Organogenesis Holdings Inc. (NASDAQ:ORGO) Q2 2023 Earnings Call Transcript

Organogenesis Holdings Inc. (NASDAQ:ORGO) Q2 2023 Earnings Call Transcript August 9, 2023

Organogenesis Holdings Inc. beats earnings expectations. Reported EPS is $0.04, expectations were $0.02.

Operator: Welcome, ladies and gentlemen, to the Second Quarter of Fiscal Year 2023 Earnings Conference Call for Organogenesis Holdings Inc. [Operator Instructions]. Please note that this conference call is being recorded and that the recording will be available on the company’s website for replay shortly. Before we begin, I would like to remind everyone that our remarks today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company’s filings with the Securities and Exchange Commission, including Item 1A, Risk Factors, of the company’s most recent annual report and its subsequently filed quarterly reports.

You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Although it may voluntarily do so from time to time, the company undertakes no commitment to update or revise the forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable securities laws. This call will also include references to contain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to those as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release in the Investor Relations portion of our website.

I would now like to turn the call over to Mr. Gary Gillheeney, Sr., organogenesis Holdings President and Chief Executive Officer. Sir, please go ahead.

Gary Gillheeney: Thank you, operator, and welcome, everyone, to Organogenesis Holdings Second Quarter of Fiscal Year 2023 Earnings Conference Call. I’m joined, on the call today by Dave Francisco, our Chief Financial Officer. Let me start with a brief agenda of what we will cover during our prepared remarks. I’ll begin with an overview of our second quarter revenue results, and an update on our key operating developments in recent months. Dave will then provide you with an in-depth review of our second quarter financial results, our balance sheet and financial condition at quarter end. I will then discuss our initial thoughts on the recent local coverage determinations, or LCDs, the related uncertainty regarding our 2023 revenue and profitability outlook and the steps we are taking to address the reclassification of our products that will be impacted if these LCDs remain unchanged and go effective in September.

Then we will open up the call for your questions. Beginning with the revenue for the second quarter, we reported net revenue of $117.3 million for the second quarter, which came in above the high end of the range of the guidance that we provided on our first quarter earnings call, driven by sales of our Advanced Wound Care products at the high end of our expectations and the sales of our Surgical & Sports Medicine products exceeding the high end of our expectations in Q2. Second quarter total net revenue decreased 3% year-over-year, which was driven by a 3% decrease in the sales of our Advanced Wound Care products and a 5% decrease in sales of our Surgical & Sports Medicine products. Advanced Wound Care product sales were driven by better-than-expected demand for our non-PuraPly products in the second quarter with sales of our well-established, highly differentiated PuraPly brand being right in line with our expectations for the period.

Importantly, our Advanced Wound Care product sales results exceeded our expectation in a hospital outpatient setting and were in line with our expectations in the physician office in Q2. As expected, we leveraged our diversified portfolio and leadership position in wound care centers and physician offices across the U.S. to increase the number of accounts served in both the hospital outpatient setting and the physician office setting. Additionally, we delivered mid-single-digit growth in units sold year-over-year in Q2, driven by double-digit growth in the hospital outpatient setting. We are proud of the team’s execution in Q2 and believe we are navigating the dynamic marketplace effectively. And as discussed, we expected a transitory impact on our growth in sales of Advanced Wound Care products in 2023, driven primarily by the impact of key products in the physician office setting working through the nationwide launches and recently published ASPs. And to date, we are pleased that these national launches have performed better than expected, this gives us further confidence that we have the right strategy to maximize our competitive position as a leader in the advanced wound care market and remain well positioned in the coming years.

Turning to an update on our operational progress in recent months. We continue to focus on and invest in expanding manufacturing capacity overall for our product portfolio and pipeline. And specifically for developing manufacturing capability for our Dermagraft and TransCyte products that were previously manufactured in California. By way of reminder, we are working with development firms to assess building additional manufacturing space at our Massachusetts headquarters and in parallel, are looking for alternatives for existing manufacturing space within the region. As previously communicated, we expect to have a definitive plan by the end of the third quarter. Our ongoing Phase III clinical trial of ReNu for the treatment of knee osteoarthritis continues to progress as planned.

The efficacy phase of the trial was completed in July, and we continue to expect to achieve the last patient last visit milestone and complete the trial by the end of the year. We’ve also made progress with respect to the second Phase III study for ReNu. We have received FDA approval for the protocol and to proceed with the second Phase III trial. This will be a 474 subject trial with the design similar to the first Phase III trial, major start-up activities are well underway with our current contract research organization and other study operations vendors, and we remain on track first patient enrollment by the end of the third quarter. We received positive response from the FDA in a Type B meeting regarding questions we asked relating to the CMC aspects of the ReNu product, including confirmation of the testing approach and the manufacturing of ReNu. As previously discussed, we expect to have a subsequent discussion with FDA regarding the clinical data requirements for the BLA, and we intend to propose the current Phase III trial, combined with the published 200 patient RCT as valid scientific evidence and sufficient for a BLA approval.

As a reminder, our plan is based on our belief that moving forward with the second trial as soon as we hear from the FDA will enable us to leverage the major operational advantages of continuing with the current active investigators. This essentially gives us more options in our regulatory strategy. Lastly, I’d like to share a few thoughts on the proposed physician fee schedule for calendar year 2024 that was published in July. We are pleased that the Centers for Medicaid and Medicare Services has acknowledged the concerns raised by stakeholders in the town hold meetings in January of 2023, and is seeking additional input from stakeholders before making any changes to the payment policies for skin substitute. As we have urged on many occasions, CMS should pay for all skin substitutes using the ASP methodology.

Manufacturers are already required to provide ASP pricing information. And as the Office of the Inspector General made clear in its March 2023 report, transitioning all skin substitute to ASP pricing has the potential to substantially reduce Part B expenditures. We also believe that transitioning skin substitutes to ASP-based payments would improve patient access enable physicians to prescribe treatment options based on the individual needs of the patient and provide the best outcomes for patients and the health care system. With that, let me turn the call over to Dave.

David Francisco: Thank you, Gary. I’ll begin with a review of our second quarter financial results. Unless otherwise specified, all growth rates referenced during my prepared remarks are on a year-over-year basis. . Net revenue for the second quarter was $117.3 million, down 3%. Our Advanced Wound Care net revenue for the second quarter was $110.1 million, down 3% and net revenue from Surgical & Sports Medicine products for the second quarter was $7.2 million, down 5%. Gross profit for the second quarter was $91 million or approximately 77.6% of net revenue compared to 78% last year. The change in gross margin was driven primarily by lower sales volume compared to the prior year period. Operating expenses for the second quarter were $81.3 million compared to $82.8 million last year, a decrease of $1.6 million, 2%.

The decrease in operating expenses in the second quarter was driven by a $2.3 million or 3% decrease in selling, general and administrative expenses, offset partially by a $0.7 million or 7% increase in research and development costs compared to the prior year period. Second quarter GAAP operating expenses included a modest reversal of nonoperating items consisting of employee severance and benefits as well as other exit costs associated with certain restructuring activities. This compares to $0.6 million of restructuring-related charges in the prior year. Excluding restructuring items and noncash intangible amortization of $1.2 million in both periods, non-GAAP operating expenses for the second quarter decreased $0.8 million or 1% year-over-year, driven by strong cost management pursuant to our strategy to prioritize investments in areas that enhance our foundation for future growth, including higher clinical study-related spending in support of our ReNu studies.

Note, we have a detailed reconciliation of these nonoperating and noncash items in today’s earnings press release. Operating income for the second quarter was $9.7 million compared to $11.9 million last year, a decrease of $2.2 million. Total other expenses net for the second quarter were $0.6 million compared to $0.8 million last year or a decrease of $0.2 million. Net income for the second quarter was $5.3 million compared to $8.7 million last year, a decrease of $3.4 million. Adjusted net income in the second quarter was $6.1 million compared to $11.3 million last year, a decrease of $5.2 million. And as a reminder, adjusted net income is defined as GAAP net income adjusted to exclude the effect of amortization, restructuring charges, GPO settlement fees and resulting income taxes on these items.

Adjusted EBITDA for the second quarter was $15.4 million or 13.1% of net revenue compared to $18.6 million or 15.3% of net revenue last year. We have provided a full reconciliation of our adjusted EBITDA results in our earnings press release. Turning to the balance sheet. As of June 30, 2023, the company had $89.5 million in cash and cash equivalents and restricted cash and $69 million in debt obligations compared to $103.3 million in cash, cash equivalents and restricted cash and $70.8 million in debt obligations as of December 31, 2022. We also have up to $125 million of available borrowings on the revolving credit facility as of June 30, 2023. With that, I’ll turn the call back over to Gary for some closing remarks. Gary?

Gary Gillheeney: Thanks, Dave. And before we open up the call to your questions, I want to share some initial thoughts on recent developments in the area of Medicare reimbursement and coverage. On August 3, local coverage determinations, or LCDs, were published by 3 Medicare administrative contractors. The LCDs address in substitute graphs, cellular and/or tissue-based products or CTP for the treatment of diabetic foot ulcers and venous leg ulcers in the Medicare population. Specifically, the LCDs require that a covered product be a skin substitute and be legally marketed. More than 130 products have been identified as not covered in these jurisdictions, including 5 of Organogenesis commercially produced products. Our PMA approved products, Apligraf and Dermagraft remain on the list of covered products.

We believe that the 5 commercialized products that were listed as not covered were improperly excluded from the list of covered products and we are engaging with all relevant parties to move these products to the covered status in advance of the effective date of these LCDs, which is September 17, 2023. The recently published local coverage determination from Novitas First Coast services in CGS to limit coverage for treatment of diabetic foot ulcers and venous leg ulcers to include only Apligraf and Dermagraft presents a significant amount of uncertainty regarding the revenue outlook for these products in these regions. Further uncertainty remains as it relates to potential impact on demand for our products when used for the treatment of DFUs and VLU wounds.

As such, we are withdrawing the fiscal year 2023 guidance previously provided on May 10, 2023. We believe that the 5 products that were listed as not covered were improperly excluded and we are engaging with all relevant parties in advance of the effective date of these LCDs. We intend to provide further information at the appropriate time in the future. With that, I’ll turn the call over to the operator to open up the call for questions.

Q&A Session

Operator: [Operator Instructions]. And our first question will come from Ryan Zimmerman of BTIG.

Ryan Zimmerman: So Gary, let’s start with the LCDs. I think you’re going to have to give investors more color about what’s going on here, given the withdrawn guidance. And what I first want to know is why do you believe they were improperly excluded? What can you share with everyone to suggest that they were improperly excluded? And then the second question is part of this, and there’s going to be a few here, but what’s drawing the guidance. I recognize there’s uncertainty, but you need to help people understand what is the payer mix of your revenue base? How much exposure do you have to Medicare? How much exposure do you have to 3 ? And if we can start to break that down, I think we can at least kind of excise the full risk from this change.

Gary Gillheeney: Sure. Let me start, Ryan, and then Dave can jump in. So the reason why we believe that we were improperly excluded is there’s 2 requirements primarily in the draft guidance as well as in the final guidance is — one is that your products are a skin. And we clearly have all of the evidence and it provided all of the information that’s regarding skin substitute. So we clearly — our products are skin substitutes. And we believe we meet the definition easily as it relates to a skin substitutes. I mean that is what our products are, that’s how they perform. They provide a scaffold for healing. They are not removed, they stimulate the wound for healing through cell migration and growth. So that hurdle, which was not identified necessarily in the pre — the draft ruling at all as a requirement, it was not.

It’s one that kind of showed up in the final draft, which is a procedural problem, but we’ll talk a little bit about the procedural problems later. Second is that your products are legally marketed that you have — you meet the FDA requirements to be on the market. And clearly, all of our products meet the FDA requirements to be legally marketed. So we are a skin substitute that’s a hurdle that we feel very strongly we can overcome, and we are legally marketed. Obviously, all of our products are legally marketed. So this is an era it’s clearly an error in our opinion, and that we will take any and all action to move these products onto the covered list. We will, number one, engage directly with the to inform them of the errors that we believe they’ve made.

We’ll also preparing a legal memo that we’ll be sending to CMS explaining the errors and all of the process issues and procedural violations that we believe took place in implementing this policy. So we feel very good, and we’re optimistic that our efforts will resolve these coverage issues based on the strength of our arguments that our products clearly meet the characteristics of a skin substitute and that we are legally on the market. Dave, you want to comment about…

David Francisco: Yes, sure, Ryan. So obviously, it was a really difficult decision for us to suspend the guidance here, particularly with, as you’ve seen, a strong H1, it was good in Q1, good in Q2. And we had good momentum in the business. And frankly, before last Thursday, expected to reaffirm our full year guidance today. So unfortunately, what’s happened is as Gary mentioned, the final LCD is really introduced a high level of uncertainty around — we’re confident in our ability to address this, but the timing of that is unclear. So that impact to revenue and profitability is unclear at this point. So that’s why we took out guidance. As far as kind of framing it up, we’re not going to disclose how much revenue we do in those . But there is a subset of that revenue that’s particularly related to DFUs and VLUs. And our estimate in that arena is about — for the first half of 2023 was about $35 million to $40 million. So I hope that helps.

Ryan Zimmerman: That was — just to be clear, the $35 million to $40 million is what you did in DFU and VLU of the 5 products that are impacted across your global revenue, not constrained to those mets. I just — I want to be crystal clear here, Dave, so that people understand and they can kind of frame this up.

David Francisco: So those are the products that are impacted in those related to DFUs and VLUs.

Ryan Zimmerman: Okay. So that’s the first half. So conceivably, $70 million to $80 million is coming out over the next 4 quarters. In a worst case, scenario environment.

David Francisco: That’s correct. In a worst-case scenario. Although, as Gary pointed out, we have a very strong argument against that.

Gary Gillheeney: I mean there’s also — I mean if you think about it, Ryan, if I could just — so Apligraf is obviously still approved. So Apligraf in these markets, if you think about the other restrictions of the LCD, which is for applications. So Apligraf, as a result of this, assuming the 4 applications stand in my opinion, has significantly more value than it ever has in these LCDs. If you only have 4 applications to solve this wound, Apligraf graph is the best product in wound care. The only product with PMA approval for DFU, VLU. And if you look at the 2 pivotal studies that we have, the average number of units per patient was 3.6%. If you look at — we have a 14,000 patient retrospective study for all wounds, the average is 2.5. So if a clinician is looking at a DFU and VLU and has to solve it with 4, I would argue that Apligraf should be the first product they consider in all of these .

The other thing that you need to consider as well is PuraPly is also used above the knee. And in these back, we still have PuraPly sales above the knee as well as VA’s critical access hospitals. So the number Dave gave you clearly is the correct number. But going forward, there are other mitigating factors that we would be pushing pretty hard in a worst-case scenario.

David Francisco: Yes. I’m sorry, just to be clear because I know you really wanted some clarity on that. But the 35 to 40, you multiply that by 2 that’s for ’24, if it’s the worst-case scenario, and this doesn’t get resolved. Obviously, it’s only 4 months in the first half is the way we talked about that.

Ryan Zimmerman: Right. That’s a good point. And you’ll have some obviously, some — you’ll lap it by September of next year. But I hear you. That’s helpful. A couple of follow-ups here, and I’m going to keep rolling just because I think people want to understand this clearly. What is your ability, your confidence, Gary, to swap out some of those sales of Affinity and purify to Apligraf and Dermagraft. I mean, given that you did suspend marketing or — manufacturing, excuse me, of Dermagraft and like how much — if we’re, again, trying to size of risk, how much can you get back through substitutions of your existing products if these dynamics old?

Gary Gillheeney: So we’re still working through that. I’ll let Dave comment if he has any more color. But obviously, shifting our share of voice, shifting our focus to Apligraf and PuraPly above the knee would be a major area of reallocation of time and resources. So we’re going through that process now. But I can’t give you an exact number, and Dave, and you have any more color. But we clearly expect both above the knee sales of PuraPly and Apligraf sales to go up.

David Francisco: Yes. I mean, as Gary mentioned, I mean, we just found this out on Thursday morning. So we’re still working through some of the stuff. But clearly, as Gary mentioned, there’s other MAX, that are covering our products above the knee in these existing MAX that we’re talking about. And then to Gary’s point about Apligraf being the first choice, we really have a fair amount of capacity opportunity here within our existing facilities, probably north of 30% to increase that capacity without any with minimal CapEx requirements. So to the extent that, that demand starts to flow in from a swap out perspective, we certainly have the opportunity to capture that demand. I think also, as you mentioned, just redeploying resources in different places as we’ve talked about before, that share of voice is important to us given the strength of our commercial team.

Ryan Zimmerman: Okay. Last one for me, I’ll hop back in queue. These proposals came out in late 2022, if I’m not mistaken. So the question is kind of to what extent do you have an idea that this was potentially coming what drove the decision for them to publish now? You can kind of just give us some context around kind of how this came about? It seems as if maybe a cut — was caught off.

Gary Gillheeney: So you’re correct. The draft ruling came out over a year ago, and then they amended it. So we responded to the draft proposal. So in that draft proposal, they were looking for FDA compliance that you are legally marketed that you have FDA approval or clearance for the products that you have. . PuraPly, our 510(k) product. We obviously have a 510(k). It’s been cleared. We provided that information. That product historically was called FortiDerm, and we thought there was some confusion around watch 510(k). So we provided all of that information and felt very comfortable with PuraPly. And again, regarding the other products, we provided the FDA regulations and guidance from the website, which were the requirements for the 361s, and we met all of those requirements.

So we provided the information PuraPly look like a pure error to us, and I think it perhaps may have been. But we felt very comfortable that what we provided as well as the comments that we submitted in May of ’22 and in November and the town hall meetings that every one of the MAX that we felt pretty comfortable that there really wasn’t going to be an issue for us. And now we find out that, well, not being — we’re not a skin substitute in their mind and they somehow misinterpreted the data and brought skin substitute requirements into the discussion. — which I believe, for the first time.

Operator: [Operator Instructions]. Our next question will be coming from Drew Ranieri of Morgan Stanley.

Andrew Ranieri: Maybe just a couple more. Maybe just a couple more following on Ryan’s line of questioning there. But you kind of touched on the revenue implications for the — or sizing the risk that you see. Can you maybe hit on the profitability impact here? I know it’s — there are a lot of moving pieces here. But could you just kind of help us think about that side of the equation as well?

David Francisco: Yes, absolutely. I mean it’s one of the reasons why, again, there’s a lack of clarity on the revenue and also the profit. So from a gross margin standpoint, that will be predicated on the amount of volume and the mix shift that will happen within the business. And again, we kind of identified this again last Thursday morning. So some challenges from that standpoint. I’d say on the cost side, though, we continue, as always, we’ll be prudent in any investments that we make and particularly with the current revenue headwinds. So we’re looking at all those components there. And obviously, as we’ve done in the past, we’ll do everything in our power to preserve profit as we go forward.

Andrew Ranieri: Got it. And with the September 17 deadline, under kind of like the worst-case scenario and kind of fully takes effect. What options do you have looking ahead to maybe change the rule over time? Or like how permanent could this be? Would it just be a year and you can revisit or just any kind of time frame around that?

Gary Gillheeney: I’ll start. So there really is no specific time frame you can request through CMS, which we will for the LCD to be rescinded. You could also request through CMS to have perhaps the audits [indiscernible] changed. There’s been precedent for that as well to my understanding. You also can address it directly with the LCDs — and then once issued, once it becomes effective, you can ask for reconsideration after that 45-day period to reconsider the entire LCD. But at any time, you can request a change in the LCD article or go to CMS, if you believe there was actually an issue in how it was implemented. . There are no specific time lines on how they have — when they have to respond though, too. So that’s always a bit of a challenge, but you do have the opportunity to go both and to the LCDs to try to get a rectification of a mistake or an error.

Andrew Ranieri: Got it. Okay. Maybe just to shift gears a bit. And Gary, you touched on PFS coming out with the proposal, and it doesn’t seem like they’re really is going to be a meaningful change this year, obviously, but heading into this LCD event. Can you maybe just talk about like what expectations you are seeing in the business now that the PFS rule was a little bit more benign than many kind of expected. I guess I’m just trying to get a sense of like the you have this event on the LCD side, but just help us maybe better understand to what you’re seeing on the underlying business and maybe what your expectations were around there.

Gary Gillheeney: And I’ll let Dave jump in. But clearly, as Dave mentioned, the trends in the business was strong. First quarter was strong. Second quarter was strong. We beat the high end of our guidance. We were ready to reconfirm guidance. And then obviously, we had this issue that brings some doubt into the last quarter. So the business has been strong. Account additions have been strong. Our national launches of our products that have become published, which is part of our strategy, have exceeded our expectations. We don’t see as much in the way of staffing issues. We’re starting to see some improvement in staffing and census in both the office as well as the outpatient setting. So good trends for the business, for sure. Dave, something if you want to say.

David Francisco: Yes. I mean I think you hit them all, Gary, but I absolutely agree. I think the first half was really strong for us. It was definitely in excess of our expectations on the top line. again, to Gary’s point, good account growth as well, which is the backbone of the demand profile for the business and good flow-through on the performance as well. So we’ve been very pleased, as Gary mentioned, too, the national launches that we were concerned about through that transition year period has been a lot stronger than we had anticipated. So we had a lot of momentum coming out of Q2. And as Gary mentioned, I think I mentioned it earlier, we were very bullish on reaffirming the guidance as we go forward. And this obviously event occurred on Thursday.

Andrew Ranieri: I have one more question or 1 more topic. Apologies. But maybe just on the surgical business, Surgical & Sports Med with a competitor kind of being in recall right now, can you maybe talk about some of the trends you are seeing in that business and maybe what your expectations are to maybe capture incremental share? And just on ReNu, sorry to pile on here. but just to make sure I heard you correctly, the last visit milestone you’re still expecting year-end 2023 for the trial. Can you remind us what you’re thinking in terms of data readout for that or any publication strategy around renewal for the first Phase III.

David Francisco: Yes. So Drew, I’ll start on the surgical. And it did exceed our expectations in the quarter. So good performance there. I think, obviously, with some opportunity there with that recall, we’re still in kind of a rebuild mode as we lost some of the products in Bone Fusion back in the midpoint of ’21. And so therefore, we really don’t have the significant infrastructure yet to take advantage of it. a change in the marketplace like that. So we continue to look for opportunities. I think it opens doors, but it didn’t get a lot of traction in Q2, but again, better than what our expectations were in the period.

Gary Gillheeney: Yes. Regarding the ReNu trial. So yes, last patient last visit at the end of the year, we’re rolling into the second trial. So we don’t have anything this year as it relates to readout or an efficacy readout. There is designed in the current trial and efficacy readout, I believe, in the first half of next year. And then once that information is available, we’ll disclose anything that’s well, in any way, unblind the study, but that could be helpful to investors.

Operator: And our next question is a follow-up from Ryan Zimmerman of BTIG.

Ryan Zimmerman: I’m back. I just couldn’t get it enough. So I just want to follow up on the prior questions. And if I’m doing the math right, Dave, it’s an impact of 4 months. And if you’re running at $35 million to $40 million for the first half of the year, simple math would suggest, it’s something like a $25 million impact in the last 4 months of the year. One, is that the right way to think about what this headwind could be?

David Francisco: It is, Ryan. The only thing I’d mention is, obviously, there’s a little bit of seasonality between the first half and the second half. So it might be a little bit north of that. But outside of that, that’s the way to think about it.

Gary Gillheeney: I mean the other thing just from a market perspective, there’s a lot of misinformation and a lot of noise in the market already. regarding the change, and that’s creating some confusion. And whenever there is confusion, you’ve heard us talk about this often, whenever there’s a reimbursement change or even perhaps a threat of a change the market reacts and things start to slow down a little bit. So there’s always that 1 component that we try to assess when we come up with these numbers, but that’s just to be fair, that’s also an issue that would happen…

Ryan Zimmerman: And then the second question is just the products that are excluded are exclusively for DFU and VLU. And so looking at these proposals — or excuse me, these finalized LCDs. I mean you’re still selling PuraPly in those given for anything above the knee. And just kind of what’s the — is there any exposure in your mind for those cases? Or is that clearly not in the scope of these LCDs?

Gary Gillheeney: It’s our understanding, and I think it’s most folks understanding that it’s only DFU and VLU. There’s been no — nothing in these LCDs either in draft or in final form that have indicated other than that in my opinion. So I mean, in closing, this, in our opinion, was clearly an error, and we are aggressively going after every avenue to get this rectified, and we will update you when appropriate if anything changes. So thank you very much.

Operator: Thank you. Again, we’re showing no remaining questions. This does conclude today’s conference. Thank you for your participation.