MASI - Earnings call transcript Q4 2017

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Masimo's Fourth Quarter and Full Year 2017 Earnings Conference Call. The company's press release is available at www.masimo.com. At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I'm pleased to introduce Eli Kammerman, Masimo's Vice President of Business Development and Investor Relations.

Eli Kammerman

you. Thank everyone. Hello,

Masimo's are Vice today Micah CEO, Kiani; XXXX which Joe This our certain Joining regarding expectations of Chairman Finance Executive fiscal reflect statements, forward-looking President will performance. Officer, judgment, and and including call of me financial contain and current Chief Young. Financial

projections materially. discussed risks to could that cause detail actual results subject However, that SEC our cause factors they to filings, are are actual XX-K most Risk could materially and from in our recent our differ uncertainties in and and results forecasts to differ including XX-Q. Form our Form

our You the guidance the company in non-GAAP for Investors Also, to chosen our into implement certain website. will will financial find has that financial XXXX. section these measures of incorporated be

company most ongoing financial are financial that business. supplementary and performance. included GAAP our of the on operations. these the performance website. The to to and the increase believes better budget, non-GAAP assess as the GAAP evaluate measures are to company's the sees these information enable same addition an measures the Management of these company's non-GAAP measure underlying measures these earnings assesses in release results Reconciliation directly transparency and comparable business indicator the the financial financial results, way reflect investors of intended within to non-GAAP management measures uses company's to performance additional and provide financial to In measures operations information

to covering content Kiani. release of be today. website quarterly within Section presentation In will issued our the now afternoon, pass a posted the supplement the addition this call I'll to the we Joe earnings have to Investors' we

Joe E. Kiani

we variety Masimo's quarter significant a thank new Eli. in as us joining business, year-end XXXX rewarding our of milestones us, year XXXX Good products. groundbreaking afternoon, review. you introducing for Thank a was while you, achieved fourth for and and for new

exceeded again the in high ended for once results another exciting year to year ahead financial on that expectations we the and a addition, us note, point In XXXX.

we plan, next embarking strong of journey years. of to larger realize Now revenues to that over saw the another In a double-digit our a million, growth. we new $XXX are by XX% on reflecting seven rise XX-year quarter completed we've set QX results, product our objectives

and customer During outcomes renewals QX, growth some care, double-digits shipments to captured incredible care strong re-accelerated and providing systems, and and growth our year into oximetries. reach significant revenue was which sizable significant compared important and also rose increase and the mention we in SET new cost pulse fourth oximetry hospitals the oximetries, complemented winning installed the an units producing hospital of U.S. from reduce of base of gratified excellent XX,XXX to by versus not estimated overseas. service. another our proven realize other X,XXX,XXX in improve to to quarter worldwide due QX products similarly finger by institutions ability excluding while XX% hospitals were and We last to rainbow to handheld

which units, a a For oximetry our believe we shipments strong momentum. XX,XXX third were quarter in of our over indication the row, is

performance business fourth grew the by across all growth driven strong was rainbow Our over geographic by too quarter XX%, as sales strong in regions.

XX% these the NomoLine new year-over-year fourth solid oximetry, realized three growth increase for Monitoring including also revenues, and Brain quarter. We with generating in our in products products, organ capnography, SedLine OX over Function also

product year, XX% million, revenues our of the to includes For full $XXX growth rainbow by which XX%. increased

some the care settings. in later I'll many performance and and XXXX and business grateful the call SET hospitals patients customers updates and adopted for our that additional new other in technologies proud our discuss and are We for today. alternate

with to will Micah our and you more in Micah? provide QX results I detail guidance. our view ask XXXX Now, financial

Micah Young

afternoon, good and Joe, Thank you, everyone.

or XXXX, fourth including million, the a and reflects year reported revenue, XX.X% the other period currency revenue, quarter over on For growth prior we of $XXX.X of which XX.X% royalty of constant total basis.

product in our of We the our over for strength XX.X% revenues and constant year saw period a currency portfolio. or were basis. quarter, the XX.X% solid on regions broad-based both prior Our an $XXX.X increase international with million growth U.S. product across

For our the a basis even both XXXX, by most product $XXX XX.X% reported of recent was full $XXX.X on year guidance and which above a to currency increased million, of revenues constant million.

oximetry, of on of these NomoLine XX% basis, product amounts which a QX the as XX% a such product with of SedLine by basis, aggregate this products was newer reach or data rainbow XX% we in to lines. to strong continue across year on represents Monitoring driven constant SpHb a usage. quarter strong period, $XX revenues support adoption our to the currency currency as million increasing currency XX% on mentioned, yet measurement organ constant another strong positive distribution of constant XX% Function Brain and capnography, grew Joe XX% our geographies of growth As revenue OX majority and over delivered for breakthrough see prior which or growth clinical basis channels. grew growth

year revenue increased by expectations XXXX, rainbow XX% our above full to $XX for of which million is the the $XX.X For million year.

grew which million sales currency constant business, direct $XXX.X XX% or user end a to through or distributors, includes XX% worldwide on basis. Our just-in-time

to for $XXX.X XX% revenue of XXXX. quarter. XX% quarter $XXX.X of million revenue in total representing OEM $XX.X or to of geography, product fourth quarter in on By the Our quarter constant currency million for with in XX% product our with line XX% the U.S. year rebounded XX% sales which the is a increase total approximately prior basis, million the direct compared represented product the a business grew period. revenue to

of the revenue with XX% prior line other XX% international the quarter on and international essentially product strong EMEA revenue these fourth product by represented on integration XX% to a quarter compared $XX current technologies to strong $XX.X million the declined milestones from significant or schedule in year relating Based by total grew quarter various NRE approximately for the million currency driven for into quarter was Masimo $X Canada. the million Medtronic of revenue million and Royalty to completed to The $X.X XXXX. we included of basis, monitors. constant revenue the revenues for Our ahead of quarter. as results Japan, Philips Royalty period. was growth million of $XX which project results, revenue in $X.X in million

Now let's P&L. turn the to the rest of

versus $X.X expense for the For million $XX total related Philips. sold revenue goods year note margin XXXX, cost the the quarter the NRE that million royalty revenue. NRE including prior gross expenses of XX.X% fourth period Also in to bolstered was revenue project of additional by and NRE XX.X% of of from include an total

Our margin in XX.X% placements quarter product amortization our was fourth XX.X% in year with prior gross monitors level costs Product a the we would in gross a of margin higher customers compared new as to higher robust expectations have for with that on of line due year period. was the to our of quarter. noted call the fourth result previous in contracts

the in other monitor are term, additional related and long these result Over placements revenues. expected high product to sensor

new replacing inventory we prior equipment also generation to the to related charges some higher introductions, are product In amortization, which incurred products. addition

margin our XX% guidance was gross year. most full for the which margin of line product XX.X% recent the year, For was product in with

conversion former newer XXXX from of increase As product to gross sensor potential fourth fourth the manufacturing $XX.X a were unpaid donation. million on increased I describe quarter included $XX.X $XX.X customers' we XX% agent a in government line. asset million scale foreign continued expenses our comparison, a SG&A related margin an quarter, momentarily balance million an optimistic tender. which increased and included annually write-down $X general due and approximately the in to Selling, will which connection are with of charitable about In to administrative RD based to expenses our million

to million the and you If levels expenses in in of development marketplace. items prior we was approximately the million these XX% year over clinical higher SG&A year $XX.X compared delivering $XX.X timing innovative have to period. technologies both increase in spending invest periods, to expenses and the expenses quarter the increased X% in the prior exclude trial fourth would to increased to The attributable continued staffing in as period. R&D Research

XXXX, write-down Philips the Agreement operating $XX.X were In of million $XXX.X the XXXX quarter expenses million total expenses the from operating included $XX.X asset quarter which fourth which I offset fourth of comparison, credit mentioned. million $X benefit the a previously million that million For included by were donation. $XXX a charitable

periods, over If approximately you both these year in increased period. have total exclude operating items the expenses would prior X%

the in driven profit margin operating XX% was increased to margin largely benefits XX.X% the NRE – growth by to asset from – the happy largely of and which our of report the due offset higher by and achievement the scale product to fourth write-down revenue are higher revenues, We quarter period.

to the down approximately for non-operating $XXX,XXX the non-operating income of was year further prior $X.X in approximately million the Moving expense period. quarter P&L, compared

XXXX, approximately FX loss interest compares to over and we net $XXX,XXX, prior of expense an During of interest income $X.X the realized fourth approximately quarter re-measurement of $XXX,XXX, of million. year this

quarter tax, tax of offset million million, which fourth Now turning $X.X stock Act exercise. the onetime benefit a tax by option was and Tax from $XX.X expense the a $XX.X in to million charge to included our related Cuts Jobs

the the mostly up end shares not higher $XX the Our to shares in is reduction treasury exercises for this of average The and share price the period. approximately shares due is quarter. period prior entirely that over the visible during quarter stock outstanding stock benefit from year our has quarter year average the count million the the X.X% XX.X million increase a the XX.X impact method. million, XXX,XXX of under period weighted the our We in for was results impact so the repurchased stock in dilutive option primarily in ago of approximately towards

diluted exercises. and reform net per to quarter fourth GAAP diluted or a a for $X.XX exercises. benefit million the Philips to of benefit million the or comparison, million per fourth adjusting related benefit option charge share $XXX.X share fourth Agreement was share, net tax $X.XX stock a exercised. $X.XX Phillips basis, For XXXX included $X.XX quarter benefit income per quarter XXXX or fourth tax to onetime $X.XX net In tax option the XXXX, per related after was and agreement included income $XX comparison, the non-GAAP of to benefit In by of related to stock quarter U.S. $X.XX XXXX was onetime net million $X.XX income a our a offset or which tax GAAP related $X.XX share. diluted stock $X.X On of $XX.X which was option related diluted income

of Our in was operating strong driven growth the our XX% expenses. rate fourth and growth product a primarily earnings revenue for XXXX lower quarter performance by

net total revenues, offset of per share a per approximately asset As $X.XX in impact I approximately quarter. per diluted $X.XX contributed largely mentioned earlier, of write-down were our the share the higher which share $X.XX margin NRE by for

sales from Our quarter, the of outstanding of third the end the at was XX days for down XX XXXX. days quarter

X.X to traditionally strong from charges season were quarter for approximately Inventory as third compared related more end we turns during $X incurred the new level QX the inventory introductions. the at product X.X of fell quarter, some Our inventory product sold million of also we by the XXXX. winter and to the

like discuss full Now, I'd to our year financial guidance. XXXX

our to financial release remarks, in these comparable supplementary chosen the reconciliation our to mentioned guidance the company within GAAP measures for incorporated into be opening financial Eli and will non-GAAP information implement website. are measures has directly XXXX. on earnings financial the certain A included our most that measures As of

other projecting are $XXX X% revenue, we $XXX and growth be in approximately product period. prior revenue, million For total over year which This revenue, includes million. of to including royalty projection reflects XXXX, approximately the

in compared prior other anticipating year We and revenues are royalty the to $XX also in million million period. $XX

royalty XXXX. million approximately are agreement in our Separately, million $X Philips in in royalty $XX expiring NRE in this for from partnership projecting year, expect We Medtronic XXXX. October revenues our with we revenue

million include towards million prior goods sold from carry expect non-GAAP higher basis approximately or revenues prior gross expenses in other lines. full $X driven note project NRE non-GAAP higher year approximately royalty points gross our revenue, for least to This We be of gross each margins, as of product to is our which at by total a basis and XX.X% points royalty which total the related projected our including XX.X% in expense reduction product lower XX% margin will cost delivering anticipate to or $XX XX of revenues XX NRE be year, We approximately of consistent than primarily year, an projection, that of $X of basis that our drive year. product core margin and goal with margins. than Also XX gross is improvement million points we margins goal long-term Philips. product

is expenses This are total strong is headwind basis margin prior XX.X% margins by from addition revenue million these of impact XXX be approximately XX.X% total business We be reduction write-down. being $XXX our revenues. non-GAAP we or to and are Based or to basis total which assumptions, the lower operating on profit year-over-year revenue. NRE of estimating driven approximately of than non-GAAP by total in operating year, XX points primarily from a contribution point royalty asset the core to the offset in projecting

Moving we that new of per tax non-GAAP a year weighted income Based option of estimating amortization further a from offset and which on $X.X earnings related our earnings XX% Based down approximately an tax. will earnings the of on XXXX per excluded projecting arrive $X.X both per estimating $X.XX. all the million non-GAAP benefits in estimated expense excess of of net are will these includes these to based XXXX expect approximately as GAAP OUS million. and our non-GAAP share approximately assumptions, And stock XX GAAP in share. of outstanding non-GAAP also we're profits, to from rate we the mix $X.XX, we are million tax our acquisition And by share be projecting GAAP of from interest financial expected recently improve $X of depreciation tax of that P&L, exercises earnings our We're perspective, are shares at average items definitions, on generate to XXXX. net for enacted approximately million U.S. result our our legislation.

turn those can release earnings both non-GAAP our on the our within of I'll You With Joe. website. find GAAP financial a of to further back details presentation, today's both call which and and that, estimates reconciliation estimates investor posted and the are

Joe E. Kiani

Thank you, Micah.

year as milestone the a we For was Masimo, reached of XXXX IPO. year, our XX anniversary

on We public to a X% XX% a And with long-term of company. a a have year embarking we're completed shorter revenue annual our operating margins. as plan of delivering of first long-term seven plan XX% and slightly goal goal long-term profit growth

upon the we securing care possible exceed our year based product $XXX of our as if sales was And points consistently we reaching that value to with XXXX projecting is we're heard We're revenue care hospital combination determined good you patient in sales forecast the care for that. started million. expect and ahead customers, by XXXX great Similarly, our our from more as sales of percentage in with realize As winning product we $XXX of X% recognize technology than who We that growth than X this product higher year, and potential X%. of in than million that earnings about Micah, to product higher feel revenue just alternate growth improving increasingly more performance our by Masimo providers breakthrough achieved our approximately for again growth customers. are technology about their renewals the outcomes. new existing happy with adopted and growth

rising in as increased various presence XX% the to regions overseas. in of realized facilitated is Our markets growth last we world investment global by around year XX%

total by Europe, Our Latin sales for with growth OUS XX% solid Middle East the America. XXXX especially in rose and

in increasingly CO-Oximetry. oximetry the to to major were We and rainbow SET SET Nagoya secured in hospitals Prospect weakness thoughtful and having Marburg, New in We and Medical Kindred to Our under Germany, Artemis University in were our fortunate California, welcome were intend regions – India, global gratified reduce particular last to Southwestern hospitals Hospital products. for Medical, patients educate more In agreements Texas, was including Jersey a unique see St. wins new strengthen will by many states, Internationally, as various convert hospital along Hospital and system diversified to risk we Masimo Lille that about a to new clinicians invest customers QX, and of efforts Pennsylvania. pulse process Cyprus, our in with with in six should Center, Japan, clinic Hospital staffing global Children UT, in we customer Other major France. base. XXXX, Nicosia year sales pulse any the Healthcare. of infrastructure in CHRU benefit Artemis geographic further in and expand an that including us larger in Luke's NYU Hospital Philipps-Universität and we with

Novant Henry In Street including addition customers and in Spain. new Health and hospitals for in Ford United Children's Ormond signed in Hospital, Quirónsalud in to very gaining important XXXX, Grupo Emirates, Canada, Sick those Northwestern Kaiser, Cincinnati in Hospital, Hospital Children we Great renewals with in the Arab Hospital those and Southeast, SEHA UK, HSSBC significant Hospital,

including Brain of for products, which rapidly important XX% in generation all low of capnography aggregate by Function or newer these We're Monitoring, us. don't XXXX, add. they providing by Japan, the the with all Root an sales EU. install SedLine OX are the received rising fashion year. and organ products, who they be oximetry, another the Our growth so for can technologies new path and each These clearances over to encouraged customers becoming like three NomoLine product second work growth need deployed step in U.S., at at and source had we yet full including monitoring around parameter system adoption a streamlined once the In world bedside time, new for multiple to cost of

of their as hospital currently with for care the broad after two for at Rad-XX environment discharged from with cleared audio in home large systems Our of We're capabilities excuse alternate recently potential healthcare – deployment actively healthcare environments. video home that patients hospital. great discussions well traditional considering me, and in and adoption being Rad-XX the has the many are as

sequence that an of recent early general Dr. anesthesia. Kazuki clinical oxygen ORi real Yoshida we're desaturation. an the of starts our showing index ORi the for of based Medical clearance generation a Reserve to enabled In induction Fukushima XX on seconds before found by SpOX monitoring a Dr. FDA during we hypoxemia A prediction for patients ORi rapid next of Function SedLine sequence correlates the reduction, for January, under about and for usefulness incidence anesthesia data that that Index accumulating of trends his Monitor. Brain Japan concluded monitor with imminent Oxygen This SET value relative could [Technical on decline, changes measurement oxygenation warning by received or that SedLine be investigated state supplemental patient approximately index to University the optimistic PaOX ORi, reduced. provides new version clinicians can signal Difficulty] Yoshida to based is a approach invented we investigators ORi enhanced provide Our ORi oximetry. of of processing similar and in is technologies (XX:XX) on study pulse an helps of and our use anesthesiologists. ground-breaking of with fellow induction rapid and

addition, of display General to developed patient platform, and monitor a researchers provide the picture in oximetry SedLine monitoring new clinicians can with Root of viewing with In the connectivity the Massachusetts brain. is our has at complete Hospital. and combination with EEG organ spectral our more with used for enhanced SedLine an features OX be deployed help

partners. making SedLine also to our are We available OEM

to the the have Moving our we rising of leverage past, into margins our investments to and potential to business benefits increase substantial we realize us made from in XXXX, enabling earnings potential model.

opportunities as patients help produce and as as increase sales our productivity more more busy services productivity. are clinician well as own introducing can we to opportunity well products to New

XXXX our the of an long-term We're for expanding further win, is new win patients, RD and as which adoption later clinical time. We sensors of use new rise us. improvement. currently global most margin the product announced benefits of steady steady more and and turn, addition, propel leaving our we includes In clinical customers our ever product clinical In that ahead potential and a improving a adoption that become from to of portfolio aware RD be for in of had anticipate associated products, from seeing We plan with good real reliable a our value includes using action fraction starting growth, flow the Masimo information some clinical that are of to more expect clinicians customers, for investigators see of the which win, will Line our Sensor luminary adoptions we breakthrough this the and technologies. breakthrough delivering medical data a year. outcomes demonstrate useful

cost We have of improve never more patient reduce focused our mission on to been outcomes and care.

we the good as outlook call beyond and open that, XXXX to to With progresses. forward year Operator? you and positive for we'll the questions. Our news more sharing with is look

Operator

comes question first from line Rick from Your the Wise of Stifel.

Your line is open.

Rick Wise

project just the ahead inflection if milestones. a you've was of in Am occur for should Thanks the activities year. that you imagine comes second should start specific of too Maybe so off, into correctly, about to that we XXXX? we special remind the us finish great Joe. half during And we and generally little imagine Maybe point than reaching to NRE where agreement it? Philips be – nicely reading are any afternoon, co-marketing XXXX should schedule could remember sort talked just us Good thinking I sooner much the about? revenue of help I from hence it Philips understand, Philips the

Joe E. Kiani

And thanks Rick. us. for Certainly, joining

partnership anticipated. seen Philips better deliver our have we already We results had than

beyond. think our accelerate you're business to XXXX able trend will objective on XXXX. right with we help that Philips And and it to XXXX will in us in overachieve continue yes, the work were in We with continue believe we

Rick Wise

again just more on And co-marketing just color and highlight or in thinking and we of the be should terms that about efforts evolves? us give are any as relationship again you could you any matures initiatives, where

Joe E. Kiani

QX was XXXX, along of with in hitting us. end marketing their rainbow Philips stride Certainly. of By the

and been renewed U.S. Europe world to to the partnership from India from sense more and the around of enjoying parts Asia, even East a have like Latin channels like America. We sales the other places

into work SET relationship. expansion CO-Oximetry. also course, that happening. of towards continue oximetry, the Pulse is our the the a of technology is One we fact rainbow you going did elements with is, there to tell oximetry, availability end can our There's the line the I Philips of what in are their SET So products, full of which of few And will SedLine, with like OX, the half, those. of work see going with we've first the doing those two integration that And in mutual which XXXX. latest of QX products NomoLine, And been beginning begin expedite XXXX be hope Philips technologies available you're then to are our three going happening. to and being there's I new to the our customers of

Rick Wise

sense you well, of about relationship make how urgency if about base I and that M&A so and does or M&A And doing kind sort Yeah. And, one, might Joe, M&A. XXXX, drivers. in again part I've you clear context? new just you've well, is several with the as you're that to your about guess of plan of it call, their so the highlighted base part driver of growth two on pursuing about an well, portfolio you're I highlight sort a doing excitement performing the M&A and it about seven-year XXXX what technology this when and a still recently extent in But future heard the thinking question to your probably is optimism that thoughts all, as meaning times related all critical that about say the entire happen multiple thinking? just latest feel about to incremental business greater your of What XXXX? what optimism are thinking beyond, Number so business of

Joe E. Kiani

Rick. great question, a Well,

products We luxury to discussing have any acquisition. maybe business in our products we better way it the the grow with current without the and our been and even have pipeline own than

diluted rather business management as we're of for shepherding that's opportunities there very meet there think at major shares are looking looking accretion we're acquisitions that its we of that to go for unique the long-term. we and delivering establish Masimo are our a investing our are wonderful not we gem be we diversify and a going to to company, we're that while the Masimo acquisitions. despite stock what not So lot opportunities with years. could our sure this why further we could we're companies ROIC good and of in being we're go that might security out acquire, make tomorrow, targets What invest but allow five see And for within looking we for are that

us going, standard good So wanted know we on a while focus sure may I But each we deliver make to be team, never management best shareholders, based the we five our have I business we the year each because years. that of do results I'll best to as just always for shareholders making about I acquire is anything. can the utmost a quarter, how our to looking we year talked the within our want to on sure this, deliver ago,

So I'll are just leave it at that that you so right.

in we Development that, have an really just Head an Business here – easily that just not capable. of because as Levy, but are say acquisition very think We and bandwidth. have us We just have brought there the management of of mode, we so much joined going who've Tao we're is could that breadth we amazing on in I

special, something not for lookout may happen. or the which on we're So may

Rick Wise

you thoughtful one I'll pick last just one that on you, me. Micah, And Great. little a Thank for from Maybe bit. answer.

us quarters Just you'd as anything about but we think specific the quarters think about or know there models XXXX? to the try the the the us you figure think on have about revenue I as beyond it's flow giving anything any out whether expiration for side the of side the have is this Thank not cost both. you'd you're of we Royalty, the guidance, year, Medtronic or

Micah Young

Sure. Sure.

Joe E. Kiani

Micah, that? do to answer you want

Micah Young

you, Thank Yeah. Rick.

give you XXXX, we throughout we have you guidance, about back but specific to year. going strong had in know the the not quarterly should we're comps strong of mentioned you half As you -- think know

see years a in higher you'll and and in the know is go normal with than should out averages. back historical of get kind But QX in more QX phase the to you'll three an last for flu about look able you be it how seasonality softer then growth or little thinking you revenue. QX probably quarters see to idea So season how the and that we're especially then of rates heavier QX and to it two

Joe E. Kiani

we then about are receiving were concerned, and down you going as know began, as XX% small Thank lower. for maybe to as our even they're been income, decades. And about have of the you. they XX% far of our today very income royalties When those they royalties

from instead the for to royalty not from a market value of ratio they our time investors Masimo, share income product normal our royalty even of on estimated the value they at and did put our today top PE earnings on put it cap most that So, of day that business. for separated in one per cash it

So investors happen been Masimo, way our cause dramatic to those we'll company we impact do with have in of of feel not in that's type best it. shareholders a has to of royalties anyone waived shift. of continue loss don't again, long-term But of going a has even company believe who I have don't some tracking our Titanic those to can value if we our as that done, something And, the royalties. approach. the expect I the XXXX, to But of minimize because we'll nor

Rick Wise

Thanks, again.

Joe E. Kiani

Thank you.

Operator

of line from question from Quirk next Your Piper Jaffray. Bill comes

is line open. Your

William R. Quirk

Thanks, Great. afternoon everybody. good

Joe E. Kiani

Bill. Hi,

Micah Young

Bill. Hi,

William R. Quirk

Joe. Hi,

a are in a years the the guys guess ago, pretty of indirect and guess the is seeing impact little measurement, because I would thought any I it SET what quarter? a steering seen that fourth somewhat I fourth Joe, benefit benefit. maybe we in the quantify but I have bit it's had have the the am consumables couple difficult and direction here of and nice first in a would first the bigger what quarter. obviously XXXX So, in had you Masimo first impact XXXX, quarter a flu an you in why question I season, Thanks. wrong back of to nice – is on recall I confess

Joe E. Kiani

not I'm you're Bill. sure talking what about

So, how respond to to know that. I don't

William R. Quirk

it nevertheless looking from test Well, season albeit helped and we it a certainly to to higher is they as census. what or transcripts ago, Joe that, with mean nice indirect a see tend from I because that, something like we if do it's back had bad as a few when appeared flu but have hospital selling benefit a you're flu admissions that not the years

was So, I the the question? that's I guess, route directing

Joe E. Kiani

U.S. last had QX yet, we said last digit the a I really think QX revenues we grew over strong Well, in and our year. year double

I know, the in you I you the can at way it look is mean of don't so I the So, eyes guess, beauty shareholder like.

William R. Quirk

I it trying suggest to certainly a wasn't Joe. negative was quarter,

So be just to clear.

results you little We're and smoothed that looking are just a out at of how just number a mentioned then comment comment any perhaps thinking appears years? Joe, and on renewals those certainly it's anything bit over based maybe not about it of could in Secondly, big renewals pricing, that boluses hospital a about or on terms your like the stable? you pretty hospital

Joe E. Kiani

renewal of be part Well our over which Kaiser, was renewal year the it XX% biggest a of sizes customer, was another obviously of there our these us. some bolus, unusual strong so was renewal the re-signing by of year is with despite up has except definition but renewals, last fact our last would big year, and been rate the our customers' nothing that about

William R. Quirk

overall And just then on pricing?

Joe E. Kiani

question, overall, was what? what that Bill, sorry, I'm

William R. Quirk

themselves? pricing just sensors trends the on Oh

Joe E. Kiani

We've disciplined and technology. value been our very customers our

there So, yet, we've pricing, out while it. respond has competitor to our to had been some doing not predatory

William R. Quirk

you. Thank it. Got

Joe E. Kiani

Bill. you, Thank

Operator

Your next of from from line question Weinstein William comes Blair. Brian the

is open. line Your

Andrew Brackmann

is this How Hi, Andrew guys. for on This actually Brian afternoon. Brackmann are you?

Joe E. Kiani

Andrew. Hi,

Micah Young

Andrew. Hi,

Andrew Brackmann

Hi.

to second. a agreement, to wanted I Philips just back for the go So,

result on Philips a for from relationships bit the in of been quarters. it's couple you've So, you seen partner agreement? little Can other that a place the about any as talk a impacts

Joe E. Kiani

seen Philips, haven't bolster something, to based ability out, doesn't or anything us industry with a want wanting OEMs to change. once if with that anything should, we fact change. more Well, term to the continue I expand has some Philips on answer want our and have to believe generally be But, no have your – agreement it doesn't question, believe us. – long left the with I to

Andrew Brackmann

then, you and of pivot you to in penetrated space? that ward guys you the expansion. year, that more Joe, right share thanks. Can talk you a now? Okay you little then more far And the And about I here Thanks. are a had how other do had. think general at question how guys into kind take talked earlier do begin conference this about bit

Joe E. Kiani

right percentage general is the I'll monitoring X% say customers know between hard that It's in of some monitoring the X% number color. now, beds probably to exact would but I I Certainly. are of general give try doing floor. our think to they're XX% somewhere the But, below you the well to floor even line.

floor, no dead study transfers So, doing on hospitals, monitoring out they the in I now given continuous team a reduction are that Dartmouth-Hitchcock, having dramatic general think that have similar every several which the one who came which rapid over results there's XX-year bed response and and activation hundred we the more a these huge period. to opportunity, in hospitals ICU saw a from of

repeating fall risk it Wall and place wall apnea. monitoring I one and that these patients should have of are they lives, itself the money see days, is every think bed saves given fell or at just going keeps continuous saves Berlin where of like go, the we it So, it that at a to opioids every way on

a hasn't within continuing is it happened grow So, it definitely that yet in business. but expect, to our way we

Andrew Brackmann

guys. Got it. Thanks,

Joe E. Kiani

Thank all joining a and much. reporting We to getting QX so you back for months. of results look you our in couple Thank forward today.

Thank XXXX. wish you. a you we So, wonderful

Operator

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

You may all disconnect.

Masimo (MASI) 27 Feb 182017 Q4 Earnings call transcript