MASI - Earnings call transcript Q4 2020

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Operator

Good afternoon, ladies and gentlemen, and welcome to Masimo's Fourth Quarter and Fiscal Year 2020 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'll be a question-and-answer session. I am pleased to introduce Eli Kammerman, Masimo's Vice President of Business Development and Investor Relations.

Eli Kammerman

you. Thank everyone. Hello,

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

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

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

decisions. all SEC, our order the XX-K consider the the within earnings to of in of non-GAAP today, way reflect financial In and with are in performance comparable measures investors the Form assess addition as and measure the believes better the sees underlying measures these company's measures to financial financial Management the investment are transparency including The make intended should that included financial Investors recent with to release statements measures informed increase company's same assesses these on to company's business. company measures these GAAP information of GAAP results enable results, additional Reconciliation website. reports and most results indicator information of uses performance the supplementary financial non-GAAP to together an and management these most to operating our such budget, to directly our our business filed ongoing results. non-GAAP provide XX-Q the and performance. evaluate

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

Joe Kiani

COVID. revenues you thank ever install effects are rapidly full critically joining demands earnings fourth challenges call. and Thank that patients monitoring quarter our critical you, to as solutions required conditions, since Throughout helping year a pandemic. in more time patient customers our millions solution was was Patient response hospital-to-home were portfolio for as enabling XXXX improve our and overcome for expanding we with for years our and we're frontlines the products the especially Within I'm XXXX, under the technologies, our committed milestone and patient in at team customers ago. home. Masimo's the workflow staff world to proud COVID this for realized our for its nimble overcome more tried of secure as as our included overwhelmed several while burden Within tough demand same the SafetyNet this year expanding this customer to solutions. us to streamline responded crisis SafetyNet for care, time the to for ill even the where patients existing hospitals also our over This responded at our and of of to due our first life-threatening before their around our products face significant hospital and portfolio monitoring, who many outcomes. than for of $X new accommodate many for of say Masimo, improve to pandemic possible even of an our to Good to wider for challenges were Masimo the founding persistent them admissions. to Eli. the billion while in system achievements the the pandemic. struggled We many team capturing COVID this XXXX expansion SafetyNet significant enabling such year-end Masimo enables pandemic to manage beyond to customers and to introduction of the last base save still XX that of that related In afternoon as was also year Last lives patient and contributed products, customers to midst important Today, exceeded dedicated environment, in to

acquisitions, hemodynamic wearable through continuous other and to and T products SafetyNet-OPEN detection continuous fall as important support Some relevant LiDCO to clinically and institutions technologies the TNI, respiratory open wearable thermometer, Cannula of to organic around acquisition help the Nasal base system monitor open softFlow, and LiDCO. such by customer Masimo safely, monitor, growing bring a these bedsore and as such High-Flow through excited stay cardiac output Radius world. Centroid and We're

another are to front, that the On for we full-year report fourth exceeded promising happy ahead. the year set financial stage quarter expectations and and results

able level to which the instituted use. to regular members. inventory XX% safe health included throughout, revenues of required pandemic their upon greater this fourth SafetyNet-OPEN, as increased achieve for such others challenges modifications the well as manufacturing relied checks our solution worldwide for team. for entire also for sheer protocols increased launched Masimo performance Changes million. product internal operations year, products our facing patients. provide and our basis customers despite multiple the to our This $X.XXX many our and levels organization, to production product reach of of of For the the We unprecedented recently the safety to care transportation reach our We billion. to related the was as our temperature including commitment measures facilities at determination operations to our quarter, were to to full $XXX revenues our And XX%, and team

scenario operating. where from would COVID We have to our for prevent prepare a plant

normal happen. Fortunately, will that out are happened we down our After from levels. hopefully of and inventory never COVID, we danger won't bring to

as installation teams occasion as also the activations in the heavy on to were field possible. in our interactions hospital of and carefully face to training ensure the customer product and sales maintained as rose timely deliveries, Our visitors, rapidly restrictions

exceptional from the their activities work has most I'll members team facilities team of maintain our continued our our of call. to the discuss always home, that later more innovation engineers many in been while of at Masimo Hallmark. of pace unparalleled Lastly,

Now, of Micah I'll provide to guidance. review ask and Micah? more our and XXXX quarter results fourth in overview year financial with detail an full you our

Micah Young

everyone. and Joe, you, afternoon, Thank good

on the As a will cover financial be otherwise. basis a reminder, non-GAAP primarily I'll noted unless measures today

reconciliations technologies our the one the so drastically a how of could customers our a at workforce the around their At when virus patients commitment change website. predicted Our in XXXX, display, found needed the be many as today's and release to our start non-GAAP lives of have Relations would global full no of they section GAAP it results people Investor as of and unwavering can well world. on to earnings the time delivering trusted most. was The

stronger XXXX reducing improving many cost a to outcomes dominated Although, the by of many and an care was foundation year established for for uncertainties, has patient even Masimo years come.

we and During shipped noninvasive instruments. quarter, the technology boards XX,XXX

approximately the the that our normal X installed fourth end of the a which technology fourth At XX% base we and now as years. instruments at end X.X monitors, estimate XX shipped technology rate. million year, our last base the and XXXX. run boards the For we we quarter, quarter result, boards XXX,XXX of over And times is have the installed nearly our has full over of approximately grown shipped

of to extra quarter, the This week $XXX constant for a revenues For the fourth included adding XX.X% basis. an were XX.X% growth fourth our our or growth of points product period. quarter, approximately the revenue percentage currency reflecting million on X growth in

boards Our point, of Also quarter. demand the recover sensors patient worldwide as procedures our pulse have worldwide sales from for we saw up instruments continued single the use sales SET adhesive and related oximeters increase in of up to and were XX% to technology were due low X% second equipment. elective Masimo

direct and worldwide for distribution reach million. revenues grew $XXX X% million grew Our the to our business $XX XX% to and reach revenues OEM quarter, business

continue the the fourth P&L, technology and Also, in the from proportion experience fulfill costs demand year the pandemic. was the year-over-year the instruments, points charges to during COVID increased to our workforce higher margins of we've manufacturing for risk margins facilities. The prior global have from which non-GAAP our the to to our COVID-related our revenue period. to compared and in reduce as we increased XX.X% implemented costs primarily These sensors. down as inventory lower to within decreased costs protect usual than XXX well customers to safety higher Moving gross protocols, coming XX.X% basis related a our boards the expenses, and include of our to due quarter freight additional decline

stock-based was to points the points as XX.X% during year. as selling, non-GAAP percentage quarter. quarter. XXX expenses general compensation driven Our operating research our of a compared expenses year XX.X% basis decreased year-over-year in as basis The And a compared leverage, prior in by development X.X% quarter as last a revenue increased well to administrative and the expenses to revenue of improvement strong percentage XXX to same and in reduction the XX.X% non-GAAP

basis As a XX.X% XX.X% result of compared points non-GAAP in prior our to margin headwinds, to the decreased period. operating year margin XXX the gross

the down further P&L. Moving

or the expense rate R&D the driven prior driven interest in non-operating is rate credits tax decrease pandemic. of income, compared which decrease period. the The was year quarter rates by primarily non-GAAP income, tax Reserve And lower the to cash the interest the during year to interest $XX.X was resulting to million $X.X a our an in of XX.X% non-deductible yields realized for compared expenses. non-GAAP and interest The in in a Our on rates tax invested increase by non-GAAP $XXX,XXX tax cut from XX% lower fourth non-GAAP to quarter in decreased resulting actions comprised compensation was rate Federal tax prior - approximately XX.X% primarily million our of period. in

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

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

EPS excess This GAAP per reflects the stock-based fourth income tax over quarter. our per from in million GAAP diluted million the quarter or the net growth of for for compensation comparison, or year $X.XX diluted In of million prior quarter GAAP Included our year GAAP XXXX $X.X quarter compared share. results, $XX was share. period. XXXX in income benefits to net $X.XX GAAP million is to fourth $XX.X of Turning the approximately tax $XX.X was XX% benefits of excess earnings prior

growth On base. for new in basis, terms markets by exceptional entering of gross of revenue our operating growth Masimo for record on year the a XX% rapidly yields XX% installed we back increased a a as growth And and year of expanding and lower delivered and challenges winning was dollar Looking basis. margin full new XXXX basis our GAAP headwinds achieved on of base XX%. with delivered profit interest and delivered EPS year installed Masimo, non-GAAP another on invested non-GAAP we an our we customers XX% cash, many XX% experienced despite and product we

full I'd our our XXXX like on Now, month. outlined to in we guidance release detail financial press that go more last into year

$XX we revenue X.X%. week year-over-year are is and XXXX. million, $X,XXX year-over-year less tailwinds of currency our approximately revenues guidance of projecting product compared of in growth revenue to XXXX, Included which For product one reflects of million

for us. year a As XX-week XXXX was

point revenue LiDCO. guidance incorporates recently roughly towards XXXX acquisition of closed our Our percentage X the also full a from contribution year

margin gross point results. which non-GAAP increase XXX XXXX a represents basis guidance our XX%, Our is over

year hardware. While more last product in margin gross a to we our mix related decline substantial saw in towards shift a our

XX Our expense of are to XXXX. reflects reverse non-GAAP mix over expectations which guidance this basis for increase year for prior our revenue, is year. the a course point operating in the gradually shift And XX.X%

expense operating expenses R&D, increased and guidance continued IP Our defend in costs related business. includes investments incremental to to our legal LiDCO the

points basis point and which partially LiDCO. Included is basis improvement of acquisition by guidance business, the operational guidance approximately leverage our approximately for headwinds profit non-GAAP margin of a is XX.X%, prior XXX points which reflects Our year. of is over existing improvements from XX related to our basis offset in XXX operating the

times to XXXX, We in more XX.X% are profit accretive to XXXX fully million beyond. $XXX operating X leverage expected Based reach expect the strong assumptions, operating growth rate. leading reflects non-GAAP in revenue and be our dollars which LiDCO grow to than to on our

Moving further down the P&L.

our X last is we income non-operating over generated our We're percentage tax expected non-GAAP we growth to will which in comprised point very estimating year. of of the year. are XXXX interest in that a million that X% projecting and of primarily prior XXXX, amount an income XX.X the reflects be outstanding to headwind non-GAAP $X.X increase Our XX.X%, which EPS for represents average is This a be also million, shares rate over XXXX. weighted a compared nominal to rate

XXX,XXX per in of Based During guidance. assumptions, the outstanding of financial repurchase impact are $X.XX; our non-GAAP GAAP XX.X%, we full are on repurchased we the these $X.XX fourth projecting of weighted shares of stock. from projecting rate share for average year, quarter of on and EPS a The Masimo approximately is reflected we of last a our shares tax all the common XXXX perspective, GAAP earnings GAAP and year. of year share

to share, respectively, tough year financial are section that projecting of year-over-year within following to please growth X-year comparisons, year. it with on revenues For when a when growth strong perspective, full our of rates outlook at mid-single-digit our you XXXX XX%, an for for revenue positive at also It earnings Relations to and Investor profitability masimo.com. profit results. operating from important release additional To and operating supplemental our annual note and fiscal compared XXXX conclude, website and imply product XXXX stacked GAAP entering profit our Despite and guidance dollars for a compound XXXX per dollar the growth and XX% we double-digit earnings growth today's XXXX. growth is look we're revenue information the exceptionally refer financial details non-GAAP

year call profitability stream Masimo incredibly strong sets strong for ahead. which last a markets for will customers, an new and has expanding foundation commitment another our entering revenue Joe. the And and terms for in I beyond. that, to delivered turn goals. of long-range built record remain in We years growth our our to With and performance year winning installed rapidly XXXX foundation back base, on Our the the delivering steadfast we recurring in new

Joe Kiani

When Micah. and see XXXX, you, adversity at of we we look unusual back Thank mix an accomplishment.

threats effects help and with the While of dealing with all we and we suppliers pandemic, customers together to global were patients. catastrophic came our the

X been turn monitoring ever only when the value and us nearly year. to brand customers than of need customers to XXXX than and Our our for any most. with more More than the year at be more instruments any turn the appreciated. more number boards brand promise did relationships Not of support, has came you new and other accurate existing fully pandemic, to life-threatening other ever. in in shipped us technology We with times the establish customers new our

Our oximetry customers, new greatly terms customers another with led partnerships are our customers. to for and in existing innovation pulse Masimo and to expanding year record and performance, our serve commitment renewing winning SET of and appreciated

Regional hospitals new significant our Kentucky. hospitals, Appalachian United mention the which across has we which of XX Some and in States, hospitals customers, can XX LifePoint, has the

MightySat wearables were strong pulse pulse technology fingertip boards, reusable oximeters, Our oximetry year. exceptionally last sensors, SET of sales monitors, and

more procedures for While patient elective use sensors subdued. were single used

procedures postponed. surgical cancelled many were As or

impact a many sensor realize year and us. a drivers of increase know business new record-breaking where visible our single our the hospital growth back, of result including and contracting hospitals from coming year's elective this demand, I developing as this are COVID-XX adhesive X factors to many you we in last reacceleration automation XX% opportunity year business surgeries expect a a for We with had of new wondering on for about record sensor in use us.

our to customer that offering automation prospects believe very business hospital software coming the able of capture be XXXX of in to broad we portfolio of information XXXX. analysis exciting all a the automate glad were that has base We're and this all to display transmission, devices and surrounding the brand. now in from of You'll patient know a expand for and of hardware regardless

new connect call In our ability industry. more lower and have also hub connectivity addition drivers rapidly iSirona. library that enable Adaptive And platform, device driver patient in Connectivity to with connectivity for believe connectivity largest we had of expanded now, recently we ever the a to and Root types have the best we to the Engine, than devices we set monitoring always within of hub an contains introduced This the med-tech everything we device brands we offered. With connectivity hospital. profile

we adopting workflow customers. I have to Replica better them for to hospital UniView: SafetyNet XXXX. XX, realized dose such and been in general to management traction will the earlier, Hospitals introduce good likely as mentioned streamline As contribute ION UniView, ward Halo to practices. solution Patient our help and during this patient setting modules, Patient product us enable other automation SafetyNet And many

with critical our SafetyNet oximetry Shortly to track product the evaluate interact second help with health. other actions. the Gateway messaging what distress, rate improving hospitals for this year, recent connected via of we to T, beds sleep each during care increased fact, X in the launch efficiency seen able Radius way product category, our Radius later than alarm year management with years. introduced have temperature. X-way addition signs times increase a while in a or of thereafter, by In with being of sleep which in alerted Masimo The first patients Sleep, introduced a that to vital pulse another Iris of number are category, more we patient team PPG. to and measures all Patient continuously as In and in we patient's SafetyNet care, to was in relay the members Replica to is Masimo boost that while product follow We XXXX, hospital-to-home information intended XX% designed

of each for that connectivity at to where products save launch to help year in and the pain currently opioid Masimo in induced with control data died respiratory or taking of FDA. hubs an addressable these transmit cloud people excited over SafetyNet-Opioid management to under with sometimes chronic SafetyNet-Opioid, depression about prescriptions of was smartphones, the potential by in clinicians. it opioids for opioid from is Patient XX wireless market reported of over In a people home. option our are U.S. the into at We're wearable the post-surgical XX,XXX We're current pain, U.S. it that the All excited the review lives analysis based technologies for representing work home, typically alone. XXXX, million prescription on

is technology indicative a common can oxygen can saturation of Our patients condition effect depression, side detect use. the be of low if to designed levels death it respiratory lead to that of is opioid us This their unexpected U.S. help a organs once the are vital the running of critical undetected, starved assembled launch oxygen. a team is as slowly of approved with SafetyNet-Opioid to in professionals We've start technology

should FDA, did MCIT for the expectation success be have frontlines by submitted to the positive the coverage Technology designation of it Technology Medicare clearance has so of study by In responded program. bolstered system and reimbursement to terms CMS. the Innovative of related means our results commercial which qualify our SafetyNet-Opioid XXXX, team. the approval publication under the and from challenge, the FDA Breakthrough a Masimo Medicare recently soon, received Our customers upon of as Utah for seeing for crisis our the solution that the may rose are COVID closing, on in been from the program we throughout

cost that heavily solutions deliver efforts clinically and to reduced and product patient of invested in improved relevant supply have care. the outcomes have We innovation

call With a confident open the to leadership innovative world. enter that in the around year, I'm new Masimo continue operator? and solutions patients will to we As we'll questions, clinicians that, delivering its

Operator

we stand Q&A [Operator compile Instructions] the by while roster. Please

with James. question Our Lawrence first Raymond comes Keusch from

Your is open. line

Frank Louthan

for be just pandemic. is Hi, taking XXXX, guys for off, questions. you there from the is significant the obviously, on given Frank guess, first to some benefits I in going Thanks comps have this Larry. the

against you can comps? do these up what underlying the understand help investors So to when growth going challenging

Joe Kiani

be an guidance we're not promising our in we the with to time, we've that yet, first will I although of the available. are think, a both pandemic midst that Well, that it vaccinations out unprecedented of all, done in of give terms of best looks

strong drivers, them, we which our And the not it very remarks, XXXX XX. I they're a that XX% on we're with that a will about that mean year-to-year bodes what for mentioned one seeing top increased in First our adhesive Xx we is XXXX? those in what what the our increase basis. all, said, them, but increased meaning was utilizing increase normally as you utilization and And like is customers have taken contacted prepared saw of every Secondly, well our of of for sensors. drivers, a

we to they QX, year, were not happening - with had most at XX% strong began QX, a dealing we level. by COVID, while at almost because procedures through where happening were Secondly, almost least XX%

middle as year adhesive world, hospitals sales. for significant do with the given We sure demand want would And there's expect was sign see expect we'll And to growth the but record But a and that as feat. in the footprint Masimo. normal us that crisis. that sensors pent up hospitals saw instead, that anything we in this their procedures to willing elective no our we now well up our growth, to convert weren't with just in larger hospitals to small we pandemic, finally, of of the deal

for of were see team but mattered room. by to because be sometimes when in outside was the a think time you with sometimes to Those they to watch themselves our us. it it patient, the home more people, Masimo the and was numbers did, kept able room great I like it before. measurements can't think SafetyNet the really and when year they And because mattered even to at meant at never them product I because was ICU the from the and best they what what partially measurement, have it a Masimo about trust

year to our done to line, bottom going like. look So forecast best is the what we've

But lot hopeful about. control. we We can't concerns be a have also to have we that

happens. what see let's So

Frank Louthan

SafetyNet, opportunity. FDA, right, quick Are the cleared? you get an Obviously, exciting year? then, timeline thanks. with follow-up. you assuming much. great, the in this opioid And to like guys on And revenues the when any be that sounds so guidance might think do one All able that just Thanks

Micah Young

part. Yeah, for of We're including back commentary some the the it the in And I'll year. guidance I'll first for revenues our status. to around not Joe the take any turn

Joe Kiani

a for the Probably collaborative opioids. most this only have had been part chose technology, designate with of a most X did relationship breakthrough history FDA. very time the that project, We the for epidemic. as FDA collaborative of products it Not SafetyNet our has one as on Masimo they could help this

with So us bottom letting in we're and line us know is lockstep is they guiding what FDA. need. FDA

to them we product are this need. forecasting don't We be the will if year, any the were they revenues while delivering And in launch we this disappointed what conservative, U.S. not year we for

keep fingers We'll what your crossed. see happens. So

Operator

with Matt comes UBS. next from Our question Taylor

is Your open. line

Matthew Taylor

Hi, question. the you taking thank for

last start So year. on the were with can use boards shipped following continue the Joe, that was, wanted first thing on to maybe to the I up just your comments customer

color you Medtronic how can going about you pretty something be the trend that's you We've have that to whether early [before year? started on and in that think [ph] in any of strong to] and monitoring ordering. Is speak talk a continuing well? talking as If about terms things to trend long-term seen here

Joe Kiani

now in hospitals in that so products those ever I that those before. what you than I we is are think Okay, is well, seeing What far monitored seeing think beds we're tell products, we're there are use. more can

time a had group that monitored patient general the they for it bed the ICU The a several the effort long from for of bed by But wasn't had we was annually XX-year study overdose. opioid floor of to use become SafetyNet. savings monitored with technology with activations showed group. our study reduced patient XX% rapid the a things And unfortunately, product, did Dartmouth-Hitchcock over team response every one in transfers also showing huge not die over by So, and they that XX%. deaths the did patients is monitored, that entire because of that were that anticipated

post-surgical all the as this telling I us, and their I'm it to respiration. and you It of believe, I especially is, could general using maybe line, going that they're begin the floors, in like more keep the affect bottom work clinicians So saves because makes think using pandemic because because are they receiving their lives, their patients opioids effective works. who drugs it, safer, wards with

As misstatement. their I think the a they've far But seen say growth. shares as us grew sure is I'm to Medtronic over comment, that

Matthew Taylor

Thank all one. ask Okay, you. I wanted to right. another

the of recently softFlow just ask Cannula. release U.S. announced High-Flow You the wanted Nasal Again, how… I to

Joe Kiani

could speak… you Matt,

Micah Young

can Matt, yeah. - you

Joe Kiani

we closer you Matt, Sorry, Would can't please hear the microphone? speak to you.

Matthew Taylor

Sorry. Is better? this

Joe Kiani

Oh, better. you. yes, much Thank

Matthew Taylor

about sorry that. Okay,

you softFlow the be we've Therapy, thinking release of High-Flow you the recently did. a acquisition product? Cannula announced that How year? the this Do after So, material the something which U.S. should that Nasal that we been for about while think that's you could about think of ramp

Joe Kiani

product. it think was best it didn't marketing the be if wouldn't we we Well,

with for is have in don't category breathing. patients category XXXX. U.S., any we the to help U.S. an put because this think the their in Yet, also softFlow revenues important experience not for we We did

softFlow obviously, So there's an here. numbers, upside takes to our off

Matthew Taylor

there space were we for some focused. consumer had in Okay. monitoring. like seen we've And And recently that look was hospital? could future? the activity in Or the arena in I some doing the they outside that other hoping, you do could in you there of baby talk around are the saw related, trademarks products about you public anything

Joe Kiani

time, this due killing really safely sudden death to Sure. was infant Sure. I deliver concerned syndrome the babies sudden SET - XXXXs, was unfortunately, would is late At going syndrome, about babies. most home. When thought parents there death pulse at the because we oximeter, most that to was home Masimo, early project I and codename back help of the Stork, infant XXXXs. The showed research it to babies their named started,

whole So the world. that killed monitoring kind of SIDS

not babies However, shown company, to home. children's I catch any SPAC, think, The public we and their a at our to their did has to that we study. in product hospital, referring you're see And at was that. patients of towards working Philadelphia, that monitor compared a gone an product was desaturations help they opportunity are recently through

unless going in at at But our we product, from they to things you like are just see in And us make is unfortunately, that not monitoring keen significant line, not product, will the future. near yeah, relevant a looking monitoring bottom critically, babies. do that So way. more well, in improvements adults, we're on least

Matthew Taylor

Great. Thank much. very you

Joe Kiani

you. Thank

Operator

from question with next Polark Our Mike comes Baird.

Your line open. is

Michael Polark

taking automation together for platform Thanks seems Joe, evening. is hospital good Hey, question. like I the coming comments appreciate the the on there.

- how nothing's you you expectation do solution inorganically What - that the there the like X, Curious, have you for is, faster number promising. automation, do then about to on guidance? a ever have you built impactful feel can a And comment is X X. you you mentioned in full look you hospital organically X-parter. X now? as But hospital or question components question are feel into XXXX? That's maybe Curious You might think the complete. X financially Or other years? next like or automation

Joe Kiani

Sure. Sure. Thank question. you. Thanks for the

into from product Micah We more are unfortunately disclosing for this are. at can the ones any go that particular that lines point. And not revenues we

products to hospital platform. than completed, automation as out although any do not other it's We with intend exciting solution it's no, complete, out more far As features and bring more there. complete this

year, - hopefully this so come out them of first half of So tuned. some and the stay will

Michael Polark

but through to balance On cash of reasonable as limited just and Obviously, your knowing free that to move to down the to in the referenced. was number happen will - with through days XXXX ratably inventory, flow what's start XXXX? that the sheet on going hard due the progress we it frame, surmise inventory world, to you is as build that XXXX work we it's

Micah Young

cash very Absolutely, inventory, when we of about despite flow, strong it, operating operating $XXX million was had this over year, cash over inventory of past flow million at you think Mike, headwinds. as we year look $XX about

to were So, again, Joe's run pandemic. we inventory parts didn't his point build remarks, we make of out sure needed that the in throughout to prepared that

as we think move to forward. so improve inventory, approaching as should we going that that's start time to normalized we more that we somewhat now be that So get through over sell to of a down and as levels, tailwind back

Michael Polark

All right. Thank you.

Joe Kiani

you. Thank

questions. more couple a for time have We

Operator

Ravi from Capital Berenberg comes with question next Misra Markets. Our

is line open. Your

Iris Long

Hi, for for on guys, is thanks This my Ravi. taking question. Iris

remote a monitoring have question follow-up I on first, oximetry. pulse the SafetyNet, So,

into have focus about what XXXX, last and how like other the then so sounds then use it in beyond quarters? X far? few be like that indications? can you indications the COVID it was these maybe demand for So into you the in expanding hospitals for is product talk really And label So for expanding the many purchased next And just case. opioid will opioid, looking the

Joe Kiani

when we it. increase to Masimo modest about a SafetyNet and saw usage compared XX%, in we Certainly, launched X-in-X maybe XX%, QX QX to

many, we've think, XXX are around the using patients with who got world, nearly and many it monitoring I hospitals them.

a it drugs as opportunity patients has abuse the As regimen far using patients' and huge not many is high-risk it which opioid with SafetyNet and a relapse the they we helps their hospital. could the solution our pathway our stay that with application our that Doctella, care in a cause Masimo and procedures to get we for Radius believe do PPG or done types transferring call will we're home SafetyNet, app on stay solutions, on basically opioid back of need for working XXX patients, solution. to problems. to beyond to that COPD care that of hospitals have hospitals, have over solution, respiratory There's in including pathway others, And

well. opportunity home going great a our we see going it's And into and So technologies. monitoring with

Iris Long

Can And Thanks. how I monitoring And you bit. there? comment LiDCO thoughts Okay, that. any big great. for Appreciate you competitive the I on little on have about acquisition the can if market want then then, talk share to maybe the market? dynamics also, is hemodynamic follow-up. another the a

Micah Young

a can this that as opportunity that we When more lines reach with know, us. with $X approaching far PVi, mechanically technology or think, you for patients as can that are be you're billion who of market you well. at look range combining the A existing market - I patient the we LiDCO, could of market, with dealing that's on applications provide at our as that Yeah, look has broad ventilated lines those have as using with PVi arterial population it's

So, and as broad things it responsiveness well. like broader solution much goal-directed - gives for us fluid therapy a

market about it look as we billion. a approaching $X So at

Joe Kiani

and to Hopefully, they'll into it I company, competitive plenty this delivery, clinical patient's believe looked that all feed image each as we think as with technology at this And in small accomplish footprint all so there. how far the now is that understanding provide I going patients. the space, and other cardiac we has that our integration performing a as will that clinicians companies of the with that is Yeah, the in were fluid the Masimo and product output, performance. product clear landscape, a - of evidence our and levels, with what's best oxygen The best enrich give only a LiDCO's out could on bigger the products, feel they can much.

very really anxious to came it team good together that with build is we're The have have all hope them strong. done. with and we happy acquisition them. to to something So We're

Iris Long

Great. guys. Thanks,

Joe Kiani

you. Thank

Operator

Piper next Our with from question comes Sandler. Jason Bednar

Your line open. is

Jason Bednar

light what to exit start we'll I what's way maybe something to everyone. is I Or our you more remarks think a that update prepared wondering, back here best will suggesting XXXX. that gradually ramp the think gradually in want that's over don't the year? in we margins shift wanted comments. again, comment I to gross the about the course mix in we afternoon, you XXXX ramp effect to read good said you rate really are a modest And margins. normalized your nicely Hey, gross reversing level? But of start models, the as of Micah, just your I'm on the above as year? the through at progression more move made. we'll

Micah Young

is a think terms it's be volumes low of going going too all QX think hospital. QX - I if high about I to - of the and But underlying patient steady being point. into a it's dependent procedures, ramp on course, Yeah, admissions being the the in underlying with it's it, point, Jason, you think to

heavily on that to dependent So sensors boards. of mix very be it's going versus our instruments and

at more that happen open volumes some in the things of back first the mix in it more up there's those and maybe back are pressure pressures half, of probably in that look up, more we to surgeries year. drives half back as So the backlogs and going more half ease the sensor as some of

a to steady as recovery I the we XXXX next here And from where of track going XXXX. we So, year. think, to back it's on through end be were exit hopefully, get back in

Jason Bednar

to that's helpful. customers, it's said top-XX back offer something just very think you for I the to you that's I looks color utilization? additional Again, ramping like. if utilization it normalized to utilization? comparable on what just utilization? drivers. I important Thanks, about an can And wanted you are any driver extra think get more case, your customers you'll because towards point you then, color Okay, do when investors. it any there great. Joe, the said And those But And Is driver normal if normalized Is back Micah. be the come know would utilizing wondering to

Joe Kiani

drivers going year. of the about Well, as year, January, Which, it our below away. but was wondering, our were very COVID Last know, July, of to like it here, XXX,XXX don't About these even and gone has highs OEMs. from get get you are they yet, used? going June, inside hasn't in sure. of, as highs are, to devices because we were shelved about isn't still did Sure, which finally, those proud just dropped are all the normal it do XXX,XXX, the we Or crazy done XX% in we're that per we drivers drops? COVID know, ventilators When you way, drivers. we by the

I them. QX, in the we in I'm growth just XXXX, were their rate, to line. happy were our compared a we but customers, you that telling draw it's can top-XX using So not modest kind the interviewed is And tell usages they that like very not having we're with, All to you in when they having were XXXX.

my trend that our continues, year. growth point sensor should this was volumes if whole XX%-plus in So we see

we'll the and it's with which see because share know, Now, don't you, helpful. whether But or just thought with could not would done COVID. not quarter I that's be them, early all I I in

Jason Bednar

Okay, and very super Joe. Thanks, much helpful.

Joe Kiani

for much, joining so us. everyone, you Thank

is, more one be operator. might happy there question. If I'll there take think I to be it,

Operator

Matson from Mike next Your with Needham. question comes

is line Your open.

Joseph Stringer

Hey, guys. squeezing me Joseph the for on is for end. Mike. in Thanks This at

the be one, quick. should Just pretty first

monitors, risk boards if to given curious global Just any and your in produce to chip the the XXXX. here ability guys' there's shortage

Joe Kiani

we left, those we shortages by what impacted In to at get least we and needed. manage were and shortages. past able the Clearly, decade the get channels that came

patients. do us to sensitive are we Our to for they products need for are that suppliers to in are needed creating hospitals that do what

know possible. I a it's problem, don't believe get we're So priority. but we have I typically to going

Joseph Stringer

TAM give well, Okay, back maybe about the with is Therapy, market And you then, that? the opportunity there there that's you. just Thank any to or High-Flow moving softFlow helpful. can details the us

Joe Kiani

that become patients. High-Flow seeing started did can for Cannula Well, it the there that even entirely And due you, acquisition of the the than High-Flow available prevalently decided can it Nasal worked fact make understanding And more we airway using were Nasal aide tell to of We the believe systems while people people's not to of patients. that's what the helpful think be are seal that I COVID was a product COVID used could I a technology respiratory of why means out better do. patient, I could how fears But there. shown COVID. to accelerated it of lot what Cannulas this think before other this

bottom believe we going $X we you to think were going we the billion So develop give number, we have line, if to best solution. And to a market. a that's

used It's to done make German at be a require way we now it to is tip at hope under it eventually noise. And But it available customers. They've really connected home. that our for home. be it. engineering. it UI doesn't here emergency U.S. cannula right usage nose It own and authorization, to good a in unique And The of will has doesn't enough a get with Giving Our the humid great supporting be creates happy to making we're used can to be Right lot air its the of it thing that in is this solution air. could it the product. a to in clearance other home air the benefits. the

Joseph Stringer

much. very you Thank Awesome.

Joe Kiani

of our normalcy hope summertime. Thank look great We QX for we'll restore and earnings great, today. by Thank Thank you a let's call. to with joining so pandemic some can much. much. so And done you us Have all end you forward be this day.

Operator

This concludes call. today's conference

You disconnect. may now

Masimo (MASI) 24 Feb 212020 Q4 Earnings call transcript