Ladies and gentlemen, thank you standing by and welcome to the Intuitive Surgical Q3 2019 Earnings Release Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mr. Calvin Darling, Senior Director of Finance, Investor Relations. Please go ahead.

Thank you. Good afternoon. And welcome to Intuitive's third quarter earnings conference call. With me today, we have Gary Guthart, our 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 the company's Securities and Exchange Commission filings, including our most recent Form 10-K filed on February 4, 2019 and 10-Q filed on July 22, 2019. Our SEC filings can be found through our website or at the SEC's website. 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 intuitive.com on the Latest Events 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 third 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 our third quarter financial results, then I will discuss procedures and clinical highlights and provide our updated financial outlook for 2019. And finally, we will host a question-and-answer session. With that, I will turn it over to Gary.

Thank you for joining us today. Intuitive has been enabling customers in their delivery of high-quality, minimally invasive surgery for 20 years, and we believe the adoption of robotics and computer-aided interventions is early relative to its long-term potential. We measure our efforts by their ability to positively impact the quadruple aim; better outcomes, better patient experience, better care team experience, and lower total cost to treat per patient episode. This third quarter of 2019 was another solid one for Intuitive in pursuit of these aims. Our performance in the quarter is a reflection of our progress, with procedures and system placements showing continued strength. For the quarter, global procedure growth was nearly 20%, aided by an increase of approximately a surgery day relative to Q3 of 2018. Growth again centered on general surgery in the United States, with positive contributions to the global growth rate from Germany, Korea and Japan. China procedure growth continues to be limited by installed base growth. Total procedure growth in China is responding positively considering the release of system quota and subsequent placements. In the United States, year-over-year procedure growth for the quarter was 18%. General surgery again accounted for the largest increase year-over-year, accompanied by solid growth in urology and stable growth in gynecology. We also saw strength in bariatrics and cholecystectomy. Hernia repair and colon resection growth rates were solid in the quarter. Improvements in system utilization by customers and alternative capital placement models are having a positive impact on our business. Our US sales force productivity improved in the quarter as our new team members gained experience. Calvin will take you through global procedure dynamics in more detail later in the call. With regard to our installed base, placement of new systems in the quarter was solid, with growth in total…

Good afternoon. I will describe the highlights of our performance on a non-GAAP or pro forma basis. I will also summarize our GAAP performance later in my prepared remarks. A reconciliation between our pro forma and GAAP results is posted on our website. Key business metrics for the third quarter are as follows. Third quarter 2019 procedures increased nearly 20% compared with the third quarter of 2018, and increased approximately 2% compared with last quarter. There was one more operating day in the third quarter of 2019 compared with the third quarter of 2018. Excluding the impact of the extra operating day, we would have been in line with our full year average growth. Procedure growth continues to be driven by general surgery in the US and urology worldwide. Calvin will review details of procedure growth later in this call. Third quarter system placements of 275 systems increased 19% compared with 231 systems last year and increased 1% compared with 273 systems last quarter. We expanded our installed base of da Vinci systems by 12% to approximately 5,406 systems. The growth rate compares with 13% in both the last quarter and last year. Utilization of clinical systems in the field, measured by procedures per system, grew approximately 6%, which is higher than the 4% growth last quarter and below the 7% growth last year. Our revenue overview is as follows. Third quarter 2019 revenue was $1.1 billion, an increase of 23% compared with $921 million for the third quarter of 2018 and an increase of 3% compared with $1.1 billion last quarter. Instrument and accessory revenue of $606 million increased 25% compared with last year, which is higher than procedure growth primarily reflecting customer buying patterns and increased usage of our advanced instruments. Instrument and accessory revenue realized per procedure…

Thank you, Marshall. Our overall third quarter procedure growth was nearly 20% compared to 20% during the third quarter of 2018 and 17% last quarter. Our Q3 procedure growth was driven by 18% growth in US procedures and 23% growth in OUS markets. Third quarter 2019 procedure growth benefited from one additional working day compared to last year. Through the three quarters, working days are now roughly consistent between this year and last. Our Q3 2019 year-to-date procedure growth was 18%, equal to 18% growth through three quarters of last year. In the US, Q3 procedure growth was largely driven by continued strength in general surgery, with substantive contributions from gynecologic and urologic procedures. In US general surgery, third quarter growth in leading procedures, hernia repair and colorectal, remains solid at days adjusted growth rates consistent with last quarter. Cholecystectomy growth continued to accelerate in the third quarter and now represents a significant driver of incremental procedures. While we remain cautious regarding the size of the addressable chole market for robotics, our recent data is encouraging. Growth in cholecystectomy represents a healthy mix of new and continuing surgeons, shows very little churn and sees increasing Firefly utilization. Bariatric procedures, while still not an area of broad emphasis, again accelerated modestly in Q3. Q3 US gynecology procedure growth was largely consistent with the first half of 2019 and last year, in the mid-single-digit range, with hysterectomy for cancer volumes accelerating modestly in the quarter. We had surprisingly strong growth in US urology and dVP procedures in the third quarter. dVP growth was just over 10% for the quarter after having moderated to low-single digits in Q2. As a highly penetrated mature procedure category, we believe that our US prostatectomy volume should track to the broader prostate surgery market. Third quarter OUS…

[Operator Instructions]. And our first question comes from the line of David Lewis with Morgan Stanley. Please go ahead. Your line is open.

Good afternoon. Just a couple of questions for me. Gary, just starting off on procedure acceleration. Even adjusting for selling, there's still a couple hundred basis points, maybe 200 basis points to 300 basis points of momentum acceleration into the third quarter. I wonder if you could talk about some of the drivers there. You talked about the gen surg capacity issues last quarter. Sounds that they've been resolved. But was that the principal driver of the momentum improvement or could just kind of point out other factors that drove this relative momentum acceleration into the third quarter? And then, I'd have a quick follow-up.

So, in general, general surgery was positive for us. I would not say that we have resolved all the constraint issues that we had talked about last quarter. We moved in the right direction. So, I think productivity for the US sales force was something we talked about last quarter. I think we took a modest step in the right way. We'll keep working on that. Likewise convenient access to systems. So, general surgery was strong for us, but I think there is more opportunity there over the long term. We had – and Calvin had touched on it, we were positively surprised in the urology part of the business, and we're digging in a little bit to figure out where that positive surprises come from. Calvin, I don't know if you want to add to that.

No, that's it. You saw us kind of settle in the low-single digits last quarter and just over 10% this quarter, and we are working with our field team and customers to better understand the dynamics behind that.

Okay. Very helpful, and maybe just a quick two-part question on broader CapEx. And, Gary, the gross system placements this quarter, I know trade-ins and retirements looked heavier, but gross system placements in the US looked a little lighter. Is there anything you've seen from a change in the capital environment in the US that you're willing to call out? And then related to that, Marshall, your commentary on next year competitive dynamics, maybe could you share with us what you've seen from some of these new systems that have now been displayed in the US and Europe, any comments you're willing to provide there and how your commercial strategy may change next year as you learn more about these systems? Thanks so much.

On the first front, I don't know that we're a perfect read on the CapEx environment more broadly. We do think that procedure growth is, in the US, the dominant driver of additional systems over time. System capability, but also clinical installed base, access. So, I think we saw in this quarter, met our expectations. I think the second question around spending looking into next year, I'll let Marshall take.

Yeah. So, you were asking specifically about dynamics around potential competitors in my comment about the impacts that might have in terms of elongated negotiations or negotiations with customers. We know that when the competitors' products comes out that that will be an impact. When it comes out or when it will have an impact is less certain. And so, we're just trying to make sure that you understand that as those dynamics occur that you're not surprised.

Next question, please.

And next we turn to line of Larry Biegelsen with Wells Fargo. Please go ahead.

Good afternoon. And thanks for taking the question. Just maybe one follow-up to Marshall. On the operating margin and the OpEx spending that you talked about for next year, in the past, you've talked about not expecting constant deleveraging over time. But how should we think about margin pressure in 2020 relative to 2019 as you invest for top line growth and you potentially have new competition coming in? And I had one follow-up.

Yeah. I think what you've heard from us and you've heard from others is that there is a substantial opportunity in front of us in terms the minimally invasive market. And so, we think about those opportunities. We think about the technology there necessary to take advantage of those to improve patient outcomes and we think about the global expansion. And so, that's where we're spending our money. We'll give you more precise guidance on what spending we'll do when we get to the January call. So, I'm not going to really comment at this point about magnitude of leverage or deleverage or whatever. But we will continue to spend on expansion.

That's helpful. And then, to stay on the 2020 theme, Calvin, on the guidance, the implied Q4, it's somewhere about 15% at the midpoint for procedure growth. Should we be thinking about more of the high-end here Calvin and maybe if you could talk about the puts and takes for next year. You have some good growth drivers from general surgery and international. Should we be thinking about kind of stability in procedure growth Thanks for taking the questions.

Yeah. I think as you look at Q4 and then further out into 2020, the growth drivers, as you say, Larry, are general surgery in the United States as well as growth outside the United States, and I think that's likely to continue to be the drivers. At the high end of the guidance range, I think we're seeing consistency with where we are on a year-to-date basis. But, again, in the third quarter, we saw benefit for some of the mature categories. I think at the lower end, you can contemplate some moderation there.

Thanks, guys.

And next we turn to the line of Rob Hopkins with Bank of America.

Thanks. And good afternoon. I just wanted to ask a couple of quick questions on the comments you guys made on SP in the prepared remarks. It sounds like the regulatory pathway is moving around a little bit. Gary, is that a function of something specific with your process or is it just a tougher regulatory environment generally with the FDA with these new robotic platforms?

Yeah. I think it's probably the latter. As you look at both our products that are moving into new clinical domains and also a little more broadly across the med device industry, it looks like the environment is becoming more data centric or the data requirements are increasing.

And then, also just wondering if you could characterize kind of the demand for SP generally and what your comments imply about kind of next year's growth opportunity in SP. Should we be thinking it's fairly limited until you get colorectal or do you see enough underlying demand that 2020 could see some nice sales of that product?

We won't forecast it for you yet on this call. I think, in general, there is an opportunity for the indications that we have and more indications are better. The clinical data that we're seeing and that's building in the database reinforces my support for the product line long-term. And I think there is also a set of indications beyond the colorectal that will be interesting to us. That said, we'll work with regulatory bodies to meet their requirements and that may take some time. That will pace us. So, near term, as we get closer to 2020 and get into it, we'll talk a little more about it.

Thanks so much.

And we have a question from the line of Tycho Peterson with JPMorgan. Please go ahead.

Thanks. I want to go back to some of the procedure commentary. The cholecystectomy recovery, can you comment on what you think might be driving that? And then, to your comments on the dVP step up, any early view on what might be behind that? Is that patients dropping out a watchful waiting or is there another dynamic there?

Yeah. On the chole side, Tycho, talked about the acceleration being driven by a healthy mix of the new surgeons and existing surgeons, not a lot of churn and increasing Firefly utilization. So, that feels a lot different than, say, our earlier experience with single site set of tools or it was more of a cosmesis-oriented value proposition. And what's interesting is, while in the past, chole may have been a popular training procedure, and it still can be that, now it's not necessarily the first procedure. It's a lot more often that it's, say, a hernia repair that's the first procedure. And as general surgeons are applying robotics across their practices, chole obviously a big part of what they do. So, there are reasons for optimism given what we see in the data, but we continue to monitor and analyze the growth trends closely and remain conservative about the overall opportunity.

On prostatectomy

Yeah, prostatectomy, I think we've pretty much stated on that. We were surprised and we're kind of digging into what the root causes may be.

Okay. And then, on SP, it sounds like you worked through the endoscope issues in relatively short order. Should we think about any sort of catch-up effect in the fourth quarter in terms of installations? And then, any comments you want to make on the IDE trial, how big you think that might have to be?

On the SP endoscope, we have released supply and – but we still have some work to do and we will work through it really for SP endoscopy at scale. So, we can support the scale we're at today, but as we get bigger and what our long-term plans are, I want to see improvements in that product line. So, we will see – we're not ready to describe what the outlines of the trial yet are. Indeed, it finalizes in IDE, that will get published in public database and you'll be able to look it up and we'll point you to it.

All right. And then lastly, any comments you can make on ASPs? I think, last quarter, there was a view that they would maybe step down, but, obviously, they didn't. So I'm just curious how we should be thinking about system ASPs going forward?

Yeah. I think it's pretty specific in my remarks actually. For ASPs this quarter, we just saw a really favorable mix just like last quarter in terms of Xis and Xs and Sis. We also saw a really favorable mix in terms of lower distributor and higher direct sales. As far as what you should expect going forward, I think what I said was for the remainder of this year. You should look at ASPs more similar to the mix between Q1 and Q2. And that's where we see it coming out, and that will reflect a higher mix of distribution sales in Q4, which is typical if you go back and look in our history.

Okay. Thank you.

And next we turn to the line of J.P. McKim with Piper Jaffray. Please go ahead.

Hi, good afternoon. Thanks for taking the question. I just wanted to touch on just the uplift in instrument ASPs. Can you talk about maybe, A, the sustainability there and just what's really driving? Is it more advanced procedures or just more advanced instruments with the staplers and vessel sealers?

Yeah. Hi, J.P. It's Calvin. Yeah, we saw this – in this quarter, revenue per procedure was approximately $1,980 and that's the highest we've seen in quite some time. Marshall mentioned in his comments that we did see a benefit relative to the last quarter just due to timing of orders, but, obviously, higher usage of the advanced stapling and vessel sealings also contributed to the growth. Going forward, clearly, the favorable timing of the orders should offset, but there is a number of factors that are going to kind of impact the trend going in different directions, including the anticipated continued growth in the advanced instrument usage, offset by an increasing proportion of lower complexity cases like cholecystectomy that we've talked about. So, I&A revenue per procedure is going to have variability quarter to quarter and I don't have a long-term direction to give you.

Okay, that's helpful. And then, maybe just on – you've got the chest conference coming up this weekend. Maybe what can we or should we expect from you guys in terms of Ion, any single site data? And then, maybe what investors should be looking for in terms of the right way to sort of compare systems or what really is going to drive adoption and surgeon interest?

So, the conference, I think what you're going to see is a lot of what we've talked about on this call. We're going to talk about just qualitatively, I think, some of the early experiences in the field. We'll be doing a lot of test drives and talking about the system and its capabilities. I don't think – there is no new data that I think is going to be groundbreaking at the event.

In general, I think you'll see, from both sides, relatively early data. I think the larger market in Ion and robotic-assisted bronchoscopy will be data oriented in broader settings, looking at safety and efficacy. And as that develops, I think we're feeling pretty good. There have been systems in the market in the past, as you know, and I think a fair number of accounts, we'll wait to see what the data says. So, there is the future benefit kind of conversations that happen in the early market. I think a lot of the market will wait to see what that expresses like in clinical use.

Thank you.

And our next question comes from the line of Richard Newitter with SVB Leerink. Please go ahead.

Hi. Thanks for taking the questions. Wanted to just follow up on chole. So, I know that – I believe chole is a faster procedure relative to some of the more complex areas where the robot gets used. So, I'm just curious the extent to which you think just acceleration, kind of staying power, could that help alleviate some of the capacity and training issues that you've outlined in the past with respect to the mix of the types of procedures getting done?

I think it can change, certainly, the utilization rate for systems in the field. It can still create access challenges as different people vie for time. But as you just described, if they are faster through it. With regard to training, I think that high volume procedures allow surgeons to move through their early experiences more quickly, and that has a generally positive net effect.

Great. And I was hoping – thanks for the color on the China procedure growth metrics relative to the overall OUS. I was just curious, as you have more systems getting placed each quarter, how many quarters you think it might take to get – approaching the international average? And I think it would be helpful just to know where was the growth rate trending in the last two quarters. Thanks. Relative to this quarter.

Right. So, the overall OUS growth rate is roughly 23%. And in the last two quarters, we've seen some modest acceleration. We're probably approaching that right now. So, a successful scenario in the next quarter or two, we may crossover.

Thank you.

And next we turn to the line of Imron Zafar with Deutsche Bank. Please go ahead.

Hi. Good afternoon. Thanks a lot for taking my question. Gary, you highlighted in your prepared remarks the stapling franchise. Can you talk a little bit more about, I guess, the 60 millimeter in particular and the impact you're seeing in terms of specific procedures, where you're seeing the uptake? Is it colorectal versus gastric sleeve? And then also, how much cannibalization are you seeing of the 45 millimeter in cases like bowel resection, et cetera?

60s mostly used in the lower abdomen. So, you definitely have stomach and in colorectal. There is modest exchange for the 45s where a 60 will do, [indiscernible]. But in general, I think that mix and surgeon selection in that space is pretty well understood from prior experience with laparoscopy. And we're not overly stressed about it.

Okay. And then, in Japan, I know last quarter you talked about some sequential slow down, but the metrics you gave today, the 40% plus procedure growth and healthy placements, I think 27, can you just talk about the contributors to procedure growth there? Is it still urology, non-dVP urology or general surgery mostly? And then, are you expecting more procedure reimbursement approvals in April 2020?

Yeah. So, as I mentioned on the call, a move back to 40% where we had been prior to last quarter. Last quarter, I think we largely felt the effect of a number of holidays or a fewer workdays in the quarter than this quarter where that recovered. So, that was the main thing. We're seeing increasing numbers of the 12 procedures that were granted reimbursement status in April of 2018, as well as continuing to see adoption of the urology procedures.

We don't think that the – of the 12 that were adopted, equal rate. And we'll see some start to break out from the pack, whether it's in colorectal or thoracic relative to some of the others. With regard to reimbursement opportunities going forward, it's something we track and we discuss with surgical societies for their support as needed. We'll see nothing to communicate with you at this time.

Thank you very much.

Next we turn to line of Craig Bijou with Cantor Fitzgerald. Please go ahead.

Thanks for taking the questions. Just a couple of quick follow-ups. Gary, on SP, I think you mentioned that you might be looking at other indications. So, I guess, I just wanted to get a sense for. Given the IDE that will be required for colorectal, could we see another indication come in before seeing colorectal?

I can give you no reason to be optimistic for that.

Okay, fair enough. And then, Marshall, just your comments on the med device tax. I just wanted to – you said that you expected to come in – and I just wanted to get – is that just you being conservative or assuming that it will come in 2020 or is there anything else behind that comment?

At this point, that is what is supposed to happen. I know there is lobbying efforts to try to change that. So, we're just telling you the way it is.

Also fair enough. Thanks for taking the questions, guys.

Thank you.

And we have a question from the line of Jason Mills with Canaccord Genuity. Please go ahead.

Hi. Thank you for taking the question. Wanted to follow up, Calvin, on the revenue per procedure. You've given us that data fairly consistently. So, [indiscernible] things would have to change quite significantly across several different procedures for that trend line to change over, let's say, the next three years. So, it's been on a nice, fairly decent upward slope. What would you say, I guess, over the longer term with respect to that trend line, given you have so much data, but it is a dynamic business? It would seem like it could continue to trend upward with some volatility quarter to quarter, but upward over a longer period of time. Maybe tell me what I'm missing, if that's incorrect

It has been increasing in low-single digits the last couple of years, anyway. I tried to mention that we do expect to see a continued contribution from the advanced instruments as a tailwind to the metric, but that's being offset by a number of factors. I mentioned increasing proportion of lower complexity cases. And fact is people are just becoming all the more efficient as time goes on as well, wasting less, doing less with more, and we help them to do that with some of the analytics we provide. So, those are the offsets. And so, you have the gives and the takes. So, at this point. I'm not ready to say whether the trend is going to continue up or be flat or trend down.

Okay, fair enough. And, obviously, the big reveal, one of the competitors recently, the number that they continue to harp on was 2% robotic surgery relative to procedures done, whether it be general laparoscopic. I was wondering if you could, perhaps Gary, comment on that number from your perspective. Obviously, much more broad. If you could comment on that number or just give any general commentary as it relates to robotic surgery penetration. I know you talk qualitatively about it being early innings, but just specifically that quantitative figure, I'd like your thoughts. And then, specific to Japan as it relates to the penetration of robotic surgery, it would seem to be lower than that. I'd like your commentary with respect to that geography specifically, if you don't mind. Thank you.

Let's zoom out for a second and then we can zoom back in. I think the opportunity for computer-aided and robotically assisted surgery and acute intervention more broadly is clearly substantial and clearly durable. And that's going to draw in new entrants, which it's doing. I think those new entrants will help accelerate broader adoption more generally and customers will appreciate that choice. And I think they will look at that. Our strategy over this period has really been, understand our customers deeply and understand the quadruple aim. It's really hard to do the total accounting of what the total available market will be. And what I'd ask you to look at is over time. What does it look like in the next couple of years? What does it look like in the next four? What does it look like in the next 10? I think some of our competitors as they speak about these opportunities are looking out pretty far. And, okay, that's a forecast. Hard to have an exact crystal ball. But, clearly, even speaking with our most candid critics, the idea that computer aids and robotics are going to make an impact more broadly in surgery is pretty well accepted. So, I think we're early innings. Japan, I think likewise. A little bit different healthcare system. The single payer system that runs through MHLW or the predominantly single-payer system means that their requirements and negotiations using data with the government early are much more important and getting those right opened the market over time, and that's what we've been working on. So, clearly, that's an early set of opportunities for us as well. Our methodology, when we think about total available market, is to be conservative in the early days, show that we can bring real value and then revise as we see greater depth. Other companies take a different statistical approach to that.

Thank you so much.

And next we turn to the line of Vijay Kumar with Evercore ISI. Please go ahead.

Hey, guys. Thanks for taking my questions. Maybe just tacking on that last question, Gary. If just look at the medium-term outlook, right, just given where we are in the CapEx cycle, given the amount of product cycles that you guys have on a number of different platforms, where – I know, historically, you looked at utilization rates as being – on the system utilization rates – the growth in system utilization as being a leading indicator for systems. Is this now – given the acceleration we're seeing in procedures, is that a leading indicator for our systems? Like, you just give us a sense for what drives that systems next year because, obviously, you have competition. I'm just curious, given why we're seeing base procedures accelerating, is that an indicator for how we should be modeling systems?

I'll just draw a broader picture and I'll let Calvin speak to a little bit of the modeling. In the broader sense, we know that in a mature market that has experience with robotic surgery that procedure demand will drive the underlying system demand, and there's two ways that they go about it. One is capacity and they can get additional capacity by more efficient utilization of their systems. We have designed our systems with that in mind. We work closely with them and in various arrangements to help them get improved efficiency. They don't have to buy an X system if they don't want to. The other thing is feature content. Does the product have the feature content that's required to do the procedures they want to do? And so, we work with them on those things. Clearly, competitors will enter the market and make claims. And I guess what I would say for both customers and for shareholders, due diligence is really important. It's really easy to make claims on trade show floors and it's pretty hard to back them up in real life. And our experience in the world has been that there is a lot of noise in the beginning as those claims are made and then it takes a couple or three years in the actual clinical market and clinical use to see what the broad market thinks about that. That will have an impact for us in the next few years. I don't know if it's next year or the year after, and I think that's what Marshall's commentary was. Signaling is that customers will evaluate and will take their time and that may change capital acquisition cycle timelines or otherwise and they change the nature of negotiations for us. But we're planning and thinking for the long term and we're focused on enablement of the quadruple aim and we'll be here for our customers as we go through that. Calvin, anything you want to help with our modeling?

No, clearly, procedures are the catalyst for driving the demand for systems. When we look at our models, we would expect to see a continuation of the trend of increasing utilization over time.

Vijay, if you have a short follow-up, this is your chance. One last one.

One quick follow-up, Gary. Headcount is up 30%, up from 5,000 to – we've crossed 7,000. That's an impressive, phenomenal number. I'm just curious now where that is going. Thank you.

Yeah. We try to balance our growth and our investments by both the opportunity and we think the opportunity is enormous and durable. And then, we balance it by what we think we can achieve and do well. And that really is what caps our growth in our spend. Absorbing, training, selecting, developing staff during rapid growth is really the challenge and that's what we are focused on. As we get into 2020, 2021 and we'll share with you in future quarters what our plans are, but we try to balance those two things, being agile and pursuing the opportunity; at the same time, making sure we're not over extended and losing our ability to execute and be efficient. So, thank you, that was our last question.

In closing, we believe there is a substantial and durable opportunity to fundamentally improve surgery and acute intervention. Our teams continue to work closely with hospitals, physicians and care teams in pursuit of what our customers have termed the quadruple aim – better, more predictable patient outcomes; better experiences for patients; better experiences for their care teams; and ultimately a lower total cost of treatment. We believe value creation in surgery and acute care is foundationally human that flows from respect for, and understanding of, patients and care teams, their needs and their environment. Thank you for your support on this extraordinary journey to improve surgery. We look forward to talking with you again in three months.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.