BIOLASE, Inc.
Q1 2016 Earnings Call Transcript

Published: 10 May 2016

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the BIOLASE 2016 First Quarter Results Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open for questions. [Operator Instructions] For the benefit of those who maybe listening to the conference call replay, this call was held and recorded on May 09, 2016. I would now like to turn the conference over to Rene Caron of DresnerAllenCaron. Rene, please go ahead.

[Rene Caron:]

Thank you, Michelle. And good afternoon, everyone and welcome to the BIOLASE conference call to discuss the results for its first quarter and year ended March 31, 2016. On the call today are BIOLASE's President and CEO, Harold Flynn; and the Company's Chief Financial Officer David Dreyer. Harold will begin the call with a brief introduction, discuss the company's strategy for growth and provide an overview of the progress being made in a number of key strategic initiatives. David will then review the company's financial results and provide additional background and color on those results, after which we will open the call up for your questions. Please be aware that a number of forward-looking statements will be made during this presentation, including forward-looking statements regarding the company's strategic initiatives and financial performance. Forward-looking statements are any statements that are not historical facts and could be identified by words and phrases including, will, may, believe, estimate, project, plan and similar words and phrases. These forward-looking statements are based on BIOLASE's current expectations and are subject to a variety of risks and uncertainties that could cause the company's actual results to differ materially from the statements contained in this presentation. These risk factors are discussed in the company's filings with the Securities and Exchange Commission. BIOLASE cautions you that any forward-looking statements provided are not a guarantee of future performance. Any forward-looking statements represent the company's view only as of today, and should not be relied upon as representing our views as of any subsequent date. A replay of this conference call will be available on the BIOLASE's website shortly after the completion of today's call. When listening to this call, please refer to the news release issued earlier today announcing the company's results for its first quarter ended March 31, 2016. If you do not have a copy of the news release, it is available in the Investors Section on the BIOLASE website at www.biolase.com. The company's results for the quarter ended March 31, 2016 can also be found in the company's Annual Report on Form 10-Q, which the company file with the Securities and Exchange Commission today May 09, 2016. With that, I'm pleased to turn the call over to the BIOLASE's President and CEO, Harold Flynn.

[Harold Flynn:]

Thank you, Rene and thank you all for joining us on the call this afternoon. We had a very busy and many important ways of productive first quarter. Although much of the progress we made did not yet translate into solid revenue growth. In part that's because our sales continue to tract the seasonal nature of dental capital equipment market. We came out of a very strong fourth quarter, typically the markets strongest quarter into a much softer first quarter which is the seasonal pattern for the entire industry exacerbated this year by the international trade show dynamics. Our objective is to achieve and maintain double-digit year-over-year growth. But to borrow an airline analogy it will be bumpy on the climb up to our cruising altitude. As we continue to focus on developing and the operational processes and the execution that will transform BIOLASE into a strong efficient and consistently growing commercial enterprise. David will go over more of the financial results in a moment, but our worldwide revenue for the quarter was $11 million, 1.4% higher than the first quarter of 2015. U.S. sales were highlight for us which greaw by 7.9%, but we are offset by 6.4% decrease internationally. WaterLase revenue increased by 11.3% in the U.S. and decreased by 7.5% internationally. We did have an additional year-over-year headwind internally this year as I mentioned a moment ago the biennial International Dental Show in Europe the IDS which is held in the first quarter every other year was not held in 2016 and that did effect our international sales in the quarter. Looking forward I'm confident the possibilities for our technology in international markets. In February for example I attended the largest dental show in the Middle East via AAEDC in Dubai and I found a lot of interest not only in Dental lasers, but in dental laser education. While the middle east is experiencing macro economic issues on the short term, there is great promising for success and continued market expansion in the long-term. I'm honored highest priority of the stage are the improvements we are making and creating a stronger sales team in terms of salesforce talent and training and demand generation and sales execution and in creating a more robust and effective laser dentist free education program. Our BIOLASE learning center continues to get great reviews on feedback as we increase the number of classes and programs held there. And as I've said based on my years of experience in the dental industry I believe education, training and customer service our key success in our commercial strategy. Our customers really need to understand how our products contribute to improve patient outcomes and how they helped achieve their business goals. We believe this process is working evidence by the fact that the average sales price of our products is continuing the trend up work. We are training our sales people to sell the value of our systems and solutions bring to patients and clinicians, not compete on prices. And we are pleased to see progress in this important area and our commercialization efforts overall. And other critically important area of progress is the development of our products innovation pipeline. As I mentioned on our last all we have studied the marketplace and created a product roadmap for research engineering and commercialization that we believe will generate an incremental revenue streams to drive sustained growth. It leverages both internal and external capabilities. It's focused on innovation in terms of both enhancing existing products including apps and developing new system that will expand both the all tissue dental laser market and our share within it All tissue laser dentistry is barely penetrated the global market. We estimated it only about 7% worldwide. So we have a huge runway ahead of us take a advantage of. As for external partnerships, most of you know we're working with IPG Medical, the Medical laser division of IPG Photonics, one of the world's largest laser companies. This is a very important and exciting collaboration for us and we're running several projects simultaneously with IPG. Some focus on technologies and components that will enhance our current offerings in our core dental markets, others will leverage some of their technologies that we can introduce to achieve new indications of laser dentistry. We believe this collaboration has tremendous promise, we can create a new generation of precise reliable and highly capable semiconductor and fiber laser based products completely new to the dental industry. I will go into more detail at this time, but I will say we expect to bring the first product in this collaboration to market before the end of 2016. I'd like to add that we're all very excited about the prospects for BIOLASE. We have a very prominent role for our current and future lasers, our innovative technologies and our practice building value propositions in the involving world modern dentistry. Both for the general dentist with the job of managing dental diseases at it earlier stages and for the specialists involved in the later stages including peridontics, endodontics and the growing market for dental implantation and the complication that can rise from dental implant. Our job is to create the most valuable innovative tools and then teach our customers how to use them to provide better patient reported outcome and achieve better results in their business. Before I turn the call over to David, I'd like to take a moment to welcome Michael Roux, our new Vice President of Marketing; and Matt Wilson, our new Vice President of Human Resources to our executive leadership team. They will both play prominent roles in the ongoing transformation of BIOLEASE and we are thrilled to have them aboard. With that, I'll turn the call over to David for financial results.

[David Dreyer:]

Thank you, Harold. Good afternoon everyone. As I did last quarter, I will focus my review today on five financial areas revenue, gross margin, operating expenses, profitability and liquidity. Overall, our worldwide revenue in this year's first quarter increased 1.4% to $11 million from $10.9 million in last year's first quarter. The increase in net revenue included an 11.3% year-over-year increase in our U.S. WaterLase sales partially offset by a 7.5% decline in international WaterLase revenue. Although, overall, laser systems revenue for the quarter increased almost 6% domestically, international laser system's revenue declined 7.5% which as Harold mentioned earlier, was primarily due to the 2016 being a year when the biennial International Dental Show Europe did not take place. Net sales for the quarter also included 103% year-over-year improvement in imaging systems revenue on a relatively small revenue base as we sold through selected imaging inventory given our primary focus on our core dental laser business. Service revenue which consists of extended warranty service contracts advanced training programs and other services increased 10% with the 10% increase in domestic revenue and the 14% increase in international revenue. The increase in services was driven by an improved focus on our worldwide advanced training program. Gross margin for the first quarter was 33.1% compared to 29.6% in the first quarter of last year. The 350 basis point improvement in gross margin reflected a larger mix of domestic sales which typically have higher product margins due to higher pricing. Our gross margin typically fluctuates with product and regional mix selling prices, product cost and different revenue levels. Total operating expenses to this year's first quarter declined by more than $500,000 to $8 million from $8.5 million last year. Excluding the impact of the favorable $731,000 legal settlement in last year's reported first quarter, operating expenses in this year's first quarter were lower by $1.2 million or 14%. When you look at the mix of spending in the three largest expense categories between this year's first quarter and last year. Sales and marketing expenses declined by $950,000 or 20%. G&A expenses decreased by $320,000 or 12% and engineering and development expenses increased by $83,000 or 5%. During 2016 as we strive to return to sustain revenue growth we expect sales and marketing expenses and G&A expenses to continue to decrease as a percentage of revenue. We plan to increase our investment in engineering and development activity during 2016 as we continue efforts to develop new products and technologies which we believe will further strengthen our worldwide market leadership position. Net loss for the first quarter declined at more than $1.1 million or 21.5% to $4.3 million or $0.07 loss per share as compared to a net loss of $5.4 million or $0.09 loss per share during the first quarter last year. The decrease in net loss is attributed to overall business improvements including a $155,000 increase in net revenue and $279,000 reductions in cost of revenue and a $512,000 decrease in operating expenses. If you excluded net interest income the income tax provision non-cash expenses for depreciation and amortization and non-cash stock-based compensation, our non-GAAP net loss for the first quarter was $3.2 million or a loss of $0.06 per share. This compares to a non-GAAP net loss last year of $4.5 million or a loss of $0.08 per share. Now let's review our liquidity. As of March 31, 2016 BIOLASE had approximately $16.6 million of working capital. Cash and restricted cash equivalents at the end of the first quarter were $6.8 million as compared to $11.9 million on December 31, 2015. Net accounts receivable total $10.1 million at the end of the first quarter as compared to $8.9 million at year end. As we said for the last several quarters cash preservation continues to be a top priority for us, even though the first quarters cash usage was as expected given our sales results we know that we need to supplement our available cash resources to further support our goals of continuing to make forward progress both commercially and driving revenue growth as well as funding our investments in new product development. As I introduced on our last call, we are in discussions with several equity firms regarding debt financing which would supplement our cash position as we ramp up commercially develop and launch new products and progress towards the cash flow neutrality. In closing I’d like to add that even though our year-over-year revenue growth this first quarter was modest we made solid commercial progress in key areas of our business that bode well for the future. Domestic sales of WaterLase iPlus has increased. Our service business grew and the increasing acceptance and popularity of our new learning center is helping us to evolve our value propositions and educate dentist on the economic and clinical benefits. I'm also very pleased with the progress we’re seeing in our new product development programs. I'm confident that when our new products are released they will further expand our leadership in the global dental market and make considerable contributions to both our top and bottom line performance. Equally important is the progress we’ve made in cutting and managing our operating expenses and reducing our cash burn rate. We still have a lot of work to do reach our goals of sustainable revenue growth, positive cash flow and profitability. But I'm more convinced now that we’re well on our way for achieving these goals. With that I’d like to turn the call over to the operator for questions. Operator?

[Operator:]

We will now open the call to questions. [Operator Instructions] During the question and answer session of the call we will limit each caller to one question and then one follow up question. callers are welcome to re-enter the queue to ask an additional question and an additional follow up as time permit. [Operator Instructions] The first question comes from Ed Woo with Ascendiant Capital Markets. Please proceed with your question.

[Ed Woo:]

Yeah. Thank you for taking my questions and congratulation on your tow new hire. I was wondering with the new I guess the VP of marketing, how is the quality and transformation of your sales force to progress? And we do that - we should start to a see significant leverage as the changes that you made when you joined them in last year beginning to early April?

[Harold Flynn:]

Thanks Ed, this is Harold. Appreciate your question. I'm very excited about Michael joining the organization which will help to accelerate the improvement in commercial execution. Marketing is a process and Michael has a lot of great experience with great companies, who have really mastered the marketing process overall. And dig deeply into analytics and market information and research. So I'm really looking forward to he's leading of the team to develop the value propositions and the hook that can then be executed by the sales organization, that we continue to invest in with respect to training, education of the sales representative as well as bolstering the talent there and filling out all of our territories. So I do expect that to pay very good dividends and even the short and medium term, but certainly in the long-term as we accelerate with new product sales and the like. So it's really preparing the battlefield from a commercial perspective. And I do really think that we're going to start to see that payoff and then certainly in the shorter to medium term as well.

[Ed Woo:]

That sounds good. And then I know you mentioned in the first quarter, it was a little bit of volatility because of the threshold that impacting. Is there anything out that we should be aware of I guess now this quarter or versus the tougher comps versus last year?

[Harold Flynn:]

Yeah, I think we see these seasonal patterns. And my experience is that the first and third quarters tend to be lighter in the dental industry for a couple of different reasons. And the second and fourth quarter tend to be stronger. Some of those have to do with seasonal vacations and Europe as an example where there is a much bigger low internationally through the summer months. The first quarter tends to be lower because of the number of dynamics especially in the capital markets where the professionals are looking at their accounting standard for the end of the year, looking at the tax implications of the Section 179, accelerated depreciation rules and the like and those are usually voted into congress in December. And this year, we're happy to hear that they were extended through this year. So that will be something that will help us move that a little bit in future years. So I would say that we do expect some level of seasonality. And then obviously as one puts new product introductions on top of that, that's where we will help to change the trajectory over the base business generally. So again I think the lightness in Q1 is understandable and as I said in the release it's not cause for celebration. We still need to be able to plan and deliver consistent double digit growth on top of years like that with the comparables. But I do think we are in a position to start to improve that in the coming quarters and certainly through the end of the year.

[Ed Woo:]

Great well, wish you guys best of luck.

[Harold Flynn:]

Thank you very much Ed.

[Operator:]

Our next question comes from the line of Paul Bornstein with Black Diamond Advisors. Please proceed with your question.

[Paul Bornstein:]

Yes hi, looks like you're making a little progress which is a positive just I had to listen to the call for last five years. There is going to be a lot of sales growth, revolving though under sales manager. My question is with the new VP of sales, Mike. I'm sure he looked at the company before he came on board. I’d like to know what’s going to be different in terms of generating sales because I think if you go back to the call every year we have the same kind of drive for sales and it hasn’t happened and it look like the company in the past seems like you’re picking a lot more progress than what I’ve seen, but we’re not there yet and in the past years the company was run for management not for shareholders. And then the second part is if he took a lower salary and kind of bigger bonus for having the sales come through. I think that would send a better message that you're really confident you are going to make the sales. So two kind of point best [ph] questions, but it’s all based on sales.

[Harold Flynn:]

Okay. Thanks for your question, Paul. The first is to correct that Michael Roux is our new Vice President of Marketing not the Vice President of Sales just to be clear on that. But what I characterize is a difference is that we are really running a marketing process that becomes much more oriented toward the customer, the voice of the customer and the value proposition that’s going to materially move behavior. In the past, I can’t really speak a lot for the past because I don’t have intimate knowledge not having Ben here about what was said specifically, what the promises were. But what I'm encouraged by is the fact that we’re digging into the analytics, we dig into market research that has verifiable data behind it and we look at the types of trend that we look at the type of value propositions including the pricing of our products and most importantly the benefits and features that are going to change the fundamental penetration of laser dentistry. And even in these early days we’re already digging into analytics relative to our consumables usage into the most important features to leverage on the new product launch, we’re engaging new agencies that are more and better experienced than launching transformational and highly penetrating technologies. So we’d summarize it by saying we’re going to be we're playing on a much higher professional level generally and without making this question go on too longer, this answer go on too long, I would say we’re stepping up our game into a real professional marketing and sales execution effort and you should be able to see that generate growth in the coming quarters as we continue to work on the value proposition and our execution process. I had characterize some of the past as the sales force doing a great job of hand-to-hand combat without real strategy and without a lot of real programs that are fundamentally designed to move demand. But really respond to various specials and quarterly promotions and a number of other very short term oriented activity, we’re really looking at changing the long term behavior of this market place and be able to deliver much broader penetration.

[Paul Bornstein:]

Sorry, I can.... that’s why it seems like you are integrating the marketing with the sales it sells the marketing kind of go together. But...

[Harold Flynn:]

Absolutely.

[Paul Bornstein:]

But spend a watch or time versus in the past, it really wasn't a huge push to marketing, except they had a product and they thought they could get into dentist pretty easily.

[Harold Flynn:]

That's right and very few products that we see ever sell themselves and great sales and great sales execution starts with a marketing message and a target segment to go after. And if you are not doing that you are out there just doing the hard work hand-to-hand and that's what the history has been and that's where we are out to change. Second part of your question was related to my compensation and I'll leave that to the compensation committee of the company to determine.

[Paul Bornstein:]

No, I wasn't talking about yours exactly. I was talking about the sales and marketing is that key, so for bonus for performance and just great sellers. Maybe if you can describe what that is....

[Harold Flynn:]

Sure. Just you're aware, their target compensation in my experience is oriented much more towards variable pay that it is fixed pay throughout the sales organization. And we continue to look at that balance and that mix. And one of the things Mitt Wilson will help us do is make sure we're being competitive to market so that we can attract the best talent in sales leadership and marketing leadership and that we have those balances correct. So I agree it's an important variable that motivates us those professionals and sales leaders in general, and we'll continue to look at that as an important aspect of the motivation and inspiration of the sales team.

[Paul Bornstein:]

Okay, that's fair enough.

[Harold Flynn:]

Okay. Thank you, Paul.

[Paul Bornstein:]

Thanks.

[Operator:]

Our next question comes from the line of Chip Saye with AWH Capital. Please proceed with your question.

[Chip Saye:]

Good afternoon, thanks for taking my questions.

[Harold Flynn:]

Good afternoon. You're welcome.

[Chip Saye:]

I have couple of questions around the imaging revenue. What was the imaging revenue in the quarter?

[David Dreyer:]

Yes, I can. Total imagine for the whole worldwide was basically total of at $692,000 almost $700,000. So the increase that we talked about 103% was really unique to us selling larger amount of inventory that we've had, which was something that we did for both the customer demand but also helping our cash flow as well. It was inventory that have been held, that we've not opportunistic buyers and so it worked out.

[Chip Saye:]

Okay, because that didn't - I thought - what's your commitment to imaging going forward? I was under the impression that you're moving away from imaging.

[Harold Flynn:]

Yes, I think that it's a good point. We opportunistically will work with partners on imaging. And our focus has been on the laser sales. The most synergistic imaging offering that we have is the three shape Trio Scanners and we actually are seeing more bundling of imaging with laser dentistry because to do a great job in CAD/CAM one needs to take care of the soft tissue margins around the teeth and there is no better way than lasers to do that to get the most accurate scan and therefore the most accurate restoration in the margins where the tooth meets the soft tissue. So we actually have been doing a number of things to integrate that offering at that level where we really have done less is on the large cone beam CT Scanners is where the things have soften for us most. And as we've exited that we had inventory of the number of those units that we wanted to make sure that we could move and we did so at aggressive prices and really be able to focus on those things that are more synergistic with the business. So it is still a focus on laser dentistry and what you have is essentially a high growth on a very small base given that this past quarter the first quarter was one of the big step downs in imaging last year. So we're now we anniversaried out to that lower imaging base and the total revenue.

[Chip Saye:]

Okay. Do you have any more of the CT Scanner to sell, any more the big systems or is this more going to be bundling of the 3-D systems?

[Harold Flynn:]

Most of what we would see in imaging will be the 3-D scanning. And I don't have in front of me the exact number of inventory of systems of the cone beam. But it's very small. It shouldn't be material.

[Chip Saye:]

Okay, got it. And just more of a financing related question, it sounds like you may borrow money from a private equity firm. And what is the timing around that, can you shed any light on that?

[Harold Flynn:]

Well I mean it's still work in process. We're working on it actively. So it's really hard to give you a definitive time period. It's not that we're talking about it and we're in discussions with third party.

[Chip Saye:]

Okay. So is this quarter or next quarter or I mean do you have any just to give us guidance because I see the cash you have and I see the cash burn I'm just trying to figure out when that infusion may come?

[David Dreyer:]

So we're that, so we're obviously focused on the short term time frame. So this quarter is six weeks left basically and starting into the third quarter are definitely practical timelines that we're focused on.

[Chip Saye:]

Got it. I appreciate that. And can you just tell me, how you're thinking about borrowing money and what's likely going to be a high interest rate. Will it make sense to potentially raise equity capital instead? I mean would it be more appropriate given you cash losses and you're going to continue maybe with some losses. Can you just, how do you think about that and can you talk about that?

[David Dreyer:]

The obvious thing in terms of like using stock is that dilution impact. And we obviously don't really want it's not a very opportune time for us to selling stock. And the reason why is because our stock in our opinion is very much undervalued. And I'm sure shareholders would all agree with this as well. And so while we've have some improvement from fourth quarter, it's still not, it would be a giveaway in our opinion. So looking at some credit opportunities which immediately there has some challenges with it, we believe it's is a much better map as what our liquidity means are. And so that's really what our focus has been on.

[Chip Saye:]

Okay. So for credit is - okay, go ahead I'm sorry.

[David Dreyer:]

And just one, obviously at this point as we showing progress, by launching new products and generating revenue growth, and that translates into our stock price. Clearly you're right, a capital way of funding the business make sense. That's not what we are right now.

[Chip Saye:]

Okay. So credit is the avenue of choice. Okay.

[Harold Flynn:]

The bridge.

[Chip Saye:]

Bridge, got it the bridge. Okay, well listen. I appreciate that. And that's all I have for today.

[Harold Flynn:]

Thank you.

[David Dreyer:]

Thank you.

[Chip Saye:]

Thank you.

[Operator:]

Our next question comes from the line of Brooks O'Neil with White Oaks. Please proceed with your question.

[Brooks O'Neil:]

Congratulations on your progress sales and David I have two questions. I thought I would follow on to the last line of question, just see if you're finding enough receptivity that would sort of rule out the potential for a convertible issue at this time.

[David Dreyer:]

Yeah. I think as long as the conversation that I've been indicating, clearly we're looking at not using equity. So I don't want to limits just to what were our funding opportunities are, but clearly we're focused on debt financing, conventional debt credit line financing not heavily leveraged borrowings with the tons and tons of warrants that's not what we're looking at.

[Brooks O'Neil:]

Great. Secondly, I'm just curious, if you could characterize the current market. I know the penetration of dental lasers is relatively low. Are you finding a market that is accepting and growing or you still in a market where the burden is really new to educate that has about the benefits of your laser system?

[David Dreyer:]

Well thanks, Brooks, good to speak to you. I would say it’s a mix of both. The market receptivity is improving when I observed conversations at a number the trade shows amongst the association members and the leadership regarding laser dentistry out there. We really need to pay attention to its capabilities. There are more and more papers being presented, more discussion being had especially at some of the previous naysayers of lasers, such as the American Academy of Periodontology. I have seen a lot more engagement from Periodontal group in general. Really looking to study and understand the positive effects not only on the anatomic outcome. But really the patient reported outcome which is where we know the real benefit of lasers were down. So I'm encouraged by that, at the same time we would not characterize the market as having great understanding or in depth knowledge about lasers and laser technology generally. Laser is not a laser in dentistry, much like in dermatology, the dermatologist understands if they're going to use a laser for a particular indication that they chose a particular wavelength and each has their benefits and their drawbacks. That level of education is not yet here in the dentistry. But it’s one of the areas that Michael Roux, myself and others are focused upon to really change that level of understanding not only about how lasers will help improve patient outcomes. But also why one choses a particular laser and I'm very confident that a well-educated clinician will chose a BIOLASE technology over most others.

[Brooks O'Neil:]

All of that makes tremendous sense and I appreciate that. Could you just talk for a couple of minutes about how you approach dentist and try to educate him about the rational for buying it or leasing the BIOLASE system and how he or she might demonstrate in their practice?

[Harold Flynn:]

Well, it’s a subject of hours of conversations certainly. But the awareness really comes from the early intervention in disease such as periodontists, such as earlier stage restorative work and the like. But it really is to talk about with the clinician what are their business objectives and what are their objectives relative to patient care. So the first part of the sales process and any good sales process are some high gained questions and a lot of listening. And different clinicians will access or enter this process from slightly different perspectives and those are the ones that Michael Roux and then the sales team subsequently will look at it how we get them into our funnel. So as we go through the funnel the process is to go in and do a once and learn for the entire organization and talk to them about how laser dentistry integrates into the practice generally and then answer any specific questions. And then we go through the process of validating that the lasers will deliver what the clinician is looking for whichever path that might have been in the beginning and then get them through the process of financing in the economics. So generally it’s tapping into these three or four different entry points from customer segment perspective that they might be looking for and then guiding them through the process, ultimately to result in a sale. So that’s what our execution process is oriented toward today. But we’ve been tapping sometimes into the patient outcome is paramount with dental professionals. But also because they are small business people their financial aspects and the ROI have to be there as well the return on investment. So we take both prongs of those knowing that they have to be better dentistry and better business simultaneously. Hopefully that answers your question.

[Brooks O'Neil:]

Really helpful. Thank you very much.

[Harold Flynn:]

Thank you.

[Operator:]

[Operator Instructions] During the question-and-answer section of the call we ask you to please limit yourself to one question and then one follow up question. Callers are welcome to re-enter the queue to ask additional questions and additional follow up as time permits. We will now pause a moment as we pull some more questions. Our next question comes from the line of Wyatt Carr with Monarch Bay Securities. Please proceed with your question.

[Wyatt Carr:]

Thank you and… [Technical Difficulty]

[Harold Flynn:]

Hello Wyatt. Something happened? Operator do we still have him?

[Operator:]

Yes, he is still connected. Wyatt can you please check and see your phone is on mute? He has not disconnected his line yet. He’s still on. Wyatt, can you please check it if you have accidentally muted yourself? [Operator Instructions] Okay. Thank you ladies and gentlemen this concludes the question-and-answer session. I would now like to turn the conference back over to Mr. Flynn for closing comment.

[Harold Flynn:]

Well I’ll start by saying Wyatt I apologize that we lost you and if you’d like to ask a follow up question please feel free to call us. In conclusion, I'm more encouraged today about the future of BIOLASE and Laser Dentistry than ever. But we still have a lot of work to do. We need to become a stronger commercial enterprise, continue to educate and service our customers and bring new and innovative products to the market, products that will enable us to achieve our vision of laser dentistry as the standard of care. As we go forward the ride maybe a little bumpy however I see the path ahead to success and believe you will see evidence of our progress over the course of the next several quarters. Thank you all for joining us on our call this afternoon and for your continued support and we look forward to speaking with you again when we announce our results and discuss our progress in the second quarter of 2016. Have a great day everyone.

[Operator:]

This concludes today’s conference. Thank you for your participation you may now disconnect your lines.