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Teleflex Q1 2022 Earnings Call Transcript


Listen to Conference Call View Latest SEC 10-K Filing View Latest SEC 10-Q Filing

Participants

Corporate Executives

  • Lawrence Keusch
    Vice President, Investor Relations and Strategy Development
  • Liam J. Kelly
    Chairman, President & Chief Executive Officer
  • Thomas Powell
    Executive Vice President & Chief Financial Officer

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to the Teleflex First Quarter 2022 Earnings Conference Call. [Operator Instructions] And will be available on the company's website for replay shortly. And now I will turn the call over to Mr. Lawrence Keusch, Vice President of Investor Relations and Strategy Development.

Lawrence Keusch
Vice President, Investor Relations and Strategy Development at Teleflex

Good morning, everyone, and welcome to the Teleflex Inc. First Quarter 2022 Earnings Conference Call. The press release and slides to accompany this call are available on our website at teleflex.com. As a reminder, this call will be available on our website, and a replay will be available. Please refer to our press release from this morning for details on how to access the replay. Participating on today's call are Liam Kelly, Chairman, President and Chief Executive Officer; and Thomas Powell, Executive Vice President and Chief Financial Officer. Liam and Tom will provide prepared remarks, and then we will open the call to Q&A.

Before we begin, I would like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties, and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today as well as our filings with the SEC, including our Form 10-K, which can be accessed on our website.

During this conference call, you will hear management make statements regarding intra-quarter business performance. Management is providing this commentary to provide the investment community with additional insights concerning trends, and these disclosures may not occur in subsequent quarters.

With that said, I'll now turn the call over to Liam for his remarks

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Thank you, Larry, and good morning, everyone. It's a pleasure to speak with you today. Teleflex continues to execute well despite a challenging environment. For the first quarter, Teleflex generated 3.2% constant currency revenue growth year-over-year. When adjusting for the estimated 1% impact of one less selling day in the quarter compared to the prior year period and the impact of our 2021 respiratory business divestiture, the underlying growth in the quarter was 5.8% year-over-year despite some disruption from COVID in January and early February.

Adjusted earnings per share increased 0.3% year-over-year to $2.88, reflecting growth in the business, offset by the impact of incremental inflation and investment for our growth drivers. Once again, our steady performance in the quarter was driven by the company's balance of growth drivers, broad portfolio of medically necessary products and category leadership, offset by the impact of COVID-19 and the divestiture of the respiratory assets. Although the surge in COVID infections disrupted the business during the first half of the quarter, we had a better-than-expected performance in March.

Specifically, we saw a notable impact in January and early February driven by deferrals of procedures, patient reluctance and patients and caregivers contracting COVID, which negatively impacted procedure volumes. However, as COVID infections declined, we saw a notable uptick in our business as we exited February. In the quarter, our high-growth portfolio, which accounted for approximately 25% of revenues in 2021 and includes UroLift, mANTA, hemostatic products, EZ-IO, OnControl and PICCs performed well.

When excluding UroLift, which was anticipated to build momentum through the year, the remainder of products in the high-growth portfolio increased in the low double digits when adjusting for one less selling day in the quarter. We continue to expect our high-growth portfolio to grow in the mid-teens for 2022 as the environment normalizes and UroLift growth improves over first quarter levels. Our durable core remains on track for 4% growth in 2022 as assumed in our guidance.

Overall, we are pleased with our first quarter performance despite the COVID-related disruptions and year-over-year inflationary pressures from freight, raw materials and labor. I am also pleased to report that our pricing strategy has gained traction early in the year, and I feel very confident in delivering our plan of 50 basis points in positive pricing in 2022. We continue to assume a more normalized operating environment as we progress through 2022 due to a decrease in COVID disruptions and an increase in elective surgical procedures.

Given that it is still early in the year, we are maintaining our constant currency and adjusted earnings per share guidance for 2022. I would once again like to thank the entire Teleflex team. The resilience of the organization continues to hold fast. Although the disruptions from the pandemic have been longer than anticipated, I believe the Teleflex team is managing through this exceptionally well. The hard work and dedication of our employees continues to be felt throughout the organization and with our customers, patients and in our communities.

With that, let's turn to a deeper look at our first quarter revenue results. I will begin with a review of our reportable segment revenues for the first quarter. All growth rates that I refer to are on a constant currency basis unless otherwise noted. During the first quarter, our Americas, EMEA, Asia and OEM segments demonstrated resilience, with all regions showing constant currency revenue growth year-over-year. Again, we continue to see the benefits of our diversified product portfolio in this challenging environment. Americas' revenues were $378 million, which represents 0.8% growth year-over-year.

In the quarter, Surgical was the biggest contributor to growth, partially offset by the impact of COVID-19 and one less selling day. Excluding the impact of the selling day, the Americas region grew approximately 2.3% year-over-year. The headwind associated with the respiratory divestiture to the Americas growth was minimal in the quarter. EMEA revenues of $136.9 million increased 3.4% year-over-year, with Interventional, Vascular Access and Anesthesia products leading the growth. EMEA continues to face a headwind from COVID-19 in early January and subsequently saw procedure volumes improve as countries across the region continued to open up.

Excluding the impact of the respiratory divestiture, revenues rose 7% year-over-year. Turning to Asia. Revenues were $69.2 million, increasing 12.5% year-over-year. China revenues increased at a strong double-digit rate, led by growth in Vascular and Surgical, while Southeast Asia and Japan also contributed to the performance in the quarter. Excluding the impact of the respiratory divestiture, Asia revenues rose 18.5% year-over-year. Let's now move to a discussion our first quarter revenues by global product category.

Consistent with my prior comments regarding our reportable segments, commentary on global product category growth for the first quarter will also be on a constant currency basis and ranked by size of our business units. Starting with Vascular Access. Revenue increased 3.2% to $166.1 million. Our category leadership in central venous catheters and midlines, along with our novel coated PICC portfolio, continue to position us for dependable growth. PICC growth was in line with internal expectations for the quarter. We expect PICCs to grow faster than the market with double-digit growth for 2022 as we invest behind our differentiated portfolio.

Moving to Interventional. Revenue was $96.9 million, up 2.3% year-over-year. We executed well during the quarter with growth across our broad portfolio. We continue to invest behind our Interventional portfolio, including complex catheters and MANTA, our large bore closure device. MANTA revenues were as expected in the quarter, with usage continuing to expand both in the U.S. and in international markets. In turn, we remain on track for our 2022 revenue objectives.

Now to Anesthesia. Revenue was $86.9 million, up 5% year-over-year. LMA single-use masks, hemostatic products, atomization and airway all contributed to growth in the first quarter, partly offset by lower sales of tracheostomy products. Hemostatic products revenues were in line with our expectations for the quarter. In our Surgical business, revenue was $89.7 million, representing 14.4% growth year-over-year. Among our largest product categories, we continue to witness robust growth in sales of metal and polymer ligation clips, offset by timing of orders in instrument our business.

For Interventional Urology, revenue was $74.9 million, representing an increase of 2.2% year-over-year and slightly above our internal expectations. As expected, the performance in the quarter was negatively impacted by the meaningful acceleration in COVID cases in January and February, which not only impacted patients, but also resulted in staffing shortages. However, we saw improvements in the operating environment sequentially as COVID-related disruptions began to ease. OEM revenues increased 9.2% year-over-year to $57.7 million.

Once again, our order book remains strong as customers recognize our broad competencies. We remain well-positioned with competitive capabilities across our markets, including faster growth opportunities in thin mold, advanced interventional microcatheters used in neurovascular and other applications. And finally, our other category, which incorporates sales of respiratory products not included in the divestiture to Medline, Urology Care and manufacturing and supply transition agreement revenues related to our respiratory business divestiture, declined by 11.7% to $69.5 million year-over-year.

The decline reflects the loss of revenue due to the divestiture of the respiratory products, partially offset by manufacturing and supply transition agreement revenues. We continue to expect manufacturing and supply transition agreement revenues to partially offset the impact on our revenue growth related to the divested respiratory assets over the first half of 2022 and that all MSA revenues will phase out at the end of 2023. That completes my comments on the first quarter revenue performance. Turning to some commercial updates and starting with UroLift.

We continue to see UroLift positioned for accelerating growth in the second half of 2022 as pandemic headwinds abate through the year and as elective surgical procedures become less disruptive. Accordingly, there is no change to our 15% year-over-year growth outlook for the year. UroLift remains differentiated from other outpatient BPH treatments with strong clinical results, studies showing rapid symptom relief and recovery, no new sustained sexual dysfunction and durable results. Investors familiar with Teleflex will be aware that UroLift is being positioned for patients that are suffering from BPH and have failed or are not satisfied with drug therapy.

Our DTC program remains an important element in our market-building activities and is poised for another successful year with internal metrics tracking to or above plan in the first quarter. As discussed previously, we are laser-focused on improving UroLift utilization for existing users and driving increased productivity of the roughly 900 surgeons that were trained in the midst of the pandemic. Our sales force is fully engaged to advance the rollout of UroLift two with conversion of the vast majority of our U.S. users anticipated by the end of 2022.

Importantly, we are getting very good feedback from surgeons that have now converted to the new device. In addition, UroLift two remains an important margin driver. And we remain positioned to generate approximately 400 basis points of UroLift gross margin expansion once the U.S. user base is fully converted. We believe that a tactical approach to moving our existing UroLift users back towards prepandemic procedure levels is the most effective way to improve growth in 2022.

Even though it is early days, we are encouraged by the improvement we are seeing in the growth from existing UroLift users. Now turning to an update on our international expansion strategy for UroLift. We have initiated our launch of UroLift in Japan on time and consistent with the April one implementation of reimbursement. We have now completed initial cases with Key Opinion Leaders and we are methodically ramping up volumes. The feedback from the first cases has been overwhelmingly positive, which reflects the clinical benefits of the UroLift system and our field clinical capabilities.

Although we consider 2022 as a building year for Japan, the country remains an important long-term opportunity for UroLift with a $2 billion TAM, and we are excited to bring this clinical beneficial treatment to those suffering from BPH. We continue to expect our sales in the region to ramp in a similar fashion to the United States in a market that is 1/3 the size. As we look into the second half of 2022, we expect revised reimbursement in France, and we anticipate launch activities in select regions in Italy and Spain. We still expect to obtain clearance for UroLift in China in 2023.

Turning to the Vascular business. We recently received an award of a sole-source group purchasing agreement with Vizient for the supply of central venous access products. The group purchasing agreement includes access to Teleflex's leading portfolio of CBCs with differentiated antimicrobial technology as well as the recently launched ErgoPack complete system. The agreement goes into effect in August and should generate incremental revenue for Teleflex over the next several years. That said, the impact of the agreement was already contemplated in our annual guidance for 2022.

Regarding potential label expansion opportunities for the hemostatic product portfolio, as we indicated previously, we have completed patient enrollment in a 231 patient IDE study, evaluating the performance of quick clot control plus hemostatic devices from mild to moderate bleeding in cardiac procedures as compared to standard gauze. We remain on track with our regulatory milestones and recently filed a 510(k) for expanded use of quick clot control plus. That completes my prepared remarks.

Now I would like to turn the call over to Tom for a more detailed review of our first quarter financial results. Tom?

Thomas Powell
Executive Vice President & Chief Financial Officer at Teleflex

As previously mentioned, our 2022 guidance contemplates a 70 basis point impact to gross margin from incremental inflation. Adjusted operating margin was 25.7% in the first quarter. The 180 basis point year-over-year decline was a result of the lower gross margin and planned investment in the business for our growth drivers, partially offset by disciplined expense management. Net interest expense totaled $10.2 million in the first quarter, a decrease from $16.1 million in the prior year period.

The year-over-year decrease in net interest expense reflects savings from the early redemption of the 2026 senior notes and the impact of reductions to outstanding debt using the proceeds of the respiratory divestiture and operating cash flows. Our adjusted tax rate for the first quarter of 2022 was 11.9% compared to 13.9% in the prior year period. The year-over-year decrease in our adjusted tax rate is primarily due to further enhancements and tax efficiencies of our global structure, partly offset by costs arising from the new provision of the U.S. tax law requiring the capitalization of certain R&D expenses.

At the bottom line, first quarter adjusted earnings per share was $2.88, which was relatively flat year-over-year. Turning to select balance sheet and cash flow highlights. Cash flow from operations in the first quarter was $62.1 million compared to $110.8 million in the prior year period. The decline was primarily attributable to unfavorable changes in the working capital, driven by higher bonus payments in the first quarter due to improved performance in 2021 versus 2020. Also impacting cash flow was an increase to our inventory levels, provide support for future growth and to minimize the potential impact from supply chain disruptions.

Moving to the balance sheet. Our financial position remains healthy. At the end of the first quarter, our cash balance was $466.7 million as compared to $445.1 million at year-end 2021. Net leverage at quarter eThanks, Liam, and good morning. Given the previous discussion of the company's revenue performance, I'll begin with margins. As anticipated, gross and operating margins declined year-over-year in the first quarter. For the first quarter, adjusted gross margin totaled 58.4%, a 100 basis point decrease versus the prior year period. The year-over-year decrease was the result of incremental inflation in freight, raw materials and labor, partially offset by favorable pricing. As expected, inflation was the largest contributor to the year-over-year decline in gross margin for the first quarter.

Nd was approximately 1.7 times, which remains well below our 4.5 times covenant. Now moving on to our 2022 guidance. We are reaffirming our expectation for constant currency revenue growth of 4% to 5.5% in 2022. In addition, we still expect reported revenue growth of 2.3% to 3.8% in 2022, implying $1 range of $2.874 billion to $2.917 billion.

When excluding the year-over-year headwind in the respiratory divestiture, our underlying constant currency revenue growth is still expected to be 5.5% to 7%. Moving to earnings. We are reaffirming our adjusted earnings per share guidance of $13.70 to $14.30 for 2022, a 2.8% to 7.3% year-over-year increase. Our guidance continues to include headwinds from the respiratory divestiture and inflation that together represent roughly $0.50 in 2022. Earnings per share growth, excluding the respiratory divestiture and incremental inflation, is expected to be approximately 7% to 11%. And that concludes my prepared remarks.

I would now like to turn it back to Liam for closing commentary.

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Thanks, Tom. In closing, I will highlight our three key takeaways from the first quarter and our 2022 outlook. First, our diversified product portfolio enabled Teleflex to deliver constant currency growth of 3.2% in the first quarter despite another wave of COVID. When adjusting for one less selling day and a headwind from the respiratory divestiture, the underlying business growth approached 6%. Second, we will continue to effectively manage the business and look for ways to minimize incremental headwinds from inflation and supply chain challenges. Although foreign exchange remains out of our control, we remain confident in our ability to deliver against our 2022 financial guidance. Third, we continue to execute against our long-range growth strategy.

We will continue to incrementally invest in our high-growth portfolio and drive dependable expansion in our durable core portfolio. We have levers in place to drive further expansion in our margins. And our balance sheet is in a solid position with leverage at 1.7 times, providing ample financial flexibility for our capital allocation priorities, including M&A. We remain confident in our future and our ability to continue to meet our commitments to patients, clinicians, communities and shareholders. That concludes my prepared remarks.

Now I would like to turn the call back to the operator for Q&A.


Questions and Answers

Operator

[Operator Instructions] Our first question today comes from Jayson Bedford from Raymond James. Your line is open.

Jayson Bedford
Analyst at Raymond James

Hi. Good morning. Thanks for taking the questions, guys.

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Good morning.

Jayson Bedford
Analyst at Raymond James

Hi. Maybe just to start, you reiterated the early guide of 15% for the year. I'm just wondering, has the cadence changed at all with respect to the gating in the second quarter versus second half? And then just more broadly, I'm curious, in your view, what's the gating factor right now to broader use? Is COVID truly in the rearview mirror? Or you're still facing some staffing concerns that are -- that's slowing growth?

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

So Jayson, thanks for the question. So first of all, I would say that we feel really confident in our full year UroLift guidance. I think the year is playing out pretty much as we expected year-to-date. January was impacted by COVID, so were the first two months -- or two weeks of February. But we still ended up with a positive growth, slightly ahead of our expectations due to the strength that we saw as we went into March. Nothing has changed in our outlook, Jayson.

We still expect the first half of the year to be low single digits, and we expect to see an improvement in the second half, culminating in the full year growth of 15%. The acceleration in the second half is really due to the second part of your question. We'll be out the other side of COVID. Patient confidence, we see recovering. And we definitely see procedural volume start to come back into the fold. During quarter 1, I was out on the road, and I met with 32 urologists, Jayson.

And it's hard not to feel enthusiastic for the recovery in the back half of the year, given what I heard from those urologists. They realized that urology procedures are beginning to come back. Patient confidence is beginning to come back. And so I think I'll finish by saying -- on your question by saying, yes, I feel really good about 15% in the back half of the year. And if you go into Q3, Jayson, it's simply a question of math.

If you remember, Q2 last year, we did 94 -- $92 million, and Q3 last year was $83 million. So the majority of the growth just comes from run rate as you go from Q2 into Q3. And then you will see in the back half of Q4, you normally get an uptick in Q4. And as people use their deductibles, that fuels that. And you would also expect existing dock utilization to pick up as we see DTC start to flush through as well. So all of the metrics tell us the 15% is good, Jayson, and we feel really confident about it.

Jayson Bedford
Analyst at Raymond James

Okay. Very clear. Thanks, Liam. And just as a quick follow-up. It's obviously been a volatile market, both private and public. You're less than two times levered on the stated intention to deploy capital. So my question is, has the environment impacted your capital allocation decisions at all?

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

No. The market has not. If anything, I feel good. I feel a lot better than I did last year about the market. You're right, our leverage is now low and out of 1.7 times. So in order to do M&A, the most important thing you need is firepower. We are chasing assets. I can't tell you when we get a patient to both. But we've got a lot of lines out there with very attractive hooks on them. We will maintain our financial discipline, Jayson.

And I think that the heavy nature of the IPO market that we saw in 2021 has moderated. So therefore, we think it's a good environment for Teleflex with the firepower we have to continue to do M&A. Obviously, we'll continue to fund R&D. We'll continue to fund our restructuring programs as well. But our main focus right now is out there looking for a nice, a good M&A opportunity, scale, tuck-in, dealer to direct and also late-stage technologies.

Operator

Our next question comes from Cecilia Furlong from Morgan Stanley. Please go ahead.

Cecilia Furlong
Analyst at Morgan Stanley

Great. Good morning and thank you for taking the questions. I wanted to continue a bit just your near-term outlook. As you think one about China impact, staffing shortages, if you could just talk about the puts and takes specifically for 2Q as you think about it. And also for UroLift, just the potential for staffing shortages to impact that bucket near term and then looking beyond 2Q as well?

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Yes. I mean I think the first thing, Cecilia, is that we reiterated our full year guidance. So that will tell you the confidence level we have in the numbers we have out there. With regard to China, I'll start there and then I'll come to UroLift. But with regard to China, as we said in our prepared remarks, China produced really strong double-digit growth in Q1, with APAC growing 18.5% ex the respiratory divestiture. Obviously, lockdowns are in place in Shanghai and with some port closures.

We normally have a couple of months of inventory in the channel. So as long as the lockdowns do not become prolonged and widespread, I believe the situation is very manageable for Teleflex. And just to level set everybody, China is approximately 4% of our global revenues, and we do not manufacture any products within China. Regarding the UroLift question and staffing shortages, again, when I met with those 32 urologists, two things really resonated with me from those conversations.

Number one, they've all seen patients come in as a result of our DTC. So that's a real positive for us. It's having an impact out there. And the other thing that I heard from them is, yes, they were impacted and are currently being impacted by staffing shortages, but it is getting better. They are seeing an improving environment as -- and then this was in February I was out on the road. So that they were beginning to see an improving environment as they came out the backside of COVID, and they felt confident that they would be able to address their staffing shortages.

Much more acute in the office than in the ASC and the office was my observation from those conversations as well. So I still think there's going to be a little bit of a staffing issue as you get into Q2. I think it will get better as you go back to the back end of the year, which is actually quite good because I also anticipate patient confidence improving as you go through Q2 into Q3 and Q4.

Cecilia Furlong
Analyst at Morgan Stanley

Okay. Thank you. And if I could follow up as well on MANTA, just off of the investment in the back half of last year, how are you thinking about growth for that profile of that business unit for 2022? Thank you.

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Thanks, Cecilia. As we've said since the beginning of the year, we anticipate that MANTA will grow in excess of 50% for the year, pretty much due to that investment and an acute focus on a greater adoption. We now believe we'll be able to train more docs. And we also think that the international growth, in particular, in EMEA is going to be quite robust. So we still feel confident. And as I said in my prepared remarks, MANTA had a good solid first quarter even with the impact of COVID in January and early February.

Operator

Our next question comes from Shagun Singh from RBC Capital Markets. Please go ahead.

Shagun Singh
Analyst at RBC Capital Markets

Thank you so much for taking the question. Liam and Tom, your guidance still reflects a wide range for EPS and is unchanged despite the Q1 beat. So can you just walk us through what the offsets are given the Q1 beat? What are you now assuming at the top versus the bottom end? And given the incremental headwinds from FX and inflation, are you more comfortable at the top or the bottom end? And then just as a follow-up, can you just talk about FX? I think the euro spot rate included in your initial guidance was for 1.12, and it seems to be tracking now at 1.05. So by my math, that could be a meaningful headwind. So what are the offsets there? Thank you.

Thomas Powell
Executive Vice President & Chief Financial Officer at Teleflex

Well, I would, first of all, say that with respect to the EPS, we're really pleased with the first quarter results despite the challenging environment from COVID. Constant currency revenue growth was at 5.8% after adjusting for the sales of the respiratory assets and one less shipping day. I'd also say expenses were fairly well-aligned with expectations. Now with that being said, foreign exchange and interest rates have been fairly volatile of late, to your point. And as a result, we'd like to give ourselves another quarter to see how things are playing out before we would make any adjustment to earnings.

As we think about foreign exchange, we had given guidance at the beginning of the year, and that was set when the euro was at $1.12. We had mentioned that at that point, it would be a 170 basis point headwind to revenue and 20 basis point headwind to EPS. The rule of thumb that we've given in the past as the euro moves, and this obviously can be offset or somewhat offset or further impacted by other currencies as well. But the rule of thumb on the euro is that for every $0.01 move, it's about a $0.05 impact full year to earnings.

Now given that we've already passed through one quarter, I'd say it's probably $0.035 to $0.04 per penny of euro. And again, this amount may be partially offset by some other currency moves throughout the world. But I'd say that as we think about the guidance that we just gave and reaffirmed, we're reflecting what we're seeing from an inflationary environment. And that assumption is that the inflationary environment that we experienced in the first quarter of the year will largely remain throughout the balance of the year, and that's factored into our guidance.

Operator

Our next question comes from Larry Biegelsen from Wells Fargo. Your line is open.

Larry Biegelsen
Analyst at Wells Fargo & Company

Good morning. Thanks for taking the question. Just one for me. Liam, you've got an analyst meeting coming up here next month. Just at a high level, any thoughts on how you're feeling about kind of the 6% to 7% LRP growth algorithm? And Street models right now are assuming about 100 basis points leverage per year after 2022. Any thoughts you can provide as we head into that meeting would be appreciated. Thanks so much.

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Yes. Larry, thank you very much for the question. Look, we're really looking forward to engaging with the investment community in late May. I think what we'll be communicating is durable, sustainable top line growth. I don't want to really put a number on it right now. But if you wait for another few weeks, Larry will be unveiling on that. We want to show margin expansion within Teleflex. We still have restructuring programs in place. We still have mix that's going to work in our favor.

We will obviously have conversations on cash flow generation, capital deployment. Our main focus is on capital deployment, as I said earlier, is M&A, R&D and further restructuring programs. And obviously, you'll see us continue to focus on ESG. So I think those would be the broad themes that we'll be discussing with the investment community. And obviously, we will invest behind our high-growth portfolio and communicate on the expectations for that aspect of our business as well.

I think that 25% of our portfolio is very exciting to us. UroLift is clearly included there, but there's a lot more to Teleflex than UroLift, and we want the investment community to see that. MANTA is very exciting. Our hemostat portfolio is very exciting. Our Intraosseous portfolio and our PICC portfolio, all really solid growth drivers. And actually, UroLift is in the middle of the pack from a margin perspective. So there's broad appeal to Teleflex, and that's what we want to communicate also

Larry Biegelsen
Analyst at Wells Fargo & Company

All right. Thanks so much for taking the question.

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Thanks, Lawrence.

Operator

We now turn to Matt O'Brien from Piper Sandler. Your line is open.

Matt O'Brien
Analyst at Piper Sandler Companies

Hi, guys. Good morning. This is Drew for Matt. And thanks for taking the question. Maybe if you could just speak to the very near term for UroLift. What do you actually see on the ground from a volume perspective? I think the Street's modeling mid-single-digit growth here in Q2. Is that consistent with what you're seeing right now? And then just, are you seeing any meaningful transitions in site of care so far this year?

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Can you just repeat the last part of your question, meaningful transitions...

Matt O'Brien
Analyst at Piper Sandler Companies

In site of care.

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Yes. Thank you very much. So really, what we saw with -- as I said earlier in my commentary, we still expect UroLift in the first half of the year to grow low single-digit growth and then to accelerate in the back half, and we're very confident on the 15% for the full year. And it's really playing out as we anticipated as a company. Obviously, Q1 was impacted by COVID in January and early February. We were encouraged by what we saw in March. March did show the green shoots of recovery.

Also, our strategy that we've implemented on focusing on existing users and training those 900 docs that were brought on during the pandemic is also showing some early green shoots, and we're encouraged by what we're seeing there. We're driving doc utilization on UL2 and ATC. And obviously, our DTC campaign is adding to our confidence in the growth for UroLift. I'm really pleased to report that we have seen no shift in site of care, and we do not anticipate seeing any shift in site of care.

The vast majority of our office-based urologists have signed up to our new pricing strategy, and that is now implemented and being rolled out to its full. So no shift in site of care, don't expect any shift in site of care for the remainder of the year. And again, I'll reiterate, feel good about 15%.

Matt O'Brien
Analyst at Piper Sandler Companies

Okay. Very helpful. And then just a quick follow-up here on your commentary on the positive pricing. How do we think about those 50 bps of price, positive price in comparison to the inflationary pressures you're seeing? And when -- based on when you think those inflationary pressures may subside, is there room to push that price even higher if those pressures are more persistent? Thank you.

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

So my father used to say that a good start is half the battle. And we've had a good start to our pricing and the rollout of our pricing, and I feel really encouraged by that. In regard to your question about how it impacts inflation, so we're expecting 50 basis points of positive pricing, and we're expecting 70 basis points of inflation, and it's already baked in to our forecast. I think that there is -- Teleflex has always been a company that's been able to deliver positive pricing. And I think if inflation gets worse, I do believe that there is some flexibility for us to increase our pricing in the future.

Operator

We move on to Matthew Mishan from KeyBanc.

Matthew Mishan
Analyst at KeyBanc

Good morning. Thanks for taking the question. Liam, could you talk to some of the dynamics of the Interventional segment and how we should be thinking about growth in that segment for 2022?

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Absolutely, Matt. Thanks for the question. So as we look, nothing has changed from our guidance at the beginning of the year. We still expect our Interventional portfolio to grow high single digits, low double digits with good execution. I think that the quarter -- the first quarter came in right as we expected it. We had some impact as one would expect from COVID in January and early February. But the recovery looks quite encouraging for Interventional Access.

Just on a broader comment, I think hospitals are probably managing the recovery on the other side of coal, but probably better than ASCs and offices, and that's what we're seeing across the board. So feel really good about the trajectory of that business and feel really good about the trajectory of MANTA and the rest of the portfolio. So high single, low double digits, with good execution, Matt, is what I would expect for the year.

Matthew Mishan
Analyst at KeyBanc

Okay. Excellent. And then on Anesthesia, can you talk about Z-Medica versus the broader Anesthesia portfolio and how that did in the quarter?

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Yes. As we said in our prepared remarks, Z-Medica was right in line with our expectation. We still expect the Z-Medica portfolio, the hemostatic portfolio to grow high single, low double digit with good execution. So very encouraged again by how that hemostatic portfolio is generating. And you could see it in the numbers, Matt, it's been a while since the Anesthesia portfolio has put up a 5% growth number -- as an organic growth number. So I think we're quite encouraged by that performance in the first quarter.

Operator

Our next question comes from Richard Newitter from Truist. Please go ahead.

Richard Newitter
Analyst at Truist Financial

Hi. Thanks for taking the question.

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Welcome back, Richard.

Richard Newitter
Analyst at Truist Financial

Thank you. Thank you. It's great to be back. Thank you very much, Liam. Maybe just to start on UroLift, this is such a strange year from a growth rate standpoint. Obviously, growth is being understated in the first half due to comps and COVID. And in the back half, as you pointed out, from a math standpoint, it's the same thing to get to your guidance for 15%, you're going to have to do well over 20%. So I appreciate 15% is the growth rate outlook for this year.

So Liam, can you just maybe help us think through what the right normalized growth rate is once we've kind of come out on the other side of recovery and anniversary-ed, hopefully, all of these different variables. Is 15% the right way to think about the U.S. UroLift business for now?

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

So the way I look at it, Rich, is we're very confident on growing at 15% this year. And this year is all about the U.S. You can get a small contribution for overseas, with Japan will ramp a little bit this year. You'll see France in the back half of the year, a little bit from Brazil, Italy and Spain. And then you'll see China get the registration next year, and we'll go into that market. And the way I look at it is we'll finish this year, we believe we'll get to 15% growth. Hopefully, we'll be out the outside of COVID in the rearview mirror.

You'll head into the following year, you'll have an easier comp in the U.S. in the first year, and then you should see some contributions begin to ramp up in the international markets. And Rich, it's great to have you back. But if you would just be a little patient for another couple of weeks, and I'll tell you what UroLift is going to do over the next three years at the Analyst Day when we all get together in New York.

Richard Newitter
Analyst at Truist Financial

Excellent. Looking forward to that, Liam. And maybe just one more follow-up. I might have missed it earlier, but your Surgical performance this quarter came in well above our thinking. What was driving that again? And 14% constant currency rate, is that sustainable? Or was there something in there that we should be thinking about? And if you could also just comment on 2Q. Any guidance or color you can give the speed for modeling in the quarter ahead on revenue and earnings? Thanks, Liam.

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Yes. We began the year, Rich, by expecting our Surgical business to be low single-digit growth The first quarter came out a little bit ahead of our expectations. And it was really driven by strong growth in APAC and the U.S. as procedures continue to recover. And also, we saw some pricing benefit. This is one of the areas we always felt to take pricing. We still expect lower single digits in the full year, but maybe a good execution. Again, back to my earlier comment on pricing, if we can sustain it a little bit better for the remainder of the year, we may get to the mid-single digits with good execution in our Surgical business, which would be a really good performance for that business overall.

So again, a good start is half the battle as my father says, and Surgical definitely had a good start. But we still expect low singles, maybe get to mids with good execution as we go through the year. And on a full year basis, again, as I said earlier, we feel really good about our -- the broad-based recovery, and we feel really good about our full year guidance, and Surgical is no different than the total of Teleflex.

Operator

Our next question comes from Mike Matson from Needham & Company. Your line is open.

Mike Matson
Analyst at Needham & Company LLC

Yes. Thanks for taking my question. I guess I'll ask another one on UroLift. So you've ramped up the DTC advertising. It seems like there's a little bit of a conundrum here because the timing of when -- I think when you kind of ramped it up as coincided with a lot of these COVID impacts and the slowdown in the growth. And I understand what's happening there and the sensitivity to the infection rates and whatnot. But I guess what gives you confidence that the DTC adds are actually proving effective and you're getting an adequate return on that investment?

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Well, obviously, we measure the effectiveness of our DTC campaign. At the end of last year, we know that the -- our expectation at the beginning of the year was to get 150% the number of impressions. We actually ended up at almost 200% right across all the metrics. We look at the number of impressions. We look at the response from the patients. We measured the total estimated appointments and procedures. And we know based on all of that, Mike, that this is a good return on our investment. Anecdotally, when I was out with those 32 urologists in the first quarter, every one of them had mentioned that patients had come in and asked them about UroLift as a direct result of the DTC campaign.

So anecdotally and measurably, we know that it is working. And we are seeing -- and we do see the value of priming the pump in order to put patients in the care of urologists. In all transparency, Mike, we don't care when the procedure gets done. As long as we are pushing these patients to our urologists and the vast majority of the urologists that are our champions only offered UroLift. So therefore, it's very focused. That's the one thing I will say about our DTC. It is very focused on docs -- put patients arriving with doctors that use UroLift almost exclusively.

Mike Matson
Analyst at Needham & Company LLC

Okay. Got it. And then I just want to ask about consensus for the second quarter. I didn't really hear any kind of commentary around where we should model. I know you don't give any kind of quarterly guidance, but you do have a bit of a tougher comp for the second quarter. Are you okay with top and bottom line consensus estimates for that sort of second quarter?

Liam J. Kelly
Chairman, President & Chief Executive Officer at Teleflex

Yes. You're right, Mike, we don't give quarterly guidance, but we have reaffirmed our yearly guidance. And I guess I'll leave it at that. That's -- we feel really confident in our yearly guidance on all lines

Operator

That is all the time we have for questions this morning. I will now hand back to Mr. Lawrence Keusch for closing remarks.

Lawrence Keusch
Vice President, Investor Relations and Strategy Development at Teleflex

Thank you, Elliot, and thank you to everyone that joined us on the call this morning. This concludes the Teleflex Inc. First Quarter 2022 Earnings Conference Call.

Operator

[Operator Closing Remarks]

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