AVNS - Earnings call transcript Q1 2018

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Operator

Good morning and welcome to the Halyard Health First Quarter 2018 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]. is event this note being recorded. Please would Dave Crawford, now like Investor to to over conference the Vice turn Relations. I President, and Treasurer Please ahead. go

Dave Crawford

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

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

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

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

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

Joe Woody

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

of execution and our closed new as of strong IT we we to the delivered another earnings, installation year, quarter start system. our cost initiating the by S&IP and begin Let momentum, saying a that off the with reshaping divestiture, top-line me continue structure began our sales solid to are

in our on outlined goals are conference XXXX last call. quarter's to on continue deliver four excellent to that an position We for I

for factors execution. growth for interventional continue as more organic continued top-line commercial with demand including a pain. well-positioned continued growth momentum seen the we've focused Multiple quarter, company drove X% and sales our First, to enhance COOLIEF double-digit we're and to

our severe with portfolio flu sales. oral and surgical health digestive growth season, year's more In the along a impacted care for respiratory drove Solid continued two to CORPAK cold quarter. contract, And pain, pump health. ON-Q demand for drive factors volume last in

fill bupivacaine which on educating through shortage First, their findings the key expected accounts a from the increased outlook remains to these industry-wide surgical continue as our audit. to second, FDA with the we to continue deepen convert second sales headwinds, to pumps is pump positive fellow's our new focus quarter; due inability Despite penetration surgeons. and

a to the opioid post-operative the for Our outreach threatening of for in opioid perspective, to solution days extended we of of pain In days. use. use. pain important earnings that of role non-opioid well-positioned our ON-Q adjusted $X.XX physicians therapy five can relief per addiction seek and as is Halyard delivered opioids. diluted ON-Q non-opioid opioid an resonating efficacy quarter, From control life a is effective the play ahead expectations. share reducing offers and benefits alternatives clinically within superior management, pain begin highlights as three is just first and an earnings

and For earnings discontinued diluted between year, share of earn per the expect adjusted we $X.XX and $X.XX to operations. continuing from

growth our company become high-growth medical capacity million a $XXX focused attractive complete, the strategy. roughly device markets execute in end dual-track pure-play of to divestiture we With have now acquisition high-margin, with

cost as more adjustable on structure. and And we're right-sizing evaluating our efficiencies We expand markets. driving are wider a M&A agile finally, us smaller a and through focused actively technologies, points, increase lens. Exploring areas that corporate opportunities help our leverage our call company,

IT internal generate XXXX. system help new support During completed our $XX million of will more cost to areas, This the $XX million in M&A of activity. speed structure quarter, we which growth, of when efficient began cost will reduce our installation integration savings and other the in

working ensure we corporate cost, the capitalize necessary are reduce ahead. also to the well-positioned efficiencies, are drive are strategic investments we we making opportunities on and While to to

strategic me made four investments growth that Let highlight examples during quarter of the we our strategy. support

from launched device XX% our First, XX our The consistently are projects. French compared most products. investment year our significant which increased digestive GJ to the of our shifting In we competitive the position transformative the portfolio. we health investment strengthened R&D four R&D medical sustaining quarter, first prior was MIC-KEY* Tube to and

than in investment expected continues is year. and our XX% clinical Second, more studies this to grow

the initiated to study the other we including therapies randomly Acid. of favorable is new as controlled quarter, patient COOLIEF to Enrolment today used show in differentiation a planned. XXX widely this During Hyaluronic study progressing

pain we AdvaMed, government management efforts, Additionally, robust its our and therapies. a Through of current my improve I team reimbursement alongside and effort through to are impact engaging legislation relations working medical devices in are way to non-opioid the other aiming Congress. help

full Vice with performance. Finally, President Vice we will Asia-Pacific new this leadership about I as see we solid Day International the as top-line will to roles forward we details Arjun domestic and behind and our growth. international to achieve success to strategy of region. in opportunity for Arjun our served are to Manager trailed and more leadership, call recently XXst accelerate New lead Asia. our served over York. who that, we regions strengthen of With Southeast well-positioned with and our record believe Prior drive the Steve. Manager on an driving at commercial report We President and Halyard's us, quarter opportunities me. first turn a team, General our With growth. XXXX. to acceleration revenue appointed and track experience momentum, continue appointment, create goals. see streamlined He brings sharing Growth Covidien focus Sarker, To an deep business solid international Arjun to effort, their of XXXX efficiencies, and our Vice in and President also our has business, look Analyst one June in General With to but our his focus held of our leadership can as we we of increased Senior will

Steve Voskuil

good Joe, morning Thanks, everyone. and

I'm the say me teams the results across that business quarter. let pleased delivered our of with First, facets multiple during the

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

year raise total our were $XXX that constant COOLIEF. adoption pain entirely to category of business. currency the device increase the pain, patient direct-to-patient to to to allocate a S&IP shared saw $XX across With fastest sales strong Halyard a to medical X% represents $XX on that for marketing on basis. million This we Those I'm strength our digestive and constant to increased awareness X% increased be as Interventional basis. X% another in million continued previously allocated costs increased to previously Overall, medical growing As company by a respiratory million. device pleased and $XXX currency driven efforts a result, million, health. increase and sales delivered quarter health, we that, are interventional allocated a required to medical X% totaled ago. a device quarter costs S&IP sales

solid driven portfolio, volume enteral brand. our CORPAK, including In MIC-KEY addition health to was the in digestive by demand feeding

Turning to last year's continued health, oral to contract respiratory care results. boost

growth. addition incremental severe drove cold longer volume and In a more and season flu

as inventory reduced see more We impacted quarter And their finally, pullback shortage. to modest a sales the distributors were by levels pain expect bupivacaine as to for mentioned, by of Joe the surgical the end second quarter. the normal

adjusted increased quarter, of costs X% strong account in negatively The impacted distribution Gross medical shared inclusion XX% dividends the Net income increase continuing line forward. medical even quarter compared R&D was However, continued for margin was previously S&IP. with to XX% $XX operating the our divestiture, $XXX a in Adjusted gross margins as were momentum profit to allocated our margin compared higher going in year devices remained to year. from IT of Operating our up year to by million and margin resulted EBITDA ago. $XX compared offset million Post million, for by the was the expect heightened educating margins to investment medical gross growth were increased million prior devices we which totaled strategic low-XXs Adjusted continues to and $XX to growth the initiatives. year conversions for ago. a focus and the products operations on top-line in prior compared surgeons in in pay as a plan. be XX%. devices

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

that This our acceleration $X quarter, expect planning assets. to our of our for we growth growth; compared high-end the we the change classification year. by because benefited plan stop at we and as in IT required SG&A finally, enhance the quarter million into second, future held-for-sale, accounting were and S&IP investments on came of we move increases volumes depreciation behind of increased the strategic and investments, second the S&IP results for device approximately medical fund to as the prior to First, assumption; though further was

complete, divestiture three structure focused cost areas. our on are we the With primary reshaping in

First, our organization.

devices our company. pure-play and corporate costs medical transform into leaner, will optimize a We higher performing

Second, process. IT restructuring which multi-year will be a

element essential are our portion efficiencies support of costs reduction growth to cost. the As we'll drive and program. you a about know, our restructuring, cost scalable IT half the have costs, an our After corporate infrastructure to a significant for

in Finally, position drive generation, to looking quarter cash balance $XXX sheet financial services. a hand. ahead that efficiencies we plans Shifting chain, and implement in we'll million of on distribution, the ended supply strong and our with purchased cash

Term repaid flow Loan from with the divestiture. the $XX of credit $XX During cash the free expenditures quarter. the and million quarter, or pay-off operating proceeds the for balance from activities will less our capital Cash facility million we totaled B

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

both We to our we between of unchanged. discontinued In earnings conference adjusted plan. key per remain The earnings our sales diluted expect and assumptions diluted share $X.XX including share planning $X.XX adjusted we from momentum earnings continuing continued our on call last and operations. earn ahead of summary, per delivered shared and

company. as the S&IP ready firepower With we devices to growth With we in and position to focused a opportunities pure-play that, strong are complete, divestiture in have take growth operator, attractive invest are medical to accelerate a questions. the

Operator

begin [Operator We the session. question-and-answer Instructions]. will now

Please ahead. comes Raymond The first Keusch from Larry go of question James.

Larry Keusch

morning guys. good Thanks,

million walk about up you So now us I previously, $XXX first through that close could M&A so $XXX capacity you've which from up on the $XXX million, sort of talked million articulating to to it was just been $XXX brings now the Steve, that's you that question, what range think million?

Steve Voskuil

It's very is one simple. fairly that --

adding that what four and the kind from in just cash that generated of million on the taking the flow, you the take $XXX brings cash to million that's So first quarter you we flow roughly. multiple $XXX

Larry Keusch

I guess X% so perfect. in that you guess constant no the indicated I obviously is that’s for planning here the X% assume did then to growth you first two-part quarter. devices, question so Okay, change X% other And assumption, to there one medical was currency I organic

there So kind continues the comp how implies could quarter? that is to guess again way out remainder there? on of or capital, fourth recognize have and consumables, really year of but tough think what model the I out you then talk Joe maybe sell alongside the And think many think of a there the well COOLIEF bit for that of we a just which I right to should about generator target kind what's how question, you about of sitting the do sort what the little in hospitals a the do I is and

Joe Woody

a our and that were at business we're the talked in quarter. very We across strong of I-Flow we momentum the the range the Larry. have business we business business had as but quarter script against a the that and for a with we're associated flu in happens see about about quarter this yet if and international flu being X% we’re we the ON-Q we're chain strong X% to talk high-end destocking higher business, the Thanks, fact cognizant season. the and with supply obviously the on focused moving and in really to not a That little about next cold the more into and that understand a range to seeing bit we the said, of that what a lot our that. thinking we ready perform stronger We're and move getting end season fourth on supply for and issue

of sale and capital, sell do from disposables. benefit We we COOLIEF. then, about right obviously You're the

are in XXX sites. COOLIEF We with in roughly about

reimbursement cases doubling I hospital available then and another fact in us calls have where can and to that sites And effort some think in the other course on private of perform ambulatory about they several with very offices orthopedic procedure that focused this just get talked is units. we hospitals there we've by a that or capacity surgical in of to better centers reimbursement.

So see that long good our pretty obviously well. this with we a we're as for studies bolstering runway and clinical

Steve Voskuil

some add the practice, mid-year we to is expect look the our assumptions time. to at those is as like take at that of we'll I'll mark, and I'll and all get be adjusting a planning I'd

Operator

The go next Please question Kristen Stewart comes ahead. of from Deutsche Bank.

Kristen Stewart

on my the questions. taking for thanks Congratulations Hi, quarter.

or it points a what any impact you to clarification point thought flu Just better to the two that? is the quantity way or was for did at percentage top-line, percentage guys of quantify you all

Joe Woody

We the business in was point quarter. didn't it just But growth device it. over a disclose the for of

Kristen Stewart

then of you then fair? base think take is because continue you out to business, it see really right if some impact guidance this of just is the can't your at for cost, about generation And take that a discontinued take out to [ph] were earnings Okay. least to will we month; way the I quarter S&IP guess operations and the [stranded] the

Steve Voskuil

that's right. Yes,

Kristen Stewart

okay. Just -- trying get to a

Steve Voskuil

That's right.

start a one will that's but bit second to will only you’ll The right. have it S&IP, quarter so simpler month easier, get yes, of little get

Kristen Stewart

earnings, around the is were to [stranded] is we about way [ph] buck if the core ongoing if earnings about of think right? take kind But the that that take of annualizing in we continuing business a does to out kind base the it sound cost,

Steve Voskuil

on done here bit and get would and picture But model have a Yes, a the again, the to from kind it’s say our we fully I'd once little what so look rest balance what I little we’ve if would us. light suggest. more mid-year year. tough extrapolate able project to the behind get tie we a to of of relative for little be pro we mark, to far forma will side S&IP of bit

Operator

Wise comes question next from ahead. Stifel. go of The Rick Please

Rick Wise

as everybody. figure about I'm May talked ON-Q, be the bad second in it you just continuing understand couple sure it? was little FDA put in understand the a us I the context. just quarter trying this quarter, what -- it to starting solid what two to is you I a about X% comments quarter in the correctly through how next in about just questions first, of all a obviously with talking Joe, put about this it if context, be big -- related morning about that of noise, feeling you it heard -- correctly, ex-headwind likely of will off wanted outlook, help you’re these sort it and resolves be good maybe shortage and just were understanding Good without if make all trying X% will would I'm the talk to be And as had this quarter in was drag overall, second third-party it a maybe the bit how more audit the to in to factors be quarter

Joe Woody

the said, they we We it’s to moving issue. a a mid-single-digit plans ON-Q have at Rick. second come business down than look and and more an that on that area the lot surgeon quarter. quickly sort the growth, with really we think a particular will in underlying of and of and industry-wide we’re filler season ability with frustrating in Thanks, through seeing That account board, it bit carry shortage the I flu the were as on of because and conversions about has north place pump of We in mid-single-digit talked it, that benefit FDA we're it's slightly pleased in in bupivacaine contingency it do as slightly move back range.

first how the up year, we to we’re it full-year just of we capital on example with that of focusing and we’re pleased make portfolio to CORPAK one One have feel in we in is of of you overall half areas business. this. just look fact last sold is that about international year the other sales our where the what one terms the give to example for Just very quarter for we is growing, sold

So we despite to it this frustrating have other places because will better. that go make but us it’s even much

Rick Wise

you in hope -- the that’s extra complete more to just see us Joe, or where you process $XXX two Maybe flow to you to help couple year, direction cash what this deals going go, how now? and XXXX. the not something also you right that in understand are you and are changing past the aspire of said where given less publicly capacity, you deals are you're in that might optimistic optimistic million you

Joe Woody

So, though sure easier. growth that creating. good the have decisions We is are make to our and progression organic benefit I'm do optimistic, because which makes I pressure of obviously the don’t feel the value deals we’re going the

in We be strategy. really are would are around talks those a smaller all deals, around would handful channels, some others of them of oriented be on technology with of but oriented

easier strong growth. again process underlying So that confident this have there really organic but and decision-making makes I’m what we an is

Rick Wise

way like Thank focused create what international, maybe several And to you're -- your infrastructure happen, to team is, mentioned leadership needs Joe? this sort international more it times that to what place be where so envisioning, whole needs turning to your sounds us just more understand Yes. you in in dialogue you. you've opportunities visible what's far, it last now, place this of in help have

Joe Woody

Two and see or Tushar, can key oriented versus John sure experience also alongside the some my our either is that in who fund but going right think franchises have the areas American to because we'd putting prior business. at making the opinion not of North with Halyard Sarker thing where board, think focus internally we than couple strategy we slower type like brought to I chronic the that we're has on opportunity not executives things there is same happen North great can rigor of the growth a in and invest lot America cases that direct and the I distributors, international. joining Arjun lots slightly growing top-line the and really in in Covidien still investment for we was business and penetrated ocean, distributors of care for can It of really really you I Rick. outside us into well What in the pain same a that Thanks, of paid business had a and frankly momentum, the see investment commercial put off exists opportunity. that we U.S. one

Steve Voskuil

would I just Yes, add.

a think more he table, stronger European change have Joe, we've now I voice do efficiently. having and hand been has it's a more only Asia-Pacific which the and reporting international previously opportunity region to got digs as in we growth to Arjun it but in and gets drive at not directly he big and his the region the around and also

play of we think we and I structures we at be so part there. sort work So as to as a efficient those could today two look want

Joe Woody

XXXX. XXXX I this I Arjun we’re coming really of the just talked end And see review benefits the for to clear, towards be establish into really XXXX now, ourselves we’re just started, to trying a in strategic about right as

Operator

of Matthew go Mishan ahead. comes Please question next KeyBanc. The from

Matthew Mishan

thank and S&IP? congratulations for on Great, taking you the closing questions

Joe Woody

Matt. Thanks,

Steve Voskuil

Thanks.

Matthew Mishan

Hi, Joe.

far? legislation opioid about the been Congress, As of what you most encouraged have so kind through request has

Joe Woody

commerce now. making aligned, built But though to AdvaMed for encourages right most action not receptive sure parties -- of Representative in how been in reimbursement is change it the plan place There we're thing Kim you're and that or affairs an actively are of well working government the first even And committees and from receptive with effort. working that me both our as very is the for to all alongside this. in been go energy is own that we have [indiscernible] involved Well, specialists. a have we've really

Congressional and to pain we've met medical So that they reference all devices patients. President's the to direction over Leaders with and XX Senators accessible make more elevate

And country well. device an that are crisis so those By way, in are see again put headlines other working we we the the there in. that news medical the solutions; I that and unfortunate we’re the cannot not every offers only but as we're solutions companies day think company it's

So encouraged out around as some more I’m from aware the some of the private these both of hospital people hospice. the doing into is very and devices of maybe educating, in for reimbursement center reading, care, of and setting and cases know change may to work trying making so you and surgical ambulatory the

I there. can So not the whole higher only industry think be helpful

Matthew Mishan

costs Owens a & of work you're expectation. that? have Thanks. you initial some shifting yet, cost And many going sense of how haven't with size fully give versus quantified do to structure years, And next third going really your then be over to you of when bucket S&IP Minor more corporate the over to better savings, few and able think to to people then, as a the you’re

Joe Woody

Sure.

we direct have On S&IP out benefit that worked have a I needs would my of team. to people say haven't lot benefit that a beyond the shared is and it our to What number. both the conveyed,

the start an a obviously gave standpoint organization us as of across areas and And head corporate resources number and so a or conveyed well. benefits that them over from gives

been So positive. that's a

a summer. And And same last clarity moving would thing that have purchase at sometime on a I'll of to part looking of that over organization also the we've restructuring optimization even the even lot the timeline the that right corporate the we time distribution the alongside activity doing our mentioned already other call, two pieces say then position to and got piece get think we On it that the talked in we of back we're to middle phase pieces to be costs about may more hit a I'll work our chain two go in of underway on IT second line. so third those exercise the speak, we complete forward chunk the a piece get then the question, the by and other half the that as services we've all of call are I like piece. in and supply of year the around the network,

Matthew Mishan

last and get this. thank around And you. right Kristen's sorry are accounting but then think question following like the read, the on base, just All up question forma going into the to to I'm I pro people

buck there pro think put As by in corporate we a and adjusting, has like million what considerations to talking the in tax also been was and like divided of base you quarter go of that talked from how assets, how about we like quarter much X nothing month tax just the we IT is then then depreciation $XX any forma XX depreciated other and a second be should about? buck million $XX about should the XX down adjustment is, to the where we on cost, should phase

Steve Voskuil

you Yes, little expect bit a may order. reverse in

S&IP and for $X IT the So that hit how million, quarter was the the there. depreciation on was much the assets so total in

you quarter device help, S&IP I about working quarter take cost think $XX.X at million. going to there corporate of the a bit device first the first from down maybe question how And the down call, different was may could was I’m direction, we of for you piece and kind if take be In it business. allocated and same the in EBITDA those million. talked the costs that the a cost framework, broke for $XXX look our we The it time how quarter $XX little work a but allocated at were the I that terms your disclosed fourth and think million bit through and to about little will

amortization the million a back And call $X and we've to before would that million that $X factored that think XX. off the have a low suggest look If synergies little you in. to to will like if pre-debt standalone would if use I in future, you bit XX picture, you for if what synergies XX basis add you down devices probably further But full-year synergy those quarterly didn’t you about on the then, we take a call of give that future, take EBITDA a normalized the when a take the to disclosure take synergies model of depreciation if about get you it the XX for quarter. think you basis with that synergies, sort first EBITDA then sort that a will on those

Operator

Instructions]. from question comes The Please ahead. Stephens. go [Operator next Cooley of Chris

Chris Cooley

Good morning. my to Appreciated taking questions.

Steve Voskuil

Chris. morning, Good

Chris Cooley

remain Just a we the stage and fluid pretty the you line there the all still talked at I still light. and operating realize think but some when this spend about curious, about of running line at on XQ the higher here transition vacancy delayed during you fourth quarter level SG&A similarly in the

where optimization spend in leaner we that's you’re expectations expect where the is a of in or on going previously for or from with would your of curious one P&L case be Just the if fact the this maybe based to come costs kind back year lower. an forward and I’m those later of just that higher commensurate running be level would if SG&A more curious perspective should if into

Just got to get there want follow-up. clarity a and some I've then quick

Steve Voskuil

Sure, yes. It’s Chris. a of bit both,

If you still organization we consistent we we’re But more as light fourth the you but a year-over-year we sequentially. as more around quarter bit bit said, spent down we were first quarter, SG&A, look some new at plan one our drive that -- organization it's that’s of a combination efficiencies, higher and intentional vacancies with component. of future with running is two, a

Again as on on also Joe part we're going has partly getting to separation as your spend before a that were going make expected that focused specialist, spending Joe, bit a anything to we had more is, on of of QX quarter, number bit a including -- the The about on is sale business ramp up question the investments to but very the and talked exited a side, second we've plan little to more yet? side quarter team first additional light QX but corporate add component the to we we on in reimbursement got other the clinical, light though we focused, forward. and business want on corporate complete, in the the side. that

Joe Woody

a especially in I for do focused we technologies, to the Yes, sort increase highlighted as good Steve’s study studies direct and has based really to return to there. script which go the could benefits a one on national seeing more just But an we is that we COOLIEF it’s payers to level margin activity in start think a different as QX. XXX up We're a the so about activities that to a patients There's headcount clinical perspective, effort and also increasing of that and of is bit year. comment show having here on move the pick the into where and and government of reimbursement that good what all patient we it’s impact over very COOLIEF affairs business want to however on lot that’s was you'll there accretive [indiscernible]. we The cost some commercial it on invest. into from advertising the see that’s a immediate place do, us area

Chris Cooley

four currently of that States terms from business on what about go lineout there potential growth on Thanks. as core? XXXX, got for and basis, now we it international I’m starts I about we then, international talked you the international like in point side being the on of curious come as of way definitely just prior kind business rate to incrementally of that six prior -- go-forward a quarters what more a just the to growth it fully. questions the earlier sorry, of about really the just should the here about think as being to really think think to I is business I’m about trying kind that's a in the volume XXXX agree rate believe opportunity. equation you in step-up And back XXXX the kind base of of setup a as really we when mean blended think underlying growth into the on I kind on

Joe Woody

can We is step or exactly the think country, more that because that in should been about so happen quantified we’re smaller million outside Right. time roughly to definitely for be in are up really haven’t the number over being time low-single-digit, encouraged a the still into stepwise of fact this and this sure. there I It’s to so and because it U.S. we over be products so really XXXX. effectively, may $XXX it commercially double-digit of I’m but it visibility talked high-single-digit. our underpenetrated growing many XXXX, grower, a not have introduced we base

Steve Voskuil

Yes, have I'd growth effort year. we it that international had plan more the that this last as our follow year, in we

that just on step and as and on execution that we So business on effective the have we we and Joe commercial we commercial focus more fully on meaningful said do believe and yield change XXXX in wins, in will execution, and the sustainable fact focus beyond short-term international a way. as -- the I some we improve in some up commercial but settled Joe domestically can I while get execution organization think

Operator

with Jonathan Please Morgan ahead. Stanley. comes question next go from Demchick The

Jonathan Demchick

so to includes taking questions if Ops, to start off for congrats continuing guidance, operations be Wanted a will so also is of think basis $X.XX you and in and you ops, so be continuing kind deal. look thanks on of embedded benefit the to quarters when half at really of continuing so $X.XX now, discontinued way op, that back Hello, imply discontinued for $X.XX fair on XQ first fair flat more the the it $X.XX a out it quarter’s XQ closing half perhaps this cancels the to with in $X.XX there the around EPS and the guidance. the obviously run to Is $X.XX the may ops do appears of discontinuing continuing be that that’s something ops business the out about to of to part assumption rate next Ops two that’s pressured, XXXX? that’s going

Steve Voskuil

talk call to is little bit our maybe relative that’s that first than pressure, in I pain quarter Joe going we bit we what $X.XX $X.XX the bit would be apart. suggest, said, lower those bit some we're the a XQ light we've devices more more pull think little but is to low that's if a one Jon, trying would model offline we’re that way to I think to can relative little a a the surgical had quarter to top-line as and strong OpEx. impact in a volume pieces relatively anticipating that such

the we’ll guidance back don't the half some our but in to and of rebound with see second expect say line So a to little pressure quarter more see year. in in expect the

Jonathan Demchick

then a a clear December S&IP from basically kind $XX so was quarter that of helped of base very into the reconciling S&IP those are restructuring had business. you very, But million $XX of on cost think savings the annualized a accounted How restructurings targeting IT about X and follow-up was those million have and and and where in $XX the reduced just talked either costs. has activities you the lower $XXX you that to about $XX I it should think the I then mean million million the trying to $XX talked mean I is quick plan? some which creates of about the like million of which so the this versus you some and I’m restructuring Understood just or to think kind we couple number of S&IP for extra some million of already about also

Steve Voskuil

both, honest. of that’s and great Yes, bit to be Jon, a

carries that $XX eliminate reduce talked and and restructuring million to about costs. portion portion I'll cost to similar take million. result of that at organization goes those one allocated side a organization the first. down really that ramp was naturally into we some of $XX those side of of allocated is A the somewhat portions dis-synergies was a there That up further. that our the On on down will out savings that of IT scale IT to that

less as that allocated beyond that have So of IT taking savings a less employees, storage have half direct you infrastructure costs less before. by they restructuring the just need shrinks will roughly so and in as we new less devices, and really there manage down then portion our were what that's computers, we to the can IT we costs that but anyway

savings IT to dis-synergies on costs reducing and part on So the back allocated to in both the and front the contribute ORG also the on half. the contribute

Operator

follow-up from Kristen Stewart of Please have ahead. And we go Bank. Deutsche a

Kristen Stewart

thanks or the one that this for of follow-up. slightly the taking full-year? that Joe first my in more I you flu, I ON-Q is direct than of Hi, was expected for benefit had just that something the comments wanted with was quarter to being the impact think clarify

Joe Woody

gave in That’s QX. well. this business mitigating capital QX We into do but where with I well as there as see But in also that strong example also we’re seeing we’re CORPAK COOLIEF. we new again offsets our partners see

Kristen Stewart

perfect. Okay,

fine now all commentary you lens that reading just S&IP opportunities the the not I the I’m or maybe evaluating at into have of and changed the through given think that exact then is new So on your just have too term but really just of size print? closed some deals in you wider the much lens, of about a wording too much M&A kind thoughts wider into

Joe Woody

but get but our we that very in but cost it to all this and York I care going a people chronic the perspective Yes June don’t well in New little a get think all company our we’ve delivering just far. at from and new technology to smaller we’ve strategy But very, active. going look the in where piece that initially, pain did the together in clear become is And the hear we we’re lens focused when growth. wider on and on that to a as participate outlined involved from both and a it’s categories lot and bit deals chance XXst are we’re and we more focused on thus as investors of organic the also we adjacencies just obviously channel some today been

Kristen Stewart

Okay, pro of and of XXst a more would should heading something any one the appreciated? expecting run kind front details June Day base, longer-term plan guys, Analyst a color you like be will then forma day that we kind last question or you what be looks from of just provide on that to that on not kind into but

Joe Woody

to bit and from and overview little that we're technologies couple tee the that our utilize look going they and will as myself key and so wants make how you is work generally products. initiatives well some technologies, update and Steve Tushar in-charge attendees breakthrough from see of the hear on to want chance to encouraging comments hear a franchise I’ll the now customers strategic John from give we of our milestones franchises, a leaders technologies a our then then in but to and at

can we reimbursement run in what and pick milestones critical the Steve, studies that? might you are our in So you get be forward. efforts going an what about be our of terms to rate of want understanding talking sort our on will and of plan clinical up

Steve Voskuil

give really growth and we different efforts, about want we for cost in and give when we healthy synergies we’ll dual-track update strategy want of what like is this together talk working look giving algorithm sure we’ll update we to and section year to a what past, organic talked that and year the financial about restructuring of that Yes, then does like model that the noise ops that on certainly this an on we look the the discontinued talked you against last we've be make what M&A picture underlying looks programs the years. with progress ahead to so about brief an that past takeout on do this the can with had and good few some business,

Operator

for Joe like session. I any concludes Chief question-and-answer would Executive to Woody, over This closing Officer turn the to Instructions]. our remarks. back conference [Operator

Joe Woody

thank to Health. everybody interest your I in for Halyard want

ahead a a be will lot. about on the Conference. Thanks Information how reminder about Healthcare the on excited found Deutsche Bank opportunities very presentation Global halyardhealth.com. at website Investor We’re May of that Relations be access X, as the and I’ll to section presenting

Operator

for The you is today’s attending now concluded. conference presentation. Thank

You now disconnect. may

Avanos Medical (AVNS) 2 May 182018 Q1 Earnings call transcript