Tandem Diabetes Care, Inc. (TNDM) Q3 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for your patience. You've joined the Tandem Diabetes Care Third Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference may be recorded. I'd now like to turn the call over to your host, Chief Administrative Officer, Ms. Susan Morrison. Ma'am, you may begin.

Thanks. Good afternoon, everyone, and thank you for joining Tandem's Third Quarter 2017 Earnings Conference Call. Today's discussion will include forward-looking statements. These statements reflect management's expectations about future events, product development timelines and financial performance and operating plans and speak only as of today's date. There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements. A list of factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is highlighted in our press release issued earlier today and under the Risk Factors portion and elsewhere in our most recent annual report on Form 10-K, quarterly report on Form 10-Q and in our other SEC filings. We assume no obligation to publicly update any forward-looking statements whether as a result of new information, future events or other factors. In addition, today's discussion will include references to a number of GAAP and non-GAAP financial measures. Non-GAAP financial measures are provided to give our investors information that we believe is indicative of our core operating performance and reflects our ongoing business operations. We believe these non-GAAP financial measures facilitate better comparisons of operating results across reporting periods during 2016 and during 2017. For additional information about our use of non-GAAP financial measures, please see the information under the heading Use of Non-GAAP Financial Measures in our press release. Kim Blickenstaff, Tandem's President and CEO, will be leading today's call. And at this time, I'll turn it over to Kim.

Thank you, Susan. Hello, everyone, and thank you for joining us on today's third quarter earnings call. With me today is John Cajigas, our Chief Financial Officer. A lot has happened since our last call. Overall, our key accomplishments since the beginning of the year have strengthened our confidence for Tandem's future success. During the quarter in particular, we, number one, received FDA approval for t:slim X2 with Dexcom G5 CGM integration and launched almost immediately thereafter; number two, we successfully demonstrated the market differentiating Tandem Device Updater, which is a key element of our product development pipeline; three, we commenced pivotal study enrollment for our first automated insulin delivery product; and four, we began the commercial launch of our t:lock, our custom infusion connector. Not only will these achievements help Tandem drive both near and long-term revenue growth, but they're also essential to attaining profitability. We believe we are well positioned to achieve and support the skill necessary to reach our profitability goal in 2019. Growth is a top focus for our business, but equally so is closely managing our expenses. The other more recent development is a substantial shift in the competitive environment, which I'll discuss more in a moment. Starting with the t:slim X2 with G5 integration, we set a new standard in our industry last month by simultaneously offering our existing and future t:slim X2 customers the benefits of best-in-class CGM integration on our simple-to-use touchscreen insulin pump. The t:slim X2 with G5 is the first and only available insulin pump with Dexcom's G5 continuous glucose monitoring technology and the only pump approved to let users make treatment decisions without confirmatory finger sticks. As I mentioned, we essentially launched, immediately following our receipt of FDA approval, which is also a rarity in our industry, and we believe sets Tandem apart from our competitors. The response from the diabetes community has been fantastic. All new t:slim X2 pumps are now being shipped to customers with the G5 integration already implemented and over 12,000 other t:slim X2 pump users were offered the option to upgrade their pumps to add G5 integration for no charge using the Tandem Device Updater. Within the first month following approval, one-third of this t:slim X2 users updated their pump to include G5 integration. Of the people who updated their t:slim X2 pumps, approximately 85% said they were satisfied or extremely satisfied with the process and we continue to receive very favorable feedback from customers and prescribers who now have a tangible experience to share with others. This overwhelmingly positive feedback also validates the considerable human factors and software development work that our talented employees put into designing the Tandem Device Updater with the same user-centric philosophy as our pumps. We are also continuing to see upside from our infusion set strategy, including the launch of the t:lock custom infusion set connector, which began shipping to customers in early September. As a reminder, the t:lock Connector was designed to look and feel like the previous Luer-lock connector, while improving the customer experience of filling an infusion set with insulin. The launch of t:lock allows us to accomplish 2 important goals: to provide continuous improvement to our customers based on their feedback as well as address the business challenge that we've been facing throughout the past few years. John will discuss the financial impact in more detail. But overall, I'm happy to see the progress we've made so far this year in implementing our strategy to capture this lost revenue. As always, we are being mindful of our customers who may have personally accumulated inventory of Luer-lock cartridges or infusion sets and are doing our best to help facilitate a smooth transition for them. I'm sure many of your are already well aware, we've also seen recent changes on our competitive environment, the most prominent being Johnson & Johnson's announcement earlier this month that they've decided to exit from the insulin pump market and shut down their Animas business unit. As a major provider of insulin pumps in the U.S. Johnson & Johnson's decision really changes the landscape as options for people with diabetes have become increasingly limited in the past few years. Now Tandem and Medtronic are the only companies that offer durable insulin pumps in the United States. We believe that competition is a healthy dynamic that drives innovation, a high level of customer care and provides balance in the industry. It's important that people have an alternative to Medtronic and Tandem remains committed to our business, our customers and developing new innovations for people with diabetes. Overall, Animas' decision has really shaken the diabetes community. They report having about 90,000 customers worldwide, approximately half of them are estimated to be in the United States. Animas pump supplies will only be available for customers who purchase for the next 2 years. So between now and then, essentially, all of Animas' customers in the U.S. will likely be looking for a new home. Animas chose Medtronic to aid their customers in this transition. However, our inbound calls substantially increased in the days following their announcement and have remained high. Current or prospective Animas customers are now looking to understand their options based on where they are within their pumps' warranty period. We believe the t:slim X2 will be highly attractive to Animas users, primarily because many Animas customers already use Dexcom CGM and we now offer the only Dexcom-integrated insulin pump. Also, we recently were able to demonstrate the power of the Tandem Device Updater to add new functionalities to customers' pumps as approved by the FDA, a feature Medtronic does not offer. And Animas customers have a history of selecting an alternative pump to Medtronic. This is meaningful, particularly in light of the increased physical size of Medtronic's 670G platform, the product's shortcoming and the center shortages they publicly reported. We'll be working hard to communicate the features and benefits of the t:slim X2 and demonstrate our number one rated customer service to people using an Animas pump as they look to make new pump purchasing decisions over the upcoming quarters. As I mentioned, updatability is a feature that is really beginning to differentiate t:slim X2 from the competition. Now that G5 integration is successfully launched, we're looking to our next major software release to roll out with the Tandem Device Updater. Based on our new products in development, we anticipate that this will be the t:slim X2 with predictive low glucose suspend along its approval by the FDA. As announced earlier this week, like G5 integration, we plan to offer t:slim X2 customers this release and any other updates approved by the FDA in 2018 for no cost. As a reminder, the t:slim X2 with PLGS is our first-generation automated insulin delivery system. It is designed to prevent hypoglycemia by suspending insulin delivery when low blood sugar is predicted based on the Dexcom G5 sensor values. We began enrollment for our PLGS pivotal study in August and are on track to complete it by the end of the year. After reports from the sites are finalized, we'll then submit a PMA to the FDA for this product. We continue to anticipate that this review timeline will benefit from the FDA's recent review of the t:slim X2 with G5 as the only different feature will be the PLGS algorithm. Accordingly, we'll be preparing to launch in the summer of 2018. Our second generation automated insulin delivery system is intended to reduce hypo and hyperglycemic events and improve the time a person is in the normal blood sugar range. This system includes the t:slim X2 pump with the [indiscernible] technology that we licensed from TypeZero as well as Dexcom's G6 sensor. We are participating in the NIH-funded International Diabetes Closed Loop Trial alongside TypeZero and Dexcom. There's been significant activity this year between all of the involved parties, including a series of IDEs with the FDA, a feasibility study in preparation for training and the pivotal study. We believe the three-month pivotal study will commence in the first half of 2018 and plan to use the data in the PMA submission to the FDA. Based on this trial timing and traditional FDA review times, we are targeting a launch of the TypeZero algorithm on our t:slim X2 platform in the first half of 2019. As you can see, we have near-term catalyst to drive sales for the t:slim X2 with G5, which was launched in advance of the strongest selling season, our launch of the t:lock infusion set connector and pump-renewal opportunities. Looking beyond 2017, we have our two automated insulin delivery products in development and are on track to file the CE Mark by the end of this year. We still anticipate commencing sales internationally in select geographies in 2018 and have prioritized our efforts to launch in Canada first. As for the exit of the Animas business, it is difficult to predict the impact of this decision on our business. Medtronic is in control of the customer was -- which puts us at a disadvantage. However, we believe the t:slim X2 is better aligned with the preferences of Animas users. We have a very competitive product offering and remain confident that our differentiated insulin pumps, the power of our Tandem Device Updater and our robust pipeline position us well to compete both in the near and long-term. We believe in patient choice and we'll be working hard to support Animas' patients as well to support our customers for years to come. Our position as a relatively small business is not yet profitable, is one that our competitors use heavily against us and regularly spread rumors that we are going out of business. In today's environment, it's marketing the fear rather than pump versus pump, since that's the front in which we've demonstrated the superiority of our products. We understand the challenges this presents and our growth expectations are in spite of this dynamic. We have a successful history of raising funds and have done so in a stair step approach over the past year and will always seek to appropriately capitalize the business. We expect to raise additional funds by mid-2018 and we'll be continuing to explore non-dilutive options alongside equity. Our employees have been amazingly resilient throughout the events over the past year, which underscores the passionate drive within our organization to improve the lives of people with diabetes. I'd like to thank them for all their efforts and contributions that have kept Tandem moving forward and making operational progress even in the face of headwinds. It's through an exceptional group of individuals and I'm very proud of all that's been accomplished. I'll now turn the call over to John to further discuss our results for the quarter and our financial guidance.

Thanks, Kim. Good afternoon, everyone. Different from prior earnings call, today, I'll devote most of my prepared comments to providing color on our Q3 results and how we see our improved competitiveness translating into our expected performance in Q4 and in the future. Many of the key GAAP and non-GAAP metrics I've previously provided on earnings call can be found in today's press release or in the 10-Q. As a reminder, our non-GAAP results are adjusted from our GAAP results by excluding the impact of our Technology Upgrade program, which was initiated in July 2016 and expired on September 30, 2017. We believe that looking at our operating results on a non-GAAP basis provides useful information when comparing to our financial results for periods prior to Q3 2016. You can find a reconciliation of our GAAP results to our non-GAAP results as an exhibit to today's earnings press release. Moving on to our results. Starting with sales. I was proud to see both a sequential and year-over-year increase in Q3 sales after experiencing year-over-year decreases during the first and second quarters of 2017. Our Q3 GAAP sales were $27 million compared to $21.3 million in Q2 2017 and $12.3 million in Q3 2016. Our non-GAAP sales were $23.7 million this quarter compared to $21.3 million in Q2 and $20.7 million in Q3 2016. For Q3, our sales were impacted by a number of unique factors. We received FDA approval for our t:slim X2 with G5 in late August, which was about a month later than our expectations. We immediately started marketing efforts, but our third quarter pump sales did not benefit significantly because of the timing of the approval within the quarter. As a reminder, it typically takes at least 30 days to complete the insurance verification process and convert a pump order into a sale. Also, we saw a substantial increase in the number of infusion sets sold both in absolute terms and relative to the number of cartridges sold. The percentage ratio of our infusion set shipments relative to our cartridge shipments for the third quarter was approximately 66%, up from 61% in Q2 and 27% in Q3 2016. For the sake of context, in 2015, that percentage ratio was 18%. This increase from 18% to 66% is a reflection of the strategy we put into place last year and we're pleased with the progress and expect this positive trend to continue. Like many companies, we believe that hurricane Harvey and Irma disrupted the normal business activities of our sales force, distributors, healthcare providers and potential customers in Texas, Florida and other impacted regions. Even though we had just announced the FDA approval of the t:slim X2 with G5, our pump orders decreased in early September when the hurricanes were impacting those areas of the country compared to August. We're also experience a noticeable decrease in our sequential monthly pumps placements for the Gulf Coast region for the entire month of September as compared to August. All of our other sales regions saw a relatively stable or increased monthly pump placements for September compared to August. In addition, we have two independent distributors located in East Texas and South Florida that experienced operational disruptions during the time of the hurricanes. Looking at our sales performance expectations for the remainder of the year, based on the catalyst Kim discussed, we expect to see meaningful -- sequential and year-over-year increases in our fourth quarter sales. In addition to the typical seasonal uplift we experienced in the fourth quarter, we anticipate that our launch of the t:slim X2 with G5 will positively impact our Q4 sales. During the last 2 weeks of September and continuing here in October, we have seen meaningful increases in our average daily inflows of pump orders, providing us an indication of the positive market acceptance of this newly launched product. Lastly, with our on-time launch of the t:lock connector, we are on track to increase our infusion sets to a cartridge shipment ratio from 66% in Q3 to nearly 100% by year-end, providing us increased sales and additional gross profits. Taking these significant drivers into consideration, we expect our 2017 GAAP based sales will be in the range of $100 million to $105 million. On a non-GAAP basis that adjusts for the impact of the Technology Upgrade program, we estimate our 2017 annual sales will be in the range of $95 million to $100 million. As a reminder, we provided non-GAAP guidance in the past, but with the expiration of the Technology Upgrade program, we are now able to estimate our annual GAAP sales as well. Moving on to gross profits. Similar to sales, we saw a year-over-year gross profit increase in Q3 after experiencing year-over-year decreases in gross profits during the first and second quarters of 2017. Our GAAP gross profits in Q3 were $11.9 million compared to $8 million in Q2 2017 and negative $1.6 million in Q3 2016. Our non-GAAP gross profits were $9.3 million this quarter compared to $8.1 million in Q2 and $5.4 million in Q3 2016. We also saw steady improvements in our overall gross margin sequentially and year-over-year. We expect that we will see a year-over-year increase in Q4's gross profits and overall gross margins as well. Reduced component material cost of our t:slim X2 and an improved warranty experience continue to be keys to our improved overall gross margin and increased gross profits. A higher percentage of our sales coming from pumps versus pump supplies also helps improve the overall gross margin. In addition, increased sales of infusion sets have also contributed to higher gross profits. Our year-to-date sales of infusion sets was $13 million compared to $5.8 million for the same period of 2016. We expect to see increased gross profits in Q4, driven primarily by increases in sales of our pumps and infusion sets. The primary drivers in our sequential improvements in our operating margin are the increase in our pump sales, the capture of additional gross profits from infusion sets and a reduction of our employee-related cost as well as the active management of our discretionary spending and capital expenditures. We have reduced our operating expenses two quarters in a row and our Q3 operating expenses are 11% lower than they were in Q1. Our GAAP operating margin improved to negative 49% in Q3 compared to negative 89% in Q2 and negative 231% for Q3 2016. Our non-GAAP operating margin was negative 66% in Q3 compared to negative 89% in Q2 and negative 103% in Q3 2016. We expect our GAAP-based 2017 annual operating margin to be in the range of negative 65% to negative 60%. On a non-GAAP basis, we estimate that our 2017 annual operating margin will be in the range of negative 70% to negative 65%. This guidance for both GAAP and non-GAAP includes non-cash operating expenses of approximately $12 million for non-cash stock-based compensation and approximately $5 million to $6 million for depreciation and amortization. With respect to cash, at the end of Q3, our total cash and investments balance was approximately $23 million. We believe our cash utilization in Q3 and the cash balance at the end of the quarter were impacted by a number of factors. These include; to support our launch of the t:lock in September and our expectations for continued increases of infusion set sales, we invested additional cash to establish and build our infusion set inventory. Our infusion set inventory orders involve longer lead times and are of a significant size. In Q3, our infusion set inventory purchases were approximately 4 million higher than they were in Q2. Our pump shipments in Q3 were weighted towards the end of the quarter, resulting in a significant portion of our cash collections not received by the end of the quarter. In July, we paid the final portion of the previously approved cash bonus to certain employees, excluding Kim, who declined to receive a bonus. The payment was approximately $1.5 million. During Q3, under our ATM offering, we raised net proceeds of $4.1 million from the sale of approximately 464,000 shares. We suspended sales under the ATM in advance of the public offering that we closed on October 17. Our equity rate earlier this month has the potential to provide nearly $50 million in gross proceeds to the company, the first $16 million of which is now closed. We issued approximately 4.6 million shares of common stock at a price of $3.50 per share and two equally sized tranches of common stock warrants, each also at an exercise price of $3.50 per share. We have the potential to raise the remainder if our newly issued Series A and Series B warrants are exercised in full. As a reminder, our Series B warrants are immediately exercisable and carry only a 6-month term. So if they are exercised in full, we would generate an additional $16 million in financing proceeds by April 2018. The Series A warrants are also immediately exercisable but carry a 5-year term. But again, if exercised in full, we would generate yet another $16 million of gross proceeds. We believe that the $23 million cash on hand at September 30, plus the net proceeds from the recent offering, allow us to extend our runway into 2018. Important factors to determining how far into 2018 are our Q4 sales performance, our ability to increase gross profits and gross margins and control and even reduce our operating cost. Also, the rate and timing of warrants potentially being exercised may extend our cash runway. That being said, we plan to raise additional capital by mid-2018 to fund our business as we progress towards profitability. We are evaluating different financing alternatives and may continue to pursue a stair step approach to raising capital. With respect to our profitability expectations, currently, we estimate our customers represent approximately 10% of the U.S. insulin pump market and that this is likely to increase to 11% by year end. We continue to believe we can achieve profitability once we attain a 15% market share in the U.S. and have a 55% overall gross margins. Overall, we believe that the combination of the t:slim X2 platform now integrated with Dexcom's G5 CGM and the power of the Tandem Device Updater will continue to differentiate Tandem as a provider of the most innovative and consumer-friendly products in a highly competitive market. And with that, I'll turn it over to the operator for questions.

Thank you, sir. [Operator Instructions] Our first question comes from the line of Tao Levy of Wedbush.

Okay. Thanks. Good afternoon.

Hi, Tao.

Hi, Tao.

So maybe we could start off with -- the fourth quarter we've always looked at as potentially being the first real quarter where you start to get a nice tailwind from replacements. And I know, last quarter was a little bit too early to comment on what you've seen. And I was wondering if, by now, you've seen any indication regarding the replacement cycle?

I think it's still relatively early. I think from what we've seen, I think we're happy with where we are. But the true test will be how the fourth quarter plays out and have enough information there to see how people react to our new product offerings and so forth.

Got you. And so far, I guess, through the quarter, have you seen any difference in sort of the insulin pump market dynamics, in terms of the sort of, I guess, customer behavior? Are they waiting longer on their pump? Are they staying on a pump off-warranty for a longer period or so far, through October, obviously barring what's going on -- what happened to Animas, the customer base is acting like you'd expect in the fourth quarter?

Well, we can't really give you October yet, but I can tell you, it's definitely a different dynamic from last year. I think the prolonged Medtronic launch of the 670G has frustrated many of their patients. We do know from their earnings call that they had a big miss here in the U.S. So something is going on with their renewals. The 630G is a part of that priority access to the 670G. So that's information we know publicly from their conference call. But I would say, it's a totally different environment from last year. I think if the market is beginning to fall, we're hearing that from a lot of different sources. I said the call volume that we talked about after the Animas exit was pretty overwhelming. So, we hope for a very good fourth quarter.

And I'll add the activity we've seen in our sales pipeline since the end of the quarter has been very good. I think there's a lot of that excitement towards the G5 launch that we have and what the Tandem Device Updater has done over the last month and how that has impacted people's decision-making.

Yes. And a leading indicator, Tao, is referrals. And we have definitely seen progress out of that hurricane disruption sequentially every month.

Okay. And then just lastly, obviously, given the challenges in the marketplace, how has the stability of your sales force been? And how many territories you actively have? And has it been a large number of churn sort of in your sales force? And that's it. Thanks.

Yes. We own about 70 territories and I'd say that the turnover rate has been very low for our sales reps in particular. I think people were excited about the upcoming and now launch of the t:slim X2 with G5. And so they're excited to have that to be able to share with the diabetes community. I think they're excited about the opportunity to share our product offerings with the Animas folks who are going to be considering new pump opportunities. And also, we did just recently announce that all of our software updates in 2018, as they're approved by the FDA, we do plan to offer those to all X2 customers for no charge. And so I think that they're excited, overall about the offerings that we have in front of us.

Thank you. Our next question comes from Matt O'Brien of Piper Jaffray.

Hi, good afternoon. This is JP on for Matt. Thanks for taking the question. I just wanted to start with just the -- is there any way you could sort of quantify the increase in call volume or pipelines that you've seen thus far in Q4? I'm trying to just -- what gives you the confidence in kind of the updated guidance for Q4? Is there any numbers that you could share with us on that front?

We haven't. It's too early. We'll definitely give you the information when we report the fourth quarter because we'll have it. But obviously, it's sort of early. We've got another week left in the month and we got 2 more months, which are generally the 2 biggest months of the quarter, especially November, December. So I'd say, it's too early to give the quantitative. But qualitatively, we're overwhelmed in the call center.

Yes. I would say that trajectory of the sales pipeline has increased dramatically from earlier in the year. And I think it's a factor of the products we have offered and brought to market as well as how the Tandem Device Updater has been received.

On the international front, is there -- how quickly could you get to Canada or what's -- I know, I think you said the end of this year, but I'm just trying to understand what needs to be done to go that way.

Well, there's definitely some regulatory things that have to be done. There's some language issues. We need 2 languages, French and English. We have a timeline, and we'll give you more information I think on that by that next call. But we're trying to get there in 2018 as early as we can because there is an opportunity there. There's a real vacuum left by the Animas exit, and they're looking for choice there too.

Got it. And then last one for me. I think you said a third have upgraded thus far. Was that surprising to you? Would you expect -- or that -- about a third of customers are using Dexcom, that's kind of where you thought would be the first ones to upgrade or would you have expected more to upgrade by now?

No. We always have suspected from what we knew and what Dexcom knows that about 30% to 35% of insulin pump users are using CGM. So that upgrade was about in line with what we would have expected. We never thought 50% would do it. But a 30% upgrade in a software route, even for Android and Apple, I mean, that's considered to be very high rate. So, we were very pleased with what we saw. The speed with which it's happened was fairly amazing. I mean, I think we're largely done in 2.5 weeks of having that approval and launching that on that following Tuesday.

Got it. Thank you for taking the questions.

Sure.

Thank you. [Operator Instructions] Our next question comes from Ryan Blicker of Cowen. Your question please.

Thanks for taking my questions. Can we just start with the SG&A, it declined $2 million quarter-over-quarter. Can you comment at all on what actions you guys took to drive that operational improvement and how we should think about that line moving forward?

Well, a lot of our comps are associated with employee-related comps, so we spent a fair amount of time sort of scrutinizing those comps as we move forward. We also have some physicians that have left the company and we looked at those very closely, whether or not we could cover the responsibilities with the existing infrastructure we have today. So that's a fair amount of it. Also there's also a fair amount of discretionary cost and programs as we looked at and looked at ways to look at better returns and better efforts of deploying our cash. So I think that has been sort of the key aspect of it. I think as we move forward, again, we'll be continuing to look at the employee-related cost and managing that as well as capital expenditures and discretionary expenses.

Got it. And then, maybe moving back to the revenue line. You guys have talked about a notably higher new patient funnel after the launch of G5 just by integration and the Animas exit. But your Q4 guidance does seem to suggest that the proportion of total year sales in Q4 is about in line with what we've seen historically. Are you seeing an increase in the new patient funnel above and beyond what you've seen historically or is it more along with typical seasonality?

I think there's the typical seasonality. I think there is some excitement that's driving the pipeline because of the G5 integration product being on the market now.

As well at the Animas exit. I mean we're hearing that qualitatively in the field. We're hearing it from our people in our phone center that we're having Animas customers who are calling in. And they may still be in warranty, but they're entering into our system to be contacted as they come off of warranty. So we're sort of building a bank of potential sales for the future, but there's no question that this is -- there's been a real change in the activity level, especially, between a year ago this quarter and this quarter. As you know, last year, the last 2 quarters of the year were affected by the whole 670G and we missed our targets there. But, we're definitely seeing that increase we would expect to see.

Got it. And then last one for me and I apologize if I missed this, but -- and I know it's difficult, but is there any way to quantify the weather impact in the quarter? And should we expect any lingering effect as we move into the fourth quarter? Thank you.

I would say that's very difficult. I think, with the launch of the t:slim G5 product out there, at the same time, it's difficult to say how much of that was -- of the change in productivity was associated with the hurricanes.

Because there definitely was a dip in referrals, if you look at that month day-by-day, you could see when the hurricanes hit. And I think that lingered around about 6, 7 days and that kind of a period. But that's in our results. So, we really can't quantify it.

Yes. And as far as an ongoing affect, there's obviously going to be some folks that are affected by the hurricane that are going to have to deal with other expenditures in their life that buying a pump might take a backseat too. So I think we recognized that and I think that's an expectation we have. But again, that's not the full impact to the entire country.

Thank you. At this time, I'd like to turn the call back over to Mr. Blickenstaff for any closing remarks. Sir?

Thanks very much. Just want to give you an update on some of our investor meeting activities. In November, we'll actually be at two health care conferences both in New York. The Stifel conference is on November 14. We present then and we'll be taking meetings with investors. On November 29, we'll be at Piper Jaffray, which is two weeks later also in New York City, and we're arranging meetings there and presenting on the 29. So, we look forward to accumulating a bit more experience in the next 60 days and keeping you apprised during the next conference call of our progress here in the fourth quarter. We're expecting to have good results and a good start to next year with all that's going on in the marketplace. So thanks for being on the call and listening to our progress.

Thank you, sir. And thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day.