Q1 2022 Quidel Corp Earnings Call
Investment to further develop and broaden our portfolio.
Let's take a look at some specifics on revenue for the first quarter.
2022 reached just over $1 billion.
That's a pretty extraordinary 167% increase.
Over the prior year period was driven primarily by strong performance in a rather than immunoassay product portfolio.
Total rapid immunoassay revenue increased by $655 million in the first quarter due to $893 million.
We saw significant sales have quip you at home OTC COVID-19 tests.
And while COVID-19 testing made up the bulk of this heightened demand. It is noteworthy that non COVID-19 sales grew 56%.
Most double that if you exclude the beckman BNP business.
As we saw increased sales.
<unk> combination test for influenza and Sars.
As well as increased demand for Sofia influenza tests.
Although we haven't seen a typical flu season.
<unk> continues to linger and interestingly.
<unk> right now is at two 1% of visits and while we are seeing increasing.
Seasonal influence activity in a few states. This highlights the importance of diagnostic testing.
And the significance of having a differentiated menu, which is part of our post pandemic strategy to widen our point of care footprint.
And introduce our full portfolio of assays to book patients.
Health care providers.
Relative to COVID-19, we are seeing softening demand and we expect this trend to continue as we head into the summer levels. In fact, we started to see this in the first quarter as test demand has shifted significantly from retail outlets to the federal government.
And to a lesser extent to the professional segment.
This shift allowed us to focus on delivering more tests to the U S.
Our test in the U S government.
Originally anticipated and in the first quarter, we shipped approximately 70 million cricket OTC.
OTC COVID-19 test to the federal government.
We'll ship the remaining 35 million tests that the government in Q2 to fulfill 108 million tests commitment.
And as you can appreciate we remain in close conversation with the federal government and related government agencies to determine that the government support strategies going forward.
We are in discussions with the government to supply an incremental number of tests in Q2, Q3, and we'll update update you on any order that is placed from those discussions our longer term expectation is that COVID-19 tests.
And infections and related testing demand will continue to wane as COVID-19 becomes more seasonal similar to as food demand.
We currently are not forecasting a significant revenue contribution from our COVID-19 products in the back half of the year.
The prospect of endemic Sars seasons amplifies the long term benefits of that brand awareness, we have generated and the strategic partnerships, we have built with retail and distribution powerhouses.
These trusted relationships provide us with access to point of care and over the counter channels for both Covid and non COVID-19 product lines going forward, which is exciting.
<unk> consistent with the anticipated shift in COVID-19 testing demand.
We continue to bolster our resilience in the post pandemic future.
By accelerating assay development and production.
And further expanding our footprint at the point of care.
Given our pipeline, we have high confidence in our ability to capture evolving health care trends that will drive both future growth and profitability.
These opportunities include a number of products we've discussed on previous calls.
Such as <unk> and our Sofia acute device.
New Sofia assays as well as new products.
Our.
Cardio metabolic and gastrointestinal segments.
Foremost among our upcoming product launches as our flagship savanna molecular platform.
As you know we already have CE approval for markets outside of the U S. But our main focus is on getting the necessary approvals to launch savanna in the U S. Later this year.
We plan to submit our Savannah EUA for RVP for next week.
And submit our if I think K in July with two more a five 10-K panel submission set for year end and three more submissions by the end of Q1 2023 means.
Meanwhile, our teams are hard at work scaling savanna instrument instrument production.
And transitioning to fully automated manufacturing.
We experienced as we are over the last couple of years, we've learned a lot about hyperscale and production and managing complex supply chains and.
And you can rest assured we're leveraging the lessons, we've learned and expanding COVID-19 testing capacity to our other products.
Once online in the fall our savanna cartridge automated manufacturing line is expected to begin its ramp up and outfit to over 1 million cartridges per month.
With $300 million annual revenues and anticipated within three years of U S launch.
Of course, we're also immensely excited by the opportunities presented by our planned acquisition of ortho clinical diagnostics.
As I've said before.
This acquisition will more than double our market opportunity to over $50 billion among the point of care clinical laboratory.
And transfusion medicine segments.
We're thrilled by the potential catalyst, we see in the combined business.
Our teams are working well together planning for the integration and the highly complementary nature quite <unk> and ortho portfolios is expected to create ample cross selling opportunities across a deep and diverse matrix of customers and channels.
To significantly accelerate market penetration worldwide after closing.
Leave it as a truly compelling formula that can position the combined business for long term growth.
And our lasting global impact and delivering advanced diagnostics to improve human health.
Integration planning is going well.
Formed 15 cross functional teams.
Defined 87 projects.
Plus defined day, one day 30 and longer timeline objectives with the day, one must have either on track or completed.
Operationally no risks have been identified that would create significant disruption on day, one through day 30.
Of course, Theres a lot of work still to be done and challenges are being identified but no critical path items are delayed overall.
We are very pleased with the cadence and progress that we've made thus far.
And are excited about getting to day one.
We are bullish on the acquisition and look forward to harvesting the expected $90 million in cost synergies by end of year, three and $100 million in revenue synergies by 2025.
We expect investors have recognized the value that can be created by bringing the companies together.
And we will vote to approve the deal here's a quick snapshot of the process to closing on April 11, we began mailing our joint proxy statement on May 16.
There will be stockholder meetings for each are quite ill and ortho.
On the business combination on May 26, we have scheduled the UK court hearing.
<unk> 2007, we anticipate the successful close.
The transaction is subject to receipt.
The stockholder vote, the UK order and satisfaction of other customary closing conditions.
In closing I'm incredibly proud of our employees and their commitment to making a positive impact in our fight against Covid and more than pleased to see them now applying that same focus and.
And commitment to their work addressing a post pandemic world.
And it goes without saying that I am exceedingly encouraged by our performance in the first quarter. It's clearly one for the record books.
And we have a long exciting roadmap for our continued growth and success as we advanced diagnostics.
<unk> human health.
It is our mission and we're happy in the knowledge that we're making a difference for Andy.
Thank you, Doug and good afternoon, everyone.
I'd also like to thank all of our employees have demonstrated quite that will strengthen the spirit.
Perseverance and dedication to deliver such outstanding results.
Because of their tireless efforts, we again achieved another record quarter for revenue.
Thing how previous high watermark debate under $9 million in Q4 of 2020.
During my tenure here I've seen quite outgrowth substantially and quite incredible culture has been the driving force behind such explosive growth and our sustained excellence I'm very.
We are proud to be a part of what we have achieved here at quite out.
As Doug mentioned total revenues for the first quarter of 2022 $1.002 billion.
<unk> the $375 3 million in the first quarter of 2021 achieving growth of 167%.
This growth is primarily due to increased rapid immunoassay product revenue, which was driven by the continued fulfillment of the U S government order for over 100 million quick view COVID-19 test.
Total <unk> revenue in the quarter from all products.
$836 1 million.
And this compares to $269 1 million in the first quarter of 2021, a growth of 211%.
In total we sold over $126 million Covid path in the first quarter.
113 million tests.
Quick view 12 million tons, where sofia and over $2 million.
All other tests.
Foreign currency exchange had an unfavorable impact of $1 million in the quarter.
Influenza revenue was $89 1 million and this is versus $16 $4 million in the first quarter of last year.
Included in the influenza number for the quarter was $54 2 million.
<unk> revenue $25 4 million.
With me are flu revenue and $5 $9 million and quick view flu revenue.
Rapid immunoassay revenues were $892 $8 million in the first quarter showing growth of 276% from first quarter of 2021.
Within this category Sofia product revenues were $224 million.
Of which a 137.
$9 million were attributable.
CSR is antigen test.
And as Jeff mentioned influenza revenue was another strong contributor to this group, adding $79 $6 million in revenue.
<unk> product revenues in the quarter were $667 million of which $657 million were attributable to the quick view Cyrus tests.
For the cardio metabolic immuno assay business revenue was $52 million lower than the prior year quarter. As a result of the agreement we entered into with Beckman Coulter in July of 2021.
As a reminder, the agreement states that in connection with transitioning the Beckman BNP business to Beckman Coulter.
Quite out with these annual cash payments between 70 million to $75 million per year through year 2029.
In the first quarter of 2022, we recorded revenue of $16 $8 million associated with this agreement.
Quarterly revenue was based on product shipments in the quarter to Beckman Coulter.
For the full year, though the minimum revenue to realize $70 million and is there regardless of product shipment.
The triage business generated revenues of $33 4 million versus $33 million in the first quarter of 2021 with growth in Asia Pacific and Europe Middle East Africa.
By a decline in the U S.
Our molecular diagnostic solutions revenue was $46 million in the quarter as we saw a continued demand for the lira Sars COVID-19, two products, which constituted $38 $2 million of the total molecular diagnostic solutions revenue.
<unk> revenues were $5 $7 million in the quarter and Savannah revenue was an incremental $400000 in the quarter.
Specialized diagnostic solutions revenue increased 23%.
$13 3 million.
Driven by an increase in sales of our DHA respiratory products.
We realized good growth in the core business as revenue, excluding the COVID-19 revenues and Beckman BNP revenues increased 105% over the first quarter of 2021 to $149 4 million.
Immunoassay revenue increased $73 million or.
We're almost 300% due to an increase in the flu and strep revenue.
Triage business increased 1% on molecular revenue increased 20% on a small revenue base without COVID-19.
Also saw strong performance in our specialized diagnostic solutions revenue as stated previously.
Gross profit in the quarter increased to $740 million and gross margin was 74% of revenue.
This compares to a gross profit of $302 million.
And 80% gross margin for the three months ended March 2021.
The increased gross profit was due to the greater product sales are quick to add home OTC COVID-19 Tac.
The decrease in gross margin was driven by a shift in product mix from higher margin Sofia Sars test the lower margin quick these virus test.
And this was partially offset by improved manufacturing absorption.
On the expense side of the business, we continue to invest in R&D and specifically our savanna platform.
Also spending in support of our longer term initiatives, such as new Sofia assays that can leverage on larger installed base of instruments and new markets next generation platform.
<unk> to name a few.
In the first quarter of 2022, R&D expense increased 13% to $26 4 million.
Sales and marketing expense for the quarter increased to $65 4 million.
The resulting from higher <unk> expense due to higher sales volume.
Higher production promotional spend associated with it quickly at home OTC task and higher compensation costs, driven by increased head count.
This year, we will continue to invest in people and resources to expand our reach as well as increase our spending in marketing product promotion and corporate partnerships in support of existing and new markets.
G&A expense in the quarter increased by $5 million to $24 $5 million, primarily due to higher compensation costs driven by outstanding performance during the current period.
As it relates to the provision for income taxes, we recorded $147 million in income tax expense, resulting in an effective tax rate of approximately 23% or higher.
Tax expense for the quarter compared to the same period last year as a result of an increase in pretax profits and a decrease in tax deductions from stock based compensation.
As of March 31, we had $1 billion and $275 million in cash and cash equivalents.
In the quarter the company invested approximately $22 million in capital expenditures and.
In April we made our scheduled $48 million payment to Abbott for the Alere asset.
Leaving one final payment of $40 million due to Abbott in April 2023.
From a use of cash perspective in the second quarter, we expect to use the majority of the cash on our balance sheet to help fund the cash payment to the shareholders.
Lows.
After close.
The transaction <unk> will be stepping in.
<unk> for the combined companies.
And Joe will do.
Credibly strong contributor going forward.
I'll still be involved with wide al but going forward more in the background to ensure continuity and health.
As appropriate.
It's been an incredible journey over the last 10, plus years and I am truly blessed to be a part of this great quite a story.
The company is in the strongest.
<unk> has ever been in numerous ways.
I build friendships that will last for the rest of my life.
And we'd like to think that along the way and provided some value that will drive quite a while to even greater achievements going forward.
Thank you very much for all of your support over the last 10 plus years.
And with that we.
We completed our formal comments for today, operator, we're now ready to open the call for questions.
Great. Thank you if you would like to ask a question. Please press star followed by one on your Silicon keypad.
Any reasons relate to ask question. Please press star one.
Again to ask a question.
As a reminder.
Please remember typically before asking your question.
These questions are answered.
The first question comes from Alex Nowak with Craig Hallum. Please proceed.
Great. Good afternoon, everyone and Randy enjoyed working with you.
A metric we are watching on the go forward for Covid testing as the low watermark per month from the spring of 2021, it was $20 million to $25 million of Covid test sales per month last quarter, I said that would be higher but we didn't exactly know that figure do we have a new low watermark for the back half of the year to think about.
Alex.
It's very very challenging to really identify a low a low watermark just because.
Government participation and the prevalence.
Bob.
The virus here or or as we go forward, though at current time I would say what we have stated previously probably as good as anything we can see at this point.
We'll say that we're not forecasting a significant amount of COVID-19 revenue in the back half of the year.
Okay.
And then maybe expand a bit more on the day 30, and maybe the day 90 plants. After closing the deal maybe highlight some of the first action items youre going to be undertaken.
Well I think initially.
We're getting to close we.
Done a lot of strategic planning, but it's really hard to really get into the execution mode until after close.
Within 30 days after close we have to file our first our first Q as a combined entity. So we're very focused on.
Really the first 90 days are actually through the end of the year to really focus on just driving both businesses, making sure that we're performing is do you expect the label.
Thanks, Ed performance requirements, and then we really get in that kind of more of that the combined entity execution here entering into 2023.
But certainly we will be planning during that time.
Hi period.
Cost synergies and revenue synergies as well.
And just one more here, maybe expand a bit more on the menu expansion for Sofia and quickly I just wanted to get start to see new products hit the market.
Im sorry, Alex I think.
You were asking about additional OTC products in the OTC market.
Okay.
OTC and standards for professional.
Expansion pipeline, there and what to expect.
Yeah I'll jump in on that one Alex I would just say that the R&D guys would tell you they've got a number of products in development on Sofia.
And so we see that as a major growth engine moving forward the instrument placements out there.
Greater than 75000, certainly represents a huge opportunity.
For further development in that space.
And.
Overall.
I think on the OCC side, it's more about.
Putting together the clinical trials necessary to get these products over and over.
Over the OTC performance hurdles.
So.
More specifics moving forward clearly as we have.
Phase <unk> phase, one et cetera identified for Sofia.
We will be in a position where we do our next analyst day to talk about things in more detail, but obviously at this stage.
That would be premature but rest assured.
We moved from 20 R&D projects per year to over 50.
That we're working on.
In any given year end.
And most of those for the most for our Sofia.
Alright, thanks for the update.
Sure. Thank you Alex.
Thank you. The next question comes from Brian Weinstein with William Blair. Please proceed.
Hey, guys. This is just an online for Brian .
To start with ortho I'm wondering if I could spend.
About five five months since you announced the deal has there been any change to how you see the value of the asset and where the combined company can play in the space.
Yes, I would say the key changes as we get to know the team over there we're increasingly impressed by it.
But the both the executive team and the management team.
I actually see more value than we probably had anticipated.
Of course until you get to know people.
At the end of the day, it's putting people together.
Until you understand.
The people that you are working with more.
More and more it's really hard to.
Pre deal understand the value I would just say.
Personally I look at more of the people side of things as everybody in our company knows that I would say.
Super impressed by the talent.
And that organization I think Chris Smith, and the executives there and have brought on board a lot of really good people.
<unk>.
I think that thats going to be helpful. Moving forward other than that we don't see anything there's no distraction from the critical path on anything that we're working on.
Yes.
For the most part I would say.
All all Super positive.
Yes.
That's good to hear.
In terms of flu wondering if you guys have any more visibility there wondering about inventory levels and anything youre seeing in the channel.
Kind of as we prepare for next season.
Okay.
Yes, no inventory levels are pretty consistent with what we've seen over the last couple of years relating to all of our corn products as you know coming out of <unk> inventory distribution has managed pretty tightly so no buildup on that at all we did see a little better increase on our call.
<unk> revenue inventory.
But thats obvious until year end.
Pretty pretty high demand going into the quarter, but overall I think on average we're somewhere between three and four weeks of inventory.
Distribution. So we're in good shape with that.
With that statistic.
Okay, Great and just one last one for us.
I'm wondering on.
What was the ex Covid exclude rapid revenue in the quarter and what kind of pull through are you guys seeing there. Thank you.
Gino.
<unk>.
While the pull through I guess.
Follow up with here related to the exact number but the pull through actually in the quarter on all of the core revenue is very strong we saw a significant increase with stripes with RSV as well as with our pregnancy test so really across the board.
We saw growth versus Q1 of 2021.
I'll get back with what the actual number was on that.
Thank you. The next question comes from Jason <unk> with Jpmorgan. Please proceed.
Hi, guys. Thanks for taking my question.
On the incremental government COVID-19 contracts task of 35 million pets into Q.
How conversations around stockpiling evolved since the beginning of the year is that something that you think is still realistic for the second half of this year or even in 2023.
Were inconsistent in weekly conversations on that topic, whether it's stockpiling more manufacturing et cetera.
And I would.
Without being too specific I would say that we can expect.
To see some level of orders and as I.
I think.
Set and Randy said.
As we don't exactly what the numbers are going to be will certainly.
Certainly let everybody know.
Yes, we are in conversations yes, we've had discussions about some specifics but just.
<unk>.
As late as just a couple of hours ago, we were having a discussion on our response that we're making on a certain requests so.
But youre going to want to.
Tracy I know you're going to want a more detailed than that but.
We will provide that when we have more firm commitments.
And.
We will be transparent about it got it.
Okay.
And then on Sofia ADC, how should we think about that testing and then Dennis Covid environment.
Does that ABC number you called out for this quarter largely on the crown driven and should.
Should we assume kind of similar volumes between the ABC test in the Standalone test moving forward.
Well I think that's fair to say, we did see an uptick in flu in the quarter.
That drove a lot of the ABC, but youre right. It certainly.
Interesting that the OMA crime variant.
And many folks manifests itself in symptoms that were very much flu like in a lot of people including myself.
So I would have described it as.
So sort of a mild flu.
And so I can see how that would drive physician behavior to make sure that we understand whether it's for COVID-19.
Got you and then just last one for me.
<unk> talked about savanna launching in the U S in the back half of the year.
Can you remind us what the margin profile of both the instrument and consumables that on Savannah, how do they compare to Sofia and also how do they compare to the combined company's margin profile. Thank you.
Thanks Casey.
Yes.
On Savannah, the nice thing is the instrument cost is very reasonable. So we're estimating that a lot of it is going to be on a reagent rental agreement.
So we'll do it over a three to five year contract is what we're currently estimating in the U S.
The margin profile.
And volume with our cartridge manufacturing certainly our target is to be incremental to our kind of overall, 65%. So we're looking at margins probably in the low 70% margins there as we get traction going into 2023.
Got it thanks.
Youre welcome.
Thank you. The next question comes from Jack Meehan from Nephron Research. Please proceed.
Good afternoon and.
First Randy just wanted to say that's been both spun NAND great working with you over the years.
So the feeling this won't be the end.
Hopefully.
Year round in San Diego or elsewhere in the future.
Yeah.
Thanks for the question.
The buildup.
Sounds good.
Wanted to start just back on Sofia.
Installed base is just.
Kind of reflecting over the last couple of years. It has expanded a lot 79000 instruments down the field.
Give us some mark to market on what the mix looks like today between physician office hospital urgent care versus nontraditional states that made us scaled up for Covid.
Sure.
Yes.
Exactly we have seen a little.
We're now seeing.
Place months, we're now seeing about a little over 15% of the placements are in urgent care.
We're seeing hospitals that above 25%.
<unk> is around 50%, but then the hospital setting you are now seeing an increase in.
Per hospital usage around six months for months versus what we had said was four before so I think the growth youre seeing.
Yes, really any current customers, adding hospitals on additional placements as well as expanded into urgent care as we've talked about previously.
And I know, obviously, the visibility and the kind of future COVID-19 demand isn't great for anybody, but I was just curious maybe what youre hearing from your Sofia customers around kind of what the ongoing utilization of these instruments is going to look like whether it be for COVID-19.
Some of the other assays under development.
Yes.
Yes, that's a good question Jack I, just we're going to have to see.
See what we see moving forward, we're projecting we're hypothesizing that we're going to be.
Post COVID-19.
Effectively this is just another virus.
So from year to year it seems so.
So that's the answer on that side I think and then moving forward obviously.
<unk>.
We're forecasting and we're putting together a business development.
<unk> surround these new assays.
I think there is a strong chance that we've identified the things that are important to our customers.
Moving forward.
I'm speaking, obviously JAK, specifically about the things we have in development.
Got it.
And then on Savannah so.
Submitting under EUA.
And then you have the five 10-K submission coming in July can you just talk about like what's the approval pathway. It looks like do you think youll get EUA approval what the.
What is the 500 10-K on top of that.
And just whats the timeline look like for full approval of Savannah.
Well in the pre Covid situation that would have been able to.
Speculate with some degree of certainty around the timeline with the FDA I think it's safe to say that particularly on five 10-K.
Prevalence is driving the clinical trial, but then the approval process.
Depending on the value of that particular product.
It's not quite as sure as it used to be so.
In the old days, we would have said 90 days from us.
That's entirely possible that another month or so.
Okay.
And then final question on the cardio metabolic business. The triage sales were up 1% year over year, it's probably a little lighter than I think the way you've described revenue in a given quarter in the past.
Were there any headwinds that you saw just any additional color on triage, specifically would be great.
Yes Jack.
The shortfall was really all U S based.
And looking into a little bit more I think it's more just kind of a sell in versus the sell through because we looked at the sell through data in U S and it was up.
High single digits. So I think it was more an inventory.
And that was really a demand for the product.
So I want to point.
It grows more in the mid single digits.
Considering that issue so it's more of a timing issue than it was a sell through issue.
And maybe for you or for Doug any thoughts on high sensitivity troponin in gist.
How the feedback is from the field on that end.
Any revenue contribution you can call out at this point.
I think we've had good success in launching in Europe in particular.
Markets.
We continue with the clinical trials here in the U S. I think the feedback from Kols in particular, who have looked at the products has been quite good. So we're not quite there yet in terms of the clinical trials, but we expect to be there shortly.
Thank you.
Sure.
Thanks Jack.
Thanks, Chuck next question.
Our next question comes from Andrew.
With Raymond James Please proceed.
Hey, guys. Thanks for the questions and Randy.
Hi, everybody else's sentiment that's been.
And fun to watch everything over the last many years and wish you domestically, if we didn't see quite as often anymore.
Maybe just first on Savannah.
And the only thing I'll call out some chip issues as far from the only ones I think Doug you commented in the past that came a little bit of a challenge to the issuer side. So are you able to build some inventory for as we head into the U S launch.
And then once you close the deal is there any thinking okay, you might get a little bit more leverage with some of those just packaging suppliers anything to look out on that.
That's a very interesting question, Andrew and I would say that we've had challenges that we've sorted through for the most part.
We're not in a position where we're building.
A ton of inventory, but at the same time, we're making progress we're building enough instruments to put more instruments in there.
R&D organization, we're building more instruments.
Supply the European launch.
And.
And certainly.
We're anticipating having some level of inventory as we launch so.
Great question, though because worldwide supply chain issues are.
Sure.
Pretty big.
Across the board.
But I do think that we have an opportunity in combining the company.
To explore things that we can jointly do together certainly.
Ortho purchases a lot of products that go into their instrumentation and that could be helpful. But that's something too.
To work on and explore and I'm hopeful that.
That's the case because at the end of the day I see the only constraint with the launch honestly being our ability to get enough instruments in the market as quickly as possible as well as our ability to manufacture cartridges.
Very very high volumes.
We've learned a lot about hyper scaling.
Got an organization that's.
<unk> got a lot of strength now that we didn't have before in terms of supply chain.
Phil and the team and operations.
Phenomenal job so far so.
Lot of work to be done, but I'm pretty confident in the team and I've got some talented folks that are working on.
Okay.
Okay, Great and maybe just one more.
I think you commented I think the number was 87 projects on the cross functional team could you give us a sense for.
How many how much of the $90 million of cost synergies may be coming from those projects.
Fully identified and fully based versus hey, we've identified something but don't quite have the plan really put together just sort of where are we in.
Trying to capture that $90 million right away.
Well, we're aims and what we're going to achieve in 2023, and we expect to have a roadmap that we can help describe for you in terms of all of that I would say that.
For the most part of the things that we had identified where possible of reductions are short length. There and there are others that gives us great confidence.
The number that we've called out is not does not over projected.
Year one two.
2023.
Were aimed at right now.
I'd, just say based on what I know right now.
I'm pretty pretty confident.
Great I'll stop there thanks for the question.
Thank you. Thank you Andrew is asking a question press star one.
Okay.
Yes.
Yes.
There are no additional questions I'm sorry.
Have a follow up from Andrew.
<unk>.
I was trying to be generous and let other people ask but all tier one more as you guys just in terms of.
So if you Hugh.
Couple of times in the call, but trying to get a sense for what the hurdles are to get that product to market a little bit more aggressively unless youre looking for before we can expect.
More concrete commentary.
Water lines.
Yeah, I like the question Andrew.
The product performed exceedingly well with that.
With Dakota products that we had but we made a determination that are launching into the market with one product was not a great idea.
And so we're working on with other menu items.
I would go on that and we.
We have manufactured.
In a situation where.
We've got inventory so we're looking at what other products that we'd want to we don't want to put on that and specifically I think it's probably a pretty good product for the professional market.
But obviously it could be a candidate for an OTC product as well.
Okay great.
Thanks Ian.
Thank you.
That is all the time, we have today. Please proceed with your presentation or any closing remarks.
Well I'll conclude just simply by saying it was a great quarter the team really stepped up and.
And rose to the challenge.
Appreciate it very much.
I don't want to sign off before saying that I know you all I appreciate it very much.
The way that you've developed in.
And communicated with Randy over the years.
Can you still going to be around we're going to we're going to try to keep them in the game.
He's got that placement and San Jose that he can't wait to get to but.
We're still we're still trying to.
The thing it was a carrot out there to keep them involved and he's got a wealth of experience and.
In addition, he is collegial he is determine these optimistic and.
And.
We're still going to keep them around for a while but he is going to be very helpful. As we move through the integration.
There's not too many people in our space to have his set of experiences.
He is a little bit 50 from time to time, but.
That's a good thing so I will just say on behalf of you all in our company that we appreciate Randy.
Everything that you've done.
And with that I would say thanks, everybody for your interest in quite a bit.
I hope you enjoy the rest of the day.
Ladies and gentlemen, we thank you for your participation and ask that you now.
Your line Goodbye.
Okay.
Yeah.
[noise].