Teleflex Incorporated (TFX) Earnings Call Transcript & Summary

Okay. Good afternoon, and welcome to day 2 of the 42nd Annual Raymond James Institutional Investors Conference. I'm Larry Keusch, the hospital supplies analyst, and it is my distinct pleasure to welcome the management of Teleflex. Joining us today from the company are Liam Kelly, who is Chairman, President and CEO; Jake Elguicze, Treasurer and Vice President, Investor Relations; and John Hsu, who's Senior Director of Investor Relations. Apologies that we're not doing the conference from Florida this year. I know those that are up in the Northeast, would certainly enjoy some warm weather given the snow that we've had as of late. But Liam and Jake and John, thanks for participating in our virtual format. For those of you that are joining on the line, there is an opportunity to ask a question of management during the presentation. If you have a question, you can utilize the Q&A function, which is on the upper-left side of your screen. And you can just click on that, and the question will come over on our side.

So with that, let's dive into the discussion. So Liam, there's -- look, there's been a lot of change at Teleflex over the years. The portfolio has been expanding. You've done that through both organic and inorganic means. You've driven margin expansion. There's been a clear strategy around the capital deployment. So just to kind of get us going here, for investors that are not too familiar with the company, can you just frame the corporate strategy and how you're thinking about the durable growth rate for the company? What are the objectives there?

Yes. Larry, thank you very much, and thanks for hosting the conference. I, too, wish we were in Florida and, hopefully, next year, we will be. So look, if you look at Teleflex today, we're a global medical technology company, one of the faster-growing diversified global medtech companies with, as you said, significant margin expansion opportunities. That clearly wasn't always the case. A decade ago, we were a diversified industrial company with the medtech assets, and we made the decision then to become a pure-play medical device company. And when -- back then, as we began our journey in 2011, our growth was anywhere from, call it, minus 1% to plus 1% as we began that journey in any given year. And we started to build out a portfolio, really built on a few key pillars: Interventional Urology, Interventional Access, vascular, Asia Pac and OEM. And our philosophy has been that not all growth is equal. And as we continue to execute and focus on those areas, we got margin expansion in 2 areas. We've got margin expansion from our restructuring programs, and then we've got margin expansion because of the mix coming from those growth drivers in our plan. And then we started to use our balance sheet as a medtech company, and we did 5 scale transactions, and they all really had pretty familiar dynamics. They all met our strategic intent of having assets that fit within our verticals, had very long IP, had very good health care economics, arguments and obviously had a value drive and were sticky in the hands of the customer that would use them. And we continued that strategy. And from a financial metrics, those acquisitions were all accretive to our growth, were all accretive to our gross margin and in time, were accretive to our op margins. So we got leverage in the income statement and, therefore, we're giving return to our investors. If you look at our long-term goal aspirations, 3 years ago, we laid out a plan that would have us growing at 6% to 7% top line growth. We would be delivering -- getting to 60%, 61% gross margin; 30%, 31% operating margin. And most investors were pretty excited about that because what that meant was, on an EPS perspective, it didn't take them long to figure out you'd get good EPS growth of that type of a portfolio. And in the first year, we were making great progress. In 2019, we had great line of sight to getting all the metrics, and then along came COVID. Now we still believe that those numbers are the right numbers for Teleflex. For us, we just have to get out the other side of COVID and then advise the investment community as to what we think we can do. And as we sit here right now, we feel we're in a pretty good position because if you're the CEO of a medtech company, as you're aware, Larry, you just want levers. You just want a number of growth drivers within your portfolio that's going to drive your long-term growth. And we have a lot of them right now. We have UroLift, UroLift 2, we've got UroLift in Japan. We've got Z-Medica, a really nice acquisition that we did. We've got EZPlaz that we just submitted our BLA. And we've got MANTA. We've got our Vidacare portfolio, and we've got PICCs. So that's the situation you want to be in if you're running a diversified medtech company. Because we all know, not everything is going to go exactly as we plan in any multiyear plan. And therefore, what you want is levers in order to be able to offset, for example, FX going the wrong way in Latin America as it did a few years ago. So that's how I would frame up Teleflex and our long-term aspirations as a company, Larry.

Okay. Very good. Look, I recognize that you provided this LRP for the 2019 through 2021 time period. Obviously, with COVID here, that's -- you've taken back your guidance. And so I'm sure we're going to get an update in the fall when you are, I believe, planning to have some sort of investor event. But how would you frame under that old LRP, which again was provided back in 2018 for 2019, you were looking for 6% to 7% constant currency growth. How would you frame where the company is sitting today and the ability to -- putting COVID aside, a more normalized environment, to be able to be back in that sort of range or perhaps even at -- above that range? I don't know. But just how are you thinking about it?

Yes. So the way we look at it, Larry, I know in your business, your tagline normally in your business is past performance is no indication of future performance. In our business, it's the exact opposite. The only indication of future performance is truly past performance. And as I look at Teleflex, again, as a diversified medtech company, and I look at what we've done in the past, in our first year of our LRP, we grew 8.2%, so well above the 6% to 7% range. In this year, ex the -- or in 2020, ex the impact of COVID, we would have again grown over 8%. And as we laid out that 6% to 7%, we've also augmented our ability to get to that growth rate. Because when we began that journey, we didn't have some of the strategic M&A that we did in that period of time in that short 2 years. So we acquired the MANTA product. We also acquired HPC in our OEM business. And then just in December, we closed Z-Medica. So we've actually added more fuel to our fire, if I can put it that way, with potential to augment our growth. Now -- so therefore, we feel really comfortable in that 6% to 7% as a guidance range that we continuously adhere to with the hope at any given year that we'll be able to beat that. And ex the impact of COVID, the first 2 years of our 3-year plan, we would have been in really good shape to be exceeding our goals for the investment community.

Okay. Great. Let's turn momentarily to COVID. Obviously, continues to be a very dynamic situation and will have a meaningful impact on 2021. You've got certainly this surge in cases that we saw late last year, into early this year. You've got the vaccine rollout. You've got new variants of the virus. So a lot going on, a lot to think about. You guys, compared to other companies in our universe, I think have taken a bit more of a notable and more conservative approach to guidance and assuming a bit more of a protracted recovery here. So maybe to start the discussion around that, what have you seen relative to elective surgical procedures in January and February in the U.S.?

So yes. So I think, Larry, we have taken a very prudent approach, if I may, to our guidance. September, doesn't seem that long ago. But if you go back to September, we were one of the first companies that really identified that the recovery in the fourth quarter wasn't going to happen the way most people thought. And we were on a little bit of an island back then. So as we were looking at stepping back into the -- to providing guidance, we thought it best that we'd be prudent in our approach. And just to remind the investment community as to what our guidance is, our total revenue for the full year is 10% to 11.5%. That constant currency breaks out to 8% to 9.5%. And you're absolutely correct. We saw the increase in cases in January and in the first half of February. That really put a lot of pressure on procedures. And my view has not changed on the state of the recovery in regard to who's going to lead the recovery. I think the recovery is going to be led by the Americas and by Asia and with Europe being a laggard. And also for Q1, I think we said on our call that our revenue in Q1 will be 22% of our full year revenue growth, and that would take into account that up surge in cases we saw in January through February. And from a days adjusted growth, that would be, call it, minus 1% to minus 2% given that in Q4, on a days adjusted basis, we had declined by minus 1%. So we've taken into account those increase in those cases, and I think that was prudent. We wanted to set up the year with a full year forecast. And in our thinking that the recovery would occur in the second half of the year to put out a forecast or guidance out there that we felt we had every chance of at least achieving, if not exceeding, as we went through the year.

Okay. Perfect. I think, Liam, you would probably agree with me that certainly, hospitals in the U.S. and maybe even more broadly speaking, have really done a tremendous job in really moving to a position where they can accommodate the treatment of COVID patients. They are certainly trying to keep their ORs open and those elective surgical procedures going. Physicians have been accommodating in telemedicine and getting patients into the system. So it's really been fairly remarkable if you look at where we are today versus where we were, in essence, a year ago when this all started. But -- so if you sort of agree with that construct, is there something about the 2Q that you see that is -- that leads you to believe that we won't be back to kind of 2019 levels? Or again, is it just, hey, let's be cognizant of this as a dynamic situation. And let's just take a little bit more, to use your words, prudent view on the year.

Well, first of all, Larry, I agree with everything that you said. And I always had the highest level of respect for hospital CEOs and for people that work on the front line. I didn't think it would even get any higher, but through the midst of COVID, it actually has, and in particular, to the frontline doctors and nurses that really put themselves in harm's way for the good of humanity. And hats off and utmost respect to them. With regards to what we're seeing in the first half of the year, we definitely, in the first -- January and most of February, we did see increased cases of COVID, as we already said. We see the rollout of the vaccine much more advanced in the United States than it is in Europe. And that's what's leading my thinking to a slower recovery in Europe than we're going to see in the U.S. and Asia. China is pretty much back open right now after the Chinese New Year, the restricted movement for the Chinese New Year. And I think that word, prudence, always comes back into our guidance, Larry. We thought it was prudent if you're going to get back out there and put guidance out there for the investment community, the last thing we want to do as Teleflex is disappoint that investment community. So we want to put guidance out there that is going to give us every opportunity to get to at least that ranges that we put out there. And here's the good thing. We've kind of derisked Teleflex for any investor who holds our stock with that assumption. The recovery happens in 2Q, better than our expectations, then Teleflex does better, the investment community does better. And obviously, that increased revenue will come from Interventional Urology, Interventional Access and Surgical. So you'll get drop-through in that area of recovery that will drive earnings to the investment community.

Okay. That all makes total sense. Backlog has continued to sort of be a debate out there. It kind of feels like some surgical specialties may have more backlog than others. How are you viewing the backlog on your business broadly speaking? I assume that you believe there is backlog in Interventional Urology. But what about other parts of business? Is there a backlog dynamic? Or should we think of you as kind of a little bit more caught up?

So I think the whole backlog thing is an important concept. As you look at the pandemic, we had a little internal phrase. We didn't call it the pandemic anymore. We called it the pan didn't. This procedure didn't get done, that procedure didn't get done. And I think as we look at it, I think it's really dependent on site of service. So -- and we just spoke about the nurses and docs that are exhausted from fighting through COVID. Now to go back to that same group in a hospital and say, now we need you to work Saturday and Sunday to work through the backlog. I think it's going to take some period of time to work through that backlog, Larry. You're going to see some of it coming for sure this year, but you're also going to see it come into 2021. But I do think that a product like UroLift, where 60% of the procedure is done outside of the hospital, in an ASC or an office environment, I think, you have a much better potential there to work through any potential backlog or postpone procedures because of that advantage of the site of service. So we'll have to wait and see how it plays out. In our guidance, we assumed that the growth would be as a result of the easier comp, for example, in quarter 2, and you'd have the COVID impact based on that. It's hard for us to monitor the backlog and how much of that is coming from backlog versus the easier comp as we go through the year. But for sure, there is -- there has to be -- there just simply has to be a backlog of patients that didn't go in and get X procedures done because of the restrictions on movements that were there globally for individuals to have procedures done.

Okay. Great. Let's switch gears here. Interventional Urology is one of the most significant areas of focus for investors given the growth profile, market opportunity, the margin expansion opportunity there. So maybe talk to us about how you constructed your UroLift guidance for 2021, given the flat performance in 2020. What was the thought behind how you constructed that outlook?

So again, we use the same process for UroLift as we had with the rest of our businesses. We built our guidance based on the recovery in the second half of the year. And with that, that's where we anticipate that we will grow at least 30% this year. If you think back a year, Larry, when we go back to 2019, into 2020, pre-COVID, we had guided to 25% revenue growth coming off the back of the year that we grew at 47%, almost 50% the prior year. Just again being prudent/conservative in our outlook. And if you looked at the UroLift, ex the impact of COVID, our assessment would tell us that it grew at almost 40% last year. So I think the assumption -- the base assumption is, it's going to be impacted by COVID in the first half of the year, and then we're going to have a recovery in the second half. And that's, again, back to that prudent/conservative outlook that we've given in order to give ourselves every opportunity to execute it against -- better at the end of the year. Now we have a lot of positives and a lot of levers to pull. We've got the ATC new product out there. We've got the UroLift 2 that we've launched. We've got DTC. We have trained, again, about 430 urologists last year, so those bolus of urologists should come through in this year. So I think the mood music is good. We haven't started dancing yet but -- or the fat lady hasn't sung, but she's clearing her throat, Larry, and we're getting ready.

Yes. No, all those things that you mentioned, those dynamics when -- and obviously, I'm not trying to put words in your mouth. But when you look at sort of 30% growth for 2021, which really is 30% growth versus 2019, right? And yet you trained more docs, you've got new products, you've got DTC behind you on a national level. You might sit here and say, yes, 30% is a nice number, but these guys should be able to do better than that. So I guess we'll see how that progresses through the year. And again, a lot of uncertainty relative to COVID, but if things start to wind down, sounds like you might have some opportunity to do better.

Yes. So the gating factor is COVID, as we all know, Larry. And I think with the assumptions that we set up, everything you say is true. So if COVID recovery starts in Q2, then UroLift recovery will start in Q2. And it will allow us also to accelerate because of access to customers, the rollout of the UL2 a little bit earlier because we're on a limited control launch now because of the fact that we don't have access to docs in the first half. The product is done. The pre-testing is done. All of the work that we did in 2020, even in the midst of COVID is ready for this product to go out the door. The restriction is getting access to those urologists. So if that frees up and opens up a little earlier, then all of those factors, the DTC with those bolus of patients that we've made aware of the UroLift, they are now under the control of urologists that use -- does the UroLift procedure as his front line of care. So as I said, we've -- I think we've set up relatively prudently to the year ahead with, as you say -- and you're not trying to put words in my mouth, but you're doing a pretty good job of it, that the year is set up pretty well, we think.

Okay. Perfect. So on -- look, when I think about UroLift and what you have done since you got your hands on NeoTract, you have continued to drive real-world data that shows the durability of this treatment. You have advanced the state-of-the-art around the visualization and the device itself. And obviously, UroLift 2 -- 2 variations of UroLift 2 in essence are -- is now approved. You trained doctors. And so there's been a lot that you've done here to improve this technology. So how are you thinking about the competitive landscape? And again, how did that factor into how you're thinking about the '21 guide? And I guess the other thing that I failed to mention, but it's super important is you have a really solid reimbursement profile in all care settings, which cannot be set for the competitors necessarily.

No. As I say, everything you say is true. I mean we look at ourselves, quite frankly, as the paranoid zebra. Paranoid zebra never gets eaten. We have a formidable competitor out there with Boston Scientific. The iTind product is at the early stages. But having said that, we believe that we are fast becoming the standard of care for the treatment of BPH. We've got 3,000 out of 12,000 urologists trained in the United States. The clinical information and data that's coming out there is compelling. Even if you look at the recent clinical data comparing UroLift versus Rezum and the patient experience around sexual function, it is compelling as to why you would pick UroLift over Rezum. You look at the most recent clinical data that was published around UroLift versus pharma solutions around the area of sexual dysfunction and patient outcomes, it's a compelling argument. And that one is really important because it -- first time it demonstrates that a procedure has an equal to a better outcome than the pharmaceutical solution, which up until now has been seen as the front line of care and will bring more urologists closer to the point where we can offer UroLift as the first line of care. We have got an advantage, as you said, in the reimbursement part of it. And we're growing into a $6 billion market in the United States with 12 million men that have the condition 100 million globally, and we've only just scratched the surface. We've got DTC in existence, and that's helping us in that underpenetrated market. And I think that it all comes down to, in our world, patient outcomes. And if we just focus on patient outcomes and the benefit that our product has for the patients, it's a situation that any urologist, looking at the data would view the UroLift as the treatment for the treatment of BPH. And I've never met a clinician yet that will not do the right thing by the patients. So it really does come down to the patient outcome. And having a couple of companies out there talking about BPH, it really is a rising tide lifting all boats. It's no harm having another company out there making urologists aware of solutions. And I think we will make UroLift the standard of care for BPH. And there's always going to be a competitor or 2 in the marketplace. But I do believe we will be the dominant player globally over now and over time.

Okay. Great. I want to get to some of the other parts of the business. So just a couple of other quick ones here on UroLift. So you certainly reiterated that you anticipate reimbursement in that second half of the year, kind of launch in Japan in second half of the year. Is it still the assumption that you are likely to get clearance, the regulatory clearance for the UL2 that was filed by the end of March? Is that still kind of the right way to think about that time line?

So we expect the reimbursement, the clearance for the product isn't the gating factors to reimbursement, Larry. So our expectation for the reimbursement is that we will get that in late Q2, Q3. And really, they meet once a quarter. So we -- that's why it's late Q2 or Q3. So we'll either hit one of the meetings or the other. We will be generating revenue in the second half of the year, and that's the gating factor. And we've already begun -- we've got pre-market development specialists already in the market in Japan. We've identified the top 20 urologists that we're targeting, and we will recruit ahead of the reimbursement, the sales team. We're moving some of our existing sales team, who already have a relationship with those urologists, into that team in order to hit the ground running. We've done virtual BPH summits. Pre COVID, we had a U.S. urologist that actually speaks Japanese, meet with some of those key thought leaders. And the connection between the U.S. and the Japanese urology society is very tight. So that gives us an advantage. They're all aware of UroLift. And it really is -- it's a hierarchical society as we all know. So it's really about getting to the top of that tree for us, getting those first 20 urologists. And in the fourth quarter -- third and fourth quarter, we will be doing procedures to fulfill the PMDA study requirements that we have to do, and then ramp in '21 and '22 and beyond.

How do you think, Liam, about the ramp that we saw with UroLift in the U.S. Now a portion of that ramp was pre ownership of Teleflex, and there was a lot of heavy lifting by a small company. But then once you had it, and the durability data got out there and there was money put behind it, we obviously saw this very nice ramp with pretty impressive growth rates. Does Japan follow that same sort of growth pattern, given that there is durability data out there, you've got Teleflex behind it, there is experience that you've been talking about with getting the societies up to speed on the technology? Or is there something unique about the Japanese market that might make it behave differently?

So there's a couple of things in the Japanese market. So first of all, the U.S. market is $6 billion in opportunity. Japan is $2 billion in opportunity. So -- and the way the U.S. ramped back in the day was it went $5 million, $16 million, $50 million. Then much of the base stays at that $50 million. It's almost like compound interest. The base grows, and then you add to it with additional urologists. So it went from $50 million then to $125 million, $200 million, $300 million. So that was the growth rate as it was laid out. So at 1/3 of the size, that's probably as good a yardstick as any of us can get for what we might expect from the Japanese market. There's one different -- there's 2 differences in the Japanese market, really. One is it's a single-payer market. So once you get reimbursement, you have reimbursement for the whole of Japan, so that's an advantage. The other is, is there are a lot of urologists. So there are 9,000 urologists for the size of the country. And the work that we're doing right now is trying to define how many of those are truly BPH urologists. We don't believe it's full 9,000. Is it 5,000 or 6,000 of those 9,000 that we truly need to train? And that's some of the work -- development work we're doing now with American development specialists on the ground. And I think, Larry, we need to get there to truly understand the trajectory of the growth. It won't be for a lack of investment, a lack of focus or a lack of training and clinical effort that will hold the growth, and the first gating point is to get to the other side of COVID, get reimbursement and then start to ramp from there. But I think the U.S. model at 1/3 the size is probably as good a playbook as we have today.

Okay. Good. Last question on this. France and China are future markets for UroLift. Where do we stand currently with lifting this off in France? And what's the latest thought around China, whether you would need a local study or not?

So for China, the good news is, Larry, that we have been informed by the Chinese authorities that we do not need a local study. That was really positive news for us. They will accept the pivotal L.I.F.T. study in order to proceed with getting the product registered. So that should mean that we should have China approval in late '22, early '23 and get into the market there. We should be in France at the end of this year, 2021. We are finalizing the pivotal trial. And I think that, that will be done, and we should, therefore, get reimbursement and be within the French market by the end of this year. Thereafter, just a few other key markets is the private market in Brazil. We also should, after France, be able to bring on Italy and Spain. So we're rolling it out globally into these different markets, and we think that's a nice opportunity for us just based on the numbers. Because as I said earlier, there are 12 million men that suffer with BPH in the United States, but there are 100 million men globally that suffer with the condition.

Okay. Okay. Let's turn to MANTA for a moment. So I saw a couple of weeks ago in one of the TCT sort of digital publications that there had done a study -- well, Ron Waksman's group had really done a study looking at the MAUDE database and looking at the various competitors. And if I were to paraphrase, the conclusion, it was, a, there are still a number of adverse events associated with these closure devices. It wasn't clear that MANTA necessarily had less adverse events. But the simplicity was remarkably different in its ease of use versus the competitors. And the ultimate punchline was Ron Waksman was quoted as saying, hey, we're converting the Washington medical center over to 100% usage of MANTA. So just want to get your sense of kind of the feedback that you are getting and the interest levels. And you already talked about sort of an 8% penetration rate of that $200 million to $300 million market. That was actually the target that you had for 2020 before COVID hit. So it sounds like you're getting back to where you want to be. But yes, just give us some thought on kind of how MANTA is resonating with the users here in the U.S.

So everything that you're saying is absolutely true. I think that it's important to recognize in the key U.S. market, last year, MANTA grew around 90%. So even in the midst of COVID, we got a certain level of penetration. And we almost got to just about 5% penetration at a $250 million midpoint last year, right? We're planning to get to 8% and a little bit above this year. And we finished the fourth quarter around $5 million. So we were pretty much pro rata at 5 -- at an 8% penetration. So again, it's back to that own assumption, Larry, COVID is going to persist for the first half of the year. If it doesn't, then it's going to do better than even our internal expectation. With regard to the clinical data, we -- there's been a number of case -- of clinical output. Now unfortunately, some of them are too small to be statistically relevant. And we always go back to the SAFE MANTA pivotal trial. What that showed was a few aspects: Number one, it showed -- because it was statistically significant, it showed a significant reduction in major complications, a 70% reduction. And therefore, the product should ultimately pay for itself over time because of those reduction in those major complications. More importantly, though -- and this is what the point you're referring to. The assurity of closure and the time to close is really, really important. Because we can cut down the mean time to closure from something around 15 or 20 minutes, down to about 20 seconds. But as we've gone through this with our clinicians, that's great. But what they love is once it's closed, it's closed. And that is surety, and that's why they're converting to the product. Because if you use any of the suture-mediated device you actually have to come back in a high level of time and do secondary closures. And one of the recent studies showed that 3 of those devices were being used in those circumstances. So the price differentiation -- differentials then almost disappears if you're using 3 per close as compared to 1 MANTA. So I think it all bodes well. And one area we are looking at doing ourselves is doing another head-to-head comparison, but one that will be statistically significant. We need to get over 1,000 patients to do that, and just do it once and for all and do a head-to-head. And I think that will, again, prove the efficacy of the MANTA product. And we're also doing an improvement to the MANTA product within our R&D group. We want to make it easier to use Doppler to actually insert the product, which will even make it better than it is today. So those are a few things that are happening in that area, Larry.

Okay. Interesting. In the last couple of minutes here, I want to just shift to really just a couple of quick financial questions. First, the Biden administration has been in here now for, I don't know, 6 weeks or so. But what is your sense or how are you thinking about a corporate tax increase for 2022?

So clearly, the Biden administration have made it one of their policies that they see corporate tax rates being increased within their term. I agree with you. I don't think it's going to happen in 2021. I mean by the time they get it through -- this is, I guess, one of the byproducts of having both houses under one control, and it's definitely something that has the potential to happen. As we all know, changing tax laws is incredibly complex. And all you need is one vote in order to stop that. But I do think we will see -- and it won't be, I think, as they outlined in their policy. I think you're going to see marginal increases in the corporate tax rate. I think you're going to see some potential modification to the GILTI tax rate. Clearly, it's not going to be a positive for any medtech, any company in the United States or any medtech company. But we -- our tax team are constantly looking for opportunities, and we won't stop doing that. But I don't think it's going to be quite the draconian increases that people originally started talking about. I mean it's very hard on one hand to be talking about a $3 trillion relief package. And then, on the other hand, talk about increasing corporate tax rates. They seem counterintuitive to me. You need corporate America to be generating returns in order to create employment if the economy is going to get back together. And taxes have never been a positive prerequisite to companies employing more people within the country. They've done exactly the opposite. So I think they'll be cautious just because of that dynamic.

Okay. Same question, what about medical device tax? How are you thinking about that? That was a -- pretty unpopular. Certainly, it was a negative for the industry, negative for innovation. There was bipartisan support to get rid of it. What do you think? Does that come back? Or not necessarily?

I would think that it's unlikely that, that comes back just given the once -- bipartisan support. So both sides of the house said this is not a just tax. And really, the reason it wasn't just is what it took away from. It took away from companies spending more on R&D, which ultimately took away from new medical device technologies that save cost to the overall ecosystem. So it was a short-term gain for a long-term loss ultimately in people's health and solid patient outcomes in the future. So I would be pretty confident that both sides of the house would be reluctant to bring something like that back.

Okay. Last, last question, super fast here. So certainly, coming full circle back to where we started the conversation. Teleflex has been a serial acquirer. You've done, largely speaking, a great job with the acquisitions. There's been this rise in these special-purpose acquisition corporations, or SPACs. And if you look at sort of the amount of money that they're raising and how much they have to gross up to go after an acquisition, it kind of lands them in that sort of billion-dollar range is what they're going to be targeting, maybe $800 million, sort of in the strike zone of where you've been, at least in some of your deals. So do you think that the environment could get more difficult to source deals if you got these SPACs floating around out there?

The longer I'm on this planet, Larry, the more I realize it's almost like a circular reference on Excel. SPACs becoming popular again. I'm almost in déjà vu. I think that my view on SPACs is it's almost like a vehicle to do a semi-IPO by going through these vehicles. But at the same time, how do they create value unless they operate like a private equity group? And we compete with private equity groups all the time and is strategic should always be able to pay more for an asset than a private equity group or a SPAC simply because we've got synergies, we've got channel, and we've already got an established area there. So if we're not able to outpace either a private equity or a SPAC, then it's the wrong asset for them and for us. And I'm happy to let them have it at that stage because it's not really for us. I think the bigger competitive nature that we're seeing in the M&A world is really IPO valuations. If you've got a really good quality asset, that is also testing the waters on an IPO, they're getting significant valuations out there. So for us, we've got to be really thoughtful about these acquisitions we're going after. And the ones that would probably not test the waters on an IPO are ones we're fairly certain we knock off that path because of the valuation that we can offer and the exit if they're under private equity ownership, for example, like Z-Medica, which is a great example of that. So -- and the other thing is, thinking of Z-Medica, I met those guys first back in 2013. A SPAC that gets set up this year, they don't have that history of watching and working with these assets and the knowledge as you go through it. So it takes multiple years to get comfortable with the acquisition that you're going to bring into the Teleflex family. And our pipeline is quite robust right now, and our leverage is down below 3 at the end of the fourth quarter. So we're in really good shape from an M&A perspective. And Z-Medica has been an excellent add to the portfolio.

Okay. Terrific. Liam, this has been a fascinating conversation. We could keep going if there wasn't a timer. I feel like I'm getting rapped on the knuckles by a ruler right now. But thanks so much for your time. Good to see all you guys. Glad everybody's well, and we'll catch up. And have a good, productive rest of your day.

Thank you very much, Larry. Much appreciate it.

Take care.