HRC
#<UNK>, just to add to what <UNK> said and to frame it a little bit, even though they are relatively small regions, certainly compared to Western Europe and North America, the Middle East and Latin America cost us about 3 points of constant currency growth here in the first quarter.
So we came out of last year, as I'm sure you'll recall, with about a 7% constant currency growth throughout the year, we had 3% here in Q1.
Latin America and the Middle East, for all the reasons that everybody on this call are all too familiar with, cost us a little over 3 points in growth.
So, as <UNK> said, Europe's hanging in there, it's not blowing the doors off by any means.
But we are certainly in line with our expectation.
But those two regions, which as I said in my comments, are going to continue for the foreseeable future, have really dampened our constant currency growth momentum that we came into the year with out of FY15.
Thanks a lot.
Yes, I think given the relationships we have got with HealthTrust and some of the contracts we have got, it should be a net positive.
We have already got a pretty strong position with Tenet.
But net-net, yes, I think it will be beneficial to us.
I think if you look at our first quarter, 7% year-over-year constant currency growth from Welch Allyn pretty much answers that question.
As <UNK> mentioned, that was the strongest quarter of their year.
So we're going to see sequentially a drop-off here coming off their strong first quarter.
But we're confident we're going to accelerate the growth from what they had historically, which to remind everybody was about a 3% constant currency growth.
Our guidance for the full year is mid single-digit.
We are off to a great start here in the first quarter.
Thank you.
Hey, Matt, this is <UNK>.
I will start and <UNK> can add some color on this.
But the R&D tax credit to us is a big chunk of that.
That's worth probably $0.06.
The beat in the first quarter of about $0.03 gives you $0.09 right off the bat.
We're going to have ---+ you've seen that we've taken our guidance up on both Welch Allyn and our North American business.
That's offsetting ---+ more than offsetting international business declines.
You've seen that we've taken our guidance down there.
So all that said and as <UNK> mentioned, the medical device tax being largely reinvested, gets us into the range ---+ the new range that we are now guiding toward.
Yes, Matt.
I think that's a key point that <UNK> made.
Two things.
The mix impact of stronger revenues in North America offsetting weaker revenues in international are benefiting earnings.
Then the device tax ---+ we quantified that the total impact was about 12% ---+
$0.12.
$0.12, excuse me.
As I mentioned in my prepared comments, we are reinvesting the majority of that into areas where we're seeing some growth, which I think I addressed on an earlier question.
So it's a combination of all of that.
The stronger Q1, the R&D tax credit, and then the mix benefit of the strength of Welch Allyn and North America.
The offsets are really the reinvestment of the device tax.
Matt, just to add to that, this is <UNK>.
Gross margins, again, are up a couple hundred basis points here in Q2.
I think the one area that's probably higher than what we expected coming into the year and possibly higher than where the Street was, is our tax rate.
I think <UNK> commented on the negative impact of the geographic mix that we're dealing with this year with international having a pretty weak year.
That's not helping our tax rate.
I think it's pretty much in the first quarter all but offset the benefit of the R&D tax credit.
So the tax rate's definitely going to be higher than what the easy math would lead you to just by rolling in the full-year R&D tax credit.
But aside from that, I think we're pretty much in line with where we were.
Obviously, for the full year, higher operating margins and higher net earnings, operationally as well as resulting from the benefit of the R&D tax credit.
Yes, Matt, if you look at the first half, second half, first half EPS growth and second half EPS growth will both be in the ---+ in excess of 20%.
So, yes.
Yes.
Again, we are not going to give specific segment or even part of a segment revenue guidance on a quarterly basis.
But we had a strong Q1 with 11% growth.
The margins are up in North America.
I think we're delivering exactly what we said we would be delivering in the rental business here in North America, which was stronger growth and improving margins as we benefit from the volume gains that we achieved last year.
So we're feeling good about that business.
Thanks, Matt.
Yes.
I think you're probably addressing the large capital investment we made last year in the rental fleet.
That's pretty much behind us.
We're now in maintenance mode with that business.
So we're back to a normalized investment level.
I think, as my comments to Matt's question just indicated, the operating leverage that we are able to get and historically have gotten off of that business on the back of volume gains, we're driving the heck out of our cost structure to ensure that we continue to drive that operating leverage to stronger margins, which we saw here in Q1.
Okay.
Thank you everyone for joining our call today.
