TFX
#So it's <UNK> here.
Vascular Solutions have traditionally been quite aggressive with product launches, and you will see that they just launched the TrapLiner which is an extension of their core GuideLiner product.
So of their, call it, $170 million per year about $50 million comes from this GuideLiner product.
The TrapLiner was initially thought to cannibalized a larger portion of the GuideLiner.
Having done some of the clinical work in Canada and in Europe, the feedback from the clinicians is that it will be used in conjunction ---+ more in conjunction with the GuideLiner so the cannibalization rates will be slightly lower, so that is a potential for upside.
In the longer term, I think with the new products, being freeze dried plasma could be a significant opportunity in the future.
We had a strong military call point in the product that will be close to that [call] point.
The proposed we have with Ping strengthens that call point into the military, so we think that will be a creative.
And their top line sales growth will be reinforced by our international channel, and we think that the potential for some further upside perhaps in the future.
So, again, the feedback is a resoundingly positive, we have put the product portfolio of percutaneous solutions which is Percuvance and MiniLap into the hands of our full sales force now and put more resources behind it.
In the US we have 24 hospitals using it up to 36 that have been through the back through quarter four which is a 68% [hit] rate which is consistent with our success rate going through VACs.
We have 35 trials on-going in North America and 60 on-going globally.
We're still very enthusiastic about the product.
Feedback from the customers and surgeons continues to be resoundingly positive, and we're just working through the value analysis committee through this year and what we expect to see as we get through those is the revenue to ramp through the year and to have more of an impact in [2018].
Thank you.
So, I'll cover the margin side so it's accretive to our overall margin.
Now there will be some adjustments as we walk through Vascular Solutions.
They count certain expenses below the line that we would've counted in gross margins but their gross margins have been in the 66% range as they have reported them.
From the point of view of synergy, clearly we just closed this a week ago, we're working through that.
Clearly we have a plan there, but we don't anticipate significant synergies in 2017, but obviously that will ramp as we get through 2018 and 2019, and I think we're pretty consistent by 2019, we will generate between $40 million and $45 million in synergies from this transaction.
I'll address Turnpike, so, the Turnpike product we're very excited by it.
We love the growth profile of it.
We love the margin profile of the Turnpike product.
The growth of the Turnpike in Q4 was almost 200%, albeit on a relatively small base.
We see this as an additional opportunity in the hands of Teleflex, because a lot of their distribution channel overseas or some of their distribution channels overseas at least, does not sell the Turnpike.
They sell a competitive product that they had taken on board as a distributor would prior to the launch of Turnpike.
So we actually see the lifecycle of that in the early stages of lifecycle for the Turnpike with many years of accretive growth to come for Teleflex and accelerated by what we can do with our channel overseas.
And on a tax rate, our approach in planning for 2017 was to develop our plan based on the prevailing or the current tax codes out there for the US and abroad.
We have not yet factored in any potential revisions and so what we will wait to do, is see what is actually coming out in terms of legislation, and once that becomes clearer we will make an assessment of the impact and provide updates.
But we thought it was premature right now to incorporate any conceptual proposals into the financial plans.
This is <UNK>.
I spent a bit of time in Washington two weeks ago and I would say while there's a lot of enthusiasm to get something out there relative to the tax reform, there is still a lot of disagreement under the surface in terms of what that really looks like.
So I think the approach wait-and-see is important.
There can be a lot of negotiation between now and some final proposal.
That's something that we're obviously watching very closely as we talked about the whole Vascular Solutions acquisition.
We initially funded that on a revolver and bank term loan, and we're going to opportunistically look to see if there is an opportunity to turn that out high-yield.
The extent that either the current administration creates a repatriation opportunity or we are able to create one ourselves internally, would cause us to reassess that financing strategy, because obviously we have over $500 million in cash sitting OUS, and that could help us to delever and perhaps take an alternative path.
We're working through the question on repatriation, I guess, by ourselves and we'll have to wait to see what happens with the current administration as far as that.
So we are watching it closely, obviously.
Okay, so it's <UNK> here again.
So, within percutaneous you have Percuvance and MiniLap, so they both address that category of percutaneous solutions.
We don't normally give specific guidance for individual product categories, but as a set area we expect it to ramp and to be accretive to our new product revenue that we will ramp up during 2017.
On the Intuitive side, we do sell a range of products to Intuitive that our [trocar] is predominantly better sold as part of their platform, and that generates approximately 30 to 40 basis points and growth to our revenue globally.
We don't see that, that growth would compromise the Percuvance opportunity in any significant way.
Correct.
Sure.
Thanks, operator, and thanks everyone that joined us on the call today.
This concludes the Teleflex Incorporated fourth-quarter 2016 earnings conference call.
