Q4 2023 MiMedx Group Inc Earnings Call

Speaker Change: [music].

Operator: Greetings and welcome to the MiMedx Fourth Quarter and Full Year 2023 Operating and Financial Results. At this time, all participants are on a listen-only basis. A question and answer session will follow. And if anyone should require operator assistance during a conference, please press star zero on your telephone. As a reminder, this conference is being recorded. It is now my pleasure.

Greetings and welcome to the <unk> Group, Inc, fourth quarter, and full year 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.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce Matt Notarianni head of Investor Relations. Thank you you may begin. Thank you operator, and good afternoon, everyone and welcome to the <unk> fourth quarter and full year 2023, operating and financial results Conference call.

Matt Notarianni: Matt Notarianni, Head of Investor Relations, Thank you, operator, and good afternoon, everyone. Welcome to the MiMedx fourth quarter and full year 2023 Operating and Financial Results Conference. With me on today's call are Chief Executive Officer Joe Capper and Chief Financial Officer Doug Rice. As part of today's webcast, we are simultaneously displaying slides that you can follow. You can access the slides from the Investor Relations website at MiMedx.com.

Matt Notarianni: With me on today's call are Chief Executive Officer, Joe Capper, and Chief Financial Officer, Doug Rice.

Matt Notarianni: As part of today's webcast, we are simultaneously displaying slides that you can follow up.

Matt Notarianni: You can access the slides from the Investor Relations website at <unk> Dot com.

Matt Notarianni: Joe will kick us off with some opening remarks, and Doug 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. Before we begin, I would like to remind you that our comments today will include forward-looking statements, including statements regarding future sales, EBITDA, free cash flow, and cash balance growth, future margins and expenses, and expected market sizes for our products. These expectations are subject to risks and uncertainties, and actual results may differ materially from those anticipated due to many factors.

Matt Notarianni: Joe will kick us off with some opening remarks, Doug 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.

Speaker Change: We'll then be available for your questions.

Speaker Change: Before we begin I would like to remind you that our comments today will include forward looking statements, including statements regarding future sale EBITDA free cash flow and cash balance growth future margins and expenses and expected market sizes for our products.

Speaker Change: Expectations are subject to risks and uncertainties and actual results may differ materially from those anticipated due to many factors.

Matt Notarianni: Actual results and market sizes will depend on a number of factors, including competition, access to customers, the reimbursement environment, unforeseen circumstances and delays, and other factors. 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. Also, our comments today include non-GAAP financial measures, and we provide a reconciliation to GAAP measures in our press release, which is available on our website at www.mimedx.com. With that said, I'm now pleased to turn the call over to Joe Capper. Joe?

Speaker Change: Actual results and market sizes will depend on a number of factors, including competition access to customers the reimbursement environment unforeseen circumstances and delays and other factors.

Speaker Change: 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.

Speaker Change: Also our comments today include non-GAAP financial measures and we provide a reconciliation to GAAP measures in our press release, which is available on our website at www Dot <unk> Dot com.

Joseph H. Capper: With that I'm now pleased to turn the call over to Joe Joe.

Joseph H. Capper: Thanks Matt and good afternoon everyone. Thank you all for joining us on today's call. I am very pleased to report that we had another outstanding quarterly performance in Q4, closing out an excellent 2023. Revenue for the full year grew by 20%, surpassing our guidelines.

Joe: Thanks, Matt and good afternoon, everyone. Thank you all for joining us on today's call I am very pleased to report that we had another outstanding quarterly performance in Q4 closing out an excellent 2023.

Joe: Revenue for the full year grew by 20%, surpassing our guidance as.

Joseph H. Capper: As you will hear, the company continues to perform at an extremely high level in all facets of the business. When I joined MiMedx just over a year ago, I stated that our mission was to transform the company into a highly focused, growth-oriented, profitable med-tech business. In order to achieve that goal, we needed to make a significant strategic pivot. We restructured parts of the business. Rationalize expenses and drive productivity improvement. I am delighted to report that our exceptional leadership team has delivered on this challenging vision for MiMedx. The pivot was fairly rapid and no small feat.

Speaker Change: As Youll hear the company continues to perform at an extremely high level in all facets of the business.

Speaker Change: When I joined <unk>, just over a year ago I stated that our mission is to transform the company into a highly focused growth oriented profitable med tech business.

Speaker Change: In order to achieve that goal, we needed to make a significant strategic pivot restructured parts of the business.

Speaker Change: <unk> expenses and drive productivity improvements.

Speaker Change: I am delighted to report that our exceptional leadership team delivered in this challenging vision for magnetics.

Speaker Change: The pivot was fairly rapid and no small feat as.

Joseph H. Capper: As a result, we have made a dramatic improvement to our financial profile. I believe when we look back at 2023 in a few years, it will prove to be the seminal year the company established a strong foundation upon which it will build for years to come. I have great confidence in the talented people I am fortunate to work with each day and believe we are just getting started on capitalizing on the many opportunities before us.

As a result, we have made dramatic improvement to our financial profile.

Speaker Change: I believe when we look back at 2023 in a few years it will prove to be the seminal year. The company established a strong foundation, which was built upon for years to come.

Speaker Change: I have great confidence in the talented people I am fortunate to work with each day and believe we are just getting started towards capitalizing on the many opportunities before us.

Joseph H. Capper: While we are pleased with the progress we made in 2023, we enter the new year clear-eyed that much work remains as we pursue our strategic objectives. More on the long-term growth plans in a bit. First, I'd like to touch on a handful of the more noteworthy accomplishments for the quarter and full year. Q4 net sales grew year over year by approximately 17% to $87 million, another outstanding growth quarter. Full-year sales closed at $321 million, up 20% over the prior year.

Speaker Change: While we are pleased with the progress we made in 2023.

Speaker Change: We entered the new year clear eyed that much work remains as we pursue our strategic objectives.

Speaker Change: More on the long term growth plans in the pit first I'd like to touch on a handful of the more noteworthy accomplishments for the quarter and full year.

Speaker Change: Q4, net sales grew year over year by approximately 17% to $87 million another outstanding growth quarter.

Speaker Change: Full year sales closed at $321 million up 20% over the prior year.

Joseph H. Capper: Gross profit margin improved to 84% in a quarter. Adjusted EBITDA was $21 million, or 24% of sales, in the fourth quarter and $58 million, or 18% of sales for the full year, representing an increase of $51 million over the prior year. We end the year with $82 million in cash.

Speaker Change: Gross profit margin improved to 84% in the quarter.

Speaker Change: Adjusted EBITDA was $21 million or 24% of sales in the fourth quarter and $58 million or 18% of sales for the full year, representing an increase of $51 million over the prior year.

We ended the year with $82 million in cash.

Joseph H. Capper: Our momentum continues with the successful commercial launch of EpiEffect into the private office setting. And as a result of multiple improvements we made to the business over the course of a year, we began 2024 with a far more attractive balance sheet than we had a year ago. To expand on this point, there are really three primary aspects that drove improvement.

Speaker Change: Our momentum continued with the successful commercial launch of <unk> and the private office setting.

Speaker Change: And as a result of multiple improvements we made to the business over the course of the year, we began 2024 with a far more attractive balance sheet.

We had a year ago.

Speaker Change: To expand on this point there are really three primary aspects that drove that improvement first our focus on operational efficiency and building a culture of expense management discipline combined with the accelerated growth of the business.

Joseph H. Capper: First, our focus on operational efficiency and building a culture of expense management discipline combined with the accelerated growth of the business led to improved cash flow generation and an increase in our cash balance throughout the course of the year. Next, the company's consistent performance led to our stock price trading at a level high enough to trigger an automatic conversion of the Series B convertible preferred stock into the company's common stock just prior to the close of the fourth quarter. As a result of this conversion, approximately 30 million shares of common stock have been added to the company's fully diluted share count. In addition to simplifying a balance sheet, the conversion ends the dividend accrual associated with the preferred stock. And last, in January, we put in place a new debt facility, refinancing a previous note at a far more competitive rate and providing us with borrowing capacity to support growth initiatives. The new debt was obtained through a syndicate of banks comprised of Citizens and Bank of America.

Speaker Change: Led to improved cash flow generation.

Speaker Change: And an increase in our cash balance throughout the course of the year.

Speaker Change: Next the Companys consistent performance led to our stock price trading at a level high enough to trigger an automatic conversion of the series B convertible preferred stock into the company's common stock.

Speaker Change: Prior to the close of the fourth quarter.

Speaker Change: As a result of this conversion approximately 30 million shares of common stock have been added to the companys fully diluted share count.

Speaker Change: In addition to simplifying our balance sheet, the conversion and the dividend accrual associated with the preferred stock.

Speaker Change: And last January we put in place a new debt facility refinancing of previous node at a far more competitive rate and providing us with borrowing capacity to support growth initiatives.

Speaker Change: The new debt was obtained through a syndicate of banks comprised of citizens and bank of America.

Joseph H. Capper: Two high-quality institutions familiar with the company and our market. Remarkably, the combined benefit of interest being received on much higher cash deposits and the lower rate serviced at the new facility has nearly eliminated an annual cash outlay of over $6.5 million of net interest expense the company was burdened with during 2023. Turning now to a progress check on the three primary growth drivers we have been laser-focused on for the past year in order to drive our success. Our highest priority is to continue to build on our leadership position in the wound surgical markets by enhancing our product portfolio and expanding geographically. For the fourth quarter, this focus again produced growth in all sites of service; sales grew by 8% over the prior year in the hospital sector, which continues to benefit from the products we introduced late in 2022.

Speaker Change: Two high quality institutions familiar with the company and our market.

Speaker Change: Remarkably the combined benefit of interests being received a much higher cash deposits and the lower rate service. The new facility has nearly eliminated an annual cash outlay of over $6 5 million of net interest expense. The company was burdened with during 2023.

Speaker Change: Yeah.

Speaker Change: Turning now to a progress check on the three primary growth drivers, we have been laser focused on for the past year in order to drive our success.

Speaker Change: Our highest priority is to continue to build on our leadership position in the wound and surgical markets by enhancing our product portfolio and expanding geographically.

Speaker Change: For the fourth quarter. This focus again produced growth in all sites of service sales.

Speaker Change: Sales grew by 8% over the prior year in the hospital sector, which continues to benefit from the products. We introduced late in 2022.

Joseph H. Capper: We continue to invest in clinical research and are in the process of adding additional resources to our medical affairs team. We believe these investments are essential to support further penetration into the surgical suite, which is a focus for the company. Our fourth-quarter sales in the private office setting grew 24%. This was a sequential acceleration driven primarily by two factors.

Speaker Change: We continue to invest in clinical research and are in the process of adding additional resources to our medical affairs team.

Speaker Change: We believe these investments are essential to support further penetration into the surgical suite, which is a focus for the company.

Speaker Change: Okay.

Speaker Change: Our fourth quarter sales in the private office setting grew 24%. This was a sequential acceleration driven primarily by two factors.

Joseph H. Capper: First, as you may recall, Q3 was marked by confusion associated with an ill-fated attempt to introduce new local coverage determinations, or LCDs, for skin substitutes by three of the Medicare Administrative Contractors, or MACs. The plan was abandoned, and we believe we had some benefit in the fourth quarter as positions adjusted. Second, we moved into the commercial launch phase of EpiEffect, the newest addition to our advanced wound care solutions product portfolio for use in the private office market. As a reminder, Epi-Effect offers a thick, tri-layer configuration of amnion, chorion, and intermediate layers with handling characteristics and product attributes that make it a preferable treatment option for deep tunneling wounds or cases where securing the graft in place with sutures is desired.

Speaker Change: As you May recall Q3 was marked by confusion associated with an ill fated attempt to introduce new local coverage determination or LCD for skin substitutes by three of the Medicare administrative contractors for Max.

Speaker Change: The plant wasn't bandwidth and we believe we had some benefit in the fourth quarter as physicians adjust it.

Speaker Change: Second we moved into the commercial launch phase of that the effect. The newest addition to our advanced wound care solutions product portfolio for use in the private office market.

Speaker Change: As a reminder, <unk> offers.

Speaker Change: Layer configuration of ambien wholly on an intermediate layers with handling characteristics and product attributes that make it a preferable treatment option for deep tunneling wounds or cases or securing the cap in place with features as desired.

Joseph H. Capper: We are excited to get this product launch underway and remain committed to organic product development and innovation in our market-leading potential-derived technology as we see this as an important component of our future growth. We also continue to make progress in developing our Japanese business as we experience another nice uptick in revenue during the fourth quarter. Reflecting on the year, we accomplished a great deal in terms of foundation building in this country. We have trained over 500 physicians, including all of the key opinion leaders, many of whom are now routine users of EpiFix.

Speaker Change: We are excited to get this product launch underway and remain committed to organic product development and innovation and our market, leading central drive technology as we see this as an important component of our future growth.

Speaker Change: We also continued to make progress developing our Japanese business as we experienced another nice uptick in revenue during the fourth quarter.

Reflecting on the year, we accomplished a great deal in terms of foundation building in this country.

Speaker Change: We have trained over 500 positions, including all of the key opinion leaders many of whom are now routine users of <unk>.

Joseph H. Capper: We are in 70 accounts, including all of the top wound care hospitals. We have established reimbursement. And we have enrolled more than a third of the patients for post-market surveillance studies. Sales are accelerating nicely, making us optimistic about 2024 and beyond. Our next priority is to develop opportunities in adjacent markets to create additional growth drivers for the company. During the quarter, we continued to work internally and externally on options to expand our skin substitute portfolio beyond amniotic tissue to include xenografts and synthetics. Notwithstanding the superior handling qualities of our placental drug allografts, we see increasing the breadth of our offering as the most advantageous way to improve our addressable market opportunity as it opens up segments of the market where it is difficult, if not impossible, for us to compete today.

Speaker Change: We earned 70 accounts, including all of the top wound care hospitals establish reimbursement and we have enrolled more than a third of the patients for a post market surveillance study.

Speaker Change: Sales are accelerating nicely.

Speaker Change: US optimistic about 2024 and beyond.

Speaker Change: Our next priority is to develop opportunities in adjacent markets to create additional growth drivers for the company.

Speaker Change: During the quarter, we continued work internally and externally on options to expand our skin substitute portfolio beyond amniotic tissue to include zealot grass and or synthetics.

Speaker Change: Notwithstanding the superior handling qualities of our central drive allografts.

Speaker Change: See increasing the breadth of our offering as the most advantageous way to improve our addressable market opportunity as it opens up segments of the market, where it is difficult if not impossible for us to compete today.

Joseph H. Capper: We believe this approach will be highly complementary to our current business, allowing us to leverage our entire commercial infrastructure. In the last few quarters, we have spent a fair amount of time evaluating a variety of products and potential relationships that may allow us to accelerate the establishment of this growth project. And finally, our last objective has been to build a corporate discipline around expense management, rationalization, and continuous process improvement.

Speaker Change: We believe this approach will be highly complementary to our current business, allowing us to leverage our entire commercial infrastructure.

Speaker Change: And in the last few quarters, we have spent a fair amount of time evaluating a variety of products and potential relationships that may allow us to accelerate the establishment of this growth driver.

Speaker Change: We hope to have something to discuss with you in more detail in the near future.

Speaker Change: And finally, our last objective has been to build a corporate discipline around expense management.

Speaker Change: <unk> and continuous process improvement.

Joseph H. Capper: Efforts in this area led to the much-improved margins we realized as the year progressed, culminating in a Q4 gross margin of 84% and an adjusted EBITDA margin of 24%. If you had asked me earlier in 2023 if we could get the adjusted EBITDA margin to this level in less than a year, I would have considered that highly unlikely, given all the things that would have had to fall in place to get that done. But the team's impressive execution even surprised me.

Speaker Change: Efforts in this area led to the much improved margins, we realized as the year progressed, culminating in a Q4 gross margin of 84%.

Speaker Change: <unk> EBITDA margin of 24%.

Speaker Change: If you had asked me earlier in 2023, if we could get the adjusted EBITDA margin to this level in less than a year I would have considered that highly unlikely given all of the things that we would have had to fall in place to get that done.

Speaker Change: But the team's impressive execution EBIT surprise me.

Joseph H. Capper: I am truly impressed by how quickly they were able to maximize returns while still growing the business. During the fourth quarter, the company again did an excellent job delivering on these three strategic objectives. And our results clearly demonstrate that to be the case.

Speaker Change: I am truly impressed by how quickly they were able to maximize returns while still growing the business.

Speaker Change: During the fourth quarter. The company again did an excellent job delivering on these three strategic objectives.

Speaker Change: And our results clearly demonstrate that to be the case.

Joseph H. Capper: As I've mentioned on previous calls, we will continue to identify and execute against the most relevant road drivers for our business in order to ensure we have sustained long-term performance and create value for all MiMedx stakeholders. Before I turn the call over to Doug, I want to provide commentary on the Act Shield Bill and our path forward. As you will recall, late in the fourth quarter, we announced the receipt of a warning letter from the FDA relating to the regulatory classification of Axiofil and Only Action Films. Specifically, the agency's position is that Axiobuild does not meet the requirements as a Section 361 product and is therefore subject to enforcement as a Section 351 product.

Speaker Change: As I have mentioned on previous calls.

Speaker Change: We will continue to identify and execute against the most relevant growth drivers for our business in order to ensure we have sustained long term performance.

Speaker Change: Value for all by medics stakeholders.

Speaker Change: Before I turn the call over to Doug I want to provide commentary on axiom fill in our path forward.

Douglas C. Rice: As you will recall late in the fourth quarter, we announced the receipt of a warning letter from the FDA relating to the regulatory classification Vaxjo Phil and.

Douglas C. Rice: And only tax Joe Phil <unk>.

Douglas C. Rice: Specifically the agency's position as it axial tilt does not meet the requirements of section 361 product and is therefore subject to enforcement as a section 351 product.

Joseph H. Capper: Prior to the receipt of the letter, we were in the midst of filing the FDA's RFP, or Request for Designation, process when access failed. We have since responded to the warning letter and expect the RFP process to culminate towards the end of Q1, at which point we will have more clarity on our path forward. At the heart of this issue is the agency's position that we are more than minimally manipulating tissue when we transform it into a particulate, and as a result, the tissue can no longer be used for its intended purpose or for homologous use. We disagree with this position when it comes to Axiofil and do not believe the FDA has been consistent in the treatment of other human-derived particulates. Transforming the sheet into a particulate provides the physician increased flexibility when treating certain geometrically complex wounds.

Douglas C. Rice: Prior to the receipt of the letter we were in the midst of following the Fda's RFP or request for designation process when access Phil.

Douglas C. Rice: <unk> responded to the warning letter and expect the RFP process to culminate towards the end of Q1 at which point, we will have more clarity on our path forward.

Douglas C. Rice: At the heart of this issue in the agency's position that we are more than minimally manipulated tissue. When we transform it into a particular and as a result of tissue can no longer be used for its intended purpose for homologous use.

Douglas C. Rice: We disagree with this position when it comes to ask yourself and do not believe the FDA has been consistent in the treatment of other human derived particulars.

Douglas C. Rice: Transforming the Chile to a particular provides the physician increased flexibility when treating certain geometrically complex wounds and does not intend to modify how the tissue functions.

Douglas C. Rice: It is not intended to modify how the tissue functions and certainly does not somehow transform the product into a biological drug, which is what Section 351 is in place to regulate. Axial fill is intended for homologous use by supplementing damaged or inadequate integumental tissue. As you can imagine, the situation slowed down the adoption of Axiofil, which is unfortunate given its impeccable safety profile and the patient benefit derived from the product. However, feedback from physician users of AxioFuel has been excellent. We intend to exhaust all of our regulatory and legal options in an attempt to ensure continued access to this safe and effective product. However, it is important to note that revenue associated with the sale of Axiofil is not material for the company, and we believe we can replace some or all of it with other products if we can't reach an agreement with the FDA on the sale of our product. Now, Joe, and good afternoon to everyone on today's call. Thank you for joining us.

Douglas C. Rice: Certainly theres not somehow transform the product into a biologic drug which is what section 351 is in place to regulate.

Douglas C. Rice: <unk> Bill is intended for <unk> use by supplementing damaged or inadequate <unk> tissue.

Douglas C. Rice: As you can imagine the situation slowed down the adoption of axial fill which is unfortunate given its impeccable safety profile and the patient benefits derived product feed.

Douglas C. Rice: Back from the physician users of <unk> has been excellent.

Douglas C. Rice: We intend to exhaust all of our regulatory and legal options and an attempt to ensure continued access to a safe and effective product. However.

Douglas C. Rice: However, it is important to note that revenue associated with the sale of axiom is not material for the company and.

Douglas C. Rice: And we believe we can replace some or all of it with other products. If we can't reach an agreement with the FDA on the sale of our product.

Douglas C. Rice: Now, let me turn the call over to Doug for more details on our financial results.

Douglas C. Rice: Thank you Joe and good afternoon to everyone on today's call. Thank you for joining us it's great to be able to report a strong fourth quarter and full year results with you. All today as a reminder, many of the financial measures covered in today's call are on a non-GAAP basis. So please refer to today's earnings release for further information regarding our non-GAAP reconciliations on <unk>.

Douglas C. Rice: It's great to be able to report our strong fourth quarter and full year results with you all today. As a reminder, many of the financial measures covered in today's call are on a non-GAAP basis, so please refer to today's earnings release for further information regarding our non-GAAP reconciliations and disclosures. Additionally, during the fourth quarter, we bifurcated our GAP financial reporting to reflect the current and historical results of our recently disbanded regenerative medicine segment as discontinued operations.

Douglas C. Rice: Closures. Additionally, during the fourth quarter, we bifurcated, our GAAP financial reporting to reflect the current and historical results of our recently disbanded regenerative medicine segment as discontinued operations. Accordingly in my comments today on our fourth quarter and full year 2000, <unk> results are made on a continuing operations basis in <unk>.

Douglas C. Rice: Accordingly, my comments today on our fourth quarter and full year 23 results are made on a continuing operations basis and exclude the historical costs of the Regenerative Medicine Business Unit, which will be disbanded beginning in late June 2020. For a full discussion of the impact of these discontinued operations, please refer to our 10-K filing for the period ended December 31, 2023. Moving on to top line results, as Joe noted, our fourth quarter and full year 2023 net sales of $87 million and $321 million represented 17% and 20% growth compared to their respective prior year periods, as we capped off a very strong end to the year. In the case of Q4, our 17% year-over-year growth rate was the fifth consecutive quarter of strong double-digit growth we have seen and demonstrates both strong market adoption and a high level of commercial execution by our sales organization across each of our sites of service during the period.

Douglas C. Rice: The historical cost of the regenerative medicine business unit, which was just beginning in late June 2023 for a full discussion of the impact of these discontinued operations. Please refer to our 10-K filing for the period ended December 31 2023.

Douglas C. Rice: Moving on to topline results as Joe noted, our fourth quarter and full year 2023, net sales of $87 million and $321 million represented 17% and 20% growth compared to their respective prior year periods as we capped off a very strong end to the year.

Douglas C. Rice: In the case of Q4 or 17% year over year growth rate was the fifth consecutive quarter of strong double digit growth, we are seeing and demonstrates the strong market adoption and a high level of commercial execution by our sales organization across each of our sites of service in the period Youll recall, we launched our latest addition to our post acute.

Douglas C. Rice: You'll recall we launched our latest addition to our post-acute product portfolio at the beginning of the fourth quarter and began to see a nice uptake of the product in the physician office channel in the first quarter of its launch. We continue to see solid growth in the hospital channel and other sites of service, even in the face of tougher cops, as we anniversary the impact of products launched in late 2022. Our fourth quarter 2023 gross profit was about $73 million compared to $60 million last quarter.

Douglas C. Rice: Portfolio that'd be effect at the beginning of the fourth quarter and began to see a nice uptick of the product in the physician office channel in the first quarter of launch.

Douglas C. Rice: We continued to see solid growth in the hospital channel and other sites of service even in the face of tougher comps as we anniversary the impact of products launched in late 2022.

Douglas C. Rice: Our fourth quarter 2023, gross profit was about $73 million compared to $60 million last year. Our gross margin was 84%, reflecting a more than 300 basis point improvement from the fourth quarter of 2022.

Douglas C. Rice: Our gross margin was 84%, reflecting a more than 300 basis point improvement from the fourth quarter of 2022. These improvements were due to a beneficial mix of product sales as well as a continuation of the trend that began in early 2023 with our quality operations and regulatory teams' efforts to scale our manufacturing capabilities as efficiently as possible in order to keep up with the elevated demand levels we have seen for our products. Our team has certainly come a long way in improving our gross margin profile and reversing a trend of margin degradation we saw more than a year ago. Our focus moving forward is to maintain our gross margin percentage in the mid-80s over the long term with our current mix of products. Selling General and Administrative Expenses, or SD&A, were $54 million, or 63% of revenue, in the fourth quarter, compared to $50 million, or 67% in the prior year period.

Douglas C. Rice: These improvements were due to a beneficial mix of product sales as well as a continuation of the trend that began in early 2023 with our quality operations and regulatory teams efforts to scale, our manufacturing capabilities as efficiently as possible in order to keep up with the elevated demand levels, we are seeing for our products.

Douglas C. Rice: Our team has certainly come a long way in improving our gross margin profile and reversing a trend of margin degradation, we saw more than a year ago.

Douglas C. Rice: Our focus moving forward is to maintain our gross margin percentage in the mid <unk> over the long term with our current mix of products.

Douglas C. Rice: Selling general and administrative expenses or SG&A was $54 million or 63% in the fourth quarter compared to $50 million or 67% in the prior year period, although improved on a relative basis due primarily to operating leverage the increase in SG&A on a dollar basis was primarily a result of higher commissions we.

Douglas C. Rice: Although improved on a relative basis due primarily to operating leverage, the increase in SG&A on a dollar basis was primarily a result of higher commissions we paid in the quarter due to our higher sales levels and increased stock-based compensation expense, partially offset by our ongoing expense management efforts, which remain an ongoing priority of the company. For example, our fourth quarter R&D expenses were $2 million compared to $3 million in the prior year period. As we head into 2024 and beyond, our R&D team has a robust pipeline of potential products in various stages of development and additionally has been executing on a number of studies to build out the body of evidence for our product portfolio, including EpiEffect, and also our other products used within specific surgical applications. One recent example of this would be the craniotomy paper that was published late last year.

In the quarter due to our higher higher sales levels and increased stock based compensation expense, partially offset by our ongoing expense management efforts, which remain an ongoing priority of the company.

Douglas C. Rice: Our fourth quarter, R&D expenses were $2 million compared to $3 million in the prior year period, as we head into 2024 and beyond our R&D team has a robust pipeline of potential products in various stages of development and Additionally has been executing on a number of studies to build out the body of evidence for our product portfolio, including <unk>.

The effect and also our other products used within specific surgical applications.

Douglas C. Rice: One recent example of this would be recruiting estimate paper that was published late last year. We believe the combination of our investments in innovation and our commitment to continue generating the largest body of peer reviewed evidence using our products will serve us well this year and beyond.

Douglas C. Rice: We believe the combination of our investments and innovation and our commitment to continue generating the largest body of peer-reviewed evidence using our products will serve us well this year and beyond. Moving into 2024, I would expect our R&D spend to modestly increase on a relative basis to mid-single-digit. During the fourth quarter, we recognized a roughly $37 million income tax provision benefit, which primarily reflects the non-cash reversal of a valuation allowance which was previously recorded against substantially all of our deferred tax assets. This reversal reflects our positive operating results during 2023 in concert with the reevaluation of our historical results, excluding our discontinued operations. These deferred tax assets on the balance sheet will be utilized in the coming years to lower our cash tax liability. From a non-GAAP perspective, our long-term adjusted effective tax rate will continue to be 25%, which reflects our expected geographic footprint and operating budget.

Douglas C. Rice: Moving into 2024, I would expect our R&D spend to modestly increase on a relative basis to mid single digits.

Douglas C. Rice: During the fourth quarter, we recognized a roughly $37 million income tax provision benefit, which primarily reflects the noncash reversal of our valuation allowance, which was previously recorded against substantially all of our deferred tax asset. This reversal reflects our positive operating results during 2023 in concert with.

Douglas C. Rice: The reevaluation of our historical results, excluding our discontinued operations.

Douglas C. Rice: These deferred tax assets on the balance sheet will be utilized in the coming years to lower our cash tax liability.

Douglas C. Rice: From a non-GAAP perspective, our long term adjusted effective tax rate will continue to be 25%, which reflects our expected geographic footprint and operating model.

Douglas C. Rice: As a result of this tax provision benefit, our fourth quarter GAAP net income, inclusive of the results of our discontinued operations, was $53 million compared to a net loss of about $400,000 in the prior year. Fourth quarter 2023 adjusted EBITDA was $21 million, or 24% of net sales compared to an adjusted EBITDA of $7 million, or about 10% of net sales in the prior year, which reflects both our top-line success as well as the operating leverage areas that I previously mentioned. Turning to our liquidity, our fourth quarter and full year 2023 cash and cash flow results reflect the meaningful improvements we have made in our financial profile. At the end of Q4, the company had $82 million in cash, which exceeds our previously stated goal of ending the year above $80 million, considering the $9.5 million share repurchase we executed with Hayfinn in late October. Capital expenditures were $2 million in 2023.

Douglas C. Rice: As a result of this tax provision benefit our fourth quarter GAAP net income inclusive of the results of our discontinued operations was.

Douglas C. Rice: It was $53 million compared to a net loss of about $400000 in the prior year period.

Douglas C. Rice: Fourth quarter 2023, adjusted EBITDA was $21 million or 24% of net sales compared to an adjusted EBITDA of $7 million or about 10% of net sales in the prior year period.

Douglas C. Rice: Which reflects both our top line success as well as the operating leverage areas that are previously mentioned.

Douglas C. Rice: Turning to our liquidity, our fourth quarter and full year 2023, cash and cash flow results reflect the meaningful improvements we've made in our financial profile at the end of Q4, the company had $82 million of cash which exceeds our previously stated goal of ending the year above $80 million, considering the $9 $5 million share repurchase <unk>.

<unk> with <unk> in late October.

Douglas C. Rice: Capital expenditures were $2 million in 2023, However, we expect 2020 for it to be an investment year regarding our facilities and systems that will enable our growth. Accordingly, we expect 2020 for capital expenditures to be higher.

Douglas C. Rice: However, we expect 2024 to be an investment year regarding our facilities and systems that will enable our growth. Accordingly, we expect our 2024 capital expenditures to be higher. And finally, as Joe mentioned, in December and January, we took steps to meaningfully strengthen and improve our balance sheet with the conversion of the Series B preferred stock and our long-term debt refinancing. In light of our strong cash position and the strength of our continued cash flow generation, I am pleased to announce that earlier this week, we repaid the $30 million outstanding revolving portion of our credit facility, leaving only the $20 million term loan outstanding. We continue to have access to the $75 million revolver availability should opportunities arise for us to deploy capital moving forward.

Speaker Change: And finally as Joe mentioned in December and January we took steps to meaningfully strengthen and improve our balance sheet with the conversion of the series B preferred stock and our long term debt refinancing in light of the strong cash position and the strength of our continued cash flow generation I am pleased to announce that earlier this week.

Speaker Change: We repaid the $30 million outstanding revolving portion of our credit facility, leaving always a $20 million term loan outstanding we continue to have access to the $75 million revolver availability should opportunities arise for us to deploy capital moving forward and we are grateful to our lending partners as Joe noted citizens Bank and bank of <unk>.

Douglas C. Rice: And we are grateful to our lending partners, as Joe noted, Citizens Bank and Bank of America, for the flexibility this new facility provides. To close out my remarks, on a full year basis, our 2023 results, which featured 20% growth on the top line, over 100 basis points of gross margin expansion, $58 million, or 18% in adjusted EBITDA, and free cash flow of nearly $25 million, were major achievements for this company. We believe we will exit 2023 on solid financial footing, which, combined with our top-line momentum, expected cash flow generation, and our recently refinanced balance sheet, will enable our ability to take advantage of opportunities to strengthen and transform this country. I will now turn the call back to Joni.

Speaker Change: America for the flexibility of this new facility provides to close out my remarks on a full year basis, our 2023 results, which featured 20% growth on the top line over 100 basis points of gross margin expansion $58 million or 18% and adjusted EBITDA and free cash flow of nearly 25 million.

Speaker Change: We're major achievements for this company, we believe we exit 2023 on solid financial footing, which combined with our topline momentum expected cash flow generation and our recently refinanced the balance sheet will enable our ability to take advantage of opportunities to strengthen and transform this company I will now turn the call back to Jonathan.

Joseph H. Capper: Thanks Doug. As you just heard, we had another outstanding quarter, once again exceeding expectations. Revenue was up 17% in the quarter and 20% for the full year. Gross profit margin increased to 84%, and adjusted EBITDA grew to 21 million, or 24% in the quarter. We continued to build cash and took other steps to improve our overall financial profile, and we moved into the full commercial launch of EpiEffect. Over the course of 2023, we posted consistently improving performance, culminating with the strong Q4 results we've just highlighted. As we look to the horizon, we believe the company is very well positioned to build on this success. Naturally, our prior year comps will become increasingly challenging as we progress into 2024 after achieving such outstanding results last year.

Jonathan: Thanks, Doug as you just heard we had another outstanding quarter once again exceeding expectations revenue was up 17% in the quarter and 20% for the full year gross profit margin increased to 84% adjusted EBITDA grew to $21 million or 24% in the quarter. We continued to build cash and took other steps to improve our overall.

Jonathan: Financial profile.

Jonathan: Look into the full commercial launch of <unk>.

Jonathan: Over the course of 2023, we posted consistently improving performance, culminating with a strong Q4 results. We just highlighted as.

Jonathan: As we look to the horizon, we believe the company is very well positioned to build on the success naturally our prior year comps will become increasingly challenging as we progress into 2024 after achieving such outstanding results last year.

Jonathan: However, given our established momentum we expect revenue growth percentage to be at least in the low double digits with an adjusted EBITDA margin above 20% for the full year 2024.

Joseph H. Capper: However, given our established momentum, we expect revenue growth to be at least in the low double digits with an adjusted EBITDA margin above 20% for the full year 2024. Additionally, I fully expect that we will continue to execute our strategic plan and build a business capable of sustaining these growth rates for the foreseeable future. In closing, I would like to thank and congratulate the entire MiMedx team for putting an exclamation point on 2023 by closing out the fourth quarter in grand fashion. Throughout this past year, we took several crucial steps necessary to commence the transformation of MiMedx into a truly exceptional company that is the benchmark for our industry. Much work remains, but one cannot deny the meaningful progress made to date. Most importantly, our team is proud of the positive impact we make in the lives of countless people struggling with chronic and acute wound healing.

Jonathan: Additionally, I fully expect that we will continue to execute our strategic plan and build a business capable of sustaining these growth rates for the foreseeable future.

Jonathan: In closing I would like to thank and congratulate the entire <unk> team for putting an exclamation point on 2023 by closing out the fourth quarter in Grand fashion.

Throughout this past year, we took several crucial steps necessary commenced the transformation of <unk> into a truly exceptional company that is the benchmark wire industry.

Jonathan: Much work remains but one cannot deny the meaningful progress made to date.

Jonathan: Most importantly, our team is proud of the positive impact we make in the lives of countless people struggling with chronic and acute wound healing.

Jonathan: We never lose sight of that mission and it motivates US every day to strive for excellence.

Jonathan: I look forward to continuing to work together as we enter this next chapter of our story.

Speaker Change: That I would like to open the call to questions. Operator, we are now ready for our first question. Please proceed.

Operator: We never lose sight of that mission, and it motivates us every day to strive for excellence. I look forward to continuing to work with you as we enter this next chapter of our story. With that, I would like to open the call to questions. Operator, we are now ready for our first question. Please proceed. Thank you. If you'd like to ask a question, you may press star 1 on your telephone. A confirmation tone will indicate your line is... You may press star 2 if you would like to remove your question.

Speaker Change: Thank you ladies and gentlemen at this time, we'll be conducting a question and answer session.

Speaker Change: If you'd like to ask a question you May press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Operator: It may be necessary to pick up... Our first question comes from the line of Chase Knickerbocker with Craig Hallam. Thank you. Good afternoon guys, congrats on a great quarter and thanks for taking the questions. First, if we take a look at the 23% position office growth in the quarter, can you give me a sense of what portion of this growth was from EpiEffect? And then as we turn into 2024, do you think this tail end that you mentioned from the confusion around the LCD is kind of, you know, sustainable in the way that you can kind of hold on to that volume that you've gained in the confusion back half of the year here? Chase, this is Doug.

Speaker Change: Our first question comes from the line of Chase Knickerbocker with Craig Hallum. Please proceed with your question.

Chase Richard Knickerbocker: Good afternoon, guys congrats on the great quarter and.

Chase Richard Knickerbocker: Thanks for taking the question.

Chase Richard Knickerbocker: First if we take a look at the 23% physician office growth in the quarter can you give me a sense of what portion of this growth was from the effect and then as we turn into 2024 do you think this tailwind that you mentioned from the confusion around the LCD.

Chase Richard Knickerbocker: Sustainable in the way that you can kind of hold on to that volume that you've gained in the confusion in back half of the year here.

Chase Richard Knickerbocker: Changed at all.

Douglas C. Rice: I'll start and Joe can provide color, but Q4 was, we grew it all side to care. We were super excited about this continued execution. I would say that while we're not going to give numbers on the epi effect, we certainly enjoyed the launch and strong physician adoption of the epi effect. We also saw amni effect continue to grow a year after its launch. So we continue to capture, share, and also enjoy the market position that we're in with the market growth that we're experiencing. Yeah, it's tough to bifurcate right between how much of it was Chowin associated with the LCD noise settling down and kind of converting back to more routine ordering patterns versus the lift we got out of EpiEffect.

Chase Richard Knickerbocker: This is Doug I'll start and Joe can provide color but.

Douglas C. Rice: Q4 was.

Douglas C. Rice: We grew at all sites of care, we are Super excited about just continued execution.

Douglas C. Rice: I would say that while we're not going to give numbers on <unk>.

Douglas C. Rice: <unk>.

Joe: Certainly enjoyed the launch and strong physician adoption.

Joe: At <unk>, we also saw <unk> continued to grow a year.

Joe: After its launch.

Joe: So we continue to capture share and also enjoys a market position that we're in with the market growth that we're experiencing.

Speaker Change: Yes, it's tough to bifurcate right between how much of it was tailwind associated with.

Speaker Change: The LCD noise settling down into kind of converting back to normal.

Speaker Change: Routine ordering patterns.

Speaker Change: Versus.

Douglas C. Rice: We don't typically publish revenue by product SKU, but I would say think about the amount of momentum we had in the private office setting throughout the course of the year. So a lot of that was just sort of a shift in dynamics in that marketplace or in that portion of the market as CMS started to crack down on some of the behavior.

Speaker Change: We got out of F b effect, but.

Speaker Change: We don't typically.

Speaker Change: Published revenue by by product SKU.

But I would say think about it.

Speaker Change: The amount of momentum we have in the private office setting throughout the course of the year. So.

Speaker Change: A lot of that was just sort of a shift in dynamics in the marketplaces.

A portion of the market as CMS started to crack down on some of the behavior.

Joseph H. Capper: Later in the year, we had the proposed LCD that created some disruption, and that settled down as well. But those types of growth rates were pretty consistent for us throughout the course of the year, Chase. So we had pretty good momentum and talent all year in that setting.

Speaker Change: Later in the year, we had the proposed LCD that created some disruption in that settled down as well, but those types of growth rates or were pretty consistent for us throughout the course of the year shape. So we have pretty good momentum and tailwind all year in that setting.

Yeah.

Joseph H. Capper: Great, yeah, and that kind of leads into my next question. I mean, if we think about that core growth opportunity that you just kind of briefly mentioned there with, you know, more companies reporting ASPs in the private office and kind of leveling the playing field, where do you think we're at in that kind of growth? In that growth opportunity from a standpoint of, you know, all the companies reporting ASPs? Are we still, you know, halfway through?

Speaker Change: Great Yeah, and then that kind of leads into my next question.

Speaker Change: If we think about that core growth opportunity that you just kind of briefly mentioned there with kind.

Speaker Change: Kind of just more companies reporting asps and the private office and kind of playing field leveling.

Speaker Change: Where do you think we're at in that kind of growth.

Speaker Change: And that growth opportunity from a standpoint of all the companies reporting.

Speaker Change: Asp's or are we still halfway through and I ask is are those kind of growth rates that we've seen in 'twenty three kind of sustainable into 2024 and the private office.

Matt Notarianni: And I ask, you know, are those kind of growth rates that we've seen in 23 kind of sustainable into 2024 in the private office? I would think that we'd probably still have growth rates like that in the private office in the first part of the year because a lot of that's going to be associated, frankly, with the continued rollout of EpiEffect. The movement from as companies register more of their products on the CMS ASP price list. It's hard to say whether, you know, that's something that's outside of our control and really it's, It's a behavior or a trend we would like to see continue, but there was a pretty big movement over the course of the last year, so I'm hard to predict how much more of a movement we would have.

I would think we'd probably still have growth rates like that private office in the first part of the year because a lot of that's going to be associated frankly with the <unk>.

Speaker Change: Continued rollout of the effect.

Speaker Change: The movement from companies registered more of their products on the CMS ASP price lists are part of <unk>.

Speaker Change: Whether that's something that's outside of our control and really it's it's.

Speaker Change: It's a behavior or trend you would like to see continue.

Speaker Change: But it was a pretty big movement over a course of <unk>.

Speaker Change: Last year, some hard to predict how much more of a movement with have you got any.

Matt Notarianni: Matt, you got anything on that? Yeah, I mean, Chase, I think the only other thing maybe to think about is there's probably, I don't know, rough numbers, 80 or so SKUs that are now on the ASP list. We know from the LCDs and some of the other published documents out there that there are probably about 200 or so SKUs in the category, so not quite halfway there, but with each quarterly refresh of the ASP list, you're seeing 5, 6, 7, 8 get added each time.

Speaker Change: On that yes.

Speaker Change: Thanks.

Speaker Change: I think the only other thing maybe to think about it there's probably I don't know rough numbers 80, or so skus that are now on the ASP.

Speaker Change: We know from obviously the LCD is in some of the other published documents out there that there are probably about 200 or so skus in the category, so not quite halfway there, but with each quarter.

Speaker Change: Quarterly refresh the ASP lift youre seeing 5678 get at it each time.

Speaker Change: Yeah.

Matt Notarianni: Great. Yeah, that's helpful. Maybe just last one for me, one for you, Joe, and one for Doug.

Speaker Change: Great Yes, that's helpful.

Speaker Change: Maybe just last for me one for you Joe and one for Doug.

Speaker Change: Any additional.

Joseph H. Capper: Any additional commentary from any sort of engagement you've had with CMS after that, you know, LCD got scrapped about, you know, any kind of future changes to reimbursement in the market? And then, Doug, just on the EBITDA guidance for 24, to make the year look more towards kind of the 20% EBITDA margin kind of range, it looks like you've got a pretty decent pickup in SG&A. Maybe just talk me through what you expect from SG&A growth. So mine's kind of easy because we, frankly, we don't really know, Chase, what's going to happen.

Speaker Change: Commentary from any sort of engagement you've had with CMS after that LCD guys scrapped about any kind of future changes to reimbursement in the market and then Doug just on the EBITDA guidance for 'twenty four.

Douglas C. Rice: Make the year more look more towards kind of a 20% EBITDA margin.

Douglas C. Rice: <unk> kind of range it looks like you've got a model a pretty decent pickup in SG&A and maybe just talk me through what you expect G&A growth in the year.

Douglas C. Rice: So <unk> kind of easy because we frankly, we don't really know chase, what's going to happen.

Douglas C. Rice: As you know theres been a lot of talk about <unk>.

Joseph H. Capper: As you know, there's been a lot of talk about CMS doing something to address the cost in this category, all the way from bundling to enacting some sort of in-between measure like they attempted to do in the second half of last year. But we're not really sure. I think the message, though, for you should be, regardless of the outcome, we're probably better positioned than most people, if not all of our competitors, in that category, in that setting. We have not played the LCD game.

Douglas C. Rice: Students something to address the.

Douglas C. Rice: Costs in this category.

Douglas C. Rice: All the way from.

Douglas C. Rice: Bundling to enacting some sort of.

Douglas C. Rice: In between measure like they attempted to do.

Douglas C. Rice: In the second half of last year so.

Speaker Change: We're not really sure I think the message for you should be regardless of the outcome, we're probably better positioned than most people if not all of our competitors in that.

Speaker Change: In that setting we have not played the LCD gain.

Speaker Change: We just.

Douglas C. Rice: We just never had that approach to the market where we tried to maximize return or maximize price by gaming one payer channel versus another, or payer option versus another, I should say. So I think we're fairly well positioned, and we've run sensitivity analysis on worst-case scenarios if this is bundled, and I think we're in a pretty good position. Frankly, stability in that particular setting would be welcome, in my opinion, regardless of the near-term disruption it may cause. And then, Chase, with regard to EBITDA in 2024, we were certainly pleased with the way that we exited the back half of the year with 20 plus percent EBITDA in both Q3 and Q4. We think we're going to pick up on two out of our three P&L lines. We feel like there's room to improve with the great work that our quality operations regulatory team is doing and providing efficiencies. We'll see some benefit from MIX, but gross margin should improve some. I've provided some comments in my script that we expect mid-80s there.

Speaker Change: Never had that that approach to the market, where we tried to maximize our return to maximize price by gaming one payer channel versus another.

Speaker Change: For payer options versus another I should say, so I think we're fairly well positioned and we've run a sensitivity analysis on worst case scenarios. If this is bundled in.

Speaker Change: We think we're in a pretty good position.

Speaker Change: Frankly stability in that in that particular setting would be welcomed in my opinion, regardless of the near term disruption it may cause.

Speaker Change: And then chase with regards to EBITDA in 2024, we were certainly pleased with the way that we exited the back half of the year with 20 plus percent EBITDA in both Q3 and Q4.

Speaker Change: We're going to pick up.

Speaker Change: Two out of three P&L lines.

Speaker Change: We feel like there's room to improve with the great work that our quality operations regulatory team is doing.

Speaker Change: Providing efficiencies, we'll see some benefit from mix, but gross margin should.

Speaker Change: Proved somewhat provided some comments in my script that we expect the mid eighties there.

Douglas C. Rice: I would expect SG&A improvement on a relative basis. We do continue to invest in the sales force, and medical education training is going to be big for us. But with our spending discipline and the leverage we're getting from our top-line growth, I would expect some pickup in SG&A. From an R&D perspective, however, we exit the year at 2% on a continuing off basis for R&D.

Speaker Change: We would expect SG&A improvement on a relative basis, we do continue to invest in sales force and medical education training.

Speaker Change: It's going to be big for us, but with our spending discipline on the leverage we're getting from our topline growth I would expect some pickup on SG&A from an R&D perspective. However.

Speaker Change: <unk> of the year.

Speaker Change: 2% on a continuing ops basis.

Douglas C. Rice: I would have provided in my comments that we expect 2024 to be mid-single digits relatively for R&D as we invest in studies around the epi effect in Japan and other places just to continue to differentiate our product and provide, you know, the bodies of evidence and peer-reviewed journals to help with both our positions and our payer constituents. So all that really leads to 20 plus percent EBITDA guidance for next year. Got it.

Speaker Change: For R&D.

Speaker Change: I provided in my comments that we expect 2024 to be mid single digits relatively for R&D as we invest in studies around ERP effect in Japan, and other places just to continue to differentiate our product and provide the bodies of evidence in peer reviewed journals to help with both our physicians and our payer.

Speaker Change: Our constituents so all of that.

Speaker Change: Really.

Speaker Change: Blades to 20%.

Speaker Change: EBITDA guidance for for next year.

Joseph H. Capper: Thanks guys and congrats again on a great quarter. Thank you. Thanks, Chase. Our next question comes from the line of Carl Byrnes with Northland Capital Markets. Thanks, and congratulations.

Speaker Change: Okay.

Speaker Change: Got it thanks, guys and congrats again on the great quarter.

Speaker Change: Thanks, Jason.

Speaker Change: Our next question comes from the line of Carl Byrnes with Northland Capital markets. Please proceed with your question.

Carl Edward Byrnes: Thanks, Congratulations on that.

Carl Edward Byrnes: And again, thank you for the questions here. First, how should we look at or think about the conversion rate of EBITDA to free cash flow with, I think, for the quarter 24? and EBITDA about $10 million with respect to free cash, and then I have a follow-up. Again, I am pleased with our execution. And really, the big event for us was late last summer when we suspended our NEED-OA program, which really improved our cash profile and cash generation. Our free cash flow conversion was roughly 50% in Q4.

Carl Edward Byrnes: Thank you for the question here.

Carl Edward Byrnes: First how should we look at or think about the conversion rate of EBITDA to free cash flow.

Carl Edward Byrnes: For the quarter 24.

Carl Edward Byrnes: Million.

Carl Edward Byrnes: Million in EBITDA about $10 million with respect to free cash flow.

Speaker Change: Follow up as well.

Carl Edward Byrnes: Again pleased with our execution and really the.

Carl Edward Byrnes: The big event for US was late last summer when we suspended our knee OA program really improved our cash profile and cash generation, our free cash flow conversion was roughly 50% in Q4 as we went from EBITDA to free cash flow of $10 million.

Douglas C. Rice: As we went from EBITDA to free cash flow of $10 million for really the back half of the year, we're at 56%. So as we sort of move into 2024, while we don't guide cash flow, we expect improvements there. Joe, in his comments, alluded to the efficiencies around interest expense being $6 million, over $6 million last year.

Speaker Change: Really the back half of the year, we're at 56% so.

Speaker Change: As we sort of move into 2024, and while we don't guide cash flow, we expect improvements there Joe in his comments alluded to the efficiencies around.

Speaker Change: Interest expense was $6 million over $6 million last year, but we expect that to be much slower this year.

Joseph H. Capper: We expect that to be much slower this year. We've got a lot of our legacy legal issues behind us, and professional fee spend, and so on will go down. Together with our top-line growth and strong EBITDA margins, we expect free cash flow conversion to continue to improve. Great, thanks. And then, with respect to getting into xenografts and synthetics, would that be an area where you look to develop new products, or would it be in the nature of, or potentially a combination of both? More than likely a combination of both.

Speaker Change: We've got a lot of our legacy.

Speaker Change: Legal issues behind us professional fee spend.

Speaker Change: And so on.

Speaker Change: It will go down.

Speaker Change: Together with our top line growth and strong EBITDA margins, we expect free cash flow conversion to continue to improve.

Speaker Change: Great. Thanks, and then.

Speaker Change: With respect to getting it to xenograft and synthetics would that be an area, where you'd look to develop new products and would it be M&A driven or essentially a combination of both.

Speaker Change: But more than likely a combination of both.

Joseph H. Capper: So we have efforts ongoing both internally and externally to expand that Skin Substitute portfolio to include the products you just mentioned. Got it. Great. And the last question, and thanks again.

Speaker Change: So we have efforts ongoing both internally and externally to expand and skin substitute portfolio to include the products you just mentioned.

Speaker Change: Got it great and the last question and.

Speaker Change: And thanks again.

Joseph H. Capper: With respect to new products, are you still on track to add, you know, one to two new products per year? Should we be looking at an additional product addition this year and then a couple additional products in 2025? I think it's an aspirational goal. If we get one to two out of the year, I think that's pretty good. But when you have a, right now, we're kind of focused on the launch that's ongoing, and we have multiple products in development, in process, if you will. When you stage them is a function of when they're ready, and then, really, when you want to move them into commercial launch based on other priorities you may have.

Speaker Change: With respect to new products or are you still on track to add one to two new products per year. So should we be looking at an additional product niche in this year and then a couple of additional products and 25.

Speaker Change: I think it's an aspirational goal if we get one to two out a year I think that's pretty good.

Speaker Change: But when you have a well right now we're kind of focused on the launch that's ongoing.

Speaker Change: And we have multiple products in development.

Speaker Change: And process. If you will when you stage them as a function of when they are ready and then really when you want to move them into commercial launch based on other priorities you might have so I think it's an aspirational goal.

Joseph H. Capper: So, yeah, I think it's an aspirational goal. Got it. Thanks. And once again, congratulations on that incredible car.

Speaker Change: Yeah.

Speaker Change: Got it thanks, and once again congratulations on the incredible car.

Carl Edward Byrnes: Thanks, Carl. Thanks, Carl. Our next question comes from the line of R.K. with H.C. Wainwright. Thank you. Thank you. Thank you. Thank you. Thank you. This is R.K. from Head to End Light.

Speaker Change: Thanks Carl.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of RK with H C. Wainwright. Please proceed with your question.

RK: Thank you this is al Qaeda hits it anyway.

Joseph H. Capper: A couple of quick questions. Just trying to see if you can give additional color on the launch of FSx in Japan. And also, when would you think that the market will become meaningful? Yeah, what we talked about today was really kind of activity-based results, mainly because the numbers are still relatively small for us. And as you know, as we've spoken about in the past, we're a first mover in this market. So there's a lot of kind of missionary work that needs to be done from an education standpoint, from a reimbursement standpoint, et cetera.

RK: Couple of quick questions.

RK: Just trying to see if you can give additional color on the launch of <unk>.

RK: In Japan.

Speaker Change: And also.

RK: Then when would you think.

RK: That that market will become meaningful for you folks.

Speaker Change: Yeah, we talked about today was really kind of activity based results, mainly because the numbers are still relatively small for us.

RK: As you know as we've spoken about in the past were a first mover in this market. So theres a lot of kind of missionary work that needs to be done from an education standpoint from a reimbursement standpoint et cetera. We were really pleased with the progress we made throughout the course of the year. The number of physicians that were training the number of hospitals that started debridement the prompt.

Joseph H. Capper: We were really pleased with the progress we made throughout the course of the year. The number of physicians that were trained, the number of hospitals that started to bring the product on board, essentially all the largest room care centers in the country are now touching the product. And we have some of the largest, most prestigious key opinion leaders that are ordering the product and reordering the product. Reimbursement is in place. So it's just in the early stage. Now you have to wait for results to come back and for doctors to get used to using the product.

RK: Onboard essentially all the largest.

RK: <unk> care centers in the country.

Speaker Change: Now touching the product and we have some of our largest.

Speaker Change: Most prestigious key opinion leaders.

Speaker Change: Our order in the product and we were in the product reimbursement is in place so.

Speaker Change: It's just early states now you have to wait for results to come back on for.

Speaker Change: For doctors to get used to using the product.

Joseph H. Capper: And whenever you're launching a new product, it takes a while. Whenever you're launching a first-of-its-kind product, it takes a bit longer, and when you're doing it in a business culture that moves at a different pace than what we're used to, it takes even longer. But I'm so pleased with the activity. It doesn't cost us a lot of money to be there.

Speaker Change: Whenever you're launching a new product it takes a while whenever you're launching a first of its kind product that takes a bit longer than when you're doing it in a business culture that moves.

Speaker Change: Pace than what we're used to it takes even longer so pleased with the activity it doesn't cost us a lot of money to be there.

Joseph H. Capper: It won't take long before we're at a point where it's potentially profitable or at least break-even. So it's not a big resource stream for us, and we think it's a smart investment given where we are. In terms of when it will be a material contributor, I don't know. It's probably going to take a bit longer before we can start talking about it in terms of revenue contribution. And then the other question, another strategy question, you have been talking about this adjacent market strategy for a couple of quarters now. So trying to figure out when we would have some tangible products in that field, either organically or inorganically, and how, you know, is this a different leg of growth that, you know, we should expect? It only has to happen once.

Speaker Change: Sure.

Speaker Change: It won't take long before or we're at a point, where we are.

Speaker Change: Potentially accretive or at least breakeven so its.

Speaker Change: It's not a big resource drain for us and we think it's smart investment given where we are at in terms of when it will be a material contributor I don't know if it's.

Speaker Change: Are we going to take still a bit longer before we can start talking about it in terms of revenue contribution.

Speaker Change: I can tell you that the percent increases are phenomenal above 2% increases off of a small number so it's going to take awhile RK.

Speaker Change: And then the other question I know the.

Speaker Change: Strategy question in New York, you had been talking about this just from a market strategy for a couple of quarters now.

Speaker Change: So trying to figure out like when we would have some tangible products in that field.

Speaker Change: Either organically or Inorganically.

Speaker Change: Hum.

Speaker Change:

Speaker Change: You know is this a different leg of growth that we should expect it.

Speaker Change: To happen once.

Speaker Change: <unk>.

Speaker Change: Current momentum gained in the private office.

Speaker Change: And it gets to that.

Speaker Change: It gets to a plateau.

Speaker Change: Hey, Jim.

Speaker Change: So.

Jim: I got most of that I think it was around timing on when we would have new product introductions associated with potential.

Joseph H. Capper: You know, the current momentum that you'll gain in the private office gets to a plateau. So I've got most of that. I think it was around timing on when we would have new product introductions associated with potential at www.thevenusproject.com, and leverage the entire commercial infrastructure we have in place and move more through that channel. So that's that was the basic rationale there in terms of timing. You know, hopefully sooner rather than later, but I can't give you any more specifics anything more specific than that, [inaudible] It's okay. Our next question comes from the line of Anthony Petrone with Mizzouho. Please proceed with your question. Thanks, and Kareem, that's another solid quarter here. Maybe, Joe, start a little bit with, you know, wound care. U.S.

Speaker Change: External agreements around he knows our synthetics right. So why do you prioritize that and prioritize that because.

Speaker Change: Those two areas of the skin substitute market make up about half of it and.

Speaker Change: The market that we're in today as you know is only the amniotic space, which is a little bit less than half of the total skin substitute market. So it just makes good natural sense for us.

Speaker Change: Two.

Speaker Change: Leverage the entire commercial infrastructure, we have in place and move more through that channel.

Speaker Change: That was the basic rationale there.

Speaker Change: In terms of timing.

Speaker Change: Hopefully sooner rather than later, but I can't give you any more specific anything more specific than that.

Speaker Change: Okay. Thanks for taking my questions.

Speaker Change: Thanks, Okay.

Speaker Change: Our next question comes from the line of Anthony Petrone with Mizuho. Please proceed with your question.

Anthony Charles Petrone: Alright, thanks, and congrats on another solid quarter here.

Anthony Charles Petrone: Maybe Joe start a little bit with wound care U S physician office wound care.

Joseph H. Capper: Physician Office wound care, you know, going back to some of the trends last quarter that, you know, given the sort of shifts that we saw from Novitas, First Coast, and some other local MACs, there was a little bit of confusion there in terms of ordering patterns. Now we have a few months here to sort of let this sit in, to where I guess we are in this transition for reimbursement and wound care. So can you give us a little bit of an update on ordering patterns? Did it normalize to some extent in the fourth quarter? And probably more importantly, how are those ordering patterns going as we sit here exiting February? And then I'll have a couple of follow-up questions. Yeah, the ordering patterns did normalize.

Anthony Charles Petrone: Back to some of the trends last quarter that you.

Anthony Charles Petrone: Given the sort of shifts that we saw from Nova costs first coast and some other.

Speaker Change: Local macs that there was a little bit of confusion there in terms of ordering patterns.

Speaker Change: There's a few kind of.

Speaker Change: Months here to sort of let the sedan as to where I guess, we are in this transition for reimbursement in wound care. So can you give us a little bit of an update on ordering patterns.

Speaker Change: Did it normalize to some extent in the fourth quarter.

Speaker Change: And probably more importantly, how are those ordering patterns as we sit here exiting February and then I'll have a couple of follow up questions.

Speaker Change: Yes ordering patterns did normalize.

Joseph H. Capper: And then, you know, we also got a little bit of an accelerant because we had a new product launch in the position office. As we talked about, we start the year with seeing similar trends as we start the new year. Obviously, our comps are going to be a bit more challenging in 2024, but we did see very similar trends through the first part of the year. First part of the quarter, I should say. Anthony, well, this is Doug.

Speaker Change: And then we.

Speaker Change: Also got a little bit of an accelerant, because we had a new product launch in a physician office as we talked about.

Speaker Change: To start the year, we're seeing similar trends as we start the new year, obviously, our comps are going to be a bit more challenging.

Speaker Change: In 2024, but we did see a very similar trends through the <unk>.

Speaker Change: The first part of the year first part of quarter I should say.

Douglas C. Rice: While we're on the topic, I'll say that Q4 also benefited from just, we saw, you know, procedural volume increases as we, as a company and as a top line sort of cadence perspective would say that seasonality is returning. And so Q4 certainly benefited from that and also sort of vis-a-vis our 2024 guidance, if you think about our cadence, I think Q1 is going to be back to sort of the traditional seasonality there where Q1, you know, deductibles reset and things like that will be our lowest quarter and we'll finish with Q4 being our strongest quarter. But I wanted to remind everybody that.

Speaker Change: Anthony This is Doug while we're on the topic I'll tell you that Q4 also benefited from just.

Speaker Change: Procedure volume increases as we are.

Speaker Change: The company.

Speaker Change: Topline that sort of cadence perspective, let's say that seasonality is returning and so Q4, certainly benefited from that and also sort of vis vis two.

Speaker Change: 2024 guidance. So if you think about our cadence I think Q.

Speaker Change: Q1 is going to be back to.

Speaker Change: Sort of the traditional seasonality there were Q1.

Speaker Change: Deductibles reset and things like that will be our lowest quarter and we'll finish with Q4 being our strongest quarter, but I wanted to remind everybody about.

Douglas C. Rice: Very, very helpful and a couple of quick follow-ups. One would just be when we think about just, you know, next horizons and updates from the local MACs. Will they be in the CMS proposal season, June-July, or will they be off-cycle?

Speaker Change: Very helpful.

Speaker Change: Couple of quick follow ups, one would just be when we think about just next horizons and updates.

Speaker Change: From a local Max will they be with the CMS proposal season June July or will they be off cycle, just latest thoughts there and the last one just maybe a recap from Joe and our dog on sort of the M&A wallet.

Joseph H. Capper: Just the latest thoughts there. And the last one, just maybe a recap from Joe and Doug on sort of the M&A wallet. The cash balance is certainly healthy. You can tap, obviously, the credit markets.

Speaker Change: Cash balances certainly healthy you can tap.

Speaker Change: Obviously, the credit markets, just thinking about the size of acquisition.

Joseph H. Capper: Just thinking about the size of acquisition targets that we should be thinking about from the inorganic side. Yes, my guess on the CMS would be the annual cycle will probably be the most important thing to talk about or any potential changes. That's probably where we're going to see it. The MACs can do anything they want off-cycle, as we saw last year. But given the way that ended up, my guess is it's probably going to be more tied to the annual cycle. But we really don't know, right?

Speaker Change: Targets that we should be thinking about from the inorganic side. Thanks.

Speaker Change: Yes, My guess on on the CMS would be the annual cycle will probably.

Speaker Change: If there's anything to talk about any potential changes is probably where we're going to see it fails. The Max can do anything one off cycle as we saw last year, but given the way that ended up my guess is it's probably going to be more tied to the annual cycle, but no. We really don't know as I indicated it can do stuff off cycle.

Joseph H. Capper: As I indicated, they can do stuff off-cycle, so we'll see how it unfolds this year. In terms of M&A, you're right, the financial profile balance sheet is much improved over the course of the year. So it gives us a little flexibility.

Speaker Change: We'll see how it unfolds this year.

Speaker Change: In terms of M&A, you're right the financial profile, our balance sheet is much improved over the course of the year. So it gives us a little flexibility in terms of size of deals, but at this point, we wouldn't restrict ourselves.

Joseph H. Capper: In terms of the size of deals, at this point, we wouldn't restrict ourselves. Obviously, if we did anything in terms of M&A, it would be to accelerate a strategic plan. So, it would have to fit strategically and culturally. It would have to be accretive or lead to accretion in a given amount of time.

Speaker Change: Obviously, if we did anything in terms of M&A would be to accelerate our strategic plan. So a it would have to fit strategically and culturally and would have to be accretive or lead to accretion in a given amount of time.

Joseph H. Capper: And we wouldn't overburden the organization. So it's hard to put a ceiling on it at this point. But I don't think it would be very productive.

Speaker Change: And we wouldn't overburden the.

Speaker Change: Organization.

Speaker Change: So it's hard to say.

Speaker Change: It would.

Speaker Change: Hard to put brackets around it at this point.

Joseph H. Capper: I would just say, if it makes sense, we'll take a look at it. I appreciate that. So hopefully, you're seeing it. Anthony, the way we've run the business over the last 12 months and probably even more so since Doug has joined the team, we tend to have a fairly disciplined approach to both the P&L and the balance sheet, and that does give you greater flexibility to scale the business over time, but we certainly wouldn't revert back to that. We wouldn't change our behavior around that kind of financial discipline because we like a new shiny object that's out there.

Speaker Change: I think it was very productive I would just say if it's if it makes sense, we'll take a look at it.

Speaker Change: I appreciate that thank you.

Speaker Change: So hopefully you are seeing.

Speaker Change: Anthony the way, we run the business over the last 12 months and probably even more so since the dog has joined the team.

Speaker Change: We tend to have a fairly disciplined approach to both the P&L and the balance sheet and it does give you greater flexibility to scale the business over time, but.

Speaker Change: We certainly wouldn't revert back to that.

Speaker Change: <unk> change our behavior.

Speaker Change: Around that kind of financial discipline, because we like the new shiny object that's out there.

Anthony Charles Petrone: Absolutely. I appreciate that. Our next question comes from the line of John Vandermosten with Zax. Please proceed with your question. Great and good afternoon, everybody, and thank you for the low double-digit revenue growth guidance. I wanted to ask another question on that, regarding how the trend might be. Should we expect an even increase over the year, or should we expect some quarters to be a little bit stronger than others on a year-over-year basis with that low-dose guide? It's a good question, John. This is Doug.

Speaker Change: Sure.

Speaker Change: Slowly I appreciate that thank you Joe.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Jon Vander motion with sacks. Please proceed with your question.

John D. Vandermosten: Great and good afternoon, everybody and thank you for the to low double digit revenue growth guidance.

John D. Vandermosten: I wanted to ask another question on that regarding how the trend might be should we expect them, even even increase over the year or should we expect some quarters to be a little bit stronger than others on a year over year basis with that guidance.

Douglas C. Rice: I can start and provide color, but... Obviously, we were excited to exit last year at 17% and close the whole year at 20%. But we knew that as we introduced new products, we were going to sort of slow that headline rate going into 2024. And we've talked about sort of low double digits as a kind of sustainable growth rate for us in 2024 will be no exception. From a cadence perspective, I would not expect the growth rate to be, I would expect accelerating revenue as we get through the year and new products continue to ramp at the rate and the rate we've talked about and with growth there. But I would expect that the first quarter would be, you know, our lowest, returning to traditional seasonality.

John D. Vandermosten: Guidance.

Speaker Change: It's a good question.

John D. Vandermosten: This is Doug I can start there could provide color but.

Douglas C. Rice: Obviously excited to exit last year at 17% and close the deal.

Douglas C. Rice: A whole year of 20%, but we knew that as we anniversaried knee products, we were going to sort of slow that headline rate going into <unk>.

Douglas C. Rice: 2024, and we've talked about sort of low double digits as a sort of sustainable.

Douglas C. Rice: Great for Us in 2024 will be no exception from a cadence perspective, I would not expect the growth rate to be I would expect accelerating revenue as we get through the year.

Douglas C. Rice: New products continue to ramp.

Douglas C. Rice: EMEA effect.

John D. Vandermosten: We've talked about.

John D. Vandermosten: With growth there, but I would expect.

John D. Vandermosten: The first quarter would be.

John D. Vandermosten: Our lowest returning to traditional <unk>.

Douglas C. Rice: And certainly, that the back half of the year will be the majority of our revenue. Okay, got it. And then looking at the balance sheet, you see some movement there, especially in the debt line, and I think we'll probably replace that $48 million with $28 million by the end of the first quarter. Does that sound right? Well, it would be more like 18.

John D. Vandermosten: Seasonality and certainly.

John D. Vandermosten: The back half of the year will be the majority of our revenue.

Speaker Change: Okay got it and then looking at the balance sheet you had some movement there, especially in the in the deadline and I think we'll probably replace that $48 million with a $28 million by the end of the first quarter or is that does that sound right to space or will it be more like 18, we repaid the $30 million of revolver.

Douglas C. Rice: We repaid the $30 million Revolver just a few days ago, and that leaves us with $20 million of Term Loan A outstanding. And we're excited that we finished the year with over $80 million of cash on a sort of net debt or net cash basis. We were $30 million positive there and excited to have the ability to reach back out for more dry powder with the new facility and the $75 million capacity if and when we need it. Okay, and it sounds like you'll have that $75 million available and that the cash balance will be pretty much the same as it was at the end of the fourth quarter. Well, we repaid $30 million, so on a net basis, yeah, I would expect... Well, we typically burn more cash in the first quarter, too. We do, so it's an important, important play.

John D. Vandermosten: Just a few days ago and that leaves us with $20 million of term loans outstanding and <unk>.

John D. Vandermosten: We're excited that we finished the year with over $80 million of cash on a sort of net debt our net cash basis, we were <unk>.

John D. Vandermosten: $30 million positive there.

John D. Vandermosten: We excited the ability to to reach back out for more dry powder with the.

John D. Vandermosten: The new facility in the $75 million capacity.

John D. Vandermosten: If and when we need it.

Speaker Change: Okay, and it sounds like you'll have that $75 million available and and that the cash balance will be pretty much. The same as it was at the end of the fourth quarter at the end of the first quarter.

Speaker Change: Well, we repaid $30 million on a net basis.

Speaker Change: Yes, I would expect.

Speaker Change: Well, we typically burn more cash in the first quarter two we do that's important.

Douglas C. Rice: Thank you. Thank you. Okay, got it. And then, looking at what you announced about a quarter ago, MediWound, and the study that they were putting forward, has there been any progress on that? And how is it working with them?

Speaker Change: An important point.

Speaker Change: Okay got it got it and then looking at.

Speaker Change: You announced a about a quarter ago Betty wound.

Speaker Change: And that are in the study that they were putting forward has there been any progress on that and how is it working with them and any updates on on how that collaboration is going.

Joseph H. Capper: And any updates on how that collaboration is going? We're, I think, just starting to get the sites up and running. Early stage. And that was phase three, if I remember my reading on that. Yeah, that's right. It was. And then looking at Japan, just one more question there.

John D. Vandermosten: We're I think we're just starting to get the sites up and running.

John D. Vandermosten: So it's early stage.

John D. Vandermosten: And that was a phase III.

John D. Vandermosten: If I remember my reading on that is that yes, that's right. It was.

Speaker Change: Okay very good and then looking at Japan, just one more question. There we did have a few on that.

Joseph H. Capper: We did have a few on that. I think you mentioned that over 500 physicians were trained, and there were 70 accounts that were penetrated. What was the penetration rate?

John D. Vandermosten: You mentioned that over 500 physicians are trained and they were 70 accounts that were penetrated what is the penetration rate I know you have relatively low sales, but I'm just wondering how much further you can go in terms of physician training and also formularies I suppose or supply.

Joseph H. Capper: I know you have relatively low sales, but I'm just wondering how much further you can go in terms of physician training and also formularies, I suppose, or supply being available to supply those. What's that? It's still relatively low.

John D. Vandermosten: Being available to supply those dispositions, what's that penetration rate.

Speaker Change: It's still relatively low.

Joseph H. Capper: We've gotten to a lot of the big facilities and the key opinion leaders, but we need to go deeper into these accounts, and we need to, you know, start to drive greater penetration in terms of usage, the number of patients that are getting access to the product. So, you know, still working through the normal dynamics, as you can imagine. It's a higher reimbursement than anything else they're used to in terms of the current standard of care.

Speaker Change: Got into a lot of the big facilities and the key opinion leaders, but we need to go deeper into these accounts.

Speaker Change: And we need to start to drive greater penetration in terms of usage the number of patients that are there.

Speaker Change: Getting access to the product so.

Speaker Change: Still working through the normal dynamics, you can imagine, it's a higher reimbursement and anything else they're used to in terms of current standard of care. So that takes a bit to digest that they're going to want to see ROI on that.

Joseph H. Capper: That takes a bit of time to digest, and they're going to want to see ROI on that. So, you know; it just takes time. Got it. Thanks, John. If there are no further questions in the queue, I'd like to hand it back to you, Joe Capper, for closing remarks. Thank you, operator, and thank you, everybody, for your questions and your continued interest in the company. We look forward to speaking to you again at the end of the first quarter, which will be in a few months.

Speaker Change: It's just takes time.

Speaker Change: Okay got it thank you guys.

Speaker Change: Thanks, Sean.

Speaker Change: There are no further questions in the queue I'd like to hand, it back to you Joe Capper for closing remarks.

Speaker Change: Yes.

Joseph H. Capper: Thank you operator, and thank you everybody for your questions and your continued interest in the company. We look forward to speaking to you again at the end of first quarter, which will be in a few months. Thanks, everybody have a great evening.

Joseph H. Capper: Thanks, everybody. Have a great evening. Ladies and gentlemen, this does conclude today's program, and have a wonderful day.

Joseph H. Capper: Yeah.

Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.