ICU Medical, Inc. (ICUI) Q3 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Q3 2016 ICU Medical, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will host a question-and-answer session and our instructions will follow at that time. [Operator Instructions]. As a reminder to our audience, this conference is being recorded for replay purposes. Now it is my pleasure to hand the conference over to Mr. John Mills, partner at ICU. Sir?

Good afternoon, everyone. Thank you for joining us today for the ICU Medical financial results for the third quarter ended September 30, 2016. On the call today representing ICU Medical is Vivek Jain, Chief Executive Officer and Chairman; Scott Lamb, Chief Financial Officer; and Christian Voigtlander, Vice President of Business Development. Before we begin, I want to touch upon any forward-looking statements made during the call, including 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 are reasonable. Such statements are not intended to be a representation of future results, and are subject to risks and uncertainties. These results may differ materially from management's current expectations, and we refer all of you to the Company's SEC filings for more detailed information on the risks and uncertainties that have a direct bearing on operating results and financial position. Please note that during today's call, we will discuss non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into ICU Medical's ongoing results of operations, particularly when comparing underlying results from period to period. We've included a reconciliation of these non-GAAP measures for today's release, and provided as much detail as possible on any addendum's that are added back. In addition, the sales numbers that Scott will be covering, as well as the Company's financial statements, the reconciliation from GAAP to adjusted EBITDA, and adjusted EPS, are available on the Investor portion of the website for your review. Now with that, I will turn the call over to the Vivek.

Thanks, John. Good afternoon, everybody. Our third quarter was a very productive quarter, as we continue to drive revenue growth and increased EBITDA, which resulted in strong free cash flow and improved net income. It has been a very busy last 12 months operationally, as we have executed well to a large volume of activity, and have emerged stronger with positive financial and operational results that have us positioned very well for the opportunity to acquire Hospira Infusion Systems. We did have some bumps, backlog, and challenges over the last few quarters, but as of today, we have resolved most of them, and stand stronger to begin executing on the next evolution for ICU Medical. In addition to the recent quarterly financial results and a recap of the operational progress year-to-date, we wanted to continue the discussion from the last call on how our direct channel was executing well, and how we see that progressing into the medium-term and the actions we have taken, which will be beneficial to our margins in the future. Lastly, it has been roughly four weeks since we announced the Hospira acquisition, and we wanted to provide some initial color and thoughts. In Q3 of 2016, we generated revenue, adjusted EBITDA, and adjusted EPS slightly above our initial expectations. We finished the quarter with approximately $97 million in revenue, resulting in reported revenue growth of just over 13% with negligible currency effects. Please note that some of this revenue growth was due to catching up from certain temporary production constraints mentioned on the last few calls, and some initial orders that came in a bit earlier than expected. Adjusted EBITDA came in just over $34 million, which was growth of 15% year-over-year, and adjusted EPS came in at $1.35, which was growth of 35% over last year. A portion of the EPS growth was driven by tax-related items, and Scott will provide more information on this in his remarks. Our cash conversions were very strong, and our cash and investment balance at quarter-end was approximately $430 million. Throughout the third quarter, we continue to have very solid performance from our direct lines of infusion and oncology, and our overall direct operations continue to generate positive momentum with 31% growth. Specifically, our direct Infusion and Oncology segments grew 35% and 42%, respectively, and critical care was up 12% due to some of the catch-up previously discussed. In our direct Infusion segment we had 35% growth, and again, some was due to earlier than expected conversions, but we continue to see stable utilization trends in our existing customer base and a growing number of new customers interested in working with ICU Medical. Our more focused selling efforts over the last 18 months have shown good results in getting back to the core value drivers of ICU around unique products, competitive value, and customer service. SwabCap, the key product from our Excelsior acquisition, has fully met our initial direct sales goals and, we believe, is on track to deliver our revenue commitments for the acquisition. As said on the previous call, we believe we will continue to see strong growth in our direct Infusion business for the balance of this year and into next year. In our direct Oncology segment, we achieved over 40% growth year-over-year and continue to believe that we are in the early stages of a very long-term growth opportunity. Last quarter, we talked about easier comps for Q2, but Q3 was more of a normal quarter last year. Our products enable hospitals to address the increasing regulatory guidelines being adopted, which are one of the many reasons we are expanding our customer base. Also, our growth has largely been driven by our historical product line, as our new ChemoLock product is still in the early stages of launch, but it will be a bigger part of our offering in 2017. Overall, we expect continued growth for our oncology portfolio in Q4 and into next year. Critical care turned out exactly as we described on the previous call, as we caught up on the production issues. We are closer to launching our new Cogent hemodynamic monitoring system and continue to be on target for a Q1 2017 launch. Let me move to OEM. Our overall OEM business declined approximately 16% in Q3. Our principal OEM customer declined 20% in Q3 year-over-year and was down 25% sequentially from Q2 of 2016. On the last call, we were extremely clear and said that we absolutely believed we would see declines in revenues from our principal OEM customer over the balance of this year, and that they would be at the smallest percentage of sales in many years at the Q4 exit run rate, but that our profitability would be generally in line in absolute dollars at our Q2 levels as our mix changed. That is exactly what happened here. All activities mentioned on the previous call relating to our newer OEM customers of Terumo, Medline, et cetera, are all moving forward. Let's talk about some of the operational activities year-to-date and what happened with gross margins in the quarter, and what we expect over the balance of the year and into next year. Gross margins improved roughly 100 basis points sequentially and are on track to improve again in the fourth quarter. On the last call, we detailed a lot of activities that have happened operationally. An update on the three items that impacted margins the most are as follows. First, relating to the closure of Slovakia, the bridge product we built in Slovakia is a few weeks away from being burnt off, and we will see the benefits in 2017. Second, the integration of SwabCap from Excelsior into our Salt Lake facility now has all processes and equipment validated. Lastly, the normal expectations on productivity gains and scaling up new products to ensure competitive positioning has been on the agenda of the operations team, and some important improvements have been made in overall productivity. These were all the items we call the high-hanging fruit that we started to describe in late 2015, and they are extremely important because they are primarily linked to our direct operations to keep improving our direct business. The value at stake here provides an offset to some of the currency benefits we have currently, and more importantly, protected us from the effect of potential volume declines from our principal OEM customer. Now, these improvements will help us be as competitive as we can in the new co. On previous calls, we stated that in the midst of all of these activities, we had some temporary production constraints that caused us to recognize additional costs in order to maintain our strong service levels with customers and had a negative impact on gross margins compared to our desired levels. As of today, all these issues are behind us, and all the right fundamental things are happening around the high-hanging fruit for continued value creation. And please remember most of our products are sold under long-term fixed price supply contracts. We've said many times we will not manage the business for some arbitrary EBITDA margin, and the same is true for gross margin. If it costs us a little more in any one quarter to solve our problems or serve customers, we would do it. And so we are not going to skimp here. And I mentioned this just, as we say; we are expecting to see improvements into Q4. From an operating expense standpoint, there's not much to talk about. Cash expenses in general, excluding transactional and nonrecurring items, are declining in the back half of this year, as we said before. The transaction with Hospira does bring some additional cost into the fourth quarter. Cash expenses, excluding transaction-related costs, will be up less than $1 million versus the first half of the year, primarily due to increased direct sales. Now, turning to guidance for the full year of 2016. We are increasing our revenue range to $375 million to $380 million. Our EBITDA target is increased to a range of $132 million to $134 million, and Scott will walk you through our adjusted EPS increase, which again does have some unique tax benefits. Okay, let's move to how all of this fits with Hospira. We announced our pending transaction to acquire Hospira approximately four weeks ago. We did this primarily on offense to create a leading pure play infusion company with a complementary full-line product portfolio, the ability to unify our distribution channels globally, and to provide compelling economics to stakeholders over time. But we did this also for some defensive reasons, as we had significant earnings exposure to a single customer. This transaction, after exploring many other options, was the best means to create additional value and control our own destiny over the long-term. Now we are getting more deeply involved in the integration planning each day and working with our soon-to-be-largest shareholder Pfizer and our new colleagues in Hospira, and our belief in the long-term value-creation remains intact. If I was to try to compare the Hospira opportunity to ICU Medical a few years ago, a lot would sound very similar. Much like ICU in 2013 and 2014, our view is Hospira and Infusion Systems has been in what we would call a prolonged transition period. During these transition periods, companies are less decisive when they are unsure about the long-term. Like our experience at ICU, we believe the Hospira business, with just some basic operational rigor, can improve its P&L in the medium to long-term. Our goals are just like ICU Medical or our previous experiences to first enhance margins, and then improve overall growth. We wanted to try to bookend the two basic scenarios we see unfolding for this acquisition. In the best case, we'll have better execution to improve our top-line performance, drive operational improvements, and improve cash conversions and returns. In the worst case, we continue to fight headwinds on the top-line, but we can still drive operational improvement and generate solid cash returns over time. Those are the exact same words we used to describe the opportunity for ICU a number of years ago, and either one of those cases, along with the defensive reality, justified the transaction. And just like ICU, there are a number of intrinsic value drivers, including high-quality or hard-to-reproduce production assets, sticky product categories, and the opportunities for more cash generation if we can prove with basic operational rigor. But what is different than our experience from ICU is the sheer size and scale of the work we have to do. This is a complex corporate carve out and has aspects of a turnaround in certain of the business lines at the same time. We do get to do this from a position of strength and stability in our base business, but it is still a very large project. We analyzed the transaction with our own view of performance, which we can see based on our insight of the marketplace. Our OEM businesses will soon become part of us. And we don't like it declining 16%, as it did this quarter, but we now have more tools and value in-hand to fix it, but it will take time, as it's more global, more entangled with a large company, and frankly has a little more baggage, given its recent history. And, as we said on the transaction call a month ago, the results in the short-term will get worse before they get better, similar to our first year here at ICU. I'm going through all of this not to talk down or talk up expectations, per se, but to make sure everyone is realistic about what we have to do here and the time it will take. We've had a lot of supportive investor calls where people have asked us, what's next? And frankly, that's not very logical to us, because nothing is next. We have to focus on getting to work on this opportunity. I'm sure there will be bigger bumps out there than we've experience to date, but we will overcome them over time. We feel that we've been very transparent with investors on our plans over the last few years and cautious with our own expectations, and we want and need that mentality to continue. Short-term outperformance is not likely with this transaction and it is important that people understand that. The first few quarters under our ownership will not be predictable and will be subject to all the expected difficulties of a carveout. If you are an investor that wants the predictability that ICU has offered in recent years that will be difficult to repeat over the near-term and into the medium-term. But when we get it right, long-term returns could be generated quickly like ICU. We believe that this was a logical evolution for both businesses. We feel we've been able to put together a transaction that didn't risk the enterprise and still left real room for value creation for investors. If you are an investor who has liked the vertical that ICU operates in but were uncomfortable with the customer concentration risk, perhaps this transaction can provide the catalyst to show the path to investment. And if you are an existing ICU investor, we appreciate your support in advance, and hope you feel that this action provides sensible, risk-mitigating capital deployment, and an opportunity for increased value in the medium to long-term. We had told investors over the last two years that if you did not have a distinct point of view on our ability to manage the Hospira concentration risk, it would be difficult to provide certainty. Today we ask that same point of view on the underlying intrinsic value of what we are creating, and we want to be realistic on the time it will take. We think it's important to understand all these variables to make the case for long-term value-creation at ICU Medical. We've said for the last two years that we believe logic will prevail and the customers' interest will drive decision, and that has happened. Very practically, we drove returns on our own business, used our equity to solve the concentration risk, and now have a hard but very value-creating project in front of us that we need to execute on. We've illustrated the value-creation case in our base business on previous calls, even assuming declines for our Hospira business. And these quarters' results hopefully add to that evidence base. And we will eventually have control of all of our businesses to improve. As always, I'd like to close with things are moving fast. We're trying to improve the company with urgency, and we're trying to take responsible action and break some of the inertia that many companies in our position face. We may hit some bumps as we take on some of these actions, and we will overcome them and emerge stronger. I really appreciate the effort of all ICU employees and our soon-to-be colleagues from Hospira Infusion Systems to adapt move forward and focus on improving results. Lastly, our company appreciates the support we've received both from our customers and our shareholders. With that, I'll turn the call over to Scott.

Thank you, Vivek. And as Vivek already mentioned, we are pleased with our revenue, adjusted EBITDA, and net income results in the third quarter. Our third quarter 2016 revenue increased 13% to $97 million compared to $86 million in the same period last year. GAAP net income for the third quarter of 2016 was $18.8 million or $1.09 per diluted share compared to GAAP net income of $16.3 million or $0.98 per diluted share for the third quarter of 2015. Adjusted diluted earnings per share for the third quarter of 2016 were $1.35 as compared to $1.00 for the third quarter of 2015. I will describe it shortly, but at the option of ASU 2016-09 did add some benefit to EPS. Adjusted EBITDA was $34 million for the third quarter of 2016 compared to $30 million for the third quarter of 2015. Now let me discuss our third quarter revenue by market segment, and then more specifically by direct and OEM. Direct sales totaled $70 million or 72% of total revenue, while OEM totaled $27 million. For the third quarter, sales in infusion therapy were $68 million, an increase of 9% from the same period last year, and represented 70% of our total sales. Direct infusion therapy sales were $45 million, an increase of 35% from the same period last year, and were primarily due to sales of our needle-free products and our SwabCap product line, which was acquired through the Excelsior acquisition in October of last year. Sales in oncology were $15 million, an increase of 38% from the same period last year and represented 16% of our total sales. Direct oncology sales were $11 million, an increase of 42% from the same period last year, which was due to an increase in both existing and new customer sales. Sales in critical care, which are essentially all direct, were $14 million, an increase of 12% from the same period last year and represented 14% of our total sales. Our third quarter sales for domestic and international were as follows. Domestic sales were $67 million, an increase of 11% from the same period last year, and were driven largely by sales in infusion therapy and oncology. International sales were $30 million, an increase of 19% from the same period last year. As anticipated, our gross margin increased 100 basis points sequentially over Q2, but was still down approximately 100 basis points on a year-over-year basis. The year-over-year decrease was caused by the remaining issues we discussed on previous calls relating to higher freight spend and customer service commitment to catch-up on temporary production constraints. We continued to see improvements in our efficiency and fulfillment rates during the third quarter. And, as Vivek mentioned, we expect to see additional improvements as we enter the fourth quarter. SG&A expenses increased $2.2 million in absolute terms from the prior year period but decreased 50 basis points to 23% of revenue as compared to 23.5%. The $2.2 million increase was in part due to increased stock compensation, and sales and commissions and dealer fees related to an increase in direct sales. This was offset by the elimination of the medical device tax. And, as expected, SG&A expenses decreased in absolute dollars when compared to the second quarter of this year. R&D expenses were down on a year-over-year basis and increased slightly on a sequential basis, due mainly to decreased project expenses related to our hemodynamic monitor for critical care. We remain on track to launch our new monitor in the first quarter. Our tax rate was approximately 18% in the third quarter of 2016 compared to 35% in the third quarter of 2015. The decrease in our third quarter tax rate was primarily due to the adoption of ASU 2016-09, which was related to stock option exercises during the third quarter. The unique benefit of this change associated with Q3 was $3.6 million or approximately $0.21 per share. We expect our tax rate to be between 33% and 35% for the fourth quarter of 2016. Now, moving on to our balance sheet and cash flow, as of the end of September, our balance sheet remains very strong with no debt. We generated strong operating cash flow of $27 million and free cash flow of $21 million during the quarter. We ended the quarter with cash, cash equivalents and investment securities of $430 million, which equates to approximately $27 per outstanding common share. Accounts receivable decreased $6.8 million from June and our DSOs decreased to 50.7 as of September 30, 2016, and compared to 59.2 as of December 31, 2015. Also, as of September 30, 2016, accounts receivable from Pfizer decreased as a percent of consolidated accounts receivable to 22% from 40% as of December 31, 2015. And the inventories as of September 30, 2016 were up approximately 2% when compared to June 30, 2016. Now we'd like to discuss our pending acquisition of Hospira and how we intend to report the combined revenue of both companies by the following four market segments. The first is pumps which includes the infusion pump hardware, service revenue, dedicated disposable pump sets, and software. Second is consumables, which includes non-dedicated sets, oncology and accessories, and will include the traditional ICU IV Therapy and Oncology segment. Third is IV Solutions, and the fourth is Critical Care. We will also be a contract manufacturer to Pfizer for certain IV solution products we will make and sell to them at cost for at least a five-year period. On a non-GAAP basis, these contract manufacturing products will not be in our reported solutions revenue, and the revenue and cost to manufacture these items were not included in the 2017 and 2018 adjusted EBITDA expectations we previously announced since they will have no impact on earnings. Following up for our call on the transaction on various investor calls, I'd also like to give a little more color around our expected 2017 Hospira Infusion Systems standalone annualized EBITDA of $75 million that we announced on the transaction call, and how it gets stepped down from their June 2016 LTM of $158 million of adjusted EBITDA. The step-down from $158 million to $75 million is as follows. It starts with the revenue line where there is a downward adjustment of approximately $150 million in revenues, driven by three factors, which include the loss of a key customer contract, assumptions on continued tangible share losses, and some budgeting, which may allow us to exit or alter how we approach certain markets. Second, there is some associated margin loss from the revenue and we believe we can find cost savings to offset those losses in the first year. Third, and the biggest EBITDA driver, is $75 million of standup costs, the majority of which will be bought in services from Pfizer until we can stand up on our own. These costs will comprise of a combination of payments to Pfizer for transitional services in areas such as IT and targeted investments and additional capabilities at ICU, in areas such as legal, finance, and tax to support a much larger, more global business. Also, on our minds but not yet penciled in, as we don't have good visibility yet, is as we focus on cash conversion of inventory, it may require us to temporarily slow down production across the manufacturing network, which could impact margins. Moving forward, the step-up from Hospira's 2017 standalone adjusted EBITDA of $75 million to an eventual projected combined adjusted EBITDA of $300 million is broken into the following categories. If we extrapolate the performance of legacy standalone ICU beyond our year-end 2016 guidance to 2018, we would expect to achieve at least $150 million in EBITDA by 2018, driven by continued growth in infusion and oncology. That is the same standalone model we have been talking about for a while. For the acquired Hospira business, we are aiming for an equal EBITDA contribution on the basis of being able to run ourselves below the $75 million when fully on our own, and being able to find additional cost savings in 2018 and beyond to offset actual standup costs. As outlined on our transaction call, we believe we can hit this run rate sometime in 2018, but do not yet know exactly when in the year. Now turning briefly to guidance for this year, we now expect our revenue to be between $375 million to $380 million, adjusted diluted earnings-per-share to be between $4.80 to $4.90, and adjusted EBITDA to be between $132 million and $134 million. As we discussed at the time of the Hospira announcement last month, we believe this was a logical evolution of the ICU business, and that once the execution is complete and all of the pieces are in place, we have a clear path forward to creating value for the shareholders of the combined company. And we look forward to keeping everyone updated on our progress at the JPMorgan Conference in January. And with that, I'd like to turn the call over for any questions.

Thank you. [Operator Instructions]. Our first question comes from the line of Brooks West with Piper Jaffray. Please proceed.

Hi, good afternoon. This is Tom Bacchus on for Brooks. Thanks for taking my questions. I wanted to start with gross margin. And I appreciate the comments from the prepared remarks, but could you just talk some specifics, and just may be give some granularity around what exactly it's going to take to drive expansion, and what you can leverage from ICUI to bring to the Hospira's business in the new co?

Hey, Tom, it's Vivek. Okay. So you're talking about gross margins, pro forma combined, after the transaction, not before?

Yes. Clearly -- I mean the deal was definitely dilutive to the new co gross margin, and Hospira was running I think it was high 20s. So just may be if you can talk about that business specifically, I guess.

Yes. I mean, I don't think we know all the pieces just yet, right? We are only a couple of weeks into this thing. There is a number of overlapping things in the raw materials we buy, the processes that are used, the locations of manufacturing. I think there's a couple of opportunities to get after there. I really don't want to comment on the specific actions, other than I think we all know that for a healthy medical device business and disposable business, blended rate in the high 20s doesn't really hit the mark. Right? So we know there's opportunity there and there are actions we will take. I'd prefer not to discuss all of them right now.

Okay, that's fair. Next, I just wanted to ask about the strategy with the new co distribution channel. Just clearly a lot more scale. Just hoping you can give some color on revenue synergies, both from an account overlap standpoint, and then just kind of from a cross-selling perspective. And just with that, is there a single touch point at each account that you can leverage with the full product breadth now?

Sure. It's a really important question. Let me answer it kind of globally and then U.S. specific, right? Globally, it brings a lot more market reach into the full product line in lots of different geographies we don't participate in. As Scott was answering on the -- some of the revenue budgeting we've done for next year, there may be markets that we want to approach globally in a different way where we are not necessarily absolutely positively direct in a given market. We have to make those decisions. And so, how we approach every global market, as we said in the Investor Presentation, will be whatever the best local strategy is. In the U.S. market, I think it's -- it was hard for us even though we are doing well and you saw good direct growth, it's hard to be a smaller supplier in a consolidating hospital market. And we think by being bigger and having more value at stake, and more things that are clinically relevant hanging together, it's a bigger opportunity set to call on, we have to work through the tactics of what's the most efficient way to call on the customers, we don't have a firm point of view on that yet. But we will have one over the next couple of months. But it's a different answer for global than it is for the U.S. For the U.S., it's much more about being at scale with all pieces, which we were not as a smaller standalone company.

Thank you. Our next question comes from the line of Jayson Bedford with Raymond James. Please proceed.

Good afternoon. Can you hear me okay?

Yes, hi, Jay.

Hey, sorry for the background noise. Just to be clear, the base business seems stronger than we expected, but there's no change to your thoughts around $75 million in standalone Hospira EBITDA next year and a combined $300 million in 2018, right?

Now I hear the train, Jason. To be clear, the $300 million was at some point during 2018, right? We're not -- we don't know whether that is Q1, Q2, Q3, when we hit that run rate. We don't have a different point of view on the $75 million contribution from Hospira next year. It could be a little bit less; it could be a little bit more. It's a business where things happen in flux. What we do feel good about is, yes, our base business continues to execute well. You picked up on that right away, right. And so it was a good quarter for us that way. And I think it gives us a good footing to get where we want to get into 2018.

Okay. And then I'll ask one more and then I'll drop here. The growth in oncology continues better direct than OEM. Can you just comment on the geographic contribution of that growth? And are you seeing any more strength or any more distinct volumes or special legislation?

Okay, Jayson, you are fading a little bit, so I'll just repeat the question. I think the question was -- oncology growth looked good, how does it compare for different parts of the world? And how much is being driven by legislative or regulatory changes? So I think the growth for us in oncology was stronger in the United States than it was outside the United States. We think a lot of those technologies were adopted earlier; outside the U.S., they are still growing nicely, but the adoption for us right now is being driven more in the U.S. than outside. And that we believe a large portion of that is to some of the smart regulatory guidance that's being adopted out there that adds more safety to the delivery of a lot of these hazardous drugs. So it's absolutely guideline based. We think it's a long-term trend and it's more U.S. than OUS for us right now.

Thank you. [Operator Instructions]. Our next question comes from the line of Mitra Ramgopal with Sidoti, your questions please.

Hi, a couple of questions. Scott, you had laid out four different lines you plan on reporting next year, and clearly the critical care business will be really small relative to the other three. Based on launch of the hemodynamic monitor, et cetera, you are still committed to this. But as you look at the new revenue base post-HIS, do you see critical care really being sort of strategic going forward?

Yes, absolutely. I mean, it's very important to us. We've invested a lot of money into developing and expanding this product portfolio, and we are very serious about it.

Thanks. And I was wondering if you could give us an update regarding now, with the focus increasing on Hospira, if the business, as you are focused with Terumo and Medline, how is that progressing?

It's Vivek. I'll pick that one up, Mitra. I think things with both of those organizations is going very well. We've cleared -- the things were a little bit sluggish with Terumo getting through all the various regulatory documentation we had to get through. We're through a large portion of it now, and that business is starting to transact as we speak. And I think on SwabFlush, the portion of Excelsior that went to Medline, we think they are executing really well. And we are serving them any way we possibly can and hoping to see them continue to grow. So both of those we feel pretty good about.

And I know it's very early, but as you look in terms of Japan and elsewhere in Asia, et cetera, does the acquisition help you as you look to leverage the sales force that you will be acquiring?

I think -- again, it's a very country-specific discussion, and so, there are places where we think our existing relationship with Terumo is the right way to go to market, and there are places that are just going to make sense for us to participate in the market. And so there's not a one answer for all of Asia. It's really going to be a country-by-country discussion. And we need to get into the opportunity set and the available book of business in each country before we make those decisions.

Thank you. There are no further questions in queue. So at this time, I would like to hand the conference back over to Mr. Vivek Jain for closing comments or remarks.

Thanks, everybody, for making the time to listen to our Q3 call. We've obviously got a lot of work ahead of us, and it's an exciting period for the company. We appreciate everybody's support, and we look forward to a live update with as many of you as we can at the next Healthcare Conference in January. Thanks very much, everyone.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude the program and you may all disconnect. Everybody have a wonderful day.