Earnings Call: Q3 2018

Oct 30, 2018

Good afternoon, ladies and gentlemen. Welcome to the Lantheus Holdings Third Quarter 2018 Earnings Conference Call. This is your operator for today's call. Please note that all lines have been placed on mute to prevent any background noise. This call is being recorded for replay purposes. A replay of the audio webcast will be available in the Investors section of the company's website approximately 2 hours after completion of the call and will be archived for 30 days. I would now like to turn the call over to your host for today, Mira Murphy, Director of Investor Relations and Corporate Communications. Mira? Thank you, and good afternoon. Welcome to Lantheus Holdings' 3rd quarter earnings conference call. Joining me today is our President and CEO, Mary Anne Haino and our CFO and Treasurer, Bob Marshall. Earlier this afternoon, we issued a press release, which was also filed with the Securities and Exchange Commission under Form 8 ks reporting our Q3 results. You can find the release in the Investors section of our website atlantheus.com. Before we get started, I'd like to remind you that our comments during this call will include forward looking statements. Actual results may differ materially from those indicated by forward looking statements due to a variety of risks and uncertainties. Please note that we assume no obligation to update these forward looking statements even if actual results or future expectations change materially. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties. Also, the discussions during this call will include certain non GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is included within the earnings release found on our website. With that, I'll turn the call over to Mary Anne. Mary Anne? Thank you, Mira, and good afternoon, everyone. Q3 was a strong quarter for us. We exceeded our Q3 guidance for each of revenue and adjusted EBITDA, driven by double digit growth in sales of both DEFINITY and TechneLite. We remain focused on driving forward our broader corporate strategy of growing our microbubble franchise, investing in our product pipeline and pursuing external opportunities that fit our growth and profitability objectives. On the call today, I will share important insight into our efforts to secure and sustain the value of DEFINITY and our microbubble franchise. First, I will turn the call over to Bob Marshall, who recently joined as our Chief Financial Officer. After Bob reviews our Q3 numbers, I will provide the update referenced as well as updates on our nuclear product pipeline and other strategic initiatives. Bob? Thank you, Mary Anne, and good afternoon, everyone. I'm pleased to be here and I'm looking forward to an exciting future with Lantheus. Let me move to the numbers. Revenue for the Q3 totaled $88,900,000 an increase of 11.2% over the prior year and an increase of 11.4% on a constant currency basis. Sales of DEFINITY continued to post solid growth at $43,800,000 or up 16% on a similar basis during the quarter. TechneLite revenue was 30,600,000 dollars up 16.2 percent supported by the manufacturer and sale of generators to an international partner, Ansto, on an opportunistic basis. During the Q3, these sales amounted to $7,500,000 and more than offset the effect of supply shortage in our U. S. TechneLite business stemming from the NTP shutdown that extended through the quarter. We also have been able to leverage our relationships with our other 2 suppliers of moly-ninety nine to limit the impact of lost supply from NTP to our existing customers. Turning now to Xenon. Despite a competitor's reentry in May, revenue declined by only $487,000 or 6.3 percent to 7 point the same period last year. Other revenue decreased 10.4 percent to $7,300,000 driven by flat product sales within the category offset by higher administrative fees and rebates. Gross profit margin for the 3rd quarter was 50.5 percent. When new manufacturing costs are excluded, that rises to 50.9 percent, an increase of 70 basis points over the same period last year. This increase is the result of favorable product and customer revenue mix. Operating expenses were 21 basis points favorable to prior year at 31.9 percent of net revenue on lower period expenditures in sales and marketing offset by both higher research and development investments in support of our product development activities and G and A driven primarily by recent executive severance and recruiting expenses. Operating profit for the quarter was $16,500,000 or an increase of 28.5% over the same period prior year. Additionally, adjusted EBITDA increased 15.5 percent to $26,100,000 Please note that our presentation of adjusted EBITDA excludes certain expenses, including those related to non cash stock compensation and incentive programs, asset dispositions, reorganization expenses and new manufacturing costs. Net interest and other expense amounted to $3,600,000 flat with prior year. Our effective tax rate in the quarter was 27.8%. Please note, the majority of our current cash tax liability continues to be offset by available NOLs. Therefore, net income for the Q3 was $9,300,000 or an increase of 8.7 percent and GAAP diluted earnings per share were 0 point 24 dollars increase of 9.1 percent both over the same quarter last year. 3rd quarter operating cash flow totaled $24,300,000 as compared to $15,600,000 in Q3 2017. Capital expenditures totaled $5,000,000 and were mainly due to continued investment in our own strategic manufacturing capabilities to drive cost optimization and reduce supply risk. Free cash flow, which we define as operating cash flow less capital expenditures, was $19,300,000 an increase of 56.5 percent over the same period prior year. This strong cash flow performance has brought our cash and cash equivalents balance to $104,600,000 strengthening our deployable capital position. We repaid approximately $700,000 of our outstanding short term debt in the quarter. Our net leverage ratio is now 1.8 times adjusted EBITDA. Turning now to our updated guidance for the full year and implied Q4, we continue to expect full year revenue to be in a range of $337,000,000 to $342,000,000 This implies a revenue range of $80,000,000 to $85,000,000 for the Q4. While this guidance assumes that opportunistic sales to Enso will significantly slow in the 4th quarter, it also does not depend on having full supply of moly-ninety nine throughout the quarter. That said, based on a most recent communication, NTP has indicated that they may resume some level of supply in the Q4. Our revenue assumptions do reduce gross profit margin for the 4th quarter relative to more recent trends. Additionally, we expect operating expenses to be slightly higher in the 4th quarter due to planned sales and marketing activities, product development investments and certain G and A expenses. However, given our strong performance year to date, we are raising our adjusted EBITDA guidance. Adjusted EBITDA is now expected to be in a range of $90,000,000 to $93,000,000 $17,000,000 to $20,000,000 for the full year and 4th quarters, respectively. Previously, we had expected adjusted EBITDA for the full year to be in a range of $85,000,000 to $90,000,000 Lastly, would like to note that the company will transition from providing adjusted EBITDA guidance to earnings per share results when we provide 2019 guidance. We believe this evolution reflects the maturity of the company as a public entity and its anticipated trajectory of growth and profitability. I will now turn the call back over to Mary Anne. Mary Anne? Thank you, Bob. I will now provide some updates on our business performance and strategic programs. We continue to drive double digit growth with our market leading ultrasound contrast agent, DEFINITY. Our sales, marketing and education investments emphasize the benefits of the appropriate use of contrast in suboptimal echos. We believe this, complemented by growth in the underlying echocardiography market, will continue to drive sustainable revenue growth of DEFINITY. We currently have underway a number of strategic initiatives to secure our microbubble franchise in addition to our activities to expand the DEFINITY patent estate. These include a new indication to expand usage and drive growth, a modified formulation with an enhanced product profile, new applications and new geographies. We believe these efforts will be engines for continued revenue growth. Let me now share greater clarity on DEFINITY's intellectual property. In the United States, we have 2 key Orange Book listed patents, our composition of matter patent valid until June 2019 and a method of use patent valid through March 2,037. Our patent portfolio also includes manufacturing patents dated through 2021, 2023, and 2,030 7. Under the Hatch Waxman Act, an ANDA applicant must give us notice certifying either that its generic candidate does not infringe our DEFINITY Orange Book listed patents or claiming those patents to be invalid. Should the FDA accept an ANDA application, we would then be notified and would challenge the applicant using the Hatch Waxman process. FDA approval to commercialize that applicant's generic candidate may be delayed for up to 30 months while our dispute with the applicant is litigated in court. To date, we have not received any notice of an ANDA applicant for a generic candidate. Solely by way of example, if we received notice of an ANDA applicant in November 2018 and the full 30 month stay applied, that ANDA applicant would be precluded from entering the market until at least May 2021 and possibly longer depending on how the patent dispute is resolved. To the extent that a notice is received in the future, all else being the same, the entry date would also roll forward by the same calculation. Accordingly, we remain confident in DEFINITY's future and continue to invest in our microbubble franchise. Now let me speak to some of those investments. I would like to update you on our DEFINITY left ventricular ejection fraction or LVEF clinical program. Ejection fraction is an important measurement of heart function and critical for certain patient management decisions as it measures the percentage of blood leaving the left ventricle with each contraction. Having successfully agreed on the special protocol assessment or SPA with the FDA, I am pleased to announce that we have already enrolled the first patient in the program. We will now complete 2 well controlled studies called BENEFIT-one and 2 powered to prove superiority in LVEF measurement accuracy with DEFINITY enhanced versus unenhanced echocardiography. The truth standard in these studies is cardiac magnetic resonance imaging. The studies will be conducted at 20 U. S. Sites and will include approximately 300 patients. We believe an LVEF indication could substantially expand the addressable market for contrast enhanced echocardiography. As a market leader, we believe that DEFINITY would be well positioned to benefit from this expansion. Another component of our strategy is the modified formulation of DEFINITY already under development. This formulation expands the value offering of our microbubble franchise by providing clinicians the additional choice of a formulation that does not require refrigeration, allowing for the greater utility of this formulation in alternative clinical settings. We currently estimate that if approved by the FDA, this formulation could become commercially available in 2020. Last quarter, we shared that we were granted a composition of matter patent on this modified formulation, which extends through December 2,035 and will be eligible for Orange Book listing upon FDA approval. Additionally, given its physical characteristics, this modified formulation may also be better suited for inclusion in kits requiring microbubbles for other indications and applications. In fact, we have recently signed 2 term sheets that include our microbubble in their development programs that are already underway. Entering new geographies continues to represent an opportunity for DEFINITY with our China program as an example of those efforts. Our partner is currently working with a 3rd party clinical research organization to read and analyze the data from the DEFINITY China confirmatory trials. After this process is completed in the coming months, our partner will submit the import drug license to the China FDA. As we approach commercialization, we will work with our partner to update and refine our assumptions of the addressable market and opportunity. Finally, as shared previously, we have a program well underway to build capabilities on our campus to manufacture DEFINITY as well as other sterile bio products. That program is on schedule and we estimate we'll be able to produce commercial product by early 2021. Now let's discuss the nuclear medicine assets in our pipeline. The 2nd Phase III clinical trial for fluperidase F18 called the AURORA study is progressing on schedule with the first patient enrolled in June 2018 and the last patient follow-up projected to occur in the second half of twenty twenty. Under our collaboration and license agreement, GE Healthcare is conducting the open label international multicenter trial, PROPET myocardial perfusion imaging, or MPI. The AURORA study will enroll approximately 6.50 patients with suspected coronary artery disease. The primary endpoint is a diagnostic efficacy, sensitivity and specificity of FlupiroDAS F18 PET MPI for the detection of significant coronary artery disease with coronary angiography as the truth standard. The future economics of this collaboration provide us with regulatory and sales milestone payments, double digit royalties on U. S. Sales and single digit royalties on sales outside of the U. S. We also have the option to co promote the agent in the U. S. Market. The other Phase 3 asset in our pipeline is LMI-eleven ninety five, a flurine-eighteen based agent we believe represents a 1st in class PET agent and useful diagnostic tool for patient populations that may benefit from molecular imaging of the norepinephrine pathway. We are currently in discussions with the FDA for an SPA for the planned single Phase III clinical trial to demonstrate improved risk stratification of ischemic heart failure patients. We will keep you apprised of our progress on this exciting clinical development candidate. To further expand and diversify our business, we are exploring external opportunities that fit our growth and profitability objectives. As part of these efforts, we are committed to smart and purposeful capital allocation. Our current focus is on the broader imaging agent space and therapeutic adjacencies. With that, Bob and I are now ready to take your questions. Operator, please go ahead. Thank Your first question comes from Raj Denhoy with Jefferies. Your line is open. Hi, good afternoon. I wonder if maybe I could start with good afternoon. With the TechneLite business and obviously very strong quarter and I think you noted that there was some opportunistic sales. I think you mentioned it was overseas. So maybe you could give us a little more in terms of what transpired in those orders? And then also any update in terms of what's happening with the South African reactor? Any updates in terms of when that might come back online? Sure. So Raj, the opportunistic sales that we referenced did occur in Australia and it was with our partner Ansto. Ansto is a supplier to Moly for us, but they also supply and produce generators for the Australian market on their own generator manufacturing line. They occurred an issue with their manufacturing line and they asked us to manufacture their generators for them. So they shipped their Australian market Moly to us. We manufacture the generators for them and ship them back and the revenue that we cite is sourced from that service that we're providing them. With respect to NTP, as Bob alluded, we have a fairly recent communication from them and by their communication, they expect to come back into service shortly. That process we anticipate will involve a startup time during which they'll only use part of their capabilities before returning to full service. But as Bob also noted, we have not in our own guidance and in our own forward looking forecast, we have not assumed that NTP comes back up to service for the 4th quarter. Okay. And that was my second question was really on that Q4 guidance. So as Bob mentioned, I think $80,000,000 to $85,000,000 in the 4th quarter. Just so we understand the complexion of the different businesses, so DEFINITY continues to grow in the teens. I'm guessing you expect it will continue to do that. But then the other two businesses for TechneLite and Xenon, should we assume that TechneLite kind of regresses back to that kind of low $20,000,000 range we've seen in the 1st couple of quarters and Xenon as you mentioned because of the reentrant of the competitor kind of stays in the low $7,000,000 range. Is that how we kind stay in that low $80,000,000 range in total? Raj, I think that's a great question. There are just basically the 4 key assumptions in the whole sort of forecast, if you will, is that DEFINITY continues its run rate that we've been seeing in recent quarters this year. So continued strong growth there hopefully. And then we also have we're expecting that NTP doesn't come back. So our assumptions are that we're able to supply the U. S. Market through whatever available Moly happens to be in, but we would expect not to be able to overcome that with the ENSTO sales that had been able to more than offset that run rate in Okay, that's helpful. And then maybe just one last one, Mary Anne. So I think again, Bob, as you mentioned, your debt to EBITDA is now down below 2%, you're 1.8%. You've talked about perhaps being a bit more aggressive or at least dynamic in terms of acquisition. Anything you can offer in terms of how your pipeline looks for deals and any areas you're focused on in particular? There is nothing specific that I'll offer Raj, as you can imagine. I will offer that when I'm ready to announce something. I will say, as you note, our leverage ratio is in very healthy shape as is the rest of our balance sheet. So we do feel prepared to execute on our strategy. Okay, great. Thank you. Thank you. Your next question comes from Erin Wright with Credit Suisse. Your line is open. Great, thanks. A follow-up to the TechneLite questions. How much did you quantify the benefit from the new relationship in Australia? And are there any other offsets that you can kind of point to in terms of other new relationships that could potentially be offsetting an offer upside in the Q4 that maybe aren't embedded in your expectations? Just trying to figure out some maybe some puts and takes and elements of conservatism potentially embedded in there. Thanks. Sure, Erin. I'll just clarify on the relationship with Australia and then Bob will speak to the numbers. The relationship with Anso is certainly not new. They have been a Moly them. We are one of the few companies in the world with a generator manufacturing line and their choice was to reach out to us to ask that in the interim while they repair and bring their own line back into service that on that temporary basis numerical, we do expect some level of that service to continue into the 4th quarter, but significantly reduced from the impact that we saw in the Q3. Right. So Aaron, so as you saw that we did have $7,500,000 dollars in the Q3 of contribution for those Amstel sales, which when we say they're going to reduce significantly, we would expect to see them start to fall off, but not to put a number on it because we've never we don't forecast opportunistic sales because that's what they are, they're opportunistic. So that's what we've embedded into the Q4. If you really were to look at your sort of second half of the year, it's pretty much in line with what expectations were for the whole second half of the year coming into the third quarter. So I think that should address your question. Okay. Yes, that's helpful. And then you've made several hires year to date, not only including the CFO, but other hires from a, I guess, other operational kind of functions. And can you speak to kind of how that could jump start your business development efforts now and where you stand with that hiring process and how that aligns with sort of your longer term vision in terms of the mix of this business 3 to 5 years down the road? Thanks. Yes. So as you know, Erin, I've made some key changes this year by kind of switching out not only the CFO role, but also the Head of Manufacturing and Operations, the Head of HR and I added by breaking out and having specific a specific title for corporate development, I added singular expertise in business development and in strategy. And I think that last role is one that certainly speaks to our intent. With each of the roles, my goal was very future oriented and looking at what it would take as a company to identify, assess and then integrate new opportunities, be they geographic, be they manufacturing or capabilities. It was really with that intent that I changed out the team and built it to where I have now. I do continue to have one opening that I have not filled yet and that is my Head of Commercial and that is a search that is actively underway. Excellent. Thank you. Thank you. Your next question comes from Lee Huang with Wells Fargo. Your line is open. Hi, thanks for taking my question. It's Lee calling in for Larry. I just want to go back to your Q4 guidance to be clear on what's in the guidance and what's not. So it sounds like your guidance does not assume that NTP resumes production period even though they might be partially back online during the quarter. That's true, Leigh. For purposes of our forecasting, despite receiving positive signals from them, our guidance does not assume that NTP returns to service in the Q4. It does assume as we have in 3rd quarter that we continue to mitigate the absence of NTP by leveraging the other 2 suppliers in our Moly supply chain. And this is Bob. I just wanted to kind of tack on to that to sort of walk it down just a little bit further because the revenue where the revenue comes from is also having the impact on gross margin, as I noted in my prepared remarks. And so the favorability that we saw in our revenue mix in terms of the customer is because that benefit is not assumed to repeat with that is one of the pressures on the gross margin. But I would also note that as we source, we are it is incrementally slightly more expensive, just because we're not getting a completely balanced supply based on timing and from whom we're purchasing. So that has an impact. But the other thing I wanted to point out within the gross margin line just to sort of flush it out was that if we have reached a point with our room temperature DEFINITY formulation, we've hit a milestone where we're going to need to run qualification batches as part of our technology transfer process in the Q4. That's about a $2,000,000 expense that would be in COGS, but then would then of course be because the manufacturing cost is part not part of adjusted EBITDA. I just wanted to make sure that I didn't see that in different models and I wanted to point that out. Got it. Okay. That's really helpful to know about Q4, the COGS. And so just going back to the revenue guidance, what is assumed in your guidance about ENSTO? It sounds like you're assuming there's some revenue in there, not the 7.5% obviously, but some number, but you also call it opportunistic. And I know in the past, when you've had those opportunistic sales in this business, it's usually not part of the guidance. So I just want to be clear what's included in that guidance? So, Lee, that's a very fair question because you're right. In the past, we were very specific to say that we did not forecast to opportunistic sales. In this case, we have line of sight into the start of the Q4 that ANSO will continue to order from us and those that's for that reason, those sales have been included in our forecast. But as Bob mentioned, they are significantly our assumption and what was included is significantly down from the $7,500,000 that we recognized in Q3. Got it. Okay, that's helpful. And then just in terms of that the sales to Enso, would you say that margin is similar to your margin in the rest of the TechnoLife business or is it very different? I wouldn't say it's very different, but it is slightly better. Okay, got it. Okay, that's helpful. And then just on DEFINITY, the number I mean 15% obviously still good growth, but I would say the number is certainly a little bit lower than we expected both in terms of the absolute dollar and the year over year growth. Was there anything to call out in the quarter in terms of the market penetration, pricing share, anything that might have changed it a bit versus first half of the year? No, Leah. I'd say there is not. We continue to see growth of the underlying echocardiography market. We continue to hold share at above 80%, which is the reference that I've offered in the past and we continue to see growth in contrast penetration. You are correct that especially compared to 2017 and perhaps 2016, the overall growth, which at that time, I think consistently held around 20% or close to 20% is down slightly, but we still see it as very positive growth of DEFINITY on a forward basis. Got it. Okay, that's helpful. And then just one quick one on your pipeline. And by the way, thank you for the greater color. That's really helpful. On the LMI-eleven ninety five, are you on it sounds like you're still in discussions with FDA. So would you still expect to start the Phase 3 this year or could that kind of move into next year? I will never say never, but I don't see it as likely that we'd be able to enroll first patient in 2018. Our stand and our commitment is that we would not enroll our first patient until we have an agreed upon SPA with the FDA. And in fact, that is what we did with the LVEF trial for DEFINITY. We had the other trial activities somewhat ready to go. We had our CRO contract and we had our site selected, but we waited until we had agreed SPA in hand before we actually went on to enroll our first patient. It meant that it was a quick and easy process from once we had agreed SPA to get to that. And as I mentioned on the call today, it's actually we're up to 3 patients enrolled already. I just referenced one in my comments, but we will wait for the FDA to come into agreement with our design of the SPA. Thank you. Your next question comes from Larry Solow with CJS Securities. Your line is open. Great. Thank you. Just a few handful of follow ups to that. Mary Anne, on the DEFINITY, the 16% growth in the quarter, I think it was actually pretty much in line with the year to date sales. So sort of pretty constant trend there. Although it has slowed obviously a little bit from probably numbers that were weren't sustainable. But going forward and not specifically, but are you comfortable sort of with whatever maybe low to mid teens growth over the next few years barring any patent situation? Absolutely. And I think, Larry, that is what I was suggesting that with the status we see of the intellectual property of DEFINITY and with the access we have to the Hatch Waxman process should and to be filed, we remain confident in the sustained growth of DEFINITY revenue. Okay. And on the patent estate and all that, how does the vial mix come into play? I believe you also have, I guess, a separate patent on that. I don't know if you called that out as one of the other patents, but We do have separate patents also that also protect our BioNyx apparatus. They are not Orange Book listed because by definition, they are not eligible for Orange Book listing, but they would be addressable through litigation where we defined that someone was in violation of the patents that cover our biometrics. Okay. Fair enough. And then just switching gears, not to beat a dead horse here, just on the opportunistic sales to AMSO. I guess your visibility is based on their own facility being down and as soon as right, is that sort of if their facility gets repaired, then you maybe don't get as much or limited sales then going forward? Is that sort of the So our visibility is actually line of sight directly from them that have forward orders already placed for a short period into with the potential, but certainly not the certainty that some level of orders might continue throughout the Q4. So as Bob and I shared, we are allowing for partial sales in our guidance and our forecast as we move forward, but again, significantly reduced from the $7,500,000 in revenue that we recognized from ANSTO for those services in 3rd quarter. Got you. So but inevitably, these sales are coming because their own capabilities are impaired at the moment, right, their ability to have that? Yes, that's true. Okay, great. Just so I'm just trying to sort of break down what are the some of the other drivers of the beat in the quarter. So you definitely sales were right in line and you had obviously I think sales excluding this one time gain would have been right in line, right? So your R and D was obviously a little bit lower than we had projected. Maybe you could discuss the lower number there? And is that because some of these trials were timing of trials and whatnot? How should we look at that going forward? I think it's fair with respect to R and D to think of it as timing. And to that extent, some may catch up in Q4, some may actually post into 2019. We'll speak more to that as we close out the year as the next quarter closes out. From a product revenue mix perspective, the addition of DEFINITY sales given its margin is always accretive more strongly than some of the other products in our mix. Bob, anything you'd like to add? Yes. I mean, just looking at the P and L in and of itself and thinking of it from a percentage of net revenue, I mean, we did see research and development actually higher as a percentage of net revenue for the in the Q3 relative to the same quarter prior year. And that had to do with pipeline development costs, the work that Mary Anne has referenced, as well as increased headcount in support of those pipeline investments. G and A unfavorable as we talked about. That was mainly because of actions in the quarter from an employee perspective. We did have and so those things will be some of that that carries into Q4 just based on some of the further recruitment that Mary Anne has also referenced. And sales and marketing did have some timing that slipped between quarters, but at the same time, there were items in there from a that were going to be planned in the Q4 that are just part of supporting the overall growth of the business. So when you really look at it, it really is a slowdown from gross margin more than it is coming from the operating expenses. Right. And you also had a write off and after write off, it looks like some inventory write offs that I know you adjusted out for in your EBITDA number, but not on your EPS. So I assume is that impacting your cost of goods line, your gross profit? In the quarter, it was really gross margin is being completely run by, I mean, honestly, it has more to do with the cost of raw materials in terms of moly and the overall performance of what we were able to accomplish on an opportunistic basis. That really was what was those are the 2 main drivers of overall volume working through the system as well for the different products. From a write off perspective, that wouldn't have been material enough to make any difference. And the opportunistic sale, is that on the gross level? I know the TechneLite margins are far inferior normally to DEFINITY and to the corporate average. So normally that bigger sale would actually impact your mix and bring your margins down, but that did not occur this quarter? Well, when you think about it from a contribution perspective, having higher opportunistic sales relative to U. S. TechneLite sales was actually a margin benefit versus what I think what you're suggesting is exactly why whatever talking about from a 4th quarter gross margin perspective because that reverses and that's the pressure that I'm talking about. So you're So just got to say then that the EBITDA a lot of the beat in the quarter is related to that, right? I mean, it seems like is that a majority of the beat in the quarter is related to that and a little right? I mean, then a little bit of puts and takes on the expense line? Yes. And obviously, the more we outperform on DEFINITY, that also has a good margin contribution as well. Right. Okay. Fair enough. Great. Thank you very much. You're welcome. Thank you. And I'm showing no further questions at this time. I'd like to turn the call back over to Mary Anne Hayno for closing remarks. Thank you. In closing, we are pleased with our business results to date and the status of our strategic initiatives. As we plan out for 2019, I, in conjunction with the new members of the executive team, believe we are well positioned and we're certainly excited about our business prospects And we look forward to updating you in the coming quarters. So with that, we will sign off. Thank you very much, everyone. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you all may disconnect. Everyone, have a wonderful day.