Q2 2024 Owens & Minor Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Owens & Minor 2nd Quarter 2024 Earnings Conference Call. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Jackie Marcus, Investor Relations. Jackie, you may begin.

Unknown Attendee: Good day, and thank you for standing by.

Good day, and thank you for standing by welcome to the Owens <unk> minor second quarter 'twenty 'twenty four earnings conference call. Please be advised that today's conference call is being recorded I would now like to hand, the conference over to your first speaker today, Jackie Marcus Investor Relations Jackie.

Unknown Attendee: Welcome to the Owens & Minor second quarter 2024 earnings conference call. Please be advised that today's conference call is being recorded.

Jacqueline Marcus: I would now like to hand the conference over to your first speaker today. Jackie Marcus, Investor Relations.

Jacqueline Marcus: Jackie, you may begin. Thank you, operator. Hello everyone and welcome to the Owens & Minor second quarter 2024 earnings call. Our comments on the call will be focused on the financial results for the second quarter of 2024, as well as our outlook for 2024, both of which are included in today's press release. The press release, along with the supplemental slides, are posted on the investor relations section of our website.

Speaker Change: You may begin.

Speaker Change: Thank you operator, Hello, everyone and welcome to the Arlington minor second quarter 2024 earnings call.

Jackie Marcus: Hello everyone, and welcome to the Owens & Minor Second Quarter 2024 Earnings Call. Our comments on the call will be focused on the financial results for the second quarter of 2024, as well as our outlook for 2024, both of which are included in today's press release. The press release, along with the supplemental slides, is posted in the Investor Relations section of our website. Please note that during this call, we will make forward-looking statements.

Speaker Change: Our comments on the call will be focused on the financial results for the second quarter of 2024 as well as our outlook for 2024, both of which are included in today's press release.

Speaker Change: The press release, along with the supplemental slides are posted on the Investor Relations section of our website.

Jacqueline Marcus: Please note that during this call we will make forward-looking statements. The matters addressed in these statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied here today. Please refer to our FEC filing for a full description of these risks and uncertainties, including the risk factors section of our annual report on Form 10-K and quarterly reports on Form 10-Q.

Speaker Change: Please note that during this call we will make forward looking statements.

Jackie Marcus: The matters addressed in these statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied here today. Please refer to our SEC filings for a full description of these risks and uncertainties, including the risk factors section of our annual report on Form 10-K and quarterly reports on Form 10-Q. In our discussion today, we will reference certain non-GAAP financial measures, and information about these measures and reconciliations to the most comparable GAAP financial measures is included in our press release.

Speaker Change: The matters addressed in these statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied here today.

Please refer to our SEC filings for a full description of these risks and uncertainties, including the risk factors section of our annual report on Form 10-K, and quarterly reports on Form 10-Q.

Jacqueline Marcus: In our discussion today, we will reference certain non-GAAP financial measures, and information about these measures and reconciliation to the most comparable GAAP financial measures are included in our press release.

Speaker Change: In our discussion today, we will reference certain non-GAAP financial measures and information about these measures and reconciliations to the most comparable GAAP financial measures are included in our press release.

Jacqueline Marcus: Today I am joined by Ed to seek out Owens & Minor's President and Chief Executive Officer and John Leon, the Interim Chief Financial Officer and Senior Vice President of Finance and Corporate Treasurer.

Jackie Marcus: Today I am joined by Ed Pesicka, Owens & Minor's President and Chief Executive Officer, and John Leon, the Interim Chief Financial Officer and Senior Vice President of Finance and Corporate Treasurer. I will now turn the call over to Ed.

Speaker Change: Today I'm joined by extra Speaker wasn't Myers, President and Chief Executive Officer, and John Leon The interim Chief Financial Officer, and senior Vice President of Finance and corporate Treasurer.

Edward Pesicka: I will now turn the call over to Ed. Thank you, Jackie. Good morning, everyone, and thank you for joining us on the call today. It's been an exciting past few weeks here at Owens & Minor. Last Tuesday, we shared with all of you our definitive agreement to acquire ROTEC Health Care Holdings Incorporated. The addition of ROTEC aligns with our strategy to strengthen and expand our existing patient direct business as one of the premier suppliers to support home-based care. Combining our organizations allows us to improve our capabilities, broaden our reach, and ultimately improve our service levels to patients, providers, and payers.

Speaker Change: I'll now turn the call over to Ed.

Ed Pesicka: Thank you, Jackie. Good morning, everyone, and thank you for joining us on the call today. It's been an exciting past few weeks here at Owens & Minor. Last Tuesday, we shared with all of you our definitive agreement to acquire Rotec Healthcare Holdings, Inc. The addition of RoadTech aligns with our strategy to strengthen and expand our existing patient-directed business as one of the premier suppliers to support home-based care. Combining our organizations allows us to improve our capabilities, broaden our reach, and ultimately improve our service levels to patients, providers, and payers.

Ed: Thank you Jackie and good morning, everyone and thank you for joining us on the call today, it's been an exciting past few weeks here at Owens <unk> minor last Tuesday, we shared with all of you our definitive agreement to acquire road Tech Healthcare Holdings incorporated.

Speaker Change: The addition of <unk> aligns with our strategy to strengthen and expand our existing patient direct business is one of the premier suppliers to support home based care.

Speaker Change: Combining our organizations allows us to improve our capabilities broaden our reach and ultimately improve our service levels to patients providers and payers.

Edward Pesicka: And furthermore, it accelerates our case to achieve our long-term patient direct revenue target of $5 billion by 2028. Demonstrating our commitment to sustainable growth and driving long-term shareholder value.

Ed Pesicka: And furthermore, it accelerates our pace to achieve our long-term patient direct revenue target of $5 billion by 2028, demonstrating our commitment to sustainable growth and driving long-term shareholder value. Turning to our second quarter performance, it was business as usual for Owens & Minor, as we hit our internal expectations with another strong quarter and made progress against our long-term strategic goals we outlined during our Investor Day in December 2023.

Speaker Change: And Furthermore, it accelerates our pace to achieve our long term patient direct revenue target of $5 billion by 2028.

Speaker Change: Demonstrating our commitment to sustainable growth and driving long term shareholder value.

Edward Pesicka: Turning to our second quarter performance, it was business as usual for Owens & Minor. As we hit our internal expectations with another strong quarter and made progress against our long-term strategic goals we outlined during our investor day in December 2023. The underlying strength of our business is evident with top-line growth in both of our business segments and improved profitability. We are excited about the second half of 2024 as we expect to outperform the first half of this year. A continuation of historical trends with strong back half of performances.

Owens: Turning to our second quarter performance it was business as usual for Owens <unk> minor.

Owens: As we hit our internal expectations with another strong quarter and made progress against our long term strategic goals, we outlined during our Investor day in December 2023.

Ed Pesicka: The underlying strength of our business is evident with top-line growth in both of our business segments and improved profitability. We are excited about the second half of 2024, as we expect to outperform the first half of this year, a continuation of historical trends with strong back-half performances. While John Leon, our Interim Chief Financial Officer, will do a more thorough review of our financials, I would like to briefly highlight a few of our operational and financial achievements from the second quarter.

Owens: The underlying strength of our business is evident with topline growth in both of our business segments and improved profitability.

Owens: We are excited about the second half of 2024 as we expect to outperform the first half of this year, a continuation of historical trends with strong back half performance as well.

Edward Pesicka: While jolly on our interim chief financial officer, will do a more thorough review of our financials, I would like to briefly highlight a few of our operational and financial achievements from the second quarter. Our products and healthcare service segment generated $2 billion in revenue, reflecting a 4% improvement over this time last year. Our medical distribution division's strong second quarter was the result of exceptional same-store sales growth, enhancements, and our supplier funding programs, and the onboarding of new business wins. Our global product division also experienced some growth at the top line and further improvements in profitability.

John Leon our interim Chief Financial Officer, who will do a more thorough review of our financials I would like to briefly highlight a few of our operational and financial achievements from the second quarter.

Ed Pesicka: Our products and healthcare service segment generated $2 billion in revenue, reflecting a 4% improvement over this time last year. Our medical distribution division's strong second quarter was the result of exceptional same-store sales growth, enhancement in our supplier funding programs, and the onboarding of new business wins. Our Global Products Division also experienced some growth in the top line and further improvements in profitability. At our Investor Day, we outlined our plan to optimize the PNHS segment through 1. leveraging the scale of the channel profitability, 2. growing our Owens & Minor branded product portfolio, and 3. expanding into adjacent channels and markets.

John Leon: Our products and healthcare service segment generated $2 billion in revenue, reflecting a 4% improvement over this time last year.

Speaker Change: Our medical distribution Division strong second quarter was the result of exceptional same store sales growth enhancements on our supplier funding programs.

Speaker Change: Onboarding of new business wins.

Speaker Change: Our global products Division also experienced some growth at the top line and further improvements in profitability.

Edward Pesicka: At our investor day, we outlined our plans to optimize the PNHS segment through one, leveraging the scale of the channel profitability to growing our own and minor branded product portfolio and three, expanding into adjacent channels and markets. In our first and quarters of 2024 we are already making progress in these areas with a particular focus on driving greater efficiencies that, in the second quarter, reduced our manufacturing, transportation, and distribution costs. These efforts, combined with inflation-mitigating tactics, gave us the financial flexibility to reinvest in our business while also doing exactly what we said we would do: increasing the overall profitability of this segment.

At our Investor day, we outlined our plan to optimize the P&I segment through one leveraging the scale of the channel profitability to growing our Owens <unk> minor branded product portfolio.

Speaker Change: Three expanding into adjacent channels and markets.

Ed Pesicka: In our first two quarters of 2024, we are already making progress in these areas, with a particular focus on driving greater efficiencies that, in the second quarter, reduced our manufacturing, transportation, and distribution costs. These efforts, combined with inflation-mitigating tactics... gave us the financial flexibility to reinvest in our business while also doing exactly what we said we would do, increasing the overall profitability of this sector. Our Patient Direct segment posted $660 million in revenue in the second quarter, a 4% year-over-year improvement driven by strong growth in diabetes and sleep supply.

Speaker Change: And our first two quarters of 2024, we are already making progress in these areas with a particular focus on driving greater efficiencies that in the second quarter, we reduced our manufacturing transportation and distribution costs.

Speaker Change: These efforts combined with inflation mitigating tactics gave us the financial flexibility to reinvest in our business. While also doing exactly what we said we would do increasing the overall profitability of this segment.

Edward Pesicka: Our patient direct segment posted $660 million in revenue in the second quarter. A 4% year-over-year improvement driven by strong growth in diabetes and sleep supplies. Our growth has even more impressive given the particularly strong second quarter we had this time last year. During the quarter, we continue to focus on our key initiatives, along with our alignment on the commercial organization within the accurate division, to improve growth in respiratory, oxygen, and the sleep journey. By the end of the quarter, we began to see that alignment deliver improved growth. As a reminder, we typically see stronger performance from this segment in the second half of the year, and we expect a similar outcome in 2024.

Our patient direct segment posted $660 million in revenue in the second quarter up 4% year over year improvement driven by strong growth in diabetes and sleep supplies.

Ed Pesicka: Our growth is even more impressive given the particularly strong second quarter we had this time last year. During the quarter, we continued to focus on our key initiatives along with our alignment with the commercial organization within the Apria Division to improve growth in respiratory, oxygen, and sleep. By the end of the quarter, we began to see that alignment deliver improved growth.

Speaker Change: Our growth is even more impressive given the particularly strong second quarter. We had this time last year.

Speaker Change: During the quarter, we continue to focus on our key initiatives along with our alignment on the commercial organization within the App career division to improve growth in respiratory oxygen honestly journey.

Speaker Change: By the end of the quarter, we began to see that alignment deliver improved growth as a reminder, we typically see stronger performance from this segment in the second half of the year and we expect a similar outcome in 2024.

Ed Pesicka: As a reminder, we typically see stronger performance from this segment in the second half of the year, and we expect a similar outcome in 2024. From a longer-term macro perspective, our patient-directed segment has considerable tailwinds supporting our organic growth efforts. From a demographic perspective, there are an estimated 133 million Americans who suffer from at least one chronic condition, with 40% of American adults suffering from multiple chronic conditions, and many more still not yet diagnosed, particularly diabetes and sleep apnea.

Edward Pesicka: From a longer term macro perspective, our patient direct segment has considerable tail in supporting our organic growth efforts. From a demographic perspective, there are estimated 133 million Americans who suffer from at least one chronic condition. With 40% of American adults suffering from multiple chronic conditions and many more still not yet diagnosed, particularly in diabetes and sleep apnea. These demographic trends make us excited about our patient direct segment despite the groundswell of support for weight loss medications. Moreover, we are not currently seeing an impact from the use of GLP ones on our serve patient population. The diabetic patients we serve are primarily type 1 or insulin dependent, which requires continuous glucose monitoring regardless of GLP one use.

Speaker Change: From a longer term macro perspective, our patient direct segment has considerable tailwind supporting our organic growth efforts for.

Speaker Change: From a demographic perspective, there are an estimated 133 million Americans, who suffer from at least one chronic condition.

Speaker Change: With 40% of American adults suffering from multiple chronic conditions.

Speaker Change: And many more still not yet diagnosed particularly in diabetes and sleep apnea.

Ed Pesicka: These demographic trends make us excited about our Patient Direct segment despite the groundswell of support for weight loss medication. Moreover, we are not currently seeing an impact from the use of GLP-1s on our served patient population. The diabetic patients we serve are primarily type 1 or insulin dependent, which requires continuous glucose monitoring regardless of GLP-1 use. With respect to sleep apnea patients, while GLP-1s may help some patients, there are still 80% of the population with sleep apnea that are not yet diagnosed.

Speaker Change: These demographic trends make us excited about our patient direct segment, despite the groundswell of support for weight loss medications.

Speaker Change: Moreover, we are not currently seeing an impact from the use of <unk> on our served patient population. The diabetic patients. We serve are primarily type one are insulin dependent which requires continuous glucose monitoring regardless of GOP one years with respect to sleep apnea patients, while <unk> loans may help some pace.

Edward Pesicka: With respect to sleep apnea patients, while GLP ones may help some patients, there are still 80% of the population with sleep apnea that are not yet diagnosed.

Speaker Change: <unk> there are still 80% of the population with sleep apnea that are not yet diagnosed.

Edward Pesicka: As I noted earlier, we announced our intent to acquire a ROTEC, which will be an expansion of our patient direct segment. ROTEC brings a wealth of expertise in respiratory and home medical equipment aligned perfectly to deliver exceptional care, innovative solutions in top-notch service levels for patients, providers, and payers.

Ed Pesicka: As I noted earlier, we announced our intent to acquire Rotec, which will be an expansion of our patient direct segment. RoadTech brings a wealth of expertise in respiratory and home medical equipment, aligning perfectly to deliver exceptional care, innovative solutions, and top-notch service levels for patients, providers, and payers. Being just a few months into our long-term strategic plan, we are progressing as expected in both sectors. Our team has done a tremendous job in just the first two quarters since launching our Vision 2028 plan and investment.

Speaker Change: As I noted earlier, we announced our intent to acquire road check which will be an expansion of our patient direct segment.

Speaker Change: <unk> brings a wealth of expertise in respiratory and home medical equipment aligning perfectly to deliver exceptional care innovative solutions and top notch service levels for patients providers and payers.

Edward Pesicka: Being just a few months into our long-term strategic plan, we are progressing as expected in both segments. Our team has done a tremendous job in just the first two quarters since launching our Vision 2028 plan and investor date. From driving efficiencies, improving customer service, to building strong organic road channels, and the plan to add road facts to our patient direct segments, all of which proves we're on the right path. And only just getting started.

Speaker Change: Being just a few months into our long term strategic plan, we are progressing as expected and both segments. Our team has done a tremendous job in just the first two quarter since launching our vision 2028 plant at Investor Day.

Ed Pesicka: From driving efficiencies, improving customer service, to building strong organic growth channels and the plan to add Rotec to our patient direct segments, all of which proves we're on the right path and only just getting started. We remain dedicated to achieving the objectives set forth during our Investor Day in December 2023, and our performance thus far reflects that commitment. I would now like to turn the call over to our Interim Chief Financial Officer, John Leon, to discuss our second quarter financial performance in more detail.

Speaker Change: From driving efficiencies and improving customer service to building strong organic growth channels and the plan to add <unk> to our patient direct segments all of which proves we are on the right path.

And only just getting started.

Edward Pesicka: We remain dedicated to achieving the objective set forth during our investor date in December 2023, and our performance thus far reflects that commitment.

Speaker Change: We remain dedicated to achieving the objectives set forth during our Investor day in December 2023, and our performance thus far reflects that commitment.

Jonathan Leon: I would now like to turn the call over to our Interim Chief Financial Officer, John Leon, to discuss our second quarter financial performance in more detail. John. Thanks, and good morning, everyone. I hope you're providing an overview of our financial results and some key factors that drove our performance in the second quarter, as well as our outlook for the remainder of the year. Our revenue for the quarter was $2.7 billion of 4% potential prior year with solid growth in both segments. Products in healthcare services grew 4% overall as the page of the prior year, with 5% year-over-year growth in our medical distribution division, as things for sale, and yet new customer wins drove the top line change.

Speaker Change: I would now like to turn the call over to our interim Chief Financial Officer, John Lee on to discuss our second quarter financial performance in more detail John.

John Leon: Thanks, guys, and good morning, everyone. I will be providing an overview of our grant results and some key factors that drove our performance in the second quarter, as well as our outlook for the remainder of the year. Our revenue for the quarter was $2.7 billion, 4% compared to the prior year, with solid growth in both sectors. Products and health care services grew 4% overall as compared to the prior year, with 5% year-over-year growth in our medical distribution division as same-store sales and net new customer wins drove the top-line change.

Thanks, Ed and good morning, everyone.

John Lee: I hope to provide an overview of our financial results and some key factors that drove our performance in the second quarter as well as our outlook for the remainder of the year.

John Lee: Our revenue for the quarter was $2 7 billion.

John Lee: Up 4% compared to the prior year with solid growth in both segments.

Products to health care services grew 4% overall as compared to the prior year with 5% year over year growth in our medical distribution Division.

John Lee: Same store sales and net new customer wins drove the top line change.

Jonathan Leon: Patient direct revenue of $660 million was up 4% compared to the second quarter last year. Major therapy categories like diabetes, sleep supplies, and wound again has strong performance, although certain respiratory therapies such as NIVA and oxygen, or low expectations. Within Patient Direct, patient eligibility verification continued to regain momentum. However, a meaningful yet decreasing backlog of customers extended into the second quarter. We should be clear of these onboarding timing issues as we move through the second half of the year. Growth profit in the second quarter was $544 million, or 20.4% of net revenue, reflecting margin expansion of 11 basis points as compared to the second quarter last year.

John Leon: Patient direct revenue of $660 million was up 4% compared to the second quarter of last year. Major therapy categories, like diabetes, sleep supply, and wound, again had strong performance, although certain respiratory therapies, such as NIV and oxygen, were below expectations.

John Lee: Patient direct revenue of $660 million was up 4% compared to the second quarter of last year.

John Lee: The major therapy categories like diabetes sleep supplies and wound again has strong performance, although certain respiratory therapies, such as <unk> and.

John Lee: Oxygen or below expectations.

John Leon: Within Patient Direct, patient eligibility verification continued to regain momentum. However, a meaningful yet decreasing backlog of customers extended into the second quarter. We should be clear of these onboarding timing issues as we move through the second half of the year. Gross profit in the second quarter was $544 million, or 20.4% of net revenue. Reflecting a margin expansion of 11 basis points as compared to the second quarter of last year. This improvement is largely the result of investments in efficiency and productivity over the last several months.

John Lee: Within patient direct patient eligibility verification continues to regain momentum however, a meaningful decrease in backlog of customers extended into the second quarter.

We should be clear these are boarding timing issues as we move through the second half of the year.

John Lee: Gross profit in the second quarter was $544 million or 24% of net revenue, reflecting margin expansion of 11 basis points as compared to the second quarter of last year.

Jonathan Leon: This improvement is largely the benefit of investments in efficiency and productivity over the last several months. Our distribution, selling, and administrative expenses for the quarter were $469 million, up from $455 million in the second quarter of 23. It increases primarily due to sales growth, as DSNA was just below 18% of revenue for both this year and last year. Gas operating income for the quarter was 20.3 million, up 87% year over year, and adjusted operating income was $76.3 million, but adjusted operating income was up 23% year over year. Interest expense for the second quarter was $36 million, down 12% compared to $41 million in the second quarter of 2023.

John Lee: This improvement is largely the benefit of investors and efficiency and productivity over the last several months.

John Leon: Our distribution, selling, and administrative expenses for the quarter were $469 million, up from $455 million in the second quarter of 2023. This increase was primarily due to sales growth as DSNA was just below 18% of revenue for both this year and last year. Gas operating income for the quarter was $20.3 million, up 87% year-over-year, and adjusted operating income was $76.3 million. Adjusted operating income was up 23% year-over-year

John Lee: Our distribution selling and administrative expenses for the quarter were $469 million up from $455 million in the second quarter 'twenty three.

John Lee: The increase was primarily due to sales growth at <unk> was just below 18% of revenue for both this year and last year.

John Lee: GAAP operating income for the quarter was $20 3 million up 87% year over year and adjusted operating income was $76 3 million adjust.

John Lee: Adjusted operating income was up 23% year over year.

John Leon: Interest expense in the second quarter was $36 million, down 12% compared to $41 million in the second quarter of 2023. This is largely due to the nearly one full-term reduction of leverage in the last 12 months. Partially set by the impact of higher interest rates versus last year. In the second quarter, we recorded a one-time tax charge of $17 million, or $0.22 per share, related to a recent decision associated with notices of proposed adjustments that we received back in 2020 and 2021. This was just communicated to us in late June of 2024.

John Lee: Interest expense for the second quarter was $36 million down, 12% compared to $41 million in the second quarter of 2023.

Jonathan Leon: This is largely due to the nearly one-fold term reduction of leverage in the last 12 months, far shall set by the impact of higher interest rates versus last year. In the second quarter, we recorded a one-time tax charge of $70 million, or 22 cents per share, related to a recent decision associated with notices and proposed adjustments that we received back in 2020 and 2021. This was just communicated to us in late June of 2024. Due to the nature of this charge, this item is included in our gap to not gap reconciliation. The matter at hand, as we discussed in previously filed SEC documents, is related to task transfer pricing methodology, which is no longer employed.

John Lee: This was largely due to the nearly one full turn reduction in leverage in the last 12 months, partially offset by the impact of higher interest rates versus last year.

John Lee: In the second quarter, we recorded a onetime tax charge of $17 million were <unk> 22 per share related to a recent decision associated with notices of proposed adjustments that we received back in 2020 and 2021.

John Lee: This was just communicated to us in late June of 2024.

John Leon: Due to the nature of this charge, this item is included in our Gap to Non-Gap Reconciliation. The matter at hand, as we've discussed in previously filed SEC documents, is related to past transfer pricing methodology, which is no longer employed. There is an expected related cash payment to be made in the second half of the year in a range of 30 or 35 million dollars. We believe the matter will be concluded without further impact on our financial results. Our GAAP-effective tax rate reflects this charge at about 89.9% for the quarter. The adjusted effective tax rate was 28.9%.

John Lee: Due to the nature of this charge is included in our GAAP to non-GAAP reconciliations.

John Lee: <unk> ahead, as we've discussed and previously filed SEC documents.

John Lee: Related to past transfer pricing methodology, which is no longer employed.

Jonathan Leon: There is an expected related cash payment to be made in the second half of the year in a range of 30 or 35 million dollars. We believe the matter will be included without further impact for our financial results. Our Gap effective tax rate reflects this charge of a negative 89.9% for the quarter. The adjusted effective tax rate was 28.9%. Our Gap net loss for the quarter is 31.9 million, where we lost the 42 cents per share compared to the second quarter last year when the net loss was 28.2 million for 37 cents per share. Adjusted an 80 income for the quarter doubled, the 28.2 million, where 36 cents per share, from 14.2 million or 18 cents per share, during the second quarter of 23.

John Lee: There is an expected related cash payments to be made in the second half of the year in a range of $30 million to $35 million.

John Lee: We believe the matter will be concluded without further impact to our financial results.

John Lee: Our GAAP effective tax rate reflects this charge or a negative <unk>, 9% for the quarter.

John Lee: The effective tax rate was 28, 9%.

John Leon: Our gap net loss for the quarter was $31.9 million, or a loss of $0.42 per share compared to the second quarter of last year when the net loss was $28.2 million, or $0.37 per share. Adjusted net income for the quarter doubled to $28.2 million, or $0.36 per share, from $14.2 million, or $0.18 per share, during the second quarter of 2023. $127,000,000 of 12% versus $113,000,000 reported in the second quarter of last year.

John Lee: Our GAAP net loss for the quarter was $31 9 million or a loss of <unk> 42 per share compared to the second quarter of last year with a net loss was $28 2 million or <unk> 37 per share.

John Lee: Adjusted net income for the quarter doubled to $28 2 million or 30 success per share from $14 $2 million or <unk> 18 per share during the second quarter of 'twenty three.

Jonathan Leon: The dollar was $127 million, of 12% versus the 113 million report during the second quarter last year. Also, we generated 116 million of operating cash in this quarter, a strong improvement versus QR-24. This will last to reduce net debt by $70.9. We anticipated good cash load generation year, but that will include typical whopping as quarter to quarter, and we remain intensely focused on cash load generation. With respect to our current outstanding debt, we have 171 million of a series of notes which is due in December of this year. Earlier this week, we gave notes to redeem those notes at par in September, and will do so with cash on hand.

John Lee: Adjusted EBITDA was $127 million.

John Lee: Up 12% versus $113 million reported in the second quarter of last year.

John Leon: Also, we generated $116 million of operating cash in this quarter, a strong improvement versus Q1 of 2014. This allows us to reduce net debt by $70 million. We anticipate a good cash flow generation year that will include typical lumping this quarter to quarter, and we remain intensely focused on cash flow generation. With respect to our current outstanding debt, we have $171 million of a series of notes that is due in December of this year.

John Lee: Also we generated $116 million of operating cash flow this quarter, a strong improvement versus Q1 of 'twenty four.

John Lee: This allows us to reduce net debt by $70 million.

John Lee: We anticipate a good cash flow generation here that will include typical lumpiness quarter to quarter, and we remain intensely focused on cash flow generation.

John Lee: With respect to our current outstanding debt, we have $171 million of a series of notes, which is due in December of this year.

John Leon: Earlier this week, we gave notice to redeem those notes at PAR in September and will do so with cash on hand. We remain committed to delivering our 2024 guidance. We expect revenue to be in the range of $10.5 to $10.9 billion, adjusted EBITDA to be in the range of $550 to $590 million, and adjusted EPS with a midpoint of $1.55 per share and an overall range of $1.40 to $1.70. Now, as in prior years, we expect to see modest sequential growth between the second and the third quarters and greater sequential growth from the third to the fourth quarter. And again, I want to remind you that this guidance excludes any impact of the Rochech Acquisition Act. With that, I'll turn the call over to the operator for the Q&A session. Operator?

John Lee: Earlier. This week, we gave notice to redeem those notes at par in September and will do so with cash on hand.

Jonathan Leon: We remain committed to delivering our 2024 guidance. We respect revenue to be in the range of 10.5 to 10.9 billion. Adjust the EBITDA to be in the range of 550 to 590 million, and adjust the EPS with a midpoint of $1.55 per share in an overall range of $1.40 to $1.70. Now, as in prior years, we expect to see modest sequential growth between the second and the third quarters, in greater sequential growth from the third to the fourth quarter. And again, I want to remind you that this guidance excludes any impact on the road check acquisition.

John Lee: We remain committed to delivering our 2020 for guidance.

John Lee: <unk> revenue to be in the range of 10, 5% to $10 9 billion.

John Lee: Adjusted EBITDA to be in the range of $550 million to $590 million and adjusted EPS with a midpoint of $1 55 per share an overall range of $1 40 to $1 70.

John Lee: Now as in prior years, we expect to see modest sequential growth between the second and the third quarters and greater sequential growth from the third to the fourth quarter.

John Lee: And again I will remind you that this guidance excludes any impact of the <unk> acquisition.

Unknown Attendee: With that, I'll turn the call over to the operator for the Q&A session. Operator? Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star one. Your first question comes from the line of Michael Journey with Lear Rink Partners. Please go ahead. Good morning, and thanks for taking the question. My apologies. Can you press star one again, please? Sorry, Michael, we lost you.

Speaker Change: With that I'll turn the call over to the operator for the Q&A session operator.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again press star 1. Your first question comes from the line of Michael Cherny with LearRing Partners. Please go ahead. Good morning and thank you for joining us.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue and if you'd like to withdraw that question again Press Star. One. Your first question comes from the line of Michael Cherny with Leerink Partners. Please go ahead.

Unknown Attendee: Good morning and thanks for taking the question.

Michael Cherny: Good morning, and thanks for taking the question.

Operator: My apologies. Can you press star one again, please? Sorry, Michael, we lost you.

Michael Cherny: My apologies can you press star one again please.

Speaker Change: Michael we lost.

Unknown Attendee: Operator, why don't we move on to the next question, and Mike, we'll get back in line.

Michael Cherny: Operator, we want to move on to the next question. Michael, get back in line. Yes. Michael, your line is now open. Hi. Can you hear me this time? We can, Michael. Okay, that was a first. We'll see if it happens again. Sorry about that. I don't know what happened. Yes, call it a Friday. That's right. I want to talk about some of the operational plans that you've had put in place, in particular, in the projects you made on the products and healthcare services side. As you think about the moving pieces on margins, you were kind of flat sequentially. Where are the biggest opportunities to expand in the back half of the year?

Speaker Change: Also while we move on to the next question and Mike will get back a lot.

Operator: Michael, you're alive.

Speaker Change: Michael Your line is now open.

Michael Cherny: Hi, can you hear me this time? We can, Michael.

Speaker Change: Hi can you hear me this time, we can Michael.

Unknown Attendee: Okay, that was a first. We'll see if that happens again. Sorry about that. I don't know what happened. Yes, call it a Friday. That's right.

Michael Cherny: Okay that was a first I will see if that happens again, sorry about that I don't know what happened.

Speaker Change: Yes call it a Friday.

Speaker Change: That's right.

Ed Pesicka: I want to talk about some of the operational plans that you've put in place, in particular, the projects you have made on the products and health care services side. As you think about the moving pieces on margins, you were kind of flat sequentially. Where are the biggest opportunities to expand in the back half of the year? Is it volume? Is it the unlocking of the backlog of customers? And how does the dynamics around the tariffs that are expected to go into place impact or not impact you relative to the sourcing side?

Speaker Change: I want to talk about some of the operational plans that you've had.

Speaker Change: Put in place in particular, the progress you've made on the products and health care services side.

Speaker Change: As you think about the moving pieces on margins, you're kind of flat sequentially, where the biggest opportunities to expand in the back half of the year is it.

Edward Pesicka: Is it volume? Is it that unlocking of the backlog of customers? And how does the dynamics around the tariffs that are expected to go into place impact and not impact you relative to the sort of things that? Let me take those probably someone in reverse orders from on the tariff aspect; you know, it's going to have a minimal impact on us, and a significant portion of our products are manufactured in our own facilities, whether that's in the US or whether that's in Mexico, Honduras. So, in the Americas, you know, our glove with print is not in China.

Speaker Change: Volume is about unlocking of the backlog of customers and how does the dynamics around the tariffs that are expected to go into place impact or not impact you relative to the circumstances.

Ed Pesicka: Let me take those problems somewhat in reverse order, you know, from the tariff aspect, it's going to have a minimal impact on us since, you know, a significant portion of our products are manufactured in our own facilities, whether that's in the U.S. or whether that's in Mexico, Honduras, or in the Americas. Our glove footprint is not in China. We have, as we've talked in the past, about more than half of our gloves are made in our own factories, and those factories are in Southeast Asia, not in China.

Speaker Change: Yes, let me take those somewhat in reverse orders from on the tariff aspect, it's going to have a minimal impact to us a significant portion of our products are manufactured in our own facilities, whether that's in the U S or whether thats in Mexico, Honduras, So in the Americas and our global footprint is not in China, we have.

Edward Pesicka: We have, as we've talked in the past about more than half of our gloves. We're making in our own factories, and those factories aren't Southeast Asian, not in China. So, you know, it's going to have a minimal impact really on our proprietary, our private label products. You know, if I think about the levers we have in the back half of the year, you know, within our product and healthcare services, you know, it's the continued execution on sourcing. You know, as we've seen prices come down and overall, let's just take a main category PPE. You know, we've done a really good job continuing to source raw materials that lower rates to make sure that, you know, those prices come down and our costs are coming down correspondingly with them.

Speaker Change: As we've talked in the past about more than half of our clubs, we're making in our own factories and those factories are in southeast Asia and China. So it's going to have.

Ed Pesicka: So, you know, it's going to have a minimal impact, really, on our proprietary, our private label products. You know, if I think about the levers we have in the back half of the year, you know, within our product and healthcare services, you know, it's the continued execution on sourcing, you know, as we've seen prices come down and overall, let's just take a main category PPE, you know, we've done a really good job continuing to source raw materials at lower rates to make sure that, you know, as those prices come down, our costs are coming down correspondingly with them.

Speaker Change: Minimal impact early on are proprietary to our private label products and if I think about the levers we have in the back half of the year within our product and health care services. It's the continued execution on sourcing.

Speaker Change: We've seen prices come down and overall, it's just taken main category PPE, we've done a really good job continuing to source raw materials at lower rates to make sure that as those prices come down and our costs are coming down correspondingly with them.

Edward Pesicka: You know, the other aspect of it is really an operational effectiveness in our PNHS segment. Continuing to look at our footprint, continuing to look at the right level of new advanced automation and technology in the warehouses to drive operating efficiencies. You know, so we saw some of the improvement in this quarter in DSNA or Distribution Selling in Administrative Expenses. You know, there's where the opportunities continue to live. You know, longer term, if we go back to our strategy, you're really the longer term impact is the expansion of our private label or proprietary product portfolio that takes time.

Ed Pesicka: You know, the other aspect of it is really operational effectiveness in our PNHS segment, continuing to look at our footprint, continuing to look at the right level of new advanced automation and technology in those warehouses to drive operating efficiencies. You know, so we saw some of the improvement this quarter in DS&A, or distribution selling and administrative expenses. You know, there's where the opportunities continue to lie. You know, longer term, if we go back to our strategy, the really long-term impact is the expansion of our private label or proprietary product portfolio. That takes time, you know, as we build the product portfolio out and then continue to work with our customers to show the value of it. And then, you know, even further along the line, there is adjacency.

Speaker Change: The other aspect of it is really an operational effectiveness in our <unk> segment.

Speaker Change: Continuing to look at our footprint continuing to look at the right level of new advanced automation and technology and those warehouses to drive operating efficiencies.

Speaker Change: So we saw some of the improvement this quarter in <unk>, our distribution selling and administrative expenses. There is where the opportunities continue to live longer term. If we go back to our strategy Youll really the longer term impact is the expansion of our private label and proprietary product portfolio of that takes time as we build the product.

Edward Pesicka: You know, as we build the product portfolio out and then continue to work with our customers to show the value of it. You know, and then, you know, even further along the line as adjacency. So hopefully that helps talk about, you know, really how we're thinking about the impact of the tariffs. You know, how we're thinking about using our continuous improvement and operating model to continue to drive operating efficiencies out and in some of the longer term and midterm opportunities.

Speaker Change: Portfolio out and then continue to work with our customers to show the value of it.

And then even further along the line as Adjacencies. So hopefully that helps to talk about really how we're thinking about the impact of the tariffs.

Ed Pesicka: So hopefully that helps talk about, you know, really how we're thinking about the impact of the tariffs, you know, how we're thinking about using our continuous improvement and operating model to continue to drive operating efficiencies out and then some of the longer-term and mid-term opportunities.

Speaker Change: We are thinking about using using our continuous improvement and operating model to continue to drive operating efficiencies out and then some of the longer term and midterm opportunities.

Jonathan Leon: Thanks, I just wanted to ask the second one, sure, on cash flow. Yeah, I know that was a big focal point earlier in the year when you gave guidance; you put some of the customer onboarding. Can you talk about the dynamics behind the reversal this quarter, and how does it factor in terms of your cash generation versus use over the course of the year, especially as you think through normalizing the onboarding of some of those large customer wins you had. Yeah, Mike and John, so obviously we thought you mentioned we talked before about the need to add inventory for those onboarding activity, and that could also slow down a little bit when you bring on large customers like we get a distribution.

John Leon: Thanks, Ed. If I could just ask you a second question on cash flow, Yeah, I know that was a big focal point earlier in the year when you gave guidance, and you talked about some of the customer onboarding. Can you talk about the dynamics behind the reversal this quarter and how that should factor in in terms of your cash generation versus use over the course of the year, especially as you think through normalizing the onboarding of some of those large customer windows?

Speaker Change: Thanks, Ed if I could just ask a second one.

Ed: One on cash flow.

Ed: It was a big focal point earlier in the year. When you gave guidance you talked about some of the customer onboarding.

Speaker Change: Can you talk about the dynamics behind the reversal this quarter and how the factoring in terms of your cash generation versus use.

Speaker Change: Over the course of the year, especially as you think through.

Normalizing the onboarding of some of those large customer wins you had.

John Leon: Yeah, Mike and John. So, obviously, as you mentioned, we talked before about the need to add inventory for those onboarding activities, and that could also slow down AR a little bit when you bring on large customers like we did in distribution. What you saw in Q2 was a little more lift in inventory, but that was offset by payables, and payables kind of offset that pretty nicely. Like Q1, we also had the quarter end on a Friday, which is actually beneficial to our payables, and we have been pretty successful in driving out payment terms where appropriate with certain parties. So, that combination is going to continue to help us out in the second half of the year.

Speaker Change: Yes, Mike it's John So obviously as you mentioned, we talked before about the need to add inventory for those onboarding activity and that could also slow down a little bit when you bring on one large customers like we did in distribution.

Jonathan Leon: What you saw on Q2 was a little more list in inventory, but that was offset by tables and tables kind of offset that pretty nicely like you one. We also had the quarter end on a Friday, which is actually beneficial to our tables. And we have been pretty successful in driving out payment terms, where appropriate, with certain parties, so that combination is going to continue to help us out in the back after the year. People might also get the seasonality in the back after the year, particularly patient direct, which will have great, well, it's very effective cash flow as the year goes on.

Speaker Change: What you saw in Q2 was a little more lift in inventory, but that was offset by payables.

Payables kind of offset that pretty nicely like Q1, we also had the quarter ends on a Friday, which is actually beneficial to our payables and we have been pretty successful in driving out payment terms, where appropriate with certain with certain parties. So that combination is going to continue to to help us out in the back half of the year keep in mind will also get the seasonality in the back.

John Leon: Keep in mind, we'll also get seasonality in the back half of the year, particularly patient direct, which will have a very – it's a very attractive cash flow as the year goes on, and their contractual allowances will – should drop as the year goes on, as well. So, I think we'll see more efficiency. Confidently, we'll see more efficiency in working capital around payables and inventory, and then we'll look at the seasonal list.

Speaker Change: For the year, particularly patient direct.

Speaker Change: Have a.

Speaker Change: Great track with cash flow as the year goes on and.

Jonathan Leon: And their contract allows us a little bit should drop as the year goes on as well, so I think we'll see more efficiency, conference will see more efficiency working capital around paying a bull's excuse of inventory. And then we look at the season list now, keeping in mind that what you're looking at is the appointing time at the last day of the quarter. So we're actually more efficient in Q2 than we saw. For example, average inventory was lower than it was at the very end of the quarter, so we were able to get that cash flow and reduce debt.

Speaker Change: The contractual allowances should drop as the year goes on as well so I think we'll see even more efficiency.

Speaker Change: It will be more efficiency and working capital of around payables receivables and inventory I think it looks like the seasonal lift now keeping in mind that what are you looking at a point in time at least the last day of the quarter. So we're actually we're more efficient in Q2 than we saw for example average inventory was lower than it was at the very end of the quarter. So we were able to get that cash flow reduce.

John Leon: Now, keeping in mind that what you're looking at is the appointment time on the last day of the quarter. So, we're actually – we're more efficient in Q2 than we saw. For example, average inventory was lower than it was at the very end of the quarter, so we were able to get that cash flow and reduce debt. But I think as the year goes on, working capital efficiency and then the seasonality of the business will drive pretty attractive cash flow compared to the first half of the year.

Jonathan Leon: But I think as the year goes on, that working capital efficiency and then the season now the business will drive pretty track this cash flow compared to the first half of the year. So, will you have meaningful cash lift conversion over the course of the year? I know that would be a point of contention rather than the year. We will do, yeah, I would be very disappointed if we did do quite a bit better the second half than we've done in the first half. Got it. Thanks so much.

Speaker Change: That but I think as the year goes on that working capital efficiency and the seasonality of business will drive pretty attractive cash flow compared to the first half of the year.

Michael Cherny: So will you have meaningful cash flow conversion over the course of the year? I know that was the point of contention earlier in the year. We will do, yeah.

Speaker Change: So will you have meaningful cash flow conversion over the course of the year I know that would point of contention earlier in the year, we will do I would be very disappointed if we didn't do quite a bit better in the second half than we've done in the first half.

John Leon: We will do it. I would be very disappointed if we didn't do quite a bit better in the second half than we did in the first half.

Michael Cherny: Got it. Thanks so much.

Speaker Change: Got it thanks, so much.

Kevin Caliendo: Your next question comes from the line of Kevin Caliendo with UBS. Please go ahead. Good morning, guys. Thanks for taking my question. First, can we talk a little bit? There's been a lot of interest around what's going on with shipping costs and how it impacts the channel. The tariffs are one thing, but the shipping costs have the ones that we can track, anyways, have risen dramatically. And I guess I'm trying to understand how it impacts you, how it impacts the industry. Does it help you that you, you're sure, and does it make your products that are manufactured domestically more attractive?

Operator: Your next question comes from the line of Kevin Caliendo with UBS. Please go ahead.

Speaker Change: Your next question comes from the line of Kevin Kelly Endo with UBS. Please go ahead.

Speaker Change: Good morning, guys. Thanks.

Kevin Caliendo: Thanks for taking my question. First, can we talk a little bit? There's been a lot of interest in what's going on with shipping costs and how it impacts the channel. You know, the tariffs are one thing, but the shipping costs of the ones that we can track anyway have risen dramatically. And I guess I'm trying to understand how that impacts you, how it impacts the industry. Does it help you that you are near shore, and does it make your products that are manufactured domestically more attractive? Just trying to understand the impact across the channel.

Speaker Change: Thanks for taking my question.

Speaker Change: First can we talk a little bit there's been a lot of interest around what's going on with shipping cost highway.

Speaker Change: How it impacts the channel.

Speaker Change: The tariffs are one thing, but the shipping costs.

Speaker Change: The ones that we can track anyways have risen dramatically and I guess I'm trying to understand how it impacts you how it impacts the industry.

Speaker Change: Does it help view that Youll near shore and does it make your products that are manufactured domestically more attractive just trying to understand the impact across the across the channel.

Edward Pesicka: Just trying to understand the impact across the across the channel. Yes, it's primarily an impact on a PNHS segment, not necessarily in the patient direct segment. Yes, for those products that were manufacturing near shore, it has to create some level of an advantage for us. But again, I talked earlier that about half of our gloves were making our own factory in Southeast Asia and bringing them over. It's impacted us in a couple of different ways. As we started to see those rates start to rise, we have made some investment in incremental inventory coming over in advance of some of those larger increases that we're seeing in the marketplace.

Ed Pesicka: Yes, it's primarily an impact on the PNHS segment, not necessarily in the patient direct segment. You know, yes, yes, for those products that we're manufacturing nearshore, it has to create some level of an advantage for us. But again, I talked earlier that, you know, about half of our gloves, we make at our own factory in Southeast Asia and bring them over. You know, it's impacted us in a couple different ways

Speaker Change: Yes, so the first primarily an impact on our <unk> segment not necessarily in the patient direct segment.

Speaker Change: Yes, yes for those products that we're manufacturing near shore. It has to create some level of an advantage for us, but again I talked earlier that about half of our gloves, we're making our own factory in southeast Asia, and bringing them over.

Speaker Change: It's impacted us in a couple of different ways as we started to see those rates start to rise. We have made some investment in incremental inventory coming over in advance of some of those larger increases that we're seeing in the marketplace.

Ed Pesicka: You know, as we started to see those rates start to rise, we have made some investment in incremental inventory coming over in advance of some of those larger increases that we're seeing in the marketplace. But ultimately, this is going to have a bigger impact on those that do primarily all of their sourcing or the vast majority of their sourcing from overseas. Look, it's a headwind that we know we have in the business.

Edward Pesicka: But ultimately, this is going to have a bigger impact on those that do primarily all of their sourcing, or the vast majority of their sourcing, from overseas. Look, it's a headwind that we know we have in the business. It's also part of how do we utilize our operating model to continue to try to offset that, whether it's advance shipments prior to some of those increases, but also continue to look at different ways to more efficiently bring the product over. But it is going to create some level of a headwind in the business in the back half of the year.

Speaker Change: But ultimately this is going to have a bigger impact on those that do primarily all of their sourcing or the vast majority of the sourcing from overseas.

Speaker Change: So it's a headwind that we know we have in the business. It's also part of how do we utilize our operating model to continue to try to offset that whether it's advanced shipments prior to some of those increases.

Ed Pesicka: You know, it's also part of how we utilize our operating model to continue to try to offset that, whether it's advanced shipments prior to some of those increases, but also continue to look at different ways to more efficiently bring the product over. But, you know, it is going to create some level of a headwind for the business in the back half of the year.

Speaker Change: But also continue to look at different ways to more efficiently bring the product over but it is it is going to create some level of a headwind in the business in the back half of the year.

Edward Pesicka: So what you're saying is you're trying to get product in sooner. Maybe you're going to build up more inventory before it starts to affect the prior, you know, as much as you possibly can and hopes that customers will be willing to buy those sooner because they know the prices are likely to go higher. Is that in general? And it may not even necessarily then buy the products sooner. It's just to have a better landed cost on the product than not.

Kevin Caliendo: So what you're saying is you're trying to get product in sooner, maybe you're going to build up more inventory before it starts to affect, you know, as much as you possibly can in hopes that customers will be willing to buy those products sooner because they know that the prices are likely to go higher. Is that in general?

Speaker Change: So the so what youre, saying is youre trying to get product in sooner, maybe youre going to build up more inventory before it starts to affect.

Speaker Change: As much as you, possibly can in hopes that customers will be willing to buy those sooner because they know that the prices are likely to go higher does that.

Speaker Change: And what general.

John Leon: And it may not even necessarily make them buy the product sooner. It's just to have a better landed cost on the product than not.

Speaker Change: And it may not even necessarily them buy the products sooner just to have better landed cost on the product than not.

Speaker Change: Good.

Kevin Caliendo: Maybe this is one for Jonathan. The patient direct ramp in the second half, it's a little bit more than normal seasonality, it looks like to me. Can you just give us a little bit of comfort or rationale behind why there will be this acceleration? I know there were investments, but could you maybe go a little deeper on that?

Jonathan Leon: Maybe this is one for Jonathan. The patient direct ramp in the second half is there. It's a little bit more than normal seasonality. It looks like to me. Can you just give us a little bit of comfort or rational behind why there will be this acceleration? I know there were investments that, if you can maybe go a little deeper on that, that would be great. Yeah, can the biggest factor, as I indicate, a matter of marks where we're still dealing with a backlog in patient direct that, frankly, is a holdover from change that we probably underestimate the extent of that impact Q1 to Q2.

Speaker Change: Maybe this is one for Jonathan.

Jonathan: The patient direct ramp in the second half is there, it's a little bit more than normal seasonality. It looks like to me can you just give us a little bit of.

Speaker Change: Comfort or.

Jonathan: Rationale behind why that there will be this acceleration I know there were investments, but if you can maybe go a little deeper on that that would be great. Yes.

John Leon: Yeah, Kevin, the biggest factor, as I indicated in my remarks, we're still dealing with a backlog in patient direct that, frankly, is a holdover from a change that we probably underestimated to the extent of that impact, Q1 to Q2. We have a normal queue of people waiting for supplies all the time, but this is substantially larger than it would normally be, and those are primarily sleep patients, so there's a little more process associated with them.

Speaker Change: Yes, Kevin the biggest factor as I indicated my remarks worse that we're still dealing with a backlog.

Speaker Change: And patient direct that frankly, as a holdover from change that we probably underestimated the extent of that impact in Q1 to Q2.

Edward Pesicka: We have a normal queue of people waiting for supplies all the time, but this is substantially larger than it would normally be. And those are primarily sleep patients, so it's a little more process associated with them. So, if you factor that, we're catching up. There's a lot of manual effort to go into that catch up, but we're catching up, and we're clear to that backlog. So you take that combination then with the normal seasonality and the business. We're pretty confident in a much stronger second half. And I'll just add two other things, as one is we were clearly understood that when we added additional commercial resources, that would create some level of, you know, I'm going to call it disruption, but some level of impact on the beginning of the year here, with the expectation that it takes about 12 months for them to provide a positive impact.

Speaker Change: We have a normal queue of people waiting for our suppliers all the time, but this is substantially larger than it would normally be.

Speaker Change: Those are primarily sleep patients.

Speaker Change: From a profit associated with them.

John Leon: So if you factor that in, we are catching up. There's a lot of manual effort to go into that catch-up, but we are catching up, and we're clear on that backlog. So you take that combination, then, with the normal seasonality in the business, we're pretty confident in a much stronger second half. And I'll just add two other things.

Speaker Change: So if you factored that in we are catching up with a lot of manual effort to go into that catch up but we are catching up and we're clearing that backlog.

Speaker Change: That combination then with the normal seasonality.

Speaker Change: He is now leading the business.

Speaker Change: We're pretty confident in a much stronger second half and I'll just add two other things is one is we clearly understood that when we added additional commercial resources that would create some level of.

John Leon: One is we clearly understood that when we added additional commercial resources, that would create some level of, I'm going to call it disruption, but some level of impact at the beginning of the year here, with the expectation that it takes about 12 months for them to provide a positive impact. So we'll see that as that progresses through the year. The other thing, if you look at Q2 year over year, last year our Q2 growth rate was pretty strong. So those are some other factors that give us comfort in the back half of the year and growth.

Speaker Change: I'm going to call it disruption, but some level of impact in the beginning of the year here with the expectation that it takes about 12 months for them to provide a positive at positive impacts that we'll see that as that progresses in the year and the other thing. If you look at Q2 year over year last year, our Q2 growth rate was pretty strong.

Jonathan Leon: So we'll see that as that progresses in the year. In the other thing, if you look at Q2 year over year last year, Q2 growth rate was pretty strong. So those are some other factors that give us the comfort in the back half of the year and the growth. Thank you, guys. Thanks, Bill.

Speaker Change: So those are some other factors that give us the comfort in the back half of the year and the growth.

Speaker Change: Great. Thank you guys.

Doug: Thanks, Doug.

John Stansel: Your next question comes from the line of John Stansel with JP Morgan. Please go ahead. Great, thanks for taking the question. Just following up on the pointer on patient direct, if there's a way to frame, given you have some visibility into this backlog, about how you think that the impact on patient direct top line growth, and then now that we're kind of a month into the third quarter, is this something that you think now is, you know, this changes kind of coming in the rear view that will be more of a 3Q benefit, or is this something that kind of could could progress into into 4Q?

Operator: Your next question comes from the line of John Stansel with J.P. Morgan. Please go ahead.

Doug: Your next question comes from the line of John Stanfill with J P. Morgan. Please go ahead.

John Stansel: Great Thanks for taking the time to answer the question. Just following up on the point around patient direct, is there a way to frame, given you have some visibility into this backlog, about how you think about the impact on patient direct top-line growth? And then now that we're kind of a month into the third quarter, is this something that you think now is, you know, since change is kind of coming in the rear view, that will be more of a 3Q benefit, or is this something that kind of could progress into 4Q?

John Stanfill: Great. Thanks for taking the question just following up on the point around patient direct is there just a way to frame given you have some visibility into the backlog.

Speaker Change: About how you think about the impact on on patient direct topline growth and then now that we're kind of a month into the third quarter or is this something that you think now is since changes kind of coming in the rear view that will be more of a <unk> <unk> benefit or is that something that kind of.

Speaker Change: Could progress into <unk>.

John Leon: Yeah, John, it's John William. To help you think about it, so what happens, you know, the eligibility verification process has become very manual very quickly, and we're doing a very good job of clearing that, getting better at that, and bringing on new providers to help us with that process. A way to think about it, and I wouldn't call it a backup, but at any point in time, there's a queue of 10,000 customers waiting for supplies, and we saw that grow into June to as much as 50,000.

John Stansel: Yeah, John, John William, we're going to help you think about it. So what happens, you know, the eligibility verification process has become very manual very quickly, and we're doing a very good job of clearing that and getting better at that and bringing on new providers to help us with that process. A way to think about it, and I would call it a backlog, at any point in time, there's a queue of 10,000 customers waiting for supplies, and that we saw that into June growth was much as 50,000. So that is getting better now; that will be into the third quarter and will continue to get better throughout the year.

John: Yeah, John John help.

John: Help me think about it.

John: So what happened.

John: Eligibility verification process has become very manual very quickly and we're doing a very good job of clearing that getting better at that and bring in bringing on new providers to help us with that process.

Speaker Change: The way to think about it and I wouldn't call it back or at any point in time, there is a queue up 10000 customers.

Speaker Change: Waiting for supplies and that we saw that into June growth as much as 50.

John Leon: So, that is getting better now. We're getting to the third quarter. And we'll continue to get better throughout the year. So, that has certainly impacted growth. And as I said earlier, a lot of that is predominantly sleep supplies, and that's a very attractive margin of business that we're waiting to get online.

Speaker Change: So that is getting better now that we are going into the third quarter continued to get better throughout the year. So that has certainly impacted the growth et cetera.

Jonathan Leon: So that has certainly impacted the growth, and I think there are a lot of it is, it's predominantly sleep supplies, and that's a very attractive market business that we're waiting to get online. Great, and then just kind of thinking about gross margins that they stepped down sick eventually from the first quarter. Now I normally think of this as kind of gross margins stepping up throughout the year. Is that kind of slight step down that you saw as that more kind of attributable to the patient direct? I guess mixed shift, or is there other factors you highlight about kind of what drove that, and then I would assume giving you reaffirmed guidance, we should just see a bit of a steeper ramp into the back half for gross margins, that's kind of the right way to think about it.

Speaker Change: Now this is predominant sleep supplies and that's very attractive margin business that we're waiting to get aligned.

Speaker Change: Yes.

John Stansel: Great, and then just kind of thinking about gross margins, that they step down sequentially from the first quarter. Now, I normally think of this as kind of gross margins stepping up throughout the year. Is that kind of slight step down that you saw, is that kind of attributable to the patient directly, I guess, mixed shift? Or are there other factors you'd highlight about kind of what drove that? And then I would assume, given your reaffirmed guidance, we should just see a bit of a steeper ramp into the back half for gross margins. That's kind of the right way to think about it. That is the way we think about it.

Speaker Change: Great and then just kind of.

Speaker Change: Thinking about gross margin is there any step down sequentially from the first quarter and I normally think of this as kind of gross margin stepping up.

Speaker Change: Throughout the year is that that kind of a slight step down that you saw is that more kind of attributable to the patient direct.

Speaker Change: I guess mix shift or is there. Other factors you highlight about kind of what drove that and then I would assume given your reaffirmed guidance. We should just see a bit of a steeper ramp into the back half for gross margins that kind of the right way to think about it.

Stephanie Davis: That is the right way to think about it; you have mixed shift in patient direct can be meaningful, and we've talked about before that sleep and respiratory areas have higher margin, things like diabetes which have been growing nicely for us. Great, thank you.

John Leon: That is the way we think about it. Yeah, mixed shift and patient-directed can be meaningful, and we've thought that before, that sleep and respiratory areas have higher margins, things like diabetes, which has been growing very nicely for us.

Speaker Change: And that is the right way to think about it yes mix shifting patient direct can be meaningful and we've talked about before that sleep and respiratory areas have higher margin things like diabetes, which has been growing very nicely for us.

Great. Thank you.

Stephanie Davis: Here, next question comes from the line of Stephanie Davis with Barclays. Please go ahead. Hey guys, thank you for taking my questions. Now that you've had a little bit of time to just have the market digest the Road Tech acquisition announcement, I was hoping to tell us about some initial feedback from your payer and provider customers and how they're thinking about the deal. I'll just talk a little; maybe I'll start it at a high level. I think it's been clear the feedback has been that this is clearly in line with the strategy you talked about, about continuing to invest in organically specifically in the patient direct space, continuing to provide a better solution.

Operator: Your next question comes from the line of Stephanie Davis with Barclays. Please go ahead.

Speaker Change: Your next question comes from the line of Stephanie Davis with Barclays. Please go ahead.

Stephanie Davis: Hey guys, thank you for taking my questions. Now that you've had a little bit of time to... let the market digest the Rotech acquisition announcement, I was hoping you could tell us about some initial feedback from your payer and provider customers and how they're thinking about the deal.

Stephanie Davis: Hi, guys. Thank you for taking my questions now that you've had a little bit of time <unk> had the market Digest as our tech acquisition announcement I was hoping you could tell us about some initial feedback from your payer and provider customers.

Speaker Change: We're thinking about the deal.

Ed Pesicka: Yeah, I'll just talk a little. Maybe I'll start it off at a high level. You know, I think it's been clear that the feedback has been that this is clearly in line with the strategy you talked about, about continuing to invest organically, specifically in the patient direct space, continuing to provide a better solution. You know, it's still early on, you know, we, you know, so to get patient and payer feedback is still in the process, but overall, it's been extremely positive. I think, overall, from a standpoint, we believe that this is going to ultimately provide a much better experience for the patient, you know, the ability to focus on a single company to support them, as well as to be able to get their products hopefully, you know So, you know, it's early on, I think we'll continue to gather that information, but that's where we are on it right now.

Speaker Change: Yes, I'll just talk a little maybe al Carte started at a high level I think it's been clear the feedback.

Speaker Change: It has been that this is clearly in line with the strategy you talked about.

Speaker Change: Continuing to invest inorganically, specifically in the patient direct space continuing to provide a better solution. It's still early on we.

Edward Pesicka: It's still early on, so would it get the patient and the payer feedback; that's still in process, but overall it's been extremely positive. I think overall from a standpoint we believe that this is going to ultimately provide a much better experience for the patient, the ability to focus on a single company to support them, as well as be able to get their products hopefully, potentially more efficiently. And then the same with the payers being able to continue to work with. So it's early on; I think we'll continue to gather that information, but that's where we are on it right now.

Speaker Change: So to get the patient and the payer feedback that.

Speaker Change: Still in process, but overall, it's been extremely positive I think overall from a standpoint, we believe that this is going to ultimately provide a much better experience for the patient the ability to focus on a single company to support them as well as to be able to get their products hopefully potentially more efficiently and then.

Speaker Change: Same with the payers being able to have.

Speaker Change: Continue to work with us. So it's early on I think we'll continue to gather that information, but that's where we are on it right now.

John Leon: And a follow-up on Patient Direct, you did call out some movements in the quarter on NIV and oxygen. Could you call out any trends or if that's more of a one-off with the own business, just given the exposure at RoTak?

Edward Pesicka: and a follow-up on patient Iraq. You did call out some news myths in the quarter on an idea at Oxygen. Could you call out any friends, or if that's more of a one-off with the own business just given the exposure at road tax? No, I would tell you what we've done in terms of growing an idea at Oxygen. I would call that you'd need to us, I'm confident that you need us and we have plans in place of working on that to remember that in the back half of the year. Okay, maybe some learning from the New Deal.

Speaker Change: And a follow up on patient direct you did call out some useful to you.

Speaker Change: Quarter on Niv Ox Jan could.

Speaker Change: Could you call out any trends or if that's more of a one off with the owned business just given the exposure at low tech.

John Leon: Now, I would tell you what we've missed for a couple quarters now, Seth, and we've talked about when we weren't doing what we should be doing except for growing NIV and oxygen. I would call that unique to us, I'm confident saying that's unique to us, and we have plans in place and are working on that to remedy that in the back half of the year.

Speaker Change: No.

Speaker Change: What we've seen is now a couple of quarters now and we've talked about when we're not doing what we should be doing and expect to do in terms of growing at Ivy oxygen.

Speaker Change: Ill call that you'd need to us confidence, saying thats unique to us and we have plans in place and working on that to remedy that in the back half of the year.

Stephanie Davis: Hey, maybe some learnings from the new deal. Thank you very much. Exactly. Exactly.

Speaker Change: Oh, maybe some lines in the media. Thank you much exactly.

Edward Pesicka: Thank you much. Exactly, exactly.

Speaker Change: <unk>.

Operator: Your next question comes from the line of Daniel Grosslight with Citi. Please go ahead.

Daniel Grosslight: Your next question comes from the line of Daniel Grosslight with City. Please go ahead. Hi, Ashlo, and that being meaningfully, you expect that to be meaningfully better in the second half versus the first half. You know, that would put you in kind of solidly positive recast low territory for this year versus your commentary last quarter where you thought you would be effectively flat or no free cash low this year. So I'm just curious what changed in your thinking, where are you out performing your initial expectations, and I just wanted to confirm that that cash low commentary also contemplates that, you know, $30 million plus payment in the back half of this year.

Speaker Change: Your next question comes from the line of Daniel Gross site with Citi. Please go ahead.

Daniel Grosslight: and that being meaningfully, you expect that to be meaningfully better in the second half versus the first half. You know, that would put you in kind of solidly positive free cash flow territory for this year versus your commentary last quarter where you thought you would be effectively flat or have no free cash flow this year. So I'm just curious, what changed in your thinking? Were you outperforming your initial expectations? And I just wanted to confirm that that cash flow commentary also contemplates that $30 million plus payment in the back half of this year.

Speaker Change: Hi, Thanks for taking the question Hey go back to some comments you made around cash flow and that being meaningfully you expect that to be meaningfully better in the second half versus the first half that would put you in kind of solidly positive free cash flow territory for this year versus your commentary last quarter, where you had.

Speaker Change: Thought you'd be effectively flat.

Speaker Change: Or no free cash flow.

Speaker Change: This year, so I'm just curious what.

Speaker Change: What changed in your thinking where are you outperforming your initial expectations and I just wanted to confirm that that cash flow commentary also contemplates that $30 million plus payment.

Speaker Change: In the back half of this year.

Jonathan Leon: Well, yes, it does. First of all, today is John. Secondly, I would tell you the increased cost of cash low comes around our focus and the visibility into the working capital activities currently underway. You know, we've talked about a lot of school quarters about the inventory ramp and had talked a lot about the toy being a little bit higher now for some shipping purposes, getting ahead of that curve. But even throughout most of the second quarter, we saw inventory be pretty well moderated compared to Q1, ran a little bit late in the quarter. But I think, as we think about that, we get a little smarter about our AP and our AR and getting better terms from folks.

John Leon: Well, yes, it does, first of all, David and John. Secondly, I would tell you increased confidence in cash flow comes around the focus on and the visibility into the working capital activities currently underway. We've talked about the last couple of quarters about the inventory ramp, and Ed talked earlier about inventory being a little bit higher now for some shipping purposes, getting ahead of that curve. But even throughout most of the second quarter, we saw inventory be pretty well moderated compared to Q1.

Speaker Change: Well, yes. It does first of all David John typically I would tell you the increased confidence in cash flow comes around our focus in the visibility into the working capital activities currently underway.

Speaker Change: We've talked about last couple of quarters about the inventory ramp and had talked earlier about inventory being a little bit higher now for some shipping purposes getting ahead of that curve, but even throughout most of the second quarter, we saw inventory pretty well moderated compared to Q1 rental a bit late in the quarter, but I think as we think about that.

John Leon: It ramped up a little bit late in the quarter, but I think as we think about that and we get a little smarter about our AP and our AR and get better terms from folks, I think we're pretty confident that cash will get better as the year goes on. We're off to a great start.

Speaker Change: And we get a little smarter about our AP or AR.

Speaker Change: And getting better terms for folks I think you'll see we're pretty confident that cash will get better with the SEC.

Jonathan Leon: I think you'll, we're pretty confident that cash will get better if you hear those on. We're seeing better collections on a regular basis that had a patient directed to. Got it. Okay.

Speaker Change: Those are.

Speaker Change: Yes.

Daniel Grosslight: Got it. Okay. Okay.

Speaker Change: Okay.

Speaker Change: I'm sorry.

Speaker Change: We're seeing better collections on a regular basis that had had a patient directed sale.

John Leon: And there were some legal expenses this quarter, I think, related to APRIA. I'm just curious what's driving that and if you expect to see increased legal expenses for the remainder of the year. No, nothing going forward. That was a one-time settlement of an action that began before we bought APRIA. So that has now been settled behind us. So nothing else going forward associated with that. Okay, great. Thank you.

Speaker Change: Got it okay, Okay and there were some.

Jonathan Leon: And there were some legal expenses this quarter, I think, related to the, to Africa. I just curious what's what's driving that? And if you expect to see increased legal expenses for the remainder of the year. No, nothing going forward. That was a one-time settlement of an action that began before we bought Africa. So that has now been failed in behind us. So there's nothing else going forward. So to do with that. Okay. Great.

Speaker Change: Legal expenses this quarter I think related to.

Speaker Change: The.

Speaker Change: Two the App just curious what.

Speaker Change: What's driving that and if you expect to see increased legal expenses for the remainder of the year.

Speaker Change: No nothing going forward that was a onetime settlement.

Speaker Change: An action that began before we bought <unk>. So that has now been settled and behind us. So there's nothing else going forward associated with that.

Speaker Change: Okay, great. Thank you.

Eric Coldwell: Thank you. Your next question comes from the line of Eric Coldwell with Beard. Please go ahead. Thank you very much. I apologize if I missed a couple of these. I, for some reason, have had a hard time. With the connection here, just a little bit hard to understand some things. In 2Q, did you break out the difference between medical distribution growth and product growth that combined to got you to the 4%? Did you give the growth rate? No, we did not. Can you? Well, I think we said that distribution grew 5% and overall the savings grew 4.

Operator: Your next question comes from the line of Eric Coldwell with Baird.

Speaker Change: Your next question comes from the line of Eric Coldwell with Baird. Please go ahead.

Eric Coldwell: Thank you very much. I apologize if I missed a couple of these. I, for some reason, have had a hard time with the connection here. Just a little bit hard to understand some things. In 2Q, did you break out the difference between medical distribution growth and product growth that combined to got you to the 4%? Did you give the... No, we did not.

Eric Coldwell: Thank you very much I apologize if I missed a couple of these.

Speaker Change: For some reason they've had a hard time.

Eric Coldwell: With the connection here.

Speaker Change: Just a little bit hard to understand some things.

Speaker Change: In <unk> did you break out the difference between medical distribution growth and products growth that combined you got you to the 4% did you give the.

Speaker Change: 303, no we didn't we.

Speaker Change: We did not can you.

Unknown Attendee: Well, I think we said that the distribution group 5% and the overall segment group 4 so I think... Okay, I didn't...

Speaker Change: Well I think we've said distribution grew 5% and overall the segment grew four so I think okay.

Unknown Attendee: Okay, I didn't hear that. It's been a bad connection today, on the. Cash flow, I know you've given a number of reasons why it improved, but I still am not sure why the original guidance was flat and now it's so much different. Was it that you're just fundamentally managing the business differently, or? Things you expected, uh, through Q1 up to the last call, just, they're, they're turning out differently than you originally expected. It just seems like a... A very different conversation 90 days later than it was 90 days ago.

Unknown Attendee: I didn't hear that. It's been a bad connection today. Okay.

Speaker Change: I didn't hear that it's been a bad connection today okay.

Speaker Change: Okay.

Jonathan Leon: And then on the cash flow, I know you've given a number of reasons why it improves, but I still am not sure why the original guidance was flat and now it's so much different. What was it that you're just fundamentally managing the business differently, or things you expected through Q1 up to the last call, just they're turning out differently than you originally expected. It just seems like a very different conversation 90 days later than it was 90 days ago. I think that's fair. And I think it comes down to, as one is focus as we continue to look forward.

Speaker Change: And then.

Speaker Change: On the.

Speaker Change: Cash flow I know, you've given a number of reasons why it improves but I still am not sure why the original guidance was flat and now it's so much different but.

Speaker Change: Was it that you just fundamentally managing the business differently or.

Speaker Change: Things you expected.

Speaker Change: Through Q1 up to the last call just they're turning out differently than you originally expected it just seems like a.

Speaker Change: A very different conversation 90 days later than it was 90 days ago.

Eric Coldwell: I think that's fair, Eric, and I think it comes down to one thing, focus, you know, as we continue to look forward. I think you've got better visibility now into forecasting of where we think their opportunities in the lever are, you know, and then it's execution on some of the initiatives we have to drive working capital improvement. So, you know, those three major factors are where it is, it's, you know, the focus, it's, you know, improved forecasting and, you know, our ability to execute on that.

Speaker Change: I think Thats fair, Eric I think it comes down to as one is focus.

Speaker Change: As we continue to look forward.

Jonathan Leon: I think you've got better visibility now into forecasting of where we think is where their opportunities in the lever are. And then it's execution on some of the initiatives we have to drive working capital improvement. So that's those three major factors are where it is. It's the focus. It's improved forecasting and our ability to execute on some of those opportunities. Great.

Speaker Change: I think you've got better visibility now into forecasting of where we think where there are opportunities in the lever are and then it's execution on some of the initiatives we have to drive working capital improvements so.

Speaker Change: Those three major factors are where it is it's the focus is.

Speaker Change: Improved forecasting.

Speaker Change: Our ability to access our ability to execute on some of those opportunities.

Ed Pesicka: Great, and now I'm just going to go back to the medical distribution growth of the 5%. Would you be capable of breaking out how much of that growth was market versus new wins? Yeah, I think it's probably the same.

Speaker Change: Great and I'll, just kind of go back to the medical distribution growth of.

Jonathan Leon: And now I'll just going to go back to the medical distribution growth of the 5%. Would you be capable of breaking out how much of that growth was market versus new wins? Yeah. I think it's the same store versus new ones. Yeah. I think it's, you know, if I think about the two of them, they're relatively consistent. I mean, so what's hard to do is, you know, our same store sales, if we look at the same store sales, they're consistent with that 4%, and then our wins, you know, are consistent to help move that up further.

Speaker Change #100: 5% would you be capable of breaking out how much of that growth was market versus new wins.

Speaker Change #100: Yes.

Speaker Change #100: Same store versus new wins.

Ed Pesicka: Yeah, I think it's, you know, if I think about the two of them, they're relatively consistent. I mean, what's hard to do is, you know, our same-store sales, if we look at our same-store sales, they're consistent with that 4%, and then our wins, you know, are consistent to help move that up further. And then there's still some remnants of some other losses we've had in the past that are coming out. So that's the way I would think about it from that standpoint.

Speaker Change #101: If I think about the two of them they are relatively consistent.

Speaker Change #102: So it is hard to do is.

Speaker Change #102: Our same store sales if we look at our same store sales they are consistent with that 4% and then our wins.

Speaker Change #102: Our consistent to help move that up further.

Unknown Attendee: And then there's still some remnants of some other losses we've had in the past that are rolling out. So that's the way I think about it is from that standpoint. Got it. Okay. Thank you very much. I appreciate it.

Speaker Change #102: And then Theres still some remnants of some other losses, we've had in the past that are rolling out. So that's the way I would think about it is from that standpoint.

Eric Coldwell: Got it. Okay. Thank you very much. I appreciate it.

Speaker Change #103: Got it okay.

Speaker Change #104: Thank you very much I appreciate it.

Edward Pesicka: Second, I will now turn the conference over to Ed Pasica for closing comments. So thanks, everyone, and you know, excited and thankful that everyone joined the call today. Now, if we think about, you know, the future dollars of mine, we're extremely excited of what's yet to come in here. You know, we continue to execute on our long-term strategy. We continue to focus on our operating model. You know, we continue to get excited about the potential and future integration and approval of the Rotex rolling that into our patient direct business, which will provide we believe significant better service for our patients, providers as well as the payers. And really pleased with the progress we've made to this point in time in our product and health services business.

Ed Pesicka: That concludes our question and answer session. I will now turn the conference over to Ed Pesicka for closing comments.

Ed <unk>: That concludes our question and answer session I will now turn the conference over to Ed <unk> for closing comments.

Operator: So thanks everyone, and you know, excited and thankful that everyone joined the call today. Now if we think about, you know, the future at Owens & Minor, we're extremely excited about what's yet to come. You know, we continue to execute on our long-term strategy. We continue to focus on our operating model. You know, we continue to get excited about the potential and future integration and approval with Rotec, rolling that into our patient-direct business, which will provide, we believe, a significantly better service for our patients, providers, as well as payers. And we're really pleased with the progress we've made to this point in time in our product and healthcare services business. So with that, I appreciate the time today and look forward to talking again next quarter. Thank you.

Ed <unk>: So thanks, everyone excited and thankful that everyone joining the call today now if we think about the future at Owens <unk> minor we're extremely excited of what's yet to comment here.

Speaker Change #106: We continue to execute on our long term strategy. We continue to focus on our operating model. We continue to get excited about the potential and future integration and approval with the <unk> rolling that into our patient direct business, which will provide we believe significant better service for our patients providers as well as the payers.

Speaker Change #106: And really pleased with the progress we've made to this point in time in our product and health care services business. So that I. Appreciate the time today and look forward to talking again next quarter. Thank you.

Unknown Attendee: So that appreciate the time today and look forward to talking again next quarter. Thank you.

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Unknown Attendee: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Speaker Change #107: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Unknown Attendee: I hope you enjoyed this video. If you did, please give it a thumbs up. I would really appreciate it. I'll see you in the next video.

Speaker Change #107: Yes.

Speaker Change #107: Yes.

Speaker Change #107: Yes.