Q2 2023 Anika Therapeutics Inc Earnings Call

Quarter of 2023 earnings conference call.

Question during the question and answer session. Please press star one I will now turn the call over to Mark Nemeroff, Vice President Investor Relations E. S. G. In corporate Communications. Please go ahead.

Thank you.

Thank you for joining us sporadic a second quarter conference call the webcast.

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A supplementary Powerpoint.

With me on the call today.

President and Chief Executive Officer.

<unk>.

Chief Financial Officer and Treasurer.

At the moment.

Before we begin please understand that sir.

During the call today.

Looking statements.

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34.

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The company's actual results.

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Uhm.

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[noise] furniture measures.

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Second quarter.

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Turn the call over.

President.

Sure.

Good afternoon, everyone and thanks for joining US please turn to slide three.

I'm very pleased to say that Anika delivered strong second quarter.

With 12% overall revenue growth.

Management business.

Gross margins improve.

Bottom line performance.

Looking at the core parts of the business.

<unk>.

16%, which is an outstanding resolved as our products continue to gain traction in the market.

Sheriff.

Oh, a pain management business was stronger than anticipated with 22% revenue growth.

Accelerating.

Strong cingal throws outside the U S and favorable product.

And the U S.

Halfway through the year.

Good results to date.

Outlet for this product.

2023.

Shortly.

Alright.

Clinical performance of any on the market.

We're pleased to see J J as robust results as they continue to further expand our number one market share position in the U S. L. A pain management market.

Performance of our international team with Cingal together with.

Posting double digit growth in the corner.

Cingal is truly becoming the next generation.

Oh, a pain product of choice.

35 markets outside the U S and we're looking forward to U S market approval.

On that topic, our interactions with the F D. A regarding bringing cingal to the U S had been progressing since last fall when we successfully Matt the primary endpoint of our latest phase three pivotal trial.

We are pleased to have had a type C meeting with the F. D. A in the second quarter as we actively engage with them towards the U S approval.

With respect to our ongoing processes to source and secure development and commercial partners.

Cingal in the U S and select Asian markets.

With the initial interest as we engage with multiple parties.

The substantial clinical and commercial Derisking has been well received and we'll update you as we have developments to share.

Or would you like preservation and restoration portfolio continues to strengthen and our newest products drove continued growth in the second quarter the slower than we originally expected.

Of our distributors experienced the recent industry dynamic of pent up demand, causing a greater focus on large joints.

We are actively determining where the strengths and opportunities are within our U S hyper channel and taking action accordingly to meet our growth objectives.

I'm pleased to report that our newest joy preservation product the Rebbe motion reverse shoulder arthroplasty system, which has been in limited release since earlier. This year is seen growing momentum as we continue to receive very positive clinical feedback.

In fact relative to our original plan, we've increased the number of surgeons in the limited launch and are accelerating the full market launch a breve emotion to September in conjunction with the orthopedics stomach for evolving technologies or O set annual meeting in Boston.

We've initiated a full slate of training opportunities both for our sales force and surgeons and the full release of Reba motion will contribute to the acceleration of virtually preservation business in the second half of this year.

I'm also happy to report that we signed an agreement with materialize the market leader in three D planning solutions to offer a customized software solution called aim or Anika implant management that.

That will be used for both our total and reverse shoulder systems aim will be available.

Eligible by the end of the year and we're excited to provide this new capability to our customers, enabling them to better treat their patients with our innovative products.

On the regenerative front and cartilage repair as we announced in May we're thrilled to have now completed enrollment of the highly fast phase three clinical trial, putting us in a position to begin a modular PMA submission next year and concluding in 2025.

The modular submission process. The F. D. A has granted us for <unk> fast allows us to accelerate the PMA finally process by engaging the F D. A as they review each module.

Lastly, we're very pleased with our progress in developing R. A J based regenerative rotator cuff patch system, which we have named integrity.

We call it integrity because of the inherent structural integrity of our H E Bay scaffold compared to the current first generation college in patches on the market.

Additionally, the higher on scaffold support healing through <unk> proved sell infiltration tissue remodeling intendant thickening.

And as critical as the implant is the instrumentation fixation and delivery of the integrity patch are just as important.

And we believe we've nailed the designs in conjunction with our surgeon developer team.

The instrumentation delivery system and fixation methods will all contribute to a seamless efficient and elegant rotator cuff augmentation system.

Integrity is a key value driver for anika, allowing us to serve the fast growing regenerative rotator cuff repair market with an innovative solution tailored for ease of use by surgeons.

Let me move into the pipeline and clinical updates if you please turn to flag for.

Over the past three years, we've been investing with purpose to establish anika as a global leader addressing unmet needs in early intervention orthopedics.

<unk>, our core expertise in Holly radick acid and portfolio across pain management, regenerative sports medicine, and Arthur surface joint solutions.

Pipeline is expanding anika near to medium term market opportunity by over $3 billion with a cadence of exciting differentiated product launches in high opportunity spaces.

We've updated a number of key items on this pipeline slide now, reflecting more substantial opportunities in the O a pain management and regenerative spaces.

First the previous longer term opportunities with Cingal inhaler fast have advanced to become more short to medium term now with line of sight to U S regulatory filings for both products.

We expect the next generation Oh, a pain market served by Cingal adds an additional $1 billion to our already billion dollar market opportunity served by Monovisc in north of <unk> and Cingal is perfectly positioned to win.

We're also very excited about our off the shelf cartilage repair product <unk> I mean.

Now estimate this U S addressable market to be over $1 billion.

Hi, all a fast as a key value driver for Anika that now has a well defined pathway to the U S market by 2026 with the pivotal phase three study fully enrolled the F. D. A designating tile a fast as a breakthrough device and with a modular PMA filing approach.

As excited as we are about Cingal inhale a fast we also believe our new integrity H a patch system is a game changer, allowing surgeons to use an H a based woven matrix to support healing for rotator cuff tears in this over 150 million dollar market.

Given the attractive market for regenerative patches with valuations averaging $250 million for recent M&A transactions for first generation College and technologies.

We believe this arthroscopic system has expansion opportunities beyond the shoulder and will also be a key driver for growth.

With all the necessary fact in case now filed and two of the three already cleared we expect to have the product ready for launch in 2024.

The histology data we are seeing through 26 weeks is quite compelling compared to the market, leading collagen patch and I can't wait to share more about this upcoming product and launch.

<unk>, we filed our final five 10-K on a higher contrast version, which will enhance visualization under fluoroscopy, an important characteristic for some surgeons in certain applications.

Also we have an exciting update that will support our build of the augmentation market.

The first clinical study on using <unk> to augment suit. Your anchors was presented at the a O S. As Sam meeting last month by Doctor <unk>, who is with Ochsner health in New Orleans Dr.

<unk> reported two key findings in a study that followed 240 patients over 12 months.

First they use a tech to set to augment suit your anchors and rotator cuff repair procedures resulted in a statistically significant decrease in the incidence of suit your anchor pull out compared to the same surgeries performed without <unk> sex.

Second the study demonstrated a statistically significant reduction in pain scores in the series using tack to set.

These data to be published in a peer reviewed journal represent clear evidence of the benefits of tack to set augmenting suit your anchors in rotator cuff repairs and highlight the significant market potential protect us at.

As the clinical evidence for augmentation in rotator cuff repairs continues to build we expect the momentum and adoption to increase as well, which is a clear win for both surgeons and their patients.

Our new extra a suit your anchor system in sports Medicine is gaining early traction in the market. Following R. Q1 full market release of the peak version with ongoing very positive surgeon feedback.

As we continue to expand our commercial presence and reached with this key product. We are also developing follow on products, including a biocomposites version that we expect to launch next year.

Lastly, our new reason emotion reverse shoulder arthroplasty system competing in the fast growing now 1 billion dollar U S. Reverse shoulder market has had a successful limited market release, and we've expanded the surgeon base beyond what we originally planned.

As I noted earlier based on the strong results in a limited release, we're accelerating our full market released to occur in September .

Together from Cingal to Reeve emotion, we have assembled a tremendous portfolio that opens up a 3 billion dollar market opportunity with solutions that truly solve unmet needs across early intervention orthopedics.

All in line with our mission of restoring active living around the world.

This progress physicians anika better than ever to deliver meaningful value for stakeholders.

Now I'd like to turn the call over to Mike to review, the second quarter results and guidance for the remainder of the year Mike.

Thank you Carol please turn to slide spot.

Oh, and they will walk you through our financial results for the second quarter of 2023.

I'm pleased to report total revenue for the quarter grew to $44.3 million, an increase of 12% of require your on Rosen already pain management.

[noise] preservation and restoration.

Partially offset by lower abdominal repeated revenues.

Below are non orthopedic revenues reduce total company growth in the quarter at approximately four percentage points.

Revenue in our largest product family only pain management increased 22% to $29.3 million due to sales growth on increasing global customer demand with my mom <unk>.

And favorable ordering patterns from both James and my Tech in the U S and for our international distributors.

As a reminder, revenues can vary significantly on a quarterly basis based on ordering patterns are partners in the U S and internationally, however that volatility generally stabilises on an annual basis.

Our joint preservation and restoration revenue in the quarter increased five per cent to $12.7 million an early growth from a recent product launches such as X slipped and Reba emotions. The latter of which remains is limited and beliefs in the second quarter what moves the full market released in September of Cheryl Highland.

Anonymous repeated revenues declined 33% to $2.3 million, primarily reflecting unfavorable year over your order timing by our veterinary distributor.

As well as the continued impact from our exit familiar to some product lines that do not support our growth and profitability objectives, which has a higher revenues last year from last time, but.

Our gross margin in the second quarter increased to 65 per cent and includes the non-cash impact of $1.6 million of acquisition related amortization expense from the 2020 acquisitions of Arthur surface and purpose of medical.

Are adjusted gross margin, which excludes the acquisition related amortization increased to 69% in the quarter up from 67 per cent last year.

This growth favourable product mix and manufacturing efficiency.

From a <unk> standpoint, our operating expenses totaled $32.6 million in the second quarter.

20th $2 million in the same period of last year.

Can we do to $2.7 million, a monitor in corporate cost of which 2.2 million related to shareholder activism that was resolved in April .

The increase in operating expenses also included higher spending this year to support compliance with expanded global regulations, namely M D or in Europe .

Mostly for our legacy always be management products.

As well as development and launch readiness costs for key upcoming products, such as our integrity H I believed rotator cuff patches.

Our net loss for the quarter was $2.7 million or 19 cents for sure.

That's down from one that loss of $2.8 million or 20 cents per share in the second quarter of last year.

We generated adjusted net income of $800000 this quarter or six cents per diluted share.

That's up from an adjusted net loss of $1.6 million.12 per share in the partner.

Our adjusted EBITDA generated in the quarter was $6.3 million.

From 4.4 moment in the second quarter of last year.

The increase was primarily due to revenue growth and approved gross margin.

Austin part by $500000, a certain monitor any corporate costs largely associated with the purpose of medical arbitration that was settled during the second quarter.

Lastly, with regards to our cash flow and capital structure.

We had net operating cash outflows of $8.3 million during the second quarter, primarily reflecting $8.3 million paid in the quarter for non-recurring costs incurred in both the first and second quarters of 2023, the settlements of the purpose medical arbitration and shareholder activism.

As well as other non recurring corporate cross.

R capital expenditures in the quarter totaled $1.5 million down slightly from last year.

Related to continued investments in manufacturing capabilities supporting growth in our early pain management barleycorn as well as instruments associated with are keen product launches such as <unk>.

Additionally, we spent $5 million in the second quarter to repurchase stock under an accelerated stock repurchase program initiated an inmate and concluded in July .

This was the first activity under the new stock repurchase program authorized by you haven't cause board of directors in the second quarter order.

<unk>, which $10 million would be split between an accelerated stuffy purchase.

Open market program.

And a second $10 million, which is subject to positive cash flows.

That would be through an open market program.

We ended the second quarter was $65.1 million in cash and no outstanding debt.

The Anika maintains a healthy balance sheet and is well positioned to continue to cell phones are growth initiatives to drive shareholder value.

Please turn to slide six.

Now I would like to review our full your financial outlook for fiscal year 2023.

Based on our positive progress to be <unk>.

Raising the low end of our previously announced revenue range.

With an updated outlook for fiscal year, 2023 revenue of $159.5 million to $163 million representing growth of 2% to 4% over last year.

As what you expect greater above market growth and OAP management, and accelerated growth enjoying preservation and restoration to be offset by lower ancillary non orthopedic revenues.

The lower non orthopedic revenues reduce total company growth this year by approximately four percentage points.

N O a pain management, we now expect revenue of $96 million to $97.5 million, that's a 4% to 6% over last year.

As our market leading products continue to gain adoption globally.

Outlook is off compared to our previous range of $93.5 million to $96 million on a strong progress year to date and positive momentum in the market.

As you look at the second half of the year all timing can vary on a quarterly basis due to a distributor ordering patterns. We accept the only came answered avenues between the third and fourth quarters to be relatively level to one another.

Enjoying preservation and restoration, we now expect revenue at $54 million to $55.5 million, that's up 7% to 10% over last year and acceleration over last year due primarily to our new products such as <unk>.

Our previous range was $55.5 million to $58 million and.

Our revised growth outlook reflects a slower than expected sales ran up this year through our hybrid channel is Cheryl mentioned.

And the second half our guidance assumes normal seasonality.

We now expect non orthopedic revenue of nine $5 million to $10 million.

A decrease of approximately 30 per cent from last year, primarily due to last year's last time buys of legacy products and veterinary order typing.

This updated outlook is a bit higher than our previous outlook of approximately $9 million.

We have no changes to the rest of our P&L outlook and continue to affect adjusted gross margin for the year to be roughly in line with last year.

And adjusted EBITDA margin to be positive for the year in the low single digits as compared to 8% last year, reflecting the cost to demonstrate compliance with expanded global regulation, primarily for like it's the only thing management products.

Enhanced operational capabilities to support sustainable growth.

As well as the development and launch a key joined preservation products.

While spending was higher in the first half of the year due to non recurring cost primarily associated with the purchase medical arbitration and shareholder activism now that both have settled in the second quarter, you expect operating expenses to decrease in the second half of 2023 compared to the first half.

And summer now over halfway through the year, we're pleased to read the low end of our revenue outlook for 2023 and beyond track for a margin targets as we drive those operational execution and the development and launch of keen products I.

I will now turn the call back over to show <unk>.

<unk>, please turn to slide seven.

Before we open the call up for Q&A I want to reiterate our excitement is the progress we've made in building an anarchist historic strength and how ironic acid addressing O a pain.

So now assembling best in class solutions across early intervention orthopedics, where.

We're pleased to see the acceleration and growth of our already market, leading viscosupplement for Oh, a pain management.

The tremendous opportunities afforded by our next generation Nonopioid, Oh, a pain management product cingal the.

The growing strength of our H, a based regenerative portfolio, including meaningful differentiated regenerative solutions for cartilage and rotator cuff repair <unk>.

And the progress we've made in further strengthening are already robots portfolio across sports medicine, and minimally invasive chewing solutions.

And we've been able to self fund this portfolio development and continue to maintain a healthy balance sheet with a solid cash position and know that.

I'd like to take a moment to thank all of our employees for their continued hard work and dedication to supporting our efforts together, we are building real momentum as we work to achieve our mission of restoring active living for people around the world and with that we'll open up the line for questions.

Okay. Thank you, ladies and gentlemen, that'll begin the question and answer session. If you have a question. Please press star one.

Fame.

I'd like to cancel your request please press star too please.

The handset first if you're using a speaker phone.

Okay.

And our first question comes from George.

George.

Good afternoon, and thanks for taking the question.

I apologize if I missed this detail earlier, we've been jumping alone from call to call. This afternoon, but on Cingal I'm. Just curious if you could give us some additional color on <unk>, what a commercial partnership might look like in the U S. That'd be similar to the the <unk> partnership with.

With my tech or what that sort of commercialization process and roll out could potentially look like.

Yeah. Thanks, George <unk>. We appreciate the question about Cingal. It's it's obviously a product that we remain very excited about you know I think considering the fact that we really have what what I see is just unparalleled data around osteoarthritis.

Pain reduction with Cingal as of next generation.

Oh, a pain product.

You know, we're we're gonna.

We're gonna run full some process around understanding our best partnership opportunities in the United States for Optimising shareholder value. Our shareholders have obviously made significant investments in the development of that product. So we're focused on I'm really driving the right.

Outcome, there relative to our shareholders I'm, obviously, not gonna get into details around discussions or potential structures, but.

There there is significant interest in the U S and we've also talked about the fact that we're engaging with parties in select Asian markets and we're seeing a lot of interest. There also so more to come on that I wouldn't want to speculate or provide any details that would get in the way of a wholesome process, but we remain really excite.

<unk> about the product and also on our our continuing dialogue to get Cingal in the U S around our conversations with the F D. A.

Okay that that's really helpful color switching to join preservation and restoration that was a really strong first quarter and then took a little bit of a of a step back this quarter relative to our expectations at least I'm just curious what some of the drivers there were in N Y that outlook is.

A little bit lighter than part was exiting last quarter.

Yeah, Great question.

Honor toy preservation business first of all we've built out a number of really strong products. We continue to get very strong clinical feedback on them with X twist and reeve emotion.

We are really in the first kind of finished the first full quarter in full market release, it back to us and we are in a limited market release of Reeve emotion. So I I don't want to get ahead of ourselves relative to where we're at with those product launches.

Another thing to consider around the fact that we've got this valuable portfolio that we felt that were just entering these larger markets, but we are learning about where our heart hybrid salesforce has strengths and areas that we need to strengthen we you know works really actively focusing on deter.

<unk> what are the strengths and weaknesses are and and taking action to make sure. We meet those growth objectives I will tell you that our approach around selling these products. We've tried to be very thoughtful about our spend that's why we've gone with that hybrid sales force. So that we don't have the the full burden of the full.

Fixed costs of Ah Ah fully own salesforce.

And then there are ways that we are continuing to drive focus amongst those distributors I'll tell you that the distributors that are really focused on us are growing and growing nicely and what we are seeing as we as we launch additional products and products that are exciting to them. That's really the way that we're gonna be continuing to drive <unk>.

<unk> and command attention from those distributors and that type of Salesforce and I'll give you. An example, integrity integrity as an exciting product our distributors are kind of chomping at the bit to get it and we're really being thoughtful about how we decide how we're gonna sell integrity. So that we can really optimize.

<unk> the the growth potential for that product the other the other thing I'll mention in in this password or <unk>.

Is we we really are seeing with some of our distributor some of our distributor cell hip and knee products and that large joint business. If you've seen the report out to some of the other competitors that are in that space, which we are not many of our distributors were focused on the large growth opportunities there in the last quarter and so getting.

Kind of Anniversarying through the bullets of patients that are coming through the system post COVID-19 with large joint I think get this to a better day and and guesses refocus with those distributors on the joint preservation business that Anika has got <unk> with all the great new product launches that were driving.

Okay that that's really really helpful. I appreciate all that detail and maybe if I could squeeze one more in touch for a little bit mentioning integrity I'm. Just curious if you could give a little bit more detail on that the five 10-K clearances, you've already received for that and what's left to go.

And is there potential but that could actually be watched at the end of this year.

Yeah. Great question integrity is is a product that we are very excited about it really continues to build our regenerative portfolio and.

Really allows us to continue to focus on that shoulder pathology that we've continued to be focused on with a number of our other product launches. So the the integrity rotator cuff patch system is a full system that has the regenerative patch component based on how ironic acid and fixate.

<unk> and instrumentation for ease of delivery and for ease of surgery for the surgeons. The fixation elements include a staple that allows fixation to bone and dark set allows fixation to the cough and so the two five 10-K clearances that we received are for those <unk>.

<unk> elements and so we're we're now just waiting on our our final process with the final five 10-K around the patch, but we've made significant progress there. The surgeon team that we've worked with to develop that is incredibly excited about this we see incredible regenerative capacity with this product relative.

To the first generation College and technologies out there in a head to head study that we've done and we really look forward to providing more information on this launch relative to the timing we will definitely be looking to launch in 2024, and if we have good news will certainly let you know.

Okay, great well. Thank you again for the time and I appreciate you.

The squeeze one more there at the end [laughter], absolutely George banks.

And our next question comes from.

Go ahead Jim.

Good afternoon, thanks for taking the questions.

Can you can you talk a little bit more about some of the options are for Cingal. After your meeting with the F D. A.

Can you just <unk> you know if you think another trial will be necessary.

Yeah. Thanks, Jim so that the discussions with the F D. A in that type C meeting where.

Really focused around a number of conversations that we've had about making sure that we address the N D. A requirements and while we don't expect to fund another kind of full factorial clinical trial. There are other questions around like the 505 B two.

Two aspects of the steroid and around the fact that F. D. A is now regulating the H a monovisc in cingal as a drug. So they were they were really the discussion was really focused around that and we are actually waiting to hear back from F. D. A on a couple of things that we submit it to them around <unk>.

Reposes to address some additional topics that were waiting to hear back from them on and I wouldn't really want to speculate on when or what we hear back, but we'll certainly update you as we learn more.

And put a potential distribution partner for Cingal fund whatever requirements are needed to get through the rest of your life.

So again good question and we we obviously have multiple work streams ongoing around partnerships in the U S and select Asian countries and the types of structures that those deals typically have involved some sort of an upfront, which I would expect so.

There is the potential for a cash infusion to help fund some or whatever that additional work would be necessary, but again, there's not an intention that anika is funding a large full sectorial clinical trial from here on out.

Okay I'm in <unk> <unk> <unk>.

<unk> completed and can you just remind me what's the flower for that trial, the follow up or yeah.

The follow up is two years. So the last patient out will be in 2025. So we'll start filing are modular PMA in 2024, and then the final module that we file will be the clinical module in 2025.

And will you be able to release any data in 2024 give us an idea of how the product performs on the first growth.

Well I'll tell you one one thing about hyla fast that I I'm not sure people in the U S are as familiar with is we've been selling that product for many many years outside the U S. They're actually 40, plus clinical publications already out there about hyla fast so we already know how it performs and <unk>.

It's based on a number of independent studies that were done O U S. In terms of when we will be disclosing data from the F. D. A pivotal trial it will not be until after we've unblinded the study which will be following the last patient out in 2025.

Alright, and then switching over to that.

Second quarter.

The.

The joint pain revenue rubbing up 22 per cent you know out of this world.

Based on your guarding for you're looking for that to come down to a average meal.

Hi, John This is Michael I'll take that question.

You know and you've been following advocate for quite some time.

You you got a lumpy revenue stream uneven ordering patterns that just happens large when you're dealing with a large company like J&J that that that can happen from Florida quarter and the majority of our revenues are transfer <unk>. There is a component that's royalties, which is related to end user sales.

We had.

Just a lot of a lot of favorable timing in the second quarter and that was definitely why it's so much higher than what a normal run rate would be and credit to our operations team for you not a product that they got through it was it was a tremendous effort, but the reason we raised our guidance for only paint ma'am.

<unk> <unk> for the year is really because of the underlying momentum in the business. So we saw a strong Q2 and my tech good <unk>, principally an outside view as we saw it for Cingal and that's been a continuing trend and Ah both of which were very encouraging and that's why we were able to to reach our guidance. So.

Uhm, yes, the second half the transfer units will be lower than than in the first half and that's what it was reflected in the guide and I tried to say, it's probably going to eat in between two three in queue for as far as we can tell from the order and patterns at that at that lower level, but the underlying and user sales Ah continue the strong momentum and and that's the basis for.

The rays and for the drink with that business.

Okay, you know I I don't recall, a 30 million dollar quarter ever before or is this the highest court or you've ever had for.

For joint pain products.

You know I'd have to look back to see but this was a tremendous quarter and we're we're very excited about that both operationally execution that occurred in the embassy that strong and growing demand. It's really encouraging. So yeah I was very pleased with the court.

Alright, and then just one.

One way to follow up on the on the other side of the business of drawing preservation down a million dollars to the first corner, which I I don't think deal directly you mentioned that there might be a backlog of patients and the large drawing.

Category that needed surgery.

Maybe maybe you didn't have as much access as you thought I mean is there any other reason why you think.

You are down a million dollars from the from the first quarter.

Yeah, I, certainly think that the industry dynamics of the hip and knee business really just seeing a very large bolus of patients coming through the system and.

A number of our distributors in our hybrid sales force also sell hips and knees and so I think from a focus perspective, there was definitely from an anika uhm.

Anika view there there was probably a distraction there for those distributors being very focused on the hip any side of the business.

I will say, though that the distributors that are very focused on anika are growing our business and growing it nicely. So one of the things that we're really doing is understanding how to continue to optimize that hybrid sales force and at the same time be thoughtful about how we go about that relative to the investing.

That we're making we still see a tremendous opportunity for growth in the J P. R business, especially with our our new product launches and we're still very bullish on the business, but we understand based on the dynamic that happened with the hip any business that there's additional work to do there and we're very far.

August on it and Jim This is Mike just one other comment I would make if you recall in the first quarter one of the things we called out was that there was favorable timing internationally and so in the U S where we're launching these new products and whatnot there wasn't a decrease in the temperatures to the second quarter at that really was timing in the international business and <unk>.

Called out on the first corner instead of it's probably gonna be ahead when did the second quarter and that's exactly what we saw.

Okay. So is there any reason to not think that this business will be with you know double digit grower.

For the next few quarters.

Yeah, No Jim I mean, if if I look at the guidance the guidance that we have is 72, 7% to 10% were 8% through the first half of the year, we accelerated in the second half of last year, we expect to accelerate in the second half of this year and you know one of the things that we're excited about as we go on to.

2024 is the Rebbe emotion and seeing that you know have it move into full market relief at the end of the third quarter, it's not as much of a big number for this year, just because people tend to buy a try it out and then and then follow on at a later point after they see how it works, but it really as encouraging as we look at.

2024, so yeah, we do see an acceleration in the second half of this year. One thing I didn't mention that was we do expect normal seasonality and so you know.

That really implies a strong Q for and and that's what we expect this year just based on things seemed to have returned to normal which is which is encouraging.

Yeah.

That's what I meant with my question, one with the double digit car I didn't mean for the remainder of 23 hours talking about 24 beyond.

Yeah, we we do that as a double digit growth business, yes.

Okay alright, thank you.

Thank you. Thank you.

And ladies and gentlemen, we have no more questions in the queue. This concludes today's conference. Thank you for participating you may now disconnect.

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