Mark Quick - Director, Investor Relations Brad Mason - President and Chief Executive Officer Doug Rice - Chief Financial Officer Mike Finegan - Chief Strategy Officer.

Imron Zafar - Jefferies.

Good day, ladies and gentlemen and welcome to the Orthofix 2014 Fourth Quarter Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Director of Investor Relations, Mark Quick.

Sir, the floor is yours..

Thanks, operator and good afternoon, everyone. I would like to welcome you to the Orthofix fourth quarter and full fiscal 2014 earnings call. Joining me on the call today is our President and Chief Executive Officer, Brad Mason; our Chief Financial Officer, Doug Rice; and our Chief Strategy Officer, Mike Finegan.

I will start with our Safe Harbor statements and then pass it over to Brad. During this call, we will be making forward-looking statements that involve risks and uncertainties.

All statements other than those of historical facts are forward-looking statements, including any earnings guidance we provide and any statements about our plans, beliefs, strategies, expectations, goals or objectives.

Investors are cautioned not to place undue reliance on such forward-looking statements as there is no assurance that the matters contained in such statements will occur. The forward-looking statements we make on today’s call are based on our beliefs and expectations as of today, April 29, 2015.

We do not undertake any obligation to revise or update such forward-looking statements.

Some factors that could cause actual results to be materially different from the forward-looking statements made by us on the call include the risks disclosed under the heading Risk Factors in our 2014 Form 10-K as well as additional SEC filings we make in the future. If you need copies, please contact my office at Orthofix in Lewisville, Texas.

In addition, note that on today’s call we will refer to certain non-GAAP financial measures in which we exclude certain items from our U.S. GAAP financial results.

We believe that in order to properly understand our short-term and long-term financial trends, investors may wish to review these matters as a supplement to our financial performance measures determined in accordance with U.S. GAAP.

Please refer to today’s press release announcing our fourth quarter 2014 and full year fiscal 2014 results available on our website for reconciliation of these non-GAAP performance measures to our U.S. GAAP financial results. At this point, I will now turn the call over to Brad..

Thanks, Mark and good afternoon, everyone. We have a lot to cover today, so we may run a little longer than usual on our prepared remarks. I will start by giving you an update on what’s been happening behind the scenes at Orthofix over the last few quarters, after which Doug will walk you through the financial results that we reported today.

I will then follow-up with my thoughts about our priorities and expectations going forward before opening it up for Q&A. After all of these months, I am excited to have the restatement behind us, the current in our SEC filings and again have the opportunity to share with you what’s been happening at Orthofix.

First of all, as noted in our earnings press release, effective April 24, Doug Rice was named the Orthofix Chief Financial Officer. Doug has been our Interim CFO since last September.

Since he took the reigns, he has not only driven the restatement process to a conclusion, but also recruited and brought on board a new finance leadership team that has already proven to be exceptional. His tireless efforts and uncompromising commitment to the quality of the work is what got us through this critical undertaking.

I know now firsthand Doug’s dedication, integrity, knowledge and leadership skills. He is the partner I need to help us drive our company forward in the years ahead and want to personally thank him for what he has already done for Orthofix. In 2014, we made good progress in positioning our business for future success.

Despite the significant time and resources we devoted to completing the restatement of our financials and getting current with our SEC filings, we have also made significant strides in many financial and operating facets of our business.

Since rejoining Orthofix 2 years ago, I have been very open about what I have seen as the strengths of the business, as well as the areas of opportunity for improvement.

Some of the positives that I have mentioned include our strong balance sheet, product portfolio and market position, while opportunities for improvement include managing our working capital more efficiently and reducing our operating expenses.

I have also spoken about the need to strengthen our leadership team, optimize our sales channels, improve our infrastructure and invest in our core technologies. I will now highlight some of our 2014 accomplishments. On the financial side, our top line stabilized and returned to modest growth.

We achieved 6.6% growth in BioStim, 4% growth in the Biologics, and 6.1% growth in Extremity Fixation. And as Doug will describe in detail, we improved our gross margins and net margins significantly, which resulted in a meaningful increase in EBITDA.

We reduced our sales and marketing expenses as a percentage of sales and our gross inventories by almost $16 million and we repaid all of our outstanding debt in 2014 while improving our cash position.

Turning to our operational accomplishments, we added experienced and talented people to both our Board of Directors and management team including Ron Matricaria as our Chairman; Jim Hinrichs as our Chair of the Audit Committee and Doug as CFO. We had a very good year in new product introductions in our fixation businesses.

In our Extremity Fixation business in Europe, we introduced TrueLok Hex, our next generation fixation system and Galaxy Unycom a novel monocortical external fixation screw.

In our Spine Fixation business, we launched Centurion, our state-of-the-art posterior cervical system, LoneStar cervical standalone interbody, SambaScrew SI joint fixation system and we did a limited market release of SkyHawk, our new lateral fusion and interbody system with its innovative retractor.

We also increased our investment in preclinical and clinical research in 2014 versus prior year by 33%. We expanded our sales channels significantly. During the year, we increased our number of sales representatives in the U.S. by 263 or 18%, while also adding more field training and education specialists.

Additionally, we increased our sales management team worldwide by 35% and have added or are in the process of adding new stocking distributors in 11 countries. And we initiated project Bluecore, a multi-year company-wide process and systems improvement initiative. I will speak more about this project after Doug’s remarks.

These accomplishments are indicators of what is to come and the shift in momentum, strategy and execution at Orthofix. Now I will turn the call over to Doug to provide financial details for Q4 and full year 2014.

Doug?.

Thanks, Brad and good afternoon everyone. As Brad mentioned, we are pleased to be in a position to speak with the investment community again. I would like to start off by saying how excited I am to be CFO at Orthofix and join this great leadership team. We have a solid foundation and I look forward to helping us grow.

The recent restatement was a significant effort over a long period of time by an extremely talented team. I am very proud of this team and what they have accomplished. We are focused on improving our financial control environment and have already implemented numerous enhancements.

We started on the people side and have hired several high caliber individuals in key leadership positions. We will also continue to invest in our processes and system upgrades as part of our project Bluecore that Brad will discuss shortly.

We have an ambitious plan and a lot of work left to do, but I am confident that we will emerge a much stronger finance and accounting organization. With that, let’s move on to the fourth quarter financial results.

Total net sales in the quarter were $100.3 million, a decrease of 5.3% compared to the fourth quarter of 2013 total net sales of $105.9 million. On a constant currency basis, net sales decreased by 3.4% as the impact of foreign currency decreased net sales by $2 million in the quarter.

Net sales in three of our four strategic business units increased on a constant currency basis. However, our Spine Fixation SBU continues to have challenges. Now, I will talk about each strategic business unit in more detail.

Starting with our BioStim SBU, 2014 fourth quarter BioStim net sales were $39.7 million, up 1.2% versus the same period in the prior year.

The increase was primarily due to enhancements to the BioStim sales organization, which included adding management and sales people in underserved geographies as well as adding additional sales representatives exclusively dedicated to our Physio-Stim product line.

Turning to our Biologics SBU, 2014 fourth quarter net sales were $15.2 million, an increase of 8.9% versus the same period in the prior year. The growth was primarily driven by an expanded sales distribution network, as well as continued market acceptance of our next generation cell-based bone growth tissue technology, Trinity Elite.

Moving on to the Extremity Fixation SBU, 2014 fourth quarter net sales were $27.7 million, a decrease of 5.4% in comparison to the same period in the prior year, primarily due to foreign currency fluctuations. On a constant currency basis, revenue increased 1.2% in the fourth quarter of 2014 when compared to the fourth quarter of 2013.

And lastly, our Spine Fixation SBU’s 2014 fourth quarter net sales were $17.7 million, a decrease of 24.5% in comparison to $23.5 million in the same period in the prior year. Net sales decreased primarily due to a loss of sales momentum in the U.S.

resulting from our efforts to reorganize the sales force to improve profitability as well as lower international cash collections in 2014.

It is anticipated that sales in this business will continue to decline for the next several quarters and then may – begin to grow late in the year as we benefit from the addition of new products, sales management, field training specialists and distributors. Now, I will move on to the rest of the P&L.

Fourth quarter gross profit was $78.8 million, up $7 million from the fourth quarter of 2013. Gross margin in the fourth quarter of 2014 was 78.6%, up 10.8 percentage points compared to 67.8% in the prior year period.

The year-over-year increase in gross margin was primarily due to higher inventory reserves recorded in the fourth quarter of 2013, as well as a product mix shift towards our higher margin SBUs, which are BioStim and Biologics.

Sales and marketing expenses were $42.4 million, or 42.2% of net sales in the fourth quarter of 2014, down $3.6 million from $46 million or 43.5% of net sales in the fourth quarter of 2013. The decrease was primarily due to cost reductions in Spine Fixation marketing and commissions expenses.

Net margin, which we define as gross profit minus sales and marketing expenses, were $36.5 million, or 36.4% of net sales in the fourth quarter of 2014, up $10.7 million from $25.8 million, or 24.3% of net sales in the fourth quarter of 2013. This increase was driven by all four SBUs, primarily our Extremity and Spine Fixation businesses.

Please refer to today’s press release for more information about net margin for each of our business units. General and administrative expenses were $23.1 million, or 23.1% of net sales in the fourth quarter of 2014, up $4.7 million from $18.5 million, or 17.4% of net sales in the prior year period.

This increase was largely due to expenses related to adding an internal audit function and other process improvements, including our Bluecore infrastructure investments. Research and development expenses were $6.2 million, or 6.2% of net sales in the fourth quarter, which was flat year-over-year.

We expect our research and development expenses to increase in 2015 as we increase our investment in clinical studies, which Brad will talk more about. Income tax expense was $6.9 million, or 373% of income before income taxes as compared to an income tax benefit of $400,000, or 3.9% of loss before income taxes in the same period of 2013.

This higher 2014 tax rate is primarily the result of not being able to currently utilize operating losses in certain international jurisdictions. In other words, we do not currently have the ability to offset certain portions of our taxable income in profitable jurisdictions.

We are addressing some of the inefficiencies in certain jurisdictions and expect to lower our effective tax rate over time. Although difficult to estimate, we expect our full year 2015 effective tax rate, excluding any discrete items, to be between 40% and 50%, but the rate may vary widely on a quarterly basis.

For the fourth quarter 2014, we reported a net loss from continuing operations of $5.1 million, or $0.27 per diluted share as compared to a net loss from continuing operations of $9.6 million, or $0.53 per diluted share for the fourth quarter 2013.

After adjusting for certain expenses, including the accounting review and restatement and the Bluecore infrastructure investments, adjusted net loss from continuing operations was $900,000 or $0.05 per diluted share as compared to an adjusted net loss from continuing operations of $3.7 million, or $0.21 per diluted share for the fourth quarter of 2013.

Although foreign currency fluctuations have provided top line headwinds, it is important to note that we are effectively naturally hedged in most of our international operations, meaning that both our revenues and our expenses tend to be local currency based. Accordingly, our earnings do not change as much with changing foreign currency rates.

Adjusted EBITDA during the fourth quarter was $16.4 million, or 16.4% of net sales compared to $8.6 million, or 8.2% of net sales in the prior year. One-time items considered in these adjustment calculations include expenses related to the accounting review and restatement and infrastructure investments.

Turning to our results for fiscal 2014, total net sales for the year were $402.3 million, a 1.2% increase over 2013 total net sales of $397.6 million. Net sales increased in three out of our four SBUs. However, the Spine Fixation SBU continues to have challenges.

On a constant currency basis, net sales grew 1.3% as the impact of foreign currency decreased net sales by $300,000 in 2014. Starting with our BioStim SBU, 2014 net sales were $154.7 million, an increase of 6.6% or $9.6 million from 2013.

The increase was primarily due to enhancements as already described, along with the reduction and third-party payer revenue in 2013 driven by our transition to recognize revenue upon accumulation of the full billable package for third-party payers.

Turning to our Biologics SBU, 2014 net sales were $55.9 million, an increase of 4% or $2.1 million over 2013. The increase was mainly due to an expanded sales distribution channel as well as continued conversion to our next generation cell-based bone growth tissue technology, Trinity Elite.

These increases were offset slightly by a reduction in the marketing fee percentage we received from MTF starting in April of 2013. For the Extremity Fixation SBU, 2014 net sales were $109.7 million, an increase of 6.1%, or $6.3 million from $103.4 million in 2013.

The increase was due to recently expanded product launches and improvement in the international collections of cash based sales. The increase was partially offset by declining revenue in Brazil, which has experienced significant disruption to the sales channel during 2014 as we rebuild our Brazil sales organization.

And lastly, in our Spine Fixation SBU, 2014 net sales were $82 million decreasing 14% or $13.4 million from 2013. The decrease was due to a loss of sales momentum resulting from our efforts to reorganize the sales force to improve profitably, which began in late 2013 and continued to the first half of 2014.

Gross profit for 2014 was $303.4 million, an increase of $12.7 million over the prior year. Gross margin for 2014 was 75.4%, up 2.3 percentage points over full year 2014 gross margin of 73.1%. The increase in gross profit as a percentage of net sales is primarily driven by higher inventory reserve requirements in 2013.

Sales and marketing expenses were $166.5 million or 41.4% of net sales in 2014, down $8.9 million from $175.5 million, or 44.1% of net sales in 2013.

The decrease was due to tighter cost controls of non-variable expenses, along with lower commission rates due to the reorganization of the Brazil sales force as well as decreases in Spine Fixation sales. Net margin was $136.8 million or 34% of net sales in 2014, up $21.6 million from $115.2 million or 29% of net sales in 2013.

This increase was driven by all four SBUs, but primarily by Extremity Fixation and Spine Fixation. General and administrative expenses were $76.8 million or 19.1% of net sales in 2014, up $12 million from $64.8 million or 16.3% of net sales in the prior year period.

The increase was primarily due to our investment and improvements of implementing an internal audit function, focused efforts on key process and control improvements, and $3.8 million spent on project Bluecore during the year.

Research and development expenses were $25 million or 6.2% of net sales in 2014 compared to $26.8 million or 6.7% of net sales in 2013.

When taking into account the $2 million payment to MTF in the second quarter of 2013 for the development and commercialization of Trinity Elite, R&D spending increased slightly year-over-year as we began increasing our investment in clinical and preclinical studies.

Income tax expense was $16.2 million or 130% of income before income taxes as compared to $7.6 million or 71.7% of loss before income taxes in 2013. Again, this high tax rate is primarily the result of not being able to utilize operating losses in certain jurisdictions.

Although 2013 also have losses for which we did not receive a tax benefit as our 2013 tax rate was also impacted by the nondeductible goodwill impairment.

For the full year 2014, we reported net loss from continuing operations of $3.7 million or $0.20 per diluted share compared to a net loss from continuing operations of $18.2 million or $0.97 per diluted share for the 2013 year.

After adjusting for expenses related to the accounting review and restatement and infrastructure investments, adjusted net income from continuing operations was $10.2 million or $0.55 per diluted share as compared to $10.5 million or $0.56 per diluted share for 2013.

Adjusted EBITDA during 2014 was $65.4 million or 16.3% of net sales compared to $56 million or 14.1% of net sales in the prior year.

One-time items considered in the these adjustment calculations include expenses related to the strategic investments in our partner in our Biologics SBU, the Musculoskeletal Transplant Foundation or MTF, the accounting review and restatement, infrastructure investments and goodwill impairment.

The improvement in adjusted EBITDA in 2014 was primarily due to the decreased net loss from continuing operations. Moving on to the balance sheet highlights, days sales outstanding or DSOs were 56 days at year end 2014, down from 64 days at year end 2013.

Our inventory turns at year end were 1.7 times, which was up from 1.5 times at the end of 2013, primarily the result of reductions in Spine and Extremity Fixation gross inventories of $16 million in 2014. Cash and equivalents, including restricted cash as of December 31, 2014 was $71.2 million, up from $52.7 million at the end of 2013.

Additionally, we had no long-term debt on our books as we repaid the remaining $20 million balance on our credit facility in the third quarter of 2014. Cash flow from operations for 2014 was $51 million compared to $67 million during 2013. The decrease was primarily reflective of the year-over-year decrease in our operating income.

Capital expenditures for 2014 were $18.5 million versus $29.7 million in the prior year. We expect capital expenditures to be between $20 million and $25 million in 2015, which includes Bluecore investments. Free cash flow in 2014 was $32.6 million compared to $37.4 million in 2013.

In addition, during the first quarter of 2015, we decreased our revolving credit facility borrowing capacity from $200 million down to $100 million. And as previously disclosed, during the first quarter we also provided a $15 million convertible collateralized loan as part of our investment in eNeura. I will now turn it back to Brad..

Thanks Doug. I will now share our expectations of how our operational accomplishments in 2014 will translate into improving performance and shareholder value in the future. I will start by talking about our three main objectives for 2015 and how each of them will drive performance improvement.

Our first objective is to continue to optimize our sales channels. Our initial step to accomplish this, as I mentioned a few minutes ago was to add many new talented regional sales leaders or field generals both in the U.S. and abroad.

The next step is to leverage these new sales leaders to find more and better sales representatives and distributors to fill gaps in our coverage and in many cases reduce the size existing territories to make room for additional sales people. This process is well underway.

Another critical factor in optimizing our sales channels is field education and training. While we have exceptional training facilities in Lewisville, Texas and Verona, Italy, both of which are utilized extensively. We also have a need for field based training and education personnel.

These three members will support our expanded sales force, assist with new product introductions and help drive growth. We are adding these resources in each of our strategic business units.

We believe these steps will help drive the top line at each of our SBUs and in fact we are already seeing good initial results in BioStim, Biologics and Extremity Fixation. Our second objective is to improve our infrastructure.

Over the years, our investment in infrastructure improvements has not kept up with our growth nor have we utilized the current best in class technologies, systems, processes and controls. As I mentioned, earlier, to address this, in 2014 we initiated project Bluecore, a multi-year worldwide process and system improvement initiative.

The strategic objective of Bluecore is to improve the reliability and efficiency of our systems, processes and reporting, as well as drive down our overhead expenses as we complete each phase of the work.

We expect to improve supply chain management, simplify finance and accounting procedures and move to less manual processes with fewer redundancies throughout the company.

Bluecore has numerous work streams primarily focused around re-implementing our Oracle ERP system worldwide, including getting all subsidiaries on one ERP system, improving our financial controls and reporting, streamlining our order to cash processes and collections and optimizing our supply chain for cost reductions and field inventory visibility.

This project began in 2014 and is expected to conclude in the middle of 2017. The total budget for this project is approximately $30 million, of which $5 million was spent in 2014 and $19 million is budgeted for 2015. We expect that approximately 50% of this investment will be capitalized. Our third objective is to invest in our core technologies.

For our Spine and Extremity Fixation businesses, we are streamlining our new product development processes from concept through post market release. While we expect to continue to develop new innovative products, our primary focus will be on our current product portfolios, fast customer response, project philosophy and iterative improvements.

This change to our new product development philosophy for our fixation businesses should yield much better productivity while maintaining our current level of spending. We are already seeing positive signs based on the quantity of products in our pipeline as well as shorter time to market cycles.

For our BioStim business unit, our strategy is to significantly increase our investment in preclinical and clinical research to broaden the therapeutic indications for our technologies. Our Chief Scientific Officer, Dr.

Jim Ryaby has assembled a world class team of researchers who have initiated numerous projects to both support the clinical effectiveness of our current products as well as find new indications for our pulse electromagnetic fields or PEMF technologies. In recent months, we have received U.S.

Food and Drug Administration approvals for two Investigational Device Exemption clinical trials, one for studying the treatment of odontoid fractures and one for osteoarthritis of the knee. MTF is the driver of our research in tissue development efforts in our Biologics SBU.

We are increasing our investment with MTF this year and have added a number of new projects in an ongoing effort to develop more novel tissue forms for Orthofix to market. These investments will also be valuable in the ongoing support for the adoption and reimbursement of our regenerative technologies.

Overall, we are committing nearly $10 million in additional research spending in 2015 to support the two regenerative business units. Along with internal product development, we will remain vigilant in finding strategic technology acquisitions and licensing opportunities.

As an example of this, we have recently announced that Orthofix has entered into an agreement that provides us with an 18-month option to acquire eNeura Inc., a pioneer in the use of portable and non-invasive Transcranial Magnetic Stimulation or TMS devices for the treatment of migraine headache.

We believe that this exciting PEMF technology not only meets a significant unmet need for patients, but also fits well to our core competencies in the design and manufacturer of PEMF devices, as well as our third party billing expertise.

This transaction and the additional clinical investments I discussed underscore the commitments that we are making to leverage our core competencies in our regenerative business units. Let me now turn to our outlook for 2015. We are in the middle of executing on the priorities previously mentioned and a lot of heavy lifting is still ahead.

While we expect to continue to make good progress in 2015 in these areas, we acknowledge that it will take time before we are firing on all cylinders. However, we do expect to continue our year-over-year growth in constant currency in our BioStim, Biologics and Extremity Fixation business units.

While we project the sales and the Spine Fixation business unit will decline for the next two quarters to three quarters, we anticipate returning to growth late in the year as we benefit from adding new sales management, new products, field training specialists and new distributors, a process that we began late in 2014.

Regarding our capital deployment strategy, we will invest in research and development that will drive growth in each of our business units and also in constructing and maintaining systems and processes that reduce our corporate risk profile and operating costs.

We will be conservative and opportunistic with any potential acquisitions of complementary products and technologies. And as our capital position improves, we will look at additional options to increase our shareholders’ return, including buying back Orthofix common stock, so long as it is at a price we believe to be below its intrinsic value.

While we expect to have a short call following our Q1 2015 filing in the next several weeks, we currently expect to report sales for the first quarter in the range of $88 million to $90 million. This represents approximately a 7% to 8% decline on a constant currency basis.

This decline was driven by the ongoing turnaround of the Spine Fixation business and the timing of collections in Q1 this year compared to Q1 2013 from our Extremity Fixation cash-based customers.

We expect that our quarterly results will continue to fluctuate as a result of the timing of payments from our distributors, where we recognized revenue on a cash rather than accrual basis. These distributors represent approximately 20% of our total revenues.

For the year, the company’s expectation is to report net sales in the range of $385 million to $390 million based on current exchange rates. This would represent flat year-over-year growth at the midpoint of our range in constant currency. Additionally, the company expects adjusted EBITDA to be in the range of $55 million to $58 million.

Before we open up the call for questions, I would like to share with you a longer term perspective on our business. We have spoken today about the changes we have made and are continuing to make in the business to drive top line growth and increase profitability.

While it will take some time for these investments to come to fruition, once we have these changes behind us, we believe that we can consistently grow at or above market growth rates in each of our businesses and we expect to achieve EBITDA margins greater than 20%.

With that, operator, I will conclude my prepared remarks and open up the lines for questions..

Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] And I am showing we have no questions in queue at this time..

Operator, we will wait a couple of minutes to see if anybody has any questions..

I am showing we do have a question coming from Imron Zafar from Jefferies. Please announce your affiliation and pose your question..

Hey, good afternoon. Thank you for taking my question. I am wondering if you can provide us some sort of a bridge between – in your 2015 guidance between revenue and adjusted EBITDA, just trying to understand the level of OpEx versus gross margin trends. So, any color there would be helpful for modeling purposes? Thanks..

Right, Imron, thank you. Good question. This is Doug Rice. I would answer that by saying that we expect margins – gross margins to stay relatively consistent to ‘14 in the mid to upper 70s.

We expect our sales and marketing expenses to be up slightly and our G&A expenses will be up on unadjusted basis, but on an adjusted basis will be down slight year-over-year..

Okay. And then – thank you for that. And then Brad, you talked strategically about both about investing in the business and expanding the sales force and increasing clinical work on product validation and development, but also talked about improved operating profitability.

Am I correct in surmising that the latter part of that the operating margin improvement is more of a 2017 and beyond story rather than a near-term target?.

Hey, Imron. How are you? Good to hear from you..

My pleasure..

I would say we should see improvement before 2017, but I would think by 2017, the middle of the late – end of 2017, we should be firing on all cylinders by that point, but it doesn’t mean we won’t see improvement in the meantime. I think as we get into 2016, we get some of these phases behind us. It will help as an example getting up on R12 on Oracle.

We will go live on R12 right now. Plan is to go live January 1, 2016 and then we will be live worldwide by the end of 2016.

So, in some of these order to cash and other things that we are doing should come in a little bit – should be done earlier than that and we should start to see the benefits of that as well as some of the spending we are doing now to optimize our sales force.

And typically, it takes about 12 months to get – to really kind of move the needle commercially when you are talking about adding sales management and sales forces and getting trained and that sort of thing. So, yes, I think that’s a pretty fair statement, but I think hopefully we can do a little bit better than that between now and then..

Okay.

And then just lastly if you could just sort of give us some more thoughts around use of your very healthy balance sheet and access to capital in terms of M&A, size, multiple dilution, how we should think about that as an area of potential growth long-term?.

Hey, Imron, Mike Finegan here. So, on the M&A side, we are going to continue to be, I would say, conservative but opportunistic. So, we continue to look for opportunities to add to each of our businesses. In terms of larger picture of capital allocation, I will let Doug Rice comment on that, but we have got thoughts there as well..

Yes, this is Doug. It’s a good question. It’s clear that we have got an underutilized balance sheet today at the end of the year. We have $70 million – $71 million of cash and restricted cash on our balance sheet and borrowing capacity. And we have repaid all of our debt.

I think in the coming weeks we will be looking very closely at our capital structure in trying to determine the right balance between dry powder and what we want to deploy in activities like share repurchases..

Okay. But in terms of assets you are looking at are they focused more on the established company competencies or sort of adjacent – market adjacencies like the TMS partnership, for example.

Are you looking for scale, diversity, what are the priorities on that M&A strategy?.

Yes, Mike Finegan again. So, on the priorities, we will look to support each of our businesses with investments outside the company. You mentioned the investment in eNeura and that’s clearly part of our strategy to invest in what is financially one of our really strong businesses from a profitability standpoint.

So, we talk a lot about expanding, we are using our platform there to inside and outside the company to pursue new opportunities. We will continue to do that.

But we will in addition to that look for opportunities to support the other businesses in Spine and Extremity Fixation and in Biologics and we continue to look at all the opportunities that are out there..

Okay.

Do you have a sense of how much the sales run-rate is for the eTMS product?.

So, that’s a better question for eNeura, but what I will tell you is that they are in a phase where they are really just becoming commercial. So, just to give you a couple of points there, they achieved their FDA approval last year. As a priority for the U.S.

market, they are doing a post-market study and that’s important, because it goes to label expansion and also goes to getting the runway paid for reimbursement in the U.S. That said they are going to be really doing commercial sometime mid-year. In the UK, they are commercial. They received their NICE recommendation earlier in the year.

And once you receive that, that kind of tees up reimbursement for the regional payers in the UK. So, that’s a process that you have to go through. That processes takes some time, because they have to go regional kind of regional payer to regional payer, but they are commercial there.

And as they get further reimbursement from the UK health system, they will make good progress there..

Okay.

If I am not mistaken, the labeling currently is for migraine with aura, what do you mean by label expansion, what other indications are potentially available in the future?.

Yes. So for label expansion, what their data shows is that in their UK experience post-market, while they have a current indication for the acute treatment of migraine with aura, there is a strong suggestion that, that in addition to migraine with aura that the device works, the therapy works in migraines with and without aura.

Further, there is a good suggestion of another claim for prevention that they would be going after. People who used this device on a regular basis seemed to show a pretty strong preventive effect, not only an acute effect. So, that would be another opportunity for a different label.

So, as they unveiled more of their clinical data throughout the year and they will be doing at the international headache meeting and then the American Headache Society meeting in June, they have a lot of different data sets they are working on.

And I think some of the opportunity from a label expansion standpoint will be clear once that data is available..

Okay, great. Thank you very much and congratulations on getting through the ongoing stuff and thank you for taking my questions..

Thanks, Imron. Thank you..

I am still showing we have no questions in queue. [Operator Instructions] And I am showing no questions in queue at this time. .

We may be having a problem with the queue, operator. Okay, well with that then, I will – I would like to thank everybody for being on the call today and I look forward to updating you on the first quarter results in the next few weeks. And we will talk to you soon. Thanks for your time. Bye..

Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may now disconnect your phone lines at this time and have a wonderful day. Thank you for your participation..