Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from the line of Kristen Stewart - Credit Suisse.
Kristen Stewart - Credit Suisse
I was just wondering, Dan, if you could just kind of go back to some of the hospital purchasing patterns and talk about why is it that some of these quarter end inventory purchases were not done in the quarter and why wouldn’t we expect them to kind of fill in in the fourth quarter? And then coupled with where currency is going, I just would have expected the EPS guidance to perhaps be a little higher.
Daniel J. Starks
Let me address generally the topic of quarter-end quantity purchases of cardiac rhythm management devices in the market as a starting point and then talk a little bit about our specific experience in the third quarter and what we are forecasting to accommodate in the fourth quarter; so, just as a bit of a background for those that are not as close to the business, quarter-end quantity purchases are a material part of the cardiac rhythm management market in the United States. We’re not going to start to break out quantity purchase amounts or other segments inside our US pacing and ICD numbers, but I do want to make some directional comments to help people understand the dynamics that we manage in our forecasting in closing-out quarters and some of the reasons that we encourage people to not make too much of any one-quarter end combined quarterly results and trend 6-month results over a longer period. So, first, the absolute details are different for high-voltage and low-voltage with respect to quarter-end quantity purchases, but if we were to blend the details with respect to high-voltage and low-voltage, in round numbers, the quantity purchase revenue in our CRM business is about 15% of our quarterly totals, and sometimes more and sometimes less, but on average over a period of time, the blended revenue quantity purchase is in that general ballpark. The size of specific quantity purchases where a customer can really vary quite a little bit, some customers would purchase as few as 5 units, other customers would literally purchase several hundred units in a single transaction; so, the quantity purchase amount, the amount of inventory that a customer takes, sometimes it will represent the volume that a customer expects to consume during the next quarter, sometimes it represents either more or less of that volume. So, there’s really just quite a bit of volatility in quarter end close in our CRM business in the United States, and it is one of the reasons why again we encourage everybody and in our own internal dynamics we tend not to make too much of any one quarter. You can see it in competitive numbers as well, you can see competition have unusual numbers either high or low in one quarter that seemed to be inconsistent with what a person sees over a longer period of time.
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