Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Joel Sendek – Lazard Capital Markets.
Joel Sendek – Lazard Capital Markets
I have a question on the margins. The sales and marketing margin keeps improving. It’s pretty impressive, and I’m just wondering if you’ve gotten to a certain steady state where you don’t have any further leverage, or is there further leverage in the sale and marketing line. Can you comment on that a little bit?
Rob Perez
We’re at the point where, as we’ve said in that past, we constantly look at the sales and marketing expense and in particular the biggest part of that is the salesforce, and we take a look at whether there is more leverage in additional people. We’re in the process of going through that this year as we’ve done every year. Where we are, we don’t think it’s going to take a significant increase in additional people in order to continue to grow this market. Changes on the margin are possible, but we don’t think you’re going to be looking at doubling up salesforce size. So we think we can continue to grow the product with just incremental changes in the sales and marketing spend.
Joel Sendek – Lazard Capital Markets
The guidance suggests that sales and marketing as a percentage of product sales is going to tick up a little bit from whatever it was in the third quarter, the 13.7%, but is the run rate for next year in the mid teens you think or will it trend lower as sales increase?
Mike Bonney
As Robert just said, Joel, we don’t think that there is loss of additional expense necessary to generate additional return. There may be a little bit around the margin. We’re not going to provide 2010 guidance on this call, but we do think that given our focus on the acute care environment and the way that that market place responds promotional efforts that there is actually a fair amount of leverage in this model over time.
Operator
The next question comes from the line of Eun Yang with Jefferies & Co.
Eun Yang – Jefferies & Co
On the SG&A, sales and marketing, why was the third quarter much lower than the previous quarter?
David McGirr
Really it’s just timing of expenses Eun more than anything. You have some programs and sales meetings for example that hit one quarter versus the next. I wouldn’t really read much into quarter over quarter changes in the sales and marketing line.
- To read the full transcript on Seeking Alpha, click here »
