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Teleflex Inc.  (NYSE:TFX)
Q3 2018 Earnings Conference Call
Nov. 01, 2018, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2018 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 be given at that time. (Operator Instructions). As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Mr. Jake Elguicze, Treasurer and Vice President of Investor Relations. Please go ahead.

Jake Elguicze -- Treasurer and Vice President of Investor Relations

Good morning, everyone, and welcome to the Teleflex Incorporated third quarter 2018 earnings conference call. The press release and slides to accompany in 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 8158978. Participating on today's call are Liam Kelly, President and Chief Executive Officer; and Thomas Powell Executive Vice President and Chief Financial Officer. 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 and 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 Liam.

Liam Kelly -- President and Chief Executive Officer

Thank you, Jake, and good morning, everyone. It's a pleasure to speak with you again to discuss our third quarter financial results. Before we get into the details I would like to say that we are very happy with our results this quarter, and not simply because of the rebound in our organic constant currency revenue growth performance. In addition to good topline performance during the quarter, we also received 510(k) approval for Percuvance. We achieved positive results from our Phase I safety trial associated with RePlas.

We acquired an innovative company in essential medical, which has a product focused on large foreclosure that could be the first to market in the US, and our two recently completed scale acquisitions NeoTract and Vascular Solutions continued to perform very well. The combination of each of these items give us further confidence in our ability to achieve a prohibitive providers 2019 through 2021 financial targets that we outlined at our Analyst Day this past May.

Turning now to our performance in the quarter. Our third quarter results were a solid start to the second half of the year. During quarter three, revenue grew 14% on a reported basis and 15% on a constant currency basis. This growth was driven by a combination of continued excellent performance from our two recent scale acquisitions and a significant rebound in our organic constant currency revenue growth, which reached 5.6% for the quarter. Included in the 5.6% growth rate is approximately 1% from increased sales of Vascular Solutions products and a contribution of 4. 6% from legacy Teleflex product line. I've pointed out to highlight that the core Teleflex product lines can deliver 4% revenue growth and can continue to perform at that levels in the future. I am further encouraged by the step-up I saw in our North American tracings data, which is an excellent indicator of end customer demand, and therefore, reaffirms our belief that the core business is performing well.

During our second quarter conference call we outlined a few events that we believed to be transient. And I am pleased to say that as we anticipated and expected, this proved to be the case. We also outlined the key drivers that we expected would accelerate our organic growth in the second half of the year. I am also very pleased to report that, thanks to strong execution across nearly all our strategic business units and the anticipated shift of distributor orders from quarter two to quarter three, we delivered upon our organic constant currency revenue growth expectations for the quarter. I also want to point out that we achieved this 5.6% organic constant currency revenue growth against our most difficult comparison of the year. Investors familiar with the Teleflex story will recall that, in the third quarter of last year, organic constant currency revenue growth was 5%.

While we are obviously focused on continued execution in the fourth quarter, our year-to-date performance gives us confidence in our ability to achieve our full-year organic constant currency revenue growth guidance of 5% to 5.5%, albeit we will most likely be at the low end of that range.

Turning to our recently completed scale acquisitions. UroLift continued its strong momentum delivering $49 million in revenue, which is an increase of approximately 45% versus the prior year period. Perhaps more impressive is that the interventional urology team delivered this growth, while simultaneously overcoming a temporary supply issue that resulted from our proactive second quarter product recalls that we noted on our last earnings call. I am pleased to report that as of the end of quarter three UroLift's supply is now back to approximately 100%. I want to add my personal thanks to the entire interventional urology team, who continue to execute at a very high level.

In addition, to delivering strong topline results and getting past the recall, UroLift was also the subject of five real world studies at an International Urology Conference during the quarter, and the team continued to expand its leadership position at the BPA (ph) survey with a large body clinical evidence supporting safety efficacy and cost effectiveness.

Turning to Vascular Solutions; third quarter revenues reached $53.2 million globally, which represented growth of over 21% compared to the prior year period. Vascular Solutions' worldwide revenue growth was robust in both North America and EMEA, which continues to benefit from the distributor conversions we initiated in the second half of 2017. We remain confident in the continued performance of VSI in the fourth quarter and we anticipate strong year-over-year revenue growth.

Turning to some other key metrics. During the quarter, our adjusted gross and operating margins reached 57% and 26% respectively, and our various restructuring initiatives remain on track to achieve the synergy levels we previously expected. Our performance this quarter translated into adjusted earnings per share of $2.52, which is an increase of 18.9% over third quarter of 2017. And despite foreign currency exchange rates being less favorable, as compared to when we last provided guidance, we are raising our full-year adjusted EPS guidance from a range of between $9.70 and $9.90 per share to a range of between $9.80 and $9.95 per share.

With that as an overview, let's now look at quarter three revenue in more detail. Third quarter 2018 revenue totaled $609.7 million, which is an increase of 15% on a constant currency basis. Beginning with the components of organic revenue growth, during Q3 we saw organic constant currency revenue growth of 5.6%. The third quarter of 2018 had the same number of shipping days as Q3 last year. So there was no shipping day impacts to our organic growth rate. Our 5.6% organic growth consisted of 3.5% from legacy product volumes, excluding the impact of the surgical product line exit, 1.6% from new product introductions and positive pricing adding about 70 basis points. These positive contributors were partially offset by the surgical product exit, which negatively impacts Q3 growth by about 20 basis points. Contribution from acquisitions during the quarter was 9.4%, nearly all of which was NeoTract's.

And before turning to a review of our segment performance, let me provide additional color as to why we expect our organic constant currency revenue growth to accelerate further in the fourth quarter. Using our year-to-date organic constant currency revenue growth of 3.7% as a starting point, we see the following drivers of acceleration in Q4; first, as many of you know, the third quarter was the final quarter that NeoTract was reported in our M&A booker (ph), and it will begin to contribute to our organic constant currency revenue growth rate starting in the fourth quarter and from that point forward. We expect NeoTract to add approximately 3% to our fourth quarter organic constant currency revenue growth. We will also have the benefit of one additional shipping day in Q4, which will add approximately 1.3%. In addition, we expect growth in our EMEA Interventional Access and Asia businesses to accelerate in quarter four, which we expect will add approximately 60 basis points. For the full year this brings us to our expectation of organic constant currency revenue growth at the low end of our 5% to 5.5% range.

As we look longer term, we remain confident in our ability to deliver 6% to 7% organic constant currency revenue growth from 2019 through 2021. This confidence is supported by increased investments behind NeoTract and Vascular Solutions to further support strong momentum in those businesses. Deeper utilization of our legacy products and accelerated momentum in growth from new products. As a reference point, if you were to include the financial performance of both Vascular Solutions and NeoTract into our 2017 results, our pro forma growth rate through the first nine months of 2018 was approximately 6.6% and for quarter three, it was approximately 8.2%.

Turning next to our revenue performance by segment. Vascular North America third quarter revenue increased 7.8% on a constant currency basis to $80.7 million, driven by the return of distributor orders and strong growth in both PICC and EZ-IO. Moving to Interventional North America, third quarter revenue was $66.7 million, which is an increase of approximately 9.9% on a constant currency basis. The increase here is primarily the result of higher sales of Vascular Solutions' products as well as growth in OnControl.

Turning to Anesthesia North America, third quarter revenue is $53.2 million, which is an increase of 4.8% on a constant currency basis. Growth in this segment was driven by our airway and pain management product categories. Shifting to our Surgical North America business, it reversed the negative trends in the past few quarters increasing its revenue 4.6% on a constant currency basis to $42.5 million. Surgical revenues were driven by instrument sales and an initial easing of supply constraints partially offset by the exit of lower-margin product lines in the third quarter of 2017.

Despite the improvement in surgical revenue in Q3, we continue to expect that surgical revenue growth will be relatively flat in the second half of 2018 as compared to the second half of 2017.

Moving to our overseas operations; third quarter EMEA revenues were up 2.9% on a constant currency basis to $139.6 million. Growth in EMEA was largely driven by distributor conversions. Now to Asia; third quarter revenue increased 6.7% on a constant currency basis to $76.5 million. Growth in this segment was led by China, whose revenues expanded approximately 14%. This was largely driven by an increase in volume following our decision to take the business direct last year.

Next, I'd like to brief you on our OEM segment. During the third quarter revenue was up approximately 13.1% on a constant currency basis and reached $54.9 million. The increase in OEM revenues were due to higher sales volumes of existing products and acceleration in timing of revenue recognition resulting from the adoption of new accounting guidance.

And lastly, third quarter revenues for the businesses within our All Other category was up 103% on a constant currency basis, totaling $95.6 million. Growth here is primarily attributable to the acquisition of NeoTract and to a lesser extent our Latin American business, which grew approximately 16%. Also during the quarter we signed a total of 21 GPO and IDN agreements, of which two were new agreements. That completes my comments on Q3 revenue performance.

Turning to a brief update on UroLift. During the quarter UroLift was the subject of five studies that were presented at the World Congress of Urology 2018 Annual Meeting in Paris. Let me summarize some of the important takeaways. First, a real-world experience study demonstrated once again that the clinical benefits and quality of life in the real world were consistent with a five-year LIFT study. Another study on the impact of prostate size and clinical results showed that UroLift provide a statistically significant improvement in symptoms and quality of life for men with prostate smaller than 30 grams and larger than 80 grams. As a reminder, UroLift is indicative for prostates up to 80 grams.

While perhaps most impressive was a study on the UroLift device, which was used on men in urinary retention. This study show that 90% of men treated for acute urinary retention due to BPH, became catheter free after treatment with UroLift. We continue to invest in building a large body of clinical evidence supporting UroLift as the only treatment that provides rapid relief with low catheterization rates and the only therapy with a zero rate of new onset sexual dysfunction.

We believe high-quality published clinical data combined with our go-deep commercial strategy, and broad reimbursement will support our previously provided 2019 through 2021 revenue growth rate expectations for UroLift. And for a final update on UroLift, we are very pleased to announce that just yesterday, we received Shonan approval for the UroLift Systems to be marketed and distributed in Japan. As a reminder, we estimate the market in Japan to include approximately 2.3 million men over the age of 50 with moderate to severe BPH symptoms who have seen a physician for their condition.

Our plan to build the market for UroLift in Japan will follow a methodical process similar to how we built the US market. First, we will focus on obtaining reimbursement, which is typically a 12 to 18-month process in Japan. Once reimbursement is established we will begin commercialization with academic centers to build strong initial clinical experience followed by a full commercial launch. At the same time, we will begin enrolling a PMDA-mandated post market clinical study using many of our initial implanting physicians. This study will provide us with another important tool that we believe will support more widespread rapid physical adoption in Japan over the long term.

Turning now to an update on RePlas, our freeze-dried plasma product. During quarter three, we completed the Phase I safety trial of RePlas, called FDP-1. The results of which were presented at AABB in mid-October. The trial was a randomized double-blinded dose-escalation study that measured certain biomarkers following infusion with RePlas freeze-dried plasma versus fresh frozen plasma in healthy subjects. We are pleased to report that the data readout for the trial was very positive. RePlas was shown to be well tolerated in normal healthy subjects with no serious adverse events or safety concerns. These results will support a final module of our BLA, which we expect to submit in early 2019.

Turning now to our most recent acquisition. With the acquisition of Essential Medical on October 4th, we obtained the MANTA Vascular Closure device. MANTA is a unique system, specifically designed for closure of large bore arteriotomies, utilizing devices or sheets ranging from 10 French to 18 French. Large bore arteriotomies are typically associated with procedures such as TEVAR and EVAR. MANTA is currently approved in the EU, and has seen rapid commercial adoption with over 8,100 procedures completed to date. In a CE Mark study, MANTA achieved 94% hemostasis with a one to two-minute deployment time and time to hemostasis of approximately 20 seconds, absorbing in the body fully within six months. We believe there is a large unmet need for a large bore closure systems, and that MANTA could be a first to the US market.

Currently manifestations improvise by stitching together multiple small bore closure systems. More importantly complications associated with large bore closures are high. According to a 2017 JAMA study, patients with -- bleeding patients in TEVAR and EVAR procedures stayed in the hospital three times longer or twice as likely to die during their hospital stay and cost an average of over $18 000 more as a result. MANTA has demonstrated in its CE Mark study, a 2% major vascular complication rate compared to a composite 7.5% major vascular complication rate associated with suture-mediated and surgical closure products, as soon as firms (ph) permit in published literature.

Our initial target market for MANTA will be TEVAR and EVAR. We estimate the global addressable markets for our MANTA technology in these two procedures will be approximately $200 million to $300 million. Following its anticipated FDA pre-market approval in 2019, we plan to leverage our strong presence in interventional cardiology to accelerate adoption of this breakthrough technology worldwide.

Before turning the call over to Tom, I wanted to take a step back and highlight how our portfolio is positioned to drive durable long-term revenue growth, including both our currently marketed products as well as our pipeline. First, both UroLift and UroLift 2 are expected to make significant growth contributions and we continue to feel very confident about the momentum in that business.

Moving to ourIntraosseous products; we are deploying more sales and marketing resources into EZ-IO and OnControl, as we believe there remains an opportunity to drive increased utilization of these products. From a vascular access perspective, PICCS has been a growth contributor and we continue to expect to gain additional market share in the future by leveraging our unique antimicrobial and antithrombogenic coatings as well as our catheter navigation platform.

In our anesthesia business, we expect our airway management solutions will drive organic growth. One significant driver of long-term growth is our platform of interventional cardiology products within our interventional access segment. This includes Turnpike, TrapLiner and our most recent addition, the chocolate balloon catheter, which we acquired from QT Vascular. Chocolate is designed for coronary angioplasty, and have a unique design that allows for less trauma to the vessel walls during balloon expansion. We expect chocolate to generate a moderate amount of revenue through our interventional sales force.

Moving to our pipeline; I covered MANTA in depth, and we continue to be excited about the long-term potential of both RePlas and Percuvance. In fact, Percuvance recently received 510(k) approval from the FDA, and we continue to expect to do a full market release of that product during 2019. We are also increasing investments in R&D to support our expected acceleration in growth from new products over the 2019 to 2021 time period. Some of our new products driving growth in Q3 include our midline catheters, VPS rhythm catheter navigation and Gel-Block embolization.

Looking forward, one example of an R&D-funded new product we expect to drive growth upon its expected launch in 2019 is the CleanSweep Closed Suction System designed to mechanically sweep the inner lumen of the endotracheal or tracheostomy tube. CleanSweep has been shown in studies to remove 2.5 times more secretions than the leading competitor's standard close-suction catheter. As you can see, given the portfolio of both organically and inorganically developed products, we are well positioned to drive sustainable, constant currency revenue growth for the foreseeable future.

That takes me to the end of my prepared remarks. At this time I would like to turn the call over to Tom. Tom?

Thomas Powell -- Executive Vice President and Chief Financial Officer

Thanks, Liam, and good morning, everyone. Given the previous discussion of the Company's revenue performance, I'll begin with the gross profit line. For the quarter adjusted gross profit was $347.3 million versus $298 million in the prior year quarter or an increase of 16. 6%. Adjusted gross margin increased 130 basis points versus the prior year to 57%. The expansion in adjusted gross margin reflects the planned impacts of the acquisition of NeoTract and Vascular Solutions, efficiencies related to footprint consolidation programs and favorable pricing. However, the increase in gross margin was partially offset by unfavorable product mix, and higher manufacturing costs. For the quarter, adjusted operating profit was $158.7 million versus $140.8 million in the prior year quarter, or an increase of 12.7%.

Adjusted operating margin was 26%, a decrease of 30 basis points from the prior year. The decrease was related to a top prior year comparable, the shortfall on gross margins and increased levels of R&D investment. On a sequential basis, the third quarter adjusted operating margin of 26% was flat to the second quarter result of 26%.

Moving down the P&L; adjusted net interest expense increased to $26.9 million from $20.9 million in the prior year quarter. The increase reflects the impact of additional borrowings required to finance the acquisitions of Vascular Solutions and NeoTract. For the quarter the adjusted tax rate was 10.7% versus 18.1% in the prior year period. The year-over-year decline reflects the impacts of the recently enacted Tax Cuts and Jobs Act and a larger tax windfall benefit this year versus last year. On the bottomline, adjusted earnings per share increased 18.9% to $2.52.

Turning now to select balance sheet and cash flow highlights. Through the first nine months of the year, cash flow from operations totaled $302.9 million, down approximately 5% over the prior year. The decrease was primarily due to unfavorable working capital changes partially offset by favorable operating results. The change in working capital is largely attributable to the factoring of Italian receivables in 2017, which did not reoccur in 2018 and increased 2018 tax payments. Finally, during the quarter we repaid $80 million of debt, and our leverage levels as defined in our credit facility stood at 3.18 times.

Next I'll briefly cover our recently completed cross-currency swap transactions. On October 4th we executed cross-currency swaps to hedge the variability of exchange rate impacts between the US dollar and the euro. Through the swap, we notionally exchanged $500 million at an interest rate of 4.625% for the euro equivalent of 433.9 million at an interest rate of 1.942%. These swaps are designated as net investment hedges and expire October 4th 2023. Given the differential in coupons and assuming a euro-to-dollar exchange rate of approximately $1.15, we estimate an interest benefit of approximately $3 million in 2018 and $13 million on an annual basis. We anticipate this benefit will have to mitigate the interest expense impact of a rising interest rate environment on our variable rate debt.

And that completes my comments on the third quarter. Now I'll move to an update on 2018 guidance. For revenue guidance, the only change we are making is to account for foreign exchange. Specifically, we now expect a full year favorable impact of 150 basis points compared to an expectation for a 200 basis point impact in our prior year guidance. We are reaffirming our full-year constant currency revenue growth guidance range of between 12% and 13%. We continue to expect that our organic revenue growth will be between 5% and 5.5%. Although, as we have mentioned earlier, we expect to be at the low end of that range. We also expect constant currency revenue growth driven by M&A to be between 7% and 7.5% and expect to be at the high end of that range. Because of the less favorable currency environment since we last provided guidance, most notably the euro and the Chinese yuan, we are adjusting our as-reported revenue growth guidance from a range of between 14% and 15% to a range of between 13. 5% and 14.5%.

Moving to margins; to reflect the year-to-date performance trends and our expectation for the fourth quarter, we have lowered our previously provided adjusted gross margin guidance range of between 57.5% and 58% to a revised range of between 57% and 57.25%. The gross margin adjustment is attributed to unfavorable product mix, including better-than-expected performance from our OEM business, which carries a lower gross margin profile; marked solution from recently announced acquisitions; tariffs related to our business in China; and higher expenses to address the NeoTract production and engineering issues. We expect to offset approximately one half of the gross margin impact to SG&A expense control and thereby partially mitigating the impact to operating margin. As a result, we are reducing our adjusted operating margin guidance to a range of between 25.8% and 26.1% from the previous range of between 26.1% and 26.5%.

Turning now to interest expense; we currently anticipate approximately $104 million in interest expense during 2018, a reduction from our prior expectation of $109 million, is primarily the result of the recently completed cross-currency swaps and an accelerated reduction of debt outstanding.

Turning to taxes; we now expect our full-year 2018 adjusted tax rate to be approximately 12.5% to 13%. This compares to our prior guidance, which called for an adjusted tax rate of approximately 14.5%.

On the bottomline, we are raising our outlook for 2018 adjusted earnings per share from a range of between $9.70 and $9.90 to a range of between $9. 80 and $9.95. The $0.075 increase in the midpoint of our adjusted earnings per share range is primarily due to our over performance in the third quarter as compared to our prior expectations.

And so in closing, third quarter delivered solid constant currency and organic revenue growth and we are very pleased with the outcome. We are also pleased with third quarter adjusted EPS growth of 18.9%, year-to-date adjusted EPS growth of 19.8%, and the actions put in place to allow us to again raise our full-year adjusted EPS guidance. We are disappointed by the need to adjust down 2018 margin guidance. However, I would like to point out that the midpoint of our revised adjusted gross margin guidance still represents a year-over-year increase of 130 basis points.

Additionally, many of the cited issues are transitory in nature and the key drivers of our multi-year margin expansion plans remain intact. We continue to expect that NeoTract Vascular Solutions and Vidacare will be major contributors to the margin expansion story, because of their higher margin, higher growth profiles. We grow more confident in NeoTract, as the business continues to exceed revenue and growth and profitability expectations.

Additionally, with the recent acquisition of Essential Medical, we know add another business with high-margin, high-growth potential into the portfolio. The ongoing manufacturing footprint consolidation initiatives remain on track to deliver planned savings and we have stepped up efforts to identify additional productivity opportunities within our manufacturing sites. The multi-year financial plan outlined earlier this year at the Analyst Day contemplated only modest contribution from new products such as RePlas and Percuvance. Recent clinical and regulatory developments provide encouragement that such products may contribute above previously projected levels. Additionally, our multiyear guidance did not consider future acquisitions such as Essential Medical.

In summary, we continue to focus our efforts and invest for sustainable topline and bottomline growth, and we remain enthusiastic regarding business prospects for the coming years. And that concludes my prepared remarks.

Now I'd like to turn the call back over to the operator for Q&A.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question is from David Lewis with Morgan Stanley.

David Lewis -- Morgan Stanley -- Analyst

Good morning. Thanks for taking the questions. I thought you -- very solid quarter. I thought, that we think about next year a little bit here. So two questions for Liam and Tom, and then I had a quick follow-up. So on growth, Liam, for you, organic revenue growth guidance for the fourth quarter implies 8% to 9% organic. You talked about your LRP in this call being 6% to 7%. So is the right way to think about next year something between the midpoint of these ranges 6.5% to 7.5%?

And then for Tom, I wonder if you could help us to some of the more volatile components of next year on earnings, FX, tariffs, tax, the impact of the debt swap. How these net out in your mind and how are you feeling about the profile for earnings next year relative to '18? And I had one quick follow-up for Liam.

Liam Kelly -- President and Chief Executive Officer

Hey, David. Thank you. So regarding 2019 guidance, obviously we'll provide that in February, not on this call. But you're right in your expectation of our fourth quarter growth. And as we outlined in the call, if you look at through three quarters, our core organic growth was 3.7%. UroLift rose up M&A in the fourth quarter. That will add 3%. And the additional day will add about 1.3%. So in my mind that simply math that gets us to that increased performance in the fourth quarter.

And then with the general improvement in our underlying business based on what we saw within the third quarter and that should add about 60 basis points. And again, we were able to reaffirm our full-year constant currency guidance of 12% to 13%. And the only adjustment we made, quite frankly, is for currency, which is just beyond our control, and then I'll let Tom now speak to answer the second part of your question.

Thomas Powell -- Executive Vice President and Chief Financial Officer

Okay. Well, with regard to some of the more volatile components as we think about some of the issues you outlined. Tariffs for next year we estimate currently to be about a $3 million full-year impact. So certainly an impact, but nothing that's insurmountable. In terms of the tax rate, this year we are benefiting from a very improved tax rate versus prior year largely due to two factors. The first is the Tax Cuts and Jobs Act, and we expect for that benefit to continue into next year. The other is due to stock-based comp windfall benefit. And that as you can imagine is less printable, somewhat dependent upon how people choose to exercise equity in health some of the restricted shares that so to be able to predict that right now would be difficult. We could have some better visibility as we get closer to the year.

On the tax front there are a couple of things also that will cause the rates perhaps have some upward pressure. The first is just the implementation of the swap and that will reduce our interest deduction and put some upward pressure. In addition, our mix is typically and skewing a little bit more in North America based. And in fact, with the growth of Vascular Solutions and NeoTract, we expect that to continue. But overall, we expect our tax rate next year below -- to be below where it was back in 2017. I'm not sure if it's going to get to the level we're seeing this year. What other --?

David Lewis -- Morgan Stanley -- Analyst

Currency, Tom?

Thomas Powell -- Executive Vice President and Chief Financial Officer

Well, currency is fairly a headwind right now. I think the average for the year is probably going to end up somewhere around 1.17 to 1.18 relative to -- that's on the euro, relative to where it's currently trading which is more in the 1.14 range. So that could be a slight headwind for us as we get into the year, but we'd have to see how the whole basket of other currencies are trending at year-end. So certainly there's some volatility as a result of FX movements this year. Seems to have stabilized a little bit right now in the kind of 1.14 range.

David Lewis -- Morgan Stanley -- Analyst

Okay. And then, Liam, just have a follow-up here on the pipeline. A couple of interesting updates announced this quarter. You're talking about the MANTA device. Obviously Percuvance approval was nice and the RePlas data. So first question is on Percuvance. The opportunity described for that business several years ago, do you still see that as the most appropriate opportunity for the size of that market? And how do we think about the contribution of some of these products next year in terms of their ability to get the full commercial launch, Percuvance, MANTA, obviously RePlas is probably not a major factor, but how should we be thinking about the contribution for MANTA and Percuvance next year? Thanks so much.

Liam Kelly -- President and Chief Executive Officer

Yes. Sure. So we're at the early (inaudible) settlement, David. So we are currently going through PMA approval for the key North American market. And that's really the goose that has the potential to lay the golden egg, if I can put it that way. It's the biggest market for large foreclosure. We -- I would be very hopeful that by the time we get to 2019 guidance that we would have very clear visibility on our PMA process and approval. If we do need a panel review, we could have approval in the first half of the year. If we don't need a panel review -- sorry, we don't need a panel review within the first half of the year. If we do, it will be in the latter half of the year. And we'll know that, for sure, I think by February.

Regarding Percuvance, I still think the market potential for this is in that $300 million range globally. The sales team are very excited to get the product back into their hands. We're doing a limited market release late in Q4. Now that we've gotten the approval, and we will start to roll the product out during 2019. We want to assess the pent-up demand that was there and the momentum that we have built up when we remove the product from the marketplace and at that time then we'll give a much clearer assessment as to what we expect in '19, '20, '21. But clearly, it's a great starting point to get the 510(k).

We're very excited about MANTA. We think that will address the $200 million to $300 million market opportunity as I said in my prepared remarks. And that's looking at TEVAR and EVAR closure procedures. And we firmly believe that we will be first to market with this product. This is -- this product is interesting, because we've been talking to this Company for four years. And as an organization, we had a decision whether to make or buy this. We were working on an internal development ourselves, and we decided that it's very complex to get a large bore closure device that works in this -- it's very hard to get a large bore device that works, get team it's paces.

And one of the added complications when you're in the catalog is, that you won't bring in the next patient until you're sure your hemostasis on the one that's on the table. So we believe, when we got approved this as a clinical data, but we believe we can make the catalogs more efficient. And some of the anecdotal evidence we got from The Netherlands would tell us that they're getting an additional procedure through the catalog as a result of using the MANTA large bore closure device.

David Lewis -- Morgan Stanley -- Analyst

Great. Thanks so much, Liam. Next quarter.

Liam Kelly -- President and Chief Executive Officer

Thanks, David.

Operator

Thank you. Our next question is from Richard Newitter with Leerink Partners. Your line is open.

Richard Newitter -- Leerink Partners -- Analyst

Hi. Thanks for taking the questions. Nice job on accelerating organic growth this quarter. I wanted to ask a quick question on the OEM accounting changes. What was the contribution from that to organic growth? Was it contemplated in your original guidance plan? And could you talk about what kind of contribution that might have to 2019?

Liam Kelly -- President and Chief Executive Officer

Yes. So it was contemplated within our guidance reach. And OEM had an excellent performance from a volume perspective, as well as some benefit from the new rec rules. In any quarter there are revenue puts and takes, and if I take them all into account the puts and the takes including the OEM is we probably had a net positive of around 20 basis points net-net. So as the OEM give us a positive, we didn't fully get through the disruption in the supply chain. And the total impact within the quarter of the OEM, to answer your question directly, is about $3 million, Rich.

Richard Newitter -- Leerink Partners -- Analyst

Okay. Got it. So by my math you still would have been above 5% backing that out right?

Liam Kelly -- President and Chief Executive Officer

Absolutely. And if you -- Rich, there's always puts and takes, as I said. So if I take all the puts and all the takes, if I take the $3 million positive from that, we didn't fully get through, all of our supply disruption is about $1 million there. We got over $3 million, as I said, on the second quarter from distributor orders mostly with stuff for $2.2 million of it's stuff. So you add it all up, it's about a 20 basis point impact.

Richard Newitter -- Leerink Partners -- Analyst

Got it. And then just as we think kind of the puts and the takes around gross margin as we head into next year, appreciate you're not giving guidance, but it sounds like some of the items are beyond currency. I just -- can you give us a sense for how we should be thinking about gross margin directionally relative to 2018? There still should clearly be upward bias even when you net out all the puts and the takes. Is that a fair assumption?

Liam Kelly -- President and Chief Executive Officer

So, as Tom said, and I thought (ph) of Tom, but I'll just make an opening, as Tom said in his comments most of these were transitory in nature and our long-term margin guidance as we said were ratable. So, and I think that nothing has changed in our restructuring programs. Nothing has changed in the acceleration of mix coming from NeoTract and VSI. As you can see their performance is exceptional, but I'll get Tom go into more of the details, I think.

Thomas Powell -- Executive Vice President and Chief Financial Officer

Yes. That's exactly it. So as we looked at the items that impacted 2018, the majority of the more transitory, I would say, that the tariffs will be one that are sticky. We quantified that at currently $3 million, but again that's not something that will throw us off of our longer-term track. As we look at that long-term margin expansion, it's really predicated on a couple of key things. One, are the restructuring programs that we put in place, and those programs are still right on track and delivering as expected. It's also a margin expansion story based on some of our key product offering such as NeoTract, Vascular Solutions and even our Vidacare. And as we look at those businesses, we remain very, very confident in their performance, and in fact, pretty excited by some of the performance we've seen recently with NeoTract beating expectations and Vascular Solutions putting up double-digit growth consecutive quarters in a row. So we're excited by the margin drivers from both a revenue and a cost standpoint. So you should expect to see continued expansion next year and to the coming years.

Richard Newitter -- Leerink Partners -- Analyst

Got it. And maybe just one last one. I Just want to be clear. So when you -- this quarter and the third quarter when you back out kind of all of the inorganic items, the actual kind of true organic growth even ex Vascular Solutions, which is organic, but even if you back out the contribution, the growth was somewhere in the 3.3% to 3.5% range. Is that correct?

Liam Kelly -- President and Chief Executive Officer

So our organic growth, Rich was 5. 6% and that includes about 1% from VSI. So therefore, we're at 4.6% on a true organic basis for our core business within the quarter.

Thomas Powell -- Executive Vice President and Chief Financial Officer

And there is about, call it 80 basis points of taking Vascular Solutions direct from a pricing standpoint that's included then in the organic number.

Liam Kelly -- President and Chief Executive Officer

Yes.

Richard Newitter -- Leerink Partners -- Analyst

Okay. That's really helpful. Thanks guys.

Operator

Thank you. Our next question is from Larry Keusch with Raymond James. Your line is open.

Lawrence Keusch -- Raymond James -- Analyst

Yes. Hi. Good morning. I wanted to come back and touch on the core business, Liam. And really sort of understand how you guys are thinking about managing that business. There's obviously been a lot of focus on whether that business can grow 4%. Maybe it's more like 3% to 4%, but I'm really curious as to just again -- are you really trying to optimize the growth there? Or is 3% or 4% good enough and really the resources are really focusing on the growth drivers?

Liam Kelly -- President and Chief Executive Officer

Yes. Well, we have this philosophy, Larry as you know within Teleflex that not all growth is equal. If you look at where we're trying to grow our business, we're trying to grow our business in NeoTract within our interventional access, within Asia Pacific, within our vascular business and within our anesthesia businesses, and now within MANTA. All of these businesses have one thing in common. They're all accretive to our gross margin and therefore, they give us better leverage within our P&L.

Coming back to your specific question on our core business. If you look at the core business within the quarter, it grew by 4.6%. If you look at our guidance toward the end of the year, in the second half of the year, we should be very close to that 4% for our core business. And as I've always said, if our core business does 4%, if it is a little bit less than 4%, we have enough levers within UroLift and within VSI to cover if it is slightly less than 4% to make it very comfortable and our 6% to 7% as an organic growth number over the multiyear period.

Lawrence Keusch -- Raymond James -- Analyst

Okay. Perfect. And then two other ones. Just on UroLift, what have to happen to push that really into sort of more of a front-line therapy division in the US?

Liam Kelly -- President and Chief Executive Officer

Front-line, just repeat the last part, Larry. I'm sorry.

Lawrence Keusch -- Raymond James -- Analyst

Yes. In the US, again, what has to happen or what could drive that device, that therapy into more of a first choice for patient coming in with BPH system -- symptoms versus medical therapy first and then moving into something like this?

Liam Kelly -- President and Chief Executive Officer

So we think we're very close, Larry, to having this as a first line of care. All of the clinical data shows that the real life experience is very close to LIFT data and that's very important, number one. The clinical outcomes data is very, very compelling. The urinary retention that I mentioned is an important one, because previously those men would wear a catheter for the remainder of their life. By using UroLift, now 90% of them don't wear a catheter. We also need to get greater penetration within the urologists. I mean, we're still very early in the penetration rate of urologists. The first 1,000 urologists within the United States, and we have a long way to go to penetrate those urologists. Once we have all of those trained, it will become the standard of care. And the key number of urologists that those less than 6,000 that treat 80% of BPH patients, but we're going to continue, Larry, to go deep rather than wide to ensure this product is sticky, and it has become the standard of care for the treatment of BPH.

Lawrence Keusch -- Raymond James -- Analyst

Okay. Perfect. And then last one just because you mentioned it, PICCS, maybe update us on the growth rate there. And remind me again if you are in China or not. And again what you see the growth drivers for PICCS?

Liam Kelly -- President and Chief Executive Officer

So our PICC growth is around 18% for the quarter, Larry, and we're really encouraged by that. We do not have a -- our coded PICC yet registered within China. We're working on it. We have the clinical study under way to support our submission. And we're looking forward to having that product on the market in the next -- once we get clinical study done thereafter, the submission should take 12 to 18 months. So while we continue to take share within the key North American market, and it is because of our antimicrobial and antithrombogenic coating technology that reduces infections for the hospitals and now they have to report them. They're very keen to adopt our technology.

Lawrence Keusch -- Raymond James -- Analyst

Great. Thanks very much, and very nice quarter.

Thanks, Larry.

Operator

Thank you. Our next question is from Raj Denhoy with Jefferies. Your line is open.

Anthony Petrone -- Jefferies -- Analyst

Thank you guys. This is Anthony in for Raj. Actually just a question, Liam, can you repeat for the fourth quarter, the moving parts on days to organic growth? And then I have a few follow-ups in UroLift. Thanks.

Liam Kelly -- President and Chief Executive Officer

Yes. So in the fourth quarter we have one additional day Anthony. And that should add about 1. 3%. And I said earlier that's simply a math problem having that additional day. And 2019 will have the same number of days as we had within 2018. And then as the UroLift rolls into organic that should add 3% within the quarter and a general business improvement continuing as we've seen in quarter three should be the last pillar to get us to our full-year guidance range.

Anthony Petrone -- Jefferies -- Analyst

And then just on UroLift. Can you remind us a little bit on new physicians versus existing physicians? Where your penetration is today more particular on the ladder in existing physicians. And so where do you think that can go over the next two years?

Liam Kelly -- President and Chief Executive Officer

Yes. So our existing, because, I'll first start with how many we trained. So we trained over 1,700 of the 12,000 urologists in North America. Regarding the utilization within physicians, our average physicians that we trained is doing an average about four procedures a month. Our highest adopting physicians are open to the teams with their adoption rate with some of them even going beyond the team numbers. So we believe that's a nice move forward. So 97% of our revenues are coming from the existing physicians. And we continue and that's because of our strategy to continue to go deep rather than go wide. And it's again, Anthony, it's about utilization and we continue to see that utilization rate improve as we go deeper within these physician practices.

Anthony Petrone -- Jefferies -- Analyst

And then a follow-up there would just be landscape is heightened a little bit, you have Rezum out there. UroLift is out there. Those are the two new solutions. I'm just wondering is the market segmenting with these two solutions? Or are they going after sort of the same sort of patient sort of profiles? Thanks again. Great quarter.

Liam Kelly -- President and Chief Executive Officer

Thank you, Anthony. So obviously both treatments are going after BPH patients. I think that our clinical data and, in particular, as it applies to sexual dysfunction, the reduction in catheter rates is critically important for men. And I'm speaking, Anthony, as a 52-year-old man myself. I personally would not want to wear a catheter. I would not want to have any impact on sexual dysfunction. And what we are targeting taking our share from, is from drilled dropout. That's where our core market we believe is, not from the surgery market. I'm not really sure whether Rezum is targeting, accessing turf market and taking share in that smaller segment. It does, to me, appears to be more, at least, from my perspective, to be more of an ablative therapy compared to the other ablative therapies, whereas ours we believe, it's just a better solution, non-invasive, pre-clinical data. Very fast recovery time, no catheter, no sexual dysfunction. So we still feel very confident that the clinical data will bear out in the long term.

Anthony Petrone -- Jefferies -- Analyst

Thanks, again, guys.

Liam Kelly -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question is from Mike Matson with Needham & Company. Your line is open.

Michael Matson -- Needham & Co -- Analyst

Good morning. Thanks for taking my questions. I guess I wanted to start with the China business, your growth was 14%, which is good, but it is down a little from, I think, the 22% you did last quarter. So can you just give us an update there? Can you remind us when you'll start to lap kind of your move, the direct sales model there?

Liam Kelly -- President and Chief Executive Officer

Yes. And you asked -- Mike, you asked for an yearly data, exactly what we've done. We've lapped the go-direct time frame in quarter three. So that is why you would see a slight deceleration in the China growth from that quarter end. But still we're very, very happy with the performance. We believe that we have done excellent execution on the go-direct of our vascular and cardiac business within China, and we continue to be encouraged by what we see within the growth, within the key China market.

Michael Matson -- Needham & Co -- Analyst

Okay. So it's largely a comp issue then and not any kind of slowdown in the economy or healthcare spending or anything like that?

Liam Kelly -- President and Chief Executive Officer

No. I mean, that we -- I mean, even if there is a slight downturn in the general economy, I can't see having that much impact on healthcare. I mean, the government is very focused on providing significant continued investment into healthcare. And quite frankly the people are demanding better healthcare and pay for service and they are demanding better healthcare within there. And of course, we all know it's hard to determine what is exactly is a slowdown in that geography with the data that comes out. But we haven't seen this in our business, Mike, to answer your question directly.

Michael Matson -- Needham & Co -- Analyst

Okay. Thank you. And then just a couple of financial questions. So the 4.6% kind of legacy organic growth, you did have the shift of orders from Q2 to Q3. So are you able to quantify how much of that 4.6% must be to that -- those orders that have moved from Q2 to Q3?

Liam Kelly -- President and Chief Executive Officer

I am -- because we have that data. So the uptick -- initially we got a bonus of orders in excess of $3 million. About $2.2 million of it was sticky to the quarter and that was anticipated in our guidance as well, Mike.

Michael Matson -- Needham & Co -- Analyst

Okay. And then, just the -- Tom mentioned that the -- you're raising your guidance despite the increased currency headwind. So can you quantify how much additional EPS headwind you're expecting at this point to the annual EPS versus what you are expecting, I guess, as of your last quarterly call?

Thomas Powell -- Executive Vice President and Chief Financial Officer

Are you referencing, well, related to the change in currency?

Michael Matson -- Needham & Co -- Analyst

Yes. Exactly. Yes, I mean, how much more, I guess, I should say, how much has it changed, I mean, because maybe had a tailwind and just losing the tailwind now or maybe it's a headwind, and it's more of a headwind now?

Thomas Powell -- Executive Vice President and Chief Financial Officer

Well, just for currency overall on the revenue impact, it's still a tailwind for the year. We now estimate that tailwind to be about 150 basis points. It used to be an expectation of 200 basis points. So that's going to reduce our revenue obviously and then has an impact to our third and fourth quarter earnings. I would say, that's kind of on the negative side. We also have some dilution from the recent acquisitions that's going to hit the fourth quarter, the incremental tariffs. And on the positive side of the equation, we've got reduced expense as a result of the swap. And frankly strong third quarter earnings, in part due to taxes and some other factors. So a number of pluses and minuses that kind of all come together to offset what our expectations are in the fourth quarter as to the pluses and minuses from currency and other factors.

Michael Matson -- Needham & Co -- Analyst

Okay. That's helpful. Thank you.

Liam Kelly -- President and Chief Executive Officer

Thanks, Mike.

Operator

Thank you. Our next question is from Matt O'Brien with Piper Jaffray. Your line is open.

Matthew O'Brien -- Piper Jaffray -- Analyst

Thanks for taking the question guys. And I wanted to push first the bid on the gross margin expansion. I know was that, just two pieces, one, it sounds like the restructuring is on track. Can we just dive a bit in on what steps you've taken thus far with that and any early benefits you're seeing? And second, as we think about the bridge getting a company closer to the long-range plan, about 300 basis points by 2021, what is between mix from acquisitions, restructuring or core expansion/new products? Is that most important to get you there or importantly to bring you above that range?

Thomas Powell -- Executive Vice President and Chief Financial Officer

Okay. So let me first just touch on, I think, you asked about restructuring. And so as we look at all the programs out there and we haven't placed there. There are a number of programs under way including, frankly the 2014, 2016 and 2018 footprint realignment programs, the integration of Vascular Solutions and OEM manufacturing project. I mean, if you combine all of these, the restructuring savings are in the range of $107 million to $127 million, the time they're fully completed. Now what we talked about is, to the end of 2017 we realized $45 million of those savings leaving another $62 million to $82 million for this year and through the completion of these projects. And the way to think about that is we had talked about $25 million to $35 million being in the time frame of 2019 to 2021. And then we've obviously realized, we realized some this year then leaves the remainder for '22 to '25 time frame.

So the way to think about that remaining $62 million to $82 million of savings is probably a quarter of it this year or about 40% of the time frame 2019 to 2021, and then the balance thereafter. And how that plays into our longer-term gross margin objective is certainly a component. But as we look at the most important components of that 200 to 350 margin, or I should say basis point margin expansion through 2021, the biggest impact is really related to mix. So the favorable benefit from NeoTract, Vascular Solutions and other products such as our PICCS and Vidacare, they are the largest component driving that margin expansion. The restructuring program is certainly a component of it. And if you think about the numbers that I cited of $25 million to $35 million that's about 100 basis points at the midpoint of that range. And again, I would say that mix will play a more important piece of the margin expansion story over that 2019-2021 time frame.

Matthew O'Brien -- Piper Jaffray -- Analyst

Okay. Thanks, and that's just very helpful. And then the second one is on UroLift. The clinical work there has been really strong the past few months, both on the results front and the cadence. So I wanted to ask your thoughts on the investment, specifically, as it relates to competition there. So what is the latest on competition in the marketplace? And are more investments needed in the channel or on the clinical front? Or are you pegging these efforts as expansionary in the market place thus far?

Liam Kelly -- President and Chief Executive Officer

So our view is that we will continue to do investments behind clinical data. I think, I've spoken to the investment community about the study we just kicked off in France. That's going to assist our reimbursement within Europe. And we have never thought, Matt, that we would be alone in this large BPH market. But I think we have the most robust clinical data out there in the market and that was born out in this conference in Paris, where we had five papers presented at the conference, which was more than any other technology in any area of men's health as far as I could see, and also much more than any other -- more papers for UroLift than any other BPH technology that's out there.

Now, I can assure you that's primarily three firms' works going on somewhere working on a treatment for BPH. I can also assure you in the last 20 years, the (inaudible) disposed of technologies that were supposed to address BPH. And that UroLift is the first one that has come off with a unique methodology to treat BPH with the symptoms that we have. So you can expect to see a continued cadence and investment on further clinical data to support that the -- the UroLift as making it a frontline care for BPH.

Matthew O'Brien -- Piper Jaffray -- Analyst

Okay. Thanks. And you just don't -- you don't think it's incremental due to that composition. It's just the same cadence that you would have expected?

Liam Kelly -- President and Chief Executive Officer

Yes. We have an internal plan for ongoing clinical data that was considered when we put out our three-year plans. So I wouldn't see any change to that required to do what we need to do with UroLift to make it a standard of care, Matt.

Matthew O'Brien -- Piper Jaffray -- Analyst

Okay. Perfect. Thank you so much.

Operator

Thank you. Our next question is from Brian Weinstein with William Blair. Your line is open.

Brian Weinstein -- William Blair -- Analyst

Hi guys. Thanks for taking the questions. Obviously, a much better quarter this quarter and everybody seems pleased with it, but it has been a more variable year here. And as I think back over the last couple of years, it seems like it's more variable than what we've seen over the last couple of years. And I'm just curious as to whether you guys have any strong feeling just to why there seems to be more variability in results. And specifically, Liam, when you were the COO, overall things seemed to be very stable. I don't think that you have filled that role in the organization. Do you think that there's a need for a COO to come on in and help bring a little bit more stability, so that we don't have the ups and downs that we've seen this year?

Liam Kelly -- President and Chief Executive Officer

Well, Brian, I think that consistently if you look at on a full year basis, Teleflex has consistently performed. And from 2014 to 2017, our average constant currency growth was 4%. And, Brian, this is almost like when you get a little bit older and you look back and you think every summer was a great summer. In the reality, not every summer was a great summer. And even within Teleflex during that time, and thank you for complementing me on my COO role, but even during that time, Brian, there were ebbs and flows. We had nuances within the quarter. But as we saw this quarter, I always try to remind people, with every ebb there is a flow. And we saw that rebound very strongly within this quarter as well. And we have made management changes by appointing a Head of North America to make sure that we have that consistency of performance. And I think that we don't give quarterly guidance, Brian, and Teleflex should be judged on how we do on an annual basis, and consistently we perform on an annual basis.

Brian Weinstein -- William Blair -- Analyst

Okay. Great. Thanks for that. And then just my follow-up would be, you talked a little bit about some areas or you may be winning some share, but can you talk to us more broadly about categories where there are share wins and maybe some increased competition and some share losses? Thank you.

Liam Kelly -- President and Chief Executive Officer

Yes. Sure. So I think, I'll start with the share wins for sure. I think that obviously takes us an -- right area (ph) for share wins. And Vidacare continues to perform very well. And that's kind of really share win that's converting the market. Our interventional business with the VSI portfolio continues to grow and take share. And I'm really encouraged by what we're doing within Asia Pacific. I'm not sure, if I would categorize it as a share loss, but we do see tougher economic volatility, if I can put it that way within EMEA, where there's more pricing pressure within the market. It's always kind of been there, but Europe continues to be a fairly price-sensitive market for Teleflex and our portfolios there. That's probably the area I would point out where we'd see a little bit of additional competition.

Brian Weinstein -- William Blair -- Analyst

Thank you.

Operator

Thank you. Our next question is from Dave Turkaly with JMP Securities. Your line is open.

David Turkaly -- JMP Securities -- Analyst

Hey. Great. Thanks. Just really quickly. You mentioned, you just mentioned Vascular Solutions obviously 21% growth. It's a big number. I'm just curious is anything you point to driving that from a new product front or sales force? Or what would, and how sustainable do you think that is?

Liam Kelly -- President and Chief Executive Officer

So within the 21%, obviously for VSI, there is a -- the go-direct encountered within that, so that's a large portion. But outside of that, we do see Turnpike, as the product continue to drive significant growth within that portfolio. I mean, that's still growing in the 40% range. We see the GuideLiner and Trapliner doing an excellent job for us, and will continue to take share within that segment. And those would be two of the areas. And we've also launched some new products around guidewire that are building momentum within the marketplace. But we're incredibly pleased with VSI and the performance of VSI, and indeed the performance of our overall interventional business units, because along with VSI, we're seeing a nice uptick on legacy products, because of the additional sales force. And we didn't build sales synergies into our models, but I am seeing that we are getting them.

David Turkaly -- JMP Securities -- Analyst

Great. Then, on to this Essential Medical, the MANTA. Based on the description and the picture there, and the collagen (ph) component, it sounds like it maybe similar to the old NGSCO (ph) (inaudible) device, but maybe for a larger access. Just curious if that's the case? And then would it be an approximation of a domestic ASP be a couple of hundred bucks? Thanks so much.

Liam Kelly -- President and Chief Executive Officer

So this is a different market segment. It is similar to that product that you mentioned, but it's a very different market segment and therefore we believe, it would attract a significantly higher ASP. Remember, Dave, that when they're closing these large bore closures, they are using two or three of these devices right now. So it's an expensive closure system for them. They also have 7%, on average, complications, as I said in my prepared remarks, we can take those down to 2% in the clinical data that we demonstrated. And as I also said earlier, and we got approved it, but what we have anecdotally seen in The Netherlands, where we have a significant penetration with this device is that they are actually able to make the catalog more efficient. Now you could get one more patient through that catalog, and all better offers to the price, because they won't even be talking about the price of the product, because it just makes them more efficient. And of course, they will know that for vascular complications that patient is going to (expletive) the hospital $18,000 to get that patients treated. So therefore, this will have a higher price point than the one you stated for sure.

David Turkaly -- JMP Securities -- Analyst

It's great to hear. Thank you.

Operator

Thank you. Our next question is from Isaac Ro with Goldman Sachs. Your line is open.

Isaac Ro -- Goldman Sachs -- Analyst

Good morning guys. Thank you. First question is on NeoTract. Just interested in some of the investments you're making in Japan. If you could maybe qualify and quantify what those mean for that part of the business?

Liam Kelly -- President and Chief Executive Officer

Okay. And yet again the investments in Japan were contemplated in our three-year guidance, so to make that clear. We will begin by putting some clinical people on the ground to start develop the market. The key here is, it's to get our reimbursement. So we will work in the fourth quarter beginning and then in 2019 to bring the product to get some clinical exposure to it. And then we will obviously begin immediately, but going through the 12 to 18-month process to get reimbursement for the product. We will then move to get those clinicians that we will have developed to do the clinical work for the post-market study that is required as part of our approval. But I got to tell you, we couldn't be more excited about getting these products shown and approved. We believe that in using the same criteria decide the US market is about $6 billion, the Japanese market is about $2 billion. And the Interventional Urology team have done an excellent job.

I would like to remind people, we only submitted at Shonan in Q1. This is an incredibly fast time line to get approval within the same calendar year. We -- internally we were expecting it to take at least 12 months, so we couldn't be more pleased with the progress we're making there and we will work to develop that market during 2019 in anticipation of reimbursement sometime thereafter.

Isaac Ro -- Goldman Sachs -- Analyst

Helpful. And just a follow-up question on M&A. Obviously, if you listen to the earnings calls across industry, most companies, if not all of them, are pretty active in looking for assets. So you guys are able to pull up a couple of pretty notable deals here that have already started to sort of chase the growth profile of the Company. Can you talk a little bit more about where you're looking at the margin to find assets and valuations that makes sense? And either -- whether that be tied to a therapeutic category or some other category or just size and scope? Just kind of curious, how you're finding assets and kind of how we should think about pacing of deal flow over the next 12, 18 months?

Liam Kelly -- President and Chief Executive Officer

Well, I think MANTA is an interesting example, Isaac. We met with Greg and the entire team four years ago, and we have been building that relationship watching their progress very closely. That's one example as to how we find assets. Obviously, another one is the banking world know that Teleflex is very acquisitive. They know what we're looking for in the assets that we want. They know that we're very focused on interventional space, men's health, the vascular space and also anesthesia and surgical. So they will bring us assets as long as they know that it meets our growth criteria or margin expansion criteria and our leverage criteria.

As Tom outlined in his prepared remarks, we are now on a gross leverage down near to the low 3s. So that gives me encouragement that we also have the financial ability to do activity, if we find the right assets. It's not lost and that's in Teleflex that we're a disciplined organization when we stick to our strategic criteria, and we only get credit for the good acquisitions, not credit for acquisitions fulls stop. So we're very focused on finding the right assets and executing. And I think it's become a core competence of this organization to find these assets, bring them into the Teleflex family and accelerate the growth thereafter by leveraging our global footprint.

Isaac Ro -- Goldman Sachs -- Analyst

Got it. Thank you guys.

Liam Kelly -- President and Chief Executive Officer

Sure, Isaac.

Thomas Powell -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from Kristen Stewart with Barclays. Your line is open.

Kristen Stewart -- Barclays -- Analyst

Hey guys. Thanks for taking my questions.

Liam Kelly -- President and Chief Executive Officer

Hey. Good.

Thomas Powell -- Executive Vice President and Chief Financial Officer

And you are back then.

Kristen Stewart -- Barclays -- Analyst

Thank you very much. It's good to be back. I just wanted to just kind of go over the EPS guidance both on a non-GAAP and a GAAP basis. Am I kind of doing the math right that the change in the tax rate contributes about $0.20 to the full year?

Thomas Powell -- Executive Vice President and Chief Financial Officer

That, it would be the right calculation, yes.

Kristen Stewart -- Barclays -- Analyst

Okay. And then on the non-GAAP guidance or the regular GAAP guidance that was reduced by $0.60. I was wondering if you could just talk to why some of the restructuring and acquisition integration targets are going to be more significant now relative to what you guys are expecting a quarter ago.

Thomas Powell -- Executive Vice President and Chief Financial Officer

Okay. Well, there's a couple of things that play into that. One was a change in some of the contingent consideration payments. As we continue to see the performance of some of the acquisitions, we adjust the amount of contingent consideration to reflect that. We also had an impairment during the quarter related to our hospital technology, which would roll into that. And then we had a restructuring program earlier this year that obviously had some impacts.

Kristen Stewart -- Barclays -- Analyst

That's perfect. And then last question just on acquisitions and the accretion dilution. NeoTract had always been thought of as $0.35 to $0.40 accretion for next year. How is that looking? And how should just think about Essential Medical? Is that more dilutive next year from an earnings perspective or neutral?

Liam Kelly -- President and Chief Executive Officer

So I'll start with Essential. Obviously Essential is dilutive in the fourth quarter, which to our earnings, which is partially reflected in Tom's comments around our full-year guidance. And now we will give guidance for Essential in February. And the only reason I'm saying that Kristen is because it's very dependent on whether we need a panel review or not as I said a little earlier. And we will have greater line of sight on that when we come to give earnings guidance. Our expectation is that it's Essential will be dilutive in '19 and then accretive thereafter. And then your other question was around NeoTract. Yes, and we're well on track to have NeoTract deliver in line with our expectation of $0.35 to $0.40 in 2019.

Kristen Stewart -- Barclays -- Analyst

Okay. Thanks very much guys.

Thomas Powell -- Executive Vice President and Chief Financial Officer

Thank you.

Liam Kelly -- President and Chief Executive Officer

Thank you very much.

Operator

Thank you. And that does conclude our Q&A session for today. I'd like to turn the call back over to Mr. Jake Elguicze for any further remarks.

Jake Elguicze -- Treasurer and Vice President of Investor Relations

Thanks, operator, and thanks to everyone for joining us on the call today. This concludes the Teleflex Incorporated third quarter 2018 earnings conference call. Have a nice day.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a great day.

Duration: 77 minutes

Call participants:

Jake Elguicze -- Treasurer and Vice President of Investor Relations

Liam Kelly -- President and Chief Executive Officer

Thomas Powell -- Executive Vice President and Chief Financial Officer

David Lewis -- Morgan Stanley -- Analyst

Richard Newitter -- Leerink Partners -- Analyst

Lawrence Keusch -- Raymond James -- Analyst

Anthony Petrone -- Jefferies -- Analyst

Michael Matson -- Needham & Co -- Analyst

Matthew O'Brien -- Piper Jaffray -- Analyst

Brian Weinstein -- William Blair -- Analyst

David Turkaly -- JMP Securities -- Analyst

Isaac Ro -- Goldman Sachs -- Analyst

Kristen Stewart -- Barclays -- Analyst

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