Q2 2019 Earnings Call

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Well, let me I'll be your conference I'd number please.

Hi that will be 349.

Zero for fuel.

Thank you I mean, how the spelling of your first and last name.

Our eighth fees H E L.

S M I P H Rachel Smith.

Okay and your company name please.

Era A.I.E.

R&D.

And your email address please.

Rachel at Arrow Dot com.

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Thank you.

Ladies and gentlemen, thank you for standing by welcome to the Quidel Corporation second quarter 2019 earnings Conference call. At this time all participants are in a listen only mode. Later instructions will be given for the question and answer session. If anyone has difficulty hearing the conference. Please press star zero for operator assistance I'd now like to turn the call over to Mr. Rubin our data.

Quidels director of Investor Relations. Please go ahead.

Thank you operator, good afternoon, everyone and thank you for joining todays call.

With me today is our president and Chief Executive Officer, Doug Bryant, and Randy Stewart, our Chief Financial Officer.

Our second quarter 2019 earnings release is now available on IR dot quite ill dot com, our investor Relations website.

We will also post our prepared remarks on the presentations tab of our IR website. Following the conclusion of this call on August eight 2019 for a period of 24 hours.

Please note that this conference call will include forward looking statements within the meaning of federal Securities laws. It is possible that actual results and performance could differ significantly from these stated expectations.

For a discussion of risk factors. Please review quite Els annual report on Form 10-K registration statements and subsequent quarterly reports on Form 10-Q as filed with the FCC.

Furthermore, This conference call contains time sensitive information that is accurate only as of the date of the live broadcast August eight 2019.

Quite ill undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call, except as required by law.

Today quite L. released financial results for the three months ended June 32019, if you have not received our news release or if you would like to be added to the company's distribution list. Please contact me at 85864 680 to three.

Following doug's comments, Randy will briefly discuss our financial results then we'll open the call to your questions I'll now hand, the call over to Doug for his comments.

Thank you Ruben and good afternoon, everyone for todays call.

I will cover three topics our financial performance for the second quarter.

The status of products in development.

And very briefly as we've done in previous quarters, the status of the Danaher litigation and as always I'm happy to answer your questions as well following randy's remarks.

Regarding our financial performance ill begin by saying that we had a solid profitable quarter.

We met our expectations.

Total revenue was 108.3 million on a reported basis up 5%.

Over last year's Q2 on a constant currency basis total revenue was up 7% versus last year.

Randy will walk you through the specifics on each of the businesses in a moment.

I'll just comment briefly on a couple of the key revenue drivers in the quarter.

Clearly the prolonged influenza season was a tailwind.

Many of you had asked what our expectation was for influenza test revenue in Q2.

We said publicly that we certainly expected to exceed last year's Q2 influenza revenue.

Which was $5.5 million and thought that $6 million to $10 million seemed like the right range.

Given our experiences in previous years total influenza revenue for the quarter was $13.1 million driven mainly by influenza test sales on existing and new Sofia instrument placements.

Our forecast was a bit off as we may have misunderstood the impact that the new Sofia placements would have.

The other revenue driver I will comment on is the three guys cardiac and toxicology business. We had said that we were expecting $276 million in revenue for the year, not considering FX, which would mean, an overall growth rate of just under 4%.

Driven by introductions in the back half of the year of the new toxicology panel globally and high sensitivity to phone and in Europe .

We said further that we would expect to see tree as revenue in the range from 64 million.

To $69 million.

In the early quarters, given sometimes significant variability in distributor orders in any given quarter for Q2 2019, cardiac revenues were $69.9 million on a constant currency basis.

Or $68 million on a reported basis.

During the quarter, we did receive FDA clearance to market the triage toxicology assay and began shipping product to distribution partners earlier this week.

In addition, we're shipping three guys to find true our high sensitivity point of care Troponin assay.

To a limited number of European customers and expect the publication in the fall of the pace steady could generate excitement for the product and accelerate our launch as we expand our global more broadly.

Yes in Europe .

In terms of development.

Product development, the R&D and regulatory teams continued their work at their usual quick pace and made noticeable progress on many fronts.

We currently fund and manage over 20.

Average our assets and infrastructure.

Our Sofia instrument base is an asset that provides incredible revenue and margin opportunity in the near to medium term.

When all R&D programs are adjusted for technical regulatory and commercial risk the Sofia assay program with its 11 assays in development.

Is the highest growth driver in the L. RFP.

Nears to launch our Sofia C. difficile feel and five other Gi assays, which are expected to be cleared in the us around the first half of 2020.

The other large potential growth driver is Savannah.

And here's a quick update.

Our confidence that we have a high performing cartridge that can be reliability.

Excuse me reliably manufactured in the millions at very high yields as never been higher.

The assay development team in Beverly is running ahead of all of the other teams.

And the development of menu will clearly not be a constraining factor.

Our third party instrument manufacturer is engaged and we still believe that we will achieve FDA clearance on the instrument by year end 2020.

And we'll launch in the us with a significant menu in the first half of 221.

Regarding the danaher or Beckman litigation matter.

Just as we manage our communication last quarter I will not be taking questions regarding pending litigation today. The court of appeal issued an order agreeing to hear our written petition on the merits of the case and has stayed the trial courts December 7th order.

We are pleased that the court of appeal has agreed to hear the merits of our challenge of the of the trial courts decision.

The timing for hearing oral arguments is scheduled for the morning of August 13th.

With a decision from the court expected.

Within 90 days from when the court hears the matter our position remains unchanged. We view Beckman claims is meritless and adds in opposition to Vectrens longstanding strategy of honoring the supply agreement.

With its previous partners Alere and bio site over the last 15 years.

We remain confident in our position and confident and the outcome of the matter on appeal.

And ultimately at trial has to matter progresses.

In summary, we had another solid quarter and we accomplished a great deal Sofia placements continue to grow aided somewhat by the launch of Sofia Lyme.

Although we are still in the early stages of creating patient and physician awareness.

The triage business is performing as expected and the integration of the Lear assets is nearly complete.

We're generating caching continuing to pay down debt.

It was a quarter when we pretty much did what we said we would do Andy.

Thank you Doug.

Good afternoon, everyone as Doug mentioned earlier today, we reported total revenues for the second quarter of 2019 at $108.3 million. This compares to $103.2 million in the second quarter of 2018, an increase of 5% and on a constant currency basis revenue increased a solid 7%.

Rapid immuno assay revenue increased 30% from the second quarter of 2018 due to strong results from our Sofia franchise, which experienced growth across virtually all products. The largest rapid immunoassay dollar growth came from the influenza category up $6.2 million.

Flu revenues for the rapid category was $9.3 million, while strep, a declined 9% and RSV increased 6%.

The strep a revenue decline was purely driven by fluctuations in distribution inventory levels.

Rapid immunoassay inventory at distribution is down 41% from the second quarter of last year and down 44% sequentially.

More granularly influenza inventories at distribution are down 56% versus last year's second quarter and strep, a inventories are down 33% versus the second quarter of last year.

For the second quarter Sofia revenue was $11.6 million. This compares to $5.1 million in Q2 of the prior year.

And Quickvue revenue was $8.9 million.

Compares to $10.1 million in Q2 of 2018.

And the cardiac amino assay category revenue totaled 68.

Million dollars in the quarter. This compares to $69.9 million in the same period last year.

On a constant currency basis revenue was in line with last year within the category tree out revenue was $36.8 million a decline of 4% from the second quarter of 2018.

Regionally three I saw revenue declines in the us and to a lesser extent Latin America, and Asia Pacific and this was partially offset by a 16% growth in China.

On a constant currency basis truly Ais revenue was down 1% versus last year.

On the Backman BMP side revenue decreased 1% over the second quarter of 2000 $18 million to $31.2 million and on a constant currency basis BMP was up 1%.

Regionally North American China delivered topline growth, which was offset by revenue decline in Europe , Middle East Africa, and Asia Pacific regions.

Revenue in the specialized diagnostic solutions category increased 13% in the second quarter.

I'm 20, $19 million to $14.3 million as our solid culture business grew 10% driven by growth in China, and our micro view bone health and complement business, which grew a COVID-19% in the quarter.

Our molecular diagnostic solutions category increased 7% in the second quarter to $4.2 million driven by a 26% growth from Solana assay revenue.

Amplivue revenue continues to decline as we migrate the c. difficile and HSV assays over to Solana.

Gross profit in the second quarter increased $1.5 million to $59.2 million, primarily the result of increased revenues and improved product mix.

Gross margin in the second quarter of 2019 was approximately 55% as compared to 56% in the second quarter of 2018.

The slight decline was a result of an unfavorable foreign exchange impact geographic product mix as well as unfavorable factory absorption.

In the back half of the year, we anticipate an improvement in gross margin versus 2018 and full year results should be consistent with last year.

R&D expense decreased by $1.6 million in the second quarter compared to the same period last year. This decrease is primarily are primarily driven by lower compensation costs.

Partially offset by higher spending on Sofia assay development and the savanna platform.

We reiterate our estimate of full year span between $52 million and $55 million.

Sales and marketing expense was $26.9 million in the quarter, a decrease of $600000 as compared to the second quarter last year. This decrease was largely due to lower transition service expenses that were partially offset by higher higher salaries as we complete the globalization of our commercial team.

DNA expense increased by $1.4 million in the quarter, primarily due to higher facility costs associated with our international expansion as well as professional service fees.

Somewhat offset by lower transition service fees as our integration of the acquired cardiac assets nears completion.

Acquisition and integration costs in the second quarter were $1.8 million down from $4.9 million in the second quarter last year as a larger portion of our global operations became fully integrated into the overall business.

Interest expense for the quarter was the $4.5 million and includes $800000 related to the convertible senior notes $500000 related to the senior credit facility and $2.2 million relating to the deferred and contingent consideration associated with the purchase of the BMP business.

The $2.3 million increase in interest expense over last year was due to the reduction in debt of approximately $158.4 million over the last 12 months.

And this includes the deferred contingent consideration.

In the quarter, we recorded a $700000 income tax benefit the benefit for the quarter was due to the fact that the discrete tax benefit for excess stock based compensation expense was greater than the income tax liability for the quarter.

We believe our effective tax rate for the full year 2019 should be within the range of 19% to 21% of pre tax income before consideration for discrete tax items.

The impact of the 2017 tax cuts in jobs Act regulations are yet to be finalized.

We will certainly determine whether.

And that will help us determine where we fall in this range.

We continue to strengthen our balance sheet.

In the quarter, we generated $34 million in free cash flow after spending $6.8 million and capital expenditures.

We used a portion of the cash to pay down another $15 million on the revolving credit facility.

Additionally in April we made our second $48 million payment to Abbott and finally in June the company exchanged approximately $45.4 million in aggregate principal amount of our convertible notes for 1.5 million shares.

In the quarter, we had depreciation of $4.9 million and amortization of $7 million as of June Thirtyth. The company had $28.6 million in cash on the balance sheet $13.1 million in principle about amount outstanding relating to the convertible notes and $18.2 million outstanding on the revolving credit facility.

The outstanding principal balance on deferred contingent consideration for the acquired cardiac assets is now approximately $184 million.

And with that we conclude our formal comments for today.

Operator, we're now ready to open the call for questions.

Ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key on your Touchstone telephone. If your question has been answered already which to remove yourself from the queue. Please press the pound key.

Your first question comes from the line of Jack Meehan with Barclays. You are now live.

Thank you good afternoon.

Yes, I was curious hey, good afternoon.

I was wondering if you could you know as you think about some of the new products you've rolled out one to start with lime.

I was wondering if you could parse out how much that contributed in the quarter and can you talk about.

Any success, you're having in.

Cross selling and utilization of other products.

That.

In the quarter I think the lime launch helped a lot with placements of Sofia.

Right now it looks like on the contracts that we have in place.

A little over 80% of the contracts include the other products flu strep and RSV.

So thats been somewhat helpful and we did see some sales of flu.

Strep RSV in the quarter as I suggested earlier.

But the real the real.

Incremental growth will come as both patients and physicians become aware that the product is available. It is the world's first CLIA waived lime test.

So it's.

It's.

That's a big program that we have in place to create that awareness in order to stimulate the Boeing we are getting contracts signed.

But we need to get patients.

Pushed to the places where there are.

Sofia twos.

We have had some success with urgent cares partnering there.

We're spending a bit of time effort and money on a word of mouth marketing campaign in the northeast.

That's taking off pretty nicely Weve also partnered with one of our key distribution partners in the northeast to run a.

A growth program as well so I think we have both.

The physician side.

Covered with our distribution partners on our salespeople.

And then I think.

We'll see increasing pull through from a patient perspective, as we create word of mouth over the next several quarters. So.

We're not we're not converting a market, we're creating a market so im trying to be a little bit patient.

But we are seeing traction.

Great.

Maybe moving and.

Appreciate the updates and confidence in the purchase design just confirm is the design officially frozen.

What's the timing for starting.

Trials and.

Is that is that what's assumed in the R&D kind of step up in the back half of the year relative to the first half.

Yes, the step up is due to.

But the development on the instrument side as well as clinical trials.

So.

Yes, we're pretty confident we're down to a decision to be made very Shirley.

On on the final Carter's design and from there we will.

We will begin the process of.

Increasing the number of crushers is that we will be making in advance of the clinical trial.

The trial start in the third quarter or.

More likely in the fourth quarter.

Yes.

For the fourth and first.

Okay, I think the important thing if the assets will definitely be ready to go.

As long as we can get the the.

The answer is made and the cartridges made in sufficient quantities will will be.

We'll be in good shape.

Great and if you don't mind, one more can you talk about the initial demand with the toxicology launch and what commercial resources, you're putting behind that.

Well I would have to say since we're shipping product this week.

It's.

That's a great question, but perhaps a little bit premature, but I can tell you that when I was at the A.C.C., We're actually you and I saw each other.

We did.

I'm told from our folks there in the field a bit of traffic.

And interested in toxicology as I mentioned on a call previous.

Previously the.

We do think we have pent up demand we have a customer list we know.

That at least the initial wave, we know where to go and who is going to want the product. So I I think should go.

Fairly.

According to our plan.

And.

That's important because there is a number of drivers to the back half of 2019 Thats one of them.

Obviously, I'd just add quickly the T to launch in Europe , So important.

Continuing with lime.

And obviously, we'll see some pull through of flu strep in in the fourth quarter.

And that's pretty important too so those are really the drivers of the back half.

Back half of the year.

Hi.

Sure.

Your next question comes from the line of Brian Weinstein with.

William Blair you are now live.

Hi, guys. Good afternoon. This is actually Andrew Brackman on for Brian .

Before I get into my question, just one quick housekeeping one as it relates to the guide.

Maybe I missed this but Randy did you confirmed that $535 million target for the full year and then the $276 million for the cardiac business.

Yes, I can answer that and then Randy will jump in with further detail a fee.

I would like to but.

There is no reason to change the forecast at this stage on the five 535. The reason I say that is because it's dependent on the new products.

And we don't have anything to either.

We certainly don't have anything would tell us we can't do it.

We're just now shipping toxicology, and then and as I expressed before we have a limited launch going on in Europe .

In the fall, we expect the publication of that Big study that I told everybody about called pace remember we had initiated a study with 2000 patients 6000 samples.

And in that study, we had hoped to demonstrate the.

The.

The fact that tree as true true phone it was actually a high sensitivity.

Troponin product it performed comparably to the bigger boxes. So.

When we see that published in.

In the fall I would hope that that will stimulate even further grow so I've got to watch the growth and again I don't really know anything more about the fourth quarter at this stage.

In terms of influenza if we assume normal then theres no reason to adjust the fivethirty five forecast at this time.

Same with the 276 on a constant currency basis.

We're we're pretty comfortable but again there it depends on the talks launch and proponent in Europe . So.

Internally, we are not changing our forecast.

Okay. Thanks for that and then as it relates to the quarter.

On the Treehouse business, the us still seems to be a little bit soft in China, a little bit.

Fast or anything that you can point to that specifically might be driving that thanks.

No it's not unexpected there as the customers run more and more BMP often they switch to a laboratory based products and so we expected some erosion in the U.S. and as we said before we expected, though to solidify that with the introduction of the new product the toxicology product.

Not really commenting yet on whether we think we can do.

That we can.

Succeed with the introduction of T. Two in.

The United States that would clearly be upside.

So thats whats going on there and then of course.

It's being completely offset by what we are doing in China.

Anything specifically that you can point to in China that might be driving that thanks.

Well the Chinese people would tell you that there are a lot of people there.

Sorry.

Comma.

With cardiac issues and there is growing awareness that using bio markers to diagnose.

Cardiac disease is the way to go so there's quite a bit of growth.

The government spending a lot of money on chest pain centers.

And so in every community eventually there will be a chest pain center, where these markers will be performed and thats. Another growth category. So just the population the amount of disease the government spend them on the category.

Our essentially what's driving.

Sales, there and we have a very competitive product.

Yes, and just came off operational perspective, we did cut out a middle tier distribution.

So that had somewhat of a pickup on a year over year basis as well.

Your next question comes from the line of Bill Kirk.

Well I for Jaffray, you went out very alive.

Great. Thanks, and good afternoon everybody.

Hi, Bill.

[laughter] Bill from Piper Jaffrey.

That's right that's right. It's me Doug a quick housekeeping question with respect to the Apace study you mentioned that the reference methods would be the kind of typical bigger box sure opponents can you just remind us specifically what the control is or the reference method isn't that study.

The sample set that was used.

Is the same sample set that has been used by all the major manufacturers of big boxes that have.

Clearance in Europe .

For high sensitivity to fund it so.

It's the same patient, but at the same.

Outcomes.

Same samples so.

It's it's.

The comparator is actually.

Those 2000 patients and those 6000 samples and how that performs relative to with all the other guys did too.

Okay got it and then two additional ones for me first with respect to the molecular business I appreciate the put and take as you're shifting it to Salon Oh, but should we continue to think about full year. 2019 is is is this is a 20% growth business.

You are asking if salon as a 20% growth business.

No no I see the overall molecular business I think overall category right yeah.

Okay. Most of the growth obviously coming from so lot of but yeah, the whole category should grow 20%.

Okay, Great and then last one for me and you've certainly heard this a lot in years past, Doug, but it's the second quarter. So were going to ask it again, we're seeing a pretty significant early flu season going on in the southern Hemisphere, So would love any and all thoughts on what that might mean for those of us the northern hemisphere. Thanks.

It's the same question I think it might be the same answer bill.

Quite often there is a correlation but we don't we certainly don't know if it's causing effect.

I think the R squared on the last 25 years.

Not counting this one because I haven't looked at it this year, but.

Yeah that I looked at previously it was <unk> 0.76.

So it says there is a correlation.

But does it really mean anything I don't know I.

I certainly think if it were that simple it would be easy to forecast fluid with it.

So.

I know that you spent a lot of.

Yes, and I think you probably know more about as I do so.

But you know that's my answer.

I'd be curious later to know Bill if that's the same answer I gave last year.

So it was.

I'll go I'll go back and check the transcript thanks, Doug Thanks [laughter].

Your next question comes from the line of Michael Peterson with JP Morgan you weren't online.

Hi, This is a limey on pretty tight call. Thank you for taking my questions.

I'm afraid on BNP last quarter, you mentioned, some timing issues you called out some U.S. order delays and I was just wondering does if you saw any re ordering dynamics this quarter and if you can quantify how much was recaptured.

No I think that's it's it's somewhat normalize you know I spent some time with one of our key distributors.

Here in the U.S. and saw their out sales and.

It's incredible that they have.

Equally the same variability that we're experiencing but.

But I don't think there was really anything of any significance that was abnormal in this particular quarter.

And I would say you know Randy mentioned that.

We didnt change the way, we distribute product in China, that's obviously.

Made its way through also in Europe , we we actually signed up.

A number of distributors. We also signed up a number of tenders. So I think that's pretty stable and smooth.

As well and we certainly didn't see anything that would tell us differently.

In Q2.

Got it. Thank you and then can you give us some more color on what drove the sprint and flu. This quarter, you mentioned Sofia placements, but can you compare it what you saw this quarter versus what your expectations were.

But the real driver remember was the prolonged influenza season.

In particular, we saw a go all the way into the quarter, which is not normal and then followed by the continuation of B.

Flu be into probably halfway through the quarter and so.

There's not a lot more than that I do I do.

No one to say that although I can't.

Calculated precisely we had a lot more new Sofia customers too.

So we were able probably to take.

A full advantage of it just because we had more instruments on the ground.

Okay great.

And then one last one from me can you talk about your gross margin progression for the remainder of the year you you've reiterated guidance of margin expansion for 2019, but you've also decreased it by 100 basis points. This quarter and you mentioned FX geographic mix and factory absorption of headwind. So just wondering how you're thinking about that.

Oh, Yeah, we are in the comments I indicated that we do for the back half of the year see gross margin expansion versus 2018.

You know we did see in the first six months of our full year guidance.

We did see some headwinds when currency as you know as well as geographic mix as you saw a little stronger growth in China versus you asked on the cardiac business.

But we see pretty much FX.

Less than a million dollar impact in the back half of the year and so we do see margin expansion in the back half of the year versus 2018.

Yes, I think it might be helpful. Randy to two.

To say also we expect.

That million dollars it would be pretty even between Q3 Q4, so it's about a half million.

Q3, FX unfavorable impact and then another half million Q4, that's what we're forecasting.

Yeah.

Got it that's helpful. Thank you.

Your next question comes from the line at Johnson with Raymond James C., We're now lives.

Good afternoon.

Just a couple from me.

Doug I was wondering if you could comment I appreciate the color there on on line and get that it's still early there's there's obviously some direct to patient work to be done there but.

How are you thinking as far as progression on tier two line I think prior to that you had said that you were hoping to get a get a product to the FDA and maybe on the market by the second half of 2000, Twentys, that's still the right way to think about.

You know that opportunity.

Yeah, we're nearing the point, where we're ready to go to clinical trials, we've we've engaged in dialogue with.

The.

With the FDA.

I'm going to look that up for you to get into specific quarter, but.

[noise].

Your next question comes from the line.

Hang on I'm answering the question.

[noise].

Yes, it looks like maybe while you're looking that I got I got a job.

Okay.

I knew it was going to be in the fall it looks like the schedule since September .

Okay, Great I appreciate that and then just the only other one I had.

Maybe an update as far as how the synergies or are tracking and and perhaps whether at this point you think there could be some some upside to the total number.

Yes, we're still we're still confirming the 20 million for 2019 that we had said earlier.

Yes, we're slightly ahead of schedule of our internal expectations.

But we didn't get we did convert over our distribution center from a habit overdue our summers rich why don't I, just overall integration update.

Since you're mentioning the warehousing.

That will be great.

Yes, so during the quarter, we transitioned both India and Brazil.

To distribution partners there.

That means at this stage, we've migrated 88 of the 89 countries selling tree as to to quite those full control and that represents about 99 will over 99% of the revenue.

The only remaining migration is Japan.

Which is well underway.

And targeted to be completed soon and Chris and actually saw on your whiteboard you at September Onest. So.

That's pretty specific.

So we also achieved a major milestone by eliminating Abbott from the distribution of the tree edge products completely so thats now done solely by us.

From our expanded distribution center here in San Diego.

Within the first month, we actually shipped over 1800 instrument sets up 1800 instruments.

From the new warehouse.

Both domestically and internationally so.

We're in very good shape from an integration perspective, we are nearly done.

It's gone extremely well.

Thanks to a number of people here, but very talented group of people.

Who were able to lead that process.

So we're OK great.

So hopefully this is the last quarter they have to actually talk about innovation.

Okay.

Great appreciate all the color. Thank you.

Sure.

Again, ladies and gentlemen.

If you have questions at this time. Please press the Star December one key on your Touchtone telephone. If your question has been answered I agree with sturdy move yourself from the queue. Please press the pound key. Your next question comes from the line of Alex Nowak with Craig Hallum, You are now live.

Great. Good afternoon, everyone jumping between a few calls here. So this may have been already.

Asked but Doug and Randy what are you thinking about from an M&A perspective that the debt is pretty much paid down and based on the last the answer you had there. It would appear your you are ready to layer on some on some new products onto the existing infrastructure.

Yeah. It's a great question and it's also a question I really cant answer I can tell you that we have three to five targets.

Among many that we've looked at that we continue to look at.

Other than that I really can't comment, but you're right. We we have the ability to go get capital. If we want it we certainly have paid down nearly all of our debt with our total debt remained like 31.

81, yes, 18 and 10-K.

18 in 13 skis, yes, yes, so you're right. We're there's not a whole lot left.

And we will be in a position to do something should we want to.

Okay got it and then Randy regarding the 535 guide if you did exclude the new products like line toxins proponent from that guide what would the number be.

I'm, sorry, you're asking at the Fivethirty five how much is how much of the new tax and.

Sure Paul networks, or new products, that's right that's right yes.

Yes, we said anywhere in that $3 million to $5 million range in the back half of the year.

Okay got it.

For those two and then also if you include alignments.

Okay got it understood and then just last question what is the latest on the Danaher Beckman Coulter lawsuit what are we waiting on and what's the next steps there.

I started the call by saying I wasn't going to answer your questions on the matter.

But I did say in the script that oral arguments will be heard on the morning of the 13.

Of this month.

Okay understood. Thank you.

Again, ladies and gentlemen, if you have questions at this time. Please press. The Star then the number one key on your Touchtone telephone. If your question has been answered or RIS during move yourself from queue. Please press the pound key.

That is all the time, we have today. Please proceed with your presentation or any closing remarks.

So I'll just end by saying thanks, everyone for dialing in we had another great quarter and I should have pointed out that this actually was the first profitable Q2.

We've had since the pandemic 10 years ago.

So we're pretty happy that moving forward, we would expect every single quarter and be profitable once it's pretty important milestone for us. So I think we should probably make a cake or something right.

But I think it was a great quarter for us and we're just happy that we got everything done that we thought we would so take care everybody.

Ladies and gentlemen, we thank you for your participation and ask for T. Please disconnect your lines good bye.