Q4 2020 Teleflex Inc Earnings Call

February 25, 2021

[music].

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2020 Teleflex incorporated earnings Conference call. At this time all participant lines are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one.

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I would now like to hand, the conference over to your speaker today, Mr. Jake <unk>.

Treasurer, and Vice President of Investor Relations. Thank you. Please go ahead Sir.

Thank you and good morning, everyone and welcome to the Teleflex incorporated.

Earnings Conference call.

The press release and slides to accompany it.

This call are available on our website at Www dot.

And as a reminder, on this call will be available on our website and a replay will be available by dialing eight.

Five.

Jeff.

Zero.

Or for international calls.

Before 530 730 share passcode 870.

Okay.

Yes.

Participating on today's call on Liam Kelly, Chairman, President and Chief Executive Officer, and Thomas Powell, Executive Vice President and Chief Financial Officer Liam.

Liam and Tom will provide prepared remarks, and then we'll open up the call for Q&A.

Before.

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.

Hi.

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.

Factors that could cause actual results or events to differ materially include but are not limited to factors referenced in our press release today as well as our filings with the SEC, including our form 10-K, which can be accessed on our website.

Additionally, during this conference call and you will hear management make references to the estimated positive or negative impact that COVID-19.

19 had on our operations during the fourth quarter.

And full year of 2020, you'll also hear management make statements regarding intra quarter business performance during the first quarter of 2021.

Management and providing this commentary to provide the investment community with additional insights concerning trends and these disclosures may not occur in subsequent quarters.

And I'd like to now turn the call over to Liam.

Thank you Jake and good morning, everyone.

Pleasure to speak with you today.

Before I get into the details of our quarterly performance I would like to once again offer my sympathies to anyone who has been impacted by COVID-19, as well as my sincere. Thanks to all of the health care workers, who continue to put themselves at risk tobacco each day.

I'd also like to take a moment to again recognize the teleflex employees around the world.

This past year has been challenging but our team has done a tremendous job serving our customers and patients globally overcoming obstacles to manufacture and distribute our products to the people that need them most.

You.

Now turning to our results.

Considering the by that time the environment, we operate in and we are pleased with our fourth quarter performance as our business did better than we expected and trends continued to improve across many of our product categories and geographies.

We saw better than expected sequential improvement from quarter, two two quarters from quarter three to quarter four.

Despite a rising number of COVID-19 infections that occurred throughout the fourth quarter the recovery and our business was led by product lines that were initially most negatively impacted by COVID-19.

Those being.

Our interventional urology, interventional access and surgical businesses as well as continued strength within our basket, our access and other product categories.

From a regional perspective, we saw strength within the Americas as well as positive growth within EMEA and improving trends in Asia.

Quarter, four revenues totaled $711 2 million, which represents an increase of two 3% as compared to the prior year period on a constant currency basis.

Growth in the quarter was aided by two additional selling days, which we estimate contributed approximately three percentage points, excluding the impact of the additional selling days, we estimate that our constant currency revenues declined approximately 1%.

The days adjusted decline reflect continued recovery progression relative to the 4% decline we experienced during the third quarter of the year and the 12% decline we experienced during the second quarter of the year and it was ahead of the expectations we had.

At the time of the third quarter earnings call.

During the fourth quarter, we estimate that headwinds associated with COVID-19 caused a net negative impact of approximately $61 million or approximately 9%.

If we were to normalize for the negative Covid impact, we estimate that our underlying business grew by approximately 11% on a constant currency basis or 8% when normalizing for the selling day impact.

In addition to seeing continued sequential improvements in our constant currency revenue performance. During Q4, we also saw a significant sequential improvement within our adjusted gross and operating margins as compared to the second and third quarters of the year.

This improvement drove adjusted earnings per share, which exceeded our internal expectations.

Lastly, I am happy to announce debt on December 28, we closed the acquisition of Zee medical and <unk>.

Market leader and Hemostatic products, we are pleased to be able to deploy capital for a differentiated product portfolio that leverages existing teleflex call points and is immediately accretive to our revenue growth rates adjusted gross and operating margin profile and our adjusted earnings per share.

Turning to a more detailed review of our fourth quarter results.

And I just mentioned quarter four revenue grew two 3% on a constant currency basis, and four 4% on and as reported basis.

The increase in revenue was driven by our vascular access portfolio.

Which saw some tail winds in terms of COVID-19 related purchasing and solid mid single digit growth of interventional urology and our other segment.

From a margin perspective, we had generated adjusted gross and operating margins up 58% and 26, 6% respectively.

This translated into year over year declines of 120 basis points at the gross margin line and 50 basis points at the operating margin line.

However from a sequential standpoint. This represented an improvement of AZ, and 150 basis points, respectively compared to quarter three levels.

On the bottom line adjusted earnings per share was $3 and 25.

Overall, our financial performance and the quarter demonstrates sustained resilience of our diversified global product portfolio and it gives us confidence and our ability to achieve our long term financial objectives. Once we get past COVID-19.

Let's now turn to a discussion of our quarterly revenue trends, which will be on a constant currency basis.

The Americas delivered revenues up $419 $5 million and the fourth quarter, which represents an increase of 5% over the prior year period.

Growth within the Americas was driven by vascular access and respiratory products, which both saw elevated demand driven by COVID-19.

In addition, interventional urology was a strong contributor as euro lift continues to be our fastest recovering procedure.

However, there were offset with declines in other product categories. We estimate that the Americas would have grown approximately 12% excluding the impact that COVID-19 had on the region.

EMEA reported revenues of $161 $4 million and the fourth quarter representing growth of four 1%.

During the quarter EMEA benefited from a one time order of Truckee ostomy products and from the extra selling days, the combination of which more than offset our estimated 1% COVID-19 headwind.

Turning to Asia.

Revenues totaled $78 $6 million and the fourth quarter, which represents a decline of seven 2%. However.

However, we estimate that we would have had positive constant currency revenue growth in the mid single digits, if not for the impact of COVID-19.

Additionally.

During the fourth quarter.

We finished transitioning a distributor in Japan.

And normalize it normalizing for both Covid and the distributor change growth and the region would have been in the mid to high single digit range.

And lastly, our OEM business reported revenues up $51 $7 million and the fourth quarter, which was down six 9% on a constant currency basis.

As we anticipated during the fourth quarter, our OEM business saw a lagged impact related to COVID-19.

Relative to our other businesses.

Investors familiar with teleflex, whether it be aware that our OEM business supplies device companies with complex catheters and surgical sutures.

And the quarter four impact reflects reduced orders from these customers, whose businesses tied to non emergent procedures. Excluding the impact COVID-19 had the business grew roughly 31%, which includes a benefit of approximately 13% from the acquisition of HBC.

As it relates to HBC I am pleased to report that we remain on track with our integration efforts.

Let's now move to a discussion of our revenues by global product category.

Starting with vascular access.

Fourth quarter revenue increased 16% to $182 $5 million.

We estimate that COVID-19 positively impacted the growth rates of our basket of products during the fourth quarter by approximately 5%.

Key drivers of revenue growth included picks, which increased approximately 20% cvc's, which increased approximately 16% and EZ Io, which grew approximately 14%.

Moving to intervention and access.

Fourth quarter revenue was $106 $7 million are down six 9% as compared to the prior year period.

The decrease was largely due to the delay and the recovery of certain non emergent procedures because of COVID-19, along with the negative impacts stemming from a catheter recall and distributor.

Conversion in Japan.

Both of which began last quarter, we estimate that the recall and distributor issue impacted our business negatively by approximately $3 million.

We expect the impact on the recall to continue to linger for the next few quarters as we do not expect to be back on the market with this product until September of this year.

While the distributor inventory headwinds should reverse and be a modest tailwind for us in 2021.

When normalizing for the impact that Covid had along with the aforementioned headwinds we estimate that underlying growth was in the high single digits consistent with our long term growth outlook for the segment.

In addition, we are pleased that manta grew 33% globally in quarter four.

Now turning to anesthesia.

Revenue was $86 $1 million, which is lower than the prior year period by two 1%.

The revenue decline was the result of lower sales of laryngeal masks and endotracheal tube products.

We estimate that Covid.

Had an approximate 1% negative impact and the quarter, implying flattish performance on an underlying basis.

Since we closed the Zee medical acquisition, just days before year and its impact was immaterial on quarter four results.

Shifting to surgical revenues declined by five 7% to $92 $3 million driven by lower sales of our ligation portfolio.

We estimate a 9% headwind from Covid during quarter, four indicating recovery as compared to the estimated 13% COVID-19 headwind in quarter three.

Moving to intervention urology quarter, four revenue increased by five 3% to $93 9 million, which represents a new high watermark in terms of revenue dollars in any given quarter on a year over year basis, the business faced a difficult gross.

Comparison, but sequentially it grew by 15% versus quarter three.

We estimate an approximate 28% COVID-19 related headwind during quarter four.

Notwithstanding the significant headwind on our growth in quarter. Four we are pleased with the path to recovery for this business unit and are also happy with the impact of the National DTC campaign, which is exceeding our expectations.

Additionally, we are encouraged that we trained approximately 130, new urologists and quarter four moving to a cadence that is consistent with our expectations prior to COVID-19 and a positive leading indicator for future growth.

And finally, our other category, which consists of our respiratory and urology care products grew six 1% totaling $98 $1 million.

We estimate the growth during the quarter was partly due to increased demand for certain humidity patient and breathing products, resulting from COVID-19, mainly in the Americas.

That completes my comments on quarter four revenue performance turning to some recent clinical and commercial updates.

Okay.

Starting with Europe.

The response to our National DTC campaign is exceeding our expectations.

And the strategic role of DTC is important as about half of the 12 million men being treated for BPH and lead prescription medications are their only solution.

Overall, we view the pilot National DTC as a successful campaign key statistics include a doubling of brand awareness among men, aged 45 or higher post campaign versus pre campaign levels.

Approximately 150% increase and visits to your lift dot com during the campaign and direct response numbers that exceeded our internal projections by a wide margin.

Lastly, we note that Google search trends demonstrate a significant and sustained increase in response to the campaign.

As such we expect to continue the national DTC effort in 2021 and beyond.

Turning to your lift too.

We have completed the market acceptance test and received positive feedback across more than 100 procedures completed by 20 urologists, we have begun a photo controlled launch.

The launches controls due to restrictive access.

Cause by COVID-19, and this will ensure we don't disrupt growth recovery with a more fulsome rollout beginning in the second half of 2021.

We remain confident that conversion to the UL two will occur over time, and we continue to expect to generate significant margin expansion as the revenue base is fully converted.

Regarding Japan, we remain on track for reimbursement decision in 2021 and view the approximate 2 billion addressable market as an incremental growth driver that will be a positive catalyst for the foreseeable future overall.

Overall between nationwide DTC, Japan rollout and the launch of UL. Two we have multiple drivers to build momentum as we seek to further expand our leadership position and BPH.

Turning to the next slide on key clinical updates.

Recently, a comparative analysis of sexual function outcomes.

Your lift studies and the medical therapy of prosthetic symptoms trial was published and the peer reviewed journal European Urology focus.

The comparison reveals that euro lift a superior to BPH medical therapy and <unk>.

Preserving erectile on and ejaculatory function and sexual satisfaction and <unk>.

Fortunately this study challenges the idea that medical therapy is the most conservative treatment option for BPH.

Overtime, we believe that more clinical research like this publication.

If you consider your lift as a first line therapy for treating BPH.

Turning to and updates on interventional access.

And.

Regarding the CTO PCI study that we mentioned on our Q2 earnings call I am pleased to announced that we have completed enrollment for this study day.

This is a prospective single arm.

Study of 150 patients across 13 sites to evaluate the performance of the entire range of teleflex coronary guidewire and specialty catheters in chronic total occlusion percutaneous coronary intervention procedures, which is the most demanding PCI environment.

Once the study results are finalized we anticipate updated labeling for our guide wire and specialty catheter products, which can address and estimated 100000 CTO PCI procedures.

Overall, we continue to invest and clinical and commercial and catalysts that will help to sustain our upper single digit revenue growth aspirations and a normalized environment.

Lastly, turning to easy price.

I am happy to update the investment community that we successfully submitted our BLA to the FDA and late January.

We recently performed a market assessment updates and still see a $100 million initial market opportunity for easy plants.

We are increasingly confident and our ability to address this commercial opportunity with revenue likely ramping in early 2022.

In addition, we believe there are potential revenue synergy opportunities with Zee medical to leverage their sales reps as well as our channel strength across the healthcare and government call points, which could add to our baseline expectations.

Which brings me to and update on our latest acquisition.

On December 28, we completed the acquisition of Zee medical and industry, leading manufacturer of hemostatic products that is a classic teleflex deal and a great strategic fit.

Investors familiar with Teleflex would be aware that we aim to invest and innovative products and technologies that can meaningfully enhance clinical efficacy patient safety and comfort reduce complications and lower the overall cost of care.

And given their differentiated products on attractive end markets, we view the Zee medical acquisition like that Avaya to care from a few years ago.

Since we acquired by the care and 2013, we have more than doubled the sales, which are still growing and the healthy double digit range. One difference is that zee medical is growing into a 600 million dollar addressable market, while the weighted cares the addressable market was closer to $250 million.

Regarding our long range financial targets Zee medical on a reinforces our ability to get to those goals and we remain committed to delivering constant currency revenue growth of at least 6% to 7% on an annual basis, and reaching 60% to 61% and 30% to 31% adjusted gross and operating.

Margins once we return to a more normalized environment.

We plan to hold an analyst day event in the fall of this year at.

At which time, we intend to provide updated long term financial goals and timetables. This completes my prepared remarks, now and I would like to turn the call over to Tom for a more detailed review of our fourth quarter financial results Tom.

Thanks, Liam and good morning, everyone.

Given the previous discussion of the company's revenue performance I'll begin at the gross profit line.

For the quarter adjusted gross margin was 58% a.

A decrease of 120 basis points versus the prior year period.

The decrease in gross margin was primarily due to COVID-19 related impacts, including unfavorable product mix and higher manufacturing costs.

Along with a modest foreign exchange headwind.

In total we estimate that COVID-19 negatively impacted our adjusted gross profit by approximately $44 million in the quarter.

We continue to tightly manage discretionary spending partially offset the reduced revenue and gross profit resulting from COVID-19.

As a result of the efforts we estimate that operating expenses.

Were reduced and the fourth quarter by approximately $13 million.

For full year 2020, we managed opex lower by an estimated $78 million.

Fourth quarter operating margin was 26, 6%.

We're down 50 basis points year over year.

Continuing down the income statement.

Net interest expense totaled $18 5 million, which is an increase of 10% year over year and reflects higher average debt balances versus the prior year period due to the acquisitions of HBC and key medica.

Moving to taxes for the fourth quarter of 2020, our adjusted tax rate was 10, 1% as compared to seven 7% and the prior year period.

At the bottom line fourth quarter adjusted earnings per share declined modestly to $3 25.

From $3 28, a year ago.

Included in this result is and an estimated adverse impact from Covid of approximately 55.

And a foreign exchange tailwind of approximately <unk> <unk>.

Turning to select balance sheet and cash flow highlights and.

And 2020 cash flow from operations was flat as compared to 2019 totaling $437 $1 million.

We are pleased with this outcome given COVID-19 headwinds and increased contingent consideration payments that flowed through cash flow from operations and 2020 as compared to 2019.

Overall as we exited 2020 the balance sheet remains in good shape at.

And at year, and our cash balance was $375 9 million as compared to $301 1 million as of December 2019.

Over the course of the year, we deployed more than $750 million for external business development opportunities. We will continue to balance our investments across both organic and inorganic initiatives to fuel our growth and drive margin expansion.

And with M&A is our primary focus for capital deployment.

Inclusive of Zee medical financing, we net leverage ended 2020.

And at 298 times, which remains well below our four five times covenant.

Lastly, we have no near term debt maturities of material size.

In summary, despite facing a challenging operating environment during 2020.

The organization and adapted quickly and executed well.

We remain optimistic towards the future and expect to recovery beginning in the second half of 2021.

As such we are reinstating financial guidance for 2021.

To begin and I'll provide a framework of key assumptions underlying our financial guidance.

Our outlook contemplates COVID-19 disruption continuing through much of the first half of the year.

And the second half of the year much closer to a normal operating environment.

Our baseline assumption assumes that health care systems, and can manage through incremental COVID-19 surges, while applying past learnings to avoid widespread procedure shutdowns.

It also excludes any material regulatory healthcare or tax reforms as well as any future M&A.

Lastly from a selling day perspective, you'll have two fewer selling days and the first quarter as compared to the year ago period.

We will have one additional day and the fourth quarter as compared to the year ago period.

And there will be no differences and the number of days during the second and third quarters.

Revenue guidance and 2021, we project constant currency revenue growth between 8% and nine 5% as compared to 2020.

We expect our interventional access surgical and vascular access product offerings to be key contributors to our constant currency revenue growth during 2021.

We also expect our interventional urology business to increase at least 30% over 2020 levels.

Additionally, Z medica is expected to contribute $60 million to $70 million of revenue or approximately two five points of growth.

Turning to currency, we expect foreign currency exchange rates will be a tailwind to revenue growth of approximately 2%.

As a result, we expect our as reported revenue to increase between 10% and 11, 5% over 2020.

And this would equate to one dollar range of between $2.791 billion and $2 billion $829 million.

Turning next to gross margin.

During 2021, we anticipate that adjusted gross margin will increase between 130 and 230 basis points.

To a range of between 58 and 59%.

We expect gross margin expansion will be driven primarily by a favorable mix of high margin products, primarily interventional urology as well as the acquisition of Zee medical and which will add approximately 50 basis points to gross margin.

Moving to adjusted operating margin during.

During 2021, we anticipate that adjusted operating margin will increase between 110, and 210 basis points to a range of between 26 and 27%.

The increase and adjusted operating margin will be sourced from the gross margin expansion.

Actually offset by normalization of certain 2020, COVID-19 related spending reductions which were temporary in nature.

As well as further strategic investments and to your lift and Manto.

Additionally, the acquisition of Zee medical and is expected to provide a modest tailwind to year over year operating margin expansion.

Given the relatively higher opex cost structure of the medica versus teleflex operating margin accretion from <unk> medical up will be less and a 50 basis points of gross margin accretion.

That takes me to our adjusted earnings per share outlook for 2021.

And this slide serves as a bridge from our full year 2020, adjusted EPS result to our full year 2021, adjusted EPS outlook.

Beginning with 2020, adjusted EPS of $10 and 67.

From an operating standpoint in 2021, we project additional earnings between $1 58, and $1 66 per share or an increase of approximately 15%.

Our 2021 EPS guidance also assumes the following.

Foreign exchange as planned and recent spot rates for key currencies, including a full year euro to dollar exchange rate of $1 21.

For 2021, and foreign exchange is expected to provide a tailwind of approximately 35.

We now project Zee medical to contribute between 21 and 26 of adjusted earnings per share and 2021 and this is an increase from our original expectation, which call for contribution of between 7% and 15.

The increase and the Z medica accretion is due to the change in our planned approach for financing the acquisition, which we now believe can be done through a combination of borrowings under our revolver and free cash flow.

Versus a previous expectation for a bond offering.

Turning to interest.

In 2021, we expect interest expense to range between 63 and $65 million.

The year over year reduction and interest expense is expected to contribute between 17 and 19 of earnings accretion. If you would exclude the incremental financing costs versus Connecticut.

Moving to taxes.

During 2021, we project that our adjusted tax rate will be and the range of 13, five and 14%.

And will result in adjusted earnings per share headwind of between 33% and 38.

The projected year over year increase and adjusted tax rate as a result of a greater expected mix of U S taxable income.

Principally resulting from yearly growth and certain 2020 tax benefits that we do not expect to reoccur in 2021.

Additionally, our assumption is that 2021 windfall benefit from stock based compensation is at a reduced level versus the typically high level realized in 2020.

We estimate that weighted average shares will increase to $47 7 million for full year 2021.

Which is dilutive by approximately 10.

Despite several headwinds our adjusted earnings per share outlook of $12 50.

To $12 70, as robust representing growth of between 17, 2% and 19% versus 2020.

Given the expectation of continued Covid COVID-19 impact into 2021.

And I will highlight some considerations regarding quarterly expectations.

As I've mentioned previously our outlook is predicated on the assumption that Covid will continue to cause disruption during the first half of the year with a particular negative impact during the first quarter.

Additionally, the first quarter of 2021 has two fewer.

Fewer selling days as compared to 2020.

As a result at the mid point of our guidance ranges, we expect to realize approximately 22% of full year as reported revenue and approximately 19% of our full year adjusted earnings per share during the first quarter of 2021.

And that concludes my prepared remarks, I would now like to turn the call back to Liam for closing commentary.

Excluding the impact of Covid, and we see our underlying business performance is encouraging.

And while the next several quarters deliver elements of uncertainty, we remain confident and our ability to execute and 2021 and are up.

Okay.

And we will continue to focus on serving our hospital customers and working with our key stakeholders. We are excited about the prospects for our business. We have several revenue drivers, including your lift Manta Zee medical.

<unk> five day care easy Plaza, and <unk> to name, but a few.

We will manage the business prudently, while staying focused to capitalize on the long term potential of our global product portfolio and closing I want to thank our 14000 employees around the world, who continue to manufacture and distribute and support products.

That are required and the fight of COVID-19, and who came together exemplifying our culture and core values by staying true to our purpose to improve the health and quality of People's lives as.

As an organization, we remain well positioned to create value for all our stakeholders that concludes my prepared remarks, now I would like to turn the call back to the operator for Q&A.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press, the pound or hash key and please standby, while we compile the Q&A roster and please remember to limit to one question and one follow up question.

If you do have more questions. Please press star one again to requeue.

Your first question comes from David Lewis with Morgan Stanley.

Great. Good morning, Thanks for taking the question just one on guidance and then a follow up for Liam on neurology. So Tom just two little small things on guidance here and topline obviously kind of a.

A little lower on the street, but your bracketing the street and the Bottomline I assuming that reflects.

FX and and see medica, but can you just sort of bridges and they're a little bit because it certainly reflects some opportunity on recovery and then what are you assuming in terms of recovery here as we head into March and now that we're at the end of February and then on a quick one for Liam.

Sure. So as we built out our plan for 2021 and our assumption is that.

And we see.

<unk> levels in the marketplace and the first and second quarter somewhat similar to what we saw in the fourth quarter and then we expect to follow that.

With a recovery beginning in the third quarter net back to what we would consider more normalized.

Procedure levels and revenue growth rates.

And then maybe just help me.

On the first part of the question again.

Oh, sorry time, just youre kind of guiding below the street and the top and inline with street and the bottom and I'm, assuming that's more FX and the C medica financing, but obviously it reflects a lot of room on earnings I. Just wanted to see if you could bridge us there a little bit and make sure thats accurate.

Well I think that is the way to look at it debt as we look at the guidance. It does incorporate FX Z medica into our guidance as well as some of the other factors that we've talked about.

And I think David if I could add one comment on the.

Top line guidance, we took a fairly prudent approach, we believe to our guidance.

September now seems like a long time ago, but when we identify the potential risk the increase and Covid cases.

And that had an impact on quarter, four and and hindsight that was the correct call now we were a little bit on and on an island back then.

But most of the market has come come come around and similarly, with the uncertainties still remaining.

We have been thoughtful as we look at our 2021 guidance now some people might say, it's a little bit conservative to expect the recovery and the back half of the year, but I would prefer to be conservative right out of the game and to your point.

If we show it to be overly conservative that should also have an impact not only on revenue, but on earnings per share for sure.

Okay.

Go ahead, Tom because you just think about that.

EPS bridge when we look at the.

And the components of our growth the growth is really coming from the strength of the operating performance. If you kind of bundle up the change and interest taxes shares and foreign exchange income pretty close to a to a wash and then obviously you have a 25 and pick up from the Medicare. So really as you think about what's driving that is the underlying performance.

The business with kind of and the nonoperating items being.

And being close to Washington in the aggregate.

Okay Super helpful. And then Liam just coming back here to <unk>.

Serology and Neo track here the Covid adjusted number for the third quarter something around sort of 30%, which is obviously a little lower and you saw on the second and third quarter and I. Appreciate there's a lot of noise and these numbers with with Covid, but and I think about sort of that 30% ish number for the fourth quarter that I also think about adding benefited DTC offsets by resurgence.

How should I think about that 30% adjusted number relative to the sort of 40% to 45% numbers. We saw on the second and third quarter, just help us understand underlying momentum and how you see that business into into 'twenty. One. Thanks. So much for your math is good.

The impact of Covid, it grew by 33% and.

We were really pleased with the performance of your lift you got to put it in the context of what happened in the fourth quarter. David We saw new variance of Covid. We saw Covid cases, rising we saw procedures getting cancelled and quite frankly, we were really pleased that we actually exceeded modestly are in.

Turn on expectations for the product.

And I think it had a really tough comp two versus the prior year. If you remember last year, we grew quite aggressively and the fourth quarter I think it was up 52%.

In Q4, so coming up against a tough comp I think that was also a.

A factor.

And my own view on this is that with the rising cases I would have expected your lift to Miss Orange.

I believe that it didn't do so because of the offset of the DTC.

<unk> supplemented that so I think we're in a pretty good shape with your lift in regards to the recovery and we feel really confident and where we're at with it.

Great. Thanks, so much.

Excuse me.

Your next question.

Is from Larry <unk> with Raymond James.

Thanks, Good morning, everyone.

Good morning Liam.

So I guess just coming back to your lift and.

And I know you guys talked a little bit about that.

Philosophy on the on the 'twenty, One guide overall, but maybe maybe again talk about how you're approaching the guide for euro lift in 'twenty, one that 30% plus how you kind of thinking about.

And the cadence of that and.

And what's assumed in that for our revenues out of Japan, and then add one other one.

Okay. So I'll start with the revenues on the Japan, Larry the revenues out of Japan are minimal.

And our guide for your lift we do still anticipates that we will get a reimbursement decision.

As we head into Q2 Q3.

And therefore be generating revenues in Japan, but it's fairly minimal within our within our current guide.

But what we would expect to see Larry and as you heard from Tom's prepared remarks.

And with the cadence of revenue in Q1.

That would lead you to the overall company revenue being debt minus one minus two ish percent in Q1, because we've seen a rising number of cases after the holidays in January that continued into February and and euro lift would be in the similar buckets. So the growth that we had in Q4 it should.

It should be a little bit less in Q1, then you should see a continued recovery as we go into Q2 and.

And Q3 and Q4 thereafter.

And if product does have and easier comp in Q2, but every med tech companies and easier comp in Q2. So I think the rubber will really hit the road if I can use that exploration when we get into Q3 and Q4 and we begin to ramp back up Covid cases should be subdued the vaccine should be rolled out at that stage.

Page and we should at that stage then.

Begin to ramp back up and I think given that the product was flat year over year pretty much in 2020 to get in excess of that 30% growth back in it that would also indicate that it's 30% growth on 2019 as well Larry.

In excess of 30% growth versus 2019.

Okay. Thank you that's very helpful. And then just the other quick question here is just on on <unk>.

You reiterated that $100 million plus market and it sounds like you went back and took another look at that opportunity and still coming out and that range.

And I suspect that and correct me, if I'm wrong that you're probably thinking about this as a late.

'twenty, one FDA clearance and how do you see that that revenue is starting to <unk>.

Impact 2022, how does that develop and.

Should we be thinking about military orders being potentially lumpy and use and you develop the civilian market at the same time.

The beauty about doing a BLA submission Larry is that you get access to both civilian and military market and I will start with the military.

In 2021 for sure because.

As you know they helped us develop the product enormous BLA submission is nine months approximately we're on a fast track and now the FDA and never tell you when that fast track and.

And again in the area of Prudence, we have incredibly modest revenue and in the fourth quarter of 2020 of this year for this product and we do expect it to ramp in 2022.

No to answer your question on the cadence, it's $100 million Mark at the military is 25. So in 2022 will be focused on that military market and the <unk>.

And again I always caution investors don't expect the military to place a $10 million order right out of the gate and it'll be significantly significantly less than that but as we develop the American and as they roll it out it through special ops through the seals into the general military and then we can pivot to the civilian market and actually.

The biggest part of the civilian market Larry as air ambulances.

Cause of the requirements for space and the adaptability of easy Plaza to that environment and that's also something that was quite encouraging and we looked at this market that it's really two big segments and then the rest are smaller segments. So it's easier for us to focus.

And so that's how we see and ramping as we go through 'twenty, one and into 'twenty two.

Okay terrific. Thanks, guys. Appreciate it thanks guys.

Your next question comes from Sheldon <unk> with Wells Fargo.

Great. Thank you so much for taking the question one on guidance and one on Linda.

Respect to guidance can you can you let us know what you are assuming for backlog and that guidance by our math it could be about 9% of sales and.

I'm sure some of it.

Flow into 2022.

And then on Matt could you comment on the lawsuit that was filed by central medical.

Moving to the Miss sales.

I'll start and payment by Teleflex following the module anything you can share with respect to your positioning the size of the milestone payment.

And next steps towards a resolution. Thank you for taking the questions no absolutely I'll start with the guidance question.

Our total revenue guidance of 10 to 11, 5% does have assumed and at a COVID-19 recovery compared to prior year.

But not not a backlog or a bolus of procedures coming back other than that and the back half of the year, it's really difficult for us to estimate what that backlog would look like sugar and and also a difficult for us to assess whether hospitals will have capacity to put that backlog through.

As we begin to recover my view hasn't really changed on the geography geographically recovery I still think it's going to be led by the Americas and Asia and I think that Europe is definitely going to be the laggard, It's a socialist health care system and the way they are rolling out the vaccine right now does not appear to be in.

And as aggressive as we see and other parts of the world.

Regarding the essential medical a lawsuit that you mentioned.

Yet we are aware of it clearly.

And we are confident that we have acted appropriately and believe that the Suez is without merit to be honest, we intend to vigorously defend ourselves and this matter and should go and youre familiar.

And with demand and product and Youre familiar that we've invested heavily behind manta with block, both clinical evidence and sales and marketing resources and the product is a key revenue driver for teleflex and performed well in the midst of the pandemic growing over 30% globally in 2020 and.

Growing by almost 90% and the key North American markets and our plan. This year is to continue to convert over 8% approximately of the large bore market this year.

And with regard to the question on the milestones I mean, there are there are contingent payment milestones contemplated in our financials.

And the total milestones as the matter of this dispute, but as I said, we will fight and fairly vigorously.

Susan.

And thank you so much on Melissa.

Thank you. Your next question comes from Matt Taylor with UBS.

Hey, guys. Thanks for taking the question. So the first one I wanted to ask was.

We're coming up here on the launch of your lift and Japan.

You've given some parameters about.

And the Tam at a high level and number of urologists things like that I was hoping you could be a little bit more granular about the things that you can control and the rollout like the pace of training.

Given we're still and a little bit of a COVID-19 environment, how quickly should we see that uptake given the constraints that you have and the debt.

Yeah.

So.

What we have done math is that we have already preceded the mark of and market development specialists and Japan, and we continue to engage we've identified the top 20 urologists.

Pre COVID-19, we actually had a U S physician that spoke Japanese and the country doing some peer to peer training. We also ran a virtual BPH summit and.

A number of these 20 Japanese urologists.

We will.

And I always I cannot reagan's triple down on economics, but this trickles down and urologists.

In Japan, where we trained at the top of the tree and these 20 are key that we've identified in order then to roll it out to the to the other urology practices and we have to do a mandate as collection of data as part of our reimbursement. So we will be doing that in the fourth quarter.

And to gather that information and we are.

And really enthusiastic and we have the other thing that is within our control Matt is to add additional sales reps and we think the timing is going to work out really really well for us because Japan is another market, where they are managing the buyers quite well now and they are starting to rollout. The vaccine. So we think as we get into it.

Q2, Q3, Q4, when we will be requiring access to train and we think the timing is going to work out pretty well for us and give us pretty broad access to the individuals and we bought a tray and so we feel pretty good about the groundwork we've done to date and we feel pretty good about the identification of the urologists that we need to train and.

And there is a heightened level of knowledge about the your lift because a lot of these Japanese urologists are very linked to the U S. Urology Association. So there is a heightened awareness of the product availability and a desire to gain access to it and once we get reimbursement I think that's when we will really begin to ramp up our efforts.

And I just have one follow up.

Moving to the next couple of years.

You're going to see a similar pace of training of urologists in Japan.

And the USA a couple of hundred.

Can you talk about those plans and the intermediate term.

And so just remember the retina.

Urologists. So you would you would imagine it's going to be a little bit less so your and also the market is little bit smaller and there are specialties and urology practice and Japan. So if you take the 9000 neurologists you would have to imagine that about 5000, or so are and the specialty we want to so that is.

Less than half of what you have and the U S. So bear that in mind with the cadence but.

And in light of that data, that's what I would expect a similar cadence, but so.

So if we train.

400 to 500 and the U S. You would expect to try and half of that once you ramp up and Japan.

Okay got it very good. Thank you. Thank you. Thank you.

Your next question comes from Richard and later with SBB Leerink.

Hi, This is Dan on.

And for rates.

Just a quick one.

And you guys mentioned for the main part cash for capital deployment would be M&A and just wondering if maybe you could share.

Some color on what kind of areas you're focusing on.

And sorry on <unk>.

We expect any.

Larger deals or the classic tuck on.

So air and first of all as Tom said knees and hips and.

And Heath commentary I'm really we had a brilliant and fourth quarter from the point of view of cash generation and deleveraging. So we're down below three times again on a net leverage basis. The type of assets first of all the strategic element of our M&A strategy, our assets that fit within one of our existing channel the portfolios are.

And in line space I mean, we really like the Cath lab. For example, so if we if we were to move into the neurovascular and peripheral and vascular space and that.

And similar call points that would be something that would be attractive.

Also I'd like to technologies that have IP zee medical that we just closed the IP runs out to 2033, so we'd like to protect the businesses.

We look for assets that have a clinically differentiated product portfolio, we look for assets that create value.

Health care economics.

Our and synergies.

In that respect.

We also look for products that are that are sticky, but we would call sticky and.

That get used over and over and again and again.

The interventional space and the vascular space and the anesthesia and emergency medicine space and the men's health space.

And and in the surgical space. So I think that's the beauty about Teleflex is we are looking in a broad area places and Thats why were and define these assets and also we're very disciplined on our approach and you can expect us to be continued to be disciplined I can tell you our pipeline is pretty full.

In this environment and even in the midst of coal, but it's amazing to me, how we were able to get some work done and we were able to close the Medicare and the midst of Covid and out.

We're down below three and that will be even further reduced as we move through this year. So we have got firepower and we are always looking at and we continue to look right now.

Okay, great. Thanks, and then just another quick one on Manta and you mentioned debt, great elaborate and Ernie per day.

And you just maybe talk about some of that trend.

And you are seeing on that okay with that particular product and.

And then maybe what.

It's kind of expected in 2021.

Yes, so if you look at 2020 and we converted.

And just over 5% of America number contemplate and converting 8% of the market approximately in 2021.

So that's the cadence that we see and that's in the midst of Covid I mean, the trends. We're seeing is it's being adopted pretty heavily and type of our procedures almost 90% of our of our cases today are still done and Thai baht and Thats.

The area, we're focused on it's a 200 $300 million market opportunity.

And we continue to ramp it up and we continue to have sales and <unk>.

<unk> allocated to it and we're all.

And so doing planning to do some clinical work to on the product and there are some enhancements that we also want to do on the product to make it even better than it is today. So all in all we're really encouraged by the progress that we're making and we expect to continue to make progress in this year and into next.

Year, this will be a multi multiyear growth driver for teleflex.

And as we convert that America, we have a long runway ahead of us to convert.

And congrats.

Thanks Darren.

Your next question comes from Anthony Petrone with Jefferies.

Thanks, a couple on on Euro lift and then I'll have one on the medica on euro lift and I'm, just trying to get a sense of the totality of backlog that's building Liam New Covid is still running through so that that's a pressure point and on the demand.

Demand push side, you have DTC and so.

And I'm just wondering if you can quantify the backlog the procedures that are building and.

And then as we look at the past couple of quarters is there anything to note on the competitive side.

Are you seeing anything.

<unk> from some of the other devices out there of note and then I'll have a follow up.

Yes, so first on your backlog question and the fourth quarter and we started at the met and now it's included in our assessment of the Covid impact Anthony just to be clear when we assess the COVID-19 impact and ex Covid. It grew by 33% included in that or procedures above the base rate cash calculation on the year before 2019.

So quarter four cancellations above that base rates. If you were to put a value on it is around 4 million Bucks.

And so that might give you an indication of that that backlog that those canceled procedures should come back at some stage when things free up on those and procedures that were booked the patient was due to have the euro and the procedure done and then either the day before on the day they canceled the procedure.

One would have to assume because of concerns over COVID-19. So that's the best benchmark I can give you.

And in that regard.

Just what was the other part of your question Anthony and I apologize.

And the other part was.

And on competition and anything of note that <unk> seen out there no.

Nothing to report really.

The same competitors are in the marketplace.

We have now crossed the 250000 patient mark that had been treated with the euro and if which is a big milestone for the other big milestone for US was it was an all time high revenue and the fourth quarter, we've never hit that revenue and to hit that in the midst of a rising COVID-19 pandemic situation and got a lot worse to me is very <unk>.

Courage and so nothing to report new on the competitive front Anthony.

And then the follow ups would be one on euro lift again would be can you remind us on medical management. The study reference today how.

And how many patients do you actually think could shift to euro lift and the medical net net are currently medical management today, and then on Zee medical.

And there's three verticals trauma, MFS and interventional and where do you think youll see the most synergies at the revenue line with the existing teleflex infrastructure. Thanks.

So far.

First on your Euro and if the number of men on medical therapy.

Of the total 12 million men and America $1 5 million of them have stopped taking the medical therapy, and that's our target market of $6 billion, but there are another 7 million men and America that are taking the drug therapy. So it's a significantly bigger market and that takes the addressable Tam.

And from $6 billion to $30 billion, if we were able to attract all of those individuals as well so that would give you the size of the scale.

With regard to to your question on the synergies are where we'd be able to leverage zee medical and from a call point for definitely on the military and <unk> call point is and it's a really strong call point for us.

And the Medicare have and exceptionally strong trauma call volume so the synergies between the two companies is excellent and the strength of the day now call point and then just consider that Anthony that we have easy Plaza, we just submitted from a BLA coming down the pike behind that really strong sales channel so thats what citizens with enthusiasm.

And we're quite encouraged with what we can do and that space.

Thanks again.

Sure.

Your next question comes from Matthew O'brien with Piper Sandler.

Hi, good morning, Thanks for taking the questions.

I guess Liam.

And that's going to get most people's attention. This morning is as the revenue guide for 'twenty, one if you're taking out the medica.

And a six 5% to 8%.

Gross on a constant currency basis, and then you've got easy comps and I understand there is still some COVID-19 impact can you break down a little bit what you're expecting for maybe a volume perspective, this year and where that is.

Kind of below trend line as far as what people are expecting out of out of teleflex.

And that's about organic growth rate or are there other areas, where youre trying to be I know youre trying to be conservative, but more conservative than others. It seems like <unk> might be one of those areas.

Just any kind of color you can provide on.

On that.

And kind of organic guidance that you're providing for the full year would.

And what would be helpful.

And Matt.

Thank you very much for the question and.

Really comes down to when do you assume that youre going to see COVID-19 recovery from Covid.

Now we could have been more aggressive and our guidance and assumed that we would begin to see recovery from Covid. In Q2, if we had I don't think it's anything to do with volume versus price versus all the other components, Matt and quite frankly, it's all down to Covid and it's all down to the assumptions that you make on Covid. So if we were to be more aggressive and we would assume going to assume we were going to see on.

Recovery and Q2 as I've heard from some of our peers that they have.

It would be a more robust revenue story and therefore, almost more robust earnings story as I've said the question I think David asked.

We've tried to be a little bit more prudent and perhaps a little bit more conservative we still see its going to be quite choppy as you go through Q1 and Q2.

And and don't forget the Covid cases, and January and early February were much worse and they were.

December and late November and.

And so that's the that's the gating factor Matt is your assumption on when Covid.

And to recover and.

And if you look at it.

And sometimes people want to go back to 2019, and if you look at the back half of 2019 compared to 2021 and we're back in that normal.

Long term guidance range for Teleflex and the back half of 'twenty, one versus <unk> 19, and again, it's all about the assumption if you assume you've on to recover in Q2 and be aggressive your revenue is greater if you assume the back half of the year. Your revenue is going to be a little bit less but you had some conservatism built in and obviously, we will update the investment community and when we get.

Two Q2 Q2 earnings release as to what we've seen in that quarter and if it's better good for investors great for teleflex and so on and so forth.

Got it and then as a follow up and I'm going to go a little off topic I know, there's a lot of neo track and Manta and indeed class questions, but you're spending quite a bit of money on MBR. It looks like about 10 million Bucks this year and I know Youre a U S story right now, but I'm just curious with that spend.

No.

Tom.

Your next question comes from Matthew <unk> with Keybanc.

Great and thank you for taking the questions, Hey, Mark Hey, Hey, Liam just to really on easy Blas and could you could you give some context on the complexity of the BLA for easy plus and and why it took several.

Several years to get through it and kind of what what did you kind of worked through with the FDA that would give you confidence for approval for approval and a reasonable timeframe and then as a follow up to that on SaaS for for Zee medical and easy class would they share the same sales force and and how are you thinking about kind of ramping that sales effort.

Yeah, absolutely so first of all and so the last part of it first.

And they will share the same sales force Mac and we are combining the zee medical and the Teleflex sales force together and.

That gives us an opportunity to have and even.

Stronger sales force and this channel in order to help us accelerate both the Medicare both.

And by the care and easy plasma and it becomes available.

The time that it took for the BLA submission mass was really driven by the fact that this was.

Unchartered waters for both on the FDA and for Teleflex. The FDA had never previously approved biologic of this nature. So it was unchartered territory for them and for US and therefore, it took a significant amount of time for them to get through their assessment as we as we.

Fed them information because to their credit they worked with us they allowed us to submit personal information as part of the BLA submission. So that's what allowed us to get give them some information and get some feedback give them more information and get some feedback and finally, we got the submission done in January and now.

Why I would think that it should take less and the nine months is number one we're on a fast track and number two they've had all the clinical data and giving us feedback on the clinical data and we've already given them.

A significant bolus of test data before we submitted the final BLA submission. So they've had a significant amount of data from us. So therefore that should help and their assessment and they have also been very cooperative in working with us and the military in moving this through the BLA submission so all of those.

Factors would lead me to be quite encouraged by.

A reasonable timeframe less and the nine months to get this approved.

Excellent. Thank you.

Yes, Matt.

Your next question comes from Mike Matson with Needham and company.

Good morning, Thanks for taking my questions I guess.

I have a question on.

Easy plan. So I know, there's a lot of folks on the BLA and the U S opportunity, but is there any international opportunity for this product.

There is Mike now.

And the military to $25 million.

The majority of that is in the U S and just.

But there is a portion overseas and of course, the civilian market is a global number so out of 100 million and is a global number and not just a U S number on.

And again, it's the same criteria overseas, it's the air ambulances and the military but as most people would be aware of and the U S. Military is one of the more active and larger military organizations on the planet and therefore, it commands a significant portion of about 25 million dollar addressable market.

Okay got it and then I wanted to ask about your Pic business. It used to get a lot of attention, but given some on the newer growth drivers has and will be getting as much. So.

Are you still taking share and that market has there been any sort of changes on the competitive dynamics there.

So I'm very pleased to report and I think I mentioned in my opening remarks, but the pick our pic business and the quarter grew almost 20% Mike. So we continue to take share and we continue to be really.

Thoughtful as we grow that business because of our coating technology that allows us to take share from the competitors, there and and a very short period of time of three years, we've moved from being the number three player to being the.

And number two player and we continue to grow aggressively and that space.

Okay. Thanks.

I'm showing no further questions at this time I would now like to turn the conference back to Jake.

And <unk>.

Thank you operator, and thank you to everyone that joined us on the call today.

Concludes and Teleflex incorporated fourth quarter 2020 earnings conference call.

Covenant.

Ladies and gentlemen, this does conclude today's conference call. Thank you for participating you may now disconnect.

Yes.

[music].

John.

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Yes.

[music].

Ladies and gentlemen, thank you for standing by.

And welcome to the Q4, 'twenty and 'twenty Teleflex incorporated earnings Conference call. At this time all participant lines are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone please.

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If you would please limit your questions to one question and one follow up question. If you have more questions. Please press star one again to re queue.

I would now like to hand, the conference over to your speaker today Mr. Jake.

<unk> Treasurer, and Vice President of Investor Relations. Thank you. Please go ahead Sir.

Thank you and good morning, everyone and welcome to the Teleflex incorporated fourth quarter, 'twenty and 'twenty earnings Conference call.

The press release and slides to accompany this call are available on our website at www Dot teleflex.

And as a reminder, this call will be available on our website and a replay.

And the available by dialing 85859.

Zero five ships.

404 factories, Devin Shreveport and.

Zero six.

And 287.

Kevin.

Five.

Participating on today's call are Liam Kelly, Chairman, President and Chief Executive Officer, and Thomas Powell, Executive Vice President and Chief Financial Officer.

Liam and Tom will provide prepared remarks, and then we'll open up the call for Q&A.

Before.

Before we begin I'd like to remind you.

Some of the matters discussed on the conference call will contain forward looking statements regarding future events and outline.

Why.

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.

Additionally, during this conference call and you will hear management make references to the estimated positive or negative impact that COVID-19 had on our operations.

<unk>.

And full year of 2020, you'll also hear management make statements regarding intra quarter business performance during the first quarter of 2021.

Management and to providing this commentary to provide the investment community with additional insights concerning trends and these disclosures may not occur and stuff.

And now I'll turn the call over to Liam.

Thank you Jake and good morning, everyone.

Pleasure to speak with you today.

Before I get into the details of our quarterly performance I'd like to once again offer my sympathies to anyone who has been impacted by COVID-19.

As well as my sincere thanks to all of the health care workers, who continue to put themselves at risk to battle each day.

I'd also like to take a moment to again recognize the teleflex employees around the world.

Now turning to our results.

Considering the volatile environment, we operate in and we are pleased with our fourth quarter performance as our business did better than we expected and trends continued to improve across many of our product categories and geographies.

We saw better than expected sequential improvement from quarter, two two quarters from quarter three to quarter four.

The OSB.

Our interventional urology, interventional access and surgical businesses as well as continued strength within our vascular access and other product categories.

From a regional perspective, we saw strength within the Americas as well as positive growth within EMEA and improving trends in Asia.

Quarter, four revenues totaled $711 2 million, which represents an increase of two 3% as compared to the prior year period on a constant currency basis.

Growth and the quarter was aided by two additional selling days, which we estimate contributed approximately three percentage points, excluding the impact of the additional selling days, we estimate that our constant currency revenues declined approximately 1%.

The days adjusted decline reflect.

Tenuous recovery progression relative to the 4% decline we experienced during the third quarter of the year and the 12% decline we experienced during the second quarter of the year and it was ahead of the expectations. We had at the time of the third quarter earnings call.

During the fourth quarter, we estimate that headwinds associated with COVID-19 caused a net negative impact of approximately $61 million or approximately 9%.

And if we were to normalize for the negative Covid impact we estimate that our underlying business grew by approximately 11% on a constant currency basis or 8% when normalizing for the selling day impact.

In addition to seeing continued sequential improvements in our constant currency revenue performance.

During Q4, we also saw a significant sequential improvement within our adjusted gross and operating margins as compared to the second and third quarters of the year.

This improvement drove adjusted earnings per share, which exceeded our internal expectations.

Lastly, I am happy to announce debt on December 28, we closed the acquisition and a Z Medicare and market leader and Hemostatic products. We are pleased to be able to deploy capital for a differentiated product portfolio that leverages existing teleflex call points and is immediately accretive.

To our revenue growth rates, adjusted gross and operating margin profile and our adjusted earnings per share.

Turning to a more detailed review of our fourth quarter results.

As I just mentioned.

Quarter four revenue grew two 3% on a constant currency basis, and four 4% on and as reported basis.

The increase in revenue was driven by our vascular access portfolio.

Which saw some tail winds in terms of COVID-19 related purchasing and solid mid single digit growth of interventional urology and our other segment.

From a margin perspective, we generated adjusted gross and operating margins of 58% and 26, 6% respectively.

This translated into year over year declines of 120 basis points at the gross margin line and 50 basis points at the operating margin line.

However from a sequential standpoint. This represented an improvement of AZ, and 150 basis points, respectively compared to quarter three levels.

On the bottom line adjusted earnings per share was $3 and 25.

Let's now turn to a discussion of our quarterly revenue trends, which will be on a constant currency basis.

The Americas delivered revenues up $419 $5 million and the fourth quarter, which represents an increase of 5% over the prior year period.

Growth within the Americas was driven by vascular access and respiratory products, which bodes so elevated demand driven by COVID-19.

In addition, interventional urology was a strong contributor as euro lift continues to be our fastest recovering procedure.

However, there were offset with declines in other product categories. We estimate that the Americas would have grown approximately 12% excluding the impact that COVID-19 had on the region.

EMEA reported revenues of 161 $4 million and the fourth quarter representing growth of four 1%.

During the quarter EMEA benefited from a one time order of <unk> products and from the extra selling days, the combination of which more than offset our estimated 1% COVID-19 headwind.

Turning to Asia.

Revenues totaled $78 6 million and the fourth quarter, which represents a decline of seven 2%. However.

However, we estimate that we would have had positive constant currency revenue growth in the mid single digits, if not for the impact of COVID-19.

Additionally.

During the fourth quarter we.

We finished transitioning a distributor in Japan.

When normalized normalizing for both Covid and the distributor change growth and the region would have been in the mid to high single digit range.

And lastly, our OEM business reported revenues of $51 $7 million and the fourth quarter, which was down six 9% on a constant currency basis.

As we anticipated during the fourth quarter, our OEM business, though and aligned impact related to Covid.

Relative to our other businesses.

Investors familiar with teleflex, whether it be aware that our OEM business supplies device companies with complex catheters and surgical sutures.

It relates to HBC I am pleased to report and we remain on track with our integration efforts.

Let's now move to a discussion of our revenues by global product category.

Starting with vascular access.

Fourth quarter revenue increased 16% to $182 5 million.

We estimate that COVID-19 positively impacted the growth rates of our basket of products during the fourth quarter by approximately 5%.

Key drivers of revenue growth included picks, which increased approximately 20% cvc's, which increased approximately 16% and EZ Io, which grew approximately 14%.

Moving to intervention on access for.

Fourth quarter revenue was $106 7 million are down six 9% as compared to the prior year period.

The decrease was largely due to the delay and the recovery of certain non emergent procedures because of COVID-19 and.

Along with the negative impacts stemming from a catheter recall and distributor.

Conversion in Japan, both of which began last quarter, we estimate that the recall and distributor issue impacted our business negatively by approximately $3 million, we expect the impact on the recall to continue to linger for the next few quarters as we do not expect to be back on the market.

And with this product until September of this year while.

While the distributor inventory headwind should reverse and be a modest tailwind for us in 2021.

And when normalizing for the impact that Covid had along with the aforementioned headwinds we estimate that underlying growth was in the high single digits consistent with our long term growth outlook for the segment.

In addition, we are pleased that mantle grew 33% globally in quarter four.

Now turning to anesthesia.

Revenue was $86 $1 million, which is lower than the prior year period by two 1%.

The revenue decline was the result of lower sales of laryngeal masks and endotracheal tube products.

We estimate that Covid.

And approximate 1% negative impact in the quarter, implying flattish performance on an underlying basis.

Since we closed the Zee medical and acquisition just days before year and its impact was immaterial on quarter four results.

Shifting to <unk> scope revenues.

Climbed by five 7% to $92 3 million.

And by lower sales of our legation portfolio.

We estimate a 9% headwind from Covid during quarter, four indicating recovery as compared to the estimated 13% COVID-19 headwind in quarter three.

Moving to intervention urology.

Quarter, four revenue increased by five 3% to $93 9 million, which represents a new high watermark in terms of revenue dollars in any given quarter on.

On a year over year basis, the business faced a difficult growth comparison, while sequentially it grew by 15% versus quarter three.

We estimate an approximate 28% COVID-19 related headwind during quarter four.

Additionally, we are encouraged that we trained approximately 130, new urologists in quarter four moving to a cadence that is consistent with our expectations prior to COVID-19 and a positive leading indicator for future growth.

And finally, our other category, which consists of our respiratory and urology care products grew six 1% totaling $98 $1 million.

We estimate the growth during the quarter was partly due to increased demand for certain <unk> and breathing products, resulting from COVID-19, mainly in the Americas.

That completes my comments on quarter four revenue performance turning to some recent clinical and commercial updates.

Yes.

Starting with your left.

The response to our National DTC campaign is exceeding our expectations.

The strategic role of DTC is important as about half of the 12 million men being treated for BPH believe prescription medications are their only solution.

Overall, we view the pilot National DTC as a successful campaign key statistics include a doubling of brand awareness among men, aged 45 or higher post campaign versus pre campaign levels.

Approximately 150% increase and visits to your lift dot com during the campaign and direct response numbers that exceeded our internal projections by a wide margin.

Lastly, we note that Google search trends demonstrate a significant and sustained increase in response to the campaign as such we expect to continue the national DTC effort in 2021 and beyond.

Turning to your lift too.

We have completed the market acceptance test and received positive feedback across more than 100 procedures completed by 2000 urologists.

We have begun a further controlled launch.

The largest controls due to restrictive access.

And by COVID-19, and this will ensure we don't disrupt growth recovery with a more fulsome rollout beginning in the second half of 2021, we.

We remain confident that conversion to the UL two will occur over time, and we continue to expect to generate significant margin expansion as the revenue base is fully converted.

Regarding Japan, we remain on track for a reimbursement decision in 2021 and view the approximate 2 billion addressable market as an incremental gross driver that will be a positive catalyst for the foreseeable future overall.

Overall between nationwide DTC, Japan rollout and the launch of UL. Two we have multiple drivers to build momentum as we seek to further expand our leadership position and BPH.

Turning to the next slide on key clinical updates.

Recently, a comparative analysis of sexual function outcomes.

And your lift studies and the medical therapy of prosthetic symptoms trial was published in the peer reviewed journal European Urology focus.

The comparison reveals that euro lift a superior to BPH medical therapy and.

And preserving erectile emanate, Jacqueline III function and sexual satisfaction.

Importantly, this study challenges the idea that medical therapy is the most conservative treatment option for BPH.

Overtime, we believe that more clinical research like this publication.

If you consider your lift as a first line therapy for treating BPH.

Turning to an update on interventional access.

Yes.

Regarding the CTO PCI study that we mentioned on our Q2 earnings call I am pleased to announced that we have completed enrollment for this study.

This is a prospective single arm study of 150 patients across 13 sites to evaluate the performance of the entire range of teleflex coronary guidewire and specialty catheters in chronic total occlusion percutaneous coronary intervention procedures, which is the most and.

Landing PCI environment.

Once the study results are finalized we anticipate updated labeling for our guide wire and specialty catheter products, which can address and estimated 100000 CTO PCI procedures.

Overall, we continue to invest and clinical and commercial and catalysts that will help to sustain our upper single digit revenue growth aspirations and a normalized environment.

Lastly, turning to easy glass.

I am happy to update the investment community that we successfully submitted our BLA to the FDA and late January.

We recently performed a market assessment update and still see a $100 million initial and market opportunity for easy glass.

We are increasingly confident and our ability to address this commercial opportunity with revenue likely ramping in early 2022.

Which brings me to and update on our latest acquisition.

On December 28, we completed the acquisition of Zee medical and industry, leading manufacturer of Hemant static products that is a classic teleflex deal and a great strategic phase.

And given their differentiated products on attractive end markets, we view the Zee medical acquisition like that a bite of care from a few years ago.

Since we acquired by the care and 2013, we have more than doubled the sales, which are still growing and the healthy double digit range. One difference is that the Medicaid is growing into a 600 million dollar addressable America, while divided cares the addressable market was closer to $250 million.

Margins once we return to a more normalized environment.

We plan to hold an analyst day event in the fall of this year at.

And at which time, we intend to provide updated long term financial goals and timetables. This completes my prepared remarks, now I would like to turn the call over to Tom for a more detailed review of our fourth quarter financial results Tom.

Thanks, Liam and good morning, everyone.

Given the previous discussion of the company's revenue performance I'll begin at the gross profit line.

For the quarter adjusted gross margin was 58% a decrease of 120 basis points versus the prior year period.

The decrease in gross margin was primarily due to COVID-19 related impacts, including unfavorable product mix and higher manufacturing costs along.

Along with a modest foreign exchange headwind.

In total we estimate that COVID-19 negatively impacted our adjusted gross profit by approximately $44 million in the quarter.

We continue to tightly manage discretionary spending partially offset the reduced revenue and gross profit resulting from COVID-19.

As a result of the efforts we estimate that operating expenses.

Were reduced and the fourth quarter by approximately $13 million.

For full year 2020, we managed opex lower by an estimated $78 million.

Fourth quarter operating margin was 26, 6%.

We're down 50 basis points year over year.

Continuing down the income statement.

Moving to taxes for the fourth quarter of 2020, our adjusted tax rate was 10, 1% as compared to seven 7% and the prior year period.

At the bottom line fourth quarter adjusted earnings per share declined modestly to $3 25.

And from $3 28, a year ago.

Included in this result is and an estimated adverse impact from Covid of approximately 55.

And a foreign exchange tailwind of approximately five.

Turning to select balance sheet and cash flow highlights and.

And 2020 cash flow from operations was flat as compared to 2019 totaling $437 1 million.

We are pleased with this outcome given COVID-19 headwinds and increased contingent consideration payments that flowed through cash flow from operations and 2020 as compared to 2019.

Overall as we exited 2020 the balance sheet remains in good shape at.

And at year, and our cash balance was $375 9 million as compared to $301 1 million as of December 2019.

Over the course of the year, we deployed more than $750 million for external business development opportunities, while continuing to balance our investments across both organic and inorganic initiatives to fuel our growth and drive margin expansion.

And with M&A is our primary focus for capital deployment.

Inclusive of Zee medical and financing, we net leverage ended 2020.

And at 298 times, which remains well below our four five times covenant.

Lastly, we have no near term debt maturities of material size.

In summary, despite facing a challenging operating environment during 2020.

The organization and adapted quickly and executed well.

And we remain optimistic towards the future and expect to recovery beginning in the second half of 2021.

As such we are reinstating financial guidance for 2021.

To begin and I'll provide a framework of key assumptions underlying our financial guidance.

Our outlook contemplates COVID-19 disruption continuing through much of the first half of the year with the second half of the year much closer to a normal operating environment.

Our baseline assumption assumes that healthcare systems and can manage through incremental COVID-19 surges, while applying past learnings to avoid widespread procedure shutdowns.

It also excludes any material regulatory healthcare or tax reforms as well as any future M&A.

And lastly from a selling day perspective, you'll have two fewer selling days and the first quarter as compared to the year ago period.

We will have one additional day and the fourth quarter as compared to the year ago period.

And there'll be no differences and the number of days during the second and third quarters.

Revenue guidance and 2021, we project constant currency revenue growth between 8% and nine 5% as compared to 2020.

We expect our interventional access surgical and vascular access product offerings to be key contributors to our constant currency revenue growth during 2021.

We also expect our interventional urology business to increase at least 30% over 2020 levels.

Additionally, <unk> is expected to contribute $60 million to $70 million of revenue or approximately two five points of growth.

Turning to currency, we expect foreign currency exchange rates will be a tailwind to revenue growth of approximately 2%.

As a result, we expect our as reported revenue to increase between 10% and 11, 5% over 2020.

And this would equate to a $1 range of between $2.791 billion and $2.829 billion.

Turning next to gross margin.

During 2021, we anticipate that adjusted gross margin will increase between 130 and 230 basis points.

To a range of between 58 and 59%.

Okay.

Yes.

<unk>.

We expect gross margin expansion will be driven primarily by a favorable mix of high margin products.

Primarily interventional urology as well as the acquisition of genetic zone, which will add approximately 50 basis points to gross margin.

Moving to adjusted operating margin.

During 2021, we anticipate that adjusted operating margin will increase between 110, and 210 basis points to a range of between 26 and 27%.

The increase and adjusted operating margin will be sourced from the gross margin expansion.

We offset by normalization of certain 2020, COVID-19 related spending reductions which were temporary in nature.

As well as further strategic investments into year lift and Manto.

Additionally, the acquisition of Zee medical and is expected to provide a modest tailwind to year over year operating margin expansion.

Given the relatively higher opex cost structure of the medica versus teleflex operating margin accretion from <unk> will be less and a 50 basis points of gross margin accretion.

That takes me to our adjusted earnings per share outlook for 2021.

Yeah.

And this slide serves as a bridge from our full year 2020, adjusted EPS result to our full year 2021, adjusted EPS outlook.

Beginning with 2020, adjusted EPS of $10 and 67.

From an operating standpoint in 2021, we project additional earnings between $1 58, and $1 66 per share or an increase of approximately 15%.

Our 2021 EPS guidance also assumes the following.

Foreign exchange is planned at recent spot rates for key currencies, including a full year euro to dollar exchange rate.

On a $1 21.

For 2021, and foreign exchange is expected to provide a tailwind of approximately 35.

We now project Z Medicare to contribute between 21 and 26% of adjusted earnings per share and 2021 and this is an increase from our original expectation, which calls for contribution of between seven and 15.

Versus our previous expectation for a bond offering.

Turning to interest.

In 2021, we expect interest expense to range between 63 and $65 million.

The year over year reduction and interest expense is expected to contribute between 17 and 19 of earnings accretion. If you would exclude the incremental financing costs versus America.

Moving to taxes.

During 2021, we project that our adjusted tax rate will be and a range of 13, five and 14% and.

And will result in adjusted earnings per share headwind of between 33% and 38.

And projected year over year increase and the adjusted tax rate as a result of a greater expected mix of U S taxable income.

Principally resulting from the airlift growth and certain 2020 tax benefits that we do not expect to reoccur in 2021.

Additionally, our assumption is that 2021 windfall benefit from stock based compensation is at a reduced level versus the typically high level realized in 2020.

We estimate that weighted average shares will increase to $47 7 million for full year 2021.

Which is dilutive by approximately 10.

Despite several headwinds our adjusted earnings per share outlook of $12 50.

To $12 70, as robust representing growth of between 17, 2% and 19% versus 2020.

Yeah.

Given the expectation of continued Covid COVID-19 impact into 2021.

I'll highlight some considerations regarding quarterly expectations.

Additionally, the first quarter of 2021 has two fewer.

Fewer selling days as compared to 2020.

As a result at the midpoint of our guidance ranges, we expect to realize approximately 22% of full year as reported revenue and approximately 19% of our full year adjusted earnings per share during the first quarter of 2021.

And that concludes my prepared remarks, I would now like to turn the call back to Liam for closing commentary Liam.

Thanks, Tom and closing we delivered solid fourth quarter results as our diversified portfolio showed continued improvement relative to the second and third quarters of the year on both the top and bottom lines, excluding the impact of Covid and we see our underlying business performance is encouraging on.

And while the next several quarters deliver elements of uncertainty, we remain confident and our ability to execute and 2021 and are up.

Okay.

We will continue to focus on serving our hospital customers and working with our key stakeholders. We are excited about the prospects for our business. We have several revenue drivers, including your lift Manta Zee medical and <unk>.

And finally care easy Plaza and <unk> to name, but a few.

And that are required and the fight of COVID-19, and who came together exemplifying our culture and core values by staying true to our purpose to improve the health and quality of People's lives.

As an organization, we remain well positioned to create value for all our stakeholders that concludes my prepared remarks, now I would like to turn the call back to the operator for Q&A.

If you do have more questions. Please press star one again to re queue.

Your first question comes from David Lewis with Morgan Stanley.

Great. Good morning, Thanks for taking the question just one on guidance and then a follow up for Liam on neurology. So Tom just two little small things on guidance here your topline, obviously, you've kind of been.

And the lower and the stream pitcher Bracketing, the street and the Bottomline I assuming that reflects.

<unk> and and see Medica, but can you just sort of bridge us there a little bit because it certainly reflects some opportunity on on recovery and then what are you assuming in terms of recovery here as we head into March and now that we're at the end of February and then on a quick one for Liam.

And.

Sure. So as we built out our plan for 2021 and our assumption is that.

We see.

<unk> levels in the marketplace and the first and second quarter somewhat similar to what we saw in the fourth quarter and then we expect to follow that.

With a recovery beginning in the third quarter Mac back to what we would consider more normalized.

The senior levels and revenue growth rates.

And then maybe just help me.

On the first part of the question again.

Oh, sorry, Tom just youre kind of guiding below the street and the top and in line on the street and the bottom and I'm, assuming that's more FX and the C met and financing, but obviously it reflects a lot of room on earnings and I. Just wanted to see if you could bridge us stay a little bit and make sure thats accurate.

Well I think that is the way to look at it debt as we look at the guidance. It does incorporate FX C medica into our guidance as well as some of the other factors that we've talked about.

And I think David if I could add one comment on the.

On the topline guidance, we took a fairly prudent approach, we believe to our guidance.

On September now it seems like a long time ago, but when we.

Defy the potential risk the increase and Covid cases.

And that had an impact on quarter, four and and hindsight that was the correct call now we were a little bit on and on an island back then but most of the market has come come come around and similarly with the uncertainty still remaining.

We show it to be overly conservative that should also have an impact not only on revenue, but on earnings per share for sure.

Okay and you were.

Greg If you just think about debt at the EPS bridge and we look at.

The components of our growth the growth is really coming from the strength of the operating performance. If you kind of bundle up the change and interest taxes shares and foreign exchange they come pretty close to a wash and then obviously you have a 25 and pickup from Zee Medical's. So really as you think about what's driving that is the underlying performance.

The business with kind of and the nonoperating items being.

Being close to Washington, and the aggregate.

Okay Super helpful. And then Liam just coming back here to <unk>.

Serology and Neo track here the Covid adjusted number for the third quarter something around sort of 30%, which is obviously a little lower than you saw on the second and third quarter and I. Appreciate there's a lot of noise and these numbers with COVID-19, but and I think about sort of that 30% ish number for the fourth quarter that I also think about adding benefited DPC offsets by resurgence.

The impact of Covid, it grew by 33% and.

We were really pleased with the performance of your lift you got to put it into context of what happened in the fourth quarter. David We saw new variance of Covid. We saw Covid cases, rising we saw procedures getting cancelled and quite frankly, we were really pleased that we actually exceeded modestly our inc.

<unk> expectations for the product.

And I think it had a really tough comp two versus the prior year. If you remember last year, we grew quite aggressively and the fourth quarter I think it was up 52%.

And in Q4, so coming up against a tough comp I think that was also a.

A factor.

And my own view on this is that with the rising cases I would have expected your live to Miss our R&D.

I believe that it didn't do so because of the offset of the DTC.

Which supplemented that so I think we're in a pretty good shape with your lift in regards to the recovery and we feel really confident and where we're at with it.

Great. Thanks, so much.

Cheers.

Your next question.

Is from Larry <unk> with Raymond James.

Thanks, Good morning, everyone.

Good morning Liam.

So I guess, just coming back to euro lift and.

And I know you guys talked a little bit about the <unk>.

<unk> on the on the 'twenty One guide overall, but maybe maybe again talk about how you're approaching the guide for euro lift in 'twenty, one that 30% plus how you kind of thinking about.

The cadence of that and what's assumed in that for our revenues out of Japan, and then add one other one.

Okay. So I'll start with the revenues on the Japan, Larry the revenues out of Japan are minimal.

And our guide for your lift we do still anticipates that we will get a reimbursement decision.

As we head into Q2 Q3.

And therefore be generating revenues in Japan, but it's fairly minimal within our within our current guide.

And what you what we would expect to see Larry and as you heard from Tom's prepared remarks.

With the cadence of revenue in Q1.

That would lead you to the overall company revenue being debt minus one minus two ish percent in Q1, because we've seen a rising number of cases after the holidays in January that continued into February and and euro lift would be in a similar bucket. So the growth that we had in Q4 it should.

And then should be a little bit less in Q1, then you should see a continued recovery as we go into Q2 and.

And Q3 and Q4 thereafter.

Your lift product does have and easier comp in Q2, but every med tech companies and easier comp in Q2. So I think the rubber will really hit the road if I can use that expression when we get into Q3 and Q4 and we begin to ramp back up Covid cases should be subdued the vaccine should be rolled out at that stage.

Page and we should at that stage then.

<unk> begin to ramp back up and I think given that the product was flat year over year pretty much in 2020 to get in excess of that 30% growth back in it that would also indicate that 30% growth on 2019 as well Larry.

In excess of 30% growth versus 2019.

Okay. Thank you that's very helpful. And then just the other quick question here is just on on <unk>.

You reiterated that $100 million plus market and it sounds like you went back and took another look at that opportunity and still coming out and that range.

And I suspect that and correct me, if I'm wrong that you're probably thinking about this as a late.

'twenty, one FDA clearance and how do you see that that revenue starting to <unk>.

Impact 2022, how does that develop and.

Should we be thinking about military orders being potentially lumpy and use and you develop the civilian market at the same time.

Yes, the beauty about doing a BLA submission Larry is that you get access to both civilian and military market now we'll start with the military.

In 2021 for sure because.

And as you know they helped us develop the product enormous BLA submission is nine months approximately we're on a fast track and now the FDA and never tell you when the fast track and.

And again in the area of Prudence, we have incredibly modest revenue in in the fourth quarter of 2020 of this year for this product and we do expect it to ramp in 2022.

And now to answer your question on the cadence and it's $100 million Mark at the military is 25%. So in 2022 will be focused on that military market and the <unk>.

And again I always caution investors don't expect the military to play at the $10 million order right out of the gate and it would be significantly significantly less than that but as we develop the American and as they roll it out through special ops through the seals into the general military then we can pivot to the civilian market and actually.

The biggest part of the civilian market Larry as air ambulances.

And of the requirements for space and the adaptability of easy Plaza to that environment and Thats also something that was quite encouraging and we re looked at this market that it's really two big segments and then the rest are smaller segments. So it's easier for us to focus.

So that's how we see and ramping as we go through 'twenty, one and into 'twenty two.

Okay terrific. Thanks, guys appreciate it thanks Larry.

Okay.

Your next question comes from Sheldon <unk> with Wells Fargo.

Great. Thank you so much for taking the question one on guidance and one on Linda with respect to guidance can you can you. Let us know what you are assuming for backlog and that guidance by our math it could be about 9% of sales and.

I am sure Shlomo quickly.

Flow into 2022.

And then on Manta could you comment on the lawsuit that was filed by essential medical.

Relating to the mist sales milestone and beyond by Teleflex. Following the module anything you can share with respect to your positioning the size of the milestone payment and <unk>.

Steps towards the resolution. Thank you for taking the questions.

Absolutely.

I'll start with the guidance question. So our total revenue guidance of 10 to 11, 5% does have assumed and at a COVID-19 recovery compared to prior year.

But.

Not not a backlog or a bolus of procedures coming back other than that and the back half of the year, it's really difficult for us to estimate what that backlog would look like sugar and and also a difficult for us to assess whether hospitals will have capacity to put that backlog through.

As we begin to recover my view hasn't really changed on the geography geographic recovery I still think it's going to be led by the Americas and Asia and I think its debt Europe is definitely going to be the laggard, It's a socialist health care system and the way they are rolling out the vaccine right now does not appear to be in.

And as aggressive as we see and other parts of the world.

Regarding the essential medical lawsuit that you mentioned.

Yes, we are aware of it clearly.

And we are confident that we have acted appropriately and believe that the Suez is without merit to be honest, we intend to vigorously defend ourselves and this matter and Hugo and Youre familiar.

And with the management product and Youre familiar that we've invested heavily behind manda with both clinical evidence and sales and marketing resources and the product is a key revenue driver for teleflex and performed well in the midst of the pandemic growing over 30% globally in 2020 and.

Growing by almost 90% and the key North American market and our plan. This year is to continue to convert over 8% approximately of the large bore market this year.

And with regard to the question on the milestones I mean, there are there are contingent payment milestones contemplate this.

Our financials.

And the total milestones as the matter of this dispute, but as I said.

You'll find it fairly vigorously.

Okay.

Susan.

And thank you for all my time on Seth.

Okay. Thanks. Your next question comes from Matt Taylor with UBS.

Hi, guys. Thanks for taking the question.

First one I wanted to ask was.

And so we're coming up here on the launch of Euro lifts and Japan.

And you've given some parameters about the.

The Tam at a high level and number of urologists things like that I was hoping you could be a little bit more granular about the things that you can control and the rollout like the pace of training, especially given we're still and a little bit of a COVID-19 environment, how quickly should we see that.

Uptake given the constraints that you have and the.

Yes.

So.

What we have done math is that we have already.

Seeded the market with market development specialists, and Japan, and we continue to engage we've identified the top 20 urologists.

Pre COVID-19, we actually had a U S physician that spoke Japanese and the country doing some peer to peer training. We also ran a virtual BPH summit and.

Got it.

A number of these 20 Japanese urologists.

We will.

I always I cannot reagan's triple down economics, but this is a trickle down urologists.

In Japan, where we train at the top of the tree and these 20 are key that we've identified in order then to roll it out to the to the other urology practices and we have to do a mandated collection of data as part of our reimbursement. So we will be doing that in the fourth quarter.

And to gather that information and.

Really enthusiastic and we have the other thing that is within our control Matt is two and add additional sales reps and we think the timing is going to work out really really well for us because Japan is another market, where they are managing the buyers quite well now and they're starting to rollout the vaccine. So we think as we get into it.

Q2, Q3, Q4, when we will be requiring access to train and we think the timing is going to work out pretty well for us and give us a pretty broad access to the individuals and we bought a tray and so we feel pretty good about the groundwork we've done to date and we feel pretty good about the identification of neurologists that we need to train and.

And there is a heightened level of knowledge about the euro lift because a lot of these are Japanese urologists are very linked to the U S. Urology Association and so there is a heightened awareness of the product availability and a desire to gain access to it and once we get reimbursement I think that's when we will really begin to ramp up our efforts.

Great and I just have one follow up.

Moving to the next couple of years.

And are we going to see a similar pace of trading of urologists in Japan, and the USA a couple of hundred a year can you talk about those plans and the intermediate term.

So just remember there aren't as many urologists. So you would you would imagine it's going to be a little bit less so your and also the America is little bit smaller and there are specialties in urology practice and Japan. So if you take the 9000 urologists you'd have to imagined and about 5000 or so are and the specialty we wanted to.

So that is less than half of what you have and the U S. So bear that in mind with the cadence but.

In light of that data, that's what I would expect a similar cadence, but add so if we train.

400 to 500 and the U S. You would expect to try and half of that once you ramp up and Japan.

Okay got it very good. Thank you. Thank you.

Thank you.

Your next question comes from Richard and later with SBB Leerink.

Hi, this is ian on for rates.

Just a quick one day essentially you guys mentioned for.

The main target for capital deployment would be and then I was just wondering if maybe you could share.

Some color on what kind of areas you're focusing on.

And second should.

Should we expect any.

On a larger deals or the <unk>.

Perfect.

And so Aaron first of all as Tom said needs and he's commentary I'm really we had a brilliant and fourth quarter from the point of view of cash generation and deleveraging. So we're down below three times again on a net leverage basis. The type of assets first of all the strategic element of our M&A strategy our assets that.

And fit within one of our existing channel portfolios are in line space I mean, we really like the Cath lab. For example, so if we if we were to move into the neurovascular and peripheral vascular space and that similar call. It point that that would be something that would be attractive.

We also like the technologies that have IP Zee medical and we just closed the IP runs out to 2033, so we'd like to protect the businesses.

We look for assets that have a clinically differentiated product portfolio, we look for assets that create value.

In health care economics are and synergies.

And in that respect.

We also look for products that are that are sticky, but we would call sticky and that get used over and over again and again.

And the interventional space and the vascular space and the anesthesia and emergency medicine space and the men's health space.

And and in the surgical space. So I think that's the beauty about Teleflex is we are looking in a broad area places and Thats why were and define these assets and also we're very disciplined and our approach and you can expect us to be continue to be disciplined I can tell you our pipeline is pretty full.

And in this environment and even in the midst of coal, but it's amazing to me, how we were able to get some work done and we were able to close the Medicare and the midst of Covid and now we're <unk>.

Down below three and that will be even further reduced as we move through this year and so we have got firepower and we are always looking and we continue to look right now.

Okay, great Thanks and.

And just another quick one on Manta and you mentioned it grew operating earnings per site could you just maybe talk about some of that trend.

Youre seeing on that project with that particular product.

And on maybe what it is.

And are expected and 2021.

Yes, so if you look at 2020 and we converted.

And just over 5% of America and were contemplated and converting 8% of the market approximately.

In 2021.

And so that's the cadence that we sell and that's in the midst of Covid I mean, the trends. We're seeing is it's being adopted pretty heavily and type of our procedures almost 90% of our of our cases today are still done and <unk> and thats.

The area, we're focused on it's a 200 $300 million market opportunity.

And we continue to ramp it up and we continue to have sales and <unk>.

<unk> allocated to it and we're on.

Also doing and planning to do some clinical work on <unk>.

The product and there are some enhancements that we also want to do on the product to make it even better than it is today. So all in all we're really encouraged by the progress that we're making and we expect to continue to make progress in this year and into next year. This will be a multi multiyear growth driver for teleflex.

And as we convert that America, we've a long runway ahead of us to convert.

Okay.

John.

Thanks Darren.

Your next question comes from Anthony Petrone with Jefferies.

Thanks, a couple on on Euro lift and then I'll have one on Z medica on Euro left and I'm, just trying to get a sense of the.

Totality of backlog that's building.

And new Covid is still running through so that is a pressure point and on the demand push side you have DTC and so I'm. Just wondering if you can quantify the backlog the procedures that are building.

And then as we look at the past couple of quarters is there anything to note on the competitive side are you seeing anything.

Competitively and from some of the other devices out there of note and then I'll have a follow up.

Yes, so first on your backlog question and the fourth quarter. We started day now it's included in our assessment of the Covid impact Anthony just to be clear when we assess the COVID-19 impact and ex Covid. It grew by 33% included in that.

Our procedures above the base rate cash calculation on the year before 2019, so quarter four cancellations above that base rate. If you were to put a value on it is around 4 million Bucks.

So that might give you an indication of that backlog that those canceled procedures should come back at some stage when things free up on those and procedures that were booked the patient was due to have the urine and procedure done and then either the day before on the day. They canceled the procedure one would have to assume because of concern.

Covid, so thats the best benchmark I can give you in that regard.

And just from clubs and Jennifer to your question, Anthony and I apologize.

The other part was.

And on competition anything of note that you have seen out there.

No.

Nothing to report really.

At the same competitors are in the marketplace.

We have now crossed the 250000 patient Mark that had been treated with the euro lift which is a big milestone for us the other big milestone for US was an all time high revenue and the fourth quarter, we've never hit that revenue and.

And to hit that in the midst of a rising COVID-19 pandemic situation got a lot worse to me is very encouraging so nothing to report new on the competitive front Anthony.

And then the follow ups would be one on euro lift again would be can you remind us on medical management. The study you referenced today, yes.

How many patients do you actually think could shift to euro lift and the medical net net are currently medical management today, and then on Zee medical.

This three verticals trauma.

Cash and intervention, all where do you think youll see the most synergies at the revenue line with existing teleflex infrastructure. Thanks.

So.

First on on your urine and the number of men on on medical therapy.

And that takes the addressable Tam from 6 billion to $30 billion. If we were able to attract all of those individuals as well so that will give you the size of the scale.

With regard to your question on the synergies are where we'd be able to leverage the medical from a call point for definitely on the military and EMS call point is and has a really strong call point for us.

And Z medic and have an exceptionally strong trauma call at <unk>. So the synergies between the two companies is excellent in the strength of the now call point and then just consider that Anthony that we have easy Plaza, we just submitted from a BLA coming down the pike behind that really strong sales channel. So that's what physicians with enthusiasm.

And we're quite encouraged with what we can do and that space.

Thanks again.

Yes.

Your next question comes from Matthew O'brien with Piper Sandler.

Q4 2020 Teleflex Inc Earnings Call

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