SMED - Earnings call transcript Q4 2020

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Operator

Greetings, and welcome to the Sharps Compliance Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jennifer Belodeau of IMS Investor Relations. you. Thank

begin. may You

Jennifer Belodeau

morning, XXXX to earnings Good fourth Sharps quarter fiscal call. and you. the welcome Compliance Thank

On call the P. their Immediately call review strategies, the take and Company's while today, will Financial formal the we participants. have and Chief from review operations, questions Executive remarks, David Company's Chief Diana business we Officer; and David will following Diana Officer. Diaz, performance, President President Vice our will P. growth Tusa, financials. the

make some and uncertainties, factors as may are our release, statements during at at Securities be portion As results this that presentation we you're to differ our risks documents statements as which materially forward-looking the in formal and other factors can future could or in from Company of These and outlined as aware, as Exchange earnings are subject where with to well events, found question-and-answer cause by the well website today. apply we the actual filed teleconference. These These the Commission. in sec.gov. are to

way, that discussion. me of ahead. David, the review to let begin with So over go turn the and David to out call the

David Tusa

comprehensive performance route-based ability we business our times of all and solutions, on during achieving margins, increased also and our Sharps COVID-XX, uninterrupted to billings fourth public while with operating EBITDA. an morning, operate these fiscal medication, unused everyone, the unprecedented diversified across our mailbacks basis, with growth, environment, the call. demonstrates a believe and strength economic Jen. growth saw we delivered a solid strategy, key health our our mailback fourth provider. U.S. improved finally, to also associated continues is and quarter but illustrates the model, company the which transforming as power you, Thank impact what remains and quarter performance income Great. to a the with X% year revenue service of of Good conference business earnings from Customer challenging XXXX increased welcome, Despite and it a to contend and our

While in ahead I'm more strategic the we what to the view on of us to Diana are opportunities significant financial and the minutes, broader discuss few of the business for the fully you will investments be going of details we making take opportunity. provide highlights to in believe a advantage

our the So to first, by capitalizing what and flu and taxing there's seasonal our protect a believe belief the further driven opportunity, strong seasonal healthcare will This experts focus a systems. flu need vaccine contracting Americans immunization flu stretched very season. be on is from

the the the are health Additionally, this shot flu related flu opening and seasonal our immunization. higher encouraging the with could a X.X XX% In risk, like estimate in immunization year, Americans estimated setting, XX% flu quarter worsen season orders, worth XX% will a a from these vaccination clinics, to and about the provide medical situation, the CDC retail clinic as we the management aware, the June mixture of of customers. than and to public of the early. drugstore store focused flu quarter XXXX shipped health XX% that's We strongly and the health million. X.X orders Therefore, Prior store. others in a get the flu seasonal We in greater million public to believe adult of receive setting very an as received our retail supporting grocery that grocery and of we're it population experts June of Americans current the efficient, seasonal strong public a year also about flu a for Experts sees of on many COVID-XX like. the to year. are flu our are percentage Further stores, retail get believe about convenient, were potentially prior And or you more and crisis. waste this consumers administered belief current safe. of services

also experts apart current only should vaccine. opportunity. of a response. COVID-XX by believe that COVID the such will efficient, and the shots the clinic maximum be the vaccine that flu, estimated effective, in role as administration the Like retail and be our vaccine coverage safe the immunizations, COVID-XX, they play with otherwise. seasonal experts Now, vaccine, ensure key XX% shots, be With setting immunizations, flu potential administering significant solve to the injections subsequent see effectiveness COVID-XX growth two determined follow-on available, supporting immunity, clinics pandemic. solution efficacy boosters most of proud importantly, opportunity. the of Further, initial to a and help pandemic. not the believe administered days as this when And in will XX retail strength, the second solution, in of can COVID-XX vaccine, the expect we to of part frequency the be The this but immune country efforts we're the to of

this that flow, this us our June, impacts which company? our does What as and September, historically, in million customer billing. a mean generates does quarters, $X it seasonal all what What So about December mean? to historically means is

seasonal historical season, potential COVID-XX flu. then that administration Americans the a COVID-XX in revenue receive so addition to vaccines vaccine be could Now, could by followed

in doubling route-based So the be We be the population. And to infrastructure, route-based to now want quarter. very June facilitating business infrastructure but core this could during seasons. really outside waste the the living it of route-based management service billings we expanded in mailback the business. assisted XXXX of an preparing near of for growing medical to addition market time, third our route-based for part and the was seasonal a business the strong expanded the prospects, customer believe our minimize or to of this states important critical obviously flu don't ability will larger spans we XX vaccine what our the opportunity, And are COVID-XX XX%

in prospects lost flow not strong the medical we're COVID-XX the waste Although we've season, business. of immunization about management sight our core growing excited of

sales the team. fact, In and significant organization a it's focus the of

opportunities opportunities, create in we investment follows. as strategic these business with Now, the

disclosed As of increased back and the well ship inventory March to meet increased potential and manufacturing demand medical related the we and positioned significantly solutions mailback to customer waste in the COVID-XX flow anticipated remain this we ensure year, we vaccine. seasonal to of

medical service sold we mailbacks year appears as entire as COVID-XX customers, So as what the our in a are we're three of the year that calendar times XXXX. flow their prospects waste in XXXX, all the We've through is and be this means potential to season. needs, more times four many we building than advised strong ready addresses to what vaccine management industry to that country calendar

to our waste significantly we're commissioned Secondly, as in disclosed overall processing XXXX. capacity We was in additional our also in started the autoclave expansion pounds year. a facility in from The our recently that of XX million medical of part capacity. treatment October we March overall expanding an waste we XX autoclave medical million back Texas of new Texas XXXX, expanding of facility, that

additional and October be We autoclave completed our XXXX. should facility Pennsylvania that at operational of by also expect an

XX of addition million our capacity. increase additional the the to waste with will capacity our processing medical Now, tripled which autoclave, essentially pounds this a year, Pennsylvania

valuable about capital processed about for of XXXX. treatment not this We building process, seven reference and costs capacity to the in triple increases think time, prudent, each our is and million but permitted point, the $XXX,XXX our $XXX,XXX, calendar about As same we at $XXX,XXX to waste pounds investment in expected medical ability waste also properly treat very a infrastructure. that's The only while autoclave. is to the the important efficiently medical year growth

important route capability had bullish us is were service of we we able It's revenue, in in be that that serves increase This able larger states more quite waste with and is expanded prospects to able infrastructure. directly important and proving density pick to pitch and while understand our The from of to more locations full, our to an Third, we up our more route-based close which when or footprint infrastructure, smaller opportunities population. in in to to XX a we're profitability. and about we're medical and route-based reaches XX% and not the that route-based ability continue them, invest customers route-based now frequently. land allows service to now deals pipeline

move let's medications. unused now, to So

the unused believe fiscal MedSafe the medication, unused of controlled need increase liners year We year. and We substances, see the XX,XXX to continue XX% medication prior for for versus envelopes. in proper over as medication solutions and continued fiscal drove the X,XXX believe of business our deployed to TakeAway for process We this we're over opportunities the leader MedSafe MedSafe receptacles the and with our now we unused medication leadership today. have returned disposal our customers, collection including the We industry. XXXX in position

above bit the [Technical and We're needs the MedSafe Although the are cost-effective, levels for current the are visiting than growing in June upcoming at opportunities the retail a of management return persists. solve safe Company a exciting quarter, solutions. our positioned the the energized customers or see supports This their We're the pharmacy is on as pandemic. be again the a comprehensive of the also pharmacies where development the in position. COVID-XX the venue returns An surrounding believe returning receive of Difficulty] and addressing marketplace as pre-COVID-XX customers, and customers which to helping view a office and could and environment that as our be concerns on of by in this what to while leadership of focusing rather supporting medical focus they to very to to meaningful we July, is also dipped liners convenient We provider seasons, our positive waste time looking reliable, while benefit a believed the retail immunization efficient, terms health. healthcare, by very in we potentially added doctor's a Company. role the these be now

to remarks. I'm make to Diana? the have cover going Q&Q, to And I'll it Q&A, closing turn few after over then we'll Diana, then financials. going a and who's Now,

Diana Diaz

David. you, Thank

due June to That the GAAP million, in was compared increased in to quarter, reduces primarily a which mailbacks, prior which This Our for June to was revenue the this than XXXX net returned $XXX,XXX adversely higher adversely is fiscal GAAP as the fourth XXXX fiscal $XX.X fourth quarter impacted recognition. of expected the $X $XXX,XXX revenue during the revenue. as to we million XXXX. deferral impacts what X% million revenue caused of XXXX slowdown by of year. the adjustment, refer means quarter quarter $XX.X to revenue GAAP increase compared

billings primarily see trends mailbacks revenue, and lost in not periods, It's billings it's living the seen an or quarter returned $X.X note the $X.X is at retail led fourth future in quarters. a near market, increase market in July The in was the by to revenue the adjustment the shot August, to rather which in billings increase million. doubling expect business. Included in important about related to customer by flu retail is million GAAP XX%. assisted XX% our million market $X.X that we would Looking million to increase in XXXX $X.X and to September of December we've this deferred increase

About in clinics, professional Our million labs, fourth to the dentists, physician, market, have primarily and half COVID-XX customers had and medical year. comprised $X.X was Most of that is some market mandated decrease down our dental, in impacted were of since our compared professional mailbacks. with this our prior of and half healthcare to XXXX of associated veterinarians, billings providers, closures physicians, centers, decrease the business other this related that The temporary quarter $XXX,XXX fiscal XX% to surgery the or the which closures facilities. other temporarily pandemic other impacted waste reopened. affected customer closed route-based the of

of expected market of in including practices, for quarter, we closure dental with customers, June publicly, from resulting As professional and of number we a a impact our billings stated the the temporary our various COVID-XX. physician reduction a

waste. that from assisted volumes that much classified stated offset also materials industry the living higher sector, by we believed as as these We increased revenue of generated be decreases medical should

strength what today's reopening the the long-term from XXXX. we've news in happened. temporarily that billings customer the see is and can release, continue and seen is, is locations closed this care you majority of As The see exactly good in August to our vast July of

positively quarterly that billings were billings September for the of July numbers, Route-based see in care on the the in of back be trends the based July the the we increased billings September and professional prior $X.X and are $XXX,XXX quarter to market fiscal Additionally, of million. in XX% The on of in expect and billings $XXX,XXX. XXXX quarter quarter. August total believe of see approximately for the million bounce we we the XXXX we a professional year by in billings impacted of $X.X market impacted in route-based billings quarter. $X.X reduced for up compared quarter, X% of contributed fourth and billing pickup Based market the in about adversely August should the million by XXXX, XXXX and range the to long-term what

the unused medication billings. onto Now,

of area compared quarter as June quarter. to year XXXX, XXX last were XXXX XX, million, about for the of units billings units, in ended for quarter, million XX, X% as XXX Our MedSafes the June fiscal X,XXX this MedSafes X,XXX the XXXX. with were and deployed total XX, June $X.X the deployed during XXXX June the were installed the contributed year up in of prior quarter. Out XX% $X.X of billings deployed

the about XXX Additionally, XXXX MedSafes XX, deployed March were ended during sequential units. quarter

June have than fiscal of MedSafe as June liners, we XXXX, is XX, XX, year. end XX% about XX,XXX of XX,XXX the the or processed XX,XXX processed As of last XXXX which at higher

June said, related and of X% The We increased see XX% increasing related marketing. additional approximately as for quarter revenue $X.X SG&A XX% XXXX, and to as was result share to this on of sequential prior the partially XXXX, increase for mailback recorded $XXX,XXX. the revenue fourth offset Company's expense. June or sold prior about led million operating Gross the a well to manufacturer fiscal and decrease fourth XX% are $XXX,XXX to the that of is Mailback of a reflecting decrease last of XX% in revenue to on the market of tax a market mailback orders increase sales fiscal billings our deferred associated valuation for in at Company Remember of to of $X.X XX% $XXX,XXX mailbacks ended for recoverability year. market in to $X.X of as and of the expense an the market gross quarter in the sales fourth allowance pharmaceutical compared almost XXXX pharmaceutical believe pharmaceutical quarter of total $X.XX manufacturer margin million million the year in and quarter the the compared benefits the XXXX, quarter. represents we GAAP XX-month million, $X.X tax manufacturer quarter and operating basis or of professional by X,XXX the GAAP of The market quarter orders versus the in prior Sharps X% fiscal previously fiscal for in in contributed increased year. of of increased XX% income for costs, fourth of in in recognition better a the marketing is of assets. the million release losses. year by compared XXXX. the XXXX a of increase mailback liners. X,XXX This income quarter to of year $XXX,XXX flu-related compared the reported investment $X.X of per same the prior to our unrecognized which headcount SG&A XX% business, quarter. tax reassessment $X.X of XXXX, with quarter, as processed the billings For XX%, increased trailing X,XXX for fourth million or processed we More the liners showed margin March SG&A lumpy, benefit, income over to and simply way continued basis, an increased look SG&A the by $XXX,XXX

million, XXXX of of tax Sharps reflect the consistent generated of the quarter, September state last net basic federal share income with fourth per is net this beginning to income, million expense XXXX, will of fourth about quarter, compared in the and financials taxes. fiscal in of quarter GAAP our with Company XXXX. which share EBITDA $X.X XX% $XXX,XXX EBITDA including forward, quarter in same diluted $X.XX income of fiscal reported the diluted basic both and pre-tax Going and income or and or $X.XX income period of $X year. The of per

that including to $XX million, billings in an fiscal the XX% billings at to orders million, billings benefit operating $X.X million X% as recovery manufacturer to XXXX the margin XXXX, XX% Home TakeAway [ph] year. for year $XX million $XXX,XXX year last system XX% increased as increase shot was increased XX% share, increased customer was per $XX.X medication sales result Company in XX% to per basic due key fiscal in the taxes XX% for year last a primarily diluted with $X.X in net for to comparisons was XXXX. per of included prior million. I Pharmaceutical fiscal for $X.X and Company $X.X billings of compared million of healthcare let's Gross income to to the envelopes million. Now, professional generated of related Company's XXXX. sales Net to million. investments The for diluted XX% $XX.X and billings described a Revenue That fiscal fiscal year. of an fiscal basic allowance of to $X.X compared and as and fiscal increased income over compared XXXX or related million, unused or $X.XX medication previously. The to full of valuation continued which $X.XX Retail of of that fiscal XXXX, The share increase recorded look income grew the billings in $X.X the consistent increased for release slightly at 'XX. or our million income but $XXX,XXX fiscal share EBITDA solutions, increased the compared XX% year million, XX%. XXXX. increase flu for as $X.XX in $X increase income million. well to to SG&A of an MedSafe, increased million, XXXX, $XXX,XXX the as was $XX tax income and of to in XX% to market marketing, $XX operating percentage as

with June solid, of working at receivable remains cash at was of sheet XXXX, June balance million. capital Our and million $XX.X Accounts million. $XX.X XXXX XX, XX, $X.X

the and month XXXX, increased including June respectively, of DSO, at months plant same was XX, portions, in days, and includes period. $X.X month XXXX, current and Texas, million June of which days quarter. the other higher compared feet XX, feet, which to $X.X higher XX,XXX square in to treatment XXXX, autoclave. Our over both due sales on including year of of of IV in XX the over long-term current was million from our the and the levels prior inventory the XX, $XXX,XXX or and year. to of grew outstanding June's revenue, poles, $XXX,XXX, reflecting the $X.X square new the increased billings inventory in increase using the spend June is from disproportionately million, about of expansion of flu-related mailback $X.X a XXXX increase cost the to June that XX,XXX million in an Most Property, facility Inventory equipment

that to by due prior Our the Texas this PPP million, treatment of of million we from from to our $X loan the $X.X of acquisition end of $XXX,XXX. long-term funds expansion, the last plus debt fund increased offset the the year, year's drew of of facility debt year repayment end partially $X.X million borrowings to

the for Program, lender, Paycheck previously under PPP, part we're be $X.X we process of the will the applying the our with by of turn CARES the established of forgiveness we Small Business and loan and Act, Department the back Administration the million announced, did to provided this as As in guidance David. Treasury. over receive Protection call that, I'll And of under the or

David Tusa

the closing ahead few make after And the a Diana. and it A&A. Great. for Thanks, open going Q&A, go up I'm remarks. let's Operator, to

Operator

you. Thank

We will [Operator Instructions] question-and-answer Thank session. now be a conducted you.

ROTH Capital. of comes line with question. Sweeney question Please first your Gerry Our with proceed from

Gerry Sweeney

taking for Good my call. morning, Diana and David. Thanks

David Tusa

bet. Good morning. You

Gerry Sweeney

Obviously, to in I season, the hitting mailback. wanted the marketing. to rubber going with is flu CDC weeks. start the road of be next the couple

in are know some just of information some start -- a marketing. and pharmacies little little the a from get work your of on I we've retail going and to doing think we the feedback more area, to customers. of this bit bit been I and stats you're But getting want

XX% of flu in past. discussed settings. your gotten of is retail in shots adults in you think As XX% prepared the this remarks, have the I

pharmacies shift or to COVID to at see with shift? understand pharmacies side, week, saying clinics, are some this customers as inoculations where different for schools retail shifting I is holding shift, know for and some satellite the your a provide this using this the to your of CDC is What customers vaccines. apparently are taking a going more least want in also conferences be flu least calls And as with are maybe them? are what well. place. about a I retail etcetera, about Just some maybe locations, at the locations, there the and administering some just to for partnering about test potential saying opportunities talking

long-winded to just I there, get want there. know thoughts So question a but… some

David Tusa

that's the we've a we're XX% customers, close expect then busy vaccines the -- contact in and prior and Obviously, XX% actually don't manufactured a significant that standpoint, listening year. from or them, a I good to our first higher very from to are our that I they say, are, I'd of very just good seen, question. all that's think No, everything flow. do of being all, know, with than

what real a can percentage we're shots last a that were more impact XX% not sold if that is increase think go we're I the were saying saying -- could at lot building XX%. look They ready be seasonal XX%. I'm is, you think a -- administered are of the doing the just should have our that you they flu number say think were ago prepared. I year? for going last roughly because they're experts data of the But Diana, and be we're setting that ready retail with what achieved. for your groups, alone, in going it than when and But exactly -- be in partnering XXXX really it's But to that they, however universities, XX% what year assured assuming and XX%, long saying, we're large XX%, or I observations with mailbacks happens, chance of pretty we for and tell it's the to remember flu I I'm at ready too or there's least or seasonal you're will us, to just that right what we them XX% not different XX%. that. a to easy to will be we're whether schools, it's I community.

So very in to the very, they're the active going be administration seasonal of flu.

Gerry Sweeney

well, would start the June I You you in shipped the detail of into quarter. a carryover carry August the as to to some one, any some us units on expect gave or, shipping? when on Could it when that, comes details to give carryover you -- mailback us and think see some to caveat the July

David Tusa

Right.

follow-on as on, pharmacy. well, them as shots. orders administering they're on the in the the been customer, So, some are always of usually all, out ago. shipped we weeks by then upfront a used sometime we to is And starting know this get way orders worked, all have business it's have of what to for work chains flu the shots in the been think hopefully, I larger the retail replenishing of large follow being flu quarter has we have that and started June first the because I mailbacks they couple The or sent going warehouse, the our originally and distribution warehouse, September. doing and the

past, be. again idea have in what's happened the until of again order the as again, happen would what that then the shot, will won't on the in to depending sometime September in their they'll November, probably reload And strength December, a we So, warehouses. good flu it follow-on where on

see. better idea to have September. just we'll a So, have We'll of

Gerry Sweeney

in queue, Then does of pipeline I'll XX back it for said states, to look the it. my looks jump I Obviously, and deep. drivers one switching that back Got the some core over of potential you how forward you of maybe there. size it? changed should describe order average assume expansion? to deals looking But because expand also, little the as detail just into But the And continue couple could it's that that's was a like? maybe last years, what's gears, in model. in then going percolating and larger we as what sort my expansion know especially the you route-based. And to

David Tusa

Sure. you I'll what focused on. tell we're

that opportunities field route-based you lot RMW average annual that are on are which of side, that would expanded working. the opportunities On the to is sale $XXX,XXX opportunities of probably this larger the driving a I business, quite the for actively size tell opportunities XXX in side we're usually the that pipeline be of $XXX,XXX. will full. probably There's pipeline at to least XXX

type of opportunity. the So that's

we've really opportunities that it's last So think that two, And with route-based were the if you think X,XXX are closed good. and growing, into the XXX, and as larger. business, or maybe over XXX, larger year expanded locations opportunities they're we about we've it, getting the

deals we believe that -- about very, Stericycle why or very, large very that's after it's we're or that And we these talking deals, get opportunities. about excited going us So it. national you're really when strongly regional

quite and excited. we we're where positioned, So we're like

to larger lot We closing pointed those resources have opportunities. of a

Gerry Sweeney

appreciate I in it. I'll back it. jump line. Got Thanks.

Operator

question. question comes of with a Brown with next Rob your from Our Markets. line Lake proceed Street Please Capital

Rob Brown

taking And my call. morning. thanks for good Hi,

David Tusa

morning. Good

Rob Brown

driving growth. grow? business on you I a wanted assisted continuing to First, the living that more just see get do little and really that color how What's been to

David Tusa

medical what the So really during hard, PPE, pandemic. in waste. -- been been because historically traditionally living, solid But happened There's lot as the gloves, into hit let would facilities disposing the me go pandemic, of care assisted the masks, the waste, of materials the They they've they've like long-term gowns. the those see trash. a during

as the facilities they're volumes waste. waste So versus treating items increased have more solid because existing from medical

So June in was very the that quarter. strong

today. roughly continuing $XXX,XXX year-over-year. increase You saw of as It's

Now, I we know know. but the continued has right strength don't next know We But there in of December, sometime now, continue, continued. care don't volume how of strength year. long-term if long that's that or the to continues going to don't as through be and appears market. September, or it

Rob Brown

you. new growth of or sense the you quarter. Thank a for unit in year. growth And medicine into year, placements how of should in market, unused just the had Okay, rest continue that of great. the the then nice Maybe next units terms on in give

Sorry. Thank you.

David Tusa

We at basis, on on I basis. think -- really an year annual And it know alone, really calendar I year this a look

Diana Diaz

XX% in the medication unused market. growth

David Tusa

strong, that, the Yes, that about you over think seen XX%. the of we we opportunity is but still to We the business. last this. Retail grow can't continue And pharmacy to guarantee have couple trends tell years. and some of I you've will that's sales the will deploy hit and in MedSafes we've market, right with we care heavily because MedSafe tell of with long-term new slowdown I long-term COVID. care into you retail. continue the has to though, now a seen been

strong. retail months, care. even adversely side sales incremental to could that continues long-term to be next But maybe XX over to affect, six the the So

Rob Brown

business? Okay, said that long-term care how of a percent And have good. you is much

David Tusa

retail will other half I are Roughly this. is the MedSafes long-term care… of Well, half split tell between and you our market, clinic

Diana Diaz

Government.

David Tusa

treatment facility. law enforcement, drug licensed Government,

Rob Brown

Okay, thank over. I'll it turn you.

Operator

Stifel. Michael line Please question with proceed next of your with Our Hoffman from question. comes

Michael Hoffman

today. exit and incremental where the do you Diana. time think have you margins now David XXXX settled David, your you Thank as going 'XX? into Hey, for

David Tusa

going on gross be XX% to between we model think continue incremental margins continue to -- out, are forward and XX% think to and I and a going basis. I somewhere our

Michael Hoffman

Okay. XXXX XXXX? in How deliver And then, gave a mailers mailers. many of XX% you us did increase framing you on

David Tusa

Mailers?

Michael Hoffman

For the mailback.

Sorry, it's my shorthand.

David Tusa

[indiscernible]? medical the For

Michael Hoffman

you Yes, for your you look talked by like? mailback how XXXX. that actual to increased number about versus XX% What's -- inventory in the response

David Tusa

So was season. we I mailbacks last the year the flu for XXX,XXX for XXX,XXX XXXX or think alone, it sold, flu business

to XXXX. be XXX,XXX able prepared just vaccine. flu, year building to be seasonal the XXX,XXX going also we're of for to gross them for flow. the of a for just So calendar We're throughout build COVID-XX continuing probably to over seasonal We're to potential build the XXX,XXX well

Michael Hoffman

balance that 'XX, sheet if Okay. have we a building We see the into vaccine? quarter as we up year inventory calendar each get gradually the on should potentially,

David Tusa

of [ph]? June, million it; had think -- was And inventory we end at mailback Right. $X.X I what of

Diana Diaz

Correct.

David Tusa

was Of that June That XX the we seasonal for had. about or at flu. XXX,XXX so million units $X.X

will continue yes, So you to see that.

course, reduce that will as year. of sell Now the as them hopefully, we throughout can we

Michael Hoffman

you've route-based aren't approximate, Great. past how XX,XXX then about that the percentage had wise talked number? customers. many And a XX,XXX approximately or about open Of you in

David Tusa

Diana, -- roughly have XX,XXX on or the that we -- was were saw X,XXX now, what high We now about So the customers. impacted. about -- on about route-based XX,XXX it it's temporarily them of

Diana Diaz

all and XX% reopened. Right, but have

David Tusa

back are XX% on. So,

Michael Hoffman

stuff schools XX% like are and And like things that? the

Diana Diaz

Maybe But practices, a were it just or depends. that few the in, Yes, most the practices there are schools. location of on geographic and dentists, the they're physician track. back

Michael Hoffman

past then how collections your in was the quarter? And Okay.

Diana Diaz

our collections. at cash collections are a any COVID-XX significant on from didn't impact Cash We normal pace. see

compared to June of DSO decreased March. as Our

there. So we're any not or problems seeing issues

Michael Hoffman

of didn't debt you any like allowance anything adjustments to or either? that So need make bad

Diana Diaz

Correct.

Michael Hoffman

What's plan? then in debt significant the current. have shift going And a the you

Diana Diaz

portion from long-term whole October. sheet. balance Okay, payments current of thing it in principal PPP which which starting the forgiveness, debt applying process the would of per we're that's But remove the includes $X so in when million for our requires to finalized, terms, its loan, related the

Michael Hoffman

it. Got

had lastly, then you in XX% increase a And that? liabilities. Okay. behind contract What's about

Diana Diaz

increase total just $XXX,XXX. that So is over

that and mailback related is recovery returns or $X.X Also, related revenue. the contract in that. Some that of flu of to about Remember, some we liability on amounts the increase deferrals realization additional the the delayed orders had delays increased increase $XXX,XXX the in of quarter. million, in that shot it because we the the is to for had

explanation the contract So increase that's really liability. that for in the

Michael Hoffman

population So catch we up, more and should see the of flu that the both back shot? plan do as mailbacks see we a if plays get really walk out, the

Diana Diaz

Correct. more It'll for stuff, come down returned as up to again. it's But mailbacks go treatment. are we if going sell

-- So

Michael Hoffman

very much. you Thank right. All Okay.

David Tusa

Thanks, Michael.

Operator

from proceed of Kevin question. comes line Barrington Steinke question next with your Research. with Please Our

Kevin Steinke

Good Hey. morning.

originally in in about of vaccine. June, timeframe, a And talked potential of You what reassessing May conference about you're mailback that your how in what obviously, I wondering, continued here. you've change your last build significantly thinking the COVID But you inventory maybe about that. had spoken ramped from up prior reassessment call on or if thought July kind for out had was things you kind on July, in June, to production previously of you

David Tusa

XXX,XXX thing, much again, So And same a little the year. on least we're pretty track calendar now to sold XXX,XXX build bit at and we're last right on over for year mailbacks. the

now inventory, is think X So the XXX,XXX. right about inventory I in

four And But it, overestimate able inventory, in times for fine. or of the turn the Of review get further we we used in They to means that's course, more. of and back manufacturing shipped underestimate quickly. adjust That can related that that's to of of we just be that we we did year, the downwards. again, is of just we what do June. it, If that's we orders, next when If every assessment we what we sure last even shot couple maybe need weeks. thing. meet need to well, follow-on it pretty flu few roughly needs then million may be we on we the upwards make three We out a year. plenty instance, a have But times, what September net good season. can

Kevin Steinke

talked have that buildup the of and you are relation inventory kind shots then boosters, two preparing and in initial are you -- what COVID Okay, then in you? multiple the the vaccine, then here, you to for about,

David Tusa

Right.

So, yes, absolutely.

a larger COVID-XX customers what's people X,XXX multiple seasonal demands two adjust for and being But the and a so hear reasons. than One, the we there's we excess get on flu, XXX,XXX more COVID-XX. we'll and in then to currently on that manufacture, probably flow, than and seasonal So, my have consider the for of COVID. those XXX or the about we're for the flu, you COVID But to yes, potentially mind, track vaccine boosters what and of inventories may basis, a possibility the accordingly. for our regular the we've reviewed and shots

Kevin Steinke

been had Okay, deals deal that as impacted route-based mean, early closing pandemic? pipeline? great. delayed pipeline in quarter, how those at also or rate just at as by closure? July as the potentially Or as on last talked flowing Was the revenue you I all July. the closure progressing is the early kind that And towards or what's all from some of about side,

David Tusa

were were that's facilities other deals we No, and good and dealing Right. more a of and question. did slowed We many facilities that did were COVID-XX, number a calling COVID-XX on as types in focused them yes, healthcare COVID-XX. of of progress, with get much on with larger have

a not are slow We the looking we an calling and us are seeing get But on sell to we for at definitely stop we them and saw reengage now as that does our few as in larger more months them, in deals, engaged down ability that involved alternative mean speak. but provider. we

Kevin Steinke

Okay, on that get way route-based team, size at sales it through mostly and I about online but the thanks. release I And that online of sold pickup and being you then due think field living. being about a in sales, it you just customer. the a I the the maybe depending kind talked about found Is thought assisted inside through sold I services of well bit that? channel, to route-based more the interesting guess into as a inside in mean, can press sales I to

Diana Diaz

lot the they've few customers heavy months. last inside success over had increasing correct. growth. of That's focus big route-based our on customers, a and The route-based part sales That's of has a in the adding a very

David Tusa

this don't When or sell And job -- by to as team sell team cannot correct, MedSafe, -- as great and his they thought and way, the selling they do that valuable is and a it all. if the inside they a field our addition the we it inside sales it's near they inside our the they're initiative, pickup, sales pickup, then a by in sell if sales job, But we phenomenal think are of was everything. a mailback, on the sales route-based they can is as all, launched today, -- a which mantra or Dennis led sell team.

Kevin Steinke

had during Okay, great. of And ensure about continuity or a pandemic. forward? costs, spike those costs those roll Have off, service you to we continuing of to in should some the then as of think kind wanted you temporary started

Diana Diaz

starting quarter, We saw about And that spending. goes June, increases was and away, some COVID-related $XXX,XXX through to continue. the those July. continued in related impact in It that March of

Kevin Steinke

Okay, thanks. That's had. I all

David Tusa

great. Okay, Thanks, Kevin.

Operator

to Mr. like Tusa, now over turn reached the We would floor you closing question-and-answer I have session. to comments. for the end back of the

David Tusa

Thank you, operator.

multi-shot a opportunities vantage several that we my be in over strong for serve. flu view could could discussed markets immunization of have strengthened the world has As that efforts believe continued impacted be revenues point our introduction, the we growth next year experts are beyond, Sharps what our From events seasons, in number and indicating favorably immunization COVID-XX and today, years.

endemic morphed similar the Now, be COVID stay. could experts which believe into viruses of has an possible more that to already situation, current that maybe it's means here or or pandemic could

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and will the all We've lot assured flue. We need, that and they we related medical And whatever a in We're is, collect, are talked mailbacks safely season to how no for near-term ready. matter the we're treat we've large else the meet to ready flu COVID [ph] demands. customers ready seasonal vacc have again, the we and how a addition opportunities, our and transport, large can cost-effectively so the waste. or COVID-XX

part medication mailback heavily in outside We and a business route-based invest as of a in expansion to of Company unused of the the the provider. to comprehensive service continue

think worked. I it's

I worked well. thing before last And think one off. it's quite signing

months them thank and we've we helping in pandemic. thank service COVID-XX the also to going customers, for them flu, our very uninterrupted customers Our our we going the is hard coupled XX that. advance what with pandemic. in a And the because employees strong to forward We're seasonal very think busy as with have worked solve of XX ensured for obviously we potentially be to work going during to them,

we'll much very thank again, soon. talk employees. today. thank on our and Everyone, So call you the everyone support. for stay you And safe, to healthy appreciate questions the and the and We

Operator

Ladies and teleconference. today's does gentlemen, this conclude

have and wonderful You may this disconnect your time. participation, your day. lines Thank a you for at

Sharps Compliance (SMED) 19 Aug 202020 Q4 Earnings call transcript