Adaptive Biotechnologies Corp

NASDAQ:ADPT

Earnings Call Transcript 2024-Q1

[Operator]

Good day, and thank you for standing by. Welcome to the Adaptive Biotechnologies First Quarter 2024 Earnings Call. Please note, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Karina Calzadilla, Head of Investor Relations. Please go ahead.

[Karina Calzadilla, executive]

Thank you, Corey, and good afternoon, everyone. I would like to welcome you to Adaptive Biotechnologies First Quarter 2021 Earnings Conference Call. Earlier today, we issued a press release reporting Adaptive financial results for the first quarter of '24. The press release is available at www.adaptivebiotech.com. We are conducting a live webcast of this call and will be referencing to a slide presentation that has been posted to the Investors section in our corporate website. During the call, management will make projections and other looking forward statements within the meaning of federal security laws regarding future events and the future financial performance of the company. These statements reflect management's current perspective of the business results today. Actual results may differ materially from today's forward-looking statements, depending on a number of factors, which are set forth in our public filings with the SEC and listed in this presentation. In addition, non-GAAP financial measures will be discussed during the call and will be reconciliated in the non-GAAP to GAAP metrics that can be found in the earnings release. Joining the call today are Chad Robins, our CEO and Co-founder; and Kyle Piskel, our Chief Financial Officer. Additional members from management will be available for Q&A. With that, I'll turn the call over to Chad Robins. Chad?

[Chad Robins, executive]

Thank you, Karina. Good afternoon, and thank you for joining us on our first quarter earnings call. As communicated last month as shown on Slide 3, moving forward, both our MRD and immune medicine businesses will remain under the Adaptive umbrella, each with its own dedicated resources and separate segment reporting. This will provide each business with the autonomy to execute on our respective focused strategies, which are for MRD, margin towards profitability with a strengthened financial profile; and for immune medicine, translating science in cancer and autoimmunity into breakthrough therapeutic programs with clear guardrails to guide investment. Importantly, we continue to preserve our strong capital position with approximately $309 million as of March 31, which enables us to bridge the R&D business to profitability and to support targeted investments in immune medicine. Our position is further strengthened by access to additional nondilutive capital through our agreement with Orbimed. Now let's take a closer look at the MRD business on Slide 4. The MRD business had an impressive quarter with $32.6 million in revenue, representing 52% growth versus prior year, driven by both clinical and pharma. On the clinical side, volumes continue to grow quarter-over-quarter with over 17,000 tests delivered in Q1, representing a 0.1% increase this prior year and a 9% increase sequentially. Growth came from all marketing indications and multi-myeloma continues to be the largest contributor, representing approximately 40% of volume. The diffuse large B cell lymphoma is our fastest-growing indication, growing approximately 25% quarter-over-quarter and now contributing to 5% of total tests.We also continue to be laser-focused on driving ASP growth by reducing out of policy and noncontracted claims and improving revenue cycle management. Importantly, we are encouraged to see the recent preliminary capital [indiscernible] set by Medicare of $1,823 per test, an increase from our current implied per test rate under the episode structure. Once finalized, this rate would go into effect beginning of 2025. This rate, which will have implications for both Medicare and commercial payer pricing give us further confidence in our ability to grow ASP per test by $200 over the next 2 years. In addition, clonoSEQ key indicators continue to trend positive in Q1. Blood-based testing represented nearly 40% of tests with multi-myeloma in blood now at 20% following positive data presented at ASH in December. Tests in the community continue to grow sequentially, contributing about 25% tests delivered. Ordering HCPs and ordering accounts grew 33% and 25% versus prior year, respectively. Additionally, EMR integration remains central to our efforts to further enhance our customer experience and to solidify our market leadership position. We saw post-integration quarter-over-quarter growth of 40% across the first 4 accounts we integrated at the end of 2023, and we now have 9 additional active Epic integrations in motion. Looking at MRD Pharma on Slide 5. Our pharma business started the year strong with Q1 revenue growth of 71% versus prior year. Sequencing revenue grew 17%, and we recognized milestones from 2 drug approvals. Last month, the FDA's Oncologic Drug Advisory Committee, or ODAC, voted unanimously in favor of the use of MRD as a primary endpoint to support the accelerated approval of new therapies for patients with multi-myeloma. ODAC's recommendation as accepted by the FDA has the potential to accelerate myeloma patient access to novel therapies and to reduce product development costs. In addition to clonoSEQ being the only FDA-cleared MRD assay for patients with multi-myeloma, it is also the singular asset that can consistently deliver the sensitivity and standardization needed to meet the FDA's performance standards. This further solidifies clonoSEQ as the assay of choice for multi-myeloma drug developers. So what does this mean for clonoSEQ? On the revenue recognition front, we can potentially accelerate the realization of revenue from existing studies. There is also potential to generate new bookings as companies reprioritize their multi-myeloma programs to leverage a faster path to commercialization. On the milestone recognition front, we also have the opportunity to monetize our portfolio of primary endpoints from existing MRD pharma contracts. In addition, this could represent a positive halo effect for the continued acceptance of MRD as a standard measure of response in the clinic. Now let's turn to immune medicine on Slide 6. The IM business is focused on developing differentiated immune-geno therapeutics in cancer and autoimmunity. In oncology, we continue to support and work closely with our genetic colleagues in the development of TCR-based cell therapy products targeting tumor neoantigens. We're jointly working with Genentech on a holistic review of the programs to enable the development and delivery of the highest-impact therapy for patients. Both companies are excited and committed as we move forward with these developments. We'll provide you with an update at the appropriate time. In autoimmunity, we narrowed our focus to select indications in multiple sclerosis and type 1 diabetes, where we believe there is still a high unmet need to develop better, more targeted therapies with a better biotech profile. Our approach allows us to discover the specific T cells that are attacking self. Therapeutically, our goal is to eliminate or block the activation of these powerful T cells and directly stop them from attacking healthy tissue. In MS and T1D, we successfully identified the subset of autoreactive T-cell receptors that are likely causing these devastating diseases. And in multiple sclerosis, we confirm the specific self-antigen or targets to which these T-cell receptors bind. This quarter, we started our antibody discovery campaigns in MS and T1D. Our goal in 2024 is to discover, make and test select antibodies to generate preclinical data that informs further investment by year-end. We continue to gauge our R&D investments based on expected data readouts throughout the year. In Q1, we aligned our resources to execute on these select 2024 programs and specific goals. As a result of these changes, we expect to reduce our immune medicine operating expenses in 2024 by more than 50% versus prior year. The IM business remains disciplined on its spend, and we continue to engage with strategic partners to help offset our cash burn. Now I'm going to pass it over to Kyle to go through the key financials and provide detail on segment reporting. Kyle?

[Kyle Piskel, executive]

Thanks, Jeff. Let's start with revenue for the first quarter on the left of Slide 7. Total revenue in the first quarter was $41.9 million, 78% from MRD and 22% from the immune medicine. MRD revenue grew to $32.6 million, up 52% from a year ago with clonoSEQ clinical testing and MRD pharma partnerships each driving approximately 48% and 12% of the growth, respectively, along with a $4.5 million increase in regulatory milestones. Excluding these milestones, MRD revenue grew 31% from a year ago. [Indiscernible] revenue was $9.2 million, down 43% from a year ago, driven largely as expected by lower Genentech amortization, which decreased 49% as well as decreases in IM Pharma Services due to a shift in focus towards target and term discovery efforts.Moving down the P&L. Total operating expenses, including cost of revenue, were $90.6 million, representing a 4% decrease from last year. This decrease was mainly driven by the continued emphasis on driving leverage across function and reductions in research and development expenses as we continue to prioritize our investments in [indiscernible] medicine. Cost of revenue decreased 3%, resulting in gross margin for the quarter of 57%, a 7 percentage point increase versus a year ago. This increase was mainly attributed to MRD milestone recognition, partially offset by lower amortization of the Genentech upfront. Finally, interest expense from our royalty financing agreement was [indiscernible] $3 million, which was more than offset by interest income. Net loss for the quarter was $47.5 million compared to $57.7 million last year, while adjusted EBITDA was a loss of $28.2 million compared to $37.1 million in Q1 of 2023. Now turning to segment reporting on the right side of the slide. Restructuring activities during the quarter aligned resources and operations, sales and marketing and R&D towards either the MRD or Immune Medicine businesses. These resources and related costs are dedicated to each business and are included within the operating spend of MRD Immune Medicine, respectively. Other corporate functions such as finance, legal, HR and IT continue to be managed centrally to avoid the synergy from duplication. We off keep the majority of these corporate expenses to each segment using direct headcount in MRD and Immune Medicine, which is approximately 75% MRD and approximately 25% IM. Certain expenses will remain unallocated such as our corporate insurance costs, governance, odysseys, our idle facility and interest income and expense, which are reflected under an unallocated corporate segment. In addition to operating expenses per segment, we are also providing adjusted EBITDA, which adjusting for certain income and expense line items continues as a proxy for cash burn per segment, excluding CapEx and working capital. Now turning to our updated full year guidance on Slide 8. We are updating our MRD full year revenue guidance to $135 million to $140 million, bringing up the midpoint of the range to reflect the realization of milestones not previously included in the guidance. With respect to trends throughout the year, we continue to expect MRD revenue to be about 45-55 weighted between the first and second half, respectively. For the year, we are lowering the total company's estimated operating spend to $350 million to $360 million, a $10 million reduction from our previous guidance as we continue to drive leverage across the businesses and manage investments. Of the total spend approximately 70% sits within the MRD business and approximately 25% within Immune Medicine. We continue to be thoughtful about our cash position. Excluding onetime costs from restructuring activity, we now expect the burn to average approximately $30 million for the remaining 3 quarters, which implies an annual cash burn of $130 million versus our previous estimate of $140 million. This represents a 14% reduction in cash burn over full year 2023. Of note, approximately 50% of the cash burn in this year is expected to come from the MRD business and approximately 40% from the Immune Medicine business. The remaining 10% is due to the unallocated corporate costs. I look forward to providing you with further financial updates throughout the year as we continue to make progress towards our goals. With that, I'll hand it back over to Chad.

[Chad Robins, executive]

Thanks, Kyle. As I think it's evident, we made important decisions over the last couple of months. I'm confident we're taking the right steps as we move forward with our 2 business segments and execute on the priorities. Our cash position is strong, and we're disciplined in managing our capital to bridge the MRD business profitability while supporting measured investments in Immune Medicine to advance our key programs. With that, I'll turn the call back over to the operator and open it up for questions.

[Operator]

[Operator Instructions] Our first call comes from the line of Mark Massaro from BTIG.

[Mark Massaro, analyst]

Congrats on the quarter. I recognize it's only been about 3 or 4 weeks. But following the FDA ADCOM meeting or ODAC meeting, where multiple myeloma was recommended to be a unanimous primary endpoint in clinical trials for multiple myeloma. Can you just give us a sense for what you've been hearing in the marketplace? Any of your customers perhaps looking to pick things up a little bit on the clinical trial side. And how do you envision this impacting your business like over the next couple of years?

[Chad Robins, executive]

Yes. Thanks, Mark, for joining the call. I'm going to pass it over to Susan, who can provide quite a bit of color on that. Susan?

[Susan Bobulsky, executive]

Yes. I mean the ODAC vote, we think it's a huge milestone for the field of myeloma, obviously, tremendous news for patients. We have been in active discussions with our pharma partners to discuss potential implications. And while many companies are waiting for the final FDA guidance, which we do expect to be shortly forthcoming, we already have a few studies that have been upgraded to primary endpoint as well as a few new [indiscernible] where MRD is being used -- a few new studies where MRD is going to be used as a primary endpoint directly as a result of the ODAC vote.In general, as Chad outlined, we see some potential upside in a couple of areas. First of all, acceleration of primary endpoint milestones that have already been established in ongoing studies. Additionally, upgrading, as I mentioned, of trials that are currently secondary endpoints to primary endpoint status, which will both accelerate the realization of those milestones and also increase their value. And then potentially additional new bookings as pharma companies reprioritize their development programs to center more back on myeloma. In the clinic, we've also had an opportunity to have quite a few conversations around this topic and clinicians are universally very, very excited on behalf of their patients. They see a tremendous remaining unmet need. And they also acknowledge the strength that this recommendation coming directly from ODAC and ultimately likely from FDA provides to the credibility of MRD as a measure of clinical response. And as a tool they can use in dialogue with their patients to individualize their care. We really believe that there is potential for a halo effect in the clinic as well.

[Mark Massaro, analyst]

And then it was nice to see the MolDX gap fill rate of 1,823 per test. I think that is scheduled to go live, I think, January 2025. How are you thinking about commercial payers? Is that something that you can potentially initiate that dialogue ahead of the go-live date with MolDX? How should we think about that as an incremental driver to the business?

[Susan Bobulsky, executive]

Yes, absolutely, Mark. So you're correct that it will go live formally on January 1 after it's finalized later this year. We are already leveraging the published preliminary rate in conversations with commercial payers. So there are 2 implications. In the short term, we had several large noncontracted payers who have been holding out waiting for the PLA price to be published so that they could complete their negotiations on price with us.And so we've already engaged them to advance with negotiations and of those of note, Anthem is a particularly large one that we're working with utilizing the recently published [indiscernible]. Additionally, over time, we can use this price to reapproach existing contracted payers to potentially bring up contracted rates that we previously negotiated if they are below the PLA price.

[Chad Robins, executive]

And one other comment, Mark, worth noting is, as we've mentioned a couple of times, the preliminary pricing rate. Obviously, there's no problems. We continue to work with MolDX on kind of finalizing the price and the episode structure.

[Mark Massaro, analyst]

And then one last one for me. You took up the low end of the guide for MRD. I assume that's just cycling in the $4.5 million milestone that you realized in Q1. Just clarifying that. And then how should we think about the total contribution in MRD milestones for the full year?

[Kyle Piskel, executive]

Yes, Mark, it's Kyle. Yes, the fee and the low-end poll is fully related to the milestones. As it relates to the go forward. I'd say we continue to be conservative as we think about the milestones in our guide and we're not necessarily anticipating anything. We don't control the timing, and we'll see how it plays out throughout the rest of the year.

[Operator]

Our next question comes from the line of David Westenberg of Piper Sandler.

[David Westenberg, analyst]

I mean, that's a really nice update. The $1,823, it is higher than I remember. I think it was 6870 for 4, so it was like $1,700 a test, which is about a little over $100. Now you said you think that you can have this be $200. So can you run us through the math that gets to $200 versus the other difference there. Also, I just wanted to have a clarification because the last payment was for 4 tests at that $6,870 rate. With this new rate, does that imply that it's kind of no open end? I mean no closed end after that forecast? And just one more question.

[Chad Robins, executive]

Yes. Maybe I'll start and Susan, please if you want to add color you can add more. Remember, the $200 in ASP raise over the next 2 years is a combination of multiple factors. We talked about reducing out of policy claims and noncontracting claims, and we're doing a lot of work operationally on revenue cycle management, faster collections. We're actually implementing AI in the appeals process. There's a whole bunch of things that we're doing just to collect money faster.So as Susan just mentioned, having the new kind of gap bill per price test will also allow us to kind of use that dollar amount to go and close some of those kind of non-contracted claims gap that will further enhance it. But if you look at kind of the Medicare percentage of tests, this is, I would say, I want to call it right now a de-risking event to allow us to get to the $200. But it wasn't necessarily contemplated kind of originally in that $200. So I want to be careful that it could represent some potential upside. But certainly, at least how we're looking at right now is at least derisking and we're quite confident that we're going to be able to get that $200 increase over the next 2-year period. The second -- I wasn't sure I totally understood your second question, David. If you could maybe ask it again.

[David Westenberg, analyst]

Yes. If I'm not mistaken, your original rate was $6,870 for 4 tests. And I wasn't sure after the 4th, like the 5th test, did you get $1,750? I don't remember if you actually did. I kind of remember you didn't, but I could be wrong. I mean, my memory does fail me from time to time. So I was thinking if there's any update in terms of being able to get paid in perpetuity versus if there's like a fixed number rate number of tests.

[Chad Robins, executive]

Yes. So okay. A couple of comments here, David. On the Medicare episode structure, we don't get paid yet for what we'll call recurrence monitoring. That being said, we have a submission in right now in our first indication for mantle cell lymphoma that we have nice data on our first kind of recurrence monitoring test, that could essentially once a patient goes into remission, kind of sets a new bar on a per test rate for Medicare.Separately, our commercial payers, we don't have a limitation on a per test basis, so we can get paid in perpetuity for as many tests as deemed medically necessary.

[David Westenberg, analyst]

And just as my follow-up, is there -- I just wondered the ODAC meeting another really positive development here. Is there differences in behavior in the way MRD is used in clinical trials in pharma versus how it's used in clinical? And specifically, I'm kind of thinking about things like testing interval or testing in terms of timing and when the test is done.And the reason why I'm asking this question is, does this have a chance to change behavior in the clinic in terms of maybe test frequency and use cases following greater usage in clinical trial? I'm done after that.

[Susan Bobulsky, executive]

Thanks, David, for the question. I mean certainly, we see that there are synergies in both directions between the MRD pharma and clinical use cases. And depending on the setting in which the trial is being performed, depending on the type of patients who are eligible for the study, the time points and frequency of testing can vary and may also vary in the clinic for those exact same reasons.So while there are no definitive differences that I would call out between clinical and pharma-based use of the test. Certainly, the use is customized to the particular need of the investigator or the clinician and patient. One thing, though, that I would call out is that in the clinic, blood-based testing has begun to really take shape with about 20% of our MRD sales now coming from blood in myeloma. That's something that farmers have great interest in, but we have not yet really explored in depth. And I certainly think that would be an incorporation of MRD and endpoint myeloma. There will be quite a few additional opportunities that will open up exploration of deeper sensitivity testing in pharma studies as well as potentially use of blood down the road.

[Operator]

Our next question comes from the line of Tom Stevens of TD Cowen.

[Thomas Stevens, analyst]

Just one on kind of the EBITDA margins by segment and thank you for breaking it out. I guess it looks like today, it's kind of negative 50 from about negative 100 last year, and it looks like quite a big dip on an incremental basis to get to breakeven by back half as kind of guided. Clearly, there's a lot of tailwind there. There's the pricing tailwind. There's the switch to the X. But I guess, could you break out maybe in a more granular way for investors, just how you get to that breakeven by next year?

[Kyle Piskel, executive]

Yes. I mean I've talked, I mean, broadly, obviously, the ASP initiatives are a big factor, margin improvements to reduce our account per volume test costs. And really, the biggest driver is the leverage throughout our operating expenses, both in the sales team and those margin profiles at the end of the day, as we continue to grow ASPs and the pharma business.

[Chad Robins, executive]

Yes. I mean, Tom, it's 3 things, right? It's raising the price per test, lowering the cost that we deliver each test and continue to look at operating expenses, and we're doing all 3. And you can see that we've made improvements and kind of reduced the operating expense for the year of $10 million, and we continue to look at ways that we can reduce expenses and gain leverage and we will do so.Just to reiterate, back half of '25 adjusted EBITDA breakeven and then the cash flow is not until '26. So just to make sure that's clear.

[Thomas Stevens, analyst]

And then just a question on kind of blood. You kind of mentioned it now 20% of your multiple myeloma volumes. What reimbursement are you getting on blood versus your kind of more traditional bone marrow or spinal tap?

[Susan Bobulsky, executive]

Our reimbursement rates aren't distinguished by sample type. So our coverage policy both for Medicare and for the vast majority of private payers are sample agnostic. So coverage applies both to bone marrow and to blood-testing for myeloma.

[Operator]

Our next question comes from Sung Ji Nam of Scotiabank.

[Corey Rosenbaum, analyst]

This is Corey Rosenbaum on for Sung Ji. So with the recent FDA ODAC recommendation during the meeting, there was a big discussion around the 10 to the minus 6 sensitivity threshold. Are any of the existing trials using clonoSEQ currently differentiating between 10 to the minus 5 and 10 to the minus 6? Just wondering how the industry may be able to start evaluating the differences between these 2 sensitivity thresholds?

[Susan Bobulsky, executive]

Yes. Thanks for the question, Cory. Absolutely, we have number and increasingly, studies are being designed to differentiate between 10 to the 5 and 10 to the 6 sensitivity. And of course, clonoSEQ is really the singular assay that can deliver that level of sensitivity consistently with a reasonable sample input and with the standardization across patients. So what we are actually hearing from the investigators who were essential to the preparations and the data that went into support for the ODAC meeting a couple of weeks ago. They acknowledge that most of the data historically that was able to be analyzed was after the negative bit.But the group, the KOLs have moved on to 10 to the 6 as the real important standard threshold, and they are already anticipating pursuing additional engagements with the FDA over the coming months and years to move that threshold to kind of the 6 over time.

[Operator]

Our next question comes from the line of Tejas Savant of Morgan Stanley.

[Yuko Oku, analyst]

This is Yuko on for Tejas. Where are you in the restructuring and resource allocation process to increase independence between the 2 reporting segments today? Are there any work that remains to be done heading into the back half? Or are they in good place operationally?

[Chad Robins, executive]

I'd say the 90% of the work has been done. In Q1, we realigned the workforce and most of that was aligning operations and R&D investments around each of the businesses. That work is complete. We still have a little bit of transitory processes and extracting the Immune Medicine Pharma Services lab from our production lab for the MRD business, but that's the only kind of remaining activity. So by and large, everything is done, and we're operating in that vein today.

[Yuko Oku, analyst]

And then asking a question on the ODAC meeting. Following the ADCOM, how do you see FDA receptibility to discussing MRD as an endpoint in other heme indications? Are there particular features of MM trials that may not lead through to other heme indications like ALL, CLL or DLBCL?

[Susan Bobulsky, executive]

Yes, thank you for the question. In fact, that's a question that was of great interest to us as well. And certainly, we do anticipate that this FDA, well, likely FDA decision following the ODAC vote will pave the way for further discussion with the FDA about MRD as an endpoint and other indication. The one that investigators have expressed the most interest to us about is CLL. And that is one for which currently the thresholds that are utilizing guidelines and in many trials are 10 to the 4th. But just like in myeloma, there's interest and continue to move that threshold further to the benefit of patients.And so we are already actively engaging with investigators to talk about how we might potentially support those efforts, providing data and supporting venues that are already being designed. We've also had conversations with our pharma partners. And interestingly, many of those who we've talked to with the intent on focusing on myeloma are actually taking a bigger picture view and looking across their portfolio to think about how they might proactively leverage MRD more prospectively in anticipation of the FDA potentially being more open to MRD data across hematologic malignancies in the forthcoming time.

[Operator]

Our next question comes from Andrew Breton of William Blair.

[Maggie Boeye, analyst]

This is Maggie Boeye on for Andrew today. I wanted to ask one on the progress of the EMR integration. I know you spoke to earlier some strong growth in the quarter from customers. But just wanted to know like what feedback has been for the accounts that you've recently added? And then how many more accounts do you expect to be able to add this year? And then how is this factoring into the growth assumptions?

[Susan Bobulsky, executive]

Thank you for the question. We are hearing very positive feedback. As you might imagine, it makes the update significantly easier to use, both from an ordering perspective and in terms of integrating the results directly into the patient's chart for clinical use. We have 9 active projects as Chad mentioned, currently in motion with IT departments at the specific sites. We have a dozen of additional sites that are in conversations, securing IT resources, going through various approval processes. And we are ready to go with any account that's ready to move.I'll note that some of the accounts that are in active, IT development are among our largest accounts. And in fact, 15 of our 20 largest accounts are Epic customers. So we're very eager to move those forward and to ensure that a meaningful portion of our volume goes through Epic over the next 1 to 2 years. And we do anticipate by the end of this year, we continue to expect between 20 and 25 accounts to be integrated. That will represent somewhere between 15% and 20% of our volume, we expect. And we expect to continue to increase the speed whereby we can get these accounts up and running. Our most recent projects are trending toward about a 7-week time line, which really nicely aligns with industry standards for our integration.

[Maggie Boeye, analyst]

And then I wanted to ask another one on improving gross margins, just because I know that one of the drivers to reach your profitability targets for MRD. Can you talk about the progress and some of the initiatives there, such as the transition to NovaSeq and the Lens overhaul and how these are progressing? How should we be thinking about these driving improvements in gross margins over time?

[Chad Robins, executive]

Yes. I mean, I think, first and foremost, on the gross margins, ASP initiatives, we're starting to see kind of some of that pull-through with some strong collections subsequent to the quarter. As it relates to the costing profile of the assay with the transition to NovaSeq, I think of that as a '25 event. We're still undergoing the development aspects of that and assessing that. So I view that as '25.And then I think the other thing to just note is overall, as a company, we're going to continue to look at everything we can do to streamline operations and continue to gain leverage without increasing expenses to get to that profitability metric. So I think of leveraging our field force as just as important as what we do in the margin profile business.

[Operator]

At this time, I'm showing no further questions in the queue. This will conclude our question-and-answer session. Thank you for participating in today's conference. This does conclude the program. You may now disconnect.