Q4 2024 Outset Medical Inc Earnings Call
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Speaker Change: Good day, and thank you for standing by walking to the outset medical fourth quarter 2024 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session will need to press star one on your telephone.
Speaker Change: Here, an automated message advising your hand is raised to withdraw your question. Please press star. One again. Please be advised today's conference is being recorded I would now like to hand, the conference over to your speaker today, Jim Mazola head of Investor Relations. Please go ahead.
Leslie Trig: Okay. Thanks, Kevin and good afternoon, everyone welcome to our fourth quarter 2024 earnings call here with me today are Leslie Trig Chair and Chief Executive Officer, and <unk> Financial Officer.
Speaker Change: The news release after the close of market today, which can be found on the investor pages about set medical Dot Com. This call is being recorded and will be archived on the investors section of our website. It is our intent that all forward looking statements made during today's call will be protected under the private Securities Litigation Reform Act of 1095, these statements relate to expectations or predictions.
Speaker Change: Future events and are based on our current estimates and various assumptions and involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied outset assumes no obligation to update these statements for a list and description of the risks and uncertainties associated with our business. Please refer to the risk.
Speaker Change: Risk factors section of <unk> public filings with the Securities and Exchange Commission, including our latest annual and quarterly reports.
Speaker Change: With that I'll turn the call over to Leslie Thanks, Tim Good afternoon, everyone and thank you for joining us.
Leslie Trig: The fourth quarter again highlighted the commitment of our entire outset team to dialysis patients and providers and showcase the financial clinical and operational advantages tableau delivers in the markets we serve.
Leslie Trig: The business performed well in the quarter driven by our strong recurring revenue business model and continued sales transformation progress we.
Leslie Trig: We demonstrated another quarter of sequential revenue growth and notable increase in gross margin a decline in operating expenses driven by our cost down measures and a significant strengthening of our balance sheet with the financing we announced on January eight attack.
Leslie Trig: Revenue for the fourth quarter with $29 $5 million ahead of our earlier expectations, which enabled us to finish 2024 with revenue of $113 $7 million. While this was below our original plan for the year. We were pleased to finish with two quarters of progress and ahead of the updated guidance we provide.
Leslie Trig: It in August.
Leslie Trig: Strong utilization across the now nearly 6000 tablets and our installed base drove another record quarter of recurring revenue.
Leslie Trig: Recurring revenue grew 13% sequentially and 17% over the fourth quarter of last year on.
Leslie Trig: On a console installed base grew 10% during the year recurring revenue grew 21% for the full year, reaching $83 9 million.
At this pace, we expect recurring revenue exiting the fourth quarter of 2025 to be on a run rate of more than $100 million annually.
Leslie Trig: We also continue to see strong average selling prices for our counsels and treatments and non-GAAP gross margin continue to expand as we sold more treatments and services across a larger installed base.
Turning to our end markets during the quarter. We continued to have success with acute care providers ready to in source their dialysis service line.
Leslie Trig: There are now nearly 4500 tableau council deployed at 850 acute and <unk> sites.
Leslie Trig: United States.
Leslie Trig: We talked about gaining scale in the acute setting as we began 2024 and we exited the year, having objectively solidified that presence as we expanded the breadth and depth of tablets footprint with an existing large health system customers as well as securing contracts with new marquee customers.
Leslie Trig: Looking ahead to the next 10 plus months of 2025, we anticipate much of our growth to come again from this end market.
Leslie Trig: We are pleased with the size and quality of the later stage opportunities in our pipeline and our sales team has made tremendous progress establishing the business case and support for outfit and tableau within each.
Leslie Trig: We recently hosted the Chief Nursing officer from a 350 bed regional hospital in the southeast to talk about results of their in sourcing program one year after its implementation.
Leslie Trig: The driver for change was something we hear often this hospital is paying where it believed to be an exorbitant cost for subpar care and service from its former outsourced provider.
Speaker Change: Casino told us that extra fees were regularly charged as a result of the outsource providers for operations.
Speaker Change: Our team came in as a partner to help build the business case support the piano and establishing a coalition for change and then rolled up his sleeves to assist in the implementation.
Speaker Change: One year after standouts.
Speaker Change: Ported that treatments had increased by more than 280%, which she attributed to the greater confidence that nephrologists in patients had with the quality and efficiency of the facilities in sourced service line.
Speaker Change: Their overall treatment completion rate is now greater than 95% and remarkably central line bloodstream infections, one of the serious and costly hospital acquired infections were reduced by 75%.
Speaker Change: Despite hearing stories like this all the time their impact never diminishes, the clinical operational and financial benefits tableau delivers for dialysis and sourcing are clear compelling reproducible and unique to our pets, which is why we are so confident in our strategy and our ability to execute against it in 2025.
Speaker Change: And beyond.
Speaker Change: Turning to the home end market, we continue to expand tablet abuse, among mid sized dialysis providers and within skilled nursing facilities, we again saw industry, leading retention rates above 90% at 90 days.
Speaker Change: There are now approximately 1425 tableau console deployed through home providers.
Speaker Change: While change takes longer in that setting we continue to make steady progress and remain driven by the stories from people who tell us their lives have been changed for the better by having access to tableau at home or in their post acute setting.
Speaker Change: From an operational perspective, we were pleased last week to receive notification from FDA that the warning letter from July of 2023 had been officially close.
Speaker Change: This milestone is followed a comprehensive FDA inspection in the fall, which successfully concluded with no 43 observations.
Speaker Change: Innovation will always be at our core and therefore, our quality system and regulatory compliance are essential it outside.
Speaker Change: I'm very proud of how our team responded and proud of the commitment to continuous quality improvement, but we haven't got it across the organization.
Speaker Change: In addition to the warning letter closure. Another recent accomplishment was the recapitalization of the company that we announced on January six.
Speaker Change: The goal of the financing was to reassure our key constituents investors customers and employees of our ability to reach cash flow breakeven based on our current projections with ample resources to prosecute our mission we.
Speaker Change: We secured a $172 $7 million in equity financing of which $168 8 million was from a group of marquee, new and existing investors and $3 9 million that will be invested by members of management and the board.
Speaker Change: An important element of the financing with the significant reduction in our outstanding debt from $200 million to 100 million, which we refinanced with a new highly regarded credit partner.
Speaker Change: The new debt agreement pushes out the maturity to 2030 and provides the option to access an incremental $25 million.
Speaker Change: We now have opened 2025 with approximately $210 million of cash which based on our current projections provides the fund is expected to capitalize the company through cash flow breakeven and beyond.
Speaker Change: Related to the recapitalization, we have a special meeting of shareholders scheduled for March 5th.
Speaker Change: I encourage all shareholders to carefully review the proxy and vote your shares.
Speaker Change: Among several proposals under consideration at the meeting we ask for your support to convert the preferred shares already issued to common shares.
Speaker Change: And authorized a reverse split of the shares.
Speaker Change: We believe the reverse split will benefit the company in two ways the.
Speaker Change: The first is in our ability to attract new investors, who may be restricted from purchasing stocks below a certain price thresholds and second we believe the reverse split and they provide commercial benefit by ensuring that how customers perceive the company's financial strength matches, the company's actual financial strength.
Speaker Change: Our rationale for these and all the proposals are outlined in the proxy and we're available to answer questions shareholders may have as they consider these important matters.
Speaker Change: I said last quarter that we expect the full dividends if our sales transformation to be realized beginning in the first half of 2025, and we remain on track to reach that goal.
Speaker Change: Three weeks ago, we brought the entire team together at our National sales training meeting with the goal of leaving with deeper competency on all aspects of our sales model and go to market strategies.
Speaker Change: During the week our team learn from one another about best practices and were inspired through the participation of customers eager to share stories of the clinical financial and operational benefits they've realized by deploying tableau.
Speaker Change: With the sales training meeting completed key roles hired and process improvements in place. We look forward to seeing the results of this highly experienced and motivated team over the coming quarters.
Speaker Change: Our guidance for 2025, which Neil will outline is intentionally conservative to provide some time to help ensure the benefits of the transformation we've undertaken are durable.
Speaker Change: Her foundational Lee we are very bullish on the competitive advantages tableau and its established ecosystem can deliver.
Speaker Change: We've demonstrated time and again that one's tableau is deployed it is used consistently and that's consistent use to drive strong growing and predictable recurring revenue.
Speaker Change: We have demonstrated the tableau delivered compelling clinical financial and operational benefits to providers and the acute sub acute and home settings.
Speaker Change: And we've demonstrated our ability to expand non-GAAP gross margin, which in 2024 expanded by nearly 12 percentage points.
Speaker Change: Finally, we've demonstrated our ability to rightsize, our cost structure by removing approximately $80 million of annualized that.
Speaker Change: These actions taken together have enabled us to reduce our cash use projections in 2025 by more than 50% to less than half of what was used in 2024.
Speaker Change: With all of these steps behind us our focus in 2025 with a transformed commercial team is on re accelerating revenue growth.
Speaker Change: And we have a solid foundation on which to build.
Speaker Change: The challenges of 2024, the tableau installed base grew by 10%.
Speaker Change: Recurring revenue grew by 21% and we are now in a run rate to perform more than 1 million treatments annually.
Speaker Change: With recurring revenue over a seven year useful life of approximately $15000 per year for each tableau council deployed in the home and $20000 per year for each tablet parcel deployed in the acute market. We estimate that there is still a half a billion dollars in recurring revenue yet to be realized from the current.
Speaker Change: Okay.
Speaker Change: As we think about the year ahead, our priorities are clear we are first and foremost focus on reigniting revenue growth and specifically copper growth. Our sales transformation has been designed and implemented to help us do just that.
Speaker Change: During the second half of 2024, we saw some positive early indicators such as pipeline expansion and deal progression, but also recognize that our work here continues.
Speaker Change: We expect to see the full benefits of these changes reflected in castle rock as we move through the year.
Speaker Change: Next we are committed to continuing to expand our gross margin. This has been a remarkable success for help that in an area with significant incremental upside ahead.
Speaker Change: And finally with a recapitalized balance sheet, we are focused on using every lever at our disposal to accelerate our path to profitability.
Speaker Change: While 2024 with a year of challenge and transformation for US what has not changed is the enormity of our market opportunity the proprietary competitive advantages of tableau and the power of its economic and clinical value proposition.
Speaker Change: These bad rock strength are at the heart of how we've driven a 50% increase in the number of health care facilities using tableau in just the last two years.
Speaker Change: We have increased our installed base by 47% in the same period and why we continue to see treatment expansion accelerating.
Speaker Change: For example, it took US 4.8 years to reach 1 million cumulative treatments.
Speaker Change: By contrast, it took us an incremental 17 months to reach 2 billion cumulative treatments and we are just getting started.
Speaker Change: I want to thank our entire team for their commitment to the patients. We serve in addition to their commitment to drive growth lower expenses and reach our shared goal of profitability.
Neil: And with that I will turn it over to Neil.
Neil: Thanks, Leslie Hello, everyone.
Neil: Revenue for the fourth quarter of $29 $5 million grew 3% sequentially driven primarily by recruiting treatment and service revenue from continued strong tableau utilization.
Neil: On a year over year basis revenue declined 3% due to lower console sales for the reasons. We previously discussed partially offset by strong recruiting treatment and service revenue.
Revenue of $21 million, consisting of console revenue of $5 million and treatment revenue of $15 $3 million grew 3% from $23 million in the third quarter and declined 8% from $22 $9 million in the prior year.
Neil: Service and other revenue of eight and a half million dollars was roughly even with the third quarter and grew 11% year over year.
Neil: Recurring revenue from the sale of tableau cartridges and service reached $23 $7 million, an increase of 13% from the third quarter and 17% year over year.
Neil: We continue to see strong culturally a speed across all end markets as a result of our disciplined pricing uptake with acute customers of our tableau pro plus offering and the return of tableau Clark with pre filtration.
Neil: So with acute customers.
Neil: Now moving to gross margin and operating expenses, which as a reminder, reflect our non-GAAP results.
Neil: Please refer to the reconciliation of GAAP to non-GAAP measures found in today's earnings release.
Gross margin for the fourth quarter of 37, 6% increased to 119 basis points sequentially.
Neil: By nearly 11 percentage points from last year.
Neil: This growth was underpinned by progress in both product and service and other gross margin.
Neil: Product gross margin was roughly flat sequentially and increased nearly eight percentage points year over year to 44, 3%.
Neil: Service and other gross margin was negative two 5% in the prior year period and reached 29% in the fourth quarter of 2024.
Neil: As I mentioned last quarter gross margin was adversely affected in the short term due to lower absorption of manufacturing overhead as a result of our reduced console build plan.
Neil: First to reduce inventory levels.
Neil: Absent the impact of under absorption of manufacturing overhead, which dampened the gross margin by approximately 300 basis points in the quarter.
Neil: You would have seen non-GAAP gross margin of just over 40%.
Neil: Operating expenses of $26 $6 million declined by 27% from the prior year period.
Neil: Given by our ongoing focus on expense management and the restructuring actions we've taken.
Neil: Net loss was $19 $3 million or <unk> 37 per share roughly 35% lower than the fourth quarter of 2023, reflecting the positive results of our drive to profitability.
Neil: Moving to our balance sheet, we ended the fourth quarter with $162 million in cash cash equivalents short term investments and restricted cash as well as we mentioned following our financing in January we had approximately $210 million on the balance sheet and have reduced our outstanding debt from $200 million.
Neil: Two $100 million maturing in 2030.
Neil: Based on our current projections, we believe this level of cash gets us through cash flow breakeven.
Neil: To close out the full year of 2024, we reported revenue today of $113 $7 million, which was ahead of our pre announced in January and the revised guidance. We had provided in August of last year.
Neil: Product revenue was $81 million, a decrease of 22% due to lower console sales for the reasons, we have previously covered.
Neil: Service and other revenue was $32 $7 million, an increase of 22% from 2023, driven by higher service renewal rates across a larger installed base.
Neil: Recurring revenue for the full year was $83 $9 million representing growth of 21% compared to a recurring revenue in 2023.
Neil: Gross margin for the year increased nearly 12 percentage points to 35, 6% or roughly 37%, excluding the impact of manufacturing under absorption.
Neil: Operating expenses in 2024 were $119 $3 million declining 26% from 2023 due to the focused efforts to restructure and streamline our operations and accelerates our path to profitability.
Neil: Operating expenses included R&D expenses of $29 $1 million sales and marketing expenses of $61.9 million and G&A expenses of $28 $3 million.
Neil: Net loss was $93 $4 million or $1 79 per share a 29% decline compared to $131 $6 million or $2 65 per share for 2023.
Neil: Turning to our guidance for 2025 as Leslie mentioned, our approach is to be conservative. We expect revenue for the full year of 2025 to be between $115 million to $125 million. The midpoint of this range would imply that the installed base and recurring revenue both grew.
Neil: By roughly 10%.
Neil: For modeling purposes, we anticipate revenue to be the lowest in the first quarter and then build as we move through the year.
Neil: Moving down the income statement, we expect another year of gross margin expansion in 2025 with gross margin for the full year in the high 30% range.
Neil: As we discussed on last quarter's call the rate of expansion will be affected as we burn down of inventory levels and under absorbed manufacturing overhead.
Excluding the impact of under absorption, we would anticipate company gross margin exiting the year above 40% in the fourth quarter of 2025.
Neil: We plan to continue to quantify this impact to non-GAAP gross margin each quarter to help you model the trajectory.
Neil: Although gross margin may fluctuate on a quarter to quarter basis as a result of our product mix. We remain right on track to meet our next gross margin milestone of 50% again gross margin expansion is driven by recurring revenue from a larger installed base.
Neil: Service leverage and our control cost down programs.
Neil: With the cost reductions we have undertaken we now anticipate opex in 2025 of roughly $90 million below the $100 million run rate that we projected on our third quarter call.
Neil: This combination of expected revenue growth continued gross margin expansion and the ongoing opex and working capital discipline means that we expect to use under $50 million of cash in 2025, which is less than half the $103 million we used in 2024.
Neil: Lastly, as it relates to our 2025 outlook I want to address the potential impact of tariffs that have been proposed on goods imported from Mexico. As you know we have a state of the art manufacturing facility in Mexico, where tableau tableau cart and tableau cartridges are produced.
Speaker Change: Do not believe we will have exposure to potential terrorists as our products are covered under a special exemption.
Speaker Change: In addition, we've previously said that we are carrying adequate control inventory, we believe will satisfy most of our anticipated demand in 2025, and which are already in the United States.
Speaker Change: We also have treatment inventory staged in the United States to meet near term demand and we are able to shift a portion of our future production to Thailand should it be necessary.
Speaker Change: To close we operate in large end markets, where our strong value proposition continues to resonate and with two quarters of good progress under our belts. We look forward to returning to growth in 2025, and continuing on our path of gross margin expansion and to profitability with that I think we're ready for Q&A operator, Please open the line.
Yes.
Speaker Change: Thank you, ladies and gentlemen, instead of a question or a comment at this time. Please press star one on your telephone. If your question has been answered you were soon with yourself from the queue. Please press star one again.
Speaker Change: We will pause for a moment, while we compile the Q&A roster.
Speaker Change: Yeah.
Speaker Change: Our first question comes from <unk>. Your line is open.
Speaker Change: Hi, good evening, thanks for taking the questions and nice quarter.
I wanted to ask quickly here for both the qualitative and quantitative outlook on the console side I heard in the comments about a 10% increase.
Speaker Change: Increase in installed base, if we take the midpoint of the guide, but if I look at the Q4 console revenue.
Speaker Change: Think sequentially down from Q3, if I got the math right I might be wrong.
Speaker Change: So I wanted to understand kind of what youre seeing from a sales force that continues to give you guidance I mean confidence in the turnaround.
Speaker Change: Any updates on large deals and how you would envision kind of the midpoint of the guidance or console sales working throughout the year cadence throughout the year. Thanks.
Speaker Change: Sure, maybe I'll I'll start and hope you all feel free to jump in yeah, a completely fair question on the console apprised. Luckily we had a lot of change and a lot to change in 2024 and.
Speaker Change: And we have a nine to 12 month sales cycle and so as we look forward here you know number one we start to annualize that.
Speaker Change: Number two the newly hired capital sales reps from 2024.
Become fully tenured in the first part of 2025 here and also were anchored by what we're seeing in the pipeline now understandably I believe we want to be conservative as we lay out the year here, but what is true is that all of the sales management.
Speaker Change: <unk> management steps are behind us the regulatory changes are behind us the balance sheet perceptions are behind us all of which can really increase our conviction on delivering strong household growth. This year and 2025 now it's really a matter of continuing to inspect and ensure that the right disciplines are being practiced consist.
Speaker Change: Generally across the country, but that's the changes are firmly in place and and there. There is good evidence of them, taking risk, which kind of gets to your question about pipeline. So let me go to their next.
Speaker Change: Here's kind of what we're seeing on the on the pipeline side first of all it continues to grow and growing in a high quality. Finally inspected way just in Q4 alone we saw more than 10% growth in the 2025 pipeline.
Speaker Change: Now roughly 70% of our top opportunities forecasted to close this year are already in the latest stages of our sales process that is an advantage. We have never enjoyed in the past as we've entered a new year. So so that's new the size of the pipeline is new.
And the diversification is no we've got really good healthy diversification between existing customers, who are now looking to expand their use of cat load across new hospitals in their networks and also new customers.
Speaker Change: Choosing to in source for the first time in 2025 with tableau, we have good diversification between.
Speaker Change: National contracts and large regional IGN contract and really good distribution across deal sizes. We are continuing to see a high percentage of potential large console opportunities that we do expect to close in 2025. So all in all again, we've had a lot of change to absorb.
Speaker Change: Org and and for the team to internalize and get good at but those changes really are behind us and we are now in the kind of what I called a rinse and repeat part of change management under the new model hopefully that helps me.
Speaker Change: Yeah, that's a lot of great detail. Thank you for that lovely I guess on the flip side, you know treatments continue to be very very strong with your consumables revenue.
And I'm curious what drove it I mean, it was at higher rates of utilization of turnover or was there. Some ASP lift that came along with some of these concerns consumables what was kind of behind some of the.
Speaker Change:
Speaker Change: A good one or 2 million higher than we had forecasted.
Speaker Change: Yeah, Hey, Marie we too were really pleased with our recurring revenue performance and specifically treatment sales. We did see very strong console utilization on our larger installed base and as we have seen in previous fourth quarters, we did see a little bit of stocking, but again nothing that I would call out.
Speaker Change: Okay very helpful. Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Shark I'm, staying with RBC capital markets. Your line is open.
Speaker Change: Thank you so much I was hoping maybe we could start on the P&L and gross margins. If you can walk us through the cadence for the year in 2025 on gross margins as well as Opex and then you know given you know gross margins.
Speaker Change: Sorry, its already given R&D was about 500 basis points below expectations.
Speaker Change: Expectations in Q4, I'm just wondering if you could also walk us through some of the areas of Opex cuts on R&D as well as SG&A you know you're also investing given the commercial focus so just walk us through some of the building blocks for 2025 that would be helpful.
Speaker Change: For sure yes sure. So please just keeping on track here with respect to gross margin we printed.
Speaker Change: At 35, 6% here for the full year, and we expect that to expand to the high 30% zone now remember our gross margin will continue to be adversely affected by this under absorption of manufacturing overhead.
Speaker Change: Since that you know, it's been roughly 300 basis points in the last couple of quarters. So we could think about it in a similar ZIP code for next year with respect to the quarters. We tend to generally expect linear gross margin expansion, but that can be affected by our product mix whether.
Speaker Change: Its wound versus acute consoles or treatment sales versus consoles, so that might put a little bit of a what I'll call. It noise in the quarterly progression on gross margin.
Speaker Change: With respect then to Opex. So again, we printed just under a $120 million of Opex in 2024.
Speaker Change: And based on the annual amortization of the of the cuts that we made of the restructuring actions. We've taken we expect opex in 2025 to be in the $90 million zone.
Speaker Change: And they get Opex for us tends to be relatively linear we do see a little bit more in the fourth quarter as we true up annual incentive comp that sort of thing, but otherwise it tends to be pretty linear.
Speaker Change: <unk> with respect to kind of where the cuts came from our cuts have been focused on making sure that we do not touch our commercial ability to execute and expand consoles. So we've kind of cut everywhere around that but remain convinced that we have the right commercial organization.
Speaker Change: And to execute against our objectives for 25, So let me pause hopefully that makes sense, yeah, I can I'll add just a little bit more color on the R&D specific question that you have forgotten.
Speaker Change: Let me give you a couple of examples that it starts with disciplined prioritization and so we are we are very very very clear and have extreme focus around what we need to get done in 'twenty five.
Speaker Change: And at the risk of repeating ourselves, it's reignite revenue growth continue to expand gross margins and execute against our very clear path to profitability.
Speaker Change: That's it and you know you can put that on a bumper sticker, that's what we're going to do.
Speaker Change: So as we looked at at R&D, We took a very disciplined approach to prioritizing kind of only the projects that directly benefited those three goals in the very near term. So said differently that meant we had to take a much closer look at R&D projects that were longer dated.
My name is that how does that pay off period that fell outside of our L. R P or towards the end of our ERP. That's an example of things that projects that were not undertaking in the near term. We also on the SG&A side. We're just seeing good old fashion operating leverage we are getting more done with fewer people.
Speaker Change: Which is exactly what you want to see in the business scale. So those are Oh, hopefully a few additional details to provide you with the context.
Speaker Change: Thank you so much.
Speaker Change: Yep.
Speaker Change: One moment for our next question.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Suraj Kalia with Oppenheimer. Your line is open.
Speaker Change: Like nobody else.
Speaker Change: Alright.
Speaker Change: Yes.
Speaker Change: Perfect.
Speaker Change: One question from my side No Bill obviously, you got a lot of positive commentary and you guys just prepared remarks.
Speaker Change: Greater than 50% reduction in cash outlay for 2025.
Speaker Change: You know what the industry is very capital intensive.
Speaker Change: I think so in some very narrow remarks I'll tell your commentary you said like you are not touching the commercial organization can you help tie both of those together in terms of cutting back so much.
Speaker Change: And the capital intensity required for growth in this business any additional color would be great. Thank you for taking my question.
Speaker Change: Hey, Suraj, yeah. So first of all with respect to our cash guidance. So number one we are expecting revenue to grow as we articulated in her cold number two we're expecting gross margin to expand as we talked about.
Speaker Change: And we have taken opex down from a gain of $120 million or roughly $90 million, that's $30 million of change right. There on top of that Suraj. We've previously talked about our efforts to reduce inventory levels.
Speaker Change: And reduce our console build plan to accommodate that and then finally, we have taken out a material amount of interest cash interest expense given a reduction from $200 million of debt to $100 million of debt. So that's kind of the bridge on cash on cash burn.
Speaker Change: Thank you I'm not showing any further questions at this time I'd like to turn the call back over to Leslie trick for any further comments.
Leslie Trig: Okay, great well, thanks to all of you for joining today I'd like to close by thanking our entire team again for the incredible difference there, making every day in the life of dialysis patients their families and the providers who care for them have a have a great evening. Thanks again.
Leslie Trig: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
Leslie Trig: Yeah.
Leslie Trig: [music].
Leslie Trig: [music].