Merit Medical Systems' (MMSI) CEO Fred Lampropoulos on Q1 2016 Results - Earnings Call Transcript

| About: Merit Medical (MMSI)

Merit Medical Systems, Inc. (NASDAQ:MMSI)

Q1 2016 Results Earnings Conference Call

April 28, 2016, 02:30 PM ET

Executives

Brian Lloyd - Chief Legal Officer

Fred Lampropoulos - Chairman, CEO and President

Bernard Birkett - CFO

Analysts

Jayson Bedford - Raymond James

Jim Sidoti - Sidoti & Company

Mike Petusky - Barrington Research

Operator

Good day ladies and gentlemen and welcome to the Merit Medical Systems First Quarter 2016 Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference is being recorded.

I would now like to hand the conference over to Fred Lampropoulos, Chairman and Chief Executive Officer. Please go ahead.

Fred Lampropoulos

Thank you, and good afternoon ladies and gentlemen. This is Fred Lampropoulos broadcasting from our facilities in South Jordan, Utah. And we’d like to thank you for joining us and taking the time to visit -- what I know is a very very busy reporting day.

The first thing I’d like to do is to have Brian Lloyd, our Chief Legal Officer read our Safe Harbor Provision. Brian?

Brian Lloyd

During our discussion today, reference may be made to projections, anticipated events, or other information which is not purely historical. Statements made during this call, which are not purely historical including statements regarding our operating or financial results or prospective transactions are forward looking statements and are subject to risks and uncertainties such as those described in our Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.

We caution you that our actual results will likely differ, and may differ materially from our anticipated results. The forward-looking statements are subject to change and are not intended to be relied upon as predictions of future operating results.

Any forward-looking statements made during this call are made only as of today's date, and we do not assume any obligation to update any such statements.

Although our financial statements are prepared in accordance with accounting principles which are generally accepted in the United States, our management believes that certain non-GAAP financial measures provide investors with useful information regarding the underlying business trends and performance of our ongoing operations and can be useful for period-over-period comparisons of such operations. The reconciling table included in our press release and discussed on this call sets forth supplemental financial data and corresponding reconciliations to GAAP financial statements.

Readers should consider these non-GAAP measures in addition to, and not as a substitute for, financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures exclude some items that may affect net income. Furthermore, these calculations may not be comparable with similarly titled measures of other companies.

Fred Lampropoulos

Thanks, Brian. Ladies and gentlemen we are delighted that you have taken the time and I’d like to review with you some highlights of our first quarter. [Indiscernible] before we start. As all of you know our first quarter is somewhat unique. That comes from the fact that we usually start out a little bit slower because of our cut down in Christmas and the way we account for earned credits of production. This has been something that we’ve talked about many many times before, but just as a reminder we also have a couple of other issues that are important for you to keep in mind and that is because of the acquisition of the HeRO graft there are some expenses in the first quarter that have to do with the mark up of the inventory as well as other expenses associated with the transactions and in a few moments Bernard Birkett will go over those particular issues in more detail.

Lets talk about revenues. Revenues for the first quarter were just over $138 million, and on a constant currency basis they were $140 million. Again, like all medical device companies, it always starts on a little bit slow as people get back, physicians get back from vacations and procedures start. That being said revenues grew at 6.6% and 8% on a constant currency basis. There was a little bit of a -- the take away that would be because of the HeRO growth and if we take that out, we’d be at 5.6% and 7% on a constant currency basis, well in line with our estimates and how we feel the business with ofcourse acceleration as we go through the year.

We still believe that the company will grow at a level of about 8% organically and then the benefits of our HeRO graft are around 150 basis points give or take. Let me just kind of weight in a little bit on the HeRO graft and give you some information there because I think it’s important. We have now transferred a portion of the manufacturing to our facility in South Jordan.

You know its always amazing to me to see the great efforts of our engineers and our management team here and the efforts to get it here. So we closed the first week of February and here it is about the third almost the end of April and we are actually producing product here on our campus. We had some people spread over a month away from home to be involved in that process. A few more words about the HeRO in just a moment.

Now on an earnings per share basis, on a non-GAAP basis earnings were $0.19 a share compared to $0.18 for the same period a year ago. And again, I’ll have Bernard go through this and the SG&A expense in just a moment.

Let me talk to you a little bit about what I think are some of the very exciting things that we are doing here at Merit. There are a lot of things going on and I’d like to address some of those for you right now.

Now, we have talked about the HeRO graft and I should say that our sales are exceeding our forecasted projection, but then again it’s only been for about 60 days or so that we’ve been selling the product, but I would say that our initial feelings about the transaction is it has met every criteria that we had expected and more. We are very excited about the future, excited about some of the global opportunities in other countries that we can be licensed in in the future.

So all-in-all we expect and I’m happy to report that this transaction has started right out of the gates to be one that’s very very successful.

Let me talk to you about a recent approval that we had from the FDA and that is for our Corvocet biopsy system. We think that this is one of the great product opportunities that Merit has ever had. It’s Merit’s first entry into the biopsy business, but for those physicians who have looked at the product that we recently introduced at the SIR meeting in Vancouver. The response was overwhelming. And so, in just a month or so we will have a full rollout of the product.

We’ve also just introduced the one stop product line and we’ve had this product for many years, but we’ve added some new safety features, some new sizes a new pigtail, so we are excited about the opportunities there.

Now, one of the big surprises for this year has been Australia. Now, Australia is a long ways away and it has a lot of challenges. So, we were able to reach our first quarter sales forecast by the 27 day of February and so we are very excited about what this will mean in the future to margins. My understanding is that we are already profitable there and so we think that there is going to be great opportunity in Australia.

And as I have told in the past that we are always very excited about having the opportunity to be direct, to be close to the physicians, to the technicians and supervisors that use our products. Those are where ideas come from. Those are where we get opportunities to sell deep into the bag.

We’ve also just opened our Canadian office. I just returned this very day as we are speaking from our new facility in Toronto. And we have five sales reps in Toronto spread across Canada and same thing is going to happen here has happened in Australia. We are already ahead of forecast and we will continue to be that way.

There are several reasons for that and I will discuss that with you in just a moment. And then another issue is our Mexico facility. As you all know, this was something that Merit needed to do to both have a low cost center but maybe more importantly as I have said is to have the availability of labor.

And in United States or better yet in Utah with a 3.4% unemployment rate, there is a challenge having this facility and now almost 500 employees. And let me go back and refresh the memories that we took a building, built it from scratch, hired a management team. We know have those 500 employees that have all had to be trained and we’ve transferred almost 12 product lines and we’ve now reached that point with each month. After this first quarter, we will be incrementally more profitable and we will add to gross margins and get us to that goal that we discussed in the past of 100 to 150 basis points of gross margin by the end of 2017.

Now, another issue has come up that I think is important to talk about. I addressed it a little bit in the comments. But let me just shed a little light on it. And that is the difficulties that one of our competitors, a noble competitor has had lately regarding a recall. This has created an unprecedented opportunity for Merit.

In order to meet the demand, we are running our both our molding and intrusion and our assembly 60 hours a week. And we expect that this is going to go on for several months. Now, it’s again, I hate to have the opportunity to benefit from somebody’s misfortune. But at the same time there are patients who have to be served, our physicians who have to treat and Merit is doing everything we can to help to step in and fill in this huge void.

It also creates other opportunities for us to sell other products. So, we will tell you the numbers after we have the second quarter and realizing, we’ve only been into this a couple of weeks. That mean if I said it was an overwhelming I wouldn’t be saying the truth. It has been consuming as you can imagine. When you go from 40 to 60 hours a week for all of our employees that are working on these product lines and they include our diagnostics catheters, our non-vascular access kits like the MAK‐NV, our vessels sizing catheters and other products that are part of this and we are ramping all of those up as we speak.

So in 90 days or so, we will then give you the results of this. We think this is again, going to be something that’s going to take a bit of time and certainly the company will benefit from this. So, I think I have given you kind of the highlights of the opportunities here and I think I’ve started since time over now to Bernard. And Bernard, why don’t you give some more of your insights to the financial performance.

Bernard Birkett

Thank you, Fred. On gross margin on a non-GAAP basis, we achieved 45.9% in Q1 compared to 44.9% for Q1 2015. Two main drivers behind the margin expansion are the changes in the medical device tax and also on the sales and both product and geographic mix that we’ve seen in the first quarter of this year.

From an SG&A perspective on a non-GAAP basis, we did 28.2% of revenues for Q1 compared to 27.5% for the same period in 2015. On an R&D, including clinical and regulatory costs, we achieved 7.7% of revenues for Q1 compared to 7.5% for the same period in 2015.

Fred Lampropoulos

Bernard, I’m going to ask you a question before the other folks get a chance but we talked about our three-year plan almost a year ago and we lay out and we are successful in completing the first year. We have talked to our shareholders about our belief of 01.02 6 complete, both on the revenue side and the earning side. Can you just comment on your thoughts on that, not just mine?

Bernard Birkett

The performance in Q1 has reflected our belief that we will achieve a three-year plan. We’ve had strong sales growth of 8% on a constant currency basis, which obviously included HeRO but that’s close to where we would have expected to be. And also on the earning side where we exceeded the earnings that we achieved in Q1 2015 has given us a strong start to the year and bodes well for rest of the year.

Fred Lampropoulos

As we are sitting here and talking about the products and other plus came three but I think we will be very interested in. We introduced this new product called the SwiftNinja. It is a Steerable Microcatheter. Up to my knowledge, it’s the only one of its type in the world and it’s a deal that we did Sumitomo.

We are continuing to see in Europe where it’s approved, extraordinarily acceptance. I would say it’s exceeding my expectations. We expect to file our FDA application in May and we hope at some time in the late summer, early fall, we will have that approval. It is an exciting product. It helps you to go places that you just simply can’t go with a standard catheter. I will talk more about that as our registration becomes closer to completion. But again, it’s a very, very exciting product from Merit. And as we went to the trade show, I have people stay that is over age during cross meeting. We just went to the ECIO over in Europe and this is all people can talk about. So again, we will look forward to having more discussion about these products in the future.

Ladies and gentlemen, I hope that you feel what we feel and that is optimism, opportunity to grow the business and create shareholder value. That’s our job. And I just want to know that we are giving all of our efforts to that end. So that being said, I think it’s time to open up the lines. So, we will turn the time back over to our operator and we will go ahead and take calls and in advance I thank you for your time and participation.

Ma’am?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Jayson Bedford from Raymond James.

Jayson Bedford

Good afternoon. Can you hear me, okay?

Fred Lampropoulos

We can, Jayson. Thank you.

Jayson Bedford

Good. Just a couple quick ones, I thought it was pretty clean here. And I realize you don’t want to go into detail around the disruption from the competitor. But is this something that’s large enough that will cause you to up your guidance at some point?

Fred Lampropoulos

I think Jayson, one of the reasons we decided to comment, comment later on is that we wanted to be able to have at least three months under our belt. But we are buying more equipment. I discuss the issue regarding the work hours. Let me tell you that that this is global. In the 35 years I have been in the industry I have never seen anything like this. It’s so unfortunate for a great company. It’s going to be I think a long time. Once you start pulling product you have to get it of course requalifies. I do not want to speak on behalf of [Indiscernible] would be appropriate. But it’s going to be long and it’s going to be deep and it’s going to create a great opportunity for Merit.

Now, after this quarter, we will see where we are. We will see what we are able to do deliver and then we will take a look at it and we will comment when and if it’s appropriate to do so. We just didn’t think it was -- it is just too early at this point. But it’s deep. It covers many products that Merit has.

We mentioned the MAK-NV. So this is a device that we used to gain access to the liver. It is hydrophilic catheters. It’s marker band catheters that are used by vascular surgeons and cardiologists and then it’s all of the various products used across the field of interventional radiology. So it’s massive. It’s the best.

And one other thing too. In terms of Merit, we are very well prepared to deal with this. Part of that, Jayson is because we are fully vertically integrated. We do our own rating. We do our own exclusion. We do the whole catheter and so that gives us a huge advantage.

Jayson Bedford

Okay.

Fred Lampropoulos

Yeah. It’s a big deal.

Jayson Bedford

Okay. On the quarter, inflation devices I think were down year-over-year. I think you mentioned an OEM reduction and kind of a drawdown of large distributors. Are you expecting kind of a replenishment at some point over the next couple quarters and anyway to kind of quantify the year-over-year impact there?

Fred Lampropoulos

Well, I think there were a couple of issues. Now of them of course is Typhoon. The sales were down there and that’s something always trying to skews the business as you know from the past. I think and a lot of the other part of it has been the international distributors over in the Middle East, really across the world. So, I think wherever you’ve had the currency issues and the strength of the dollar and the difference there, world crisis and those sorts of things. So, I think that’s what we are seeing that.

Now that being said, we have a new device that we will be introducing in the very near future. The 40 atmosphere device and I think just being out there with a number of these issues in the peripheral side of the market, Jayson, the basixTOUCH hits that market. And so that’s one of the things that happen when you get the benefit of being in front of these with customers.

So, I should say one more thing too. And this gain relates to the Cook situation. We are getting to hospitals. We are on all the national accounts. All of the IBMs and we have access. But there are some places that are kind of solely this company or there that company. This kind of breaks down those walls and I think the thing that’s been so interesting about this is how much people appreciate what we are doing.

I mean, we are working weekends. We are working nights. We are doing all of these things to meet these customer needs and customers appreciated and that’s nice if someone appreciates the effort. It’s not just, get a catheter out there. It’s the work that we are doing to help the physicians do their job.

I mean, think about taking all of these products off globally. It’s a huge disruption. So back to the question, I think that we will see, particularly as we introduce these other interventional radiology products. The Corvocet is right in there. You’ve got some new guide wire products. You’ve got reasons. So, my expectation is that we will see that recover. Mostly, they will see the increase coming from the direct hospital sales.

The stop-on the dealers is it’s tough times. It’s tough to get dollars. It’s tough to do this. So, I think that’s going to continue to be soft. But I think on the direct side, that’s why Canada and Australia and I should mention we started in Japan. That’s going to be a much slower process over several years but we are now planning to go direct in Japan in the next three or four years. But we are just laying the foundation to do that. That’s a long answer but I hope that answers your question.

Jayson Bedford

No, it does. And I guess just lastly for me. I apologize. It may be in the PowerPoint, Bernard. But the U.S., o-U.S. mix in the quarter and I think it look like it was -- the growth was double-digit for both I believe if you back up the OEM.

Bernard Birkett

In the U.S., the total growth was about 8.5% year-on-year. And that’s including OEM, excluding OEM, yes, it would have been double-digit growth, OUS fell 3.2% on a reported basis and 7% on a constant currency basis.

So, all of the markets and essentially in total its growing, obviously there is a slight drop in OEM and in OEM that relates typically to the customer on the inflation device sale, so those two are linked.

Jayson Bedford

All right. Thanks. I'll jump back queue.

Fred Lampropoulos

Thanks very much.

Operator

Thank you. And our next question comes from the line of Jim Sidoti from Sidoti & Company.

Jim Sidoti

Good afternoon. Can you hear me?

Fred Lampropoulos

I can Jim. It's good to hear your voice.

Jim Sidoti

Great. Just a couple of more on the recall, is it something you think is just a one or two quarters thing or how old do you think they will last?

Fred Lampropoulos

Well, it’s a really good question. It is difficult to answer. So, Jim, I think it could be one or two years. It could be a couple of quarters. I think maybe another part of the question on answer might be, how much of the stuff that we're selling right now will stick. And as this just surpassing, I think we're going to able to keep a good portion.

Unfortunately some people been having troubles but its not just now, they've been having them for the last year or two. And I think these are great opportunities particularly when we start talking about the biopsy, we start talking about the SwiftNINJA, Steerable Microcatheter. These are the very same customers. And so I think you get a shoot at other products. If we do the job and deliver, that's we were – I mean, we're burning the oil out here. We're in the area of folks going by, we're here.

The whole staff is sitting here and they will be back out there. I don't want to be flip about it but I'm just saying I think its going to a lot longer, is it five years now, is it a year, most likely it will at least that my opinion, that just my personal opinion.

Jim Sidoti

And is it primarily in United States or is it an international phenomenon as well?

Fred Lampropoulos

It's international, Jim. I mean, I think again one of the issues that Merit benefits is if you look at Australia and Canada where we've just started these direct operations in Australia on January 1st and in Canada on April 1st. the ability to go in there with 10 or 12 new sales people and have them to be able to solve the problem for somebody and then to transfer the existing business from wholesale to retail.

In many cases these improvements are somewhere around 30% to 50% improvement in pricing, which is going to help us in our gross margins. But we're seeing – I mean, I had string of emails out of Japan last year. We're getting calls from countries, not just from distributors or hospitals, but it's that big of a deal. So, we're seeing it across the planet.

Jim Sidoti

Great. So, it sounds like you're buying equipment, you're working over time, I mean, what other thing do you need to do to respond to this?

Fred Lampropoulos

Well, I think its – we're not – equipment we're buying some additional braiders and some additional equipments, but we already have a lot of capacity in place because of our new facilities and that sort of thing. I think what we have to do? The real issue comes down to, how do you allocate this fairly? How do you do those sorts of things? Because everybody wants the product, and so, it’s a business side of being fair, and it's also not working your people's to do that. I mean, 60 hours a week is a lot. It’s a lot of hours, Jim. So I think we have to be wise.

We'll be making a trip down to Texas next week. The management team will – it just managing a crisis like this and an opportunity like this using good judgement and we've been through these things. We've had these opportunities before, but I have never in 35 years as I mentioned ever seen anything quite like this. So, we have the facilities that we built in. I remember we spend a lot of money to put capacity in place. So this involves moulding in Salt Lake City. This involves a lot in Pearland, Texas.

And you know when they started out we had all those rains and those flooding down in Houston last week. And despite that people so came to work and I think its big something you probably guys don't want to hear about the quality of the building, but we had problems with the facilities or with the water. And we just kept right ongoing. So we'll again, we'll give you a full report and we'll able to see better where this thing is going after we get a full quarter behind our belts, but its going to be – and then we sort of have to do everything else. And I think one of the things that we've talk to our saleforce about this to make sure that we meet customer needs but that we sell all of our bags as well. So our saleforce is there out there, and not only that, but our management team.

So I'd got people like Monroe May and I've got people like Joe Wright and I've got all these guys. We're out in the fields. And we're out there as a management team along with the troops and our country managers. We've had the troops out there. And like I said I don't revel on anybody misfortune, with a [Indiscernible] kind of fund.

Jim Sidoti

All right. There was another week call during the quarter; Boston had a recall of the fetch catheter. Is that material in your business?

Fred Lampropoulos

I wouldn't say its material, but we opened accounts and on our aspiration catheters did we get some that business? The answer is yes. There was another one buying another company that we get business from that? Yes. Why we have thing, Jim I try to sit down and look at the staff and another we've done. We've deployed engineering, our teams and had a lot of conversation about looking at the problems that others were having and make sure they were striding [ph] around, that we're looking at our processes, our own limitations and that sort of things.

So I think we're trying to be insightful and humble at the same time in looking at the issue because every country goes through this at one time or another, in one form or another. So we're trying to keep just good senses about us and stay humble and make sure that our processes were in line.

Jim Sidoti

Right. And then, as you just looking a year results for the quarter, if you don't consider these recalls for a time being would you say you're on track to hit the guidance that we put in February?

Fred Lampropoulos

Yes. We just discuss that earlier Jim, but the answer is we want to reaffirm and we have a little bit higher on the SG&A kind of stuff a little things in the first quarter, but we always have that, it has to do with the lot of things like FICA and all these issues, but we believe that the numbers that we have published in terms of our growth and our earnings capability, our things that we're all committed to do here at Merit controlling those expenses. And again we may have again because of this and our new products other opportunities that we'll talk you about as they develop.

Jim Sidoti

All right. Thank you.

Fred Lampropoulos

Thank you, Jimmy. Thanks for the time. Good to hear your voice Jim.

Operator

Thank you. And our next question comes from the Mike Petusky from Barrington Research.

Mike Petusky

Hey, guys. Thanks for taking the question. Do you guys have by month in the first quarter kind of the sales comparisons, I guess what I'm trying to get to is did the quarter get stronger in terms of sales comparisons as you went from January to March, because it seems like you're alluding the year again off to a very slow start. You guys have that data by any chance?

Fred Lampropoulos

We have but we don't discuss it generally, but I think you statement is fair. And let me give a little background on it. You come off the holiday. There is a couple of things that affect us on the margin side, because as I mentioned how we account for production and how that affects margins and that sort of thing. But it's always a little bit slower. Everybody – come back to work and not anybody [ph] rushes into the hospital using people and I have seen this in my own family by the way.

You get the holidays over. You want to take a week or 10 days, if you have to have something done sure of something that's acute you go get it done at that point. And so that's been kind of the history what we've always seen is it starts out, it starts to kind of warm up. You get some mark. It kind of heats up and I think this is fair, I think though we had a higher first quarter revenues than before. Yes, that's unprecedented actually we've always – we never had that before, I don't believe. Is that a fair statement?

Bernard Birkett

We did back before 2012, but since in the last number of years fourth quarter would have been higher than the first quarter of the following year, but this year we were on par and where were we are where we need to be and based on what we would have forecast this. We're still committed to the guidance that we gave at the beginning of the year we're on track and so I don't think we need adjust any of those numbers or really comment any further on this.

Fred Lampropoulos

But again, bottom line Mike is it did accelerate during the quarter and we expect its going to continue accelerate.

Mike Petusky

So, can I ask then, it seems like you guys do have some more to do on gross margin to kind of get where you guys wanted to be for the full year given the start, I guess I would have expect the gross margin given the suspension of the device pack to have actually sequentially improve on a reported basis and it doesn't appear to have done this Can you guys comment on that?

Fred Lampropoulos

Yes. Let me explain to you a little bit. So in the Merit accounts for production when the product goes to the sterilizer, so you bring people back from the holidays and as you recall we shut down between Christmas and New Years and then you crank everything back up, you start building product and you get product that starts to go probably in a second week of January and it kind of ramps from that point.

We don't take credit for product until it goes to sterilizer and comes back, yeah, and take it and put it into inventory, so its something that we again talk about quite often, but listen I wanted to back to what Bernard said, and that is we expect to hit our revenues, our gross margins and our bottom line, that's our expectation and that's what we affirming today.

Bernard Birkett

And when we gave guidance we said that the margin improvement were happen throughout year, so it wasn't all going to come into first quarter and its improved by a percent on a non-GAAP basis Q1, 2015 to Q1, 2016 and that's inline with our expectations and we expect that margin expansion to continue throughout the year.

Fred Lampropoulos

And let me put little more color on it too. As we mentioned earlier in our comments, the facility in Mexico is now reached at breakeven point. Since the end – we have transported additional products down there and Mexico is a recipient some of the opportunity because of this disruption in the marketplace. So we're going to able to apply overheads and those are going to cover and create opportunities in terms of gross margins and that sort of thing. So again we're not just made at all in any way. In fact I would say we'd be quite to the contrary.

Mike Petusky

Okay. Let me just ask one question around the money being spend and I didn't get a sense of how much is being spend over kind of respond and position yourself on this product [ph] recall, is that likely to impact in any way in the second quarter margin, the money you're spending given that probably the revenue doesn't flow, but maybe you don’t get the full impact of the revenue associated with what you're spending, I don't what you're spending now. Can you just comment on that?

Fred Lampropoulos

Well, the only thing that we're spending is we've just purchase some additional braiders and some things like talking about maybe a $1.25 million worth of expense for braiders or something like that. The rest of the stuff it's already in place. So we already have extruders and braiders, equipment and fusers and all of these things. So…

Bernard Birkett

And that's capital expenditures sold obviously it get depreciated over time, so you're not going to guess to hear that hit straight to your cost of good sold, its not going to affect margin straightaway.

Fred Lampropoulos

Yes. I mean, we're not paying for shipping. We are doing some over time but the additional volume applied to that overhead were more than cover the cost increase we think opportunities that we'll talk about on this call in about 90 days. But we're not asking to go and spend huge sums of money your bring [Indiscernible] to do all this math.

We have mentioned, why we spend this money on Mike, over the last three, four years putting capacity in place and I think we're uniquely positioned. There are some of our competitors that will also benefit from this, but they are vertically integrated like Merit is. So I think we have huge advantage in terms of our authority to respond to customer. So clear we have advantage. So, I hope that answers your questions.

Mike Petusky

It does. You have tough comp in the second quarter, do you guys have any hope that you guys can actually show a positive comparison in terms adjusted EPS, I mean you had a very good second quarter last year?

Bernard Birkett

Yes. Fred, do you want to comment on that. We don't give guidance but again, Mike I know and I wish I could do that, but we just do that. Again, I guess the best thing for me to say, we’ve said it over and over. We’ll meet our year, we’ll meet everything all those expectations that we’ve put out there we will meet period.

Mike Petusky

Okay. All right. Thanks Fred, I appreciate it, thank you.

Fred Lampropoulos

Okay, Mike thank you sir.

Operator

Thank you. And that concludes our question and answer session for today. I would like to turn the conference back over to Merit management for any additional comments.

Fred Lampropoulos

Well ladies and gentlemen, thank you very much for taking the time, again a busy day. Now, we spend a lot of time today talking about disruption. Please keep in mind things like the SwiftNINJA. Keep in mind the other new products that Merit has and the geographic expansion that helps us to get higher sales prices and higher gross margins. There are a lot of very very positive things going on in the company. There’s going to be a lot to talk about in the next quarter and we’re looking forward to that. So stay tuned, thank you for your attendance, and good night from Salt Lake City.

Operator

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone have a good day.

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