Accendra Health, Inc. (ACH) Earnings Call Transcript & Summary

All right. Good morning, everyone. I'm Jailendra Singh, healthcare technology and distribution analyst at Credit Suisse. Thanks, everyone, for joining us for this session. Next up, we have Owens & Minor. And from the company, we have Ed Pesicka, President and CEO; and Andy Long, EVP and CFO. By way of background, Owens & Minor is a leading healthcare logistic company is incorporating product manufacturing, medical distribution and technology services. We are going to do this in a fireside chat format. I have some prepared questions, which I plan to cover. If anyone from the audience has a question, please e-mail them to me at [email protected]. Ed, Andy, thank you so much for doing this. Really appreciate it.

Thank you, Jailendra. It's glad to be here.

Maybe to begin, I know you guys reported earnings last week. Revenues and profits came pretty good, above expectations, above consensus. Maybe talk about some key highlights there, key drivers in the quarter. And especially when you think about like how global supply chain is being disrupted and you are showing pretty good solid results, talk about some of the key drivers there?

Sure. Well, maybe Andy can just give some of the data and then I'll give you a little bit more of the why and the detail behind it. So...

Yes. So Jailendra, I think the way I saw the quarter shake out and a couple of the key financial highlights and talking points for me are top line, the business grew both sequentially and year-over-year, both businesses, right? So our Global Solutions and our Global Products businesses grew year-over-year about 8%. And both businesses grew sequentially from Q2 to Q3 after you adjust or normalize for the glove cost pass-through dynamic. So seeing sted strong momentum carry into Q3. And then on the bottom line, when I look at our earnings per share, right, and year-over-year, we were able to deliver flat EPS on an FX-neutral basis despite a couple of key headwinds, right? So we've talked about the accelerating impact of inflation. We talked about the glove cost pass-through, right, that Q3 was really what I expect to be the lowest point in terms of our glove cost pass-through margin impact. And then, of course, Q3 had a higher share count than we had last year at this time because of our equity offering last October. So despite all of those headwinds, again, we were able to deliver FX-neutral, EPS-neutral results. And again, that's really based on the strong results and the execution of the business.

And then maybe I'll take it from there and talk a little bit about how we did it. So if you take a look at the 2 segments, and I'll start with our Global Products business. So you're right, Jailendra, there are significant global supply chain issues. There's backlog in ports, but that's what makes us different as we have less reliance on that than most in the industry. As we've talked during the pandemic, and we talk now is the bulk of our product is manufactured. In the Americas, we're making the fabric for our N95 surgical wrap of isolation gowns. That fabric is made in North Carolina. We added capacity in 2019. We doubled it and then we were able to significantly produce that product. So we don't have that impact from China and the importing of the products. We do make our gloves in Thailand. But again, differences we're making about half of the gloves ourselves in our factory. And we have unique routes to get our product in efficiently. I think the other thing, if you really look at this going into the future -- as we continue to to see this global supply chain crisis continue. And those that are manufacturing of products, products in China are going to have the risk that the tariffs get put back on them. That's more of a future-looking issue you're going to have to deal with. So that's what we really saw with our Global Products business. And look, others had big write-offs of PPE. We didn't because we weren't going outsourcing it at premium prices and trying to sell it at premium prices. We were still manufacturing it at pre-pandemic cost outside of inflation and commodity price increases. So we didn't have those write-offs. The other thing we saw about 8% growth in that business, separating out the glove cost pass-through, and that's really because medical-grade full portfolio of products, being able to provide the entire suite of PPE, again, with manufacturing in our factories, with our technology, with our people, with our processes in the Americas that can be delivered by truck versus by boat. On the other side of the equation, from our Global Solutions segment, strong top line growth again. I talked on the call about we're winning new business. Not only that because we have the ability to be flexible and scale quickly, we're not fully automated, we have that nice balance of what we talk about between technology and touch. That's why we're able to go and grow that business and win that business. You put that all together, that a complete value chain from the manufacturing to our distribution as well as the home health space, we could serve that entire continuum. And the last thing why I think we continue to be successful on that is we have some great supplier partners in our distribution business. And we're making sure that the customer has the ability to make the choice and the clinician can choose what's best for them versus trying to force all of a certain brand or product on to them. That's really it from a macro level. On the other -- excuse me, I'll add is, Andy is right, we saw tremendous inflation this quarter. We saw inflation ramp from the beginning of the quarter through the end of the quarter. And we leveraged a couple of things to offset that. We aggressively continued with our Owens & Minor business system, which is focused around continuous improvement and taking waste out as well as that incremental volume and getting that fixed cost leverage to offset it. I think we were clear, yes, it was a great quarter. However, if we wouldn't have had that inflation and out of abundance of caution in Q4, we would have raised our guidance, as we talked about on the call, but that's really how we thought about it. So I would say the team is executing well on all fronts. We have to continue to execute well every day, and we have to continue to find ways to get better as we move forward.

Great. That was a good summary. You also called out several new customer wins on the earnings call, in addition to contracts coming from larger customers. Can you touch on what is resonating with these customers? And are they leveraging both Global Solutions and Global Products?

Yes. So maybe I'll answer that question kind of from the end of the question back. So the answer to the question at the end is absolutely, they are leveraging our Global Solutions as well as our Global Products. And frankly, now some of them are leveraging our Patient Direct business. So as the patient leaves the hospital and goes home, in those categories where we have strength and we participate in the home, they're actually utilizing that service. So that's really one of the aspects at the end of that question, we're seeing going in the market. The other reason why is, look, Jailendra, our model is different. What we provide is different. And our model is really around that right balance of technology of touch. The model is around having our own portfolio of products, whether that's the Halyard brand or the MediChoice brand, but still having a significant number of partnerships that relying and trust on us that they have a fair opportunity to sell their brands into our customers because of our portfolio isn't as broad as some of our other competitors in the market. So that's resonating with our suppliers, and that's resonating with our customers. I think the other thing as I keep talking about this technology and touch, we put technology in our distribution centers, again, so we can be flexible in scale, but yet improve our service. Our on-time delivery is very, very high. It's in the 99-plus range. Our shipping accuracy or picking accuracy is in the 99-plus range because of what we've invested in technology. But even when the pandemic hit, the ability to execute on that ability to be flexible in scale, the ability to produce more products, that resonated. Then as pandemic came out and we're in the summer, people were looking at it going, well, maybe I need to think about this differently. And then all of a sudden, global supply chain crisis hits in August, September. And people are looking at it saying, this could last well into '22 or into '23. You're right, your model is different. We like what we see in your model. Let's look to partner with you. So on the call, I did talk about success we've had recently. I've talked about the fact that it's both small and larger customers where the success is. So those are the things we're seeing in the marketplace today. And look, we have to compete every day. We have to get better every day, and that's the other aspect of our focus.

So in terms of these new RFP volume and activity, are you surprised by the volume right now? Maybe talk about that. And especially when you think about hospitals and health systems, are they looking to explore new agreements at this point in the pandemic? I mean, unfortunately, we are still not done with COVID. Or are they still largely heads down? Just trying to understand that, I mean, are we -- are they really starting to -- RFP volumes starting to pick up now?

It's a mix with -- it's a mix on both. It is some of them are just exhausted in saying, I need a different solution. Others are saying, well, we have pent-up demand because from 2020 really through now, I didn't do RFPs, because they didn't want to make a change while everything was going on. So it's really been a mix of both. But I think it's really is, hey, we're hearing things about Owens & Minor, and let's sit down and have that conversation. Owens & Minor, you helped us during the pandemic, let's understand how we can broaden your relationship. Owens & Minor, your debt leverage relative to others in the market is very low, so you have the ability to invest and help us and support us. Let's understand what you're doing in that technology and touch in that deployment to help us. So that's really where the conversations are. But there is a mix. There are some that are saying, you know what, our clinicians are exhausted. Our supply chain teams exhausted, and let's just stay the course. And others are saying, yes, we're tired, but we can't go through this anymore.

Yes. And I mean you kind of touched upon this like your expectations for 2022. You did maintain those EBITDA and EPS guidance, which you outlined, first as part of your Investor Day back in early May. The concern sometimes we get from investors and others is that given global supply chain still remain very uncertain, volatile, and you did point to that, like how some of the other competitors have been still like a little uncertain and unclear about the future for next 12 months, and the PPE demand in general, how it's going to look in a post-COVID world? Maybe you let's said double-click into what gives you that level of visibility and confidence you can achieve those results. Is it more like having own manufacturing, like a U.S.-based manufacturing? Is that the main reason? Like, I just curious to understand that.

Well, obviously, running a business, there's all kinds of moving parts and you got to try to manage all of those. I mean, we've got a lot of lot of moving parts going into next year. You're right, PPE demand, we've kind of seen it settle in, and we're content with where we are. But when I say content, I don't mean that as we've relaxed. We understand where it is, but there's still opportunities to continue to gain share. We see usage at higher -- much higher levels than they were pre-pandemic because the protocols are in place. We see usage higher also because the emergency use authorizations have been revoked. We see usage higher outside of our normal channels. We talk about the retail space we moved into. So those are factors that we understand and gives us confidence going forward. Our continuous improvement, that just continues into the future to drive productivity. You have other factors out there. You have inflation. And we've done -- really did, I believe, a very, very good job in the third quarter of offsetting that inflation with productivity, volume, fixed cost, leverage. That continues. So that's kind of -- we've got our projections on that going forward, but that still can move. And that's commodity, that's labor, that's transportation, that's labor cost in transportation. So we'll pull levers we need to on that. And if we have to do bigger adjustments, we'll work on that also. So there's various factors. So really, what we do is continue to look at our appropriate capital deployment to drive operating efficiencies and growth. We'll continue to look at utilizing what makes us different and why customers want to do more business with us. And we'll continue to battle every day to win share. So that's how we're going to manage through this. Business is an ever-changing environments, and you just have to -- you have to see around that curve. I know it's an overused phrase but see around that curve to adjust accordingly in advance and then make real-time decisions that affect thinking about what affects both now as well as the long future. But it comes down to this. We make it simple. We rely on basically our blueprint. We rely on our culture of how we're going to operate. We rely on our business discipline. We rely on the right investments, and that should give us those long-term results. And that's, frankly, what we lean on every single day.

Okay. That makes sense. And one thing which looks like you did not rely on is passing on the price increases to your customers beyond gloves. I think gloves was the only place where you did call out that you did pass on the cost increases. But some of your competitors, other distributors, GPOs have been doing that more often. I think that's what probably is kind of you are being differentiated from among your clients, right? And what are you hearing in general, not just from your relationship point of view, but other distributors and GPOs they work with from hospitals and health systems in terms of feedback from their relationship?

Yes. I think obviously, the feedback is positive. Our lead value is integrity in our ideal values, and we want to be open and transparent with our customers. We really believe you have to have that type of dialogue. And you're right, during the pandemic, outside of commodity-driven prices or glove prices where we had cost increases, we were open and transparent on that. Our team did a very good job as, for example, on gloves, as costs went up, we did a very good job staying in front of that and the transparency. And as costs have come down, we've been open with the customers. I think related to inflation; I talk about inflation in commodities. I talk about it in labor, and I talk about it in transportation. And you probably read -- you've seen the news over the last day or so, highest inflation rate in 30 years. We will have those -- we need to have those conversations with customers from all aspects of our business, from Patient Direct to distribution or as well as our Global Products business. And we'll have those open dialogues with our customer. And where it's appropriate to talk about price, we will talk about price. But that's how we think about this. And it's really about being open and transparent with them and recognizing what we have to do to best serve them and what we have to do to support our business.

Okay. Maybe just on these gloves cost pass-through. I mean you guys have been talking about this for the last like 3 quarters or so, but we still keep getting questions like how exactly it works? Let's spend a few minutes here on kind of walk us through how it is impacting your business from a revenue and operating profit point of view? And of course, I think you have said that the profitability impact for this year should be net neutral. And for next year, it should be all gone. Just give us a quick update and quick overview there?

Yes. So I'll let Andy take the bulk of this. But again, I mean, whether it's been on earnings calls, whether it's been with our customers, again, going back to that transparency, we tried to be as open as we can on it with factors that are moving every single day. You can see a small increase or decrease in the glove price, multiply that by millions and millions of gloves and a 30- to 60-day inventory levels from the time you get it off the docks at the time you sell it has a lot of moving parts. But I'll let Andy cover some of the math and the detail on this.

Sure. And I'll back up a little bit, too, just because I know a number of you in the audience are new to the story here at Owens & Minor, so just a little background. I think it's important to note what Ed said very early in the conversation is that with regards to gloves, we source about 50% of our gloves, but we also manufacture, we self-manufacture about 50% of our gloves. So this cost pass-through dynamic really relates to the 50% of the gloves that we source from third parties. And because of the supply and demand imbalance, with demand exceeding supply, it's basic economics at this point. Those manufacturers know that there's the ability to raise price. And they've taken advantage of that and done so, right? And so as Ed said, our team reacted very swiftly, right? So at the beginning of the year, we saw these cost increases coming from those manufacturers in Southeast Asia. And we raised prices very quickly, right? And so this is where the imbalance starts to begin, right? So in Q1, we raised prices very quickly. But the gloves we're selling in Q1 or the gloves we purchased in Q4 of last year at the lower cost, the pre price -- the pre cost increase. So you've got this big dynamic of higher prices and still the historically low cost, and that really explains the strong performance that we had in Q1. Now as we moved into Q2, prices remained high in the marketplace, but Q2 costs catch up with price. And that's because in Q2, we're now selling the cost that we bought in Q1. And there's this 90-day lag because, again, there's time to get the gloves from the manufacturing in Southeast Asia over the ocean, through the congested ports in the West Coast and into the warehouse. So that's that 90-day lag I'm referring to. So prices and costs catch up in Q2, so we saw some margin compression. And then as you move into Q3, what I just reported last week, and as I had set the expectation back in the Q2 call, is that prices would start to come down in the marketplace, but costs would remain high because in Q3, we're selling those high-cost gloves that we purchased in Q2. And so we saw further margin compression. And then as I talked about on the call last week, I expect as we go into Q4, that prices will come down a little bit, but now we'll start to see easing in the costs because costs in the marketplace have fallen, and we start to come closer to parity, not quite, but I still expect us to have some headwind in Q4. But the way I think of it is for the year, the ups and the downs, the timing effects should closely net out across the quarters. The strong Q1, think of that offsetting the weaker Q3 and the slightly favorable Q2, kind of the mirror image of a slightly unfavorable Q4. One thing I do want to stress is that I do believe Q3 is the low point in terms of margin compression in our Global Products business. I do expect sequentially that between Q3 and Q4, we will start to see some slight increase in margin sequentially. And then as you talked about in the opening question, Jailendra, as we move into 2022, I see costs and pricing being much more tightly aligned and getting back to more of that normal cadence of earnings as opposed to what we saw this year, that any quarter of 2021 is not a good quarter to take an annualized to get a good run rate. There is no 1 quarter that has typical seasonality or a quarter that's kind of our run rate quarter.

Great. That's a good summary. The other thing which you kind of, Ed, you talked about is the inflationary pressure on different items. What are the key areas where you're seeing that inflation pressure? What pain points have been? And how you guys have been able to offset those pressure? Because I mean, I understand like some guys have been trying to pass on the cost to their customers, but that has not been your core focus. Help us understand the offsets for your business?

Yes. And the offsets up to now is where we are and really -- so I'll cover the key components and drill down a little deeper. We have seen wage inflation probably not to the extent of others because our wages were actually at a fair market price for our distribution center workers as well as our manufacturing centers. In addition to that, we've tried to be very flexible with our teammates and find creative solutions. Generally, people don't leave purely because of wage. People want to stay with the company because it's the right purpose that they're focused on. People like to stay with a company because they have work conditions that work well, whether that's remote work or whether that shift differ -- adjusting shifts to better fit people going to 4/10s or different types of shift work, so that way we can better serve our teammates. So we have seen wage inflation issue is as all wages go up, the high tide races all boats. So we've mapped that out and manage that so far this year. The other is commodity costs, whether it's polypropylene or whether it's nitrile, we have seen commodity cost increases. We saw the commodity cost increases in polypropylene. When I talk about our vertical integration, we're making the fabric in North Carolina, but we're also getting the polypropylene primarily out of Texas and the ship channel in the United States. So it's really -- it's easy for us from supply chain and it creates less disruption. When you have that big freeze down in Texas this year, you had some of the plants run into issues, and that drove some of the price up. That's balancing out now, but we did see commodity increase. Transportation costs, we've seen increases on. The benefit, I think, we've had though in transportation is a couple of years ago, we outsourced our delivery to Penske. However, our drivers state, meaning we flip the badges from us to Penske. So we still have -- most of our fleets are people that have worked 20, 30 years for Owens & Minor. We flipped to Penske, and it gave us some benefit with new vehicles as well as route optimization, which we continue to optimize because -- and DOT driver training. So that's helped us mitigate it. And then you have fuel costs, too, that are part of it, let alone general inflation, whether it's heating, cooling and all other aspects. So those are the things we saw. I think that we looked at the third quarter, we saw an increase from July to August to September. We're anticipating where it is here in the fourth quarter. And we don't know where that's going to go into next year. So those are some of the things we're seeing and some of the ways we're trying to mitigate each one of those aspects. We'll look at price where appropriate. We did take price up on products when our costs went up on gloves and some of our raw materials on those. So we have had those dialogues -- that dialogue. But -- so that's what we're seeing from an inflationary standpoint to offset it. And we anticipate to offset that. We have to continue to drive our productivity. We continue to use volume and get some fixed cost leverage and where appropriate price. So it is inflationary period that we really haven't seen as you read recently over 30 years, it's been the highest inflation. So we have to continue to be diligent on that, manage that and be cognizant of it. And we're also looking at broader things we can do to help offset that. But some of those levers take longer time to implement. But that's how we're constantly thinking about it.

That all makes sense. Maybe let's spend some time on the trends you're seeing in the home health market. I mean the broader home health companies have come under pressure because of brand because of labor issues there. Your business is not that directly exposed. Maybe talk about that how -- what trends you're seeing in that business, which is serving a tailwind for your Byram business has been doing very good and maybe spend some time here?

Sure. So again, we like the home health space. We've talked about this. We're seeing above-market growth in that business. When I say the market, we look at the public companies that are in home health, maybe not necessarily in our same categories, but we look at those public companies. We have conversations with our suppliers. And we believe we're growing much faster than the market. The other thing I really like about that business is the categories we're in diabetes, ostomy, wound care, incontinence and urology, breast pumps. Some of those categories are very fast-growing categories. So -- and if we all think about it, if you have a doctor's visits, most recently, I had a doctor's visit, and it was virtual. And it was at-home virtual doctor visit. Luckily, I don't need anything as a result of that. That was just a normal meeting. But if I did, I wouldn't have to go to the pharmacy. I wouldn't have to go into the office. I could just have it delivered direct to my home. And that's really what our business model is, is for those consumable type products you need post the diagnosis in that space, we're the ones that can provide it. And here's what else makes it unique is we are focused on the customer experience. Yes, that's a B2B connectivity that's required in our Patient Direct business. But it has to have a great business to consumer experience. Recently, we've launched everything from an app where you can order and reorder all your products directly from your phone. We're seeing that acceptance accelerate. But if you think about our client base, it could be anybody who's in their 90s to anyone who's in their high teens or early 20s. So we have to be able to handle all aspects of that -- of the order entry, and we do that. So that's really what we've seen. We've seen that growth in the home health space. We've seen the growth in the fact that people are comfortable with just ordering and having it show up. And then -- but that's another business that has inflationary pressures, and we're continuing to work with the payers and our partners to understand how do we offset some of that. And it can be through a lot of different factors. It could be through a unique delivery methodology. It could be through, again, taking cost out by going to an app order versus a traditional telephone and other things such as that. But again, love the space and love what that business has done over the last several years.

Great. Maybe we can spend some time on the capital allocation priorities moving forward. Can you parse out how you're thinking about capital deployment, where the priorities might be across organic investment, debt paydown, M&A, share buybacks? Just give us some update there.

Sure. Maybe I'll let Andy can start on this and then I'll add a little more color. Andy can talk about our process and how we're thinking about it, and I can add some color afterwards, too. So Andy?

Yes. And Jailendra, as I think about that, I think maybe even taking a step and looking backwards to see how we've historically deployed capital, but it really sets the stage for how we're thinking of things going forward because there's a lot of continuity in what we're doing today and how we see it in the future. But over the last 18 to 24 months, we've gotten a lot of visibility for our debt paydown, right, going from over north of 6x leverage down to sub-2x leverage. But what I want to make sure is not lost in that message is that our priority has been taking that cash flow that we've been generating and reinvesting in the business, right? We've invested and Ed's talked about a lot of those areas to date, right? The technology, the infrastructure. What we haven't talked about, what's another area for us to invest in is along with the new customers that we're bringing on board is putting in the working capital, the inventory, putting that in place on day 1 in advance of going live so that bringing on a new customer from day 1 is a very positive experience. So we -- because we've got that dry powder, we've got that ability and have had that ability to invest in the business. So going forward, looking ahead, I would say that our priorities remain very constant, right? So organically investing in the business is still our top priority. And then as you look at -- because of the strength and balance sheet that we have, because of the leverage situation we're at, we can now actually start to entertain inorganic investments in the business. So that's really something that is being looked at and where the opportunity is right. We talk about fungible capital deployment, whether we take our dry powder and enter a business directly organically or do we see a better path to going to market inorganically through an acquisition. So we're constantly evaluating that. And then as far as the last piece of capital deployment, that is really returning capital to shareholders. And whether that's in the form of a dividend or a share buyback, Jailendra, and quite frankly, I see that happening probably later in our strategic evolution cycle as these investments that we've made start to take root and bear benefits. That's where I see maybe in the 2-plus years, 3 years out that we start returning that capital in those forms to shareholders.

Yes. And I'll just close with this is -- Andy talked about, we talk about it internally, we've always talked about this is fungible deployment of capital. We're looking for ways to provide the best long-term growth opportunity, the accretion, working positive cash flow. And again, both from a short term and long term and whether that fungible deployment goes into organic investments that may take a longer time to translate into great returns, we'll look at that. If we look at inorganic, that may provide upfront benefit in better long-term financial returns, we'll look at that, too. So we are not locked in and saying X percentage of our dollars goes here and X percent goes there. We're looking at what can drive long-term shareholder value, what can drive that long-term profitable growth, and then that will work into our deployments going forward.

Okay. But let me...

I'll say -- I'll just say one last thing is we're excited in the fact that through the improvement of the business, the discipline we've shown over the last 3 years, we paid down more than $1 billion of debt. We have our debt-to-EBITDA ratios well below 2, and we have the flexibility now to properly reinvest in the business for the long term. And we didn't just pay down debt. That's I want to make sure everyone understands. We invested hundreds and hundreds and hundreds of millions of dollars back into the business, both in capital and operating investments over that period of time in addition. And that's also partially the reason I believe why our model is starting to be recognized, and we're doing well in the market.

Okay. Just in terms of M&A focus, like when you're looking for these acquisitions, are you more focused on Global Solutions business? Global Products? Maybe talk about some areas, which will be your target from M&A perspective?

Here's the way we look at it. We believe -- and we said this at Investor Day, we like the home health space. We really like that space, and we like our manufacturing space, too. So that leaves in the middle our med distribution, which we will invest in organically to improve infrastructure and add space or square footage as needed with our volume growing. But we think about it more from both organic and inorganic investments really in those 2 areas in our Global Products business and also in our home health space business.

One last thing I want to ask about the just competitive landscape across some of your businesses. We have seen Medline in the news fairly recently kind of a pretty good valuation there. Maybe got access to more capital for them. Talk about how -- what are you seeing in the landscape and maybe spend some time how you are differentiated compared to Medline and some others out there?

Yes. I think at a high level, we do see the valuation and that is what it is. We also recognize that they will be highly leveraged right out of the gate. And I think most people understand when you're highly leveraged, that has implications potentially on how you need to run and operate your business. I'd say the differentiation between us and the others, I wouldn't just call one out, but the others is, again, I think it's clear, our product portfolio isn't as broad as theirs. But that gives us the opportunity to partner with suppliers and also provide a broader choice to our customers. Versus others in the space, we don't have a fully automated robotic distribution center that we -- meaning that the customers have to adjust for what we do. Versus our technology and touch balance lets us to quickly be flexible and scale up that Americas-based manufacturing versus sourcing products from overseas or manufacturing products from overseas, that's another differentiator. So it really comes down to what model does the customer wants, and they're different models. And I believe ours is being recognized right now for what we can provide that's different.

Great. Before we wrap up, anything else, Ed or Andy, you want to talk about before we wrap up?

Yes. Andy, unless you have anything, but I'll just close with, Jailendra, thank you for the time today. We enjoy doing this. We enjoy telling the story of what we're doing as a company. We did -- we just closed out Q3. And here we are on November 11, and we're about almost halfway through the fourth quarter. So we are already in that fourth quarter focus right now as well as starting to look out more detailed into the future. And we're excited what we see. We're excited about the ability to serve our customers. We're humbled by the opportunities we get. And we live every day by our mission about empowering our customers so they can advance healthcare. Because ultimately, it's the clinician that's doing the work to save the patient, treat the patient, and we're just here to make sure their job is much easier. So we're excited about the future, and we look forward to more of these in the future.

Great. Thank you so much for your participation. And thanks, everyone else, for dialing in. Thank you.

Thank you.

Thanks, Jailendra.