Earnings Call: Q3 2020

Oct 23, 2020

Thank you. Good morning, everybody. It's glad to hear in Lund together with Maria Moreen, who is Head of Corporate Communications here and also Magnus Blix, CFO. So I will take you through the presentation and also Magnus will chip in and help me today. So I'll start now. So please move to Slide number 3. And for those of you that haven't followed us throughout the years, I think it's important to give a little bit of a baseline and of course, television, the vision and mission at the end of the day for us is to replace traditional microscopes in laboratories. And since we have a strong offering both when it comes to the outcome sites that we can provide a good outcome in blood analysis and we also improve efficiency by digitalizing the workflow in the lab and automatizing it. We also addressed the cost base basically. So sometimes we will call this kind of the Holy Grail that you deliver value to customers and labs at the end of the day. And I think that has throughout the years proven to be a success and thereby also helped Elevation to penetrate the market throughout the years. If we move then to Slide number 4, just to give you an overview of the situation out in the market, all in all, there are roughly 4,000,000,000 blood samples taken every year globally, dollars 2,500,000,000 of those are taken in large labs, which we define as the lab that have more than 130 samples per day and there are 17,000 of those around the world. And the whole kind of the whole target and objective of kind of the hematology workflow is to address and assess blood related diseases that can be clustered I think into 3 groups. You have the blood cancers like lymphoma, myeloma, you have anemia and you also have severe infections basically. And there are 30 of those that at the end of day needs to be diagnosed. And the first step in the hematology workflow is there is a cell counter and the cell counter kind of looks for abnormalities in the blood. And if there is an abnormality, you have to do a second step in analysis, which is the microscopy analysis. And there are 2 options since the last 15, 20 years. The one is television and one is traditional microscopy. And of course, 15% of 2,500,000,000 blood samples is just below south of 380,000,000 per year roughly, which is the cell division market that we step by step try to go for. And of course, we have over the years and we'll continue to do try to take larger and larger part of that workflow. And of course, as you all remember, we acquired a company called Well Diagnostics end of last year. They are part of that workflow since then basically we're trying to optimize the whole process. In large labs, we have penetrated roughly a little bit more than 20% of the market in the last year, which means that a little bit more than 3,500 laps out of the 17,000 are using Celavision. So that's the setup in the large labs. The other major segment that we address is the small and medium hematology labs and there are roughly 100,000 of those globally. And it's basically the same workflow, but of course, it's much less samples in those labs. I would say it's we define that as less than 130 samples per day. And there we would then advise or recommend the DC1s and the SME workflow that goes with that, that we launched C Marked February last year and I'll come back a little bit on the development on that later on as well. So that is a market savings we're starting to penetrate now step by step. And it's still very low percentages, but we have a few 100 of those out there today that we have shipped, so to speak, during the last year. So that's kind of the 2 major segments that television aims to target. I think another important component in our if you go to Slide 6, in our offering is the business model that we've developed throughout the years, where we've been very loyal to this indirect business model where we basically partner up with a global hematology players and we have global long term agreements with all of them since long and we're working close to them since long. And we complement that with our market support offices where we now are present in 18 countries or 18 markets and cover more than 40 countries and you can see all the countries where we have presence listed here. And I think Russia is the last one this year that became operational, I would say, this summer basically. So that's how it looks like on that. And then we have a set up where we basically have when it comes to the devices part of systems, we have a 3rd party manufacturing and we have in house production or manufacturing for the reagents or the stains. And all in all, we have a little bit less than 200 employees globally. So that's Salvation. I would say the 6th player of Sysmex, Beckman, Mangrohe, Siemens, Riva and Abbott are basically covering the whole hematology markets. If a customer wants to buy a hematology line or products, they go to 1 of these 6 and then we are, of course, behind them as a part of their offering. So that's how it works. And as you can also see, Sysmex is a very dominant player. They have, I would say, more than 65% global market share, which means that they are a little bit the last year's at least driving the market. And the runner ups are Mindray and Beckman and we of course cooperate with all those. The strategic and then at the television has been also pretty the same for the last few years. If you go to Slide 7, we have focused on geographic expansion to be present with local colleagues in the local markets to penetrate and open up those. We're also focused a lot on segment expansion. We moved from 1 to 4 segments within the last year basically, where we now have strong offerings and can start to penetrate and commercialize those. Innovation has always been high on our agenda. And I think at least the last 5 years, it's been more than 50% R and D spend versus sales, which is I think it's a good KPI on that. Supply chain focusing on that and also then since we have an indirect business model, it's a lot of focus on developed partnerships basically. And you can also see kind of our financial targets that we set up a few years ago and those are over an economic life cycle. So that's that. If we go down to Slide number 9, basically just to kind of summarize the presentation also showing a little bit that the products we have is that we have now, I would say, since a year back. So if we would have gone a year back here, we only provide a digital morphology systems for large labs basically and we have then expanded by acquisitions, but also with our organic development with the DC-one. So now we kind of cover the whole workflow. So once the blood has to be analyzed in a microscope, we can basically cover everything that is needed since a year back basically. Now of course, our challenge is to commercialize this in all key markets, because there are always some tweaks in every country that needs to be addressed. But that's basically what we have in front of us. We spent a lot of time, I would say, last year to really kind of put this portfolio together, which is now ready and also in many ways commercialized already. So I think it's important when we discuss that you understand that this is kind of the setup have. So that's that. If we then move a little bit into the financials, which is kind of the key point of this call, We had we reported a 24% decline in sales versus last Q3, as you've all seen. And of course, the majority of that part is related to COVID and the challenges we've had with that the last few quarters. So if you look a little bit region by region on Slide 11, Americas has been, I would say, a few tough quarters behind us. I think if we just kind of give a status where we are today, we got 510 clearance for television DC1. As you remember, we have for a long time said that we target Q4 and we're quite proud and happy that we managed to deliver 510 clearance in Q4. So that basically means that we as of now also can start to commercialize and sell basically DC1 in U. S. And it's I mean, we have 2 major partners now that's Beckman and Sysmex and they're both ready and prepared to do that. So we will start that basically immediately. We got the Fast 10 ks Clears last Friday, so it's pretty fresh. We've also seen a very tough year in U. S. I think we're not the only company. U. S. Has been a tough market and we've seen a lot of negative impact due to COVID-nineteen in Q3 especially. And I think it's basically so that our products are installation products, which others install the products, set up all the IT structure, etcetera, before it's operational and that has been tough the last two quarters basically. What we see now is that in U. S. Especially we see that the low point in sales has been passed now and we see during the last end of last quarter and now when we move into quarter 4 is that we see installations increasing again from the low levels, which I think is a very positive sign. If you look at the patchment rate, so basically if you look at how many of all installations include television, they are still as high as before. So when we look at our partners, in this case Sysmets and Beckman, they've suffered as much as we have in U. S. During the last, let's say, 2 quarters and we now together start to increase sales again. Then of course it's always hard to predict the future right now, but I think now we see at least a stable improvement coming up. Meanwhile, we have also signed global distribution partnerships when it comes to slight preparation, which is especially reagents slash stains, which means that we can now start to address also markets in our partners in Americas with the RAL Stains. And that's been a closed market before CelloVision acquired RAL a year ago. So that's also been a good progress. So right now in the middle of discussing how we'll start to build up that business basically. So all in all, if we summarize U. S. Or Americas and U. S. For that matter, it's been a few tough quarters behind us. We see that the low point has been passed. We see increased installations again. We see a DC-one that is now cleared for sales. So I think we have a predict and we have then a global partnership, global distribution agreements with our key partners. So that means that we now can start to push on the gas again and start to move ahead. So that's that. If we then look at APAC, a little bit of a weak quarter, but if you look at year to date growth, it's 34%. I think what happened there was that we had a few distributors that especially in China that were a bit nervous about our capabilities to keep up production during the pandemic in Q2. We saw some inventory built up in Q2 basically that has kind of limited us in Q3. I think all in all, if we summarize APAC, that's probably the region that's more back mostly back to let's say normal situation or pre corona situation when it comes to business. Both China and also Japan has shown strength, I would say, and it's showing that. And from an activity perspective, it's more or less back to normal. So that means that all the activities that we do to build penetration and market improvements are being done. I think the 2 markets that still are a little bit shaky, if I may say so, is India and Australia where we see that there are restrictions in those markets. But I think the key markets are coming together. And also in APAC we've now signed global partnerships which basically means that also there we're now running pilots in some key markets Korea, Hong Kong are two examples of that and we're moving to other markets also which stays the coming months and we'll start to build our present there where it's very closely linked to of course our digital morphology products. Then EMEA, of course, there we have growth, but that's also part to the a lot of the RAAL diagnostics and this is the last quarter when we are not fully comparing apple to apple on that. We see that there is a commercial integration of rail that is finalized. And of course, there is a lot of focus around still in Europe because that's the historical base for the valve sales. We are also trying to grow that market. We have had also there a negative impact due to COVID, especially I would say in Q3, but then we've also seen that the market is opening up again. And I think at least the last month we've seen a return to normalization. And we've also seen now that the DC01 orders are coming in again, which was not the case for a quarter or so. And also to finalize EMEA, we now have a operational fully operational market support organization in Russia that can start to address that market. So to summarize it a little bit, I think APAC and EMEA, especially APAC are really, I mean, full activities, EMEA close to full activities and Americas kind of have passed, let's call it the low point that happened during this quarter. So I think all in all, it's more positive than it's been the last 2 quarters where we have indicated clearly that we have challenges in the markets. If we then move to Slide number 12, and just to kind of give a little bit more other highlights in Q3. First of all, again, we got the 510 clearance last Friday. So that means that we'll start to ship DC-1s and we can do that. So that's kind of the focus area now and we'll start to penetrate the U. S. Market, which is of course our normally under normal circumstances our number one market. And of course, next steps for us is to also get registration or regulatory clearance, commercial clearance in China because that's now the only market where DC-one is not yet approved, which is something that will take place next year basically. So for all other markets now we can ship DC1. As you all know, it's a year ago since we acquired RAL Diagnostics. We spent a lot of time this year to kind of develop integration activities and those are now finalized and they're institutionalized and we also recently launched a new global organization that is now operational and that kind of should drive so that we optimize all the synergies here that goes with the RAAL Diagnostics acquisition. Then on the COVID-nineteen side, I think some highlights there or maybe highlight is the wrong word, but some comments on that. I think what we see now, especially where we have installed a television system since before is that they are used more than ever. I mean we are a little bit if we take it a little bit to stretch it a little bit, we're a little bit like MS Teams or Microsoft Teams or Zoom for the hematology lab. That basically means that if you sit in the lab and have a television equipment, you don't have to be in the lab, you can work remotely. If you have traditional microscopy then you have to sit in the lab and do the analysis. And as you all know, it's in all areas, people are asked to work from home. So we see in labs where we are installed, we see very high usage of our systems, especially kind of the connectivity part of it more than ever. And then of course, we have also, as I would say, all other companies, but we can do it even more than others because we have this kind of digital solution at the end of the day. We can implement all the virtual work methods and make sure that we can run remote customer training and there is a very high focus to implement this remote access procedures and applications that we have in labs. So that's extremely hard important. So the challenge we've had the last two quarters is basically to be able to install new installations. So the pipeline is there, it's just that you have to get the lab to open up and then it can be installed. So that's been key since we have hardware that has to be physically installed in the lab. Yes, and then the reagents or the RAL diagnostics product lines, we are now launched that globally. We need to launch that. I think RAL was strong in 5 European markets prior to the acquisition. Now we target to be strong in 40 to 50 markets globally in the coming years. So that's of course a process that's ongoing. And of course the first step there is always to have a distribution contracts with your partner so that you can start to sell. And then of course, once you have that, you take the next step. We also launched complete veterinary system or offering into the veterinary system and then there we also have a close partnership now with Sysmex and some pilot installations in one of the largest I would say veterinary lab chains, which is IDEXX basically, where we are supporting with the digital morphology. So that would be a rollout. It's still, I would say, a small fragmented part of the business, now we have a kind of a tangible way forward here. But still, it's a small part of the total business for us. But I think it's one important step forward in that area, where we now have a substantial possibility to start to penetrate that segment as well. And that's both for the DC1 and the large lab systems since we have that preliminary versions of all those. So summarizing that, that's basically I would say the highlights. And then we have one other company. So this is also my last quarterly report, 24th and last for now at least. And we have also appointed an acting CEO that will step in when I leave and that is Magnus Brix basically, who has been the CFO for the last 7 years at television. So I think we have a very good acting CEO coming in here. And I will hand over to Magnus now and allow him to go through the financial numbers more in detail, I would say. So Magnus, the stage is yours. Okay. Thanks a lot, Salko. Yes, I will take you through the last slides here, the financials. And starting with Page 13, we have a quarterly overview of some of the key ratios in our income statements. And we can see that we ended up Q3 with sales of €88,000,000 If you look at the trend, you can see that it's a clear dip to a normal trend curve that we have. And as Slatko has explained, we've been affected with the pandemic. With the COVID pandemic, it has affected our revenue. It's 8% down year over year. And if we exclude currency effects and structural effects, it's 24% down, so it's quite significant. Nevertheless, we've been able to preserve results at a fairly good level. We have an EBITDA of 24.6 percent and that is around 28% EBITDA margin. So considering the downturn on top line, the financial results are quite good anyhow on the bottom line. Much of that is through what we call cost conscious operations. We have prioritized our activities in our projects and focus on the necessary ones only. And by doing that, we've been able to keep our cost under good control. And that has then resulted in a fairly good outcome on the bottom line. Comment on the gross margin, it's 64.8% this year versus 76.1% last year. And then this year, it includes also the product line from the acquisition that we did in Q4 2019. And the gross margin for that product line, the reagents, is lower than the average before. So that's the explanation of the downturn there. Okay, next slide, Slide 14. A few more comments on the Q3 outcome. If we look at the sales, we can see that, yes, organically, it was 24% down. FX effects was negative 5% in the quarter. And then the structural effect is solely related to the rail acquisition that was done in Q4 last year. So this is the last quarter where we'll have this structural effect in the comparison. Expenses, I talked about cost conscious operations and you can see that expenses decreased 21% versus last year. And if we exclude the RAL expenses, we can see that the downturn is actually 32%, so quite significant there. I need to mention also that we released accruals for incentive programs worth CHF 6,600,000 in this quarter. So that's also part of the low cost, low expenses. Capitalized R and D, that's the project that we're working on and that's the R and D work that is going to render new products in the future. And we're happy to see that, that has actually increased in the quarter compared to last year. So the focused activities that we have is to keep the important R and D projects running at full speed. So CHF 5,500,000 this year versus CHF 3,000,000 last year. From a cash flow point of view, it was negative for the quarter by €20,000,000 And last year at the same time, it was positive with almost €28,000,000 euros The difference between the years is that we, this year, have started to depreciate on loans related to acquisition. We didn't have any loans last year. So this is the 1st year we have that. Also cash flow from operation, negative 3.9 and there is a negative effect on working capital mostly related to inventory build actually. That's where we have that one. All right. Next slide, Slide number 15. Here we can see more year over year trends. And if we look at the rolling 12s, that is €490,000,000 in sales. And that represents a 60% growth versus last period, last rolling 12 period, same time last year. So it's an increase, but a little bit slower increase than we're used to seeing. If we look at the last line in the table, the EBITDA margin, we can see that we have an EBITDA of 29%, which is a little bit lower, but still fairly good considering the situation in the market, I would say. A key ratio for us that is quite important is the operating expenses in relation to sales. And we can see that it's fairly low even though that sales are low. We've been able to keep the same ratio almost here, so 44% in that ratio. And if we look at the chart down to the right in this picture here, we can see that if you look at the blue bars, you can see that the sales trend is some the growth trend is somewhat slower here for the rolling 12 numbers, so the effect of the COVIDs. And if you look at the lighter blue line, you can see that, yes, the growth rates in operating expenses has also been reduced significantly. So this is where we run the cost conscious operations. And you can see the scalability in the television business model here on this slide. Yes, basically, Okay. So that's kind of it for today from a presentation perspective. So then we open up for questions basically. Thank you. Our first question comes from the line of Urie Tratner from Carnegie. Please go ahead. I have a few questions. You try I feel like you're emphasizing weak U. S. Markets, but note that European and APAC is much worse off on a Q2 to Q3 comparison. Q3 comparison? Do you see the same type of inventory buildup in these markets throughout Q2 that have affected Q3 as well? Yes. I mean, APAC, if I comment on that, I mean, it was clearly so that when the pandemic come, and that came first to China, of course, which is, at the end of the day our number 2 market. And then it came to Europe in March basically, which was like end of Q1, early Q2. So that since I think where China reacted and I don't think it was on the assets, but basically we're scared that we couldn't deliver. So in Q2 and if you look at the growth in Q2, I think it was 100% or so versus Q2 last year, they placed extra orders to be safe if something happens because they didn't trust our ability to deliver. And that, of course, affected Q3 because now they have to kind of empty out that safety stock. And going forward, I think we have a more normal situation where we don't see the same stock up and we don't see we see higher cost because we were able to deliver throughout the whole pandemic and we are able to deliver also now. So I think we will see a little bit less volatility here where I think APAC has been 1 quarter plus 100% and the next quarter minus whatever minus a lot at least 40% to 50%. And still when we then summarize the 1st 3 quarters, I think in Asia, we see a strong performance in that region with 34 percent growth basically. So that's where we are. And I think Q2 was gigantic for us and then Q3 was a little bit more painful for that region. Okay. And on to the next ones. I note that RAL has quite a dramatic drop in gross margin by 10 percentage points compared to Q2. Is there any specific reason for that major drop? Because I know that the volume in terms of sales is not down that dramatically, but 10% seems to be quite a steep drop in gross margin. Yes, I think there are two reasons. I can take one and then I will let Magnus to explain the other one. First of all, I mean, RAL had a very good development the 1st two quarters. Despite the pandemic and all that, they had a solid growth. So there was some stock up in EMEA, especially for our space, especially by our partners, Sysmet. And of course, in Q3 that we show also it's vacation time snow that we saw softer Q3. And of course, we had a lower top line, the gross margins are affected in Raul. That's one explanation. Then we also had another kind of a cutoff thing that happened in the Q3, Magnus can explain more in detail. Yes, I can explain it a little bit. Of course, when you recognize your sales, your sales recognition should be aligned with your delivery terms, your Incoterms. And here, we found a difference between how it was done in the past and how we want to do it in the future. So when identifying that, we did a onetime correction here in Q3, and that hit the top line with about SEK 1,000,000 to get that correction in there. That's a onetime effect that we see. Yes. So that's the two reasons for that. Okay. Great. So just on the margin and the cost expansion, because I note that this was your 4th consecutive quarter with negative EBIT growth and this despite RAL contributing in 3 of these quarters. So could you give us some shed some light on the cost expansion trend going forward? Is sort of what we're seeing on a rolling 12 month basis what we should expect going forward as well? Yes. I mean, one thing that we have worked very hard with the last, I would say, at least 5 years, if not more, is our business model to make it as scalable as possible. And that means that we can kind of follow top line with our cost base. So we are ready to accelerate activities, which means that you increase your OpEx base. As soon as we see the light in the tunnel and we as many other companies put the contingency plan in place in March this year, where we basically parked certain activities and really went for the most important activities. And some were, of course, natural, it was hard to travel for the team and so forth. So what we've done now is that since we see, as I mentioned here in all regions, basically in different ways, the light in the tunnel, if I may say so, We have now started to accelerate some activities again, some projects and also some other activities in marketing. So we will monitor the market development closely. And we are dependent here on, of course, Beckman and Syslex and the other ones. Once they can go in and install again, we will follow. As I said, we have the same attachment rates as before. So that basically means that as soon as they can go out and start to install, we will follow with that and then we will also accelerate, maybe accelerate is a strong word, but start to increase our activities and thereby our OpEx. But should anything go down the drain, let's say that we have a second global wave and we have lockdown globally, we can also follow down with and go back to the contingency state. And we can do that quite fast, because that's the we don't sit with a lot of kind of product manufacturing personnel or a big sales force out there. So we can be very, very agile to what's happening in the market and adapt all the time. I think that's one of the benefits with the business model we have and that's what we use now. So we can quite quickly if we see a good trend, which we I would say do right now, then we can adapt to that and start to activate initiate activities again. And that's how we will do. So we monitor really, we try to monitor the market development all the time. How does it look? How many installations are going on? How much our partners in different markets go out and install things or systems and then we follow with activities. So that I think that's how it would look like for the coming years, at least until the pandemic is here. Okay, thanks. To make sure that we safeguard our business or balance sheet at the end of the day. Great. Two last questions. 1 in regards to the veterinary segment. You have been selling to the veterinary segments with your prior platform. So just from a legacy perspective, how much have veterinary segment contributed to total sales percentage wise? And sort of the second question is, you taken any orders as of today on the DC1 platform for the veterinary segment? Yes. I think percentage wise, as you for those of you that just followed us a few years, in the past, we had direct sales and we made a big we won a big deal, I think it's 5 years ago now for Amtech, where we started a lot of veterinary instruments and then we had a kind of a tough journey because we again, we operate best in indirect models. We turned around and said, let's we have to find out a way. So we spent kind of a lot of time to get partners on board and primarily Sysmex stepped on board. And at the same time, we also had to adjust our offering basically to make it more attractive to the market. So we now have veterinary applications both for DSC-one and also for DI-sixty, which is the Sysmex oriented product. And Sysmex together with IDEXX, which is the major player here on the customer side, so to speak, have started up a big hematology installation program. They have a prototype ProSight, which is the Sysmex CBC and that's cell count for that segment. And then also started to promote digital morphology into that segment. And that, of course, is a DC-one or a DS-sixty dependent on the size of the lab. So we have pilot installations in U. K. We have pilot installations in U. S. Where we sold and also we have sold a few DC-one that's also. So but that's starting up right now. So we should see some development there the coming year. The long term outlook for that market segment is very hard to say, but it's a few percentages of our sales currently. So I wouldn't put the number, but it's a low number, low percentage at this time. But now we have a partner and we have a partner that is promoting digital morphology into that segment, which is a big change versus before. Perfect. Last question is on the DC-one. And as you stated in this report and during this call, the U. S. Market is kind of problematic right now. Obviously, it seems to be trending in the right direction end of the quarter. But do you see sort of the current state of the market as problematic launching the PC1? Could you just repeat the question? I didn't follow you. Yes, sure. I'll try to just keep it short. Do you see it as problematic or more problematic to launch the DC-one in the U. S. Based on sort of current market dynamics with or sort of current market conditions with COVID-nineteen? Absolutely. I mean, if you ask me, I would prefer not to have COVID-nineteen every day of the week. That would make our lives much easier. That being said, we can still do it now. I think 6 months ago or 3 months ago, it would have been much tougher. Now, it's opening up at least step by step. So now we can go ahead. But I mean, in the perfect world, there will be no COVID-nineteen and we could then we could have gone full ahead, so to speak. So, we can do it, but it's not as optimal as it could be, if I say so. But it's much better than it was 3 months ago. Okay, perfect. I'll go back to the queue. And once again, good luck, Slapko. And Magnus, welcome to the CEO share. Thank you. And the next question comes from the line of Felix Veenan from SFO. Please go ahead. Yes. Hi, Sleddko. Hi, Magnus. Thanks for the opportunity to ask questions again. A couple. The first one on inventory levels of stocks in the supply chain. Can you just briefly talk about China again? Is it levels now below average or and are customers reordering or are they in line with longer term averages, just what you see there? Yes, I think Ulrik had the same question. So what you can do here to get kind of the full picture, I would say Q1 was normal and then you have to take Q2 and Q3 and divide that sum up and divide by 2 basically because that's normal and then Q4 will be more normal again, if you understand what I mean. So Q2 was extraordinary in one way and Q3 were extraordinary in the other way. Okay, very clear. You follow me? Thank you. Yes. And then on your own balance sheet, I noticed that and Magnus touched on it, the inventory levels are significantly higher on a year on year comparison, but also compared to Q2. Can you just shed some light into that, probably Magnus? Was that related to the diesel 1 launch or is that related to Wett? I can see 2 there are 2 effects basically. And one is that if you sell a little bit less instruments, you tend to have a little bit more finished goods on inventory. That's one. And then on the other hand, for components, we have one we made some last time buy of critical components to our systems. And yes, of course, when you do that, you have a negative impact on their cash flow. You build some inventory. And then as you use that inventory, you'll get your money back sort of and you have a positive effect later on then on the cash flow statement. But yes, we're going to have a little bit higher inventory for in the near future, let's say. Okay. Very good. And then on leverage, Magnus, into you, I noticed that the debt on the balance sheet is coming down quite nicely. So can you just elaborate again on the maturity profile of the long term debt and whether you plan to refinance that or whether you plan to pay it down in full? And also give a rough indication about the quarterly repayment rate, is it around SEK 10,000,000 or where does it fit? That's a little less by quarter To be exact, if I remember correctly, it's about CHF 5,700,000 that is related to the loan for the acquisition that we repay each quarter. And the plan is it's a straight amortization, and the but of course, we follow the cash situation closely. But so far, during the pandemic, we're still generating cash and have a fairly good cash position. So we continue to amortize on the loan. Okay. Perfect. And then both of you or whoever wants to take it again on the RAL product, the Reagen. From the sales there and probably also through your machines, the connectedness to your database that you can see, can you see that the number of blood samples that are being analyzed, can you see a pattern going through the pandemic that we've reached a low point and now the number of samples being analyzed is increasing and where are we compared to the level of pre COVID or and probably give some kind of indication of how that shape looked. Was it very deep? If we look at some companies, they see the Q2 being down, I don't know, 40%, 50% or was it down more like 15% or just some any kind of indication was it fantastic? Yes, I mean, I can answer that. I mean, we've seen the same pattern more or less in every market. So when the pandemic came, now you have to remember that we take care of the more severe blood samples. So we are not as much affected as the older blood samples, so to speak. But what happened is in every market basically, China in Q1 and then Europe in Q2 and U. S. In Q2 as a few examples. And we've also seen that lab chains have reported the same development, and we've done our own studies showing the same figures is that 1st 2, 3 months of the pandemic, it went down 40% to 50%. The blood samples as such, I think, are part of it, since 15% are reviewed, I think that's been a little bit higher. So that number has been a little bit lower. And then gradually going back, and I would say now, we're more or less 90% to 100% back on track, pre COVID, so to speak. So it's been like a 6 months journey in every market, down 40%, 50% and then slowly back to close to 100%. Okay. Very clear. Perfect. Thank you. So I think now we are back to the old numbers in most markets. Yes. And then on the just on RAL again, on the global rollout, can you give us some kind of just an idea about what the contribution will be to either revenues or in 'twenty one or just the shape of that rollout, how will it be just to give us a better idea of what we should be factoring in? Yes. And I can give a little bit high level because I mean when we set targets, it's a little bit that if you look at where historically they've been growing say 5%, 10% the last 3, 4 years. And I think if I take out the pandemic under normal circumstances, the plan is of course to grow 15% ARRIS within the other part of the business. And the way to do that is of course to continue to grow in the core markets where RALA has been very successful, markets like France, Germany, and the looks, the core markets and parallel with that also introduced RAL to many other markets where television has been successful. Our focus right now is of course to expand within Europe, but also to introduce well especially in APAC, some markets like Korea, Hong Kong and we'll take that further to China, Japan and Australia in the next step. So that's where we're spending time to prepare for that and make sure that we can start to deliver to those markets. And I think pilot cases in Korea and Hong Kong have been successful. So we've got a great start. But this is a step by step process, of course. And then of course, the Americas is next step as well. And then also with DC1, just to be clear, that is launched with a RAL stain already today. So even if you have small installed base that will step by step increase, of course, and there we have the RAL stains attached. There is a protocol, which is also supported by Sysmex, for example. Very interesting. And just following up on the RAL products, I remember a couple of quarters ago in a conference call, we had a discussion about the competitive environment there and difficulty of getting the brand products over market share from existing players. Probably you can share some more experience or feedback from customers take up. Anything you've seen in the marketplace would be great just to have some more flash on that debate. I think, I mean, what we're doing is we're utilizing our relationship with our partners as we had before, and we're adding a component in that. So when we discuss with seismic spec and wherever it is, now we also discuss slide preparation offering reagents and all the equipment, the smear making and sustaining devices. So, I mean, of course, the first steps there has been to sign global distribution. That's kind of the ticket to play. Once you've done that, then you have to start to go local basically to regional and discuss with the different management teams in the different markets of how to launch it. So we have like parallel discussions. And then of course, in the perfect world, there will be no COVID, then you can travel and do hands on training and all that since we have challenging. So the next steps now is to move into new challenging. So the next steps now is to move into new markets, but I mean there's always some tweaks you have to do for each market. Not that always goes for everything you do in life. Okay. So your I mean the end customers offices make sense on, they don't turn the product down and say, hey, I've got a better No, no, no. Rell are seen as a very high quality product. But of course, it's known in 4 or 5 markets where they have been around for a long time and really well penetrated that. Then if you come to Korea, I would rather then you have to kind of start from scratch and build a reputation. That's what I mean. And then you have to do the same thing in Hong Kong and so on basically. But we're very determined to be successful in all markets. So we just have to do the homework and the classic blood, sweat and tear part of it, which we're in the middle of now. Yeah, very clear. Okay, just two more quick questions. The first one to you, Sladko. In terms of thinking forward as you leave the company, what are the best ideas that you would give for your successor? Might it be Magnus or might it be another person? As I understand, Magnus is an interim decision? The first question is that. I think what makes Solution successful in the last 5, 6 years or even before that is the focus and that you take a larger and larger part of the hematology workflow with RAL, with EC1 and all things we're doing. I think now we have the portfolio. We have a complete portfolio also for the web segment, but especially the human segment. And now it's all about doing the same trick as we've done in maybe U. S. And Scandinavia in the whole world basically to turn every market into success. And that is a lot of we need to do what we did in those markets in maybe 4 to 50 markets at the end of the day and come to a situation where we have high attachment rates for the small and large labs and on top of that you also kind of position same protocols where you show value to the customers and push that. And I think continue to do what we do, but do it in a focused way. It's a lot of energy, but you get a good return on investment there. And I think we've proven that before and I think we just should continue to do that for now. Great. Thank you. That will be my number one focus. And then to Magnus, I think as I adjusted, Blavcos focuses very much on the commercial agenda, driving distribution, building up the sales offices and so on and then ultimately getting the orders in. So how do you plan to fill that role and in particular divide your time between these tasks and then the CFO role? And relates to that, will you probably distribute some more responsibility to the head of the sales department and just about that? Yes, for sure. Slatko has been very strong in the commercial area, but there is another good thing that he's been building a very strong team, too. So we are a capable team of driving these projects all the way through product development, through commercialization. There is a strong team. So sure, I will take part in that team and try to coordinate operations the best I can. I made sure to have some relief on the finance side, so I can I actually can spend some more time on the overall business? And I'm looking forward to this. It's an interim period, so it's a window of time, and I will do the best at this time. I would just like to add, I mean, I might have perceived being quite commercial, but meanwhile, we have invested a lot into innovation. I mean, we have developed the DC-one the last 5 years that we just launched, which is a completely new product from scratch into new segment. We have also invested into route to have that as part of our portfolio, which is maybe I would say, call it non organic R and D at the end of the day, but now we have a part of our portfolio. So I think we as team has focused on both. Then maybe I think in all the quarterly reports and so we've maybe pushed a little bit more for the business more than commercial part. But I think we have I mean, we have invested a lot in innovation. I think if you look at the television innovation team, it's 3 times as big as it was 4, 5 years ago in personnel, which means that we can do 3 times as many activities. But then of course, since it's R and D, we were a little bit cautious in kind of telling what we're doing before we can launch things basically. So that's maybe why when we sit in a quarterly report or have discussions, we focus more on the commercial park, because that's a little bit more it's less secret and more transparent in that way. Sure. Okay, perfect. Thank you very much. Satko, to you, obviously, all the best. Magnus, I look forward to hearing you on the next conference call. Thank you. And the next question comes from the line of Karl Oskar Braidingen from Berenberg. Please go ahead. Hi, good morning. I have a follow-up question to the launch of the DC-one or the market approval in the U. S. How should we think about the market uptake here? We touched a little bit about the current trading. But given that you have now received the market launch, is the product readily available for the distributors to apply and sell into different pending processes? Is this happening immediately? Or how is there a specific lead time for the sale? Yes. I think, of course, there is formally, it's clear. So that means that we can ship it if there comes an order. What we've done in parallel is that our partners, they have kind of Americas organizations. And when they did their preparation to launch that both Sysmex and Beckman, I mean, Canada is also part of America. And there it's been available for a year or so. So they basically prepared the launch completely. So U. S. Was already pending a 510 clearance, which now has happened. So they're ready to go basically. But then of course, you need to start the sales cycle. So there is probably a few extra going away now because it's been kind of early adopters, but then you have to start the sales cycle. So the sales reps have to go out and get the deals and then you have installation X weeks or months after that and then we start to build up the pipeline and that has to happen now because if the customer wants the product, we need to be able to ship it and then a very important part of that is 510. Meanwhile, we prepared here in production and all that. So we have industrialized the we we're really focusing on industrializing the products. So we are ready to ship if and when orders come. Okay. Thank you. And you mentioned that, obviously, the physical presence at the laboratories for installations is taking a toll on weighing on the sales. But how should we think about the actual tendering processes and the interaction between distributors and the client? Is there a building pipeline of new sales installations that needs to be taken that have been postponed this year coming out? Is the new progress and pipeline continues to build or has this also been put at a halt alongside the installation? I think, I mean, there was a hit in Q2, Q3, definitely. But what I think also is 2 things. I mean, again, we're a little bit back on track because we see that installations are going up, so labs are opening up again. I think the other part is that both distributor ourselves and customers has learned to work virtually. So you can do a lot through Teams or Zoom. And a lot of the interactions takes place in that forum these days, also tender processes. So that means that at the end of the day, I think it's back to normal, but it's more now it's a different type of fora. You don't meet physical, you meet our teams and you do the processes there. And I think that is happening. Okay. And just lastly, I think some of the previous comments we got on the amount of unit sales for the PC1 was sort of a ballpark estimate of between 100 to 200 units sold so far. Is there any updated number you can provide us with that how the progress has gone because this has sort of been the ballpark estimate for some time now? And if we any light you can shed on the development or sale of DC-1? Yes. I mean, I would say 200 plus at this stage. And I think what's happened is that we had a very strong we were already in Q4, then we could start to eat up the back orders and really shipped last year Q4. And Q1, we went into the quarter with full speed ahead and then the COVID came, so Q2, Q3 were dead more or less and now we see an uptick again. So it's like a sinus curve, I think somebody said. It really looks like that, the same. And now it's kind of climbing up again. And of course, we hope that the U. S, the 510 will give it a boost on top of that. What we see in EMEA, for example, is that we're back to, call it, the normal pre corona on DC1, which was a very good sign for us a month ago or so. Okay. Thank you very much. That was all for me. Yes. Thank you. And as there are no further questions, I'll hand it back to the speakers for closing remarks. Okay. So, then, thank you again for calling in and good luck to everybody. We might meet in other for us somewhere else sometime, who knows. And I'm convinced that Magnus and the team here will take you through the coming quarter reports in a fantastic way. So thank you and have a good day.