LIVN
#Good morning.
I'll let <UNK> answer these questions.
<UNK>.
Yes.
Thanks, <UNK>.
Let me start if I can with the question on the FX and the hedging.
We have overall ---+ I haven't given guidance or details on the individual aspects of our hedging strategy, but what I have said because it is an ongoing process that we continue to look at on a monthly basis.
So right now, we have a very selective hedging program.
We actively hedge certain currencies based on our own and partners' forecast.
But we also have very natural hedges that sit with us due to our sales and where our costs fit.
So right now, what we have said is for this year that we expect some FX volatility and that may come from various currencies and we'll continue to monitor that.
But on a bottom-line basis, we do believe right now that we have adequate coverage to mitigate a lot of the risks that are potentially out there in the macroeconomic environment.
In relation to the gross margin, really there are three elements to this one.
Obviously, the largest element in that is mix element.
We also have some benefit of equal amounts, both the medical device tax and the synergies and cost improvements.
But from an FX perspective, there is very little if any FX upside that is being driven on the gross margin at this stage.
Much of our cost of goods are valued at dollars and we're a dollar denominated currency.
So really right now, there is very little if any FX that's driving that is number.
In terms of the inventory statement, again, in terms of our gross margin, we are in a position where we gave the adjusted gross margin.
For the year if you look at the press releases and the GAAP numbers, we have included for the first half of this year, we called out a $35 million inventory step-up.
We believe that most of that now has actually been taken by the P&L in relation to the step-up, and we don't expect much more if any step-up to be hitting the P&L in the second half of this year.
Right, so in terms of the AspireSR, about 80% of our sales in the US are made of AspireSR, so which is probably the fastest conversion we have ever seen in this business, and that speaks volumes about the value that the patients and physicians feel about this device.
So in terms of let's say volume growth, we need to think inside Canada there are two moving parts here: one which is the new patient growth and the other part is the replacement business.
In terms of the new patient growth, again the second quarter was double digit and we see this as a strong trend for the business.
It is very difficult to predict going forward, but we believe it is a result of the AspireSR additional benefits to patients, and we see more and more patients that are drug-resistant that come and have an AspireSR implanted.
The second part which is the replacement market.
So at the end of the battery life, we see this is as obviously a slower growth element, but we see trends that are back to our historical trends of replacement growth in particularly in the US.
Again, we are confident in our ability to hit the 9% to 11% sales growth this year with really the most important for us factor being the new patient growth that is really the one driving mid to long-term growth for this business.
Thanks, <UNK>.
Because we are a larger Company now than both companies were before, we are not maybe splitting some of the subcategories into the details that we used to have as separated companies.
But what's important to see is that we believe the trends that we see in mechanical valves are long-term trends in which we don't see necessarily a turning point for mechanical valves.
The market we've said before is declining, and it's a global phenomenon.
So we don't expect the turnaround point for mechanical valves anytime soon.
And second, we see that the traditional surgical valves ---+ ours, but also when we look at some of our competitors' recently announced results, we see that this is a challenging market because the future is probably for new technology valves, particularly for sutureless valves like Perceval.
It's probably too early to say that when Perceval will become basically the only valve that we'll sell, but it's really not an unlikely scenario in the long run to see that all aortic valves surgeries will be done with Perceval-like valves, and we expect that this will continue.
As the valve itself will see improvements in the years to come, we believe that this will become the valve of choice for physicians and basically will represent the vast majority of the valve sales that we have in the Company.
We don't give those numbers out, <UNK>, but if you look at our long-term goal which is $80 million to $100 million by 2018, and you do the math and if I remember correctly, we sold $37 million of valves this quarter.
Your math is probably right still.
But it is the fastest-growing, by far, the fastest-growing product we have in the valve business.
And again, if you look at our long-term guidance of $80 million to $100 million, I think that gives you a good idea of where Perceval will sit in the next two years.
In Japan, the KORA 250 ---+ look, what we said very, very directionally, we said that we had around 20% market share prior to starting to lose share because of the MRI compatibility, or the lack of MRI comparable product, for us in Japan.
And we believe we've lost about half of the share that we used to have, so again, indicatively, you can think about us at the low point having 10%.
KORA 100 has helped us get a few percentage points back, and we believe that KORA 250 will help us get the rest back.
Let's say, indicatively today we are half the way through.
But we believe that in the next 12 to 18 months, we'll be able to get back to our historical position in Japan with the support of our local partner there and the quality of KORA 250, which is the smallest and only automatic MRI mode product in the market.
Thank you.
I just want to thank everybody for being on the call today and appreciate, I know we ran over a little bit so we appreciate you being with us and have a great day.
