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Syneron (NASDAQ:ELOS)

Q4 2010 Earnings Call

February 16, 2011 8:30 a.m. ET

Executives

Carol Ruth - IR

Shimon Eckhouse – Chairman of the Board

Louis Scafuri – Chief Executive Officer

Asaf Alperovitz – Chief Financial Officer

Analysts

Rich Newitter - Leerink Swan

Amit Hazan - Gleacher & Company

Anthony Vendetti – Maxim Group

Dalton Chandler – Needham & Company

Patrick Delaney - UBS

Rod Wong - RTW Investments

Operator

Good day ladies and gentlemen and welcome to the Syneron Medical fourth quarter 2010 results conference call. [Operator Instructions.] I’d now like to turn the conference over to your host, Ms. Carol Ruth from The Ruth Group. Please go ahead.

Carol Ruth

Thank you operator. I’d like to welcome you to Syneron Medical’s fourth quarter 2010 conference call. Statements on this call may be forward-looking within the meaning of the US Private Securities Litigation Reform Act of 1995 relating to the company’s future events or future performance, including statements with respect to Syneron’s expectations regarding, but not limited to, the financial forecast for 2010, the launch of new products and the maintenance of a leadership position in core and non-core markets.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the company’s actual results, levels of activity, performance, or achievement to be materially different from any future results, levels of activity, performance, or achievements expressed or implied in any forward-looking statements.

These risks may include, but are not limited to, the risk factors set forth under the heading Risk Factors, in Syneron’s annual report on Form 20-F filed with the SEC. These factors are updated from time to time through the filings of reports and registration statements with the Securities and Exchange Commission.

These statements are only predictions and Syneron cannot guarantee that they will in fact occur. The Company does not assume any obligation to update the forward-looking statements discussed in today’s conference call.

Finally, this presentation includes non-GAAP financial measures. Syneron provides reconciliation information at the end of the fourth quarter results press release on the Investor Relations page at www.syneron.com.

Speaking on the call today are Syneron’s CEO, Lou Scafuri, and Syneron’s CFO, Asaf Alperovitz. Shimon Eckhouse, Syneron’s chairman of the board, is also on the call and will be available to answer questions during the Q&A portion at the end of management’s prepared remarks.

Now I’d like to turn the call over to Lou.

Louis Scafuri

Thank you, Carol, and welcome to Syneron’s fourth quarter 2010 conference call. We ended 2010 with our highest quarterly revenue, and first profitable quarter of the year, demonstrating our ability to grow and leverage the combination of Syneron and Candela.

During the course of the year, we focused on strengthening our aesthetic market leadership position to drive growth and create value for our shareholders. These initiatives solidified our global leadership position and built our customer base by providing customers with innovative products that address their evolving needs.

In 2010, we focused on the following: integrating Candela operations to maximize our global sales force and distribution, training and aligning the sales channel to enable cross selling and coverage, building recurring revenues, launching innovative products and driving procedure volume, broadening outreach to industry thought leaders and conducting clinical trials to further validate product effectiveness, investing in research and development, maximizing operational efficiency and the bottom line, and acquiring innovative technologies and products.

I'm happy to report we've been successful on all fronts. I believe we're a much stronger and formidable company today than we were one year ago, both financially and operationally. Most significantly, we are well-positioned to further build on these initiatives and capitalize on growth opportunities in both our core business and on our new emerging technologies, as well as improve profitability. I will discuss each of these topics today after reviewing our strong fourth quarter results.

Total revenue for the fourth quarter was up 15% year-over-year and up 20% over the third quarter. The year-over-year revenue increase was driven by 20% international growth and 6% growth in North America. Of particular significance was the increased utilization of our high-margin consumables.

As most of you know, this consumables metric is indicative of the success of our products and contributes to our recurring revenue stream and gross margin. Consumables sales from the Syneron product line grew at 288% year-over-year. This is a strong indicator that our products are being well received in the marketplace and that our customers are using our products to drive patient volume.

Non-GAAP gross margins improved to 54.4% during the quarter, mostly driven by a higher mix of Syneron products and consumables, higher sales volume, and the efficiency measures we have implemented. This, combined with the control of our op ex, resulted in a positive operating margin and in non-GAAP earnings per share of $0.10 in the fourth quarter.

This is a very meaningful accomplishment for the company. We are very excited to have achieved this significant milestone one year post-merger - profitability driven by the execution of synergies, cross-selling, and customer focus initiatives. As we continue to strive for operational excellence and introducing products, we expect continued improvements in our financial results.

The Syneron team is very excited with the expansion of our product portfolio and the new additions in our pipeline. We expect that these will be key components of our growth in 2011 and beyond.

Earlier this month, we had multiple new products on display at the American Academy of Dermatology in New Orleans. This included the ePrime energy-based dermal rejuvenation system, the CO2RE fractional CO2 resurfacing system, the Elure advanced skin lightening topical, and the revolutionary eMatrix complete sublative rejuvenation system. The AAD is one of the major shows for our industry, and we were enormously pleased with the very strong physician interest and feedback on these products.

We left the Academy confident that we are successfully leading the changing needs in the aesthetic marketplace and meeting the evolving demands of our customers. We are offering innovative, clinically proven products, and introducing new treatment categories such as with ePrime and eMatrix. These new categories further differentiate Syneron and its customers from the competition.

ePrime was one of the most talked about, hottest products at the AAD this year. We are excited to be watching it during the first quarter of 2011. ePrime is the first patented, minimally invasive aesthetic device that precisely targets and delivers radio frequency energy directly into the deep dermis to reach and maintain a targeted dermal temperature regardless of skin conditions. The end result is a significantly lower cost and minimal down time alternative to surgical lift procedures benefitting both patients and physicians.

In a 100-page clinical study, ePrime demonstrated dramatic improvements in skin tone and volume after a single treatment, leading to consistent clinical results for patients. As part of the study, a group of blinded board-certified dermatologists and plastic surgeons noted improvements of wrinkles and skin laxity of the lower face on all patients at the three- and six-month followup. Exceptional and consistent clinical results, combined with ePrime's ability to provide physicians a new treatment option at a new price point for patients, will be the key drivers of the product's success.

The early reports from the ePrime introduction indicate strong physician interest, and we expect it to gradually build sales traction during the year. As we build the install base and procedure volumes grow, we will also benefit from sales of ePrime's single-use consumable. It is important to remember that ePrime represents a completely new treatment category for physicians and Syneron, giving our customers new revenue opportunities and providing Syneron with an incremental growth engine.

During the fourth quarter, we successfully launched the CO2RE fractional CO2 resurfacing system. In December, the CO2RE received FDA clearance for fractional and conventional dermatology skin treatments. This system utilizes state-of-the-art patent-pending laser technology to provide dermatologists and plastic surgeons a powerful and versatile tool that covers a wide range of their patients' aesthetic needs.

Also during the fourth quarter, we completed our first revenue shipments to the North American market of the recently launched Elure advanced skin lightening topical. We have also received a repeat order from our distributor partner in Singapore following the Elure launch in that market during Q3.

The Elure products are based on a unique clinically demonstrated naturally occurring enzyme, Melanozyme, which reduces melanin in a fast and safe manner. Early feedback out of Asia, China, and the US indicates a high level of enthusiasm for Elure among aesthetic consumers, and also includes endorsements from leading medical aesthetic experts around the world.

The worldwide professional market opportunities for skin whitening exceeds $1 billion, and we believe Elure has shown the potential to be a category-leading product based on its safety profile and superior efficacy and speed of action.

Last week, we formally launched our MEmyelos consumer hair removal system for home use in Paris after a successful launch in Israel at the beginning of the year. The ME is a dual-action system that utilizes Syneron's proprietary ELOS technology, which safely provides permanent hair growth reduction for the widest range of skin and hair colors.

The ME combines ELOS with an optional epilator or shaver that allows it to achieve both immediate and permanent hair reduction. The system requires no preparation and is up to four times faster than competitive energy based consumer home care removal systems.

In December we announced the acquisition of Pharos Life Corporation, the maker of the Tanda LED home use devices. The Tanda products are clinically validated and are complementary to our existing technologies, including our home use partnership with Procter & Gamble. Tanda's products are marketed directly to consumers through premium retailers and include products for skincare such as acne and anti-aging, as well as wellness solutions such as pain management.

This acquisition provided Syneron with an immediate presence in the North American consumer aesthetic market with a leading brand name that is a trusted partner to retailers such as Sephora and Nordstrom. It will provide us with an additional new revenue opportunity and valuable experience in the premium retail marketplace.

Elure, ME, Tanda, and our dental laser devices, are the leading product lines in our emerging technologies portfolio, which also includes pipeline products in the direct to consumer home use initiatives. This quarter we began segment reporting of our results, and it breaks out our professional aesthetic device business from our emerging technologies.

Asaf will provide more details in his remarks, but in short, we believe that this reporting will provide important transparency for investors. It also underscores the importance of the emerging technology business to the future by expanding the profile of the company in the larger aesthetic market.

The segment reporting will also allow investors to track the operational progress of our core professional aesthetic device, or PAD, business. Throughout the course of 2010, we effectively integrated the Candela business, significantly grew our revenues, right-sized the organization, made efficiency improvements, and closely controlled our expenses.

We have balanced our drive towards sustained profitability with our continued strategic investments in R&D and sales and marketing. By breaking out the operating results for both segments, we will be able to provide a better view of expected margin improvements in our PAD business as well as the revenue ramp and strategic investments we are making in our emerging technologies.

Overall, we are pleased with our fourth quarter results, which demonstrate our ability to expand our market leadership, launch innovative new products, and execute on a strategic plan to diversify our business and invest in high growth opportunities.

Over the course of the year, we advanced our reputation with thought leaders and customers alike with our strong clinical data and treatment category-creating product innovation. We introduced four new products, all of which we expect to continue gaining momentum in the marketplace and to be continued drivers of top line growth.

We are entering 2011 with [inaudible] portfolio of products, several new exciting products in the pipeline, the strongest global sales and service network in the industry, and $215 million in cash to support our strategic initiatives. We also expect to maintain our focus on improving gross margin, driving operational efficiencies, and increasing profitability.

In summary, we believe Syneron today is well-positioned to strengthen its global leadership and market position.

I would now like to turn the call over to Asaf for his financial review. Asaf?

Asaf Alperovitz

Thank you. I would like to point out that the financials we will present on today's call for 2009 are pro forma, assuming that the merger with Candela had occurred on January 1 of 2009.

Revenue in the fourth quarter of 2010 was $53.5 million, up 15% compared to $46.6 million in the fourth quarter of 2009. International revenue grew 20% year-over-year to $35.3 million, and North American revenue grew 6% to $18.2 million. 66% of the fourth quarter 2010 revenue was in the international market, compared with 65% in the third quarter of 2010 and 63% in the fourth quarter of 2009.

Product revenue and service revenue for the fourth quarter of 2010 was $38.6 million and $14.9 million respectively. Gross margin for the fourth quarter of 2010 was 52.5%, or 54.4% on a non-GAAP basis, excluding stock based compensation, amortization, restructuring, and items related to the Candela merger, compared to 50.8%, or 52.3% on a non-GAAP basis, in the third quarter of 2010. Gross margin for the fourth quarter of 2009 was 49%, or 50% on a non-GAAP basis.

The gross margin improvement is primarily due to the following factors: higher mix of Syneron products and consumables, which was also driven by increased cross-selling; high production and sales volume; and operational efficiency measures that we implemented.

Fourth quarter 2010 GAAP operating income was $8 million, or $4 million on a non-GAAP basis compared to a GAAP operating loss of $5 million, or $0.5 million on a non-GAAP basis in the third quarter of 2010.

GAAP operating loss for the fourth quarter of 2009 was $8.6 million, or $5.8 million on a non-GAAP basis. GAAP net income from continuing operations before non-controlling interest for the fourth quarter of 2010 was $8.1 million, or $0.24 per share, compared to a GAAP net loss from continuing operations before non-controlling interest, of $5.3 million, or $0.15 per share in the third quarter of 2010.

GAAP net loss for the fourth quarter of 2009 was $6.2 million, or $0.18 per share. On a non-GAAP basis, net income from continuing operations before non-controlling interest for the fourth quarter of 2010, was $3.4 million or $0.10 per share, compared to a net loss of $1.5 million or $0.04 per share in the third quarter of 2010. Non-GAAP net loss for the fourth quarter of 2009 was $4.1 million, or $0.12 per share.

Fourth quarter non-GAAP operating income and net income exclude one-time income and expenses as detailed in the company's financials at the press release, with the main item being a one-time income of $8.5 million related to the recognition of a deferred gain, which is related to the company's merger with Candela Corporation. The deferred gain, or negative goodwill, was the result of an excess of fair market value of the net assets acquired over the considerations paid for the Candela acquisition.

As Lou mentioned, beginning this quarter we are providing segment reporting for revenue and operating income in our quarterly results press release. We have broken out our business into two segments: Professional Aesthetic Devices, or PAD, and Emerging Business Units. The PAD segment includes the widely acknowledged Syneron and Candela business.

The emerging Business Units segment includes our Elure skin whitening, Tanda LED systems, and ME hair removal system, all currently on the direct to consumer home use market. These segments also include our Light Instruments dental laser devices, along with pipeline products that include our strategic home-use device partnership with Procter & Gamble and Fluorinex teeth whitening and fluorination.

Together, these markets and development-stage products represent a significant growth opportunity and are part of our overall growth strategy. However, since they are all early in the life cycle, we are carrying a relatively high level of expenses to further develop these products and introduce them to markets. Accordingly, we are breaking out the sales and operating income for the PAD and the Emerging Business segments in order to provide you with a higher level of transparency into the progress that each of our segments is making.

For 2010, the PAD segment generated an operating income of $302,000 on a non-GAAP basis. For the fourth quarter of 2010, PAD revenue was $52.1 million, or 97% of total revenue, and Emerging Business revenue was $1.4 million, or 3% of total revenue.

Operating income in the PAD segment on a non-GAAP basis was $5.9 million, representing an operating margin of 11.4%. Operating loss in the Emerging Business segment was $1.9 million. Moving forward, as revenue ramps up in the Emerging Business segment, we expect to achieve better operating performance in this segment.

Turning to the balance sheet, our DSOs declined on a year-over-year basis to 71 days, representing a decrease of 18 days compared with a DSO of 89 days in the fourth quarter of 2009. DSO in the third quarter of 2010 were 85 days.

On December 31, 2010, cash and cash equivalents, including short-term bank deposits and investments in marketable securities, net of a [bad] debt of $2.7 million that we assumed as part of the Pharos acquisition, were $215.2 million, and equity was $278.5 million.

With that, I will now turn the call over to the operator to answer any questions you may have. Operator?

Question-and-Answer Session

Operator

[Operator Instructions.] Our first question comes from Rich Newitter of Leerink Swan. Please go ahead.

Rich Newitter - Leerink Swan

So maybe I'll just start off with the emerging market segment that you guys began breaking out this quarter. And maybe you can just give us a little bit more color on the 2011 outlook. How should we be modeling these segments, both from a top line perspective and on the bottom line? Can you give us a sense of which products maybe - what kind of profitability assumptions you're anticipating? Where the ramp will bring you from the beginning of the year to the end of the year, both on the sales contribution and the gradually potentially improving profitability perspective?

Asaf Alperovitz

We can only give general indication at this stage. We will continuously [inaudible] invest in this segment in 2011. We want to further develop and successfully introduce these products into the market, but to provide more specific profitability data at this stage, we don't intend to.

Rich Newitter - Leerink Swan

Or maybe from a US-OUS perspective? Will it be more biased towards OUS sales generated from this segment?

Louis Scafuri

Well if you look at the addition of Tanda to our product line, that already has the basis in the consumer retail outlets in North America, we see one level of contribution. And if we look at the rollout of MEmyelos in discrete markets in Europe, we see a contribution from there as well.

Rich Newitter - Leerink Swan

And maybe just turning to your US performance, you were up 6% year-over-year in North American markets. That was a nice improvement in growth. How do we think about the US market and growth rate and your growth in that marketplace as we move into 2011? Should we expect kind of an accelerating performance given the cross-selling opportunities and whatnot? Or is this a good base level to kind of model?

Louis Scafuri

Well, we believe we're just getting started with cross-selling. Clearly we have traction. Clearly we're coming up the learning curve very rapidly, and we always look to improve our performance. I would say consistent with other comments we've heard about industry growth this year, we see the North American marketplace growing in the high single digits and we see our ability to gain market share with new products and bundling and various strategies that we're now in the process of implementing, one, again to support our market leadership.

Rich Newitter - Leerink Swan

And just on the international performance. That was a really nice quarter for you guys. Was there any particular region that drove that? I know some companies have been talking about a very strong pickup in demand in Asian markets? Did you see that as well?

Louis Scafuri

We've seen strong demand in growth in the Asian markets throughout 2010 and we have a very strong indication that that market will continue to grow very robustly in 2011. We also had a very strong performance in Western Europe from several of our subsidiaries as well as our distributors, as well as from Brazil. So again, back to what we've said earlier, we're deploying our marketing resources and sales resources where there's opportunity where the business is growing. We like to stay as agile as possible.

Rich Newitter - Leerink Swan

And then maybe just one last one on the emerging businesses, can you just give us a rough timeline of where all the different products you mentioned are in their respective launches, and when you anticipate certain pipeline products to potentially reach the market?

Louis Scafuri

Besides the PAD, the professional aesthetic devices, we have three new products planned for this year. We have several other products planned as well in the Emerging Technologies.

Rich Newitter - Leerink Swan

So Elure is fully launched right now in the US and OUS. What about the MEmy? When does that potentially come into the US? How early into the launch? Did that just launch? Should we expect that to gain steam in the back half? Just if you could talk about the products you actually are launching right now and the potential revenue contribution. Or just give us a sense of where they are in the launches?

Louis Scafuri

We're just in the early stages across the board. We have rolled out Elure in North America. We're just now ramping up our sales distribution. Early indications are quite strong in terms of customer experience and satisfaction and demand for the product, both in North America as well as in Asia. I would say we're just barely taking our first steps and scratching the surface with the opportunity that's there. As far as the MEmyelos, again we're in the initial stages of rollout with that product. We have no immediate plans to launch it in North America at present time, and we'll continue to provide updates along the way as we progress.

Operator

Our next question comes from Amit Hazan of Gleacher & Company. Please go ahead.

Amit Hazan - Gleacher & Company

Maybe first I'll just ask a similar question. A little bit longer term, just to give us a sense of where you think these product categories can go for you if we think about the emerging technologies and the home use business. What kind of revenue do you think they can generate in the coming years? We realize you're in early stages now, but as we think about 2012, 2013, what's the realistic opportunity for you with your products like Tanda, MEmyelos and the Procter & Gamble relationship?

Louis Scafuri

Well, if we look at the market today, we actually see the emerging market segment to be equivalent to the traditional aesthetic device business in terms of opportunity. I believe some of the statistics we've heard is that in 2010 this market is already several hundred million dollars in size, with rapid growth of approximately 25% year-over-year estimated. We've invested, historically, in this emerging technology. We're just now beginning to see the fruits of our labor, and we plan on being a major market leader in various segments of this evolving marketplace.

Amit Hazan - Gleacher & Company

And specifically to Tanda, can you talk a little bit more about how we should think about the progression here in the US in terms of, if I'm not mistaken it's currently prescription based. So how you're currently - through what channels you're currently selling the product now and when you'll start selling it directly non-prescription?

Asaf Alperovitz

As for prescription I assume you are relating to the latest press release we had for the around the eyes wrinkles, and just we expect to go to full commercial also throughout the year.

Amit Hazan - Gleacher & Company

When can you sell it non-prescription? You're still waiting for another approval there? Is that right?

Asaf Alperovitz

Yes. In this year, 2011.

Amit Hazan - Gleacher & Company

Okay. And then the last question from me, just to get your comment on the FDA recall issue with the eMax and if you can kind of explain the detention issue and how that's going to impact you, if at all.

Louis Scafuri

First off, we don't expect to have any significant effect on our results. On December 23, we received a warning letter from the FDA on our eMax device and our skin-tightening labeling. First off, a predicate device exists for the eMax. Our applicators are approved, and discussions are currently underway with the FDA. Our skin-tightening claim is really one where we have a wrinkle reduction claim as does Syneron and many of our competitors, and it's really a matter of language with wrinkle reduction versus skin tightening. So discussions are underway with no significant effect on results.

Operator

Our next question comes from Anthony Vendetti of Maxim Group. Please go ahead.

Anthony Vendetti – Maxim Group

So in terms of the gross margins, combining with Candela you've slowly every quarter have moved them up. Should we expect continued gross margin improvement sequentially in 2011? And where do you expect gross margin to be when you exit 2011?

Amit Hazan

Well, we are certainly working diligently to improve the gross margin. The major item that improved our gross margin throughout the last year would be the increased Syneron product sales portion of the overall consolidated sales. Syneron products are with higher gross margin. We had the increased consumables sales throughout the year and consumables sales certainly with higher gross margin are part of our strategy for [inaudible] revenue. Our business model that we're very focused on. We are presenting premium products such as ePrime and Elure. They also have a relatively high ASP and profitability that will further contribute to our gross margin in this year. And we continue to implement cost capping and efficiency measures to continuously push our costs down. All that should help us improve our gross margin. [inaudible] providing any number. We won't provide any further estimation

Anthony Vendetti – Maxim Group

Okay. And in terms of the credit markets, when you're out there selling these higher end professional products, are ASPs remaining constant? And then B, are the credit markets opening up sufficiently to drive sales, or do we still have to work through those macroeconomic events?

Louis Scafuri

First off, our ASPs are stable. And as far as the credit markets are concerned, being very strong in the core we're seeing customers with a strong credit profile and we certainly know how to get these people financed. In terms of things that we see emerging, we see the non-core marketplace continuing to showing us indications that activity is resuming. So from the standpoint of being able to get a customer financed, I would say that the conditions have improved from Q3 to Q4.

Anthony Vendetti – Maxim Group

Okay great. And then just a little further up on - so Elure has launched in North America now as well as in Asia. Can you remind us, Lou, ePrime and the fractional CO2, where they are? Are they commercially available in the United States right now?

Louis Scafuri

We launched the CO2 in December, and we had outstanding initial traction with the device. We actually created a back order situation. We exceeded our estimates with the CO2RE early on. In Q1 of 2011 we're struggling to get as many demo units out there as possible because we've had a very strong market response to this product. As far as the ePrime is concerned, we'll be rolling out - we have several sites around the world up and running. We're planning the first initial series of shipments during Q1 and we're feeling quite strong after coming from the AAD with the market response to both the scientific validation and the key luminaries' thinking around this device. Our sales force is [inaudible], [inaudible] and poised and positioned to execute on a global basis with both devices.

Anthony Vendetti – Maxim Group

Are these devices right now being manufactured in Israel? And right now is it just the Candela products still being manufactured in [Wheland]?

Louis Scafuri

That's correct.

Operator

Our next question comes from Dalton Chandler of Needham & Company. Please go ahead.

Dalton Chandler – Needham & Company

Just wanted to come back for a minute to a comment Lou made about the North American market growing this year at high single digits. Were you talking about the market generally, or specific to Syneron?

Louis Scafuri

Generally.

Dalton Chandler – Needham & Company

Okay. And do you think you can grow faster than that?

Louis Scafuri

We have growing confidence in our cross-selling initiative and the ability of our sales reps not only to be able to learn, both the Syneron and Candela products, as well as the introduction of some very innovative new product categories, so we feel a very strong growing momentum with our sales organization in North America.

Dalton Chandler – Needham & Company

And then blended with the international growth rate, should we be expecting something in maybe the low teens for the year?

Louis Scafuri

We would like to outperform our competitors. And I'll leave my comments there.

Dalton Chandler – Needham & Company

Okay [laughter]. And you've touched on this a little bit already, but just with respect to the consumer products, how you expect to position Tanda versus the products P&G is expecting to launch, and if your agreement with P&G constrains you in any way in that market?

Louis Scafuri

First off, the relationship and the agreement with P&G did not constrain us. Secondly, the channel to market capability of both Tanda and its high end retailers versus P&G is quite different and quite diverse. We see them as being complementary and our approach versus some of our competitors is multipronged. We have many, many different things working right now and as we begin segment reporting and one takes a look at our investment and success in the marketplace, I think people will have a greater transparency and appreciation for the investments we've been making over the last several years.

Operator

[Operator Instructions.] Our next question comes from Patrick Delaney of UBS. Please go ahead.

Patrick Delaney - UBS

As a shareholder, I'm interested in the skin whitening product. You had a launch in North America and Singapore, and you said there was a reorder. How would you categorize the size of that reorder?

Louis Scafuri

In the several hundred thousand dollar range just in Singapore.

Patrick Delaney - UBS

And in North America? Was there a reorder?

Louis Scafuri

In North America we have our physicians reordering. We're just now hiring some direct sales people, expanding our discussions with potential partners there, and we're just now really getting the product off the ground.

Patrick Delaney - UBS

This is an exciting part of your business. I would hope that you'd put extra emphasis on this category.

Louis Scafuri

We're going to go fast and hard and achieve results.

Operator

Our next question comes from Rod Wong of RTW Investments. Please go ahead.

Rod Wong - RTW Investments

I just had a couple questions on Elure also. One, I was wondering how many doctors' offices are you aiming to make it available in the US this year? And then I was also wondering who makes the sales call for that product? Are these dedicated reps or is it just your general sales force?

Louis Scafuri

Well, we certainly would like to get traction in the marketplace, and we're targeting key geographies initially. We have a broad-based web campaign. We are at the major trade shows. We are cross-selling the traditional device sales force and adding specialists. We just added not only a senior marketing person as well as someone to help us internationally to the additional team that we have right now. We just added a sales leader in North America - in the process of recruiting some direct reps to complement our existing distribution. Again, we're going to look at our channel to market capability, some of the partnering opportunities, some of the direct capabilities that we have. There's clearly a halo effect. The product does open doors. We would like to get to as many customers as possible. And certainly our internal targets are ones in which we're ambitious and one in which I think if we execute according to our plan are achievable.

Rod Wong - RTW Investments

Okay. And then just as far as Asia beyond Singapore, could you touch on when you might launch in the other major Asian markets?

Louis Scafuri

We have a huge amount of interest coming out of Asia. In several countries, such as Japan and China, we're gated by going through the regulatory approval process. We're in various stages of qualification of distributor partners in the marketplace. And we're looking for some of these things to go live hopefully in the middle to second part of 2011.

Operator

I'm showing no further questions at this time and would like to turn the call back over to Mr. Louis Scafuri.

Louis Scafuri

Well, I'd like to thank all of our employees for their hard work, dedication, and focus in a year which was very challenging. A year in which we had some very challenging economics as well as many different things for our growth strategy going on. We appreciate their hard work and dedication as well as our partners, to make this a successful year for the company. Thank you very much. We appreciate it, and we'll see you next quarter on the call.

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