MMSI
#So let me go to Canada and let me go to Australia for starters, because those were the startup businesses.
The ability to go in and to serve your customers\
Yes, that's a good question.
So one of the things that, when we modeled and we purchased that business, we modeled at around 55% gross margin.
As part of the transfer, making sure that we could get our manufacturing up and running here, we built bridge inventory.
I believe when I talked to our good friend in the back of the room, that we will finish up that inventory in the next 30 days or less.
Is that fair.
So in the next 30 to 60 days, we will have used up all of that higher cost ---+ and remember, that's pretty high cost, because we gave incentives for people to stay there.
It was a much higher cost.
What we found out is that when we brought it here, put it into a production system with Neil Peterson, who oversees our manufacturing and our engineering, and Ron Frost, our COO, we essentially doubled the throughput.
And so we're now estimating that those revenues are going to be about 70% ---+ margin, excuse me ---+ gross margins at 70%.
You add onto that now the Super HeRO, and there are some common pieces there.
So if we were to say at mid-October that it's essentially 30 to 60 days, you'll see a little teeny bit probably in the fourth quarter.
But for all intents and purposes, <UNK>, the first things that go out in Q1 are going to have those higher margins on them.
And we're also seeing some momentum in the business as well.
So we think it's a great product.
So let me answer your next question.
Yes, it's a good question.
So what we did is we've shut down the European operation.
I think we have about five or six of the 37 folks, so that's a big deal.
We put and moved customer service, and we moved the inventories that were at a third party out there.
What we have here is some wrap-up.
It's HR, it's some accounting things and audits that had to be completed.
There's facilities, and of course, we're keeping some R&D people.
But do you want to maybe, a little bit more on that.
Yes, it's primarily wrapping up the facilities, <UNK>, in Germany.
We have reached an agreement there.
We are looking at what we're doing with the facility in San Jose and pulling that together.
And there are some car leaks and some other operation leaks that need to be taken care of.
But essentially, all of the work regarding personnel has been done.
That was the biggest piece of the equation for us.
Some of those costs will run into the fourth quarter, but we're actually ahead of where we had forecast on that.
So just some of those non-personnel-related items need to be wrapped up in the fourth quarter.
And Jayce, we had our OICs out on TDY for civilians.
That's officer in charge and temporary duty, where we had folks from Salt Lake City that were there on the ground in place, running the businesses.
They have now all been recalled.
They're back on post, and I think that speaks to the issue of having those issues substantially complete.
It's just a few other things that we need to wrap up.
But the management, the sales, all those things, have been completed.
So there's not much left to do but a few little housecleaning details to wrap this up.
I would say no.
I would say we have not at this point.
And what we did is we wanted to stabilize and make sure we retained their revenues; we wanted to get the business pieces done.
We had an initial sales training ---+ and remember, the sales force now consists of half Merit people and half DFINE in this OIS division.
So we\
That's correct.
No.
In the third quarter, we did about $7 million.
In the fourth quarter, it should be about $9 million, so that will accelerate.
Because remember, there was about $16 million that we felt that we would capture to the balance of the year to fit our program.
And incidentally, think about it for a second, <UNK>.
You've got a business that you buy, salespeople leave, you've got the disruption, you're shutting down, and you can maintain those revenues.
Oh, you're including the HeRO.
He's including the HeRO in that number for the Q3.
In the fourth quarter.
Oh, in the third.
Okay, I'm sorry, okay.
Yes, HeRO in there, I'm sorry.
There you go.
Okay, I'm sorry.
Oh, yes, Mexico's been running for 18 months.
I'll tell you some of the really blessings of Mexico.
First of all, the people that work there are hard-working, wonderful human beings.
The great part, <UNK>, is our turnover rate.
Think about this ---+ a new business establishing down there with a lot of device companies.
We have a turnover rate that's less than 1%.
I can't think of anything happening better to Merit than having made the decision to get that business up and running.
And again, there are cost benefits; of course there are.
However, the more important thing is the availability of labor and then being able to retain those people.
And we've done it, I think, with good management techniques in terms of how we take care of people, how we feed people, how ---+ we even have an air-conditioned warehouse.
Those things may sound a little trite, but they're not.
And they've made a huge difference.
And in Mexico, the company to work for in Tijuana is Merit Medical.
Yes, I think ---+ listen, I don't think there's any question that when you can grow in a summer quarter on your core business, and drive that business, that we're getting pull-through.
It's coming through in vascular access, needles.
We've introduced a new inflation device into the interventional business there.
And incidentally, just to comment on one of the other questions about inflation devices, cardiology procedures are somewhat flat.
The radial procedures are improving.
But we never include our inflation devices in the endoscopy business in the inflation device numbers.
We throw them into that area or throw them into the endoscopy business.
And so that's something that we don't ever put upstairs in that other product, and that product is, for the sake of discussion, is up almost 15%.
So we're continuing to sell those inflation devices as well as the balloons and the other things.
So again, as I look at the business, <UNK>, overall, it's very healthy.
We're getting pull-through.
We're solving problems for customers.
And we have this big pipeline of new products.
And I ---+
Go ahead.
Go ahead, <UNK>.
I'm sorry.
So the biggest factor on the embolization side of the business was the reduction in orders that we got coming out of Nippon Kayaku out of Japan.
So they filled their shelves, so we saw the big numbers there.
And then now what they're doing is they're ---+ I guess I'll say they're coming to reality ---+ they're managing their inventory.
So that's the biggest single issue there.
And the other thing, too, is that all of our salespeople were really working on maintaining this business from the DFINE.
So there's all that training, people out in the field, people maintaining the business, and that was our priority.
That's where we spent our time.
Yes, and there's one other factor that will help that business, and that is we have a couple of new products that are in the pipeline, so that will be one thing.
And then maybe the more important thing is the SwiftNINJA.
I don't think anybody really understands the impact of this product.
I tried to state that, but remember, this is a steerable microcatheter.
And listen, when you can sell a product for $1,200 in Europe, and we expect and we hope ---+ I'll just say I hope ---+ I hope that we'll have that product approved here in the next couple of weeks.
It's a big deal, and what do they put through those.
The answer is embolic materials.
So it's a big, big factor for us to have that present and to work with interventional radiologists.
It will help that substantially.
That's the pull-through that I think, with a number of products, that will certainly pull through embolics.
No, well, you know, <UNK>, for good and varied reasons, I'm not going to comment on that.
We have a clinical trial out there, but there's other things that we're working on, and I'm just not going to answer that right now other than to say that that is an active trial.
It's not under any scrutiny or anything like that, but I'm just going to hold back on that, and it has nothing to do with any of that stuff at DOJ.
But there is an opportunity out there that, at the appropriate time, we'll discuss on the trial.
We are making more money ---+ we get higher prices in those locations for our products, on what I\
Great idea.
What a great idea!
(inaudible).
I hope that answers your question.
Yes, well, listen, if one thing that Merit is, as you know, is the global leader in inflation devices.
And procedures change.
The biggest issue is that when you're doing declots and you have to do a PTA for these patients, they require higher pressure, and they have higher-pressure balloons.
Merit had a 35-atmosphere, but some of the larger balloons are rated at 40 atmospheres.
We had a competitor that came out with a 40-atmosphere, and we were able to respond to it.
And we actually already had it in the mill.
So there was a little bit that's lost, I would say, in the second quarter, maybe the first and second ---+ just a little bit, not a lot ---+ and then I think the bottom line is people prefer the basixTOUCH, and certainly, the higher pressure.
Incidentally, just so I can say this so my competitors to hear it, we have the capability to go up to 55 or 60.
So in our technology and the things we've qualified, as higher pressures are needed, we already have that capability in-house.
So hopefully, that will discourage our competitors.
But we're set and we're ready to go.
The higher the need, we have that capability that's already proven.
So that will be a little tip for my competitors ---+ we're already there.
Well, again, everybody, we had a lot of folks on the phone today.
I think it was 120, and I want to thank you for taking the time.
And I know that there are a lot of calls that you\
