Title

Presentation

Operator: Ladies and gentlemen, thank you for joining us this morning for the AdaptHealth Fourth Quarter Earnings Call. At this time, I would like to introduce Mr. Chris Joyce, General Counsel.

Christopher Joyce: Thank you, operator. I’d like to welcome everyone to today’s AdaptHealth Corp. conference call for the full year ended December 31, 2022. Everyone should have received a copy of our earnings release yesterday evening. If not, I’d like to highlight that the earnings release as well as a supplemental slide presentation regarding full year 2022 results is posted on the Investor Relations section of our website. . In a moment, we’ll have some prepared comments from Steve Griggs, Chief Executive Officer of AdaptHealth; Josh Parnes, President of AdaptHealth; and Jason Clemens, Chief Financial Officer of AdaptHealth. We will then open the call for questions. Before we begin, I’d like to remind everyone that statements included in this conference call and in our press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

These statements include but are not limited to, comments regarding our financial results for 2022 and beyond. Actual results could differ materially from those projected in forward-looking statements because of a number of risk factors and uncertainties which are discussed at length in our annual and quarterly SEC filings. AdaptHealth Corp. shall have no obligation to update the information provided on this call to reflect such subsequent events. Additionally, on this morning’s call, we’ll reference certain financial measures, such as EBITDA, adjusted EBITDA and free cash flow, all of which are non-GAAP financial measures. This morning’s call is being recorded, and a replay of the call will be available later today. I’m now pleased to introduce our Chief Executive Officer, Steve Griggs.

Stephen Griggs: Thank you, Chris. Good morning, and thank you for joining our call. AdaptHealth is a full-service nationwide provider of products and services for patients at home and in the community, empowering them to live their healthiest lives. I’d like to express my appreciation to our 10,931 employees operating in 726 locations in 47 states, including more than 1,000 health care professionals who work daily to serve AdaptHealth’s more than 3.9 million patients. 2022 was a crucial year in the development of AdaptHealth setting us up for successful 2023 and stay on track to achieve our longer-term goals. Most important, AdaptHealth continued to grow its revenue and customer base in 2022, even in the face of supply chain and labor cost issues.

Driving this growth was our ability to source and deliver CPAP devices to satisfy the demand that is built up as a result of the Philips recall. These efforts, including extra labor and other extraordinary costs contributed to the decline in our 2022 gross margin, but we intentionally incurred those costs as part of our plan to increase market share through the accelerated pace of patient setups. It is important here to note that the vast majority of ADAS revenue is recurring, particularly in our sleep, respiratory and supplies lines. Once we set up a new patient on 1 of our devices, we have a reasonable expectation of significant ongoing revenue, initially through the rental, if applicable, and then with ongoing supplies. Therefore, 1 of our key metrics is Sensus, the number of people we serve in each product line.

As a result of this acceleration of setups, our census of PAP device patients has hit record levels. These Pat census figures are a key focus for our operators as they convert to recurring resupply orders. Accordingly, resupply census is also at record levels. AdaptHealth has built a national scale that is unmatched in the industry and invested in infrastructure throughout the organization to support attractive long-term growth opportunities in our immediate markets while we continue to make upgrades into our talent. This work included the complete overhaul and integration of our accounting and finance infrastructure, featuring our enterprise-wide Oracle implementation, which began in February 2022, as we continued our efforts to improve our internal controls over our financial reporting.

As a result of these infrastructure improvements throughout our operations and revenue cycle management we achieved a record of $374 million of cash flow from operations. During 2023, we will continue to make investments to drive improvements. During 2022, we also took the first steps in our journey towards building ADAP 2.0, which Josh will discuss in greater detail. We know that HME suppliers are crucial in the health care continuum, especially for post-acute and chronic disease management. Most of our devices are connected and generate actionable data to help manage chronic conditions and reduce downstream cost. Adapt 2.0 reflects our commitment to continue to facilitate that connectivity for the benefit of our patients and payers. In conclusion, I have great confidence we are entering this year from a position of strength.

Based on significant progress across a number of important strategic initiatives, we expect to drive increased shareholder value going forward, and we believe our updated guidance for 2023 fully considers and addresses any 2022 headwinds expected to continue throughout this year. Our management team remains focused and confident in achieving the 2025 goals we shared at Capital Markets Day in September, namely to generate $4 billion in revenue, $1 billion in adjusted EBITDA and free cash flow of $300 million. Now I would like to turn the call over to our President, Josh Parnes, to provide further details and an update on strategic developments.

Joshua Parnes: Thank you, Steve. This past year, AdaptHealth took the first steps towards building ADAPT 2.0. Technology and innovative care models are at the center of our team’s focus. We are now in the process of enhancing the digital and in-person connection we have with our 3.9 million patients and testing how best to use this connectivity to drive better outcomes at a lower overall total cost of care. . Adapt has been a leader in e-prescribe and the significant administrative savings and efficiencies it provides in our business. E-prescribe and digital orders continue to increase as a percentage of our business and will continue to be a focus, which will enable increased order transparency and collectibility of revenue.

Beyond e-prescribe in 2022, AdaptHealth deployed an integrated payer portal to allow a payers care and claims management teams to seamlessly monitor and coordinate patient services. These integrations have allowed both parties to reduce the administrative expense associated with providing care for more of their patients. This technology is scalable and proprietary and available to deploy on behalf of additional payers. Additionally, AdaptHealth recently launched my App, a comprehensive mobile application to facilitate channel of choice communication with patients as well as provide the ability to place and track orders, and in the future, enable full patient billing access and clinical encounters for our chronic disease management programs.

As we continue to roll out, my app it will become a powerful resource for patients to access data on their connected medical devices. We are seeing strong adoption by our patients with over 30,000 downloads from the Apple, Android app stores, up from 3,000 in Q3 and more than 17,000 of our diabetes patients registered to access the system and 3,500 patients ordered products digitally. Our goal is to create an application that allows patients to interact with us on ordering, billing and clinical disease management which will allow for a transformative patient experience at a lower overall cost of care. Finally, initial work has begun on disease-specific care models. Our goal is to utilize our pipes into the homes of our almost 4 million patients to demonstrate more cost-effective and patient-centric care models.

We believe we can help bridge the gap that exists in understanding real-time data on patients living at home with chronic conditions through connected services and devices. We have confidence that we can help our patients get more proactive care and enable more effective value-based care models over time. Now I’ll turn the call over to our CFO, Jason Clemens.

Jason Clemens: Thanks, Josh. Good morning, and thank you for joining our call. For the full year ended December 31, 2022, AdaptHealth reported net revenue of $2.971 billion, an increase of 21% from $2.454 billion in 2021. For the fourth quarter ended December 31, 2022, AdaptHealth reported net revenue of $780.3 million, an increase of 11% from $702.1 million in 2021. Non-acquired net revenue growth was 5.3% for Q4 led by sleep, our largest product category. Patient census is now the highest it has ever been, surpassing our previous record set in Q2 2021, immediately prior to the Respironics recall. Q4 sleep growth is a good indicator of the continuing patient demand for sleep products that we expect will continue in 2023. For the fourth quarter ended December 31, 2022, adjusted EBITDA was $146.0 million, which fell below what we expected when we revised guidance downward in January.

First, let me remind everyone the reasons for the January reduction. Our CPAP supply chain today is much healthier than it has been. Although we grew sleep rental revenue sequentially from the third quarter to the fourth quarter, we did not grow as fast as we expected. Across the product portfolio, we expected a higher mix of rental versus sales revenue for the quarter. Rental revenue carries gross margins of almost 100% versus 40% for sales revenue. So we adjusted bottom line guidance accordingly. Further, we detected incremental inflationary pressures, which we also noted as part of our January 10 guidance. As previously discussed, our cost structure increased in response to the challenging supply chain environment. We implemented centralized distribution centers to store additional product to protect against recurring supply interruptions.

We also locked in purchasing agreements in special terms to ensure we receive the products our patients needed when they needed it. Many of those agreements came with surcharges related to raw materials, shipping expense and fuel pass-throughs. Others came with cost increases related to new product launches. However, the cost of these factors were approximately $10 million more in the fourth quarter than we had anticipated in January. We also experienced an increase in payer refund and recoupment activity which caused a reduction in net revenue and adjusted EBITDA for the quarter of $10 million. Although refunds and recruitments are normal course for health care providers, the size and timing of this activity was unexpected and very recent so it was not accounted for in our January 10 guidance.

We believe that we have appropriately accounted for general refund and recruitment activity in our 2023 guidance. Finally, we experienced $6 million of unanticipated variable labor and other operating expense in December. We believe these impacts are contained to 2022, but we have built in an appropriate level of conservatism to account for any surprises in 2023. For the full year, cash flow from operations was $374 million, up $98 million or 36% over 2021. We are very pleased with this improvement, particularly the contribution from our revenue cycle as days sales outstanding was 42 at the end of 2022, down 5 days from the end of 2021. During last quarter’s earnings call, we highlighted the investments we’ve continued to make an e-prescribe and in our claims edit engine, and those investments are continuing to perform.

I’ll point out that our accounts payable transformation initiative is complete, and we achieved our days payable outstanding target of 62 days, down from 79 at year-end 2021. We also delivered cash flow from operations improvement despite $35 million of higher interest payments in 2022 over 2021. So overall, our cash generation is in very good shape. Free cash flow, defined as cash flow from operations less capital expenditures, was a use of $18 million for 2022 as CapEx was $391 million for the year. Quite frankly, we don’t have a better use of cash than buying enough equipment to satisfy the needs of our patients. On December 31, 2022, cash on hand was $46.3 million. Per our covenants, net leverage was 3.69x, at the end of ’22, we maintained 0 balance on our $450 million revolver.

As a reminder, on December 15, 2022, our Board of Directors authorized the extension of our previously announced share repurchase program to allow for open market purchases of our common stock through the end of 2023. We did not complete any repurchases during the quarter. And for the year, we repurchased $14 million. As announced this morning, we are adjusting our overall guidance for 2023 to account for the items discussed earlier. Our 2023 guidance for net revenue is $3.16 billion to $3.24 billion, this represents 7.7% nonacquired growth over 2022. Our guidance for adjusted EBITDA is $650 million to $710 million, representing 14.5% growth over 2022. The midpoint adjusted EBITDA margin of 21.3% is up from 20.0% in 2022. Our guidance for CapEx is 10% to 12% of net revenue reflecting elevated equipment purchasing in the first half of the year and decreasing purchase activity over the second half of the year as we work through the PAP setup backlog.

We are in process of installing new cost management initiatives focused on revamping our supply chain infrastructure, rationalizing our real estate footprint and consolidating various supplier agreements into national contracts to leverage our buying power. In addition to our focus on technology, we’ve added great people in new roles, particularly in finance and accounting as we work to harden our newly established control environment. To that point, we hired an impactful leader in October 2022, Christi Archbold, our Senior Vice President of Corporate Accounting. Christi has made considerable contributions since joining AdaptHealth. So effective March 4, we expect to promote Christi to Chief Accounting Officer and Principal Accounting Officer for the company.

With that, I’ll turn the call back over to our CEO, Steve Griggs.

Stephen Griggs: Thanks, Jason. As I said before, AdaptHealth is entering 2023 from a position of strength based on our national scale, investments in infrastructure continued improvements in supply chain and a positive regulatory environment. Adding to the strength and stability of our core business are the continued upside of growth and operating efficiencies expected from our technology investments and the continued rollout of Adapt 2.0. Moving on to 2023. We believe we have addressed the inflationary cost pressures on our business and appropriately reflected them in our revised guidance. And I share our management team’s confidence that the financial targets we laid out at our September ’22 Capital Markets Day will be achieved. Operator, please open the line for questions.

See also 17 Biggest Payroll Companies in the World and 13 Countries That Produce The Best Hackers.

Operator: . We’ll take our first question from Pito Chickering with Deutsche Bank.

Philip Chickering: See a lot of questions here, so I’ll let a lot of others ask some of the details. So I’ll just lead into, why does our 2023 guidance assume lower rental revenue and therefore, potentially lower EBITDA, your CapEx guidance percent of revenue is going up. I mean just intellectually shouldn’t higher — increasing CapEx associated with increased rental revenue and therefore increased EBITDA?

Jason Clemens: Yes. Thanks, Pete. This is Jason. I’d point you first to our supplement that we posted to our website, regarding Q4 results. In the product category mix, we are responding to what we’re seeing within the product category, specifically rental. We had expected sequential growth within respiratory of several million dollars. And in fact, we shrank within respiratory rental. HME and other categories, we had expected some modest sequential growth, and those product lines remained flat. . Sleep was a strong performer, continues to be a strong performer. It was up sequentially by $5 million. Frankly, we expected more, but the numbers landed where they did. So we’re, in fact, responding to the trends and lowering the rental revenue, as you called out, which drops essentially 100% to the bottom line.

Regarding CapEx, we’re providing what we believe is a conservative expectation on CapEx at 10% to 12% of revenue. That’s still higher than our historical norms, we would expect 10% of revenue in more normal circumstances. So kind of normal supply chain and no PAP recall environment. So hopefully, that adds some color to your question.

Philip Chickering: Okay. And then second question is here. Can you talk about organic diabetes growth you had in 2022. What are you seeing for 2023, how much of this shift from DME to pharmacy impact to you in 2022? What do you assume for ’23? And if you look at yours or goals of for 2025, $4 billion in revenues, EBITDA of $1 billion, free cash flow $300 million. Diabetes is tracking lower in ’23 versus ’22? How does it impact your 2025 targets?

Jason Clemens: Sure. So let me start first with the question on channel mix change. With our diabetes portfolio, we are not seeing substantial move from the medical benefit to the pharmacy benefit within our book of business. I will say that we are responding to lower diabetes growth in the second half than we anticipated. I’ll remind everyone that at the beginning of ’22, we had pegged expectation for our diabetes product line to grow 18%, around mid-’22, we tempered that expectation to the mid-teens, and in fact, diabetes nonacquired growth landed in the low teens. So we are responding to that shift. Volumes and start activity are generally healthy. We are under pressure from payer mix, essentially lower price points depending on the payer, and we’re accounting for that in our guidance for 2023.

So some of the $50 million revenue guide down for ’23, it is in response to tempered expectations on diabetes. Now to your question on 2025, essentially all financial targets, top line, adjusted EBITDA as well as free cash flow, we still believe that we will achieve those targets in the time line we outlined, I’ll remind all that those expectations had very limited acquisition assumptions built in, significantly less than the company has demonstrated historically. And so as we respond to change in non-acquired growth, we do have the lever, obviously, of acquired growth. I’d say separately, we also set at Capital Markets Day that we had expected over time for diabetes revenue growth to glide down over the next several years. we said that 3 to 5 years out, we thought that diabetes would land at a mid- to high single-digit nonacquired growth component of our product portfolio.

And so we are seeing the impacts we expected, albeit faster than we had predicted.

Operator: And we’ll take our next question from Brian Tanquilut with Jefferies.

Unidentified Analyst: This is Christian Schuman on behalf of Brian. So going into 2023, just kind of make sure on how we should be thinking about the Q1 seasonality, sequential EBITDA trends kind of like we had touched on with the weakness in Q4? And then also third quarter, the EBITDA cadence.

Jason Clemens: Sure. Good question. This is Jason again. I would say, firstly, that if we look at the full year revenue guide, we are projecting a 7.7% increase in non-acquired growth over 2022, that is down from what we predicted previously, namely due to the factors in our rental portfolio as well as diabetes that we discussed. . I would tell you that Q1 non-acquired growth, we believe, will be in the area of 6.5% to 7% nonacquired growth and will step up over the course of the year due to changes we are installing regarding sales focused commissions, incentives related to sparking growth within those rental product lines. That will take a little time to pull through, but we do expect that to pull through over the course of the year. In terms of margin profile we’re expecting 21.3% of full year adjusted EBITDA. I would tell you that the shape of EBITDA for Q1 should be similar to what we saw last year for bottom line.

Operator: And we’ll take our next question from Joanna Gajuk with Bank of America.

Joanna Gajuk: This is Joanna Gajuk here. So just a couple of questions here. When it comes to your diabetes, you said obviously things are slowing down. And I guess, in January, you talked about 11% to 13% growth for ’23. So where is it shaping out? What do you assume for the guidance? And I guess how does this impact, if at all, your long-term guidance for diabetes.

Jason Clemens: Joanna, sure. This is Jason. I would say, firstly, that regarding diabetes, I think you referenced the word slowdown. Again, I wouldn’t articulate it as a the material slowdown in new start activity and volumes, I mean, again, we are responding to changes in payer mix, so the kind of the profile of revenue that we are earning in this product category is changing. After all, we’ve expected it to change over time. And again, we — as we look towards 2025, we had expected diabetes product line growth to land in the mid- to higher single-digit area for non-acquired growth. So we are seeing that faster than anticipated. I would say for 2023 we believe that we will deliver high single digit up to 10% of nonacquired growth within the diabetes category.

Joanna Gajuk: Okay. And then same thing, I guess, on sleep. It sounds like things are going better. And I guess, does that change any — or anything you’re seeing there, your prior comments on long-term growth out of there of 7% to 10%.

Jason Clemens: Sure. So within sleep, no change. We’re very pleased with the demand that we have within the sleep business. We are very confident that we will deliver the previous expectation for sleep revenue within 2023. I would tell you in terms of meeting that demand, we are not going as fast as we’d like. We appreciate, I think, the hard work of everyone out in the field in terms of responding to unpredictable receipt of PAPs. I mean we’re getting what we need, the timing of when specifically it comes in and how we’re getting that out to locations and patients. That is — we are managing it, but it is still unpredictable. So it’s all systems go. We are burning the variable pay over time that you’d expect for us to meet each and every patient that needs a PAP.

And so what you’re hearing is largely timing in terms of meeting demand first half — I’m sorry, second half of ’22 into arguably first half of ’23. But overall, very, very strong patient demand, and we believe that we will deliver the previously guided sleep non-acquired growth for 2023.

Joanna Gajuk: Okay. So I guess the actual outlook for this year for ’23 was above that long-term guidance, right? somewhere like 11%, 13%.

Jason Clemens: That’s correct, Joanna. Another data — yes, that’s correct. Another data point for you is our PAP rental census, I mean our previous record for PAP rental patient census was set in the second quarter of 2021. That exactly coincided with the timing of the Respironics recall. . So since then, it has been an unusual environment, a challenging environment to continue to grow that census. However, in Q4 of ’22 we have set a new record of PAP rental census. You’ll see it in Slide 5 of our supplement. If you look at PAP rental category, bottomed out in terms of revenue in the first quarter of ’22. We had previously reported the low point of census was February of 2022, and we’ve continued to grow since then, albeit slower than we had expected based on patient demand due to the reasons discussed. But it is all systems go within the sleep business.

Joanna Gajuk: Okay. And I guess on the cash flow, so clearly, CapEx is higher. But how should we think about the operating cash flow for the year? And I guess, any change to kind of your long-term views that you previously outlined on free cash flow in general, that should be running in 7%, 8% of revenues.

Jason Clemens: Yes. Good question, Joanna. No change to the 2025 expectations for free cash flow. I would tell you for 2023, my current estimate is between 3% and 4% of revenue will convert to free cash flow, defined as cash flow from operations less capital expenditures. I would point you to the cash flow from operations growth over the full year 2021. We are very pleased with this growth. We’re particularly pleased with the investments that we made within the revenue cycle, people, process and technology. We’ve discussed our intake portals and our intake procedures regarding e-prescribe. They are continuing to improve. We’ve discussed our claims edit engines within the revenue cycle that continue to perform and are evolving and maturing every day.

And that has all resulted in DSOs coming down 5 days year-over-year. And so what you’re hearing is inflow, cash flow from ops, we are in very good shape. I mean in normal circumstance, no pandemic, no CARES Act refund and repayments and everything that’s happened over the last several years, we would expect cash flow from operations to represent a 2/3 flow-through from adjusted EBITDA. If you look at 2022, that is around 62% of adjusted EBITDA. And so you’re seeing the inflows improving, we’ve discussed the accounts payable transformation efforts and AP as a use of cash was sizable over the course of 2023 — I’m sorry, 2022. Those efforts are complete. And so based on current trends within rev cycle and current use of cash within our working capital we would expect to deliver about 2/3 of our adjusted EBITDA down to cash flow from operations for 2023.

From there, you’re left with CapEx. We’ve discussed our expectations. We’ve provided a range that we believe is appropriate. And for the full year, again, it is escalated versus our expectations of what the business would do in normal circumstances, which would be 10% of revenue. And so applying that the 2/3 conversion of adjusted EBITDA to cash flow from operations, less where we land on capital expenditures will result in between 3% and 4% of revenue converting free cash flow.

Joanna Gajuk: That’s super helpful. The last 1 on the — you mentioned some efforts of cost cutting in the press release. And so do you assume some incremental cost cutting in your guidance? And what is it and how much exactly, thank you. Just curious about sort of with that 3% to 4% of revenue converting into free cash flow. What is that outlook on acquisitions in 2023 vis-a-vis where your leverage stands today .

Jason Clemens: Sure. I’ll take a part of the question. I’m going to ask Steve and Josh to weigh in on free cash flow expectations and how that relates to M&A. Regarding the acquisition activity within 2022, I’d remind you, it was very, very early in the year, and it was quite immaterial, was about $17 million, I believe, of acquired revenue in ’22. That was essentially all completed on or before early Q2. And so there is extremely limited impact of kind of stub period revenue part of our guidance and our expectations. Steve, do you want to take the acquisition?

Stephen Griggs: Sure, Jason. Thanks. So obviously, in 2022, we did limited acquisitions, I think just 2 or 3, very minor impact to our business. we would expect that to be higher in 2023. We’ll probably use the vast majority of the cash flow generated for those acquisitions. So if you use those numbers that Jason put out at 3%, 4%, 3.5% of revenue. That type of cash will probably go towards acquisitions and a rounding error towards that. So I would guess they’re going to be in they provide just short of $100 million.

Operator: We’ll take our next question from Matthew Blackman with Stifel.

Mathew Blackman: Maybe, Jason, to start, you mentioned in the prepared script that baked into the ’23 guide is some sustained headwinds that you saw in 2022. And there are a lot of moving parts. I just want to make sure I can wrap my arms around it. It sounded like headwinds in diabetes and sleep and maybe also to some extent on respiratory and HME. And then on EBITDA, it sounds like continued inflation and then product mix headwind. Can you fill in the blanks? What am I missing there? And is there anything else to call out? And then 1 quick follow-up.

Jason Clemens: Sure, Matt. No, I don’t believe you were missing anything. I would say as part of the — a little over 1 point of adjusted EBITDA margin expansion that we do expect for 2023 over 2022, we expect about half of that coming from — a little over half of that coming from labor and operating expense and the remainder coming from the cost — the actual cost of goods growth. . So in other words, top line growing 7.7%, we do not believe our COGS, our labor and OpEx will grow at that same pace. And so we expect to get operating leverage and enhanced margin.

Mathew Blackman: All right. Appreciate that. And then diabetes, curious what your thoughts are on why we saw the payer mix shift emerge here in the fourth quarter? Just any thoughts and I assume it’s sustained into 2023. But just any thoughts on why that is, whether it was transient, it doesn’t sound like it, what the trigger may have been for that?

Stephen Griggs: Our reps are out there calling on doctors and they get their patients. And I think in the businesses that we’re working on, particularly at our cross-sell that we’re doing to GPs, they’re more government-based patients. And so I think just the emphasis on the sales side was just more towards that type of doctor and resulted in that type of patient. So we expect that to continue throughout 2023. So we’ll see more government payers in our diabetes mix than we’ve had in the past. And I think that’s really that we’re calling them on more primary care physicians than ever before, and we would expect that to continue.

Mathew Blackman: So it sounds like this is largely manifesting in the CGM side of the business rather on the pump side.

Stephen Griggs: Correct.

Operator: . We’ll take our next question from Richard Close with Canaccord Genuity.

Unidentified Analyst: This is John Finney on for Richard Close. So we’ve been hearing from some of your competitors supply . So I was just kind of wondering what is the state of your backlog today? And what do you see — do you still see that being bled down probably by in the first half of 2023. And do you still see yourself gaining market share through bleeding down faster than competitors?

Stephen Griggs: Yes, we had stated that our backlog, we should be through it by the end of the first quarter, first part of the second quarter. I think we’re on pace for that. So we will see that. And we do believe, based on the amount of new patients that we’re getting that our market share has improved from pre-pandemic or pre-recall levels. So we’re pretty confident and we’re not pretty — we’re very confident that those will continue, and so we’re in good shape.

Operator: And it appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.

Stephen Griggs: We’d just like to thank everybody for attending. We appreciate the support, and we look forward to working hard in ’23 and managing our costs better and continue to deliver the revenues that we have. Thank you very much, and we appreciate everybody.

Operator: That concludes today’s teleconference. Thank you for your participation. You may now disconnect.