BIOLASE, Inc.
Q2 2015 Earnings Call Transcript

Published: 6 Aug 2015

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the BIOLASE 2015 Second Quarter and Six Months Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open up for questions. [Operator Instructions] For the benefit of those who maybe listening to the conference call replay, this call was held and recorded on August 5, 2015. I would now like to turn the conference over to Rene Caron of DresnerAllenCaron. Rene, please go ahead.

[Rene Caron:]

Thank you, Tim. Good afternoon, everyone and welcome to the BIOLASE conference call to discuss its result for the second quarter and first six months ended June 30, 2015. On the call today is BIOLASE’s new President and CEO, Harold Flynn and David Dreyer, the Company’s Chief Financial Officer. Harold will begin the call with a brief introduction including a review of his background and comments on what attracted him to BIOLASE; David will then review the Company’s financial results and provide additional background and color on those results, after which we’ll open the call for 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, 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 views only as of today and should not be relied upon as representing our views as of a subsequent date. A replay of this conference call will be available on the BIOLASE website shortly after the completion of today’s call. For those who maybe listening to the replay, this call was held and recorded on August 5, 2015. When listening to this call, please refer to the news release issued earlier today announcing the Company’s results for the second quarter ended June 30, 2015. 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 second quarter ended June 30, 2015 can also be found in the Company’s quarterly report on Form 10-Q, which the Company plans to file with the Securities and Exchange Commission on or about Friday, August 7th of this year. With that, I’m very pleased to turn the call over to the new BIOLASE President and CEO Harold Flynn.

[Harold Flynn:]

Thanks, Rene and good afternoon everyone. I want to thank you for joining us and welcome all of you to the BIOLASE 2015 second quarter results conference call. As most of you know, this is my first quarterly results conference call as a President and CEO of BIOLASE, having joined the company on July 13th. Before I turn the call over to David to review the financial results for the second quarter and the first six months of 2015, I would like to share a few thoughts with you as to why I joined the company and why I’m excited about my new role and the prospects for BIOLASE. In doing so, I’ll touch upon some of my relevant background and experiences. After considerable research, several discussions with the BIOLASE board of directors, including meetings with BIOLASE’s past CEO, Jeff Nugent as well as discussions with my family, I decided that joining BIOLASE was the right career move for me at this time. I felt that my unique background skills and recent eight years of dental industry experience were readily transferable and very well suited to my new role as President and CEO of BIOLASE. I was very impressed by the BIOLASE intellectual property portfolio as well as its current product offerings and the prospects to introduce new innovative products. I also was impressed with BIOLASE’s market-share leadership. Combined these assets really provide a great platform to build from, to profitability grow the company and not only extend the company’s dominant leadership position in dental lasers but also to expand penetration and utilization of laser-based systems as well as grow the market itself. While this will take some time and a great deal of hard work by the team here, I’m pleased and very excited about the opportunity to lead BIOLASE at this pivotal time in its history. And I look forward to meeting many of you over the coming months. By way of background, I’m an electrical engineer by formal education and take a systemic and strategic view of the enterprise as well as its markets, products and services. I’m very proud of a long history of leading organizations through customer focused innovation and new product launches across multiple industries. I’m fortunate to also being inventor on several patents including two that cover implantable dental devices during my recent tenure Zimmer Dental. A common theme throughout my career in medical devices and diagnostics is providing products and services that meet the needs of customer clinicians to simultaneously practice better medicine and achieve better business results. I worked in medical devices and diagnostics for over 25 years and for last eight years, I was President of Zimmer Dental, concentrating on the dental industry. That experience really provided me the opportunity to visit with hundreds of dentists and industry thought leaders to better understand their new needs and how they deliver patient care. At Zimmer, we were dedicated to finding new solutions and invested heavily in research and development as well as clinical studies to demonstrate product effectiveness and differentiation. To effectively innovate in dentistry, one has to be very close to the dentists and their staff and viscerally understand the needs they have in their everyday practice. Other key components I found to be critical to long-term success in this industry, include providing superior customer service and support as well as excellent training and education. Our responsibilities as device manufacturers in this industry extend well beyond making great products and having great marketing and sales, so that we ensure our customers can use the products and services we provide safely and effectively and that they achieve their clinical and business goals related to our solutions when we have cutting edge solutions and technologies as we have today, they are not exposed to them in the universities and we aim to into fix that overtime. The BIOLASE Practice Growth Guaranteed initiative is resonating very well with new customers and it’s a good example of what I’m talking about. In fact I was handed an email this morning of a customer who is one day after their training event last week and was excited about the opportunities that the WaterLase system provided in their clinic. And I’ll just briefly read a couple of points from it. Good morning. I had to write and let you know that yesterday, using laser in practice was a huge success!! Our associate jumped right in, she used laser on five patients. One patient was a teen who needed a buccal cavity repair. She seem quite apprehensive about ‘needle’ and ‘drilling’. Our associate did not hesitate and reassured both patient and mom that we use the latest technology and she won’t even require a shot. Complete success! Patient reported that the entire procedure was comfortable. Mom and patient were very satisfied. One other patient I must mention was an infant, just one month old. She presented with two neonatal lower incisors which were very loose. After extraction, our associate used the laser for hemostasis. Amazing results!! We couldn’t have move forward so quickly without the incredible training you provided to doctors and the assistants. Thank you again for such an excellent clinical and educational experience!! So while an anecdotal and an e-mail of one, it really demonstrates the power of bringing technology and great education together. And you can see that we not only trained dentists in the indications of their new WaterLase iPlus 2.0 laser system but we also show them how it works best in their practice and how it can help them serve their patients better and in turn grow their practice and its revenues. We’ll continue to explore additional innovative ways to partner with our customers to improve the standard of care while achieving their desired financial results. While I’ve been at BIOLASE just over three weeks and at the moment I’m spending a great deal of time listening to my team, our clinical advisors, investors and our board of directors, at the moment, it’s premature to discuss any definitive strategy. But I will say I’m very enthusiastic about the direction we’re taking and continuing the journey of transformation at BIOLASE that was launched by my predecessor, Jeff Nugent. I’m committed to expanding our leadership in the dental laser industry. And to do so, we need best in class customer engagement and service, a strong focus on new product introduction, and highly effective marketing and sales practices to increase awareness and convey the clear and compelling value propositions to our customers. And finally, we need an excellent training and education programs, so our customers understand how our products are used to help them treat patients and achieve their business objectives. With a list of objectives like this and are current state, it’s clear to me that we will -- that it will take clear prioritization and focus on the difference makers in each of these key areas. It will involve a great deal of work over a sustained period of time to build this company and its brand to its rightful place. But I’m very confident it can be done and the team and I are eager to rise to the challenge. With that, I’d like to turn the call over to our CFO, David Dreyer for the financial details of the second quarter and the first six months 2015.

[David Dreyer:]

Great. Thank you, Harold. I want to start out by welcoming Harold at BIOLASE. Since he joined the Company last month, he has immersed himself in our operations and demonstrated a real commitment to quickly gaining a firsthand in-depth view of our operations and our personnel. I would also like to add on a personal note that after being here for only five months myself, I’m even more excited about the opportunities that lie ahead for BIOLASE. Now, let’s review the results for the second quarter and the first six months of 2015. I’m pleased to report that net revenue for the second quarter of 2015 was up 17% year-over-year to $11.9 million from $10.2 million in the second quarter of 2014. This was primarily due to a 22% year-over-year increase in our worldwide laser systems business. Revenue generated from sales of our flagship WaterLase systems increased by 42% worldwide including increases of 47% and 35% for domestic and international sales respectively. Overall revenue generated from sales of our diode system decreased by 5% year-over-year primarily due to a decrease in international diode systems revenue of 19%, partially offset by an increase in domestic diode systems revenue of 17%. Worldwide revenue from consumables such as tips, gel and hand pieces supporting laser products, grew by 30% year-over-year with double-digit growth in both the U.S. and international. The worldwide increases in laser systems and consumables revenue were partially offset by decline in worldwide imaging systems revenue. Net revenue for this year’s first six months increased by a $1 billion or 5% to $22.7 million from net revenues of $21.7 million for the same period last year. This increase was primarily due to increases in worldwide laser systems revenue of $1.4 million or 11% when compared to the same period last year. Revenue generated from sales of our flagship WaterLase systems increased by 20% year-over-year for both domestic and international sales. Overall revenue generated from sales of our diode systems decreased by 2% year-over-year primarily due to a decrease in international diode systems revenue of 14% partially offset by an increase in domestic diode systems revenue of 20%. For the first half of 2015, consumables and other revenue increased $729,000 or 24% over the same period last year. These increases were partially offset by decreases in worldwide imaging systems revenue of $1 million or 54%. Gross profit as a percentage of net revenue for the second quarter and the first six months of 2015 was 31.2% and 30.4%, respectively compared to 36.6% and 35.3% respectively for the same prior year period. The decline was primarily due to increased promotions related to this year’s launches of WaterLase iPlus 2.0 and EPIC X. In this year’s second quarter and first six months, total operating expenses were $10.7 million and $19.2 million respectively compared to $9.9 million and $18.5 million for the same period last year. The year-over-year increases were due to higher spending in engineering and development for the development of both new and existing products and technologies combined with increased sales and marketing expenses for newer product promotions and marketing programs to build brand awareness. These increases were partially offset by a decrease in G&A expenses, primarily due to reduced legal expenses and professional fees and a credit related to a legal settlement with the competitor in the first quarter 2015. Net loss for this year’s second quarter and first six months was $7 million and $12.5 million respectively or $0.12 and $0.21 loss per share respectively. The net loss in last year’s second quarter and first six months was $6.4 million and $11.3 million respectively or $0.17 and $0.31 loss per share respectively. The increase in net loss was primarily due to our lower gross profit margins and increased operating expenses in 2015 when compared to 2014. The adjusted non-GAAP net loss for this year’s second quarter after eliminating net interest income of $23,000, income tax provision of $36,000, non-cash depreciation and amortization expenses of $166,000 and a non-cash stock-based compensation expenses of $935,000, is a total $5.9 million or a loss of $0.10 per share. The non-GAAP net loss in last year’s second quarter was $5.7 million or a loss of $0.15 per share. The non-GAAP net loss for the first six months of this year was $10.5 million or a loss of $0.18 per share compared with the non-GAAP net loss of $9.8 million or a loss of $0.26 per share for the same period last year. I’d now like to discuss our liquidity and capital resources. As of June 30th, we had approximately $27.3 million in working capital. Cash and cash equivalents at the end of this year’s second quarter were $20.1 million compared to $31.6 million on December 31, 2014. Net accounts receivable totaled $9.8 million at June 30, 2015 compared to $9.0 million at December 31, 2014. I’m pleased with the reduction in our cash burn during the second quarter of 2015. As of June 30th of this year, the Company’s cash and cash equivalents totaled $20.1 million, which reflected an $11.4 million reduction during the first six months in 2015. $7.6 million of that reductions occurred during the first quarter and $3.8 million of the reduction occurred during the second quarter. This $3.8 million decrease in our cash burn reflects management’s increased focus and attention on better management of its uses of cash. With that I’d like to turn the call over to the operator for questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from the line of Chris Sassouni of Eagle Asset Management.

[Chris Sassouni:]

Good afternoon, Harold. I had a question regarding what has been going on with diode sales and why they have been declining OUS.

[Harold Flynn:]

Hi, Chris. Good to hear you on the phone.

[Chris Sassouni:]

Thank you. Yes, I was just wondering if you could help me to understand why the OUS EPIC sales have been declining.

[Harold Flynn:]

Yes. I’ll actually let David start with that, if you don’t mind.

[David Dreyer:]

Sure. When you basically look on a quarter-to-quarter basis, the decline wasn’t as dramatic but we saw overall international sales decline in the second quarter. It’s partly timing, as you work with distributors in terms of what their buy-ins are each times, so there is clearly some variability. Generally speaking, the overall trends, we believe what’s expected going forward in Q3, Q4, are following the fairly typical pattern. We don’t really see anything that would suggest otherwise.

[Harold Flynn:]

Chris, I had a fair bit of experience with international distributors and I haven’t had the chance to speak and meet with a lot of them at this point yet, but I do know that there tends to be a little lumpiness quarter-to-quarter and then there can be different compares that happen, depending upon what’s happening kind of locally, what’s happening with foreign exchange rates and as people buy in ahead of movements of exchange rates, which makes our product more expensive and the like. So, I’m not aware of any specific downward trend and like kind of establish a few quarters going forward to make sure that that business continues to be healthy. But there is nothing remarkable that I’m aware of in the short time that I’ve been here rather than normal timing type issues.

[David Dreyer:]

And I’d just add one more thing, basically Chris is that, when we look at year-to-date trends generally that our diodes actually grew; it’s quarterly trends where we saw it not grow.

[Operator:]

Our next question comes from the line of Jason Aryeh at JALAA Equities LP.

[Jason Aryeh:]

Harold, welcome to the company and we look forward to your leadership. I wanted just to ask a few questions. I appreciate your explanation at the onset of the call of why you joined. And personally I’d like to thank the activist investors led by [indiscernible] investment management for hiring Harold and the like for where they transforming the company and bringing you on. If you may be tell us, in the first three weeks, what surprised you either pleasantly or unpleasantly? Obviously your kind of -- you’re the second CEO post the transformation. And can you tell us kind of what you inherited? Your predecessor had a good reputation in his own rights. And there was some concern in the marketplace that because the change was made, things were not okay at the Company but some -- maybe you could give a little bit of an explanation to your shareholders regarding that.

[Harold Flynn:]

Sure, Jason. And pleased to meet you. Thanks very much for your question. I think kind of taking those somewhat in reverse. I had very good collaboration with Jeff Nugent who is commuting 2,600 miles each way twice a week to be on post here. And I think he did yeoman’s work jumping in at times that during my research I’d only call as highly dramatic. And through those times just took the reins and really started to launch a transformational effort within the organization. And I am happy and pleased to really continue and accelerate that with perhaps the different set of experiences and skills that Jeff has had at a slightly different point in my career than where Jeff was. So, we had many meetings. We still are corresponding back and forth and he has been very helpful and supportive in the transition. And it’s very unusual to have two CEOs address the organization during the start-up period as we did but we were collaborating at that level of effort. And I believe Jeff said in the previous call that he would be very supportive of a transition if they could find somebody, perhaps either better suited or with different sets of experiences that could help the organization grow. I think Jeff working with the board found that need to be the case and then supported and actively participated in my recruitment here and convincing me that this was a good opportunity and convincing me of the great potential of the organization. But I can certainly understand how -- from the outside of that context, it might cause some level of concern, but I would say it’s almost the opposite that Jeff was being a good steward of the Company and looking toward the future to try to make sure to have every opportunity to be successful. And I’d say that that actually leads a little bit into some of the surprises that I had and certainly positive ones that for what I saw in the press and what I saw that again I will just characterize as a lot of drama that the employees and team here were incredibly engaged and very positive about the prospects of the Company that an early stage company like this and I experienced it in my early career at a company called IDEXX Laboratories which some of you may know that you need to have zealous believers to be successful and work your way through challenges and improve the company. And we see that here. I think the people here are highly dedicated. The team has been very committed and gone through a lot of difficult times. And I was pleasantly surprised by the positive demeanor and the engagement bubble of the team. So that’s a lot to work with. The focus on innovation and technology has been not so much of surprise but a pleasant reinforcement. And as I look in the first three weeks, I look at why has the company not achieved more than it has? And I look at being able to convey a clear and concise and compelling value proposition to our customers. And that’s the one place where I would say that we have a lot of work to do. And the initial impressions are that we’ve been very technologically and product focused and we have turn our sights and be customer centric and customer focused and put ourselves in their shoes and have a compelling proposition that speaks on terms they understand, so that they can know they’re practicing better medicine and better business simultaneously. And I will say that in my past when I’ve had the opportunity to do that and work with great teams to do that, it has created a lot of long-term value and a lot of long-term growth. I think those are some of the initial impressions. I hope I answered your question.

[Operator:]

[Operator Instructions] Our next question comes from the line of Paul Bornstein at Black Diamond.

[Paul Bornstein:]

Since first time speaking with the new management again. I think I have been involved in the stock in and out that I’ve known five management teams. So, I guess my question is, I’ve always thought the products were good at BIOLASE about R&D expense and we’ve never got the leverage from any of the management team in the sales aspect of it. So, I’m kind of curious what you see different from Jeff’s work or you’re indicating, you’re adding on to the sales effort of Tim. But when you announce $16 million run rate, so how do you get up there very quickly because this has been going on for years and years and years and the stock is at a very low point. And so if you execute even little, the stock should move up significantly and your warrants in your stock will be worth something. So, I’m just kind of curious, since you know the history, which has been not very good at BIOLASE, what are the changes that you see you’re making to leverage this thing very quickly because we don’t have 10 years to wait or six years to wait, five years to wait, given the -- I don’t know, you’re the fifth management in the last, I don’t know, six, seven years. So, that’s a significant problem with BIOLASE. So, give me some confidence that they don’t need any new management and Oracle has made the fix here? [Ph]

[Harold Flynn:]

Well, thanks for your question, Paul. I think in the first 30 days or so, it’s incumbent upon me to really assess and diagnose. And I’m fully aware and sensitive to the fact that we don’t have decades or half decades to make meaningful change and move in the right direction. But I also want to make sure that our decisions and our investments are measured because as you would even say and partially did throughout your commentary, the current business trajectory is not sustainable. And there has been infrastructure that is in place for a business like this that needs higher amounts of revenue to sustain more meaningful growth. So, I think there is violent agreement among shareholders, the board of directors and the management team here that our highest priority of business is to meaningfully grow the top line. And I’d outline a few of the areas that I’ll be focusing upon that I think need work, the customer engagement and the clear value proposition being amongst the two highest, right. The antae for a company like this is high quality products and great products. And Jeff took a number of steps to improve the quality and customer service efforts but those have to continue a little bit further. As a commercial matter, I’m looking at how we go to market. At my past company at Zimmer Dental, we very effectively used training and education as a big lever to make sure that we could ensure people understood the differentiation of the products and use them effectively. So, there are number of things that have to happen simultaneously. And it will take a lot of work and it will take some time, but I’m not thinking five years to have measurable differences. And I’m only going to be able to build creditability through performance. And as you see that quarter over quarter, there is not much that I’ll be able to say here today that will be much more than commentary and our results will have to speak for themselves. I do believe that it will take a lot of focus, it will take prioritization and it will take a lot of hard work to do this. But I think in the long run, we’ll be rewarded by doing things right, doing things the right way and really focusing on that customer more than focusing on our technology, which I think to-date has been a big part of the stunting of growth is getting to enamored with technologies and wavelength when customers want solutions and procedures. And the Practice Growth Guaranteed is a program that has helped move us in the right direction but I think there is significantly further to go in that respect as well as how we commercially go to market. So, again at week three, I think it’s premature to talk about my specific strategies. And in fact I really wouldn’t want to arm our competition with specifics at this point either because I tend to be pretty fiercely competitive. But I will say, I’m committed to see meaningful change and meaningful progress. And in the coming quarters, we would have to articulate what those milestones are that we are believe this transformation is moving at a reasonable pace, at a successful pace and one that will build long-term value for shareholders. And sorry for the frustration of the past, but I can only really focus forward and really say from here we need to have a very sustained and credible climb out. And I’m going to do everything I can to make that happen.

[Operator:]

Our next question comes from the line of Chris Sassouni at Eagle Asset Management.

[Chris Sassouni:]

I had a question for you David. Why were the promotions embedded in the cost of goods sold and therefore dampening down the gross profit margins and why didn’t those promotions flow through the -- into sales and marketing?

[David Dreyer:]

It’s a good question, Chris. It’s not promotions necessarily as pretty good that that would be in marketing expenses. It’s more accommodations that were made in terms of pricing and the impact that that had on gross margins. That’s really what we’re seeing in terms of the what the impact is to our margin rate.

[Chris Sassouni:]

Okay. And then just on the subject of products, can you comment at all in terms of the timing or the nature of the new products that are still due to be released in the remainder of this year?

[Harold Flynn:]

Chris, it’s Harold. I really can’t at this point. We have certainly in all tissue franchise to not only sustain and maintain but to grow. We’re looking for those ways to help transfer the indications to more procedural based activities. So, you should expect to see some focus on that with the current product sets. And then when we’re ready to certainly make a launch, we would want that to come to the market in a meaningful way and not telegraph that too much from a competitive perspective because we know there is active competitors out there that would love to have that information.

[David Dreyer:]

Chris, one thing I wanted to add in the last question as a clarification but there is also service expenses such as we have to replace things like fiber systems and such. And when you upgrade, offer new upgrades, clearly we saw that trend also in the first half of the year as well. So, those would be servicing of expenses, they have cost of sales as well.

[Operator:]

Our next question comes from the line of Jason Aryeh at JALAA Equities LLP.

[Harold Flynn:]

Hello again Jason.

[Jason Aryeh:]

Two more granular questions, Harold. You had mentioned several times here, in the answer to past few questions about competitive environment and in our diligence about a year ago on the company, the two things that came up were what exactly differentiates WaterLase and our other products competitively and maybe you could just give us your thoughts on that. And the second question you brought up earlier about educating dentists who did not have a chance to view the technology in their schooling and their education and now getting them trained on and maybe the hurdle that that causes as opposed to younger dentists who are coming out of schools who do have experience with lasers work, this becomes may be much more of a pleasant play. Could you address those two issues?

[Harold Flynn:]

Sure. I will do my best. At week three, I would not call myself well versed or immersed in our technology at this point. But a lot of lasers and laser energy are basically tuned via their wavelength, the target, certain molecules, certain tissues and the like. So, the competitive differentiation is often about the wavelength or the generation of the laser energy that might be used. So, when you use particular wavelength, different tissues and in our case water will respond differently and that will give you different cutting, let’s call it, attributes whether it would be fine or course whether it would be high energy or low energy, our tends to be much finer in its cuts and its ablation relative to some of the competition. And in future quarters, I would be happy to probably give you more of a dissertation as to differentiation. But generally speaking, I would equate the technology to some sort of kind of procedural attribute like fineness of cuts if that makes some sense. And hopefully that simplifies it a little bit. And at least I have heard from several of our clinical advisors and their comparisons of lasers across dentistry, ours is absolutely the finest with respect to the cutting resolution, certainly working in some of the issues and other competitors will tout certain things about their technology but they won’t necessary be as good because they maybe more damaging the surrounding tissues than ours would be. So, really, as you think laser surgery, you think precision and you think minimal collateral damage to tissues around the various anatomy that you’re trying to treat. So, hopefully it’s a high level. And I’m happy three months from now to give you probably a more in-depth answer. With respect to education and the universities, in my experience, the universities and the dental schools, I must say, they are somewhere in the mid 50s, depending upon the quarter, so somewhere between 54 and 56 dental institutions in the U.S. and then certainly a lot outside of it. In my last role, we had agreements with and collaboration and grants to up to about half of them, about 28 at any given time, including engaging them to teach our clinical training center activities at the Zimmer Institute. So, what you find is, it’s very difficult for a dental school to punch a hole in their curriculum, which has already been full and usually understaffed and underinvested in to put new technologies in. And even people coming out of school, my commentary was about the fact that in dentistry, unlike other medical device areas, it becomes incumbent upon industry to train the dental professionals usually after their graduation and perhaps fellowships or other things that they might pursue for continuing education and whether they’re specialists or not or general practitioners. There are also a number of fine teaching institutions and developments for continuing education for the clinicians that are other modalities by which they gain experience. In my last case, it was with dental implants and regenerative medicine and in this case, it will be laser technology. So, it’s a long-term bet because you have to have people exposed to it. The tendency is that people unexposed in the universities to technologies and products will have a tendency to use those. So, it’s an important place to have some investment. But those clinicians tend to be associates for five to seven years and not necessarily the decision makers. So, it’s got to be carefully considered in our portfolio of investments to grow the top line. And if you think about a portfolio where we’re going to put those investments between new products, near-term, training and education as well as all the way back in to the university. So, I’ve got a fair bit of experience looking at that, let’s call it investment allocation relative to those educational channels. And we’ve got to pick the spot that’s going to be right for us. Hopefully that answers your question. If not, you can follow up.

[Operator:]

Thank you. Ladies and gentlemen, this concludes the question-and-answer session. I would now like to turn the conference back over Mr. Flynn for closing remarks.

[Harold Flynn:]

Okay. Thank you very much and thank you everybody for joining us for the call this afternoon and me for my first call, as a leader here BIOLASE. I’ll conclude by summarizing that I highly value and focus on customer engagement, meaningful product innovation and high caliber training and education. I believe that’s consistent with some of the question and answers that we just went through as well. And I believe this is consistent with the transformative efforts that were put in motion here, as evidenced by the reception of the WaterLase iPlus 2.0 and the Practice Growth Guaranteed initiative that we spoke about earlier. In my three weeks here, I have been impressed by the talent and drive of our team and I believe we have many of the building blocks to expand our leadership in the dental laser markets and to build prosperous future for BIOLASE and its stakeholders. I look forward to working with this team of dedicated professionals toward those ends. So, thank you all for joining us today. And I look forward to joining you again on our next conference call when we report our results for the third quarter of 2015. Have a great day everyone.

[Operator:]

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for participation.