Q4 2022 Heska Corp Earnings Call

Speaker 1: The.

Speaker 2: Greetings. Welcome to the Haska Corporation fourth quarter and full year 2022 earnings conference call. At this time all participants are on a listen only mode.

Speaker 2: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to you, OBS, John A. Guard. You may begin.

Speaker 2: Thank you and good morning everyone. Welcome to Hesca Corporation's earnings call for the fourth quarter and full year of 2022. As a reminder, today's conference is being recorded. I am John A. Gard, Head of Investor Relations at Hesca, and with us this morning we have Kevin Wilson, Hesca's Chief Executive Officer and President.

Speaker 2: and Captain Grassman, Heska's Chief Financial Officer. Mr. Wilson and Ms. Grassman will provide details surrounding the results reported and then we will open the call to questions.

Speaker 2: Prior to discussing Huskies results, and before I turn the call over to Kevin, I would like to remind you that during the course of this call, we may make certain forward-looking statements regarding future events or future financial performance of the company. We need to caution you that any such forward-looking statements and opinions are based on our current beliefs and expectations and involve known and unknown risks and uncertainties, which may cause actual results and performance to be materially different.

Speaker 2: and the obligation or intention to update any four-looking statements to reflect events that occur after the time such statements were made.

Speaker 2: Also during this call we will be discussing certain financial measures not prepared in accordance with generally accepted accounting principles or GAP. A reconciliation of these non- GAAP financial measures, the most directly comparable GAAP measures , is provided in our earnings release, which may also be found by the Dean of the Investor Relations section of our website. In reviewing our fourth quarter in the year 2020 results, please note all-

Speaker 2: It is now my pleasure to turn the call over to Kevin Wilson, Heska's CEO and President. Kevin?

Speaker 3: Hey, thanks, John , and good morning, everyone. Before I begin, I'd like to encourage participants to review this morning's release.

Speaker 3: It's detailed and helpful, and I'll try to refrain from unnecessarily reading it to you now.

Speaker 3: As usual, Catherine will cover the financial results from the quarter, so I'll be brief with my own thoughts this morning, some of which will echo our last call.

Speaker 3: To begin, I'm smiling this morning. We have a great release, basically across the board, and we like our outlook. It´s going to reach a new level, a new speed challenges. It´s going to reach a new level, a new speed challenges.

Speaker 3: I'm entering 2023.

Speaker 3: Heska again gained market share, greatly improved gross margin, and delivered 15 to 18% growth in key subscription metrics.

Speaker 3: Supporting this subscription's growth, Hesca had another great year placing analyzers into competitive accounts and into our subscriber base with a particularly wonderful performance in premium chemistry analyzer placements, which were up 28% in the fourth quarter year of a year. We also hit our stride on element aim.

Speaker 3: After working through supply chain and in-person team training delays and bumps in the road and our international corporate accounts launches

Speaker 3: In the fourth quarter, we finally got to rolling momentum and finished 2023 with over 370 analyzers in operation, over 40 of which were activated in the month of December alone.

Speaker 3: customer feedback is positive. Utilization at both urine and fecal consumables is growing steadily. Systems are working as designed, margin profiles are great, and ElementAims economic contribution is growing nicely.

Speaker 3: differentiator for HESCA in a very competitive market.

Speaker 3: Other key differentiators that are proprietary to HESCA are now also making a market difference for HESCA.

Speaker 3: Heska's proprietary highlights now include the LMNI Plus Immuno-Ace platform, which is now wholly owned by Heska following the completion of her acquisition of Light Deck, the platform's inventor and manufacturer.

Speaker 3: with a new state-of-the-art manufacturing plant Longmont, Colorado coming online this year.

Speaker 3: We will have the ability to manufacture up to 1 million tests per month on this exciting platform for key immunosatests and for our soon-to-launcheska new QVET cancer screen and monitor.

Speaker 3: Available exclusively at the Planet Care on L-Mini Plus in minutes.

Speaker 3: with a very small blood sample and for under $50. This menu innovation is revolutionary in the battle against pet cancers.

Speaker 3: Just in the United States alone, over 6 million dogs are diagnosed with cancer each year.

Speaker 3: with nearly 50% of all dogs over the age of 10 developing the disease.

Speaker 3: Early screening and detection is key, especially in pets that otherwise appear to be in good health, and Hasco is leading the charge.

Speaker 3: In recent peer-reviewed published papers, new Q detected canine lymphosarcoma at a 77% rate and detected canine hemangiosarcoma at an 82% rate.

Speaker 3: and there's more to come. This is a big, important and urgent need that veterinarians with LMNI plus and new Q from HESCA can meet for screening and monitoring affordably and quickly at the point of care and with high clinical confidence. Rounding out our growth drivers for 2023, our HESCA's new True Rapid series of single use tests.

Speaker 3: in 2023 and beyond.

Speaker 3: As I mentioned on our last call to the extent that we are doing a forward probability exercise,

Speaker 3: Many of the delays, headwinds and oddities in prior year comparables that Haskell experienced in 2022 are now set to flip into neutrals and positives in 2023.

Speaker 3: pricing dynamics and our cost inputs are favorable

Speaker 3: year-over-year patient hospital visits and for an exchange currency trends are expected to moderate or improve.

Speaker 3: Our new growth drivers are exciting and we have momentum over the competition in long-term lines like chemistry and hematology.

Speaker 3: And the timing is good. For nearly five years, we've invested heavily.

Speaker 3: We have planned, worked, and publicly communicated that Heska was targeting to transition from our five-year build phase to our five-year win-it-scale and win-it-innovation phase in 2023.

Speaker 3: 2022 is behind us, 2023 is here, and we have assembled an amazing and very unique asset to win at scale and win at innovation.

Speaker 3: So with that, I'll turn the call over to Catherine to detail our quarter and the full year before we move to our Q&A time.

Speaker 4: Thanks, Kevin, and good morning, everyone. I'm pleased to take you through our fourth quarter and full year 2022 results, along with an overview of our outlook for 2023. Peska finished the year strongly with fourth quarter and full year reported revenue of 66.3 million and 257.3 million respectively.

Speaker 4: are reported annual revenue for 2022, grew 5.4% when adjusting for currency headwinds of approximately 10 million, and was slightly ahead of our updated outlook.

Speaker 4: Our North America segment revenue was in line with the prior year in the fourth quarter and grew 1.8% for the full year. For both periods, increased subscriptions, including placements of element AIM, drove POC lab instrument double-digit growth. Met price gains on our consumable portfolio, as well as newly launched products, contributed to consumable sales growth of approximately 9% in both periods.

Speaker 4: as we continue to execute on our research programs of transition in Europe .

Speaker 4: Consumables were slightly improved from prior year on a constant currency basis, even as the macro environment and the European region impacted vet visits and consumer spending. Additionally, throughout 2022, we continue to focus on transitioning existing customers to the subscription programs in which we share price discounts in exchange for longer-term contracts, which has a dampening impact to revenue initially.

Speaker 4: This effort is succeeding and can be seen in improved gross margin.

Speaker 4: Fourth quarter consolidated gross margin improved approximately 100 basis points to 41.9% and 150 basis points to 43.2% for the full year. While the fourth quarter gross margin expanded to 46.5% in our North America segment, full year gross margin was in line with prior year at 46.7%.

Speaker 4: Net price gains were offset by increased instrument placement and other variations among lower margin products.

Speaker 4: International growth margin expanded both in both the quarter and the year to 33.4% and 37.3% respectively. Two key drivers in this expansion were one, the transition of customers to the reset program, which includes Heska's work on product rationalization and subscription transition.

Speaker 4: yielding full year expansion of 560 basic points.

Speaker 4: and two, the acquisition of that scene. Total operating margins for the quarter and the year was negative 4%, and negative 7.9% respectively. The decline versus the prior year of 750 basis points was driven mainly by one time acquisition related costs and other non-recurring charges, the most significant of which is related to a $10 million payment in the first quarter.

Speaker 4: based resolution and expansion of our true rapid portfolio.

Speaker 4: Adjust the EBITDA for the quarter with 6.2 million and adjusted the EBITDA margin with 9.4%. Adjust the EBITDA for the full year was 27.2 million and adjusted the EBITDA margin with 10.6%. A reported decline of 110 basis points.

Speaker 4: The ongoing investment in future growth I just spoke about compressed the margin in the current year.

Speaker 4: Our balance sheet is strong with cash of approximately 157 million. On January 3rd of this year, we closed the acquisition of light deck utilizing approximately 22 million cash.

Speaker 4: Now for our financial outlook for 2023. We expect consolidated revenue within the range of 278 to 288 million, which reflects reported and constant currency growth of 8 to 12%. Our guide includes growing our subscription-based 20%, continuation of favorable underlying fundamental to relating to price gains.

Speaker 4: Moderation and vet visit trends anticipated in the second half continued successful placement of approximately 400 aluminum amylizers. Expanding menu to include cancels cancels are screening and monitoring tests as well as other rapid assay diagnostic test expansion. All resulting in a POC lab range of 165 to 175 million.

Speaker 4: We are estimating a range of 60 to 70 millions per POC imaging. We continue to see macro headwinds relating to capital sales of imaging related products, which will net against growth of our PIN solutions in POC imaging. We expect some growth in POV-PVD product groups, while OVP products are expected to remain relatively consistent with 2022 levels.

Speaker 4: From a cadence standpoint, we anticipate acceleration of revenue beginning late in the second quarter and ranting throughout the remainder of the year. This is based on the current macro environment, expected moderation of industry trends in the second half, timing with certain product launches, the impact of the timing of placements in 2022.

Speaker 4: and variation within OVP. We expect North America to comprise approximately 60% of total revenue, which is...

Speaker 4: which includes an estimated TRC-LOD consumables growth rate of 12 to 15%.

Speaker 4: The remaining 40% of total revenue in our international segment includes an estimated reported POC lab consumable growth rate of 12 to 14% with currency impacting the range by approximately 300 basis points. Our focus in 2023 will be a continuation of Reset Subscription Transition, placement of new offerings in existing customer locations, as well as new customer acquisition. The remaining 30% of total revenue in our international segment includes an estimated report

Speaker 4: We expect to expand our growth margin between 100 to 200 basis points, not including the impact of the light deck acquisition.

Speaker 4: Our 2023 adjusted EBITDA margin expectation without the light deck acquisition is to expand 100 to 200 basis points.

Speaker 4: and expectation without the light deck acquisition is to expand 100 to 200 basic height as well.

Speaker 4: The acquisition of LITE-DEC will compress HESC's adjusted ePATO emergent to be in line with 2022 at or around 10%. LITE-DEC is a low-term strategic investment, expanding HESC's research and development capabilities, as well as our manufacturing capabilities. LITE-DEC is a high-term strategic investment, expanding HESC's research and development capabilities.

Speaker 4: New product pipeline painting is underway as we look to further develop proprietary technologies. Plant utilization and cost rationalization efforts are also a top priority for the place on our health consultant community.

Speaker 4: Further, while we have not yet completed our purchase accounting for the White Deck Acquisition, we preliminarily expect depreciation and amortization expense of approximately 19 million to 21 million stock compensation expense of approximately 13 to 15 million interest expense was summed up as a percent amount. Strea******************************************************************** Critic?? 19 logo bush** fed up

Speaker 4: And we expect to generate a tax benefit of 5 to 10%.

Speaker 4: In 2023, Heska plans to utilize cash for a number of initiatives, including operations specifically relating to the LIGEC acquisition. Investment and CAPEX projects, such as our new headquarters and other improvements, as part of recent acquisition.

Speaker 4: Additionally, we will continue to make other investments in growth, all approximating to about a use of 60 to 70 million of capital. To close, as Kevin mentioned, we are pleased with our performance in the final period of 2022, and we are confident in our position and outlook as we begin 2023. With that, we would like to open the call for your questions. Operator? Yes.

Speaker 5: Kenny, and at this time we will be conducting a question and answer session.

Speaker 5: If you would like to ask the question, please press star one on your telephone keypad. A confirmation tone will indicate your line as in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hands and sit before pressing the star keys. In one moment, please while you pull forward questions.

Speaker 5: Our first question comes from the line of David Westenberg with Piper Sandler.

Speaker 5: Please, we'll see with your question. Thank you for...

Speaker 6: question. I'm so

Speaker 6: So incredible guidance.

Speaker 6: I caught me off guard. I probably saw my questions on that because it was quite good. I want to kind of just see it on confidence and in seeing that, particularly around the international. I know there's a lot of economic we get in Europe , but there has been.

Speaker 6: So I guess the state will more than question what I'm saying. All you know, masking is that confidence in that international subscription that growth, you know, given the factors that they just kind of mentioned.

Speaker 3: Hey, David. It's all I'll start broadly. We've been working to convert customers to subscriptions. And as you point out, you know, we share roughly a...

Speaker 3: A 10-15% price discount in a lot of cases in exchange for six-year contracts. A couple positive things happen. We get price increases based on CPI and CPI throughout most of these European regions has been running hotter than even in the United States. So you can look at those at kind of like 8-10% price increases. And so we're we're lapping some of those and they're getting.

Speaker 3: then not across the board, but in the aggregate we'll use less consumables than the first half of the consumers that we've already switched to subscription. So to have a less of a dampening effect.

Speaker 3: And then the third thing I would point out is, you know, we think we'll have better execution and things like our true rapids launch going into the selling season kind of April May. We didn't really execute on that last year and so that becomes a tailwind and our product rationalization. So.

Speaker 3: We've lost or walked away from certain products over the last couple of years as we rationalized some of those products and some of those headwinds are now fully baked in and that they don't happen again. So yes, Europe is more difficult on a macro basis. It's a little harder to see through, but we do have some of those helps that I just called

Speaker 3: I don't know, Catherine, I don't know if I got them all.

Speaker 3: I don't know, Catherine, I don't know if I got them all. Yep, yep, I think you had all of them.

Speaker 6: I guess switching the U.S. and I guess switching the total total number here. And I don't know if you give contribution for new products in that guidance, but, you know, is there any kind of way to press to frame, you know, what some of the new products might do in whether it's pain, rapid.

Speaker 6: And I noticed seeing, you know, you're breaking out premium versus non-premium. What exactly do you mean by that? Is that the legacy skill versus the element, reverse visits and element, chemistry analyzer, and all stopped there since you have leather analyzes.

Speaker 3: No, so I think when we say premium, it's a little bit in line with kind of how the industry looks at it. You have kind of main anchor products on a point of care lab and then you'll have kind of what I'll call satellite products that go around that.

Speaker 3: So virtually all of our subscriptions will look to kind of main testing segments. That would be chemistry, hematology. We would call urine and fecal. So kind of the bigger monthly commitments. And then you'll have things like blood gas.

Speaker 3: kind of smaller utilization analyzers. And so we just don't want to necessarily conflate, you know, chemistry, hematology, kind of a core piece of lab with a small unit, a satellite piece of lab, like a, like a, like a coagulation analyzer that has a much lower utilization. So I think that's what we mean by that. Sorry, and on the new product contribution. Thank you for your information.

Speaker 3: Yeah, I don't think we're calling that out as specifically and a lot of it is we have a lot of them. So we call those out. So yes, there are a lot of new products and we've been investing pretty heavily in bringing them to market and now they're coming to market. So those are definitely tailwinds as well, but I don't know that we want to discreetly break those out at this point.

Speaker 7: Got it in congrats and on the great print. Thank you David.

Speaker 5: Our next question comes from the line of Chris Chat with J.P. Morgan. Please we'll see you with your question.

Speaker 4: Okay, this is a catarina on from Chris. Thank you so much for taking your questions and the two from me. So the first kind of building on your previous comments around price in Europe , just want to ask the same question kind of in North America. So out of that 12 to 15 percent point of care in North America, so both growth member, how much price benefit isn't better than that? And how should we think about pricing dynamic as we move to the year as it kind of left some of the price increases from last year versus what?

Speaker 3: You're welcome Catherine do you want to take price and I'll take visits

Speaker 4: Sure, sounds good. Hi, Katarina. Yeah, we expect price to contribute about 7 to 8 percent in North America and fairly evenly distributed throughout the year based on how we increase our prices relative to our contractual agreement.

Speaker 3: and so on,

Speaker 3: On price, I'll just add one more thing. There's a positive there for us as well. So if we get seven to eight percent, we think our competitors have taken more. In the last year, which improves that value bridge, that value gap, just in terms of pricing, we think we show more value.

Speaker 3: So we think that's a net positive for us just in terms of competitiveness. In terms of that visits, the comms are much easier. Things are normalizing. I can't wait till we get to a world where we're not talking about the effects of the pandemic and some of those types of things. So some of that is normalizing. We do see getting to neutral year over year.

Speaker 3: And we do see getting to positive in the back half. And I don't think we're inconsistent with some of the other market participants in that regard. They're still labor constraints, but we're also seeing denovo clinics more than I've seen in many, many years. So brand new clinics starting up.

Speaker 3: and we're seeing acceleration and technician hiring, technician training, technician school's opening, one open in San Diego and just graduated their first class in the last quarter. So.

Speaker 3: We're solving it and then I think efficiency is something that's good for the industry as well So we're all starting to push especially through the practice software and faster testing We're pushing efficiency. So I think the market works in 2022 is More difficult in that regard than we think 2023 will be

Speaker 3: And then I think efficiency is something that's good for the industry as well. So we're all starting to push, especially through the practice software and faster testing. We're pushing efficiency. So I think the market works in 2022 is more difficult in that regard than we think 2023 will be. Great. Thank you so much.

Speaker 5: You're welcome. Our next question comes from the line of Aaron Wright with Morgan Stanley . Please we'll see with your question. We'll see with your question.

Speaker 8: Great, thanks for taking my question. So is 40 AIM placements a quarter the right way to think about placement trends from here for AIM? And I'm just trying to reconcile with the run rate that was implied with the 500 placements that you were originally targeting. I guess should placements accelerate from here in the coming quarters?

Speaker 8: or how should we think about that quarterly cadence and also the mix of international versus North America in terms of the installed base on aim. Thanks. You're welcome. So less international installed, certainly than North America. We didn't really...

Speaker 3: get good activity in our international launch really until the fourth quarter of this year, which was you know as we called out was certainly part of not getting to that 500. I think the total number we said over 40. I think it was 44.

Speaker 3: I'm trying to be precise, so if I'm this by one or two in either direction, give me some grace there. So on an evidence space.

Speaker 3: We look at that and we say the entire sales cycle, meaning we can engage with customers that are on our pipeline, we can pitch the product, we can get them to commit to the product and then we can install the product. That entire sales cycle was in full effect in the fourth quarter, both internationally and domestically.

And so we know without pre-sales, without backlogs, without those types of things in the number, we know in the fourth quarter in December , we can get to 44. So if you annualize that, I think that's more than the 400.

that we're guiding towards for the year. So we feel good about it. We think it's evidence-based. We see little bright shoots. I think I saw a nice report of 14 committed in Australia, which is a very small market relative to some of our other markets. So those are things that we just didn't have the ability to get earlier in 2022.

Can you remind us of the economics around that test for Heska and pricing there on? Thanks.

You're welcome. So I'll let Catherine do quantity guide things like that. Pricing, we think will be under $50 to the veterinarian.

We think that compares favorably to reference lab options that are higher. And then the economics on that are good. They're in line with our better consumables numbers, which tend to be high margin, gross margin numbers. That are good in reality.

So, Katherine, I don't know if we're calling out to Sreetly, what new queue contribution is? Yeah, no. Yeah, we haven't called it out specifically. It is a contributor to consumable growth, but not overly meaningful in this guide for 2023. I think we're going to, you know, based on...

I'll eliminate an A in launch. We're going to take a little more time and probably update quarterly Aaron on the progress of new queue as When it launches and throughout the quarters thereafter.

Okay, thanks. And if I could just sneak one in more of a housekeeping question. But I think you mentioned 10 million in licensing spend that you're excluding from adjusted profits. Was that what's that related to it? That R&D investment or was is this something more operational on nature? Thanks. Thank you.

Yeah, so the 10 million that we're excluding from adjusted EBITDA was a payment that had to be immediately dispensed from an accounting standpoint in the first quarter of 2022, but it is in relation to the new two cancer screening and monitoring tests and licensing of that product.

but it's just from an accounting standpoint couldn't be it couldn't be capitalized and amortized.

Okay, thank you. Our next question comes with a line of Ben Hanoor with Alliance Global Partners. Please proceed with your question.

Thanks for taking the questions. First of all, for me, Kevin, is there any color you can provide, like kind of a new Q reception of the initial launch, and it's early days, and then on the announced products, can you refresh our memory of what those are beyond?

kind of new to you and the true rapids and then the timing of what should investors expect on the on announced projects with when might those.

be disclosed or launched. You bet. So, new queue.

NewQ, we just got done with the Western Veterinary Conference, one of the top two conferences in Las Vegas, and several talks on NewQ attended.

extraordinarily well and it was one of our focuses at our booth and so we had hundreds and hundreds of veterinarians coming by. So we think the reception is fantastic. The peer reviewed published data is good. Additional peer review data is.

coming and being published and so it's we think it's an extremely

important product. Not just financially, we just think screening for cancer is one of the most important things you could technologically be able to do. And if you think about the size of the screening market, which is what tends to drive a lot of veterinary care for things like heartworm screening for things like kidney function.

And those types of things we think cancer is so prevalent and so important that it's a very big opportunity. In terms of unannounced products, we...

We got so busy and we have so many things happening that we just...

We don't want to gen up every single product. So we still haven't stopped on just basic menu expansion on just our current product line. So you can think things like new features for hematology. You can think things like new menu for immunosay.

They're a little bit more just down the middle of the fairway that they're definitely additive, but they're not Big spike movers, and so I'm gonna avoid that one because I don't want to step in the we try to be a little bit disciplined We're talking about so many positives with our pins launch and the cloud with the new queue with the acceleration and In aim in the fourth quarter

just, you know, rapids, true rapids coming out. So we have a lot of needle movers that we just don't want to over-message so. So.

Okay, that makes sense. Turn off and then just listen, it's time for a chapter. When you look at the utilization levels of accounts and what their contracted level of utilization applies.

You know, let's say that in North America or whatever that number is, it's 10 percent greater utilization than the contractual value. Is that figure whatever it is, roughly similar and international, or is there any kind of discrepancy there in terms of...

the utilization level versus the contracted level.

Yeah, I understand your question. And I think we don't have, you know, we're just now a year and a half really into the reset program in Europe , but I would say trending lies. It doesn't seem to vary significantly at all from North America. Yeah.

So we tend to, yes, that contract minimums that are achievable and even can be exceeded by our customers. So I think we're...

And a pretty good spot in both side months. So the strategy is effective at the same between the two. You don't want to set it too high or too close to the actual utilization. And you want there to be a little bit of room there.

You really do. There are minimums you don't want them to be scary and you don't want to force clinical utilization. So you're really trying to align yourselves with the customer. And the point is to align them so that we're friendly and we're partners and we're helping and we're growing alongside them for six years and ideally ten or more, right, with renewals. And so getting out ahead of them and putting pressure on them through contract minimums is generally not the...

at half point or so share each year, but what could potentially accelerate that, and do you see that accelerating down the road? What could potentially accelerate that, and do you see that accelerating down the road?

Yeah, so there are some constraints. Remember, the vast majority of the market is under contract with somebody. And so some of it's just mathematical constraint. You could come up with the world's best product ever. And a large percentage of the population of available clinics are going to be in a contract that has several years left with either Heska or with the competitor. So there's just a natural patients cadence.

that you do have to get around. So, if somebody wants to switch a cell phone contractor, they just can't just stop.

and switch. So that tends to be a moderator on some of that number. So that's part of why you see a slow grind forward.

Corporate accounts and larger consolidators certainly are an opportunity because they go on contract and off contract in higher bulk. Even those are not binary though you don't get 100% day one in the vast majority of them.

So that's just a natural limiter that people should be aware of. New product though, you know, we think LMNI plus, especially with...

with the new Q point of care cancer test, we think that is so compelling that it can sit alongside just about anybody's core lab without impinging on their existing contract. And I think that's a growth driver for us certainly, but it's also a nose under the tent, so to speak, for when that contract does come up to earn the rest of the business.

So that's a little bit more of our strategy. Okay, great. Well, congrats on the corner. Thanks for taking the questions. Hey Ben, thank you. And our next question comes with a line of Jim Zodody with Zodody and Company. Please proceed with your question.

Hi, good morning. Thanks again for taking the questions. Quick one for Catherine and a few for Kevin on light deck. Catherine, what was the impact of currency in the quarter? Sorry, are you again? Hello?

Can you hear me?

Yes, I can.

Okay, sorry about that. Okay, so impact or currency for the quarter on top of time? Is that what you're? Right, right.

It was probably about a, we're probably about flat, unconsolidated for the quarter.

When that are about a little over one percent growth, yeah.

So you would have been 1% growth on a constant growth. It's not hurt.

Yes, it's not for currency. OK.

Yes, it's not for currency up. OK. All right. And then on light, Jack, Kevin.

You know, they had a lot of projects on the way that weren't regulated, human-related water testing. What's the status of those projects? Are those things you'll continue?

You know, on a case by case basis, Jim, but we're a veterinary company and one of the reasons that we wanted to directly own that business was to focus and accelerate the product development of things like NuQ. And then we have other menu that we want to accelerate that are, we think are extremely compelling. So our focus is veterinary menu.

And I would be doubtful that we get distracted from that. Now, a way forward would be to find a partner interested in water, a partner interested, certainly in human. And that road has been trodden by a back-sus back in the day, partnered with Abbott. Ab.

You'll see it go the other direction. Abbott partners was so at us in blood gas. And so I think that would be probably a better way forward is to have a partner who's interested in medical menu. But until then, our primary focus really is to get these veterinary products out because they're big and they're compelling. Understood. Okay.

Then, Casson, you said I think got a $22 million cash payment for LIPEC, but the purchase price was $39, so is there contingencies payments that are due later in the year next year?

So a portion of the purchase price is actually existing reacquisition of debt, so like debt forgiveness for previous investments we had made over the years, yeah.

Okay. And then on, you know, your capital used for the year that $67 million. Does that include right that?

or is that in addition to the 22 million for light deck? No, that includes light deck.

And is the balance of that capital spending or is that combination capital and R&D type things.

Is the balance of that capital spending or is that combination capital and R&D type things? It's going to be a combination.

Okay, and then the last one for me, you said 3 million of interest expense which seems

Like, a double what it was in 2022, is that due to rising rates or, you know, what's the reason for that? It's a little bit of hedging, just on rates, but it's really about 2 to 3 million on interest expense. Okay, all right. Thank you very much.

You're welcome, Jim. And we have reached the end of the question and answer session. I'll now turn the call over to Kevin Wilson for a close remarks.

Hey, thanks operator, thanks everybody who joined the call. Thank you to the analyst for good thoughtful questions and for building models and following our...

Hey, thanks operator, thanks everybody who joined the call. Thank you to the analysts for good thoughtful questions and for building models and following our company. We've.

We've invested very heavily a lot of work, a lot of capital to ascend, but what we think is just a great asset and we think 2023 is a year of execution for us. So we look forward to our next update and until then thanks for your confidence and for your participation with Heska's We Do Our Work.

work, a lot of capital to ascend, but what we think is just a great asset and we think 2023 is a year of execution for us. So we look forward to our next update and until then thanks for your confidence and for your participation with Hescaz we do our work. Everybody have a good day.

And this concludes today's conference and you made this connection line at this time. Thank you for your participation.

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