Good afternoon. Thank you for joining us for the BioTelemetry Fourth Quarter 2018 Earnings Conference Call.

Certain statements during the conference call and question-and-answer period to follow may relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities and Litigation Act of 1995.

Such statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company in the future to be materially different from the statements that the company’s executives make today.

These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements. During this call, we will present both GAAP and non-GAAP financial measures.

A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which is distributed and available to the public in the Investor Information section of the BioTelemetry website at gobio.com. At this time, all participants have been placed on a listen-only mode.

The floor will open for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Mr. Joseph Capper. Sir you may begin..

Thank you, operator and good afternoon, everyone. I am Joe Capper, President and CEO of BioTelemetry. I am joined by Heather Getz, our Chief Financial Officer. I will start with highlights about the fourth quarter performance and other key developments. Heather will take you through a more detailed review of our financial results.

I will then provide commentary on how we see the business continuing to evolve as we get further into 201. After our prepared remarks, we'll open up the call for questions. I am extremely pleased to report that we ended 2018 the same way we started with another record setting quarter.

We once again surpassed expectations and set new highs in revenue and EBITDA. This marks our 26 consecutive quarter of year-over-year revenue growth. As you'll recall, we set highly ambitious top and bottom line projections at the outset of 2018.

Throughout the year, we consistently outperformed and then increased these projections, ultimately surpassing our original revenue and EBITDA estimates by approximately $20 million each, making 2018 a tremendous success by any standard.

We delivered these impressive full year results, while working through -- working our way through a major integration with near forward execution, which resulted in a realization of our $30 million synergy objective ahead of projected timeline.

We managed three significant product introductions, sales force expansions and multiple system and infrastructure investments and enhancements. We also dedicated significant time and resources evaluating numerous strategic opportunities to incubate future growth drivers.

We can share with you one example of these efforts given our recently announced agreement to acquire Geneva Health Solutions. I will discuss in more detail why we're so excited to get them on board. Clearly 2018 was an action-packed year and I could not be more pleased with how the team has performed.

In a year when all the major indexes posted negative returns, we doubled the market value of our company while maintaining a strong balance sheet. I was recently asked the secret to our sustained performance. Like any successful endeavor, it requires being one step ahead of the competition and solid execution.

We communicate the drivers of our strategy to each quarter and what we have built, cannot be easily replicated. It starts with having a leadership team in place that knows the market, knows the customers and has drive to take the company to new heights.

We have applied our knowledge of the industry to develop a highly effective market strategy that is yielding consistently strong results. We have also been making key acquisitions and investments that have been critical to this ongoing success.

As a result of our focus, we have industry-leading product offering, exceptional sales and service, excellent customer retention and the broadest geographic coverage in our industry and a pipeline rimming with new opportunities for biotelemetry.

As a reminder, the pillars of our strategic roadmap are to go deeper and wider in cardiac monitoring in order to expand our leadership position, to continue to build upon our leading researcher services business by expanding our service offerings and last to identify other markets that will benefit from the application of our wireless platform and primary technology.

These remain our primary areas of focus as we move into 2019, a year in which we again expect great things from the company. Given the strength of biotelemetry as one of the largest fastest-growing and most profitable connected health companies in the market, we are better positioned than ever to continue to execute our plan.

As a result of our exceptional performance and our confidence about the future, we expect to continue to experience double-digit growth for the foreseeable future, which Heather will detail in her upcoming comments, but first I want to share with you some key metrics and thoughts about our performance in the fourth quarter.

During the period revenue grew by 13% to $103.6 million, ahead of expectations. Full-year revenue was $399.5 million up 39% from 2017. Overall margins continue to improve as quarterly EBITDA grew by 33% to $30.5 million exceeding our expectations and bringing full year EBITDA to $113.4 million, representing an increase of 74% over 2017.

We ended the quarter with $81 million in cash up nearly $80 million in the quarter. MCT was up 11% in the quarter and 14% for the full year.

Our research services team continue to outperform the market with revenue up 26% in the quarter and 30% for the full year and we continued efforts to build upon our new digital population health management business with key partnerships and internal investments.

As we take a closer look at the Healthcare Services business, there is a lot to be excitement about. The fourth quarter represented the first period with the LifeWatch integration being fully annualized.

As I had mentioned on previous calls, this has been incredibly successful project having met or exceeded all expectations including $30 million of synergy, probably the most notable aspect of the integration was the team's ability to retain and grow in our largest and most important accounts with organic healthcare revenue up 14% for the year.

Additionally, we continue to see excellent growth in the quarter with our new MCT and extended Ware Holter products, as mentioned MCT again grew at double digits and the extended Ware Holter product continue to penetrate the market growing at triple digits. This demonstrates tremendous market acceptance of these two marquee products.

In the latter part of 2018, we completed analysis and planning to grow the Healthcare Services sales team by approximately 20%. This expansion process is now well underway and will support continued growth in 2019 and beyond.

We believe added resources to what is currently far and away the most productive sales organization in our industry is a wise investment. Another initiative that will most certainly accelerate growth in the healthcare segment will be the addition of the well regarded Geneva platform.

In keeping with our strategic intent to go deeper and wider in the cardiac monitoring market, we recently announced our plan to acquire Geneva Healthcare Solutions, which is expected to close in the first week of March.

As an early stage company, Geneva has developed an innovative, proprietary cloud-based platform that aggregates data from the leading device manufacturers system, enabling the company to remotely monitor all of the physician's patient with implantable cardiac device such as pacemakers, [indiscernible] and loop recorders.

Geneva's platform provides physicians a single portal to order patient monitoring, view monitoring results and request routine device checks, helping drive significant in-office efficiencies and patient compliance.

This solution is transforming the way physician offices consolidate and manage data from implantable cardiac device, given precious time back to the staff to focus on patient care. Our diligence found their clients greatly value the many benefits of the platform and that has translated into impressive growth for Geneva.

The next logical step will be to merger the functionality of the Geneva system with that of BioTel Heart's user interface providing even greater workflow and data management efficiency to the thousands of clients we serve.

We believe the combination of the Geneva solution without current remote monitoring offering which has an opportunity to radically change the way we relate to customers in the cardiology market and it will further solidify our leadership position in remote cardiac monitoring, while providing access to over $1 billion of additional market opportunity.

Switching to research services, we were happy to report on another excellent quarter, capping off a tremendous year. In fact 2018 marked the third consecutive year in which we have had at least 20% growth in this division.

During the quarter, we continued to invest in infrastructure and additional business development resources, a recurring theme across all parts of biotelemetry.

Also as mentioned on the last call, we were starting to have success incorporating our proprietary ePatch monitor as a critical element of new cardiac studies, creating cross-segment topline synergy. During the fourth quarter, we saw an increase in effectively as we committed to another large study using ePatch with a top 10 farm company.

While we are not at liberty to discuss the details of the study, it was clear that the strength of our position in cardiac market and the access to our cutting-edge technology like ePatch helped win this business.

As many of you know, BioTelemetry has worked with innovative consumer tech companies as they seek to integrate heart-held trackers into their popular wearable devices. Those screens tools are designed to notify consumers of potential cardiac risk that may require medical monitoring, diagnosis and possible treatment.

During the quarter, we began another project of this type and are excited about its potential to further integrate health and fitness information seamlessly into the lives of consumers. We are delighted to support this trend as it has the potential to substantially expand our market and closely aligns with our mission to improve human health.

In studies like this BioTelemetry is uniquely positioned to leverage the strength of our research and healthcare division to acquire, analyze and report cardiac data. For the full year 2019, we again anticipate double-digit revenue in the research business.

From a strategic investment perspective, we are also continuing to evaluate additional services and technologies that may have the potential to accelerate our objectives for this important segment.

With the healthcare and research division, which account for over 95% of the company's revenue flow in double digits, we have the luxury of spending more time and resources, developing additional opportunities for future revenue growth.

In 2018, we introduced our latest generation wireless blood glucose monitor powering our digital population health management service. Later in the year, we also acquired certain assets of commercial partner in this business, expanding our reach into several key customers.

As we move into 2019, we're allocating more business development resources into this segment and expect population health to become a meaningful contributor later in the year.

We also continue to put more effort into the evaluation of numerous connected health technologies and solutions to better understand where we can best leverage our capabilities. The Geneva acquisition, is illustrative of this effort and thanks from my earlier commentary, it is easy to see why we are so excited about its potential.

We are developing additional opportunities for unique partnerships with companies looking to enter the healthcare space, the Apple Heart Study being a prime example. These are just a few of the many exciting prospects for the company.

Expect BioTelemetry to continue to lead these market development efforts as no other company is as well-positioned to capitalize on such opportunities. To sum up, we're obviously very pleased with the company's exceptional performance in the fourth quarter and for the full-year 2018.

More importantly, we expect that the investments we're making across the company will support our future growth objectives.

With that, I'll now turn the call over to Heather for a detailed financial revenue of the quarter, Heather?.

Thank you, Joe and good afternoon everyone. As Joe just announced, we closed out the tremendous 2018 with an incredibly strong fourth quarter where we recorded record revenue and adjusted EBITDA.

To summarize the fourth quarter of 2018 marked our 26 consecutive quarter of year-over-year revenue growth with total revenue reaching $103.6 million and exceeding expectations, which represents a 13% increase as compared to the fourth quarter of 2017 and resulted from increased revenue across all of our businesses.

Healthcare revenue increased $9.1 million or 12% once again driven by significant increases in both MCP and extended healthcare volumes as well as favorable payer mix. Our research revenue increased 26% or $2.7 million largely due to a higher volume of studies in both imaging and cardiac. Moving to gross profit margin.

Our gross profit margin for the fourth quarter of 2018 was 61.7% versus 59.3% in the prior year period. The increase in our margin was primarily due to volume related efficiencies, synergies from the acquisition of LifeWatch, favorable product and payer mix and lower depreciation associated with the new MCT.

The favorable impact was partially offset by higher consumable cost from our patch products. Our fourth quarter adjusted EBITDA was $30.5 million, our highest quarterly adjusted EBITDA in the company's history, which representing a 29.4% return on revenue.

The increase in our EBITDA margin was primarily due to the same factors impacting our gross margin as well as synergies realized in OpEx. Moving on to our tax rate, As you may remember in 2017 the only tax cash the company paid were for save taxed because of the use of federal NOLs.

In 2018, we recorded a GAAP tax benefit of 1% with only a nominal amount of cash taxes paid due to the benefits of certain large discrete deductions taken during the year.

For 2019, while we expect our GAAP tax rate to be approximately 20%, we anticipate, that we will continue to be able to utilize our $150 million of net operating loss carry forward. As a result, we believe that we will pay approximately $1 million in taxes in 2019.

Moving on to our balance sheet, we ended the quarter with $80.9 million in cash and $200 million of indebtedness putting our debt to EBITDA ratio under 2X. Year-to-date we generated $72.7 million in cash from operations. As previously mentioned, during 2018 we had one-time cash outlays deliver $15 million largely for acquisition-related activity.

In addition we used $24.6 million for capital expenditures driven by the next generation MCP and extended Ware Holter devices as well as for capitalized software and hardware as we invest in our IT environment and infrastructure. Free cash flow was $48.1 million, which is far in excess of any other year in the company's history.

As aside, in the first quarter of 2019 we will use $45 million of cash for the upfront payment of the previously announced Geneva acquisition. Shifting gears, I will give a quick reveal of the full year 2018 and touch on the outlook for the first quarter and full year of 2019.

To review our full year 2018 revenue was $399.5 million with EBITDA of $113.4 million. This represented a revenue increase of 39% over 2017 as reported at a 14% organic rate. Adjusted EBITDA grew a remarkable 74% and our adjusted EBITDA margin increased 550 basis points to 28.4%.

As a reminder, at the point of the LifeWatch acquisition, pro forma EBITDA margin was 18%. This means the combination has created an impressive 1,000 basis point improvement in less than 18 months.

These results show a reflection of the strong revenue growth from the commercial launches of our MCP and extended Ware Holter patch products, the introduction of our products into the legacy LifeWatch account, the positive impact of synergies as well as the strength in our research business.

Looking at 2019, we mentioned on our last call, that we can expect double-digit topline growth and EBITDA margin expansion. More specifically for 2019, we expect topline revenue in the range of $438 million to $442 million, first margins of approximately 63% and EBITDA return of approximately 29%.

This guidance reflects additional investments that we are making in our sales force, on our information technology and for new product development as well as the slight headwind from a couple point reduction in Medicare pricing which went into effect January 1.

To be clear, this guidance excludes any benefit from our acquisition of Geneva, which is expected to close in early March. As always, we will continue to update our guidance as the year progressive. For the first quarter of 2019, we're projecting revenue of $102 million to $105 million and EBITDA return of about 28%.

We would like to remind everyone that Q1 is heavily impacted by the resetting of payroll taxes and the timing of sales meetings. These impacts our gross margin as well as our EBITDA return. To summarize, the company remains in a strong financial position with moderate leverage and additional capacity if needed.

We just capped off the year with our 26 consecutive quarter of year-over-year revenue growth and realized our highest quarterly revenue and adjusted EBITDA in the history of the company. We achieved the high-end of our synergy target on our key growth initiative. And with that, I will now turn the call back to Jeff..

Thanks Heather. As you just heard, we had an excellent fourth quarter. building on the momentum we had cultivated over the past several years. Our strategy is yielding the results we expected and we continue to broaden our opportunities. We are in the early stages of several potentially significant drivers of future growth.

The addition of Geneva will further broaden our cardiac offering, strengthen our leadership position and significantly accelerate our growth line.

To ensure continued success throughout 2019, we will focus on completing the healthcare sales force expansion to help drive further market penetration of our MCP and extended Wear Holter systems, continuing to grow our research business by making additional business development and infrastructure related investments, building out our digital population health management business, expanding on key partnerships we have developed and completing the acquisition and integration of Geneva.

Given our excellent results and the momentum of the company, we remain bullish on the business for 2019 and beyond. Based on Heather's comments about how we see things beginning to take shape, it is clear we are in store for another great year.

We have all the key elements for continued success, a proven and experienced management team, market-leading products, exceptional sales and service and a solid financial foundation. In 2019 we will monitor over 1.1 million people or one every 30 seconds.

Our revenue will grow by double-digits with EBITDA margin in the high 20s and the company will generate significant amount of free cash allowing for accelerating investment into other connected health solutions, solutions which will improve the quality of care and dramatically reduce the cost to deliver that care.

While we are pleased with the progress of the company, we get far more excited about what lies ahead. Our powerful cardiac monitoring clinical research businesses have the potential to produce solid growth for years to come. We also look forward to increased contributions from our developing population health business and other areas of investment.

As I close, I would again like to thank those of you who helped deliver our 26 consecutive growth quarter. Let's continue to build on the excellent momentum we have established together. With that, we'll now pause and open the call to your questions, operator we are ready for our first question..

[Operator Instructions] Our first question comes from the line of Bruce Nudell of SunTrust. Your line is now open..

Good afternoon. Thanks for taking the question.

So just could you explain the clinical value proposition of Geneva on as you know course a lot of the -- all of the cardiac-driven companies provide remote connectivity to specialized EPEs and I was just wondering if this is a different population of docs? How does this figure in from easing workflow for subscribers?.

Yeah great question and it goes to the heart of the value proposition offered by Geneva Health Solutions. Each of the primary cardiac device companies have remote monitoring systems, but they are all proprietary.

So workflow within a large cardiology practice that is monitoring patients who have devices from multiple device companies is kind of a nightmare because it required to download data from three or four different systems and then manage that data.

What Geneva has done is developed the software platform that consolidates that on behalf of the physicians.

So the staff and the physician can work out a single portal and manage remote monitoring from the various cardiac devices for the various manufacturers big, big workflow efficiency, one of the primary pain points that was the feedback that we received. It was one of the primary pain points in the cardiology practice..

Thanks for that. And my follow-up is I think the Apple Heart study is going to be at ACC at a late breaker.

Will there be any read-throughs from it in terms of what it means for companies such as yourself in terms of kind of feeding the funnel or any other significant take-home will be pretty self-evident in your view?.

Yeah I mean that's been our view all along, that if anything they are going to expand the size of the pie, the device is more of a screening tool and the benefit there is folks were walking around with potential arrhythmias undiagnosed may have these trigger on this device. Next step would be they would go to a clinical great device like ours.

It can't do the type of diagnosis that we can do, or can provide the type of information the physician would need to treat a patient. So I can't give you numbers, but kind of the logical take away is we're going to expand the size of the market..

And our next question comes from line of Brooks O'Neil of Lake Street Capital. Your line is now open..

I am at the airport so I apologize in advance for any background noise, but I am curious if you could just detail what you're seeing from a competitive position, particularly in the cardiac monitoring business?.

I would say nothing really new from the last few quarters. The same competitors that have been out there are out there. We continue to outperform relative to competitors set, but there is nothing really terribly new to report. Obviously we launched two new products this year and both of them are getting wide market acceptance.

One growing double digits relatively mature market, the other growing in triple digits and we're actually seeing in our other two legacy points as well Brook. So nothing really new to report from a competitive standpoint..

So you mentioned the new product.

I'm curious if you have any additional remote monitoring, cardiac remote monitoring products in the pipeline that you will launch in 2019?.

Nothing that I'm prepared to talk about today. I think the focus will be let's get the Geneva platform acquired and integrated I mentioned in my talking points that the next logical step would be to integrate our user interface capabilities with those of Geneva.

So if you think about that from a cardiology practice perspective, I mentioned that they could be using our practically using multiple software interfaces for the various manufacturing companies. They also have one for us. So in the long run, we're not looking at going forward with one. We're looking at consolidated five systems into one.

So huge efficiency within the cardiology practice, all of that is remote monitoring. We do have additional products in development in our pipeline, but nothing that we're prepared to talk about today..

Then my last one, I'm just curious you could tell us what you're seeing and what you're thinking about it diabetes I'm personally quite excited about the opportunity in diabetes but where do you think you're at, where do you think you're going in diabetes in 2019?.

Yeah it's still a little bit early on. We spent most of '18 focused on the LifeWatch integration and then focused on getting the latest generation wireless blood glucose monitor through development and making enhancements to the cloud-based platform as well. So we got all that done.

As we move into '19, we're invested more business development resources, outselling the program. We anticipate starting to get a bit more traction as we move into 2019.

One of the other areas that could benefit this initiative, is the new remote monitoring code that Medicare put in place at the beginning of '19, which allow physicians and IDTS to monitor chronic conditions remotely. We're still developing programs around those codes.

And our next question comes from the line of Marco Rodriguez of Stonegate Capital Markets. Your line is now open..

I was wondering if you could talk a little bit more about the sales force expansion, maybe if you can discuss the timing, may be how many additional heads you might be looking to add there as well?.

Yeah so we're moving it up by about 20%. So we will rate anywhere from 95 to 118 will be 115 to 120 in 2019. We will probably 75% way through that as we sit here today. Obviously new headcounts aren’t that productive in the first year. It take a little bit of time to ramp up, but we think it's a good investment.

We have seen in the path as we added a few headcount. It makes sense, we're seeing good return on margin of investment and so we'll continue to do that..

And individual flow, will that money flow through the sales and marketing line or is there going to be a mixture between that and the class of services?.

No, that would be all sales SG&A..

And then maybe if you could talk a little bit Joe about fiscal '19 here obviously on the guidance side, you've gone through a lot of the drivers here that are pointing towards growth. Maybe you can talk a little bit more about some of the risk that you're kind of taking a look at and monitoring..

Same as always. Our biggest risk is reimbursement to the extent that there's some new technology which we monitor pretty closely. That's always a high level risk, none that bothers us. We got a good view on reimbursement. We do have a little bit of a headwind coming into 2019.

So it's probably somewhere in the 1%, 2% range in terms of overall revenue as a result of a rate cut or rate cuts from Medicare. So when we talk about 10% growth, it's really kind of 11% to 12% and we think that that's it's really comfortable for us this year. So nothing new from a risk perspective.

I think all of the same stuff and look we're pretty close to everything that's happened in the industry. Again a lot of questions about consumer tech companies who are trying to come in to talk a little bit about earlier in the call is a risk to us. No actually we think that that's a tremendous benefit for the industry.

There's a couple more that are common into, one or two more that we know of that are coming in to the category we're working with one or two more. We've just entered into another study with one. So we think connectivity is really good for the category.

It brings more awareness and ultimately these folks got to get treated and they're not going to be treated until they get a lot of our products..

And last quick question just kind of coming back on Geneva assuming the acquisition closed this year as expected, just wondering timing wise here as far as the integration efforts timing wise is how long you think it'll take?.

You got to think about this one differently than LifeWatch. LifeWatch was a massive integration project because a lot of that benefit was coming from cost synergy and merge into the sales and marketing infrastructure. So we really needed to get that done quickly. We're not expecting any cost synergy from Geneva.

This is all about driving that top line and solidifying our position within the cardiology market. We believe that grapping a software service like this around products and services that we already offers is just going to further entrench us in these practices. So our plan there is really market expansion as quickly as possible.

We talk I think in the press release about their revenue in 2018 being approximately $6 million. So we didn’t talk about the fact that they were already breakeven. So they are their own rate and which is clinical right because now we have the opportunity to really invest in growth.

This tells you that it's not high cost structure, behind this and it make sense right because it's not the same as our monitoring business where we are required to manufacture and supply devices. This is primarily a software to the service with them and IDTF service behind that.

So really the mentality here is get them on board, clear them with our current cardiology sales force and infrastructure and we'll enter that business as fast as possible. Naturally we'll start to kick off earnings over time, but that's really not what we're after in near-term.

We're after topline growth in sales, which is perfectly aligned with the sellers and the group is coming on board..

And our next question comes from the line of Jayson Bedford of Raymond James. Your line is now open..

So just maybe along the last line of questioning there, the 20% jump in the sales force is that in support of the base business or more in anticipation of Geneva coming on and then just as a follow on to that, is your existing sales force, are they going to be selling the Geneva offering as well?.

Not all that planning is kind of underway. The 20% growth in the cardiology sales force of BioTel heart division of BioTelemetry is a standalone initiative. That was happening regardless of the Geneva acquisition. With Geneva coming on board, we will in all likelihood allocate even additional sales resources to that effort.

The two organizations, they are not so much smaller teams.

The two organizations will partner eventually to work closer and closer together, but the idea is at least initially have the BioTel Heart cardiology sales force feed into the Geneva sales organization and again I don't want to get bogged down with a whole lot of synergy exercises and integration exercise.

I really want both of these groups sound as much as possible if that makes sense. We have -- the benefit here is BioTelemetry has relationships with thousands of doctors, thousands of doctors. The Geneva Group has built a nice business with a relatively small number of parent accounts to date.

We have the opportunity to take that and move it through the BioTel Heart sales channel. We want to do that as rapidly and efficiently as possible. So we're going to need dedicated specialists on the Geneva side of the house if you will even though they're going to be working very closely.

I don't want to give you an impression that we're going to run it as a totally separate company. They're going to be working very closely, but they're going to have kind of a dedicated role. The important thing there is in terms of the customers, there is 100% overlap..

And Joe at that point will you be ready maybe it's right here just to talk about the potential revenue and EBITDA contribution from Geneva in '19 and '20..

Well it's not right here. We get to get close first and then we'll put out a little bit more guidance on it right and so we're still modeling together out and they're still in ramp up phase..

Okay.

And I don't mean to jump the gun on this, but are you planning on quantifying it or talking about the potential revenue contribution at the time the deal closed or is that a 1Q call type of event?.

Oh no. Well give some guidance when the transaction closes to the best of our ability and then we'll give obviously update on a quarterly basis when we get together on these calls. I just don't want to get too far upfront but our primary objective is to get it close..

And I may have missed this, I am not sure if it's given in the release, but just in terms of the international piece of the business, Joe can you talk about the potentials of to maybe globalize the business going forward and is that a strategic initiative here in '19?.

I would say it's a strategic initiative. It's not one that is it were we've thrown a ton of resources at in '19. We have started to invest some resources in that area, but it's more early stage development and primarily looking for the right partners in various parts of the world or at least think it makes sense to be doing business.

We don't anticipate opening up shops all around the world. We think we'll do this through partnership which is really the only strategy that makes sense for a company of our size..

And then just last question for me I think you touched on it or alluded to it earlier, I think you mentioned multiple M&A opportunities and you talk about one Geneva, you also thought about a pipeline of new opportunities.

I wasn't sure if that was internal opportunities or additional M&A that we should expect over the next 12 months?.

I would say both, so we're always developing initiatives, products, things within the company that will enhance our business and help us execute our strategy to the extent we can accelerate that longer-term strategy or longer-term plan via M&A we will look to do that and I've been cardiology research, what's your priority and it really is you're market dependent what's there in a perfect world I'd invest a little bit more health than research, but the assets have to be there for men and have to be there for me at the right price..

And our next question comes from the line of Mitra Ramgopal of Sidoti. Your line is now open..

First just coming back to the Geneva acquisition obviously LifeWatch was a homerun, clearly was a competitive much more established company with a track record. How comfortable were you sort of taking a look at Geneva given it's still very much an emerging company and you didn't have that quite the history with it you had with LifeWatch..

I though with the product offering was a no-brainer. It would lead to buy it and when I came in contact with the folks at Geneva, they were just world class people. They were so far ahead of what other folks were doing this is in the space. It just made all the sense in the world for me to make the investment to accelerate this idea.

Again this is a top pan point that in the cardiology practices that we service. Arguably it's not a pain point that we're creating what was there and we can solve it, we're going to further solidify our standing in that practice. So I am very comfortable with it.

There's already dedicated payment on the service, they’ve established a nice ramp-up, they have super high quality people. We have all the other infrastructure that is needed to this. They could've done it on their own. Again I think I mentioned earlier that they were already approaching breakeven or at breakeven.

They could have gone out and raised money for a PE sponsored to do this on their own, but partnering with us allowed them to get where they wanted to be in the next three years a whole lot faster.

So we'll provide an opportunity for them to land this business a whole lot faster than if they were doing standalone basis, but we think it's a really attractive business..

And I know you've already talked about making some incremental investments in 2019 sort of the sales force. I just wanted on the R&D front however you brought on or launched a number of products in 2018. Should we see that starting to come in a little or are you still quite a bit to be a investing on in terms of product developments..

No, no we're investing quite a bit on the R&D side both on the system side as well as the product side. A lot machine learning NAI to bring more efficiency to the operation, a lot on the product side as well and then across the platform. So looking at cardiology we're looking in some other areas as well.

So we're continuing to invest a lot of money into business..

And finally Heather what you would be thinking from a CapEx standpoint for 2019?.

We're probably looking about $25 million and that includes a combination of devices to meet the demand as well as some infrastructure investments that we talked about on the IP side..

And our questions comes from the line of Gene Mannheimer of Dougherty & Company. Your line is now open..

Congratulations on a good year. I wanted to ask you first about the triple digit growth you're seeing in the e-patch.

I am just trying to glean how much of that growth is from the commercial call it out to practices versus the stuff that you're doing in the research segment with the clinical trials?.

That's all out to practices all in the healthcare market..

So the research piece than with that you're doing with Sun Pharma is incremental of that?.

It is and to the extent we see benefit from that, we're going to see it more on the research side than the healthcare side..

Can you talk a little about the number of salespeople and practices that Geneva had pre-acquisition?.

I think on the rev side they felt a little bit about the number of accounts that they have and I think it was somewhere around 60 parent accounts and very few business development resources in place.

Again it was a small company with a handful of people out driving that business and so we think that once we unleash our sales organization and we can leverage all the current relationships we have in place and the fact we did fit for everybody for all of our high-volume accounts, this is a perfect solution to bring into the cardiology.

So today relatively small I think again the opportunity that we calculate it was well in excess of $1 billion and that was just by looking at the installed in plant base and multiplying it by the average selling price for the CPT codes that are already established for the services we're going to be providing and we think there's actually market potential higher than that, given the growth rate of the implantable loop course that's also been into this solution.

So big market bit opportunity and it's a relatively unpenetrated..

And Heather I appreciate you CapEx comment.

Any guidance on cash flow this year considering also what you're paying for Geneva in Q1?.

Yeah excluding Geneva we're looking at free cash flow of about $90 million to $100 million. So with the cash on our balance sheet obviously we'll pay for the upfront payment to Geneva..

And our next question comes from the line of Bill Sutherland of Benchmark. Your line is now open..

Just at this point I think just one I want to look at that's the revenue guidance.

So it's coming -- comes in midpoint around 10% for the year and others point or two of pressure on Medicare, but the figure that's mostly offset by a little the revenue from Geneva, so give or take around 10% and then so I am just wondering how to think about the key that two main segments research and healthcare relative to that there is research move into that kind of growth rate or how should I think about that?.

So first of all none of that includes, that includes nothing from Geneva right. So you're right, we're saying 10% if you pro forma that for rate cuts it's probably more like 11% to 12%-ish and yeah last year, the research business grew by an unbelievable rate like 30%. The market growth rate is probably 3% to 5%. So we're asking them for 10% this year.

I think we're comfortable forecasting that based on the backlog that we have in place, but which is still phenomenal growth, but you know the way we can afford test our business so we try not to get people out of our seat, but it's too far out of our seat.

I think it's about this time last year we were talking about 10% growth for the business in 2018. I think we're asking for like created the 385 out of this and we were able outperform and move that up.

We were slightly bigger business than we were at this time last year and I did talked a little bit about the dynamics of the research business and of course we think it's just going be nice upside with Geneva as well. So we're comfortable coming into year with that number but you know us..

As far as the sales force impact and the productivity ramp do you think that's a difference maker by the back half of this year?.

Yeah it will take a little bit of time to get that done and the people in place and trained. So you'll see some impact of it but you'll see more impact in 2020..

And I am not showing any further questions at this time..

Thanks again. That's going to conclude today's call. Appreciate your support and we'll speak to you next quarter. Thanks operator..

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