Diagnosticos da America SA

BOVESPA:DASA3

Earnings Call Transcript 2022-Q2

[Operator]

I would like to point out that those of you need simultaneous translation, where this tool available on the platform. Just click on the [indiscernible] interpretation and in the lower part of your screen and choose your preferred language Portuguese or English. This is being recorded and will be available at the site of IR of the company.

[Operator Instructions]

We have pointed that the questions -- the information in this presentation and anything that may be said during the company conference about the perspectives of business of the projections or operational methods of Dasa, our beliefs and premises of the company as well as information currently available to the company. Future projections are not guarantees of performance. They involve risks, uncertainties and premises as they refer to future events, which may or may not happen. Investors should look at the economic conditions, market conditions and other factors, operational factors may affect the future performance of Dasa and future performance. And now I pass it over to our Director of IR of Dasa.

[Unknown Executive]

Good morning. Thank you all very much. We start our presentation with a few considerations of Pedro Bueno, President of Dasa followed by Felipe Guimaraes, Financial Director. We also have Andrea Dolabela, Director of Products and Marketing, Emerson Gasparetto, Director of Hospitals and Oncology and Rafael Lucchesi, General Director of Care and Diagnostics and Coordination. All will be here available to answer your questions as soon as we finish the presentation. Okay. Now Pedro Bueno.

[Pedro de Godoy Bueno, executive]

Good afternoon to everyone. It's a pleasure to announce the Results of the Second Quarter of 2022 of Dasa. In the period, we continue to grow in the execution of our business planning with robust growth, the integration of our acquired companies and the evolution of our digital platform, Nav. We know that we still have lots of opportunities, but the implementation increase of the -- both in the gross margin as well as the dilution of our G&A. That's why it's important to mention that meds have been mapped out and are prepared by the management of the company. We're confident in the process -- the continuing process of improving our margins and shall continue to gain strength in the second half of the year.

Go to Slide 4, please. We had solid financial. We had BRL 3.5 billion in a growth of 24% compared to the second semester of 2021. The growth of our revenue, first place, first of all, the growth of 76% in the gross revenue of our oncology area, a result which represents 25 -- 29% of the consolidated revenue of the company in the second half -- second quarter, an increase of 12.8% compared to the same period in 2021.

This first quarter, we consolidated -- the first half of the year, we consolidated all of our acquisitions from last year. In second place, we had growth of 8%, excluding the impact of the COVID and the unit of outpatient care and diagnostics and coordination of care. The increased volume of [indiscernible] and average ticket. In the front of digital initiatives, we continue to deliver consistent results in the execution of our strategy in the Nav strategy. Once again, increasing the base of new registers. The base res 4.6 million users at the end of this quarter reflects our leveraging of the strength -- the current strength of our core business to help the platform to grow.

A number of new users compared to the patients in Nav reached 1.1 million in the second quarter of 2022, 6x more than in the second quarter of '21. On the -- we had [ 3,000, 4,000 ] new doctors in the quarter, maintaining the trajectory of acceleration of growth. With these additional med doctors, the number of medical users reached 29,000, telemedicine consultations increased 26% in the second quarter compared to the second quarter of '21. This year, 138,000 tele consults were registered by the end of the quarter. The web check-in services reached 495,000 users in the quarter, a growth of 23x compared to the 20,000 users in the same quarter of '21.

With the mission of offering the health that people desire and need, we advanced in a relevant way in the expansion of our ecosystem. In 2021, we inaugurated -- '22, we inaugurated our first integrated space in Alphaville in the city of Barueri and Sao Paulo, reuniting Alta Diagnósticos, which together will offer an experience -- complete health experience to our clients. We also inaugurated in the quarter 2 new units, Alta units in the city of Sao Paulo and Barueri.

In May, we completed the acquisition of CENTRON, a reference center in oncology and Rio de Janeiro. And finally, in June, we announced the acquisition of LUSTOSA labs in an important mark in the strengthening of our presence in Dasa in Diagnostics in the metropolitan region of Belo Horizonte.

Going to Slide #5. As I mentioned in the previous slide, we closed the third -- the second quarter with our gross revenue, record gross revenue of BRL 3.5 billion. Based on the graph on this slide, we can observe that our revenue has grown consistently and sequentially over the years. Fruit of the advancing of our successful advance of our strategy of expansion and integration and the navigation of our users among our assets.

Going to Slide 6. It's also important to mention the -- that as we present the evolution of the profitability of the company of oncology hospitals, even with the increase of the participation of acquired companies in a process of integration, which generally presents lower contribution margins than the other assets in the first moment. As we can observe in these graphs, the improving of the gross margins when compared to the second quarter '21, appeared even with growth of 57.2% in the total number of beds. The evolution of this margin is a result of this more efficient operation of our hospital assets integration of the acquired companies and the improvement of our operational indicators. Our revenue in this period was forced by the occupation of beds, an increase of the amount of complexity in our hospitals and the attraction and retention of medical teams with very high qualifications.

Going to the next slide, we present here the evolution of our platform Nav in the second quarter, and we continue to invest in technology in this area. In this quarter, the number of new users in the platform was 1.1 million, resulting in a total number of users registered of 4.6 million. This represents a growth of 144% when compared to the same period of the previous year.

Beyond the patients, NavPro was good app the mediators reached 49,000 users with a growth of 127% compared to the same period of '21. Robust growth of users occurs at the same time has evolved our evaluation of our users in the app stores. In the second quarter of '22, Nav received a lot of reviews of 4.6 on a scale of 1 to 5. This evaluation increased in relation to the evaluation of 3.7 registered in June of 2021. The Nav platform has become one of the more and more important channel of connection with patients and doctors, strengthening the experience of the users and continues to gain efficiency for this health sector. On our side, we continue to dedicate to the development of the platform, looking at the improvement of functions, which can generate better involvement and recurrence of our users.

Going to Slide #8, please. We -- our service or web check-in went through over 1 million users since it was launched last year, including 495,000 in the second quarter of -- this initiative represents a 19% reduction in the average time of people waiting versus the traditional check-in process beyond where you see the time of waiting and improving the user experience of our patients. With this experience, we've been able to increase the efficiency of our units, especially in relation to the reception area.

It's very -- another important component of our strategy is the navigation of the user in our system through the experience, which generate involvement. We continue to evolve over the second quarter with an increase of 851% in the number of access to the Nav when compared to the second quarter of '21. Our consultation via telemedicine, which offers on the platform increased by 26% in spite of the cooling of the pandemic. In the first quarter of -- first half of '21, we had 238,000 tele-consultant and the tendency for growth continues positive. In this quarter, we have 15 specialties available on the platform compared to 9 in 2021.

Going to Slide #9 to talk about our strategy of expansion starting with hospitals. Since the beginning of 2021, we've more than doubled the number of units in our portfolio going from 7 to 15. As a consequence, the number of beds, so beds has also doubled, reaching 3,417 by the end of the second quarter of '21 -- '22. With that, we come on a command center, last final lease generation were the second largest platform, private platform of hospitals in Brazil. In the segment of oncology, almost tripled the number of units of attendant service went from 12 at the beginning of last year to 35 currently. We're present in 7 states and in Brasília, and we are today the third largest independent oncology group in Brazil.

In the segment of diagnostics, we count on 1,000 units and more than 34 with technicians, maintaining our leadership in the segment in the country, both in sales as well as in a number of examinations. We increased our amount of capacity to be able to attend these patients during the entire journey and in important markets. So it was a better experience to users and it increases and reinforces the brand and our ecosystem strategy.

As mentioned at the beginning of the presentation, in August, trying to strengthen our positioning as the biggest integrated network of medical care in the country. We inaugurated our first health space, integrated health space in Alphaville in the city Barueri uniting the Alta and Nove de Julho brands, which will offer health experience -- a complete health experience to our users. These new concepts offers a complete structure, including fast care, surgical care, medical consultations of several specialties, clinical analysis and image analysis, oncology, health space for the woman and device or other services. We also inaugurated 2 other units of Alta in the city of Barueri.

Next slide. Beyond organic expansion of our network, we also continue to execute our strategy of growth through acquisitions, especially hospitals and oncological centers. In the last 12 months, we have created 8 assets strategically located, which added 1,768 beds to our portfolio. In May, we concluded the acquisition of the CENTRON specialized in oncology and Rio and also led by Dr. Tabak, it was a reference in oncology and onco-hematology in the southern zone of Rio de Janeiro. We have 18 info-fusion chairs, 8 medical centers and in 2021.

In June, we also mentioned the acquisition of Lustosa laboratory, an important mark in the strengthening of our presence in diagnostics of Dasa in the metropolitan area of Belo Horizonte, the third largest market in Brazil. Those are the important brand with 26 units, making it possible beyond the capture of synergies, expressive operations along with Dasa, which Dasa already has in the region.

On Slide 11, we're sure that the -- in the middle of our network, we have the capacity to impact thousands of people reaffirming our commitment with the sharing of values with our public. In July, we advanced with our sustainability report for 2021. The report went through an external audit who guarantee the trustworthiness of the data, and we -- this document is available on our IR site. Another highlight of this semester is that for the second year in a row, we had an inventory of greenhouse gases with a reduction. We have committed to be 0 carbon by 2030. By 2022, in a voluntary way, we reached 100% of the greenhouse gases of our inventoried hospitals in 2021.

I'll now pass over to Felipe Guimaraes, who will talk to you about how our highlights our financial highlights.

[Felipe da Silva Guimaraes, executive]

Thank you, Pedro. On Slide 13, we have the results of our oncology hospitals. The net revenue grew by 69% in the second quarter in relation to the second quarter of '21, meaning BRL 1.6 billion, fruit of the growth of number of beds and grew by 61% compared to the -- on an annual basis, reflecting the acquisitions realized in the period with the better utilization of our infrastructure. Also a fruit of the growth of the rate of occupation, which registered growth of 0.8%, when going from 77% in the second half of '21 is 77.1% in the second half -- in the second quarter of 2022.

Average ticket, gross ticket per patient, which reached 8,300 per day, reflecting a better utilization of the beds for high complexities operations, having affecting the negative impacts of the acquired hospitals in recent time and the number of hospitalizations due to COVID in the previous period, profitability the oncology hospitals with a gross margin of 16.3%. Despite of the -- and the process of integration of the new hospitals acquired. In the first moment, these have a lower contribution margin than the other assets in our portfolio. It's important to mention that the gross margin in the second half of '22 was benefited by the combination of a high level of hospitalization together with the suspension of the voluntary operations of the INSS.

The velocity of the execution of our integration and the acquisitions performed last year is moving along well compared to the initial program. It's important to mention that we have more than half of our beds in hospitals -- in mature hospitals and which deliver lower gross margins. which is important in the continuous process of improving our margins, which should continue to gain strength in the second half of the year.

Following this, going to Slide 15 to talk about the business units of the outpatient units. In this quarter, these units in a growth of approximately 8% without the COVID numbers, however, compared to the second half of 2021. Without the average ticket went from BRL 534 in the second quarter to BRL 567 in the second quarter of '22 for direct users, an increase of 9% in spite of the diminution of COVID in our numbers. And due to the number of examinations, which was 91 made in examinations in the quarter. 1,000 exams in the quarter, it grew by -- going from 37% to 36.7%, principally due to the negative effect seasonal -- due to the mix and the utilization, especially vaccines, which represent lower margins and lower expenses as a result of the impact of the -- inflationary impact on rents, fuel and electric energy. This quarter, we had the impact on the margin of BRL 47 million due to the operational expenses, which were being recognized in our G&A.

We now go to Slide 16, we will talk to our financial -- consolidated financial results. As mentioned by Pedro, we closed the second quarter with a record gross revenue of BRL 3.5 billion, an increase of 24.7% in relation to the second quarter of the previous year. The adjusted gross profit reached BRL 976 million in the second quarter, a growth of 8.4% compared to the same period the previous year.

Considering the adjustment mentioned in the previous slide, the gross margin adjusted had a reduction of 3% in relation to '21 due to 3 principal factors. The impact of 1.1% due to the growth -- relevant growth of the participation of the oncology hospitals, which have lower margins in the diagnostic sector than the diagnostics sector. Second, due to the follow the margin of these oncology hospitals of 2.6% due to a typical semester as a result of the combination of the second wave of COVID in the country and the non-suspension of the optional procedures and reduction of 4% due to the mentions -- the things mentioned previously. The administrative costs as they went due to the recent acquisition, grew by 8% compared to the going from BRL 320 million to BRL 417 million, a reflection of the company -- in the company due to the Nav platform and digital initiatives.

It's important to point out that for comparison, we finished the second quarter of the impact of the BRL 47 million related to the cost of the operation. And that in the previous quarters, were not classified as expenses. The general and administrative expenses went to BRL 460 million or 14.1% of our net revenue, a reduction of 0.9% compared to the first quarter of '22. The adjusted EBITDA was BRL 561 million with 17.1%, in line with the first quarter of '21, which had the benefit value of BRL 51 million.

Going to Slide 18. I want to mention about our debt and the cash position. We closed the second quarter with a net debt of 3.6x EBITDA, a fall of 0.4% compared to the previous semester by the position of cash and for payments related to M&A and working capital. The net debt increased for the issuing of debentures in April of '22. It continues to work on the management of this debt and our capital structure so that we can take advantage of the opportunity, organic and inorganic opportunities in the future. Thank you all for listening. I'm now going to pass it over for the question-and-answer session. Thank you.

[Operator]

[Operator Instructions] The first question is Vinicius Figueiredo, sell-side analyst.

[Vinicius Figueiredo, analyst]

The question would be in relation to the average ticket of the [indiscernible]. We see a fall in average ticket. When we look at the behavior of -- the quarter-on-quarter behavior, and we see that there were several acquisitions consolidated in this quarter in that business unit. And I wanted to understand how would that have been in the organic operation, trying to isolate the effects of these acquisitions. If you could comment also how you see the complexity of these procedures within the hospital environment? And also how you're doing in terms of the other payers.

[Pedro de Godoy Bueno, executive]

you mentioned the first effect, which impacted our average ticket in the hospital, which was M&A and new hospitals coming online year-on-year and having part of the impact -- another impact, which is more relevant, which is the mix of everything that we've seen in the first semester last year compared to this year. We had the second wave of COVID last year with a higher complexity and seriousness than in the first wave, which represented a much higher number in our revenue compared to the first quarter of last -- compared to this year.

Looking at the impact of M&A, but also the impact of COVID, you have a higher level of elective surgeries and a lower level of ICU usage. So this impact are the principal impacts which affected this average ticket, which was reported. In relation to the negotiations with the operators, we think this is in line with what we've been commenting with you in relation to hospitals who have been able to do diagnostics above inflation, but in line with what we have planned for the period.

[Operator]

The next question is from sell-side analyst of Goldman Sachs. Gustavo, please turn on your audio so you can make your question.

[Gustavo Miele, analyst]

Two questions from our side, 2 quick questions. One is related to BO2, we wanted to put a look at the premium brands, especially on the Alta brands to try to understand if there's any gain -- relevant share gain in that company during the semester? When you look at this niche, it's a little more premium, looking at the Sao Paulo operation. Pedro mentioned that we opened some stores looking at Alta, this niche, but I wanted to look at a little bit of this effect if you see any share gain in this segment, it might be interesting to understand that.

And the second question in relation to update -- in relation to the integration of the M&As, which the company has recently done. In this quarter, we saw the Parana hospital coming in with this year. We saw several M&As during the year. I wanted to understand a little bit of the level of maturity that these guys are and see it so we can see these hospitals migrating from stage 1 to stage 2 of synergies in accordance with the playbook which you presented.

[Unknown Executive]

Gustavo, this is [indiscernible]. The answer is yes. Alta continues with very growth -- above the market growth. And the principal points are the arrival of new users, the very high level of faithfulness of our users of Alta and a very high level of recurrence due to the high level of brand loyalty. The new opportunities are not yet -- there's not a huge impact on our growth. However, we do have a lot of concern capacity to occupy in the units which are already open and that we've been able to capture consistently. So our strategy continues of occupying the current units and units in strategic basis. In [indiscernible] other units in [indiscernible]. I'll pass it over to Felipe.

[Felipe da Silva Guimaraes, executive]

In relation to the integrations, we are principally -- majority of our hospitals are still in Stage 1, and they're only now beginning to deliver important synergies, but they still have an important part to enter, especially those related to the equalization of the systems. We need to equalize these systems, especially those related to SG&A. So there are important steps that we're taking that are in fact, our profitability, but there's still lots to do in the first stage of the integration and the second stage is in parallel to the first stage. So therefore, it is the 1 that's the furthest ahead. And nonetheless, we had most of our assets are still entering between January and February. In the case of San Domingo, Parana, and [indiscernible] these other assets are which have an important value to be absorbed within the first phase, Phase 1 of the integration.

[Operator]

Next question is from Fred Mish, sell-side analyst from Bank of America.

[Frederico Mendes, analyst]

I have 2 questions here. One, what I'm trying to understand better the dynamic speaking -- looking at the numbers of margin. Starting with hospitals. I think you saw new hospitals coming in. On the other hand, the concentration that comes in at the end of next year. Looking at the [indiscernible], you should have a strong position. If you do a ramp-up of this margin, and this margin should evolve. It should have this effect and the effect of the rate of occupation, which is very strong, but this should also help your margins. Last year, we saw that, that margin was flat quarter-on-quarter. But quarter-on-quarter, it was flat. I want to understand this margin of the hospital's margin.

The second question is also speaking about margin we saw -- the first quarter as being stronger in this industry, but the margin seems to be a stronger fall off, especially looking at these -- [indiscernible], we understand that Alfa should have a better margin than the rest of the business, you should have an important margin growth with Alta. So finally, I wanted to conciliate the dynamic of this in your margins.

[Pedro de Godoy Bueno, executive]

The first impact on the hospital margins, what happens is as these are integrated with higher profitability below what we saw this first negative impact and the actions, which are not only on the hospital level, but we have been dedicated for some time as well as our business as usual in the old [indiscernible] hospitals, the efficiency starts to hit the top, and this impact will be negative on the margins of the acquired companies doesn't happen. So that's what we see in the first quarter -- in the first or second quarter. But as Felipe mentioned, it's not every action or efficiency option that we are capturing at the first moment. This is a continuing ongoing work, and we look at all of the base, and it becomes close -- easier for us to see in the next semesters.

As far as the margins of B02, B02 is throughout a growing -- we had gained margins there. The question is the relevance of Alta as overall is still not as representative. So it's true. You're correct in the question of the gains, but in the representativity overall, it doesn't make that much difference.

However, the principal effects of this quarter, as was mentioned, of this half or the inflationary curves, such as in the area of logistics, which is very important, a question of fuels and also electric energy, which has an important impact considered even seasonal in the second semester where we've seen an improvement going forward. However, we understand that these impacts were attentive to them and at the same time, looking at the front of the execution of our digitalization, which in the long term, will be fundamentally important to gain more efficiency and to lower our margins in BO2 to improve our margins in the BO2 in diagnostics area.

[Frederico Mendes, analyst]

If I can make 1 follow-up question on your point, which I think is an important point just to understand, when you buy a hospital in the first moment, you have a gain of synergies in the first month. I imagine related to the repricing and something like that and also a strong gain in the beginning in the first few months, but it's not necessarily the true during the second phase or 6 longer. In the second 3 months you don't really gain anything or very little. So in reality, the margins will be flat quarter-on-quarter. Is that true? Is that correct? Or did I miss something?

[Unknown Executive]

In the first moment, you have the principal synergies which are price list and G&A, which are -- in our book, we detail these the first 30 days, 30 to 90 and then long term, which going to brownfields, et cetera. The first action was our prices in G&A, they happen very quickly in the network. The actions which take more to do in the operational model, such as the substantial model, the team changes and more complex questions and asserting the model. This has an impact, which is more medium term. The start in the first quarter, but they're go maturing, and it will probably be felt more in 6 to 12 months when you'll see more relevant effect. So this model of bringing complexity to the hospital, increasing the operational census and the acquired units is more of a medium-term gain.

[Operator]

Next question is from Mauricio Cepeda, sell-side analyst from Credit Suisse.

[Mauricio Cepeda, analyst]

I hope you can hear me. I have a few questions. First is very financial. That's the question of the leverage that you mentioned in the presentation. I understand that the interest rates are still quite high. Do you have any plan to deleverage that might bring this net debt -- lower this net debt more quickly that's the first question.

And the second question is in relation to the diagnostics unit. These are market units, which has a higher visibility to speak about that. How is the demand going versus the pre-pandemic levels? And what characteristics are you seeing in this demand if it has a lot of routine or if you see exams related to distortions in that taking advantage of that, the thing that you mentioned of market share, how have you seen the market share gains in what lines could you point that out?

[Unknown Executive]

Okay. Cepeda. I'm going to answer the question of leverage. As you saw, we reached our peak of leverage in the first quarter. We saw the impact is due to the closing of the conclusion of the majority of our deals. And then we started our process of deleveraging in the second quarter, which will since practically reduced quite a bit already the payments in our M&As. So reduced by 0.4%. And we believe the relation of cash to the previous quarters -- in the following quarters, we'll continue to follow that same tendency helping us to lower our leverage. So right now, it's a natural process of having a lower level of M&A, which will help us to deleverage the company by generating internal cash.

As far as the question of the diagnostics market, with our mix, which came back very close to the pre-pandemic levels, ex-COVID. And ex-COVID, we also had the characteristics a little different than last year when the COVID generated a lot of diagnostics with -- such as tomographies. So we can see that the general characteristics has gone back to a more normal mix, pre-pandemic mix. And we don't see any big changes in that sense.

In relation to the market and market share, we see that we gained important market share last year. It's a lot very strongly in COVID, but also in the ex-COVID and our base last year was very high. So we've accompanied this very closely, especially the question of long-term gains, and we were able to compensate the strong reduction of COVID with organic growth of approximately 2%, and we have strong levers to continue the growth of that compensating this reduction of COVID which are already projecting plus reductions to try and do sustainable growth in the long term with investments -- strategic investments as we mentioned here in Alta in the capacity of services and some brands and in units of -- service units that we see in the market.

[Mauricio Cepeda, analyst]

You've also -- have you coming to our market share numbers? Do you do research, internal, in-house research? Have you been company in our market share numbers?

[Unknown Executive]

We have several sources -- we look a lot at the IMS data, which helps us to do a comparison of expenses with diagnostics compared -- versus revenue, which we have. We also have data from our users the I&S expenses takes a while to come out. So we look at the growth of users by city and calculate the recurrence of exams and consultations and then we evaluate how our market share is by city, by market. And then we have the picture of COVID overall and our participation in COVID. These are the principal numbers that we bring -- the market is very -- we have a very robust market intelligence, which helps us to accompany the market very closely.

[Operator]

Next question is from Rafael buy-side analyst from [indiscernible] investments.

[Unknown Analyst]

Congratulations on the results. I wanted to know a little bit more about the oncology front. What are the principal perspectives that you have for the next few years? And what does the company have in mind for this in terms of strategy? And what do you -- would you consider your exchanges in oncology that we've seen in recent periods. I also wanted to know if you -- any difficulty in pre-passing these prices? If you have any cumulative demand since the pandemic? And if you have entered into the merit of the -- if you could explain that to us, any changes in that area?

[Unknown Executive]

Thank you for the question. Oncology, Rafael is very strategic in our business for 2 reasons. One, in oncology diseases have a period of growth. It's a tendency that they will grow, some which is relevant? And secondly, because it's totally fits with our strategy and our ecosystem of care. The early diagnosis of oncology has a total -- an impact on the total cost of this patient, which lowers the cost and generates a better solution. So it's totally aligned with our strategy. And we consider this in the strategic vision that you mentioned, oncology is 1 of the high-growth businesses of the company. These are the numbers that we accompany of growth in this business here in the company.

The question of talent, we made the acquisition of AMO in the Northeast. It was a sensation of company very, very good people. And Nelson, the CEO is today the Head of our Operations in oncology for all of Brazil. So we see that in acquisitions. We also are seeking a leader -- a medical leader in Brazil and Gustavo is 1 of the oncologists, most renowned oncologists in Brazil in and out of Brazil, ex-President of the Brazilian Society of Oncology and he's a medical reference, which you have been seeking, remembering that this business is what gives us focus for the last few years looking for this leadership. So we're well positioned now. We're growing -- and we're the third largest player already in Brazil, in oncology, with talent, exceptional talents heading up the business -- and this was aligned with our strategy of navigation, early diagnosis, [indiscernible] treatment and better results.

[Operator]

The question-and-answer spirit is now ending. I'm going to pass this over to the final considerations of the company. Thank you.

[Pedro de Godoy Bueno, executive]

Thank you very much for having connected with our call. We're here very, very animated and enthusiastic about the possibilities going forward in the company, and we're very dedicated to capture them in the second half of the year. Thank you very much, and a good weekend for all of you. Thank you.

[Operator]

The video conference of results of the second quarter of 2022 of Dasa is now closed. The IR relationship area is ready to answer any other questions you might have. Thank you to the participants, and have a good afternoon.