Lynn Pieper - IR Westwicke Partners Mike Carrel - President and CEO Andy Wade - VP & CFO.

Danielle Antalffy - Leerink Partners Cecilia Furlong - Canaccord Genuity Suraj Kalia - Northland Securities Matt Miksic - UBS.

Good afternoon and welcome to AtriCure's First Quarter 2016 Earnings Conference Call. My name is Jonathan and I'll be your coordinator for the call today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call.

As a reminder, this cal is being recorded for replay purposes. I would now like to turn the call over to Lynn Pieper from Gilmartin Group for a few introductory comments..

Thank you. By now, you should have received a copy of the earnings press release. If you have not, please call 513-755-4136 to have one e-mailed 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.

AtriCure undertakes no obligation to publicly update any forward-looking statements. Additionally, we 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’d like to turn the call over to Mike Carrel, President and Chief Executive Officer.

Mike?.

Thanks Lynn. Good afternoon, everyone and thank you for joining us today. We're off to a strong start in 2016. During the first quarter, we reached several milestones positioning us for accelerating growth throughout the year. We're reiterating our revenue guidance of 25% growth for 2016.

In looking at 2016 we're particularly excited about initiatives that are driving our topline expectation. We have two new products recently cleared and on the market in cryoFORM and AtriClip PRO2.

We also expect in contact to more meaningfully contribute as the year progresses as we enter new sites, expand in the West Coast and leverage our full sales force. Longer term, our end markets still remain underpenetrated. We're ramping our clinical trials and expect our outcomes and differentiation to propel sustainable 18% topline growth.

Revenue in Q1 reached $35.9 million up 20% year-over-year. Growth was led by sales in the U.S., which were up 23% and driven by all three areas of the business. International revenue was up 10% for the quarter.

The AtriClip product line remains our fastest growing franchise and we continue to see strong and growing interest in managing the left atrial appendage. This market is still left in 20% penetrated, so we have a lot of opportunity for growth. We are pleased to announce that we recently received FDA clearance for the AtriClip PRO2 Exclusion System.

This represents our most minimally invasive LAA management technology launched today. The AtriClip PRO2 uses a lower profile player to enhance visibility within the surgical field and improves maneuverability to tight anatomic basis. We expect that this new offering will support continued strong growth in the AtriClip line of products.

As part of our commitment to advancing technologies for the treatment of Afib, we continue to make substantial investments in R&D and will keep innovating to provide physicians with new and better options for treating our patients.

Our new product release is combined with the 2015 enhancements and our roadmap going forward give us great confidence in our ability to achieve our objectives for the next several years. Turning now to our CRYO platform. We are pleased to have at recently received FDA clearance for our new CryoFORM Probe which we announced earlier this month.

The CryoFORM Probe offers increased probe flexibility to adapt to a variety of surgical oblation procedures. The U.S. clearance comes on heals of our European launch of CryoFORM last fall where we received positive feedback from our customers.

On the clinical front, we are making solid progress on DEEP AF and CONVERGE, our two IDE trials for sole therapy treatment of persistent and longstanding persistent Afib.

A brief update on each; Deep AF, our trial for staged Dual Epicardial-Endocardial procedure for the treatment of Afib now has 13 sites enrolling - 13 sites initiated and 40 patients enrolled to date. We are seeing early traction with our online patient recruitment campaign and continue to target enrolment of 220 patients by the end of 2017.

The CONVERGE IDE is the first head to head study to evaluate the convergent procedure versus catheter ablation in patients with persistent and long standing persistent Afib. We expect the trial result to support FDA approval in contact devices specifically for the treatment of persistent atrial fibrillation.

We have made solid progress on enrolment with 43 patients enrolled to date. We expect to continue to make meaningful progress on both CONVERGE and DEEP AF this year by adding several new sites to each trial and accelerating enrolment.

The same can be said for our non-IDE trial in Europe, CEASE-AF which compares a DEEP like procedure to standard catheter ablation.

We also started enrolment in the ATLAS trial in February evaluating prolific treatment of left atrial appendage for patients at risk of pre operative Afib and we are on track begin enrolment of the FROST trial to evaluate the effectiveness of cryoanalgesia for pain management and thoracotomy cardiac procedures.

We expect that sound clinical data to further differentiate us as a company and extend our leadership position in the treatment of Afib from many years to come. Switching gears, we announced today that we have strengthened our balance sheet with the addition of a $25 million term loan with Silicon Valley Bank.

While our balance sheet was adequate before, we are able to secure this loan at favorable rate in terms and thus eliminate any doubts about the strength of our balance sheet. Additionally it is important to note our financial plans have not changed and we remain committed and confident in getting the EBITDA profitability in 2018.

Additionally, before turning to call over to Andy to provide more detail on terms of the updated credit facility in our financials, I want to reiterate our confidence in our 25% topline growth objective for 2016 which would be driven by an acceleration of growth in the second half of the year.

As we discussed in the last, the last call for the first half of the year there are some headwinds we faced and what was otherwise, and will otherwise be a very strong underlying performance that I want to walk you through. First our CRYO business was slightly softer than expected in Q1 as we waited U.S. clearance of the CryoFORM Probe.

We are pleased to be now be in a position to launch the Probe and expect to ramping contribution throughout the year. In the short time, [indiscernible] 4.40 market we are already receiving excellent feedback.

Secondly, we have made substantial progress integrating in content further expanding and strengthening our presence in a minimally invasive ablation market. While our training of the combined commercial team is off to a strong start, our national sales meeting was delayed from its originally scheduled date in early Q1 to early April.

As a result, we have not seen all the benefits of our training programs and expect to see these in the back half of the year and into 2017. That said, in the short time we have combined the teams, we've already added over 20 new accounts and done over 40 new account trainings on the product.

These activities will drive significant growth in the remainder of 2016. We also want to provide some commentary on the recent data coming out of the American College of [Radiology] in Chicago.

As you may be aware, the PARTNER 2 Trial results surpassed many of the expectations of their paving away for TAVR penetration in the intermediate risk patients. We've always anticipated adoption of TAVR for intermediate-risk patients and have factored this into our business planning and expectations.

While we do expect TAVR adoption to increase, many centers were already starting to treat intermediate-risk patients with TAVR. Market commentary and analysis has indicated that hospitals with TAVR program have also seen a halo effect from their TAVR programs with dramatic increases in all heart related surgical procedures.

This halo effect should not change moving forward and is beneficial to our business. Additionally to the extent that we do see or would see declining SAVR procedure volumes, there still remain a substantial opportunity for AtriCure in the SAVR space.

We estimate that only 25% of the patients presenting for SAVR who have documented AFib actually receive a concomitant ablation today. A large percentage of patients will still require SAVR for reasons such as poor femoral access, artery and other factors.

Our opportunity in the SAVR space is only somewhat driven by the overall SAVR volumes and rather it is driven by large part by the under treatment paradigm that exists today.

Moreover in the concomitant space we estimate that the CABG plus concomitant AFib treatment opportunity is roughly four to five times as large as the SAVR plus concomitant AFib opportunity.

While mitral valve plus concomitant AFib is the highest penetrated today, at roughly 60%, there remains significant opportunity in this space as well to balance off any effect if there were to be any declining SAVR volumes that would have on our business.

Thus we expect that our concomitant AFib ablation business will continue to grow in the mid teens for the foreseeable future, while our clinical trials DEEP AF and CONVERGE lead to new approvals for standalone AFib treatment closer to the end of the decade.

We believe this multipronged growth strategy combined with our clip and cryo efforts support our long-term growth plans. In summary, we're off to a solid start in 2016. Our foundation is strong and the excitement in our business is palpable.

We remain well positioned to continue to execute on expanding and delivering our portfolio of innovative solutions for AFib ablation. I'll now turn the call over to Andy Wade, our Chief Financial Officer..

Thank you, Mike. For the first quarter of 2016, revenue increased 20.3% on a GAAP basis to $35.9 million. On a constant currency basis, worldwide revenue increased 20.4%. Revenue from product sales in the U.S. was $28.3 million, an increase of 23.3% from the first quarter of 2015. Revenue from open chest ablation related product sales in the U.S.

increased by approximately $1.6 million to $14 million representing growth of 13.1% driven by our education and training efforts. The open growth was slower than in prior quarters with steady open clamp growth in a slightly lower rate per CRYO probes.

We expect the CRYO growth rate to ramp up with more meaningful contribution in the second half of this year, based on a recently announced 510-K clearance for our CRYO form probe. U.S.

sales of products used in minimally invasive procedures increased approximately $2.4 million to $6.7 million up 54.7% and influenced significantly by the nContact acquisition. While we're pleased with the solid impact of the nContact acquisition in Q1, we continue to believe that this business will only see modest organic growth during 2016.

Development of clinical data in support of MIS ablation for treatment of AFib through trials such as our DEEP AF and CONVERGE IDE studies is critical to growing this market and business over the longer term.

As Mike mentioned efforts to move the nContact product set into our existing customers will ramp through the year as the training of our combined commercial team takes hold. Conversations with physicians in both the EP and surgical communities continues to be extremely positive. U.S.

sales of the AtriClip system during the first quarter of 2016 were $6.8 million as compared to $5.5 million for the first quarter of 2015, an increase of 24.4%. We remain encouraged by the strong and sustained growth rates for this part of our business.

International revenue grew 10.1% on a GAAP basis and 10.9% on a constant currency basis as compared to the first quarter of 2015 to just under $7.7 million. Strengths included Japan, China and France with softness in a few of our core EU markets. Valve tool sales were roughly $900,000 worldwide including approximately $700,000 in the U.S.

and $200,000 in international markets. Gross margin for the first quarter of 2016 was 72.1% as compared with 72.7% for the first quarter of 2015.

Pressure on gross margin included moving into a larger and more modern facility to support our growth, along with continued heavy capital placement particularly as we penetrate worldwide minimally invasive markets as well as placing our CRYO generators. Positive impacts on gross margin included the increase mix of U.S.

sales, the suspended medical device tax and the impact of nContact products. Operating expenses increased 31.5% or approximately $8.5 million from $26.9 million for the first quarter of 2015 to $35.3 million for the first quarter of 2016.

Research and development expenses which include clinical and regulatory activities were $8.6 million for the first quarter of 2016 or 23.8% of sales, an increase of $3 million over the first quarter of 2015.

The increase was driven primarily by both efforts in our product development team as well as the ramp in spending for our MIS related trials including the CONVERGE trial observed as part of the nContact acquisition.

SG&A increased approximately $5.5 million for the first quarter - from the first quarter of 2015 to a total of $26.8 million or 74.5% of sales. The increase was primarily due to the changes in our sales and training organizations to both support the nContact acquisition and our general level of growth and procedures.

In addition, we have made some investments in administrative areas to support our growth. Our adjusted EBITDA loss was approximately $4.4 million this quarter compared to a $2.1 million adjusted EBITDA loss for the first quarter of 2015. Our net loss per share was $0.31 for the first quarter of 2016 compared to $0.19 for the first quarter of 2015.

We ended the quarter with approximately $29.5 million in cash, cash equivalents and investments. As Mike noted earlier, we closed on an updated credit facility with our long time banking partner Silicon Valley bank.

The facility provides for a $25 million term loan, as well as a revolving credit facility secured by receivables and inventory both bearing interest at prime. The term loan will be interest only for 12 months with an option to extend an additional six months based on meeting growth targets.

After the interest only period, the term loan will amortize monthly for the remainder of the five year term and even increments. The credit facility is subject to certain covenants around liquidity and sales growth along with other customary terms and conditions.

Our intent in updating our credit facility was to take advantage of the availability of capital at a very reasonable cost and favorable terms to the company thus strengthening our balance sheet. Lastly we are reiterating our guidance for 2016. We anticipate constant currency topline growth of approximately 25%.

At current exchange rates, this represents approximately $162 million in worldwide revenue. We anticipate gross margin to be approximately 71% to 72% for the year based on current trends and investments to support growth. The top end represents a slight increase from our 2015 reported gross margin.

Items with positive effect on gross margin include volume leverage and programs to increase efficiency, the positive impact of the nContact products, and the suspended medical device tax.

Headwinds on gross margin include moving into a larger and more modern facility to support our growth along with continued heavy capital placement particularly as we penetrate worldwide minimally invasive markets.

We're still targeting long term gross margins of 75% and believe this is achievable within the next few years due to increased volumes and efficiency.

We expect R&D to be 23% to 24% of sales with the largest driver of the increase due to the absorption of the CONVERGE trial from the nContact acquisition along with the expansion and enrolment of our DEEP AF trial and continued R&D pipeline development. We expect SG&A to be roughly 70% to 71% of sales in 2016, which is slightly under the 2015 rate.

The overall increase in SG&A expense is driven by continued investment in our worldwide sales team as well as training and education expenses. We expect adjusted EBITDA for 2016 to be a loss of approximately $14 million to $15 million.

The heavier loss compared to 2015 is driven primarily by the acquisition of nContact in late 2015, including PMA clinical trial expenses and enhancements to the sales and education teams to support the MIS portion of our business.

In terms of EPS, this EBITDA range translates into a loss of between $1.12 and $1.22, with the Q2 loss similar to that of Q1 and improving slightly through Q3 and Q4. As Mike mentioned, earlier we expect some of the headwinds in Q1 to continue in Q2 with a more meaningful acceleration in revenue growth in the second half of the year.

With the in mind we expect Q2 topline growth to be in the range of 23% to 24% versus the prior year. Again we're reiterating our 25% growth expectation for the full year. At this point I would like to turn the call back to Mike for closing comments..

Thank you, Andy. We're pleased with our start of 2016. We're ramping up our clinical trials with a focus on DEEP and CONVERGE, bringing new products to market for the AtriClip franchise and optimizing our commercial footprint for sales training.

We expect CRYO and nContact to be big contributor in the back half of the year and I’m more excited about our growth prospects than ever. We're confident in our 25% topline growth objective for the year, long term growth objective of 18% and our path to profitability in 2018. With that, we'll now open it up for questions..

[Operator Instructions] I would now like to introduce our first question as Rick Wise from Stifel. Your question please..

Hi, guys it’s a [Joe] on for Rick. Thanks for taking the question.

I guess just to start and congratulations getting the AtriClip PRO2, but as we think about your product pipeline should will be thinking more about into development as just broadening your portfolio or are these going to be kind of iterations to make the procedure easier for docs or a combination of the above..

It's going to be a combination of the above and in the short term both PRO2 in particular is an extension of an existing product especially getting its making a lot easier for them to use the product and then by the end of the year we'll be coming out with a PROV and that product will likely be able to more of a platform change.

It’s a great product that we're looking forward. It will also be for more minimally invasive procedures, but then enable us to actually get an even smaller spaces longer term. So I think that’s going to pertain some things in the future from that standpoint.

On the CRYO side of things, obviously we made some tremendous progress over the last couple of years with two new product extensions that we've done and we anticipate further ones on cryoanalgesia and other parts of our business as well..

Okay. Great. And then just may be to touch on the clinical trials, it looks like enrolment for DEEP increased nicely sequentially, but may be not so much for CONVERGE.

Can you may be just talk about what’s -- why was there a slowdown for CONVERGE enrolment and was there something specifically that caused it and then maybe what you expect to do by yearend in terms of enrolment for DEEP and CONVERGE?.

Yeah, we're not giving specific numbers for the year, but we're going to continue to see increases on both of those trials as the year progresses and specifically relating to the CONVERGE in terms of what you proposed as a slowdown. It's pretty much on track to kind of what we thought would actually get.

One of the items when we bought nContact is there is several sites that we're so happy with the success that we're actually having with the procedure, that they are having trouble randomizing to the other arm in the trial.

And so I actually went out in the quarter, visited almost every one of those sites, it was a -- I am having a difficult time randomizing and getting patients convinced because they were just so happy with what they were getting at their institutional with the results of CONVERGE.

So one of the items that we're doing is we're actually going back to the FDA over the course of the next three or so months talking about expanding the number of sites because we're not getting the amount of volume that we might otherwise like to get from some of the sites that are our great customers, do great work for patient, but may not be able to enroll as brisk rate as we would like in the trial for basically they're getting good results..

Great, thanks Mike. I'll hop back queue..

Thank you. Our next question comes from the line of Danielle Antalffy from Leerink Partners. Your question please..

Thanks so much. Good afternoon guys and congrats on a great quarter.

Mike you did gave color in the prepared remarks on the impact of tavern intermediate risk condition, but I was wondering if you could give color, a little bit more color on the long term growth trajectory there because we’ll have an intermediate risk approval in tavern potentially by the end of this year.

They're studying low risk, what happens to the end user market here if tavern is eventually approved in low risk? If you may be could give us some sense fast way to growth that still exists even in that scenario that would be helpful..

As I mentioned I'll start with the other parts and I'll get to the Tavern in a second, but we think about both on a module side we continue to be underpenetrated there.

We're doing a lot to training and we’ve helped that penetration get up to 60% and that number can get even higher, but you would be surprised at how many sites are still not treating it fully and using the complete set of products actually finish off and do the trading.

So we're making a lot progress and continue to do that on the mitral site of the business. On the CABG side, there is even more upside and we're really starting to see many of our sites begin to adopt and treat these patients.

There is more and more data coming out from STS and other societies about the treatment for CABG and for the AVR as well that you must treat, you should treat these patients. And so I think that the societies are behind it. Our training is behind it. We’ve got the fellowships going and we're creating that kind of awareness for it.

So both of those areas still have a tremendous amount of growth from the under-penetration area and on the mitral side, that number is growing every year in terms of the number of patients and procedures being done and on the CABG side that continues to grow at a slower pace at a 1% to 2% pace on the number of procedures, but we're growing, because we're getting increased penetration in there because that's even less penetrated than the AVR side of it.

On the CABG side we're closer to about a 10% penetration at this point and we think that we can make some significant progress on that side. On the AVR side, we did look at and say what’s going to happen? We played out all the different scenarios. I don't think anybody completely knows what’s going to happen in it.

What you've seen over in Germany and some other areas you've seen a decline of about 5% or so percent on the overall AVR standalone volume.

But what you're also seeing is when you combine AVR with CABG in a lot of procedures, you're actually seeing an increase in the overall combination of those two and so I was at a site recently where while they've seen a decrease on their AVR volumes, they've actually seen an overall increase in their heart volume as result of the AVR plus CABG coming together in some of those.

We're obviously not going to be able to do tavern in those particular procedures. And from that standpoint, when you play out the worst case scenario and you look at maybe some softness on the overall topline procedure growth, we really believe it's still underpenetrated.

At 25% penetration, even if you had a significant shrinkage on that, as I mentioned in my comments, we still see a tremendous amount of upside in growth coming off of the AVR and then combine that with the other pieces on CABG and mitral, I think we’ve got, as I mentioned mid teen type growth from now through the end of the decade.

To think beyond that is I think a little too long term from where we sit today but hopefully that gives you some context and perspective to it..

Yeah no, that’s very helpful and I’ll follow up with a question I tend to always ask and that's any sense of where you guys are from the training perspective how much of the growth here with driven by same-store sales given your deeper training efforts I guess should say?.

We trained or we had about 250 physicians and nurses and other professionals actually go through our courses this year in total in 2015 we do track very closely the procedure that goes on within those sites that come with the training. We continue to be those who come typically get about a 40% increase over the previous maybe 38% to 40% or so.

And some of those sites are actually sites that had previously been to training too.

So you're getting it off of those sites is what they're doing is they're either sending different physicians to get trained or if somebody continues to have an interest to kind of grow their capabilities beyond micros and into the AVRs and into the CABGs and so that’s a lot of where the training continues to be.

We’ll continue that training this year. I think many of the other efforts that we're seeing are the in-person training as I've mentioned before on this. The Cox fellowship had eight participants this year. We anticipate another eight.

We re-upped it with AATS and we're recruiting for another eight for this coming year and we anticipate that that’s going to build a bench of people that are actually able to do this and do the full Cox 4 in 95% or so of the patients when they come in with Afib..

That’s great. Thank you so much..

Thank you. Our next question comes from the line of Jason Mills from Canaccord Genuity. Your question please..

Hi, this is actually Cecilia Furlong on for Jason and we just wanted to ask about U.S. open ablation in U.S. sales growth on a year-over-year basis slowed modestly from the term lines in 2015 and continue to slightly lower growth trend seen in the second half of 2015.

Could you just give us a bit more color on the dynamics of these two end markets and what your expectations are for these franchises through the balance of 2016?.

As I mentioned in the previous question with Daniel I think I covered most of the rational. So I won’t go back and repeat myself on the open side of the business by CABG AVR and kind of why we see the growth rates continuing to increase there and those underpenetrated market.

On the flip side of the business we had -- obviously we've always talked about having incredibly frothy growth in 2015. We never anticipated to be in that 40% plus for the long term and so we feel like the growth rate that we're sitting in right now was actually we're continuing against the bigger numbers, higher comps.

We’ve always talked about that being north of 20%. We've been consistent on that call and we are north of 20% this quarter and we anticipate that going forward as well..

Great, thank you and then just turning quickly to gross margins and I appreciate you commented a bit about this, but you again showed meaningful progress on the DM line in Q1.

Are you seeing more expeditious returns from you COGS efficiency programs and can you just give us little more color on your thoughts for DM expansion over the next few years? Thank you..

Sure, Cecilia I wouldn’t say that we've seen anything ahead of our expectation there. So I kind of talked through some of the headwinds and tailwinds so to speak. I think that covers what we've been up to and what we're seeing.

Over the next few years it really is going to be leveraging the facility that I spoke of that we've recently moved into those things as well as just normal their efficiency programs looking for material cost and other things to drive down really the cost side and push up the margin. So, just the steady march to the 75%. .

Great. Thank you..

Thank you. Our next question comes from the line of Suraj Kalia from Northland Securities. Your question please. .

Good afternoon, gentlemen. Congratulations on a nice quarter..

Thank you..

Thanks Suraj. .

So, I was looking to just ask I know it's been asked a couple of times and let me ask the same question a little differently. Thinking about paddler keeps coming up regularly in client discussions, so like our understanding right now is roughly 400 or center around the country.

I believe these procedures, I guess the first part of my question is, based on you guys internal due diligence, what is the volume of SAVR that overlaps these 400 or centers? And that other part of my question is about a third of these patients is that’s what the data indicates will have to accommodate in AF. It simple covers some of the AF.

So how was it being treated currently I guess would be my question?.

I’m going to address your second question because it's actually a really, really insightful question because the data actually that’s coming out if you actually look at it that those patients that actually have AF that were being treated in the tablet program had much worse outcomes than those patient they did not AF and there is more and more data that’s going to be coming out and getting published over the next 6 to 12 months on it.

You're absolutely correct and I should have made that comment in my prepared remarks, but just since many of those papers have not come out yet, it was may be a little bit premature on it, but you're right, I do think that that is going to one of the pre-purchase you're looking at because I think they're going to have to look at those patients.

So they don’t have to go in and do a secondary procedure on that front. That’s going to be something that I think many of these sites are going to look at. In terms of the overlap at the specific 400 centers, I don't want to be guessing if I told you a specific number relative to the overlap on that side.

I do believe they're about 58,000 AVRs done last year. We anticipate the number will be reasonably consistent in the U.S. this year and our conservative estimates have -- we actually bring that number down in terms of how we give our guidance.

So we don't assume that it will be slightly assume worse case kind of scenario when we actually look at those over the next couple of years because obviously we can't predict everything associated with it.

It was interesting though to listen to listen to some of the conference calls of some of the players in the space that are selling valves in those areas where they actually continue to see growth in some of their AVR products and I was fascinated to see that. Whereas we're not saying that we're going to see growth per se in the number of procedures.

We're going to continue to see an increase in penetration from that 25% and that's where we're going to get our growth..

And I know I am not asking for guidance per se, but where are your revenues per procedure currently and let's say exiting fiscal '16 now that you have the platform or so cleared, how do you all see your revenues per procedures if I can use that metric in the U.S.

for open heart or for minimally invasive? How do you want to define it? How should we think about. Thank you for taking my questions..

Yeah it’s an estimate that is out there in terms of the total amount. I think that the number that was previously given have been around we estimated to about 3500 or per procedure. It’s a mix of products though because it depends on what they're doing, that’s on the open side of our business. It depends on what they're doing.

On Cryo it would be possibly less than that if they're using clamps plus Cryo plus clip its going be obviously more that that. So it really depends on, which products are you using to complete the maze, but we estimate it's about a 3500 or so per procedure..

Thank you. Our next question comes from the line of Matt Miksic from UBS. Your question please..

Hi thanks for taking the questions, just a couple of quick follow ups, one on, a question was asked around training, and I just wanted to get a sense Mike year-over-year you think budget training activities, this quarter you like a regular run rate now it’s early this quarter is about the same level of activity as last year or are you expanding that by some amount that you can talk about and then I have one follow up?.

On the advance courses that we do we typically have that day and half type of training program to dive deep on that. We typically have 10 to 12 of those per year.

We're on the same kind of ramp as we had last year, although we had more people attend them then we have last year/ So we likely will have probably several more, it’s not a big jump on the number because we would like the keep the number pretty tight from that standpoint.

I’d say it's relatively similar on that front in terms of the training where we're seeing increase is in the number of people that are actually visiting sites of going to clinic or going to some of the other community hospitals that do treat all the AFib and so we are going and for concomitant surgery. So we do see increases in those numbers.

The Cogs fellowship obviously has impact and so we're looking at many different ways to do some of the training. We did add for example last year one of the big items that we did that we did not have in previous year we're now adding nurse and PA training as well.

so that we can train in the hospital to be aware of it to understand AFib and so we are expanding it beyond just the surgeons so that we can have influence throughout the hospital and make sure everybody is aligned with how treat this, when to treat it, which products to use etcetera..

Okay. So Andrew your description and the same roughly the same….

I think roughly the same -- the answer is it's roughly the same on that front, yes..

Okay. And then on penetration just to make something we've tried to over the 50% in that I thought it was 60% maybe a couple of quarters ago I’m wondering whether it’s like sneaking up on 60% and over we're over, is that actually still at about 60%.

And just as we look at these procedures and the way you described in the percentage of folks getting these procedures that also have AFib as being a kind of target, just to clarify is that precipitated or is that the total AFib number? Thanks..

I think so the 60% number is an estimate at the end and we look at the data from STS, that STS data is quite frankly 18 months behind relative to what the full penetration rates are etcetera. So from that standpoint, we're doing our best estimates based on looking at some of that old historical data, some of the trends that were there.

What we're seeing in the products that we've got with the feedback we get from our sales force etcetera and knowing sites that are not doing it today that we know that we know that we could move towards that and kind of getting a general feeling, the overall volumes in the U.S. So it really is our best estimate on those numbers.

I think when you try to get precision between 60%, 62% or maybe with 58% and now it's 62%, I don't have that level of precision in it and quite frankly it's next to impossible to actually get it when you look at it.

Secondly and it's really important to understand that when people talk about 60% and we've talked about this before, that that's just the number of people that are doing some sort of ablation. It does not mean that they're doing the full cost made for.

So not only do we have growth to go from the 60% to let's just call it 90%, which it should be on the [roles] because you're already opening a [indiscernible], but in addition to that within the 60%, they may only be doing a pulmonary vein isolation and using whether it's our clamps or competitive clamps to basically do that procedure.

That is not a full Cox. So there is growth within that procedure as well and so we do have several layers of growth that we can achieve both better training to get them to do the procedural rights and use the full set of products to treat that patient, the best that they can and actually growing the number of patients that can get treated..

Did that answer your question?.

I think I answered the question. Are there more..

I am not showing any further questions in the queue. At this time, I would like to hand the program back to Mike Carrel for any closing comments..

Great. Well, thank you everyone for joining and participating in the call this evening. Have a great evening and the rest of 2016..

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day..