ICU Medical, Inc. (ICUI) Q2 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for standing by. And welcome to the ICU Medical, Incorporated Second Quarter Fiscal Year 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference may be recorded. It's now my pleasure to turn the floor over to John Mills. Sir, the floor is yours.

Good afternoon, everyone. Thank you for joining us today to review ICU Medical's financial results for the second quarter and 6 months ended July 30, 2012. On the call today, representing ICU Medical, is Dr. George Lopez, Chief Executive Officer; and Scott Lamb, Chief Financial Officer. We will start the call by reviewing key operating and financial achievements for the quarter, then Scott will discuss second quarter financial performance and provide the financial guidance update for the third quarter and full fiscal year. Then the company will open the call for your questions. Before we start, I want to touch upon any forward-looking statements made during the call, including management's beliefs and expectations about the company's future results. Please be aware they are based on the best available information to management and assumptions that management believes are reasonable. Such statements are not intended to be a representation of future results and are subject to risks and uncertainties. Future results may differ materially from management's current expectations. We refer all of you to the company's SEC filings for a more detailed information on the risks and uncertainties that have a direct bearing on operating results and performance and financial conditions. With that said, I'll now turn the call over to Dr. Lopez. Go ahead, Doc.

Thank you, John. Good afternoon, everyone. During the second quarter, we achieved revenues of $77.3 million, which was in line with our expectations and driven primarily by growth in our infusion therapy products. Also, domestic distributor and direct sales were up 10.7%. Gross margins during the second quarter expanded to 427 basis points sequentially and 404 basis points year-over-year to 50.6%. While these improvements were offset by expected higher operating expenses, we reported solid profitability of $9.1 million, or $0.63 per diluted share, during the second quarter. We continue to generate strong operating cash flow of $13.1 million. We are raising the bottom end of our earnings guidance. We ended the quarter with no debt and cash of approximately $193 million, which equates to over $13.50 per share. We announced that our ChemoCLAVE system for the safe handling of hazardous drugs will be packaged with Mobius Therapeutics' Mitosol kit, an FDA-cleared used -- drug used in ophthalmic surgery, an additional market to oncology. We have also recently received specific mention, as 2 studies presented at the 37th Annual Congress of the Oncology Nursing Society show our ChemoCLAVE needle-free closed system transfer device protected nurses from accidental exposure to hazardous chemotherapy drugs while increasing their satisfaction and perceptions of safety. Additionally, a clinical case study prepared by clinicians from Women & Infants Hospital in Providence, Rhode Island showed that our custom IV system featured the MicroCLAVE needle-free neutral displacement connector helped reduce NICU infection rate by 60%, while also addressing the recent FDA concerns regarding the safety of our competitors' positive displacement needle-free connectors. Now I would like to turn the call over to our CFO, Scott Lamb, to review our second quarter financial results and our financial guidance. Scott?

Thanks, Doc. Before I begin, let me remind all of you that the sales numbers we are covering, as well as our financial statements, are available on the Investor portion of our website for your review. Our second quarter 2012 revenue was $77.3 million, a decrease of 0.7% compared to $77.8 million in the same period last year. Net income for the second quarter of 2012 was $9.1 million, or $0.63 per diluted share, as compared to net income of $9.5 million, or $0.67 per diluted share, for the second quarter of 2011. Now let me discuss our second quarter revenue performance by market segments. You can also view our detailed market segmentation in our earnings press release. For the second quarter of 2012, sales from the Infusion Therapy market increased 4% to $51.5 million and represented 66.6% of our total sales. This growth was driven by strong performance of needle-free connectors, primarily CLAVE and MicroCLAVE, as well as custom sets. More specifically, sales from CLAVE and MicroCLAVE increased 3.4% to $27.3 million compared to $26.4 million a year ago, representing 35.3% of our total revenue. Custom infusion sets were up 7.2% year-over-year to $20.6 million compared to $19.2 million a year ago and comprised 26.6% of our total sales. We expect sales in Infusion Therapy to increase approximately 7% to 9% in fiscal year 2012 from fiscal year 2011 and to be driven by both needle-free connectors and custom sets. As expected, sales from the Critical Care market were down 4.8% to $15.7 million compared to $16.5 million a year ago and represented 20.3% of our total sales. The decrease was attributable to competitive volume and price pressures beginning in the second half of last year. We will be introducing new products in the second half of this year and are excited about the long-term opportunities they represent. Given the current market conditions, we expect Critical Care sales to decrease year-over-year by approximately 1% to 2%. This is an improvement from our previous estimates of a decrease of approximately 4% to 8%. Sales from our oncology market were flat at $7.1 million compared to $7.3 million a year ago, primarily due to stocking that occurred in the second quarter last year. On a sequential basis, sales from the oncology market were up approximately 11%. Based on the current demand, backlog of conversions and expected growth opportunities, we forecast sales from this market to increase approximately 25% to 35% for fiscal year 2012, down from our previous estimate of 35% to 45%. The change in our projected growth rate is based on slower conversions of new business. The market opportunity continues to expand for our oncology products, and we're excited about the long-term opportunities for our growing product offerings in this market. Our other product category, which primarily includes products in the renal and enteral markets, was down 32.8% to $3 million compared to $4.5 million a year ago, representing 3.9% of our second quarter total revenue. Sales from TEGO increased 17.4% year-over-year to $2 million. This strong growth was offset by the elimination of Orbit sales, which we stopped shipping last quarter. As a reminder, we sold the Orbit product line during the fourth quarter last year. Excluding Orbit sales, our other product category was down 9% for the quarter. Including the sales of Orbit last year, we expect sales in this product category to decrease approximately 20% this year. Now our second quarter sales by distribution channel were as follows. Domestic sales to Hospira were flat year-over-year at $27.2 million, as strong performance of custom infusion sets and oncology products was partially offset by a decline in CLAVE's and MicroCLAVE's needle-free connectors. For both the second quarter of 2012 and 2011, domestic sales to Hospira represented 35% of our total revenue. Our non-Hospira domestic sales increased 10.7% to $29.4 million compared to $26.5 million a year ago, as double-digit growth in Infusion Therapy and oncology products was partially offset by an expected decrease in Critical Care. Our 2012 non-Hospira domestic sales represented 38% of total revenue compared to 34% last year. International sales were down 13.8% to $20.7 million year-over-year, representing 26.8% of our total revenue during the second quarter. The decline was primarily attributable to softness in Europe and the exchange rate of the euro. Foreign exchange from Europe negatively impacted our sales by approximately $1.3 million year-over-year. Our gross margins for the second quarter expanded 427 basis points sequentially and 404 basis points year-over-year to 50.6%, reflecting a more favorable product mix by selling higher-margin products, a favorable peso exchange rate and improved manufacturing efficiencies. Based on these factors, we now expect our gross margins to be in the range of 48% to 48.5% for the year compared to our previous range of 47% to 47.5% for the full fiscal year of 2012. SG&A expenses increased by 15.6% year-over-year to $22.8 million compared to $19.7 million for the second quarter of 2011. The increase was primarily due to higher sales and marketing costs, as well as higher legal expenses and other one-time costs. As a percentage of sales, our SG&A expenses were 29.5% compared to 25.4% a year ago. We expect SG&A, as a percentage of total revenue, to be approximately 27% for the full fiscal year of 2012. Our research and development expenses increased to 9.6% to $2.7 million compared to $2.5 million for the second quarter of 2011. This increase was in line with our expectations, as we continue to invest in our existing and new products for all our target markets. We expect our research and development expenses to be about 3.3% of revenue for the full fiscal year of 2012. Our tax rate for the second quarter was 33.2%, and we expect our tax rate to be approximately 34% for the full fiscal year of 2012. Our operating income for the second quarter of 2012 totaled $13.5 million or 17.5% of sales compared to operating income of $14 million or 18% of sales a year ago. Our EBITDA totaled $18.4 million compared to $19 million for the second quarter a year ago. Now moving to our balance sheet and cash flow. As of June 30, 2012, our balance sheet remained very strong with no debt and $193.5 million in cash, cash equivalents and investment securities. This equates to approximately $13.58 per outstanding share. Additionally, we have $263.6 million in working capital. During the second quarter of 2012, we generated $13.1 million in cash flow from operating activities. Our capital expenditures totaled $4.6 million during the quarter and primarily included machinery, equipment and molds for our plant in the U.S. Days sales outstanding for the second quarter were 53 days. We expect DSOs to be approximately 55 to 60 days in the foreseeable future, which is an improvement from our historical DSOs. Now let me update you on our financial guidance for the fiscal year 2012 and the third quarter. Based on the current business trends, we are narrowing our previously announced revenue guidance range for the full fiscal year of 2012, the new range of $318 million to $325 million compared to the previous range of $318 million to $330 million. On a market-segment basis, we expect our Infusion Therapy sales to increase year-over-year approximately 7% to 9%, we expect Critical Care to be down approximately 1% to 2%, and we expect our Oncology Market segment to be up 25% to 35%. We expect our other category will be down 20%. We are also raising the bottom end of our previously announced diluted earnings guidance range. The new range is $2.55 to $2.70 per share compared to the previous range of $2.45 to $2.70 per share. For modeling purposes, our tax rate is expected to be 34% for 2012. For the third quarter of 2012, we expect our revenue to be in the range of $81 million to $84 million, and we expect our earnings per share to be in the range of $0.65 to $0.72 per diluted share. Our operating cash flow is expected to be approximately $40 million to $50 million in 2012, and we believe capital expenditures will be $13 million to $18 million in 2012. Operator, we are now ready to open the call for questions.

[Operator Instructions] Our first questioner in queue is Matt Dolan with Roth Capital.

So maybe let's start on the revenue and guidance. It looks like Infusion and Critical Care are doing better than expected. And I think in the last call, you talked about sell-through data being pretty strong. So can you give us some more commentary on what's driving down the top end of the range? It sounds like Oncology and maybe European softness as you can kind of rank order those for us, that'll be helpful.

I wouldn't necessarily rank order them for you, but I think you called it out there. There's the combination of Oncology, softness in Europe and the effect of the euro exchange rate.

Now what's happening in [indiscernible]?

In Oncology, it's -- we're still seeing all the positive signs that we saw the last quarter but maybe just a slight shift to the right in some of the new business conversions and some of the new accounts that we are converting. But that's it.

Europe?

Again, as we mentioned in the second quarter, softness in Europe, that's not helping. And then the euro exchange rate, we didn't expect the euro to be as weak as it is.

It went from $1.40 to $1.20. Oncology -- Matt, Oncology, has just taken a pause. We did a soft launch in the U.S. with Diana, and we found different things. We found out the market was different in the USA, and we had to go back and write -- re-write software and -- that we didn't anticipate. And that software is done and ready to be released. We also bought all the machines we could because there was shortage on the product -- shortage on screen. And we've -- had to re program for that. So which is just taking a pause.

Okay. I mean it looks like, with your Q3 guidance and what that implies for Q4, it would seem that you're not worried about Europe being a chronic problem, and it's something that you can manage. Is that fair to say?

Yes, very fair to say.

Okay. On the gross margin side, based on your guidance, it's up a little but given Q2 has to come down sequentially by a pretty good number. So walk us through what's happening there and what kind of a normalized number should be once we exit the year.

The -- first of all, there's some estimate on where the peso is going to end. And that the drivers for the improved gross margin were the peso exchange rate and better product mix by shipping the higher-product margins and lastly, manufacturing efficiencies. Now some of those manufacturing efficiencies were due to Slovakia, as we were building additional safety stock and inventory for the summer months, as we were anticipating workers taking some time off during the summer months. So Slovakia will be back in the third quarter, back to its normal capacity utilization. And then the peso there, it's difficult to estimate where the peso is going to end up and then product mix.

Product mix being #1.

Okay. And now on the new product side, Doc, I know you mentioned you might touch on a few today. So it's been like a consistent question for you. Anything you can share on the new product side in this call?

Not really, not until the run rate of $1 million. We should have something to talk to you next quarter.

Okay. And the last one is a question that we get frequently is use of the cash. It seems like they're a couple acquisition opportunities potentially out there. Any commentary on that? And that looks like you didn't buy back stock. So why not?

As to acquisitions, we have too many new products we're launching this year to think about an acquisition. I always say, you can't run and mate at the same time. Scott?

Well, yes, exactly right. And we're always looking, but we are focused right now on the launching all of our new products. As far as the buyback goes, we'll continue to look at that on an opportunistic basis.

Our next questioner in queue is Junaid Husain with Sidoti & Company.

Scott, relative to your legal expenses, could you quantify what the legal expense was in the quarter?

I can't tell you what the amount was, but it was a little over $0.5 million over last year.

Got you. And then could you remind me? Was this related to your litigation with RyMed?

Primarily, yes.

And then what level of additional legal expense do you think we should be baking into our expectations for the balance of the year?

As you know, legal expenses are a variable. And we're never quite certain what we're going to spend there, just depending on the state of affairs, so to speak. I think, if you look at -- I will just stay with the -- approximately 27% SG&A as a percent of total revenue. That's probably the best thing to do going forward for this year.

Got it. All right. And then, Doc, relative to Oncology, is it your thinking that, say, with the hard launch of Diana, yes, you should be able to make up some of the slower growth you're currently seeing in your oncology franchise?

The sell-through is actually up in Oncology. Hospira ordered excess inventory as they do always with new products. The sell-through is up quite nice as a percentage. But I expect a hard launch in the fourth quarter of this year on Diana. And I think it's going to be a big thing.

And then, Doc, on Diana, can you tell me how is it distributed? Is it -- are you selling the bulk of your products through the Hospira channel? Or do you do it through your own distribution channel, through your own sales guys? Or is it kind of split between the 2?

We have a big order from Hospira for Spain. But we've sold about 40 machines and then we stopped to update the software and change the machine, one of the molders and the screen sets. But we sell it through -- in the U.S., we sell it direct. We have 2 people that are -- have shown the product, came back with their customers for comments and we've modified the product. And it should be ready by next week to start it again and continue...

Do you have 40 -- I'm sorry, you have 40 machines out in the field.

In Europe. And [indiscernible] what I found out, though, is when we came to the U.S., they wanted more documentation. The drug that was given the dose and the time, they asked for much more documentation. And I figured it out. In the U.S. -- in Europe, they're concerned about accuracy in the right drug and speed. In the U.S., the pharmacists are more concerned about lawsuits and he wants documentation to protect them. So we've made that quick adjustment. But it's something I didn't foresee that lawsuits will be more prevalent, more the reason to buy the Diana than not. And so we're adapting to that change in the market.

Got you, fair enough. And Scott, just from a pricing perspective, if we walk through your portfolio on aggregate level, how has pricing fared in the different product lines: CLAVE, Custom, Critical Care? Was it up, down, net neutral for the quarter?

It's been stable in all of our target markets and that includes Critical Care.

Next questioner in queue is Mitra Ramgopal with Sidoti.

Scott, first, going back to the gross margin, the 400-plus improvement we saw, I don't know if you can help break it down in terms of how much was really mix versus efficiencies and of course, currency at the end.

Sure. So the mix was about 90 basis points, peso is 110, and the rest was efficiencies.

Okay. And I guess the reason for it to be dropping off a little in the second is just because, again, you can't really count on the currency. Is that sort of the main factor?

Primarily, currency also. We expect Slovakia to be back down a little bit, back to its 35% capacity utilization. It was up probably around 40% for the second quarter.

Okay. And again, this is just attributable to the softness you're seeing in Europe right now as opposed to anything else.

Softness and we are building up a little bit of inventory in anticipation of workers taking time off in the summer.

Okay. And I believe you'd mentioned in the SG&A, there was some one-time expenses.

Yes.

Had a few. Is that similar to what we saw on the legal side, the bump up there?

Well, legal was part of it. We have some one-time stock comp expense, as well as some increased one-time cost in IT.

Okay. And did you add to the sales force, in terms of continuing to build it out?

We did just a couple, however, in the quarter.

Okay. And again, the [indiscernible] in CLAVE and obviously, MicroCLAVE, I mean, is there anything you're doing different? Or is it just a question of just continue to leverage your sales force?

It's -- certainly, Clear MicroCLAVE is a winner out there. And we continue to have the best product in the market.

Okay. And then quickly, just with ObamaCare sort of being passed now and the looming medical device tax out there, is there anything in terms of initial thinking that you can do to sort of mitigate some defects of the tax? Or is this pretty much something you just have to swallow completely?

You know what, we're still looking at that and what our options are going forward. And we'll have something in place by the end of the year. We're looking at what that's going to look like.

Next questioner in queue is Lawrence Solow with CJ Securities.

Not to beat the horse over the head with a stick, but just on the gross margin, the -- you're implying about a 250 basis point drop or so in the second half. It's sort of similar to what your guidance was around 48% in the back half. Relative to this quarter, is the -- are you assuming the peso rebounds? Or is it mostly just the efficiencies? Or obviously, most -- and I realize some of the efficiencies you will lose with Slovakia going back down, but is that or most of the justice is coming from in the changes you look out?

Well, remember, we're raising 100 basis -- our guidance by 100 basis points. And it's difficult to say where the peso is going to end up, as well as the continued softness in Europe.

So are you assuming the peso is basically flat from where it is? Or are you actually assuming it does come back in?

We're assuming a little bit. It's about as low it has been in a long time. So we expect a little bit of strengthening. But who knows, right?

Okay. And the mix -- the improved mix, is that more -- is that higher than the custom sets? Or is that where the mix is driving? Or was it also a improvement?

In custom sets.

Yes, okay. Slovakia, the -- I guess, you said you expect to go back to 35% next quarter. I know you had said -- I think, in the last call, at least, you thought it was going to reach high 40 by year end. I guess that, that's -- would that be a number you need to revise downward or...

Well, we'll let you know more in the third quarter. I would imagine that in the fourth quarter, if Europe doesn't get any worse, that we should see some pickup in the fourth, as we get back into the swing of things and leave the summer months.

And the -- just to touch on that, is it -- the sort of 200 basis points improvement, that's a sequential for the efficiencies, is that mostly from Slovakia? Or are there other things? I mean, did that increase in utilization from 35 to 40 drop at 200 basis points improvement in gross margin? Or is there other things in there?

Well, there's improvement to all of our factories. We saw improvement in all of our factories in both absorption and efficiencies.

Okay. And I guess you're assuming that some of that -- those are not all outside Slovakia. Even some of the other ones are maybe not permanent or maybe not permanent meaning the next couple of quarters. Obviously, you're always seeking efficiency gains and maybe got a little ahead of itself. Is that fair to say?

I won't call it getting ahead of itself, but they're -- they did very well in the second quarter.

Right, got you. And the stock comp, you touched on a little bit just on the prior question. It sort of went up to 1/8 and you're -- is that -- so that seems like it's a little inflated. Is it more apt to fall to the $1 million per quarter run rate that it had been running at?

It should come back down, probably closer to the pre-second quarter.

Okay. And then just last question and maybe Doc can address it or either one of your guys. Some -- well, someone knew the name and I know you guys don't discuss your pipeline until product sort of reached the $1 million sales threshold. But can you maybe -- even from a 30,000-foot level, just sort of discuss your pipeline in more general terms? I know you've mentioned it's strong as it's ever been and where you're looking out -- coming out of new products. I know you have some Critical Care products, I guess, in the bull pen but maybe you could sort of give any more color to that, if possible.

No.

All right. Did you say no?

Oh, yes, I said no.

Next questioner in queue is James Terwilliger with Benchmark.

Let me try to speak up here. Real quick, can you talk about [indiscernible] other markets that surprised you from an international perspective that will [indiscernible]? [Technical Difficulty]

Next questionnaire in queue is Gregory Macosko with Lord, Abbett.

Just with regard to the R&D, it's growing rightly so. Do you anticipate that the growth will slow next year in the 3.3% level? Is that -- have you reached kind of a stasis level? Or do you expect that to be -- continue to grow faster next year as well?

No. I expect it to go down next year, Gregory.

As a percentage of revenue.

Because most of the expense -- yes, the percentage [ph] is absolute dollars. Because most of that is the new products, the molds for the new products, equipment, molding machines. So I expect that to go down.

I see. So the design for the manufacturing process for the new products, in effect, is a big chunk of what you're doing now. Is that fair to say?

Exactly.

Okay. And the guidance on the DSOs, 53 and it's down -- I guess it's down from what it has been historically. Do you expect to maintain that even with the -- Europe being a bigger part of revenues on a longer-term basis?

No, we expect DSOs to maybe climb back up and to be somewhere around 55 to 60 days. If we can hold it below 55, that's fantastic. But we would expect it to start inching back up a little bit.

We eventually do get paid, though.

Eventually, we get paid.

So far and we have cash to cover.

With regard to Slovakia and just sales over there, how is the -- are you penetrating new hospitals? Give us some color on how things are going over there with the custom set business.

Well, [indiscernible]. It's -- like I said, we're seeing softness in Europe. So the capacity utilization in the factory over there is staying steady state at around 35%, albeit we are up [indiscernible] -- 500 basis points in the quarter. The whole reason behind Slovakia, as we've mentioned several times in the past, was to shorten supply chain for the European market. We're still very bullish on the European market and the custom set opportunities over there. And tenders do tend to take time. Tenders are also always custom sets. And if you react quickly to that, you have a huge advantage. So we're doing well.

But have you signed up any -- have you signed up new hospital? I understand that there's ups and downs relative to the vacation. But have you brought on new accounts?

Yes.

Yes, just like with Diana -- we have 40 different hospitals on the Diana. Then the sets will be made for Slovakia for Diana. It's disposable.

And with regard to Diana, is that an -- is the hospital buying the machinery? Or are you putting -- placing it in and they're through -- paying for it with the consumables?

Both, both.

So some buy and some will pay for it with consumption.

Exactly.

Okay. And what do you -- do you expect that to be the same case in the United States when you enter? Or are you going to take a single approach?

We'll take the same single approach, but I don't know which way the market is going until we test it. We were -- just at the beginning in the U.S. This is a soft launch.

Okay. And is there any likelihood of price improvement in the Critical Care area in the United States?

We have a new product we're entering in the market with. It's coming up soon within the next probably 12 weeks. And that will be a very, very good margin product. But we will see. I'll let you know when we get to the million-dollar run rate.

Okay. But I mean, with regard to just the overall pricing environment, is the point you look to improve pricing in the Critical Care area by new products that kind of replace older products? Is that the strategy there or...

Well, I think eventually that's always a strategy in any market that we're in, try to improve both pricing and margin of new products. On the existing product line, we don't see any change in pricing going forward in the immediate future.

Next questioner in queue is Jayson Bedford with Raymond James.

Just first on the gross margin mix. Clearly, there was a year-over-year shift in mix. But quarter-on-quarter, the mix seems pretty similar. The gross margins were up north of 400 basis points. So I guess I'm just wondering, what are the key products that drove the gross margins higher here in 2Q, say, relative to the first quarter?

Doc already mentioned Oncology and Custom but also the exclusion of Orbit in the second quarter of this year.

Got you. Okay, that's helpful. And then is it fair to assume -- meaning the weakness in the peso, I think it's been primarily over the last few months. Is it fair to assume that you'll see more of an impact/benefit from the weakness in the peso in the third quarter versus the second quarter?

No. Well, it depends on where the peso goes. But it's transactional based. So if the peso stays about where it is, I wouldn't expect to see much improvement there.

Much improvement on a quarterly basis -- or on a sequential basis, you're still going to get the year-over-year benefit, right?

Correct. Yes, sequentially.

Okay. What drove the sequential improvement in Critical Care -- meaning, is this a better market? Do you feel you took some share? Or are you seeing effects of some newer GPO contracts?

Well, we have been adding accounts. And the Critical Care team's been out there, fighting tooth and nail to get back into the game. They've been doing a good job of landing some new accounts. So as long as pricing can remain stable, we are relatively bullish on bringing that back.

Okay, just last couple. Oncology, what can you do to accelerate conversions? Is Diana going to help you there? Or could it be a distraction for the first couple of quarters as you launch the product?

Well, I don't look at it as a distraction, to be perfectly honest. It is -- we have certain sales people that are focused just on Diana. I think that we're doing everything we can. As we've mentioned in the past, it's all about creating more and more market awareness. And sometimes you don't have -- in addition to that, you don't have control over some of these conversions. The hospitals take their time, and I think that the beauty of Diana is it -- not only does it help the pharmacists and the technicians give the drug accurately and quicker into the closed system. It is a system from beginning to end. And Diana opens that door so we can control the aspiration from the bottle, through the bottle adapter, all the way to the IV set to give the chemotherapy. And so it's in -- we can bump our competitors by wrapping it all up in the package. So we think that Diana is going to be important in the U.S. as it is in Europe. But it's really the, I call them, the umbrella products that we're after. We're after the millions and millions of adapters used on vials and IV sets to administer the drug.

Okay, that's helpful. The color is helpful. Just in terms of Oncology and looking at the pipeline, is it fair to say -- at least my inference from your comments were more -- it's been a little bit of a pushout as opposed to the pipeline getting weaker. Is that a fair characterization of your Oncology business right now?

Yes, that's exactly what we're seeing.

Okay. And then just lastly, how many new products will you launch in the second half of the year? We've got Diana. I think you mentioned another new product in Critical Care. What else do you have?

We really don't want to talk about them. Because that could go wrong.

And with that, that does conclude our Q&A session. I'd like to turn the program back over to Mr. Mills for any additional or closing remarks.

Great, thank you. Thank you, everyone, for participating in today's call. Also, as a reminder, we will be attending a number of investor events this quarter and look forward to updating you on our 2012 progress during our third quarter call in October. Thank you.

Thank you, gentlemen. Again, ladies and gentlemen, this does conclude today's program. Thank you for your participation and have a wonderful day. Attendees, you may disconnect at this time.