, making meaningful improvements in our gross margin profile as the year progresses, and demonstrating our ability to deliver material free cash flow, we have in excess of $350 million of available capacity to execute on further bolt on.
The acquisitions as well as consider additional share repurchases should our shares remain meaningfully below our calculated intrinsic value.
Although our 2021 performance was uneven given to the macro environment we.
We advanced many of our key initiatives that will support solid progress in 2022.
Now I'll turn the call over to Michael.
Thanks, Joe.
As you noted we have made meaningful progress against our value creation initiatives and are setting up well for a solid 2022 that will combine mid single digit top line growth with M&A execution. Additionally, we will show improved gross and operating margins as well as consistent free cash flow generation.
So let's begin with a review of our fourth quarter results.
Total sales of 193 million was up four 5% compared to last year.
As a firm throughout the year, we indicated full year net sales growth would range from 2% to 4% compared to the prior year, we achieve the higher end of the range with net sales increasing three 9% on a constant currency basis compared to the prior year excluding discontinued.
Discontinued products manufactured in our Mexico facility.
Despite the pandemic related tailwind for respiratory health in the fourth quarter of 2020 chronic care sales increased by a little over 8% to 126 million every quarter.
Adjusting for the 2020 tailwind respiratory health sales would have been flat for the quarter in line with market growth.
We did not notice any additional benefit from the omicron Berrien as related hospitalization did not increase in Q4 until the end of December nor do we expect any meaningful impact to our closed suction catheters as hospitals continue to carry out their first line of care before placing patients on ventilators.
Additionally, we believe we are experiencing a relatively normal cold and flu season.
Shifting to digestive health, we continue to see strong growth across both of our North America and international markets, resulting in fourth quarter growth of over 17% within our digested health portfolio Neal that grew almost 47%.
<unk> of conversion store and it technology, despite supply constraints impeding additional growth.
Moving to pain management, we delivered $68 million of sales 1 billion behind prior year, driven by continued headwinds in <unk>, partially offset by strong performance across our intervention all pain portfolio.
As Joe noted growth in Q4 was hampered from impacts brought on by the Army called Barry and then return slowdown in elective procedures, coupled with staff shortages.
These impacts had an effect across the pain portfolio <unk> was disproportionately impacted us primarily in inpatient therapy.
We partially offset these losses the paid block pro channel partner growth and expansion into the S. T.
We are well positioned to drive sequential improvement into the first quarter of 2022.
These initiatives move forward and we benefit from an anticipated tailwind of elective procedure recovery.
Additionally, supply constraints and raw material shortages have temporarily impacted our ability to meet the bandwidth and the game ready business with backwards exceeding $1 billion at the end of 2020 one.
Despite these headwinds we continue to experience strong market growth and demand and we expect to be able to work down our backlog in the first half of 2022.
Moving down the income statement adjusted gross margin decreased to just under 53% or minus 80 basis points compared to last year.
As indicated earlier, although we did not meet our internal projections for gross margin progression. We are pleased with the progress on gross margins through the year given the persistent challenges existing in the macro supply chain environment.
Compared to last year gross margin was impacted by higher inflationary pressures inclusive of both our transportation and raw material costs.
We're able to offset some of these inflationary costs for manufacturing savings during the fourth quarter.
Looking towards 2022, we continue to expect adjusted gross margin to steadily improve as a range of efforts. We are implementing throughout operations begin to take hold.
However, we also remain cognizant of the global supply chain environment that remains disrupted and.
And we are unable to predict the timing of when these high higher inflationary factors will begin to soften.
Additionally, the availability of certain raw material components remains a challenge as we work through our existing rolling back Rolling back order.
Now turning to the bottom line financial metrics.
Adjusted operating profit totaled $25 million compared to 21 million in the prior year.
Our sales are lower spend across SG&A and R&D were partially offset.
Favorable gross margin as we noted earlier.
Adjusted EBITDA totaled 31 billion compared to $27 million last year.
Adjusted net income totaled 23 million compared to $13 million a year ago, and your 46 of adjusted diluted earnings per share of 65% increase versus the prior year.
Our adjusted EPS for the fourth quarter was enhanced with tax planning strategies that contributed approximately eight cents of benefit.
Turning to the balance sheet and cash flow statement.
Our balance sheet remains a strength for us and continues to provide us with strategic flexibility as we grow.
We have over $110 million of cash on hand, with 255 billion of debt outstanding post the closing of the ortho generates acquisition and completion of our share repurchase program.
Our pro forma EBITDA post acquisition, we have over $350 million Bachelor and capacity to utilize towards our capital allocation priorities.
As noted earlier on a full year basis, we grew three 9% with solid delivery across most of our portfolio.
Additionally, as we have noted throughout the prepared remarks, the remainder of the uncertain environment with regards to our supply chain, both from a cost perspective and availability of products adjust.
Adjusted gross margin was just over 52% compared to 55, 6% a year ago, primarily due to higher freight cost inflation of raw materials and labor costs and inconsistent plant performance.
Partially offset that impact we have managed our cost structure with regard to SG&A and R&D throughout the year.
Finally, we were pleased to achieve a $1 15 of adjusted EPS for the year with around eight a favorable tax benefit in the fourth quarter as noted earlier.
As Joe indicated our primary objectives in 2022 centered around solid organic growth delivering on our oracle generate strategy.
Making meaningful improvements in our gross margin profile and demonstrating our ability to deliver material free cash flow.
The impact of the coronavirus and its knock on effects like inflationary headwinds remain unpredictable.
However, our overall execution in 2021 has positioned us well in 2022 and to deliver on a meaningful a material step forward toward our desired financial profile.
Organic net sales should grow 3% to 6% in constant currency terms with ortho generates delivering sales of $70 million this year.
The low end of this range assumes continued difficulty with accessing raw materials and unevenness with the return of elective procedures.
Our gross margin profile will improve sequentially given the positive impact of the fourth of January and we anticipate annual gross margins in the range of 55% to 57%.
With the lower end of that range, capturing uncertainty around inflation and distribution costs.
Operating expenses are expected to increase compared to 2021, we will invest domestically and internationally with a clear expectation of return on investment. However, we will remain below 40% of SG&A as a percentage of sales for the full year, but the first half of the year likely being slightly above 40%.
Free cash flow should exceed 90 billion in 2022, as we drive sales and margin growth.
Leveraging our operating expense structure.
We do not anticipate favorable operating working capital for 2022 as inventory will increase to help support raw material shortages and reduce our existing back order.
We expect to see quarterly sequential earnings growth driven by sales volume and cost savings with first quarter results being meaningfully softer versus the duration of the year.
Has been consistent with past historical performance.
As a result, adjusted diluted EPS should range from $1 55 to $1 75.
We have made great progress in 2021 to set ourselves up for a successful 2022 and beyond.
Excited that much about cash flow uncertainty is now behind us.
We remain confident in our ability to lead our strategy and to take the necessary steps to drive gross and operating margin improvement and deliver more consistent results as we look towards 2022.
Operator, please open the line for questions.
Yes. Thank you.
When we went out to begin the question and answer session.
I ask a question you May press Star then one on your Touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble the roster.
And the first question comes from Chris Cooley with Stephens.
Good morning, and I appreciate you taking the questions here today.
Michael maybe if you just start help us maybe parse out a little bit more of the guide.
And specifically here I guess two parts to the question.
With the addition of both the <unk> and a pretty strong contribution there in revenue $70 million.
You know one would just think that there may be a little bit more of a natural lift there in the gross margin. So we'd hope that you could maybe help us parse out kind of the headwinds that you've talked about from a macro perspective.
Versus the underlying base business and then with a general X just as we think about the components of growth I'm, sorry of gross margin and then similarly, when we look at the EPS guide a while it's not explicitly called out I guess, we can work through it but it would be helpful to kind of get a better feel for how much you're anticipating getting from the ACA.
With vision, how much from the base business as it stands and then the incremental contribution from some of these cost savings initiatives that I've got a quick follow up thanks.
Great Chris Thanks for the question.
I'll try to get each of those names, but if I Miss one just ask again, so I'll start with the gross margin I think the best way to think about that because we're not going to give specifics around our ortho generates a margin profile for a range of reasons one of which is we're not sure exactly how quick we can integrate what we want to do with that and that may have an impact.
As the year goes it goes on but one way to think about it is the 55% gross margin in the low end of our range a majority of that right over 50% of that increase from 52. This year to 55 would be the uplift for more generous as we get more towards 50, 657%.
Gross margin a majority of that uplift is because of the good work we're doing in the normal organic efforts from a cost of goods sold standpoint, plus hopefully we get some tailwind with inflationary pressures lessening and some of the other things we commented on in the prepared remarks.
So that would be the gross margin piece.
When we think about the revenue guide 3% to 6%.
70 million.
He sees an absolute number that assumes the 11 months plus one week that we would own it. So actual results of 70 million the 3% to 6% organic guide excludes four.
$4 5 million of match their revenue from our Bachelor facility.
So organic guide is based off of 740 million organic revenue from 2021.
So hopefully that helps to clarify the organic guide on the revenue piece 70 million actual ortho <unk> that we believe we will achieve in 2022 for the purity that we own it and then on gross margin low end of that gross margin. If we achieve that that'll be the majority of that will be because of the uplift from the ortho generates acquisition.
As we get towards 57% a majority will be because of the organic work that we intend to implement this year.
And just I guess, just just to clarify again, then as well just from an earnings contribution perspective, when I think about the EPS guidance range.
Yeah, So we're not going to provide that okay fair enough.
And then I guess just for my follow on I, just want to make sure I understand your assumptions behind Ortho <unk> I believe at the time of the acquisition at the at the end or Middle of December .
$130 million that you paid there at closing.
It was around.
Two and a half times 20, twos estimated revenues and so you know.
It makes it pretty much sensory when you think about the timing.
Just curious, though about what you're thinking from a growth rate perspective for that business.
So going forward I'm going forwards yeah, no great question the growth rate is we expect it to be.
Moderately accretive to our organic topline growth.
Okay.
Thank you very much for clarifying that.
Yes.
I'll get back in queue.
Thank you and the next question comes from asking me, Sean with Keybank.
Great and thank you for taking the questions and I just wanted to follow up on <unk> question there.
For on.
Arthur Chin Rx are there headwinds that need to be accounted for in store.
I could see that growth rate.
You know where the move to single shot I mean, some changes and I guess how.
How.
How it's being reimbursed.
Is there is there is some things we need to pay attention to him.
Matt I'll, maybe take that as Joe Woody I think the way to think about it is that we feel like we can sort of maintain our.
The trajectory that they're on over time, we think we can.
Adding to our direct sales force, but we sort of want that to run stand alone for a while and yes, we're paying attention to the reimbursement changes, which we have fully model in or.
Prepared for next year, but that could mean in the second half of this year, there's a little bit of utilization change that goes on nonetheless, as Michael said, we're still going to be north of our growth rate current growth rates and it's going to be accretive to our growth.
Okay.
I just wanted to make sure I understood. The gross the gross margin trajectory correct.
What you're saying is half of the the hassle from 52 to $55 is from is from or if they're Jenner X.
Not not the not the bump from 52, all the way to 55 is that is that correct.
That's right exactly.
Okay.
And then you said you were making some investments in N.
In SG&A and R&D to start the year what are some of those investments and where are you where are you putting dollars to work.
Yeah.
Yeah.
So last year as the back half of the year, we started to see continued headwinds with gross margins, we made choices around stopping or delaying selling and marketing and R&D activities that we felt comfortable doing I think we mentioned this on our third quarter call as well that we didn't think we'd have a long term disruption in our investment profile.
As we enter into this year with obviously the benefit of the ortho generate acquisition other things that we believe are starting to loosen up as far as opportunities for us.
Wanted to make sure we put those investments back in so.
We're adding back in a couple of million of R&D that we delayed from last year.
And then also some key selling and marketing initiatives, we have some small launches.
Half of this year, we want to continue and invest behind Neil net and the opportunity that we have there. So it's kind of spread around that but it's primarily related to delaying of things that we put all in the last four to six months of last year.
Okay and just last question on the on the free cash flow of $90 million.
Is that is that just flowing down from from EBITDA like core or are there. Some moving pieces, there where you were where theres some lump sum that you.
Got it.
No. So thats $90 million of core in addition to that we still have $13 million of tax receivables. Some lingering cares act and other tax receivables that is not in the $90 million. If we were to secure those tax receivables that would be in addition to the 90. The 90 is key.
Core it also assumes a heavy headwind with inventory. So if we manage our inventory in a slightly different way and or supply chains react differently. There may be some potential upside as well. So this is all core and it doesn't include some potential upside.
Okay. Thank you very much.
Thank you.
Thank you and once again. Please press Star then one if you'd like to ask a question.
And the next question comes from Rick Wise with Stifel.
Hi, Good morning, Joe Hi, Michael.
Maybe just going to recent trends.
You were emphasizing that maybe December wasn't impacted.
Impacted by some of that.
The COVID-19 headwinds.
I assume January one.
Just what are you seeing more specifically now we are basically two thirds through the quarter are you actually seeing.
In your business, what we're reading the newspapers the lessening of Covid.
Headwinds in and are you starting to see some early encouraging signs on the elective procedure front that sort of underpins your optimism about the year.
Yeah, Rick I would I would say that generally you know piece of December as everybody has reported and then into January as we've emerged into February we're seeing.
A little bit of Green shoots if you will I do think Q1 is still going to be affected.
In terms of elective procedures, probably getting better into Q2, and certainly better in the second half and that's considering that we don't have any other issues or variance.
Impacting I think others have spoken to and we feel like there is a.
A bolus of procedures, especially in the orthopedic space that are going to get done and start.
Come into fruition as soon as the majority of the hospitals go back to a normalized level and that's the big debate the normalized level.
Doesn't always come as quickly as everyone anticipated throughout.
Throughout the pandemic and again, we know Theres a staff shortage component, but I do think it's looking to get better a crime move through pretty quickly I think as we exited the quarter, we will start to see a little bit of an uptick in primarily in our business as you probably know.
The biggest impact is on on Q less so on cool leaf in the chronic care business.
Right right.
And I just.
It says naive question, a little bit but.
Obviously your costs your detailing it in multiple ways your cost pressures.
Pressures of rising supply chain product charges et cetera to what extent.
Are you all able to pass along are you talking to your customers about it.
Are you negotiating with them.
How's that unfolding.
Yeah, I think the difficulty I mean everyone's going to experience.
You know some compensation inflationary issues that will probably remain with us and then some of the raw materials will come in come and go I do think there's an opportunity for some price increase for us throughout the year.
But but the majority of what we do is G. P O and IGN base and I think that's the struggle for medical devices versus as an example of consumer.
Product company that can pass it along a little bit more.
Quickly. So we do have some plans that we think.
You know that we roll into this year and we'll get some benefit and then as we renegotiate contracts I think there's a general understanding from G. P. S. <unk> that not just us, but all medical device companies are going to be looking to.
Pass along some of this transportation and some of the general raw material increases as well.
Great and just last from me, Joe you've been absolutely spot on and you know.
Straight ahead in terms of Ah highlighting that.
Your M&A activities continue that youre working on multiple things and you know.
Recently, you've you've.
Hugh.
Captured ortho generics, which is clearly a compelling acquisition.
As Youre thinking about this year are you as optimistic are you as confident.
Any color on you Youre, hoping it's more in the first half and second half in <unk>.
Any incremental color about.
What all is.
It's going to it's going to be.
Hey, Dan.
Sure I mean that you know we exited the year talking about our two that where we're very near term.
I would say that we have three bolt ons that we're looking at and we're looking across both.
The chronic care business and the pain business. My you know you never can time, these things and so I wouldn't call it necessarily for the for the first half, but we'll do it we can but certainly I think we will leave.
2022, with one or two additional bolt ons of the type and variety that we've been working on I think we're gonna start to benefit from the cash flow generation and being a good position then to do what I would see as a larger deal for us in 2023.
Obviously first delivering and executing what we're laying out here today.
Meaningful for us in larger can be several hundred million dollars. It doesn't have to be a $2 billion of $1 billion deal and that probably is not realistic.
But there are some bigger things that we can do that would have a greater impact on the business. So I see another one or two this year.
Looking at something larger probably next year.
And I apologize if I could sneak in one more I meant to ask.
<unk> revenue growth outlook.
The $70 million forecast.
Just help me understand.
Because I've been asked.
And haven't had a great answer with reimbursement getting hit in 'twenty.
In 2000, <unk>, how does it grow how do we think about growth this year and next.
Said differently how does it.
Not get impacted.
You know given that headwind what are the offsets. Thank you so much so yes.
Thank you Rick for US, there's two things to benefit as one of them were coming from a smaller base versus some of the competitors that have larger basis.
And also the way that CMS is looking at this as Theyre looking at the ASP.
And generally our asps are in a good spot there definitely going to get <unk>.
Reduce that but we're in a good spot as.
As we stand now and so when we speak of are Michael said on this call still north of our valve.
Valve in us growth that would contemplate even a reduction in reimbursement. So we built this all in.
Still think its going to be accretive to our growth and accretive to our margins as well.
Very helpful. Thank you.
Yep.
Thank you and then last question Cutsinger, an area with Morgan Stanley .
Hi, Joe Hi, Michael Thanks for taking the questions just a follow up on the ortho <unk>.
That record.
Can you, maybe just talk a little bit more about the components of growth and how you're thinking about the three and five injection markets and your ability to drive growth there.
It is worth a <unk> is it all about just expanding the customer base or is this the is this largely kind of a mix benefit of moving five to three injections.
So a couple things one we just a reminder, we will be able to develop if we choose to a single injections, but thats sort of a in.
In the future, but if you think about the growth.
Good growth from the existing sales force ultimately we want to put this into our groups.
Groups. So there is an opportunity for expansion and growth there. So that we are both selling together.
The products.
I think the other thing to think of is that there are a lot of physicians a good percentage of them that that believes that three to five is a better route because oftentimes in a single injection the pain.
Relief is not very long and so if it's spread out over a period of time and then Additionally, we have different call points that we think it would be interested in this product interventional pain, where we call with Cooley.
You know the various pain clinics that we work with on a different basis. So we feel like there's a good runway of growth for us and also longer term to think to contemplate whether or not we would develop a single. So we don't feel like the runway or the projections of what we're talking about being north of our current growth.
Right would require us to have a one injection there.
Yeah.
And then just maybe a little bit more kind of on the strategy you combine strategy with with north of a general accident at Cooley, If I mean, how does this product fit and fit in with the <unk> I think there was data that you were developing for Cooley first H, a but just kind of curious if you. If this uplift uplifts coli sales or there could.
Would be potentially some cannibalization between the two products. Thank you.
I think ultimately it's going to help both ways. So the 10 99 group that is selling currently north of Gin and then our own cool if direct group.
When we start to think about calling on interventional pain clinics, and orthopedic surgeon offices and ambulatory surgical centers. So you can also think about the fact that were.
Working internally and externally on another approach juice something cool if related.
The ambulatory surgical centers. So I don't think that certain modalities are going to disappear, we've kind of seen that with corticosteroids.
They're here, they're not as effective but there's usually a cycle and different viewpoints of treatment I don't think a J is going to go away, but I think that there's an interesting.
Market in total, which we're going to spend a lot of time in and develop on treating OA of the knee and so we sort of have two forays now called frequency RF.
How ironic acid and then there are other technologies that we're considering and looking at either for open innovation investments or potential acquisitions. So I think theres going to be sort of a pathway. It actually starts with kind of going in and.
Looking at the patient and seeing about an opportunity to lose weight or to exercise and it sort of moves to the.
The advil and leaves and then onto steroids and then H E.
So I think that it's a good place for us to be where we can build a competency.
Got it and sorry, just one last one for Michael but I and I'm, sorry, if I missed this but how.
How should we be thinking about 2020 two's tax rate and share count kind of given that you have the 30 million dollar repurchase authorization outstanding. Thank you.
Yes.
Share count.
I would think kind of flattish to slightly down versus last year and then.
And then the tax rate you guys are getting the kind of 2027% rate normalized.
At this time.
One time opportunity, we had from a tax planning strategy in the fourth quarter that was discrete and onetime in nature that won't repeat it was a good opportunity around the Baxter closure that we had the 26, 27% rate in 2022 and likely into 2023 still remains appropriate.
Yeah.
Thank you.
Thank you and we have another question, Chris Cooley with Stephens.
Oh, Thank you for taking the follow up just maybe one other quick one as we think about our generation of cash.
In the course of the year.
In prior presentations.
<unk> mentioned.
The evaluation of the existent portfolio and potential monetization of some of those assets to help.
Five additional growth capital for the business going forward any update on your thoughts there you know as we enter the new year are you comfortable with the portfolio was schuh has a habit here today or no.
Alternatively, do you see some opportunities to to prune and enhance the growth and margin profile and as a result have more capital for these tuck ins.
I think there's more opportunity for us and I think Baxter is kind of a good example to think about in terms of we saw something that was gross margin dilutive.
And we decided to exit I think theres opportunities for us too.
Sell some other skus in other portions of our business that.
Arent attractive part of the strategy on the go forward that would be beneficial to us and the metrics that we're driving alongside of the strategy and we're continuously looking at the portfolio and getting honed in more specifics. So there's more of that I think to come.
And that should benefit us I think on a future M&A.
Or on future M&A opportunities as well.
Thank you.
Thank you and this concludes our question and answer session I would like to try to forge what have you for any closing comments.
I just like to thank everybody for their continued interest in avenues and we're very pleased with the execution in 2021, given certainly an uncertain environment, we're certainly committed to creating.
Shareholder value and anticipate 2022 is going to begin to deliver on that and then I'm confident that original detailed combined with our market leading portfolio in attractive markets positioning us for sales growth margin expansion and positive free cash flow as we continue into 2022 and look forward to talking to all of you more about this thank you.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Okay.