Covalon Technologies Ltd

XTSX:COV

Q3-2025 Earnings Call

[Operator]

Good morning, ladies and gentlemen, and welcome to the Covalon's Q3 Fiscal 2025 Conference Call and Webcast. My name is Joelle, and I will be your conference operator today. As a reminder, today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Brent Ashton, Chief Executive Officer.

[Brent Ashton, executive]

Thank you so much, Joelle, and good morning to all of you on the call today. We really appreciate you connecting in. I'm joined today by Kim Crooks, our Chief Operating Officer; and Katie Martinovich, our Interim Chief Financial Officer; and Saleha Assadzada from Covalon is also helping to coordinate the conference call and the webcast today. Saleha will now provide us with some instructions.

[Saleha Assadzada, executive]

Thank you, Brent. Good morning, everyone. My name is Saleha Assadzada, and I'm the executive assistant to Covalon's Chief Executive Officer. I would like to thank everyone for joining -- taking the time this morning to attend our conference call.

Before we begin the discussion, I would like to remind participants that this call and webcast are covered by Covalon's safe harbor statement. Please read the safe harbor statement on this slide. This is also available on our website. I will now turn the call back over to Brent Ashton, Covalon's Chief Executive Officer.

[Brent Ashton, executive]

Thanks, Saleha, and it's great to be able to speak with all of you. So thanks for taking the time to engage with us today. I'm really excited to be with you today and share the strong progress that Covalon is making. During today's call, I'll be discussing the following topics. First, I'm going to start with some really amazing thoughts by Jaden.

She's a patient that our team and I had the opportunity to hear from a few weeks ago, and she'll share some comments about the life-changing impact of Covalon technology. Second, I'll share some really encouraging recent highlights from Covalon that will have a strong impact on our short- and long-term future.

Third, I'll dive into our financials. During last quarter's earnings call, we shared that we had solid line of sight to sequential quarter-on-quarter revenue for Q3, and I'm happy to report that we've delivered on this. We will show some key sequential quarter-on-quarter metrics, and then we will also review our Q3, our year-to-date and the trailing 12 months financials.

And as we've done for the past 4 quarters, we'll also showcase some key metrics from our U.S. Vascular Access and Surgical Consumables business segment. Fourth, we'll dive a little deeper into our innovation and business development work that we have been driving over the past few quarters. This work is an important part of our plans to transform Covalon and make an even bigger difference in the lives of patients and the clinicians who serve them.

And then we'll wrap up and take questions. We will prioritize questions via the web interface. So as we are going along here, please feel free to type your questions in. So last quarter, I had the privilege to share the story of Sandy, a nurse leader at one of the top children's hospitals in the U.S. and how she uses Covalon technology to help protect her patients.

This quarter, I'd like to highlight a different perspective from the patient side, the story of Jaden. Jaden is a young woman living with multiple complex conditions, including Ehlers-Danlos syndrome, which is a connective tissue disorder, intestinal failure, which requires her to receive nutrition through a central venous catheter and postural orthostatic tachycardia syndrome, a cardiac condition which requires IV fluids. For Jaden, a central line isn't just part of her care plan. It is literally her lifeline.

And when we first met Jaden, she described the struggles that she faced with traditional IV dressings, every dressing, even those labeled for sensitive skin would leave her skin red, itchy and painful. Dressing changes left her feeling completely defeated and clinicians told her this was just simply something she would have to live with.

That completely changed when she began using Covalon's IV Clear, our dual antimicrobial silicone adhesive-based gentle-to-skin IV securement dressing. In her words, the difference has been life-changing. Her skin is healed, it's no longer red or itchy or painful and dressing changes are no longer something she dreads. She also talks about how she can clearly see the IV site without other devices covering it. which allows her to gauge early potential signs of infection. Covalon's amazing technology gives patients like Jaden relief from the trauma and pain that they had come to expect.

Like Sandy last quarter, Jaden represents the very real impact our solutions have on clinical outcomes, but also on the dignity and quality of life for patients. These remind us why we come to work every day at Covalon to advance care to protect patients and to do so in a way that blends strong clinical performance with compassion.

So with Jaden's story as a small view into a bit of our why as a company, I'll now move into some really exciting recent highlights since we last spoke back in May. Last quarter, we provided some insights into early returns from Covalon's focus on market development and clinical evidence generation and dissemination. Momentum continues to build here in the next few weeks are just going to be such an amazing time as we share some of these advancements with our customers.

You might recall from last quarter about a very impactful study that was conducted on our VALGuard, Vascular Access Line guard, which is our fastest-growing product. To recap, this was a study by a team of nurse researchers at a large, well-known children's hospital in the United States. The study was focused on reducing central line associated bloodstream infections that are now CLABSIs. In the United States, these CLABSIs carry significant financial penalties that are in place to incentivize hospitals and other providers to take steps to continue to reduce these infections.

Accordingly, infection prevention is a big priority for hospitals, and they are investing large sums of money to help reduce these infections. This hospital had already implemented a number of prevention steps but wanted to take additional actions to lower their infection rate, and so they decided to begin using Covalon's VALGuard product.

This one change in their infection prevention protocol was able to drive a very significant reduction in their bloodstream infection rates in the departments that use VALGuard in the trial. So to update on progress here. First is that we can now share that the study has successfully passed through the peer review process, which is very rigorous and will publish in mid-September in the fall edition of the Journal of the Association for Vascular Access, a very well-regarded scientific publication that is trusted by thousands of vascular access clinicians in the United States and around the world.

Given the confirmed publication, we're also in a position to publicly share the name of the hospital that did this work. It is the Children's Hospital at Montefiore Located in New York City, Cham, as it is most commonly referred to, is a premier academic children's hospital nationally renowned for its clinical excellence, innovative research and commitment to training the next generation of pediatricians and pediatric subspecialists.

Each year, Cham cares for over 9,000 hospitalized infants, children and adolescents with complex medical and surgical conditions, including 1,100 in the state-of-the-art pediatric critical care unit and approximately 900 critically ill newborns in their neonatal intensive care units.

The Cham team have been absolutely fantastic to work with on this initiative, and we are very grateful for the partnership here. The work they do at Cham is nothing short of amazing. You might also recall me sharing that this study was selected as a poster at September's Association for Vascular Access their annual scientific meeting, which is the premier platform for the latest innovations and emerging technologies in vascular access.

A few weeks ago, we were delighted to learn that this topic has been elevated to be 1 of only 4 topics to be presented from the podium in a breakout session focused on pediatric vascular access topics, which will give even greater visibility to this impactful and rapidly growing technology from Covalon.

We are also still on track for this study to be presented as a poster at October's AMCC Magnet Pathway Conference, which attracts more than 11,000 nursing leaders and professionals from around the world. We expect this type of clinical evidence dissemination to be a significant growth accelerator for the adoption of Covalon's amazing technology.

A few other notable highlights. Covalon has advanced a new use case for our CovaClear silicone dressing that is really starting to generate significant interest. Due to some strong testing work by our team, we've been able to add a new indication for this product. This new use case indication offers customers strong clinical and economic benefit, and we see this as an exciting new revenue opportunity. We'll cover this in more depth in a few slides when we dive a little deeper on innovation.

And switching gears to the investor side, we're very pleased to be able to share that our common shares are now eligible for electronic clearing and settlement in the United States through the depository trust company. This is commonly known as being DTC eligible. This eligibility process has successfully been completed and will make it much easier for retail shareholders in the United States to be able to invest in Covalon.

This has been a bit of a gating factor in the past for a large number of U.S.-based investors, and so we're excited to be able to make it easier for them to invest in Covalon and share in our journey here. And on the international front, happy to report meaningful progress on several areas. We've successfully registered our fast-growing VALGuard line, VALGuard product in Canada, Brazil and Panama and have seen strong initial interest there, which will only accelerate in the coming weeks with the clinical evidence we discussed earlier.

We signed a new distribution agreement with a new partner for Israel, [ Lab Partners ] and are excited for growth prospects there. And last but not least, Covalon was recently awarded a new tender for our IV Clear product in India. Our international business has had a strong year of growth so far, up more than 35% year-to-date. And we see these advancements paving the way for a robust future.

Moving to the financial side. Given our commitment last quarter to achieve sequential quarter-on-quarter growth here in Q3, we thought it would make sense to share this view in a little more detail. Revenue at $8.4 million was up more than 10% sequentially between Q3 and Q2, led by more than 40% sequential quarterly growth in our U.S. advanced wound care sales channel.

Our gross profit and gross margin were down compared to last quarter, but this was a function of more than $800,000 of charges related to the destruction or provisioning for obsolete or slow-moving inventory or product that didn't meet our high-quality standards. The vast majority of this amount was the final cleanup from our CovaWound and CovaView excess inventory build that dates back several years ago.

Excluding these largely onetime costs, our adjusted gross margin was more than 55% for the quarter, representing an improvement over last quarter's adjusted gross margin. Adjusted EBITDA performance was strong on a sequential quarter-on-quarter basis, more than 50% higher than last quarter at almost $1 million.

And then zooming out to various time horizons, you can see Covalon's quarterly year-to-date and trailing 12 months performance. Looking at just Q3, we came in at $8.4 million of revenue, which came in 9% below last year's Q3, which was our highest revenue quarter of 2024. And adjusted EBITDA was just under $1 million, which was a $1.5 million decrease from Q3 of last year.

On a year-to-date basis, with us being 3/4 of the way through a year, we've got 8% growth on revenue and $3 million of adjusted EBITDA, which is down slightly from last year-to-date. And then from a trailing 12-month standpoint, solid revenue growth at 13% and adjusted EBITDA more than double the prior period.

Across all 3 of these time lenses, we've continued to demonstrate smart spending and investment in operating expenses, which have come in the high 40s as a percent to our revenue. On the right-hand side of the slide, you can see a good view of our FY 2025 year-to-date revenue performance compared to the same Q1 to Q3 look from the prior 3 years.

This lens is looking at our worldwide product revenue, both the Advanced Wound Care, which is primarily our collagen business as well as our Vascular Access and Surgical business segment. It's a worldwide view so it includes both U.S. and international. For 2025 year-to-date, these business segments represent over 99% of our revenue, so it's a very good view to the current laser focus of the company and how these business segments have performed over the past few years.

With this focus, we've clearly been winning in the marketplace, more than doubling our revenues in the past 3 years and achieving a 3-year compounded annual growth rate of 27%, which is around 5x the underlying market growth rate of the spaces that we play in. And from a cash generation standpoint, we sit today at just over $18 million, up almost $9 million from a year ago, and we've grown our cash on hand each of the past 5 quarters.

This cash position is rare for a company of our size and gives us tremendous optionality. In addition to the slides here, you can go to the presentation on our website and in the appendix, we have additional financial details on Q3, Q3 year-to-date and our trailing 12 months as well as each of our past 8 quarters. Looking at the U.S. Vascular Access and surgical consumable sales channel a little more closely, we continue to be a strong partner to the top children's hospitals in the U.S., demonstrated by 8 out of the top 10 of those best hospitals counting on Covalon to help them deliver superior outcomes for their patients.

And then looking at the metrics that we believe are important KPIs for the sales channel, as we look at our top 50 U.S. hospital customers from last year in terms of retention of these important customers that we've worked hard to acquire and grow, we've maintained 100% success in retaining all of these 50 customers.

This reflects the stickiness and the value of our products, and it also reinforces the strength of Covalon's post-implementation engagement model including clinician support, education and continuous value delivery, which ensures sustained adoption well beyond initial conversion. Our second priority is to grow our existing HEP either by adding new products that they weren't previously purchasing or by growing volume of existing products in the account. Here, we've seen solid revenue growth of 25% year-to-date from the same group of our top 50 hospitals from last year. And third is around adding new customers. In Q3, we added 15 new hospital accounts to our revenue roster, which takes us to 65 new hospitals through the first 9 months of the year, which is basically even with our total of 66 from all 4 quarters last year.

Importantly, we are not simply focused on acquisition volume and chasing a number. We're also investing in deepening engagement and product use across these new hospitals from the outset, which supports long-term revenue growth and retention. And then transitioning to the next part that I told you I'd walk through today. Three quarters ago, I showed this slide and talked at a high level around the importance of these 4 areas of advancement for Covalon and their importance to our multiyear growth journey.

I've previously covered commercial advancement and market development areas. And today, I'd like to go a little deeper around the innovation and business development side of things. Next quarter, we'll close this out by covering our operational optimization. While Covalon has done a remarkable job of growing with the current products we have and with our existing strategic partners, we see innovation and business development as a critical piece of how we will transform Covalon and make a massively larger impact to patients, the clinicians who serve them and our customers and partners.

On the innovation side of things, over the past year, we've made solid progress in shifting our innovation prioritization from being largely sustaining focused to being largely growth focused. In doing so, we've more than tripled the size of our innovation pipeline, building strength across 3 key states; advancing fully resourced prioritized programs towards defined time lines and outcomes, investing in early-stage work on opportunities that we believe have strong promise and drawing upon a significant shift externally for Covalon to generate new ideas and concepts that can shape the future.

We've also increased our emphasis in 3 critical areas. First, in addition to existing work around line extensions or new shapes and sizes, we're more actively focusing on new products, both those that are new to Covalon and those that are new to the world.

Second, we're expanding our intellectual property focus, including work on picket fence strategies to strengthen our competitive moat on key products. And third, we're pursuing new use cases, indications and claims that will help us unlock even more value from our existing technologies. For those of you who aren't as familiar with these kind of med tech-centric terms, on the next slide, I'll double-click to an example.

And then on the business development front, a lot of encouraging work here, where over the past year, we've had dozens of discussions with other companies to look at potential partnerships or other inorganic opportunities. It's been exciting to be able to examine the art of what might be possible with this exciting external engagement.

So while new products are what most people think in terms of innovation, I'm also a huge fan of innovation applied to existing products, specifically new use cases, new indications and new claims. And on this slide, you'll see a really exciting new use case and indication for Covalon's CovaClear IV product line. This product has been on the market for several years now, but this new use case is relatively new, and we're starting to see a rapid increase in interest.

So from a foundation, the initial reason why Covalon launched CovaClear IV was as a primary IV securement dressing for an IV catheter. You can see a picture of this use on the left-hand side of the slide here, where CovaClear IV is being used to secure and protect a proper peripheral IV. And so when you have a single IV dressing lace and this could be our CovaClear IV like you see on the left, but most commonly in the market as a [ 3M tagater ], a Medline Soroye or Smith & Nephew IV3000.

When you have a single primary dressing and that dressing becomes soiled, and I hope none of you are eating your breakfast listening to this. But when the dressing becomes soil, this could be where the patient is vomiting or has a kind of liquid-ish bowel movement where some of it ends up on top of the dressing or if they were to spill food or drink onto the dressing surface, no matter the cause, if the dressing becomes soiled, there's a standard protocol that calls for an entire dressing change.

Now this just doesn't change the dressing and put it back on. It involves a whole set of steps, including prepping the skin with an alcohol or CHG containing skin prep, maneuvering the IV catheter and a whole bunch of other steps. And the whole process typically takes 2 nurses about 15 or 20 minutes to do and it can involve as many as 10 different products that can include a new dressing, adhesive remover, skin prep, gloves, a mask, a securement device and so on and so on.

And in doing this procedure, you also increase the risk of complications such as catheter dislodgement or bloodstream infections. So the new use case that we are talking about here, nurses are colloquially referring to it as a Mudflap application. And when you think about what a Mudflap does on a truck, right, it keeps dirt and mud from getting all over the back of the truck. Well, this new Mudflap use case uses our cooler IV to keep things like vomit and liquid bowel movements and spilled drinks and whatnot from coming into contact with the primary IV securement dressing which would then require this dressing change.

So think of this use as cover dressing or protective dressing that keeps the primary dressing intact and nonsoiled. If the CovaClear IV mud flap application does get sailed, you just peel it off, new one on which preserves the integrity of the primary dressing underneath. This just takes seconds to do, and it's just one product, a new CovaClear IV dressing.

And so for the clinician and for our customers, this saves a ton of time and money spent on supplies, and can also help protect against the complications I mentioned earlier, such as catheter dislodgement or bloodstream infections. On the economic side, we'll be sharing some more details in a couple of weeks, but some early insights we have from a poster that a large influential U.S. Children's Hospital will be presenting at the Association for Vascular Access Meeting in a few weeks, suggests that using this CovaClear Mudflap application has delivered about $2 in savings for every $1 spent on the CovaClear IV.

So a really strong economic benefit in addition to the compelling clinical benefits. We see this as a sizable opportunity in both children's hospitals as well as on the adult side. And we also see it as a really great way to get into an account to kind of break into an account that we're not in today, where once we've established our presence, our team can then advance various cross-sell opportunities to get the broader Covalon portfolio to be used by the hospital.

So a very exciting new use case. So to wrap up today's call so that we can then take questions, a quick summary. The impact that Covalon's amazing technology is having with patients, the clinicians who serve them and the health care providers is significant. You heard that in Jaden's words, and our team sees this every time we're blessed with the opportunity to work with our customers to help them solve their challenges.

We're advancing a lot of work to demonstrate how Covalon's products improve our customers' clinical and economic outcomes. We're investing and driving actions that are creating strong shareholder value creation, and there's a very exciting future ahead for Covalon. We couldn't be more motivated and driving for that multiyear growth journey.

And with that, we'll transition to our Q&A -- we'll take a short pause here for a few seconds and then start with questions that are typed into the Q&A feature here online. So we'll take about a 30-second pause here to get things in order and then answer your questions.

[Brent Ashton, executive]

Okay. I think we're ready to start. So we've got a number of questions here. The first question -- there's actually a couple of questions on this front. And it was essentially around Covalon hiring Origin Merchant Partners as a financial and strategic adviser. Has there been any progress in the last 3 months?

And yes, there's been a ton of progress, a lot of really exciting engagement. It's one of those processes that once we have something to announce, we will. But I would say it's been a very encouraging process to date. And when there's an outcome that warrants advising on, we will do that.

There was a second part of this question from the first person who asked it around. Last quarter, Covalon had clear line of sight via in-house orders forecast and recent strategic partner sell-out trends to a strong Q3. Do you have line of sight into the current quarter now almost 2/3 complete?

And there was a similar question from Mathieu Martin around strong -- last quarter, we had strong visibility into -- or we had visibility into a strong second half of the year. Can we comment on the outlook for the rest of the fiscal year and going into next year? And so yes, we were a little over halfway through the quarter. And we continue to stand by that strong second half.

We think we'll see -- we're expecting to see sequential quarter-on-quarter growth in Q4 over Q3 as well from a revenue perspective. And we're bullish about our continued sequential growth here and strong growth heading into next year as well.

Arnold Shell has a question about are you really as happy as you seem to be? And I guess, for sure, I guess, the -- when we think about the business, I'm really bullish. I've given you a lot of examples of the solid progress that we've made and the difference that we make, saving lives, nurses and doctors raving about our products. I'm really proud of the financial turnaround that we've made from a few years ago.

And another thing that I think people tend to overlook, health care is not a fad. It's not going away. It's grown every year. The broader health care space has grown every year forever. It's the only industry that has not had any real downturns. And so when we think about investors, yes, some could probably make a little more money if they time the right hot sector of the day, but the macro is solid and I'm -- and the team are really proud of the accomplishments we've made.

We hit on some of the things like on the market development side, the international front that we believe will be a really, really exciting future for us. So I hope that answers that one.

There's a question around material drop in trailing 12 months adjusted EBITDA. And as I'm reading this. And do we expect improvement? And the answer is yes, absolutely. We -- as we head into Q4 here, as I said, we're bullish on a stronger finish to the year. We see margins stabilizing from the kind of onetime events we had here in Q3.

And as we look at 2026 and beyond, the actions that we're taking were committed to and believe there will be a strong growth picture for the company, which will drop to -- we've demonstrated very strong management on the spending line. So as those -- that revenue growth and margin -- stable margins drives clear EBITDA. We do expect that to be strong for us. Yes.

There's a question from Andrew Rem around like the total addressable market or the addressable market for the month flat use case. Just looking at that there's -- we think it's huge tens of millions of dollars from a total addressable market standpoint. We're not going to get there overnight. But we do think we're going to get off to a fast start here as we roll this out.

But when you think about just the sheer number of patients that have these kind of contamination events, whether that's in a PICU or a NICU or any pediatric part of a hospital or elder patients kind of, I guess, usually at the bookends of the lifespan there where these things tend to be the most prevalent. We're talking about tens of thousands of patients every year, hundreds of thousands of patients. And as I explained, right, so there's clinical benefit for this.

But one of the things I really love about this -- this application is through the study that we'll be sharing more details on when it is presented in a couple of weeks, there's a strong economic benefit as well. And so for hospitals that are in the U.S., in particular, and really all around the world that are looking for cost savings and whatnot. This is a clear winner. So tens of millions of dollars in terms of a broad-based total addressable market for cold lung, we think this can be a strong multimillion dollar use case for us in the coming years.

There's a question here from Juan Hoffman around elaborating on inventories at your customers and distributors and our thoughts on the current levels of inventory in the system and underlying sell-out trends. And so on that side of things, yes, when we look at -- so really 2 different businesses in the U.S. One is around our U.S. Vascular Access and surgical consumables business. And for that, the vast majority of our revenue actually is done directly with the hospitals. We do have a smaller portion that goes through distribution where they might keep 30 days of inventory on hand is pretty typical.

The hospitals themselves tend to keep a little bit less. So I'd say that's a very manageable part of our inventory position. With the U.S. Advanced Wound Care business, there -- those strategic partners keep a little more of inventory on hand. And we do have visibility in some cases to the sellout. We're really encouraged by the sell-out trends there. And we think it sets us up really well heading into 2026 here.

Julian also had a question around, have you noticed any changes in the competitive environment? Has there been any impact from the U.S. trade tariffs on that? And it's a great question. So thanks, Juan. I would answer that. We are seeing some changes. And the tariff, in particular, we are seeing an uptick in interest and orders around our Advanced Wound Care platform in the U.S., where a sizable percentage of the other competitors there manufacture either in China or the U.K. or Germany.

And China, in particular, those tariffs are a lot higher. I think they're currently probably best to look at CNBC right now because they do seem to change every pretty frequently. But I think at last gas, they were around 30% with a threat of perhaps doubling to 60%, but there's a pause. But we are seeing that play out. And so I think it's a very good benefit for us. The U.K. and Germany are lower. I think they're 10% and 20%, respectively.

So we're seeing that as well. And then just broader, we are seeing a broader trend, and not just us, but as I talk to other companies, relative to medical products made in China. And so we are seeing that have an impact where I think we're seeing more U.S. and other countries shift away from made in China to -- for a variety of reasons, the tariffs are one. Two proximate more in kind of the Americas or parts of Europe and the Middle East.

Specific -- Arnold had another question more specific to the tariff situation. So yes, just to expand upon that, we still maintain a competitive advantage here. 99% of our revenue into the U.S. goes out tariff-free. And the vast majority, like I said, the vast majority of our competitors in the wound care space are seeing these tariffs. So I'm not going to opine on where the U.S. trade [indiscernible] in the future. But I would say, in the current state, we at Covalon definitely view it as a competitive advantage for our company and our North American-centric manufacturing strategy is paying good dividends.

And I think that's it on the questions. Just let me look back here. Oh, sorry. Marc Has, we had kind of 2 questions from Julian that we lumped together. Mark Has has a question on capital allocation strategy. Do we have any CapEx needs, M&A, NCIB?

And so on that front, we are amazingly fortunate to have a lot of really great options on the table or in development. Should we invest in machinery and automation to lower our costs? Yes, absolutely. Good idea, and we're doing that. We've got 2 investments in the hundreds of thousands of dollars range that are going to drive strong cost out? Should we spend money on acquisitions? Yes, those can absolutely be transformative. We're working on this. Should we do dividends or share buybacks?

Yes, there's pros and cons to those, and those are discussions we have at the board level. But overall, it's just so great to have the options. There are a lot of smaller cap companies out there that are struggling to see how they'll keep their payroll going next month. And I'm really glad that isn't where, myself or our team have to spend our time, we were able to spend it much more on the growth and future side of things.

And so with over $18 million in the bank, as I said, that's a large sum of cash and great optionality to have for a company of our size. So that's it from the queued questions. At this point, it sounds we're hearing from the operator that there are no questions from phone people -- people on the phone.

And so with that, if you stayed on the call until now, you're clearly very interested in Covalon, and we appreciate that a ton time. I'd like to close with an ask here. If you don't already follow Covalon or myself on LinkedIn or on our company's various social media platforms on X or Instagram or Facebook, I would encourage you to do so, and you can see those at the bottom of our press release.

You won't have to wait until next quarter to hear and see some highlights -- we'll be providing some great updates from these 2 major scientific meetings that we'll be at in September and October and it will give you a feel for the excitement that was just building and that we're really bullish on that and then we're generating that with our current and future customers.

So you'll definitely be glad that you did. Beyond that, I just hope that each of you have a great rest of your day and a great rest of your summer. All the best, and thank you so much for your strong support of Covalon. Have a great day.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect.