Misonix, Inc.
Q4 2019 Earnings Call Transcript

Published: 15 Aug 2019

[Operator:]

Good day, ladies and gentlemen, and welcome to the Misonix Fourth Quarter Fiscal Year 2019 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Norberto Aja, Investor Relations. Please go ahead.

[Norberto Aja:]

Thank you, operator, and good afternoon, everyone. Thank you for joining us today for the Misonix Fiscal 2019 Fourth Quarter Conference Call. We'll get started in just a minute with management's presentation and comments. But before doing so, let me take a minute to read the safe harbor disclosure language.Today's call and webcast contain forward-looking statements within the meaning of the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995, and can be identified by words such as anticipate, believe, estimate, expect, future, likely, may, should, will and other similar references to future periods. Examples of forward-looking statements include statements we make regarding guidance relating to our financial results. Forward-looking statements are neither historical facts nor assurance of future performance. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, changes and circumstances. Therefore, you should not rely on any of these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements that may be made from time to time, whether as a result of new information, future developments or otherwise.Today's call and webcast will also include non-GAAP financial measures within the meaning of the SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company's website.With that, I'd now like to turn the call over to Mr. Stavros Vizirgianakis, President and CEO of Misonix. Please go ahead.

[Stavros Vizirgianakis:]

Thank you, Norberto, and good afternoon, everyone. Thank you for joining us on the call today to review our fiscal 2019 fourth quarter and full year results. Joining me on the call today is Joe Dwyer, our Chief Financial Officer. Let me begin by making some brief remarks on the quarter and full year financial results before offering some comments on the evolution of Misonix over the past 18 to 24 months and our expectations for the next 18 to 24 months.The fourth quarter marked yet another strong quarter for Misonix with total revenue rising 12.9% compared with Q4 of fiscal 2018 and by 18.9% on a full year basis, excluding license fees.Equipment sales for the fourth quarter fell by 12.8% driven by a 30.8% decline in international equipment sales caused by the supply chain disruptions that we had previously disclosed, which created a backlog of international equipment orders and, to a lesser degree, by our transition from our legacy solutions to Nexus domestically.As added perspective, including the equipment sales backlog, fiscal full year 2019 product revenue would have increased by approximately 21%. Despite this temporary headwind in equipment sales, we are pleased with our results across both recurring revenue in consumables, which grew by 23.3% compared to Q4 of fiscal 2018 and by 20.2% compared to full fiscal 2018, as well as the performance of our equipment sales, which while declining in Q4 were still up over 15.5% for the full year.The domestic sales team did an outstanding job transforming the majority of the business from distributors to direct with minimal disruption over the last 18 months, laying the groundwork for the Nexus rollout. I will let Joe comment in added detail regarding our fiscal 2019 fourth quarter and full year financial results. I wanted to take this opportunity to take a quick look back at what has brought us to where we are today and what we see ahead of us in the coming quarters. About 2 years ago, we set a new course to position Misonix for sustainable long-term growth and profitability. I'm pleased to be able to say that we have been overwhelmingly successful in achieving this goal. We are proud of the significant accomplishments the team has achieved over the past 2 years that have moved the company into a positive direction and built a solid and stable foundation for future growth and profitability. These efforts have translated directly into shareholder value creation as reflected in our share price over this period.We now have a core group of people with experience and enthusiasm to lead the company forward. During the past year or so, we have made some key hires, including the incorporation of Sharon Klugewicz as Chief Operating Officer to our management team as well as the addition of Gwen Watanabe to our Board. Both of them are world-class executives with extensive experience in the medical device field and have already made valuable contributions to the company.In addition, we've strategically expanded and reconfigured many of our teams along with numerous staff members. We've also changed internal procedures and vendors and should see a significant improvement in performance over time. These changes are slowly paying off, and we look forward to reaping further benefits going forward. Speaking of sales, we've basically transformed our go-to-market strategy, and upon the anticipated completion of our Solsys acquisition, we'll be doubling the size of the company from a revenue and staff perspective while almost tripling the sales force and creating two separate and dedicated sales channels for specialty surgical and advanced wound products. This focus will create opportunity for additional distribution opportunities and bolt-ons over time.Upon completion, which we expect in late September, the Solsys acquisition will mark a transformational point in Misonix' history and qualifies one of the more important milestones. We made this transaction not only with a disciplined financial approach but did so only after determining that we are capable of both integrating the companies and creating synergies and economies of scale, but also on the basis of our analysis that the combination of the two will yield greater results than as two separate stand-alone companies. As we mentioned at the time we announced the deal, the acquisition of Solsys will not only provide us with a revenue stream from TheraSkin sales that is growing at an annual rate in excess of 25%, but also significantly enhance our ability to address the domestic wound biologics market, which is valued at approximately $700 million annually and which is projected to grow at a compound annual growth rate of 8%.In short, we hope you agree that the Solsys acquisition will create added shareholder value as we leverage mid- and long-term growth opportunities for the combined company to grow revenue in excess of 20% per annum. We are working extremely well with the Solsys team to ensure an efficient integration in order to deliver on the value of this compelling combination for our patients and our shareholders and remain on schedule with our integration road map.As we've mentioned, Nexus will play a vital role in that growth. As most of you know, Nexus is our next-generation integrated ultrasonic surgical platform that combines all the features of our three existing solutions, BoneScalpel, SonicOne and SonaStar, into a single fully integrated platform that will also serve to power these plus future solutions. We have begun a limited release of Nexus, and the feedback is very positive. Over the coming quarters, the rollout will accelerate, and our pipeline is looking promising. Nexus will be the solution we focus on in the U.S. to expand across just about every area we target, including neuro, spine, wound and general surgery.And most recently, we announced that we were granted CE Mark approval for Nexus. We are pleased with the news, as we will now be able to enter other strategically important geographic markets for us in the European Union later this year in addition to the U.S. as we continue to expand our footprint and diversify our revenue across markets and procedures. All this brings us to where we are today, a company with strong recurring revenues, healthy double-digit top line growth, an expanding geographic footprint, a growing portfolio of products and solutions, a healthy balance sheet, a much improved operational infrastructure, more robust controls and procedures, a great group of strategic partners and most of all, a world-class team of people working in unison towards the same goal, to make Misonix better each day.As we look ahead, we are cognizant there is still much work to be done, and we are excited and confident in our abilities to rise to the challenges. We continue to work through our historical supply chain issues and are confident that after completing the review of the entire supply chain, that the various initiatives we have implemented will improve product availability for legacy as well as Nexus products. For example, while Nexus consoles will be manufactured in the U.S. at a contract manufacturer, we expect that our existing partners in China will manufacture legacy BoneScalpel and SonaStar consoles by the end of the year. Misonix will then focus solely on handpiece development and manufacturing. We further expect that all disposable products will be manufactured at various vendors, and ultimately, shipped directly to customers once consolidated.We've completed three years of revenue growth of 18% to 20% per year, which has strained our supply chain, which is needed to be revitalized and strengthened. While we've made great progress, we still have work to do and can see our path to completing this important initiative.In summary, our financial results for the fourth quarter and full year fiscal 2019 highlight the benefits of our recent investments, our strategic initiatives and the progress being made towards sustainable growth and profitability.With that, I would now like to turn the call over to our CFO, Joe.

[Joseph Dwyer:]

Thank you, Stavros, and good afternoon, everyone. I'll begin by reviewing our financial results in greater detail. Fiscal fourth quarter product revenue increased 12.9% to $9.8 million, reflecting a 23.3% increase in consumables sales, partially offset by a 12.8% decline in equipment sales. Looking at our geographic segments. Domestic sales for Q4 increased 22% and international sales rose by 0.6%.Fourth quarter operating expenses of $9.1 million increased by $1.2 million, reflecting a rise of $1.7 million in G&A expense. This is primarily attributable to the $1.3 million of fees and expenses relating to the Solsys transaction. Fourth quarter selling expenses were essentially flat at $4.4 million, and R&D expenses of approximately $900,000 decreased by 33% resulting from the wind-down of the Nexus product development costs. We reported a fourth quarter net loss of $2.3 million or $0.25 per diluted share versus a net loss of $1.8 million or $0.20 per share in the prior year period.The impact of the transaction-related expenses in the fiscal fourth quarter 2019 on a per share basis was $0.14. Our adjusted EBITDA was a positive $228,000. As a reminder, as we -- we define adjusted EBITDA as earnings before interest, depreciation, amortization, taxes, noncash comp expense and Nexus R&D expenses, and for this quarter, we've also excluded our Solsys transaction-related expenses. Looking at our full year results. We generated record product revenues of $38.8 million, representing approximately 19% growth over the prior year period. Total product revenue growth included a 20.2% increase in consumables sales and a 15.5% rise in equipment sales. Including the sales backlog at year-end, fiscal 2019 product revenue would have increased by approximately 21%, which is slightly ahead of our revenue guidance for fiscal 2018.Geographically, fiscal full year domestic sales increased 14.6% and international sales rose 25.7%. In the prior year period, we recorded $4 million of license revenue, which is nonrecurring this year. As a result, total revenue increased 6% this year over last. Our gross profit margin was a healthy 70.2% for the year, which is roughly flat compared with last year, excluding license revenue, in line with our full year guidance. Full year operating expenses of $34.7 million increased by $4.9 million, primarily reflecting our expanded direct sales team and investments made to drive operational excellence across the business, as we pursue our next phase of growth, as well as Nexus development cost of $2.1 million and transaction fees for the pending Solsys acquisition of $1.4 million.For fiscal 2019, we reported a net loss of $7.4 million or $0.79 per diluted share, which is an improvement over the prior year period net loss of $7.6 million or $0.87 per share. Fiscal 2019 adjusted EBITDA was a positive $130,000 compared to an adjusted EBITDA gain of $4.2 million in fiscal 2018. Remember that last year included $4 million of license revenue with 100% gross margin. So without that, last year's EBITDA was a positive $159,000, about the same as this year.Moving on to our cash flow and balance sheet. Working capital at June 30, 2019, was $14.1 million and cash used in operations was $3.7 million, mainly due to a $3.2 million use of cash for working capital, offset by a net loss in cash -- noncash expenses. We ended fiscal 2019 with $7.8 million in cash. As it relates to our recent M&A activity, as Stavros mentioned, in the fourth quarter, we announced the acquisition of Solsys in an all-stock transaction valued at approximately $97 million as measured on the basis of the Misonix share price on the date the transaction was signed. The transaction has been approved by the Boards of Directors of both companies and the issuance of Misonix shares is subject to the approval by Misonix shareholders and Solsys unitholders.At closing, current Misonix shareholders will own 64% of the combined company and the Solsys unitholders will own the remaining 36%. We have set September 26, 2019, to hold a meeting of Misonix shareholders to vote on the transaction and other related items. Regarding guidance for fiscal 2020, we expect product revenue growth in excess of 20% and gross profit margins of approximately 70%. We estimate that the first half of fiscal 2020 will encompass about 47% of total annual revenue with the remainder being generated in the second half of fiscal 2020. On a stand-alone basis without Solsys, we expect that adjusted EBITDA will be around the breakeven level. Assuming the successful completion of the Solsys transaction, at the beginning of our second quarter, we will add the Solsys revenue stream, which generated $24 million of revenue in calendar 2018 and is growing at a rate in excess of 25%. As a combined company, we will be generating annual revenues of over $80 million. We will provide further combined company guidance after the transaction is completed.We expect to assume $20 million of Solsys' secured debt at closing, and we've renegotiated the terms of the debt with SWK Holdings, the lender, to reduce the interest rate and approve other key terms effective on the completion of the acquisition. The interest rate will be about 10%. We've also secured another $5 million of borrowing capacity from SWK. At closing, the combined entity will have around $12 million to $15 million in cash -- combined cash and borrowing capacity. As a result, we expect that Misonix will have sufficient cash and debt capacity to fund our operations through profitability.In closing, we are pleased with our performance for fiscal 2019 and the direction we're headed, which we expect will enable us to meet our goal of enhancing long-term shareholder value as we move through fiscal 2020 and beyond. As we prepare for the closing of the Solsys acquisition and the controlled launch of the Nexus later this year, we continue to focus on actively managing our capital structure, driving sales, improving productivity and increasing efficiencies across the business.With that, I'd now like to open the call to questions. Operator?

[Operator:]

[Operator Instructions]. We'll take our first question from Alex Nowak with Craig-Hallum Capital Group.

[Alexander Nowak:]

Stavros, the supply chain problems a couple quarters ago were related primarily to the titanium consumable tips. So what happened in the supply chain here to hit the equipment side of revenue this quarter?

[Stavros Vizirgianakis:]

Thanks, Alex. I think what we saw was specific shortage of components. More specifically, on the BoneScalpel consoles, we had issues with getting ample supply of display screens as well as foot pedals. As we know, the BoneScalpel platform is aging; it's close to 10 years old. And I think as the years go by, it becomes more challenging to source both parts. So distributors -- not distributors, manufacturers had promised us certain deliveries and, quite frankly, let us down at a very late stage and to go through validation of other components with other suppliers just takes a very long time. So I think we've taken the viewpoint that we'll have to build up inventory levels on those pretty significantly, but that certainly hurt us. Because I think the sales team did their job, they brought in the sales and we were sitting with close to $800,000, the majority of it sitting in international equipment sales that were just incomplete units and unable to ship.

[Alexander Nowak:]

Okay. Got it. And then did you say earlier that the challenges related to the equipment, were those primary resolved by the end of the quarter? And when will that $800,000 equipment backlog be shipping?

[Stavros Vizirgianakis:]

Yes. I think the challenges on the equipment side are ongoing. They're not going to just go away in a couple of weeks. We think that over the next 6 months, the supply chain will improve on the equipment side. I think we also have constraints internally in terms of being able to build these units as we focus more of our efforts on building handpieces, which are now a fairly significant item with Nexus. And I think in that -- previously, we used to sell a single handpiece or maybe 2 per system. With Nexus, we're now having to sell four handpieces per system. There is a significant drain on manufacturing resources.So we're looking at this holistically and saying that if we really want to build capacity internally to build handpieces, we think that we're best served with moving the legacy hardware out of the building. So we are going to be doing a technology transfer September with our team of production and engineering staff with a Chinese partner to actually start manufacturing BoneScalpel units in China, so that we can really focus the manufacturing resources that we've got on handpiece building. So it's really twofold. Think of it as a challenge around parts and also challenge in terms of scaling resources to build those units. So we feel comfortable that we've got a good supplier, outsourced supplier with Nexus generators that can scale that as needed, but we also feel that it's necessary to move SonaStar and BoneScalpel offshore, so that we can just focus on handpieces internally. So on a local Misonix level in Farmingdale, our goal is just to be manufacturing handpieces by the end of the year.

[Alexander Nowak:]

Okay, guys. That makes sense. And then you began to commercialize Nexus here in the quarter. Beyond the customers that you first let try the system prior to the FDA approval, what are the latest Nexus users that just got their hands on the box call within the last couple of weeks, what are they saying? What do they like? And when do you plan to wean off that limited market release?

[Stavros Vizirgianakis:]

Yes. I think the strategy is that we're going to be in limited market release for the first quarter. We're involved in a significant product evaluation. For the first time, we're going head to head with our 2 major competitors on the West Coast. So right now, a big chunk of our resources in terms of engineering, marketing and sales support resources are taking part in this evaluation, which is a 6- to 8-week evaluation. So this is going to give us a very, very good chance not only to see how Nexus performs but to see how Nexus performs head to head against the 2 competitors and their new units in the marketplace. The early signs are very, very encouraging. I think that having the RF capability is something that does provide us with an advantage, especially for other applications like general surgery. So, so far, we're very optimistic.We have a very good pipeline, a robust pipeline established. The sales team is really chomping to go, but we have just taken the viewpoint, let's use the first quarter, let's iron out all the problems right now. All engineers are hands on deck and spending a lot of time supporting the sales staff in the field because it's such an important product for us. We don't plan to do anything on the international side in the short term because we just feel that it's far too important to just cut ourselves too thin. So I think for the first quarter, it's really going to be focused accounts. I would say probably half our resources are being spent on this one specific idea and evaluation right now. And I would say from the second quarter, we really start opening Nexus up to the wider market.

[Alexander Nowak:]

Okay. Understood. And there's a last question for me. Joe, equipment sales has been a little bit stagnant here. Let's just exclude the backlog component. But excluding that, the equipment sales have been stagnant. So just -- with the launch of Nexus here in fiscal '20, what should we be thinking about equipment sales going forward?

[Joseph Dwyer:]

Equipment sales probably would be, I guess, for full year, will be probably 74% consumables, 28% -- 26% equipment, somewhere in that range.

[Operator:]

We'll take our next question from Ryan Zimmerman with BTIG.

[Ryan Zimmerman:]

So I just wanted to ask Stavros thoughts on the previous question. You had a backlog of $800,000. You also did call out the fact that Nexus could be coming to the international market given the CE Mark. Do you have a sense for maybe what was delayed or what the pent-up demand could have been if Nexus was already out there? Just trying to get a sense of kind of where equipment sales would land at with all these kind of puts and takes.

[Stavros Vizirgianakis:]

Okay. If we had to look at our pipeline, Ryan, I'd say that our pipeline is probably close to 150 units. That's in pent-up demand that we are hoping to supply over the next 12 months. Part of the challenge with the launch of Nexus has been ironing out early software issues, getting through all of that, but also ensuring that we have ample supply of disposables because essentially what has happened, our supply chain has been very, very constrained this year just supporting the legacy products because if you look at our consumable growth, that's been at 20%. We've had to use the same supply chain to essentially build a duplicate range of products in the Nexus range. So I think that our early concern is having ample consumables to support the Nexus launch, so that we don't convert accounts, place units into marketplace and then run into a situation where we've got a backorder with Nexus because the legacy disposables are not backward compatible into the Nexus unit, if that answers your question.

[Ryan Zimmerman:]

That's helpful. And then I just want to ask two things, and then I'll hop back in queue. One, where did you end the quarter from a legacy Misonix sales rep standpoint?

[Stavros Vizirgianakis:]

I think we ended the quarter with about 51 resources. We're now up to 55 because we had a training program at the end of June in Miami. So we're kicking off the year with 55. So you can look at that as 48 sales people, 7 regional sales managers and the plan is to add 5 per quarter this year going forward.

[Ryan Zimmerman:]

That's very helpful. And then just lastly for me. Integration of Solsys, sounds like you're going to wrap that up in the first fiscal quarter here. Anything to call out that may be taking a bit longer that could impact the timing of the transaction?

[Stavros Vizirgianakis:]

Look, I think this was a complex transaction, being the first transaction for us. I think there was a number of back and forth with the SEC reviewing our S-4. We went through 4 rounds of review before we finally got approval yesterday, and we went live with the registration statement. So I think that the encouraging side is that the Solsys team is executing well. The fact that the SEC has taken a little bit longer, I think they've done a very fulsome review of the transaction and the document. So we'd obviously wanted to shave a month of that, but it is what it is. We're hoping that on the 26th of September, we'll vote and get everything closed. But everybody -- both organizations are very excited to get going. I think just from a momentum perspective, the quicker we can do it, the better because with salespeople, right now, the Misonix people are obviously very focused on the neuro and spine opportunity with Nexus, and while they're managing the wound business, we don't want to drill out the integration and lose any momentum because there is significant momentum on the ultrasonic wound debridement side of the business. So that's about as much color as I can give you for now.

[Operator:]

We'll take our next question from Kyle Rose with Canaccord.

[Kyle Rose:]

Can you hear me all right?

[Stavros Vizirgianakis:]

Yes, Kyle.

[Kyle Rose:]

Gentlemen, wanted to talk about your 2019 guidance -- or fiscal 2020 guidance and kind of what's contemplated there. It sounds like obviously there is lot of puts and takes, you got the manufacturing and the supply side, you got the new product launch both internationally and in the U.S. And then towards the back half of the year, you're going to have Solsys come on. So I guess, what is the underlying contribution that you expect from Nexus in fiscal 2020? And then what, if any, headwinds or negatives do you contemplate from the base business?

[Stavros Vizirgianakis:]

Kyle, we don't have a specific number drawn out for Nexus. I think what we are going to see is that what -- when we move from limited release to full market availability, we see the Misonix business accelerating from the teens to 30% by the fourth quarter. So we are expecting significant ramp-up in the business. A lot of that ramp-up on Nexus is coming from neuro business as well as additional penetration in the spine business. So we think that there's a lot of momentum that's built up there. The early indicators from the market are that even the existing users of the technology feel that with the additional power that the bone cutting capabilities are enhanced. So I think that we draw further penetration in the spine business, there's definitely more opportunity in the neuro market. We think that with handpiece sales on the neuro side, that also significantly moves the bar because those handpieces are in excess of $20,000. And we're saying at this stage, probably in excess of 2/3 of Nexus placements will have more than two handpieces. So we're probably talking in the order of four handpieces per consignment and two of those being neuro that add significant revenue. So we're thinking really, second quarter, momentum starts building and it really lets rip in the third and the fourth quarters when we've got that base out then and all the sales reps have got their hands on the product.

[Kyle Rose:]

Okay. That's very helpful. Let me just ask a follow-on question there and just ask even my previous question a different way. You gave the break -- the revenue breakdown, first half, second half, you have 47% in the first half, 53% in the second half. I guess, with some of the puts and takes that you've contemplated, the manufacturing that's going to continue for the next 6 months, Nexus that's going to come on, it sounds like more in the second quarter, but really gain steam in the second half. Why wouldn't you expect more of a weighting of the revenue mix towards the back half of the year?

[Stavros Vizirgianakis:]

I think the underlying business on the disposables side is strong. We saw 22% consumable growth in the third quarter. So I think that the fundamental in the consumables, which are 3/4 of the business, continue to remain strong. I think we're going to see some handpiece sales. Obviously, going to be more in the second half of the year, but I think that there's good, steady business on consumables domestically and internationally at the moment.

[Operator:]

We'll take our next question from Michael Kaufman, MK Investments.

[Michael Kaufman:]

Stavros, sounds like you guys are doing very well with a very full plate. I just wanted to get a little color on the fact that there was no license revenue this year. What does that say about your Chinese partner? And is that -- because the original contract had some additional royalties and/or license revenues going forward?

[Joseph Dwyer:]

Michael, it's Joe. Yes, the contract we had with our Chinese partner did have royalty revenue in the first three years of the contract. The first payment of that isn't due until this December. So we're not there yet. We haven't recorded anything. And we're not modeling royalty revenue in our guidance for the next year. The timing of that payment could move a little bit, so we'll record that when we get it. But the relationship is still strong and moving forward, and we're looking forward to monetizing that.

[Michael Kaufman:]

Now the Chinese partner that's going to build your units, is it the same or a different partner than you're using for this business?

[Stavros Vizirgianakis:]

Well, right now, in China, we have two entities that we deal with. In terms of manufacturing, we're looking at using one partner for the manufacturing of the units. Our biggest concern is to increase capacity. So the way to think of it from a Chinese perspective is that they're going start manufacturing, but these units will not be for Chinese market consumption. It will be a question of we'll buy these units to sell elsewhere in the world or they will drop ship to our end market customers outside of China. In terms of Chinese manufacturer, they still need to get registration with the Chinese FDA to be able to manufacture and sell in the Chinese market. So it really is two separate factors, but everything is going to be done at one facility.

[Michael Kaufman:]

I guess the question is, did you look at somebody like Jabil to -- an American company to do it who has manufacturing sites all over the world and does a lot of medical manufacturing? Because if there are issues between the U.S. and China, it may be that if you only have a Chinese manufacturing partner, you could have less flexibility.

[Stavros Vizirgianakis:]

Yes. We didn't look at Jabil in particular. I think we looked at the existing partners for a couple of reasons. One of them was concern with tariffs. If tariffs get worse, we want to obviously step up the Chinese ability to manufacture products in China so that we don't experience any disruption to the business. I think with the legacy products like BoneScalpel and SonaStar, it wouldn't be as challenging to find other manufacturers, if needed. We just saw this as a natural evolution to the partnership since we've got a lot of goodwill and a good partner in China, let's try and do more together with them. But it certainly doesn't preclude us from looking at other manufacturers going forward. You also know that next year, our focus in the U.S. is squarely around Nexus. So with our focus being so heavily weighted towards Nexus, there's less importance for us in the longer term on these legacy products. So I think we've certainly got options, but I think in the near term the Chinese could help us. If things really turn south with the relationships, we can look at other options. We certainly aren't excluded from doing that.

[Operator:]

And ladies and gentlemen, this concludes today's question-and-answer session. I would now like to turn the call back to management for any additional or closing remarks.

[Stavros Vizirgianakis:]

Thank you. In summary, we continue to see multiple avenues for sustainable growth that we can and I expect we'll execute on. We operate in a growing industry and in healthy markets that offer massive opportunities to grow our current modest annual revenue. It's an industry with an increasing need for world-class solutions that can provide more efficient and effective patient outcomes, that can create added operational leverage among health care providers and that are easy to use and highly adaptable. We've continued to invest in our products and our people to better service our clients, and ultimately, patients around the world. And I firmly believe that our future success continues to be within our control.Given these characteristics, I remain very optimistic about the investment case for Misonix given the many opportunities we have in our hands to continue to grow shareholder value. I want to take this opportunity to close by thanking the outstanding team at Misonix for all the terrific work they're doing to build the new Misonix and capitalize on our abundant opportunities. I'd also like to thank our loyal customers, great partners and supportive shareholders. We look forward to speaking with you again when we report our fiscal 2020 first quarter results. If any additional questions arise in the meantime, please contact our Investor Relations firm, JCIR, at 212-835-8500. Thank you very much for your time. Goodbye.

[Operator:]

Ladies and gentlemen, this concludes today's conference. We appreciate your participation.