Q4 2019 Earnings Call
This time off just concerned listen only mode. After the speakers presentation noble your question and answers section.
Ask a question during this session you'll need press star one on your telephone.
Please be advised to today's conference is being recorded if you acquire any further systems Posh Star Zero I would now like turn the conference over to your speaker today, Mr., Jake Elguicze, <unk> Treasurer, and Vice President of Investor Relations. Please go ahead Sir.
Good morning, everyone and welcome to the Teleflex incorporated fourth quarter 2019 earnings Conference call.
Press releases and slides to accompany this call or available on our website at www Dot Teleflex Darko.
As a reminder of this call will be available on our website a replay will be available by dialing 855.
Five knowing to 056, well for international calls for zero or.
373, 406, passcode 585 700 so.
[music] participating on today's call or Liam Kelly, President and Chief Executive Officer, and Thomas Powell Executive Vice President and Chief Financial Officer.
Women, Tom will provide prepared remarks, and then we'll open up the call to QNX.
Before we begin I'd like to remind you that some of the matters discussed in the conference call will contain forward looking statements regarding future events as outlined in our slot.
We wish to caution you that such statements are in fact forward looking in nature and are subject to risks and uncertainties and actual events or results may differ materially.
The factors that could cause actual results were events to differ materially include but are not limited to factors reference in our press release today as well as our filings with the FCC, including our form 10-K, which can be accessed via our website.
With that said I'd like to now I'll turn it over to Liam.
Thank you Jake and good morning, everyone.
It's a pleasure to speak with you today.
The fourth quarter 2019 capped an excellent here for teleflex.
During Q4, we once again generated upper single digit constant currency revenue growth, but also achieving the highest adjusted gross and operating margins just becoming a pure play medical device company.
During the fourth quarter revenues grew 7.1% on a constant currency basis. Unlike the first nine months the year during Q4 the strength in our topline performance was once again broad based and included 54.4% growth in intervention hydrology, 6% growth and interventional access and four point.
<unk> percent growth in vascular access.
From a geographic perspective, we achieved particularly strong growth within the Americas for constant currency revenue growth was 11.7%.
Fourth quarter constant currency revenue growth also included the benefit from one additional setting.
However, this was offset by a headwind, resulting from the shut down about facility of one of our third party sterilization providers during the war.
From a what are your perspective 2019 was the first year of our three year long range plan and I am pleased that we were able to exceed our NRP constant currency revenue growth expectations.
Our interventional urology business grew approximately 48% or intervention access business grew approximately 10%.
Oh, Yeah business grew approximately 8% by both our vascular access in surgical businesses each grew approximately 6%.
Additionally.
During 2019, we were able to proactively pulled forward investment spending that we expect would pay benefits in future years.
Finally, we exited the year with an adjusted gross and operating margin profile that provides us confidence in our ability to achieve our previously provided long raise target.
As we transition into the second do you ever at RP, we remain confident in our ability to generate significant constant currency revenue gross margin expansion and adjusted earnings per share growth.
Uh huh.
Im pleased to announce that every the 18, we completed the acquisition a privately held I WG high performance conductors inc. or HPC and industry, leading manufacturer of highly engineered minimally invasive medical solutions.
HPC is expected to be accretive to our constant currency revenue growth rate and our adjusted operating margins.
Importantly, we also expect this acquisition to be accretive for our full year Twentytwenty adjusted earnings per share.
With that as an overview, let's now review order for revenue in more detail.
I will begin with a review of our reportable segment revenues unless otherwise noted the growth rates I would refer to on a constant currency basis.
The Americas delivered revenue was up $400 million into fourth quarter, which represents an increase of 11.7%.
It was driven by or interventional urology, surgical intervention or lack thereof, and vascular access product categories.
I don't know what are your basis, the Americas grew 10.6%.
Moving to hear me.
As reported revenues of $145.9 million in the board water, which represents a decrease in zero <unk>, 0.6%.
The decline in EMEA revenue with impart due to the timing its phasing of certain distributor orders.
On a full year basis EMEA grew 2.7%.
Turning to Asia revenues totaled $80.5 million in the fourth quarter, which represents an increase of 2.7%.
Product standpoint growth was strongest within our interventional access and down it's easier categories, but from a geographic perspective, our business in China grew 8.5%.
This was somewhat offset by weakness in Australia, New Zealand and India.
On a full year basis Asia grew 6.8% led by growth within China of 11.5%.
And lastly, our OEM business reported revenues of $54.6 million in the fourth quarter, which represents an increase of 4.3%.
What are your basis, our OEM business grew 8.2%.
Now, let me move to a discussion of our revenue by global product category.
Like my comments regarding our reportable segments my comments regarding our global product category growth will also be on a constant currency basis.
Starting with vascular access.
Order for revenues increased 4.6% to $154.6 million.
This was driven by growth in pigs, and easy are you.
Now to interventional access fourth quarter revenue was $112.7 million, which is an increase of approximately 6%.
Growth was broad based on was driven by increased sales and complex catheters biologics uncontrolled unmanned.
This was somewhat offset by the divestiture of our catheter reprocessing product line, which had a very strong fourth quarter of 2018.
Turning to anesthesia waterborne revenue was $85.3 million, which represents a decrease of 1.3%.
It was primarily driven by a slight reduction in the buying patterns of U.S. based distributors.
Shifting to our surgical business revenue increased 3.9% to $95.2 million.
The increase revenue was driven by sales of ligation clips.
Moving to interventional urology waterborne revenue increased a robust 54.4% to $89.1 million. This was a fantastic performance during the quarter, particularly considering it was up against a very different difficult comparable.
Our sales force continues to make excellent progress writing physician adoption of your system.
As we ended the year, having trade in excess of 500, new urologist exceeding our goal of training 450, new urologist.
Given that since the inception.
We have trained over 20% up to 12000 U.S. based urologist.
Coupled with an expectation that we were trading at least 500, new urologist. During 2020, we plan to begin a pilot <unk> national direct to consumer campaign as we move throughout the year.
It is our belief that this campaign would further aid in creating awareness of you were live system I'm going to help make your list the standard of care for the treatment to be age.
Transitioning to your live to we continue to expect to begin the rollout of the U.S. to during the first half of this year.
And finally since OEM was covered and.
Summarize fourth quarter revenue for the businesses within our other category, which consist of our respiratory and urology care products.
Revenues here were down 4.2% totaling $89.4 million.
Despite a rather robust flu season.
These product categories declined as compared to the prior year, primarily due to the sterilize aegion issue that I referred to earlier.
That completes my comments support for revenue performance.
I would like to briefly discuss our recently received label expansion for the you're live product.
During January the FDA granted the your list system, an expanded indication for you.
Treat larger prostate between 80 and the underground.
The collection update I presented to the FDA demonstrators that the euro system treatment is safe and effective in men with larger prostate with outcome similar to the pivotal lit randomized control trial.
This new indication marks another exciting milestone and is an opportunity for hundreds of thousands of more men to benefit from the earliest system and the jury <unk> and long lasting really can provide without any risk of sexual dysfunction.
And finally before I turn the call over to Tom I'd like to take a moment to update you on the acquisition we announced this morning.
On February 18th we acquired HPC EUR $260 million HPC is a market leader in insulated ultra fine wires, I'm, probably might might go down or tubing components and would become part of our OEM segment.
This acquisition provides two highly complementary differentiated capability platforms, including.
Ultra fine wired should've been components for therapeutic application in fast growing markets, such as electrophysiology, BARYPREM management and pain management.
Yeah, well position also gives our OEM business a platform with ultra fine wired components, Bergen conducting electricity and health care applications.
We are pleased I'd been able to make this acquisition as it is expected to be accretive to our constant currency revenue growth rate and adjusted operating margin profile, both in the immediate and long term.
It is also expected to be accretive to our adjusted earnings per share beginning in 2020.
In closing I'd like to reiterate how pleased we were without performance during the first year of our long range plan.
Revenue growth exceeded our initial expectations driven by broad spectrum of products and geographies, but on the bottom line, we were able to grow our adjusted earnings per share more than twice, our as reported revenue growth.
After having completed the first year of our three year at RP would be confident in our ability to achieve the goals laid out in may of 2018.
I would like to thank our employees and management teams are there excellent execution I'm for their continued focus on reaching our goals.
That completes my prepared remarks, I'd now like turn the call it over to Tom for a more detailed review of our fourth quarter financial results and full year Twentytwenty financial guidance Tom.
Thanks, Lam and good morning, everyone.
Given the previous discussion of the company's revenue performance I'll begin at the gross profit wise.
For the quarter adjusted gross profit was 403.2 million versus 369.3 million in the prior year quarter, four an increase of approximately 9.2%.
Adjusted gross margin increased 160 basis points versus the prior year period, reaching an all time high a 59.2%.
The expansion in adjusted gross margin primarily reflects increased sales volumes.
Favorable sales mix of higher margin products, including your lift vascular and interventional access.
If it from footprint restructuring programs and net positive pricing.
Adjusted operating profit was 184.5 billion as compared to 169.9 million in the prior year or an increase of approximately 8.5%.
Adjusted operating margin increased 60 basis points versus the prior year period, reaching 27.1% also an all time high.
Continuing down the income statement net interest expense decreased to 16.8 million and this compares to 23.1 million in the prior year quarter.
The decrease of interest expense, primarily reflects the impact of our cross currency swap agreements.
Moving to taxes for the fourth quarter, our GAAP effective tax rate was negative 6.4% and reflects a discrete tax benefit resulting from remeasuring the relevant deferred tax assets and liabilities, while on a non U.S. legal entity restructuring undertaken as a result before and tax law change.
That became effective on January one twentytwenty.
On an adjusted basis, our fourth quarter tax rate was 7.7% as compared to 11.7% in the prior year period.
It takes me to our fourth quarter 2019, adjusted earnings per share, which was $3.28 or an increase of 18.4% as compared to prior year.
Turning now to select balance sheet and cash flow highlights.
During 2019 cash flow from operations totaled 437.1 million up 2 million as compared to prior year.
The increase in cash flow from operations is primarily attributable to two favorable operating results, partially offset by net unfavorable impact of changes in working capital.
Contingent consideration payments of 26.1 million.
When normalizing for the contingent consideration payments cash flow from operations would have increased approximately 6.5%.
Turning to debt and leverage.
During the fourth quarter reduced debt outstanding by approximately $90 million.
Our net net leverage was approximately 2.4 times at year end.
Following the completion of the acquisition of HPC, our pro forma net leverage would be approximately 2.7 times.
Lastly, during the fourth quarter the company completed the redemption of its previously outstanding 250 million five in a quarter senior notes due in 2024.
Well this transaction is leveraged neutral it will benefit 2020 in the form of reduced interest expense.
Transaction was completed two borrowings on the revolver.
In summary, 2019 was a very successful here for teleflex.
We were able to raise our constant currency revenue growth expectations twice ultimately achieving revenue growth of 8.1%.
From an earnings standpoint, adjusted earnings per share increased 12.6% to $11.15.
We're pleased to have been able to raised guidance during the year and then deliver full year earnings in excess of our upwardly revised guidance.
The earnings beat was particularly rewarding has to do so required us to offset a foreign exchange headwind that was approximately twice that of our initial expectation.
Well, it's greater than expected tariffs in China, and an unforeseen issue with one of our third party sterilization providers.
This completes my comments on fourth quarter and full year 2019 results now I'll move to 2020 guidance.
In 2020, we project constant currency revenue growth of between 7.28, 0.2%.
This range includes approximately 1.2% of revenue growth coming from the acquisition of HPC.
Excluding the acquisition, we project constant currency revenue growth of between six and 7%.
With interventional urology, interventional access and vascular access being key contributors to growth.
As it relates to your lift we expect revenue to increase at least 25% over 2019 levels.
For 2020, our guidance assumes a 70 basis point headwind from foreign exchange with the greatest impact being in the first and second quarters of the year.
As a result, we expect our as reported revenue to increase between six and a half and 75% during 2020.
And this would equate to a dollar range of between 2.764 billion and 2.790 billion.
Our guidance also assumes sterilization disruption will adversely affect our first half of 2020 revenues by between five and $7 million.
Lastly, our guidance assumes a revenue headwind in China from the Corona virus of $5 million to $10 million or approximately 5% to 10% of our full year China business.
This projection assumes that liked in China returns to normal at the beginning of April however, given the fluidity of the situation. The assessment it may change as we learn more.
Turning next to gross margin.
During 2020, we anticipate an adjusted gross margin will increase between 65, and 115 basis points to a range of between 58 in three quarters percent and 59 in one quarter percent.
We expect gross margin expansion to be driven primarily by favorable mix of high growth high margin products.
Putting interventional urology interventional access and vascular access.
As well from continued benefits from previously announced footprint restructuring programs.
Moving now to adjusted operating margin.
During 2020, we anticipate that adjusted operating margin will increase between 145, and 195 basis points to a range of between 27 in one quarter and 27 and three quarters percent.
The increase in adjusted gross margin largely come from gross margin line, coupled with greater opex leverage as compared to last year.
As previously communicated we pulled forward certain opex spending into 2019 and as we move forward into 2020, we expect to better leverage our cost structure from both of your perspective as well it from our base business.
Finally, the acquisition of HPC is expected to be a minor tailwind at the adjusted operating margin line.
And that takes me to our adjusted earnings per share outlook for 2000 to 20.
This slide serves as a bridge from our full year 2019, adjusted EPS result.
Full year 2020 bps outlook.
Beginning with 2019, adjusted EPS of $11 in 15 cents.
From an operating standpoint in 2020, we project additional earnings of between $1.92 cents and $1.99 cents per share.
Increase the between 17 and 18%.
Included in this range is a 6% adverse impact from sterilization.
We expect to generate the significant level of operating leverage the revenue growth favorable mix in manufacturing cost reduction initiatives.
In 2020, we expect interest expense to range between 70, and 73 and a half billion dollars.
And this includes an assumption that we will initially fund the acquisition of HPC borrowing under our revolver and then term out those route ball for borrowings later in 2020.
The year over year reduction in interest expense is expected to contribute between nine and 16 cents of earnings accretion.
Moving to taxes.
During 2020, we project that our adjusted tax rate will be in the range of 13 and 14%.
And we'll resulted in adjusted earnings per share headwind of between 27 and 42 cents.
They are projected year over year, increasing the adjusted tax rate is the result for greater expected mix of U.S. taxable income.
Somebody resulting from yearly growth.
Additionally, our assumption is that the 2020 windfall benefit from stock based compensation is it a more normalized level versus the eight typically high level realized in 2000 to 19.
Turning to share count.
We estimate that weighted average shares will increase to 47 and a half million for full year, Twentytwenty, which is dilutive by approximately 11 cents.
Moving to FX, assuming a full year euro to dollar exchange rate of $1.11 excuse me $1.11 cents FX is expected to be a headwind of approximately 10 cents.
And finally, we are factoring in between five and 10 cents headwind associated with the Corona virus.
Despite several headwinds are adjusted earnings per share outlook of $12.50 to $12. In 70 cents is robust representing growth of between 12.1 and 13.9% versus 2019.
We're a growth rate approximately double that of our expected as reported revenue growth.
And while it's not our practice to provide specific quarterly financial guidance. It has been our practice at the outset of each year to highlight some considerations regarding variability between our quarterly expectations.
Beginning with excuse me beginning with selling days 2020 has one additional day as compared to 2019.
As there is one less day in the first quarter and two more days in the fourth quarter.
Similar to 2019 or guidance assumes that we will realize approximately 22.5% a full year reported revenue and approximately 19.5% of full year adjusted earnings per share during the first quarter 2000 to 20.
These estimates reflect our expectation that Q1 will be adversely impacted by $5 million to $7 million as a result of sterilization plus $5 million to $10 million as a result, the corona virus.
That's our expectation that FX impacts will be the greatest in the first quarter.
From an adjusted EPS perspective, the combination of the sterilization item in the Corona virus are expected to negatively impact you and results by 11 to 16 cents.
Finally, our revenue and profitability in the first quarter will be negatively impacted by one fewer selling day, which we estimate will have a 9 million dollar impact on revenue.
Somewhat offsetting these Q1 headwinds will be the partial quarter benefit coming from the acquisition of HPC.
That concludes my prepared remarks, I'd like to now turn the call back over to Liam for closing commentary.
Thanks, Tom in clothing, we're excited for what 2020 holds for Teleflex.
We expect as reported revenue growth of between 6.5% and 7.5% on constant currency revenue growth of between 7.2% and 8.2%, including approximately 1.2% from the acquisition of HPC.
And despite certain headwinds we expect another year of strong adjusted earnings growth that is about double the rate of our forecasted as reported revenue growth.
Looking out to 2021, we remain confident in our ability to grow our constant currency revenue growth between six and 7% and our adjusted gross and operating margins to reach ranges between 60, and 61% and 30 and 31% respectively.
That concludes my prepared remarks, now I'd like to turn the call back to the operator for Q in it.
Thank you as a reminder to ask a question you lead to press Star one on your telephone to draw your question press the pound.
And our first question comes from David Lewis with Morgan Stanley. Your line is open.
Good morning.
Let's start with gross it maybe have a quick question on China to follow up but just thinking about 2020 guidance and some of the key contributors. So I noticed you do you track contributed half of corporate gross or 2019, you're guiding 2020 or 25% that's meaningfully down from the 50% you exit rate and you've given the difference in 25% and 35% grow for you this year as a full points.
Gross I, just sort of walk us through the investments.
In 2020, and why be realistic for growth to decelerate. That's that's sharply and then related badly I'm just on Moneta, just give us any sense of what you're thinking monitor market share should be in a in 2020 that I'd quick follow up on China.
Yeah, absolutely David So let me start with the growth profile of Teleflex with your it into next year lift in 2019, so our total growth constant currency growth was 8.1% your lifted contributed approximately 4% to that and the rest of the business approximately 4.2%.
Now do bear in mind. Please David that we did have that sterilization impact of about 30 basis points. So if you were to normalize but that the rest of the business would have grown at 4.5%.
We've always been reasonably.
I'm cautious when we enter a year as I've said many times, we are moving from the early adopters of the past borrower with regards to that to the euro the product and as such it does we've always thought it shouldn't take a little bit longer to bring those new category of docs on board, having said that we have X.
Did you do an incredibly high level through 2019, the end market conditions doesn't change and as we announced on the call today, we're going to do a nationwide and direct to consumer pilots and during 2020 that we think could could actually help that product as we make more.
More men aware of the possibility that there is a long term long lasting solution with no sexual dysfunction for the impact that they have so we'll see how we go through the year, but it had a burn storm or other 2019.
Your lips product as you are aware it even accelerated as we went through the year and quite honestly beat all of our expectations as it ended ramp and especially in order for it 54.4% when there were really up against their toughest comparable.
Of any of the year, so excellent execution and I think if any if nothing else. It does validate our decision not to shoot to launch do you want to answer that sales force in the fourth quarter and keep them focused on onyx that are raising the top line and the other part of your question was I think around Manta.
And I think that.
We've completed the limited market release in Q4, MBR in Q long a full launch as of January 1st.
We continue to get really positive feedback and I reorder rates and the customers and with the combination of our limited market release and continued growth in the EMEA, we actually penetrated 4% of our target market of $200 million to $300 million in 2019, and we actually expect to penetrate 8% did that American in 22.
Randy.
Great clinical data as you know, 70% reduction in basket or complications and taking the meantime to hemostasis down from six to 10 minutes 23 seconds. So we're very excited about that product as well I think I answered all your questions David today.
You did the I mean, just one quick on Sean I appreciate the commentary on China corner virus in fact for first quarter, just more broadly Bam there'd been multiple competitors. Some news competitors talking about China pricing developments in 2020 and beyond a one of your competitors in the peripheral catheter segment, just maybe talk about your China portfolio.
And how you're feeling about China tenders and pricing impact on your business as we look out this year and next year. Thanks, so much.
Yeah Cheers, David So really when we decided on what I'm when we decide what products were going to sell into China, We're very very selective so.
If you think back to where I'm going to stay some investors really didn't surprise that our highest gross margin or by any of our regions was it Asia Pacific.
A key part of that is because of the products, we actually seven China, which are the highest end of our surgical products, we sell our coal just cvcs and pick at our CBD, we sell our intra aortic balloon pumps and we sell our portfolio darn geo not on products that are highly differentiated incredibly hard to two to copy.
And that's why I believe that our portfolio in that regard at least is embedded unique and we have not seen that same price pressure that we know what oh other companies I've been talking about and I think it's down to the portfolio. We felt we sell very few of our fully catheters for example, because in every.
Region that you'd be selling in that'd be 50 competitors, whereas if you're setting quoted cvcs wood with.
Anti Thrombogenic, an anti infectious protection there was no competitive during that phase of their for you're not under the same price pressure. So our selective news in the portfolio that we sell in China. David is really starting to is in regard to that price pressure that others are theme.
Great. Thanks, so much.
Thank you.
Our next question Kerry comes from Larry Keusch with Raymond James Your line is open.
Thanks, Good morning, everyone.
Mark.
Yeah, I guess to just started out.
Maybe directed towards Tom.
And I think Liam you you may citizen in your prepared comments, but the punch line is that that you guys still remain confident in your ability to hit the margin targets in the L. RP.
If I look at you know kind of what you have assumed for 20 2019, I think on the midpoint of the ranges around 170 basis points, so that would [noise].
Implied acceleration above 200 basis points of expansion in 2021, So again, just remind us how you're thinking about that 30% to 31% range and what gets you there from from where we currently are.
Okay, well I think as we look at the key drivers of our margin expansion.
It will come primarily from the mix of high growth high margin products, including interventional urology interventional access vascular access manta.
As well as benefits from the previously announced footprint restructuring program. So those are the key drivers of gross margin and that's going to drop down.
To the operating margin when we when we.
Also take a look at the op margin. What we're seeing is is really despite the investment behind the year lift we continue to see their op margin accelerating dramatically as we are better able to leverage cost structure, Miss even more of that as that business continues to grow yeah, and perhaps the level of investment it wasn't as high as what we saw in 2019.
So essentially no what we're going to expect for 2021 is a continuation of these factors that are driving twentytwenty, which is essentially mixed into high growth high margin products benefits from restructuring programs a leverage of our cost structure on both the the base business as well as euro left and so those are.
The key components I would say that as we look at this.
The euro with product will be a major driver of our margin expansion.
Okay, Perfect and then maybe just on that point for your lift in for Liam Liam maybe just give us sort of a multipart question here, but talk a little bit about the salesforce adds that you've been able to make as you come into 2020 in the U.S.
Where do you stay and right now with building the infrastructure.
For Japan, and again, what from the time, you get reimbursement to when you really get things up and going in Japan, what what has to happen I think theres actually a.
Post post approval post reimbursement study that has to be done. Thank you.
So Larry Thank you very much so let's start with the sales force in the U.S. So we have.
We added approximately 20 sales.
In the fourth quarter up 2019, our original thinking was we would be adding them right about now we pull that forward. So that we would begin the year with a stable salesforce with all the territories aligned and and the team executing at a high level as they have been since we bought it I mean this is this.
Businesses continues to exceed our expectations Larry.
From Japan, we still expect be generating revenue in 2021, we do anticipate that we will get the reimbursement approval.
The latter half of this year and therefore generate revenue at 2021.
We have all pre invested and we have PDP fees on the street, Larry doing market development work in Japan, as I speak and we had them in 2019.
Once we get to the latter and a 2020 that would be some modest additional investment in order to ensure that we start generating revenue in 2021, but really.
Modules revenue in Japan, and 2021, Larry I would ask you rather than in 2020, and that's what we've been consistently trying to tell the investment community.
With regard to the post reimbursement, yes, there is a requirement to to gather some information and we have the infrastructure in place to do that in order to submit that to the government that shouldn't that shouldn't stopped the revenue ramp Larry It's just that it's a database that we continue to actually like Dave.
In North America as we grow.
As much as we did in 2019.
Alright, perfect. Thank you very much.
Thank you.
Thank you. Our next question comes from Richard Newitter with SVB Leerink. Your line is open.
Hi, Thanks for taking the questions I have two one on your last and then one on the acquisition that you did and and how that fits into your long range plan.
Maybe just on your unless we have is is the right message here because it's out there it sounds like all the all the indicators are things only feel like they are set to get better from a momentum standpoint, yet it as David asked earlier in your guidance implies a pretty pretty significant deceleration.
Is that basically just predicated on an assumption that dish kinda transition to middle adopters. They use quite frankly been anticipating and braced for for a number of quarters in a row that haven't quite happened and stifled growth that that's your that you're kind of running assumption that it's going to hit in 2020, but if it doesn't present.
Normally that.
There should be a a faster growth trajectory there I guess am I thinking about kind of your what's driving that this deceleration versus what you're actually seeing in reality and that that that discrepancy. There is that the right way to think about it.
Average said the good question the rich nothing has changed in our end markets and there's no big bold, but let me start by saying that there's nothing to worry being kind of your thought that that business. Secondly, let me just there at the beginning of every year, we're always pretty cautious about moving from the early adopters of the fast follow.
Sure No we've tried to offset that by adding more sales reps and that seems I've done the treat for the last couple of years, but as you would ask us to be from time to time, just be we're trying to be a little bit cautious out of the gaze into.
In case, it has an impact from moving early adopters the past borrowers, but there's no big worry out there from the type of like teams perspective with regard to the end markets.
Actually spend a full week on the role in this quarter visiting with urologist talking to them, but the DTC that we were anticipating at bringing and I'm asking them to be ready because the one thing that we need as we do the test at National DTC is be catcher's Mitt.
I'd tell you there was a lot of excitement from the urologists that I imagine I think I must admit about 15 urologists over a week and there was a lot of excitement about the but we were doing in DTC campaign I think the all this is on teleflex to inform men about the you're live product being a.
Solution to the treatment BPH, our research tells us that Optum and have BPH are under the care to be urologist, only about six five or 6% of them are aware of the your lift being available and that's something that we feel that we have to address them we have to raise.
The knowledge of man out there about the treatment option with no sexual dysfunction. So I I think thats the way we're looking at it right now retune as we go through the year, obviously, we'd update as we go.
Okay. Thanks for the color there Lam and then maybe just a follow up here on the acquisition and as it relates to your long range plan, what's the growth profile of of HPC on the topline and I'm I'm, assuming it's growth accretive.
With the context of of the 6% to 7% long range plan, which does not contemplate any acquisitions, nor does the 30% to 31% operating margin target by 2021 does this does this deal potentially.
You know puts you towards the mid to upper and or does this kind of how does this factor into your ex acquisition long range plan guidance metrics. Thanks.
Yeah, I think you're writing a acquisitions were not contemplated in our long range plan I think to be balanced rich. Neither retired as neither was FX. Neither was to grow novartis. Neither was sterilization and we've overcome all of those obstacles as we as we've exceeded our long range plan in delivering better top line growth and better earnings bridge.
Share than we anticipated so like any long range plan, there's headwinds and Tailwinds. This was not enough in our long range plan, you're you're absolutely correct. It is accretive to our our topline growth, it's actually accretive to Oems topline growth and it is also accretive to our op margins.
And that's obviously why we were we were keen to get that but more importantly, I think for our OEM business. It gets us into a really nice space. It gets into this tynwald wire reinforce catheters space that is growing rapidly because these are the way that the catheter spaces moving catheters half.
To get smaller than they have to have more torque and if you're going into a neural procedures interventional radiology interventional cardiology structuring hard peripheral and as procedures. This is the type of technology that you must have and it was the gap within our OEM business and we couldn't be happier.
To close it's just a couple of days ago.
Thank you.
Thanks Rich.
Thank you. Our next question comes from Shagun Singh with Wells Fargo and your line is open.
Thank you so much but the question I wanted to touch on your own left so strong performances for can you share some metrics what does such as you know the utilization rates, you're staying within your current customer by customer base.
<unk> customer onboarding as well as it did you see initiative and that.
Specifically on the BBC initiatives Aleem I believe you had indicated that you put up pretty good class of Oh physicians trained about 6000 I suppose.
You know kind of ahead of expectation, but can you elaborate on on the national undergoing nationally, but did you see a initiative you know, but you know how extensive isn't going to be and if it goes well.
I know full launch 2021, typically it's associated with it they get meaningful uptick in drilling so any color that would be helpful.
Okay. There's a lot there she guns are fine do as many as I can so on your first point you know about 60% of our growth at continues to come from existing customers with 40% coming from new customers that we that we bring on I can tell you that we have come.
When you to seasons, we bought this acquisition same store sales ramp.
Order after quarter after quarter and that's one of the indicators that we look for is the same store sales and how they ramp regarding your prior to your question on DTC. We did want to have a catcher's Mitt should going but also we didnt month, what our competitors that we were thinking of doing this.
So the so that's why we were being a little bit more coin the normal as we were talking about this as we said sat back and done the analysis of our geographic coverage. We believe we have sufficient urologist trained out there so that patients will be able to find new urologist and every part of America. Following the DTC.
He campaign.
You go back to 2018, we did at six DTC six regional Dtcs than last year, which is 16 dtcs. So we've actually got a good base of knowledge on the direct to consumer campaigns. It wouldn't be a mixture of up television camp.
Pain.
Focusing on some of the cable channels CNN Fox news, the golf channels and so on so forward, but a bigger part of it will be on the complimentary digital Facebook and Google PBC Web med and all of those type of areas. We're very excited to launch this pilot or it will kick off in.
In Q2, and and we will monitor the results. The do you experienced a we got from our regional campaign was we got a nice uplift in men's seeking treatment for BB age in those areas. So if that if that is the same result, we see with the national campaign.
Then we will consider our options should go into to roll that out more broadly in late or 2020 and into 2021, but that wouldn't be supported by the revenue growth. That's the campaign would frame.
I got it. Thank you if I could just follow up you know, there's about 400 basis points of growth gross margin expansion opportunity, but you know enough good point, though but it wouldn't be launched I believe.
Well, that's because you're making some visualization changes they leave could you elaborate on what the changes are that Tom.
How much of the positive impact from this transition gross margin peak.
The second half 2020, thank you for taking my question.
Absolutely, yes, so we didn't make the modest changes to the product and from based on feedback from our urologist and we believe we just wanted this product to be perfect. I mean do you have one has such a massive reputation out there with urologist, we want to you as to to be perfect. In every way and we believe that this modest change will act.
Even helped the adoption move even quicker.
So we're confident in getting that product launched getting the five 10-K in Q2 and beginning to do some procedures.
It's one of the reasons why some of our margin expansion is a little bit backend loaded into 2021, because that's when the owners of the conversion will take place I, let Tom go into the details on that.
Well I think that's that's the right way to think about it is that we expect to get the you all to out midway through this year, but the real benefit we expect to be realized in 2021. So we're we're modeling just modest benefits as a result of the beginning of that conversion in 2020.
Thank you sound like.
Thanks, you got.
Thank you. Our next question comes from Matt Taylor with <unk>. Your line is <unk>.
Hi, Thanks for taking the question.
I wanted to dig into the sterilization issue a little bit.
When we talked.
Month, or two ago I thought that most of that was going to be resolved. So just wanted to understand the new things that have popped up here in terms of your forecast for the headwind from sterilization what are the factors that could cause that to be better worse than expected this year.
Yeah. So first of all of them and begin by same after the impact of the sterilization capacity issue is contemplated in our 2020 guidance and though we communicated today. So that's the first thing as we said in our prepared remarks, we expect the revenue impact to be by 7 million and approximately six cents in IEP, yes impact.
Correct.
The the product categories impacted or surgical OEM and the other category for our urology products.
What we discovered as as we went into the early in the in the first quarter was study, we took the though little bit longer than anticipated to revalidated. Some of the cycles. So we do get this bit of an overhang into into the first quarter and I was five 7 million, it's not going.
In two to two it's not that significant didn't impact for <unk> for a company our size anymore. I think that the gating factors are we still have one cycle to finish that should finish the revalidation invest in early March and.
We fully anticipate back that to happen and we feel pretty good about our current estimate that we have in our plan and baked in.
It does hit.
The first quarter.
I think that the broader point I think I'd like to make too Matt If you don't.
Give me a second is we've got to impact in the first quarter I'm, one less billing day and then as you go through the year, what what one would expect to see is once corona sterilization and the days behind is what you'd expect to see during the year you'd expect to see mentor ramp you'd expect.
Your lips to continue to demonstrate strong growth as well as basket or a pack and OEM with us they have the acquisition booked into the OEM business. There and then as you get through the year end he's into quarter. Four you pick up that one billing Dan did an addition of billing day in the fourth quarter, which which would have a revenue.
So that's.
Thanks for.
Allow me to expanded their mass.
Oh, Thanks Leo.
And then I guess I was hoping you could spend another minute on the acquisition for an OEM business, it's not an insignificant multiple oh, just curious if you could talk about the capabilities that you're bringing online is that just something that you're going to be able to grow with some growing categories and OEM with or can you actually use the.
Abilities in products that you make without acquisition to come out with your own products can you talk about the outlook for that business a little bit more [noise].
Yes, absolutely and first on the multiple mass.
You are obviously because late in the mode multiple on revenue I'd tell you, it's a very attractive multiples on adjusted.
EBITDA. So I think that we look at this is an OEM acquisition to put capability into that OEM business. We bought a small OEM business few years ago Calc Arteaga I won't we discovered following that acquisition was it was a win win and we were able to leverage there.
Our customer base in order to accelerate some of our growth and vice versa. Then.
Take our customer base and leverage their product portfolio.
Ben It's the same play here and again.
As I said earlier, the smaller tynwald reinforce catheters are the fastest growing space and the catheter business in the OEM space and so therefore, we expect this business to be accretive to even Oems growth at the mine Teleflex.
Thanks Leo.
Thanks, Matt.
Our next question comes from Anthony Petrone with Jefferies. Your line is open.
Hi, Thanks, maybe two quick ones from me here just on on Euro left I'm wondering what percent you know the market the larger prostate indication actually opens up and so you know how much of a benefit that indication specifically will average as you move forward.
And then the second will be on Mont you know they the outlook there Liam I'm kind of wondering what's baked in for.
The lower as tab or indication as well as a new TAVR centers coming online following me and Steve.
Oh, Okay, there was no.
In the term guidance. Thanks.
You broke up a little bit at the end, but.
Well when they when we last spoke the low risk tabare was not necessarily considered in our alco market size for longer term. Okay. Thanks, Anthony so.
First of all the or lets go there that's about 3% to 5% of the patient population wouldn't be covered by that you know I think that that would expand the markets to that level also the way to look at it is you know in the past urologist if they.
Okay scope to patient and there's still a larger prostate they may have decided to go for a TARP or another option, whereas this is expands that American it just makes it easier for the fast followers. It just removes one other objection for our sales force with regard to manta.
We're still working on the basis of the markets. It is about 200 300 million.
We didn't expand those low risk tires, which might add another 10% of the bottom in the top end a antony, but what we know today you know the 690 TAVR centers in the U.S.
We in our fact, finding and our limited launch we know what's going to take as 10 cases to train an intervention. This five proctored and five observed and a busy centered those around 300 cases. So we think we've been portfolio in the way we've laid it out we've got 4% of let's take the midpoint of that.
Let's say 250 million, we penetrate about 4% of the Golden market and our plan is to penetrate 8% by the end of this year. So that's our goal and obviously again, we'll update as we go on our progress, but we couldn't be more excited about that mines product. It is doing really well out there and very positive feedback from <unk>.
Of course.
Hi, that's helpful. Thanks.
Thank you.
Our next question comes from Matthew Michelle Hammond with Keybanc. Your line is open.
Good morning, and thank you for taking the questions.
Hey, we haven't seen so you are usually euro lift sequentially accelerate but what I consider to be the two other sustained growth drivers for teleflex, which is interventional and Asia both sequentially. It decelerated during the year and I'm just trying to understand what what drove the deceleration there is the guideliner portfolio.
It is slowing down some in interventional and are you just ticket in between period, but where we're mantra is ramping and a replas approval.
Yeah. So first of all our complex catheters that wouldn't be a segment that we book the Guideliner, we have not seen any slowed to its slow down in that segment, you actually had a very robust year I wouldn't worry too much about the interventional area mass does a couple of things going on there we had we book our enjoy.
Balloon pumps in that business, so you're drawing balloon pumps had a really good Q1, Q2 solid Q3 capital spending was a bit light in the fourth quarter. So even though that business grew in the mid teens in the fourth quarter with middle single saw that there's a dynamic and the other big dynamic that's going on in that business is the business that.
We sold at a really good Q4 last year I think the did about three and a half million Bucks. So you're you're on a tough comparable with that business year over year. So those are the two businesses I I couldn't be happier that business that interventional business grew 10%.
We've been saying all year and that it like when do the high single to sneak into the Ddos and that really happy with the performance there regarding Asia Asia was pretty much in line. What we wanted as well you know grew 7% in a full year basis in the fourth quarter, we did see a little bit of softness in Australia, New Zealand and in India.
Just Andy your stuff that didnt come in as fully as anticipated, but not not in a big way. It was that a very modest surprise and those two areas is the way I'd characterize it.
Okay.
I apologize if I missed it but what was the what was the operating cash flow on Capex guidance for 2020, and how does that compare to where to where you thought it was playing in the 2018 to 2021 plant.
So as we think about cash flow from ops per 2020, we would we would expect that to be in the range of 485 million with Capex of about 110.
If we look about back first is what we expected during the L. R. P timeframe in the guidance. We provided were for below that for a couple of reasons.
The largest factor is contingent consideration so as a result, the performance of near tracked.
Twentytwenty, we will pay approximately $80 million a in contingent consideration above.
What was previously expected or I should say the cash flow from operations impact is about $80 million from that.
In addition, we put in a couple of new restructuring programs in 2019.
And the restructuring expense the cash expense as well as some of the Capex is about $27 billion related to that and then finally FX has impacted us by by almost $40 million calls at the L. R. P expectation. So we've got a couple large factors that are causing us to be underneath where we had expected to be I'll say that obviously the contingent.
Duration winds down as we get into 2021 will be down significantly from the about $80 million this year and.
That will benefit us as we look at our free cash flow is going to next year.
Hi, Thank you very much.
Yep.
Thank you. Our next question comes from Matthew O'brien with Piper Statler Your line.
Thank you good morning, Thanks for taking my questions.
Tom I'm not real good math, but can you help me on the accretion side from the acquisition I'm getting just over a dime accretion and within that question, what I'm trying to ask a little bit more about is on the DTC spot side with the spend that you're gonna be doing this year because the guidance range. It if you did get about a dime of benefit.
From the deal is a little bit below what the streets modeling you have a big tax headwind.
And then you also got this DT ceased headwind that I don't think people or expect to you. So I'm trying to get a sense for you know when you when you kind of net out some of the puts and takes on the spending side of things what EPS growth, but it looks like.
So as I think about Iceman did you say that you're getting 10 cents of accretion.
Little more than that yeah.
Okay. So.
As we look at ice man I would say that that's probably above our expectation you know we're expecting some some modest accretion and relative to that it's really dependent on the financing how quickly we turned out that that that revolver borrowing in and what rate, we're able to achieve a so I would.
Say that you know that that's probably little bit of a difference and then are you help me understand are you trying to factor out some of the one off items and do and adjusted.
S or yeah, well, how big is the DTC spend you know again I don't think does it get you had said you were going to do this a little bit later on versus a national spend this year. It's I don't think most people are expecting that plus the tax rate, obviously quite a bit higher than which had 19.
And again adjusted for just it's just some just some general commentary around those as we think about whatever our story is.
Okay.
So as we think about.
The the spend a neural lift in 2020, we look at the total digital spend a excluding DTC and then layer in DTC that spend would be up about $2 million relative to what what we had spent in and 29 and I think Matt the way should look at really is the only unforeseen.
Headwinds D. Yes are the ones that we spoke out all the others recon lasers are building our plan. So you've got the Corona virus, we weren't anticipating sterilization that we're anticipating so if you just add those two together pick the midpoint, you're talking about 10, or 12 cents or something like that from those two and therefore, it's going to isn't in the.
First quarter with regard to DC DTC, we're spending more money on the de under DTC to do a national campaign.
But but that's baked into our powder already and that was in our thought process now you're right on a year over year. There is an increase in spends to to invest behind that.
It should have an impact on revenue and its and I think making more men aware of this condition will actually help us in longer term as you look at at the HPC acquisition, the internal nickname Firdos Iceman, that's a Tom was referring to a little earlier.
That was a project name of the acquisition. So the HPC is modestly accretive and.
Dependent on wasn't a financing we put in place on that but we're really excited about that acquisition because the technology that it brings to us. So all in all we feel that if we take a step back what the type of company. We're trying to build hearing we have better than our building is a company that if we grow let's call it 6% on the top we're trying to.
Double down in the income statement as you get the earnings to give you our investors a 12% return on the bottom.
So that's what we're trying to achieve a as we layout our plans over the next number of years.
Fair enough and then just preparing to follow up.
You are live to Liam I totally appreciate you want to roll this thing out slowly to get a perfect given how many clinicians that you have to roll that out to two we really think about the you know I'm sure you'll go slow the back half of this year.
But the rollout and then a little more so in 21, but the real financial impact really coming.
The back half of next year ended 2022.
I wouldn't say I would expect to see an impact in 2021, a math. The reason we want to get this perfect is to make it easier for the clinicians to two to actually adopted and the way. It works out there in the marketplace, what our sales reps, they're not in every case, obviously, but they do.
Eight milk run.
Once a month to revisit urology practice and make sure that the patient outcomes are sufficient to make sure. They don't have any issues with the product.
And some to make sure that that they are touching base with the key customer a non that milacron and an average urologists you know they will need five cases to be trained.
One day's work for an upper urologists, because they tend to stack cases so.
I think that.
The adoption should be facilitated by the changes that we've made it also reduces their clinical waste, which should help improve the margins within the office or the C and also it reduces our carbon footprint. So I'm.
Would come through and say you should expect to see a pickup in margins.
From that you're live to in.
The back half of this year and then more common 2021, Matt.
And just you going back to the going back in the first question you'd asked to just about the earnings power I think page 14, probably highlights nicely. Some of the you know the factors that you could use if you were trying to adjust for some of these headwinds now.
In addition to that you'd want to consider certainly the sterilization impact, which I think we call out at about six cents and then again on on the HPC acquisition, depending on you know when and how we turn that out will impact. It's a it's it's accretion but it. It's you know to liam's point, it's modestly accretive.
In 2020, but I think page 14 gives you the highlights of what to consider.
Appreciate the color. Thanks.
Sure.
Thank you. Our next question comes from Chris Cooley with Stephens. Your line is open.
Good morning, and appreciate you taking the questions maybe just a couple of quick housekeeping ones from me then a clarification just.
On a housekeeping perspective.
With leverage now on a pro forma basis at approximately 2.7 times up a little bit here, just curious how you're thinking about the use of the cash flow going forward and your coverage ratio. There and then similarly on easy pause I think pass you'd hope to have a dialogue with the agency.
This call can you, maybe just give us an update on that point as well like so much.
I'd say the Chris so.
I would be remiss it'd be not to say that our collaboration DFT has been very constructive we are all very excited by the product because we all know it can have a positive impact for the military and for civilians alike.
We have actually completed a large all of the testing that the FDA required or you are right. Chris we were hoping to meet the FDA before this meeting the FDA have actually asked us to submit all the data in March and now we're gonna be meeting with them in April that's the current schedule.
And you know we've continued to sale these uncharted waters, but I'm really happy with the progress we're making on this on this product I think that's the meeting with the FDA in April should we be shed some light on at least our thinking around time lines run the BLE submission. So we're looking forward to that meeting your.
Other question with regard to our leverage and use of capital. So as you saw from the announcement today at H.B.C.. We continued to use our capital to do really good strategic long term M&A at 2.7 times net leverage we still have capacity on our balance sheet number still active vendors.
Still assets out there that we would be interested in so.
Right now that would be our preferred use of our cotton continued to do really good M&A.
If I could just maybe one other quick ones just wanted to clarify I think in a prior question you stated that there was only 5% to 6% of patients.
Under treatment by Urologists that we're aware of euro lift.
I'm curious is that for the whole.
The whole urology community are those for the actual.
Implanters right now so it would seem relatively low for the implanting community that would be active users of your lift and that's if it's the latter can you maybe talk to us about why that message is it getting communicated within those practices.
So I was talking about patients Chris Okay, amend that like you talked about competition.
Thanks, Mike.
Thank you.
Sure.
Thank you. Our next question comes from Chris <unk> with Barclays. Your line open.
Hi, Thanks for taking my question I, just wanted to I guess returned a little bit back to cash flow that isn't that I'll say, just kinda talk through some of that puts and takes there.
And I.
I guess.
When when do you guys expect to kind of see a little bit more strength less cash flows I guess just looking there. It seems like you guys have I understand that contingent consideration accounting and how that works, but seems like there's also in a lot just kind of coming through at Senate, though onetime cost but acquisition integration.
Restructuring on Alpha looks like you guys had some.
<unk> costs and for MDR as well that seems to be higher than I would've anticipated in the 2020 numbers too. He may be just shed a little more light on on cash flow improvement.
I'm, calling for <unk> and expectations there.
Oh thanks.
Sure and Christian I think you've you touched on that the key point is the contingent consideration as well as FX on some of the new restructuring programs. We've put in place you know as we as we look at some of these the restructuring programs. Our use of cash now obviously, we put them in place because we see that as a longer term.
Capabilities to drive margin expansion as well as future cash flow.
As we look to where we'll start to see an acceleration we believe that.
2021 will show a market improvement and the some of the factors that will cause that it's just the level of contingent consideration will go down from about $80 million in 2020 to 25 or so million in 2021.
We'll also see an increase obviously in our net income.
And then we will have as we continue to to build the business we.
We put more inventory into the channel right now in order to help with the with back orders as we go into the next couple of years, we actually see inventory coming down at that for two reasons. One is a lot of the footprint moves are going to be starting to be behind us and so the strategic builds to transition from from one facility to another.
We'll start to go down and we also have some programs in place to to the greater improve our as no key processes and otherwise to help take down those inventory levels.
I'd also say another area, we'll see some improvement is just in Capex you know Saar Capex has been elevated in 2019 and 2020 in part due to manufacturing footprint moves and having to fit out. This new locations. So those are the key areas that will look to see a driving future cash flow growth, but really 2021 is.
As a year what are you should see some nice acceleration relative to what what we see in 2019 Twentytwenty.
And then what about the MD our cost does seem to be pretty high for 2020 is that just kind of a one time as you're getting in compliance it doesn't new regulations.
Well, that's that's actually a multiyear program. So we do have a considerable amount of expense in 2020 relative to 2019, but.
That will even carry out for a couple of years beyond that as we fully implement.
Okay. Thank you very much.
Yes.
Thank you. Our next question comes from Dave Turkaly with JMP Securities Your line open.
Thanks, Chuck I'll give you two quick ones your first.
You highlighted the reduction in buying patterns of U.S. distributors and anesthesia I just wondered if you could give us color on what that is when it reverses.
And then secondly, obviously fired out there now I think in Asia, you highlighted price increases is driving the majority of 2.7% Cc increase that's just wondering if you gave it give us some color on why you are able to do that where exactly you're gaining price. Thanks.
So starting to start with the pricing. So so the pricing in a argued the growth in Asia Pacific within the quarter.
Was you're right, 2.7%, but I don't think we said that was all mostly volume. So that's really volume of our our interventional access our vascular access products.
Where the growth is coming from there from an enterprise wide from a company on a full year basis. You are correct. When do you get about 30 basis points and positive pricing as an organization, that's really coming from a few areas.
Our surgical business took a onetime pricing opportunity.
That was able to drive some pricing in our vascular business in our interventional business and in in Asia Pac as it was positive pricing as the negative pricing would normally occurs in response to three in M.D.A., but are you guys at all it up it was positive this year to around 30 basis points Dave.
The other part of your question is around the buying patterns.
So what we saw there and honesty views that you know to $3 million of de stocking in the in the fourth quarter that normally comes back.
I think that on a full year basis, we did see some destocking as an enterprise.
From these distributors, but it's a smaller impact for teleflex anymore, Dave. It's it's just because in the past half our business used to go through these distributors and only one third and it's a modest impact teleflex is a hole in the fourth quarter and what the both of us sitting within a season.
Thank you are buying pattern comment versus the timing. So thank you for that.
No worries.
Thank you our next question comes from.
Mike Mattson with Needham Your line is open.
Thanks for taking my questions I'm most of its been answered, but I just had a couple of more on the DTC campaign for your lips. So one I guess.
Just from a timing perspective, you know when you when you've done the trials with the.
How long does it take from one to adds one to one it reflects a you know in your revenue and I'm just wondering if you're going to essentially see some front end increasing spending before it starts translate agree to growth.
And then two you know you mentioned that it drives just awareness of BPH in general, So, which obviously will drive more patience to get your let's put it might you know, bringing more patients to the competitors as well. So you think you can kind of.
Steer them works, we were to a euro.
Some of the other things that are out there. Thanks.
So let's get started last one so our goal Mike is not to run DTC to help our competitors.
If I said that [laughter] at the AD, who would be very focused on some of the uniqueness of your that product I didn't really comes back to all of the clinical evidence is out there I mean, there is no other product that you can offer to a patient has zero nuances of sexual dysfunction, and that's that's going to be a.
A key message that it's going to two to to be communicating out there for sure well what will happen in real life is as a patient comes into the urologist and as the urologist scopes that patients if they have issues with their bladder most of them with their prostate inspired is at a TARP is required then that that could.
<unk> and apartments, and actually Mike that won't be a problem pros intelliflex is not with them and get the best treatment option for him I've had the best possible outcome that would be fine, but we we've seen with our regional dtcs that the majority of patients are taken both for the your product.
I don't think couldn't be any different from we go nationally with regard to how long. It normally takes it really depends on the urology practice when demand engages with urology practice you'd expect them to shed jewel.
The procedure within timeframe about four to six weeks. It once it goes beyond six weeks I think did our feedback has been you tend to get a bigger a drop off but we are communicating with urology community to make sure that they are prepared and ready.
For for this campaign and that's what we've been doing since the beginning of the year.
Great. Thank you.
Thank you and that's all the questions we have for today I'd like to turn the call back to Jake Elguicze fees for any further remarks.
Thanks. Thanks, operator, thank you to everyone that joined US on the call. Today. This concludes the 12, what's incorporated fourth quarter 2019 earnings Conference call.
[noise], ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
[music].