Good day, thank you for standing by. Welcome to the Bioventus Q1 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star zero. I would now like to hand the conference over to your speaker today, Dave Crawford, Vice President of Investor Relations.
Thanks, Daniel. Good morning, everyone, and thanks for joining us. It's my pleasure to welcome you to the Bioventus 2022 Q1 earnings conference call. With me this morning is Ken Reali, CEO, and Mark Singleton, Senior Vice President and CFO. Ken will begin his remarks with a review of the Q1 highlights and his thoughts on the current market environment. He will conclude his remarks with an update on the progress of our 2022 priorities. Mark will then provide further detail on our Q1 results and conclude with an update on our full year guidance. We will finish the call with Q&A. A presentation for today's call is available on the investor section of our website, bioventus.com.
Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A, risk factors in the company's Form 10-K for the year ended 31 December 2021, as well as our most recent 10-Q filed with the SEC. You are cautioned not to place undue reliance upon forward-looking statements which speak only as of the date made.
Although it may voluntarily do so from time to time, the company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the applicable securities laws. This call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these non-GAAP financial measures. Definitions and reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the investor relations portion of our website at bioventus.com. Now I'll turn the call over to Ken.
Thanks, Dave. Good morning, everyone, and thank you for your interest in Bioventus. We are off to a strong start to the year and continue to build on our momentum. It was fantastic to see the activity, excitement and interest for the new Bioventus at our booth during the recent American Academy of Orthopaedic Surgeons or AAOS convention in Chicago. As we highlighted our expanded portfolio of Misonix surgical products along with our peripheral nerve stimulation therapy acquired through Bioness, which complement our existing call points. Along those lines, we are extremely proud of the way that our entire organization continues to strengthen our long-term outlook, and we are looking forward to building on this momentum in 2022. Bioventus has continued to progress against our 2022 priorities.
CartiHeal received PMA approval in March, while market conditions last week forced us to cancel our initial funding plan to finance the pending acquisition. We are pursuing alternative financing options in evaluating the overall feasibility of the acquisition, considering these financing alternatives. It's a difficult financing environment, and our goal is to try and find a possible alternative that will maximize stakeholder value in the near and long term. We are also very proud of our performance during the quarter as we continued to execute on our strategic goals and drive growth despite a number of headwinds, which included impacts related to the ongoing hospital staffing shortages as well as Omicron-related challenges faced by our Surgical Solutions business in January.
Moving to our results, revenue increased 43% during the Q1 to $117 million, including organic growth of 9% despite some continued challenges from the COVID-19 pandemic. Across Pain Treatments, we saw double-digit revenue growth driven by continued market share gains by our single injection DUROLANE therapy and our three injection GELSYN-3 therapy. We remain well positioned to take advantage of the shift towards single and three injection treatments for osteoarthritic knee pain. DUROLANE and GELSYN-3 each represent roughly 20% share of the single and three injection markets respectively, with significant room for additional growth in the coming years for both therapies as they increase market penetration. In addition, as you may recall, last year the AAOS highlighted that high molecular weight cross-linked hyaluronic treatments such as DUROLANE showed statistically significant improvement in certain knee osteoarthritis patients.
DUROLANE possesses the highest molecular weight of single injection therapies available, which produces the longest residence time in the joint and an extended half-life, strengthening our competitive position within the HA market. Meanwhile, our five injection therapy, SUPARTZ FX, maintains its leading share of approximately 40%. As the only company with a portfolio of HA products across single, three, and five injection therapies, we have held the number two position in the HA market and look to become the market leader over the coming years. As many of you may already be aware, reimbursement for HA may soon shift from wholesale acquisition costs to average selling price in the coming months. Given the sales mix of our HA portfolio, we don't believe that this new pricing dynamic will fundamentally impact our overall growth opportunity.
However, it is possible we may see some variability over the coming quarter or two as customers adjust their ordering patterns. Turning to Surgical Solutions, as I mentioned, Omicron-related disruptions limited elective procedures early in the quarter, reducing growth to the high single-digit range. These disruptions also impacted revenue from Misonix during the quarter. As a reminder, these disruptions only impact approximately 25% of our total business. That said, we were encouraged by the sequential monthly improvement that we saw over the course of the quarter and finished March strong. Despite the macro environment challenges, we continue to execute and innovate within Surgical Solutions. As an example, we are very proud of our progress with the launch of OSTEOAMP SELECT Flowable, our injectable allograft bone graft substitute solution, which remains a contributor to our momentum in this vertical.
Restorative Therapies revenue generated double-digit growth underpinned by the Misonix wound therapy business and our advanced rehabilitation business, which has continued to perform well since we acquired it last March. Finally, our international segment grew 82% on a reported basis, driven by our Bioness and Misonix acquisitions, and 11% on an organic basis, driven primarily by continued strength in DUROLANE. Mark will discuss our guidance shortly. Even amid improving market conditions and elective procedure volumes, we continue to see some impact from the ongoing hospital staffing challenges, where reports estimate there are nearly 400,000 fewer healthcare workers than before the pandemic. We expect these disruptions to continue over the next few months, but we believe that conditions will begin to trend towards a normal environment in the H2 of the year. Now I'd like to update you on our 2022 priorities.
As I highlighted earlier, we are off to a great start to the year and remain focused on our execution across our key priorities for 2022. Our first priority is to achieve double-digit organic growth for the year through the continued strong execution of our commercial organization. During the quarter, we saw progress across all three of our key growth areas. In Pain Treatments, we continue to enhance our market access through contracting with payers and recently signed a new exclusive contract with Cigna for DUROLANE, and as one of two providers for three shot therapy, in our case, GELSYN-3. Within Surgical Solutions, we have seen a strong reception to the initial rollout of our new BoneScalpel Access used in minimally invasive spinal surgeries.
In restorative therapies, our positive clinical trial results for TheraSkin have helped gain additional payer coverage, boosting coverage to three out of the four largest commercial plans, which we will look to further expand. Our second priority is to complete the integrations of our recent acquisitions while delivering on our cost synergy commitments and leveraging our enhanced scale to accelerate sales. With the Bioness integration completed, we are making meaningful progress towards integrating Misonix. As a reminder, the integration is largely focused on corporate functions and manufacturing operations and requires minimal commercial integration. We remain on track for it to be completed next year and to deliver $20 million in cost synergies by the end of 2023. Besides the realization of cost synergies, our combined commercial teams continue to leverage our enhanced scale and customer relationships to accelerate sales growth.
We already have seen initial wins from cross-training our Misonix sales team on our bone graft substitutes portfolio. Misonix's sales team has historically focused on urban and teaching hospitals, which differs from the Bioventus sales approach that is more focused on suburban hospitals. In recent months, we have made inroads into major teaching and urban hospitals and expect to further leverage these Misonix customer relationships. In addition, we recently hosted our first Surgical Solutions mobile lab event, where we're able to introduce surgeons to the complete Bioventus Surgical Solutions portfolio. Our scale enables these enhanced training and marketing efforts to reach potentially new customers for our Misonix BoneScalpel.
Our third and final priority for the year centers on the potential acquisition of CartiHeal, which we believe is a revolutionary and game-changing device for multitudes of patients suffering from knee osteoarthritis and osteochondral defects. As I mentioned earlier in my remarks, on 29 March CartiHeal received PMA approval from the FDA, and on 4 April , we exercised our option to purchase the remaining interest in CartiHeal. We are now exploring alternative options to finance this transaction. Given the increase in debt to finance CartiHeal, we will pause on further M&A activity until we return to the upper end of our targeted range of net debt to adjusted EBITDA of three to four times. We expect to achieve this by the end of 2023, primarily through increased EBITDA achieved through double-digit sales growth and margin expansion, as well as free cash flow generation.
It is important to note that we feel very strongly about the Bioventus business, our ability to drive double-digit growth for the foreseeable future and create meaningful stakeholder value. This is the case whether or not we complete the CartiHeal acquisition. In conclusion, we continue to build momentum as we execute on our growth strategy and drive further market penetration across our three customer-focused verticals. I am confident we will deliver on cost synergies from our acquisitions and enhance our growth profile by leveraging scale and commercial infrastructure to deliver consistent double-digit growth. Now I'll turn the call over to Mark.
Thanks, Ken, and good morning, everyone. Let me start by saying that I'm honored to be a part of the Bioventus team. This is an exciting time for the organization, and I have enjoyed getting to know everyone over the last month as I've come up to speed on all of our opportunities. In my short time here, I've been impressed with the talented team and the dedication to delivering on the company's growth initiatives, as well as the commitment to successfully integrating recent acquisitions. I look forward to partnering with Ken and the rest of the executive leadership team to accomplish our 2022 priorities and execute the strategy in place. Now, let me begin with a review of our Q1 results. Revenue of $117 million increased 43% compared to the prior year.
We saw a nine percentage point increase from organic revenue, along with a 34 percentage point increase related to the acquisitions of Bioness and Misonix. We were able to deliver sales within our original plan despite hospital utilization being negatively impacted by the Omicron variant and the ongoing effects of staffing shortages, which is a testament to our diversified portfolio and strong execution of our commercial teams. Our sales performance drove adjusted EBITDA of $7 million. Across Pain Treatments, we grew 25%, driven by 23 percentage points of organic growth across our HA portfolio and a two percentage point contribution from our PNS products, which we acquired from Bioness. DUROLANE and GELSYN-3 products continue to capture market share across the single- and 3-injection therapy, respectively. In Surgical Solutions, we grew 68%.
We saw eight percentage points of organic growth across the bone graft substitutes, which was impacted by the delays in elective procedures due to Omicron and staffing issues that I previously highlighted. The Q1 included a 60 percentage point contribution from Misonix surgical portfolio. Finally, across Restorative Therapies, we delivered 57% growth. Sales of the Bioness advanced rehabilitation portfolio and Misonix wound business contributed 36 and 39 percentage points, respectively. Moving down the income statement, adjusted margin of 76% was down 320 basis points compared to the prior year. The decline in gross margin can be attributed to lower gross margins from our recent acquisitions. Overall, adjusted operating expenses increased $56 million, driven by costs related to Bioness and Misonix when compared to the prior year.
In addition, the prior year benefited from a decrease in expenses of $25 million related to the change in fair market value of accrued equity-based compensation associated with our IPO closing price. Now, turning to our bottom line financial metrics, adjusted EBITDA totaled $7 million compared to $11 million from the prior year. Higher sales volume was offset by higher operating costs related to our acquisition of Misonix and a return to more normal travel cadence for our sales teams. Adjusted operating income decreased $2 million from $33 million in the prior year. As previously mentioned, the decrease in equity compensation drove the reduction. Adjusted net income totaled $3 million compared to $33 million a year ago, and we earned $0.04 of adjusted diluted earnings per share. Now turning to the balance sheet and cash flow statement.
We ended the quarter with $27 million of cash on hand and $368 million of debt outstanding, which included a $15 million draw on our revolving credit facility at the end of Q1. Operating cash flow represented an outflow of $21 million for the quarter. As we discussed on our prior earnings call, cash flow for the quarter was impacted by annual bonus payments to our employees and payment of the majority of our annual insurance premiums, which represented cash outflow of $18 million. Neither of these payments will occur again until next year.
In addition, we had a one-time payment of $11 million to former Bioventus employees, which related to our stock plan prior to our IPO. We anticipate cash flow to be positive for the remainder of the year as earnings accelerate and the large outflows in the Q1 do not repeat. This pattern is consistent with our historical quarterly phasing. Finally, let me provide an update on our 2022 guidance. Based on current trends in our business, we are reaffirming the net sales and adjusted EBITDA guidance we provided on 10 March . We continue to expect net sales to be in the range of $545 million-$565 million, including Bioness and Misonix. The midpoint of our guidance reflects double-digit organic growth for the year.
For the year, we expect adjusted EBITDA to be between $94 million and $107 million. As a reminder, we plan to provide you with full year earnings guidance once we complete the financing and acquisition of CartiHeal. In closing, I am honored to be a part of Bioventus team, and I am excited to pursue the numerous opportunities across our business. We continue to execute on our growth initiatives and maintain our top-line momentum while completing the integration of Misonix. Operator, please open the line for questions.
As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Alex Nowak with Craig-Hallum Capital. Your line is now open.
Great. Good morning, everyone. Looks like we had about 9% organic growth this quarter. Just maybe expand on that bridge to get to the double-digit growth that you're expecting for the full year. How much of that is an elective procedure recovery? How much of that is integrating all the acquired businesses together? Maybe kind of give us some maybe a highlight on April and May, just how elective procedures are trending.
Sure. Well, a lot of it is really the elective procedures that were curtailed in the early part of the quarter that we did see accelerate as we went through the quarter as hospitalizations declined. We see that as historically has been a 20% driver of growth for us, and we do see that returning as we progress through the year. That will be certainly put us over the top on the double-digit growth analysis. You know, as far as the current trends in the business, as mentioned on the call, we do see an acceleration in our business as we progress through the Q1 , and that was really all aspects of our business, by the way.
Particularly in the Surgical Solutions area, as you mentioned in your question, we've continued to see that play out as hospitalizations have decreased. Now, the one aspect to that we also talked about is the staffing issues in hospitals, and that is a real issue, about 400,000 fewer healthcare workers that are not in the system supporting surgeries and so forth that existed before the pandemic. We are hopeful and really see that trend improving, based on the numbers we look at as we progress through the year. Why does that matter? Because that aspect of it increases the proficiency of surgeons and the number of cases they can do on a daily and weekly basis. That will obviously drive revenue as well.
We look at that as really a function going back to your first question as Surgical Solutions returning to double-digit growth.
That's helpful. We've also seen some shortage notifications come out for iohexol and other contrast agents. Just curious, in the last couple of weeks here, have you been seeing any delay of procedures just due to the shortages?
No, we have not seen those kind of delays, Alex. From our perspective, that has not impacted our business.
Great. That's good to hear. Then just lastly, can you maybe expand a bit more on the possible alternatives here for CartiHeal, just the conversations you're having with that company and others. You seem pretty committed to the deal on the prepared remarks, but also you mentioned, or at least it had sounded like you'd also be considering canceling the transaction if you just can't, you know, pull together. Just curious, ultimately expand more on that.
Yeah, look, Alex, first of all, I wanna enforce one thing. We believe in the Bioventus business and our ability to drive double-digit growth with or without CartiHeal. So we're looking at CartiHeal, and obviously it's a very compelling technology. We think it's a game changer, but it's not a frenzy at all costs situation. We're gonna look at alternatives that we think are gonna be best for all of our stakeholders in the short, medium, and long term. So those are options that we're evaluating now and discussions with our banks as well as with CartiHeal. As we progress, we'll make the right decision here that we think is the right decision for Bioventus and for all of our stakeholders.
Excellent. Appreciate the update. Thank you.
Thanks, Alex.
Thank you. Our next question comes from Robbie Marcus with JPMorgan. Your line is now open.
Hi, this is actually Rohan on for Robbie. I guess I wanna kind of piggyback off of that question to start off. Would you be able to provide some more detail kind of regarding the metrics that you're looking at specifically or the limits you put in place for the financing? Obviously, you mentioned that it's not a finance at all cost situation, but maybe just some more color on that. What are the considerations or what are your current considerations? Are there any deadlines in place to finance this acquisition? I have a follow-up. Thanks.
Yeah, Rohan, you know, I can't get too specific on that. The color I'll provide to you here is, look, we look at our ability to drive our current strategy and drive our commercial business and double-digit growth as priority one. We have to be able to do that. Any financing consideration cannot and will not impair our ability to drive the significant potential we have with the Bioventus business today. Any options that we look at, that is the lens and certainly the filter of how we look at it. We're not gonna get into specifics today on what we're looking at. Certainly, once again, I'll emphasize it's a situation where it's not a deal at all costs.
It's a deal that makes sense for Bioventus and all of our stakeholders. We're weighing that very carefully.
Thank you. Also just one second question. I guess given the rise in COVID cases that we're seeing in the present, obviously, you mentioned a strong recovery in the back half of the quarter. Would you be able to maybe talk a little bit about how much of this or any kind of COVID impact that you're contemplating in the low end of the guidance range, given the new dynamic right now?
Sure, Rohan. Well, just to enforce, you know, one of the benefits of our business at Bioventus is we're well diversified. Only 25% of our revenue comes from elective surgical procedures. What we've seen since the advent of vaccinations is the other 75% of our business has remained strong and a strong growth profile, regardless of case surges that we've seen on again and off again here over the past couple of years. You know, as far as elective surgical procedures go, you know, that's something we watch carefully, relative to hospitalizations. At this point in time, we are not anticipating a significant rise in hospitalizations as we progress through the back half of the year.
We think based on the current climate, what we're seeing with the variants and the vaccination rates across the country, that we'll be able to get through that. You know, we do have in our forecast and our guidance, you know, a certain amount of headwind there, and that would be more on the low end of our guidance. Certainly, we are hopeful that between the hospital staffing coming back as the year progresses and the pandemic continuing to stay in control relative to hospitalizations, that we'll be able to get through this.
Great. Thank you so much.
Thanks, Rohan.
Thank you. Our next question comes from Kyle Rose with Canaccord. Your line is now open.
Great, good morning, and thanks for taking the questions. This is Jubran on for Kyle. I wanted to start maybe with the Cigna agreement. How long, you know, are expectations in terms of engaging with those accounts and building up the patient funnel? Maybe what's the lead time look like there? And secondarily, how significant of a driver could it be within Pain Treatments over the near to midterm?
Sure, Jubran. Well, if we look at UnitedHealthcare, and our UnitedHealthcare contract as a precedent for this, you know, generally the volume increases that we saw were over a period of 12-18 months. I would say that Cigna, first of all, the contract doesn't become active till 1 July . You know, I would look at it over the next year and a half as reaching its full potential. You know, it's a great opportunity for our sales team, once again, to get into new accounts, that are a large part Cigna accounts or a certain percentage, and then cross-sell our to non-contracted patients, non-contracted business. This has worked really well for us. We do this strategically.
Once again, we're not interested in contracting with every payer, but the right ones that we think open the door to the largest number of accounts that get us into the ability to cross-sell our large portfolio of HA products into non-contracted business as well. I'd look at the next 12-18 months as being a time where we'll reach full benefit of the Cigna contract.
Got it. That's helpful, Ken. Thank you. Maybe just as another question, with integration and absorption of your acquisitions as a primary focus for 2022, maybe just a refresher on your R&D pipeline for the year more broadly. If we could just get an update on expectations just in terms of products coming down the pike organically.
Sure. Well, as mentioned, you know, the OSTEOAMP Flowable has been a great success. That was launched in the H2 of last year and gets us into minimally invasive spinal fusions. The BoneScalpel Access, which is also used in minimally invasive spinal fusions, is in a limited market release today, and launched earlier this year, and we expect that to be in full market launch later this year in the late third, early Q4 , for BoneScalpel Access. Looking across, we have SonaStar Elite, which is our ablation technology that we expect to launch in the H2 of this year, again, late third, early Q4 . We are continuing to work and we'll be submitting a PMA supplement on our EXOGEN technology for scaphoids, and that will be towards the end of this year.
We continue to work through our Phase II study with MOTYS, our placental tissue product, and that enrollment is going quite well. PROcuff, our rotator cuff product, we expect to submit for 510K clearance by the end of this year. That's a rundown of some of our near-term priorities in terms of research and development and product development.
Great. Thanks again for taking the questions.
You bet.
Thank you. Again, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our next question comes from Amit Hazan with Goldman Sachs.
Hey, this is Philip. I mean, thanks so much for taking the questions. I thought I'd follow up a couple on the HA side. I thought the market share comments were really interesting and impressive for DUROLANE and for GELSYN-3. Interested to hear if you can kinda talk through what sort of kind of structural volume headwinds you're seeing from the rest of the market and the positioning of strength from a market share perspective. Kind of maybe in the context of the decision by Cigna, how your discussions with payers are going, discussions with physicians, what you're seeing kind of from the market from a you know, volume headwinds that are partially offsetting the strength you guys are seeing in market share.
Sure, Phil. You know, we continue to see a robust market and need for HA. Keeping in mind that hyaluronic acid has a very distinct need in the clinical continuum of care for osteoarthritis patients. That funnel of new patients coming in continues to grow each year with the aging population. We have a terrific tailwind there, and we're not seeing a lot of volume headwinds, I would say, by any means. In fact, that volume of patients, as I mentioned, continues to grow just based on the sheer demographics. We feel our lineup of HA products, starting with DUROLANE, which has the highest molecular weight and its longest residence time in the knee, positions us very well to continue to gain market share in this area.
Keeping in mind, DUROLANE has only been in the U.S. market since 2018, so it's early in its product life cycle. We feel we can continue to drive from its 20% market share today, upwards to 40%, which is traditionally our goal. That's as product SUPARTZ FX, our five injection, has had 40% market share for quite some time with the same type of competitive dynamics. We feel pretty comfortable stating that. GELSYN-3, our three injections, has only been on the market since 2016, so once again, we see opportunity for continued market share gains there as well. We use the payer contracts as a way in the door with new accounts. Keeping in mind that we have a lot more penetration that we can gain.
A contract like Cigna gets us into new doors and allows our sales force to penetrate and sell the non-contracted business besides Cigna. That strategy worked well for us with United. It's a delicate balance 'cause we're not trying to contract with every payer, but those that get us into the most doors, and certainly, the Cigna contract provided that opportunity.
That's great, Ken. Thanks so much. As a follow-up, you touched on the potential pricing mechanism change here coming in the H2 of the year. Something you could maybe just provide a little bit more detail on sort of the mechanism of how that pricing change could affect your business and any quantification you might be willing to sort of characterize over the next 12 months or as you annualize a potential pricing change.
Sure. The way we look at this is, we do expect the ASP reporting to happen. It's not 100%, but we think it's likely in the H2 of the year. That impacts Medicare pricing specifically to ASP reporting. On the other side of the equation is our contracted business, where we pay rebates very specifically with contracts like UnitedHealthcare and Cigna, we pay rebates. Within our contracts with these payers, we have very specific clauses to reduce the rebates based on ASP reporting. When we do our analysis of volume in our business, volume of syringes, the actual reduction in rebates offsets any reduction in reimbursement specifically based on ASP reporting.
We've run these calculations very carefully, and we feel strongly that not only will we be basically neutral through this process but we can gain market share as we go forward in the medium term. Now, as I mentioned on the call, we do expect, Philip, some volatility based on ordering patterns changing. What I mean by that is maybe a surgeon going from ordering and buying and billing direct as HA versus going through a specialty pharmacy. We do think that this type of ASP reporting is gonna change certain behavior, certain buying behavior, and that could create some near-term volatility as this unfolds.
We don't see this as having a medium-term impact on the business whatsoever, and in fact, think it'll level the playing field in such a way that leveraging our position, our strong portfolio, and our large sales force, we can continue to penetrate the market.
That's really helpful, Ken. Just to follow up on that last point, the volatility that you're talking about in potential ordering and buying pattern trends, do you expect that to essentially kind of shake out this year in and of itself such that a pull from one quarter might be a push to another vice versa?
Yeah. I expect it from a timing perspective to be this year in the third and Q4 . If we see any volatility, it'll be then.
Okay. All right. That's great. Thanks so much for the questions, Ken.
Yes. Thank you, Phil.
Thank you. I'm showing no further questions at this time. Oh, now I'd like to turn the conference back over to Ken Reali.
Well, thank you, Daniel, and thank you everyone for your continued interest in Bioventus. We are off to a strong start to the year and are well-positioned to deliver on our 2022 priorities. Last week, Bioventus and our employees celebrated our 10-year anniversary, and we are proud of the business we have created. We look forward to further accelerating our momentum across our short and midterm growth drivers to sustain double-digit organic growth, expand margins, and create stakeholder value through our enhanced portfolio and synergies from our recent acquisitions. Thank you very much.
This concludes today's conference call. Thank you for participating. You may now disconnect.