AngioDynamics (NASDAQ:ANGO) Q3 2019 Earnings Call

0:00 Good morning and welcome to the NGO Dynamics third quarter fiscal year 2019 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero from your telephone keypad. As a reminder, this conference call is being recorded. The news release detailing the third quarter results crossed the wire earlier this morning and is available on the company's website. This conference call is also being broadcast live over the Internet at the Investors section of the company's website at www.angiodynamics.com, and the webcast replay of the call will be available at the same site approximately one hour after the end of today's call. Before we begin, I would like to caution listeners that during the course of this conference call, the company will make projections or forward-looking statements regarding future events, including statements about expected revenue, adjusted earnings, and free cash flow for fiscal year 2019.

0:57 Thank you for joining us. discussing the company's operating results and financial performance during this morning's conference call. I'd now like to turn the call over to Jim Clemmer, AngioDynamics President and Chief Executive Officer. Mr. Clemmer?

1:38 Thanks, Rob. Good morning, everyone, and thanks for joining us today for AngioDynamics' third quarter fiscal 2019 earnings call. Joining me today on the call will be Michael Greiner, AngioDynamics Executive Vice President and Chief Financial Officer, and Stephen Trowbridge, Senior Vice President and General Counsel, who is also the leader of our clinical team. Michael is under the weather today and will not be doing the financial portion of the call, but is with us to answer any questions that you may have during the Q&A portion of our call. Today, I will provide a brief overview of our operating highlights and financial performance for the quarter. Before I close our prepared remarks, will have a discussion of the NanoKnife Pancreatic Cancer Direct Study. Stephen has joined us to answer specific questions that you may have related to the approval of this study that we announced yesterday morning.

2:39 Overall, we are really pleased with our results for the third quarter. Despite some pockets of softness, we were encouraged by our solid results in a number of areas, and we continue to generate profitable growth with a focus on operational excellence and building a market leading cohesive product portfolio. As I will discuss later, our third quarter performance positions us to achieve our annual guidance for revenue, adjusted EPS, and free cash flow. Our net sales for the third quarter of fiscal 2019 increased 3% to $86.3 million. driven by growth in our oncology and vascular interventions and therapies businesses, including contributions from our recent acquisitions of BioSentry and Radiodyne, which are in line with our expectations for the third quarter.

3:41 At the product level, our angioVac, dialysis catheters, fluid management, and Solera products exhibited solid growth During the quarter, offsetting lower nanonife capital sales, which were primarily a result of timing and continued expected slowing of our radiofrequency ablation products as market adoption focuses on our microwave ablation technology. With regard to the performance of each of our businesses, our VIT business grew 3.3% year-over-year as strong growth and the AngioVac and Fluid Management product lines, along with continued strength in our core business, were partially offset by an anticipated decline in the venous insufficiency business.

4:35 The pace of this decline continues to decelerate and we continue working diligently to stabilize this business and anticipate better comps in fiscal year 20. AngioVac procedural volume remained strong, with procedures increasing 19% year-over-year, representing our sixth consecutive quarter of double-digit volume growth and further validating this unique technology. As we mentioned in detail at the J.P. Morgan Conference in early January, we are continuing to make targeted R&D investments in our thrombus management portfolio while also identifying external growth opportunities.

5:23 We believe there is a significant opportunity available to us in the moderately complex segment of the thrombus management market based upon the success of our Unifuse and AngioVac platforms which serve the simple and complex ends of this space respectively. The middle of this market is a significantly larger addressable market than we currently serve, with meaningful opportunities for growth and share gains. Our vascular access revenue declined 4% during the third quarter, as continued strong performance in sales of our dialysis products was offset by declines in sales of PICs, midlines, and ports.

6:13 We experienced very strong growth in port sales during the second quarter, which we believe impacted our ability to drive growth in the third quarter. We do anticipate returning to low single-digit growth in the fourth quarter in both our ports and our midlines businesses. Revenue from our oncology business increased 15.1%. Strong sales of our Solero microwave product and revenue contributed by our BioSensory and Radiodyne acquisitions helped to offset a decline in NanoKnife capital sales during the quarter. We remain pleased with the early success of our oncology acquisitions, which are both progressing in line with our expectations as we continue to build out our oncology business around a continuum of care portfolio.

7:09 We also recently received 510K approval for electron and cancer treatment related to our OR-TRAC real-time dosimetry device. This approval both defines and supports the future growth profile of our OR-TRAC while positioning us to obtain additional indications in the future. Despite the softness in nanoknife capital sales, we continue to see momentum and increasing global adoption of this groundbreaking technology. And we are thrilled to have received IDE approval from the FDA, which we announced yesterday morning, for the use of our nano knife technology in the treatment of stage three pancreatic cancer, which I will discuss in more detail after we're going through the financials.

8:08 In addition, another positive development in the quarter included are previously announced successful outcome in the Delaware intellectual property litigation with Bard. We were pleased with the court's decision to dismiss this case. After reviewing the financials, I want to remind everyone that each quarter we post a presentation on our investor relations website summarizing the key items associated with our quarterly results as well as our financial guidance. Those slides are intended to complement our prepared remarks. Our net sales for the third quarter of fiscal 2019 were $86.3 million, representing a year-over-year growth of 3% when including our Radiodyne and BioSentry acquisitions, and declining 0.8% on an organic basis.

9:07 Our gross margin for the third quarter of fiscal 2019 contracted by 10 basis points to 54.1% from 54.2% a year ago. We continue to see gains in gross margin related to operational and supply chain improvements as well as positive impacts associated with our portfolio optimization strategy, specifically the radiodyne and biosensory acquisitions. These gains were offset during the third quarter by headwinds related to FX, which were approximately 20 basis points compared to the prior year, as well as a one-time benefit that we received in the prior year quarter related to our plant closures worth approximately 50 basis points.

10:00 We continue to anticipate our full-year 2019 gross margin will finish in the range of 54% to 55% with a fourth quarter exit gross margin exceeding 55%. Our research and development expenses during the third quarter of fiscal 2019 were $7.2 million or 8.4% of sales compared to $6.5 million or 7.7% of sales a year ago. Consistent with our comments over the past several quarters, we are spending more in R&D and clinical around some of our core technologies.

10:45 And we continue to anticipate R&D spend to be approximately 8% of net sales for this fiscal year. This already contemplates additional spending related to the rollout of our NanoKnife study and also to support our recent acquisitions. Moving down the income statement, SG&A expense for the third quarter of fiscal 2019 increased to $28.2 million or 32.7% of sales compared to $25.7 million or 30.7% of sales a year ago. We anticipate SG&A expense as a percent of revenue to be approximately 32.5% for the full year inclusive of approximately $4 million in SG&A expenses as a result of the two acquisitions earlier in the year.

11:48 Our adjusted net income for the third quarter of fiscal 2019 was $7.4 million, or 19 cents per share, compared to an adjusted net income of $8.7 million, or 23 cents per share in the third quarter of last year. The 2018 Tax Reform Act went into effect for us during our third quarter last year. Adjusted net income for the third quarter of fiscal year 2018 was based upon a tax rate of 23%. We have updated our full year, prior year, post-tax reform rate to 30.62%, resulting in a two-cent impact on last year's adjusted net income.

12:38 Our current statutory tax rate is 23% in fiscal year 2019. Adjusted EBITDAs in the third quarter of fiscal 2019, excluding the items shown in the reconciliation table in our presentation, was $14.9 million compared to $16.8 million in the third quarter of fiscal 2018. This 11.3% decline is attributed to the previously noted increase in R&D and SG&A spending, partially offset by our increase in revenue. In the third quarter of fiscal 2019, we generated $8.3 million of cash from operating activities, and our free cash flow was $7.5 million.

13:34 Now, turning to our balance sheet. As of February 28, 2019, we had $41.7 million in cash and cash equivalents and $133.8 million in debt. This excludes the impact of deferred financing costs recorded on the balance sheet. As a result, our net debt adjusted EBITDA ratio is currently 1.55, providing us with sufficient to execute against our investment and capital deployment strategies. Finally, we are reaffirming our financial guidance for fiscal 2019.

14:19 We continue to expect 2019 net sales in a range of $354 million to $359 million. We also continue to expect adjusted EPS between 82 cents and 86th Sense, as well as free cash flow between $26 million and $31 million. Now I'd like to take a moment to continue our earlier discussion on the recently announced NanoKnife IDE approval and to provide more details on the direct study. As noted in our press release yesterday, we are very excited to begin enrolling patients into our direct study and improving the standard of care for pancreatic cancer.

15:13 This disease afflicts approximately 57,000 new patients every year in the United States alone, and approximately 25% of those patients present as stage three, making them good candidates for our direct study with NanoKnife. In terms of the details of the direct study, it will include a real-world evidence next-generation registry at up to 30 sites, as well as a randomized controlled trial at up to 15 sites, each with a nanonife treatment and control arm. Our design anticipates each nanonife arm to consist of approximately 250 patients with an equal number of control patients.

16:05 The primary endpoint of the study is overall survival. As a reminder, we also received a determination from the FDA that the direct study will receive a category B designation. This means that the FDA has determined that the information we provided demonstrates that their initial questions around safety and effectiveness for the NanoKnife system for the treatment of stage 3 pancreatic cancer have been resolved. This is a significant positive as the device and the related treatment during the study will be eligible for reimbursement, significantly mitigating the overall costs of the study.

16:54 We are not updating our guidance at this point, but we intend to have a further readout on our three-year strategic and financial plan to share with you by our fiscal year-end call. We are looking forward to this comprehensive study that will demonstrate our technology's unique capabilities and benefit pancreatic cancer patients. We are thrilled to be able to start enrollment soon. And in fact, we've launched angiodirect.com as a website All of us at AngioDynamics are dedicated to the idea that the standard of care for this deadly disease can and should improve.

17:45 With that, I'll turn the call over to the operator for your questions. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, Please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question is from the line of Matt Hewitt with Craig Hallam. Please proceed with your question.

18:30 Yeah, this is Lucas Baranowski for Matt Hewitt here at Craig Hallam. Thanks for taking the questions. I guess first off, you know, congrats on the IDE approval. And, yeah, we've just got a couple of questions around that. It sounds like enrollment is going to be starting soon, so maybe you could just give us some color on how we should be thinking about this trial from a timeline perspective and when there might be a readout.

19:07 Lucas, good morning. This is Jim. In a moment, I'll give Steve a chance to answer you in more detail. But first, I want to talk about, for a second, how we got here. and again, Inc. Dynamics has invested heavily in resources to support this trial. We're very committed to having this opportunity to prove our technology to help these people in need of care. What we've done, Lucas, in the past year and a half or so, internally, was invested very heavily in bringing really good people to our team. Led by Steve Trowbridge, I mentioned earlier, he'll answer your question, who runs our clinical group. Led by Warren Nighan, who runs our regulatory and quality group. and led by Brent Boucher, who's the general manager of our oncology business. These three people have brought really talented folks to our team that have helped us accomplish this goal of getting this IDE approved by the FDA.

19:58 So we're very excited by what can happen. Let me have Steve chime in with a bit more

20:02 detail for you. Thanks, Jim. Good morning, Lucas. Thanks for the question. With respect to enrollment, what we're stating is that we're targeting June as the time for the first enrollment of these patients. As you know, we've been working on this trial for a while. We've been working collaboratively with FDA for a very long time. We're very pleased to get the approval, and we're looking forward to starting. As we've talked about before, this study comprises two parts. So there's an RCT aspect to it as well as a real-world evidence registry aspect to it. We are hoping that enrollment in either of those will start by the June timeframe. And then with your question to the readout, we do expect that we'll be giving periodic updates around enrollment as we go through this, but as we've talked about, we're expected to enroll this trial to the end. We have an interim analysis set up to test our statistical assumptions, not to try to have any early readout.

20:54 So our current expectation is to run through this trial.

20:58 Okay, thank you. That's helpful. And then, you know, you've also talked in the past and on this call about how physicians in the trial, you know, will be getting reimbursed. I mean, is there any color you could give, you know, around kind of those reimbursement amounts and, you know, where they've been set at?

21:24 Sure. So as we've talked in the past, we did receive specific ICD-10 codes from CMS for using nanoknife to treat pancreatic cancer as well as specific codes to use nanoknife to treat liver cancer. We do know that those ICD-10 codes have mapped into specific DRGs, and again, as we said before, we were pleased where they mapped. We think that they were the exact right mapping. They went into the appropriate DRGs that carry the appropriate level of reimbursement to the physician. Now, the third leg of the stool for reimbursement is coverage, and that's where this trial comes in. With FDA designating our IDE approval as a Category B, we'll then be talking to CMS. And as we've talked before, we've had a lot of conversations with CMS and are very well down that path. Once CMS also agrees to approve this trial as a Category B, anybody who treats patients under our IDE, so that's either in the RCT or in the registry, will be receiving coverage using those ICD-10 codes that will then map into what we think are the very appropriate high-paying DRGs.

22:27 Okay, thank you very much. That's all I had.

22:30 Thank you, Lucas. The next question is coming from the line of Jason Bedford with Raymond James. Pleased to see you with your questions.

22:40 Good morning. This is Matt Wiseman on for Jason Bedford. Thanks for taking the questions. So my question is really on the nanonive trial. So could you walk us through the difference between the RCT and the real-world side? What are the physician and patient incentives for each of those? and if you could just kind of walk through the differences there, that'd be great. Thanks.

23:02 Sure, Matt. I'll take that. Appreciate the question. So as we've talked about in the past, AngioDynamics is very committed to this technology. We really feel that NanoKnife is a game changer for patients and the trial design that we've been able to develop collaboratively with the FDA I think is a very great illustration of how committed Angio is to this technology. Anytime that you're doing a trial, there's Design elements that are going to be more important than others. And we think that our comprehensive design is aimed at trying to get to all of those very important elements. So if you think about a randomized controlled trial, what you're looking to do is to isolate as many variables as possible to prove out that whatever survival benefit that you're seeing is coming from your technology. But that comes at the expense of a very hyper-controlled environment.

23:48 So there's some very specific inclusion-exclusion criteria. Not every patient may qualify to meet either of those criteria to then show up into the RCT. And what you end up doing is you randomize a patient after they've gotten through the initial staging of having stage three cancer to either the nano knife arm plus chemotherapy or the standard chemotherapy arm. So that's how you're trying to isolate those variables. But as is also very well known in the clinical arena, not every treatment happens in a hyper-controlled environment. And so the real-world registry that we have is looking to provide the flip side of the coin. What is the benefit of this technology in a real-world setting? So in that setting, patients are not randomized, and the inclusion-exclusion criteria is a little less severe and robust as it is in the RCT.

24:36 So by putting these two things together, our comprehensive study design will give us Great data on how it looks when you're controlling as many variables as possible, but also what you can expect when you're using this technology in a real-world setting. And we feel that that's going to be most meaningful to patients, physicians, payers, and all the other stakeholders.

24:56 Got it. Thanks. And then I guess as a follow-up to that, has the FDA stated or have you talked to the FDA about what specifically they're going to require for the approval? Does the RCT need to be completed for approval, or could it happen sooner depending on the real-world evidence? And then, obviously, I'm assuming the real-world evidence trial will enroll quicker due to the less inclusion criteria. Thanks.

25:24 So that is true. We do expect that the real-world evidence side will enroll quicker anytime that you're running an RCT. Getting through that inclusion-exclusion criteria that I talked about sometimes does create a little bit more of a prolonged timeline than you would expect. I will say that the conversations that we've had with FDA, now we've been talking about this for a little while, and it took a little longer than we wanted to get to the approval, but The underlying reason for that is we engaged in very in-depth, very collaborative conversations with FDA about the overall design considerations for this trial. So we have a sense, as we've gone through this, with the study design that we have now, if this technology proves out exactly the way that we think it will, will get us to an ultimate approval. So that was, I think, what was very beneficial about the time that we spent working with FDA. Our current expectations right now are to enroll both of these things. We think that there's very valuable evidence that comes out of both the RCT and the real-world evidence arm. We think they complement each other and get us to that overall approval. So our current expectations is that we are going to be enrolling both of these to get to the end of the trial.

26:30 I appreciate the questions. Thank you. The next question comes from the line of Matthew Mission with KeyBank. Please receive your questions.

26:40 Great, and thank you for taking the questions. Hey, Jim, the fourth quarter seems like it's going to require a pretty strong quarter to hit your guidance, and you seemed fairly confident in that. What's behind that confidence in the fourth quarter?

26:58 Good morning. If you take a look really, Matt, at our three quarters coming into this year combined, we're really right where we thought we'd be. Always something's a little softer, something's a little stronger. In a complex company like us with a diverse portfolio, you have those challenges. But Matt, we have a pretty good view of our customers. We have really, really great sales and marketing people that give us customer feedback. And we really have a good sense of what's going on in our marketplace due to the connections and the relationships that our salespeople have. So we feel strong, Matt, about two things. The revenue associated with our base businesses, the revenue associated with our new acquisitions, that are performing well, and then also the great operational excellence tools we have in the background. Although gross margin ticked back slightly this quarter, we showed you why. We feel really strongly by what our supply chain and our quality improvement teams are doing to enhance our gross margin, so we feel good about the quarter, Matt.

27:53 You also talked a little bit about timing around nanonight sales. Did some sales get pushed from 3Q to 4Q. And then also, can you talk about how you expect Nano Knife revenue to progress through the course of the clinical trial?

28:12 Sure, a couple things. So to address your first piece, we don't really push sales, especially capital sales. As you know, in medical device business, I've been doing this 30 years. Capital sales really are at the whim of our customers. When they choose a technology like Nano Knife, they have to go through the approvals necessary in their own healthcare networks to get the approval for capital spend. Sometimes those approvals and the spend things come at a different pace. We can't control those. I think we see sales that we expect in one quarter sometimes come a little earlier or a little late, but we don't actually push or direct that. Our customers do that. A little softer than we thought, but not at all an issue for us. Secondarily, As far as what we expect for Nano Knife due to the trial, I think what we'll do, Matt, is give you some updated guidance soon.

28:58 We roll out our 2020 plan that you'll have in full detail, and even a three-year look at our strategic plan. We'll give you then a really good, thorough walkthrough of how we believe the Nano Knife trial will impact our sales.

29:11 Steve? The one thing I would add to that, Matt, is we will be coming out with that plan. New Three-Year Plan, and you'll get some color around revenue as we move forward there. The primary purpose of running this trial is not to generate revenue. Clearly, the primary purpose of running this trial is to generate the evidence to prove out to our stakeholders as well as the regulatory agencies that we should have an expanded indication and that this technology plays a very important role in treating this very deadly disease. That being said, because it is a product that we have on the market, because we've gone through the process with the ICD-10 code that we talked about and that we've been able to prove the initial questions of safety and efficacy to end up with a category B, we do expect that there will be revenue that will help mitigate any of the costs of this trial so that this wouldn't be seen as a typical costly trial in a very linear fashion.

29:59 So I would expect there will be more colors to come out with our three-year plan in that context.

30:04 Then on to OrTrack. Congratulations on getting that through the 510K approval. Can you give us a sense of what the expectations for that is as you ramp that over the next one or two years? Yeah.

30:25 So, Matt, what I'll do is, joining us in the call today, we have Brent Boucher, who's the general manager for oncology business. I'll have Brent answer that question for you, Matt.

30:34 Hey, Matt. It's Brent. Nice to talk to you again. So the indication that we got, just to clarify for those also listening in, is an expanded indication that enables the ORTRAX system, which was previously cleared for both photon radiation and high-dose rate brachytherapy during cancer treatments, was expanded to include electron radiation. Radiation, which is the most common radiotherapy treatment in the market today. So it certainly expands the capability of the OrTrack system to do real-time dose symmetry in the three most common areas. So we expect this to expand our opportunity to position the product, which again is the first of its kind to deliver real-time adaptive dose symmetry reading in all three of these areas.

31:26 So we expect it will impact radiation. The growth prospects for the technology going forward.

31:35 And just lastly, Jim, can you just give us an update on your efforts with the portfolio transformation and how conversations are going with the ability to maybe get a couple more M&A deals through?

31:51 Sure, Matt. We've talked to our investor base. talked to our employees and our customers about AngioDynamics' need to adapt our portfolio to the changing clinical demands of our marketplace and the way our customers deliver care. So I wish I could announce things more quickly, but as you know, sometimes these ideas take a bit more time to get over the finish line than you'd want. Again, I think we've shown the ability this current year with our acquisitions of BioSentry and Radiodyne. When we find unique, differentiated technologies, We're able to act quickly and to bring them into a portfolio, and we'll look to do that again going forward. And we also, Matt, may move some things out that maybe don't work for us as well as they may work for somebody else.

32:37 So we want to make sure our portfolio is more focused and defined on giving caregivers exclusive technology and tools to deliver care. Matt, I can't wait to share news with you when we have it about how our portfolio gets defined more clearly in our future. But today, this is all the news we have. Thank you very much. Thanks, Matt. Thank you. As a reminder, to ask a question, you may press star 1 on your telephone keypad. The next question is from the line of Jason Mills with Canaccord Genuity. Please proceed with your questions.

33:10 Good morning. This is actually Cecilia Furlong on for Jason. And I just wanted to continue on the NanoKnife discussion. Beyond pancreas, what is your current outlook in terms of different organs or potential utilization of the technology?

33:26 Thank you, Cecilia. So, you know, NanoKnife has been on the market for a while. We've had our general soft tissue indication. We've been following where the market has been leading us in terms of where this technology has promised. Clearly, we feel that pancreas is the first place to go. There's a pressing unmet need. We understand that the mechanism of action of this technology has a role to play to treat this deadly disease. That being said, we think that NanoKnife is a platform, and we are absolutely looking at the next areas to go into. Outside the United States, there's been a lot of data that has been generated in areas like prostate. I would expect that that's someplace that we would look at as we move forward. We also have a short, medium, and long-term roadmap for this technology that includes additional organs. It includes additional changes to the technology and next-generation elements of this technology.

34:15 So we can think of things like brain, lung, other areas where the mechanism of action could really have a great promise. That being said, we're committed to pancreas. This is a lot of the work that we've done. This is the comprehensive trial that we're embarking on currently, but we do expect to be expanding out into those other areas as we continue to show the promise of Ananias.

34:38 Okay, great. Thank you. And then just turning quickly to AngioVac, could you provide just a little more color around, one, what you're seeing right now from a competitive standpoint in the market, and then just two, more on updates around next-gen products and for the color on how you're thinking about building out kind of that middle portion of the treatment spectrum. Thank you.

35:02 It's a good question, Cecilia. So if you look back, as we mentioned today, again, we're really excited with the procedural volume growth, again, six quarters of really, really important growth for us. You know, our clinical team and our sales team has done a really good job in the conversations with our customers explaining the value of our technology. We also mentioned back last June when we started this fiscal year, The general manager of that business and the sales and marketing team split the sales force out so they can have a more direct touch and build those relationships with our customers. So now that we laid that groundwork, what you just said is important for us. We're coming out with a new version of AngioVac later this summer, which will enable our physicians really to do what they ask. They really design this product in concert with us to help them navigate it through the channels they want to get it to to help with care delivery.

35:50 We have another product in design that will be about a year later giving, again, more physician treatment and control over how they use our product in more areas. From there, as identified earlier, we know the space really well. And as we said earlier, a great on the lower end of acuity with our Unifuse and a great on the higher end of acuity with AngioVac, which does what no other device can do on the market. But there is that significant gap in between. And there's some other good devices out there that we see from competitors that do a good job. But we don't think anything has really solved the exact need. to deliver what our physician partners are looking for. So we're looking at using our own research and development to expand the scope of our two devices, and we're also looking as well for unique technologies that are available outside that maybe we can bring in-house. So we hope to talk to you in more detail soon, but that's really what we see in this space.

36:40 We think it's a unique opportunity, and we have a right to be there based upon the two unique technologies we have today with Unifuse and AngioVac.

36:50 Great, thank you for taking our questions. Thank you. At this time, I'll turn the floor back to management for closing remarks.

36:58 Thanks, Rob. So, folks, to close, I want to remind the listening audience today how proud we are of the work that was done here by the AngioDynamics team to get the approval and the IDE that we were able to announce yesterday. This took a lot of effort and work by a lot of really talented people in our company who worked tirelessly and were committed to getting this approval over the goal line. We've added to our team significantly in the past two years here, bringing in some really, really talented people who've helped us to get this goal. Now all we want to do is help our physicians treat more people in this area. And while we've done this, we've also run our business in a really good fashion. We've come closer and closer to what we believe will be a defined company from a portfolio perspective, and we'll share with you news as that changes.

37:45 And we also do what we do best every day. Our really, really strong operations and manufacturing team manufactures and assembles devices every day at world-class quality levels to help physicians deliver care to patients. We have really good people at AngioDynamics, and we look forward to sharing our story with you during the course of this year. Thanks for joining us this morning. Thank you. This will conclude today's conference. You may now disconnect your lines at this time. Thank you for your participation.