AtriCure Inc (ATRC) 2015 Q1 法說會逐字稿

Good afternoon, and welcome to AtriCure's First Quarter 2015 Earnings Conference Call.

My name is Joyce, and I will be your coordinator for the call today.

(Operator Instructions) As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Lynn Piper of Westwicke Partners for a few introductory comments.

Please proceed.

Thanks, Joyce.

By now you should have received a copy of the earnings press release.

If you have not received a copy, please call 513-755-4136 to have one emailed to you.

Before we begin today, let me remind you that the Company's remarks include forward-looking statements.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond AtriCure's control, including risks and uncertainties described from time to time in AtriCure's SEC filings.

AtriCure's results may differ materially from those projected on today's call.

AtriCure undertakes no obligation to publicly update any forward-looking statement.

Additionally, we may refer to non-GAAP financial metrics.

A reconciliation of these non-GAAP measures with the most directly comparable GAAP measures is included in our press release, which is available on our website.

With that, I would like to turn the call over to Mike Carrel, President and Chief Executive Officer.

Mike?

Thank you, Lynn.

Good afternoon, and thank you, everyone, for joining us today.

We are off to a promising start in 2015, and are pleased to report strong first quarter results.

Based on those results, we are raising our guidance for 2015 to a range of $123.5 million to $125.5 million, reflecting approximately 17% to 19% year-over-year constant currency growth.

Last month we hosted AtriCure's first analyst day, and I want to thank those who joined us both online and in person to discuss available markets for our products.

We are very encouraged by the feedback we continue to receive from physicians about their excitement for AtriCure solutions.

Our key takeaway from the discussion was a multi-billion-dollar market opportunity ahead of us, which was further validated by the physician presenters.

On today's call, I will start with a quick overview of our results for the quarter, followed by an update on our business, our clinical trial progress, and education initiatives.

Then I will turn the call over to our CFO, Andy Wade, who will provide detail of our financial results.

After that, I will come back to make concluding remarks and then open it up for questions.

Turning to the quarter, our first quarter revenue reached $29.9 million, an increase of 20% as reported, and 24% on a constant currency basis when compared to the first quarter of last year.

We demonstrated solid growth across all of our product lines in the US, where sales grew 26% year-over-year.

US open heart sales were up 19%, MIS up 26%, and AtriClip sales were up 52% in this quarter.

Open clip was up 41%, while AtriClip Pro grew 89%.

On the international front, sales increased 4% as reported, 18% on a constant currency basis.

As you know, the dollar has strengthened recently against virtually all major currencies resulting in significant foreign exchange impact on our international sales.

In the midst of these headwinds, we continue to see strong growth from our direct sales channels driven by key contributions in Germany, the Netherlands and France.

Sales were a bit softer in distributor channels particularly in Eastern Europe and Japan, but we expect to see stronger growth in the second half of the year.

The strongest trend we see in our business is increasing clinician interest in managing the left atrial appendage.

We believe we are just at the beginning of addressing a multi-billion-dollar market.

As we announced last week, we have sold over 50,000 AtriClip LAA exclusion devices to date, which is more than all other LAA management devices combined.

Even with over 50,000 Clips placed to date, we will have just scratched the surface.

In the US alone, there are 300,000 open heart surgeries and fewer than 12,000 open AtriClips were implanted in 2014.

This means that only 4% of the population who may benefit from AtriClip are actually getting it, and that is just in the US.

As you know, open heart surgery is our core market today, and we are encouraged to see the physicians increasingly adopting AtriClip in these cases.

Several new medical societies focusing on the LAA have been created in conferences dedicated to the LAA management have prospered and are enjoying great attendance.

As an example, in March, Dr. Sacha Salzberg hosted a very successful course in Zurich, Switzerland on the benefits of LAA management, including improving the results of catheter and surgical ablation treatment of afib in reducing incidents of stroke in those afib patients as well.

Dr. Salzberg emphasized that currently the most effective way to close the LAA and experience these benefits is with the AtriClip.

We remain encouraged and excited by the high interest in this event by surgeons.

At the end of the quarter we announced some other very exciting news as well.

The expanded indication of our CryoICE cryoablation probe, or CRYO2 for temporary pain management.

This is the first cryosurgical device FDA cleared for temporary pain relief by ablation of peripheral nerves.

This indication provides patients and physicians with better options to manage the pain associated with a thoracotomy.

We are currently putting together a multi-center clinical trial to gather more data demonstrating the clinical success in managing pain, as well as the impact on both patient care and hospital costs.

Throughout 2015, we will be focused on educating and training physicians on using the CRYO2 for cryoanalgesia, and we expect an uptick in CRYO2 sales in 2016 resulting from these activities.

Turning to R&D, our pipeline is strong and building.

We are continuing to advance our RF ablation and cryo platforms, expand our clip franchise, and find new and less invasive ways to deliver our technology.

We expect to bring at least two new advances to market every year.

Now for an update on our clinical programs.

Our staged DEEP, dual epicardial-endocardial procedure for treatment of afib, or DEEP AF, trial is up and running with four sites onboard.

We have enrolled three patients and are expecting enrollment to accelerate in the second half of the year as more sites complete the IRB approval process.

The sites that are getting onboard first are those who have the greatest amount of experience with the procedure and have already forged a strong afib team approach between the EP and surgeon, demonstrated by the strong referral pattern.

Thus, we are confident in the sites we are onboarding and are looking forward to providing enrollment updates with you on future calls.

Moving on to our stroke trial.

We are continuing discussions with key opinion leaders and we have been making progress working collaboratively with the FDA to design our protocol.

There remains strong interest in the trial, and getting the right design is critical to enrollment and ultimately trial success.

Simultaneously, we are pursuing several non-IDE studies to increase the level of evidence for management of the left atrial appendage.

One such trial is called ATLAS.

The study's hypothesis is that the exclusion of the left atrial appendage with the AtriClip will decrease composite events of reoperation, significant bleeding, and stroke or TIAs postoperatively when compared to a second arm of patients treated with medical management for postoperative afib.

We are looking forward to providing updates on this as well.

Training and education continues to be an important pillar of our growth strategy, and we saw tremendous benefit from our efforts in 2014.

We conducted eight advance courses in the US last year which were attended by physicians from 80 different institutions.

In 2015, we are continuing to focus on physician education, including expansion of our phase two training programs and onsite training.

We already have four onsite training centers up and running and are looking forward to adding even more over the year.

In addition, we are incorporating more innovative educational opportunities for our physician customers.

We are currently collaborating with organizations such as the AATS and ISMICS to integrate training and education courses into trade shows and society meetings in order to get even broader access to physicians.

Another example of our commitment to education is the inaugural James L. Cox Fellowship in Atrial Fibrillation Surgery, which we established in collaboration with the AATS.

The multi-year commitment will provide newly graduated cardiothoracic surgeons with highly engaging educational experience at leading surgical afib centers across the United States.

We are incredibly proud to be a supporter of the James L. Cox Fellowship.

Dr. Cox is widely recognized as the leader in our field, and we are pleased that this program has come to fruition as recognition of his contributions, as well as AATS's commitment to education and furthering the practice of surgically treating afib.

On the sales and marketing front, we continue to increase our sales rep and clinical support headcount targeting an additional five to six people in each group over the next several years.

We also recently added a new VP of European sales to help expand our growth there.

In summary, 2015 is off to a solid start.

We will continue to focus our investments in education, innovation and clinical science, which we believe will fuel continued growth.

I will now turn the call over to Andy Wade, our chief financial officer.

Thank you, Mike.

For the first quarter of 2015, revenue increased 20.3% on a GAAP basis to $29.9 million.

On a constant currency basis, worldwide revenue increased 24%.

Revenue from product sales in the US was $22.9 million, an increase of 26.3% from the first quarter of 2014.

Revenue from open chest ablation-related product sales in the US increased by approximately $2 million to $12.4 million, representing growth of 19%, driven by our education and training efforts as we build the still under-penetrated market for concomitant surgical ablation.

US sales of products used in minimally invasive procedures increased approximately $900,000 to $4.3 million, up 26.1% and driven by all MIS products.

Of note was strong performance of the Fusion product line, which was acquired at the end of 2013.

While we are pleased with the solid growth of the MIS business in Q1, we do still continue to believe that this business will only see modest growth during 2015.

Continued development of clinical data in support of MIS ablation for the treatment of afib through trials, such as our DEEP IDE study, are critical to growing this market.

US sales of the AtriClip system during the first quarter of 2015 was $5.5 million, as compared to $3.6 million for the first quarter of 2014, an increase of 52%.

We continue to be encouraged by the strong growth of this part of our business.

The MIS AtriClip Pro business continues to show very strong results albeit on smaller numbers.

International revenue grew 3.9% on a GAAP basis, and 17.6% on a constant currency basis as compared to the first quarter of 2014 to $7 million.

Strengths included the direct markets in the EU and certain distributor markets.

Valve tool sales were roughly $800,000 worldwide with approximately $700,000 in the US and $100,000 in international markets.

Gross margin for the first quarter of 2015 was 72.7% as compared with 71.1% for the first quarter of 2014.

The primary drivers of the improvement were the increased mix of US sales, the elimination of the Estech transition-related expenses recorded in 2014, and an improvement in product costs.

Operating expenses increased 5.1%, or approximately $1.3 million from $25.6 million for the first quarter of 2014 to $26.9 million for the first quarter of 2015.

Research and development expenses, which include clinical and regulatory activities, were $5.6 million for the first quarter of 2015, or 19% of sales, an increase of $1.6 million over the first quarter of 2014.

The increase was driven by both clinical trial and product development efforts.

SG&A decreased approximately $300,000 from the first quarter of 2014 to a total $21.3 million, or 71% of sales.

The decrease was due to the heavy amount of transition-related expenses recorded in the first quarter of 2014.

As a reminder, we closed an acquisition on 12/31/2013 and recorded over $2 million in nonrecurring costs in the first quarter after closing.

This decrease was partially offset by increases in selling and training costs.

Our operating loss for the quarter was $5.1 million compared to $7.9 million for the first quarter of 2014.

Our adjusted EBITDA loss was approximately $2.1 million this quarter compared to a $4.7 million EBITDA loss for the first quarter of 2014.

Our net loss per share was $0.19 for the first quarter of 2015 compared to $0.31 for the first quarter of 2014.

We ended the quarter with approximately $58 million in cash, cash equivalents and investments.

Lastly, we are positively adjusting our guidance for 2015.

We anticipate constant currency top line growth of approximately 17% to 19%, up from our previous guidance of 16% to 18% constant currency growth.

At current exchange rates, this represents approximately 15% to 17% year-over-year growth on a GAAP basis, or a range of $123.5 million to $125.5 million.

We now anticipate gross margin to be approximately 71% to 72% for the year based on current trends and investments to support growth.

The bottom end represents a slight increase from the 2014 reported gross margin.

Items with a positive effect on gross margin include volume leverage, no additional nonrecurring costs from the Estech acquisition, and programs to increase efficiency.

Headwinds on gross margin include continued heavy capital placement, placing a new building into service in the fourth quarter of this year, and the strengthening of the US dollar.

We are still targeting long-term gross margins of 75% and believe this is achievable within the next five years due primarily to increased volumes and efficiency.

We expect R&D to be 19% to 21% of sales driven by spending in clinical trials and product development.

We expect SG&A to be roughly 69% to 70% of sales in 2015, driven by continued increases in spending related to selling, training and education, and international expansion.

Adjusting for the one-time Estech transaction-related items in 2014, this represents a slight leveraging of SG&A expenses.

We continue to expect adjusted EBITDA for 2015 to be a loss of approximately $7 million to $9 million.

From a cadence perspective, we expect the second and third quarter losses to be higher than the current quarter with improvement into the fourth quarter.

The improvement from 2014 is driven primarily by the completion of the Estech acquisition in 2014, as all nonrecurring costs were complete by the end of the year.

We continue to feel that the investments in clinical science and product development are driving the bulk of the EBITDA loss but are warranted given the exciting long-term growth plan of the Company.

At this point, I would like to turn the call back to Mike for closing comments.

Thank you, Andy.

We are off to a good start in 2015.

AtriCure continues to position itself as a leader in the surgical treatment of afib with a full suite of innovative and unique products and unparalleled commitment to training and education.

We look forward to updating you on our progress during future calls.

We will now open the call for questions.

Joyce, can we open the call up for questions?

(Operator Instructions) The first question comes from the line of Jason Mills of Canaccord.

Please proceed.

Thanks for taking the question, Mike and Andy.

So, first question, just on the US business, Mike phenomenal result in the quarter.

You mentioned the MIS business.

Really strong results, better than we expected by a wide margin.

You don't expect that to continue, but how would you sort of expect the DEEP AF trial as it gets ramped up to impact that line and sort of some excitement around that trial?

And then also in the US, the AtriClip business continues to chug along.

Do you expect growth to come down a little bit via difficult comps as the year progresses and, also, just how you are thinking about the Watchman launch juxtaposed to the AtriClip business?

All right.

Well, I appreciate the question.

There is a lot in there, so hopefully I'll answer all of it.

I'll start with the MIS, as you kind of talked about.

We had a great quarter, as you mentioned, and we obviously feel really good about the overall platform and where things are going in that front.

Fusion actually drove a lot of the growth in that market.

We started to see some of the impact of having Fusion, which came from the Estech acquisition, in our hands for over a year now and we're starting to see some of the impact on that.

But like you said, there are more difficult comps as the year kind of progresses.

If you remember about a year and a half ago we saw a nice big blip and nice growth out of MIS, only to have it come down a little it on an organic basis, so we want to be conservative.

We are super-encouraged by it.

We do think the DEEP trial will continue to garner great recognition out in the marketplace.

It is going to be getting interest, and we are getting a lot of interest from different surgeons and EPs, and we spend a lot of time on that, but we're just trying to be conservative just because we can't go out and proactively market.

And so as a result of that, it's really kind of just -- the market and the industry doing it on its own, and that's why we continue to remain conservative on it.

Clearly, MIS is upside to our numbers and our story for the year as we kind of go through it, but we wanted to kind of keep it as upside as opposed to kind of baking it too much into the guidance that we've got out there.

As it comes to the Clip, you mentioned it, we definitely feel very good about the growth and what we've got in that part of our business.

In fact, the latter part that you talked about, the Watchman, we believe that just the excitement around managing the appendage, the importance of managing the appendage, is you can see it having an impact on our business.

We think that it will.

Watchman is not a competitive product.

Again, we've always talked about it being very complementary to what we do.

They are really treating it as a sole therapy basis, and we're treating it concomitantly with our ablation procedures, and so as a result of that we kind of get the benefit of the talks and the dialog around managing the appendage.

And so we continue to see strong growth coming off the Clip franchise in the US, and we actually saw some good growth OUS as well in the Clip front, also.

As I mentioned, there was a conference that was held over in Switzerland by Dr. Sacha Salzberg, and there was just a lot of great energy and enthusiasm around managing the appendage.

So, we feel really good about the Clip as we kind of go forward.

That's helpful.

Following up, Andy, on your gross margin commentary, fantastic result there as well, and it looks like you're a little bit ahead of plan, but was there anything besides the US mix being maybe a little higher in the quarter that contributed on a one-time basis?

And how should we -- you gave your guidance raised a little bit there, but how should we sort of gait the quarters from here on out?

Thanks, guys.

Sure, no problem, Jason.

I think the US mix definitely was the biggest thing driving margin in the first quarter.

Additionally, the Estech stuff from last year was in there and was material to that.

Those are really the two biggest things.

As far as the rest of the year, I think you can gait it pretty consistently through the year.

Obviously, mix is going to impact that, so we will continue to watch that closely.

Thank you.

The next question comes from the line of Danielle Antalffy with Leerink Partners.

Please proceed.

Mike could you give a little bit of an update you've given in the past on where you stand as far as the various phases of training?

You've talked about there's three different phases, maybe talk about where you are now, this quarter.

And how should we think about that contributing to accelerating growth as we move throughout the year?

Sure.

The phases, and I guess as a reminder for those, is that the first phase is really kind of the core Maze training course that we did.

That was kind of the basic two- to three-hour didactic course that kind of got you familiar with what the Maze was, where to put the lines.

That was the one that we did for the FDA and was very successful in educating and training a lot of surgeons.

That was the bulk training that we did.

And then what we've done since then is kind of phase two.

We still do some of phase one, because there are surgeons that have not been to some of the courses, they want just the refresher course, and so we still do host that, it's just a lot fewer surgeons that go through that.

Now we're very focused on phase two and three, phase two being the more advanced course than the first one.

It's a day session.

It's an evening and then the next day.

They get into much deeper content relative to how do you actually do the procedure.

They talk back and forth with other surgeons who are doing the concomitant treatment, and we've done, I mentioned 80 through the end of last year; we've actually got 140 accounts in total that have gone through that training since we started it.

And, as I mentioned on the last call, we get about a 40% to 50% increase in volume from those sites coming off of the advanced courses.

So, it's a very good course in terms of getting it to -- the surgeons to come out of there and actually begin practicing and using the products and treating patients.

And so we're seeing a lot of good results from that.

We will continue those.

Last year we did eight courses.

We've got 12 on the books in the US this year.

We've also got another 10 or so OUS as well.

So, there's a lot of training that we're doing on a global basis.

We anticipate that the OUS ones will begin to have impact at the end of this year and early part of next year.

And then phase three is really more in person.

I talked about that onsite training.

We've got sites set up in the US where surgeons will go and watch some of these concomitant cases and be able to talk to surgeons about the cases, and we've got four set up right now and we're starting to enroll people, physicians to go to that training and we will continue to expand it.

The other thing to note on the training, I talked about the three phases, is, we also do a lot of work, as we saw this quarter, around working with the societies on programs.

For example, this James L. Cox Fellowship program I mentioned in my comments.

That's the kind of program where there will be 12 sites that will be taking on surgeons for a three-month fellowship course.

They will be getting basically everything you need to know about it, working under some of the best and at some of the best sites in the country and even in the world.

So, we are really excited to be a part of that.

Dr. Damiano is the lead on that through AATS, and really kind of put together the program.

And so we're excited to kind of become a part of that and become a part of the society on that front as well.

So, those are some of the other creative ideas and ways that we're going to be approaching education and training as well.

The next question comes from the line of Mike Matson of Needham & Company.

Please proceed.

Hey, guys, this is actually Brad in for Mike.

Just going to take the other side of the first quarter.

International, I know it's a smaller part of the business, but it seems like it's slowed a bit, especially ablation.

Just wondering your thoughts on that picking back up in the back half of the year, and then why, just anymore color on Japan and Eastern Europe weakness?

Yes.

So, overall, on the international basis, like you said, we saw some headwinds relative to foreign exchange.

We were 18% growth on a constant currency basis, and we were -- obviously, the currency had a large impact on getting us closer to 3% to 4% growth rate on a GAAP basis.

So, that was a major impact and we anticipated not much more growth than that, quite frankly.

If you remember, our original guidance was 16% to 18%, so it's kind of at the high end of our growth, it's just that the US outperformed so strong that I think it had some sort of -- it had an impact on it from that standpoint.

In terms of on the direct basis in Europe, things are going incredibly well.

I feel very good about the countries that I talked about.

That's actually where we have a direct presence.

In Japan there was some currency components to it as well, but we don't sell to them in currency, so we are working through that on the Japanese front and we're getting new approvals for Clip and other products here over the course of the next 18 months and even as this year kind of goes on.

So, we feel really good about kind of where we are on the Japanese market and what the numbers look like for the year.

Eastern Europe, that's a less predictable part of our business and we kind of put that into our numbers as we think through it.

Quarter-to-quarter it's a little more difficult to predict.

We've got a good sense for what the year is going to look like, but in any given quarter each country is a little bit smaller of an impact, and, like you said, you miss on one country and it can kind of have a small impact.

It was just a lot of countries missing by a very small dollar amount, quite frankly, and that's why, as I mentioned, we are pretty much in line with what we thought overall because we were so strong in the Western European countries.

Great.

Thanks, Mike.

And just wondering what are your thoughts on the recall announced on Monday of TigerPaw.

Obviously, it can be looked at as a positive since it's you main competitor for the Clip, but wondering if you think there is any negative impact or if you think that should help accelerate AtriClip?

It's always unfortunate when another company has to go through a recall.

You think about the patients and the impact that it must have had and the tough decisions that a company has to go through on that front.

So, from my standpoint, there is not a positive or negative to our business, per se.

Out in the marketplace we are continuing, we know that our product is safe, effective.

We've got 50,000 of them that are out there in the field today, and so we really continue to sell and focus on really the positives about what we've got within our product as opposed to on the competition on that front.

All right.

Thanks, Mike.

The next question comes from the line of Tom Gunderson with Piper Jaffray.

Please proceed.

Hi.

Good afternoon.

So, Andy, just a quick clarification.

There was some interference when you said US Clip sales, were they $5.5 million and a 52% increase?

That's right, Tom.

Okay, just wanted to make sure I got that.

And then, Mike, the stroke trial, do you want to hazard a guess or a range of times as to when you think the protocol IDE will be accepted, Part A and Part B, as you continue to talk with the FDA and even to some extent the KOLs, but more the FDA.

Do you get a sense that they understand the difficulties in enrollment that you might encounter with a controlled trial, and are they easing up on some things that might make that enrollment easier for you?

I wish I could answer you right now.

I think it's to be told in terms of the conversations.

They've been very welcoming, that's the FDA, in terms of the conversations.

For us right now we're trying to assess with the Watchman being approved and with the guidance they had given us before to really kind of do a randomized trial against aspirin, where are we today in those conversations?

And, like you said, enrollment would be difficult, likely, on the latter one, and so we're trying to figure out what's the net benefit to us and what label are we actually going after?

We sell the product today, and obviously we're doing very well on that front, so we want to be very careful not to impact the positive franchise that we have today.

We've got product that's out there, it's helping patients worldwide in managing the appendage; we want to do something that is going to benefit even more patients, so we're being very careful in terms of the best way to approach it.

We're not in a rush; we're not going to just try to get a trial out there.

And so, again, they're being very open to dialogue, but I don't know that we've gotten great -- we're not at the point of having pure guidance.

If I hazard a guess, we'd like to have some decisions on this and finalize kind of what our strategy is by sometime in the back half of the year.

And, again, it doesn't really have an impact on our revenue or our growth over the next several years; it's really a long-term play on it, so we're going to take our time, but likely it would be the back half of the year.

Okay, thanks.

That's it for me, I'll leave it at one and a half questions.

The next question comes from the line of Rick Wise with Stifel.

Please proceed.

Hi, guys.

It's (inaudible) here for Rick.

Thanks for taking the question.

You've given this in the past, but can you quantify how many clinicians you have trained in the US and maybe how much you have left to do?

Yes.

Well, the number we've always quoted is 1,500.

We are really not focused on the training in the US on the numbers basis anymore, because we've kind of gone through and actually met all the obligations we had with the FDA and that was really why that number was important.

We had to make sure all the accounts were trained.

We are now selling to -- over 870 customers bought product from us in 2014.

That's up from 670 accounts several years earlier, and so we've obviously seen some uptick based on some of the things that we're doing out there.

But from a training standpoint, it's really difficult to say how many more we have to get done necessarily.

It's really more focused on the advanced training, onsite training that I talked about earlier.

Great.

And then you mentioned two new products a year for launching, but can you give us any more color about what areas we might be able to -- or what areas you might be launching them?

Is it open, is it MIS?

Yes and yes.

We are really focused on clip, cryo, RF, all aspects of that.

Our research team, we've added a lot of talent there in fire power, quite frankly, in terms of getting product out the door.

You saw some of the work we did on cryoanalgesia.

It wasn't just the label, there is an approach to that, and we've got other products that we're going to continue.

Again, it will hit on all aspects of our business.

Anything we can be doing to kind of create better lesions, make things more minimally invasive, that's really kind of the focus that we've got for all of our product lines right now.

All right.

Great, thanks so much, guys.

The next question comes from the line of Charley Jones with Market.

Please proceed.

Good afternoon.

Thanks for your time.

I guess I want to start with the Clip.

I was curious if you could give us a little bit of detail around the open Clip.

It seems 41% is pretty good given 20% growth in ablation, 26% in the US.

Are you pretty fully penetrated in your own procedures and are you starting to really get some traction in the non-AF cases, or are you really taking share from Medtronic?

And I guess I was hoping you could make some comments maybe around market growth in the US and internationally, to pick up the other half of Tom's question.

Yes, as it relates to the growth of the Clip kind of being a faster growth, I just think you've got more customers that are beginning to use it now.

Not all customers are using it.

They may have been doing ablation before and now they're doing that, so we're just seeing more and more sites kind of pick it up that were not necessarily using the Clip before.

So, that's been really kind of more of the accelerator than anything else.

We do have some people doing it concomitantly with some other non-AF procedures.

I'm starting to see some of that in terms of just discussion.

It's obviously one of the reasons why we're doing the ATLAS trial was to actually test that theory out, and so we've got some growth associated with that.

So, that's really why you're seeing it, just more accounts buying from us, and those accounts that are buying from us are actually doing it on more and more cases.

And so I think that's really driving most of that growth from that standpoint.

In addition to that, there have been questions on our calls before around the MVRs and AVRs and CABGs, and as AVR and CABG kind of concomitant treatment grows, which we believe that it is, you're starting to get more Clips on those cases as well.

Because sometimes on the mitral valves we'll just cut and sew it themselves as opposed to putting a Clip on.

So, that's what's really driving the faster growth on the Clip side than anything else.

And then I didn't completely understand the second part of that question.

The market growth?

The market growth for your open ablation business.

Are you, if you're growing the US 26%, where is Medtronic?

Where is the market growth?

It is real difficult for us to know.

Medtronic obviously has their numbers with a very, very large organization.

It's more difficult for us to kind of capture that data.

We are really focused on kind of penetrating within the accounts that we've got today and creating sticky revenue from that standpoint and getting them, quite frankly, just to treat more patients.

So, we are more focused on just growing the market overall.

We grew 19% open in the US.

We've talked about that before, that 15% plus number on the open side.

We see that kind of going for several years, but we don't know exactly -- we have to -- ask me in six months what the growth rate was, because then we'll have the data from STS to kind of see it, but I can't know within the individual quarter, per se.

And then it kind of leads to my next question.

I think you were talking with Danielle back in February about the STS considering a recommendation change from a 1B to a 1A.

Have you learned anything more about that process and can you talk to us a little bit about that and whether or not you think that enables maybe an acceleration of growth in your open business, maybe not from 26%, but from your guidance of 15%?

You are correct.

Back in -- at STS back in January, the committee that was focused on this did make a recommendation to the broader STS population and membership and we are still waiting to hear if they have accepted that.

Hopefully, they will.

It can take anywhere from 3 to 12 months for those types of votes to kind of go through.

I haven't heard anything to the negative on it, so I'm not sure that I would [hear], but the good news is there has been a recommendation that has been made and as soon as that information comes out, I'm sure we will all probably see it, whether it's in different press releases and news from the STS.

But, yes, I do believe that once that comes out, it won't have an immediate impact.

That next day people aren't going to go start to do the procedure, but I think that cumulatively, as more and more good data comes out like that, it's going to have a positive impact on the open growth.

Thanks a lot.

There are no further questions in queue at this time.

I would now like to turn the call back over to Mike Carrel for closing remarks.

Great.

Thank you, everyone, for participating today and joining our call.

Have a wonderful evening.

Ladies and gentlemen, this concludes today's conference.

Thank you for your participation.

You may now disconnect.

Have a great day.