Staar Surgical (STAA) Q3 2023 earnings call transcript

Thank you, Operator, and good afternoon, everyone. Thank you for joining us on the STAAR SURGICAL conference call this afternoon to discuss the company's financial results for the third quarter ended September 29, 2023.

On the call today are Tom Frenzy, President and Chief Executive Officer, and Patrick Williams, Chief Financial Officer. The press release of our third quarter results was issued just after 4 p. m. Eastern Time and is now available on STAAR's website at www. star. com. Before we begin, let me quickly remind you that during the course of this conference call, the company will make forward-looking statements.

We caution you that any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs, and prospects. These statements are based on judgment and analysis as of the day of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risk and uncertainties associated with the forward-looking statements made in this conference call and webcast are described in the Safe Harbor Statement in today's press release, as well as STAAR's public periodic filings with the SEC. Except as required by law, STAAR assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so.

In addition, to supplement the GAAP numbers, we have provided non-GAAP adjusted net income, adjusted income for ICL, the corresponding adjusted earnings per share, and sales in constant currency. We believe that these non-GAAP and adjusted numbers provide meaningful supplemental information and are helpful in assessing our STAAR and feature performance. A table reconciling the GAAP information to the non-GAAP information is included in today's press release. For brevity, all references to growth rates on today's call refer to year-over-year growth unless otherwise stated. Following our prepared remarks, we will open the line to questions from publishing analysts. We ask analysts to limit themselves to two initial questions, then re-queue with any follow-ups.

Finally, we intend to use our website as a means of disclosing material non-public information And for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website in the Investor Relations section. Accordingly, investors should monitor our investor website in addition to following our press releases, SEC filings, and public conference calls and webcasts. And with that, I would now turn the call over to Tom Frenzy, President and CEO of STAAR.

Thank you, Brian. Good afternoon, everyone, and thank you for joining us on today's call. For the third quarter, we achieved net sales of $80.3 million and ICL sales growth of 13%, which was consistent with the outlook we provided on our last earnings call, despite a declining market for refractive procedures. We are also reporting another quarter of positive earnings for STAAR, which puts us on track in 2023 for our sixth straight year of double-digit ICL sales growth and gap earnings profitability.

We're also on the path to deliver 15% to 20% compound annual growth over the next three years. The combination of high growth and profitability is a rarity for medtech companies our size. We continue to engage our surging customers and prospects, raise ICL consumer awareness, and make progress on the initiatives I spoke to you about on our last earnings call and at our recent investor day. As you will have seen in our earnings release, we now expect to come in at the low end of our previously provided fiscal 2023 outlook for ICL sales of $320 million to $325 million due to macroeconomic weakness in certain regions and potential disruption to our sales in the Middle East.

The Middle East represents sales of approximately $2 million in the fourth quarter. Returning to our financial results, for the third quarter of 2023, ICL units globally were up 14%, and global ICL sales of $81.1 million were up 13% as reported and 13% in constant currency. By region, AIPAC ICL sales were up 13%. EMEA ICL sales were up 14%. And in the Americas region, ICL sales were up 5%. India, which overtook China earlier this year as the world's most populous country, was a standout market for us in the third quarter. Currently, India represents less than 3% of our global ICL sales, but it is a market where we are making investments in both resources and distribution, and one which we believe represents an attractive opportunity for our future growth.

In Europe, where the refractive market is down, our two largest markets, Spain and Germany, grew 9% and 8% respectively. Turning to the two largest refractive markets in China, ICL sales grew 14% in the third quarter. We remain confident in our long-term growth prospects in China, bolstered by comments on our investor day from our largest customer's chief medical officer that Evo ICL has a long runway for growth. Recent actions by the Chinese government, including additional stimulus, should support consumer demand as well. In the U. S. , Refractive Surgery Council reports that industry procedure volumes declined 15% in the third quarter, continuing an eight-quarter negative trend. Our ICL sales in the U. S. grew ahead of the market, up 6% in the third quarter.

Evo ICL was launched in the U. S. in the second quarter of 2022. On an apples-to-apples basis, U. S. Evo ICL sales growth totaled 13% for Q2 and Q3 2023, compared to a 15% decline in refractive industry procedures for that same period. Year-to-date, industry procedures are down 13%. All told, we are achieving solid growth despite a less certain economic and geopolitical environment. The pace of our growth is well ahead of the industry due to our market-building initiatives, including elevating ICL awareness, and we are taking share as a result of our best-in-class lens-based technology and its benefits, including Meaning removability, no dry eye syndrome, and excellent night vision that ICL surgeons and their patients tell us they greatly value.

I talked to you on our last earnings call about my current state assessment of our business and the actions we have been taking to accelerate EVO adoption. We shared more details in September at our investor day, and today I am pleased to report additional progress.

First, with respect to making our company even easier to do business with, we are in the final stages of developing the EVO standard, which is a comprehensive set of enhanced training, education, and practice development tools and processes that we will use to support our SURGING customers and their staff. We are also supporting several investigator-initiated studies designed to increase surgeon comfort and confidence in measurement and lens size selection. The first study is nearing completion, and we anticipate the study will be published in a peer-reviewed journal in the first quarter of 2024.

Second, we are introducing and advancing new and novel products. We received 510K clearance from FDA in late September for the AccuJet Refra single-use injector for our EVO family of lenses in the U. S. The new customized user-loaded injector for EVO is designed to increase ease of use and efficiency. We are introducing this delivery device to a subset of surging customers through the end of the year and anticipate making it more broadly available in the U. S. and other markets beginning in 2024.

Turning to our extended depth of focus lens, Evo Viva, for the early presbyote with myopia ages 45 to 55. We are expanding the rollout of the product following the annual meeting of the European Society of Cataract and Refractive Surgeons in September. We have identified protocols to assist with surgeon and patient satisfaction, and we are supporting our VIVA surgeons to help set proper patient selection, expectations, and outcomes.

Third, we are leveraging new analytic tools implemented in 2023. In conjunction with our new organizational structure and leadership in the U. S. , we have segmented our U. S. customers and identified one group we are calling U. S. Highway 93. U. S. Highway 93 is a group of 93 U. S. practices, approximately 20% of our total practices, and 50% of our U. S. sales that have favorable parameters for EVO adoption and where we will focus our efforts on driving growth through tailored programs.

One early example of our success is a new alliance agreement with a multi-center practice in the southeast. We signed the agreement in September, and the customer is moving quickly down the diopter curve with utilization of lower diopter lenses between minus three diopters and minus six diopters, up 300 percent compared to his prior year-to-date utilization and also compared to all customers in the U. S. The alliance agreement offers attractive pricing and support to the customer while maintaining solid gross margins for STAAR.

U. S. Highway 93 is consistent with our stated goal of going deeper with our existing customer base. Alliance agreements with other U. S. Highway 93 customers are in process. And finally, we launched a patient call center partnership linked to our doctor finder in two cities in October. The call center is intended for SURGICAL referral and EVO patient education. Today, we expanded our call center to several additional cities, including Los Angeles, Chicago, and Boston. While still in the early stages we have a lot of enthusiasm around our ability to answer patient questions and create a closed process for our DocFinder website aimed at increasing the return on our sales and marketing investments Patrick Thank you Tom and good afternoon everyone As a reminder all of my references to growth and comparisons will refer to year growth relative to the prior year period, unless otherwise dated.

Also, please note that we have provided a geographic sales table with today's press release to match the three major regions we showed during our September investor day and also provide key country breakout of our ICL business. Total net sales for The price for Q3 2023 were $80.3 million, up 6% compared to net sales of $76.1 million a year ago. The increase in net sales was attributable to a $9.1 million or 13% increase in ICL sales, which was mostly offset by a $4.9 million decrease in other product sales. We are nearing completion of the previously announced exiting of our low-margin, non-core, other products, Cataract IOL business.

Gross profit for Q3 2023 was $63.6 million, or 79.2% of net sales, compared to gross profit of $60.5 million, or 79.5% of net sales a year ago, and $70.7 million, or 76.6% of net sales for Q2 2023. The 30 basis point decrease in gross margin as compared to Q3 2022 is primarily due to increased sales return reserves and period costs associated with manufacturing projects partially offset by product and geographic sales mix.

The 260 basis point sequential increase in gross margin from the second quarter is due to an other product's cataract IOL reserve that did not recur in the third quarter. Normalizing our Q2 2023 gross margin results in a 60 basis point decrease sequentially for the third quarter, which is related to geographic and product mix. We continue to expect gross margin will be approximately 79% for Q4 and approximately 78% for the full year. Moving down the income statement, total operating expenses for Q3 2023 were $57.3 million, up from $46.8 million in the year-ago quarter, and down sequentially from $62.1 million in Q2 2023.

The components of total operating expenses were as follows. G&A expense for Q3 2023 was $19.3 million, compared to $14 million a year ago, and $18.1 million for Q2 2023. The year-over-year increase in G&A is due to increased compensation-related expenses, outside services, and facility costs as we position the company for future growth. For fiscal 2023, we continue to expect G&A expense will be approximately $19 million in the fourth quarter.

Selling and marketing expense was $26.6 million for Q3 2023, up from $23.1 million a year ago and down from $32.3 million in Q2 2023. The increase in selling and marketing expense from the prior year was due to increased advertising and promotional expenses and compensation-related expenses, partially offset by lower trade show costs. The sequential decrease in selling and marketing expense was due to decreased marketing, promotion, and advertising expenses, trade shows and meetings, and timing. We now expect approximately $1.5 million of expense will shift to Q4 due to timing of investments, resulting in approximately $28.5 million of selling and marketing expense in Q4.

Research and development expense was $11.5 million in Q3 2023 compared to $9.6 million a year ago and $11.8 million for Q2 2023. The year-over-year increase in R&D is due to increased compensation-related expenses and US EVO post-approval clinical trial expenses associated with the three-year study. For Q4, we continue to expect R&D expense will be approximately $12 million. Operating income in Q3 2023 was $6.3 million or 7.8% of net sales as compared to $13.7 million or 18% of net sales for Q3 2022. For fiscal year 2023, we continue to expect operating margin will be approximately 5%, and we anticipate expanding operating margins in future years while continuing to make investments across the business in order to support the 15% to 20% three-year sales CAGR outlined at our Vision 2026 Investor Day in September.

Net income in Q3 2023 was $4.8 million, or $0.10 per diluted share, compared to net income of $10.3 million, or $0.21 per share in Q3 2022. On a non-GAAP basis, adjusted at income for Q3 2023 was $15 million, or $0.30 per diluted share, compared to adjusted net income of $18.1 million, or $0.37 per diluted share in Q3 2022. A table reconciling the GAAP information to the non-GAAP information is included in today's financial release. We continue to expect our effective tax rate will be approximately 35% in Q4, subject to no significant change in our valuation allowance. Turning now to our balance sheet, our cash, cash equivalents, and investments available for sale as of September 29, 2023 totaled $201.7 million, We have a $225.5 million as compared to $225.5 million at the end of the fourth quarter of 2022.

The decrease in overall cash is due to the timing of accounts receivable. Based on current forecasted payments, we do expect our AR balance to move down by year-end to our Q2 2023 levels and even further down in Q1 2024.

We invested $9.2 million in CapEx during the third quarter and $15.1 million total year-to-date through the end of the third quarter. We now expect full-year fiscal 2023 CapEx will be approximately $21 million, down from our previous $26 million estimate due to manufacturing projects, which will move into 2024.

As Tom said, due to the economic environment in certain geographies and recent world events, we now expect to be at the low end of our previously announced revenue range, which would result in net sales of approximately $74 million in the fourth quarter. One additional item. On October 25th, we began a voluntary recall of approximately 300 EVO and EVO Plus lenses distributed in the U. S. beginning in September 2022, with the measurement deviating plus or minus half a diopter from the as-labeled power. We have identified and fixed the problem, and we do not expect any material operational costs related to this matter. STAAR will be attending the Stevens Conference on November 16th in Nashville and BTIG's Virtual Ophthalmology Day on November 27th.

We will also be conducting in-person investor meetings in New York, Boston, and Hong Kong with Mizuho, William Blair, and Jeffries, respectively, in November and December. Tom?

Thank you, Patrick.

Ten months in the chair of chief executive officer, I can tell you the world has changed. The war in Europe continues. Inflation and higher interest rates are exacerbating broad economic challenges, and now a new war. And our refractive industry has not been immune, yet STAAR continues to grow. We continue to take market share, grow the overall refractive market, and generate earnings in cash. As I mentioned before, our technology is without peer, and our opportunity remains large, the epidemic of myopia that impacts more than 2 million people globally.

Today, our growth opportunity is led by China, the largest market in the world for refractive procedures and other APAC geographies. But as we look to the future, we see many other markets representing a more meaningful contribution to our growth. Our vision remains to become the first choice for those doctors and patients seeking visual freedom, and I am confident with our growing momentum, we will achieve that vision. This concludes our prepared remarks, operator. We are now ready to take questions.

Yeah, sure. Thanks, Anthony. Good to hear from you. Again, we had a solid quarter. I think we continued to grow in the Asia-Pacific regions. China was solid. India had a very good quarter. Other Asia-Pacific geographies were favorable. As I mentioned in the prepared remarks, in Europe, certainly our two biggest direct markets, Spain and Germany, had good quarters. And in the U. S. , despite a continued declining refractive market, we showed good growth. But again, we're mindful of what we read in the newspapers, as you do as well. And we're constantly monitoring those factors and keeping our ear to the ground with our people in all those markets globally.

Yeah, sure, Anthony. Thank you for the question. And again, just as you stated, we agree. It is predominantly geared towards the public hospital system versus the private hospital system. The majority of our business, close to 80%, is on the private side, 20% to 25% on the public side. But we're constantly monitoring that situation. To date, it really hasn't been material, but we're keeping close tabs on it.

Thanks again. I'll hop back in. Sure.

Maybe you can talk a little bit about the economic arrangements offered and you know if you be expanding that to other U practices Sure Jan again thank you for the question The practice we reference is a big multi cataract refractive practice based in the southeast part of the country They do a lot of cataract surgery They do a lot of corneal refractive surgery and certainly have a very nice growing lens refractive surgery practice I think in terms of what's driving the move down the dioptic curve, I think it's a little bit of both of what you mentioned. We certainly continue to increase consumer awareness through our investments in terms of digital marketing, but I also think internally the practice has done enough procedures that their confidence level is extremely high, And they've made an absolute commitment that anyone minus three and above that falls within our treatment range, EVO is going to be part of that discussion.

And I think as consumers hear more and more about the benefits of EVO ICL surgery, they're opting for it versus laser-based vision correction.

Yeah, and just to add the last part, I would say that we did know that this specific practice has made the price of LASIK that they offer in their practice, or EVO as well, a little bit more on parity. He still starts charging a slight premium, but certainly down from prior, maybe six to nine months ago when he was charging for EVO.

Sure, Young. Let me take a stab at it, and certainly Patrick can add any color he would like. I think, again, we're certainly monitoring the macroeconomic environment closely. We read the same newspapers you read, so I think our ear is certainly to the ground as well as talking to our people as we do on a routine basis. But I will tell you, certainly in the Tier 1, Tier 2 cities, we're very pleased with in-market sales. They continue to be strong in the month of October, and on a year-over-year basis, we expect to deliver certainly north of 25% growth for Q4 sales in China. So, you know, we have to be mindful of the trends, but we certainly like what we hear and like what we continue to see in-market.

Yeah, this is Patrick, of course. As we outlined on our IR day, and the deck is still on the website, so people can certainly reference that. We did talk about a pretty good expansion, up to 1,000 basis points over time. So we said we would hit 12% to 16% in 2026. One should expect that as revenue goes, operating margin expansion will go. So we talked about a 15% to 20% CAGR. As a reminder, what we said in the IR day holds today. We expect the growth as we move from 25 to 26 years will certainly be higher than probably in the near years of 23 to 24, 24 to 25. And that has a lot to do with all the initiatives we're putting in place, the structures that we're putting in place, and just getting more traction as we move down that diopter curve and increase our brand awareness as we get the practices set up.

So we're confident about the expansion in the operating margin. It just comes down to where do we want to continue to make investments to build out what we see as a strong franchise and really take more and more market share and eventually build the overall market as well.

No, I think certainly from an ability to meet the demand of the customer in terms of timing of product, inventory levels are such, yields are up, and, you know, we certainly are meeting most orders right from inventory. And then in terms of customizing, particularly on the TORIC side, you know, we're within a six-week period of time, which is our stated goal, and that's always improving. Relative to what we're doing in the U. S. from a structured point of view, Warren Faust, our chief operating officer, is taking much more of an active involvement with our U. S. team as we certainly implement across the U. S. Highway 93 initiative. And I think keeping his ear to the ground and bringing his wealth of experience and leadership will only help as we continue to gain momentum in the second biggest refractive market in the world.

Sure. Thanks.

Yeah. Hey, John. How are you? First of all, how's your vision? It's great. Good, good. I always want to check in and make sure that Evo's performing as it should. But, yeah, specific to your question, as part of the alliance agreement and the volume commitment that a surgeon and that practice give us, there is some erosion of price, but it's relatively within expectations. And I think, again, it cuts both ways, right? We give a little bit on price. They give a little bit on what the consumer is paying and the combination thereof, given our strong balance sheet and no debt and, you know, the cash we generate. We're in a position to be a little bit more flexible to drive growth.

Yeah, and remember, John, at the Investor Day, we outlined our Vision 2026. We provided a full P&L on the gross margin. I specifically addressed the fact that we would still stay at about 81% for all three years, which gives us a little bit of leeway, wiggle room, to be aggressive if we need to, but more importantly to make sure, as Tom said, we're given a little, they're given a little. And so we did contemplate in our numbers currently and in our future numbers as well.

Yeah, look, I think there's a couple of things there. Certainly in Europe, we've talked about the refractive markets being down. We are seeing it in the U. S. Tom outlined that in his call, right? We're in mid-teens when you look at year-to-date. We're starting to see that in even areas outside of China, which continues to grow, but is down overall from a refractive, I would say, from this year compared to last year.

With that said, we're being very mindful about where we make our investments. We did have a step down in Q3. Some of that was timing, which we pushed into Q4. But at this point, we're not reducing, I would say, notably, anything related to macro issues we're seeing out there, because we are still growing, as Tom outlined during the call. So as long as we're seeing the growth, we're seeing the good return, we'll continue to grow. I think the big thing for us is, as we get things in place, where can we start putting more investment into areas in order to drive further adoption, whether it is in the U. S. or certainly outside areas of the U. S.?

And I think I would only add, John, I think we've gotten smarter about how we're investing, and we're going to invest dollars where we think they're going to be rewarded the most, and that's what's happening.

We didn't, but we're essentially on the same track that we've been on, right? So, you know, we reported obviously a little north of $4 million again. So I think at this point, we didn't reiterate it, that's a good catch, but we're kind of on what I would call the steady state of around the $4 million. We might do a little north of that as we go into Q4, but, you know, we're thinking about that as we contemplate 2024 and beyond. But I think consistent with what Tom has said and what we have said, the U. S. is going to be a little bit of a slow go in the short term here until we move into 2024.

And we think we'll achieve more meaningful acceleration as we move into the second half of 2024.

Yeah. Hey, George, thanks for the question. I think between both office-based surgery suite and a physician-owned ASC, I think it's a little north of 50% of the 93 fall into a setting of care that's extremely favorable.

Again, it's a small base, but given the population there and the need, we see India growing. Also, in smaller markets in the Asia-Pacific region, like Vietnam, like Malaysia, have all been showing consistent growth as we, you know, wind down 2023, and we think that will continue in the 2024. Certainly the initiatives we're doing in the U. S. , we've said, you know, will take time, but we believe, and Patrick just reiterated, you know, I think we'll start seeing some real inflection in the back half of 24 leading into 25. Europe, certainly our hybrid markets like France and Italy, Benelux, continue to show consistent double-digit growth.

So we're very pleased and really we're very encouraged to see Spain and Germany have the quarters they had. And I think Europe is poised to fight through the economic advantages they're facing. And in spite of that, you know, producing reasonably good numbers, which sets us up for, you know, a solid 24 and beyond.

Yeah, and we provided the additional table, which I think everyone will appreciate and sort of break out ICL, especially to show how Japan is doing. We still have some FX headwinds there, and we are showing revenue growth. But on a unit standpoint, they still continue to deliver very well. As many of you are aware, the yen is at an all-time weakness over the last 30-plus years here compared to the U. S. dollar. And then consistently in terms of macroeconomic headwinds, you know, Korea once again had what we would call not quite as a strong quarter. We outlined that in the table as well. It was kind of flattish, up 1% year over year. And that's consistent with what we talked about on our Q2 call when we did bring the numbers slightly down, notably for Korea when we pointed it out in Asia Pacific.

But everything else, Tom said, are things are going pretty well there, and we're feeling optimistic about some of those other areas at this point.

Yeah, it's a fair question. And, you know, as we said, we're coming down on the low end of the guidance range that we said, so that'd be about $74 million for Q4. We still believe, though, based on everything we're listening to and everything we're seeing out there, it's a bit early for us to start contemplating and talking about 2024. Clearly, we're taking market share. And I think what Tom outlined on his prepared comments is showing that even in light of a declining refractive market in many parts of the world, We are taking share or even making a growing share. So I don't want to be overly optimistic. At the same time, we want to make sure we see another 90 days here before we start talking about 2024.

But it is pretty clear that there are some slowdowns that are happening out there, and we're being very mindful and trying to track those to see if it will have ultimately any sort of impact on our business.

Well, again, Margaret, this is Tom, and as we stated at our investor day in the three-year CAGR, we saw the U. S. business going from high teens to roughly a $50 million franchise over that three-year period of time. And certainly Highway 93 is a step in that right direction, as we have always said we needed to go deeper, not wider. And as we do that and we come down the diopter curve, the opportunity to grow the business at those rates is very real.

Yeah, and, you know, we talked about the U. S. And I might as well address the question we got earlier because you guys asked the question. So, as I said, you know, we expect that we'll continue to see sort of flattish growth in the U. S. sequentially here now until we move into the second half of 2024.

At the same time, that doesn't take away from our conviction of that 30 to 50 percent CAGR that we specifically outlined for the U. S. in our Vision 2026. And as I said at the beginning, we do expect to see higher growth rates when we go throughout that three-year CAGR, right? So as these initiatives take place, getting back to your question, Margaret, about adoption within those practices, as they begin to see a minus three walk in the door and think in their heads, the first choice for them is Evo. That's where we start garnering a larger piece of the market share that they have within those individual practices, and that's what's really going to grow the business overall over the next three years.

Yeah, thanks for the question. Specifically, it is too early, as we indicated, to make some broad statements, but we've been very encouraged by the activity level. And quite frankly, within one of the markets, we generated 18 solid leads that we passed on to practices ready to convert. So it's encouraging, but it's way too early to make any determination of the real impact. But the enthusiasm and the activity level is certainly encouraging. And I think importantly, the practices, especially associated with US Highway 93, are on board with this. And that's always one of your concerns when you start doing a call center. But this is something that other companies have done, and we're seeing very good cooperation and partnership with our practices, and we expect that to continue.

Sure. As we talked about at the investor day, and I think it came up earlier in some conversations, iBright is a new technology that could come to the market in China. It's an acrylic-based as opposed to a columnar-based ICL, And we think that could gain approval mid to third quarter of 24. But again, we think competition coming is a positive, certainly imitation being the highest form of flattery.

And, you know, we certainly have first mover advantage with well over 2 million and a half implants sold around the world. And we also have a pricing and market segmentation ready to implement upon competition coming to the marketplace. But the real difference is the columnar material that we have pioneered, the biocompatibility of it, the performance of it from a quality of vision postoperatively, you know, It gives us continued confidence that even with competition coming, we will maintain our first mover advantage.

Yes, Steve, thanks for the question. Again, as I've stated before, I think it's important as a business for us to be in the presbyopia channel, if you will, Even though we're talking about myopic patients that are suffering from presbyopia early in their stage, 45 to 55 years old. So as we met with a group of surgeons in Vienna at the most recent ESCRS meeting in September, we were encouraged by the feedback we received, and we're going to continue to work with a subset of surgeons, Certainly less than 100 in that marketplace as we continue to refine the positioning both externally and internally of the product.

And think over the coming three-year horizon, you know, the EvoViva will play a role. We have yet to define how big of a role it will play.

Yeah, and as a reminder, we actually did not include any material, Presbyopic or Viva lens, in our three-year category that we put out there at Investor Day.

Yeah, no, I think we have built into our assumptions. And again, I think we are structured in a way that we'll be able to maintain any type of new interest that comes beyond the 93. And again, as I said, the 93 in my prepared remarks represent a little over 50% of our volume in the U. S. So clearly, the remaining volume, we're going to manage through our current infrastructure as well as through our customer service organization.

Well, thank you for joining our call today. We look forward to speaking with many of you in the coming days and weeks. Thank you, everyone.