Heska Corp. (HSKA) 5 Nov 192019 Q3 Earnings call transcript

Good day and welcome to the Heska Corporation Third Quarter 2019 Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Jon Aagaard, Director Investor Relations. Please go ahead, sir.

Thank you and good morning, everyone. earnings the Corporation's XXXX. quarter Heska to call third for of Welcome am Investor of Aagaard, for I Director Relations Jon Heska.

made of that Prior XXXX to regarding the the future you performance future earnings forward-looking Company. results, implied filings such by detailed places, Any in reflect the time and quarter statements we course to during that of I would the to events could expectations of forward-looking make specifically as discussing may morning's like to statements Corporation's was such occur Factors made. in risks any any SEC. Heska's based performance speak statement they update obligation certain differences materially this call, third disclaims intend and We only Heska on intention and annual financial may cause release events or actual remind beliefs and to or with forward-looking and the and Heska are after quarterly our are unknown and which or are statements. contribute statements caution and such you does statements to known time forward-looking different writing not cause expressed to that results forward-looking this those from uncertainties that involve or current including any be and that need

call Heska's and Grassman the Napolitano, we'll Chief and Ms. the to President; Officer details Jason surrounding Wilson, Strategy Catherine Wilson Executive this Chief and us results Heska's have Heska's Financial we questions. then provide With Officer, Kevin morning Officer. open will Grassman, reported and Chief Mr.

Heska's and over my pleasure President. to it Kevin? then, Kevin turn to time, is the this call CEO Wilson, At

morning, Thanks Jon. everybody. Good

our to that year developments. business line pleased product core another our driving growth timelines the remains we're full in that initiatives and major quarter are report and Today outlook, including with strong

Animal Subscription Lab Active helped we year Value, with progress timing areas strong in Lab Contract XX.X% year-to-date. and Sales nearly with our way expansions, drive growth results, favorable Diagnostics Subscription in Under Companion POC row. Retentions all key the Months continued for period in Subscription, and led again exceeded a Consumables again period. Strong campaigns, prior for in nicely Subscriptions, goals or Minimum the the these the line test capturing and market Core the performance met up Our our and full-year year to space anticipate menu lab sixth share in outlook. over all

achieved the areas in in period. several We

had healthy First, performance. commercial we

good especially Second, to anticipated raise development cash our results, our research and on $XX.XX our highly third, offense. had power we help in Element we UF our investments product. trends capital and delivering And million operating schedule are completed and positive

the and veterinary by is we execution generally by enter healthy year to Heska's momentum specifically. As and look a close XXXX, good underpinned in an that central sense and position we out market exciting market that

for of Care that veterinarians driving outcomes pets of diagnostics financial of veterinarians. which to and pet makes products voice speak, Heska's portfolio is families, because the full Point health positive can't for and pets indispensable pet outcomes to Heska's central the positive are care critical

continue again. Our strong that several but to Point of diagnostics are deserve well Care growth benefit known mentioning long-term trends from

pet from trend is of the and benefit that expanding multiple across to continue humanization generations We pet globally in demographics. households

make business. an increasing providers healthcare on the modern indispensable from Point pressure profit We of of and traditional continue part ongoing veterinary Heska Care an see which to diagnostics streams, veterinary

consolidation. and health continue care's which accelerating investment domestically to several regulatory corporate benefit and industry markets drive and internationally, We wonderful patient streamline these continue They into drives care And continue to continue investment positive health to providers, see hospital robust we for both All diagnostics. to others consolidation global trends see robust trends. and environments. veterinary veterinary payor and utilization from and visit

this coveted in a this healthcare capitalize of senior accelerate spots our To very Into we successfully of issued number on within rapidly limited set growth September are up, to we million of one initiatives. animal the Heska and space. space, global claim convertible $XX.XX intended at to and the notes thrilled strategic positive fund opportunities within expansion

to I'll Jon that, in the Catherine release With turn to through this outlined call our other over walk and updates morning.

Jon?

again join to thanks has and Kevin, chosen you, who this morning. Thank to us everyone

to in a Catherine covers the some points of release, want details. presented information and good financial of moment to take the high today's here lot we call before We a out

Heska tests progress June, analyzers, First, I'd as in Heska's like as launched eWrap BUN to respectively, and take to innovation. and chemistry Panel. immunoassay well gas our Heska's product to overview In Plus progesterone new moment a blood

work effective from to we our quarter. are our optimistic deliver two and that customers. response and finding the utilization good market helped quarter, launches teams in retention launches product of sales analyzers These from are broad With sales the new tactics positive teams and in fourth our

Element scheduled line. Heska's expansive and cards, limited of i+ new has in December. availability Early Element next favorable first immunoassay the lower platform we and veterinary generation reception design, Heska's broad superior for leading immunoassay market. health and roadmap markets only analyzer current profile, quarter within multiplexing Heska's i+. Heska's i+ is began Point June, Element is Point with release of leapfrogs testing, full In cost animal for of been for market multiplexing release Care of global global platform third i+ Care and test Element

analyzer broad target of research targeted release results, began a Heska's favorable. Element And UF the to our are pleased Heska December. reiterate is now market to in previously Heska's closer has to lastly, expansion. June released begun. the us installs anticipated late yield timelines. geographic market. to directly RC, we Company's highly the quarter urine development Also leading that continue and and platform Element key investments time note and on fecal our chemistry to on new Initial starting been now rotor-based release reception have launched And Early

to market is Element from hundreds first-mover dollars. expected be major of innovation of millions a be UF in to many Heska estimated a

to testing new urine technology. confident potential benefits, of market continue the be We opportunity, and creation this and fecal value timetable, in feasibility, for exciting

a few Now of quick is progress expectation. our is well with acquisition Australia, is I'd first France markets. Diagnostics Lab and good ahead in which begun. Point slightly to expanding Heska's like our to overview it XXXX which of progress in our performing complete Also is of moments Optomed Care take making installations have Heska running

from our to in execute, of conviction in to relatively markets scale line bottom results, our Heska minor wins Care continue expansion. the while a Small in and market These of early ability roadmap work America. North and for expansion expand, learnings detailed international in Heska's Diagnostics provide Australia early Lab Point strengthen into impact, continue future outside

Heska well and existing perform to market Lastly on expansion, to corporate extend turn sites continues relationships. accounts, as to which of continue and number the to our grow opportunities we expand begin we to for see also

with through PetVet of extension for mid-teens now end the Care XXXX. a has such now for extended and Centers Care great additional Heska is and very note years with through One growth Heska PetVet of end which the term track reliable solid growth on strong its customer an is of annual is XXXX XXXX. Centers, two by that

in with individual account, corporate progressing Heska's account are outlook. wins, retention our XXXX, year full the line and results subscription For

to information Catherine? of the the to covered lot go now financial through a quarter. turn of I the will Having there, details Catherine call over

and good Jon, morning, Thanks everyone.

decrease strong the $XX.X quarter Core the performance in was XXXX. We over the a report over Revenue or X.X% are $XX.X for to pleased third X.X% a was segment, third our quarter quarter Consolidated of XXXX. million of Animal, quarter for CCA the $XX.X of third Companion a XXXX. of million million, revenue increase third the quarter for in XXXX,

Laboratory XXXX which to sales vaccines our second is grew expected in revenue manufactured full-year in line of of to for was XXXX, specifically Offsetting XX.X% a quarter Revenue third this from Point quarter of of XX.X%, of lower heartworm Merck. and pharmaceuticals Care of from Tri-Heart, outlook XX% the preventative Consumables increase XX%. compared the with

segment, is Revenue as to largely of the our third in Vaccines third million due the quarter to and of timing. or $X.X XX.X% from to OVP increased which XXXX, quarter Other XXXX compared Pharmaceuticals,

quarter gross to to mix. consumable quarter grew XX.X% increase margin in third due basis in X.X% compared as margin to XXX of revenue. points of third basis XXXX, segment X,XXX of as XXXX XXXX, the compared product quarter compared the of in XXXX in in the third XX.X% Consolidated third XX.X% XXXX. to the the of CCA our XXXX the gross of from decreased was quarter as points third OVP third unfavorable quarter the to In segment quarter margin to resulting

a of legacy Operating third increase non-recurring settlement $X.X the primarily complaint in loss quarter in XXXX. due operating recorded to the of to XXXX. an $XXX,XXX charges quarter $X.X income is operating income relating as to of million million The of in increased third compared the marketing of

operating call. of charges decreased $X.X quarter previously sales million initiatives increased million due $X.X of of on development to the XXXX XXXX, Excluding OVP-related primarily and or $X.X for on third and adjusted on third income non-recurring million, XX.X% $X.X profitability product the spend research from lower million, quarter discussed this

amortization third Stock-based for and benefit third tax the for a XXXX quarter effective rate $X.X quarter for million million Depreciation compared XXXX XXXX. $X.X compensation tax of of a for rate The of Company's income was XXXX. and XX.X% for XX.X% was XXXX benefit of quarter compared the of was both quarter of third million quarters XXXX. the third the rate the to tax $X.X third to of

XXXX of basis, million On quarter for to of effective rate charges, activity. the relating tax the X.X%. the was the of reinvestment associated a as tax non-recurring business $X in the volatility Company's of effect a level tax a to expense compensation rate due with non-GAAP of Company's excluding discrete tax third rate the benefits and stock-based tax result The lower is income the in a

Heska per XXXX. $X.XX to which to loss of of third to approximately the $XXX,XXX a per Corporation $X.XX other related of loss or expense of loss cybersecurity of million quarter was network a impact $X.XX or approximately attributable per event or loss a third the share includes $XXX,XXX a Net XXXX quarter compared for $X.X share, in share, of

in non-recurring attributable the quarter Corporation core share. adjusted was million, $X.XX net third diluted per Heska charges $X.X income XXXX earnings to for Excluding of the XXXX, of

had September approximately $XX.X compared As Heska in $XX.X XXst, of to December XXXX, XX, as Corporation cash million million XXXX. of

net any expenses. the credit of Senior Convertible was was amount the fund outstanding facility million indebtedness X.XX% issued $XX.XX net $X of under initial of facility. after fully letter Notes the On used September proceeds discounts the credit The XXth, due Heska $XX.X XXXX. deducting approximately and XXXX Approximately from all $XX.X principal were the to used offering in as to collateral repay million proceeds notes aggregate the the purchasers' million million of of sale Corporation

our fund through to the Heska Corporation use and and net businesses or complementary strategic technologies other proceeds remainder general of from notes expansion or to corporate efforts, other capital the intended including intends purposes. working of the transactions for acquisitions

operations $X.X for the months million from XXth, to XXXX. payment September cash of was operations September nine of $X.X the compared to flow ending million million for months litigation Cash use of by $X.X XXXX, settlement XXth, provided a due nine ending as

XXXX, we to outlook believe our Regarding in-period quarter will provide the balance our as our our of our XXXX, guaranteed. Pertaining or outlook we but said, for call. outlook may XXXX full-year indicated of guidance. full-year and outlook earnings our that during XXXX previously, don't achievable, quarterly continue fourth investors That is regular course for provide not to recall on we

Day host to where on to Regarding and York our plan discuss outlook growth we an May Heska's strategy Investor strategic topics XXth, will product New Analyst forthcoming. incorporate investors analysts. City geographic XXXX outlook multiyear past Details surrounding new we and in developments, research more for our business and fully activities, will the and raise, event helpful be effects launches, other expansion, capital development and from XXXX,

we the open call your like for that, questions. would to With Operator? up

from will Guggenheim now We Westenberg go question of Instructions] first Please Securities. [Operator ahead. David take our

Your line is open.

taking for the on questions good Thanks a and quarter. congrats

maybe how two how it do So the that a just on period. came anticipate big for Is market enough big market, first to market? and being three-year you think competition out would you of fecal that in about if

David, it's Kevin. morning. Good

us that's think think I the itself I've out accurate. seen out reports Fecal million $XXX and unaddressed, in one a called $XXX big I fecal urine market very, in successful think an basically of certainly of combining for we you, think somewhere million to maybe from we is very advantage range and we've doing is Care and Point in there, and that. we're is and if terms

the to market we need. them technicians messy, yeah, They the on and at convince So, that veterinarians, good there a user. It's unpleasant not and in They depending of in veterinarians results think our It's you often. process relatively have we variability you think it's if do a quickly. do conversations get with least a manually. market, these

sample get having can we with consistent think manual more results we prep And results improve without process. to like that and and better standardized messy deal things the to

we compelling. pretty So it's think

think In puts advocating internationally, came and on machine space, regards as the from more on it just both probably view depending hurtful. to probably having slight as speed to on average competition, focus the that market visibility a domestically there a to out negative. penetration, competition it and I another I'd I more and would view marketing where positive, be helpful wouldn't opposed up as

- But the you to sense kind be about just of in is and pulling of the how if And helpful. I get when then a about there, outside I'm U.S., when any of versus geography, vague I'm investment to fully kind us question. you talk can you're sense a might give back thinking can there ripe you sort that guiderails getting market it's versus you see be the a of growth U.S., realize would a outside outside trying U.S. a is certain attack

like types legal past model out on to Largely, have with markets of balance and just property assets Yes. us and democratic rights. generally westernized keep things, to in our to we currency, good it's banking that legal. that's in good like I've markets own for business called we and our place remind important the sheet. of those stability people, kind I'd

first piece. the I that's think So

for are China we're Zealand not focused, instance. So Central Asia think Europe, Europe, really Western good We're focused. examples. Australia-New We not

really than on. into and for opportunities development business It's to growth very where most And for way for market looking market, more more us in ripe closely. a jump of that terms really to ripe very, of international that tied are thoughtful are markets and jump looking on, these that's are

is our thoughtful business I would we think getting we'll that and can of couple entry important of where will largely intend If each entries. in next it. thoughtful dictate will a beachhead over some dictate And those to market couple we of good a through market the years. markets get next development, that grow point take

a I Optomed Dave, it's availability, we it good by Jason of in France do Napolitano. we'll mentioned, And as example as both or acquisition Kevin in acquisition. did and think Australia, organically, on based is

one Is you. of the just reference took in that - Thank you, be squeeze color something and Jason. towards? a Just offline. And helpful. strategic place. if a take a couple business? I'll Thank I it could was Is sorry, that is outside offline. quick might lab one there on And congrats again direction good the I'll real and just opportunistic of acquisitions And quarter you any jump that that there

we in are acquired or by was be North labs largest Marshfield ANTECH, but market Yes, is effectively past IDEXX. largely large two the by which was America. is players, and Lab in by in would served remaining independent to by namely love labs markets, the partnered Phoenix Mars. Zoetis, month Those reference acquired international We IDEXX two with think America owned central North

instantly Heska really lab company can point-of-care and And a so American we a the largely that's don't these potentially markets, we component reference possibility that. the in are in component think see market the tie-ups. Heska some central because penetrating But international to of nice North bring quite do like those

thank So you.

question Please of Canaccord our take We Massaro will next now ahead. from go Genuity. Mark

is line Your open.

Max Mark. for Masucci This is on

XXXX. two the Centers So your by with relationship you term PetVet years to of extended Care

what some gives in So the and through confidence rate at you can conversions slower-than-expected growth and I that prior this guess of how the years, solutions you arrive I the XXXX? mid-teens in are address agreement guess did what

fair know Okay, question. Max. you followed a more customers. closely. probably They're That's aspect a guys little I our story have that of good

to while little up. years. things with a for takes We've it them two been Sometimes get synced working

As big corporate you'll customer were they recall, our announced. first

And think a six and on agreed we nine And thing. get the little extend we work to that the So we over good them longer so that's last them months more intensively. basis. to worked I get bit a to a with with economics we've

In the degree have confidence that. we terms in of a high of growth,

and of the on. I growth and confidence in And terms up do rates we've to synced have that expectations high just what servicing are think of go-forward in what and commitments obligations degree our a on a their we very basis.

looking And and additional their of companies of how's maybe tuck-in in additional profile? Do terms the resemble you in Optomed Or opportunities reach, looking for are M&A are Europe? that financial size, from different terms funnel in that you profile? see at financial Optomed

one? Yes. that Jason, you take to want

It's Jason. that. sure. I'll take Yes,

opportunities several at Europe. looking are in We

of good I strong in several those, them like in There's companies personality things think just obviously that to like out proxy got to someone's type guiding see to reluctant pretty Optomed deals their start we of to country. a and very We there. particular good I'm presence see. market tend a along for the closing to country, driven. is real be because these someone things

Optomed-like right find see sure And got you're do got to a you've got you've next the to to Heska. by going your year, you've you've over But expect the and being I few diligence, got transactions good announced a be economic opportunity, to arrangement.

right what the entry Optomed thing - appetite is, not larger healthy us, we us. like good just too smaller their they're small. entry Yes. But position transaction. negative market if think obviously for well. that in I points that was as not that's And an for add for have we're And I'll local that's point signaling a the We a they have

So both. we consider I think

for sure. sure, For

more then one And if can. I

Moines. Des instruments manufacturing now in you're in consumables So some

we I is challenges margins of benefit of and or to further I us manufacturing going any and should sort is the gross gross beat to how see in XXXX your guess, the quarter. process guess margins any when yourself out? that expect on guys You for

depends do which I Yes, it gross about. think talking you're on margin

talking be that driven gross by mix. you're If can also margin, consolidated about

you our and may stable, whether as tests, the better some So these in launch things it new products of through than or margins analyzers, some them have be or like supplies that. that of run imaging OVP the

in investment started development still on Moines. mode We're We and not that. in manufacturing have tests mode Des

- we any of So haven't seen haven't that. benefit we

that product new doing they still profiles, mix, gross started as haven't we positive in piece. a our and part good be as margin also do of have margins the Some the very manufacturing can But become well. they of on impact think consolidated that. launches investing we We're

onto next We'll Raymond then Andrew of our move Please ahead. question James. from Cooper go

Your open. line is

lot's A but relative already model. been our think asked, maybe to I just one

build I a think had marketing slower was little we than the sales bit and expected.

more when there potentially how think So add either going products scale kind commentary some Australia then some about with of conjunction do think build-up, helpful? of again you of a you domestically internationally just any and ahead be in And these well domestically of of - reach Optomed would to just and with and sort we the in France? newer in terms you're of about as internationally as how

we a out qualified there's President those In this and our added Point year They've year Kevin scale, actually grow very headcount. do we think promoted This They a terms been build last Lab individuals adding as to a Jeff and manage for two time. of guys. long Klass great to very, Vice O'Brien, I we've of so week domestic force throughout to just shout aggressive and been Care sales out roles little here the year. the Business. job. don't -

think feet order right we've align know. things I when continue will and anticipate we investments. we releases we making our the on in That need But got I actually so street. the quarter-by-quarter And you product to those those about do to expand as timing varies reach. with the are

be we then more be M&A here? you'd or And fragmentation fit these don't of lot on internationally, circling in to back would thoughts that there frankly involved sort of kind say want lot there's are on any assets international ones markets. the better a that a I think of a

linked more nature? lab it your something to maybe that's or whether little do a rank had about horizontal be something there's think obviously existing bit with something bit it a like point, little what than be, that's how what afield, different you in of further opportunity, partnering your directly ordering more business lot maybe clearly, more to whether a So vertical domestically. is in Optomed versus market reference But you or a

I it think, take Kevin and and... Jason, I'll a first stab so at

Yes, I will supplement.

I if am Jason can let me it. know with

Heskas us not attractive, called to think in for and we've integrate. that attractive very geographies be be mini past out easier would I in is Heska would the in

positive So further very lot go I think afield. whole are beachheads. I to those expect wouldn't us a

I think you've them. listed

Heska mini type little got of expansion. geographic You've

are got reference labs that central You've geographic expansions.

out an or anything or - not States. customer go bolt-on We've be company, in bases software we're app could us insurance that's wouldn't management some revenue I crazy the not not market core local company, new called and streams. buy good a expansions kind United We're practice business. of expect brand and the our that's oddities of that out looking And companies geographic of go to to with

We got the we've We right think think the capabilities. model. got right we've

those the probably scaling those in over from applying years, scaling I taking from strategy. and more several Australia France and and the think we've and two XX I countries months, next business is other it's think learnings that our existing gotten the and Optomed about couple,

Yes, think with I - I yes, Kevin. agree

Just to little a supplement bit.

that look at really that amount would primarily geographic. on product expansions, front we what is I with think a I'm I that we're type opportunity of doing. huge see the looking not at fits Most but there's

getting those As got we geography. Kevin at in-clinic a point. into matter given we've reach and this mentioned, the suite products largely that a think And the right to We've we international need. it's rights of products got

want can would hard to that got much synergistic saying what confident message pretty that we're going will acquisitions. we be disciplined on. we've sure for don't out ultimately properly be it's pretty interested bring to - things We We fit. me looking at about there an are send we're integrate opportunity. I the trying in in to look to to here But being imagine and going We're at we

from of Alliance Our next Ben Please question ahead. Haynor go comes Global Partners.

Your open. line is

just see the Is that year. XXX-plus me anything up Lab there here versus rate attribute first kind the First that nice can free Is expiring? that mix? Is of promotions increase? a international point expansion? basis kind Is kind term it driven? was for equivalent the kind What the step half Consumable Is or for of menu it of most drove to it you specifically in growth it it of of days? part

It’s think a questions. you but timing in number a in that. just there quarters and general shipments and like And of things year-over-year mix some things business. quarters terms current I the are really year could health there Remember be prior it’s some of are to timing year comparing

guided year. XX% the We for XX% to

barely we're those think at the we're the still goalposts. for just I about we've with the quarter, of but right those within positive goalposts think end year. it third got And I

extension, new missed term of is this, that the it timeline I on expansion the the did or PVCC I'm if and sorry the agreement? come but instruments then And purely alongside under placement just

of a Yes, it's an little think it's extension. I both bit

more better in of testing got we've financial targets think I and alignment much performance. and terms discreet

long-term feel about, we again, XXXX. forecasts good for really our So

through got I XXXX. they installations. very very them. strongly them do we've can agreed got support to good And and that team they've think And got we've the ready believe numbers that with for to alignment we focused a

a in place. good it's So

I is know this? we every next one, similar be lastly this. good up to year kind UF timing launch I you five think or coming then what's this held every of think me, Analyst held a with way May, a of for And to the previously one-off Day you or Should the the about from one years announced the expect Excellent. Element before

suspect one-off, the instance, probably deserves models has fecal that's a of some that the those more term And health. the walkthrough some business and our whole you them enough times drives longer company for a and more we'll investor do of that it. need detailed product, moved And a of community launch revenue that really I modeling of opportunity urine what baseline how models. analysts can market we when the probably that affect it's think changes when has four that's

We the and raised could suspect surrounding more over $XX that what like. of those I million impacts deployment we'll for details be development have business

So they're really of analyst coming that major community want period. sit may think we be news to after is some through model the that by investment that to down enough going and that probably and

question next Sidoti ahead. go Jim & Our comes Sidoti from with Please Company.

Your line open. is

seems you've the right back it going direction like everything the to to got seems seems medicine, heartworm everything than be So, other the like medicine Tri-Heart in here, growth.

gotten the couple you from to on have expect though feedback that you Tri-Heart end Regarding any regarding business Merck of come a over and user is demand, pricing, years? back next

would the would provide. like QX consistent call. a and we that - the we part at that guidance our I stated will had not sense while to of do - say our QX of and we the levels to we'd on think think had that thought I looks that necessarily free Jason been be point we return, said pretty We have previous are with years I that in what business feel but supplement XXXX but it that what we'd say and

But be their that Jim but They're under information Merck there rolls their had on to of much Yes largely I've the relationship historically obligations. been to and in-depth up me pretty disclosure have know people some to because sensitive they they've too we giving pretty they talking strong discussions terms price share. some consistent competition with seem there seeing holding them. This side. own in is demand out generic, isn't pretty that

day forecast. lot in And get we'll forecast If the be anything, originally. able it's next a confidence had hoped in we've more for hand we've call, a And have purchase terms by the year. got than as little I so we on time, and a Catherine lead good mentioned, got better I locked give a to of time you orders next expect XXX

pretty And and surprised then big product what's the have quarter, quarter regarding from sheet. a up the is me some million the last couple Inventory me that previous from on down coming going which one launches there? balance you

the have that, think beginning on - requirements. following other previous higher the may periods And only inconsistent it's purchases than quarter, we cadence but the change would I minimum generally similar be there. it as was purchase just year I expected imaging our the related inventory a From based between in the think in that be of

We only a some of We managed at we supplement probably up that did [indiscernible] we business piece QX, during get the rolls under to so of QX that shipped me. that's the inventory Jim. end it hold

rise expect early inventory so to XXXX? again should Okay, we

yes. Absolutely,

And question our of comes Please ahead. Jackson Benchmark final Company. The from Bruce go

Your is line open.

Just more product. about a the Tri-Heart questions couple

quarter, So third launch into as heartworm to that when discussing did be had discussions demand known Zoetis on something that Tri-Heart well factor during in the Elanco with working for is you XXXX? had Merck the the

those of XX on on products, out the to more those year go as protects it's old lower end we discussed out I And I'm sort describe going in as the higher market. been there obviously, it’s worms of pill. see I more a fleas, products against would every Tri-Heart two to well the all think call end, the And grail one to It trying the much the pest heartworm generic. tick, what intestinal We've heartworm. as holy everybody's there, of

their there's when that Elanco a competitive certainly aware think those the So for are and preparing the don't landscape Zoetis is forecast they're product. we Tri-Heart of products on they Merck us. impact And of and tremendous directly

Absolutely, of then year with plan to Element okay, i+ later demand how the launch then grows. does is it the the side this so manufacturing transition the as great. And

were else reagent your So right about instruments you and the someone the being manufactured facility. believe doing now thinking by manufacturing I

the play transition So that and of just over into late XXXX? course does out XXXX how

think I end XXXX more Yes, transition. an it's of of

that as of a major make We for all we're in and analyzers have and it. bringing and have that. the we like gross looking XXXX product cost it anticipate. really need in drive manufacturing, don't would lockdown, We analyzer the we fulfill into good we constraints that a or and really tend We've so, production the utilization got But launch going to are positive manufacturing more XXXX. margin volume major XXXX a at demand have we to It's The without driver in not margin, that it. won't in-house things terms and supply plant that tests, enough great. of

And force, question sales then headcount from me of your I last could the please? get -

last it's want with have the after quarter. a top my you think head. we'll don't of I much moved off up I call. you don't follow it don't from give number, but I the wrong to

It time. CEO there this to or the to no at I back further additional like Kevin appears any turn for remarks. closing would call questions Wilson,

joined the thank analyst and To pleased thanks Well, to am We appreciate who I you, questions. just I call. very everybody the the want close reiterate, operator quarter. with

our think year I generally. like the R&D like We market We're major great our of we full UF our we beginning the did Element for health and our you forward job. quarter execution updating and next team on specifically call closer year. to a the again of look on

Everybody have a good afternoon.

your participation. today’s and Thank that call. gentlemen you Ladies for concludes

disconnect. now may You