AVNS - Earnings call transcript Q4 2017

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Operator

Hello. And welcome to the Halyard Health Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to of conference Investor like Crawford, to would President Vice Relations. now turn over the David I Mr. Crawford, Please go ahead.

Dave Crawford

and quarter for the our Good a our divestiture morning, pleasure call will Health for website, our me S&IP to my Senior are the Steve our and with Joe President us. our XXXX joining and the call. presentation Woody, performance Steve on fourth update this finish with financial halyardhealth.com. an assumptions Halyard Then outline review A CEO morning everyone on session. Investors and provide begin to and for of thanks welcome CFO. priorities. provide section brief for the will planning Q&A earnings We'll XXXX. business, additional review financial today's With conference outlook of results a Voskuil, available our call and It's details Vice on you performance Joe is

As expected statements a assurance given reminder, our financial the as those industry. could materially in to statements. economic results. can from and performance, company, forward-looking the No be differ future forward-looking our to related results conditions, Actual comments today contain our

forward-looking future information with press statements risk more could the influence SEC. the about For and our that results, factors today's see filings please and release prior

on this be and we adjustments measures. in The exclude press morning's both GAAP further these described will comparable referring items release. information Additionally, release to adjusted outlook; results reconciliations certain and financial press to has

the turn Joe. call I'll over Now, to

Joe Woody

everyone Halyard morning you in Health. Thanks, your and for thank Dave. interest Good

I'm proud strong a XXXX and and by of execution. us, start accomplishments me Let that for was saying our team's year

medical all we continued momentum delivered growth of record performance categories. across Our solid organic with a results demonstrate devices, quarter as our in

XXXX our of transformation surgical same began device of earnings business. prevention announcement while company with our time Additionally, We launches, the performance. we plan. at on all achieved this the XXXX product above executing the a delivered of strong focused into We number building the and and sale infection our of increased medical

third for guidance. the medical XXXX. have year in X% consecutive per our sales full XXXX $X.XX For from adjusted organic and to our year, earned increased of in fourth we the the share, we X% us over quarter device grew moving in X% Medical to diluted earnings business, growth enabling earnings ahead device rate achieve

performance solutions care. the GPO increased conversion sales year, for of number medical drivers the X% growth prior strong contributed $XXX successful A For $XXX ON-Q, acquisition. CORPAK non-opioid full business, device organic our and up the of demand from X% to million growing our and and in by pain contract for the a million, including growth this like continued COOLIEF to CORPAK from growth X% of oral the year, driven our

We in giving and in expect these confidence XXXX, long-term. continue us the growth near our further to trends prospects over

that past the growth a both opportunities we developed of with team, focused several will months, strategic review Over We've comprehensive I strategy management of portfolio. a our organic and have more conducted Directors Board dual-track of our our advisors consisting pursue and business. inorganic alongside

implement to action performance the and our future. for flexible taking organizational structure are and today We that is can drive scalable right

markets, a seasoned team, opportunities. integrating experienced pain President nicely opportunity leadership both corporate accomplished our care. organic Franchises. strategic excited and and medical John division. growth Manager addressable Tushar and site John education, large access he efficiencies, franchises. and This including management as and is experience have team. in a John of management President executing strategy. Today, call continue create appointment and Global strengthening expansion, to We're in Strategy surgical medical our accelerate focusing with strengthening marketing, innovation In through outcomes Franchise marketing strategy, addition, our spans growth global we're facets differentiating and dovetails for new positioned care and recently, driving our served an marketing chronic chronic and we we executive categories can drive clinical many we I'm experience that enhanced identifying of and and business developing our with through acquisitions. and America of leadership leadership of on Global products a sales see these for and focused business and awareness. to our and professional pain responsible global to will General including global growth, in our Most pleased with device the strategy. Teleflex's be With invest M&A our morning, announce of as North significant capabilities This In - for well point

me three will strategic the make to achieve XXXX Let highlight of investments growth. in this examples we

demonstrating clinical evidence, will clinical expanded differentiate First, and superior improved function pain than we of alternative look COOLIEF XXXX. life in patients from Overall studies from distinguish ourselves for products in to expect quality with to chronic grow by more we who the through ability our duration of therapies see investment suffer relief, to we pain. XX%

of As to focus coverage. on COOLIEF you most reimbursement enhanced studies help therapy for will can position imagine, the

knee by reaching severe Second, who XX approximately patients COOLIEF see opportunity and an to the we adoption accelerate osteoarthritis. million experience growth

treat to direct increased raise effort will with physicians with to expand osteoarthritis. use patient who of the advertising an knee We the awareness along

represent with anesthesiologists ON-Q surgeons non-opioid in we Finally, and growth surgeons will educating of patients make benefits with ON-Q an the efficacy continue administer about the while to an underleveraged on therapies, the medical treatment, invest decision pain typically with opportunity. emphasis professionals and to treat

the we also our been of R&D enhance us for we product the each The three in rate accelerate year prior sales capabilities growth. years. and increase to the able than past number launches in investment and has increase investment our enabled faster will our talent of to in As have years

non-opioid breakthrough solutions. technologies. these In our pain in our transformative investment us have maintain While we're launches excellence and helped of accelerating leadership also pain therapies we have center pursuing other market been

to We'll growth organic introduce continue leverage expertise $XXX commercial to opportunities patient as capacity the to million. with applications to leverage M&A help our to will improved our drive complement our new therapeutic we coming million of look outcomes in We $XXX years.

financial current In above we're terms margins at Having looking through or completed the viewing the categories. a our and to targets portfolio for we growth ability with M&A wider is criteria leverage deliver of increase are range a points lens our strategic we in our help of with market. that wide call targets robust Today size. that our opportunities will explore expand us our or pipeline review technologies, vary addressable

goals align discussed. our which Finally, four with I just highlight let for XXXX me the areas

on top line to execute and build for Our us momentum future up investments to our strategic first be our priority set will growth.

will our and Second, S&IP close the deliver commitments. we divestiture TSA

we a as this We expect early in million transaction close and transaction tax from will quarter $XXX approximately second net to costs. after and reminder

organization a Our rightsizing leaner, business. more we third priority become process is agile to our as the continue to

be well executing in operating to in will will synergies, size million to delivering for build our and us cost of aggressively a our I'm the We are scalable our infrastructure IT a end to confident our appropriate working plans eliminate of These the in significant costs with restructuring while efficiencies the actions commitment million them. we on by $XX investing following underway S&IP efficient enable and drive while infrastructure. $XX the a by XXXX. divestiture, company more structure to reduce

deploy value. strategically we XXXX have enhance to transformation look we'll to succeed well are into Clearly made progress through positioned and capital M&A medical in shareholder a pure company. to significant play in our Finally, device

and June make We call that, strategic M&A. committed forward With New to positioned our Analyst on capitalize to York. growth first opportunities on about to have in investments strategy commercial us to on we're build and efforts sharing Steve. turn Our product Day through details our our I'll innovation more momentum XXst, over the execution, to at look

Steve Voskuil

Thanks, everyone. Joe, and morning, good

teams First, and let with device on flow. disciplined cash with in and and cost comment work momentum, pleased, medical also particularly our our I'm pleased management continued delivered XXXX, the top-line strong our how me results

a release the the as medical stated like business into process, treated operations. due S&IP overview of of to morning, our as more that to and as I'd go continuing numbers, business detailed results are S&IP operations, the we press divestiture this discontinued the reiterate the we in device Before

total million ON-Q $XXX quarter, $XXX sales device medical With required to key increase one lift $XX to momentum of increased driven and point shift-in distributor, and outreach finally, across by another continued $XXX for contributed X% solid operating sales pain North sales device care relief. growth. of XX% in Surgical on quarter top-line IV previously sales. entirely category last These adoption device million, to in we business. previously respectively. allocated fastest to And medical $XX call, to for health S&IP infusion our of as for business a acceleration efforts, product year S&IP to strong last increased cost COOLIEF sales due the totaled respectively. sales quarter which million X% allocated oral profit a a in discussed $XX that, we awareness, second these our are continue conversion the growing XXXX, the year's med America. allocate million. to raise fourth respiratory million increase contract demand categories. saw were increased Overall, the compared drove to shared As timing the to million costs Also, the result, continued to In and to quarter We million. medical $XXX device all Halyard in to The year. the and costs to earnings patient be pain our Interventional of delivered

the to and Adjusted to gross of EBITDA was shared allocated in continuing inclusion quarter, costs, S&IP. were the which IT XX%, adjusted million, For year. was compared $XX distribution margin prior previously the to million from $XX due operations

to business ago, continue Tax S&IP XXs after and includes $XX Jobs expect the year Going device a gross $XX Act. totaled the closes. million forward, low million medical income $XX for Net Cuts benefit million, from we compared to the divestiture the a which margin

we earned mentioned, Three strong $X.XX factors Joe per adjusted our to share. diluted performance. As of contributed earnings

strength device the mentioned volumes. medical in I as First,

continue expenses. prudently manage to Second, we

corporate the in business, operated on of cost with As our to separating we areas, higher focused restructuring. the SG&A delayed and minimize we levels vacancy investment across

franchise We investment as in our we also review. completed teams, delayed some portfolio our

However, in also on in opportunities executing in while that value our initiatives XXXX, drive create to our our structure. corporate business, we'll accelerate and efficiencies investment

we quarter. This our benefitted as were the change will approximately S&IP of for depreciation months our divestiture of to and $X.X Finally, of sales, for continue on million. the because S&IP results classification required two treatment closes. the held by last IT accounting stop This assets accounting the until

million, full $XXX X% to driven Medical increase. primarily a of device total million results. $XXX XXXX increased for device sales compared XX% year. recap volume. compared billion, profit prior our higher operating to X% Medical a prior year by Overall, brief the sales $X.X Now, of year were the to increased

our in generation, sheet Shifting with balance $XXX was Additionally, prior for to the XX%, of expenditures new medical million and million third financial XXX diluted strong which from expanded marks year. an to activities million margin year totaled compared quarter, the share high. the prior on to year, points margin expansion. or the cash year. $XXX increase flow consecutive per quarterly in position, totaled Cash compared the the a which ended Adjusted hand. device EBITDA capital XX% $X.XX, basis for operating the we free earnings cash cash to of Overall, $XX year we operating delivered adjusted less of $XXX million

free we year, of continue For $XXX fund that flow, pleased generated which growth. cash flow. free will future I strong million we the to help generate cash our am

Now outlook and XXXX our turn key planning to year. for assumptions our the me let

provide of to earnings completed. is Minor will S&IP Owens sale the We guidance once &

operations. a are currency XXXX, momentum in Building following providing to device we for X% medical constant on the sales basis. we planning X% continuing on increase key However assumptions to expect a

technologies. accelerate to support medical breakthrough product expect device in innovation growth We to and R&D

will Given first spend be heavily XXXX. the to of our current portfolio, weighted we more anticipate half our

Cuts be on range rate expect XX% company's effective the will impact the to business between Tax year, We Job medical even year. tax is currency rate. the for The the to the effective a positive on XX% as and foreign have compared prior and impact device translation tax Acts expected adjusted to the adjusted

We from dis-synergies continue the million. range between $XX to expect divestiture S&IP to $XX net and million

the of divestiture portion a used be repay that expect our term the will from to loan. proceeds We

earnings continued strategic our delivered we capitalize the medical also Finally, ahead growth we diluted of In device per increase organic will plan. to in business summary, our investment mentioned, opportunities. on our share momentum and adjusted as our

that a operator balance sheet leading accelerate which device provides With medical opportunities, in take Our into power including questions. the us company. we to with strong development product and growth fire transformation will to our invest are further M&A, ready

Operator

you. Thank

first with [Operator now the comes begin James. will session. Larry We the from And Raymond Keusch question question-and-answer Instruction]

Larry Keusch

just I growth questions Thanks, touch business you the in medical within reimbursement OA there first, if COOLIEF, what growth and well? here, drivers in two guess for good morning of device I sort knee the read usage to around of to about, sort upon expanding XXXX is the I the guys. talk anticipate could of could guess you drivers one want be activities that indication, which as

Joe Woody

patients. in There Thanks, this Larry, that with are management orthopedic hospital surgeons outcomes very everyone the product in pain primarily the driving and driving COOLIEF, some we interested Joe the is because is in cases are although the in to of growth setting Woody. couple one are ways are the reimbursement stays remind of physicians,

JP effective. we as an of increased to on or an or need that it we're require really some requires initiating business. to month we that each the outpatient I are the this allows for anywhere get that and things we we do sort trajectory hundred and business and we drive time in to year, at And we more very U.S. and into, said And growth have that and studies, clinic get of hospitals. example, growth really we better market. of putting these Morgan, like outpatient once we right for So, medicine in end working to can prove expediting the capital then the sort earlier, investment we that orthopedic believe are said, are that that reimbursement about the proving and setting, in in XXX drives hospitals the Hyaluronic the That the feel said million office enter dollar is in, data. sites, we working that's calls and studies toward selling also lobbying talked sports to that that are XXX on us There a actually of does and reimbursement against I then we several Acid are this were many patients

Hyaluronic that's think U.S. osteoarthritis, the market one as just close $X you If billion for in Acid to treatment

you a far be HA, some But this time and pain you to payers. this sharing to to We in to of steroids are with mechanism on get and action we that that years working relief, of some up does two going compare data cases we again can if believe outcome. or compare take the and it's better

Steve Voskuil

front COOLIEF, seems help Yes, got the would on front talking we help investment investment all terms and grease I are every add is, customers. We’ve year in case that gears behind end specialists of sales. in it the like time, the to process that's clearly this time of We’ve additional again. of and got end about reimbursement investment

laying clinical to beyond. going education XXXX, the but payback medical we're more of doesn't clinical, said, seeds Joe but only in XXXX, strong for As invest in course and not necessarily

Larry Keusch

I flow and part for is, it's think we generation question about cash one should device how standalone the just one, sort Okay, business. medical then other free terrific. guess, two the And of

moving at in cost million for us million, another we $XX cash once way, rid this about this $XXX million next of flow year? to a pieces, then about basis, S&IP to the number begin said year combined $XX $XX the million, think how Steve for got on of And think get So XXXX? free you've you also you $XX million about savings the help dis-synergy level, maybe reiterated obviously the do number to of if talked for you high business those

Joe Woody

half things just of of is devices. going good is the medical is us cash more it, our from but to generation that one Steve for I'll say handle than Sure,

set think well, to Larry do it I you Steve So pretty that. up does want but us take through

Steve Voskuil

very think we increased this year. are the we saw Yes, a it that - and device we every I generative last on side, it's lucky have is this year, we saw business cash year

give give we little more cash perspective on going later, earnings So bit especially guidance forward, flow. a some we'll

transformation, impact will a costs, also couple generative but has XXXX. For some sales will again that for there grow. and impact of separation of very those to that we'll to growth that, will will cash and capital will by deploy we for cash more costs be IT XXXX, business, cash it things be caught increase unusual, the both forward, have margins flow continued going continued But have

So we longer picture are very optimistic a cash on on flow.

the as doesn't away And a getting then in only of driving $XX the but ever committed will well about saw the would to we couple of A million is with our of the out, believe go from not previously million IT press have we $XX costs the next the the $XX indirect prior million stranded come of million say, over $XX that and and on no on savings are as business. I commentary that going back $XXX of million we'll as $XX think cost the S&IP as to to costs absorb some past to million be On year. transformation, total you to million have costs left of understanding, first IT million some some portion rump $XX that that to that to to to ultimately $XX $XX XXXX that, we've you back costs, still in the and that we $XX million remaining talk are design the change million direct that talked years. organizational follow, of the million the release as changes. allocated portion about about office if can And in gone of in that $XX

leading in be that December that did order to will work as of the So well. you probably lay we sort the of design happening saw some that edge X-K of

very those costs committed change, getting out. no think but on I So

Larry Keusch

million pickup, of up $XX through of $XX assume the back to the sort picks it the or business would S&IP ratable gating the year? towards that the million XXXX, just it And of gone once is I remainder does of end is

Joe Woody

probably Larry, the normal we year back does to half quite we or little when try give probably a this our that light back back and - if that Yes, end guide picture plan spend will quarter on actually typically you that front last little more - spend end OpEx alone of little basis we spending, you but more that is in than we to on normalize it's if the light fourth a OpEx on ramp more half, weighted you a up a bit, weighted. bit in in kind quarter a had a

Larry Keusch

terrific. guys. Thanks Okay,

Joe Woody

you. Thank

Operator

Thank you. And the next question Rick comes Wise Stifel. from with

Rick Wise

Good everybody. morning,

sure ways, apples, and several close out the S&IP earnings business, if $XXX thinking I me just XXXX for - add is what post mean, there about you start lot power going [ph] is are guidance think but appreciate here, of putting it in give we first. differently, off to the the with to more XXXX. to depreciation. come and overhead, profit device around couldn't make off million I $XXX around of have take say sake us base But wrap million of just framework if I apples direct XXXX great med numbers back moving to base the you framing I Joe it'd will have net us apples us Let the Steve the the help you'd apples would I could color base, guidance the the outlook, this S&IP, maybe could be arms our us new some you're

hear, you model. answers, mid-XXs kind of I piece Lot at So here it'd and all all just $XX million year have solid into don't ground and the us base we $XX time if the some more get a could the set into you on the same something our great million, of appreciate to but head as synergies. moving like before up

Steve Voskuil

challenges. as and think Yes, appreciate through to post was it I the that tried we to to certainly the does I accounting provide have know look and say We've help is you it I color press some release. understanding, the but going some this complicated quarter, to challenges said

at think the device that you about the so Med we've - top-line side. If got

you results the the margin about you press of device some the maybe margins If to look would the segment's device segment give think the med picture look table a QX end what of include like. at release at we med

as there that are that point, use in of segment factor in a that kind margin. adjusting you are If included not starting that you some items

then probably some it said, XXXX going I give to the frame of obviously. in about have adjust look so a it that. give normalized kind you XXXX but we that four device talk up areas that about detail was Joe level can adjustments, of we're we will think in XXXX about. talked of in growth med have margin also what for on I as to And we're factor light that framework. for adjustments, a probably normalized an the will standpoint the going business more XXXX, in is other impact you You XXXX. more as And OpEx that for picture margins the as think then to picture start spend, for going the offline, some that talked the growth that's We're synergies some we again can XXXX investments And in on have remain And and in to you like quarter co-business. with couple a from those for the

so apples-to-apples course look of XXXX, another device out business, again, the accretion over well as there. those we margins a year of in solid So the in quarter, margin overall, year for accretion the med on margins

by our the apples-to-apples quarter basis very standpoint from performance med So on devices. an for strong

Joe Woody

I The add. only thing would

X-K there once talk to this CORPAK, of Just next are efficiencies planning more momentum. watching like we manufacturing synergy yesterday been call thing with in I point I have going be question of In filing people a went improving QX with transaction after how close LMI. distribution have EPS, broadly this have things the good synergies lot pleasantly a to and on talked been we the the people the frankly we And about are much and and I've bit think early in we've a little to got will we and would we are an this. ourselves about of competency surprised just that here, lot have our do

this our And all. clearly increasing and reflect So having story, new and understand very a bad job And top communication confidence our getting is to a not bottom-line. just the clarity it creation and we and not at our investors. does clear value really tighter

Rick Wise

Yes. if comments could to M&A. turn The - I your Joe on

Joe. that's that or new your deal me know it. in active? reacting about lens clearly types? lens do I you're new to you're aspect You I are of hope much you deals? Is you do questions maybe listening this or deal, have the you does a - incremental expect that specifically, of wider in of think that's maybe Any don't commit, would active same expect And more that or Are or deals going the XXXX? to do can't month, you or and should hope transformative great, to wider we to be Or couple we terms signaling I'm and I'm you said you in know year target should of you're to do ahead. this key but size that over Thanks. A language, going hope but is and in a years something and expect color suggest

Joe Woody

differently. fact the is on of was of away we about call all tell my in having have talked and do a like to terms XXXX. small If capability can LMI do to work have will that. we is deals I the mid-size believe it mean, I more the two we be that that And if you with And personal transactions straight on do deals closing last the integrate delivering manage can to goal there you I in there TSAs. we

although strategic You still focused of TSAs, of or involved that imagine going they're negotiate very divestiture on in to go but that all the at investors Teleflex point also are actively we close S&IP call deeper recent timing from their world, help intently the looking are as that's ongoing disbursed the the M&A on are Tushar of say has sort link an which in. all I'd the an and and to in It's things, the those to bulk for M&A over background XX and us executive think and franchise can out these and XX surgical is they we way can companies having expedite hire we're going to the was some John through. I that. the side hard business deciding But on different I the team also and who ones always we're commercial now would the that

can what in invasive confident So as and it. and CORPAK we to I orthopedic there. COOLIEF. around JP And chronic then where still expand the Morgan then I surgeons more I was comment orthopedic [ph] the put area also around we is in movement for think landscape happening pain then at be bandwidth is healing looking thought have and oriented some type and the myself. And thing there's through win a in Lynn's did the goal that think eventual that and on And do have to to an device in where we personal additive very transformative we a sportsmen looked in a in there's more the entire if deep talked orthopedic of about exercise do pain of we validated but and we've we XX% at Conference third with ON-Q our care we're it med out to party Board, because obviously had could do acquisitions, a minimally

effort to this growth in position and get confident happy M&A. we'll and there a an frankly to be execute have I'm there, we ability good focused So very to organic I'm have

Rick Wise

Thank you much. so

Operator

Thank question comes you. Mishan KeyBanc. And with next Matthew from the

Matthew Mishan

that synergies back the completely necessarily than allocated actually and to staying Halyard not coming already back million of about that piece talking $XX And net how year? in the net corporate higher gracious for I I want want $XX the $XX different synergy that over the restructuring. cost XXXX. just that to I'm of corporate business answering being morning cost the three And with cost I'm $XX what S&IP million make into you a and bunch are sure of cost questions, asking about the amount base thank to in corporate these make cost of taking costs Health net then and those good are like on of think million certain to a restructuring just you've a that And side. the of of because the there's $XX is of S&IP to currently of million, eaten in for you that the I to in Health trying number next of the OMI is coming right then thank us in you million have that all were Yes, years the corporate understand that's you some just it questions, are number with those going restructuring Halyard up and to have, and base much said allocated $XX is understanding you just not thinking you're million taking those. and ways to to are this sure of then

Steve Voskuil

the miss me. by one order, right, on cost Starting going back to the for are device your question be going business. with corporate to I'm if try taking cost that's med absorbed those you I Okay, fundamentally but circle in corporate now to

past our strategy that is in of cost talked the of actually cost cost corporate the part our IT. actually largest and we've big takeout a corporate targeting is component clearly Now

those that thinking after example the benefits the so think transformation med extent the last year cost call going savings to assume about remain Co. to I is for corporate. corporate right [ph]. we And the and start IT talked segment in about way costs we're one, go if device But also to on and

of and where cost and go million $XXX leaving handling the of storage the that sharing of in again On Then our part to usage when shared devices for allocated last go costs agreements year and that about also some with costs lot and year one a think naturally. those assays some OMI goes allocated of those cost IT for with cost times there OMI. goes many naturally two, so like employees, away in a well way with S&IP are Likewise component S&IP included task - costs some there's those we key away. costs example in things those as away down of facilities,

we to that those million burden business portion net but left costs in the So million really of $XX of as XXXX. costs to of of from million you're that million ramp that's go really shift number targeted med both device savings all dis-synergies talked bear and the again to going absorb inside those both $XX out you of in so When designed, have in large to OMI. is and Many distribution through Then eliminating the organization you targeting we're that cost it's transformation, areas. out left IT to efficiency. $XX taking allocated of that may chain dis-synergies supply with we the those it's corporate it's up of we're $XX costs, past the optimization

of are kit underway the fast way already. all initiatives, a of which So it's by

not and this happening with a those leaders see of so all are And already. is projects wait

going get the So of if essence the that's don't I'll know out to questions. pause I

Matthew Mishan

No, I think it does.

I fully the how think the moving there right or number. four get to and understand I three to pieces

that growth? appreciate Is fourth not I sustainable think really in your of about through into how And as go would organic acceleration talking tailwind you COOLIEF to kind So some Steve. XXXX do what you're then that mean that you quarter. the sustainable revenue

Joe Woody

the that and them frame again in that that targets of us, U.S. of the COOLIEF month. thousands we're now so will increasing progress, and of sort in every we're the Yes, in I hospital, - continue reimbursement be don't there I will with for we've XXX because are to think even hospitals

mid to a actually for they're normally do in condition. the to their I lot you'll but very office hospitals of in a day do in a that better referring positive. that's also and term Orthopaedic this And the longer - surgeries surgeons so the longer surgeons setting. that think results So are as reimbursement the have looking would and able and on revenue payers, commercial Then to with reimbursement, they're work patients these the see be with impressed then outpatient office. orthopaedic that But sports term we get medicine OE focused

again frankly, within good taking up getting surgeons our product runway because patient result. and And anyway, we've totally ON-Q a think we orthopaedic of a and the really trying look for number the is at ON-Q they're same and get that a duration hours to years. growth that, the XX of excellent great is So, for and our pain are strong, product business on that's really segment that the with got for in

on more focusing we're focus there. why surgeon a that's So,

a quickly do really obviously surgeons are really they ones are calling that physiologist, the are utilizing or the at their opioids. and make patient how closely get utilizing can their rehab sure we to looking the not over really Although patients

Matthew Mishan

now of the contingency that the XXs, And question And potentially the Okay. like deal, there of how me, low-to-mid last accounted OMI a rising oil deal is cost and in protect on to was OMI? for material kind the prices, any oil was against model? for

Steve Voskuil

announced do But around for know have polymer up one. Yes, prices the some The oil they fourth I in of is to on quarter up adjustment range we and There little I'll think results. we a took currencies, just really move bit no and mechanism their may the outcomes little planning them. that prices how a that were take we model, that seen I like assumptions sure, around, when that's were would builds commodities deal bit that in business. I'm OMI they

Matthew Mishan

much. Thank you very

Joe Woody

you. Thank

Operator

next [Operator Cooley comes you. Chris with Thank Stephens. And Instructions] from the question

Chris Cooley

the taking you appreciate and questions. morning, Good

Then and the constant fourth greater quarter not up X% pretty you points bit XXX could at years distributor is there to the and if saw back the which basis business follow-up. just if I on you the there bps, a Just device X% for rate, timing go there. and organic could the I run or the I've little the XXX growth, and takes to X% then nicely. model you coming XXX strongest. kind colour on why about at several in start, translate volume growth you back guide to at to of And look basis that me, the just there's on want for I that year? a with to of currency the couple still Maybe reconcile the look the And to come appreciate the there what puts and from that quick on more some got we colour does fourth basis gave maybe a the and XXXX? a Steve, look quarter to side, other that just talk if on but, does

Steve Voskuil

XXXX, probably that But quarter, We've build key the back happy some think But the the a was calling we when plans mid-year O&E you I'll probably color. sitting Joe capability second said approval mentioned additional was the have to be against we fourth Chris. at were lot we organic, the to out again the that a and to Yes, year, with And could the fantastic, to but needed mark quarter fourth was confidence and start we're add fourth the of quarter moving so there. factor, by had been a we some into on FDA investment as from the been in big quarter the approval, we've quarter more need we all would and of to and drivers, IDPs deliver hard some able fourth guidance big at point big then performance. quarter already but factor. ramped still do. and a did certainly a to a of And get to that you businesses all X% that I selling strong do on by the look And some recognized like care, care, device We're to the of plan, some that the are the had we're XXXX, second not we of has the quarter first last turn up it oral to from is begin again start will normalizing point XXXX, that kind Joe. have to kind quarters quarter saw that, COOLIEF, things, lapse and lap but just again from off well, to we and level to in - all fourth the standpoint there'll performance. that from we of additive you're okay I a in the IV And guess to I'll of year it's in drop going getting but is fourth you going well. side you as benefits oral surprised I needed businesses still and calling be think was going out fourth

Joe Woody

we terms think I is that a teams going quarter, that cheering not existing continues and do ability XXXX. changing have into at one-time business, think personally see and grow John the attention on I have sales for be be transition work I the order with part on it look past to talked as having on frankly coming COOLIEF me historically, Steve Steve and of international is of you this of which only the have move hit CORPAK growth, is calls, into I QX again, in of that penetration can to still am thanks little this to and going have to putting them way as IV fourth Yes, I and opportunity a a and a in would commercial Chris, months, a into getting that benefit ON-Q, was have or in But with think spending still we And oral patients. lot Tushar over first and U.S. a on the look my longer room thing our seven of accounts term that same-store XXXX. the that and I and three been business mean, and sort the we're and would week way couple half directing sales area one of the an I to important at to with as do go commercial hours about the their bit and seasonality customers in well, operations of frankly him, penetration we care, then but our legs add, that and you which bit to

of expect will be you attention lot this of U.S. on better and the be. it would a As international size companies, can companies

long-term and mid I And of along that a had Chris. of reimbursement you follow-up sort the that's so COOLIEF. with And think,

Chris Cooley

Yeah, I so thanks appreciate color, the much.

heighten you summarize guided focus and and is of kind guys to I X% what momentum company the you the bar heard what the that has say, to here positive the said correctly. Just I historically with med is the X% clearly range, which think I early am growth comfortable in to for you hearing are very device, on of kind you historic X% X%

Joe Woody

we correct, That's very are comfortable.

Chris Cooley

I two Post maybe that patriotic housekeeping follow-ups, effective maybe know you obligated see pay that the bit you as And ask I about the you feel Steve, so margin tax always it's well, seeing could doing guys quick but and were really to just think Perfect. this your thoughts moving Thanks consolidate? I costs management? quickly And at then one cost your there. out a S&IP peers then you question believe go working does tax much have four three, overall some bit as balancing to time, I then savings, could where so much. were us into little we of overtime? systems and And how forward little just nice to a rate capital rate on spend, of best a just as what better can higher IT spin in than help come point just on that still play down, how as been to

Steve Voskuil

Sure, happy to. would be

as we slightly and are longer no operations organize didn't Big way number have are. have talked pointed as our have be the we still Mexican happy manufacturing planning the forward. so tax you some can of opportunities patriotic reform but we we And less we we to if some out and obviously forward, are we impact tax a those patriotic of just us, on rate still tax about, landscape you as going So, imagine have go side very forth. opportunity, relevant, for would

there systems believe the we past, give mind bring in year a do, the on work we little bearing the bit so IT, need moves to have tighten maybe we some OMI as progresses. on room system. model margin some that's some rate that the From is tax still have have we this So in maybe IT operate costs further, on here talked will a range contacts have to but a to we to again we got think guidance that we that we about have as that we probably that down side, to new as today is new IT high probably again more

at believe place And it's around finishing a so to that stages months really lining going system now, we order the they in what putting work, that planning, of are be we're we company starting just time going of in to a a be we've the of costs to about around in expect IT be expect two last level in detailed to the a to fast XX to is want of the we're need XX for but costs be as that ERM magnitude we that to When there'll get areas, IT are in do process, pre-transaction that to in past managed the significant very we an recognize one way transition be. direct as carefully. the the back to future standpoint get can half to that, size of said be our risk going to is have move back benchmark as we savings kind also manages from we're side be to that, the of you'd least

we back in we that platform we when the office those activity the transaction of supply inventory, common comes done language a pointed visibility benefits, consolidated then be will to a IT a have back the sales, have transactional transaction, in do common are all same costs out have of spoken work, much and you global don't is chain to process. to savings added the today will better language second world be other story. will costs those as more the being the that we of which able of lot on There also visibility The around of lot as

work of the right the and to the M&A lot we top able are detailed of have path on do So, to we as it, the deep are work, planning of it's a team drive focus place, in excited of being the and savings able separation complete excited well. about on of, the to no got it's a a going lot work be But on they back. doubt about lot those to we forward down have

Chris Cooley

you. Thank

Operator

Thank from Demchick question you. Morgan Jonathan And next with our comes Stanley.

Jonathan Demchick

quarter back no for times, about costs that you right little following of these of between I go Hello, I $XXX on they what if this year is bit get I've I I top get talk and know are allocated Jon. understood we none probably been just dis-synergies the those and away was, for question, that so think S&IP, of previously missed respectively we but divestiture million apologize so of in Thank was $XX million the that we've but just quick number. kind the the and you a costs added this, make then I specially I kind longer that just hovering time, the correctly. taking much the one number of guess calls, is sure tackled that this to but wanted

Steve Voskuil

but to little problem, it am no bit just we I before, walk again. through happy a talked Yes, about Jon,

the currently gets So, those million transaction number when of a completed we're away that's the go about allocated, cost think $XXX naturally.

anymore. for storage S&IP handling there not incurring will S&IP, cost handling away cost we that So are inside goes and for storage for example, when be and

have of in of those And So of for role inside, as scale we arrangements to the goal redesign have then like imagine out costs that costs down as dis-synergies laptops share costs with down to immediately order of well. past. the that the were the some And elements million those you some X-K $XX fourth with taking OMI. is sharing sharing left that less group a you organizations that some in scale don't that When are as talk about we that cost devices, talked released quarter. cost million deliberately costs we will of away the can so naturally. have $XX you less costs people, taking all will IT naturally Also sharing fourth or we TSAs facilities, component part less those or about are some then arrangement through support to go so the we we the

that's about after remaining you've steps left through for those dis-synergies other gone those So, XXXX. think what's

Jonathan Demchick

Okay.

million number $XXX were something we like this at talking basically midpoint becomes So the million that? $XX

Steve Voskuil

right. $XX million to $XX million that's

Jonathan Demchick

for the device next unit you the help Yes, just first comparison second prior we the profit I perfect. at on to Thank when is the then more off okay, on for I that year? question device the look it And should then of you. Thank could of kind that and the just would the took expectations understand maybe are year heading safe the guys we current apples-to-apples for the guess it assume the an was XQ, quarters me And guess part still quarter, had quarter of the that in lower versus reporting. if into where that that second I be bridge are you you. it profit be

Steve Voskuil

question, first answer To yes. your Sure, yes.

look fourth again you apples-to-apples underneath if apples-to-apples. helps So at the change it you no but hopefully release quarters three is previous of at table with back quarter and that, press the there that with the the is the

quarter-to-quarter has look first and of quarter-to-quarter. that's R&D have biggest the of that we a we the quarter, how quarter drivers device million had in order closed the that a had the quarter that magnitude out had bearing volatility about piece operating margin and probably here if R&D $XX the and big at moves On every the the R&D spending out of on million in which spending over biggest year med spending We device through. margin did $X one for obviously year the fourth think course in some there plays margins things and we I such projects of inside fourth pretty you

biggest driver So that's fourth the quarter.

Jonathan Demchick

Understood, very thank much. you

Steve Voskuil

Thanks.

Operator

else is would the Instruction] Woody any [Operator to the to for closing nothing call there you. Thank like Okay, return present, at comments. Mr. I and

Joe Woody

the thank in would I like for interest Look you. very continued Halyard Health. buddy to Thank

over the about Conference couple our ahead very everyone to As are Raymond business, Institutional going we you opportunities website Barclays about on access present weeks and Xth, XXth, are March Global halyardhealth.com. can the in how the our James information found March the tell on presentations on excited Healthcare next of can relations we interested investor for section the these of to Conference be

week. have a So, great and thanks everyone,

Operator

attending now is now conference Thank presentation, disconnect. you The you you. today's for Thank concluded. may

Avanos Medical (AVNS) 27 Feb 182017 Q4 Earnings call transcript