Good afternoon and welcome to AtriCure's First Quarter 2017 Earnings Conference Call. My name is Shannon, and I'll be your coordinator for the call today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Lynn Lewis from the Gilmartin Group for a few introductory comments.

Thank you, Shannon. By now, you should have received a copy of the earnings press release. If you have not received a copy, please call 513-755-4131 to have one emailed to you. Before we begin today, let me remind you that the Company’s remarks include forward-looking statements. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond AtriCure's control, including risks and uncertainties described from time-to-time in AtriCure's SEC filings. AtriCure’s results may differ materially from those projected. AtriCure undertakes no obligation to publicly update any forward-looking statements. Additionally, we refer to non-GAAP financial measures, specifically revenue reported on a constant currency basis and adjusted EBITDA. A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures is included in our press release, which is available on our website. With that, I’d like to turn the call over to Mike Carrel, President and Chief Executive Officer. Mike?

Thanks, Lynn. Good afternoon, everyone, and thank you for joining us today. We are off to a solid start in 2017. Revenues were $41.3 million, up 15% over last year, reflecting notable strength momentum in the AtriClip franchise, solid performance in our open business and continued transformation in the minimally invasive market. During the first quarter, we also made progress across all of our strategic priorities. We are advancing our clinical trial programs, getting traction with CONVERGE and ATLAS and other key studies in strengthening our team. As such, we are reiterating our 2017 revenue guidance of approximately 13% to 15% growth year-over-year as well as our expectation for bottom line improvement as the year goes on and EBITDA profitability in 2018. A key to our growth is bringing on great talent and in Q1 we added significant talent to our team with nearly 30 new teammates hired including Dr. Vini Doraiswamy as our Senior Vice President of Clinical, Regulatory, and Scientific Affairs. Vini brings extensive healthcare experience and deep knowledge of the Afib space. He most recently served as Vice President of Global Clinical Operations at St. Jude Medical. Prior to this role, he spent a large portion of his career at St. Jude in the Afib market and served in various leadership capacities in program management, clinical affairs, strategic planning, and portfolio management. Vini is an important addition to the AtriCure team given our intense focus on clinical science and the importance of our clinical and scientific initiatives over the next several years. We also welcomed two exceptional new board members Reggie Groves and Kris Johnson both of whom bring extensive experience in medical devices, executive leadership and financial management. Reggie is currently REVA Medical. Previously, Reggie served as Medtronic's Vice President and General Manager of Afib Solutions,…

Thank you, Mike. For the first quarter of 2017, revenue increased 14.8% on a GAAP basis to $41.3 million. On a constant currency basis, worldwide revenue increased 15.4%. Revenue from product sales in the U.S. was $33.3 million, an increase of 17.7% from the first quarter of 2016. The increase in sales to customers in the United States resulted from growth across all of our key product categories. Revenue from open chest oblation related product sales in the U.S. increased by approximately $1.7 million to $15.7 million representing growth of 12.4%, driven by our education and training efforts and the impact of our CryoForm product, which launched in the second quarter of 2016. We are encouraged by the U.S. open growth especially given the softness experienced in the preceding quarter. U.S. sales of products used in minimally invasive procedures increased approximately $1.6 million to $8.3 million, up 23.2% and influenced significantly by expansion in our EPi-Sense business. We feel that the experience ramp of our MIM team along with the support of our regional sales managers and clinical specialists, we'll continue to drive this business forward as more physicians realize the benefit of the CONVERGE procedure. U.S. sales of the AtriClip system during the first quarter of 2017 were $18.7 million as compared to $6.8 million for the first quarter of 2016, an increase of 27.1%. We remain confident in strong and sustained growth rates for this part of our business. The launch of the AtriClip Pro 2 in Q2 of 2016 has had a meaningful impact on our business both in pricing as well as access into more procedures. International revenue grew 4.4% on a GAAP basis and 6.9% on a constant currency basis as compared to the first quarter of 2016 to $8 million. Growth was modest in…

Thank you, Andy. In closing, we are off to a solid start in 2017 and we expect continued traction and raising momentum as the year progresses. With our enhanced focus on minimally invasive approaches, we continue to drive towards greater predictability while also expanding our reach and impact on patients worldwide. The AtriCure team is strengthening and our pipeline of new products along with clinical trial progress set AtriCure for solid long-term performance. With that said, we will now open up to questions.

Thank you. [Operator Instructions] Our first question comes from Jason Mills with Canaccord Genuity. You may begin.

Hi. Thanks for taking the question. Congrats on a good start to the year Mike and Andy. Can you hear me okay?

Yeah, we can hear you great thanks.

Super. Andy, just quick housekeeping to start, I missed the Q2 and specifically the commentary about, in Q2, I wasn’t sure if you said open or total U.S. being toward the lower-end of your annual guidance range. Could you just calibrate me correctly on that?

Sure, Jason. We just said that Q2 should be towards the lower end of the worldwide full year range, which we gave is 13% to 15% growth.

Okay. So that was – okay, for the whole business, okay.

Correct.

So, Q2 in total towards the lower end of 13% to 15%. Got it. Okay. Mike, the most obvious thing that jumped out to focus, I’m guessing, this quarter is the bounce back in your U.S. open business. Could you talk a little bit more about how – if you look at the two quarters combined, Q4, which is obviously disappointing and Q1, which bounced back a little bit quicker than anyone expected. What did you see as you look at those two quarters combined that was much different than maybe what you’ve seen over the last year or two?

I mean as we’ve talked about, Jason, in terms of U.S. open on the last call back early in February, this year is going to be on the open side. We feel like it’s still going to be in a single-digit number, mid-single-digit for the year and we will probably have some bouncing between quarter relative to that. What we did see is we see – obviously we saw a lot of treatment. The STS guidelines are positive. I don't know that they had a direct impact on patients treated per se in the first quarter, but I do think that they really give us a solid place as we look forward for not just Q2, but really as we look into the latter part of the year and into 2018 and these guidelines have people very excited for the long-term here and really provide a nice substantial solid base. It’s an underpenetrated market and people are excited about it. Any specifics for this quarter, I think it's just a matter of – you are going to have choppiness quarter to quarter on volume that’s happening in procedures would happen in a hospital.

Okay. And just to take that a step further. You talked about being completely full in your training programs, so you also talked about adding companywide 30 employees. Talk about the things that most influence the sales growth trends within a given year. I would presume training and new teammate hiring or at least towards the top of those and could you talk about within the training program, if you're focused primarily within those programs on the aortic and CABG – can comment on aortic and CABG, which are relatively underpenetrated or perhaps any details you could give about that? And then on the sales rep side, out of those 30, sort of how many of those were quota carrying reps or can you give us any color about the additions to your sales team? Thanks guys.

Sure. I mean the things that really are going to drive our growth this year are really along the lines of – last year we spent a lot of time getting our team up to speed, assimilating the new technologies. We rolled out, if you recall, Pro 2, our rolled out CryoForm. We obviously stimulated the acquisition we did at the end of 2015 with the EPi-Sense product line. And those are really going to begin to kick in this year. That’s what is going to be – the bigger growth driver is all those new technologies, people having comfort selling them, positioning them properly. The training on the concomitant side clearly helps and those guidelines are obviously kind of giving us a solid base from that standpoint. But I would say it's really the products as much as anything else that are really going to drive some of the growth relative to that. We saw that on the clip side of things. The Pro 2 actually – we sold more Pro 2s than we did Pro in this particular quarter, so we had more revenue there. So that was obviously a big strong point for us. That product was introduced in the middle of last year and is really gaining traction on the minimally invasive side of our business. And so, I’d say those are really the biggest growth drivers relative to this year as the assimilation, the comfort level on that team and having a MIM team that’s really been in place for a longer period of time gives us a lot more comfort as we look at 2017 and begin to look at 2018. In terms of the size of the sales force, the 30 people are kind of across the entire organization, a lot of that’s on production. But in terms of the sales force we've added several MIMs, we’ve also added on a lot on the clinical specialist sides. The number of reps has really been up just a couple. And I'd say that a lot of it’s on the clinical specialist side to make sure that we're doing case coverage and covering it on that side. As I mentioned, I think really a big part of it is in – it's about more dollars per rep than it is about getting net new reps on more that are going to drive revenue this year.

Got it. That’s helpful. And then, Andy, one for your and I will get back in queue. Gross margins are about 50 bps above what we expected and are sooner at the top end of the guidance range for the year. What – I guess the question is, I don’t mean it to be negatively tented, I guess it’s going to come across that way. What's going to cause you to sort of leak down to the mid or lower point of that range when you start the year towards the higher end?

I can be simple things, Jason, like mix. So, obviously, the U.S. growth rate was pretty high, so that can impact. Some of it may be hat investments in our teams as the year goes on. So there are a few things that will keep us within the overall guidance range of the 72% to 73% for the full year.

Thank you. Our next question comes from Danielle Antalffy with Leerink Partners. You may begin.

Hey, guys. Thank you so much for taking the question and congrats on a solid quarter. Mike, I apologize if I miss this in the prepared remarks, but I know you guys added, I think, you said you added 30 new employees in the quarter, I’m just wondering where we stand now on sort of rectifying the issues that impacted sales last year from a sales force perspective, some of the sale force distraction from nContact, do you feel you are at steady sate now from a sales force perspective?

We are definitely at steady state from a sales force. We are adding new people and we are getting them more stimulated every day. But I think we're at a basic steady state per se, but we're going to be adding more MIMs as the year goes on. We are not fully staffed in that area and will be adding more clinical specialists for sure as well.

And then just a follow-up. If you think about the long-term growth potential of the company and you had what seems to be hopefully an anomaly last year from a top line growth perspective, a strong start to this year with a return to growth. And I guess I'm just wondering in the past you guys have talked about sort of a mid teens, maybe higher long-term growth trajectory here. Where do you guys stand with that? I’m not asking you to provide long-term guidance, but just trying to think about if you take all the pieces of the business from the clip to open and then eventually to permanently invasive, how the long-term growth profile might shakeout here?

A couple of comments on that. I’m not sure that our growth rate was that bad last year, it just we didn't hit the expectation that we set because we're still at about, I think, 20% or so for the year. But in terms of kind of answering kind of looking forward, we are pretty darn excited about where the business is going. We've got a lot in the pipeline like you talked about. We’ve got the clinical trials. And as you kind of look as the years go on, we do think we can see some healthy growth rates without giving specifics. For this year, we are very comfortable in the 13% to 15%. We think that’s a solid number to be with and we're going to continue to kind of march towards that in 2017. Obviously, we're excited about CONVERGE, we are excited about that trial, the results coming out with that, all the minimally invasive work we're doing on the clip side and those are things that could be accelerators in the longer term for sure to our overall growth rate.

All right. Thank you so much.

Thank you. Our next question comes from Rick Wise with Stifel. You may begin.

Good afternoon, Mike and Andy. Mike, maybe just turning back to CONVERGE, you've made it again abundantly clear that one of the company’s – your top clinical priority remains centered on completing conversion enrolment. And if my math is correctly at 61 patients, you're now – and tell me if I’m wrong, at 40% of the patients enrolled of the 153 you need. A couple of questions around that. Is this where you thought you would be on May 4? You talked about expanding the number of sites. Remind us where have you been, where are you, where do you expect to be by the end of this year and again just your latest best guess as to when you’d think you might hit for enrollment?

Yeah, an excellent question relative to CONVERGE on kind of what – it is our top priority as you mentioned. We did add quite significantly this quarter after having obviously very small enrollment. I look at CONVERGE very similar to the way things happened when we did – for those of you that were around during the post-approval study for our ABLATE trial. In that trial, when we kind of started to get back up and running, again, we hadn’t enrolled in about 9 or 10 months. The trial came on board, we had 11 or 12 sites that were enrolling and in a very quick period of time, as we build up our clinical team, once we got that done after about a year, we saw enrollment accelerate in 2014 where we were able to complete it way ahead of plan, but it took us a while to kind of build that infrastructure, we went from 12 sites to 40 sites that we’re enrolling and we basically quadrupled the enrollment over about an 18-month period. I see that’s what happened with CONVERGE. If you asked me at the time of acquisition, we are behind where we thought we would be at this point because a lot of sites we inherited were not doing any enrollment and so we kind of have to restart the trial from that standpoint and get brand new sites up and running. That's the bad news. The good news is that we've got 5 new sites that just started getting up and rolling. We’ve got several more coming online right now. Those sites are beginning to enroll patients. April was our best month in the trial history in terms of number patient enrolled. So, we are really beginning to accelerate that. I anticipate Q2 being solid and then Q3 really accelerating from a enrollment paced standpoint. So we're kind of where we thought we would be if you’d asked me on January 1 of this year, but not necessarily when we bought the company back in October 2015 from that perspective. In terms of our kind of enrolling by the end of the year, it is still a stretch goal for us. That was kind of the goal when we first bought nContact. We thought we could get everything enrolled by the end of this year. I’d say that’s definitely is a stretch goal at this point. It’s likely kind of middle of next year, but we are doing everything we can. We are incented internally to get it done by the end of this year and so that’s what we are marking towards and we're going to go as – get us as far as we can to get to the 153 patients by the end of this year. You are correct, it's 40% that we’ve enrolled to-date at 61 patients.

Okay. And turning to your comments on international performance this quarter, which as you correctly said, it’s currently softer than usual and it seems like a bunch of small things, unrelated, maybe temporary in nature, but maybe help us understand because if I’m understanding correctly, you’ve slightly lowered your guidance, I had – if I wrote it down correctly in February saying international would grow mid-teens, now you are saying low-to-mid double digits, which I assume is a little less. Help us understand why all that gets back on track in the second quarter or does it take till second half or I'm just not sure I understand.

Yeah, I mean the thing that happened in Q1, which was we actually expected it was in Japan, it's a large distributor, our second largest country that we sell to, we’ve just gotten cryo and the clip approved, we will be actually sending our first shipment for clip this quarter. We anticipate a big bounce back. Their year-end was as of March 31. And so, from our standpoint, it's – nothing to do with the volume happening within that country per se, it's just kind of the cadence of the quarters that they've got and then managing of – really getting inventory lower on their end. When you look at kind of this quarter, we feel very good about demand in Japan. We think we’re going to have a big bounce back from that standpoint and will have some cryo orders and some clip orders this quarter and begin to kind of get back onto a nice solid traction for the next three quarters through the year. So we feel comfortable on that front. That’s really where it – it was a little bit softer. Yes, we anticipated Japan a little bit, China was a little bit softer than we expected and I’d say that it was – but it was mildly softer and when you look at the percentages, these aren’t big dollars relative to the overall business, but they have an impact on the overall percentage per se. So we’re just a little bit softer on that standpoint, we are doing a lot, we met with our China distributor this week and feel like we're going to have a solid year, maybe not quite as good as we thought on that front, but again I think that overall we still feel like we will be at 13% to 15% as a company.

Got you. And one last question for me on guidance. Mike, you said repeatedly in your prepared comments you’re driving us toward stability, you're looking for and expecting steady but measured growth this year. But I don't quite understand the second quarter sort of careful comments; you slightly exceeded my expectation, it seems like a really great U.S. first quarter. But help us understand, I look at nothing but a soft – you have, I think, an easier comp in the second quarter year-over-year if I’m looking at it correctly, you got – the new product launches continuing to go well, the sales force is more fully integrated, it is functioning presumably successful. I'm assuming that the volume that’s going through the new facility will help, I don’t know, I’m not sure I understand why it should be anything different than first quarter if not or if not better? Thank you.

Sure. My general comment on that is again long-term I feel like we're in a great spot for building the right foundation for that long-term growth, but I'm cautious on a quarterly basis, I think, and we’re asking investors to be cautious as well in terms of kind of anticipating getting ahead of ourselves on that front. It's a big jump in terms of the revenue numbers from Q1 to Q2 and the comp is actually – Q2 last year wasn’t – is not necessarily an easier comp in Q1 was per se and so I'd suggest that it's just a big jump in Q1 to Q2 and we want to make sure that we are ahead of the curve on this one and we think that we should be – people should be modeling towards the low-end of the range.

Thank you. Our next question comes from the Suraj Kalia with Northland Securities. Your may begin.

Good afternoon, gentlemen. Thank you for taking my questions. Congrats on a nice quarter.

Thanks, Suraj.

Mike, can you hear me alright?

Yeah.

So, Mike, forgive me, I’m just been popping three calls. In CONVERGE I know you’ve talked about the number of patients enrolled and the cadence and speed of enrollment, Mike, I want to ask something different in CONVERGE and, again, forgive me if you’ve already mentioned this. In CONVERGE, am I right in saying that the posterior wall is going to be isolated in all patients during the epicardial approach?

Correct.

And on the endocardial part of the equation, is there a protocol specifically whether you go to the tricuspid line or you go to the – would everyone follow the same protocol, Mike?

The protocol is that they finish off the pulmonary veins because you're not completing that part of the kind of back wall ablation, what you're doing is you’re basically ablating the back wall, covering that and then the EP is coming in and finishing up pulmonary veins.

Okay. I guess what I was just trying to understand is when the final results come out we could compare that the approach would all be the same and what I'm hearing is the approach, the epicardial versus endocardial they would – you could compare apples to apples, did I get that right?

Correct.

Mike, in terms of the Japanese market, did you – can you give us some additional color how you think about it, launch, so on and so forth?

Well, we feel really good about a lot of the activity that’s happened in the Japanese market overall. We've just gotten cryo approved at the end of last year. Clip has been approved and we will be shipping our first shipment clip into the market. We are doing some training over there at the latter part of the end of this month. And so, we believe that's going to a big boost for long-term as we look into 2018 and 2019 and so we’re feeling really good about the distributors that we have over there. And as we look at it, it’s just getting more and more of our products in line there. There is no minimally invasive work really being done over in Japan today. So that'll be the next leg of those tools to bring in our minimally invasive products in that market. So, we’re kind of bringing a lot of the products that we have from other markets there, and eventually we will bring our minimally invasive tools as well.

Fair enough. And final two questions, I will hop back in queue. Did you talk about the nContact contribution in the quarter? And also staged DEEP AF, the status of that, have we removed the temporary pause or any color there? Thank you for taking my questions.

Yeah, sure. We don't break out on the MIS side between the two, so we did not give color on that. Relative to the DEEP trial that we've got, we’ve had very positive conversation with the FDA. We anticipate that we will get through the FDA comments sometime by the back half of this year and then we'll begin to go through the process of adding site at that point in time. But right now, the focus is really on CONVERGE, again, had really positive conversations on DEEP, but focus is on enrollment on CONVERGE and that’s really where the team is spending most of their energy.

Thank you. Our next question comes from John Gillings with JMP Securities. You may begin.

Hey, guys. Can you hear me okay?

Yeah.

Okay, good. So, I know that we've hit a little bit on the U. S. reacceleration already, but I just wanted to dig into that a little bit more because it is obviously sort of a key element of the quarter. So, looking at last quarter, some of the things you guys cited were surgeons moving at maybe a little bit higher rate than normal, sales managers being pulled away from OR, some of more things that I didn't think would necessarily be resolved quickly, so if you look at kind what happened this quarter, did some of that come back, were those issues resolved or was it more the STF guidelines, CryoForm gaining traction, maybe just kind of walk through the different pieces of the puzzle?

It’s all of the above in terms of the impact on it. Everything you just described actually does have an impact on the open number and where it is which is also why we say that it's a little bit – it will be inconsistent on a quarterly basis. If you look at last year's overall growth, it did have kind of a little bounce throughout the year, it wasn’t just at the end of the year relative to the surgeons did not move in the fourth quarter, some of that was the impact of a surgeon moving earlier in the year and then coming back online. There has been a little bit less movement. Some of those surgeons are kind of back in place, that’s definitely had a positive impact for sure. But as I mentioned earlier, the biggest thing is really our team has been in place, is on much more solid ground as we look at this year and they’ve had these technologies for a longer period of time. They're not – they’ve not only been on for 6 months now, most of them have been on for 12 months to 18 months. That knowledge and experience played big dividends for us out in the field in these open accounts. But again I don't think we want to get ahead of ourselves on the open side of our business. In the short-term, I just think you're going to see choppiness as the year kind of goes on. We're anticipating single-digit numbers there with the double-digit over 20% on the MIS and the clip numbers overall.

Okay, makes sense, and I appreciate the color. Just quickly on the MIMs, I think, you mentioned you had hired some during the quarter, can you tell us where you stand now and is 14 still the goal for the year or has that moved around at all since last quarter?

14 is the goal for the year. We still have several account to bring onboard as we kind of go through the year. So, we still have more to bring onboard. 14 is the goal, but we might expand that and go for more. We're not going to hold back if we feel like we're getting the right talent. The question is getting – it takes time to find the right person that can be very impactful in the cath lab and really understand EP language and be able to communicate between EPS and surgeons.

Okay, makes sense. And then last one for me. You mentioned the five new sites for CONVERGE, just help us understand how long does it take for one of those new sites to sort of get up and get running at a good clip?

A good clip is a question we are asking ourselves now. As we are trying to get them all up and running, I’d say that to really get that first patient takes about a month or so as they kind of get through it and then we anticipate that they'll begin to contribute in a more meaningful way between kind of 2 months and 6 months. So we will start to see – that’s why I’m talking about third and fourth quarter being good months or good quarters for us overall. Q2 I think will be a nice uptick from Q1 relative to enrollment, but it won't be as impactful as Q3 and Q4 when those sites are really up and running in a big way.

Okay, alright. Well, thanks a lot guys and congrats on a good start to the year.

Thanks.

Thanks, John.

Thank you. Our next question comes from that Matt Miksic with UBS. You may begin.

Hi. Thanks guys for taking our question. So, I just had maybe a couple of additional follow ups on some of the questions that have already been asked. One was on this thing you’ve mentioned a couple times, Mike, is sort of user this taking out a conservative-ish view regarding the second quarter and talking about this sort of variability maybe in the near-term in the open business in the U.S. and I'm just wondering if you could provide any color on what drives that kind – if there's an ebbs and flows kind of fact that you're seeing month-to-month or quarter-to-quarter, what kinds of things are driving that and then I have just one follow?

Yeah, the number one thing that drives the business on that front is procedure volume, cardiac procedure volumes. Remember we are the secondary procedure. So, the primary procedure somebody is going in for is – they are going in for a mitral valve, an aortic valve or a CABG procedure. And as a result, since we are the secondary procedure, they’ve got – first you’ve got to have those procedure volumes on all of those and they’d also got to have the incidents of Afib within that. That's the biggest driver to it than anything else is going to be that volume on what happens. That's why it's on a month-to-month basis it may be different percentage. On an overall basis for the year, we are obviously able to kind of predict or have a pretty good feel for it based on numbers and history and looking at news sites coming online or new surgeons that are beginning to do more work on it. But on a month-to-month or quarter-to-quarter basis, it's a little more difficult to kind of know exactly the incidents relative to the number of surgeries.

That’s understandable. And then on the – and I guess I would ask – do you see the same fluctuation at all on the clip side just – is there same sort of reliability on the open procedures up and down seasonally whatever it is?

On the open clip you see a little bit of that variability for sure. I mean the open clip does grow a little bit faster because sometimes people do use the open clip on some other patients and so they will do it just much of outpatients, so that we do see that happening. So, it does grow at a faster pace, but you can see some semblance to that variability. That being said on the minimally invasive side you see that there is increased volume with our Pro and our Pro 2 basis. Those are products that are being accepted very well and really driving the growth quite substantially. Those products would drive us over 20%, not the open clip.

Okay. That’s helpful. So then – the other sort of follow-up, maybe two here on CONVERGE procedure. Just trying to understand your aspiration goal you are driving towards enrollment by the end of the year, if you could maybe step back and remind us what that means in terms of data and potential filing and reaching the market? And then I have just one other follow-up on that part of the business if I could.

Sure. So, I mean – if you look at the data – if we are able to hit that like you mentioned, I think, the aspirational or stretch goal at the end of the year, again, we think it’s probably more likely middle of next year and we are working hard to get it done by the end of the year. But just think in terms of after that date, you’ve got about 15 months before the complete follow-up is going to be completed on those patients, so they are going to actually track those patients. And then once those patients are tracked from that last patient in then you are going to have to go pull the data together and then go to the FDA and possibly go to panel and then it’s obviously not necessarily in our control in terms of how the timeframe works from there. It can three to six months to put the data together and then beyond the three to six months, it’s obviously depending upon the information the FDA or the panel might require at that point. So, that kind of gives you are general sense of what the timeframe might look like in kind of a best case scenario and maybe a more extended case scenario.

So, maybe if I’m reading that right, sort of best case scenario would be kind of towards the end of 2019 for commercial, is that right or data earlier that year and then potential approval later in the year?

That’s correct. That would be your best case scenario based on enrollment and that’s obviously why we want – faster we can get the enrollment done, the faster we can obviously pull it in, which is why we are focused on putting all of energy and resources behind that.

That’s helpful. I understand. You got some loops to get through before we get to that point. But the last if I – and I’m not sure if this comment around capital placement drove the potential effect on margins. If you could help remind us what role that plays in your business and if there is a – see any sort of seasonality or we should expect any kind of acceleration or slowdown in that part of your business?

Hi, Matt, it’s Andy. The depreciation impact we are talking has to do with the generators that we are placing across sort of all part of the open and MIS ablation side, so it’s just – it’s what the device is – the disposable devices plug into. So, as we grow and specifically as we rollout the EPi-Sense product to more centers, we are placing generators around that. And we are obviously balancing that constantly in terms of the placements to drive the business and then there is a margin impact as we depreciate that over the years. So, nothing crazy, but it is from a quarter-to-quarter perspective you can have a small increase as placements get a little heavier.

So, you’re getting the capital on the field maybe into a center that’s not using that much of the nContact consumables then it’s going to weigh a little heavier and then it will ease periodically, that’s kind of the phenomenon you are describing?

Yeah, I mean, it is – but it’s blended among the entire customer base. So, I mean, we are talking about pretty – relatively small impact, but it does one more targeting about small basis points, small bps in the margin, those are things that matter.

Okay. Well, thanks to the color.

Sure.

Thank you. I’m showing no further questions at this time. I’d like to turn the call back over to Mike Carrel for closing remarks.

Everyone, thank you so much for joining us tonight. We look forward to obviously spending more time with you at the various different conferences. Again, thanks for attending. Have a great day.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. Have a wonderful day.