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Cooper Companies Inc  (NYSE:COO)
Q1 2019 Earnings Conference Call
March 05, 2019, 4:15 p.m. ET

Contents:

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 The Cooper Companies 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. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to introduce your host for today's call Ms. Kim Duncan, Vice President, Investor Relations and Administration. Ms. Duncan, you may begin.

Kim Duncan -- Vice President, Investor Relations and Administration

Good afternoon and welcome to The Cooper Companies' first quarter 2019 earnings conference call. During today's call we will discuss the results included in the earnings release, along with the updated guidance and then use the remaining time for Q&A. Our presenters on today's call are Al White, President and Chief Executive Officer; Brian Andrews, Chief Financial Officer and Treasurer.

And before we begin, I'd like to remind you that this conference call contains forward-looking statements including all revenue and earnings per share guidance and other statements regarding anticipated results of operations, market or regulatory conditions and integration of any acquisitions or their failure to achieve anticipated benefits.

Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties. Events that could cause our actual results and future actions of the company to differ materially from those described in forward-looking statements are set forth under the caption forward-looking statements in today's earnings release and are described in our SEC filings, including Cooper's Form 10-K all of which are available on our website at coopercos.com.

Should you have any additional questions, following the call, please call our investor line at (925) 460-3663 or email ir@coopercos.com. And now I'll turn the call over to Al for his opening remarks.

Albert G. White III -- President & Chief Executive Officer

Thank you, Kim and good afternoon everyone. Welcome to our first quarter 2019 conference call. We're off to a strong start this year as we continue to successfully implementing our strategic objectives, such as investing in key accounts, increasing promotional activity and investing in infrastructure. These efforts are all tied to producing strong sustainable revenue growth and they're paying off.

For the quarter, we reported 628 million in consolidated revenue up 6% year-over-year up 8% pro forma. Non-GAAP earnings per share were $2.88. CooperVision posted revenues of $470 million, up 6% as reported, or up 8% pro forma. CooperSurgical posted revenues of $158 million, up 9% as reported, or up 8% pro forma. I'm extremely pleased with these results as our focus on increasing our strategic partnership activity and supporting our market-leading products is producing strong results.

For CooperVision strength we're seeing throughout the world, the Americas was up 4%, EMEA 9% and Asia-Pac 13% all pro forma. All three regions were led by continuing strength from our daily silicone hydrogel lenses which grew 38% pro forma. The Americas, in particular posted significant strength around daily silicones with both Clarity and MyDay performing well. EMEA was very strong led by daily silicones, torics and multifocals while Asia-Pac posted another robust quarter led by daily silicones and Biofinity. So I'm happy to say strong and diverse growth around the world, driven by strong products and exemplary sales and service.

Regarding product families, both our daily silicone hydrogel franchises Clarity and MyDay are performing extremely well and our focus will remain on these product families, as the global contact lens market continues to shift in this direction. Outside of dailies, Biofinity and Avaira Vitality continue performing well combining to grow 7%. As a reminder, these two silicone hydrogel product families comprise our focus in the FRP or frequent replacement product market which encompasses the two-week and monthly modalities.

Also included in this segment, our unique products such as Biofinity Energys which helps individuals deal with digital eye fatigue. We also saw strength in torics and multifocals this quarter with torics growing 9% and multifocals up 8% both pro forma.

Turning to the market, the global soft contact lens market grew 8% in calendar 2018 to roughly $8.7 billion. Within this, we grew 10%. And I am extremely happy to report our market share increased to 24%, so we're now tie with Alcon in the number two spot, while we estimate J&J share at 40%, B&L is at 8% and then a few small manufacturers making up the rest.

The primary growth driver for the market continues to be daily lenses which grew 13% and now accounts for roughly $4.6 billion or 56% of the total market. Within this segment, silicone hydrogel lenses drove the growth up 34%. It's important to note that although 53% of revenue dollars are in daily lenses, the percentage of actual wearers in dailies is much lower due to the price difference. We estimate daily wearers encompass somewhere in the low to mid-20% range to the overall market, and thus, offer a very significant long-term trade up opportunity for the entire contact lens industry.

And regarding future market growth, you've heard me talk about the positive trends in the contact lens market and these remain in place. Be it the increasing incidence of myopia around the world, the global transition to daily contact lenses, geographic expansion or growth in torics and multifocals, the future looks very bright for our industry. I am not sure the market will continue growing 8% as it did this past year, but I could certainly see it growing 5% to 6% for several years in the future.

Turning to our strategy, I want to mention a few important points around our growth initiatives and silicone hydrogel 1-day lenses, key accounts and our efforts around customized product offerings. The shift to 1-day lenses from FRPs generates roughly two to three times more revenue per patient. And within the 1-day market, the trade up from a traditional hydrogel to a silicon hydrogel generates an additional roughly 20% premium. This is great for the industry and I expect all contact lens manufacturers to continue sharing in this multi-year trade up trend as a rising tide should lift our boats. Having said that, what's unique to Cooper is our current market share within Dailies is only 18% compared to roughly 31% within the FRP space. This shows if we can get our fair share of new daily fits, we should post strong growth for years to come and I am confident we can do that based on our momentum, our strong product portfolio, and the positive new fit data.

Regarding key accounts, we're continuing to strongly support these strategic partnerships with a focus on helping them grow and retain their customer base. These are extremely knowledgeable business people and they understand the growth potential for contact lenses and that it goes well beyond the shift to dailies. In particular, they appreciate the value of cross-selling contact lenses to their customers who wear glasses. Working to reduce contact lens dropout rates, the value of fitting the best lenses for each situation such as torics and multi-focals, and the growth potential of expanding geographically, and we're here to help them in each of these areas, driving growth in their businesses.

Regarding our customized product offerings, we're making excellent advancements within distribution, labeling and packaging to support our efforts around providing customers a diverse set of options to help them grow and retain their patient base. This includes opening new facilities, expanding others, upgrading systems and increasing our use of automation to become more efficient. All this activity is very important in today's world where customers expect premier behind the scene support.

Finally, before moving to CooperSurgical, just a quick note to say, we completed the acquisition of Blanchard in January, which is another specialty lens company with a strong position in scleral lenses. Although this is a small market focused on providing contact lenses to patients with concerns such as the regular corneas, hard to fit eyes are people with severe dry eye problems, this is another step in growing our specialty business, which we're excited about.

Moving to CooperSurgical. We reported revenues of $158 million, up 8% pro forma, fertility posted strong results growing 9% as last quarter's integration activity moves behind us. We continue to believe the global fertility market has fantastic long-term growth potential and we are a market leader in this space. As a reminder, this part of our business, includes products like media, IVF medical devices and genomics, and these products are sold throughout the world.

Outside of fertility, our office and surgical business grew 7% pro forma with strength noted in PARAGARD which is the only non-hormonal IUD or long-acting reversible contraceptive and the US market. This product grew 10% even up an extremely strong fourth quarter and we continue to believe it will do well going forward. Supporting this growth is an active advertising campaign, including TV ads in select geographies, print media and social media, depending on the market that you live in, you may have seen the TV ads, but if not checkout Paragard.com where you can see the commercial.

Although early in the campaign this promotional activity has generated significant interest and we've seen dramatic increases in visits to our website and much greater discussion on social media. In conjunction with this activity, we've also been investing heavily in physician training to support practitioners as request for PARAGARD from that our patients increases. We're closely monitoring these marketing efforts evaluating the cost benefit, but early indications are very positive and we've thus accelerated promotional activity that was planned for later this year in the Q2 to allow us to concentrate this activity and obtain a more effective understanding of its impact.

After this quarter, we plan to return promotional activity to more normal levels to allow time to analyze the data and determine appropriate go forward marketing investment strategy. Given PARAGARD has only roughly 17% market share in the $1 billion IUD market, we believe there exists significant opportunity for future growth, if we can effectively communicate the advantages of the product. Outside of PARAGARD, our office and surgical business grew a solid 5% pro forma.

Lastly and CooperSurgical we had two small business development items I want to quickly mention. First, we acquired a small company named Incisive Surgical in January, which sells unique absorbable skin staple called INSORB. Second, Utah Medical bought back their the US distribution rights from us for the Filshie Clip. The impact on revenues going forward as minimal as they offset one another. So in conclusion, we're having a strong start to this year, and I continue to feel very positive about the direction of the company. I want to thank our employees for their hard work and dedication as that's what's driving our success and I'll now turn the call over to Brian.

Brian Andrews -- Chief Financial Officer and Treasurer

Thank you, Al and good afternoon, everyone. Most of my commentary will be on a non-GAAP basis. So please refer to today's earnings release for a full reconciliation of GAAP to non-GAAP results. Al covered revenues, so I'll focus on the rest of the financials and guidance.

Consolidated gross margins in the quarter held steady at 67.5% year-over-year. CooperVision's gross margin was 66% down from 67.1% last year with the entire decline being attributable to currency. Outside of currency, operational positives such as product mix were offset by items such as rebates and temporarily higher secondary handling costs. CooperSurgical's gross margin improved significantly from 70% to 72% from 68.8% last year, driven by product mix, including higher sales of PARAGARD and fertility products. Consolidated operating expenses grew 9.9% in the quarter, driven by increased investing in sales and marketing in both CooperVision and CooperSurgical. This includes both businesses, continuing to enhance our sales forces by selectively hiring around the world with a focus on key accounts.

Within CooperVision, we also saw increased investments in distribution, where we continue, upgrading our infrastructure along with higher R&D, including continued activity around myopia management. Within CooperSurgical, operating expenses grew mainly associated with higher sales and marketing costs related to PARAGARD. Operating income improved year-over-year by roughly $2 million even in the phase of currency headwinds and the operating margin for the quarter was 26.2%. Below operating income we reported $18.2 million of interest expense and an effective tax rate of 2.6%, this low tax rate was driven by several factors including favorable internal restructuring activities, excess tax benefits received from the exercise of stock options and an audit settlement.

Notably, regarding the audit settlement, we reached a final agreement with the UK tax authorities associated with our dispute over the transfer valuation of certain intellectual property associated with the Sauflon acquisition. The settlement resulted in a refund of $29 million from the $42 million we paid in Q1 of last year. Non-GAAP, EPS for the quarter was $2.88 with roughly $49.9 million average shares outstanding. Free cash flow was $22.6 million, comprised of a 101.8 million of operating cash flow, offset by $79.2 million of CapEx. Net debt increased by $41 million to 1.989 billion. The increase is primarily attributable to the acquisitions of Incisive Surgical for $33 million and Blanchard for $31 million offset by operating cash flow.

Moving to guidance, we are increasing our consolidated fiscal 2019 revenue guidance to 2.631 billion to 2.676 billion, this includes raising CooperVision to 6.5% to 8% pro forma growth or $1.968 billion to $1.995 billion, reflecting the strength we saw in Q1 and our belief that the rest of the year should be strong even against hard comps in the back half of the year. CooperSurgical's revenue guidance is also be increased slightly to a stronger 3% to 6% pro forma, were $663 million to $681 million reflecting our strong Q1.

Outside of revenue, we continue to expect gross and operating margins to improve slightly year-over-year. Interest expense is expected to be slightly lower as we are now assuming only one additional 25 basis point rate hike which we model to occur later this month.

As for taxes, we're now expecting a full year effective tax rate around 11%, down from our previous expectation of around 14%. This reflects Q1 and our latest expectations for the remainder of the year.

On FX currency has moved slightly in our favor, and we are now forecasting a negative $0.47 of FX this year, $0.08 cents better than our initial guidance provided in December. Having said that this $0.08 is offset by the Filshie Clip transaction, which resulted in the receipt of $21 million of cash, but the loss of near-term earnings. Incorporating all of this we are increasing our full-year non-GAAP EPS guidance to $11.85 to $12.15 up $0.50 at the midpoint. This increase is roughly, comprised of $0.40 from tax, $0.07 from operational improvements and $0.03 from lower interest expense.

With respect to quarterly gating as Al mentioned, we're shifting marketing spend associated with PARAGARD from the end of this year into Q2 and now anticipate fiscal Q2 non-GAAP EPS in the range of $2.70 to $2.80. Q3 and Q4 are now expected to be slightly stronger than initially expected due to this. And with that, I'll hand it back to the operator for questions.

Questions and Answers:

Operator

(Operator Instructions) Our first question comes from Jeff Johnson with Baird.

Jeff Johnson -- Baird -- Analyst

Thank you. Good afternoon, guys. Can you hear me OK?

Albert G. White III -- President & Chief Executive Officer

Yeah.

Brian Andrews -- Chief Financial Officer and Treasurer

Hey, Jeff.

Jeff Johnson -- Baird -- Analyst

Okay, great. Hey, Brian. hey, Al, how are you? So just wanted to start maybe on CVI (ph), on the European number, that number definitely came in a little bit better than we were expecting. I think it stayed sequentially kind of stable at 9% versus where it had been the quarter before, but the comp was about 500 basis points tougher. So just wondering, is that kind of a sign of some of that big retail business, some of the kind of big account wins and does that, is there some sustainability to that strength in Europe than even as comps get kind of tougher this year throughout the year. Thanks.

Brian Andrews -- Chief Financial Officer and Treasurer

Yeah, I would say yes to both of those, I mean it is attributable to strength, we're seeing in key accounts. We tend to talk generically are broadly about key accounts around the world is there are obviously key accounts in different regions in some span multiple regions. But when you look at the European region, there are a number of important key accounts there and we've had success there and we believe we're going to have success going forward. Part of the reason that we took our guidance up to 6.5 to 8 for CooperVision was two, one reflect the success we had in the first quarter, but two I'm trying to just show the confidence we have in CooperVision numbers in total including Europe even against the challenging comps in the back half of the year.

Jeff Johnson -- Baird -- Analyst

Yeah, understood. And then maybe on PARAGARD just as my follow-up question. You know that 10% number I know it's a good number. It did come in maybe a little light of what we're expecting and maybe we were just out of line with our expectations, but I thought you had some easy inventory comps there. So again just want to do a reality check. Where was the PARAGARD performance this quarter relative to your expectations and how is that performing at the profitability line as well.

Albert G. White III -- President & Chief Executive Officer

Yeah, fair point, Q1 was a pretty easy comp because of PARAGARD we had all that noise last year, it seems like almost in every quarter with respect to channel inventory and trying to settle things down. But at the end of the day, the 10% growth that we had in Q1 for PARAGARD was in line with our expectations. So that's kind of the important thing. That product is -- as you know is a very profitable product for us. Having said that, we are reinvesting a lot of those dollars, I touched on that a little bit, Brian actually quantify that to some degree in terms of some of the investment activity we are pulling into the second quarter.

So I'll get, I won't comment on direct profitability associated with it, other than to say it is indeed a highly profitable product and one that we really truly want to try to drive growth out of it.

Jeff Johnson -- Baird -- Analyst

Thank you.

Operator

Thank you. And our next question comes from Larry Biegelsen with Wells Fargo.

Larry Biegelsen -- Wells Fargo -- Analyst

Good afternoon and thanks for taking the question and congrats on a really nice quarter, Al. One geographic question, one tax/EPS question. So EMEA was very strong at 9% but, Al, Americas did dip 4% from 8% last quarter and actually the comp was a be bit easier. So I mean we did hear some anecdotal feedback that late in the year, the US market was a little soft. Can you provide any color on that and expectations going forward? And I had one follow-up.

Brian Andrews -- Chief Financial Officer and Treasurer

Yeah, I would agree with that. I think if you look at our results and the results of our competitors out there who -- with their numbers, it shows some of the weakness that was in the U.S. market, I don't think that there was anything particularly that needs to be pulled out of that, right? Like any true fundamental change in the business, I think it was just a little bit softer of a quarter, and that's OK, that happens sometimes, there's not too much we can do about that. I mean, we grew 4%, so we obviously believe that we continue to take market share there and are happy with that number in terms of putting it in the context of the overall market growth.

Larry Biegelsen -- Wells Fargo -- Analyst

And then on EPS, Al, one on the tax rate, that a 11%. How should we think about that going forward? And I know it's early, but I just wanted to hear from you if you feel like you can get back to double-digit EPS growth in fiscal 2020 it's encouraging to see the guidance come up today for fiscal 2019 and now it's about mid-single digits at the midpoint, but how should we think about looking forward a little bit. Thanks for taking the question.

Brian Andrews -- Chief Financial Officer and Treasurer

Yeah, I mean, we had the low tax rate there was a decent amount activity this quarter that brought it down, I'm talking about Q1. Q2, Q3 and Q4 will be somewhat similar in the low teens is our expectation. If you look at next year, most of this activity is directly associated with this fiscal year, meaning, we would expect next year probably closer to a more normalized rate of 14% again, that wouldn't include like stock option and equity some of that kind of stuff, which could pull it lower. But I think we'll kind of go to that, 14% is kind of rate that we've talked about in the past.

With respect to getting to double-digit EPS growth. Yeah, I was pretty clear that I felt really strong about that, that we can do that, now the effective tax rate coming in at a 11, going to 14 next year means, we need to hurdle that, but we'll see, we'll see what we can do on that, I don't want to get into guidance yet for next fiscal year but I continue to believe that the fundamentals of the business are very strong, you can see that especially in the revenue growth. So I continue to be pretty optimistic about back half of the year and next year.

Larry Biegelsen -- Wells Fargo -- Analyst

Thanks, Al.

Operator

Thank you. Our next question comes from Chris Cooley with Stephens.

Chris Cooley -- Stephens -- Analyst

Hey, thanks, good afternoon. I appreciate you taking the questions. Al, I just wanted to see if you can maybe give us a little bit of an update on MiSigh and myopia control, a lot of interest in myopia control at SECO this past weekend on both the frame as well as the contact lens front, but very limited data so far. So could you just maybe give us an update on how that's tracking from an R&D perspective and when we could start to see that here in the States and I've got one quick follow-up.

Albert G. White III -- President & Chief Executive Officer

Yeah, definitely a fair question. I mean, we're excited about MiSight and the entire myopia management field here within CooperVision, there's no question about that and we're doing a lot of work on that internally, some of that you obviously see in the R&D line and then some of its within our operating expense infrastructure right now. So we're excited about it, we believe in the future, we believe there is actually significant upside there and I think that when you look at myopia management, you talk about getting kids into contact lenses who are maybe 8, 9, 10 or 11, 12, 13 year old that type of thing, that expands the market for contact lenses that also obviously helps everyone with visual correction.

Another interesting stat is the average contact lens wearer, whereas there is lenses around 7 years, but if they are fit in a contact lens first as their first form of visual correction rather than glasses they were contact lenses on average 14 years. So getting aware in the contact lenses to start is a significant advantage for the contact lens industry. Having said all that, it's still a little early I've kind of held up a little bit on the myopia management side, Mysight and I'm excited as you can tell about it, but I don't want to get in too many details on it yet. We're working through the approval process in myopia message in my site, we have the lens in the market in select countries around the world.

So we're making progress at the right point in time, I'll kind of get into that in more detail.

Chris Cooley -- Stephens -- Analyst

I appreciate the color. And then if I could just follow-up on Jeff's earlier question on PARAGARD I know in the past you've talked about the incremental spend at the marketing effort and need to see that requisite margin drop through. Can you just give us maybe some broad strokes around what you saw in those markets where you rolled out to dancing in the streets -- marketing initiatives there, what type of pull through were you're seeing at the OB-GYN level is kind of script (ph) conversion. Just trying to get an idea of some metrics that we see this incremental spend in the 2Q, what type of growth we should kind of model thereafter. Thanks so much.

Albert G. White III -- President & Chief Executive Officer

Yeah, Chris. That's a great question. And it's kind of same question that I have right now. So what we've seen as we went into those markets, we did the TV commercials and the reaction has been very positive, we've seen a very significant increase in traffic on our sites and PARAGARD related sites and whether it's blogs or anything along those lines in the social media side is definitely much higher in those markets where we've done the TV advertising. How does that TV advertising and that significant increase in activity related to or translate to actual product sales? That's a little bit more of the question.

So that's what we're doing right now, we're going to continue that type of activity for several more months here we're running, -- we ran it through February, we are -- March, we are April -- those dollars are fairly large, but it's really a matter right now saying OK, how does that translate, there's a lot of activity, there is a lot of excitement, there is a lot of positive energy and discussion around the positive attributes of of PARAGARD, does that translate to actual in the wear base increasing.

So that's a little bit of a question mark, right now, I mean we're doing that we're doing the work we're tracking it carefully. I think we're doing everything right I have a 100% confidence in the team who is working on that. For now we haven't really changed our guidance with respect to PARAGARD I think because of the comps PARAGARD has kind of a challenge, back half of the year, but we'll see, that we can do a little bit better. I'll give you, I'll be able to definitely give you more information on the next earnings calls to how some of that's translating actual sales though.

Chris Cooley -- Stephens -- Analyst

Thank you for taking the questions.

Albert G. White III -- President & Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Steve Willoughby with Cleveland Research.

Steve Willoughby -- Cleveland Research -- Analyst

Hi, good evening. Thanks for taking my questions. One for Al and one for Brian. Maybe, Brian, first if you could just but will say, they we can give a little better. I'll give you -- II'll be definitely more information on the net earnings call to how some of that translates sales. Can you for talking my questions. Could you just clarify that the $42 million charge a year ago and then the $29 million refund this year, it wasn't clear to me in your P&L whether those were included or excluded in non-GAAP results in both periods? And then secondly for Al, maybe Al, if you could just provide a little bit more color as it relates to some of these strategic accounts, what the customers are finding most interested as you're partnering with these people. Is it inventory, pricing, private label, distribution or kind of all of the above?

Brian Andrews -- Chief Financial Officer and Treasurer

Sure. So Steve, I'll handle the first one. As far as the the DBT payment we made in Q1 of last year, in Q1 that impacted our free cash flow and took us down to $29 million that we received as a result of the tax settlement actually was received, the cash was received in Q2. So it will improve our free cash flow in Q2. But the impact from the settlement resulted in our tax rate -- but that was part of one of the three reasons, the primary drivers of our tax rate going down to 2.6% in Q1.

Steve Willoughby -- Cleveland Research -- Analyst

If I could just follow up on that real quick Brian, and so not to belabor on tax question on the call, but, so a year ago then, was the $42 million -- was that charge included or excluded in non-GAAP numbers?

Brian Andrews -- Chief Financial Officer and Treasurer

That was included in Q1 of last year.

Steve Willoughby -- Cleveland Research -- Analyst

Okay, thank you. Perfect.

Albert G. White III -- President & Chief Executive Officer

And quickly on strategic account, Steve, I can say it's all of them, the things that you mentioned. I think, whether it's the ability to offer a customer brands kind of as we've historically talked about private label like the ability to offer customer brands, the ability to ship directed in many cases. Our willingness and ability to do customized labeling and packaging, all of that stuff and you combine that with like our desire and our willingness to offer better marketing and promotional support. And having and all that kind of be tied to supporting the key accounts, like it's the key accounts relationship. We're here to support that key account and help them grow their wearer base and retain their wearer base, that's what we focus on. And that's key and that entire message is being received really well by key accounts. So I'm not sure I would necessarily pull one thing but I would say the whole gamut of what we're offering from a customized solution perspective is what intrigues those key accounts.

Steve Willoughby -- Cleveland Research -- Analyst

Okay. Thanks, Al.

Operator

Thank you. Our next question comes from Jonathan Block with Stifel.

Jonathan Block -- Stifel -- Analyst

Thanks guys. And I apologize in advance if any question already asked. But maybe two for me. The first is on some of the investments in CVI from a shipping perspective, do you think those investments become leverageable so to say in 2020 or do you believe there's going to be sort of a long tail or longer tail to that as that fulfillment remains a big priority for the Company. And then I've got a quick follow up.

Albert G. White III -- President & Chief Executive Officer

Yes, I don't think where we are today that will leverage those distribution items next fiscal year. My guess is the distribution expenses kind of grow in line with revenues, that's what I would expect. I mean we're doing a lot of distribution expansion right now, a lot of upgrade work and so forth. So there the expenses are heightened. I think that gets better next year again growing kind of equal the revenues, and then I would expect that we'll probably see leverage from the distribution expense line in fiscal 2021.

Jonathan Block -- Stifel -- Analyst

Okay. And then if I can have sort of the part B to that, just to go throughout the P&L. I would invest obviously a huge investment for you guys this year. Another one Al is a lot of reps that you brought on on the CSI side, specific to your initiatives around PARAGARD. So, is there a way to think about maybe that item if the DTC initiatives are successful, that might be a more leveragable line item next year, because you brought in the reps -- you have some success arguably with the TV initiatives and maybe that's one where you start to see some leverage work, its way through the P&L next year.

Albert G. White III -- President & Chief Executive Officer

Yes, I would absolutely agree with that. I mean we have around 60 direct sales reps right now in PARAGARD, about 20 reps internally, we've hired those individuals kind of over the last year or so. So as we annualize that that makes life a little bit easier. But as we get into next fiscal year, you're absolutely correct, like we'll be able to leverage that some. I still believe that at some point in the future, we'll be able to combine those sales reps to some degree with our existing sales infrastructure, our sales reps doing our in-office medical devices. We're not obviously doing that now, but we will have the future. So I do believe there is some leverage opportunities within CooperSurgical, it's just now is not the time to do that. We're really working on driving revenue growth in that business and we'll continue to for the foreseeable future.

Jonathan Block -- Stifel -- Analyst

Okay. And (inaudible) borrow one here and based Steve's prior comments, I guess I missed the color on the call, but maybe if you could just help me out. The tax rate going forward, is this step down specific to fiscal '19. It sounds like per your prior comments, it maybe there might have been a specific credit refund or do we sort of -- when we look out and I think many of us had assumed that 14-ish percent tax rate was the new level set going forward. Does that still take hold or do we lower going forward as well? Thanks guys.

Albert G. White III -- President & Chief Executive Officer

Yes, I think the 14% would be, for now the correct way to look at next year. This deal -- this activity was -- will be, it was in Q1, it will all be within this fiscal year. So I think next year 14% would be the appropriate rate to use.

Jonathan Block -- Stifel -- Analyst

Okay, thanks guys.

Albert G. White III -- President & Chief Executive Officer

Yes.

Operator

Thank you. Our next question comes from Anthony Petrone with Jefferies.

Anthony Petrone -- Jefferies -- Analyst

Thanks. Maybe one on my side, one on PARAGARD, just to maybe get an idea of market opportunities. Just on my side, is there anything you could share just on exactly what the opportunity is within the US for myopia control for pediatric patients, so that would be in dollars, if you have that information? That would be the first question.

And the second on PARAGARD would be just, do you have any information on sort of the number of active prescribers today and sort of where you think that can go with the direct-to-consumer advertising campaign? Thanks.

Brian Andrews -- Chief Financial Officer and Treasurer

Yes, let me touch on PARAGARD . When we look at PARAGARD, some of the stuff that we've learned is that it's important to get some brand awareness out in the marketplace. The physicians know that PARAGARD exists. It's been out there for a little while. They know it exists, and if a patient walks in the door and ask about it or specifically ask for it, then the doc discusses it with them and frequently that's the product that they walk away with. So the feedback that we've received from all the work that we've been doing is create and including from the physicians is, create some brand awareness about this. Let's talk about this, let's have a discussion around the non-hormonal advantages associated with this product. That's why you you hear us talking more about the branding side in the advertising and social media marketing side of things.

We are also doing the training with the doctor. A lot of that activity is more just a reminder to the doctor of, hey, this product was not being supported or it was not being heavily supported and marketed and so forth. It's still here, it's still exist. As a Company, we're obviously dedicated to the space, it's a very important space to us, and we're going to continue to support this. So as individuals come in and ask for this product, doc, let them know that it's here, and as a reminder to you here are the advantage of it -- advantages of it. So it kind of gives you a little bit of color around that.

On my side or myopia management in general, I'm not going to get into any numbers yet. The only thing I can -- and I would point you to on that is myopia management really when we get into it as you're talking about kind of kids. Let's call it 8 years old to 13 years, right? I mean children start going into contact lenses on their own around 13, 14 years, and it's not myopia management lenses, but they're still going starting visual correction in the form of contact lenses.

How big is that eight to 13-year-old marketplace? It could be pretty significant, and I mean it could certainly be fairly significant in the US, and it could be on a global basis also, but there's still a lot of work to do there. So I don't want to get over our skis here, there's still a lot of work that we need to do and I don't want to start quote numbers yet on it.

Anthony Petrone -- Jefferies -- Analyst

Fair enough. Thanks again.

Operator

Thank you. Our next question comes from Matthew Mishan with KeyBanc.

Matthew Mishan -- KeyBanc Capital Markets -- Analyst

Great, thanks for taking the questions. Al, I'm going to risk embarrassing myself on some poor math on the call here and this probably also why you moved away from these numbers, giving them every quarter. But I have 8% pro forma growth for CooperVision last year for your 2018. I believe you said calendar year, that growth was 10%. Does that mean that November and December would have been much stronger than January, did I get that math right?

Albert G. White III -- President & Chief Executive Officer

Yeah. So you got two things that goes in there. One is the fact that it's calendar versus fiscal, the other is the market data that that we quote ends up being manufacturer sales data, it's our data, but it's on a gross basis versus a net basis. So that was one of the reasons we pull that out as because it was a little confusing, right? So you have to look at it a little bit more on a directional basis, that's probably the easiest answer to give you on that. You're exactly right, that's why we pulled some of those numbers out, because the market data is great directionally, but when you really peel specifically into the numbers, it gets a little more challenging.

Matthew Mishan -- KeyBanc Capital Markets -- Analyst

Okay, fair enough. And I'm just trying, understand the legs of the key accounts strategy you have. I realize the key accounts is a broad term, but if you kind of -- how should I think about how many more are there to sign? Is it a matter of kind of kind of increasing penetration with them or maybe them like taking share in the market and you kind of growing with them?

Albert G. White III -- President & Chief Executive Officer

Yeah, I think there is a few different ways that we look at that in terms of opportunities. There's no question that higher penetration rates within existing key accounts is very important and we look at that from the context of saying we have a great relationship with some, we'd like to sell more lenses to that company. The other way to look at it is to say, we have key accounts where we have strong relationships with them where the relationship is stronger on the FRP side, the two-week or the monthly side and we really want to expand that relationship to the daily side. Now, that would be -- you can look at that in terms of improved penetration rates also. But it's really to say, hay, we have a great relationship with you guys, we love you you love us, we have a great, a great strategic partnership, let's expand that into the daily silicone hydrogels, as an example, we're in a lot of cases we're under penetrated there. So you get that and then you do get some situations where we do have either really low penetrations or a kind of minimal relationships with people as they grow and we're trying to get in the door to ensure that we're offering our full suite of products there. So I think it's -- depending upon how you look at it, it comes from a few different angles.

Steve Willoughby -- Cleveland Research -- Analyst

Thank you very much.

Albert G. White III -- President & Chief Executive Officer

Yeah.

Operator

Thank you. Our next question comes from Joanne Wuensch with BMO.

Joanne Wuensch -- BMO -- Analyst

Thank you very much for taking the question. It looks like the market accelerated the growth rate at the end of 2018, what do you think drove it to that 8% versus the historical 4% to 6% range? And how do you think that's sustainable or not?

Albert G. White III -- President & Chief Executive Officer

Yeah. A lot of that growth, obviously, it's always a little challenging by quarter, right, and you look at everyone's performance and then you have to look at prior years in comps and so forth. But you're right, there is strength in the marketplace right now. A lot of that strength is getting driven by the factors that I was talking about, be it geographic expansion, be it growth in torics, multifocals and it's heavily being driven by -- the driven by the shift at Dailies and within that, the sub segment the silicone hydrogel daily component of the market, there is a lot of growth potential in my opinion, with those areas for many years.

I mean, I believe that the shift to daily silicone hydrogel themselves has five, six, seven year or something like that in front of us a pretty solid trade-up growth from that. And then when I look at geographic expansion, as an example, I mean some markets like India are tiny and almost non-existent. I mean they offer fantastic growth potential same with China and a number of other markets that are out there. And then when you look at markets where that are more developed where you having fits for like torics and multifocals like the US and some other developed markets. The penetration rates of those type of lenses are significantly higher than they are more under developed countries.

And over the years, we've always seen as countries develop, contact lens usage increases in the fitting of "the correct lens" or the proper lens increases. So I really believe we have many, many years in front of us is strong growth in the contact lens industry

Joanne Wuensch -- BMO -- Analyst

My second question has to do with SG&A spend, which increased year-over-year, some of it is going to the PARAGARD campaign, but sort of it is going into the key account strategy. Is it 50-50? I mean how do I think about how you decide which lever to pull for which franchise? Thank you.

Albert G. White III -- President & Chief Executive Officer

Yeah, it varies by quarter. As Brian highlighted kind of at the end there, we are pulling some pretty decent promotional activity forward on CooperSurgical and that means that in Q2. Here, you're going to have heightened activity associated with PARAGARD not to go back to normal, I would say, at the end of the day like we're investing in both of them, that we're not afraid to invest in both of them obviously within CooperVision, we're doing everything we can, that business is incredibly important to us, whether it's investing in infrastructure, manufacturing capacity, key account, salespeople and so forth, we're driving everything, we're pulling every lever we believe we can that provides a good return by investing in that business. Within CooperSurgical, from a key accounts perspective, we're also doing that. But as I discussed on PARAGARD, we're being a little bit more selective here as we look at the cost benefit of that and coming up with the correct strategy.

Joanne Wuensch -- BMO -- Analyst

Thank you very much.

Operator

Thank you. Our next question comes from Matthew O'Brien with Piper Jaffray.

Matthew O'Brien -- Piper Jaffray -- Analyst

Afternoon. Thanks for taking the questions. I guess, Al, just for starters on the CVI performance it's been very, very good. Dailies is quite good, seems like you're pointing a lot toward the key accounts really driving a lot of that is there anything underlying the in that business, that's also doing well that we're not asking about? And then back on the key partnership side of things, is there, is there any kind of meaningful competitive response that you're seeing, I'm assuming that your bigger competitors are also targeting these accounts. I mean, how are they responding to what you're doing in some of these accounts as you're taking shares so quickly there.

Albert G. White III -- President & Chief Executive Officer

Yeah, I think, I mean, kind of maybe answer both of those to some degree in the same way. I mean, we are the only company out there with the full and broad daily silicone hydrogel offering, right? The broadest like we have MyDay in the premium side, we have Clarity in the mass-market side, we have pulled sweated Clarity is that sphere, toric and multifocal. So we're out there, the products are out there in the marketplace, obviously, we have competitors who have some products out in the marketplace, but for now, we need to capitalize on the fact that we have a great broad product portfolio and that's what we're doing and we're out selling that hard right now.

Now, yeah, competitors are going to come out with new products, of course, they are, I mean this is a highly competitive industry and it's not like, some of the medical devices with heart valves or something like that. I mean we're 24% of the market Alcon is, J&J is, Bosch is, so people come out with new products all the time we have new products in our back pocket some stuff that we'll be launching over time. But for now, the key on both of those is that we have a great product portfolio and a highly energized team and that's the key behind our success. So we're anticipating competitors continuing to want to get back in and take share and we're through new products and we'll do the same through new products and we'll move the market.

Now one of the key points on this though, and it's important to remember is that as the market shifts to daily silicone hydrogel, the market growth improves. And that's why I keep kind of going back to saying, this is not one guy wins, one guy loses kind of thing. This is the shift to daily silicone hydrogel in this trade-up and this geographic expansion and so forth is lifting all competitors, everybody is getting better numbers, I mean the market grew 8% last year, I continue to believe we're going to see strong growth in the marketplace.

Everyone is going to grow, as long as they're acting intelligently within the marketplace. So I don't view this is kind of a win-loss with competitors, I view this as a win-win. I think that we have a better product offering and some better capabilities and then our competitors in the areas that we're focused on, yeah, we don't do the heavy branding like J&J does in the areas we're focused on, we have a great products that we integrate skill set and we're executing and doing really well there. So I think we'll continue to, but that does not kind of disparage our competitors who I believe, continue to put up pretty good numbers.

Matthew O'Brien -- Piper Jaffray -- Analyst

That's very helpful. As a follow-up, and you started to touch on that a little bit. Just the Asia-Pac growth continues to be very good, I'm assuming most of that is Japan at this point but China was an area that you guys have been talking about for years now. Are we getting to any type of inflection point in that geography and what kind of resource are you putting behind in that geography to deliver some outsized growth over the next couple of years.

Albert G. White III -- President & Chief Executive Officer

Yeah, you're right, Japan is probably still around two-thirds of that market, it's somewhere in that kind of range, maybe at 60%, 65% of that market. So it's a important driver there the other countries that are there are also important -- you mentioned China there's a number of other countries there, so we are seeing diverse growth throughout that entire region, we're under index there, there's no question about that. So it's incumbent upon us to invest there and we are investing there. We are putting a focus on key accounts and sales people and marketing and advertising efforts and we need to continue to do that. That team has done a very, very nice job over there and they've done it for many years and frankly we continue to believe they'll do that for the foreseeable future. So I won't get into necessarily in particular is on that, but I would say that, that's a very important region for us and we are investing dollars there and we will continue to invest dollars.

Matthew O'Brien -- Piper Jaffray -- Analyst

Very helpful, thank you.

Operator

Thank you. Our next question comes from Brian Weinstein with William Blair.

Andrew Brackmann -- William Blair -- Analyst

Hi, Al, Hi Brian, this is Andrew Brackmann on for Brian today. Al, maybe a strategic question for you. A lot of the discussion has been sort of around the trade-up and dailies but new wearers here sort of in the developed markets, how do you sort of grow that new wearer base in those markets. Is that still around key accounts, is there anything else that you guys can do there? Thanks.

Albert G. White III -- President & Chief Executive Officer

Yeah, we are seeing some growth in new wearers on a global basis, it's not much, certainly low single digits, but we are seeing some growth there. One of the things that we'll talk to some of the big retailers about in our key accounts about -- and we talked to them, but I think this is true for the entire industry is we need to do a better job with drop outs. There is a lot of people that are going to contact lenses, they'll get fitted because they want them -- they'll get some free lenses, they'll take them home, they will try them, maybe they have a hard time inserting the lens or there's something that's causing them a little bit of problem, and then they don't stick with the lenses, and they go back to glasses. And we get too much drop out there within that first week or two weeks.

So we've been talking about that with people and say, hey, we need to do a better job of follow-up here, right? We fit somebody in contact lenses, let's give them a tax or give a phone call, something where we reach out to them two days later or three days later, four days later, hey, how is it going? What can we help you with? How's the insertion going? How's the comfort going and so forth. I think we need to do a better job there.

I mean there're some interesting stats out there and they're kind of big numbers, but if you look at right now, there is like a 140 million contact lens wearers in the world and there's like 200 million contact lens wearer dropouts. And that includes people who just initially started wearing them and dropped out and it could be people who have gotten older and stopped wearing them. But if we could just do a better job capturing the dropout and working with these key accounts in these big retailers and reaching out to patients and say I know you want contact lenses, I know when you were in the store, you liked them and wanted to keep wearing them, why aren't you buying more of them. That's a key way for us to grow this industry.

I mean we can literally double the size of the industry by just keeping people in contact lenses that want to be in contact lenses. So I think that's an area where all of us can improve. I mean, we can improve on that, J&J and our friends at Alcon and Bausch and the big retailers, I mean we can all do a better job of growing the wearer base.

Andrew Brackmann -- William Blair -- Analyst

Got it. Thank you. Very helpful. And then, Brian, maybe a question for you. Could you maybe provide an update on where you're at with daily silicone hydrogel margins here. I think you're adding some capacity. So, is it safe to assume that those might be under a little bit of margin pressure here in the near term versus long term? Thanks.

Brian Andrews -- Chief Financial Officer and Treasurer

Yeah, well, I'm not going to get into the specifics about where those margins are landing, but suffice to say the margins on our daily silicones are -- put a little pressure on our margins overall. But that being said, we said that gross margins are going to be up slightly year-over-year, operating margins up slightly. So we try to manage this business to the operating margin level. Now whether you're talking about key accounts or just business in general. And so we'll work through it. And as we get more volume through our plans, and as we continue to improve our sales in those products, our cost premiums go down and our gross margins go up. So that's the -- that's been the story historically for Cooper.

Andrew Brackmann -- William Blair -- Analyst

Great, thanks.

Operator

Thank you. Our next question comes from Chris Pasquale with Guggenheim.

Chris Pasquale -- Guggenheim Securities -- Analyst

Thanks. Al or maybe Brian, can you quantify the spending which you're pulling forward into the second quarter. Just want to get a sense for the EPS impact because you call that out as the reason for the below consensus guide in 2Q.

Albert G. White III -- President & Chief Executive Officer

Yes, I mean we have talked about kind of $2.70 to $2.80 in the quarter, and I know everybody kind of had their expectations out there. For us, it's a fairly decent pull forward as you can imagine. It will depend on a couple of different factors, but we're certainly could be talking $5 million, $6 million, $7 million in that type range.

Chris Pasquale -- Guggenheim Securities -- Analyst

Thanks, that's helpful. And Al, can you give us any color on the relative strength of your two daily silicone hydrogel franchises these days, is MyDay still growing faster than Clarity off of a smaller base or is that moderated now given Clarity is addressing maybe a larger market segment.

Albert G. White III -- President & Chief Executive Officer

Yes, it's still -- that's still the same. Both lenses are doing really well, our both product families is doing really well. MyDay is growing faster than Clarity, but it's still a decent amount smaller than Clarity.

Chris Pasquale -- Guggenheim Securities -- Analyst

Thanks.

Operator

(Operator Instructions) Our next question comes from Robbie Marcus with J.P. Morgan.

Robbie Marcus -- J.P. Morgan -- Analyst

Thanks. Appreciate the question. Maybe a housekeeping question. Can you go through some of the pro forma adjustments in the quarter, maybe what FX was on the topline and bottom line and how you think about FX for the year?

Albert G. White III -- President & Chief Executive Officer

I'll let Brian.

Brian Andrews -- Chief Financial Officer and Treasurer

Okay. So FX for the quarter was about a $16 million negative, $0.20 detriment to EPS. For the year, we've got the detriment from revenue, around $55 million and $0.47 negative to EPS.

Robbie Marcus -- J.P. Morgan -- Analyst

Were there any other pro forma adjustments that you could give us in the quarter?

Brian Andrews -- Chief Financial Officer and Treasurer

There wasn't really much...

Albert G. White III -- President & Chief Executive Officer

Really wasn't much (inaudible) chart than we had in size there, but both of those I think closed in January, they were really -- there was really no adjustment for that.

Brian Andrews -- Chief Financial Officer and Treasurer

Really wasn't much there, no.

Robbie Marcus -- J.P. Morgan -- Analyst

Okay, maybe. And then, Al, just to follow up on your comments before without getting all of those patients who have dropped out back into the system. Can you talk about maybe the pathway to do that, is that something to you as Cooper and J&J have a database to do or is that going to have to be driven from the doctor level?

Albert G. White III -- President & Chief Executive Officer

Yeah. It has to be driven by someone so to speak. So if I use my example that a patient comes in and says, hey, I want to try contact lenses, the practitioners says here, try Clarity, its' a great product, you're going to love this and here's five days worth of lenses. What needs to happen is that some point at least once during that those five days, someone needs to reach out. And it could be a text, right? It could be a phone call, but someone needs to reach out to that patient and say, how is it going. You like those lenses, is everything OK with the visual acuity and the comfort and so forth. So whether that's coming from us or whether that's coming from the practitioner themselves like, it's important to reach out. So the ideal one is obviously, it's the practitioner or the practitioners office is reaching out inquiring with the patient, how things are going. But we can work with them on that, I mean automation itself is important.

I mean, when you think about some of the stuff that we do with Eye Care Prime and reaching out to patients and letting them know, hey, it's time for you to come in for your annual checkup and that kind of stuff. If we can link some of those IT platforms together where it says, hey, someone was fit in lenses, let's send them a quick text and ask them how it's going and so forth. That would be us working to help the physician themselves. So, I think however, we do it as an industry, it's something we need to continue to focus on improving.

Robbie Marcus -- J.P. Morgan -- Analyst

Thanks a lot.

Operator

Thank you. And our next question comes from Steven Lichtman with Oppenheimer.

Steven Lichtman -- Oppenheimer & Co. -- Analyst

Thank you. Hi guys. In Asia Pac Al, obviously Cooper results remain strong. You mentioned, of course you're under index there. So what do you think the underlying market is growing in Asia Pac, just trying to tease out, how much you're growing ahead of the market, probably in that region? Do you think about the sustainability of that market growth looking ahead?

Albert G. White III -- President & Chief Executive Officer

Yeah, I think that, that market is going to continue to grow nicely, and I believe that. I mean when you end up looking at at the the Asia Pac market, if you will, for the last calendar year, it grew 7% and we grew 13%, I'm talking about calendar quarter data, now I'm going to market data. If you look at the fourth quarter that market grew 9% and we grew 16%. So I think you're getting a number of different factors there. One, as I was saying, we are under index, we're hitting the market hard with some great products, so I think our chances of growing faster than the market are good. But the market itself is strong, the shift to dailies that we talked about is not as dramatic there because a larger percentage of population is already dailies. But you are getting a shift to daily silicones.

And then you're getting the geographic expansion, the new wearers base, that's where you're getting a lot of your new wearers. So when I talk about low single digits, let's call 1% globally of wearers, that is a higher percentage in Asia Pac. So I think when you combine all those things I talk about there, the excitement around Torics, multifocals, the excitement around geographic expansion, that kind of stuff is driving the growth in Asia-Pac. And we'll frankly for quite a while, I think, that that region probably has the best long-term growth dynamics of the industry.

Steven Lichtman -- Oppenheimer & Co. -- Analyst

Got it. And then Brian I apologies if I missed this, but I know you talked about some gross margin headwinds this year on the last call and some of the proactive work you're doing on distribution center expansion, some legacy product write-offs. Overall, any change to your thoughts on the impact there either way this year on gross margin?

Brian Andrews -- Chief Financial Officer and Treasurer

Yeah, I mean, as far as gross margins go, I mean what we said is gross margins will be up slightly year-over-year. I mean, I think when you look at the impact to FX, I mean you've got that headwind from FX really kind of impacting us mostly in Q1 and Q2.

Albert G. White III -- President & Chief Executive Officer

He's talking about those secondary handling.

Brian Andrews -- Chief Financial Officer and Treasurer

Oh, my bad. Yeah, so secondary handling, that was a bit of a drag for us in Q1, but it was what we expected. We kind of gave a little bit of a range and built that into our guidance last quarter, no real change and update there. We certainly are going to have some elevated freight and secondary handling, some inventory obsolescence that will flow through the year, but it's baked into our guidance and expect some of that stuff to fall away as we get toward the end of the year and certainly into next year.

Steven Lichtman -- Oppenheimer & Co. -- Analyst

Got it. Thanks guys.

Operator

Thank you. And our next question comes from Isaac Ro with Goldman Sachs.

Isaac Ro -- Goldman Sachs -- Analyst

Good afternoon guys. Two questions, one on growth and one on margins. On the growth side, can you talk a little bit about your expectations in the Americas, just given all your comments about global market growth, that 4% number, I was interested if that was sort of the new normal you expect for the year to medium term?

Albert G. White III -- President & Chief Executive Officer

No, I think that we saw some weakness, be it us or kind of the marketplace in the Americas and the U.S. marketplace here, but there's still a lot of positive underlying fundamentals, especially the shift to Dailies, we talk about the shift to Dailies and daily silicones, but both of those are happening in the U.S. market. So I would envision that U.S. market posting better numbers.

Isaac Ro -- Goldman Sachs -- Analyst

Okay, helpful. And then on the margin question, just there was some detail you guys give us on the investments you made this quarter and then kind of what to expect from the go forward. Can you just maybe quantify the incremental investments year-on-year that you guys made this quarter just to help reconcile that year-on-year margin performance, as we separate the investments versus FX and in other items. Thank you.

Albert G. White III -- President & Chief Executive Officer

Yeah. We gave some numbers on that last quarter. I think in particular, we talked about like $0.14 if I'm remembering right from kind of some elevated inventory and secondary handling charges and so forth, and then we've built that in our guidance this year and we're not going to break out any more numbers or detail on that, it's already built in the numbers, I'd echo Bryan's comments that we did have heightened costs here, those are reduced as we move through the year. We'll still have some stuff probably with inventory obsolescence depending upon how we move through things even into next year, but they're all wrapped into the numbers.

Isaac Ro -- Goldman Sachs -- Analyst

Okay, thanks.

Albert G. White III -- President & Chief Executive Officer

Yeah.

Operator

Ladies and gentlemen, thank you for participating in today's question-and-answer session. I would now like to turn the call back over to Mr. Al White for any closing remarks.

Albert G. White III -- President & Chief Executive Officer

Thank you. I don't really think I have much to add. A good solid quarter, I appreciate the interest, I appreciate the questions and so forth. We're continuing to execute on our strategy, and we look forward to reporting to everyone again once our next earnings call, it's a little earlier than usual, I think, it's May 30th is the date to our mark for our next earnings call.

So with that, thank you.

Operator

Ladies and gentlemen, thank you for participating in today's conference, this concludes the program. You may all disconnect and have a wonderful day.

Duration: 60 minutes

Call participants:

Kim Duncan -- Vice President, Investor Relations and Administration

Albert G. White III -- President & Chief Executive Officer

Brian Andrews -- Chief Financial Officer and Treasurer

Jeff Johnson -- Baird -- Analyst

Larry Biegelsen -- Wells Fargo -- Analyst

Chris Cooley -- Stephens -- Analyst

Steve Willoughby -- Cleveland Research -- Analyst

Jonathan Block -- Stifel -- Analyst

Anthony Petrone -- Jefferies -- Analyst

Matthew Mishan -- KeyBanc Capital Markets -- Analyst

Joanne Wuensch -- BMO -- Analyst

Matthew O'Brien -- Piper Jaffray -- Analyst

Andrew Brackmann -- William Blair -- Analyst

Chris Pasquale -- Guggenheim Securities -- Analyst

Robbie Marcus -- J.P. Morgan -- Analyst

Steven Lichtman -- Oppenheimer & Co. -- Analyst

Isaac Ro -- Goldman Sachs -- Analyst

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