ICUI
#Hi, Jason.
No, that has that taken out for the intercompany between ICU and Hospira legacy.
We had that eliminated.
You're talking about what's posted on the website and supplementals, right.
That should not have the contract in it.
I think that's a great question.
I think competitively, Jason, we don't want to get exactly into it, so could we talk a little bit rough numbers.
First of all, the loss of that month is $80 million, so that's a big, that's one third of that gap.
So the real year-over-year downdraft is more in the range of $150 million or so.
And at least half of that was because of one specific contract.
And I would say half of that was due to share erosion in other places.
I'm not sure I'd want to be more specific than that.
Okay, that's helpful.
Then just as a follow-up, when we look at the four buckets of revenue for 2017, I'm guessing you don't want to give guidance on a line by line-item basis, but maybe can you give us an idea of which of the four segments will grow.
And where do you see a little bit of pressure.
The consumables segment will grow, but because our growth is being added to that.
Otherwise, the legacy businesses, as we've said, that was part of the original purchase in October and even the revision was certainly the pump and dedicated sets.
And the solutions businesses were going to be smaller in 2017 then they were in 2016.
So I think it's a little bit of the question we just were talking about a second ago, which is, are we calling it right.
Is this the right number.
I don't think we've ever justified the transaction or the return saying we assumed growth in either one of those businesses.
So certainly not in 2017 and certainly not in 2018 of the run rate number we showed.
We were presuming the status quo.
Okay.
And <UNK>, you touched on it earlier, but and I realize you've only had the Business for a few weeks, but you still think the portfolio and the quality of the offering is what you thought it would be, right.
I've looked at this as a little bit more of an execution issue versus a portfolio issue.
Is that a fair understanding.
Look, I think we have, just like when we got to ICU, we were very cautious on quality systems and making sure we delivered our end on that, and I think the same applies here.
This Company is invested in quality systems a ton, but we have got to get through everything we need to get through there.
And the team is really good and working on that hard.
I would tell you the time we've spent with customers, people don't have an aversion to any of these products.
People use these products and like them for many years.
There's not a lot of flaws in them.
Certainly on the consumables bucket, it's our product, so we know them very well and we believe in them.
On the solutions bucket, that's essentially a generic drug-like item.
It's about quality and reliability and service.
And on pumps, it's more differentiated, but the legacy business here has invested a lot, but don't know that they've executed necessarily well and obviously had a lot of issues with the remediation stuff.
So I don't that we come into this and say we need a whole bunch of new stuff that hasn't been contemplated or that where partnerships aren't in place or heavy bets haven't been made on next-gen technology already.
I think the chips are in on that.
I think it really has been, certainly in two out of the three lines, very much about commercial execution, and in one of the lines, it's a little bit more about technology.
Right.
So as far as the balance sheet goes, it's no secret we're totally under levered here and that was for the reasons that <UNK> spoke about.
I think for us going forward, as time goes by this year and we get our arms wrapped a little bit more around some of the CapEx expenditures and the timing of some of the stand-up costs, we'll be able to give better guidance around expectations in CapEx and free cash flow.
Until we get there, I would just say that we wanted a conservative balance sheet for a reason in this market, in this industry, and we did that on purpose.
My view, <UNK>, is there is like four pieces out there that are a little bit up in the air right now.
We got a lot of inventory with this transaction.
What is the rate that we're able to monetize that and turn it into cash.
It hurts our P&L as we slow down production, but it helps cash if we move that stuff out the door.
How much stand-up cost do we have to put in.
And we have an idea of that.
And how much CapEx do you have to put in.
And then where is the baseline of sales relative to synergies and cost we can take out.
And when we see the whole picture, then I think we have a different confidence interval to address the balance sheet.
It's a little tongue-in-cheek, we were irrationally over-capitalizing [red] legacy ICU.
By our standard, we're in a better place.
Once we know those four pieces, we know the cash coming out, then we can decide, can you do something and where the relative valuation of the Company as.
You have seen the way we've acted when we thought our own security was mispriced historically.
So we don't want those opportunities to pass us by.
It's nice to hear from you, <UNK>.
I think culturally there are spots where it is not the different; where there's a lot of people who care about the customer.
And the best people often are the ones who rise to the occasion on that, and I think there's a lot of people here who share that value.
And so I don't think there is some culture clash going on.
I think we have to make and have made and implemented some tough choices around where there was duplication, not to have that duplication.
And I think that also helps culture when there is some clarity around that.
Because we had some uncertainty and there was literally 17 business days into this thing, and we've addressed it; it's done for the US market.
And I think that goes along way.
That hasn't been rolled out yet.
This is all happening real-time; we're actually here in Chicago working on such things.
That hasn't happened real-time yet to the customer face, or that changes made it's way to an actual customer.
But I think again, you've seen ICU or in our previous experiences, do some of these things before.
They take time to gel; they take time to heal.
But I think we're ---+ we worked really hard to try to make sure we get the right people on the right seats in the right place, and that's an ongoing process.
The word cross-selling is always an interesting word to me.
We're buying into businesses that we weren't in, so it's not necessarily cross-selling; it's just selling what they had.
And at some level, they were selling the things that we were the manufacturer for.
So I don't think there's a lot of cross-selling in the classical sense.
Internationally, I think there's certain markets that we want to invest in and want to invest in aggressively, where we can justify the investment now, where we couldn't as ICU.
But I also think there's some markets that we need to really think through, can we drive good returns there and what's the right way to participate in them in a way that this Company wasn't forced necessarily to think before.
And right now, the value is much more at stake in the US, so we're more focused on that.
Over the next couple of quarters, we'll turn our attention to some of those deeper international questions.
But there are absolutely some high-value markets that we need to place bets in.
It looks like that's the end of the call.
We look forward to answering any of the questions investors have.
As our first call owning this new part of our business we are very excited, we're excited for new colleagues, we're excited for our investors to watch us go to work on this thing.
So we look forward to everybody joining our next conference call.
I assume just like this one, it will be late in the reporting season.
There's a lot of work going on; I just want to warn everybody about that, and we look forward to speaking with everybody then.
Thanks for your support.
