Good day, ladies and gentlemen, and welcome to the LivaNova Plc Second Quarter 2019 Earnings Conference Call. After the speakers' remarks, there will be a question and answer session. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Matthew Dodd, LivaNova's Senior Vice President of Corporate Development.
Please go ahead, sir.
Thank you, Jessa, and welcome to our conference call and webcast discussing LivaNova's financial results for the Q2 of 2019. Joining me on today's call are Damien McDonald, our Chief Executive Officer Thad Huston, our Chief Financial Officer and Melissa Farina, our Vice President of Investor Relations. Before we begin, I would like to remind you that the
the
discussed in the company's most recent financial filings and documents furnished to the SEC, including today's press release that is available on our website. We do not undertake
to update any forward looking
statement. Also, the discussions will include certain non GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press releases available on our website. We have also posted a presentation to our website that summarizes the points of today's call. This presentation is complementary to the other call materials and should be used as an enhanced communication tool.
You can find the presentation and press release in the Investor Relations section of our website under News and Events Presentations at investor. Livanova.com. With that, I will now turn the call over
to Damian. Thanks, Matt. Well, welcome to our Q2 2019 conference call. Today, we will discuss our results, provide some recent highlights and reaffirm guidance. Our 2nd quarter adjusted earnings per share reached the upper end of our guidance range.
Along with strong performance across all business lines in cardiovascular, we were encouraged to see our neuromodulation business stabilize on a sequential basis in the U. S. I'm going to start off by discussing some recent highlights, then move to our sales results by business. After my comments, Thad will provide you with additional details on the financials. Then I'll wrap up with closing comments before moving on to Q and A.
On June 12, we closed a tuck in acquisition of Miami Instruments. The company was founded by Doctor. Joseph Lamellis, an internationally recognized expert in minimally invasive heart surgery and the Professor and Chief of Cardiac Surgery at the University of Miami Health System. Miami Instruments has a suite of products designed to enhance minimally invasive cardiac surgery procedures, which fits well with our Perceval Sutulos Aortic Valve. This transaction is expected to have an immaterial impact on our sales and earnings forecast.
On June 18, Stacy Ansing Seng was elected to our Board Directors. Stacy is currently a venture partner with Life Stone Ventures and sits on the boards of Kala Health, Hill Rom, Pre Cardia, Cinnova Holdings and the Fogarty Institute For Innovation. In addition, Stacy has previously held executive roles during her more than 25 years of experience in the healthcare and medical device industries. We're delighted to have Stacy join our Board. On July 15, we announced FDA clearance of the LifeSpark system, a new advanced circulatory support pump and controller.
LifeSpark is a completely redesigned system that includes a magnetic bearing, improved portability, a simplified interface, easier setup and a higher flow rate. Clearance came slightly ahead of our expectations and we will initiate a controlled release of Luxpark later this quarter. We expect CE Mark for LifeSpark before year end. Turning now to our net sales results for the 2nd quarter, which will all be stated on a constant currency basis. Total net sales were down 1% compared to the Q2 of 2018.
Cardiovascular showed strong operational growth in the quarter, while neuromodulation was down due to U. S. Performance. While our overall U. S.
Business declined 6% due to the softness in neuromodulation, Europe grew for the 7th straight quarter and rest of world grew double digits for the 3rd consecutive quarter, excluding the impact of a Canadian distribution exit. Cardiovascular sales were $172,000,000 up 1.2% from the Q2 of 2018 due to growth in cardiopulmonary, advanced circulatory support or ACS and heart valves. Cardiopulmonary sales were $131,000,000 the quarter, a decline of 1.3% versus the Q2 of 2018. Heart lung machines sales grew mid single digits driven by strength in both S3 conversions and competitive placements, especially in rest of world. Our oxygenator sales declined due to the previously mentioned terminated Canadian distribution agreement.
In the Q2 of 2018, sales from this agreement were $8,600,000 and were located in the rest of world category of cardiopulmonary. Excluding this impact, oxygenator sales grew in the mid to high single digits. Turning to heart valves. Sales for heart valves were $33,000,000 in the quarter, up 4.6% versus the Q2 of 2018, driven by a strong rest of world performance. Perceval grew in mid single digits this quarter as continued softness in the U.
S. Was more than offset by growth in Europe and rest of world. ACS reflects our TandemLife business that we acquired in April of 2018. Sales in the quarter were $8,000,000 representing nearly 40% growth versus the Q2 of 2018 and consistent with the Q1 of 2019. Last year's sales force expansion continues to gain traction and we saw strong growth across all product lines, especially ProTech Duo.
Now let's turn to neuromodulation. Sales were $104,000,000 down 4.8% versus the Q2 of 2018. In the U. S, sales decreased 9.9 percent to $81,000,000 and we're ahead of our guidance range of $70,000,000 to $80,000,000 While the competitive pressures and field turnover that we experienced in the Q1 stabilized in the Q2 as expected, we were encouraged to see our overall implant rates rise modestly versus the Q2 of 2018 led by mid single digit growth in end of service implants. We saw another strong quarter of double digit sales growth in Europe based on the continued adoption of SenTiva and a strong performance in the UK.
EU adoption of Scentiva is now 53% of generator sales with strong uptake in the UK, Nordics, Germany and Spain. Rest of World delivered a robust quarter growing nearly 20% driven by a strong performance in the Middle East, China and Southeast Asia. And finally, our neuromodulation pipeline continues to make good progress in both our treatment resistant depression or TRD and heart failure programs. In TRD, we continue to work with CMS to finalize our RECOVER trial protocol and still expect to enroll our 1st patient by the end of the Q3. In heart failure, our ANTHEM HeF Ref US pivotal trial continues to perform ahead of our expectations at over 65 active sites and more than 100 randomized patients.
We are confident in our growth prospects and we'll continue to focus on execution, strong portfolio management and developing the talent and culture of LivaNova. I'll now turn the call over to Thad for a review of our financial results. Thad?
Thank you, Damian. I'm going to discuss the Q2 financials in greater detail. Sales in 2nd quarter declined 1% versus the Q2 of 2018. Sales growth in ACS, heart valves, HLM and oxygenators were offset by a decline in U. S.
Neuromodulation and the impact from the termination of a Canadian distribution agreement. Adjusted gross margin as a percent of net sales in the quarter was 69.3%, up 100 basis points from the Q2 of 2018. The margin improvement was driven by mix, price and operational efficiencies. Adjusted R and D expense in the Q2 was $40,000,000 compared to $33,000,000 in the Q2 of 2018. R and D as a percentage of net sales was 14.3% versus 11.3% in the Q2 of 2018.
As previously discussed, R and D is increasing behind development of next generation products, including HLM, SenTiva and TandemLife, along with clinical trials and strategic investments in TRD, TMVR, sleep apnea and heart failure. Adjusted SG and A expense for the Q2 was $108,000,000 compared to $104,000,000 in the Q2 of 2018. SG and A as a percentage of net sales was 39%, up 2 80 basis points versus the Q2 of 2018. The increase is largely due to the full impact of expanding ACS commercial capabilities, strengthening our commercial organization in international markets and a year over year decline in our U. S.
Neuromodulation sales. Adjusted operating income from continuing operations was $44,000,000 compared to $60,000,000 in the Q2 of last year, which reflects the impact of lower neuromodulation sales while increasing investment in our key growth drivers in R and D. Adjusted operating income margin from continuing operations declined 490 basis points to 15.9%. Our adjusted effective tax rate in the quarter is 15.4%, an improvement from 17 point 4% in the Q2 of 2018 as a result of ongoing tax efforts. Finally, adjusted diluted EPS from continuing operations in the quarter was $0.70 compared to $0.96 a year ago and at the high end of our guidance range.
Moving to cash flow. Our cash flow from operations excluding payments for one time integration and restructuring costs for the first half of twenty nineteen was $38,000,000 Capital spending for the first half of the year was $11,000,000 which was $2,000,000 lower than the first half of twenty eighteen. Our cash balance at June 30, 2019 was $45,000,000 down from $47,000,000 at December 31, 2018. Our net debt at quarter end was $163,000,000 up from $124,000,000 versus year end 2018. In July, we made our first payment of $135,000,000 in connection with the settlement of the 3T multi district litigation in the United States and we entered into agreements with our insurance carriers to recover $34,000,000 under our product liability policies.
As part of our asset valuation analysis, we determined that the delays in the Amphaira R and D program resulted in a pre tax $50,000,000 non cash impairment charge in the 2nd quarter. Now turning to 2019 guidance. In Neuromodulation, we continue to expect our U. S. Business to gradually improve in the back half of the year.
We still expect U. S. Neuromodulation business to fall within a range of $315,000,000 to $325,000,000 with the Q3 anticipated to fall into a range of $75,000,000 to $85,000,000 In terms of overall guidance, we continue to forecast 2019 sales growth between 1% 3% on a constant currency basis. If current exchange rates remain unchanged, the company's full year revenue guidance will be negatively impacted by 1%. Also note that guidance includes 1 quarter of sales from TandemLife prior to the deal closing in April 2018 or $8,000,000 and the impact of exiting the distribution agreement in Canada that represented $32,000,000 in sales in 2018.
Now turning back to the rest of the P and L. We continue to project adjusted diluted earnings per share from continuing operations to be in the range of $3 to $3.10 While we don't normally provide quarterly guidance, we are providing a 3rd quarter EPS forecast range of $0.70 to $0.80 and a total sales range of $270,000,000 to $280,000,000 Our guidance for all other full year metrics is unchanged from May 1. With that, I'll turn the call back to Damian for some final comments. Thanks, Seth.
While our U. S. Neuromodulation and Perceval sales remain challenged, corrective actions are progressing and the rest of the business lines and regions are performing well. We continue to expand gross margins, make significant investments in our R and D portfolio, while streamlining expenses in non core areas. We look forward to updating you on our continued progress and delivering on our commitments to drive shareholder value.
And with that, Jessa, we're ready for questions.
Thank you. Your first question comes from the line of Rick Wise from Stifel. Please go ahead.
Good morning, Damien. Good morning, Pat. Good morning, Rick. Good to see the neuro business seemingly stabilized a little bit here. Let's start off with Neuro.
And a couple of questions related to it. Maybe just update us on some of the Q1 challenges you faced. It seems like you're making progress or have addressed them. The sales force turnover seems to have resolved. Maybe talk about some of the operational issues, changed comp and how that's affecting the business and adding, I hope, to your confidence about the second half.
And maybe related well, actually I'll stop there for the moment. Okay. I can go on and on.
We look forward to it. Look, overall implants rose modestly in the quarter. End of service implants were up mid single digits year over year and new patient implants were down mid to high single digits year over year, but up sequentially from Q2. So I think that was positive. And without getting sort of too granular on the year on year impact, let's paint it as similar to the Q1 with the new drug entrant and the commercial issues.
We did feel and we're encouraged by the fact that even though we're only a few months into our stabilization plan, we're encouraged by this NPI improvement sequentially. The sales force retention and comp, I think, has progressed well. The customer and territory optimization plans are progressing. We're hiring as we talked about previously into that field force to support them from a science point of view. We're working on our competitive positioning.
We're really got much more granular on our weekly drill on how we execute commercially and share best practice. So again, it's 1 quarter, but we're encouraged.
That's great. Do you feel like you have a I mean, given your comments on the first half replacement side of things, do you have a good line of sight on second half replacement volumes? And is that mid single digit notion a reasonable trajectory to think about? Is that the right way to think about it?
Hey, Rick, it's Matt. So on end of service, we generally assume 2% to 4% for an annual basis. So yes, we're
a little bit ahead of that
in the first half. Some of it was comps. The comps were a little easier in the first half. They get a little tougher in the back half. So for now, we're kind of sticking with that full year range we've historically seen of 2% to 4%.
But our guidance in terms of NPI does reflect a year over year decline in new patient implants in the Q3 and then returns to a slight increase in Q4. So we do have some confidence that these headwinds will lessen in the back half of the year.
Just jumping around a little bit. The Damien, you mentioned about the you still expect the TRD trial to get underway this quarter with your approval. My feeling is it's been imminent. I'm sure you hope it's imminent. Where are we now in sort of can you give us any color on your conversations or what to expect or what's holding it up or any color?
When does it get underway do you think?
Well, look the process with CMS is iterative. And they're not bound by timelines like an approval process with the FDA. And this is the 1st non coverage decision that's moving from a clinical trial into a registry. So there are a lot of moving parts. So we don't have a set timeline on when CMS has to approve this the full study design.
But we expect and hope that the protocol will be finalized in the next few weeks. And as I said, we're still banking on the 1st patient enrolled by the end of the quarter.
Yes. And just last from me, gross margins were absolutely better than expected given some of the pressures on the Neuromod side. Thad, you talked about mix, price and operating efficiencies. How do we think about gross margins from here and maybe the relative importance of those factors as we contemplate the second half? Thanks so much.
Thank you. And you're absolutely right. Given the impact on neuromod, you would have expected it to actually be a bit worse, but we have been seeing great progress on all fronts, both price mix and operational efficiencies, and we expect that to continue, especially as neuromod starts to pick back up in the back half of the year.
But we haven't changed the guidance on gross margin from the 68.5% to 69.5%. We're really seeing that that group is progressing.
Great. Thanks again.
Thanks, Rick.
Your next question comes from the line of Raj Denhoy from Jefferies. Please go ahead.
Hi, good morning. I'm going to try and ask a couple of follow ups to what Rick was asking. But on the U. S. VNS number, right, so I appreciate the guidance is still 315 to 325.
That implies that in the low end of that implies that the back half of the year will be sort of flat on where you guys were here in the Q2. And so I guess I'm trying to kind of get your or take your temperature in terms of how the quarter progressed? Are you seeing acceleration in the core business in new implants such that maybe you're a little more comfortable with the upper end of that as we move into the back half of the year here?
Yes. Look, again, I think we're a few months into our stabilization plan. I mean, it's encouraging to see the sequential uptick in NPIs. But we want to see a continuation of this trend before we start adjusting guidance up. So that again, you know it's not our normal drill to give you quarterly guidance.
So I think that's why we're being prudent here and giving that sort of visibility.
Okay. I think you also mentioned that you're much more close to monitoring sort of surgery schedules and the like. What are you hearing in terms of the interest in Epidiolex, new script impacting the pipeline. Is there anything you can offer just even anecdotally or qualitatively quantitatively, I should say, in terms what you're hearing from the field in terms of whether that drug is still having an outsized impact on patients moving through the funnel?
So hey, Raj, this is Melissa. Our data is showing that our scripts are trending kind of flattish to down, so no change since the last time we spoke about it. Although we're not providing specific guidance on the impact of each of the headwinds, we do expect the impact of Epidiolex to continue over the next 3 to 6 months.
Okay, fair. And then just lastly, again on the VNS depression trial, the CMS mandated trial. I guess, I'm curious what the holdup still is. My understanding and talking to you guys before that it was still this decision on what that gating event would be to move to the registry portion of the trial. Is that still a point of discussion with CMS or what are they still working on in terms of the final sign off on that trial design?
That and a number of things. As I said, it's very iterative, Raj. We respond, we get some more questions, we respond, we get some more questions. I think we have a really great relationship. We're continuing to be in a very open dialogue with them.
But as I said, this is the first time that a non coverage decision has got especially one that's been around for a decade has been rebooted and moving from a trial to a registry. It's just, like I said, a lot of moving parts. We're just continuing to work with them, but that's why we don't have a definitive date, but we're encouraged and hoping that we still enroll by the end of this quarter.
Yes. And so to that point, will you in a sense, if CMS doesn't officially give a full sign off on this or if there's still some discussion or debate going on, will you begin that trial in the end of Q3 or will you wait until you get a definitive answer from them in terms of what the trial looks like?
Again, I'm hopeful we'll come to some resolution with CMS and we are really encouraged by that. A lot of the conversation we've had has been very progressive. And we have a really great panel of key opinion leaders and investigators lining up. And they've done a lot of work in parallel to the CMS work, so that they're ready to go as soon as we can get the final sign off. So I think again it's encouraging and we're going to work towards that end of quarter first patient in.
Okay, great. Thank you.
Your next question comes from the line of Matthew O'Brien from Piper Jaffray. Please go ahead.
Good morning. Thanks for taking my questions. Just a couple for me. Good to see the recovery here of neuromod in the U. S.
And I don't
want to push too much
on this, but just wanted to deconstruct a little bit more where some of the recovery came from. It sounds like it's really more internally driven, because I think last quarter you mentioned some sales force turnover, some ordering patterns. Did you get some bolus of orders here in Q2 that you that kind of fell off from Q1 into Q2? Did you backfill some of those rep positions and they're ramping faster than you may have expected? Just any commentary on that would be helpful.
No, absolutely. I think we you clearly see that we've already made adjustments to our compensation structure, the methodology that we've put in place is really well received by the field force. We backfill the majority of the positions. And we feel that we have a very clear line of sight around the new patient funnel and the stages from patient identification to implant. And we're really going into the levels deeper on reporting on account performance.
And going forward, we're much more focused on sales force effectiveness and improving our customer targeting and segmentation as well as really building out the storyline on the unique aspects of VNS Therapy, looking at all different drugs in using VNS. So we feel that that is the biggest driver of the things that we've controlled. We have gotten under control and we have more confidence about our back half call.
Got it. And then just 2 more for me and I'll ask it both together here, but separate questions. Epidiolex, I think it received a favorable opinion in Europe with potential approval here in a couple of months. I think the indications are fairly narrow. But would just love to hear what you're thinking about the launch of that product in those indications for the back half of this year and the potential impact it could have on that European business that's doing well.
And then LiveSpark, I'd love to just hear a little bit more about the rollout there and how that can influence the ACS business because that's been performing better than expected? Thank you.
Yes. Great questions, Matt. So Epidiolex in Europe, we're learning a lot from the U. S. Launch of Epidiolex and we're going to continue to assess their go to market strategies and how we execute against that.
We're training the team on messaging and our in market responses. We're not going to take any new drug launch lightly and the dynamic in the EU though is different and the EU business run rate is much smaller than the U. S. Obviously 15% of the U. S.
Business. So it's much more contained. We know where the accounts are. Are. We know again a lot about messaging and how to competitively position.
So I like the way we're preparing for this. So that for us is a very key focus for that the Neuromod team in Europe. Lustbach, yes, look, I really love Marchbach. There's a bunch of things that I mentioned, the new magnetic bearing has the possibility of improving clinical outcomes. It's improved portability and the dual batteries mean that you can move it around the clinic very easily and not worry about battery life.
So it's very portable. The interface is really fabulous and brings it into the new millennium. It's easier to set up. I mean, I've seen people doing a 5 to 7 minute setups and we're going to be very aggressive on training for that and it's higher flow rate. So for the more severe cases, we're using it in shock, MI, acute heart failure, cardiac arrest.
So this higher flow rate is a big deal as well. So the team is really excited about this. I mean, this is I think we've talked about this very attractive aspect of buying TandemLife was that they were so far down the pathway in this new product development and the fact that it's not sold internationally. So we're really excited about what this can be. The team is really executing well.
Again, nearly 40% growth in the quarter is tremendous. And we're expecting LifeSpark to be part of the next momentum lift for that group.
Very helpful. Thank you.
All right. Thanks, Matt. Cheers.
Your next question comes from the line of Matt Taylor from UBS. Please go ahead.
Good morning. Thank you for taking the question. So I just wanted to ask about the trend in cardiopulmonary actually. So the I understand the Canada exit, but the U. S.
And Europe results were a little bit slower than we've seen in some of the recent periods. Can you talk about that trend? Do you expect the growth to pick up in the back half there? And maybe just give us a sense for where you are now in the upgrade cycles for HLN machines and oxygenators?
Hey, Matt, it's Matt. So for cardiopulmonary broadly, talking about heart, lung, oxygenators, some of the other ancillary pieces. Overall, we said they were both kind of in the mid to high single digits. So globally, it did well. We had much tougher comps in the U.
S. This quarter for those two businesses. But internationally, we really saw strong growth and they've been doing that for quite a while. So nothing really unique there from the Q1. I'd always say in the back half, we still feel pretty good about those businesses being mid single digit growers on a global basis.
Yes. Okay. So we're continuing to progress well there with our sales execution. We've got about at least 12 months in the current upgrade cycle. And we expect to have our next gen HLM in the second half of twenty twenty.
But our current business is not entirely comprised of upgrades from S3 to S5. We're continuing to see meaningful level of new installations, particularly in the rest of world. And S5 to S5, so old S5 to new S5 upgrades. So that team continues to execute well. We're very focused on that funnel, well as making well as making sure we get the Polaris program complete late next year.
And just to follow-up on the pipeline questions. I just wanted to clarify, I think at one point, you're talking about a goal to get about 100 patients enrolled in the TRD trial this year. Do you think that's still possible? And could you give us any updates on mitral or sleep apnea that are relevant?
Yes. I clearly think that's still possible and it's certainly dependent on getting the first patient in Q3 and that is still our goal for TRD. Some of the other programs, as we mentioned, were where we had seen some delays with sleep apnea, but heart failure is doing extremely well and actually is enrolling still ahead of plan and where we have over 100 patients
currently. So that's really going well. And in Kaeson, on they really made excellent progress on the redesign. They've locked into a new design that incorporates the valve and anchor system into a single delivery system. We previously had the valve went down one system, the anchor went down another.
This is now a single delivery system, which I think is going to really work on ease of use. Our initial feedback and discussions with the FDA has been positive and we're going to do our preclinical work kicks off with the bench testing animal studies, biocompatibility studies imminently. And then we're really planning on restarting the trial in the first half of twenty twenty. So I think good movement there from the team and again a nice rebound given what they had to do in a very short period of time.
Great. Thanks a
lot. Your next question comes from the line of Mike Matson from Needham and Co. Please go ahead.
Hi, good morning. Thanks for taking my call or questions. Just wanted to go back to the LifeSpark question that Matt had asked. I'm just curious, if we look at pricing, mix, volume, how is that going to impact the growth of that business? Is it something where it's easier to use?
It will drive increased utilization or and then curious if there's any kind of margin differential on the new product versus the old one?
Yes, good question. So margin, no, it's roughly the same margin, which was above our fleet average anyway quite significantly. So it's accretive to margin every time we sell 1, which is again a very attractive aspect of the business. So I think for us, one of the things the team has been constrained by is opening significant numbers of new accounts because we stopped making the existing controller a little while back. So we only had a certain number of units to open new accounts.
So the team I think has done a great job being very focused on account penetration rather than account acquisition. And so now with the new device, we'll obviously be going to the big users to drive penetration deeper where we believe there's still a lot of upside and they already know the product. But we'll also have the opportunity to start looking at account acquisition. And because it is much more simpler and portable, as I mentioned, this will be very attractive for the smaller hospital groups that are not the major programs. So I think this is a very attractive for the U.
S. And then internationally, we need to start looking at how do we arrange our market penetration opportunities there. And we're literally going country by country to look at how we start those with kits first and then the controllers.
Since we acquired the business, I mean, we doubled the sales force and we've seen a very consistent double digit growth of this business. And so now having LifeSpark that will only help us in accelerating our position in the back half of the year.
Okay, thanks. That's helpful. And then does your guidance still include I think you had factored in $5,000,000 to $10,000,000 for TRD for the trial and I know you just answered a question about the timing and whatnot, but I'd assume you're still sticking with that and what's the timing of the trial for the change?
That's exactly right. That's what we were assuming.
Okay. So that would fall mostly into the Q4, I assume, at this point? Yes. Do you
have any yes. Okay.
That's all I have. Thank you.
All right.
Thank you. Thanks, Mike.
Your next question comes from the line of Jason Mills from Canaccord Genuity. Please go ahead.
Hi, this is actually Cecilia on for Jason. And I wanted to just follow-up on your discussion of Caisson. It's great to hear about the progress, but I was just wondering how you're thinking about investing in the structural heart field in general, going forward just versus your other pipeline initiatives? And then just the potential to augment via M and A in the future?
Hi, Cecilia. How are you? Welcome. We look, I think we're very encouraged by how Caisson has rebounded here. And our focus on structural heart is really to get this program through the next sets of milestones.
We really haven't been very aggressive at adjacencies or M and A while we get this program going. More broadly, M and A continues to be a key part of that growth strategy. I think we previously mentioned that while we reduced some of the debt from the 3T litigation, we're going to be very focused on that. But we are still having a very active discussion and funnel on M and A opportunities. And if the right things come along that meet our metrics and hurdles, then we'll be opportunistic.
But our M and A focus still is very focused on the head and heart.
I would just add, I mean, I think we clearly have a fantastic pipeline both with depression and heart failure, sleep apnea and Caisson, we clearly need to support those investments and get those products to the next phases. And that's where we're really focusing on that as well as obviously getting the base business back to growth in the back half of this year.
Great. I appreciate the color. And I guess I just wanted to ask as well about trends in your U. S. Personal business.
And what you were seeing in Q2 and just account trends recently and as you look to the back half of the year and beyond 2019 just with low risk how you see this business performing?
Well, look, I continue to have the team focus on their turnaround in the U. S. We're really focused on better commercial execution, procedure training. We are very keen about this valve in valve indication and remembering that more than 40% of procedures are concomitant procedures. So you need to have an alternative to TAVA in more than 40% of procedures.
The things where there's a CABG or a mitral valve or AFib. So we like what Perceval can do in this space. And it's part of the reason why we bought the Miami Instruments business. It's a set of instruments that facilitate the minimally invasive cardiac surgery, which is our focus and strategy. So I expect that this team will gradually find their feet.
As I think I mentioned before, what we were committed to with market, what we were committed to was Perceval. What we got wrong was just the time it was going to take to get this to rebound. But I'm quietly encouraged by what the team is doing.
Great. Thank you.
There are no further questions at this time. I turn the call back over to Mr. McDonald for closing remarks.
Well, thank you very much everyone for joining us. We appreciate your continued support and interest and we look forward to the next call with you. Thank you.
Thank you. This concludes today's conference call. You may now disconnect.