Curt Hartman - President, Chief Executive Officer, Director Luke Pomilio - Chief Financial Officer, Executive Vice President of Finance.

Richard Newitter - Leerink Partners J.P. Peltier - ‎Piper Jaffray Mike Matson - Needham & Company Matt Mishan - KeyBanc Jeffrey Cohen - Ladenburg Thalmann Pat Dearchs - Deutsche Bank.

Good afternoon everyone. Before we begin, let me remind you that during this call, management will be making comments and statements regarding its financial outlook, which represent forward-looking statements that involve risks and uncertainties as those terms are defined under the federal securities laws.

The company's actual results may differ materially from its current expectations. Please refer to the risk factors and other cautionary factors in today's press release as well as the company's SEC filings for more details on factors that may cause actual results to differ materially.

You will also hear management refer to certain non-GAAP financial measures during this discussion.

While these figures are not a substitute for GAAP measures, management will use these figures to aid in monitoring the company's ongoing financial performance from quarter-to-quarter and year-to-year on a regular basis and for benchmarking against other medical technology companies.

Adjusted net income and adjusted earnings per share measure the income of the company excluding credits or charges that are considered by the company to be special or outside of its normal ongoing operations. These adjusting items are specified in the reconciliation in the press release issued this afternoon.

With these required announcements completed, I will now turn the call over to Curt Hartman, CONMED's President and Chief Executive Officer, for opening remarks. Mr.

Hartman?.

Thank you Liz. Good afternoon and thank you for joining us for CONMED's first quarter 2017 earnings call. With me on the call is Luke Pomilio, CONMED's Executive Vice President and Chief Financial Officer. Today, I will provide a brief overview of the financial and operating highlights for the quarter year.

Luke will then provide an analysis of our financial performance and an overview of our fiscal 2017 financial guidance. After that, we will open the call to your questions. Overall, we are encouraged by our first quarter results while clearly acknowledging that we still have work to do drive further improvement in our performance.

Total company sales in the first quarter were $186.6 million, an increase of 3% as reported and an increase of 3.7% in constant currency over the prior year period.

From an earnings perspective, first quarter GAAP diluted net loss was $4.5 million or $0.16 per diluted share, compared to reported net loss of $2.3 million or $0.08 per diluted share a year ago. Adjusted net earnings of $10.6 million decreased 8.7% year-over-year and adjusted diluted net earnings per share of $0.38 decreased 9.5% year-over-year.

Our international markets which accounted for 47% of total company revenue had another solid quarter delivering 2.4% reported growth and 3.9% constant currency growth.

General surgery reported solid constant currency growth of 10.1%, marking the fifth consecutive quarter of double-digits growth while orthopedics increased 1.5% in constant currency delivering growth for the fourth consecutive quarter.

Domestically, general surgery, which represented 31% of total company revenue delivered 9.5% growth driven by endoscopic technologies, continued strength in AirSeal and our broader laparoscopic offering. Domestic orthopedics at 22% of total company revenue improved but remains challenged as evidenced by 3.7% decline year-over-year.

That said, it was the best performance in four quarters, while improving trends across all product categories. Further, we remain focused on new products and signs continued to point to an improving trend in the second half of 2017. Looking at new products.

Our emphasis on innovation continues to unfold as our marketing, R&D and manufacturing teams execute on our pipeline strategy. During the quarter, we participated in both the AAOS and SAGES annual meetings where we had the opportunity to showcase several new products. At AAOS, we introduced seven new products.

And at SAGES, we introduced HelixAR along with our focus on low impact, the keystone of which is AirSeal, coupled with a robust offering of Mini-Lab instruments. Overall, we are pleased with our start to the year and the consistency in performance from our international markets and the domestic general surgery category.

However, work remains to further accelerate growth, particularly within domestic orthopedics. Going forward, we remain laser focused on execution in growing the business as we look to build upon the first quarter performance. I will now turn the call over to Luke..

Thank you Curt. As mentioned, our total sales for the first quarter of 2017 were $186.6 million, an increase of 3% on a reported basis and an increase of 3.7% on a constant currency basis versus the first quarter of 2016.

Our topline performance during the quarter was driven by solid growth within domestic general surgery which increased 9.5% year-over-year as well as continued strength in our key international markets. This growth was partially offset by decline in domestic orthopedics, which I will review in a moment.

Domestic sales, which represented 53.3% of total company revenue, increased 3.5% year-over-year. International sales, which represented 46.7% of total company revenue, increased 2.4% on a reported basis compared to the first quarter of 2016.

Foreign currency exchange rates, including the effects of the FX hedging program, had a negative impact of $1.3 million on first quarter sales. In constant currency, international sales increased 3.9% versus the prior year period.

As we discussed on our fourth quarter call, we have now transitioned to two reporting categories, orthopedics and general surgery from the three previous categories. As such, visualization has been reclassified into orthopedics to more appropriately reflect how we operate and manage our business.

With that, I will now review our two reporting categories with all growth stated in constant currency. Worldwide orthopedic revenue decreased 0.7% in the first quarter. Domestically, first quarter orthopedic revenue decreased 3.7% versus the prior year period.

We saw sequential improvement in both single use and capital sales growth with single use sales posting its best quarterly growth rate in over a year. Internationally, orthopedic revenue increased 1.5% year-over-year representing a fourth consecutive quarter of growth and was driven by strength within our direct markets.

Worldwide general surgery revenue grew 9.7% in the first quarter, driven by continued strength in sales of the AirSeal system and in advanced surgical overall. Domestically, general surgery sales increased 9.5% on continued momentum with AirSeal, which drove advanced surgical growth as well as another strong quarter in endoscopic technologies.

Internationally, general surgery sales increased 10.1% due to strength across our direct markets and another strong contribution from AirSeal.

As previously discussed, we discontinued the sale of our Altrus tissue sealing device effective July 1, 2016, which caused a $260,000 headwind in the first quarter consistent with our comments on the fourth quarter call. We continue to expect $100,000 headwind in the second quarter of 2017. Now turning to other components of the income statement.

Adjusted gross margin for the first quarter excluding restructuring costs declined 20 basis points to 54.2% compared to 54.4% in the first quarter of 2016. Adjusted gross margin was negatively impacted by foreign exchange of approximately 30 basis points offset by approximately 10 basis points of favorable product mix and pricing.

We continue to expect fiscal year 2017 adjusted gross margin, excluding restructuring costs, in the range of 54.5% to 55.5%, which assumes a currency headwind of approximately 30 basis points versus 2016.

As previously discussed, we continue to implement our next leg of targeted manufacturing cost improvement programs which we expect will be breakeven in 2017 with a net benefit to 2018 and beyond. As a result of these initiatives and as we had anticipated, first quarter gross margin came in below our full year 2017 target.

We continue to anticipate that this will be the case in the second quarter as well and foresee Q2 gross margin roughly in line with Q1. We expect to see an improving gross margin in the second half of 2017, which we anticipate will be weighted towards the fourth quarter.

This guidance assumes that foreign currency exchange rates remain consistent for the remainder of the year. Moving down the income statement.

On an adjusted basis, which excludes the impact of amortization, selling and administrative expenses for the first quarter were $75.1 million or 40.2% of total sales compared to $70.7 million or 39% of total sales in the first quarter of 2016.

Given the seasonal nature of our business, we anticipate that SG&A will vary from quarter-to-quarter in the range of 37% to 41% and continue to expect our full year 2017 SG&A as a percent of sales to be in the range of 38.5% to 39.5%.

Research and development expenses for the first quarter were $7.6 million, consistent with the fourth quarter of 2016 and lower than the $8.3 million in the first quarter of 2016. Our R&D spend is project based and as such, the quarterly spend is impacted by project disbursement timing.

We continue to expect full year 2017 R&D expense in the range of $33 million to $35 million with the goal of slightly higher spending in 2017 versus 2016 in order to drive additional organic growth from our pipeline.

From a spending standpoint, we saw slower spend rate in the first quarter but still feel good about our product pipeline as evidenced by the new products we featured at recent trade shows. Adjusted EBITDA margin in the first quarter of 2017 was 16.3% compared to 17.1% a year ago.

The unfavorable impact of foreign exchange reduced first quarter 2017 adjusted EBITDA margin by 40 basis points. Turning now to a discussion of our income tax rate. Our adjusted effective quarterly tax rate decreased to 31.5% from 32.2% in the first quarter of 2016.

For the full year 2017, we continue to estimate a non-GAAP tax rate of approximately 31% to 32%. Our diluted net loss per share on a GAAP basis was $0.16 compared to diluted net loss per share of $0.08 in the first quarter of 2016. The primary factor behind the GAAP net loss was the $12.2 million Lexion verdict, which we accrued in the quarter.

As we discussed and as outlined in today's press release, we exclude the cost of special items including litigation, acquisitions, restructurings, gains on the sale of assets and debt refinancing net of tax, as well as amortization of intangible assets, net of tax from our calculation of adjusted diluted net earnings per share.

Excluding the impact of these items, our first quarter adjusted diluted net earnings per share were $0.38 versus $0.42 in the prior year period. Looking at the balance sheet. Our cash balance as at the end of the first quarter of 2017 was $34.7 million compared to $19.9 million at March 31, 2016 and $27.4 million as of December 31, 2016.

Accounts receivable days as of March 31, 2017 were unchanged compared to a year ago quarter at 66 days. The inventory balance at quarter end was $140 million compared to $143.8 million at March 31, 2016 and $135.9 million as of December 31, 2016. Inventory days at quarter end were 143.

Consistent with historical seasonal patterns, inventory picked up in the fourth quarter as fourth quarter is typically our strongest sales quarter of the year. Long-term debt at the end of the quarter was $487 million versus $488.3 million as of the end of 2016.

Excluding any potential impact from repatriation and assuming payment of the Lexion judgment, we now expect senior debt repayments in 2017 in the $10 million to $15 million range with a year end 2017 leverage ratio of approximately 3.5 times. Now turning to cash flow.

Cash generated from operating activities totaled $15.3 million for the first quarter of 2017, compared to cash used by operating activities of $16.6 million a year ago. Finally, as described in today's press release, there is no change to our previously issued financial guidance.

We continue to expect 2017 constant currency sales growth in the range of 1% to 3% based on exchange rates as of April 21, 2017. The negative impact to 2017 sales from foreign exchange is still anticipated to be approximately 50 basis points.

In addition, we continue to forecast adjusted diluted net earnings per share in the range of a $1.85 to $1.95, which includes an estimated negative impact from foreign exchange based on exchange rates as of April 21, 2017.

The adjusted diluted net earnings per share estimates for 2017 exclude the cost of special items including litigation, acquisitions and restructuring costs, which are now estimated in the range of $16.5 million to $18.5 million net of tax and translates into approximately $0.59 to $0.66 per adjusted diluted share.

Additionally, these estimates exclude amortization of intangible assets, which are still estimated in the range of $12 million to $14 million net of tax or approximately $0.43 to $0.50 per adjusted diluted share. And now I would like to turn the call back over to Liz for Q&A..

[Operator Instructions]. Our first question comes from the line of Richard Newitter with Leerink Partners..

Hi. Thanks for taking the questions. I was hoping maybe just to start off on U.S.

orthopedics and you definitely made some progress there from a growth standpoint in the first quarter and I was hoping you can just give us a sense as to how we should think about the contribution from some of those new products that you rolled out at AAOS contributing as we move through the year? Are these products that you think are -- how would you characterize them? Singles? Doubles? And maybe you can just give us a sense as to when do you think it will be in positive territory for that business?.

Sure Rich. The first quarter for U.S. orthopedics was a better quarter in terms of a little more consistent performance and we think that's a byproduct of the focus we started putting in there in the second an d third quarter last year at the sales force level, a little more training, a little better management of capital pipelines.

All of that is well and good. However as you noted, it really is about new products and at Academy we were able to launch seven new products.

What I would do on those seven is I would refer to those, three of those as what I would call more major and four of those more in the minor category, things that were gap fillers or were needed for the business. The three majors that I would be looking at would be the CuffLink shoulder system. It's a fairly comprehensive shoulder platform.

We have started the launch of that already. So that is out in very early release, getting good feedback and we think that will continue to build over the year. The second is the Trinity three-in-one camera system, which is really a more economical option for the ambulatory surgery center market and on a global basis some of the emerging markets.

That will launch a little bit later in more full force, if you will, in the second quarter. That's more of May, June timeframe. And then the third one is the Diamond-Like Coated shaver blades which we have talked about for a number of quarters now, the need to do something bigger in the resection category.

And this is the first new things we have done there, probably going back to 2011, if not longer. And that has started to launch. So those are the three big ones. The other four are important. I don't want to be dismissive of them. But those three are really what leads our recovery efforts here.

We think all seven of them contribute and start to contribute in the back half of the year with more emphasis in addition to what we are seeing from the Edge platform which we really launched kind of in full force in the third quarter of last year and then some other stuff that we launched last year, the AssistArm and KFx, the TenoLok device.

All of that stuff coming together is what we think allows us to move into positive territory as we get into the second half of the year..

Okay. That's great color. Just two additional quick ones just on your topline. So you had a really nice step-up in growth overall this quarter. SurgiQuest really hoped that move to organic into inorganic. I guess you know you are at the upper end of your range in 1Q on an easier comps.

So should we just read that the reiteration of the topline, you are trying to take a conservative approach to the year? Or is it realistic to think of trends continue, you should be moving more towards kind of the mid to upper end of that range? Is that a fair way to read?.

Well, we are pleased with the first quarter, but it is only one quarter and I am not interested in a repeat of the first quarter of 2015 where people got excited about one quarter and there was more work ahead. And second, if you look at the comparables, as we step into the second quarter, we had a respectable second quarter, excluding our U.S.

orthopedics business last year. So the comparable gets a little bit tougher. We had a really good AirSeal second quarter last year. If you remember right, we detailed those numbers out. So we are just being appropriately conservative, given that we would like to put a trend together here before we think about any changes to any guidance.

And we also want to recognize what we are going against from the prior year. So I think it's a combination of those factors, Rich..

Our next question comes from Matt O'Brien with Piper Jaffray..

Hi. Good afternoon. This is J.P., in for Matt. Thanks for taking the question. I am just trying to get a sense of how SurgiQuest performed in the quarter.

I don't know if you guys will want to break it out or not, but just trying to get an idea of kind of legacy general surgery, how that's performing, how SurgiQuest is doing?.

J.P., it's a fair question. We are not going to breakout SurgiQuest anymore on a go forward basis. I would tell you, in my opening comments on the general surgery category, I really referenced three things. I referenced the endoscopic technologies business which falls in the general surgery category. It had another good quarter.

That has really been a nice business for us, really beginning last year and that continued in the first quarter. I mentioned that we had a good quarter in AirSeal and I mentioned that broadly speaking the rest of our laparoscopic offering also had a good quarter.

So I think in the historical commentary about starting to see a little bit of synergy sales, we feel like we saw little bit of that at the tail-end of last year and that's continued into this year. All that said, we remain excited and encouraged by what we are seeing from AirSeal on a global basis.

And as I commented on the last call, it really is early earnings for us with AirSeal in international, given the kind of the history that chronology of events there from SurgiQuest to CONMED and the U.S. market remains an attractive growing market for us. So all good on the AirSeal front is what I would say..

Got it. And then moving back to the U.S.

ortho market, I get that you don't want to raise guidance and there is still room to improvement, but I guess from your high level viewpoint from a product standpoint, a pipeline standpoint and a people standpoint, you think you have got the right team and the right products that are coming online to really sequentially improve from here going forward?.

Well, I think the status is in line with my comments that it starts with people and I feel like we have assembled the right team there. And then we have to give that team the amount of time to do the work to turn things around that are essential.

And the first edge of that work is getting new products out and Academy was a really good showing where we brought seven new products out. And year-to-date for the business, we have nine in total, a couple that we would put out at SAGES on the general surgery side. And I think I commented on the last call that we were marching towards 20 this year.

So we still have more work to do there. I have never met a sales person who didn't say they want more products and our job is to continue to find those, whether it's internal or via acquisition. But I like the direction that we are going.

Ultimately the market is going to decide whether we are doing the right things here on the products and so that's why I am a little bit hesitant until we get more time under our belt with the new products that we have put out there and see how the market response. We just have got to wait for that to happen..

Our next question comes from Mike Matson with Needham & Company..

Hi. Thanks for taking my questions. That was obviously good quarter from a revenue perspective. And you did beat on the EPS number. But just looking at the margins, operating margin was down year-over-year despite probably the strongest revenue growth you have had in a while.

So I am just curious, why that didn't translate into more leverage on the operating margin line? And just looking out longer-term, if you are able to sustain this 4% to whatever percent type of growth, when would we actually see that translate into some leverage?.

Hi Mike, it's Luke. From a gross profit standpoint, the 54.2% was in line with my expectations and I think that number is at a lower level than what we expect for the year for the reasons that called out in our prepared comments. From an SG&A standpoint, expenses were a little higher than I anticipated, but nothing that I view as structural.

So to get back to when we will see a turnaround, I think from a margin standpoint, Q2 will be at the lower level, start to see some improvement in Q3 and definitely in Q4 we will be back to the kind of margin numbers we saw back in early part of 2016, even though we have a currency impact.

From an SG&A standpoint, I still feel really good about our guidance for the year being in that range of 38.5% to 39.5%. So I think that from a spending standpoint, it's something we just need to keep our eyes on..

Okay.

And just looking out longer-term, if you are able to reach and sustain mid single-digit revenue growth, do you feel like that will enable you to deliver consistent operating margin leverage?.

Yes. I would point to our investor presentation where I sort of outlined the constant currency like EBITDA margin expansion 350 basis points over last two to three years on flat sales. So I feel really confident that over the longer haul with topline growth, we have a lot of opportunity to expand margins..

Our next question comes from Matt Mishan with KeyBanc..

Hi. Good afternoon. Just following up on the gross margins. You had mentioned that you had some gross margin initiatives going on right now where you are spending some dollars. Can you talk a little bit about what you doing? And then maybe what type of savings you would expect from that in 2018 and 2019 when it's annualized..

Sure. Well, let me talk about the initiative. We did a lot of work over the years focusing on our fixed structures. As you know, we took 12 plants down to three plants. So at this point in time, our structure is what it needs to be.

The latest round of initiatives really has to do with material costs as well as looking at our SKU portfolio and doing some SKU rationalization. So that's what's underway. As far as what that would bring to us, I am not going to comment on this at this point in time but that will give updates as the year goes on..

Okay. And then Curt, on the R&D side, you have had the other Kurt running that for a little bit.

What are some of his early takeaways and some of the key changes that he is making on the R&D side?.

Yes. That's a great question.

So Kurt Azarbarzin moved into that role in the third quarter of last year and the first part of his work has been focused on a bit of a journey around the different R&D organizations and looking at the talent profile, the type of engineers that we have, the interaction between marketing and R&D and working in collaboration with the business leaders and then dive then into really highlight what our core competencies are and making sure that we are leveraging those and at a very fundamental level, do a little more work around the process that starts from marketing goes through R&D and involves manufacturing and quality and regulatory and making sure that the leadership across those roles is aligned and everybody has got the right expectations.

Secondarily and it comes with time, is spending more time with the R&D and marketing teams and really focusing on the technology and the market spaces we want to move into and doing that in a manner that's appropriate from a financial standpoint with business expectations being the driver there. So he has had a very good tour.

He is obviously retained some of his past work on the AirSeal platform just because of his inherent knowledge there, but with each day that's being handed off more and more to that R&D team and he has taken a broader role on the broader portfolio. An d he is phenomenal with marketplace key opinion leaders.

So we are doing everything we can to get him in front of customers outside of what I would call the traditional general surgery market, more in the orthopedic side. And he is also doing a little bit work on the M&A front. He is a great partner to have in evaluating early M&A ideas. So pretty full palate of the things..

Our next question comes from Jeffrey Cohen with Ladenburg Thalmann..

Well, hi. Thanks for taking the questions. I guess the first question is line with the previous questions.

Are you going to provide any commentary as far as the visualization platform from the quarter?.

Moving into this year, Jeff, we moved visualization into the broad orthopedics, because it was fundamentally just a product line and I think I said in one of the calls, we sell more AirSeal than we do video. So it didn't make sense to me to break it out.

I think our biggest comment on video was the introduction of the Trinity platform at AAOS, which is the next innovative product that we put in there.

Again we are in the penalty box on video because the company hadn't done anything for seven years leading up to 2015 and launched the IM8000 and now we are back in 2017 with the Trinity three-in-one platform. And you should assume that we are probably continuing to work on that portfolio..

Okay. Great.

And then could you provide a little bit of color how of your thinking now about SKUs and product lines and rationalizing some of the current product launch and some of the R&D process under there, not necessarily number of SKUs but has the company considered taking some of the products offline and focusing more aggressively on other segments and new product lines?.

Well, I think you kind of touched on it with one of your words. It's about putting a process in place. Anytime you talk about discontinuation of products, anybody in the sales or marketing organization, that's not the type of work that they typically want to do.

So you have to have a robust process that engages them and then you have to have the manufacturing and accounting, cost accounts of that organization all lined up in a comprehensive process. And that's a big part of the work that we are doing, is putting in a robust process. We started that work last year.

We have had an early set of what I will call reductions on items that were slow-to-no movers, just cleaning up a little bit of the legacy portfolio. And as we keep that process alive, we will get more aggressive with it.

It just freeze up a lot of resource and efficiency because anytime in this industry you have products in your portfolio, there is oversight, regulatory, quality, distribution management, warehouse, site, all the good stuff. So we just want be a more efficient operator and that's what these efforts are focused on.

In terms of the overall portfolio, I really think about the business every day as orthopedics and general surgery and the assets that we have in here are appropriate for the time and where we are as a company as we continue to work to move the business forward..

Our next question comes from Kristen Stewart with Deutsche Bank..

Yes, hi. This Pat, on for Kristen. Thanks for taking the questions. I want to go back to the product pipeline first. Of the 11 products that are kind of outstanding of the 20 for the year, about how may of those from the ortho business? And then when I look at last year, you guys lunched 15 products. This year you are forecasting 20.

Is that the right ballpark for the next few years, 15 to 20 products a year?.

So Pat, it's a good question. We haven't broken out the split between orthopedics versus general surgery. But obviously if you look at where the company is right now, it's probably a safe assumption that it's more heavily weighted towards orthopedics than it is general surgery.

And further that, that 20 really doesn't reflect any potential external products that may be acquired. So it's really focused on what we are doing through the internal pipeline with the exception of one. We had one small product tuck-in that I noted in that 20. So the short answer is, it's never enough. The industry demands ongoing innovation.

And to the extent that our marketing teams and our R&D teams and the process around that whole innovation cycle continues to be enhanced, we will do as much as we reasonably can from a financial and product standpoint. Though it does reach a point where you don't get the true benefits. You cold put a lot of great products in front of the sales force.

But every day they are forced to make choices. So there is a fine line over which you can offer too many things and I don't think we are at that fine line yet. I still think there is more gaps in the portfolio and there is more refreshes that need to happen.

So right now, we are running and cycling through as many things as we possibly can within the confines of the people resources and the financial resources that we have available. So it's hard for me to say, will it be 20 next year, 20 the year after that, probably a little early for me to comment on that.

But my point in breaking out the number was, a couple of years ago it was five, last year it was 15 and now it's up to 20. So that commentary way back in January 2015 about people and then products, I am using that metric to show that the attention has fully gone into the product side..

Great.

And then I guess just on the Trinity launch, just given the timing of the launch in the May, June timeframe, what kind of impact on second half of this year you guys are baking in and as you look into the first half of 2018?.

Well, we haven't really given product line specific guidance. Obviously as we said, that's an item that's pretty well suited for the surgery center environment or the lower cost financial sensitive buyer. And that's a first for us. So I am hesitant to give any type of range estimations there.

And we want to get the first one out in the market and will go from there..

Fair enough. Thanks for the questions..

[Operator Instructions]. We have a follow-up question from the line of Mike Matson with Needham & Company..

Hi. Thanks for letting me back in. I just had two follow-up questions. So first Curt, just wondering how we should think about the potential impact of the low-impact surgery rollout in the general surgery business? And then second question is just on the power instruments business, your main competitor there Stryker is launching the System 8 this year.

So just wondering if you are worried about any sort of competitive impact there from that?.

Sure. Great question. So we introduced low-impact at SAGES and we are in the early stages of getting that out into the market, doing the training that's appropriate for that type of approach and really the center piece of low-impact is the AirSeal platform because of the capability that it provides intra-procedure in terms of lower abdominal pressure.

Around that, we put what I think are very advantaged unique set of Mini-Lab instruments that we believe are fairly differentiated relative to what's in the marketplace. So at the end of the day and I think I commented to people at SAGES about this, for us low-impact is not about, per se, how many Mini-Lab instruments sets we sell.

While that is an important element, it's really about leveraging the AirSeal platform and everything that brings and expanding the AirSeal platform into that broad laparoscopic surgery market, which is a much larger market than the laparoscopic robotics market where the company has historically focused.

So it's about opening up the full beachhead of potential is what low-impact offers to CONMED. And we are excited about it.

There has been a lot of work behind the scenes that have gone into that in terms of working with key opinion leaders, patients and really trying to understand the story and how best to market this and work with surgeon on this approach. And we are in the early stages, but we thinks it's part of a long-term offense for the AirSeal platform.

On the power tool side, yes, very aware of the competitor. And you know the simple statement is any time a competitor puts a new product in the market, it's going to introduce a competitive scenario.

I have also been around long enough to know that when a competitor introduces something and a trial goes on, buyers are typically quick to say we are interested in the trial. But if we are going to do a trial, we open it up to competitors and we would welcome the opportunity to bring our power tool system into any open power tool valuation.

We think we have an advantage system. We think we have unique battery technology, sterilization, waterproof capabilities that are unique to the CONMED platform. So we look forward to competing, whether it's against this system or any other system in the marketplace..

Okay. Thank you.

I am showing no further questions in queue at this time. I would like to turn the call back to Mr. Hartman for any closing remarks..

Okay. Thank you Liz and thank you everybody for your time today. We appreciate your time and attention and we look forward to speaking with you on our next earnings call, which will be held on July 26, 2017. Thank you..

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone have a great day..