MASI - Earnings call transcript Q2 2019

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Operator

Good afternoon, ladies and gentlemen, and welcome to Massimo's Second Quarter 2019 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, Massimo's Vice President of Business Development and Investor Relations. ahead. go please Sir,

Eli Kammerman

hello, and everyone. you, Thank

are; Joining and Micah CEO, Kiani; and Vice me Young. President Officer, today Executive Financial of Joe Chief Chairman Finance and

This financial performance. Masimo's which of call expectations forward-looking including our XXXX judgment certain reflect fiscal regarding will contain current statements,

differ subject actual to periodic results and materially our Risk they to actual are that forecasts cause could SEC. the projections in with our risks differ filings to However, factors detail are uncertainties that and could results materially. our in discussed cause from

will these our You find Relations in section website. the of Investor

Also, financial these or to this accordance GAAP. not call with will that in refer generally as include a non-GAAP discussion of calculated Principles We measures financial certain Generally measures. Accounting Accepted are

to the to investors company's budget, the assess measures In performance. and addition to evaluate operating GAAP company's such the results, non-GAAP measure business these an indicator same additional intended results. to enable provide way assess non-GAAP to of and ongoing in are sees as results the financial uses management these results performance Management information company's measures

measures most increased comparable that business. order of Investors measures, financial the non-GAAP measures and financial performance our including most statements better included are website. Reconciliation financial earnings and the make release The our company to the believes of supplementary reflect information financial of these investment with on the and informed GAAP the within transparency these SEC underlying directly recent in should our reports XX-Q all consider to our decisions. today XX-K filed together with Form

the this posted will Investor the have afternoon. today, website content covering within we the Relations presentation to addition earnings our to In issued quarterly supplement we release section be of a

Kiani. the pass Now call Joe I'll to

Joe Kiani

exceeded and Thank Once that earnings you. Massimo's second Thank quarter we're second Eli. us XXXX for quarter again, happy call. results afternoon expectations. report thank you to joining Good for you,

settings. for breakthrough quarter their technologies we growth our in reducing the the of adoption care value achieved improving based and The illustrates patient cost care increasing upon in care health of the second multiple

XX% to by the to increased constant over benefit customers breakthrough existing technologies. million. while of product stream basis new of a our that steady ability result our XX% This customers, of a on virtue Our also currency attain in using revenue gaining $XXX.X clinical approximately reach reflects our

to today. the Due momentum we the the I'll will later our of continue, earnings that XXXX. for in developments superior we and our business growth again once quarter second discuss saw are our more the call expectation revenue guidance in raising and

second detail guidance. ask to with quarter our more Now our you results and on I'll in review financial Micah provide update an XXXX

Micah Young

Thank everyone. you, Joe, good afternoon, and

earnings measures we today's you primarily as with get well be as financial the to filed let will noted on be financial SEC otherwise. financial our for release, investor today regarding X-K on information information and unless Please the the started supplemental further that remind the quarterly refer covering a and non-GAAP reconciliations. me will we basis I non-GAAP presentation measures Before www.masimo.com

our business. strong are with are in that mentioned, very we Joe the we As seeing happy momentum

revenue margin the another reflect operating earnings results product expansion for Our quarter second exceeded of that quarter strong performance and expectations. growth,

and growth we year and reflects growth prior boards which the X% a XX%. technology over of During approximately approximately the XX,XXX quarter, monitors, of quarter shipped year-to-date

XX.X% currency product were basis. a or revenues reflecting the XX.X% our $XXX.X second XXXX, million constant growth of quarter of For on growth

which ASC of to the equipment revenues that for Please new our accounting our growth contributed recognized this million standard approximately quarter XXX, revenue note under rate X% roughly monitoring the quarter. $X.X product included accelerated

performing product laid better all we growth across our out plan. platforms, are this by performance driven revenue of originally long-term which in rates quarter was major Our the growth than strong our that

strong particular key in presence are seeing U.S. business. within growth We continue our grow to markets our global we and

Moving rest the P&L. on to the of

the the mix, margins. implemented basis and This XXX XX.X% cost reduction year points quarter, to activities XX.X% to and efficiencies improvement margin improve period. we've compared our increased in manufacturing additional to increased customer gross by prior product favorable For the second was product non-GAAP primarily driven our

selling, levels the costs the in Non-GAAP XX.X% innovative in points The XX expenses cost our basis primarily prior higher development commitment R&D reflecting to product XX.X% to points compared that Non-GAAP and in administrative of increased and care. prior period. period. year general compared of revenue expenses to technologies decreased of improve outcomes related increased while year was product to staffing and reducing XX.X% X.X% XXX due to spend revenue investing basis project patient the research to

For profit XX.X% compared XXX increased prior to period. to basis the reach quarter, the second in points our XX.X% non-GAAP year operating

We the very operating excited seeing leverage are that we about business. are the in

seeing organization global deliver enables growth required innovation business. -- that the which in fuels company, the reinvest the us further seeing we Our productivity across is operational are that fuels discipline demonstrating that to the are increased growth in we to

Moving $X the by compared invested on realized was in further the primarily on yields an in due increase prior basis net Non-operating to was and position higher and interest to million million quarter $X.X period. cash a year the down for investments. cash driven short-term our our non-GAAP stronger P&L. interest income increase income approximately The

to Turning taxes.

to of non-GAAP second effective in a the XX.X%, rate quarter the was effective non-GAAP in in period. expense XX.X% year tax compared prior million, of tax resulting non-GAAP a Our tax $XX.X rate

the shares the million period. compared quarter million Our to were in XX.X for XX.X weighted average prior year outstanding

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

or share. diluted This net share. $X.XX comparison, $X.XX quarter In quarter. For the or EPS non-GAAP XXXX growth per million net diluted second non-GAAP over the XX% was income quarter, million was per $XX.X reflects year of our approximately non-GAAP second prior $XX.X income

quarter the XXXX second per million share was XXXX net GAAP second share. diluted GAAP our income $X.XX $X.XX income $XX.X to quarter to $XX.X net or diluted of Turning comparison or million non-GAAP per in -- GAAP for was results. or

extremely summary, our In are as of basis non-GAAP the non-GAAP product happy performance of and revenue XX%, growth operating of points for delivered we XX%. currency EPS with organization XXX constant second global margin expansion quarter growth our

to an our guidance. like with you year XXXX I'd update full Now on financial provide

XX.X% basis increasing a or million $XXX our $XXX growth increase to $X of basis. constant revenue This product XX.X% a As of strong a represents our of million. performance million, the on currency result reported our XXXX prior on guidance second reflects guidance year-over-year are of quarter, we in above an which

that year. half note of includes guidance $X the of our revenue recognized Please in million monitoring accelerated revenue XXX the approximately under first product equipment ASC

at continuing product remains points represents assumptions, unchanged operating and operating guidance prior non-GAAP the project to guidance profit gross non-GAAP margin year Based Our expense on over margins at we product unchanged these XX.X% of basis XXX remains of our which non-GAAP improvement are of revenue. XX.X% XX%,

the P&L. Moving further down

income. $XX XXXX, which million We in in primarily interest non-operating income expect of comprised is generate non-GAAP to approximately

the additional tax our rest year average rate are XX.X repurchases year. non-GAAP estimating for of weighted the outstanding roughly shares reflects share And that be for remains million, Our XX%. the unchanged no will we at which

on our increase EPS which guidance our represents to these of we above now Based non-GAAP of increasing $X.XX are guidance prior all $X.XX. $X.XX, assumptions, an

for GAAP our a from perspective a rate from of tax result we projecting and earnings full projected the a represents XX% XX.X% $X.XX GAAP As in non-GAAP which guidance EPS are of grow per GAAP an our now of prior to year, approximately $XX.XX $X.XX. is XXXX share and increase of

masimo.com. non-GAAP per earnings our for release information share, please GAAP full Relations financial section supplemental within and of For the details and earnings today's refer XXXX additional website on our Investor financial guidance year to at

that, I'll to turn back the With Joe. call

Joe Kiani

had quarter, introducing We key gaining clinically productive Micah. you, Thank customers impactful another products. and innovative

We seeing care. they because technologies, patient of breakthrough they adoption reduce outcomes improve but are cost increased the only not of our do

being new honor commitment XXth of Halo XXXX at in of year anniversary In launch keeping the one with month in our we least of per founding, announced ION. to product April, launch our our this

continuous Our medical saturation, records. as rate score or a physiological oxygen pulse as few from warning three as proprietary parameters: single data much electronic trend upon index aggregate profusion Halo ION data from and index early based including data produces available as

connected is part of and from monitors hospital and intended modules, captured comprised to of to for Each and ION information streamline system SafetyNet hardware patient. software of notification displayed clinical bedside all Masimo Halo Patient's as a The a workflow X ION assessment. to patient's is Halo from patient and score monitoring to on clinicians' devices automation supplemental of storage streamline clinical ranging suite, the XXX, the helping types presentation number multiple remote our

a for initiative We're three and sizable dollar Iris total include cover beds. Vital feeling capture nearly which California long-term after securing near-term facilities contract monitoring over outpatient SafetyNet, quite contract Root and with will will the automation and Signs encouraged potential with hospital hospital large a XXX network, products. This about Patient our a multi-million our new communication software inpatient and hub, of patient multi-year

of of addition, to monitors our customers In across automation hospitals. all pipeline a in have eager to And our what's deploy their is over Rad-XX its deploy hundreds strong planning we the all more, hospital world customer technology this of clinics.

sensor, million clearance SET in a OEM May or PPG. was our rainbow In that The sensor PPG tetherless of Radius approximately the area attached Masimo any be brand monitors. pulse oximetry or wireless patient transceiver a to is products of two the wearable SET-based FDA of comprised system new SET can to oximetry the sockets SET new Radius

PPG We're interest settings four-day general a the a sensor, life. to PPG the seeing the while lightweight ICU neonatal The numerous Radius sensor in in having from Radius strong is ward. from hospitals still very battery

FDA by which to later serve The is Also, the on of us working sensor this with with as our being potentially it eight as deal core Radius we of hope a closely products the launch our PPG important FDA out SafetyNet as year timely once system, and product device products after epidemic. selected FDA we the XXX help this to will one of whole the designating opioid clearance. get breakthrough opioid for launch over product

unprecedented cerebral important patients brain the clinical and where for saturation oxygen oximetry Another with damage. superior monitor. technology our use the vulnerable OX's of from saturation, indication June with our the scenarios trend clearance provide brain oxygen lead for FDA core follow to neonatal cerebral that not OX receipt There We're missed permanent the are saturation. able into could now neonatal ICU, can does brain many in of to accuracy absolute most where the benefit recent the oxygen oximetry occurred if

Rad-XX our the One in monitor of which of Department, was a Turning customer lung function as of broadly SpCO us field assessment the as million carboxyhemoglobin second with use dollar notable for monitor EMMA noninvasive for its to implementing part dioxide customer multi- carbon as well contract. extended capnography Fire York quarter New activity. our of had adoption end-tidal

A the directly our Leonard hospital This and new noteworthy customer as gained ZOLL. a is longtime on example quarter Hospital, various the in OEM and through Wood Army our which basis. General Community branches expanding rainbow of will with based Missouri of measurements begin U.S. an both broad partner using in our business was military

house Center multi-year realized for in as hospital the Children's important with in University products international Atlanta, multi-million the including Medical UAE with a Healthcare full for many Yale luminary contracts contract well we In Health our contract. and Slovenia as won new university significant in also a rainbow System. arena, Ljubljana Loma We hospital dollar quarter the win renewals Linda of

each second we We we notable a in being is Berlin One global Hospital. period. believe realizing was for high in our the quarter potential are for from We us as renewal successful tender new our opportunities Astor continue for footprint. expand business Charité Tuscany system care also to global a won the and multi-year those significant in quite health quarter

of Irvine, fulfill product you mission have what problems. outcomes to here our cost and As by Day we to our portfolio heard, the patient continue great Investor expand consider unsolvable mid-May improve reduce to hopefully some see ahead care our conference during solving and to in potential

provide that of impact due that to culture cost our for world real innovation care technologies around clinicians large their more care has kind reduction a afford provide. the empowers patients the to to have better We the and

our technologies. XXX $X be save despite U.S. future challenges a using with million about we that around can world. of estimate our care a why continue the beds future the by We over health year This is to and optimistic hospital

With that, the we'll to Operator? open call questions.

Operator

Instructions] [Operator

Joe Kiani

Should question take please? Okay. we our first

Operator

Taylor Our comes first line UBS. the of question from Matt from

is open. Your line

Matt Taylor

guidance. have little a about that and It updated in the new are more those products outlook some bit might you of hoping you give for talk momentum like to some was how good able the I pretty result. the Nice be you things color us of Can board? differentially? on SET sounds other across doing your

Joe Kiani

sorry in with of but question beginning I'm correct? the your fitting our products Is missed I question Matt, that are how our is your I think new guidance.

Matt Taylor

Yeah. Generally, being of separately just and and I how talk to those you be rainbow adopted. new might SET products understand then product the some was hoping able are help us about

Joe Kiani

do Micah, take that? to you want

Micah Young

Yeah. I'll Yeah. take that. ahead go and

in So, Matt back that we are – Investor at showed rainbow seeing original had our at in our well the results than newer second rate if our We're growing advanced that in quarter. some we growth our And running because all to time, rates May, we the step-up that SET perimeters. of growth our those rates you showed we as were growth when in newer and stronger faster back go met plans. QX, even haven't a where a in Day products at those our

we very in we're growth So the playing seeing plans. rates to that X% outperforming had the SET growth original that's from of X% strong

kind a there that Rainbow, at SedLine are we originally parameters, in but all growing OX. XX% you growth And originally rate. look of then give rate want We line multiple you the to in where we're those those advanced to details a All of growth plan. view plan. the growing into that capnography get and growth don't a of the XX% want of when than at NomoLine high those we faster and I contemplated it's aggregate product performing against that are which out laid by – rate the

comps basis; will still our growth at at because of the we're we on a very in you on look half contemplating XX.X% a in look if grew basis. XX.X% half constant to you those the also the year last our well. of back strong But the as ahead have you rates recall year-over-year If currency growth guidance half grew we first year, currency constant the guidance, that's back

coming got against we're very we've the So half. comps back in up tough

those comps half average our implies as rates exclude the and is two average average If XXX back in of the first you growth growth the last years the year you normalize over on ASC for half growth about XX% two-year tough well. last per when years XX% year the over two

reflects what think business degree high shows confidence confidence. we're is of it the a I momentum we in have in So seeing this that and our guidance

Matt Taylor

if some And parameters? much could Thanks, you're I Philips Okay. of of adoption rainbow wondering, second how how new come going? question to on through? helpful. that color Micah, is that's starting if we're base any you see comment seeing and on those was And some very of customer the the advanced sensors in maybe agreement

Joe Kiani

Certainly. Philips relationship is going well.

for in two advanced the within expect year monitors. of introduced Philips half second of be to parameters three We the our

advantages and from marketing the from both comes that sales think of agreement. perspective from force technology our I addition, our In understanding the

especially see XXXX. as We momentum, we enter continued expect to

products, growing a from As million there were I was SET growth. you know oximetry new a to $XX far $XX around we our time, year think million as

That do continues that. to

clearance FDA that And So than hopefully clearance the the contribution us that a continue new growing SafetyNet forward. to PPG seeing with the the expect upcoming have fact Radius we more you're of that about year opioid that and now brought products momentum. reflects -- we $XXX now of grow the million to of hopefully

demand growing. and and getting partners they OEM of far And to they're it than well. grew Rainbow is is the doing provide hemoglobin. from hearing much too NomoLine customers The Rainbow seeing XX%. Rainbow' as more very without our more We're and great all that is OX wanting adoption more hemoglobin. we're hearing concerned, SedLine As rainbow into them particularly

but facing have guess is clinical I those, we're as midterm moments we long-term. about of out we're as mean, It one our feeling are we're short-term the the of us. don't well challenges benefit very many our doesn't challenges, there So what trumping seeing that rare of a is where believe and technology I good

Matt Taylor

Joe. Thanks you. Thank

Joe Kiani

you. Thank

Operator

line Our from of Stifel. Wise from is next question Rick the

Your line open. is

Drew Ranieri

Drew Hi, question. the Joe Micah. tonight. on Rick for to Thanks start. and for It's Ranieri just taking Joe,

multiple product to a few. name you the Radius ION On highlighted just PPG, call, introductions: new Halo

new in impacting imagine, XXXX? we lift think positive I’d growth-enhancing? should should or Are growth-sustaining these How we more it more about have products growth? maybe these see products a clear impact, new but from they visible will longer-term

Joe Kiani

I'm You're an guy. entrepreneur. asking optimist to wrong the

as industry Rainbow these go obviously slower say, to going momentum an than But in as new I'm things enhancing. are you products we well where So hope. are

momentum. help at us our should these least up keep So

I out countries getting new tell a we to are countries from the to you What high-resource we're lot community can is famous to hospitals products, of hospitals. when interest showing mid-resource

and the we're I their kind a why even products we new of the we've seeing to we've seeing talking about that we're continuing level. feel kind that growth these with higher chord So hit think growth about been good that's of and

Drew Ranieri

touch quarters; It Got I then was XX,XXX-plus you've in for that range growth it. than at now just of isn't shipment shipment eight but to the on just double-digit and know X% softer growth. clearly the linear, anticipated. been we shipments kind past growing little And a for quarter.

any quarter remainder given march expect the we call higher the you we maybe of that customers fully discussed all that XXXX? of and dynamics I new in just particular played to should out the appreciate? up didn't was the mean And shipments on there that renewals over kind then

Joe Kiani

that to I you of for I quarters. all, happy the quarterly shipments know next anticipate XXXXX-plus first call Well think let doing of last three was on we the

prior expected base. it's we our which quite if installed to fully what in coming is about to you our shipment, additive this invoiced So year's line think

we he's things Yes. -- some did could of from Trump As have the doing it far been suffer as out there. Unfortunately, better?

of pretty One was his work. hard OEMs our by hit

So to better brought are better as to than well as do do there. than expect will -- on even OEMs more, some was -- the and and new we out do the we of expect year new we board that do overall, but year it because more there. We getting some quarters that of year do next expected parameters in we that have Philips anticipate this

Drew Ranieri

one Micah. it. Got for then one And maybe last just

need your Just sounds solution. broader in and is hospital automation Masimo regards and a this model to business your might structure. force sensor greater like theme shift Clearly to offering at from sales becoming it driver to

sales does evolution SG&A time how And evolve with automation your expansion have the force is just over So operating drive a LRP, an how that's needed? hospital to if margin is there lever, to opportunity? into key your factored that being

Micah Young

Yes. thanks question. the for Drew

think to it's more hospitals we're well. we do leverage be you very type the As of about as We're through continuing to hospital of sell are And similar but to a point, back-office call automation opportunity settings the right the little it's the that commercial great in global -- addressing of hospital within a able same footprint. see that. our to bit

-- operating we the leverage deeper ability leverage a more gives those us continue Now we but And only and leverage accounts. margins. that's fits not points the we in revenue can very into XX% pull-through improvement to nicely of rep it. year and into to keeping great accounts our to and go we the of that each mind products, service as to it to other trying bring of more because XXX It opportunity footprint, every drive in in long-range it's and as our drive plans

Drew Ranieri

you taking question. the Thank for

Joe Kiani

you. Thank

Operator

from line question Bill Our from the Jaffray. comes Quirk next Piper of

open. is line Your

Bill Quirk

afternoon Thanks. everybody. Great. Good

Joe Kiani

Hi Bill.

Bill Quirk

Joe. Hi

you Almost for balance guidance So, I million back quarter. the the stock signaling allocation? How continuation thinking some per in think obviously You debts. is bought that. in question sheet. I obviously No about here a capital probably cash guess first this Micah. are not But $XXX of

about think where us priorities help are. Just your

Micah Young

Yes.

terms shares. a Bill, that to -- into and That's of So, of of we in in the go structure course, plans repurchase more we we plans in put back market put place. corporate

not is one include I'm any have guidance our our continue not I'm What year. to signal if repurchase with outstanding. we we saying that to not do I'm not trying guidance repurchasing we're additional say anything this shares. does to trying shares So, --

So, if if we that in do that share count do upside we there would so. additional reduced be

Bill Quirk

of And Okay launch, then understood. about of or SafetyNet the release? the going the Opioid in segments and into any that to initial of heading just perhaps chase updated terms market market Joe approval thinking you're thoughts upon opportunity kind

Joe Kiani

simultaneously uses Well, I those for available but probably product will on to first we're reaching might product benefit obviously those customers parties believe think that easier for people are prescribed prescribed that opioids make well. be going may focus We the as we both although, opioids. are who for

XX,XXX shared look that due And guys think And we neighborhood opioids from they're XX,XXX was when people two roughly in of opioid prescribed Of before. this to the you overdose, the years a that you data number the about with I ago million at are year. died opioid prescriptions prescription opioids. about annually, XX of

pretty and opportunity it's a large large problem out. for to So, us help

Bill Quirk

great are or X% of to just Okay, I'm And the can if one and me. if the the you that outperformance factors trying Obviously, think exceed then Micah, us year to it. one-off the a there's X% I around your little that out any particular sustainability. more kind to the SET, of balance last think know rates. And across continue products about specifically here growth to above or got this of maybe continue so don't Help bit kind guidance thinking that for hear Joe portfolio over figure that just beyond?

Joe Kiani

a think by of is few Well, I it's One factors. technology. really our continued adoption driven

adding XX,XXX-plus shipping growing installed a as quarter So, that's drivers the that's to base. the installed base, we're

been moderate that wasn't remember flu high as strong. the and QX, QX. has even to QX census. believe has to in with you it And We Secondly, though do in census season

believe I census. has strong there been flu to unrelated a QX So,

we in lot being I keep numbers we But our hospitals of up also past we're won in live that months seeing continues the convert which world hospitals contracts technology. with in number to think going of implemented with a our six is around the those momentum the our historical

field, what least, despite the retain be but existing probably last course, a renewal our better -- of very to on team a doing the of improving to job delivering customers. my our good than promise And And, and not in doing while that of rate but XX% for lot great might its normal technology a existing would I of patient and we're challenges of some due credit reducing not is job of cost care. the customers care

Bill Quirk

Thanks Okay, got quarter. Nice it. guys.

Joe Kiani

you. Thank

Micah Young

Thanks Bill.

Operator

from Our the of Needham Mike Matson line next question from comes & Company.

Your line is open.

Mike Matson

Hi. Thanks for just to taking with product. my I questions. I start guess PPG Radius wanted the

that's received and to Just quarter? curious growth the what to contributed second degree how in being that

Joe Kiani

the First very product of all, reaction has to the been positive.

planning As of do far ramping weeks. We've to contribution market it's in to been next its our We're zero. couple been release full as production. up the a QX to

PPG the start future. in the expect Radius we us quarter and to helping So this

Mike Matson

least Thanks. Analyst pocket reimbursement on pursue SafetyNet, you're have sort out you plans timing at product? planning go of you've the What you do think, to I do for And Okay. But in then go about of Opioid that? of kind Day that think said initially. to would you be? at place the that would And

Joe Kiani

correct. reimbursement strategies. That's And are both that on working things said we're true. Well you've

I guess our final CMS if them. process. came to out our and that of the own we're And ahead thought Opioid of might plans a lot comment and become of they strategy reimbursement are new couple help Some on SafetyNet days promising clarifications by ago they a going

Mike Matson

Okay. Micah. a And question from just then finally

added so quarter one if product growth growth this XXX you heard for So ASC about point correctly to this guess. I I this with your

start does like year the base, or? So kind will next how what in that's that a it -- year point or of when drag this? be to lap still next go you happens be Will a like like

Micah Young

Mike. Yes,

So the our yes how out. both standard -- this plays we're new percentage we're about and its one going neutral neutral implying we This it's -- are in quarter. see estimating trying revenue basically guidance year. full We've point the to year-to-date be back it's to -- our got contributing relatively quarter half $X in it'll second We're million first of for in the year. the that to be the

quarter that's contributing give the an and -- be you of we there. it's We're have want transparent you how so why numbers to each idea

So year-over-year. so there it will the we think contribution based be -- but when be it issues can that can of on relatively think ASC -- XXX, do installations with it's we timing will year-over-year that timing-related similar we

not -- But X.X on our next don't year. we how year about right about any think so think it's it it's we point now expect it growth. large full would So guidance about that's

Mike Matson

Okay. have. Great. That’s all Thank you. I

Micah Young

you. Thank

Operator

question next from Capital. Misra Ravi Our the line from of Berenberg comes

is open. line Your

Ravi Misra

taking Hi. everyone. questions. for you the Good Thank afternoon,

and on So margin I have just two; one on one rainbow guidance. gross the reiterated

it picking about out. I'll So on rainbow least at laid was geographic kind Micah has response. the you. of us rainbow that or versus hoping going coming or growth better a could the been strong? I so little up or via planned via after us it's just base on bit my mix, Thank customers and Joe, that help was it save incremental follow-up why sounds long-term existing you think activations like then new your performance of And thoughts help understand is

Micah Young

Yes.

both. from seeing definitely we're So

saw If we're -- on think look and -- seeing larger needs -- it's customers infrastructures. we're seeing We the we're well. growing seeing talked coming that Joe we're growing especially outside about it U.S. you board if you as military about it. There's some with growing also orders with earlier at where the

and XX% seeing we to had more plan. that's really rate what's growth contribute and in and in that drive we're than past faster broad we've helping that original So the our seen adoption

Ravi Misra

the sales Thanks yet Great. one stays gross – the up on growth gross at stable number XX.X%. organic and margin put the kind in margin -- you of

pull-through about rainbow and of think you're well. it why headline like OX this us doing if be as help with Just there in wouldn't sounds better products some more

Micah Young

-- With yes. pull-through

So we're definitely seeing improvements.

keep mind and look seasonality you the in business. this year-over-year If -- of

made improvements year-over-year So basis margin expansion. XXX is we've of points about the

ASC if and in standard. had you margin we're that improvement's We due -- a offset some a basis full lower year bit that in through be -- nicely very there. it's to little So -- to XXX, of on margins of lower XX tracking going But accounting and the look the headwind roughly helping the points. new on we believe QX coming

expectation So, of line on ahead very internal to we ahead tracking we're not be want and long-term where or with our plan. our in to expectations as well performing our well internal if

So, more before of -- the we would different raising there. and see to a play out we as do get think we it things bit any ever automation on want little ahead expectations ourselves hospital we with

Ravi Misra

guys. Thanks, Great.

Joe Kiani

you. One Thank more question.

Operator

of James. next from Our question Raymond comes Keusch the from Larry line

open. is line Your

Larry Keusch

Good Thanks. afternoon.

the you on opioid know that the filing XXX(k). of the just an thing do on product, this you cleared that I give safety the to expect the the you by have said just year. us of end Joe, for So could expectations update

along can again about how those should thinking an whether could we then or I you think more. this be product. over-the-counter lines, or is And about be prescription then -- help us And had one ultimately product

Joe Kiani

file couple the or called -- Well, -- we in XXX(k) the know the application intend don't next exactly months. to I of what it's

of prescription I good, our you which the have not They positive. very users see tell to very discussions FDA, but a with think users, with well. list can what as just I been benefit

anybody to make proper with about working been them user instruction. be used by we've has the product how just much and sure interface So, on can the without

and chronic are FDA We've opioids. that of new been as that collecting a lot well data as those of users who on users to who those see are likes

start together we get really for. of year, by be hopefully by looking us once that's of in closely the to by what the we progressing collaboration terms end will working really and And this, don't revenue something expect are should end FDA, this well. like it to we that if begin is given it'll submit it for on close the And So, unique things XXXX. year the we the of FDA clearance the therefore with

Larry Keusch

Okay. Very good.

you is revenue this that the with so aspect to contract over-the-counter just And one at this then And just dollar platform that starting one that like the create other sounds I point or is about the the or multimillion wondering evolution? that is automation in relative out we whether hospital thinking way multi-year California it is way hospital a or of question subscription-based know should to was an And second that this talked stream. contract. prescription. be it's whole

Joe Kiani

model is We that It so the technology-as-a-service a as software-as-a-service do customers. starting do model go with and way It see way. to is.

it. that We said is And strong hopefully the does beginning product. many. just as that have this of very yes, earlier, I in have for the So interest do

scale I more entire up, demand product. one we can so just the just without it organization to the think trying distracting on we're meet

Larry Keusch

just sorry Okay. versus And I'm over-the-counter prescription. the

or thinking we should way the Just on one that? be other

Joe Kiani

both. think I

it. to thinks want prompting I think both I think of out the don't I scope, FDA should us even speak without both. it it but should be be

even requiring So, And or assuming the think I both. I there. over-the-counter can product start get instruction of clinician both, of be and hurdles in that not will pass the and clinical if beginning doesn't it usability it think terms some intervention, should it from

Larry Keusch

good. Thank Very you. Okay.

Joe Kiani

Thank you much.

Joe Kiani

Enjoy to the next our all you for you. We earnings quarter look your call. Thank our summer. forward Thank joining of rest for earnings call. us second

Micah Young

Thank you.

Operator

and call. Ladies today's this conference concludes gentlemen,

You disconnect. may now

Masimo (MASI) 31 Jul 192019 Q2 Earnings call transcript