Good day, ladies and gentlemen, and welcome to the first quarter 2017 Teleflex Incorporated earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question- and- answer session, and instructions will follow at that time. If anyone should require operator assistance at any time, please press star then zero on your touch-tone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Jake Elguicze, Treasurer and Vice President of Investor Relations. Sir, you may begin.
Good morning, everyone, and welcome to the Teleflex Incorporated first quarter 2017 earnings conference call. The press release and slides to accompany this call are available on our website at www.teleflex.com. As a reminder, this call will be available on our website, and a replay will be available by dialing 855-859-2056, or for international calls, 404-537-3406, passcode 12639722. Participating on today's call are Benson Smith, Chairman and Chief Executive Officer; Liam Kelly, President and Chief Operating Officer; and Thomas Powell, Executive Vice President and Chief Financial Officer. Benson, Liam, and Tom will provide prepared remarks, and then we'll open up the call to Q&A. Before we begin, I'd like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides.
We wish to caution you that such statements are in fact forward-looking in nature and are subject to risks and uncertainties. Actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today, as well as our filings with the SEC, including our Form 10-K, which can be accessed on our website. With that, I'd like to now turn the call over to Benson.
Thank you, Jake, and good morning, everyone. To begin, I would like to start the call by saying that we are quite pleased with our Q1 results. Following a solid fourth quarter performance to end 2016, Teleflex is off to a strong start in 2017. During the first quarter, revenues grew by 14.8% on an as-reported basis and 16% on a constant currency basis. This includes the contribution from Vascular Solutions product lines, which added meaningfully during our partial quarter of ownership, accounting approximately 5% of our constant currency revenue growth and delivering approximately $0.03 to our adjusted earnings per share. I'm happy to say that Vascular Solutions revenue and adjusted earnings-per-share performance during the quarter was in line with our initial expectations. That integration activities are well underway and continue to be on track.
Turning to our base business, during the quarter, top-line growth was broad-based and covered several of our operating segments. We continue to see stability within our end markets, good global utilization of many of our products, and positive momentum in revenue generated from newly introduced products to the market. Additionally, the flu season in the fourth quarter of 2016 and the first quarter of 2017 was more normalized, and we do not currently expect the same distributor ordering pattern dynamics in 2017 that negatively impacted our business in 2016. Finally, during the first quarter, we continued to make progress on our distributor conversion within China. Turning to profitability, during the first quarter of 2017, we generated adjusted gross and operating margin growth of 110 and 100 basis points respectively.
The margin performance in the quarter was modestly better than our internal expectation and gives us confidence in our ability to achieve our full year 2017 guidance targets. The additional operating leverage generated in Q1 translated into adjusted earnings per share of $1.80, which is an increase of 18.4% versus the first quarter of 2016. Given the good start to 2017, we are reaffirming both our full year as reported and constant currency revenue growth ranges and slightly increasing our full-year adjusted earnings per share guidance range.
While Tom will go through this in more detail during his prepared remarks, the decision to increase our full-year adjusted earnings per share range is primarily due to moderate operational benefits that were achieved in Q1 as compared to internal expectations, the acquisition of Pyng Medical, which closed in April and was not in our original adjusted earnings per share estimates, and a larger than anticipated tax benefit that occurred in the first quarter associated with stock compensation tax benefit accounting change. In closing, Teleflex is on track to either meet or exceed the original 2017 financial targets that we provided the investment community a few months ago, and we continue to believe that 2017 will be yet another year in which we can leverage our income statement through a combination of revenue and non-revenue dependent actions, further expanding adjusted gross and operating margins and adjusted earnings per share.
That completes my prepared remarks. I'd like to turn the call over to Liam.
Thank you, Benson, and good morning, everyone. For the consolidated company, first quarter 2017 constant currency revenues grew 16%. This includes positive sales volume of existing products, which contributed 7.8%. These sales volumes were aided by five additional selling days during the first quarter. If you were to normalize for results for the additional selling days, our constant currency revenue growth from core product volumes would've been approximately 1.8%. We estimate that the additional days added about 6% this quarter. The main reason the billing days had a larger impact in quarter one versus the fourth quarter of 2016 is the result of a smaller denominator. Quarter one revenues were lower than quarter four. Our decision to go direct within China resulted in our former master distributor of vascular and cardiac goods to no longer purchase products.
As we said in our last earnings call, we view these sales headwinds in China to be temporary in nature and not indicative of our longer-term growth potential in that country, and we anticipate a return to positive revenue growth during the second half of 2017. In fact, we've continued to make progress in adding to our direct sales presence in that area and believe that over the longer term, we will be able to improve margins, get closer to the end users of our products, and gain better control of the sales channels. Turning to revenue growth coming from recently completed acquisitions. During the quarter, M&A contributed approximately 5.8% of constant currency revenue growth. Of this amount, Vascular Solutions added about 5.1%, while Cartica, an OEM business we acquired in September of last year, added about 70 basis points.
While we did not own Vascular Solutions for the entire first quarter, one of the reasons we acquired the company was because of their ability to consistently generate double-digit revenue growth, and they did not disappoint in quarter one, growing approximately 13% in the first quarter of 2017 as compared to the prior year period. Growth in Vascular Solutions was primarily due to increased sales of our Turnpike, GuideLiner, and Micro-Introducer Kit products. Moving to new products. The positive revenue trend we have seen for the past several quarters once again continued in quarter one, this time contributing approximately 1.8% of constant currency growth. This represents the highest constant currency revenue growth contribution stemming from new products yet, and positions us well for 2017, as many products which were launched during 2016 continue to gain traction.
From a geographic perspective, new product revenue growth was once again led by our North American businesses. While from a product line standpoint, new product sales were particularly strong within our surgical, vascular, and anesthesia product lines. Surgical new product sales were driven by increased utilization of products used in robotic procedures and the further penetration of our Weck EFx offering. Vascular new product revenues increases are attributable to further penetration of our infection control orientated antimicrobial and antithrombogenic Arrowg+ard Blue Plus PICCs. While in anesthesia, the growth is primarily due to increased sales of our LMA Unique (Silicone Cuff) product and the Rüsch TruLite laryngoscope. Finally, during quarter one, we saw continued improvements in the average selling prices of our products, which drove revenue higher by another 60 basis points. This was primarily due to increases in our vascular, surgical, and Asia reporting segments.
In summary, if you were to compare the first quarter components of constant currency revenue growth, excluding the shipping day impact and Vascular Solutions, to our full-year 4%-5% guidance range, you will see that they compare favorably. Excluding the impact of the additional shipping days, core product volumes grew 1.8% and was within our full-year guidance range. Pricing grew 0.6% and was also within our full-year guidance range. While new products and Cartica added 1.8% and 0.7% respectively and were above our full-year guidance range. Next, I would like to provide some additional color surrounding our segment and product-related constant currency revenue growth drivers during the first quarter. Vascular North America first quarter revenue increased 14.8% to $93.8 million.
The increase in vascular revenue was largely due to higher sales volumes of Vidacare EZ-IO and OnControl devices, increased sales of infection control coated CVCs and PICCs, as well as from the impact of the increase in the number of selling days within the quarter. Moving to Anesthesia North America, first quarter revenue was $48.2 million, up 4.7% versus the prior year period. Growth in this segment occurred within Vidacare EZ-IO, Atomization, and Airway Management devices and was the result of additional selling days in the quarter. Turning to our Surgical North America business, its revenue increased 17.7% to $46 million. The increase within Surgical is primarily attributable to higher sales volumes of access ports, ligation clips, and chest drainage products. Growth in this business was also aided by the additional selling days in the quarter. Shifting to our overseas operations.
EMEA revenues continue their positive trajectory, growing 10.9% on a constant currency basis to $130.7 million. The improvement in Europe revenues was largely the result of the increased number of selling days. However, if you were to normalize their results for the selling day impact, we estimate that EMEA revenues still grew approximately 3%. Moving to Asia, our first quarter revenue decreased 0.4% to $49 million. The decrease here is primarily due to sales volumes being negatively impacted by our distributor-to-direct sales conversion in China. As I mentioned earlier, we currently expect a return to positive revenue growth within Asia during the second half of 2017. Turning to OEM. During the first quarter, revenue increased 28.4% to $43.3 million and was primarily due to higher sales of catheter and performance fiber products, as well as the Cartica acquisition.
Lastly, first quarter revenue for the businesses within our All Other category was up 45%, totaling $76.9 million. Growth here is primarily attributable to the acquisition of Vascular Solutions, as well as sales of additional cardiac intra-aortic balloon products. I would also like to point out that Vidacare product sales continue at a very good pace, growing globally 23% on a constant currency basis in quarter one 2017 as compared to the prior year period. As has been our customary practice, I would like to next briefly update you on the status of GPO and IDN awards, as well as some recently received regulatory approvals and product launches. Adding to the success we realized in 2016, during the first quarter of 2017, we won an additional 14 new GPO and IDN agreements and extended 16 others.
Of the agreements won and extended in quarter one, 16 were sole source in nature and cover a wide variety of clinical areas, including our laryngeal masks, ligation clips, midline catheters, laryngoscopes, CVC catheters, humidification devices, PICCs, and arterial product offerings. I point this out because it further supports our ability to generate positive, broad-based revenue growth within clinical practice areas that are not overly susceptible to extreme cost pressures or elective procedure downturns. Moving next to some recent product introductions and regulatory approvals which we've received. I mentioned earlier that one of the reasons we acquired Vascular Solutions was because of their ability to consistently generate double-digit revenue growth rates. Another reason we acquired them was their robust product pipelines.
The next three products I'm going to talk to you about are Vascular Solutions products, while the fourth is a new cardiac balloon pump that we are bringing to market. Starting with the Spectre Guidewire. We recently received 510(k) clearance and began U.S. commercial launch of this product, which is designed for premium performance in coronary and peripheral interventions and has enhanced trackability and torque control. The device is a guidewire available in multiple lengths and has both a distal hydrophilic coating and a proximal PTFE coating. Approximately 70% of the guidewire used in percutaneous coronary interventions, or PCI, are considered workhorse guidewires and are used to deliver catheters, balloons, stents, and other diagnostic and therapeutic devices. It is our belief that the Spectre Guidewire will be applicable to the majority of PCIs. Turning next to Twin-Pass Torque Dual Access Catheter.
This product also received FDA 510(k) clearance and was launched both domestically and internationally. This catheter contains both a rapid exchange lumen and an over-the-wire lumen. The beauty of this product is that with the guidewire deployed through the rapid exchange lumen, the over-the-wire lumen can be used for guidewire exchange, subsequent delivery of a second guidewire, or fluid injection to a desired distal vessel segment. It is a product that is designed for procedures that call for the delivery of two interventional guidewires from a single catheter in clinical situations where catheter delivery and control are paramount. Turning to the TrapLiner. This is the third new Vascular Solutions product that received FDA 510(k) clearance during the quarter.
This product's design is similar in nature to Vascular Solutions' popular GuideLiner extension catheter, but it has the added feature of an integrated balloon for trapping a standard guidewire. It can be used as an alternative method to the trapping technique that requires the use of a PTCA balloon to exchange an existing over-the-wire catheter while maintaining guidewire position and is most commonly used in complex interventional procedures. Lastly, from a new product standpoint, I would like to call your attention to the Arrow AC3 Intra-Aortic Balloon Pump, or IABP. This device helps a weakened heart pump blood and can deliver IABP therapy to a broad range of patients, even those not previously considered candidates for IABP therapy. Clinicians can use this pump on patients with severe arrhythmias or with heart rates as high as 200 beats per minute.
It has a third-generation autopilot mode, which uses proprietary algorithms, which helps address key clinical challenges and simplifies the delivery of IABP therapy. We are quite enthusiastic about their potential and view them as nice revenue growth engines of the future. Moving next to an acquisition update. I'm pleased to report that we continue to put capital to work, completing the acquisition of Pyng Medical in April. Pyng's product portfolio includes a variety of innovative life-saving tools, including intraosseous infusion, pelvic stabilization, hemorrhage controls, and emergency airway management devices. This accretive all cash transaction further enhances Teleflex's product offering to the military and civilian trauma markets and builds upon our previously completed acquisitions in the emergency medicine field, most notably LMA and Vidacare.
As Benson stated in his prepared remarks, this acquisition was not included when we provided our initial 2017 financial outlook, and it is expected to contribute in a very modest positive way to our revenue and adjusted earnings per share during the remainder of 2017. We welcome the Pyng employees to the Teleflex family and look forward to their contributions in the future. Lastly, before I turn the call over to Tom, I would like to provide you with an update on the various restructuring efforts underway at the company. As most of you are aware, Teleflex is committed to driving non-revenue dependent leverage throughout the income statement. As such, during the first quarter, we announced two new restructuring programs. The first program relates to the integration of Vascular Solutions operations into our operations.
We initiated this program in quarter one and expect it to be substantially completed by the end of the second quarter 2018. We estimate that we will incur pre-tax restructuring charges of between $6 million and $7.5 million related to termination benefits, employee relocation, and outplacement costs. Additionally, we expect to incur between $2.5 million-$3 million of restructuring-related charges consisting primarily of retention bonuses offered to certain employees. All of the aforementioned costs will result in future cash outlays and will be added back when we calculate adjusted earnings per share. We began realizing synergies associated with this program during the first quarter of 2017 and expect to achieve annualized pre-tax synergies of between $20 million-$25 million once the program is fully implemented.
I would like to point out that we continue to believe that we can achieve annual pre-tax synergies of between $40 million-$45 million related to Vascular Solutions by the year 2019. The second restructuring program that we committed to during the quarter relates to the centralization of certain administrative functions within Europe. This program will commence in the second quarter of 2017 and is expected to be substantially completed by the end of 2018. We estimate that we will record pre-tax restructuring charges of between $7.1 million-$8.5 million, almost all of which constitute termination benefits, and all of which will result in future cash outlays. Similar to my comments regarding the costs incurred as a result of the Vascular Solutions restructuring program, all of the aforementioned costs associated with the European restructuring plan will be added back when we calculate adjusted earnings per share.
With the European program, we expect to achieve annualized pre-tax savings of between $2.7 million and $3.3 million once the program is fully implemented, and we expect to begin realizing savings during the first quarter of 2018. In addition to the restructuring programs that I just mentioned that we initiated during 2017, we have other ongoing restructuring programs related to consolidation of our manufacturing operations, as well as programs designed to improve operating efficiencies and reduce costs. We have been receiving feedback from the investment community that they would like us to summarize all of these restructuring programs in one place, and we are attempting to do that here. It is very important to understand that this chart simply represents the restructuring initiatives that have been approved and that are currently underway at the company and their respective costs and synergies.
This does not include additional savings that we anticipate to generate that come in the form of annual cost improvement programs, material substitution initiatives, improved pricing, or potential future restructuring programs. These expected savings would be additive to the amount shown here, and it is our intention at our Analyst Day later this year to provide a comprehensive summary of all our expected savings over a forward-looking multi-year period. That being said, our announced restructuring programs indicate that we expect to incur between $104 million to $125 million of total charges by the time that these programs are complete, and that as of December 31st, 2016, we incurred approximately $63 million of those costs. Turning to anticipated savings.
We expect that we will generate between $80 million to $96 million of annualized pre-tax synergies by the time these programs are complete, and that through December 31st, 2016, we achieved $31 million of these annualized pre-tax savings. This leaves us with between $49 million and $65 million of additional annual pre-tax synergies yet to be realized. It is our belief that we will realize substantially all of these estimated annual pre-tax savings and synergies by December 31st, 2019. That takes me to the end of my prepared remarks. At this time, I would like to turn the call over to Tom for him to review our financial results for the first quarter and provide our updated guidance for 2017. Tom?
Thanks, Liam, good morning, everyone. Given the previous discussion of the company's revenue growth drivers, I'll begin my prepared remarks with gross profit. Before I do, I'd like to reinforce that the company is off to a good start in 2017. On a constant currency basis, revenues were slightly better than our internal Q1 estimates due to broad-based strength across most of our strategic business units. While currency headwinds were more moderate than we had initially expected. We realized expansion of both gross and operating margins versus prior year levels. Financial leverage was good, with 21.1% adjusted net income growth being generated from 14.8% as reported revenue growth. Cash flow from operations generation was also strong and increased 36% versus the prior year period.
Given the performance in Q1 and our outlook for the remainder of the year, we are raising our adjusted earnings per share guidance by $0.05 on the bottom end and $0.08 on the top end of the range. Turning now to first quarter results. For the quarter, adjusted gross profit was $267.1 million, versus $227.8 million in the prior year quarter. Adjusted gross margin was 54.7%, representing a 90 basis point sequential increase from the fourth quarter of 2016, or a 110 basis point increase when compared to the prior year quarter. The 110 basis point increase versus prior year was sourced as follows: 60 basis points from the base business, 35 basis points from Vascular Solutions, and 15 basis points from foreign exchange.
Versus prior year, adjusted OpEx spending grew by 15.4%, reflecting the inclusion of Vascular Solutions OpEx, R&D investments for new products, and expenses associated with the five extra selling days during the period. Adjusted operating margin improved by 100 basis points to 23.4%. The year-over-year improvement was sourced as follows: 100 basis points from the base business, 10 basis points from Vascular Solutions, and a headwind of 10 basis points from foreign exchange. Of note, we expect Vascular Solutions to become increasingly accretive to the operating margin as the integration program progresses. Continuing down the income statement. Adjusted net interest expense increased to $15.1 million from $10.2 million in the prior year quarter. The increase reflects the impact of the additional borrowings under our credit facility to finance the acquisition of Vascular Solutions and the impact of the issuance of the four and seven eights senior unsecured notes last May.
For the quarter, our adjusted tax rate was 16.1% versus 19% in the prior year. The year-over-year decline in our adjusted tax rate can be attributed to the new accounting treatment for excess tax benefits from stock plans, which provided a favorable tax benefit of $3.4 million or $0.07 in the quarter. If you were to exclude this benefit, our adjusted tax rate for the quarter would have been approximately 19.5%. On the bottom line, adjusted earnings per share increased 18.4% from $1.52 in the first quarter of 2016 to $1.80 in the first quarter of 2017. Of the $0.28 increase in adjusted earnings per share, base operations added $0.33, Vascular Solutions added $0.03, and taxes added a year-over-year benefit of $0.07.
Partially offsetting these gains were headwinds from interest expense of $0.09, weighted average shares of $0.04, and foreign exchange of $0.02. Turning now to select balance sheet and cash flow highlights. During the first quarter, cash flow from operations was $91 million, or an increase of 36% over the prior year. The increase was primarily the outcome of improved operating results and working capital management. At the end of Q1, cash on hand totaled $689 million and leverage stood at 3.54 times. That completes my comments on the first quarter. I'll move to 2017 guidance updates. Beginning with revenue, for 2017, we are reaffirming our full-year constant currency revenue growth guidance range of 12.5%-14%. We continue to assume that our base business will grow 4%-5%, and that Vascular Solutions will add 8.5%-9% to total growth.
We also continue to expect as-reported revenue to increase by 10%-11.5%. Based on our currency assumptions, this translates to an as-reported revenue dollar range of between $2.055 billion-$2.083 billion. We are also reaffirming both our previously provided adjusted gross margin guidance range of 55.4%-56%, and our adjusted operating margin guidance range of 25.6%-26.3%. Our full-year 2017 adjusted tax rate guidance remains unchanged at 17%-18%, although given the windfall tax benefit realized in Q1, we now expect the year to average in the mid to lower end of that range. On the bottom line, our outlook for 2017 adjusted earnings per share has improved to a range of $8.05-$8.23, up from our previous outlook of $8-$8.15.
The increase in our adjusted earnings per share guidance is primarily due to larger than expected tax windfall benefit and a modest improvement in base business operations. While it is not our practice to provide specific quarterly financial guidance, for modeling purposes, I did want to highlight some considerations regarding variability between our 2017 quarterly expectations with a particular focus on the second quarter year-over-year growth rates. The first point I'd make is that there is one less selling day in the second quarter of 2017. The next point is that the second quarter has a tough comp, as the second quarter of 2016 posted strong operating performance with adjusted earnings per share growth of 33% and the highest adjusted gross and operating margins of any quarter during 2016.
As a result, it is our expectation that in the second quarter of 2017 versus the second quarter of 2016, we'll see tempered revenue growth due to one less selling day, modest gross margin expansion, and flattish EPS growth due to the tough comp. For the third and fourth quarters versus prior year, the comps are more typical. As a result, we expect meaningful year-over-year margin expansion and EPS growth for these quarters. While second quarter growth rates may appear soft as a result of the tough comparable, we do expect continued improvements in operating performance. In the second quarter, we project a sequential improvement in adjusted EPS and also in adjusted gross and operating margins versus the first quarter of the year. In fact, we expect sequentially improving adjusted margins and EPS for each of the second, third, and fourth quarters of 2017.
The sequential quarterly improvements are attributed to increasing synergies from the Vascular Solutions integration, improved mix, additional operations productivity and footprint savings, and increased revenues and margins from the China go direct during the second half of the year. Other considerations for the second quarter include the fact that we'll incur a full quarter's worth of interest associated with the financing of the Vascular Solutions acquisition. Additionally, during the second quarter, we incur the expense burden of the sales and support infrastructure needed for the Chinese distributor to direct conversion. However, it will take time to clear the channel, the prior distributor's inventory, so the expense burden will occur before the ramp-up in revenues. In closing, we are very pleased with the start of the year. Revenue growth came in ahead of expectations, and the upside was broad-based. New products are also running slightly ahead of expectations.
Margin expansion is tracking well, foreign exchange rates are trending favorably, and the integration of Vascular Solutions is on track. That concludes my prepared remarks. At this time, I'd like to turn the call back to the operator for questions. Operator?
Thank you. Ladies and gentlemen, if you have a question at this time, please press star then the one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question comes from Matt Taylor from Barclays. Your line is now open.
Good morning. Thanks for taking the questions.
Good morning, Matt.
Hey, Matt.
I guess, the first question I had was, can you help us understand how you're thinking about the earnings guidance raise, with you coming ahead in Q1, helped a little bit by tax here, things are going well to start the year. Surprised to see you not raise a little bit more. What are you thinking about in terms of different risks throughout the year? You're getting a little bit of a lift from FX. Just want to understand that a little bit better.
Sure. Why don't I take that? As we looked at the first quarter, we did have a benefit from the windfall tax of about $0.07. We also had a couple pennies as a result of the over-performance in revenue that flowed through the bottom line. We did see a nice start to the year on both revenue and EPS. As we thought about the guidance, we took a look at FX, and in the quarter, while we had some translational benefits. The revenue upside didn't flow through to the bottom line, largely because of an offsetting transactional downside. We didn't see the FX benefit flow through in any EPS generation.
As we think about the balance of the year, we want to work through the next couple of quarters and make certain that we've got funding available for any investments that we need and make sure that we've got sufficient resources for the integration of Vascular Solutions. Thought that the upside from taxes and the slight benefit from operations we could flow through as additional upside to our guidance. As we get further into the year, we'll take a look at how currency is trending. Right now, since the French elections, we saw a nice move, with the euro strengthening, that will tend to help us. Should that continue, we could see some favorability there. We also look to see how our operations plays out before we would consider a higher raise on our EPS guidance.
Okay, thanks for that. I thought it was encouraging to see the pickup in the contribution from new products. I was hoping you could just give us a point or two on what really drove that and maybe touch on the contributions that you're expecting from these new acquisitions.
Okay. Matt, it's Liam here, I'll take that. With regards to new products, it was pretty broad-based. We're encouraged by that, quite frankly. We did see a nice pickup in our VPS PIC offering, with the preloaded PIC that we had obviously launched late last year. Of course, the ongoing focus of our PIC customers on the infection prevention and thrombus prevention is critically important to us, because they've moved away, or they're starting to move away from, and they have to report infections now on PICCs. Therefore, they're acutely aware that a coded PICC is saving the hospital funding. The other areas that we saw a pickup was in the surgical group, in our EFx, within our anesthesia group, in the LMA product family, in particular on the LMA Unique with Silicone. Percuvance continues to ramp during the year.
Isn't a significant contributor yet, but it'll ramp during the year, and also within our respiratory group on some of the humidification products. It was pretty broad-based, Matt, that's very encouraging for us because across all our business units, we're seeing a pickup.
Great. On the acquisitions, can you talk about those?
Yeah. Pyng was the acquisition that we announced, and it's going to have a modest revenue contribution. We expect that Pyng will contribute about 20 basis points or thereabout to our top line, $3.9 million in revenue. Obviously, Cartica contributed 70 basis points within the quarter. Just remember, Matt, that we closed Cartica in September of last year, you'll see a stronger contribution Q1, two, and then it'll trail off three and four, we're still comfortable in our guidance for previously completed acquisitions.
Great. Thank you for that.
Thank you. Our next question comes from Lawrence Keusch from Raymond James. Your line is now open.
Thanks. Good morning, everyone.
Morning, Larry.
Hey, Larry.
Hey. Liam, you obviously mentioned the Vidacare growth in the quarter, which I think you said was 23%, very impressive. Could you just walk us through where you're seeing the growth, both in applications and perhaps geographies?
Yeah. We continue to see solid growth within the EZ-IO and OnControl, Larry. Just to give you a basis point, the EZ-IO grew at over 20% globally, and the OnControl grew above 35% globally. We're very encouraged by that. Again, Larry, it was pretty broad-based. We had a strong European performance. We closed the last ambulance service within the U.K., which obviously helped, and we continue to expand within Europe. On the domestic side, we continue to see hospital adoption of the EZ-IO as an emergency device for vascular access. Clearly the new sepsis guidelines are also helping us, Larry, where it is indicated now for use for sepsis patients, and that's obviously helping clinicians make that good decision to use an EZ-IO in the acute environment for sepsis patients. Again, Larry, pretty broad-based, very solid in Europe, and continued solid growth in domestic markets.
Okay, perfect. Two other ones. Maybe you've owned Vascular now for, I guess, just under three months. Any observations from you guys relative to what you're seeing there, what may be a little bit better, what may need a little bit work? Just quickly for Tom, are you maintaining the $1.04 assumption for the EUR, or have you changed that at this point?
Okay. Well, I'll cover the Vascular Solutions piece first. Larry, we're very positive on the integration of Vascular Solutions. We have now consolidated the sales organizations. We saw very robust growth in quarter one with Vascular Solutions, 13% growth over prior year. As I said during my prepared remarks, that's one of the reasons we bought this company, was for that consolidated growth. They're hitting their timelines on new products. We had three new products from Vascular Solutions launched in the quarter. That's very encouraging. I'm glad to report, Larry, no surprises as of yet with the Vascular Solutions integration, and we continue to monitor it very closely, but very encouraged so far.
With regard to the foreign exchange, just by way of background, when we locked in the rates for our plan in early January, the EUR was trading at 1.04, and that's the rate we selected. By the time we gave guidance, I think it was a little over 1.05 at the end of February. Following the French elections, it's risen up now to 1.09. We see a lot of movement in the rates. The way we're thinking about it, Larry, is right now, we have not changed that assumption in our projections to move it each time we get a different change in the spot. I think would be a little bit hectic for us and trying to communicate that to everyone else. We've left it steady at 1.04.
Should the rates stay where they are right now, we would expect to see some benefit on revenue as well as earnings. As we saw in the first quarter, there can be offsets. We had a translational benefit largely from the EUR in Q1, we saw about a $5 million pick-up in revenue. However, we didn't see any EPS benefit because there was a transactional offset that offset the translational EPS benefit. For right now, we're keeping in our projections that 1.04 rate. We recognize rates can move very quickly in both directions and just haven't updated based on today's rate.
Okay, terrific. Totally understand. Thank you very much.
Thank you. Our next question comes from David Lewis from Morgan Stanley. Your line is now open.
Hi, guys. This is actually Scott Lang filling in for David. I guess a couple quick ones from me. Tom, just looking at organic growth. Organic growth by our math kind of slowed this quarter on a comp adjusted basis, and you were kind of facing the easiest comp of the year. Can you help us think through kind of the underlying drivers for Q to one Q on organic growth? What gives you confidence that growth can accelerate in the back half?
Okay. Scott, I might take that. It's Liam here, if you don't mind. If you look back on a year-over-year basis, so our growth last year was 1.1%, although there were some billing days. If you normalize for billing days, it was about 3.3%. If you exclude any previously included M&As, the growth in this quarter was 4.2%. We've actually shown quarter Q1 last year over Q1 this year, actually nice progression. In relation to our guidance, our guidance is 4%-5%, and it did include previously included M&As. If you take that metric in the 4%-5% range, we're actually at 4.9% at the top end of that range. Scott, we're quite encouraged by the first quarter performance on the revenue line. What lets us believe that it will continue towards the latter half of the year?
As we said in our prepared remarks, we had a dealer to direct in China. Therefore, that impacted our Q1 revenues in the region of about $2.5 million. That will continue through Q2, but once we get into Q3 and Q4, that distributor will have burnt off their inventory, and we will be dealing directly with those customers and shipping products. That's why we expect to see somewhat of a pickup in the H2 from core volume.
Yeah. That distributor to direct conversion is accountable for about 50 to 60 basis points of revenue in the first quarter. If you add that to the 180 of volume, that puts you, call it 230, which compares favorably to last year's average, which was just over 200. We actually see the first quarter, once you adjust for that, is a slight tick up. To your point, the comp wasn't that difficult.
Got it. Thanks, guys. One more from me. Surgical performance improved quite substantially, and I was wondering if you can share kind of Percuvance feedback from SAGES and what your updated expectations are for the impacts from that on growth over the next kind of two years. Thank you.
SAGES was a very positive meeting for us, as it always is. The update on Percuvance is that within the quarter, we went through 11 new VACs in the quarter. Three were rejected. Eight have resulted in purchases. We continue to see the adoption. It continues to be surgeon by surgeon, Scott, but we're still encouraged by the performance of the product. We haven't changed our estimations in line with that. As we said, next year Percutaneous Solutions will be 1% of our revenue, and as you get into 2019, it will contribute 1% of our growth, and we're consistent with that.
Very helpful. Thank you again.
Thank you. Our next question comes from Anthony Petrone from Jefferies. Your line is now open.
Thanks. Good morning.
Good morning.
Maybe just to go back again to the reconciliation on top-line guidance again, just as we move through the second through fourth quarters here, just given the beat in the first quarter earlier than expected close on Vascular, new products seem to be doing well. There'll be some more coming later this year, and then you had some small tuck-ins. I'm just kind of curious the why not a raise on the top-line guidance as well? I'll have two follow-up questions. Thanks.
Okay, Anthony, I'll take the revenue one. We had Vascular Solutions closed when we gave guidance. We had the timing of Vascular Solutions already built into our guidance range at 8.5%-9%. If you look at our guidance, we had volume 1.8-2.4. Quarter one was 1.8. New products, 1.4-1.6. We were at 1.8, so we were above the higher end of the guidance range. Pricing to 50-60 basis points, we were at 60 basis points, and previously included M&A 30-40, and we were at 70 basis points. We're very encouraged by the first quarter. Don't forget that the previously included M&As, as I said to Matt in my previous comments, that was closed in September.
You would expect a good pickup in the first two quarters and then a little bit in quarter three, but it won't be available in quarter four. We are very encouraged by our performance in Q1, and as Tom said earlier, we just are being a little bit prudent. We want to see another couple of quarters and run our business and be a little bit prudent with regard to any raise we might want to make in the future.
No, it makes sense. Maybe the follow-up would be on Vascular Solutions. Just in the synergy target, just how does the distributed direct conversions play into that, if at all? What is sort of baked into the bottom line this year for distributed to direct conversions for Vascular Solutions specifically? I'll have one question about M&A.
Yeah. When we gave the guidance of the $40 million-$45 million of synergies with Vascular Solutions, what we said was, in the first year, this year, what you would see is that mostly coming from OpEx synergies. Next year, 2018, you would see the dealer to direct conversions, any that would be appropriate, and following years, it would mostly come from operational efficiencies. We have no go-direct built into our plan for 2017 and none executed to date.
Excellent. Last one for me would be, just the large deal announced a couple of weeks ago, Becton for Bard. Bard is a big competitor. Maybe just some thoughts around that transaction. On the positive end, is there a potential for gains? Should we see some dissynergies? On the headwind end, is there a risk to the combination of these two businesses should that deal close? Thanks.
This is Benson, Anthony. Actually, I think the overlap between us and Bard is significantly exaggerated. Our principal competitive product lines with them happen to be in the PICC area. We compete with them some in the hemodialysis catheter area. We continue to see really good growth in our PICC line in the U.S. It's largely driven by the antimicrobial and antithrombogenic coating and by the positioning systems we have. We don't expect that to change at all as a result of BD owning Bard. I think that there's some reason to believe that there could be some disruption in the marketplace overall. Again, our overlapping product lines with Bard are actually minimal. We don't see it affecting us negatively at all.
We do think that Bard was one of the companies that occasionally showed up competing for product lines that we were interested in on the acquisition front. We think that those are way too small now for BD to give much consideration to, kind of eliminates, we think, a competitor in the acquisition space that we operate in.
Anthony, I'd just add to that, just in the quarter that we just closed, we saw our PICC sales growing at about the 25% range. We're continuing to be really encouraged by the progress that we make in that one area that we compete with Bard in actually taking share. That goes back to the earlier comment that I made, that hospitals are now really focused on infection and thrombus prevention, and we are the only company with a coated catheter that helps to prevent both.
Thank you.
Thank you. Our next question comes from Mike Matson from Needham & Company. Your line is now open.
Morning. Thanks for taking my questions.
Good morning. Sure. Morning, Mike.
Tom, I was just wondering if you had some idea of how much the extra selling days contributed operating leverage in the quarter?
In terms of the selling days, we estimate it was right around six points of revenue growth. In terms of GP, it's a little more difficult to fully estimate down to the bottom line. In terms of GP, around $15 million in the quarter. You could assume that we'd get somewhere around eight to nine on the bottom line.
Okay. The 13% growth at Vascular Solutions, did they benefit from the extra selling days? Just given that it was only a partial quarter, I guess they wouldn't have?
This is Liam here. The type of business they're in, they don't actually have any benefit to the billing days. That is just a direct comparison year-over-year.
Okay. All right. Finally, the 60 basis points of pricing, I think you mentioned that some of that had come from the transition to direct distribution in China. Can you tell us how much of that was from that move? Going forward, what does that impact look like? Is it going to be similar?
The most of it came from our core business. The majority of that pricing came from Vascular Surgical and Cardiac in North America. The contributions from Asia were through the distributor model, not coming really from the distributor to direct. Incredibly modest. I wouldn't point too much to that coming through yet, Mike. You're going to see that in Q3 and Q4. That's where we'll be talking about the contribution on pricing in Q3 and Q4 from that distributor to direct.
Okay. Got it. That's all I have. Thank you.
Thank you. Our next question comes from David Turkaly from JMP Securities. Your line is now open.
Great. Thanks. I was wondering if, as we sort of realize that this quarter had a big impact from the days, but we look at your segments, is there anything new that you're seeing in terms of the growth profile? I was wondering if there might be any chance, realizing that other is going to have Vascular Solutions, but your other categories, is there a way to quantify or put a handle around sort of what you expect the growth to look like? Or at least maybe rank them in order in terms of how you think you're going to get to that top-line growth profile for 2017?
You're talking specifically, David, about the other category?
X the other. Other's going to have Vascular in it.
Okay
I mean, Vascular Solutions. If we look at Vascular North America, Anesthesia North America, Surgical Europe, obviously with EMEA with a big quarter. I was wondering if there's a way you could sort of put a, I don't know, range around to what you're anticipating any of those to do, or maybe even just rank them sort of in order of what you think will grow the fastest.
Normally, David, what we expect is we expect our Vascular portfolio to grow in that high single digits. We expect Cardiac division to grow in that high single digits. We would expect Surgical and Anesthesia to grow in the mid-single, perhaps going into the higher singles. For EMEA, we would expect those in the low single digits growth rate on an annualized basis. Asia, once we realize the go direct, we'd again expect that to be in the high singles.
I would add to that, Dave, that I think our overview of the quarter is on a broad base and on a broad geography, things were more robust than what we had thought. It's a continuing positive trend. Some of it comes from, I think, certainly no slowdown in utilization, and some of it comes from just share gains. I think we left the end of first quarter quite favorable about the underlying trends. Again, that almost throughout our business portfolio and throughout our geographies.
Thanks. That's helpful. As we look at the model, Vascular Solutions being an other, you mentioned a bunch of new products on the call, I think three from them. Is it your intent to kind of include those, show them as we move forward in that other category with Vascular sales, and not as part of sort of your new product growth, the 1.8% you reported this quarter?
Dave, I think the intention is to report Vascular Solutions contribution this year, and then any and all revenue associated with Vascular Solutions contribution this year in the all other category. Then as we move forward, the different growth drivers beginning next year, if Vascular Solutions starts to have new products that come to market, we will then add any revenue growth into those buckets of new products or price or what have you.
Yeah. Just to clarify, in the 1.8% from contribution from new products, there is no Vascular Solutions in that. That's all core Teleflex growth accelerating off the back of last year.
That's very helpful. Thanks a lot.
Thank you. Our next question comes from Richard Newitter from Leerink. Your line is now open.
Hi. Thanks for taking the questions. Benson, just a comment that you made earlier answering some question on the evolving kind of consolidation landscape. With Becton, it was an interesting kind of way to view it, Becton taking a perspective competitor or someone who could compete against buying assets against you. I guess, what's your approach to M&A for the next year and a half? You're digesting Vascular. You don't do large deals really through intervals greater than or fewer than kind of one to two years. Just maybe give us a sense as what we could expect on capital deployment towards M&A.
I think our viewpoint is that we're going to deliver from this acquisition relatively quickly. Given that perspective, we have certainly not slowed down our appraisal and evaluation of opportunities that are out there. I think it's going to be more driven by particular opportunities more so than anything else.
Okay. Got it. Just on China and emerging markets, given that it's an area that you're kind of investing in a little bit more, can you give us a sense, first of all, what the percentage of sales is today? Where do you kind of see this percentage going longer term over the next two, three years? Should we think that this is going to be a double-digit grower like it had been for Bard? Bard's been having a lot of success with their PICC adoption in that category. Was wondering kind of if you think you'll be able to compete as effectively with them now combined with Becton, who has an even stronger presence in China. Thanks.
China for us last year was about an $81 million business. It grew at about 7% on the entire year. Obviously, part of our go-direct strategy was to accelerate our growth rate. What we've seen is the business where we didn't have a master distributor, the business we controlled ourselves, mainly surgical, LMA, and anesthesia, our growth rates at sales out were much higher. If you add back the impact of China into the Chinese growth rate, we grew there in the 3.5%, 4% range in this quarter. We do see that accelerating into the latter half of the year. We do expect China to be in that high single, low double-digit range for us on an ongoing basis.
Okay. That's helpful. Thank you.
Thank you. Our next question comes from Matthew Mishan from KeyBank. Your line is now open.
Hey, good morning. Could you guys give us an update on how you're looking at the long-term financing for Vascular Solutions and kind of what's implied still in the guidance?
Sure. Well, as we communicated at the last earnings call, our approach in thinking about that was to put into our financial assumptions the assumption that we would look for more permanent long-term financing towards the midpoint of this year. With that being said, there's some developments ongoing in Washington with regard to tax reform, the potential for repatriation, and we're watching that closely. Should an ability to repatriate come up and that change our plans for the proposed high yield or other financing, we'd certainly let you know at that point in time. Right now, we have not made a definitive decision to postpone that. As you know, we put that into our guidance as a mid-year financing.
Do you need to see definitive progress on tax reform over the next three months for you to postpone doing that financing? Or what would you need to see, though, to postpone it?
Well, what we're really waiting for, trying to identify, is will an opportunity emerge to allow us to bring back cash? We've got quite a bit of cash sitting overseas. If events were promising or look very promising, well, then we would continue to postpone that financing until something became definitive one way or another. Right now, there just isn't enough information to make that definitive one way or another decision. We'll continue to monitor, and if it is looking promising, we wouldn't put in that high yield or other long-term financing until a definitive outcome was determined.
Okay, got it. Then moving on. I know this is like a longer-term product for Vascular Solutions, but could you give us an update on where RePlas is at? Did it progress into clinical trials as expected?
Yes. Jake here. We have just initiated the first clinical trial, and that is to determine the efficacy. We have a high degree of optimism that that will be positive simply because this procedure is available not in the way that we do it, but it is available in other parts of the world in a glass containment bottle. We've a high degree of confidence that this will be successful, but it has begun.
All right. Thank you very much, guys.
Thank you.
Thank you. Ladies and gentlemen, in order to ask a question, please press star, then the one key on your touch-tone telephone. I'm not showing any further questions at this moment. I would like to turn the call back to Jake Elguicze for any further remarks.
Thanks, operator, and thanks, everyone, for joining us on the call this morning. This concludes the Teleflex Incorporated first quarter 2017 earnings conference call.
Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.