Fred Lampropoulos - President and CEO Kent Stanger - CFO Elizabeth Pratt - Executive Director, Radial Program Global Rashelle Perry - General Counsel..

Tom Gunderson - Piper Jaffray Jayson Bedford - Raymond James Jim Sidoti - Sidoti & Company.

Good day, everyone, and welcome to the MMSI’s Fourth Quarter 2014 Earnings Conference Call. At this time, I’d like to turn the conference over to Fred Lampropoulos, Chairman and CEO. Please go ahead, sir..

Good afternoon, ladies and gentlemen there, and thank you very much for taking the time to join us this afternoon.

We’re broadcasting from Salt Lake City in our corporate headquarters, where we have about 30 members of our general staff that are located here, and we will start our meeting today by having Rashelle Perry, our General Counsel, read our disclaimer.

Rashelle?.

Thank you, Fred. During our discussion today, reference may be made to projections, anticipated events or other information which is not purely historical. Please be aware that statements made in this call may be considered forward-looking statements.

We caution you that all forward-looking statements involve risks, unanticipated events and uncertainties that could cause our actual results to differ materially from those anticipated in such statements. Many of these risks are discussed in our Annual Report on Form 10-K and other reports and filings with the SEC available on our website.

Any forward-looking statements made in this call, are made as of today's date and we do not assume obligations to update such statements.

Although, Merit's financial statements are prepared in accordance with accounting principles generally accepted in United States, Merit's management believes that certain non-GAAP financial measures provide investors with useful information regarding the underlying business trends and performance of Merit's ongoing operations and can be useful for period-over-period comparisons.

The table included in our release and discussed on this call, sets forth supplemental financial data and corresponding reconciliations of GAAP financial statements. Investors should consider these non-GAAP measures in addition to, not as a substitute for, financial reporting measures prepared in accordance with GAAP.

These non-GAAP financial measures exclude some but not all items that affect net income. Finally, these calculations may not be comparable with similarly titled measures of other companies..

Rashelle, thank you very much. And again, welcome. We’re delighted to have you with us. As you can see from our press release that, we had, what we believe is a continuation of our third quarter results, and I think that we reported solid results across the board.

You take a look at our growth, and you’ll notice that we are in the double-digits and I think that’s very respectfully that the core was 11% And 12% respectively, 14% overall and we’re I think very, very pleased.

I would like to say essentially from the onset that last year we reported to you our guidance, and of course we changed that in the first quarter and we upped the revenues and lowered the earnings amount.

The bottom line is, is that Merit hit every one of its original numbers, saved the updated sales forecast which we missed by $1 million, but it still ended up by almost $12 million above our forecast. So I think that overall, I am pleased. We have a lot of programs going on that we will discuss with you today.

And then we’re looking forward to either having you in person or to participate or listen to our webcast, which we plan on having on March 5. We think, and I believe, that it will be very insightful to Merit’s business plans to essentially talk about how we believe this business is going to grow and increase in profitability over the years to come.

And some people, there are various point of view, we understand that there are some risks involved in a three-year plan, but we think that it’s important for you to understand that plan in order to get some insight on this year and where we’re taking the business.

So the net of it all is that you and we believe that we can continue to grow the business that we can improve all of its operating metrics and bring higher profitability to the company, and then we believe and we hope that that translates into higher value for our shareholders. So we’re excited about that.

If we take a look at our business overall and take a look at the various segments, we can take a look at strength for the year in our inflation devices. We can take a look at kits which were a little bit lower and we expect looking forward that our kits will have less attention by plan.

If you take a look at our stand-alone products - and I suppose that the outstanding area where our embolics, which were aided by the things that we’re doing in China and those things that are going on in Europe, we have a huge improvements in embolics sales in Europe and of course in Japan and China, I think I mentioned that.

But if you take a look at our Malvern, which is Thomas Medical, you look at our catheter just across the board, you will see that we had, what we believe is, just outstanding growth for the business. The numbers speak for themselves. They are improved. They are improving and they will continue to improve. So I think we have a solid business plan.

I think that sales. I think margins. We’re able to maintain and to control, in some areas reduce our expenses. Our operating profits are improving. One, I don’t want to call it a negative because I don’t believe it is. In fact I think it is in fact show some of the strength in the U.S.

market, but that is that we had a higher tax rate this year and we’re going to have Kent explain that in just a moment, but that really is a reflection of stronger U.S. sales and the improvement in those sales. We had - in terms of regions.

I think that’s another very, very important part of our business, and that is that our international markets continue to grow and grow very smartly. Our overall EU dealers in direct grew at around 25% last year. The star once again was China. And China grew at 27% last year.

And we continue to make inroads into these markets and part of our overall growth plan is new products, differentiating older products by essentially remodeling some of those products, and again continued geographic expansion and opportunities like we are making in Brazil, like we’re making in Australia and that will continue to look at those markets where different distribution models giving us higher margins and a larger presence in the geographic areas have helped the business, which has been part of our plan for many years.

So it’s a continuation of some of those plans in areas like Spain and other areas that we will talk about more and more going into the future. I think, Kent, let me just turn it a little bit time over to you and have you comment on your views on our financial performance..

Yes, I’d like to highlight what you’ve something you’ve already said. The embo-therapy has really increased our QuadraSphere. Our highest gross margin product in our line is up 77% this year, as well as our core product for the Embosphere is up 21%. So those are really helpful in, what I think our future is, and in helping our gross margins.

Another thing that I want to point out is that we’ve improved throughout financial statements. We’ve seen the gross margins go up. We’re seeing improvement sequentially in our control of the operating expenses and the improvement of our operating income.

So we’re beginning to see the leverage we promised through, not only increased top line growth, we’re seeing gross margin improvement, we’re seeing improvement as a percentage of sales in our operating expenses. We’re seeing a reduction of interest.

We were able to pay our line of credit down $14 million this quarter alone and able to reduce our leverage ratio of EBITDA to earnings ratio to debt and that is down at 286. So we went from 324 to 286 in one quarter. I think that’s pretty remarkable..

And of course we’re fortunate that we have a good portion of our debt that is hedged. Now there were some statements by the Fed today and it seem to be somewhat dovish and that sort of thing. We can't predict those things, but I think the way we’d managed the business and structured it is that we have a minimal amount of risk based on our structures.

I would like to, for just a moment, talk a little bit about the FX effects, and again I’ll have Kent weigh in just a moment because we think that’s been issue in the fourth quarter alone. It affected our revenues by about $1.1 million..

Yes..

And we’re going to talk in just a minute about our 2015, and we’ll talk I think in a more detail about foreign exchange, but I will say this because I think it’s actually quite fascinating and interesting, at least for me, and hopefully I’m sure for you, and that is with the FX effect and what it does for the top line, we have a very interesting situation because of our manufacturing and our expenses and the various things that we do in Europe that if we maintained sales at the levels that we predicted here, it actually has a positive effect on the company on earnings.

And it’s a really kind of an interesting deal. So Kent, just on the overall FX effect, whether it be this year, but certainly where we are, and I will talk about what we pegged our results to next year. But can you just discuss a little bit that phenomena that I just discussed..

Yes, I’d be happy to do that, and it’s probably more germane as we look forward to the future because that’s where the euros just began to really follow a lot since the end of the year began in late last year, but it’s been pretty dramatic and we’ve seen that in other currencies as well.

And so as we sell in those currencies, obviously it’s affecting our total sales. Fortunately we’re naturally hedged, in fact favorably hedged in this case, because our expenses are about $3.6 million greater than almost $12 million we’re saying is a change in this top line.

So the net of that is a couple of million dollars of benefit to us in a forecast for next year. So it’s a nice range until you have your manufacturing facilities, three of which the largest is the one in Galway, Ireland.

And then you have your distribution facility in support for the sales force and you have the sales force itself and then the expenses that go, they have input costs, in other words, materials you purchase.

You have the labor and you have the overheads of brands and everything that it takes to operate the facilities and the operation that are denominated in euros, plus the sales force, their travel and another expenses and benefits.

So take all that together, and we’re one of the few companies that they are going to find out there that can say that the euro dropping is actually helping net income statement..

But one of the thing that Kent just mentioned, just a little bit of discussion that is with our presence in many of these foreign countries at Brazil, Mexico, China and so on and so forth, there are other effects that come into place from a lot of these countries as the dollar has strengthened here.

But again, overall, as we throw that all in the soup pot here, we find out that it’s actually is going to benefit. So you will see lower revenues. And in fact, as we now move because I think, I mean the numbers are there, you can look at them. I hope you’re pleased with them. We are somewhat pleased, not totally pleased.

And by that I mean we can always do better. But I think that the one thing that you can expect here, we have, I think, worked very hard on improving our budgeting process and our accountability. We’re serious about what we’re doing.

We’re committed to what we’re doing and we want to make sure that you, not only come away for that feeling but we have support and you can see empirically the things that we’re doing to improve the business overall. Let me, if I could just for a minute, move to this pipeline.

I talk about it and one of the things that you’ll be able to see is that on the March 4, Merit will file its 10-K. This will be one day before our conference. And in that document, we will talk about some new products and some things that we think are going to have an impact on the company in the future.

And at our conference, we will show some of those products, and we will have some discussions about what they do and what the market sizes are and so on and so forth. We’ll also make that part of a WebEx or a webcast, so that everybody will be in the loop in terms of these opportunities.

But one of the things that company is doing, and I’ve discussed this at many of the conferences in the past and that is that many of the projects are longer term projects now than they have been, because they have more opportunity. As an example, we will talk about - again and without letting the cat out of the bag until that document is filed.

There are these longer term projects.

So wherein the past a project might take 15 to 18 months or two years, we certainly have a number of those, but we have other products that are now three years and something are out as long as five years that are in our R&D numbers and things that we’re working on that have substantial market opportunities and this is part of the transformation of the company into higher margin and higher market opportunities worldwide that we’re looking forward to talking to you about.

So again that pipeline is full and we are doing something a little bit different that we’ve done in the past, but we’re doing as maybe a little bit more and that is one of the things that the change in the marketplace has broad about is that there is not as much private equity and venture in many of the medical device companies as there have been in the past.

So there is a lot of smaller companies out there, and Merit is engaged in a number of R&D contracts that are relatively small, and I am going to say, immaterial to the business overall, but projects that we’ll be able to talk to you about when you come out here that have to do with vascular access and have to do with things that we think are pretty important as the devices that we’ve been using on a legacy basis are becoming more sophisticated and help I think with better outcomes and some of those things that we’ll talk to you about when you’re here in as part of our webcast.

I think that pretty well covers it. The numbers are there, and again I think they are consistent with our efforts and lot of opportunity for improvement in the future and that’s something that I think we’re looking forward to. Let me talk a couple of things here that I think are important as we move forward.

Now, many of you will recall that we have had some discussions about Mexico. And as many of you know, we have a contract manufacture in Mexico, and we’ve been involved with that vendor for about 10 years.

Merit made a decision a few months ago, in which, we have leased, not bought, but leased a facility in Tijuana, Mexico, that should be up and operational on or about July 1, give or take. And on that date, we will start moving in a number of product lines that are currently being produced by our vendor in Mexico.

However, as of May 1, Merit will take control of that existing facility and its employees, and we think this is actually really quite exciting, because what it does for us is that it allows us to have people to know how to build the product and asks people to have that experience and our hope is to retain those employees.

And as we’ve discussed it as a management team, we think that this is the appropriate course rather than going in and staring up a business from scratch and having to hire and having to train people, we think this will help us with a much smoother transition. Over the next two to three years, we will have as many as 500 employees.

Our current facility there, employees are about 150 people. And our plan of consolidation will continue. So as you know over a year ago, we successfully and without interruption to customers shutdown our original facility in Salt Lake City and consolidated into our new facility here.

By September of this year, we will also shut down and consolidate another facility here in Salt Lake City that we affectionately call 80/40. That’s about two miles from our facility. And of course the efficiency that comes from that is always significant. You don’t have to transport parts.

And we will take and look at the products that we think will fit best and some of those will go to our Texas facility. Some of them will come to South Jordan and some of them will go to Mexico. This consolidation will continue to be evaluated over the next, I must say, months, and maybe the next year or so, as we bring the New Mexico facility online.

We expect that by or about September 1, give or take, 30 days that the existing manufacturing that is in a facility that Merit will take control of and then will vacate and move will then be into our new facility in Mexico. We think this is going to have a substantial cost savings benefit.

We think that it could add substantially to gross margins in profitability. We will talk about this in a lot of detail in our conference because it spreads over three years as we fill this up.

So we talk to you today about the fact that this is going to be taking place and is in our numbers that we will now talk about for 2015, and we will then talk about it and expand that out over the next three years in our meeting that’s coming up.

So let me, if I could, move forward to discuss our forecast or at least our guidance for this year and put a little, I think, color on that. You’ll notice that we have a sales forecast of 5% to 7%.

Now, if you look at this year and you take a look at the second number 12%, 14% core and otherwise, this will of course take out a couple of percentage points because that was part of this year into the Maquet transaction for our Safeguard product.

And so if we go to the core number and then you take the 2.5% or so that would come out just from the currency, I would say that this is a conservative number. I think last year, if my memory serves me correctly, we did 7% to 9% or 8% to 10%, and of course we outperformed that.

But we want to be reasonably cautious, but I also want to make sure that you understand that we’re not negative on the business that - and in fact, it’s quite the opposite. We believe that the business will improve dramatically.

In fact, I can say as you look at these numbers for next year, every one of our parameters are expected to improve; gross sales, gross margins, operating profit, both GAAP and non-GAAP earnings across the board, everything will improve based on our budgets that we spent a lot of time on and the commitment that we have from our staff.

And so I think that is I think probably the most important thing. You’ll take a look and take a look at the earnings numbers, and of course we give a range and we hope that we can do better, but this is what we believe that we can commit to and this does have faith into at some of the startup costs that are associated with our Mexico facilities.

So Kent, you want to maybe give a little bit more color on the range for next year?.

Yes, I mean, the top line I think is again is conservative. It’s something that we felt like we meet in spite of lowest FX effects. We’re improving our GAAP earnings in the range of [indiscernible] and then also 12% on our non-GAAP, which is more consistent way we’ve looked at it I think everybody does.

So when you look at the GAAP version, it’s at 22%. So we believe that we’re going to have the discipline we need in our operating expenses and in our gross margin, the operations into our lean manufacturing.

There is going to be some transitional costs here due to the setting up of the Mexico and the movement of the product lines over there and some, we call, moving costs or temporary costs in the SG&A, but overall we’re setting ourselves up for even as we’re going to talk more in nine days about what the future can bring for having put in place this infrastructure and capabilities for offshore manufacturing at lower cost, both the labor and overhead are going to be in this.

Yes, but it’s not just Mexico. I mean, it’s not like it’s a one trick pony here. It’s the consolidation of existing facilities. It’s better efficiency, inventory turns, I’d like to go on and on about the metrics that we’re using, and automation.

In our automation center, which we’re really looking forward to showing people - I’ll give you an example of one piece of equipment. We currently have a piece of equipment producing a product that I think currently runs at one unit every, Neil [ph] that’s on the - well, I’m not going to say the name of the product but one every....

Seven minutes..

Seven parts per minute. So you can do the math on that. Now we have a new piece of automated equipment that is here, and will be put into effect in about the next, I’m going to say, 30 days to be operational that now moves it from seven to 30 and reduces the overhead or the headcount there by over 14 individuals.

Now those people will be retained in other jobs and other growth, but the point is that, we now are getting our business to a certain mass that allows us to really invest in these areas that help to bring our costs down and make us competitive in markets that have been marginal. When I say marginal, we’ll simply make more money.

And I could go on and on about these things, but again, we’ll hopefully be able to talk you about what some of those projects are in those cost savings. Now, as you know, we do not talk about quarters.

However, we think it would be appropriate to put a little bit of color so that we don’t go through what we went through last year and let people understand that the bottom line is and that’s what we’re all here for is that we’re going to have what we believe a substantial improvement of our earnings over the year ago period, but there are things that affect us in the first quarter that I want to make you aware of.

So it’s not a surprise to anybody. And here are some of the things that we do. We start out the year by having sales meeting of all the divisions.

And we do that through the month of January and early into February in which we go through and we train and we launch and we find it’s much better to do that and to get a fresh start, and that’s why the SG&A line sometimes in that first quarter is a little bit heavy, but it goes and it balances out during the year.

So you will see and continue to see, I’m going to call it for lack of a better word, some seasonality. But that seasonality would be substantially improvement over last year.

Let me give you some other ideas, as we start up the business and close out the year and we had a very, very strong close, then what happens is, it has to start up, but you don’t really earn the application until it goes to the sterilizer so you have a couple of weeks of delay and then you have the negative variance in January, but we have that every year.

But we want to make sure that people understand. You have increased healthcare costs. We’re now going to be carrying the rent for this Mexico facility that even though we got seven months free rent, give or take, that as part of the accounting rules, we have to take it over the term of the lease even though there is no cash going out.

So there are all of these little things that we want to make you aware of, and I guess our concern is and the reason we’re sharing this with you is we don’t want in the first quarter to have a situation where we come out, and we come out with numbers and all of a sudden they said, well, there they go again because it’s quite the opposite from that.

And we want to make sure that again the seasonality, you’ll see it ramp during the year, you’ve seen in the last several years and you’ll see it again this year, but we still believe that those numbers will be substantially improved over last year.

So I think from a comparative point of view, I think you’ll be pleased but you need to understand how this thing ramps up and why those things exist.

Kent you want to talk, maybe a little color on it?.

Yes, I mean there is certain of our overhead costs like payroll taxes of startup or matching of those. We have some other increases - healthcare for example gets kicked in and steps up. It’s fixed for the year, but its higher rates to start the year, as a percentage sales. This all will fit the net income and the operating income of the company.

So yes, we’re a little concerned about just making sure people that were conservative in guarding that there is a seasonality to our sales that seems to be increasing and as well as our earnings. Yes..

And by the way, we see that as we start this first quarter, we see that the numbers that we’re projecting here being met or exceeded.

So I think we’re on track for being able to deliver solid results to you next year and bringing this Mexico facility, shutting down other facilities, increasing their automation, doing a lot of things that we’re doing here to reduce costs - and then a lot of them, we’ll talk about some of these at our conference of things that we’re doing differently.

Listen, old habits die hard, but I think that there are a number of things that we’re doing here, whether it be from promotions in presidents clubs to healthcare, wellness and we’re doing a lot of things that will improve this business and I think you’ll see, again as I mentioned early, improvements in every - and again what I believe in, every significant portion of financial reporting you’ll continue to see that, although it will ramp during the year start out.

So we want to just make sure that everybody just kind of stays calm and collective that we don’t expect blind faith, but we expect that we’ll be able to show those improvements in the first quarter, in the second quarter and throughout the year.

And that we’ll get the performance that we hope will translate into shareholder value as we go through the year. So I think that’s the essence of it, ladies and gentlemen. Just in summary, a strong finish to last year.

One interesting little point, this I know doesn’t mean maybe a lot to some of you, but I have to tell you, the month of December, in which we did about $48 million in revenue, we operated at 14.7% operating profit. Now, it shows that we can get balance and we can get leverage on these statements.

As Kent pointed out, if you take a look at the top line growth and look at this bottom line growth, you’ll see that there is substantial leverage in the earnings percentages as they come off these sales numbers that we’re giving you and they are significant.

So again, we will be able to show that to you in a plan with more detail on the guidance here and how we’re going to get there in our webcast, again as Kent pointed out in just nine short days. We’re excited about having those of you who are coming to Salt Lake City.

We hope that maybe even through this call that it will maybe ignite and some of you would love to come join us. We know that we’re going to have a lot of people on the webcast. We know that we’re going to have a number of you here and we’re excited to have you and show you what we’re doing in our business plan.

So I think with that being said, we will now turn the time over to you, and we’ll go ahead and let the operator come in and fire away, ladies and gentlemen..

Thank you. [Operator Instructions] And we’ll take our first question from Tom Gunderson with Piper Jaffray..

Hi. Good afternoon guys..

Hi, Tom.

Good, how are you?.

So I just a couple of numbers questions, since I think a lot of the strategic stuff at least will be covered in early March, but I want to double-check what I heard. $1 million to $2 million positive impact from foreign exchange earnings line in 2015.

Is that right, Kent?.

That’s correct..

Closer to $2 million. Yes..

Okay. And then I thought I heard Fred say 2.5% top line currency. That comes up to like $10 million or $11 million.

Is that right?.

Yes, it’s more like $12 million. Yes..

Yes. I think it’s $11.8 million, but pretty close, yes sir..

And then Fred you also said just maybe in the last paragraph or two of your comments that you’re comfortable with Q1 that’s out there.

Is that revenue or earnings, or both?.

Well, what I said is that our plan, our budget and we were operation - I’ve only seen a month, but we’re comfortable that we’re on track and doing just fine..

He is referring to our internal forecasts and budgets and stuff..

Yes..

I see, okay. And then for that Q1 commentary that you made and the seasonality.

One way to get around that was used on - or sort of the tables sometimes is just take, if you’re going to get 6% growth on the top line and whatever on the bottom line, we can just a portion that 6% to every single quarter and then the seasonality that you saw last year is reflected in that.

Do you see any seasonality, any special in 2015 that would upset that kind of math?.

Tom, I would have to take a look at that and look at the numbers and see how you spread that. I think you hit the nail on the head, that’s your side of the table, and I would be I think reluctant to comment on things on your side of the table.

If you want to talk about my side, I’ll talk about that, but I don’t want to comment on how you might look at it..

Okay, but there is no change in....

What I was trying to do is..

It was a long way of saying there is no change in seasonality..

No change in seasonality. Yes, I mean we expect to have momentum, but as Kent pointed out and I did, you have these - it’s kind of loaded the expense side for the reasons I mentioned, healthcare and sales meetings..

Earnings are going to ramp..

So earnings are going to ramp, just kind of like what you saw this year. But on higher revenues and we think improved margins..

Generally I think we’re agreeing with what you’re saying that there is going to be similar patterns by the quarters.

I think that’s what you’re asking?.

Yes..

And yet it seems to be amplifying a little bit, I would just say that..

And again what we didn’t want to do is - our goal is to outperform of course the first quarter of last year and we think that we’re - I believe that we will do that. I don’t want to get into - substantial for me means - that means something different for you, but we’re going to beat it [ph] I think we hopefully over the last years substantially.

But again, sometimes when you look at the first quarter or second quarters that how you’re going to make the year, I’m just confident that in our planning and short of anything that I don’t see coming at me, I’m confident that we’re going to be able to meet and our goal of course will be to exceed the numbers, but we’re, I think, much more comfortable this year that staff and our planning and everything that we’re doing, we’re just kind of in shape.

We’re in shape..

Sounds good..

We’ve been looking out..

That’s it on my end. And I’ll see you in Salt Lake in a couple of weeks..

We look forward to it, Tom. Thank you, sir..

[Operator Instructions] We’ll move next to Jayson Bedford with Raymond James..

Good evening.

Can you hear me okay?.

We can Jayson. Thank you..

Okay. So just I guess on gross margin. It looked quite strong in the fourth quarter. It’s fair to assume, you didn’t really see any benefit in the fourth quarter from FX? I guess that’s my first question.

And then secondly, when we look to 2015, you’re assuming that gross margin expands as we look at the ’15 guidance, correct?.

That’s correct..

We had about 18 bps that have helped in our gross margins in the fourth quarter to answer your question on the FX effects..

Okay. And then maybe can you give us a little bit of guidance here on the middle part of the P&L. You’ve given us the top and the bottom.

Just wondering how you see the gross margin, SG&A and R&D lines shaping up for the year?.

Yes.

Kent?.

So on a GAAP basis, we’re thinking we can get up towards 44.5% to 45.5% in that range. And on….

Gross margins?.

Gross margins, yes..

And that’s on a GAAP basis just to be clear?.

Yes. I just want to be clear, because that’s primarily modeled our numbers first and then we talk about adjusting them, but then the range for SG&A, we think is 28%, 29%, and we should be able to do that on a GAAP basis..

Okay.

R&D?.

Yes, R&D is going to be around 7% and then we’re going to have about 0.6% or somewhere - somewhere in less than low 7s, and then you got to add clinical trial stuff that’s 0.5% give or take a little bit..

Okay. That’s helpful. And then I guess can you talk a little bit about the radial strategy. You made some deals - a couple of deals late last year. I know you were high on that. Can you just talk about how that is progressing and maybe, I don’t know, if there is a way to quantify the progress, but if you can just comment on the radial efforts..

Yes, let me tell you what we’re doing, Jayson, and we appreciate the question.

And by the way, I think there is something emerging out there that we’ve been part of and that is, we’re starting to see radial docs starting to take a look at how to use the radial approach for doing, for instance Left Gastric Artery Embolization and those sorts of things.

And so that’s kind of a little kicker in there that we’re starting to see some trends on. We have some specialty boards that are used for patients, and that business is growing for us. We have a new radial sheet that is out on the marketplace, and we’re seeing that starting to ramp up as well.

I think maybe the biggest indicator is we have our Think Radial program. And in that particular situation here a couple of weeks ago, we had, I think it was 15 docs that were here. We had cadavers. We did the training.

And there are multiple benefits that come from that, not just on the procedure itself, but the familiarization that we develop in the training and the goodwill that we develop with physicians. I’ll give you an example of one, Jayson, that is, we had one of the guys that literally come out of course and said this is the best course I’ve ever been to.

Would you please have your salesman call on me next week? I mean, that’s music to my ears, but we’re able to train the partners, but there are a lot of other peripheral benefits that come out of this.

Now, we have a program coming up in, Liz, in April?.

Yes..

And because of the demand I think right now - just give me the quick numbers and I’ll repeat them over here..

49 doctors on the list that want to sign up..

Yes. So 49 docs when it comes to the class that have already signed up and trying to get in, and I think we’re actually going to expand the number, which is generally been around 12 to 15, up to about 20. So that means that we can accommodate just a portion. So we’re seeing that increased interest for training.

We’re seeing - and I think we’ll see the same benefits that are coming to that. We’re working on some new radial artery catheters and shapes and all kinds of things that help to fulfill this need. Now, there are some, who believe - in fact, I read a report and had a comment just recently where someone said, well, it’s topped out, it’s done.

Well, not only do I not believe it, I believe that the evidence that we’re seeing is just the opposite of that, that we believe that this will continue to expand. And one of the very interesting parts just as a side note is, one of the areas that hasn’t caught on is California.

And so we are going to make a special effort to try to expand the presence of the radial approach in California. But in a number of other areas, in the Eastern part of the country and the Mid-Atlantic areas, we’re seeing continued strong growth there. So we have the products. We have interest in physicians.

And at the end of the day, when they want to come and they want to learn how to do it, I think that’s the best indicator. And so I think we’re very pleased with it, and I think it’s going to be again a key driver to our business going forward..

Okay. Thanks. I’ll leave it at that and I look forward to seeing you guys next week..

Great. Thanks Jayson..

[Operator Instructions] We’ll move next to Jim Sidoti with Sidoti & Company..

Good afternoon.

Can you hear me?.

We can Jim. It’s good to hear your voice..

Great. It’s great to hear you too, Fred..

Thank you..

With this new facility in Mexico, I just want to be clear, is this facility nearby the facility where you’re actually buying the parts now, or is the same facility or where is it located?.

Well, first of all, it is within five miles. So it’s relatively close.

It is a new facility that is - and part of sort of an existing sort of business park in which we have 140,000 square feet of a new facility and then we’re taking 60,000 square feet of an existing facility, which will be warehousing and that sort of stuff, combined about 200,000 square feet.

We will be moving a business right now that’s in about 40,000 to 50,000 square feet, will be coming into it immediately. And then throughout the next 18 months from starting at about May of this year, over the next 18 months, we believe that we’ll have 450 to 500 employees there.

So it’s in those products in which we have high labor and low engineering requirements, although we have a full cadre of engineers, but I think maybe deeply important that I want to mention is we have a fellow who is a seasoned veteran and a former co-worker with one of our plant managers, a fellow by the name of Carlos Santos.

And Carlos has years and years of experience, and I think the key to any of these things that we found in our facilities Jim, is that General Manager, that Managing Director is the key guy. And this is a guy who is well-known in the area, and we’re just absolutely delighted to have him on board.

He has been on board now for three or four, five months with us. And so that transition will be so much easier with a guy with experience. And remember, we have an existing business there that will move. We also have an existing engineer core living in San Diego that support that. So we’re in pretty good shape here in terms of the venture.

This isn't something where we’re stepping into something we know nothing about. We’re there. We’ve been operating out of there now for over 10 years, but we think it’s time again to consolidate and to take advantage of just a wonderful workforce and we’re excited about this opportunity..

Okay, great. And then I just wanted to follow-up too on the BioSphere growth in the quarter. Is the new products in China really fueling that, or what’s responsible for that and what do you think….

Yes, a lot of that’s coming out of our relationship in Japan, growth in China. We’re growing in Southeast Asia. We’re growing in Europe. We have growth in United - I mean it’s just kind of across the board. We’re having growth out of some products that were designed and developed after Merit purchased BioSphere, and those products are growing.

There is also some wires and catheters that use in delivering those products as well but - and we have new products that are under development, new embolic materials. I’m not going to go into lot of discussion there right now, but we just continue to believe that it’s a great area to be in.

I will mention something to you, just that comes to mind and it’s on the public record, but just last Friday, we received approval from the Brazilian government for our HepaSphere and our varying PVA products and we’re already approved for our Embosphere.

So all of our embolic products, which are of course our highest margin products, are now approved, and Merit has direct authority and licensing capability in Brazil. Well, we think that’s significant. And so we expect a lot of these things out of that capability as well.

Now in addition to that, remember that these have to be delivered by micro-catheters and those micro-catheters are produced by Merit, and that’s a business that we believe also is going to have great opportunity.

So we continue to be very excited about the embolic business, and of course the products, the faster access products that you have to have to deliver those products..

All right. And then the trial that Kent referenced before when he talked about the R&D budget, I assume that’s for the embolics here in the U.S.

Can you just give us an update on where you are with that trial?.

Yes. I’ll give you kind of 30,000 and we’ll go into a lot more detail on this and publish this out when we have our meeting, but we actually have I think three trials underway, let me go over them.

We have the HiQuality study and we are expanding enrollment of that product and that is for the combination of our HepaSphere product in combination with doxorubicin, and that particular trial that we announced expanding into Asia. Yes, it’s always a little bit tough because the enrollment is over 500 patients but its progressing.

I think we have right now little over 200, 250, even a number like that pretty close.

How many?.

175..

175 people enrolled in that study. So we’re making progress. We have the PAE study. I think we called that the BEST study. And this is the one in which we are using Embosphere and this is for embolization of the prostatic artery. And this is for patients with BPH and other issues involved around that. And that’s coming on very nicely.

And again, it all has to be delivered - and we centers of excellence and that’s moving along. One that is also now started is our new study and I’m forgetting the name of it, the Evolve [ph]..

Valve [ph]..

Yes, but what’s the name of the study? The Evolve [ph]. So I was right. So what this is, is a esophageal stent with a built-in valve to overcome reflux. And I think that we have to enroll 50 patients..

60..

60. Okay, guys, 60. And it’s a randomized….

Two arm study..

Two arm study, thank you. And one of the arms is with the valve, but one of them was with our EndoMAXX and we’ve already enrolled 60 - excuse me, six patients but it’s starting to gain momentum and we’ve only been doing this for a couple of weeks. And so we’re very excited about what this means to get this study moving forward.

So those are the three studies that are going. And when you’re out here and hopefully you come in Jim, we’ll show you the products, we’ll show you some of the information on the studies and we’re looking forward to having that conversation with you when you’re out here. So that’s all things I can do right now for the update on the studies..

All right, great. And yes, I will be there next week, so hopefully we can dive into it a little deeper. Thank you..

Great. Thanks so much, Jim..

[Operator Instructions] And it appears we have no further questions in our queue at this time..

Well, okay then. Guys, we’ve got a lot of work to do. I think we’ve delivered solid results in the fourth quarter. I hope you feel that way as well. I think the numbers again speak for themselves. We have a plan. We are executing that plan.

We believe that as we’re able to show you this three-year plan, we believe that - and this might help that you’ll have a same optimism for the future of this business, it’s profitability and what that means in terms of creating shareholder value. So we’re really looking forward to that conversation with you and having you in hosting here [ph].

So again if you can't get here, then we know because totally we’re going to have a large audience on our webcast. So we’re excited about that as well. And we will provide slides on that webcast. But listen, there is nothing like being with me. You need to be here - Kent feels bad because he always wanted to talk to me and he wants to see you..

Yes..

We have members of our staff here. And for those of you who’ve been here and have seen this place, we have some new things to show you.

We have things that I think that you understand the vision, you can understand where the growth is going to come from and you’ll be able to see with your own eyes about where profits are going to improve and increase, and why you should have continued interest in Merit.

So Kent, do you want to add something?.

Just that I think that there is real value in seeing the infrastructure capabilities, capacities, technologies, and the infrastructure we have to be able to growth the company without adding a lot of overheads so that we can leverage. And I think that’s the biggest message.

I want to point out that the numbers at the bottom line of our projections for next year are double the growth rate at the top line and that is something that I think is refreshing and exciting to see for our future and it’s going to accelerate beyond that and we’ll talk more about it later..

Yes. And we’re going to show you some new products and some things that we will disclose in our 10-K. You can read those on Wednesday, and you can come and see them on Thursday and we will show some of those and they’ll be part of our webcast, things that are very exciting and they have great opportunities.

So ladies and gentleman, businesses are interesting and they are challenging and we live in challenging times and difficult times. And yet, here we are with - I think, as I said early in the day, we’re in the best position we have ever been as a company. We are looking forward to presenting that, either in-person or through the webcast.

And it’s exciting times, but that excitement is not just high-school-ish. This is serious. And again I’ve said it three or four times is the commitment that we have and the need that we have to improve the profitability and the returns and creating the shareholder value.

Some of which we’ve seen, but there is a lot more to go and we’re excited to have you involved in. So thank you for your time. We’ve gone just about an hour, and we want to, I guess, thank you for your interest in the company and we’ll look forward to seeing you here next week. And boy, we got some great things for you to see.

You’ll have a much understanding of what we’re going to do to create this value which we believe will be successful. So I look forward to seeing you next week. Again, thank you for your time. And with that said, we’ll sign off from Salt Lake City, and wish you a very good evening. Good night..

And with that, that conclude our conference call for today. We do thank you all for your participation..