Zimmer Holdings Earnings Call Insights: Persona Launch and Dornoch Capacity
Dan – Barclays Capital: This is actually Dan stepping in on for Matt. Just a quick question, I appreciate the comments you made on Persona and how that really becomes a more meaningful contributor towards I guess the back half of the year. Can you discuss, Gel-One, which you called out as a meaning contributor this year, power tools, VIVACIT-E, some of those pipeline items, are those kind of also expected to ramp the year or is it really mainly Persona where it is more of a back half contributor?
David C. Dvorak – President and CEO: We have exciting new offerings in all of our product categories, Dan, and I think it’s fair to say that the general launch plans for each of them would have them ramping as the year progresses, so if you look at knees, obviously Persona is the largest launch in the Company’s history. We are just beginning that (general) release and the academy was really the formal initiation of the launch program, so that will ramp as the year progresses, but we do expect it to be impactful in 2013. Within hips our VIVACIT-E products has been out for a couple quarters and so the penetration rate continues to increase there and that’s going to be a significant help within our hip business, the Avenir Hip Stem will just get going in the second quarter and so that will be a second half event for sure. Then you get into extremities, the total ankle replacement and now the Nexel Total Elbow, that really will continue to sequentially progress through the year within the extremities business. You asked about Gel-One; Gel-One really was launched in earnest at the very end of last year and we look to make good progress, are right on track if not a bit above our planned expectations coming into the year within the first quarter and feel very good about the execution that we’re running to within that opportunity category and the list goes on and the others, I mean there is obviously very significant opportunity within the surgical business with some of the internal development projects that have been initiated and successfully completed over the last several years as well the external development projects, including the Transposal Fluid Waste Management System. So you should expect to see sequential improvement. I would tell you that I’m very confident that you’re going to start to see some of the early benefits of these launches in the second quarter.
Dan – Barclays Capital: Then just one quick follow-up on R&D. It’s a little below. We’re expecting a little below than our 5% kind of range. I appreciate your comments on – I know you guys kind of completed a large number of projects. The transformation initiatives are obviously helping there, but as far as like a normalized rate going forward (is current), the 5% kind of a good rate or I’m just kind of curious about where you’d see that in longer term in normalized, I guess?
James T. Crines – EVP, Finance and CFO: I think that that is a good rate. It could differ in some periods, a bit below that. It could accelerate a bit above that. We will regulate it over time, but as far as the midpoint expectation, Dan, I think that reinvestment at that level was an appropriate way to think about it.
Ravi – Bank of America/Merrill Lynch: This is (Ravi) in for Bob. My first question is just on Dornoch and really just how much capacity does Dornoch have to pick up loss business from the Neptune recall. For example, I think when you acquired Dornoch, they were doing about $10 million in revenue, but if the opportunity is there for them to do $30 million to $40 million, do they actually have the capacity to do that?
David C. Dvorak – President and CEO: They do. It’s been a terrific effort I will tell you from the point of closing that transaction to ramping up production relative to the opportunity that we have before us and I want to give a shot out to the Dornoch team and the broader integration efforts that taking place within the organization because it is – it’s been heartening to see the amount of work that people have been willing to put in to fully exploit the opportunity we have. We believed that was going to be a good fit and plug meaningful gap and address an opportunity that we have within our surgical portfolio and it exceeded our expectation to date, but we look to do big things in that category this year…
Ravi – Bank of America/Merrill Lynch: I just wanted to get your thoughts on the pending AAOS statement on the clinical benefit of hyaluronic acid. When are you expecting that letter to come out? Do you think there is any chance that they change their mind or what the impact of that letter to actually be on Gel-One and just the overall HA market?
David C. Dvorak – President and CEO: We aren’t overly concerned about the outcome of that. The letters, I recall, went out for comment and I think the comments were due in the early part of March. There is speculation that the guidance document, whatever form it takes, may become available sometime perhaps next month. But I will tell you that the productivity that we’re seeing within the sales force on the Gel-One product, and if you think about the entire trend within the field where payors are highly interested in early interventions and solutions that might represent either a deferment of a more significant procedure or even addressing that patient’s issues to a point where a procedure – a follow-on procedure could be avoided, there is a high, high level of interest because it’s a very cost-effective way to treat patients and care for them. So I don’t think that that market is going to go away and we’ve received terrific feedback on the users of Gel-One to-date. So, I believe that we’re very well-positioned and I think irrespective of what comes out of the guidance document, we’re going to continue to be able to address a significant clinical need with the Gel-One product.
A Closer Look: Zimmer Holdings Earnings Cheat Sheet>>