Q1 2023 MiMedx Group Inc Earnings Call
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Speaker 2: Good afternoon and thank you for standing by. Welcome to the Mamedics' first quarter 2023 operating and financial results conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Thank you.
Speaker 2: I would now like to turn the conference over to your host, Mr. Matt, Nitoriani, head of in Restor Relations for Mamedics.
Speaker 2: over to your host, Mr. Matt Notarianni, Head of Investor Relations for Memetics. Thank you. You may be good.
Speaker 3: Thank you, operator, and good afternoon, everyone. Welcome to the MIMEX First Quarter 2023 operating into financial-resolved conference calls. With me on today's call, our chief executive officer, Joe Capra, and chief financial officer Pete Carlson. As part of today's webcast, we are simultaneously displaying slides that you can follow.
Speaker 3: You can access the slides from the investor relations website at memetics.com.
Speaker 3: Joe will kick us off with some opening remarks and Pete will provide a summary of our operating highlights and financial results for the quarter and then Joe will conclude with some additional updates including a discussion of our financial goals. We will then be available for your questions.
Speaker 3: Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales growth, future margins and expenses, expected market sizes for our products, and potential timelines for clinical trial and at the A-SIM missions that are used.
Speaker 3: The expectations are subject to risk and uncertainties and actual results may differ materially from those anticipated due to many factors.
Speaker 3: Actual results mark its time in an FDA review will depend on the number of factors including competition, access to customers, the reimbursement environment, under scene circumstances and delays. The results of our clinical trials, our interpretation of those results, and other factors.
Speaker 3: Additional factors that could impact outcomes and our results include those described in the risk factors section of our annual report on Form 10-K and our quarterly reports on Form 10-Q .
Speaker 3: which is available on our website at www.mimedics.com. And with that, I'm now pleased to turn the call over to Joe Capra. Joe. Thanks, Max. Good afternoon, everyone. Well, it's only been two months since our last call. We have a lot of exciting news to share.
Speaker 3: Starting with our outstanding first quarter performance. Setting the stage for what we anticipate will be an extremely successful 2023.
Speaker 3: I've been on board now for a full quarter and as I stated on our last call, this early assessment process continues to present a business that far surpasses my original expectations.
Speaker 3: During these first 90 days, I've spent time analyzing all parts of the business. Formalizing our strategic planning process.
Speaker 3: meeting with customers, business partners, and several of you in the shareholder community, all in an effort to determine our best path forward. While still early on, it's becoming clear to me that we operate in a relatively less orderly area of the healthcare industry, which is abundant in untapped opportunities.
Speaker 3: I will discuss in more detail our plan to restore the company capitalizes on these many opportunities while continuing to operate, optimize, or operate in platform.
Speaker 3: But first, I want to take on some of the most noteworthy highlights from the first quarter.
Speaker 3: Q1, year over year net sales grew by nearly 22% to 71.7 million, the highest first quarter net sales performance we have delivered in five years.
Speaker 3: Gross profit margin is 227 percent.
Speaker 3: which was an improvement, so potentially. And the justice needed that was 5.5 million, up from a loss of 1.7 million a year ago, at 7.2 million dollars, when in the right direction.
Speaker 3: These positive results all reflect superb execution on the part of the entire company.
Speaker 3: Among these impressive numbers are adjusted to be about Warren's special attention.
Speaker 3: To be able to generate $5.5 million of positive adjusted EBITDA so early in the year clearly shows that we're beginning to unlock leverage in the business.
Speaker 3: which will undoubtedly improve with scale.
Speaker 3: We have no interest in revenue just for the sake of growing. We must and will improve our profitability as we grow. Naturally this will increase free cash flow generation, our balance sheet will improve, and we will create growth funding optionality. Our better than expected performance becomes that much more impressive when you consider that our expense burden Q1 is typically higher than other quarters during the year.
Speaker 3: Specifically, we had about $3 million of expense during the quarter as a result of payroll taxes released on January 1st.
Speaker 3: and the cost of her natural salesmen, both of which will not recur for the remainder of the year.
Speaker 3: These expenses are the annual bonus payout for use of a CATS specific to the first quarter. As such, we expect to build CATS as we move further into the year.
Speaker 3: It is my practice of already called to report the company's progress as it relates to the key elements of our strategic focus. On our last call, I spoke about the three areas in which we are concentrating our time and resources in order to drive growth and sustained diet creation. As a reminder, our first growth objective is to build on our leadership positions in the willingness of surgical markets by enhancing our product portfolio and expanding geographically. Success in achieving this objective will be dictated by how well our commercial organization performs over time.
Speaker 3: This first quarter was certainly an example of what commercial excellence looks like. From that end, during the quarter, we achieved European revenue growth across all types of service.
Speaker 3: We had a welcome sound increase in a private office.
Speaker 3: During the quarter, the OIT published a report relating to the reimbursement practices we have repeatedly wait to be concerned. While the OIT report is clearly aligned with our position, its premature to determine if AgWen each practices will be re-endained. We continue to stay close to the rulemaking process and remain optimistic, it will result in a level of playing field. In the surgical recovery segment, we continue to build momentum particularly around our new products, which were launched in the second part of last year. We believe the future for growing our footprint across a variety of surgical procedures remain bright.
Speaker 3: particularly as a body of real-world evidence for wide range of applications continues to grow.
Speaker 3: And finally, we made Warheadway developing our business in Japan with initial sales starting to commit to this important international market.
Speaker 3: We anticipate adoption to begin their ramp in the coming months and quarters. Our second growth objective is to develop opportunities in adjacent markets to create additional growth drivers for a company.
Speaker 3: Make it doubtless as it means to first and foremost strengthen our position in the market statements in which we currently compete by blocking our operate.
Speaker 3: As such, we have formalized the process for assessing and prioritizing various strategic opportunities as they arise. Additionally, we will look for ways to leverage our technology in commercial strength in order to develop adjacent opportunities with the NEAT OA project representing our major investment.
Speaker 3: To that end, we were excited to get the NEOA study officially up and running and to begin enrolling patients during the quarter.
Speaker 3: The will of insurgable contribution margin improved to 28.5% in Q1. As you will recall, our goal is to get to 30%, and we are well on our way. Another efficiency metric we've spoken about is to get our corporate expenses as a percent of our net sales to 20% or below. For Q1, this number improves to 20.4%. As a result of the efforts to curb GNA across the enterprise. All in all, the team did an excellent job. We'll fill in with the momentum we had coming out last year.
Speaker 3: I will formulate for success lies in our ability to consistently identify and execute the gifts the most relevant growth drivers for our business.
Speaker 3: As I mentioned on our last call, if we remain focused and execute on the plan just at mine, I'm confident you will continue to build on this franchise of the opportunity to create tremendous value and once again, status-pamedics as a world-class healthcare company.
Speaker 3: Now I'm trying to call over to Pete, who will recap our first quarter results. Pete. Thank you, Joe. Good afternoon, everyone, and thanks for joining us today. Before I begin my remarks about the first quarter, I want to reflect on my time with my medics as I prepare to move on to future opportunities and how it has been a pleasure serving as the medics's CFO these last several years. Thank you.
Speaker 3: I am proud of the team's progress since I joined. In honor to have helped lead an organization with products that impact the lives of a large and growing number of patients. In addition to continuing to expand access to our products over the last three years, we've also built a robust finance and accounting organization that is...
Speaker 3: First, as Joe mentioned, our first quarter, 2023 net sales were $71.7 million compared to $58.9 million. Joe outlines many of the specific drivers of this performance in his remarks, and I'm pleased to also report on the numerous areas of strength we saw to start the year. On a sequential basis, while our first quarter is historically the lowest revenue quarter of the year due to deductible recess and generally lower patient traffic, our first quarter net sales may hear represents the smallest step down from the preceding fourth quarter that we have seen in recent years.
Speaker 3: compared to each of these periods in 2022.
Speaker 3: Moving to gross profit and gross margins, our first quarter gross profit was $59.3 million compared to $49 million. And our gross margin was 82.7% compared to 83.1%, roughly flat on a year-over-year basis.
Speaker 3: On a sequential basis, the improvement in our gross margin reverses a several quarter trend that saw pressure from lower production yields weigh in our performance.
Speaker 3: Well, there are several factors impacting growth margin, including product mix, but to highlight the efforts of our quality operations and regulatory teams in improving our production efficiency.
Speaker 3: Telling general and administrative expenses for Best G&A were $52.3 million compared to $49.6 million. The increase was primarily driven by higher commissions from the higher sales along with higher travel expenses in the first quarter, both of which more than offset savings associated with actions taken in the fourth quarter of 2022 related to headcount. Our research and development expenses were $6.5 million compared to $6 million. The increase over the prior year period was driven primarily by costs associated with the start of our D08 trial in the first quarter.
Speaker 3: But this matter with the FCC would conclude these sizable expense burden, the company's shoulder over the past several years.
Speaker 3: Net loss was $5 million compared to a net loss of $10.5 million.
Speaker 3: of $1.7 million for negative 2.9% of net sales.
Speaker 3: On a segment basis, that sales and mood and surgical total $70.6 million compared to $58.3 million, reflecting the growth of approximately 21%.
Speaker 3: The Wounded Concert of Chico's Segment Contribution of $20.1 million represented 28.5% of Wounded Searchable Met sales compared to a segment contribution of $13.2 million, which represented 22.6% of Wounded Searchable Met sales.
Speaker 3: during the first quarter of 2022. Turning to regenerative medicine, operating expenses sold $5 million compared to $4 million. This increase was driven by the commencement of our knee OA clinical trial, which began pre-screening and enrolling patients during the quarter.
Speaker 3: We expect spending to continue to ramp through the year as additional sites come online and communication, enrollment activity increases.
Speaker 3: Finally, our SG&A expenses incorporate another total of $14.6 million representing 20.4% of our total net sales compared to $15.5 million which represented 26.4% of total net sales. Another key indicator is interest rates which UEI could use in getting stock compensation.
Speaker 3: Our corporate and other SG&A expenses totaled $12.1 million, representing 16.9% of our total net sales, compared to $13.6 million, which represented 23% of total net sales in the first quarter of 2022.
Speaker 3: As of March 31st, 2023, the company had $61.2 million of cash and cash equivalents compared to $66 million as of December 31st, 2022.
Speaker 3: The sequestal decline in our cash and cash equivalence was driven by several factors that typically get in the first quarter.
Speaker 3: such as the payment of annual employee incentive compensation, as well as investments in working capital, primarily accounts receivable and inventory that reflect increased sales activity.
Speaker 3: Based upon our current position and expectations for the business, I want to reemphasize that we would remain well capitalized and do not foresee the need for external financing.
Speaker 3: I will now turn the call back to Joe. Joe, thanks Pete. As you know, people will be leaving my medics in the coming months.
Speaker 4: He is the hardest time with my next. Keep joining the Piddle Fund, hit the company's history. What you can make vital changes is to strengthen our account and finance organizations.
Speaker 4: He did an outstanding job and the company is on solid financial footing thanks to his leadership and experience.
Speaker 4: He leads by a strong team and a lengthy list of accomplishments.
Speaker 4: We are grateful for all that Pete has contributed to my medics and wish him our sincere best in all future endeavors.
Speaker 4: The search for our next guest on was long gone. Let me go forward to bringing in an individual of similar caliber in the coming months.
Speaker 4: People continue to work with the company to ensure that a smooth and seamless transition takes place.
Speaker 4: In summary, as you have just heard, we started the year with an excellent first quarter. You already mentioned the recorded. Quarterly, the total is 71.7 million, top of the year, 22% year-over-year. First profit margin of 82.7 percent.
Speaker 4: Adjusting you without a $5.5 million.
Speaker 4: continue to roll out a new product in the U.S. against Southern product in Japan, and continue to drop efficiency and expense for actualization throughout the organization.
Speaker 4: Pete just spoke about our cash position and the fact that we do not foresee the need for additional capital raise in words upon our current business plan, short of any meaningful investment opportunities.
Speaker 4: To add bit more color to additional developments our work mentioning, first, you will recall our previously announced family note to turn circuits contingent upon 510K FDA clearance with a flex product.
Speaker 4: We believe we are nearing the end of a portion of legal expense overhand related to past issues, which has not been insignificant. With the conclusion of such matters in our sights, we look forward to a more productive use of capital.
Speaker 4: Looking ahead, we expect to build cash
Speaker 4: A close state by stating that while one quarter does not represent a trend, I believe our business is in an exciting phase of growth. As we seek to combine commercial success with operational excellence in pursuit of sustainable, profitable growth and as a result, a very bright future. With all that I have learned since joining my medics and continent, we can do just that.
Speaker 4: Given our strong start to the year, I want to reiterate this, our expectations for low double digits top line growth for the foreseeable future.
Speaker 4: With that, I would like to open the call to questions.
Speaker 2: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is 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 handset before pressing the star keys. And one moment, please while we pull for question ends.
Speaker 2: Our first question comes from the line of Antony Petron with Mizzouho Group. Please proceed with your question.
Speaker 5: Oh great and congratulations on a strong quarter here and Pete good luck on the transition. It was great working together and hope to see you again soon.
Speaker 5: Maybe to start just on the top line performance in the quarter, certainly ahead of our expectations.
Speaker 5: And, and, and, and, and, and, Jo and Pete, we've been hearing a lot this earning season so far about a procedure volume rebound on several of the earnings calls over the past two weeks. That was showing up in our data earlier in the quarter and then again, and some of the results we've seen it's pretty evident that, you know, things sort of changed.
Speaker 3: in that channel as well. And then I'll have a couple of follow-ups. Thanks. Good afternoon, Anthony, and thanks for those comments, as well as the questions. When we look at it overall, I would say, you know, probably as much as 5% of our growth is driven by the combination of the easier comp last year due to the COVID impact that we talked about as well as the extra day. So that is driving some of the growth and the better, you know, we knew that was going to be a factor, obviously, both of those items. The, there, and as you saw, it may not have had a chance.
Speaker 3: of not only the additional patient volume, but some aspect of practices working with us where maybe they hadn't been recently because of the reimbursement environment and so they were making more economic decisions. That one's really hard to quantify.
Speaker 3: And then we did, and you see this principally in the surgical area, and that's reflected in some of that, in that hospital growth. Our new products were our key contributor to the growth overall. So we're very pleased with how those are performing. And all of those factors are drivers for the top line growth you see.
Speaker 3: which did exceed not only your expectations that you mentioned, but even some of our internal expectations. And I think your comment about patient volume is an appropriate comment. We've seen the same reports across the spectrum of just higher volumes.
Speaker 4: Yeah, Joe, anything you'd ask? Yeah, just a little bit more Anthony. First of all, thanks for the question.
Speaker 4: You know in preparing for today's call. We spent a good bit of time on this trying to Bifurcate how much of it was market driven how much of it was just a peer execution right because we we want to get the right throwing a message across So what Pete just talked about was kind of the dynamics in the market and and we did see upticks in
Speaker 4: all the sites of service. But I think it's important to kind of give a little bit of color about the quarter itself. Each month in the quarter was significantly better than each month in the prior year. And then each month in the quarter, there's only three, built on the previous month to the point where in March we saw a sales number that frankly we didn't see till very late last year.
Speaker 4: the rest of the year, it will tell you that the organization is just performing better than our accounts.
Speaker 5: No, very helpful color there. And I guess a logical follow-up is just when you think of the plus 21.7%
Speaker 5: performance and what appears like.
Speaker 5: At least to some degree some sustainable drivers over the next few quarters. Show you reiterate the low double digits sort of long term growth rate put to push a little bit here. I mean, you know, not to get ahead of ourselves, but is it possible that you certainly trend above that long range target for the remainder of 2023?
Speaker 4: But first I'm glad that you picked up on that and and yeah part of that Anthony is because the first quarter does have noise in it you know given that last last year's Q1 was slightly different we got to give it a little bit more time to see what's really there. I do like the momentum coming out of the fourth quarter like the momentum we saw in the first quarter.
Speaker 4: It's still very early for me. I've been here for a whopping 90 days, so I'm still getting the feel for the rhythm of this business, the ebbs and flows of the business. And so it's just going to take me a little bit more time. And I think Q1, or excuse me, Q2, Q3 will tell that story. And I'd hate to get way out ahead of ourselves as you indicate.
Speaker 4: and start pounding our chest and say everything's great because you always have challenges. And there's still, I think, some things that have to shake out in the private office but before we really know what's happening there. So I like it when I really like it in that kind of low double digit area. And look, it's not us trying to sandbag, seriously. We're just trying to give you our realistic expectation for the full year. No, I understood. Last one for me, and I'll get in two years.
Speaker 5: The $5.5 million in adjusted EBITDA, also well ahead of expectations. And maybe just to close out here, I mean, how much of that was purely the revenue beat versus some of the restructuring activities that are ongoing? Again, congratulations on the quarter and thanks for taking the question.
Speaker 3: Thanks, Anthony. You know, the adjusted e-butt number has multiple components to it. Certainly, sales volume is positive with the high-grossed margins. But as we noted, the gross margins in the quarter were also up on a sequential basis, relatively flat to a year ago. Since original repl? Hz Hces Meg , 7 lifetime diet, mala hello, 7 lifetime diet,
Speaker 3: But from getting our gross margins back up, approaching the mid-80s, and we think we can get to the mid-80s, you know, within the next 12 to 15 months or so, that's very helpful to our bottom line performance. But we also did have efficiencies and leverage. We know there's leverage in the system here. We're very...
Speaker 3: pleased to see the SG&A costs grow at such a much lower level than the revenue grew in the quarter. And, you know, we've always said as we get our revenue growing that you would not need to model out expenses growing at the same level. Certainly the activities and some of the actions we took in the fourth quarter can be very
Speaker 3: All of those factors are good. Being cautious on expenses.
Speaker 3: both on the G&A level and in the selling level, and then gross margin improvements. The team's done a great job there. It is processed and efficiency matters, and there's more to come. And then obviously at 80-plus percent margins, a good bit of that falls to the bottom line when you have strong quarter like we did in revenue.
Speaker 3: Thank you again. Our next question comes from the line of Carl Burns with Northland. Please proceed with your question. Thanks for the question and congratulations on the strong quarter. And Pete, thanks for all your help. I think most of my questions have been addressed here, but I wanted to drill it.
Speaker 4: down a little bit more on the physician segment being up 30%. Obviously, you know, there was pent-up demand, and you're seeing some of that work off mid-COVID and the extra day. But were there any other factors that you attribute to that 30% gain? More specifically, I mean, do you think the OIG recommendation to CMS?
Speaker 2: Our next question comes from the line of Swayam Pakula with HC Wainwright. Please proceed with your question. Thank you. Thanks for taking my questions. Pete, I wish you the best and it's nothing like living on a high note. So good luck and talk to you soon. Just to follow up on Anthony's line of questioning, one of the things you folks have been talking to us this afternoon is on execution and how good the execution has been.
Speaker 2: So part of the execution formula is the sales force being with you for a longer period. So as the experience increases, they are going to get better and better. So can you just talk to that effect?
I know, I think about a couple of years ago, you know, there was some new, some addition to the Salesforce. And I'm just trying to figure out how much of that is helping out because that can potentially provide some sustenance.
I think it's helping a lot. I think the Salesforce leadership that was put in place a few years back had made a lot of changes to bring order to the organization and I think they did a great job with that. So I'm extremely pleased with
Not just the leadership but the performance of the sales organization to your point. When you settle down, turn over a little bit, you have a bit more stability. But when you have good clear direction, you have better performance as well. So I think all of the above RK. I think the team is doing a very good job. And I expect.
that as we grow this business as Pete indicated, you will see more leverage out of the S in SG&A. Clearly you are going to get more leverage out of the G&A because we have more control over that. And I think the organization did a good job of streamlining and cleaning a bit of that up as Pete indicated, and we are starting to reap the benefit of that. But my expectation is we will see EBITDA improvement.
Along the way and where it goes. I'm not quite sure yet because we're not there and we don't know what's going to take to get there, but I fully anticipate even down margin improvement as this business scales and a good bit of it will come through by leverage of that sales organization You don't have to buy on the other hand, of the whoever you work for but you were on the other side. if you can scale over and then you pay the cost but you're not moving on And yet as you can see obviously
Fantastic. Thanks for that. And then talking about patient volumes. So what are the metrics that you folks follow on the patient volumes? And do you see that consistently increasing into the second quarter as well, because we are about a month and a half into it now? And I'm trying to…
think about how we could think about at least for the second quarter because that was also, when you compare it to second quarter of 2022, there was still a lighter quarter for you folks over the full year last year. So the first one you were talking about...
And I'm not sure that's something that we've traditionally put out. So we're using pretty much the same metrics that you are. And then the second part of your question was really around Q2. I'm sorry, you'll break it up a little bit. You said Q2. Thank you.
Look, right now again – what's that? You're right. It was quick for you too.
Yeah, right now we're really kind of sticking to kind of annual guidance of those double digit and there will be some movement quarter to quarter. But I'm going to cop out on that one and say any more time to figure out the rhythm of this business. Frankly.
Well, we are doing everything we can to grow this business. We have new products in the pipeline. It's not just Salesforce execution, but we see that continuing to improve. We have Japan starting to come online. We have drivers in the business that will help us grow, but we are just not comfortable yet saying that – and we are certainly not comfortable giving quarterly guidance at this juncture. And RK, it's Pete. Just going back to last year, you mentioned some of the –
Thank you. One last question from me. On the new product contribution, is there any additional color that you can provide on that? And obviously, as Japan matures, that will be a major contributor as you just said.
Okay, it's Pete, you know, the new products have been successful. We're really pleased with those. They were a good contributor in the fourth quarter and continued that contribution here in the first quarter. So they are a big driver of year over year growth. Remember, we've got two of them out there, one's a particulate and one's a...
of year over year growth, but then it becomes less as you get the third quarter and obviously fourth quarter. We're very pleased. It's really helping our surgical recovery strategy, and it's a variety of procedures. And frankly, we see that expanding as time goes on. Both the number of clinics or hospitals using and physicians using the product.
as well as the nature of procedures being used. It's one of these things that as we have more and more case studies from actual applications, we can share those stories and it really builds on itself. We've made an investment in medical education and a concentrated effort.
So we're very pleased with it. It's the two different types of products. It ties into the surgical recovery strategy. And the real-world evidence, the case evidence, is going to be a strong driver. Because surgeons are, that's an area that has a high bar for data, if you will. And this is the way we get data.
You're exactly right. It's the growth surgical recovery growth step, 8% growth, but you're right. In order to continue to see growth there, we're going to need to continue to invest in research because they want data. Fantastic. Thank you both and congratulations again on a great quarter.
It's the growth surgical recovery, growth step 8% growth, but you're right. In order to continue to see growth there, we're gonna need to continue to invest in research because they want data. Fantastic. Thank you both and congratulations again on a great quarter. Thanks, okay. Thank you.
All right, next question comes from the line of John VanderMausen with Zacks. Please proceed with your question. Thank you, and Joe and Pete, thank you for taking my question. I thought I'd start out with a question on new products. You said that was one of the big drivers for performance in the first quarter.
And I know that there had been a goal to roll out some new products every year to kind of keep that going on. How was that coming along for 2023? And then I think you had mentioned something about Terms therapeutics and perhaps that milestone had been delayed. Will that be related to one of the new products and how will that kind of fold into that goal of new product launch?
So just the kind of commitment within the organization was to try to get two to market each year. We are not tied to that number. It doesn't have to be two, but it's not a bad guidepost because this market does require innovation to stay relevant.
It's an area that we continue to invest and we have a fairly robust pipeline of opportunities to continue to introduce to the market in the coming years. Tern clearly was one of those that would have introduced an antimicrobial xenograft into our portfolio. It would have been a first, it would have been a second.
a 510k approval, which would have been a predicate for us to build upon. Unfortunately, the 510k milestone was not met. We continue to work with them. We continue to think that the antimicrobial is the right way to go. So we'll see how that unfolds. But you're right, the milestone was missed contractually. We're not committed to make that payment this calendar year. So
But that will need to be renegotiated. Yeah, John , it's Pete. Certainly that was in our sights as a new product for the year. A reminder that we have access to that antimicrobial technology without this specific product approval. So there are really two parts to that transaction. And we are doing work there, whether we get something out this year or very soon.
If for the company as much as externally, we were really trying to get, make sure the focus across the company was on product development. We've been successful on that and we will read those rewards as we go forward. Okay, thanks. Again, I look forward to revenue growth in Japan. I sense that it's still early days and they're not...
substantially material yet, the revenue contribution, I mean. How do you expect that to evolve over the year? And then I know you had been training a bunch of providers. Is that still going strong, that training exercise? It is. We have some of our own folks on the ground there as well.
There is a lot of missionary work that needs to be done in these early days. The fact that we have some sales already is very heartening. And we anticipate in the coming months, the coming quarters that we will begin to build. Again, a little early to put numbers on it, but we are very optimistic about how the project is starting to unfold.
Okay, great. Thank you, Joe. Thank you, Pete.
And as a reminder, if you have any questions, you may press star 1 on your telephone keypad. Doing so will ensure that you are joined into the questionnaire's queue.
We have reached the end of the question and answer session. I'll now turn the call back over to Joe Capper for closing remarks. Thanks, operator. Thanks, everybody. We appreciate your continued support of the company. That concludes today's call. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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