Q3 2019 Earnings Call

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to withdraw your question press. The pound. Thank you would like to introduce Mr. Ji Hamlin Harris Investor Relations person penumbra.

Mr. Hamlin Harris you may begin your conference.

Thank you operator, and thank you all for joining us on today's call to discuss numbers any relief for the third quarter 2019.

The press release and financial tables, which include the GAAP to non-GAAP reconciliations can be viewed under the investors tab I don't compete website.

Uhhuh W.W. done number <unk> dot com.

Nicole So this conference call the company will make forward looking statements pursuant to the Safe Harbor provisions of the private Securities Litigation Reform Act as 1995.

These statements regarding our financial performance commercialization clinical trials regulatory status quality compliance and business trends.

Actual results could differ materially from those stated or implied by a forward looking statements due to certain risks and uncertainties, including always referenced in our 10-Q for the quarter ended September 32019, which will be filed with the FCC on November seven 2019, I thought as those described in our 10-K for the year ended December 30 120.

18, which was filed with the FCC on February 26 2019.

As a result, we caution you against placing undue reliance on these forward looking statements and we've heard you should review a periodic filings with the FCC, including the 10-Q and 10-K previously mentioned for a more complete discussion of these factors and other risks that may affect future results for them up pricing that stuff.

The number disclaims any duty to update or by the forward looking statements as a result of new information future events developments or otherwise.

On this call certain financial measures presented on a non-GAAP basis, a reconciliation of GAAP to non-GAAP financial measures is provided in all posted press release.

We anticipate the prepared comments on today's call will run approximately 17 minutes, Adam L. sets up a number as chairman and CEO will provide a business update and in Threeq <unk>, President and CFO , who will discuss financial results for the quarter and updates on our revenue guidance, we said that I would like to turn it was the calls Adam Elsa.

Thank you achieve good afternoon. Thank you for joining the numbers third quarter 2019 conference call.

Our total revenues for the third quarter were $139.5 million a year over year increase of 24.8% as reported.

25.5% in constant currency.

We had operating income in the quarter of $13 million compared to an operating loss of $20.8 million for the same period last year.

Our business continues to see robust growth and we remain highly encouraged by or patient markets.

And our ability to innovate within these markets.

In the third quarter, we saw significant growth in the U.S., but.

But stronger growth in our international business, which was due to the timing of some over international orders from distributors.

Reviewing the highlights from the quarter, our vascular business continues to outperform and drive significant growth contribution.

Over the past year, we have introduced our view of this growing patient opportunity.

We believe that it will be a highly attractive area, where we can make a difference for years to come.

To that end today, I will share the positive and exciting results from a clinical trial studying or indigo system and acute pulmonary embolism.

Just yesterday at a late breaking session at the vascular intervention advances or Veeva meeting.

Data from the XTRAC trial were presented by Dr. collection system.

As a reminder.

Extract as a single arm trial studying numbers indigo system in acute pulmonary embolism.

The study enrolled 119 patients.

Just 22 centers in the United States.

According to the American Heart Association pulmonary embolism, more PV affect roughly 300000 Americans per year.

We believe that 150000 of these patients may someday be treated intervention. We however, we estimate that less than 15% of those are only 20000 are currently being treated today due to inadequate clinical evidence and technology.

You extract trial achieved its primary endpoint and reducing the RB Lv ratio.

27.3%.

And had a major adverse event rate within 48 hours of 1.7%.

These results were achieved without.

Use of Thrombolytics, 98.3% of patients.

The median procedure time for Indigo was 37 minutes.

We're very encouraged by these results.

More excited about the potential for indigo to help patients who suffer from P.E.

With the results of the extract trial, we are pursuing regulatory clearance from the FDA indigo system to be used in PE.

We will keep you updated on this effort and the expected timeline as we know more.

We believe that he can be another meaningful opportunity for the number to hope countless more patients.

And it will further expand the numbers opportunity in peripheral thrombectomy.

Our excitement for the Indigo system continues to grow and our team continues to take on the hard work and challenging task that are necessary for us to succeed.

Our investors have been curious about how we're penetrating this patient opportunity.

We've talked about innovation and clinical evidence, but I want to take a brief moment to Sharon Indigo case from this past quarter.

The story behind it helps illustrate what our team leases in the field and how we handle it.

The particular vascular surgeon involved in this case had brought in indigo system and it was practice a few years ago, but.

But decided he would use it only of surgical embolectomy did not work.

A few months ago 90 year old patient presented to him with large clot burden both legs.

Due to the age of the patient and the unique circumstances the position that elected to use the indigo system with our new high flow tubing and new engine pump.

To his surprise you removed the clock in the first like in 60 seconds and did the same thing on the second like.

This was a fantastic results for this patient and it was evidence enough for the position to convert indigo system has his frontline tool.

Conversions like this requires significant time and effort from our commercial team and positive patient outcomes like this provide the motivation for our time team to do this difficult work.

As we move in the 2020 and beyond you extract either.

Potential p. indication and new technology innovation.

We'll all help support our continued growth and momentum in vascular.

Now we would like to provide two updates on our neuro business.

First in late July we launched our latest stroke technology, but number Jeff.

Seven extra flex.

Since its launch we observed a few developments.

As we've shared during investor conferences in September the launch of Penumbra jet seven extra flex has been different than prior launches.

Given the large number of competitor products entering the U.S. market. This year, it's taken longer than prior launches to get meaningful physician experience with the number jet seven extra flex through the ended the third quarter. We believe that just about half of our current customers in the United States have the product.

Notwithstanding the longer timeframe. The initial feedback from physicians has been outstanding.

There's been more positive than any of our prior launches.

Positions have been extremely favorable Bob it's navigation.

Ease abuse and increased speed of the overall stroke procedure.

The positive feedback is not only been from current customers, but also from competitive catheter users as well.

Another early and unique observation is that number jumped seven extra reflects is allowing some physicians to reduce the need for adjunctive devices, such as stent Retrievers indoor microcatheters.

Well this had some clear negative near term financial impact on a result, particularly with our own threed device.

Speaks to the strength of the product and is very positive for a long term strategy.

Second following strict six straight quarters of strong growth in the U.S. stroke market. We've recently seen threed data sources suggest that the U.S. truck market grew at a less robust rate in the third quarter.

We remind you that we've always said market growth is not linear as measured quarter by quarter.

Looking at the past four years periods of less robust growth have never lasted longer than two quarters.

That historical pattern, coupled with our view that the efforts to treat more and more patients are still as strong as ever gives us great confidence in the longer term outlook for market growth.

Along with our confidence in the longer term growth of the stroke market.

Aspiration will continue to gain share as the frontline mechanism stroke intervention.

The clinical evidence has now been established in support of our early conviction.

Just last week and independent physician initiated met analysis was published in the journalist stroke and cerebral vascular diseases that included over 9000 patients from September 2012 through December 2017. This analysis showed statistically significant.

Higher rates of Revascularization as measured by ticky to be or three.

And better numerical patient outcomes as measured.

<unk> MRF scores of zero, one or two at 90 days in favor of aspiration versus stent retrievers.

This evidence as to what we learned in the aster encompass trials as well.

And finally, just last week, the American Heart Association updated guidelines to recommend aspiration is non inferior to stent retrievers as a first line technique to treat stroke.

As we head into 2020, we're excited about are newly launched the number jetstep, an extra flux as well as the new innovation coming in our stroke technology, which will drive growth in our neuro business.

Well our initial focus has been in the United States for both are major patient markets the underlying disease that we treat our global.

Over the past few months I have spent considerable times with our team across several countries in Europe and Asia.

We see large international opportunities with corresponding challenges across regulatory reimbursement.

And commercial capabilities that we need to address to be successful.

Over the last few years, we've seen two trends in our international business.

First we have gained greater confidence in the vast patient opportunities in stroke.

Well as vascular.

Second we have seen more variability in our international financial results as a result of distributor models and larger international markets.

Well many of our distributor relationships have enabled us to quickly enter a market.

We see such structures is having limitations as we grow.

We have begun working to a ball burst structures to build the capabilities to better support long term sustainable growth.

Our goals for future structures or to have continued growth and leadership in the stroke market.

To develop a regulatory and commercial platform to bring our vascular portfolio and the remainder of our neural portfolio to these markets.

And to have more visibility in these geographies.

As we moved to the end of 2019.

We're very confident about the prospects for durable growth.

For many years in the future.

We have done the hard work by continuously innovating and adding new products so patients.

We're now undertaking the hard work to put proper structures in place. So that we can invest in our global growth.

These efforts are a reflection of our size and success to date.

Simply put.

We're more excited than ever.

About our future.

I'll now turn the call over to Sri to review the financials.

Thank you Adam.

For the third quarter ended September 32019, our total revenues were $139.5 million, an increase of 24.8% reported and 25.5% in constant currency.

Our geographic mix of sales in the quarter were 65% U.S. and 35% International.

Neuro and vascular represented 60% and 40% of sales respectively.

While the third quarter has historically demonstrated seasonality due to summer so neuro and vascular saw sequential growth.

Our overall growth was largely driven by our vascular business and the timing of certain international orders coming in Q3 amounting to roughly $2 million.

Revenue from our neuro business grew to $83.2 million in the third quarter 2019, an increase of 11.5% reported and 12.4% in constant currency compared to the same period a year ago.

Our neuro growth was primarily driven by sales of ARPU number system for a scheme extra work.

As Adam mentioned in his prepared remarks, our results in the quarter were impacted by dynamics related to our pin number just seven extra flex launch and buy less robust growth in the U.S. stroke market.

Revenue from our vascular business grew to $56.3 million in the third quarter 2019, an increase of 51.6% reported and 52% in constant currency, which represents our sixth straight quarter of greater than 45% growth.

In the quarter, our vascular growth was driven by results from both our thrombectomy and embolization businesses and specifically from our growing patient opportunities within both current and new physician customers.

As a note next quarter our year over year comparisons include the launch of our peripheral embolization products in Japan, which will have an impact in our year over year growth metrics.

That being said, we expect strong sequential growth into the fourth quarter, and we see our vascular business, having significant multiyear runway ahead.

Our gross margin in the quarter was 68.8% of revenues compared to 67.1% of revenues for the same quarter last year.

Total operating expense for the quarter was $83 million or 59.5% of revenue compared to $95.9 million or 85.7% of revenues for the same quarter a year ago.

As previously discussed we are actively investing in our growing opportunities, which will result in growth in our R&D NSG and they spend.

Our research and development expenses were $13.7 million for Q3, 2019 compared to $9.1 million for Q3 2018.

Our R&D expenses increased largely due to an increase in product development and testing costs within both existing and new areas.

SGN expenses were $69.3 million for Q3, 2019 compared to $55.9 million for Q3 2018.

Our spend increased primarily due to personnel related to expenses largely attributable to headcount to support our growth.

We had operating income in the quarter of $13 million compared to an operating loss of $20.8 million for the same period last year.

We continue to expect to invest in the growth of our current business and also on the development of potential new areas.

With regards to our revenue guidance, while we are not formally revising our revenue guidance range. We are comfortable slightly above the top end of our previously stated range of $535 million to $540 million.

This guidance implies a slight sequential increase to the fourth quarter.

And reflects the possibility of another quarter of lesser bus stroke market growth and the timing of international orders.

And now I'd like to turn the call back to Adam for closing remarks.

Thank you Sri.

As we near the ended the year I would like to reflect on our progress.

We spent over a decade at number of building a strong foundation for our company.

An incredible capacity for constant innovation, our world class manufacturing operation the best commercial team in Med Tech and supporting functions that make it all work.

At our upcoming Investor day, we look forward to sharing more detail on our business and how we are positioning ourselves for future durable growth.

This represents our first investor day since going public in 2015, and we're looking forward to sing you all there.

Thank you and now we'll open the call to questions.

Thank you at this time I'd like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Pause for just a moment couples acuity roster.

Your first question will come from the line of Larry Biegelsen of Wells Fargo. Please go ahead. Your line is open.

Hey, good afternoon, guys. Thanks for taking the question.

For me one on the real system.

Well, that's going on a stroke, Adam so first on the real system. What's the latest there where are you in your preparations for a commercialization and how meaningful can revenues be in 2020, given just directionally would be helpful and I had one follow up.

Okay, great questions. So we're.

Going to go into as we've said in the past a little more involved detail.

The Investor day coming up in December .

We are.

Prepared and getting ready for launch in 2020.

Of that system. So that timeframe is on track as we indicated in the in the past.

And we'll use the opportunities investor day to sort of go through.

The details of the commercial launch sort of the pricing model itself.

As well as give you some early indication.

What we think the expectations will be for that product in 2020.

Fair enough and then Adam this year, you've been talking about changing the stroke treatment paradigm. So I guess my my question is where are you on that path.

You still on track to accomplish that over the next 12 to 18 months and when are we going to learn more about this lightning system, we're going to learn more at the Investor day, Thanks for taking the questions.

Great question, let me try to.

Answer that question the right way the answer to the first sort of.

Larger question of how.

Far along or we are we still on track around my comments about.

Continuing to sort of changed the the paradigm.

Which as I've said publicly really involves.

Getting.

All of the cloud out in.

That's the timeframe as possible for.

Almost all the patients the answer is we are still very.

Very much on track.

With that work.

And there is no there's no update on specific timing, but they're certainly not there has not been a a delay or change in my optimism around that.

I still im very excited to continue.

To provide a lot of the innovation that this field has seen and enjoyed over.

Over the last sort of four or five years.

And I mean.

We remain excited about that.

As it relates to the the product.

Name Lightning, which I think you.

Determined as part of a trademark filings.

I think it's premature to.

Attribute.

That product name to any particular.

Franchise within our business and we'll just have to wait till that product.

Is cleared or approved and launched.

Okay. Thanks for taking the question.

Your next sorry.

Your next question come from a line of Jason Mills of Canaccord. Please go ahead. Your line is open.

Yes.

Jason Mills. Please go ahead your line is open.

I'm sorry, I was on mute Adam can you hear me okay.

Yes, I cannot Jason.

Hi graduation, and Greg here I wanted to start outside the U.S. Adam.

You mentioned some of the opportunities and challenges there.

You mentioned that the distributor.

Relationships and going through distributors.

Can you be different than the direct.

Markets that you're going after here in the United States could you talk about how over the next two to four years.

You see your international business commercial progress on taking place in other words will you go direct in more markets overtime or do you see.

The result, being expansion of these distributor relationships as you grow.

Yeah, I think that to a great question and I'd love to sort of.

Give some sort of detailing context to it.

First of all the the larger point is the diseases that we're treating our global in nature.

And that's we spent a lot of time talking and have as a company about the U.S. stroke market or even now a lot more about the indigo stroke market or indigo market in the U.S., but the opportunity to help a lot more patients is global but we've got.

It is sort of know that we can be successful. So the U.S. market has proven very valuable to to really honed our skills and innovate our products as we go into some of these larger markets.

You start.

In many of them with a distributor model for accompanied that was out our size just four years ago.

But at some point you outgrow that if you're successful because your interest or not always alive.

You can get bigger and have the opportunity to invest in the growth of those markets. The those interests are not typically aligned with the financial model of a distributor relationship that doesn't mean.

That our distributors arent extraordinarily talented and do really great work in these markets. It's just that the financial model doesn't necessarily line up so we're not announcing on this call any specific.

New model or relationships.

But really the opportunity to.

Realign our interest with a partners or alone to do that kind of work and we will as those relationships get sorted out we will be certainly.

Extremely proud and happy to sort of announced them.

But they they really fundamentally involved the opportunity to invest in the kind of work you need to both regulatorily clinically and commercially.

To penetrate markets.

That that are not always obvious like.

Peripheral thrombectomy, and others and that need that kind of alignment.

That's great color. Thanks.

As a follow up on on the vascular side, obviously great growth.

It was a loss I mean, you commented about two of the larger segment.

Thrombectomy market.

Yeah clinical study data, which I wanted ask you about impede E. In the case study, which was in D.V. tea.

You talked about.

And we really strong.

Thank you.

Right.

Which.

I don't see growth.

Yes.

Oh.

Yes.

Right.

Right.

With respect.

Yes.

Okay.

Desires.

Jason.

Jason.

Losing you.

Hi.

On that side of what I mean.

Yes.

Jason I I don't know if you can hear us, but we lost a lot of that question.

It's sort of went into a cellphone dead hole, but but I I picked up a few little things. So I may not be addressing your specific question, but I think I'm getting some of the just so.

You initially talked about the two two areas PE with our new clinical data I think you may be misunderstood I didnt, specifically call out whether it was a DBT or in arterial case.

That I highlighted that Keith happened to be arterial.

As opposed to DBT as some folks have known following US we've had.

An extraordinary success on their arterial side.

With our product.

For the case happened to be arterial.

But it really.

Two again guests on your question because I couldn't hear all of it.

The combination of using clinical data where necessary and appropriate like in PE.

And using experience or.

Constant.

Work with physicians to get them to continue to have the experience of using our product.

In situations where can be helpful.

You really need both of those to continue to grow the market.

I think this.

The story outlined that this is a team our commercial team sort of never gave up on on this physicians.

Desire to continue that previous patients well.

And are now going to see some additional success.

And the physician, we'll see some additional success because of his experience on the clinical side, particularly in areas like PE.

Clinical evidence is going to is necessary, even just to get the formal indication.

To be able to do it and I think more importantly.

To access the larger patients beyond the 20000 in order to prove that we really should be intervening are helping patients in a more direct way, there's a lot of parallels to the stroke market some years ago.

You know the numbers of patients are actually similar in that regard as well.

And these are patients that are not well they they're not everybody with the p., but patients who have a sub mass supermassive.

They can convert to a massive their life can be in jeopardy, but at a very minimum.

If they go on Antech Clemens, they don't feel well they can't breed they have.

A very uncomfortable and risky time for for a fairly long period of time as it resolves and we're offering and hope to continue improve.

Safe and much more appropriate alternative.

So that's a new opportunity that requires both technology clinical data on the other side I did allude to.

The fact that there'll be additional technology coming.

We will.

Talk a little bit more about that in our Investor day.

Both on their tiro, DVT and piece side and for that.

We will allow us to continue to have better and better experiences.

That will grow the market so I apologize for not hearing your whole question, but I hope.

I.

Try to answer is best thing.

My apologies for the connection I'll get back in queue. Thank you.

Your next question comes from Robbie Marcus of JP Morgan. Please go ahead. Your line is open.

Thanks for taking the question and nice quarter.

Sure you're out Im wondering could be for both of you you know a lot of us have done.

Calls on the extra flex and they've come back.

Good and better and faster then talk to docs that have switched from competitor products talk to docs that we're trialing Medtronic and and stopped after using after a flat and every variation in between so I was hoping given all the positive feedback that being a lot of investors that hurt.

How do you want us to think about the growth trajectory of this product into 2020, we do have some easier comps with trialing from Medtronic against this time.

Seth and offset by what maybe a little down ticket market growth here, just any commentary you could help to think about growth into 2020.

Appreciate it thanks.

Great Hey, Robbie a tree of I'll start with this and I think your feedback is exactly consistent with what.

We've been gathering since we launched in late July the product has gotten phenomenal feedback from physicians.

I think Adam even commented in his in his prepared remarks, it's one of the best launches we've had.

Of our stroke technologies, what is around that.

We obviously feel very very strongly about the technology and that obviously is something we can control within our innovation, but what's around that is.

The market and the environment and we tried to shed some light on this I think as we went through the quarter I think we recognized.

Some of the dynamics around launching and we shared that with investors I think we've we've now gathered that the market maybe as we said in our commentary growing a little less robust. It's the obvious question is so what is the market growing at the beginning of the year. We said the U.S. market was growing about 6.5 thousand patients that's about 17%.

It's hard to measure on a monthly or quarterly basis, but I think what we can say just to provide a little more visibility for investors.

Provided just as we head to the ended this year and for 2020.

We'll wait to provide that guidance on our fourth quarter call, but as we head to the end of this year I think there are two big components to think about for the overall company.

Stroke.

And our vascular business, which happens to be about the same size as our stroke business. If you look at the revenue numbers that most of you model.

The stroke business, we feel will will grow into the end of the year for the full year at about 15, 16%.

And that is a combination of all of these dynamics that we take into account when we say that and on the on the vascular business.

We feel like that will grow into the end of the year year over year. It at it sort of the low 40% range. So I think those two.

Data points should help people with a little bit more visibility as we had through the end of the year and like I said for 2020.

We'll wait like we typically do to provide that on our Q4 call.

That's really helpful. Appreciate that tray and then just as a follow up we saw the XTRAC data yesterday, we've seen you over the course through the year raised the procedure targets that you're.

You're moving into peripheral up to 350, and that's excluding pulmonary embolism.

By my math, you're still in the single digit penetration into that market, maybe could you talk to pulmonary embolism, what does that add and as you launch a new product family you now.

Do we do we view this as a slow steady grind over time.

With with strong double digit growth or is this something where we could see more of an inflection point. Thanks.

Thanks, Rob if the question so let me.

Address the first part of the question around he the there's no question, there's a an immediate once we get our indication.

Which we haven't got yet this data is the step in getting that but with that indication.

We can go after.

Sort of that first 20000 patients we identified in the U.S. again globally, it's different thing, but in the U.S. market that are currently getting some form of intervention today.

Whether that's a competitive device or just sort of catheter directed leases.

And given our data.

I think one can assume that we will do pretty well.

In that marketplace.

With that set of patients. The next step of course is to.

Go after they other patients that we think we can help.

That we outlined today on the call as being about 150000 again similar size.

Just slightly smaller and our estimate for the U.S. stroke market those are patients that in order to go after them.

Are we would wait until our next generation products likely but also do some more serious clinical work around proving clinical outcomes, we don't have.

An announcement to make on this call about that study or that trial, but that is certainly been our ambition really since we started doing this some years ago with with our peripheral business. That's an important group of patients there.

They can be quite sick and we really over to them to do this kind of work.

And open up this treatment modality.

As it relates to sort of the overall business.

Which is how I read the question.

It is.

I think you called it a sort of slow and steady.

I think you said grind.

50, some odd percent growth or over 45% growth for six quarters.

Maybe your definition of slow and steady is different than mine, but.

I think it's pretty appropriate growth rate.

And I think what Weve indicated on this call.

We have a lot of room.

To continue to grow.

Into the two our vascular business for a number of years.

Ahead of Us and.

If I can sort of step back for a second you know this is.

Exactly what we talked about four years ago. When we went public we talked about.

The opportunity to.

New areas like stroke.

And other new areas and then as people caught up.

As innovation.

You know continued though when people competed we would also have new areas that we can open this up for and I, just kind of want to maybe highlight.

One way of thinking about the the the two markets the two big markets. We're in.

We think about our stroke business in the U.S., which.

No one will ever say we.

Don't care about and aren't competitive.

If you look at one percentage point of market share.

So.

That's what we control in the stroke business, we don't really control market growth. We have fund efforts around get ahead of stroke, and then state legislatures and all but we don't really control the local efforts that drive that market growth, but we do have some roll and ability to execute in.

Market share questions.

So one percentage point of market share.

In the U.S. stroke business equals about $2 million a year in revenue.

If you switched or vascular business and let me comment we are obviously going to fight for every point of market share.

And I think we've proven that were pretty adept at that.

And I.

I think with jet seven extra flex, we and your calls have shown that we have that ability going forward.

At same time of one point of.

Market penetration or market share really they're the same thing.

In our vascular business, because those patients already being treated by some other modality, but theres still being treated we don't want to get them there to be treated so one percentage there.

In those markets for us today is about $15 million year, So we're going to do that too.

We can do both things they're separate commercial teams and we can do both.

But if were successful in both.

One, we'll obviously have a larger impact on our.

Business going forward than the other just by this your different numbers sizes.

And that's just sort of worth pointing out.

As we think about the business going forward and.

Do not misunderstand that is that comment is meant to say we care about both businesses the same and we're going to execute as well as we can in both businesses, but by definition, one will have an outgrowth outgrow outsized impact on our performance.

Thanks, a lot maybe consistent with the better word choice not to slow steady.

[laughter] I didn't mean to call yet [laughter]. Thank you thanks right thing.

Your next question come from line of Bob Hopkins Bank of America. Please go ahead your line is helping.

Okay, Thanks, and good afternoon.

That's why.

Hey, just want to see if I could clarify some of the comments you made earlier I just want to make sure I heard you on the U.S. stroke market.

If you kind of earlier in the year thought the marker we grow 17 and now you're seeing it more like 15 to 16 is is that what is that what you're saying it seems like a pretty subtle difference.

No I think just to clarify we've said.

A few things on this call and I'm glad you asked the question so that we can clarify it.

What we said Bob is at the beginning of the year when we introduce guidance, we've talked about the U.S. stroke market growing 6.5 thousand patients, which translates to about 17% growth.

Right. The comments about Q3, specifically where that we saw less robust growth in the stroke market. We didnt quantify what that is it's incredibly hard to do that.

Standing still on one quarters.

One quarter's worth the data, but what we did provide.

As for our global stroke business.

Our our sense that the annual growth for 2019 would be in that 15% to 16% area. So just under what we had initially highlighted for you a stroke, which we always used to sort of the proxy for how to think about our stroke business growth. So hopefully that helps clarify what.

What that language was around.

Okay. So you're saying you think this year the global stroke marker will grow 15% to 16% in procedures.

We are saying that our global business will grow 15% to 16% and in the answer to Rob's question. Oh, We also gave a little more clarity around our vascular business growing in the low fortys pretty low 40%.

For 2019, as an annual growth rate as well so thats regarding our business.

Okay. So.

According your filings I think in the second quarter your global scheming stroke business grew about 17%. So it sounds like from your comments that that slowed this quarter is that is that fair.

That's that's correct less than okay less than Q2.

Okay, and that's primarily a U.S. phenomenon.

Yes, I think the.

The three things that we mentioned and these are all related to our neuro business, Bob I'll sort of again just for the sake of being clear about them. There are three things in the quarter.

That are notable to highlight for neuro.

We had at international order pulled forward to Q3, which we quantified of about $2 million.

We had the dynamics around the jet seven extra flex launch, which I think you recall some of the.

Dynamics that we talked about in some of the September investor meetings.

And conversations with you as well about how we saw that taking a little bit longer.

And different from our prior stroke launches and the third item is the U.S. stroke market growth being less robust than what we've seen in the first half of the year. So as we think about the combination of those three things that's relevant to Q3 and as we think about the comment about you a stroke growth.

We've generally seen that not just be one quarter, but our are careful and cautious expectations that would carry into Q4.

Okay, and you know since as you know, it's obviously an important part of the companies.

Legacy and future I know, it's only one quarter, but can you give us a sense of magnitude as to what you think the U.S. market slowed because it's sort of the reason I'm asking because I haven't heard it from other players or just in all of our checks I'm just curious what you're thinking in terms of magnitude just like what you're seeing.

Yeah, and I want to emphasize it it's it's hard for us to on the market basis to do that I think we pay attention to the market sources and the reason why we mentioned that as we see three distinct different sources that are showing a slowdown in Q3, so without sort of read.

Characterizing how we see the market growth rate.

Our business is dependent on two things market growth and share share change. So what we're providing in lieu of that sort of market growth, which is hard to kind of recast is we're we're providing our view of our growth rate for the year in stroke. So that's another way of trying to provide a little more visibility about what this all means and what to.

Anticipate but as we get through Q4, we're obviously going to have the benefit of another quarter to understand and to assess not only the whole year, but you know, but over the course of six months. What this dynamic looks like and we'll provide that like we always do in January about talking about next year's market growth rate.

Okay, and Bob if I could add just yeah I'm sorry good.

No I was just.

One other quick thing.

Yeah go ahead asked the question.

What was it was on it was on a different subjects if you've got.

Well, Yeah, let me just add to let me just at a touch on.

The difference.

Between Mark determining market growth in market share you know there's.

Understand for sure that there was no exact science and you know in a competitive space.

Which is it you know we do understand that.

We use we've seen a number of sort of third party sources together with our own data to try to train Gilly both of those important metrics in and that's really important so that we're putting the the energy and effort in the right place you know obviously as it relates to market share.

Our own data in our sort of first hand knowledge about our accounts.

It is also a really important source, but.

You can't ever be certain around market growth.

No there's no one magic source, but we do looking at all these other sources have pretty high degree of confidence that the robust growth rate. We've seen for the last six orders slowed a bit in the back half of the third quarter and if you just sort of look at historical patterns is not new we've seen it several times.

For the 40 years, we've been public and commonsense tells us that that will likely continue a little into the first part of the fourth quarter. So that's why we sort of put that out there.

But it doesn't really give us cause for any kind of long term concern.

Let me address market share or competition sort of directly as it's different than the market growth.

Within market share competition, there really two distinct dynamics at work and I think it's important to not lose sight of this.

Different than in other areas with competition, where it's a direct either or you either use our product or use someone else's product.

In this field because of the nature of the use of stent retrievers and aspiration catheters or just one of them, it's a little different and one dynamic there's there's really two distinct.

Competition or competitive dynamics. The first one is where customers don't use any of our stroke products at all.

And they then decide because of aspiration gain.

As a mechanism to use a competitors.

Aspiration catheter.

Maybe we either with a competitor stent retriever or without a century just alone.

And that dynamic a competitor certainly jeans business in share for their catheter.

They lose share in their stent retriever or they may just gain a catheter and keep the century business, but that doesn't really have any negative impact on us we don't lose any business and that's here in that dynamic.

In the other dynamic where a customer was using our aspiration and switches to someone else.

That's a different dynamics can we saw that dynamic play out a little bit at the beginning of the year and really the first two quarters and we talked about it.

But since the launch of number jet seven extra flex.

We haven't seen that dynamic as much in fact, we've started to see signs that our team is beginning to take that share.

From those customers that we might have lost so there is some nuance around bull market growth, which I think we've tried to be very open about.

And the competitive issues, which.

Sometimes get a little confusing because of the fact that you can have somebody gaining use of their product and that doesn't have any impact on us but is it frankly sets us up for future success, it potentially taking that business back or away from them.

Okay. That's that's helpful. Thank you and then just lastly to finish up and sorry for taking so long I've just two other quick things you're mentioning the evolving structures in.

In Europe are their financial implications that those evolving structures that are worth calling out you know could that be short term disruptive.

Long term productive just curious if there's any financial implications of evolving structures and then Sri packet Larry's conference you offered some commentary on 2020 as a kind of that 17 to 19 is being a good starting point to think about 2020, those comments still apply or given some of these moving pieces.

Should we just wait to the analyst day.

Yes.

Let me hit the first one first about the goal of this structures I think is around the fact that we see that there's.

Pretty robust opportunity outside the U.S. in both markets and the structure is the goal of the structures it to be able to invest and to see the growth that we think we can we can have and I think thats the point of making the comment.

People haven't heard the number talk a lot about outside the U.S. markets. We're starting to have good success and a lot of markets outside the U.S. and I think it's pretty natural that we would think of the structures that can allow us to have the best long term sustainable growth, So that's where that.

I thought process in strategic.

Thinking is coming from and those things don't happen.

Overnight, they take a while to develop and so we want to put that on the radar. So that we can begin having that conversation.

With the market.

And our investors and the second point on the growth rate, we're not going to comment on that today I think we we generally try to talk about everything we're seeing in our business and now we're into big markets.

Six product franchise.

Franchises. Many many countries in every gift giving quarter, they're going to be dynamics that go on I think we try very hard to kind of point those out, but if you think about bubbling all that up to the whole company.

This quarter, we grew constant currency, 25% for the first nine months ended the year, we're growing 25%.

We feel really confident in sort of the overall growth to the company and the setup of growth drivers into 2020, I think we'd like to take the opportunity to talk about some of that on December threerd at our Investor day, and use our fourth quarter call to introduce guidance.

So.

Maybe I'll just leave it there.

Okay, great. Thanks, so much for taking the questions.

Thanks, Bob.

Again, if you'd like to ask a question press star tend to number one on your telephone keypad. Your next question will come from the line of Margaret cause or William Blair. Please go ahead. Your line is open.

Hey, good afternoon, guys. Thanks for taking the questions.

So the first one I wanted to follow up on his vascular and when I get all the conversations about stroke and so on but just quarter. After quarter, you guys seem to be delivering on that side of the business so that.

Just couple of questions within that can you provide any additional metrics that really speaks the value of that business and stickiness.

And then specific to the quarter I can you give us a sense of the drivers of that business has had existing accounts new accounts and how does that look like as we go through 2020, a indications wise or otherwise.

Yeah, Margaret it's a great question and I'm glad you asked it I think we've started to spend a lot more time sort of describing the opportunity we started at sort of the broader market opportunity.

We've benefited by having more places where indigo can be used I think as weve begun to outline and update the market opportunity. Its expanded because we find indigo is being used in more more cases.

The other opportunity there is to penetrate that opportunity as Adam mentioned unlike stroke.

The main difference or the cheap difference here in this market is the patients are already being treated these are patients in hospital being treated so when he talked about sort of penetration, it's replacing another therapy, that's happening versus in stroke. Some of those patients aren't even getting to the hospital for us and have an opportunity to treat so how do we go about addressing those patients.

It's in penetrating.

Acknowledge sheets clinical evidence, we just had clinical great clinical data yesterday with extract that hopefully allows us to move into PE. Once we're able to hear back from the FDA.

There are a number of new customers, yet still get to for US I think we're just in the early innings of being able to get to all the customers. We can get too and then also then addressing all the cases, where they can use indigo. So it's also do you think about new customers and also their utilization of the device. So when we say there is a long runway ahead.

We see that because we see it not only the market opportunity, but then tended tangibly in the in the in the customers and new opportunities with with customers that we've seen a few.

Okay and that's helpful. And then just wanted to follow up on the analyst day, and we're kind of talking a little bit throughout this call about what you will see I won't say, but maybe just more bluntly am can you provide us a sense of how much clarity or timing going to spend on kind of the three different businesses and then.

When you walk through some of the updates will there be new product updates and.

Hence market sizes, and then as well.

Longer term, you know top or bottom line guidance. In addition to kind of short term outlook. Thanks.

Yeah, I think weve.

Spent a lot of time, telling people not to set their expectations.

On us giving.

Long range guidance and some of the things that I think people would love to have I think the intent is since the IPO, we really havent had a chance to go deep on the other businesses that are driving our growth and if you look at what's driving our growth as I mentioned, our vascular business is just about the size of our stroke business.

I think we want to go deeper with investors to describe what are those markets and what is our strategy against those to drive growth.

We also want to go into the other parts of our neuro business stroke, yes, but other parts to that we think that can drive growth.

And and share with everyone that more clarity around the drivers that we feel like will drive not just 2020 growth, but also longer term multiyear growth.

Beyond that and so we like that to think about that is the things that help us drive durable growth. So I think the ideas just to go deeper to educate our investors who may not have hurt us or had the opportunity to understand those parts of our business and drivers.

There are no further questions at this time.

Miss him Hamlin Harris I turn the call back over to you.

Thank you operator.

Sound management team. Thank you all again for joining us today. So your interest into number we look forward to updating you fourth quarter Paul.

This concludes today's conference call you may now disconnect.