Good afternoon. Thank you for joining us for the BioTelemetry Third Quarter 2016 Earnings Conference Call.

Certain statements during the conference call and question-and-answer period to follow may relate to future events, expectations and as such constitute forward-looking statements within the meaning of the Private Securities and Litigation Act of 1995.

Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company in the future to be materially different from the statements that the company's executives may make today.

These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements. At this time, all participants have been placed on a listen-only mode.

The floor will be opened for question and comments following the presentation. It is now my pleasure to turn the floor over to your host, Mr. Joseph Capper. Sir, you may begin..

Thank you, operator, and good afternoon, everyone. I'm Joe Capper, President and CEO of BioTelemetry. As on our previous calls, I'm joined by Heather Getz, our Chief Financial Officer.

I'll start with an overview of our third quarter performance, Heather will take you through a more detailed review of our operating results, I will make closing comments and we'll then open up the call to your questions. Let's get started.

I am extremely pleased to report this afternoon that we've delivered another record setting quarter, during which we met or exceeded all expectations, posting our 17th consecutive growth period, with new highs in revenue and EBITDA.

Our business continues to generate outstanding results and we expect to maintain this momentum for the foreseeable future. Going forward we need to continue grow in our healthcare segments at a pace faster than the industry and deliver solid results from the research segment. We've good reason to be confident in our ability to do just that.

As I have reiterated on numerous calls, there're three core guiding principles that we believe have produced our exceptional results.

As a reminder we focus daily on solidifying our leadership position in cardiac monitoring, establishing a leading research business and seeking to identify markets that would benefit from the application of our wireless platform and proprietary technology.

Our adherence to these principles is unwavering and will continue as it has been instrumental in generating the consistent results we've had for more than four years.

With our strong business momentum and a continued successful execution of our guiding principles we're well positioned to achieve our full year guidance and continue to excel as we trace this into 2017. Let's take a few minutes to review some of the Q3 highlights. During the period, revenue grew by 22% to 53.1 million within the range of expectations.

Organic revenue grew by 14%. EBITDA grew by 40% to 12.2 million exceeding expectations. Year-over-year quarterly volume was up 9%, with MCT volume up 12%. We ended the quarter with $32.3 million in cash, up approximately $7 million sequentially.

The role out of CardioKey continued to be an outstanding success story, as we now service in excess of 13,000 patients. Our research team made excellent progress in integration VirtualScopics and building the imaging backlog and we continue to advance business development activities that will create additional sources of revenue.

Let's take a closer look at components of the business that are driving this success. In our healthcare division, we generated greater market penetration with growth in all three major service sites, MCT, Event and Holter. As I mentioned a moment ago, overall volume was up 9%, with MCT up 12% in the quarter.

On previous call, I outlined several contributing factors that drove our excellent organic growth such as market expansion opportunities, our comprehensive product portfolio, improved messaging and our sales force productivity.

In terms of the potential for market expansion, we recently received excellent news that Anthem has reversed its long lasting position and is now covering MCOT for use at the certain patients. Specifically, Anthem has approved MCOT for use within the cryptogenic stroke patient population.

The natural question is how big of an opportunities does this present for MCOT. We say it has the potential to be quite significant. Anthem is the largest health insurance provider in the county with subsidiaries in 14 different states.

Additionally, using remote cardiac monitoring to detect the possible presence of A-Fib in cryptogenic stroke patient is a rapidly expanding practice and MCOT is far in a way the best product to use in this situation due to its unmatched A-Fib detection capability.

As numerous studies have shown, MCOT consistently picks up more A-Fib than any other remote monitoring options. Due to its systems design and market leading suite of algorithms. The news from Anthem is incredibly positive and represents an opportunity to build a relationship that may lead to increase indications at some point in the future.

This development coupled with the proposed 2017 CMS [ph] scheduled published in July and indicating minimal impact to the MCOT rates gives us greater confidence in an improvement payer landscape.

A lot of factors that continue to positively affect growth is the resounding impact of our comprehensive portfolio approach and how it is providing us with a significant competitive advantage. No other provider in our space can match us in terms of breath of product offering.

Not only do we provide more options but not other competitor comes close in terms of product performance, an attribute that is becoming increasing important as more segments of the market demand higher level of diagnostic accuracy.

Optionality is a strength we are committed to build upon, but the continued rollout CardioKey, our extended wear Holter and the upcoming launch of our recently FDA cleared next generation MCOT. As a reminder CardioKey is a 14 day Holter with a single channel and two leads.

We introduced this product to the market last year and starting making it more widely available earlier this year. While the numbers are still relatively small, having recently surpassed 13,000 patients served, there is clearly a niche for CardioKey, in fact our monthly volume has growth three fold over the last six months.

We also acquired ePatch device in a DELTA transaction earlier this year. Giving us another option for an extended wear Holter in a patch format. The MCOT conversely is a four lead, two channel telemetry device that will be introduced in both a patch and a lead wire form factor.

This systems incorporates our proprietary algorithm and detection capability which have establish MCOT as the Gold Standard among remote monitoring options.

Think about this, our customers will have the benefit of the most accurate and sensitive arrhythmia detection technology in the market in a light weight, easy to use patch form factor, or a lead wire configuration for those who prefer not to wear a patch. We believe this should improve patient compliance and expand utilization.

We're excited about the recent FDA approval for this new system and look forward to full market introduction. With demand for remote monitoring solutions on the rise our healthcare services business is incredibly well positioned to continue to outperform the market.

Our high organic growth rate, improved margins, new products and expanded payer coverage are all contributing to the momentum the business is experiencing and we expect that to continue as evidenced by our guidance. Turning to the research business.

During the quarter one of the priority objectives was to integrate VirtualScopics, the imaging solutions company we acquired in the second quarter. As a reminder VirtualScopics focuses on oncology, musculoskeletal and other therapeutic areas requiring centralized imaging services.

As we have discussed on numerous occasions expanding our research services offering has been one of our high priority initiatives aimed at improving a long term competitiveness of this division. Completing the acquisition of VirtualScopics went a long way in accelerating this strategy.

As I mentioned on our last call combining imaging with our cardiac services has already made us a formidable competitor. The market response to this combination has been overwhelmingly positive providing us with a nice spike in our pipeline and backlog for imaging services.

At this point I'll pause and turn the call over to Heather for a detailed financial revenue of the quarter, then I will close with some comments on how our plans for future growth are taking shape.

Heather?.

Thank you, Joe, and good afternoon everyone. As Joe just announced the third quarter of 2016 marked our 17th consecutive quarter of year-over-year revenue growth. Total revenue was $53.1 million which was in line with our expectations and represents a 22% increase as compared to the third quarter of 2015.

Healthcare revenue was strong with an increase of $4.7 million or 13% over the prior year. The strength in healthcare resulted from a 9% volume increase across all products with our MCOT growing at 12%.

Also contributing to the healthcare revenue was the impact of a favorable product mix as well as the increased Medicare rate which as expected added about $1 million. Our research revenue increased $4.9 million due to an increase in imaging revenue with the VirtualScopics acquisition.

Moving to gross profit, our margin for the second quarter was 62% or a 140 basis point improvement over the prior year. This margin improvement comes from favorable pricing dynamics in the healthcare segment as well as operational and volume efficiencies.

These positive benefits were partially offset by the impact of a mix shift due to higher revenue in our research segment, which carries slightly lower margins.

We continue to experience strong operating margins post acquisitions, while as mentioned above the acquisitions did put some pressure on our gross margins we saw increased adjusted EBITDA margin both sequentially and compared to the prior year.

We generated adjusted EBITDA of $12.2 million for the second quarter, a 40% increase as compared to our Q3, 2015 EBITDA of 8.7 million, and a 23% return on revenue. This is our tenth quarter of sequential EBITDA margin expansion. Now turning to the balance sheet, we ended the quarter with $32.3 million in cash compared to 19 million at year end 2015.

We generated $8.9 million in cash from operations and 6.1 million of free cash flow in the quarter. We used 2.8 million for capital expenditures in the quarter primarily for additional devices in our healthcare segment.

At the end of the quarter we had $37 million of indebtedness which is less than one times our trailing 12-month EBITDA, as we mentioned on our last call we expect to continue generating cash from operations on a year-to-date basis, we generated $26.4 million of cash from operations which gave us the ability to pay down the revolver by 11.5 million in October, this amount is requested on our Q3 balance sheet in the current portion of long term debt.

As you can see, we have maintained a very healthy balance sheet with our strong cash balance and low debt levels. Shifting gears, I will now touch on the outlook for the remainder of 2016 and touch briefly on or preliminary expectations for 2017.

We've exceeded our expectations for the nine months of the year, our strategy has delivered strong results through September and we expect that momentum to continue into the fourth quarter.

That being said we are seeing some softness on the Cardiac Core Lab portion of the business, steaming from the FDA contemplating a change to the cardiac safety testing requirement in clinical trial. This has called some pharma companies to delay studies as they await guidance from the FDA.

With this in mind, we are expecting revenue to be about 53 million to 54 million for the fourth quarter or about 15% over the prior year quarter, with an adjusted EBITDA return of approximately 22% to 23%. Given our year-to-date momentum, we are confident that the company's ability to achieve this guidance.

Looking ahead to 2017, we will have the full market launch of our MCT patch, expanded payer coverage with the recent Anthem decision, additional international offerings with the launch of some redesigned products and increased growth from our newly added imaging business.

We expect the growth in these areas to be partially offset by the softness in the Cardiac Core Lab in the earlier part of the year as we waiting a decision from the FDA.

Also based on the proposed rates and the physicians fee schedule we are anticipating a slight reduction in the MCT Medicare reimbursement for 2017, considering these factors at this time we are expecting 2017 revenue growth of approximately 10% and an EBITDA return of about 23%.

To summarize, we posted our 17th consecutive quarter of year-over-year revenue growth and 10th quarter of sequential EBITDA margin expansion. We have a strong balance sheet with more than $30 million of cash lower leverage and additional debt capacity if needed. The company has never been in a stronger financial position.

And with that I’ll now turn the call back over to Joe.

Joe?.

Thanks Heather. As you've just heard, we had a highly successful third quarter continuing to track ahead of 2016 expectations. In addition to achieving excellent results, we received news from Anthem with regard to MCOT covers. We continue to prepare for the introduction of next generation MCOT device in both the patch and lead wire form factor.

We completed over 13,000 CardioKey services, and furthered the integrated of VirtualScopics, dramatically improving the competitive strength of our research business. Our strategy is clearly working as designed. To ensure continued success in 2016, we will stay focused on a following items as we close out the year and move into 2017.

We will build on our comprehensive approach with the future market penetration of CardioKey followed by the launch of our next generation telemetry system, continuing to capitalize on the increased A-Fib awareness and education in the market place by showcasing the best-in-class attributes of our technology, to leverage the Anthem opportunity and work to further expand payer coverage for all services, complete the integrate VirtualScopics and evaluate additional acquisition targets that will accelerate our strategic plan.

By continuing to execute our plan, we expect to deliver more record-setting results. Our guidance for 35% plus year-over-year EBITDA growth demonstrates the confidence we have in our business.

Before I close, I would like to spend a few minutes discussing our third guidance principle, which is to look for ways to utilize our technology beyond its current application. As you know, we’re one of the only profitable digital health or tele-health companies in the market.

And we’ve had a long stated desire to identify or develop new market that would benefit from the application of our wireless platform and proprietary technology. More and more, we see emerging opportunities for BioTelemetry to provide what we will call digital population health solution into the employer and payer markets.

These are services that are designed to help control the cost of care amongst certain membership groups. Typically, those who are living with high cost chronic conditions. These population health management solutions become more efficient and affordable when coupled with digital monitoring technologies.

An excellent example is the CHF care management solution being developed by Wellbridge Health, a startup which we have helped fund. Some of the care management or populations health solutions we have been examined show promise and may lead to considerable reductions in healthcare expenditures.

However, today’s solutions are fragmented and short on sound clinical and economic outcome data.

Given our proven ability to successfully develop cutting edge monitoring technologies and our commercial infrastructure, we believe BioTelemetry is uniquely positioned to take a leadership role in the developing area of digital population health, offering applications that will have a material impact on quality of life and cost of care.

As such, we continue to analyze investment opportunities in a verity of technologies and solutions that fits just being, stay tuned. In closing, I would again like to thank those at the Company who helped deliver our 17th consecutive growth quarter.

Your work is extremely important as people depend on us every day to collect and process information that may save their life. We will continue to leverage our technology to identify additional ways to bring down healthcare cost and provide critical information where needed. With that, we'll now pause and open the call to questions.

Operator, we're ready for our first question..

[Operator Instructions] And our first question comes from the line of Bruce Jackson from Lake Street Capital. Your line is now open..

So just a couple of questions, first on the patch devices, can you tell us about -- have you done any studies on the diagnostic yield yet for CardioKey or for the new MCOT patch device?.

MCOT patch -- first of all, the MCOT patch device is not on the market yet. So CardioKey, we have not -- CardioKey is an extended wear Holter as you know and we have not done any real work in that area yet in terms of yield.

We would expect the new MCT device to have approximately the same diagnostic yield that we have on MCOT, since it has pretty much the same embedded technology and as you know there is nothing close to that in the market..

Okay and then trying to found out your MCOT discussion, I apologize if you already said this, but what was the percent of revenue -- total revenue for MCOT in the quarter?.

The percentage total was about 52% Bruce. And that -- just to say that suite is a little bit differently because of the increase in research as a result of VirtualScopics relative to other quarters..

And then speaking on research you haven't really commented on the backlog recently, can you give us just kind of a general idea, is it bigger than a bread box, or how many quarters of backlog potentially are you looking at and how might that flow into revenue over the next year?.

We haven't put that out Bruce and we've made commentary in the past about how it’s accelerated and its growth rate. Examining the backlog for the imaging business is slightly different than the metrics applied to the cardiac business. So it's taking us a little bit of time to kind of get used to that.

I will tell you this when we acquired VirtualScopics the feedback from the marketplace was incredibly positive and we did see a nice spike in our backlog. The VirtualScopics team had a full year objective in terms of bookings that was met probably in August or September.

So, we're tracking ahead of expectations, we're having a few near term challenges if you will with the research division, it's really on the cardiac side and as Heather mentioned in her commentary, the FDA has backed off a little bit from TQT [ph] mandate and is moving towards other standards, and there's a little bit of a gap in publication of those standards.

There were a few meetings over the summer with FDA and there's schedule for December, where we expect to get more clarification.

I think the good news is it looks like they’ll require more testing in early phase studies, which plays to our favor because we've been a lot stronger competitor in the early phase of studies, cardiac [indiscernible] studies, but it remains to be seen.

It's not a dramatic impact, but it a little bit of an impact and that’s a little bit of an impact, so that’s kind of why we're hedging a little bit on our Q4 revenue numbers if I say..

And last question with Wellbridge can you just remind us, it's a -- I believe it’s an equity investment that you have in them and can you sort of tell us about how much that is and are there any plans to take the product development beyond congestive heart failure?.

I would --..

It isn't equity investment, we don't have it broken out separately. So, it can give you an idea of materiality on that, we haven't actually provided that..

So, it's not a number that’s material to us, it's a small investment and there are still -- they completed a pilot few months ago, they're kind of moving into a commercial phase. So they're still early in their lifecycle, but they’ve now have billing customer to customers, very good outcome from the primary private study shown above 158% ROI.

I do believe that the customers are already asking them to expand beyond congested heart failure, what we've typically found is with care management or population health management executives, they want more than one solution, so there is a little bit of a pull from the market.

So, their challenging the state disciplined in early phase around congestive heart failure and some services were appropriate, but to get the company commercial is where they do too much other crazy stuff..

And our next question comes from the line of Jan Wald from Benchmark Company. Your line is now open..

Just I have a couple of questions, first, Joe you mentioned that data is becoming more important to your customers and I guess I just like to hear about that a little bit, why do you think it's becoming more important, how do you know it's becoming more important and how are you doing relative to the compensation with data?.

Here is what we know Bruce, and I am going to probably give you a little bit longer winded answer, I am sorry Jan -- probably a little bit longer winded answered than you were looking for. But this is one of the challenging things in this industry, not everybody will test their devices against standardized data base.

And as we have discussed in the past, these standardize data bases the MIT data base. We tested very well against that and we are public about it. Some folks aren’t very public about how they test against that databases. Some devices -- we have no idea how they perform.

Where we do know and studies we have participated in, we know that we are better than anybody else that’s making the information public and I’ll use -- so you’ll ask where is it becoming important. Certainly in the cryptogenic stroke patient population where we just got, as I mentioned additional coverage from Anthem.

There was -- we’ve done I think probably five or six explorations [ph] that we’ve done. Our devices has been used in about five or six different studies, routinely we find atrial fibrillation, present in cryptogenic stoke patient populations far in the way of rates higher than any other devices we’ve seen used in that population.

In some cases five times better, in the case of us versus the implantable loop recorded, we’re five times better, when you compile the various studies that are out there.

And there is a study of studies, if you will, that’s been produced even using net analysis work to show how much better MCOT is in implantable loop in the first 21 days of monitoring for the detection of A-Fib.

We know that we are 100% accurate down to 30 seconds, we don’t know if anybody else can even detect down to 30 seconds, let alone the 100% accurate. We receive these test data [ph] that are below that, you can argue what the clinical significant of that is, but we have the capability to do it and present it to the commission.

It's not our responsibility to determine clinical significant, it’s our responsibility to provide a tool that is the most sensitive and the most specific as possible. Jan, at the end of the day this is a diagnostic product, I have been in diagnostic in well over 20 years.

It always comes back two things, how accurately you can diagnose the finding and how fast you can provide that information to the physician at the time the physician thinks they need to know the information. How fast you can take that data point and put it back in their data set, so that they can care for the patients.

Accuracy and speed, so with MCOT you have the most accurate algorithm that we know, and it is far in a way the fastest turnaround time that know of because as you know it’s a connected product. So I think you’re starting to see more and more demand fourth accuracy.

We have approached regulatory agencies to ask them to get involved in this, because we think it's really that’s important. And I said some clinicians at times were products are 73% accurate at two minutes and I’ve always said would you privately test that’s 73% accurate before you operate on somebody, of course not.

So you want a very accurate diagnostic test and you want that information as fast as possible..

Okay, thank you.

I guess another competitor has I guess entered the market in a certain way iRhythm, would you compare and contrast your product portfolio with that device because that one sort of screened into the market in the -- screened on to the investor community in a way that kind of surprising to me?.

Yes, I was happy to see them get out. I was delighted with their valuation because obviously you can look at the Company and you can compare it to us. They have a fairly high growth rate over the last few years. But as you know that they don’t really compare very favorably to an organization like us by product or certainly by Company.

If you narrow your question down a little bit for me, I might be able to help you. I don’t want to just go through a litany of areas where we compare to them, but if there is an area that is -- that you're thinking about specifically, I can highlight it a little bit for you..

I think the way it was sold to investors and I may have this wrong, you may have a better idea, was that, it is a new way to treat -- it’s not a Holter, it’s not an MCOT, but it’s all you need in order do all the work you need to do to diagnose a patients.

So, you got a cheaper alternative that’s going to be more cost effective in that healthcare system, care to comment?.

Maybe that’s the way some people saw the presentation, I did not see it that way and maybe that’s the way they articulated. But what I saw on some of the announcements was that they aspired to be the primary first line ECG monitoring product. So, let's talk about what it is. It’s a Holter, it’s a Holter recorder that is extended beyond 48 hours.

It goes up to 14 days. It does not have connectivity. It’s not near real-time monitoring. So, in situations where more data is desired, a research setting or maybe some clinicians that want more data in 48 hours, it makes sense to do that. By going beyond 48 hours, the theory is you will improve diagnostic yield.

We certainly saw that with event recorders. You can still detect more things because as you know symptoms for arrhythmia don’t always occur on a daily basis. Sometimes they occur less frequently than that. So, the longer you monitor the higher probability it's going to pick something up and going out to 14 days is better than 48 hours.

Going out to 30 days is better than 14 days. We know that because we found a much higher yield, we use in events in MCOT than we get against Holter. But it records like a Holter.

My understanding is, that’s what it is, it’s a Holter and then it's downloaded at some point and information is then transferred to a server or cloud where they have some analytical tools, that they apply for it. I think it’s a decent product as you know we’ve one in form of CardioKey. That's the same thing it goes out for 14 days.

CardioKey is not currently in a patch form factor, but we have another product that will be in a patch form factor and will do the same thing, it will be an extended-wear Holter. So, I do think that there is nice niche for extended-wear Holter. I’m not sure yet how big of a niche.

The challenge with a product like that is in order to get it to the server to cloud, you have to send it via the U.S. Postal Service which is not the fastest way to get information into an analytical engine. So turnaround time is probably the worst of all modalities in the space.

So you're looking at it for certain patients, as you certainly want to use a product like that on a patch where there's a high risk of some sort of a life threatening arrhythmia.

It's great that it goes past a few days, but on day four, day five when the patch has a life threatening arrhythmia what's going to happen, we still got to wait to till end of the service, take it off, mail it in and have it interrogated.

I think it's a cool product, I think the fact that they're were the first to get an extended wearable product is a good thing, they went for several years without competition in that market, they now have it. I think the factor that they were able to put it in a patch form factor, that was a cool thing.

As you know when you put a product in a patch form factor, you do give up some accuracy, because the lead wires are spaced closer together, that's the theory, lead wires are spaced closer together. So in all likelihood, in a 24 hour period that product detects less than a traditional Holter..

And our next question comes from the line of Marco Rodriguez from Stonegate Capital. Your line is now open..

I was wondering if maybe you guys can talk a little bit more about the launch of the MCOT patch just kind of any updates on timing, sales and marketing activities, anything of that nature?.

Yes, it's kind of in test now output, and moving into beta, where we've got some live products. We're still collecting information on it, we'll roll it out, a little bit slow here as we finish up the year mostly like to build out into the first quarter of next year.

So we’re finishing the final production, finishing live testing with wearable devices, and then we'll launch sometime early next year, full launch I should say early the next year..

Is there any if any incremental spend to launch that product?.

Not significant. No [Multiple speakers]. Think of it more as a shift of resources..

And can you kind of provide a little bit of an update here on the research services side, just sort of any kind of M&A targets, what evaluation kind of look like, joint venture type deals that you might be taken a look at?.

No, we typically do not comment on that type of activity. Our primary focus really was to integrate -- on research, to integrate the platform that we acquired in second quarter. That was an important acquisition and we have some work to do in order to integrate those two platforms.

Obviously, from sales and marketing perspective we’ve fully integrate the teams, but there is a little back office work that we think could drive some efficiency. And we're actually kind of -- we focus on a little bit more on some other areas, since we've made a big acquisition in resources this year..

And a couple of quick just kind of housekeeping modeling questions, G&A and sales and marketing declined sequentially with revenues kind of up slightly sequentially.

Just kind of wondering if there's any sort of one-time items that were in those line items?.

No, I mean it was down minimally, and I think it mainly was around meetings and trade shows that occurred in Q2 versus Q3, and you're going to see that trend back up a little bit in Q4 with the same reason. We talked about adding some resources there as well as you're going to see a few more meeting and trade shows..

And lastly, DNA in the quarter was about 3.7 million, is that a good level from which to model from?.

Yes, I think that’s fair for now..

Got you, thanks a lot guys I appreciate your time..

And we do have a follow up question from the line of Bruce Jackson from Lake Street Capital. Your line is now open..

Just a quick question about the extended wear Holter business model and I believe that reimbursement codes they’re using right now are capital rate [ph], and my question is -- two question, where do you think the reimbursement codes are going? And the second question is it considerable that you could also sell your existing products, using exactly the same reimbursement code?.

So let me comment a little bit on the first part -- I am not going to give you much help to be honest with you Bruce. I know that there was some talk about rate reduction earlier in the year and then was corrected, and the rate was brought back up to its current level.

I don’t think that there is national pricing for extended where Holter, yet, but we are hopeful that they will be. Your comment about using current products to bill under that code, we can use CardioKey and we can use ePatch to bill under those codes. So those are Holter like products that go beyond 48 hours, up to 14 days.

As long as we meet and there might be some other requirements for the code -- there are certainly other requirement for the code, but they are unconnected products, so they’re not real -- they are not telemetry product, they’re Holter recorders that have been interrogated at a later date..

Okay, that’s very helpful. Thank you..

And we do have a question from the line of [indiscernible] from Sidoti. Your line is now open..

I just wanted to touch -- I know it's very preliminary in terms of 2017 outlook, but regarding the 10% on the topline, are you factoring any benefit from the Anthem increase for additional coverage?.

Little bit. We are -- look it's early to be given too much specific guidance, we are kind of given directional guidance at this point based on things that we know about. We are still in a process of negotiating all of our in lab work provider agreements with the different subsidiaries.

So I am not sure at what point we’ll start to see material up tick on that some little hesitate to build that into numbers that we’re putting out for next year. And again the numbers were meant to be more directional..

Right, no totally understood. I was just trying to see how conservative you are being. Thanks. Also as we look in terms of, I don’t know you don’t have any M&A, et cetera built in or pricing, et cetera.

But then we look on the cost side, as it relates to for example like R&D obviously is up this year relative to last year, but given that you’re intruding the new MCOT, et cetera.

Should we expect that to coming in a little or you are still going to be investing?.

We have a pretty active pipeline of upgrade that -- it's not just a new product launch, we’re working all the time on our center software, we are making upgrades. The team of people that are working on algorithms, were making various upgrades to the different systems, so we’ll still have a significant spend in R&D.

As a percentage of revenue, it probably comes down but total dollars, overtime it probably comes down a little bit. But total dollars will stay same or track up a little bit, probably just not as fast as revenue tracks up, if that helps. Long winded way is that, we’ll get more leverage out of it overtime as revenue grows..

Thanks for the color. And I had a -- just on the other charges line, I know it was a little over a bump this quarter.

Is it fair to assume we should see that coming -- resembling more to what we saw in the first half for the fourth quarter?.

No, I think in Q4, you’re going to see a similar number to Q3 and that for two reasons, one with the VirtualScopics' acquisition. That’s why you’re seeing that bump up in Q3 and we have the ongoing patent litigation with ScottCare that will go into Q4. So, I would expect Q4 at least to be about the same as Q3..

And that does conclude our question and answer session. I would now like to turn the call back to Mr. Joseph Capper for any further remarks..

Thanks operator. Thanks again everybody for your continued support and interest in the company. We'll speak to you next quarter. Have a great night..

And if you joined the conference late today, you may listen to the conference call via digital replay, which will be available through the investor information's of the BioTelemetry Web site at www.gobio.com until Wednesday, November 16th. And that does conclude our program for today. You may all disconnect. Everyone have a wonderful day..