Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jon Wood from Bank of America.
Jon Wood – Bank of America
Christine, the one-time gross margin benefit, that’s the LabCorp sale?
Christine A. Tsingos
Yes.
Jon Wood – Bank of America
So you have a gross margin on that instrument that’s higher than your core?
Christine A. Tsingos
Typically, these instruments are placed under a reagent rental program, and in LabCorp’s case, they elected to purchase them, so under reagent rental, we get the gross margin over time, but with a purchase, we see it more upfront, so for us, it’s a matter of recognizing gross profit upfront for those units.
Jon Wood – Bank of America
But it actually boosted the percentage as well, or it was just incremental dollars?
Christine A. Tsingos
A little bit of that.
Jon Wood – Bank of America
That agreement, like Quest, is it just for the ANA panel, or is there a more comprehensive set of tests within that contract now?
John Goetz
Yes, it’s for a more comprehensive set of panels. We’ve got the ANA in there as well as EBV. We have an opportunity for vasculitis. It’s a pretty nice placement relative to panel utilization there.
Jon Wood – Bank of America
Can we just talk about the process chromatography impact you called out in the press release? Is that a function of lower process chromatography business or just a hard comp?
Bradford J. Crutchfield
It is definitely just a hard comp. The business is pretty lump obviously there. It’s very large customers. If we looked at it over a 4-quarter period, the business is fine and it’s certainly growing. It’s just that the first quarter was a tough comp.
Jon Wood – Bank of America
This happened in the fourth quarter. It’s safe to say that both the fourth quarter of ’07 and first quarter of ’08 both were elevated quarters, and that’s what we see in the numbers today?
Bradford J. Crutchfield
In ’08 and ’09, yes, definitely that’s the case. The last two quarters certainly reflected that, and we have a fair amount of visibility to the business going forward, so we can see where that’s coming from.
Jon Wood – Bank of America
So does that comp issue persist in 2Q and beyond or should that impact be largely washed through at this point?
Bradford J. Crutchfield
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