Baxter International Inc. (BAX) Q1 2021 Earnings Report, Transcript and Summary

Good morning and welcome to Hill-Rom’s Fiscal First Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded by Hill-Rom and is copyrighted material. It cannot be recorded, rebroadcast or transmitted without Hill-Rom’s written consent. If you have any objections, please disconnect at this time. I would now like to turn the call over to Ms. Mary Kay Ladone, Senior Vice President, Corporate Development, Strategy and Investor Relations. Ms. Ladone, you may begin.

Good morning and thanks for joining us for our fiscal first quarter 2021 earnings conference call. Joining me today are John Groetelaars, President and Chief Executive Officer of Hill-Rom and Barbara Bodem, Chief Financial Officer. Before we get started, let me begin by reminding you that this presentation includes forward-looking statements that are subject to risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those described, including any impact related to the COVID-19 pandemic. Please refer to today’s press release and our SEC filings for more information concerning risk factors that could cause actual results to differ materially. In addition, on today’s call, non-GAAP financial measures will be used. Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release issued this morning. Finally, I would also like to mention that in addition to the press release issued this morning, we have posted a supplemental presentation which highlights Hill-Rom’s performance and 2021 financial guidance. These materials can be accessed on the Investor Relations page of our website. So with that introduction, let me now turn the call over to John.

Thanks, Mary Kay and good morning, everybody. Today, we are pleased to announce strong financial results for Q1. And as a result, we are raising both our revenue and earnings guidance for the full year. We started our fiscal year building momentum, accelerating recovery and expanding demand for many critical care products. This underscores our significant transformation, the diversity of our product portfolio and strong execution against our strategic priorities. Q1 revenue grew 8% and adjusted earnings of $1.53 per diluted share increased 35% versus the prior year. We exceeded guidance on both metrics. New product revenue exceeded $150 million, an increase of more than 20% and we achieved significant operating margin expansion of 260 basis points. We executed on our accelerated business optimization program and advanced our strategic growth platforms with both organic and inorganic investments. We listed several other accomplishments in the press release issued this morning, but none of these could be possible without the dedication and commitment of the entire Hill-Rom team around the world. I continue to be impressed and proud of how our team members are rising to the occasion to support our global customers and the broader healthcare community. Now, let me provide some perspective on our quarterly financial results before turning the call over to Barb for more detail. For Q1, revenue growth of 8% reflects better-than-expected performance across all three businesses, as the recovery progresses faster than anticipated, along with the benefit of select one-time COVID purchases. At this point, more than 80% of the Hill-Rom portfolio is showing stable or sequential improvement compared to the fourth quarter. Relative to our guidance, we estimate one-time COVID purchases accounted for about half of the upside or about $40 million and $0.20 per diluted share as COVID cases began peaking late in the quarter. We expect to see some ongoing benefit in the fiscal second quarter, although at a more measured pace, given the good news about the declining volume of COVID hospitalizations. The remainder of the Q1 upside can be attributed to recovery of the underlying business as we continue on the path toward normalization. Geographically, U.S. revenue exceeded our expectations and increased 1% as lower capital revenue like beds and surgical equipment was offset by higher demand for bed rentals and several Front Line Care products. International revenue increased 19% on a constant currency basis with double-digit growth across Europe, Asia-Pacific and Canada. We are encouraged by the strong execution in these markets as we strengthen our engagement and partnership with local governments and customers while supporting their needs during the pandemic. We are also pleased that our strategic investments in China are paying dividends, with a targeted go-to-market commercial strategy and ongoing recovery delivering double-digit growth for six of the last seven quarters. Now, let me turn briefly to review the performance by business at constant currency rates. First, Patient Support Systems revenue increased 8% in Q1, which includes the one-time COVID benefit mentioned earlier. PSS performance reflects the strong international growth of 33% driven by market expansion of med-surg and ICU bed systems across Europe and other markets. As expected, U.S. bed purchases and care communications revenues were down modestly compared to the prior year, but we continue to anticipate sequential recovery from here. We believe we are very well positioned with our strong value proposition and differentiated ecosystem of smart beds and connected care solutions as hospitals prioritize clinical workflow efficiencies. This continues to be validated by several recent competitive wins, including a 5-year standardization project for Hill-Rom with Nurse Call, Voalte mobile applications and medical device integration across one of the nation’s largest healthcare systems. In Front Line Care, first quarter revenue increased 5%. Performance continues to be driven by double-digit growth in patient monitoring, blood pressure and thermometry. Physician office-based products, including our vision care and physical assessment tools, also continue to rebound as U.S. physician office visits resume. In our Vision Care business, we successfully obtained CMS coverage for annual diabetic retinopathy exams in the primary care setting and secured an agreement with a national pharmacy chain to improve access to screenings. Lastly, Surgical Solutions revenue increased 4% in Q1, reflecting strong international growth with the completion of some large projects in EMEA and as expected, lower revenue for surgical equipment in the U.S. due to access limitations related to the pandemic. As I mentioned last quarter, this pandemic has demonstrated that the work we have done to build a strong portfolio will allow Hill-Rom to uniquely benefit from the accelerated transformation of the global healthcare environment. Hill-Rom is well positioned to drive meaningful value and deliver our long range of aspirations of mid single-digit top line and double-digit bottom line growth. We continue to execute on our strategic priorities, including new product momentum and emerging market expansion, while creating value with our business development activities. As you know, on Monday, we acquired the contact-free continuous monitoring technology from EarlySense. This digital sensing technology is currently integrated into our Centrella Smart+ bed to help identify clinical deterioration that can lead to improved survival, decreased costs and decreased need for ICU admissions. By expanding capabilities of the Hill-Rom’s connected care ecosystem, we continue to widen the differentiation gap by transforming the bed into a patient monitoring platform that acts as the hub for digital connectivity and communications. Earlier this month, we also announced our intent to acquire BardyDiagnostics. Bardy is an innovator in digital health and a leading provider of ambulatory cardiac monitoring technologies. The Carnation Ambulatory Monitor, or CAM patch, provides a differentiated, wearable bio-sensing technology that is designed to promote patient comfort and compliance, streamline clinical workflow and yield clinically actionable data that enables physicians to identify specific cardiac arrhythmias. There is a clear value proposition, vast body of clinical evidence, cost effectiveness data and physician support for this category of devices. That said, we are actively monitoring the situation related to the announced category 1 reimbursement rates by Novitas last week and we will provide an update when more definitive information is available. In summary, I am pleased with our strong start to the fiscal year and how our team is executing during these unprecedented times. Despite the challenges posed by the ongoing pandemic, our customers’ continued trust and support for the solutions we provide demonstrates our resiliency and why our vision of advancing connected care is more vital than ever. Now, let me turn the call over to Barb.

Thanks, John and good morning, everyone. I will briefly walk through our financial results before turning to our updated guidance. As mentioned, worldwide revenue in Q1 of $741 million grew 8% compared to $685 million in revenue last year. Revenue growth on a constant currency basis was 6.5%. All three businesses generated higher than expected growth driven by accelerated recovery trends and expanded demand for critical care products. Adjusted gross margin was 51.2% and expanded by 130 basis points versus the prior year. This was the result of favorable product mix and operational improvements. R&D spending increased 11% to $35 million, highlighting our commitment to drive innovation and advance our portfolio of connected care solutions. Adjusted SG&A of $205 million increased 3%. We continue to fund our strategic growth platforms and IT transformation, while managing discretionary spending and realizing planned savings from our business optimization program implemented last year. As a result, adjusted operating margin improved 260 basis points to 18.8%. Interest and other non-operating expenses for the quarter totaled $11 million. This is lower than the prior period due to the benefit of insurance recoveries totaling approximately $5 million or $0.06 per diluted share. The adjusted tax rate was 20.5%, slightly higher than our original expectation due to the geographic mix of our profits. Overall, this translates into adjusted earnings for the fiscal first quarter of $1.53 per diluted share, which is an increase of 35% from $1.13 per diluted share in the prior year. Now, turning to cash flow. Cash flow from operations for Q1 was $100 million, a 30% increase compared to the prior year, primarily driven by higher net income. Capital expenditures totaled $29 million, $5 million higher than the prior year, driven by the continued investment in our global IT transformation. Free cash flow advanced 35% to $71 million. Our balance sheet and financial position remains very strong. In Q1, we returned $70 million to shareholders through dividends and share repurchases. We ended the quarter with $295 million in cash and our debt-to-EBITDA ratio at the end of December was 2.7x or 2.3x on a net debt basis. Now, let me conclude my remarks with our updated guidance. Let me start by saying we have not included the impact of the BardyDiagnostics acquisition in our updated revenue guidance. However, the earnings per share guidance ranges provided today provides sufficient flexibility to absorb deal-related dilution in fiscal 2021 under various scenarios. So with that said, for the full year, we now expect revenue to increase 0% to 2% on a reported basis, which includes a benefit from foreign currency of approximately 100 basis points. This compares to our prior guidance of a revenue decline in the 3% to 5% range. By business segment, at constant currency rates, we expect Patient Support Systems revenue to decline between 2% and 4%, an improvement of more than 400 basis points from our previous guidance range. We now expect Front Line Care revenue to grow between 2% and 4% as recovery in the underlying businesses continues. And finally, we continue to expect Surgical Solutions revenue growth of 3% to 5%, with recovery towards pre-COVID level. From a profitability perspective, we now expect adjusted gross margin and operating margin to be approximately flat to the record levels set in fiscal 2020, with gross margin of approximately 51.5% and operating margin of approximately 18.8%. We expect R&D to approach 5% of sales and expect SG&A to represent approximately 28% of revenue. We now expect other expense, which includes interest, of $65 million to $70 million and a tax rate of 19% to 20%. This translates into adjusted earnings of $5.70 to $5.90 per diluted share for the year, roughly an increase of $0.45 per diluted share compared to our previous guidance range and reflecting mid-teens earnings per share growth after excluding the one-time COVID impacts from both the current and the prior year period. From a cash flow perspective, we are now expecting operating cash flow of $400 million to $430 million, an increase of $30 million compared to our prior guidance. We continue to expect capital expenditures of approximately $100 million, resulting in free cash flow of $300 million to $330 million. For our fiscal second quarter, we expect revenue to increase 0% to 2% on a reported basis and adjusted earnings, excluding special items of $1.40 to $1.45 per diluted share. And now, I will turn the call back over to John.

Thanks, Barb. In closing, while we expect the pandemic to continue to impact the global healthcare landscape in the near-term, we remain optimistic about the year ahead and our continued execution on a path toward recovery and normalization. With the diversity of our portfolio, we are well positioned for growth as we navigate this transition throughout fiscal 2021. Over the long-term, we remain committed to driving sustainable and profitable growth, achieving our strategic objectives and unlocking significant value for patients, caregivers and shareholders as we deliver on our mission. So now I would like to open up the call for Q&A.

Thank you. [Operator Instructions] First question comes from Rick Wise with Stifel. Please go ahead.

Good morning, John. Good morning, Barb. Let me start with, I think, focusing on two things, one, the better-than-expected beat business performance. And this is sort of a general question, but help us better understand the drivers of that beat business improvement? To what extent, is it just recovery environmentally in various geographies or execution? To what extent, is it new products? If you could give us a little more color there? And maybe just as part of that, John, you could talk about the pipeline you highlighted, you have emphasized in the past the 10 new products coming in the current fiscal year. How is that – how do we think about the impact there as well? Does that – how quickly does it help you drive accelerated growth? Is that all fully dialed into your guidance, just help us understand those two big picture things for starters? Thank you so much.

Yes. Thanks, Rick and thanks for the question. Well, we are very pleased with the performance in Q1. It’s really split between accelerated recovery at a pace faster than we expected and that’s really good news. And it was broad-based across all businesses and across all geographies. So even feel better about that knowing how broad-based it was across our entire portfolio. So that was about half the driver of our beat versus consensus. The other half came from some COVID benefit. It’s important to say that it wasn’t a pull forward, but it was rather an expansion of demand that we have been talking about for the last couple of quarters. We have been anticipating and expecting international markets to expand their ICU capacity and that’s exactly what we are seeing out of Europe, particularly in France and Italy in the prior quarter. So hope that helps characterize the nature of the beat, broad-based more rapid acceleration of recovery and some COVID benefit, particularly out of Europe on the ICU expansion category. With respect to the growth driver of new products in the second part of your question, new products in the quarter grew over 20% and $150 million for the quarter. So, very pleased about the performance of that growth engine and its ability to deliver throughout this pandemic. We saw last year in fiscal ‘20 that we beat our expectations on new products. Our pipeline is chock full of new launches this year. We have 10 new launches expected. A great number of those happen in Q2. And if you will recall, Rick, by the time we reach peak revenue of our typical launches, it takes about 2 to 3 years. So what we are really building out is kind of springing the coil to leap us forward into the future because we have so many product launches planned this year. We had 6 last year. We had over 10 this year. And I think that positions the company very well for continued new product performance as we look into the out years.

That’s great. And just one quick housekeeping question, just because I think some – there might be some questions about it. I know you’ve retired your non-core revenue use of that term with the exit of the international surgical OEM business. But did this quarter complete that? Was there an impact in this quarter or is that all behind us now? Thanks so much.

Yes. Thanks, Rick. We have retired the definition of core, non-core. However, in this quarter, we did have $11 million of what we would normally call non-core in the revenue number. And that was due to our partner on the surgical OEM side, who really requested an additional buy-in of inventory. So that was fulfilled in the first quarter.

Thank you very much.

Next question comes from David Lewis with Morgan Stanley. Please state your question.

Hi, good morning and thanks for taking the question. I guess a couple of things here for me. John, just thinking about sort of the enthusiasm for growth vectors, there is a lot of enthusiasm heading into 2020. I mean do you think it’s safe to say what we are seeing here is those investments with new product growth of 20% and EM traction, do you think you can be definitive those investments are now playing off and your confidence in that 5% plus growth is now elevated or do you think we are sort of putting the cart before the horse?

Great question, David. I think if we break out the COVID impact last year and this year, what we are actually seeing is mid single-digit top line growth and 15% EPS growth. And even if we do the similar math and compare ‘19 to ‘21 in our new guide, similar mid-single-digit top line, higher than 15% EPS growth. So I think those underlying to your question, the underlying growth vectors of new products in emerging markets and growth-oriented acquisitions are all delivering throughout this period of time and feel very good about the outlook there. Of course, as you know, as all of our investors know, we had a really strong Q3 last year. So we’re going to have to cycle past that Q3 comp in a couple of quarters. And then I think the ongoing transparency on a constant currency and reported basis, we will demonstrate that strength in that top line performance.

Okay. And just two more quick ones for me, I’ll ask them both together. Barb for you, I mean just given John referenced the strong third quarter there is some historical volatility in the business. Can you just give people a sense of what assumptions you made in this forward guidance this early in the year to give people confidence that this guide still remains risk-adjusted. And then John for you, just on Bardy, it sounds like you are confident in your EPS guidance regardless of the outcome with Bardy. What are the next steps from your perspective with Bardy? Thanks so much.

Thanks, Dave. I will turn the first part of the call over to Barbara to answer and then I will come back.

Good morning, David. Thanks for the question. If I heard you correctly, what you’re looking for is how balanced and achievable is our guide for the remainder of the year. And as you think about the two – the top and the bottom line, as you think about the improvement on revenue guidance for the year, the majority of the roughly $140 million, $150 million worth of improvement that we’ve signaled with this guide is coming from our overall performance in Q1. And as John talked about, part of that is coming from onetime COVID, but more importantly, it’s coming from the underlying momentum of the business and the stronger-than-expected recovery. And we will see that momentum play into Q2, which also plays into the improvement as we think about the full year revenue improvement. The other thing I’d drive there is we have been more explicit about FX and the impact for the full year. And we anticipate that on the top line, we’ll have about 100 basis points of benefit from FX on revenue for the full year. So really what we’re reflecting is we’re reflecting the first half strength of the year, recognizing that we have very challenging comps in Q3 and we have three quarters ahead of us to go. From a bottom line perspective, we are looking at an improvement in our bottom line EPS trajectory of $0.45, and that really reflects the performance of Q1. What that does is that it reserves any further favorability that we would see in Q2 to offset any potential dilution from business development deals. And you should think about it as a floor. So as we have looked at this, we’ve looked at it very much as it is balanced and achievable, but it also takes into consideration that we’re early in the year and there is uncertainty regarding the pandemic and uncertainty related to the overall trajectory of where we’re going. But we believe that this is an achievable and balanced view.

And then, David, to your question on Bardy, as we’ve said in our opening comments, our prepared comments, we’re continuing to monitor the reimbursement situation closely. And our guidance contemplates various scenarios that can absorb or cover the dilution that was expected from the Bardy deal. So as Barb just mentioned, you can think of this guidance as the floor in those various scenarios of a different party outcome. I am going to really limit any further comments on Bardy going into this call. It’s a really sensitive period of time in light of some pending discussions that will likely take place with [indiscernible] and other industry stakeholders. And for that reason, I don’t think it’s productive to have speculative comments and read into it too much. I would like to say that given the strength of our business and given the strength of our Q1 performance and our rate and our increase in guidance for the full year, we feel very good about the growth of our underlying business and our ability to meet this increased guidance.

Great. Thank you so much.

Michael Polark with Baird is on the line with a question. Please state your question.

Hey, good morning. I was curious about the 5-year standardization project you called out in Care Communications. Wondering if you could give us any more color there. Would you name a name, who is the customer? If not, frame size, number of facilities, total number of beds, perhaps contract value to you over the 5-year term. And then maybe just a little bit of color, as you put together that platform, right, Nurse Call plus Middleware and Voalte, maybe would be interested in hearing about the sales process there and why you won and what sort of things the customer seems most interested in?

Yes, great question, Mike. Happy to answer that. Unfortunately, I can’t mention the name of the customer, but it was one of the largest – one of the top three largest hospital systems in the country. And the full end-to-end solution that Hill-Rom was able to bring and our enterprise ability to scale a solution like that is really what made us well positioned to win. So when I say end-to-end, I’m talking about Nurse Call, the middleware to do medical device integration, which came from our EXL acquisition and then the Voalte or mobile communications that also came to that acquisition of Voalte. So that combination of those full – that full communication suite of digital communications is really what made the difference. And having the comments and trust that Hill-Rom was an organization that could scale that type of deployment over a 5- year period, it would go up there. I haven’t – didn’t have a chance to go back and confirm, I believe this is our single largest deal that the company has ever done as part of one contract. So it was a big win. And we expect it to provide a nice backlog of orders and future revenue as we recognize revenue over the next 5 years.

Appreciate that. And Barb, I have to ask one. So, let’s assume you move forward with the transaction, I know that sounds like it’s very much TBD, but let’s assume you move forward, I understand there is an earn-out structure in the current arrangement. Sometimes when those frameworks are put in place, the acquirer isn’t plugging the product into its existing commercial infrastructure right away. Let the acquiree execute against the earn-out. What is the base case in terms of taking the Bardy product to your current Welch Allyn physician office sales force? Is it wait 1 year or 2 and let the earn-out unfold or is the expectation that if and when the deal closes, that your sales force would be able to sell that product on day 1?

Yes. Our going-in proposition there, Mike, was to lead that sales organization to its own and to invest in it and then separately add the channels that we have in primary care and Welch Allyn to complement it. So that was our approach. Going in, that is our approach.

Thank you very much.

But again, thanks for the question. I just want to reiterate that our focus is on long-term shareholder value. And in any scenario related to acquisitions or related to things that are going on in our core business, our overwhelming commitment is to drive double-digit EPS growth and mid-single-digit top line growth. And we’ll manage accordingly in various scenarios.

And Matt Taylor with UBS is on the line with a question. Please state your question.

Hi, good morning. Thanks for taking the question. I just wanted to ask one about the comments that you made on ongoing demand for ICU bed expansion. Going back to last year, there was – mid Q3 where you talked about a lot of that being more one-time and the ICU opportunities being longer term. But it sounds like its coming capacity even sooner than you expected. So I was hoping you could help kind of square those comments and discuss whether your order book looks good and you are continuing to see strong demand there and whether we should view this as more one-time or the start of a new stronger trend?

Yes. Thanks, Matt, for the question. Yes, so what I tried to indicate in the past was that we would probably see that ICU expansion come in lumpy, right? It’s going to come in at times in a quarter, and it’s going to come in hot and heavy and feel kind of like a onetime. And then it might be off for a quarter and then might come back a quarter after that. So our current outlook and it’s incorporated into our guidance, so we do expect another strong performance out of Europe in the bed category. It’s – we see it in our backlog. We do expect another strong performance out of Europe in that category for ICU expansion requirements. So this will be a couple of quarters in a row now where we’re seeing it. And it’s a little bit hard to predict longer term, say, beyond a couple of quarters, because that visibility is not there when the timing is going to happen. However, from a broader aperture or broader time frame point of view, in over a multiyear period, that growth opportunity is definitely there, we believe. We have – we were hesitant to call it out back in the middle of last year. And then we saw enough data to give us the confidence that it was real. And now we are seeing it showing up in the results. So it will, at times, come in lumpy. We’ll try to give investors a great heads-up to when we’re seeing it coming and incorporate that into our guidance. But we see that – at this point, we see it obviously, in Q1. We see it again a little bit in Q2 attenuating from Q1. And then we just don’t have clear enough visibility to call it out yet in the back half of the year.

Okay, okay. And just had a question on the Care Comms, I was hoping you can comment on that specifically in your installation-related businesses. It sounds like that have gone better than you expected in the period. Can you talk about the growth for that and the outlook for installation-based things given continued pandemic stress?

Yes. So, we are very pleased about the deal that we just discussed and the orders that are coming in. However, from a recognized revenue point of view, Care Comm was relatively flat to last quarter. It’s gradually recovering. And as our access improves – but during the last quarter, access into hospitals and even in the current period is very limited. So our ability to complete installations and recognize revenue has been stalled. However, the pandemic continues to wane and hospitalization has continued to drop. We’re very optimistic about the back half of the year and seeing that business come back to pre-COVID levels.

Okay, very good. I will leave it there. Thank you so much.

Thanks, Matt.

Matt Mishan with KeyBanc is on the line with question. Please state your question.

Hey, thanks. Good morning, guys. Just first on RetinaVue, I think you mentioned that you signed a deal with a national pharmacy chain for increased screening, can you talk a little bit more about that channel versus the primary care physician and the strategy to growth that?

Yes. Thanks for the question, Matt. The whole premise of the technology is to provide better access for patients. So you don’t need to see an ophthalmologist to have their annual retinal exam. And putting it in the hand of either a primary care physician’s office or, in this case, a retail pharmacy location helps us achieve both the promise of the technology married up with the improvement in the sales channel or the access channel. So this is an exciting opportunity for us. I’m unable to announce who the partner is, but it’s one of the largest chains in the country. And we are very pleased about that partnership. And we’re in the early phases of rolling that out and looking forward to a ramp of that activity in the second half of the year.

Okay, excellent. And then I hate to go back to Barbie, and I realize it’s a sensitive period of time, but I’m just curious, the reimbursement decision from Novitas and you mentioned there is pending discussions there, is that a final decision or are there mechanisms in place to comment or appeal?

Yes. I think this is a well-covered topic by a lot of the sell-side analysts. So I’m really, as mentioned, I am not going to actively – we are actively monitoring developments on reimbursement and we will provide an update when more definitive information becomes available.

Okay. Thank you, John.

Thank you, Matt.

Mike Matson is on – with Needham is on the line with a question. Please state your question.

Hi, guys. This is Joseph on for Mike. Just one today, I was curious on the cost savings in the quarter from the restructuring. You guys could maybe explain if there was any, how much and where did that come from? Thank you.

Thanks, Joseph. I’ll turn it over to Barb.

Hi, Joseph. Thanks for the question. Hey, what we talked about at the end of last year is that we were triggering a $50 million sort of accelerated business optimization activity. Most of that, over two-thirds of that was going to be coming from sort of reductions in headcount. So, it’s going to come more from the [indiscernible] areas. The balance of it was coming from reprioritization of discretionary spend across the business. So we are on track to deliver that $50 million. It’s roughly equal as you think about it over the course of the year. We did realize significant savings in Q1, which we’ve been, as we talked about last fall as well, reinvested in the business. And we have been spending a lot of time making sure that as we identify opportunities to save or optimize the business that we are reinvesting it behind our growth drivers and in those levers that we think are going to support our mid single-digit top line growth and our acceleration out of the pandemic. So, we are realizing the savings. It’s pretty equal across the course of the year. And we have got mix now between what is coming from sort of [indiscernible] and then what’s coming from other levers.

Awesome. Thank you very much.

At this time, I will turn the call over to the presenters.

Well, thank you all for your questions today and really was a great quarter and a great start to our year. Momentum is building. We feel very good about the growth drivers that we have been investing in over the last several years and it’s really leading to great margin expansion and sustainable durable growth. So we are confident moving forward and thank you all for joining our call.

Ladies and gentlemen, this concludes today’s conference call with Hill-Rom Holdings, Inc. Thank you for joining.