Earnings call transcript: Covalon Technologies Q2 2025 sees slight revenue miss

Covalon Technologies reported its Q2 2025 earnings with a slight miss on revenue expectations, posting $7.59 million against a forecast of $8.67 million. The earnings per share (EPS) also fell short at $0.02 compared to the anticipated $0.03. Despite these results, the company’s stock showed resilience, gaining 5.66% in the latest trading session, closing at $2.95. According to InvestingPro data, the stock has delivered an impressive 105.88% return over the past year, with a current market capitalization of $28.97 million.

Key Takeaways

• Covalon Technologies reported five consecutive quarters of profitability.
• US product revenue has grown with a 3-year CAGR of over 30%.
• Stock price increased by 5.66% despite earnings miss.
• Strong growth in vascular access and surgical consumables, over 40% year-to-date.

Company Performance

Covalon Technologies continues to demonstrate robust growth in its core segments, particularly in vascular access and surgical consumables, which have seen over 40% growth year-to-date. The company has maintained a strong cash position of $18 million, an increase of $11 million from the previous year. This financial stability is complemented by a three-year compound annual growth rate (CAGR) of over 30% in US product revenue, significantly outpacing the market. Based on InvestingPro’s Fair Value analysis, the stock currently appears to be trading above its Fair Value, with a Price-to-Book ratio of 5.87x. For deeper insights into Covalon’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: $7.59 million, below the forecast of $8.67 million.
• Earnings per share: $0.02, below the forecast of $0.03.
• Gross margins: Maintained in the 55-60% range.
• Cash position: $18 million, up from $7 million a year ago.

Earnings vs. Forecast

Covalon’s Q2 2025 earnings did not meet market expectations, with revenue falling short by approximately 12.5% and EPS missing by $0.01. This marks a deviation from the company’s previous trend of meeting or exceeding forecasts, though the stock’s positive movement suggests investor confidence in the company’s long-term prospects.

Market Reaction

Following the earnings release, Covalon’s stock price rose by 5.66%, closing at $2.95. This upward movement suggests that investors remain optimistic about the company’s future growth potential, despite the earnings miss. The stock’s performance is notable against its 52-week range, with a high of $4.30 and a low of $1.11.

Outlook & Guidance

Covalon expects sequential quarterly growth in Q3 and anticipates a stronger second half of the year. The company is exploring mergers and acquisitions and shareholder value creation opportunities. Future projections indicate a significant revenue increase, with plans to expand the ValGuard product line substantially by 2030.

Executive Commentary

CEO Brent Ashton expressed confidence in the company’s trajectory, stating, "Covalon has never been in a stronger position than where we sit today." He emphasized the company’s focus on accelerating product adoption and unlocking significant value, noting, "We’ve only just begun and see a strong future that will enable us to realize the multiyear growth opportunity."

Risks and Challenges

• Potential volatility in international sales mix affecting gross margins.
• Dependence on US and Canadian markets for revenue.
• Competitive pressures in the medical technology sector.
• Execution risks related to M&A and expansion strategies.

Q&A

During the earnings call, analysts inquired about potential share buyback and dividend considerations, gross margin fluctuations, and sales team expansion. The company is also exploring M&A opportunities with Origin Merchant Partners, indicating a proactive approach to growth and market expansion.

Full transcript - Covalon Technologies Ltd. (COV) Q2 2025:

Joelle, Conference Operator: Good morning, ladies and gentlemen, and welcome to the Covalon’s Q2 Fiscal twenty twenty five 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. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be a question and answer session. If you would like to ask a question during this time, you can submit your typed question via the webcast. Alternatively, if you would like to ask a question over the telephone, simply press then the number one on your telephone keypad. If at any time during this call you require immediate assistance, please press 0 for the operator. At this time, I would like to turn the conference over to Mr.

Brent Ashton, Chief Executive Officer Ms. Kim Crooks, Chief Operating Officer and Ms. Katie Martinovich, Interim Chief Financial Officer. Please go ahead, Mr. Ashton, Ms.

Crooks and Ms. Martinovich.

Brent Ashton, Chief Executive Officer, Covalon Technologies: Hey. Thank you so much, Joel, and good morning to all of you on the call today. I apologize for our, our technical difficulties at the start here, thanks to some good quick troubleshooting by Celia and other members of our team. We’re back in business here. We do appreciate you connecting in today.

Kim Crooks, who’s our newly promoted chief operating officer, and Katie Martinovich, our interim chief financial officer, who joined me on the call here today. And Salya Asadzada from Covalon is helping to coordinate the conference call and the webcast today. Salya will now provide us with some instructions.

Salya Asadzada, Executive Assistant to CEO, Covalon Technologies: Thank you, Brent. Good morning, everyone. My name is Salya Asadzada, and I’m the executive assistant to Covalon’s chief executive officer. I would like to thank everyone for 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, Chief Executive Officer, Covalon Technologies: Hey. Thanks, Celia. It’s great to be able to speak with all of you today. During our call today, I’ll be discussing the following topics. First, I’m gonna start with sharing some thoughts by Sandy Khan, a remarkable nurse leader at one of the top ranked children’s hospitals in The United States, and her thoughts around the difference that Covalon technology makes for her and her patients.

Second, I will walk you through some very exciting recent highlights from Covalon that have us extremely bullish on our company’s future as well as a look at our Q2 year to date and trailing twelve months financials. We’ll also showcase some key metrics from our U. S. Business. Third, we’ll dive a little deeper into our market development work that we have been ramping up to drive accelerated adoption of the amazing products that Covalon has in its portfolio that make a huge difference in the lives of patients and the clinicians who serve them.

We see the outcomes of this work being a significant growth accelerator for the company. 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 starting from the patient impact side of things, I’d love to introduce you to Sandy Khan.

Sandy is an amazing nurse leader at one of the top right children’s hospitals in The United States. I had the privilege to first meet Sandy about a year ago and came away so impressed with her commitment and passion for her patients and their care. We should all be so lucky to have a clinician like Sandy if we end up in a hospital. I won’t read the quote word for word here. You’re probably already doing that, but I will call attention to some notable highlights here.

First is the critical and challenging. The work that Sandy and her peers do across The United States and around the world is critically essential to the life of patients. In her case, pediatric patients. And it isn’t easy. Challenges abound.

Challenges like bloodstream infections that tragically affect hundreds of thousands of patients each year with a high mortality rate of fifteen to twenty percent, and skin trauma and pain associated with alternative products. Second is around her favorite pro Covalon product, our IV clear antimicrobial gentle to skin IV securement dressing. As you can see in her words, it’s making a real difference with her patients. Fewer disruptions in their treatment and significantly less discomfort. And third, clinically effective and far more compassionate.

Sandy and thousands of other nurses who are passionate for the care of their patients trust Covalon’s technology to help them achieve the strong outcomes they’re shooting for and doing so with a strong eye towards compassion, understanding that all patients from a sub one pound preemie to a hundred plus year old patient and all of us in between greatly appreciated being treated with compassion when we’re not at our best. We’re very fortunate to have passionate partners like Sandy who don’t just accept the status quo, but instead push forward, always looking for the best possible solutions for their patients. And similarly, at Covalon, our team members wake up each day energized to be able to advance care and make a big difference in the lives of patients, big and small, young and old. So with that as a backdrop to our purpose and motivation, we’ll now switch gears and I’ll share a small sampling of some recent highlights. First, I’m extremely excited to share some great news about a very impactful clinical study that was conducted on our ValGuard vascular access line guard, which is our fastest growing product.

A team of nurse researchers at a large well known children’s hospital in The United States conducted a clinical study of ValGuard across critical and acute care units. The study was focused on reducing central line associated bloodstream infections, otherwise known as CLABSIs. In The United States, there are significant financial penalties in place to incentivize 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 bloodstream 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 implement Covalon’s VowGuard product.

This one change in their protocol was able to drive a very significant reduction in their bloodstream infection rates in the departments that used the product in the trial. The results are so compelling that the research team have had the study selected to present at two very notable scientific conferences this fall. 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. And then in October, the ANCC Magnet Pathway Conference, which attracts more than 11,000 nursing leaders from all around the world. In addition, this study is in the final stages of the peer reviewed publishing process in a major scientific journal.

We expect to see the study published later this year. Now I realize some of you may be asking, hey. How will this impact Covalon and the value of our company? This is a big step for Covalon and and for our pathway to win in the market, and it matters because clinical evidence can be a huge growth accelerator for the adoption of products, especially new to the world type products like Vowgard that have no real direct competitors. With what we’ve already seen and what we know is coming, including this evidence piece, we are confident that this product can grow from a few million dollars today to more than $30,000,000 of annual revenue by 02/1930.

Second up here is a recently signed agreement with a long standing partner for our collagen advanced wound care dressing product, Paul Hartman USA. Our partnership with them has been a very strong one, and this partnership has been a big driver of Covalon’s growth over the last three years. Our new agreement is a three year agreement with options for future renewal terms. All told, we expect this strong partnership to drive significant revenue growth for the company over the term of the agreement. Third here is our recently initiated work with Origin Merchant Partners.

We’re very excited at the opportunity to partner with them to advise in advance on a range of opportunities aimed at maximizing shareholder value and expanding the reach of our technology. These opportunities can include joint ventures, mergers or acquisitions, partnerships or a variety of other actions. Our primary objectives here are to enable different ways for our amazing technology to benefit an even larger patient population and to unlock the significant value that we feel is inherent in Covalon. And in the past month or so, I’ve had the privilege to represent Covalon and present, take questions, and do dozens of one on one meetings with current and future investors in the company at two different investor conferences, Planet Microcap Showcase Vegas twenty twenty five and the twenty twenty five Bloom Burton Healthcare Investor Conference in Toronto. It’s been great to be able to share how far we’ve come as a company in recent times and our exciting future ahead.

Very energizing conversations and dialogue on the future of our company and why to invest in Covalon. And last but not least, TerrAs. As I’ve seen and you probably have seen as well earnings announcement from competitors and other industry players in the spaces we operate in, I’m hearing warnings of tens or even hundred million dollar plus tariff impacts to these companies who have intertwined their sourcing or selling supply chains into China and other countries. At Covalon, we’ve had a very deliberate North American centric strategy for our manufacturing and supply chain, and boy, has this ever turned out to be a great approach. To date, we’ve not incurred a single penny of tariff related costs on our products, and moving forward, we don’t expect to see any material impact here.

Over 99% of our company’s total revenue comes from products manufactured in either The United States or Canada. And especially on the advanced wound care side of our business, we have a number of competitors that make their product in China, which is now at a 30% tariff rate. And also Europe, which president Trump signaled last week could see tariffs increase to 50% at some point in the future. We are the largest collagen advanced wound care dressing manufacturer in North America, we are business. We

Will Looking at the past year and the current year to date, you can see the strong revenue growth relative to prior periods. And as we stated last quarter, we knew that our Q2 revenue would be lighter, driven out of The U. S. Advanced Wound Care sales channel, but we do have solid line of sight to sequential quarterly growth in that channel and for Covalon overall for Q3 and for our second half to be stronger than the first half.

It’s worth noting that in Q2, our Vascular Access and Surgical Consumables and International sales channels both had strong growth well into the double digits, and year to date, both of those sales channels are up more than 40% over last year. On a gross margin view across the three different time lenses, performance in that 55% to 60% range, which is at or above the gross margins that we see from many of the larger med tech consumable companies. Q two was a little less than our recent performance, and this was driven by a higher geographic mix of revenue coming out of our international sales channel, which has a lower gross margin than The US sales channels. And across all three time horizons, we’ve continued a disciplined approach to spending. And with the positive adjusted EBITDA in Q2, that marks our fifth consecutive quarter of profitability.

With the cash generated from our operations in Q2, we ended March with more than $18,000,000 in cash on hand, an increase of about $11,000,000 from a year ago. This is a tremendous amount of cash for a company of our size, which gives us a lot of flexibility for different options to increase shareholder value. And you’ve heard me talk in the past about the hard work and focus the company has put on The US business over the past few years. And if you look at the right hand side of the screen, you’ll see the outcomes of that work. This U.

S. Product revenue includes both our U. S. Advanced Wound Care sales channel as well as our U. S.

Vascular Access and Surgical Consumables sales channel. In markets that are growing in the mid single digits, Covalon has grown at a three year CAGR of more than 30%, call it five times higher growth than the underlying markets that we operate in. In addition to the slide here, you can go to the presentation on our website. And in the appendix, we have the full details on q two, q ’2 year to date and our trailing twelve months of financial information. And then looking at The US Vascular Access and Surgical Consumables sales channel in a little more granularity, we continue to be a strong partner to the best of the best children’s hospitals in The US.

And looking at the metrics that we believe are important key performance indicators for the sales channel, as we look at our top 50 US hospital customers from last fiscal year, our number one priority is to retain all of the business that we fought hard to acquire. Done. 100% retention of all 50. A huge testament to the stickiness of our business and the great products that these amazing hospitals count on from Covalon to enable them to achieve the outstanding outcomes that they deliver. Second priority is to grow our existing accounts, either by adding new products that they have that they weren’t previously purchasing or by growing the volume of existing products in the account.

And here we’ve seen strong revenue growth of 38% from the same group of our top 50 hospitals from 2024. And the third priority is to add new customers. In Q2, we added 29 new hospital accounts to our revenue roster, which when added to the 21 we added in q one, takes us to 50 new hospitals through the first half of the year, which given that in all of last year, we added 66 new hospitals total is quite the acceleration here. And then transitioning to the third part that I told you we’d walk through today. Two quarters ago, I showed this slide and talked at a high level around the importance of these four areas of action.

Last quarter, I went deeper into the commercial advancement area. And today, I’d like to go deeper, a little deeper around the market development side of things. In future quarters, we’ll cover the other areas. Market development is vital for driving growth in med tech. By focusing on these four areas on the screen, we’re building trust, supporting our value proposition with clinical and scientific evidence, and building key relationships.

And here at Covalon, this area has been a big recent focus for us under the outstanding leadership of doctor Kate Ebley, our recently promoted vice president of clinical affairs. So why as an investor should you care about this work? Well, three big reasons. First, it’s an amazing growth accelerator, helping us increase awareness, shorten our sales cycles, and allowing us to have strong value conversations with hospitals and other health care providers. Second, it’s also a massive amplification vehicle.

Key opinion leaders who become strong advocates for the solve of the clinical problem have vast audiences and a credibility factor that goes a long way. And third, effective market development work can also have a mode effect, creating higher hurdles for future potential competitors. For our first bucket here of clinical and health economic evidence generation and dissemination, it’s very deliberate to have both the generation and the dissemination here. The evidence piece is the key starting point, generating robust clinical and health economic evidence to demonstrate product efficacy, safety, and value. And our recent ValveGuard clinical evidence piece that I went deeper on earlier is a great example here.

Beyond that, we’ve also built a really robust hopper, a very strong hopper of evidence generation efforts in various stages. This is new ground for Covalon and very exciting for our future. But what good is evidence if no one knows about it? And that’s where the dissemination becomes critical. Spreading the word of findings through scientific publications, presentations, and targeted communications to inform stakeholders and accelerate adoption.

And as you heard me reference on the VowGard study, we already have two different meetings where more than 10,000 nurses will be in attendance, where our study authors will be showcasing and speaking to the great results of their research. We also expect to see the study published in a major journal here later this year. In addition to that, we are working to be able to communicate this evidence in many ways to reach all sorts of different customer segments. Second here is around engagement with key opinion leaders. We’re building trusted relationships with these clinical leaders who align with our brand values and the therapeutic areas we operate in.

And then we collaborate with them to co create authentic, impactful, educational content and leverage their expertise to increase awareness of the clinical problems and the role that Covalon products play in solving them. In the past year alone, we’ve more than doubled our engagement with key opinion leaders, and it’s both an increase in quantity as well as quality that we’ve achieved here. Third is around clinical customer engagement, and here it’s all about connecting our company to our customers in a dialogue focused on the clinical challenges and our abilities to help them achieve their desired outcomes. In the past year, we’ve had upwards of a hundred of these interactions from our clinical affairs area to current and future users of Covalon’s technologies. These conversations are accelerating revenue opportunities as well as uncovering unmet needs and challenges that fed into our new product offer.

And then fourth, strong and strategic partnerships with professional organizations that provide leadership in the therapeutic areas that we operate in, such as wound care, vascular access, surgical, and infection prevention. Our partnerships with these groups have been essential, allowing us to contribute to advancing specialty, help to shape clinical guidelines, and supporting initiatives that improve patient outcomes. These relationships have also given us access into the largest clinic clinician networks that where we can achieve further benefit from access to cutting edge innovation and commercial opportunities. So to wrap up today’s call so that we can then take some questions. A quick summary.

The impact that Covalon’s life saving and life changing products are making with patients, the clinicians who serve them, and for health care providers is significant. You heard that in Sandy’s words, and I see it every time I meet with a hospital or clinician. It’s incredibly motivating for us here at Our growth accelerators are kicking in and driving meaningful outcomes, including our focus on market development. Exciting work to date and even bigger and more impactful things to come. The bottom line is that Covalon has never been in a stronger position than where we sit today.

Profitable operations, a clean balance sheet with more than $18,000,000 in cash and zero debt. We’ve retained a highly regarded adviser to identify merger and acquisition and other opportunities to unlock value for our shareholders. And even with us getting to this point, which the Covalon team, our board and I am very proud of, we’ve only just begun and see a strong future that will enable us to realize the multiyear growth opportunity that exists here and become a major player in the very attractive and important spaces that we operate in. And with that, we’ll transition to q and a. For our questions, we’ll start with questions, excuse me, that are typed into the q and a feature here online.

We’ll take a thirty second pause to get things in order and then answer your questions.

Joelle, Conference Operator: We will now open the floor for questions. As a reminder, if you would like to ask a question at this

Brent Ashton, Chief Executive Officer, Covalon Technologies: We have a question from Jerome Uzoziri. And the question is, given the company is sitting on $80,000,000 of cash combined with our comments around the low valuation of the company, it’s a question around buybacks. And and, yes, you know, our our cash position does give us significant flexibility as we explore various avenues for accelerating growth and increasing shareholder value, whether organically or through m and a. It’s also allowing us to make investments in CapEx, and it’s a great position to be in where we can also support a share buyback program. This is an active area of discussion with our board and and with Origin, but not something we have executed on to date.

We have a question from John Gregory around comments at recent investor comments investor conference of of of doubling the share price each year for the next five years. And the question is when will the company be able to provide quarterly guidance? You know, at at our stage in the company, that’s just an area where we feel we have a a really bright future. As as I stated, we are we are very confident in our ability to grow the company and to continue to execute on shareholder value creation activities. At this point, we’re just in the stage of our company and and given the the predictability of our our revenue.

We’re we’re not issuing guidance. We have a question from Matt Horvath around the main drivers of the erosion in gross profit as a percentage of sales. And, yes, that, that is around, the shift in in revenue mix. So, our our international business, which is a smaller part of our business, but it does come at a lower gross margin. So that was a higher percentage of our mix this quarter compared to previous, previous quarters.

We do expect that gross margin to to rebound. Worth noting that even that 55%, which is what it was in q two, still at or above gross margins from a lot of larger multinational med tech consumable companies like Baxter, BD, and and three m Healthcare or Solventum. We have a question from SAS ASAS, and it’s around the adjusted EBITDA for the trailing twelve months, has has fallen off, in the previous quarter. What explains the drop and is, more representative? Yeah.

And that’s that’s a function of the the softer quarter from the US Advanced Wound Care. We had a a a big run up in sales in that channel a year ago. As we explained last quarter, we saw a softer quarter this this quarter with strong signs from both conversations, orders in house, forecasts to sequential quarterly growth heading forward in Q3 and a stronger second half than first half of the year. There’s a question from Alex Fye and it’s asking about Valgard sales for Q1 and Q2. We don’t split those out separately, but as I said, it is our fastest growing product and we do believe that that product between the strong growth we’ve seen already, the acceleration effect of this clinical evidence and future work that we’re we’re doing, that, that product can be a $30,000,000, product for us by 2,030.

Just question from Arnold Shell around, are you considering a dev dividend rather than a share buyback? Those conversations happen at the board, and it’s always something we do consider, not not something that we are are here to announce today. We have a question from Zach Trease, and that is, what does the future of your international sales channel look like? Do you anticipate gross margins to improve the back half of the year as The US sales channel picks up? So I’ll I’ll answer the second part of the question first.

Yes. As as we see that sequential quarterly growth kick back in in q three and a stronger second half, we expect gross margins to pick back up. And then on the future of the international sales channel, it’s it’s an area that, you know, we’ve definitely rebounded this year. It’s it’s a strong growth driver for the company, and and I commend the team. Really, there, we’ve been focused on you know, we have some amazing products, and there’s no reason why those products shouldn’t be used by patients in other countries beyond The United States and and other areas of focus.

And so, excuse me, we’ve been expanding both the products in existing countries as well as looking at adding additional countries. And so, you know, the future, I think, is very bright there. We we we absolutely love our technology. You heard from Sandy some of the the comments on the benefits of of the IV clear, and and there’s lots of other positive comments about other products. And so between our our wound care advanced wound care products and our vascular access and surgical consumable products, we see a strong strong growth growth there going forward.

And then we have a question from Matt Horvath around, you know, why did we engage Origin Merchant serve Origin Merchant Partners around undervaluation and and things that we’re evaluating from management. And and so, yeah, that when we think about Origin, right, we’re we’re very fortunate to have to have them as a partner. Our primary objectives there were to accelerate the adoption of our products to benefit a larger patient population and to unlock significant value that we believe is inherent to the company. We did issue a press release on this on May 20 that has more details and and would refer you to that there. We’re just refreshing here to see some additional questions that have come in.

So that there’s a question here on how is Covalon developing itself for long term competitive edge, hiring better salespeople, offering the right products at the right price. Yeah. It’s a it’s a multi multi stage question there. And this sorry. This question was from Henry Liu.

And it’s, you know, really, it’s it’s what we’ve talked about on the on the one slide. So it absolutely starts with, commercial and advancing our commercial business. We are adding sales reps, have added, in The US and look to continue to do that. But it’s selling in different ways and and messaging and marketing in different ways as well. The market development piece, went into deeper here.

That’s a very key part as well and and a key part of how we establish that longer term competitive edge. We haven’t talked about it yet. That’ll probably be next quarter. But around innovation and some really exciting work that we’re doing, we have our hopper of new product, new use cases, new claims, new line extensions is triple where it was a year ago. So there is no shortage of things we can do, and so prioritization is key to make sure we’re doing the most impactful ones.

And then, obviously, we see a big opportunity around, business development, potential m and a activities. We think those will, be a huge driver of our future, future company position. And then the last question we have here is from Andrew Rem, and it’s how does EBITDA margin on international sales sales compared to The US? That’s we we report EBITDA at the company level, and so that’s that’s there. Obviously, you know, the gross margins on we we have set shared today.

The gross margins on the international business are a little less than on our US business, but it’s also a different selling model and so different EBITDA profile. So that that wraps up the questions online. Happy to take any questions over the the call now.

Joelle, Conference Operator: Your next question comes from Andre Udin with Research Capital. Your line is now open.

Andre Udin, Analyst, Research Capital: Okay. Thank you, operator. Hi, Brett, Kim and Katie. I just had a couple of questions. Can you please comment on the gross margins this quarter?

And was that actually due to certain product mix?

Brent Ashton, Chief Executive Officer, Covalon Technologies: No. So actually, margins product margins have stayed fairly consistent. It’s it’s really just a function of the international international revenue was a higher percentage of our revenue this quarter, and we expect that to normalize back through the back end of the year here.

Andre Udin, Analyst, Research Capital: Okay. That’s great. And maybe you can comment a little bit on your M and A strategy. Are you primarily looking at The U. S.

Market? And do you have any sort of areas of focus that you want to target?

Brent Ashton, Chief Executive Officer, Covalon Technologies: Yeah. So, you know, because of that sorry. I should have said thank you, Andre. It’s great to hear your voice again and appreciate the dialogue. Yeah.

On the m and a front, you know, we’re actively involved with Origin here. We’re we’re looking at a lot of opportunities on the table, and I wouldn’t wanna rule anything out. Obviously, you know, North North America has been a big area of focus for us. But but geographically, you know, I think there there are opportunities certainly at at a bound in in North America and beyond as well. It’s it’s certainly an area that we we will look at.

Don’t wanna provide you know, at this point, it’s we’re in the middle of the process, and so I don’t wanna comment on specific, you know, targets or or areas of focus to respect the process.

Andre Udin, Analyst, Research Capital: Okay. That’s fair enough. And you you made a little comment on your US Sales Reps that you’re gonna be adding. How many sales reps are you at, and where do you think you wanna go to?

Brent Ashton, Chief Executive Officer, Covalon Technologies: Yeah. We we currently have one open open role for that’ll cover the West Coast Of The US. And then as we look at 2026 and beyond, continuing to to refine the model and as as we advance and grow, what what we so we’ll look at what, you know, what makes sense to grow in a responsible way because we don’t want to, you know, hire on a a ton of people and and then push costs up and and kinda repeat some of the challenges in the past. So we’ve got an exciting future in in on our commercial side and very exciting between our our sales team, our marketing team, and and all the all the good work that’s going on there.

Andre Udin, Analyst, Research Capital: K. That’s great. Thanks, Brett.

Brent Ashton, Chief Executive Officer, Covalon Technologies: Hey. Thanks, Andre. Thank you for the question.

Joelle, Conference Operator: There are no further questions at this time. I will now turn the call over to Brent for closing remarks.

Brent Ashton, Chief Executive Officer, Covalon Technologies: Well, hey, I really appreciate the questions from this group. I hope that each of you have a great rest of your day here. All the best and thank you again and look forward to talking to you again in three months’ time.

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

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