Inogen, Inc

Welcome to InnoGen's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. To ask a question at that time, please press star and one on your touchtone phone. If anyone has difficulty hearing the conference, please press star and zero for operator assistance. As a reminder, this conference is being recorded today, May the 5th, 2022. I'd now like to turn the conference over to Jason Summers, General Counsel. Please go ahead.

Thank you for participating in today's call. Joining me are CEO Nabeel Shabshab and CFO Kristen Kaltren. Earlier today, Inogen released financial results for the first quarter of 2022. This earnings release is currently available in the investor relations section of the company's website. As a reminder, the information presented today will include forward-looking statements, including, without limitation, statements about our growth prospects and strategy for 2022 and beyond, expectations related to our financial results for the second quarter and full year 2022, our expectations with respect to supply challenges and cost inflation related to semiconductor chips, used in our batteries and concentrators, our expectations on European regulatory clearances and related impact on our international sales, our ability to create shareholder value by driving awareness of our products, expectations regarding our international and domestic sales channels, expectations related to our rental channel, expectations related to our prescriber sales channel organization, including the expansion of the sales team and implementation of healthcare intelligence platforms and tools, to our partnership with Ashfield Healthcare. Higher expectations, expectations regarding reimbursement and regulatory changes, our expectations regarding the market for our products, and the impact of the COVID-19 pandemic on our business and supply and demand for our products in both the short term and long term. The follow-up statements in this call are based on information currently available to us as of today's date. These forward-looking statements are only predictions that involve risks and uncertainties that are set forth in more detail in our most recent periodic reports followed with the Securities and Exchange Commission. Actual results may vary, and we disclaim any obligations to update these forward-looking statements except that they may be required by law. We have posted historical financial statements and our investor presentations in the investor relations section of our company website. Please refer to these files for more detailed information. During the call, we will also present certain financial information on a non-GAAP basis. Management believes that non-GAAP financial measures, taken in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain non-cash items and other expenses that are not indicative of Inogen's core operating results. Management uses non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions. Reconciliations between U.S. GAAP and non-GAAP results are presented in tables within our earnings rules. With that, I will turn the call over to Inogen's President and CEO, Nabeel Shamshal. Nabeel?

Thank you, Jason. Good afternoon, and thank you for joining our first quarter 2022 conference call. We are pleased with our execution during the first quarter of 2022, whereby we continue to mitigate higher cost and supply chain headwinds while largely meeting stronger customer demand, hence delivering results that exceeded our expectations. This accomplishment is significant in the context of the semiconductor shortages and the company navigating a month-long global manufacturing shutdown from January 3rd through February 9th, 2022. We have made steady progress on the execution of our strategy to expand and effectively increase our sales footprint, specifically in the prescriber channel, while driving increased productivity across all our commercial operations. We continue to work through supply chain challenges to meet the market demand, and we are investing behind our commercial strategy, R&D, and clinicals in support of long-term sustainable and durable growth and profitability. Now, turning to the first quarter, total revenue declined 7.5 percent to $80.4 million from $86.9 million in the same period in 2021, primarily driven by supply chain constraints that resulted in limited sales and our domestic business-to-business channels. We directed the available capacity primarily to the direct-to-consumer sales and rental channels and our international business-to-business channels to balance strategic imperatives while optimizing revenue and margins. In an effort to mitigate margin-related pressure, we have recently implemented an additional price increase in our domestic direct-to-consumer channel beginning in March 2022, in addition to the previous price increase that went into effect September 2021 in all channels except rentals. Domestic direct-to-consumer sales increased 12.2 percent to $34.4 million in the first quarter of 2022 from $30.6 million in the first quarter of 2021, primarily driven by increased average selling prices. Inside sales representative productivity increased in the quarter despite lower average inside sales representative headcount, which was down approximately 6.9 percent from the competitive period in the prior year. We continue to optimize our inside sales capabilities with increased focus on enhanced sales management disciplines and data-driven selling techniques, and we are actively managing turnover through a focus on talent acquisition and development that is aimed to strengthen our commercial capabilities across the board. We are pleased with the performance of our inside sales team in the first quarter. We saw improved direct consumer sales productivity per representative and increased average revenue per order versus the first quarter of 2021. Rent and revenue in the first quarter of 2022 increased 31.8% to $13 million from $9.9 million in the same period in 2021, primarily due to increased patients on service and higher Medicare reimbursement rates. As of March 31, 2022, we had approximately 43,200 patients on service, which was up 24.5% compared to March 31, 2021. We had approximately 32,800 billable patients on service as of March 2022, an increase of 22.1% over the prior year. The increase in patients on service was primarily driven by our strategic efforts to elevate prescriber awareness and referrals, through our prescriber sales team and greater utilization of patient leads for rental opportunities aided by the relaxed Medicare criteria for oxygen therapy reimbursement due to the COVID-19 PHE. Domestic business-to-business sales in the first quarter of 2022 decreased 83.4% to $5.1 million compared to $30.7 million in the first quarter of 2021. This was a result of the current supply-constrained environment and based on a strategic decision to balance various business variables. Most critically, as of early May 2022, we have started shipments to our domestic business-to-business channel in order to elevate some of the order backlog in our system. International business-to-business sales in the first quarter of 2022 increased by 77.7%, or 86.8 percent on a constant currency basis to $27.9 million compared to $15.7 million in the first quarter of 2021. The increase was primarily driven by a strategic decision to prioritize that market to fulfill existing demand ahead of the EUMDD certificate expiry as we progress the ongoing regulatory filings to secure the necessary MDR certificates for later in 2022. Despite the continued supply chain challenges, we remain cautiously optimistic about the demand while we monitor COPD diagnosis and prescription rates in anticipation of them returning to pre-COVID-19 levels in the U.S. and other major markets. Supply chain disruptions and increased cost of critical components have persisted across industries, including the medical technology sector, specifically as it relates to availability and cost of semiconductors. Due to the war in the Ukraine as well as the COVID-19 extended lockdown in China, such shortages are expected to remain a challenge and negatively affect our operations potentially into the second half of the year. We are closely watching these trends and actively pivoting to mitigate ensuing impacts through strategic sourcing, product redesign, and pricing actions. In the first quarter of 2022, premium pricing for chips sourced from the open market has trended higher versus the fourth quarter of 2021 which has resulted in inflated costs that negatively impacted our cost of goods sold. As part of our strategy to minimize supply disruptions and meet a higher portion of the expected 2022 demand, we decided to forward buy a portion of our semiconductor requirements for 2022. Some of the opportunistic purchases of semiconductor chips remain on the balance sheet as prepaid expenses and other current assets or inventory. This is because much of these components have not yet been utilized in the manufacturing process, nor sold to customers in the period. While we expect some improvements, we believe that supply shortages and resulting cost impacts are likely to continue through the second half of 2022, resulting in higher cost of goods sold per unit versus the first quarter of 2022. We are pursuing additional motherboard redesign, as well as aggressively engaging our regular suppliers to get firmer commitments, while simultaneously canvassing the open market for additional quantities. We are pleased with the motherboard redesign for our Energen 1G5 POC, which has already gone into production, as well as the price increases that have allowed us to cover most of the cost inflation related to the chip shortages. Now for an update on the strategic initiative focused on increasing the size and productivity of our prescriber sales organization. As of March 31, 2022, we had 54 sales representatives versus our target of 60, which we expect to reach during Q2 2022. This team is focused on top decile oxygen prescribers nationwide, which we believe will allow us to cover 65% of the oxygen therapy patients in the U.S. at the point of diagnosis and prescriptions. Supporting this team are 12 virtual concierge service reps that handle all the administrative tasks and allow the prescriber sales team to maximize their selling time. While still in the early months, we are very pleased with the initial results across both our contract sales organization, Ashfield, as well as our internal Inogen teams. This is evidenced by a faster productivity ramp for new hires, increases in patient referrals, and growing referrals from new prescribers. In addition to expanding the sales force and coverage, we are focused on driving sales productivity through proprietary prescriber insights and analytics specific to that channel for the first time in a gym. Next, I'd like to cover reimbursement rates. In the first quarter, CMS implemented a 5% Medicare inflation adjustment effective January 1, 2022. As expected, the 2% Medicare sequester benefit that has been in place since May of 2020 due to the COVID-19 public health emergency, or PHE, expired on March 31, 2022. The sequester then resumed with a 1% reduction to rates from April 1, 2022 until June 30, 2022, with a full 2% Medicare sequester expected to resume on July 1, 2022, and continuing through September 30, 2030. As a reminder, based on the DMEPOS rule finalized in December 2021, the areas that are non-rural, non-former competitive bidding areas will be subject to a reimbursement reduction once the PHE associated with the COVID-19 is declared over. In these areas, rates would probably decrease approximately 20% to be in line with the former competitive bidding areas. In addition, once the PHE is declared over, the relaxed Medicare criteria for oxygen therapy reimbursement would be removed and the new oxygen national coverage determination would be in place. It is important to note that the PHE has been extended recently for 90 days through July 15, 2022. Now moving to the status of our European regulatory clearances. As a reminder, current Energen products are commercialized in the European Union under medical device directive certificates, and ours is expected to expire on May 18, 2022. We anticipate securing an approval of our medical device regulation submission and for the issuance of the MDR certificate during the fourth quarter of 2022. We have prioritized shipments to Europe to go into supply chain before May 18, 2022, which should help us meet existing orders. Additionally, we have applied for select EU country-level derogations or exemptions as an additional mitigation measure. Derogation requests have been filed in Germany, France, Spain, Italy, Belgium, the Netherlands, and a few other European countries. While we await final decisions for those countries, We have secured the UKCA certificate required to continue to ship products into the UK and expect shortly to have the certification required to continue to ship products into Switzerland. I would like to reiterate that the anticipated gap in EU marketing is unrelated to product safety or performance and will not impact US commercialization. Based on our latest discussions with the notified bodies, we expect the EU MDR dossier for our improved products to be reviewed and potentially cleared in time for long-term operations in the EU. As we look ahead, despite some near-term challenges, the underlying demand for our offerings is strong, and we are committed to increasing the POC market penetration and improving patient access. While we are focused on executing on our commercial strategy and driving pricing excellence, we remain committed to working through the ongoing supply challenges and mitigating the material cost inflation impact. We are continuing to build capabilities, invest in our infrastructure, clinical evidence, innovation and new product development, as well as further commercial capabilities to strengthen and advance our market leadership position and portable oxygen therapy. We believe that these focus areas and investments will contribute to our goal to driving long-term sustainable and profitable growth and value creation. I'm also happy to formally introduce our new CFO, Kristen Kaltreider, and turn the call over to her now. Kristen?

Kristen Kaltreider Thanks, Mubile. I'm very happy to join the team here at Inogen. Total revenue for the first quarter of 2022 was $80.4 million, representing a decrease of 7.5 percent over the comparative period in 2021, but an increase of 5.2 percent sequentially from the fourth quarter of 2021. Gross profit in the first quarter of 2022 was $35 million, a decrease of $4.9 million as compared to the first quarter of 2021, driven primarily by lower sales volumes, lower labor and overhead absorption due to the temporary manufacturing shutdown, and higher cost of materials associated with the purchase of semiconductor chips on the open market. This was partially offset by higher selling prices and favorable channel mix. Total gross margin was 43.5% in the first quarter of 2022 versus 45.9% in the comparative period in 2021. Year over year, gross margin declined 240 basis points, driven primarily by higher cost of materials and lower labor and overhead absorption, partially offset by higher average selling prices and decreased mix of domestic business-to-business sales. Diving one layer deeper, Sales revenue gross margin was 41.4% in the first quarter of 2022, declining 330 basis points from the first quarter of 2021 driven by the same factors. Rental revenue gross margin was 54.7% in the first quarter of 2022 versus 55.1% in the first quarter of 2021, a decline of 40 basis points. The decrease was primarily driven by increased depreciation and service costs, partially offset by higher Medicare reimbursement rates. Moving on to operating expenses, research and development expense increased to $5.4 million in the quarter, compared to $4 million in the first quarter of 2021, primarily associated with increased product development costs and personnel-related expenses. Sales and marketing expense increased to $28 million in the first quarter of 2022 versus $25.5 million in the comparative period of 2021. This increase was driven by higher personnel related and consulting expenses. General and administrative expense increased to $15.2 million in the first quarter of 2022 versus $12.5 million in the first quarter of 2021, primarily due to increased personnel-related expense aimed at rebuilding core capabilities of the company, one-time recruiting and severance costs, and the non-cash change in fair value of the new era earn-out liability. In the first quarter of 2022, the company reported a net loss of $14.2 million and loss per diluted share of 62 cents. On an adjusted basis, the company reported a net loss of $8.8 million, adjusted EBITDA loss of $5 million, and an adjusted loss per diluted share of 39 cents. Finally, we ended the first quarter of 2022 with cash, cash equivalents, and marketable securities of $223.4 million. with no debt outstanding. We incurred significant additional costs in the second half of 2021 and the first quarter of 2022 for the semiconductor chips purchased on the open market, but not yet sold in finished goods, which contributed to increases in prepaid expense and other current assets and inventory. As of March 31, 2022, these balances were $22.2 million and $34.1 million, respectively. Now turning to our outlook, while we have been successful in working through the supply challenges in 2021 and Q1 2022, we continue to see ongoing supply chain uncertainty, especially in light of the additional complexities brought on by the war in Ukraine, as well as the COVID-19 lockdown in China. We will not be providing detailed financial guidance for the full year 2022, but we can provide some general context to our expectations for the second quarter of 2022. The company expects total revenue for the second quarter to improve sequentially and be similar to the second quarter of 2021. We believe the semiconductor chip shortage experienced across many industries has and will likely continue to have a negative impact on operations. As Nabil mentioned, we are actively working with suppliers both in the regular and open market channels to continue to procure necessary semiconductor chips. We are also exploring additional motherboard redesigns. Up to this point, we've had reasonable success in mitigating much of the material cost inflation through price increases across all channels, excluding rentals. But expect continued challenges until supply needs demand and component prices stabilize. We expect gross margins for the second quarter of 2022 to be in line with the first quarter of 2022, as increased selling prices are offset by continued cost pressure. We remain committed to making investments in clinical research, research and development, and building the necessary infrastructure to support future durable revenue growth and margin expansion. Given such investment initiatives, we still expect increased operating expense for full year 2022 compared to 2021, with the expectation that these investments will begin to meaningfully benefit results in 2023 and beyond. In summary, despite our pricing actions, we expect negative adjusted EBITDA in operating and net losses in the second quarter of 2022, reflecting the anticipated supply-constrained environment increased cost of goods sold per unit, and incremental growth investments. To reiterate, while in the short term our outlook is impacted by certain supply constraints, we are proud of the actions we have taken to make structural improvements in our business, including our investments in our prescriber sales and service organization, productivity improvements in our direct-to-consumer channel, and increases in our average selling prices. We believe over the long term, our strategy to optimize the commercial infrastructure and drive productivity while investing in clinical research and research and development supports our plan to return to sustainable revenue growth and profitability. With that, we finish our prepared remarks, and we will be happy to take your questions.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove yourself from the question queue. For participants 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. The first question comes from Robbie Marcus from JP Morgan. Please go ahead, Robbie.

Hi, this is actually Lillian for Robbie today. Thanks for taking the question. Maybe starting with the P&L, I know there's a lot of moving pieces here with supply constraints, inflation, price increases. So could you just give us some color on how you're thinking about margins progressing over the rest of the year, specifically gross margins?

Hi, Lily. This is Kristen. We are not giving guidance for the back half of the year at this time, but for Q2, we are suggesting that the margins will be in line with Q1.

Okay, got it. And again, I know there's a lot going on with pandemic, UMDR, and I know you guys have taken price to kind of offset some of those headwinds, so I'm just trying to get a sense for how underlying volumes are doing in this environment. So is there any way you can parse out, you know, the size of those price increases and how much volumes and price are contributing to growth right now?

Yeah. Hi, Lily. It's Nabila. I'm going to take that one. So I think we would be more comfortable commenting on the underlying volume if we were not in a supply-constrained environment. Because today, everything that we can make, we can sell, and we cannot really put a gauge on are we meeting all the underlying demand in the market out there in all the channels or not. We know that we are backlogged in a couple of channels, so we believe that the underlying demand continues to be very stable and strong, and our ability to meet it is supply-related, not demand-related. And maybe just as a reminder, back to the margins, and this is not about the remainder of the year. As the supply chain pressures abate and that negative BBV that has hit our cost goes away, we took also the price increases as a reminder, and that should be accretive to the margin line. But we will know once we see the demand and supply stabilize in the chip market and us determining what the costs are going to be moving forward for the remainder of the year at least.

Got it.

Thank you. Thank you. The next question comes from Matthew from KeyBank. Please go ahead, Matthew.

Hey, good afternoon and thank you for taking the question. I just want to understand the dynamics in the direct-to-consumer rental channel. I believe you're having sequential success with the direct-to-prescriber sales force, but at the same token, reimbursement is relatively capped and the price of the PLC is a are kind of moving higher. How do you kind of reconcile those two factors and decide between, you know, which one you're going to prioritize with the direct consumer rental versus the sale?

Yeah, so Matt, thank you for the question. So let me start with the fact that we have prioritized both channels from a supply perspective. So let me get that out of the way. Today, the production goes primarily to these two channels. And then as we talked in our prepared remarks, The remainder goes to Europe because of the EMDR as well as the margins, and then the rest will be to be. So let me go to the DTC question that you asked just now. So for us, that is a channel that is the basis of some of the performance that we have, and we're working on making sure that we continue to support it, but we're working on increasing productivity and efficiency so we can drive higher growth rates within the channel and make sure that we are optimizing the cost that growth for us. Now with that said, a lot of the growth will come also from the prescriber channel because we're going there where people are actually diagnosed and prescribed. So you get at that point in time 36 months of billable per patient which is a different profile from a financial perspective and we have demonstrated in the recent year that we are able to continue to work on the margins of both businesses and they're almost equal, and they will actually continue to get improved with the productivity and the efficiency. So, again, we're not taking our eye off the DTC. On the contrary, we're continuing to refine that, but we are also putting a lot of effort behind the prescriber channel because there is growth that sits out there that we were not participating in, and it's time for us to actually be able to participate and get our fair share of that growth. Exactly.

Sounds like you take a long-term view of that area. Do you have visibility to, like, increased supply in 3Q and 4Q at this point? You know, I ask the question because, you know, your second quarter sales, at least where you're pointing them to, are definitely much better than where, you know, the last two quarters have been. Can you maintain that level of sales in 3Q and 4Q based upon your level of visibility at this point.

Thank you. Thank you, Matt. So let me maybe just go back and reflect on how we managed 2021 and the first quarter of 2022. Those challenges that have been there all along did not prevent us from actually being very industrious in terms of how we found ways to be able to get that supply to meet most of the demand that's there. We're not meeting all of the demand. Now, it's a little bit difficult for us to continue to, because there are two new variables that are on the table. Of course, the Russia-Ukraine war, as well as the shutdown in China. With that said, we are very focused on, and we've listed the three things. I'm going to start with the open channel and the open markets, the regular channels, and the board redesigns. hoping that we would be able to continue to block and tackle like we did on a weekly basis. This is not something that we're managing in the long term. This is daily and weekly meetings that help us get to where we need to do in terms of meeting the demand. But there is on the table because there are the two variables I just mentioned that we still haven't really learned how they're going to materialize in terms of is it going to be very different than 21 or is it going to be similar? We've managed for, call it, six quarters with the supply shortages, and we hope that our efforts will continue to help us manage moving forward. But we'll see. We need to wait and see a little bit on the two new variables.

This last question for me, I think you're making a lot of investments. You're dealing with a ton of supply chain issues, but there's a ton of demand out there. The last piece would be, does the balance sheet remain intact? As you go through the next couple of quarters, do you still walk out with a couple hundred million dollars of cash? How closely are you watching that at this point?

Yeah, so I'm going to maybe make a couple of comments without quantifying things. So we actually pre-bought some of what we need in 2022 already, so that already has eaten into the cash balance that we have. I'm not going to quantify how much of it and what's remaining, but we're in a good position in my mind with the cash that sits on the balance sheet to do three things. One is continue to run the business despite the increased costs. The other one is invest like we had promised in the beginning to build a stronger company and then pay off these investments in the next year or so moving forward. And then thirdly, we remain open to potentially growth through inorganic means. We believe that the cash balance we have will allow us to balance and manage these three things at the same time. So the answer is we feel very comfortable with the cash balance we will have on hand.

Okay, excellent. Thank you very much.

Thank you, Matt.

Thank you. Ladies and gentlemen, just another reminder, if you'd like to ask a question, please press star, then one. If you'd like to ask a question, please press star, then one. The next question comes from Mike Madsen from Needham & Company. Please go ahead, Mike.

Yeah, thanks. So I wanted to make sure I'm understanding the situation with the EU MDR. So Just from a modeling perspective, you know, what should we be assuming for the international B2B business over the next couple quarters until you get the MDR in place? I mean, is it going to drop significantly in that time frame or not?

Yeah. Hey, Matt and Nabil, thank you for the question. I think you guys could look comparatively to the quarter and say, okay, definitely there was a push on our side within the allowed MDD legislation to be able to send product into the European market ahead of time to meet the demand that existed in our system with the orders that were backlogged. Now, part of it is, of course, to satisfy the market need while we actually are beyond the certificate expiring, which is May 18. We believe that from the current feedback that we have from the bodies that are reviewing this, including BSI, is we'll be able to dovetail that supply of the market with the renewal of the MDR certificates on the back half in Q4 of 2022. So there is an increase in sales. Of course, there's going to be a little bit of a dip because of the push, but then we have to pick it up in the balance of the year once we get the certification that we need from an MDR perspective.

Okay, got it. And then I assume if the demand there is, I shouldn't say demand, but if your sales there are lower because of this issue, then you can funnel some of those POCs into the domestic B2B channel because you've kind of been starving that portion of your business in that time? I think

Yeah, Mike, I think that's fair to say. Also, we indicated in the prepared remarks that we started now in May, in the first week of May, to ship product into the domestic B2B channel. The intent is to remediate some of the pressure that this channel has actually taken in terms of the prioritization. And we'll see, depending on supply, how we can balance all the channels that we have, but definitely supply. Part of it is going to go to the B2B US channel, depending on supply levels that we have. We've already started shipping in May.

Okay, and then my final question is just on your new product pipeline. I know you're probably not going to talk about what's in the pipeline or the timing, but I guess what I'm wondering is, have the supply chain issues had any sort of impact on your ability to develop and the timing of any future product launches, like new POCs or anything like that? Has it caused delays there that, you know, cause you to be launching them maybe later than you otherwise would have?

Yeah. So maybe I'll characterize it in a two-part answer. What's in the pipeline is relatively closer to a new and improved, which have the same variables in terms of supply and the chips that are required, the chipsets that go on the motherboard. So you can say you're dealing with an equal level of either challenges and or the mitigations that we're running. In terms of future products, one of the things that we're thinking about is, and we're working actively on through outside partners, is how do you leap forward in your motherboard designs for products that are either existing or future products that take into consideration where the investments are going from the foundries, basically. Because, of course, you know of all the people that part of the challenges we face is these lower margin, low power chips were the ones that were under the most constrained supply. It's because they never actually prioritized them and they were going towards the more complex. So the balancing game moving forward in new product development is to work with third parties outside that are experts in terms of the technology roadmap and from these chipset manufacturers, for us to really factor that into our design efforts also, so eventually we don't have to go through the same issue that we suffered within the last year or so.

Okay, that makes a lot of sense. Thank you. Okay, thanks, Mike.

Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back to Nabil Shabshab for closing remarks. Thank you.

Thank you. Thank you for the question, guys. While in the short term our outlook is impacted by certain supply constraints, we are proud of our pricing execution to mitigate most of the margin pressures while continuing to meet demand as a result of the focused efforts by our manufacturing and commercial teams. I'm also pleased with the progress we are making in terms of structural improvements in our business, including a management team that is focused on new sources of growth including commercial execution, rebuilding our innovation pipeline, and investing in market development efforts. I remain confident in our ability to advance Inogen to a global market leader with innovative, evidence-based chronic respiratory care solutions with long-term sustainable revenue growth and profitability. As I conclude, I would like to thank our investors for your support and your interest in Inogen. and thank the Energen employees for their continued dedication and hard work that has allowed us to continue to serve patients with oxygen therapy needs in the U.S. and abroad. Thank you so much, and have a good day.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.