BIOLASE, Inc.
Q4 2014 Earnings Call Transcript

Published: 5 Mar 2015

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the BIOLASE 2014 Fourth Quarter and Yearend Results Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. [Operator Instructions] For the benefit of those who maybe listening to the replay, this call was held and recorded on March 4, 2015. I would now like to turn the conference over to Rene Caron of Allen & Caron. Rene, please go ahead.

[Rene Caron:]

Thank you and good afternoon, everyone and welcome to BIOLASE's 2014 fourth quarter and yearend results conference call. On the call today is BIOLASE's President and CEO, Jeff Nugent; and Brendan O'Connell, Vice President of Finance and Corporate Controller. Jeff will begin the call with a discussion of strategic changes the company began implementing early in the third quarter and he will discuss the progress being made and Brendan will run through the company's financial results and comparisons to prior period. After Brendan's discussion, Jeff will make some closing remarks before we open the call to your questions. Please be aware that a number of forward-looking statements will be made during this presentation, including forward-looking statements regarding our strategic initiatives and financial performance. Forward-looking statements are any statements that are not historical facts and can 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 SEC. BIOLASE cautions you that any forward-looking statements provided is not a guarantee of future performance. Any forward-looking statements represent the company's views only as of today and should not be relied upon as representing our views as of any subsequent date. A replay of the call will be available on the BIOLASE website shortly after this call's completion. For the benefit of those who maybe listening to the replay, this call was held and recorded on March 4, 2014. When listening to this call please refer to the press release issued earlier today announcing the company's results for the fourth quarter and year ended December 31, 2014. If you do not have a copy of this press release, it is available on the BIOLASE website at www.biolase.com. The company's results for the year ended December 31, 2014 can also be found in the company's annual report on Form 10-Q, which the company plans to file with the SEC on or about Friday, March 6. With that, I'm very pleased to turn the call over to Jeff Nugent. Jeff, please go ahead.

[Jeff Nugent:]

Thanks Rene and good afternoon everyone. I want to thank you for joining us and welcome all of you to the BIOLASE 2014 fourth quarter and yearend conference call. Before I begin my comments this afternoon about the results of 2014 fourth quarter and full year, I want to discuss an important announcement we made earlier this week. We issued a news release on Monday morning, announcing a key addition to our Senior Management Team with the hiring of our new CFO, David Dreyer, who will be joining the company officially on March 19, next Monday. David has extensive experience as a Chief Financial Officer with a number of publicly traded medical device, medical staffing and pharmaceutical companies. He also has a hands-on experience in healthcare services, biotech, pharmaceutical, medical device research, manufacturing and marketing. He has a very strong reputation as a strategic thinker who has managed successful turnarounds and has experience in mergers, acquisitions and strategic alliances and has a background in developing international markets, all of which are key to BIOLASE. David also has extensive Investor Relations experience, earning the respect of analysts and the investment community. I am sure, you will enjoy meeting David and working with him. The latter half of 2014 marked the beginning of the transformation of BIOLASE with a new Board of Directors and Management. The company had serious problems by midyear. There were two things that stood out. First BIOLASE is the leading company in its category with a substantial global market. Second and more importantly in the immediate term, we needed to build the kind of disciplined, customer centric company that will take advantage of this opportunity. We needed a new strategy and to clear up past problems that were left behind. Among the many problems we have faced, revenues had steadily been declining since 2013 and there were substantial legal and administrative expenses caused by litigation and a proxy battle that worsened the negative momentum even further. We needed to recapitalize the company and make some critical changes in leadership in rebuilding market credibility. One of the first things we did was to increase the financial resources of the company with two equity financings; one in July and one in November. We paid off and terminated all of our credit facilities that put BIOLASE in a much stronger financial position. At yearend we had approximately $32 million in cash as a direct result of the investors who see the opportunity that BIOLASE represents indicating their strong statement of confidence in the underlying potential of this business. We also changed BIOLASE orientation to be far more customer centric. We listened to our customers very, very carefully and what we heard was that there was room for improvement in both quality and customer service. We took immediate steps to resolve these issues and are now seeing high reliability across all our products. We also doubled the warranty period of our flagship WaterLase system, which tells our customers that we not only take pride in our products, but we also stand behind them with confidence. These rapid changes demonstrated progress toward remitting many of the problems that we faced. In August, we retained a well known market research firm to assess the baseline level of customer loyalty and satisfaction and to track it on an ongoing basis. They're tasked with regularly surveying our customers and measuring our progress in improving customer loyalty and satisfaction. Our responsibility is to act on this information provided and to drive improvement. In less than six months, the trend is encouraging as our net promoter score, a widely accepted measure of customer loyalty has well more than doubled. We've also made important strides on the new product and innovation front with the introduction of two new products in the last few months. First we introduced a new version of EPIC X, an enhanced soft tissue laser late last year and then just last week we introduced dentistry’s first-ever Practice Growth Guarantee with the launch of our new advanced WaterLase iPlus 2.0. Our Practice Growth Guarantee is an guarantee that WaterLase iPlus 2.0 will not only improve the experience of the patient, but will also help the dentist grow his or her practice. That is a breakthrough that's never been done before in the dental laser business and at BIOLASE we're offering it because we're that confident of our WaterLase iPlus 2.0 technology and our support behind it. The reception we received at the Chicago Mid-Winter Meeting last week was extremely promising. Our goal is to be the leader in innovation, in modern dentistry and to elevate the overall dental experience. We also have a goal of driving 30% of our revenue each year from new and improved products and let me emphasize that's a minimum of 30% of our revenue each year from new and improved products. To do that, we must listen to what our customers are telling us and to deliver to them new products like EPIC and like WaterLase iPlus with a practice growth guarantee and increased customer support. This commitment and effort resonated in Chicago and it's the message we will take with us next week to the International Dental Show in Cologne Germany, the largest dental conference in the world. Traditionally, almost 40% of our revenue has come from our international sales. This signals to us that there are countless opportunities for growth and based on these opportunities for growth and based on these opportunities these markets bring, we believe we can increase our international sales base significantly as well. For 2014, our revenue from consumables and other accounted for approximately 14% of total net revenue. We believe there are additional opportunities for growth in this category and have placed significant strategic emphasis on that goal. While our results for the fourth quarter of 2014 are not what we have targeted, net revenue for the quarter was highest of any quarter during 2014. We're encouraged that net revenue in the third and fourth quarters of 2014 increased compared to the first two quarters of the year, reversing the trend of declining revenue seen in the first half of 2014. Further financial comparisons will be covered by Brendan in the next section. Now that we've increased financial resources, improved product quality and customer orientation, we have a defined strategy and a program of disciplined innovation that is driving the development of important new products. I am confident we can begin growing again in 2015. I'll return with some closing remarks, but now I would like to turn the call over to Brendan for the details of our financial results. Brendan?

[Brendan O'Connell:]

Thank you, Jeff. First I'll review the results for the fourth quarter of 2014. Net revenue for the quarter was $13.2 million as compared to net revenues of $15.2 million for the fourth quarter of 2013, a decline of 13%. This decline in net revenue in the 2014 fourth quarter, when compared to the fourth quarter of 2013 resulted from lower domestic and international laser system revenue, imaging systems revenue, and license fees and royalties, partially offset by increases in consumables and services revenue. As expected, the company experienced an improvement of 19% in its core laser systems revenue during the fourth quarter of 2014 when compared with the third quarter of 2014 and an increase of 37% when compared to the second quarter of 2014. Net revenue of $13.2 million for the fourth quarter of 2014, was the highest of any quarter during the year, up approximately 4% from net revenues of $12.7 million in the third quarter and up 30% from net revenues of $10.2 million in the second quarter. As Jeff mentioned earlier, we believe this upswing in revenue in third and fourth quarters is a clear indication that we’re reversing the downward trend in revenue that have been occurring during the first half of the year. Gross profit for the 2014 fourth quarter was 39% of net revenue as compared to gross profit of 42% net revenue in the prior year fourth quarter. The decline was primarily due to a change in product mix with lower sales of higher margin laser systems. Total operating expenses in the fourth quarter of 2014 were $8.9 million, compared to $8.4 million in the fourth quarter of 2013. The increase was primarily due to increases in G&A expenses of $915,000, engineering and development expenses of $308,000, partially offset by decreases in sales and marketing expenses of $639,000 and excise tax expenses of $28,000. There was also a $249,000 loss of foreign currency transactions in the fourth quarter of 2014 compared to a $24,000 gain on foreign currency transactions in the fourth quarter of 2013. Net loss for the fourth quarter of 2014 was $4.1 million or a loss per share of $0.08 as compared to net loss of $2.2 million, or a loss per share of $0.06 in the fourth quarter of 2013. After removing interest expense of $6,000, income tax provision of $30,000, non-cash depreciation and amortization expenses of $167,000, and non-cash stock-based comp expense of $346,000, the non-GAAP net loss for this year’s fourth quarter totaled $3.6 million, or $0.06 per share, compared with a non-GAAP net loss of $1.4 million, or $0.05 per share, for the same prior year period. Next I’ll review the results for the full year ended December 31, 2014. Net revenue for 2014 was $47.7 million as compared with net revenue of $56.4 million for the year ended December 31, 2013, which is a decline of 15%. Domestic revenues were $29.8 million or 63% net revenue for 2014 compared to $35.7 million or 63% net revenue for 2013. International revenues for 2014 were $17.8 million or 37% of net revenue compared to $20.8 million or 37% of net revenue for 2013. The decrease in period-over-period net revenue resulted from decreases in domestic and international laser system revenue, imaging systems revenue, and license fees and royalty revenue partially offset by increases in consumables and other and service revenue. Gross profit for 2014 was 38% of net revenues, which was consistent with gross profit as a percentage of net revenue in 2013. We believe that our revenue results for 2014 were pervasively and negatively impacted by the significant distractions caused by the shareholder litigation proxy fight and the related disruptions within both management and the marketplace as well as the lack of sales management and turnover in the sales path. Operating expenses for 2014 were $36.1 million or 76% of net revenue as compared with $32.5 million or 58% of net revenue for 2013. We expect operating expenses as a percentage of net revenue will decrease for the year ending December 31, 2015. The increase was primarily from approximately $4.3 million of additional professional fees and legal expense incurred by previous management related to the shareholder action brought by the company’s largest shareholder, Oracle, to resolve disputes over management, corporate governance and the composition of the Board. The increased professional fees and legal expenses also included expenses related to the proxy contest and new litigation brought by the Former Chairman and CEO in July 2014, which was subsequently dismissed. The company believes the professional fees and legal expenses incurred in 2014 are atypical and expect these expenses to decrease significantly in 2015. For the year ended December 31, 2014, there were also increases in payroll and consulting related expenses. Beginning in the second half of 2014, we appointed new key personnel to management to lead our sales and marketing departments including a new Senior Vice President of Worldwide Sales and Account Management as well as a new Vice President and Chief Marketing Officer. Furthermore in the fourth quarter of 2014, we enhanced our sales force domestically and internationally including filling vacant positions. For the reasons stated above, our net loss was $18.9 million for 2014 or a loss per share of $0.45 compared to a net loss of $11.5 million for 2013 or a loss per share of $0.35. The increase in net loss of approximately $7.4 million was primarily due to a decrease in gross profit of $3.4 million, increased operating expenses of $3.6 million and increased foreign currency translation loss of $365,000. After removing interest expense of $458,000, income tax provision of $112,000, non-cash depreciation and amortization expenses of $696,000 and non-cash stock-based comp expense of $1.4 million, the non-GAAP net loss for the year ended December 31, 2014, totaled $16.3 million or $0.38 per share compared with a non-GAAP net loss of $8.5 million or $0.26 per share for the same prior year period. I will now cover on liquidity and capital resources. At December 31, 2014, we had approximately $31.6 million in cash. The $30.1 million increase in our cash and cash equivalents from December 31, 2013, was primarily due to cash provided by financing activities of $46.8 million partially offset by net cash used in operating and investing activities of $16.2 million and $197,000 respectively and the effect of exchange rates on cash of $234,000. At December 31, 2014, we had approximately $38.6 million of working capital. Our principle sources of liquidity at December 31, 2014, consisted of the approximately $31.6 million in cash and $9 million of net accounts receivable. Since the second half of 2014, our goal is to refocus our energies on strengthening leadership, worldwide competitiveness and our professional customers and their patients. We’ve enhanced our Senior Management team, increased our sales force and reintroduced innovation in our products to our customers including the EPIC X and WaterLase iPlus 2.0 with the practice growth guarantee. I believe these changes will be the key drivers in the growth and future of BIOLASE. With that I’ll turn the call back to Jeff.

[Jeff Nugent:]

Thanks Brendan. I would like to conclude my opening remarks with the perspective on what has attracted so many of us to the BIOLASE opportunity. There are countless examples of real technological advantages transforming the way healthcare is delivered. Many refer to this transition as the technology adoption curve. For example and there are many, we see the transformational changes brought about with the application of robotics by intuitive surgical and the tremendous shareholder value they created. We see the profound changes made at dermatology with the adoption of lasers and related technologies in that medical specialty. Ten plus years ago, it is widely accepted that the overall use of lasers by dermatologist was well below 10%. Today the majority of dermatologists have incorporated lasers in their practices as a direct result of the advantages they bring to their patients and to their practices. Although there are differences between these two specialties, there is a clear comparison between dermatology and dentistry and the adoption of lasers within the dental category will result from our ability to articulate and improve the same level of both patient and practice advantages. Today approximately 40% of dentist have incorporated only the diode soft tissue laser in their practices, while less than 5% of dentists have purchased the all tissue laser such as WaterLase iPlus, our global market leading franchise. We have strong professional support among key opinion leaders and positive user experiences to help advance this adoption curve. I believe the dental market will make that kind of transition. With our help, dentist will recognize the advantages that our technology offers. Our lasers are easier to use, will result in higher patient satisfaction and offer a return on their investment. One of our goals is to elevate the total dental experience. We know what needs to get done here to execute on the many advantages inside of BIOLASE. We’ve spent significant time deeply understanding what those changes are and we believe that we are on a positive track to be able to see the benefits of those changes. We will show that the world's largest manufacturer of dental lasers will lead this change. With that, I’d like to turn the call over for questions. Operator, would you please begin.

[Operator:]

[Operator Instructions] Our first question comes from the line of Joe Munda with Sidoti & Company. Please proceed with your question.

[Joe Munda:]

Good afternoon Jeff and Brendan, thanks for taking the questions. Can you hear me okay.

[Jeff Nugent:]

I can. Thanks Joe. Good to hear your voice.

[Joe Munda:]

Jeff, can you give us a little bit more color on some of the issues from past management that you guys are trying to clean up here in the quarter? Third quarter you saw 3% growth, this quarter down 13%, little bit more color there would be helpful. As well as, can you give us some sense of what the litigation expenses were in the quarter? Thank you.

[Jeff Nugent:]

The last question first Joe, litigation expenses in the fourth quarter were zero. We had accrued all of those in earlier periods, third quarter specifically. And to your first question, the primary things that we have continued to improve are primarily related to the negative momentum that we saw coming in. And it’s not a secret that our primary flagship laser WaterLase has been contracting for approximately two years. So that is the momentum that is very difficult to turn around and with some of the new product introductions as recently as last week, we believe that we have at least the partial solution to do that. We’re optimistic based on the reception that we received, but in addition to the negative momentum, that we were left with approximately 20% of our territories that were unfilled. So the process of refilling and re-establishing our field sales territories was a time consuming process. The average for the back half of the year is that we had approximately 20% of our territories either open or filled with new representatives that everyone knows and these categories take time to train and bring up to speed. So those are some of the major things that we had to fix, but I would also add that some of the quality issues that we face, that we jumped on right away, did take some time. I think the significant change to a more customer orientation. And that’s really led us to some of these innovations that we put together. All of those resulted in overcoming the negative momentum that we inherited at the beginning of the year and I should elaborate further, but I think those are the major issues.

[Joe Munda:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Kathleen McGrath with WallachBeth Capital. Please proceed with your question.

[Kathleen McGrath:]

Hi guys, thanks for taking the question. Starting out what is new product iterations that you're launching, have any other changes targeted and proven the compliance with changing out the chips giving the comments that you made with focusing on improving the consumables line?

[Jeff Nugent:]

Yes, we’ve begun to incorporate new improved chips in both our diode as well as our all tissue laser, but we’re just beginning to get started. We have an aggressive goal in 2015 to increase the consumables part of our business. An obvious place that is going to drive that is in the chip area. We have not seen a significant increase to date through 2014 is what I am talking about and I don’t focus on making excuses. But we’ve had our hands full just fixing the basic problems that we inherited, incorporating new improved chips that offer additional value to the dentist is something that we have committed to begin by the end of the first quarter of '15. So chips are a critical part of consumables and it’s something that we’re planning on making significant improvements in. I wish I could be more specific, but this is a future priority actually beginning the end of this quarter.

[Kathleen McGrath:]

Okay. That’s helpful. And then kind of given the typical spending patterns with capital equipment and also coupled with kind of the lower sales that happened in 2014 and the fact that we’re a little bit into the quarter now already, would it be reasonable to assume that Q4 would kind of be the low watermark for quarterly sales or would it be reasonable to think that there could be some softness in the first half of the year? Can we kind of get more penetration and effectiveness from the new sales force in 2015?

[Jeff Nugent:]

Well there are a couple of things that I would point out. One is Q4 is traditionally the highest revenue period of the year. So there is some seasonality. I would not translate that to any expectation in 2015 and while I’m very hesitant to give any guidance we’re really looking at returning to growth in 2015 one quarter a time that the first quarter will benefit from the launch of new iPlus 2.0 and again that was just released last week at the largest dental show in the country. And we’re taking that to Germany beginning of next week to be able to introduce that and the international markets as well. So I don’t want to over answer your question, but we have a confidence that we’re going to be able to stabilize the WaterLase franchise beginning in first quarter.

[Kathleen McGrath:]

And if I could just place one more if I've not exceeded the two…

[Jeff Nugent:]

That’s okay.

[Kathleen McGrath:]

When Fred was very -- kind of spoke 2012 spending levels as a little bit of a goal to kind of get BIOLASE back too, with him gone, is that still where you’re looking and getting kind of that $7 million and $7.5 million quarterly run rate on OpEx spend?

[Jeff Nugent:]

I think it’s a benchmark. I call it a stake in the ground. I think it is a comparable that we pay a lot of attention to, but we've also indicated that one of our primary goals is to return to profitability and OpEx is a function of topline and one of the ways that we expect to achieve profitability is to increase the growth rate and be able to leverage those operating expenses across a broader revenue base. Does that help?

[Kathleen McGrath:]

Yes absolutely. Thank you for taking the questions. Greatly appreciate it.

[Jeff Nugent:]

Sure.

[Operator:]

Thank you. Our next question comes from the line of Chris Sassouni with Eagle Asset Management. Please proceed with your question.

[Chris Sassouni:]

Good afternoon. I just had a couple of quick housekeeping questions. What were the total legal expenses that you would attribute to both the internal litigation and proxy contest and all the things that went on primarily in Q2, Q3 and some in Q4 last -- this past year?

[Jeff Nugent:]

As I mentioned earlier Chris, that we had no residual litigation expenses in the fourth quarter.

[Chris Sassouni:]

Okay.

[Jeff Nugent:]

The primary expenses were recorded in Q3 and that I believe we've devoted those earlier and that the total legal expenses are between $3.5 million and $4 million.

[Brendan O'Connell:]

$4.3 million Chris is what we're disclosing.

[Chris Sassouni:]

Okay. All right. And then so the next thing I want to talk about is just a better understanding of the whole situation with the sales force. So it's clear that there were unfilled territories and that some of those territories were then filled, but there is sort of different buckets. First there is the question of what do you think the optimal number of reps is and then two, look at what -- if there is an optimal number of reps that you sort of triangulated to, then if you look at what the levels of -- what the number of reps were at the end of Q2 and then you had turnover and then where they ended at Q4 and where you hope to have the sales force in place optimally at some point this year. I just wanted to see the trends in terms of the optimal number of reps relative to the actual number of reps that you both had at the end of Q2 and then that you added to during Q3 and Q4 net of the turnover?

[Jeff Nugent:]

Chris, I don't have the specific number at the end of Q2, but as you recall, there was significant disruption during Q2 to our litigation expense and frankly that's what drove out a number of our sales representatives and since the end of Q2 and that very disruptive process, we've been selectively refilling those territories with a higher quality individual than we ever had. And because we have been more selective has taken longer to be able to fill those territories, but the other question you asked is the actual number of territories. We've indentified an optimum of between 30 and 32 territories. In addition to three very senior regional directors who have proven themselves and actually are relatively long term employees of BIOLASE with very high commitment level. So we're very fortunate with the leadership we have inside of the sales organization. But again, I don't want to belabor the point, we currently have approximately 30 people in those 32 territories and we plan to experiment in adding to those because this is a function of average revenue per rep. As long as we place them in the right locations and we're becoming much more data driven, we know where the primary opportunities are, and again going back to your question, the current number is approximately 30.

[Chris Sassouni:]

Okay. And then what is the target for the average rep -- revenues per rep taking into account, let’s assume that they were all sort of, having at least one year of experience, so they're sort of up and they've been trained and they're sort of in their territories, what should -- just as a benchmark, what do you think that the revenues per rep should be?

[Jeff Nugent:]

Well, our goal is minimum of $1 million per rep and not all of them are going to get there. It's going to take time for them to develop their relationships and to become productive. That we’re talking specifically about U.S. representatives.

[Chris Sassouni:]

Yeah.

[Jeff Nugent:]

And got another 40% of the business coming from international, which is part direct and part distributor oriented. So we’re talking specifically about U.S. I’m very interested in exploring the opportunity to expand territories, to split territories and have more feet on the street to be able to take this increased message that we’ve got and demonstrate the results that they can generate.

[Chris Sassouni:]

Okay. And my last question is where are we situated in terms of the international distribution both in terms of direct reps and then distributors in terms of, is that -- would you say that the distribution outside the U.S. is relatively stable or that there is still quite a bit of work to do in terms of getting the right distributors and the right reps.

[Jeff Nugent:]

I’ve spent quite a bit of time with our international group and I believe that we have not only a stable group of distributors, but I was just over in Germany two, three weeks ago and I met with them all and I got to tell you, I was very impressed. I've dealt with distributors in a number of other categories. And not only are these superior and very qualified, but the level of commitment that they have to BIOLASE was extremely impressive. So we’re going to be back with them next week. And there is the majority of the business and international is through distributors. So it is a different business model to be able to maintain the relationships with those distributors and increase their confidence in the new BIOLASE and help them understand the improvement -- significant improvements that we’ve been making all along.

[Chris Sassouni:]

Okay. That’s all the questions I have. Thank you, I appreciate it.

[Jeff Nugent:]

Thank you, Chris.

[Operator:]

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

[Paul Bornstein:]

Yes thanks. I have been a long-time shareholder and obviously that has not worked in my favor, but most of the calls have been talking about the sales opportunity because the products are great and the R&D is great. I wonder if you can just outline, what you’ve done since you come on Board give me a past best example of how you are changing the sales from what happened in the past to currently now that is going to drive sales going forward and gets you guys the profitability and not talking about GAAP versus non-GAAP because obviously, when you are at profitability that's not going to come into the equation. So maybe couple examples of how you're changing the sales effort because it seems like you’ve made some good changes, but still I’m not totally clear on how that's going to ramp up sales in a big way?

[Jeff Nugent:]

All right. I think that's a great question and something we pay a lot of attention to. I think the primary change we've made is increase the quality of our sales reps and having a greater portion of our territories build that’s one. I think number two is the reputation BIOLASE with increased quality and increased uptime in the hands of the dental professional is something that is certainly making a difference already. What I mentioned in my comments about the net promoter score increasing by over 50% in less than six months that translates what a net promoter score means is the percentage of our customers who recommend our products to their colleagues, in other words they promote their positive experience to others that’s one. I think the other one is and I try to simplify these things, but historically BIOLASE has not focused on their customers. And there is a significant gap between the time of sale selling a unit and maintaining that relationship with the customer and ensuring that they are satisfied, ensuring that we’re doing everything possible to put us at the highest levels of customer satisfaction in the industry. Now these are all words that anybody can say. One of the things that I have mandated inside of BIOLASE is we need to say the things that only BIOLASE can say and achieving the highest levels of quality achieving the highest standard within our sales force. All those kind of things are translating into the confidence we have to be able to increase the revenue, which is critical to being able to achieve overall sustainability. I hope that answers your question, does it?

[Paul Bornstein:]

Yes, it’s going in the right direction. I think you’re having a major impact here to change things around, because you've made management changes, which seems to be in the right way. And now the bottom line is you're seeing a huge jump in revenue, which should happen because the products are very good. Your R&D team is the best out there. It's just sales have been a problem. And so seems like you’re addressing it and hopefully can start seeing that and that will have an impact on the company significantly, so that’s the key?

[Jeff Nugent:]

Well, I’m glad that you’re a longer term shareholder. I’m delighted that you recognize that our products are the best in the industry. And I compliment you on having an insight into our R&D team, because they really are the best in the industry. So I think you’re on the right track and we get it and our task really is to be able to integrate these things in a way that translates to a purchase decision that is much easier for the profession to make.

[Paul Bornstein:]

Yes I might give you a call on something on the sales force side later on off sight.

[Jeff Nugent:]

I’d be happy to follow-up with any of you on any unanswered questions today.

[Paul Bornstein:]

Okay, thank you. Keep up the good work.

[Jeff Nugent:]

Sure. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Joe Munda with Sidoti & Company. Please proceed with your question.

[Joe Munda:]

Jeff, just a quick follow-up, do you envision any further distraction from the former CEO? I know you put out a press release talking about past pre-fighting a proxy battle naming himself among a fleet of new possible Board members, any color there would be great. Thank you.

[Jeff Nugent:]

Joe, as we’ve discussed, that is a -- let me put it this way, it is a minor annoyance that I don’t know how long he is going to continue to make the same allegations that he has for a long time. We have conducted internal and external assessment to what his allegations are and I can tell you that they’re totally without merit that we don’t plan on letting that disrupt our forward progress. And it is frankly his right to institute a proxy fight and frankly we’re prepared for it. I don’t see a significant risk and I’d rather leave it at that.

[Joe Munda:]

Okay. Thank you.

[Jeff Nugent:]

Thank you.

[Operator:]

Thank you. Ladies and gentlemen, I would now like to turn the conference back over to Mr. Nugent for closing remarks.

[Jeff Nugent:]

All right. Thank you. Before I close this afternoon's call, I would just like to reiterate the excitement that we all share about, the progress that we're making in the transformation of BIOLASE. While there are always risks and obstacles in the road when you're on a rebuilding and transforming a company and that is true at BIOLASE. We get it. We understand. We've made substantial progress. I know we will continue to make good progress in fixing the range of problems that we faced in the middle of last year. We still have challenges to overcome. We're not underestimating them, but with the improved product quality, the increased focus on customer satisfaction, the robust technology pipeline that will result in additional new products beyond what you've already seen, the substantial opportunities in international, a total commitment to quality and improved sales organization coupled with improved overall execution in every part of the company, I am totally confident that we can deliver on the promise of BIOLASE and create far more value for our shareholders. That's our number one objective. So I want to thank you all for joining us today. I also want to thank our employees, everyone here at BIOLASE for their commitment to achieving our success and also to you shareholders for your continued support. I look forward to meeting more of you in person and encourage you to join us on the next conference call when we report our results for the first quarter of 2015. So again, thank you very much. We really appreciate it.

[Operator:]

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.