Ladies and gentlemen thank you for standing by. Welcome to the Intuitive Surgical Q1 2018 Earnings Release Conference Call. At this time, all participants are in listen-only mode. Later we will conduct the question-and-answer-session and instructions will be given at that time. [Operator Instructions]. And as a reminder today's conference is being recorded. I would now like to turn the conference over to Senior Director of Finance and Investor Relations, Calvin Darling. Please go ahead.

Thank you. Good afternoon and welcome to Intuitive Surgical's first quarter earnings conference call. With me today we have Gary Guthart, our President and CEO, and Marshall Mohr, our Chief Financial Officer. Before we begin, I would like to inform you that comments mentioned on today's call may be deemed to contain forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our Securities and Exchange Commission filings, including our most recent Form 10-K filed on February 2, 2018. Our SEC filings can be found through our website or at the SEC's EDGAR database. Investors are cautioned not to place undue reliance on such forward-looking statements. Please note that this conference call will be available for audio replay on our website at intuitivesurgical.com on the Audio Archive section under our Investor Relations page. In addition, today's press release and supplementary financial data tables have been posted to our website. Today's format will consist of providing you with highlights of our first quarter results as described in our press release announced earlier today followed by a question-and-answer session. Gary will present the quarter's business and operational highlights, Marshall will provide a review of first quarter financial results, and I will discuss procedure and clinical highlights and provide our updated financial outlook for 2018; and finally, we will host a question-and-answer session. With that, I'll turn it over to Gary.

Good afternoon and thank you for joining us on the call today. Intuitive is dedicated to the mission of improving the availability and quality of minimally invasive surgery. We had a strong first quarter in pursuit of our mission with customer use of our systems at the top of our growth range, continued momentum in new system placements, and stepwise progress in the development of markets outside the United States. While we're pleased with our performance in the quarter the opportunity for improvement in surgery is substantial and much work remains to be done. Global procedure growth was approximately 15% in the first quarter of 2018. Underpinning this growth was increased use of da Vinci in general surgery in the United States, continued growth in urology in Europe and Asia, and multispecialty growth in China. General surgery growth was led by hernia repair and colon resection. Mature procedures in the United States including prostatectomy and hysterectomy for malignant conditions grew above expected rates again in the quarter. European procedure growth was mixed by country partially as a result of headwinds in the number of business days relative to Q1, 2017. Lastly, additional procedures were granted reimbursement by the Ministry of Health in Japan effective April 1, 2018 at reimbursement rates equivalent to laparoscopy. Calvin will review procedure trends in greater detail later in the call. Our capital placement performance in the first quarter of 2018 accelerated relative to 2017 with growth in total placements rising 39% from 133 to 185. Net of trade-ins and retirements our da Vinci installed base grew by 13% over Q1 2017 from approximately 4,023 to approximately 4,528. Placement performance was strong globally particularly in the United States. Capital placements have been lumpy and we anticipate volatility in placements for the remainder of 2018. Turning to…

Good afternoon. I will describe the highlights of our performance on a GAAP and non-GAAP or pro forma basis. Our results are also posted on our website. First quarter 2018 revenue of $848 million grew 25% compared with first quarter 2017 revenue of $680 million and decreased 5% compared with seasonally stronger fourth quarter revenue of $892 million. In the first quarter of 2017 we deferred approximately $23 million of revenue associated with the da Vinci X tradeoff program that we offered certain first quarter customers. This revenue and related costs are recognized in the third and fourth quarters of 2017. Our comparison to 2017 results reflects a deferral as recorded. We also have adopted the new revenue standard as required under GAAP and retroactively restated prior period results. We have updated the supplementary financial tables posted on our website to reflect this restatement. The adoption of the revenue standard had the effective increasing first quarter 2017 total revenue by approximately $5 million and net income by approximately $1 million. The impact on the annual results for 2017 was insignificant increasing total 2017 revenue by approximately $9 million and increasing net income by $11 million. Revenue also benefited by approximately 2.5 percentage points from a weaker dollar. Excluding the impact of the revenue deferral and currency changes, revenue grew 18% relative to the restated 2017 first quarter. First quarter 2018 procedures increased approximately 15% compared with first quarter of 2017 in reflect with last quarter. Procedure growth continues to be driven by general surgery in the US and neurology worldwide. Calvin will review details of procedure growth later in this call. Instrument and accessory revenue of $460 million increased 21% compared with last year which is higher than procedure growth primarily reflecting increased usage of our advanced instruments and customer…

Thank you, Marshall. Our overall first quarter procedure growth was 15% compared to 18% during the first quarter of 2017 and 17% last quarter. Our year-over-year Q1 procedure growth was driven by 14% growth in U.S. procedures and 18% growth in OUS markets. In the U.S., overall, Q1 procedure performance by specialty closely aligned with patterns present in 2017. In U.S. general surgery, first quarter 2018 growth was consistent with 2017. Q1 growth was again driven by hernia repair which continues to provide the most incremental cases and continued da Vinci adoption in colorectal procedures. Early stage adoption in bariatric procedures and growth across the breadth of the general surgery category also contributed to growth. In U.S. gynecology, first quarter 2018 growth was consistent with 2017 trends as procedures grew modestly year-over-year with growth led by hysterectomy. We believe gynecologic procedure consolidation continues to drive modest growth as an increasing proportion of US gynecology procedures are being performed by physicians that specialize in complex, benign and cancer surgery who tend to be uses of da Vinci systems. Q1 US urology procedures had growth rates consistent with 2017 driven by prostatectomy volumes. As a mature procedure category, we believe that our US prostatectomy volumes have been tracking to the broader prostate surgery market, which has benefited from recent macro trends. In other US procedures, adoption of lobectomies and other thoracic procedures was again solid during the first quarter. Utilization of our da Vinci XI systems and surgical staplers which helped to optimize robotics thoracic procedures has been increasing. First quarter OUS procedure volume grew approximately 18% compared with 23% for the full year of 2017. First quarter 2018 OUS procedure growth was driven by continued growth in DVP procedures and earlier stage growth in kidney cancer procedures, general surgery and gynecology.…

Operator Instructions] Our first question will come from the line of David Lewis with Morgan Stanley. Please go ahead.

Gary a couple strategic questions for you. The first is on leasing. So, there is more operating leases in the last two quarters than the prior four quarters. And it feels like the 23% number is frankly going higher. So, it's starting to feel this is much more company driven than customer driven, and so the question is really to what extent does leases make a lot more sense as competitors are coming to market sort of in what way can leasing be very powerful defense?

Yeah, well first thank you. I think to the extent that we can help customers access robotics for their programs and do it in a way that fits their needs, we're happy to do it with leasing. I don't think it's a massive strategic change one way or another, viz-a-vis competition. From our point of view, we're confident in our products, we understand and are confident in the value they bring. If we can be flexible with customers and allow them to get access to the products they need when they need it, we can make it a little easier for them to do it sooner rather than later in terms of their finances, that helps us and we're willing. I think over time; our customers are going to evaluate competitive systems. They're going to go look at them. And if somebody brings out a product that meets their needs better, I don't know that leasing one way or the other is going to make a difference. For us, it really is kind of a first principles thing. Do you believe in robotic surgery as a way to increase the availability and quality of minimally invasive surgery if you do and you're committed to it and we can find the way that help you get a system, and then we're happy to do it?

Okay. And then curious, a question on flexible catheter system as well. So, based on your timeline, I'm kind of assuming you're 9 months behind a recent competitive launch. So, I just wonder how concerned you about this window are, and you talked a lot about the ecosystem both at SAGES and again in this call. In what ways can sort of the multi-system ecosystem approach be sort of a barrier to entry for new robotic entrants in this segment?

Yeah, I think in terms of any of the systems that we're going to place or somebody else places, I think the robot itself or the product itself is just the first step. You have to provide the robot, but you also need the instruments and accessories. You need to be able to help do product training, you need to build proctoring networks. You want to be able to help your customer do benchmarking and analytic analysis of usage patterns relative to what the rest of the world is doing. And so, I think they expect support beyond the dropping off of a system at the backdoor. And we have built that over years, we have come to understand it deeply and I think it is valuable to our customer. And I think that helps us, I think other companies have various degrees of enablement in that space. With regard to flex catheter in particular, we have been investing in it as you know for years and years. This has been a long-term investment. We have built technologies and made decisions about our architectures based on first principles not by looking over our shoulder at what other people are doing, but by really engaging customers deeply and understanding their clinical needs. That has driven us, continues to drive us. We have connections into the customer base because of those first principle investigations, and those folks visit us. They look at our technologies, they visit others and look at technologies on the market or soon to be on the market and they make decisions. We're going to make decisions based on clinical value and demonstrable outcomes. You’ve seen the early parts of that with regard to the publications at CHEST. I think there are advantages for people who are first movers, but I think they're short lived, I think that in this space because there are a lot of alternatives in the marketplace and because it’s going to be a market that’s driven by clinical data over time, the best solutions are going to win and I am confident in our technology and even more confident in our team.

Our next question comes from the line of Bob Hopkins with Bank of America. Please go ahead.

Great. Thanks for taking the question and good afternoon. So, as I looked at your print, obviously there’s lots of big impressive numbers in this first quarter report, but one that really caught my eye was the system sales number. And I know historically that’s primarily driven by procedure volumes and procedure volumes have been very strong. But I was wondering given this was really the best growth I think you’ve seen in system placements since 2010, was there anything in particular that drove the strength this quarter. Just wondering if you could sort of tease that a little bit more what happened in systems placements this quarter. Thank you.

Bob, you are absolutely right, systems placements are driven primarily by procedure growth and you have to look at it over a period of time because systems can be lumpy in any particular quarter. So, if you look at 2017, the installed base grew 13% and procedures grew 16%. So those procedures that were really driving that installed base growth. This quarter we had a little bit higher proportion of trade outs. That reflects I think as I said in my script, customers wanting to avail themselves to fourth generation capabilities. And we also saw high sales of Xi validating that that system has features that really are driving adoption. So, I think it’s lumpy. I think it’s hard to make conclusions based on one quarter of increased trade-in volume and I just would be cautious there and we expect to see some volatility. But overall over a longer period time of time systems will follow procedure growth.

Great. Thank you for that. And then I want to follow up also on one more question on flex catheter, just curious what’s left to do before you file with the FDA? And just maybe thinking a little bit longer term, but when do you think we might start to hear a little bit more about other potential indications for flex catheter beyond lung?

Sure. For now, as we said in earlier in the script the teams are doing the product validations, they are doing the testing that supports our submissions. And we are stabilizing the supply chain and that’s important when we launch we want to feel good about our ability to make the products, and our sub suppliers’ ability to make their parts. We are progressing. I think the team is doing a very good job. So, there we are progressing against our plan. For starters, as I said I think in the past, I am excited the flex catheter technology because I think it’s a platform and we will have other opportunities outside of the lung. Where we are today is focused on bringing this first product to market and satisfying the needs of the interventional pulmonologists and thoracic surgeons. I think that is a major opportunity. I think perfecting the clinical pathways, the use of the product and data generation is important for us to focus on. And so, our organization is tightly focused on that mission now.

Perfect. And then is there any update on China at all or?

Marshall might speak to kind of where -- I think you’re implying the quota but Marsh you speak to that.

We really don’t have much of an update on the quota, we still sit here awaiting the finalization of that quota, again just to give you the background of the quota, really applies to the years 2016 through 2020, its part of the five year planning budgeting process that the Chinese government goes through, Central government has finalized the budget but has not yet done its -- completed its negotiations with provinces, and hospitals about who will get how many systems and so we wait.

I think in general what's going on there doesn't appear to be Intuitive specific, I think it’s more rolling through the centralized government processes, we think that the core interest by Chinese customers in our products and the company and robotic surgery more broadly is strong and we feel slight forward progress in terms of the way the process has been moving. We just can't call what the timelines are, and so we’re at the limits of our ability to influence that outcome.

Next question will come from the line of Larry Biegelsen with Wells Fargo. Please go ahead.

It looks like you guys had 99%, almost 100% increase in the international system revenue but about a 30% increase in the year-over-year system shipped, Marshal what drove the difference in those growth rates?

So, a couple of things that I pointed out, one was that in 2017 we had six leases, in 2018 we have one, obviously when you have an operating -- and these operating leases, operating leases you don't have revenue, so, some of that is attributable to it. Also had a foreign exchange or currency exchange that was a -- when they're back here as the U.S. dollar has weakened over the year, and we also had a favorable mix of product. As I said, in my script, we had a high mix of Xi around the world that also included OUS, and we also had a favorable geographic mix. If you noticed there was substantive sales in to Europe and again these are lumpy so you can’t take one geography and extrapolate that forward, but in Europe we did well. We did a little bit lower sales relative to the prior year and some of our distribution markets where we sell at a lower price. So, you just put all those factors together and it adds up to increasing revenue to the extent that it did.

And then for my follow-up we've been increasingly hearing that India did present itself as a large opportunity, potentially even becoming the number one international market. Could you talk a little bit about how you see that market developing this year and over the next few years?

We’re optimistic that India will represent a good market long term but I think in the short term to think that it’s going to snap to our second largest market, our first largest market is not happen. We have a distributor there, we've been working with for years, we've made -- I think we have around 40, 50 systems installed in India, the total -- but the total number of procedures that they generate is maybe 1% of our total revenue -- of our total procedures. So, it is not consequential yet. We are making investments in it, we do think it’s -- again long-term that it’s a viable market and a good one for us, but we’re at the very, very, very early stages.

We’re are actually at 68 systems in India currently.

Our next question comes from the line of Tycho Peterson with JPMorgan. Please go ahead.

Maybe first question on emerging procedures. Bariatric got a little bit more attention at stages this year and Calvin you called that out in your comments. I know you're in the process of getting back to FDA with the questions on the Stapler. But Gary, can you maybe just talk a little bit how you think about this market evolving and how much market development you guys need to put behind once you get Stapler out?

It's going to be an interesting one to see evolve. I think it's early for us to put much commentary on it. We see interest by surgeons, having said that, it's a highly penetrated procedure with laparoscopy. And there are a lot of highly skilled laparoscopists in that market. And in that sense, it's stands in contrast to prostatectomy or hysterectomy for malonic conditions which were predominantly open procedures. So, we see some core demand and interest. Certainly, we want to complete the product offering in the Stapler. I think the real question there of where it could go overtime, I'd like to answer in future calls as we get a few quarters underneath the belt.

Okay. And then thinking a little bit about Japan with reimbursement coming out at peri and lap. Does that change your view on the adoption curve at all? And are there steps you can take to try to increase these codes [ph] overtime and presumably that will require additional studies?

Yeah, I think that in general I think reimbursement decision is a positive for us. It's not an alloyed [ph] positive. I think that it will concentrate adoption into the bigger centers, that's okay. I think we're in a position to support that and we will do so. We all make investments for data collection in Japan. And the use of that data collection will be certainly something we can have to share with surgical societies and with the government as time goes on and to the extent that we show additional value and I think it's something that the government will consider for future reimbursements. I wouldn't ink anything on your calendars yet as to changes in reimbursement from this space. Although I think that there is some water to go under the bridge here. I think the interest -- having just been in Japan I think the interest is high. I think surgical society is seeing it as a positive step and endorsement by the government. I think that the economics in the right centers will work well for them. And it's an exciting for us and our team in Japan. And I'm looking forward to seeing them have a chance to broaden their base of business and get to know more customers.

Okay. And then lastly on SP. Are you willing to comment, were there any surprises with FDA questions from your perspective? And then as we think about the rollout obviously you've talked about the three initial application areas. It seems like there is already some interest in other use cases. So, I'm just curious about how much pent up demand do you think there is out there today?

Yeah in terms of the nature of the questions that came back, I think it's within the kinds of conversations we've had with FDA over the years. And so, I think our teams are working on it. I don't see commentary that I would signal to you one way or another either particularly small questions or particularly big ones, I think it's right down the middle. With regard to potential applications overtime. I think general interest in SP is high, which is exciting to me. And I think one of things that made us excited to invest in the first place is that it allows an approach to entry into the body that's little more flexible than multi-port approaches. And I think that will open some opportunities in the future for surgeons who are looking for alternatives. Of course, that takes time. I will have to do protocol developments and data collection to get additional clearances as needed. But it was not unanticipated, that was part of what we had thought in terms of investing in the platform. This year will be a limited launch as we build volume and as we start to do things like enabling the proctor network and pursuing the sequential indications that we’ve talked about. So far so good, I think the team is on plan. I think the clinical response we’ve been getting from surgeons who are evaluating the data and looking at that base that looks really good.

Our next question comes from the line of Amit Hazan with Citi. Please go ahead.

Good afternoon, guys. I just had a couple of guidance questions and then one other for Gary. First on the procedure guidance. Just trying to understand the changes that you moved the numbers modestly but not too much that it was the toughest comp you had all year but at the nice 15% right at the top of your prior guide. Your installed base growth is still at 13% year holding really nicely. Just trying to understand what you are thinking about at the midpoint and low end of guidance now, it is OUS returning to 20% that growth or what else should we be thinking about both the low to mid-end procedure guidance?

Yes, the elimination of the low end of the range or flex our Q1 performance including the continued growth in general surgery, colorectal US kind of on pace with the trends we saw in 2017. We also benefited from growth in -- and again mature gynecology, urology procedures. Our current guidance assumption is at the low end on the US side, probably in gynecology shifting over to low single-digit decline which we think is aligned with the overall benign hysterectomy market moving to low single-digit, neurology growth and then some moderation within general surgery mostly reflecting lot of big numbers with some modest contributions in thoracic, pediatrics and other earlier safe procedures. We -- OUS no system quota in China to the extent it’s going to add capacity and it’s kind of a slower ramp in Japan with the new procedure set. On the high end they are still maintaining the trends in gynecology with low single-digit growth. Urology maybe some just minor moderation there to mid-single-digits growth and very slight moderation in US general surgery and continued nice trends in pediatrics and the emerging procedures. We do expect some moderation in China but probably less so at the high end of the range.

And then kind of burning a question here that in a while for Gary, I just wanted to ask, give the success you’ve been experiencing, what’s the biggest risk you see for the Intuitive story today?

I guess I will start with -- I think the opportunity for the use of advanced technologies to help surgery is really substantial and there are both a lot of interesting scientific advances in the space we are in and there is a lot of need. I think there’s always there’s kind of two or three risks for an organization like ours I think has to manage. One of them is I think the day-to-day operations that are required to supply your customers can keep you from making the launch of investments to need to keep advancing the yard. And so, we manage that firmly. But I think that you need to do both and I think we’ll have missed a serious opportunity if the systems that are enrolled, a decade from now look like today, so I think that there’s real opportunity for advancement, so that’s one. I think the second thing that’s just vital is that these things are complex technologies, they absolutely require outstanding human beings, and human capital and they need to be brought into a company that has a culture of satisfying the customer and performance and so I think washing out a culture with growth can be something that is a problem and we need to attend to it. And I think the last thing is that healthcare is local, I think that when we want to make progress outside of the United States, it takes a deep understanding of the countries that we’re working in and real skill and capability there. The metal may look the same but the healthcare system in the way it values products differs and I think that being too shallow in those assessments can meet risk in underperformance and if we underperform than others will satisfy the need. So those are kind of the victory for me.

Our next question comes from the line of Richard Newitter with Leerink Partners. Please go ahead.

I just wanted to clarify, on the comments with respect to guidance, and how China fits in, I think Calvin you said China utilization or growth slowed in 1Q as you had called out previously, if that -- if the current level of China growth would hold or persist for the rest of the year, is there still a way for you to get to the upper end of your guidance assuming no quota, in other words, how dependent on China with where your run rate is now with your latest data point to hit the upper end of your guidance?

No, I think it’d be possible, again I think we are calling for some moderation in China and just order of magnitude right, the U.S. business, general surgeries are largest category in the U.S. gynecology is the large set of procedures and that mature category is urology, so I think those just have larger basis of business that kind of things impact and then we’re going to have a bigger impact at least on this year in terms of the growth rates.

And maybe just one follow-up on an earlier question on bariatric, one of the things that we continue to see in this market is the adoption of Sleeve gastrectomy, at the expense of gastric bypass, and I was just wondering are you guys feeling like the application of robot has a bigger appeal or a bigger unmet need in either one of those two and can succeed if the world goes the way of sleeve gastrectomy?

I understand the question right the difference in suturing is a lot in terms of the amount of suturing between those two. I think it’s too soon to tell right now what kind of the value statements are going to be in bariatric surgery over time, so like I said I think there’s some core interest here, the procedures are taxing on surgeons, they’re demanding procedure, and there are differences between those two techniques, I think stay tuned is really the short answer here, we will let it play out over the next few quarters and report back.

Our next question comes from the line of Rick Wise with Stifel. Please go ahead.

Good afternoon, Gary. And thanks for the awesome quarter. Just two questions from me. Maybe just a little more color for hernia adoption, for hernia outlook. Obviously continues to go great. Just curious from your perspective, what aiming do you think we are in terms of robotic adoption. How sustainable is this kind of growth you're seeing over the next few years? And maybe a little color on, I assume largely driven by incisional at this point, or is the inguinal catching up. Can you just help us reflect on the drivers as you looked out over the next few years?

Sure. This is Gary. I think we're still in the early part of the game, I don't know exactly what inning and whether there'll be extra innings or not. But it we're not in the first innings, it's now becoming evaluated fairly broadly. Inguinal has been the primary driver in the hernia space to date. We think incisional hernias are also an opportunity and that may rise in the future relative to inguinal. So far so good. We look at of course clinical publications and presentations and value statements as reported by clinicians. We also look at reorder patterns and use, are they trialing or are they sticking with it. And so far, the performance in terms of ongoing use and sticking, stickiness, sticking with the procedure once they've tried it is quite good in inguinal hernia repair and that's a good sign for us. So, we think we bring real value here. And customers came to report back as much. We look forward to the next several quarters.

Yeah. And just last for me Gary, you have been kind enough in the past to be I think very frank and direct about the looming competition. And just I'll be curious to hear your latest thoughts. The two larger companies since we last spoke in this kind of context. One of the competitors seems to be delayed. You now have a smaller competitor approved in U.S. and in Europe. Just curious how all this is changing reflecting the market or selling discussions. Is it slowing down or it is a positive they're slow down. Again, any updated perspective will be very welcome. Thanks again.

Yeah, as we said before, I think that need is clear. And I think that the opportunity afforded by the kind of the core technologies that are available are also clear now have become clear. I think customers are always interested in choice. We can provide them choice within our ecosystem, but they'll look for choice outside that ecosystem also. And I anticipate it, in my response customers when they ask is they should evaluate the alternatives. I guess what I would say is the hardest thing to compete with is the power points that don't yet exist in a product and the concepts that can't really be evaluated. I think in general, the existence of competition validates the space. I think that it signals to surgical societies the broader acceptance of the concept itself I think that's generally positive. I think these organizations out there that are large and small all of that staffed by capable people. And I think that they're going to work hard and look at alternatives. And to the extent that they come up with some really strong ones. I think that will change what’s happening at our customer base but so far so good. I haven’t seen product concepts so far that Intuitive hasn’t either considered and built or considered and consciously passed on. It doesn’t mean that we’re not wrong, we could be. But I feel like we have a good team. I think our team thinks about the problems holistically and from the customers’ perspective. And if we continue to do that, I think we will be well positioned vis-à-vis competition.

And last question will come from the line of Isaac Ro with Goldman Sachs. Please go ahead.

Thanks. Good afternoon. I appreciate that. So quick follow up on the outlook in Asia specifically Japan and China. So, in Japan, are you expecting any meaningfully uptick in systems placements with a new reimbursement in place? And the reason for asking is it seems that you had a fair amount of what I would call idle capacity for existing placements prior to the updated reimbursement. So, I am wondering if you'd help us map back what the new reimbursement means to incremental system demand.

Yes, I mean, we mentioned in our comments, Isaac. We are expecting it will probably modest. We have got nearly 300 systems in Japan currently. And so, I think there’s a lot of capacity that can be applied to this new set of procedures. These set of procedures can involve a process here of bringing up the teams and going through training and they are gradually building as we gain experience and confidence. So, I don’t think there’s going to be a tremendous need to expand capacity here in the early days. It is true that some of these new procedures and they in the general surgery and thoracic categories can definitely benefit from our fourth-generation technology, Xi technology, there will be some interest on the part of some folks to upgrade to the newer models. But for us right now I think it’s really about building a foundation clinically in the market and like we always say, eventually the capital will follow but we are not predicting anything too dramatic this year.

Okay, thank you. And then I am trying to follow up there. It sounds to us like that there will be hopefully some kind of update at the federal or national level with essentially a number if you will for new quota. But can you help us think through your understanding of how that number will then disseminate to the prudential [ph] level and eventually convert to origin revenue, whether it be the order process, how it varies, timeline, anything to help us understand the translation of the quota to actual action.

It’s a negotiation that occurs between Central Government and the provinces, so we are not permitted that negotiation and I don’t really understand or know what the time table is. I can tell you that last time the quota was approved that it took several quarters for it to translate into any kind of sale to us. So, if you recall the quote last quarter we got was around 2013 and yet we saw most of systems at the end of 2015. So, you go through that negotiation between Central Government and provinces and then you also then have a tender process with each hospital at the end of it and that takes time.

Alright. Well that was our last question. As we have said previously, while we focus on financial metrics such as revenues, profits and cash flow during these conference calls, our organizational focus remains on increasing value by enabling surgeons to improve surgical outcomes and reduce surgical trauma. We have built our company to take surgery beyond the limits of the human hand and I assure that we remain committed to driving the lot of few things that should make a difference. This concludes today’s call. I thank you for your participation and support on this extraordinary journey to improved surgery and we look forward to talking to you again in three months.

And ladies and gentlemen, this does conclude today's conference. Thank you for your participation. You may now disconnect.