Earnings call transcript Q4 2022

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Operator

Good afternoon, ladies and gentlemen, and welcome to Masimo's Fourth Quarter and Full Year 2022 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. sir. ahead, go Please,

Eli Kammerman

everyone. Hello, you. Thank

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

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

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

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

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

financial information operating provide intended non-GAAP In way measures the are to investors company's the addition assesses additional to results assess in management to same to results, results. enable GAAP such these

and these reflect the company's business non-GAAP uses financial budget, the believes that better increase performance non-GAAP financial of the of performance indicator underlying measure an these measures sees evaluate transparency and company's The as company and to measures the performance. Management business. ongoing results

measures financial primarily a Further, be of will XX, for results we once basis, to acquisition business covering we today prior the on forma otherwise. be as XXXX. will to date non-Healthcare today, this we segment. April which unless be noted referencing our again also presentation historical include will non-GAAP will In pro the measures, Therefore, be financial referring Sound our United

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

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

I'll Kiani. the Joe call now pass to

Joe Kiani

for Thanks Eli. year year-end Good afternoon call. earnings and for us was momentous thank XXXX for Masimo. Masimo's XXXX joining you a

expectations. Our Healthcare business outperformed

clinically vast We in market strategy the health owner healthcare proven the opportunity new and United, Denon our markets continue such of Wilkins, to with to Marantz. we iconic and professional consumer and capture accelerated of Bowers as Sound innovate our deliver brands & products acquisition

as have investment the of provided tremendous capabilities. technology immediate monitoring, signal years audio working Consumer business Masimo of across has marketing and acquisition Sound hearables, and The sales Instead, scale by realize would automation integration us our to unlocked combination of otherwise completed processing, are already the and many to diluted with the and unique the audio distribution and we've engineering, wearables physiological re-branded build. telemonitoring United, potential and taken of markets that automation

performance our with revenues on year organic fiscal $X.XX billion, the reaching exceeded in growth. back consolidated Healthcare XX% Looking XXXX, revenues financial $X billion, representing

year XXXX, The bringing fiscal organic acquisition, Masimo as to the to last representing added which revenues, million closed XX% revenues our reported consumer year, $XXX million well. business for early April pro in $XXX forma Consumer in growth

momentum included This continued X% organic X% healthcare from business XX% representing growth the year, our revenues results and we've $XXX consumer strong million, consolidated quarter our fourth Our with the growth. business. audio built from of throughout growth

customers. from through XXXX we Healthcare, consistent in benefited success In winning new

business significant Our Health. Franciscan of fourth quarter gaining new Lady, the and during capture with to continued Fresno Nuvance Community Hospital Ministries business We the

University Children's we and renewed customers our Hospital. Temple including addition, Cincinnati contracts of with In many

health. as opportunities about not consumers solutions but platform this for product Consumer strategy. in fueled by new Audio growth in was business our hearable improved just chain excited the in conditions supply introductions and momentum enables our new audio, integrated strong long-term innovative I'm

launches product Later that for growth franchises. in the XXXX new in our slated on the consumer healthcare will call, professional I'll share and our more long-term support details

Our results across the our for our large to strategy on share our us ability portfolio demonstrate to clinicians and we and many patients, increasing made within to growing The market shareholders consumer capture in compete XXXX in. health we for years strong create progress come. positions financial markets value and that

it With XXXX that more I'll financial an quarter to and fourth and pass on results to review Micah year guidance. our provide detail, in our full update

Micah Young

power you, of the revenues, our guidance profit per and all fourth share business results with range. demonstrate the Joe with afternoon, everyone. quarter Starting operating and our end the good Thank earnings our clearly of combined above high earnings

representing million was a forma on $XXX pro growth Our consolidated X% constant basis. currency revenue

$XXX segment, Healthcare growth. our For currency constant million fourth were XX% quarter representing revenues

shipments driver period. shipments year. driver of Our full the base XXX,XXX shipments of our boards quarter grew over total and With yielding nearly for by instruments prior-year the reached those technology XX,XXX X% for installed the

was and various gas growth fueled oximetry by areas monitoring, are our the encouraged the hospitals Further, revenue strong of rainbow care NomoLine we across solutions making by and Capnography are Healthcare serve. the products. monitoring we to Our our adoption OX in cerebral progress blood platform performance drive we from constituent

Hospitals other have contribute hospital to better practices. management workflows general been setting streamline adopting patient them enable Patient in to the ward and automation SafetyNet solutions to and our

Gateway more via grew and XX% of Root our by Iris XX% number installed beds than SafetyNet In for XXXX. by in the fact, connected increased Patient base platform Connectivity the and

basis. segment currency innovation facilitated quarter strong portfolio chain non-healthcare execution pressures constant revenues continued our on in forma Consumer pro and performance growth our were $XXX the million strategy of For Easing X% a supply quarter. fourth representing

successful benefited We new for gains saw product during double-digit introductions Marantz which the some and Denon brands, quarter. the from

with continue sales prior-year franchise strong Bowers growth period. headphone very to Wilkins addition, doubling see those their the versus in & In

down P&L. the moving Now

reported non-GAAP we quarter non-healthcare gross for business. XX.X% included the and margin for of For of business of consolidated fourth This Healthcare our XXXX, XX.X%. gross XX.X% margins our

supply I chain floor throughout and believe headwinds inefficiencies fourth the for earnings expected we our was to steady our on last due margin recovery with mentioned As currency quarter gross call, XXXX. the

profit our share increased our per and quarter. our diluted For business, $XXX share million fourth earnings non-GAAP the X% to operating XX% for increased per $X.XX to consolidated non-GAAP

in we the wearables, representing revenues as massive $X.XXX revenues and was of $X.XXX our reported capturing of forma Fiscal constant billion, currency a billion hearables, for success within achieved for position company year pro and telemonitoring. markets new XX% We share year dynamic profitable growth. XXXX

great We view the Masimo also we of we over XX% for delivered the team results integrating growth operating consumer dollar past around as growth and the of are business the EPS profit XX%. year, Considering a world. achievement these new

to December guidance provide an like our initially financial outlined full XXXX we year I'd that Now, Investor at on update back on XXth. our Day

year now projecting revenue growth billion, on pro $X.XXX consolidated we X% constant are a billion $X.XXX range a representing of full currency and For XXXX, the basis. to X% to forma

an exchange increase guidance, this midpoint the million to improvement increase at range of an $XX prior million of due Compared due million is and improved comprised which to $XX the of to our of increase foreign of represents our an expectations. $XX sales

our projecting now of billion representing growth. Healthcare billion, guidance constant For of $X.XXX are X% range. midpoint increase million currency our XX% revenues we segment, at This to to of an the $X.XXX $XX represents

an of X% of -- segment, to Non-Healthcare to we million, represents increase of million now million representing our the $XX the growth. projecting This are $XXX at For X% revenues projecting range. Consumer constant midpoint currency $XXX we are guidance

increase representing operating This improvement to due $XXX expectations. at the $XX an our ranging exchange of XX% to guidance range foreign million consolidated from non-GAAP We are profit to improved growth. operational XX% represents projecting million, million of midpoint also and $XXX

further Moving down the P&L.

and interest reflects XX.X% expense higher are of $XX tax we projecting expense million million We to on has of of are of portion weighted which $XX non-operating that floating and now a rate our outstanding million. average rate shares projecting debt XX a the

improvement $X.XX $X.XX. represents assumptions, Compared an at EPS to partially range offset by a the of improved expectations the and interest range operational of the due we midpoint Based to increase this prior on projecting foreign higher these to of expense. $X.XX non-GAAP are guidance, exchange

to quarter briefly our Turning first outlook.

operating to per non-GAAP of $XX to are projecting $XXX million, revenue $X.XX $X.XX. non-GAAP of to $XX $XXX We profit consolidated million and million, of share earnings million

investments associated Please products the year. expenses our the of further presentation investor reference quarter timing of on for Our website our higher as and this the trade launch marketing theft as preparation the health first details. secrets with well of earnings in sales against trial reflects guidance later Apple consumer litigation for

while can see you As the strategic our a solid business, strong required growth. growth incorporating outlook investments consumer to our deliver on the foundation sustainable in for and XXXX reflects build for initiatives health

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

Joe Kiani

you Thank you, Micah. much. very Thank

even for Masimo, milestones new to came of big record year we should of a also customers new While Masimo, XXXX bigger, significant both XXXX. the all the because be XXXX because in but expect that was

business Healthcare over significant growth technologies. for Healthcare a strategic will best and Consumer from business customer in a year of second record mark in new worldwide for XXXX anticipate our the had US We milestones to year and Masimo benefits phase terms our ever beginning of wins business. company the that We the Masimo the important a realization of many achieving for second of

are products automation remote strengthening on monitoring powers the now we Consumer ecosystem Masimo that focused expanding With connected and shared and our services.

million. data to rise suite installed the XXX,XXX the our One quarter in hub-based with HEOS of HEOS of our of of in streaming number in the continues is the an HEOS used now devices devices as HEOS-containing realize X.X exceeding components Growth home connected for important products. health base for increase fourth we devices

at home in cloud new untethered hub, wearables, our as innovative we plan health our outlined broaden us million which Day, care devices customers home HEOS with and our serve Investor the we future. secured X and for at allow As connected reach XXXX, over activate of offer to applications the to many connected will Masimo and in health

should in some have highly three these planned Investor by year received. at the we we're contributions, health years. for We next Day, from feedback and a new of product products stage the with set this of encouraged shared our the consumer you launches products important that revenue meaningful two series We to

clearance. Up first medical FDA WX which will watch, be pending now of XXX(k) the our is version

as our already our global monitoring leveraging Masimo baby-focused launch system, which Soon Consumer's after strong strategy will map that STORK, out baby receiving from reach. interest is be retailers, we

BX In our unique technology individual's displayed a fitness the our for hearing half spectrum, earbuds out for with the sleep an next-generation And stores profile. the slated together, is second of points launch price this and plan launch. that we acoustic to our can bands, in system various feature our of year, portfolio Android sound sets round with will will wearables marketing Later and synergy. operating watch, with retail for that year, Freedom customize adaptive be

new the device. measurement science body drug stores year, and have also products planned Radius monitor check sale later this temperature T vital spot disposable the We for in VSX,

understand new our about these you why prospects product excited launches, for so With are health. consumer can we

professional in our to December, market product portfolio develop clinicians At early to warning we the the a our healthcare announced to same from Sepsis time, care Index, patient sepsis. help patient in our catch designed deterioration of solution In and strengthen settings. their we track recovery condition continue leadership breakthrough limited release

In into January, activity solution, compliance we announced hygiene hand AI-based a platform. hospital visual the Masimo our automation monitoring release clinical of limited system, integrated our

into We future. expect of both roll the market these in near full to release,

the telehealth, a by to In our telemonitoring in-hospital to home work Philips, new patients, of partnership, the to via iX care. partnership In our continue with access to nurses to to to that and will addition hospital we in system. and support health WX improve our expand initiatives The business, adds connections. while OEM disconnections Philips watch to reducing for related PIC announced sensor organically our mobility Philips by and we experience and our enabling improve home addition capabilities for quality WX will January both

such driver Micah approximately that are healthy strong products we as in business, had announced. shipments the In included economies, XX,XXX very Health units XXXX. our with not These for achieved of as in Global developing growth Rad-G sales numbers numbers

We also to organizations, international that major with will developing humanitarian deploy partnerships continue in countries. Rad-G secured

Apple's which cases the products. on ITC towards to I our our critical provide in Finally, to received of are favorable the and step months the the and update want ITC ahead, We from Court. PTAB, to advance IP Federal look ongoing litigation both continuing We forward our elimination a an rulings with in with Apple.

in here expect We April, our to in have trade trial secret California.

record our the you new have to our and of unmet have very of Through can monitoring needs. year value to and confident opportunities and we markets track sites executing IPO. clinically our bring product cost have customer-centric our ahead, done since energized we advance large to Masimo differentiated our for see, technologies, improving outcomes our just our lives to keenly superior on development, our are exciting shareholders, mission continue applications. reducing all I'm a approach As continue patient to as and improving have strategy, that focused and innovations we we will by and create of innovation the taking noninvasive care long-term to and proven

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

Operator

Stifel. you, [Operator We'll take sir. Wise, our Instructions] Rick Thank question from first

Rick Wise

Hi, a such picture. Good start year. places Micah. Joe. strong afternoon. big Hi, exciting finish Maybe There are many I'll maybe some the start. just to see to Very to so first

high just year? on all about the suggesting to You that quarter about off. I'm the currency strong contemplating – you're that at talked have maybe thinking macro pressures integrating you level into thinking into talked just challenges in first So about macro some stabilized third the you chain a guidance the are this on are quarter about things high again, your curious supply Is and – call start inflation. XXXX. how just earlier – level, persisting how you remain

Joe Kiani

Well, maybe add see, at take No, more to one Micah crack and which challenges I another census those wants add a if is I'll then and some I'll exist it. and still hospitals. detail think to

the a not been seen XXXX. that be, new levels to we customers about mentioned good many makes they but are record not yet. the new even – what the many things. return our guidance to feel that Well, have us deployed example, in attained have for of customer contracts used We I

us. we ride not And product Masimo benefit of with can of anticipate believe to exciting all solutions but challenges. and benefit to new we we products we beginning that some believe these So course have will these use converting I hospitals them and our of those only through

the to ride to exceed we to challenging is have hopefully The else what and supply think even perfect. through guided only able ones have that That although we've chain. seen hope better seems not But still Micah? is gotten ease far I so we be everything them and here.

Micah Young

the add point improved. end We've And have mentioned to the thing we like chain. We're only to out my to I company that – expect woods yet in – the Joe's earnings the point a are in was think the is last And not there. stabilization out to prior to remarks, feel start feel supply on of supply consistent fourth we the but steadily stabilizing we that that's some costs seen not I going Rick, wood of Yeah. throughout yet. issues on saw at the companies see as prepared the year. chain with really call any definitely they're don't quarter. to the definitely low in mentioned we Freight what improvement. improve we most and

Rick Wise

Middle the the a but the about coming on again, it WX, WX to can for us to East on are you Great. CHF. Joe in the roll here, WX big go Where because importance of just you asking are Maybe And called of number ways question. the level where I'm lots quarter to I'm WX are last that talk COPD You focus out hospitals with of it you there? in maybe talked we the next – about going soon, a version high rollout? piloting

the Thank You WX what's partnership. Philips – the greater driver? depth us you. And just for announced XXXX in update for where what's Maybe this outlook next? are baked Masimo into we

Joe Kiani

Thank you, Rick.

feedback, looking and our incredible getting at all, is customers of incredible first those even independent So, people WX reviews from it.

a looking it. it are hospital-to-home play consumer We The have play. happy yet. out at -- it, with not It's people been our that rolled have channel through still hospital

into of of in thousands hopefully it this seeing that We systems the WXs them rolling talking contracts We're hitting. turn half these about are the feedback. at we're and quarter deployment I mean of benefit of into of out to hope lot getting the buying a second them looking and good home. some verbal and tens

if I watch and think products or As Masimo BX, to because what far the band we want team, with user-friendly not roll Freedom we feel beautiful because now, Fitbit devices. other are of out a that the imagine, right we plans much want who our for consumers have and as know smart kind consumer they important along want it's the like what it those more the for wearable

So, sales -- of might to year. a know rollout really this well might let of that and we just the demand tease QX We out do see QX, people as these happening WX help pre-sale to let in things what's coming the even consumers. as which

I results things the hospital-to-home call, side great. some all going next announce of earnings hope are And we'll at the concrete able the in be from all to business. So,

Rick Wise

so you Thank much. Great.

Joe Kiani

Rick. you, Thank

Operator

question is BTIG. next Marie Thibault, Our

Marie Thibault

for you we thinking finish at spending If better year. a on operating for Thank I wanted for seems profit, question cadence here this full spending congrats a to and how little strong try year. Micah. the bit you're afternoon. the be for we seeing the Good what to little understand year. taking the to about guide probably look the ask than it Hi. will questions a could I and a throughout assume lighter If bit certainly I first QX

we beginning that of little spending projects cadence? How a about front-weighted think that the thinking some should we these sort new year? about be some of being should So the of the of in bit on

Micah Young

Great Marie. Yes, question, absolutely.

is in prepared mentioned -- I our now but improve secret it that, we've P&L to the quarter first that can some coming the the are quarter, in everything through are it we of costs we We're in doing As trial trade to Apple where our not want of remarks, right profitability to got some in related stands the where first case. be.

additional some the those launch of that launches quarter. later revenue channels year, those investment some that so making for in all the Also, through see are as we prepare that is in investments we're and products working you health ahead and to we the ahead promotions there. investing strategic products, for the investment leading consumer So of first will

mention really that are is, the drive to right out success the of out channel, our total into building the success. I before promotional to for the and with drive revenues making investments and about making of that launches some did thing properly areas activities though that we're tied that X% year all sure company One we've got those this we're building

only continuously can not improve see do in So, that we're everything you'll expectations. Like said, to I and but going to that, exceed QX. we meet

Marie Thibault

very a Like lot helpful Thanks leave topics hear. And I'll good you better there's you of That's increased but taking ones detail. expectation? million FX strong Rick just the sounds to good juicy a It to that for Thanks to sales Okay. to my you try more the $XX in guidance said, some that called that to peers. for benefit like what by lesser here, maybe that for out really was the finish it? drove understand, headwind, questions. year, or had something the improved addition the really FX certainly there but

Micah Young

No, think a we to finish the to strong had as I year. Marie, we look, start

holding rate. growth So guidance standpoint are a we of top-line basically our from

good XXXX. product closer we're confidence. It's as feeling to still us and about launches, going So, giving for these very to exciting get be it's us, we more an year

right premium and the We Denon about thoughtful now luxury Marantz being for mentioned X% of Consumer very X% prudent X% that for play Bowers growth out the to those are Day. XX% – brands non-healthcare we So Investor up non-healthcare. to we're about And Audio thoughtful well. at to & things the rate holding overall see we're Wilkins We'll X% just but guidance. and that on of healthcare and holding and X%, side, how

Marie Thibault

Certainly are.

Okay. Thank you.

Joe Kiani

you. Thank

Operator

Mike Company. question next from our And Needham & is Matson,

Mike Matson

products. the the taking new for Thanks I'll health afternoon. particularly my I good questions. with consumer guess products, in Yes, start

the have for Is into in year, for those you So kind you of guidance how keep conservative guidance your there much those? for to this very just out? have it or baked anything been

Micah Young

in and key we a amount a that even of – taken modest products conservative for want Yes. item through we've got to too XXX(k) approval. out as December a that are we tied Mike. think plays mentioned I year lot We've channels. FDA to revenue kind Plus note of We've this got of is to these just I in one back approach how there those see launch

well. being we're thoughtful about as So that

Mike Matson

of just secret the question then is I guess, would I've kind it trade that? And more is damages assuming trial really outcomes the potential firm I royalties on then second Apple victorious? just there but is how Okay. like And for the and Masimo familiar the part things mean are I'm understand. that be Would timing? be of I patent what seen of never before. sort of with these one trials potential or just

Joe Kiani

seeming weeks of one-week The Yes. had a ago most there delay said with We be will the he firm. judge dates our at maybe couple are conversation and at a time. a

too. will week begin litigation first April Selna trade we Judge and a last So before that against had a probably in a And three Apple hope trial right former started to We there two front took of stuff and he the secret product. just who weeks. it'd our competitive went of to employee

in an So in judge that technology products case, had the injunction that the on it. did our

that the secret to hundreds we then hoping will of this that an from depending dollars also be we're the case trial, in billions concludes, trade injunction. damages judge could there of what and So jury it are what million concludes get this with And dollars.

So have see. we'll to

Mike Matson

then also Thanks. what and that healthcare I And I the the why it. Look equity. business remember from than the kind there specifically private non-healthcare significantly on kind one business. but that sales and understand of the was Got case it I owned was marketing by – just know of spending that's on lower Okay. was on within the side. R&D

sales in R&D that marketing are been guys increase business? in planning you or to investments or have So and – you any

Joe Kiani

previously of penetration. they But and had as there really the I you're should speakers, are weren't end already market when way well in really Well, comes that think investing good the it opportunities. right certainly think themselves high they a receivers, I music, they to as

side bolster So business. of our is the hearable their to focus really

go market That headphones. had good QX, I We a And ago. is the a example of that go the that for share We market. revenues same headphone combined believe to compared want think that a technology year mentioned have after we we our Micah quarter the makes want to potential we to have $XX companies even it of after that doubled X% us earbuds. not these should and billion

This adaptive quality still technology actual and acoustic what's there. Marantz is than The a Bowers remarkable. with audio and lot better are Denon out

yes, So to that on was see – going will to – we so think it to run succeed. going them compared being certainly we and our that's them. be when a are investment one you're to and markets where of is growing reason by private so we focus large equity And have the – to

And something we that then, going neglecting. house think we're Rembrandt were HEOS. found. HEOS in invest to And the it's the We it. is in they old

house to wearable bring going easy. the it on always the use out. make shine connected know, And we're it. throughout it And and monitoring you put want And to to as we

that earnings what to our do want to can invest growth we'll So we without that, in we delivering. sacrificing continue

Mike Matson

Okay. Thanks. it. Appreciate

Operator

question next Wolfe Michael Our Research. Polark, is

Michael Polark

Hey. Thank on picture one. bigger one One you. WX. One numbers

I what missing? clear. saw the I this XX% X% looking why? FX I I heard so If at be Investor want Day to there? healthcare I the to am On input on adjustment growth just call. there guess constant I'm an XX% like Was X% numbers, The there. to slides

Micah Young

Yeah.

last range of a So showing Mike, rates we of that's year. just off because were growth

rounding it on of wider on bit bit the point, there little little finishing So range created a a just it based range. -- the

Michael Polark

Got it.

So dollars hold.

You'd in be quarter. the

Micah Young

we're improved And right XX -- I Yes. taking up million I think. have around, hold. think, front can I $XX me. total. let's I about it in by by somewhere I say, dollars revenue in don't $XX million, -- if remember of -- think Yeah correctly, currency And

Michael Polark

get The some units. interested for a one it. tens this of and you are it is of as is goes six something? vision patient your buying is Joe or year. talking a discharged and but, it in a they patient there versus on hearing get this use to keep to a more for you're mean, to I you that such WX. of equipment then follow-up is months or customers to the home discharged like Got can goes wears hospital And curious, better maybe back these WX reusable thousands recycled, I'm systems question

Joe Kiani

know You that's a what question. really good

I or the is back. be if it forgive customer. cleaned, they'll they'll can can think it product reused. time the be And reusable let will tell, force them keep Certainly,

So we'll have end-up what see just doing. they to

Michael Polark

you. Thank

Joe Kiani

you. Thank

Operator

is next Loop question Our Capital Jason Wittes, Markets.

Jason Wittes

Thanks for Hi. taking my questions.

just of off, First sort clarify.

said, consumer I additional planned about I Did of much costs for the you those lot is, like et correctly? think And a that X% for hear you costs that expect pre-launch advertising products XXXX. launches? should cetera there we with -- a that

Micah Young

Yeah.

put channels different of the marketing consumer launch dollars existing on advertising is those promotional promotional business. through of costs the through really we marketing So types -- or type some associated what go there those with of in they'll launches. Depending the product

what that's to. So tied that's

to that's we do big as these December activities talked but with has be really worldwide the you we promotional leverage as business that -- they've course, investments last over associated in professionals Of what's XXX got way, about sales and and know channel on going a marketing to the able have consumer launches. we're

Jason Wittes

Okay.

XXX points and incremental basis the rest United's existing is Sound cost then So infrastructure? the falls about on

Micah Young

That's right. that We're synergize going channel. leverage to and through

Jason Wittes

think thousands you Okay. we mentioned, hospitals announce WX? tens means, be for And that then be how should we you multimillion-dollar contracts will about Thank when at recognizing And contracts, revenue buy that acknowledging on or pathway WX, you. how basically start as there revenue helpful. do least of That's to looking you anticipating WX?

Joe Kiani

tens be but be of Yes. a they'll a every year. contract that right And now of Yes. big combination provide. We multimillion we're the anticipate multimillion-dollar the and dollars some product we the it contracts. doesn't to that of millions will of talking mean service systems dollars And it's maybe

the really how XX it. works but that been last clinicians caring to of years magic that technology know our XX, the So has use

with. So people sometimes we're hospital able staff, monitor providing by by remotely to a hospital service where patients sometimes the these by contract that caring sometimes clinicians third-party will we staff, be

will well. a products those with going need and the monthly patient's be assure to care so yes safety is service So the along they

Jason Wittes

I’ll Good. That back in helpful. get was queue.

Joe Kiani

you. Thank

Operator

Jason Bednar, Up next is Piper Sandler.

Jason Bednar

you Thanks. I'll some on any start on on you comment Good the on you guide first questions have WX. and And then may the the the had the with here here with that? regulatory the same maybe guys. process on interactions afternoon. Congrats have update FDA I quarter if just Maybe wonder there, if Stork. could

that think still as well I as is one mentioned. you pending

would we the the about baby interest sorry And then and the launch? assuming And more kind a load to retailers can qualify look I on you maybe over launch the talked three you are success would years? -- the next but Joe you from mentioned in Stork? curious we here, how to if for a approval stamp process same following adoption I'm but for there? how think of elaborate lot maybe lot You've on And would today, Stork do WX What about put as if you be two we Stork? you can

Joe Kiani

sure. Sure,

as we and and good they hope some the SafetyNet with of we We're encouraged. regulatory climate, them the quarter or to that, recognize the for to in We really FDA. some Stork WX hope alert clearances the finally get next had other with Along products we've that have have On like discussions the cleared two. well.

clearance. we're linking FDA launch the not However, with Stork of

the be FDA including FDA. be While in We US without I we FDA product the think kind believe internationally market first our it the of because clearance. can it with success its we'll with clearance by cleared do much better will to

a about US your I with question what die then the babies think sudden year. maybe unfortunately births four X,XXX infant death and looks of in Stork -- do a part was syndrome success we So think of like. year the maybe and There's next million

the SET pulse essential Masimo think we it's So plans that for product fulfills a whole very oximetry.

don't revenue should $XXX of know So I next $XXX reach maybe few it million, million the years. over

we'll -- it continue that. hopefully will So call I success past growing that would and

Jason Bednar

real I'm to Okay. I mean maybe just reconcile -- time. this trying

$XXX and we're talking But So I thought Freedom. T now of points Radius time $XXX lumped on from not contribution out about thrown was maybe launches. reconciling doesn't apologies admittedly that that I'm million -- new math get to having to and I having that there. talking of the I'm XXX basis just for and And a pretty maybe include we're now going there good from on if little questions basis at you from Investor XXX a contracts are WX maybe VSP Day. that bit conservative, in numbers but ask hard some it tens million or were sometimes. some these -- products And that that of millions we're was was big at and -- here about BX now points Stork guys some

misestimating So help maybe I there? that with what am or maybe me missing

Joe Kiani

beating. Masimo you Well, the and the I -- we're with think within of we're first truth But hopefully and really it before. start-ups I've meeting of we Health our predict start-up a numbers one is you, our company numbers really in done all comfortable give those is can't Consumer well.

lot anticipated, longer it is but good news the took a than anticipated. lot a I successful did than I more Fortunately I first start-up became

where see a year. to Is the would we So as think Stork asked be question going in $XXX $XXX on year? success, I be million to million it you the success me is this far which No. as

I to next Hopefully years. think three years. few two the certainly on

those my earlier not far of to in as those more regarding going going contracts. revenues, the as then but deployed partners They're are contract, overnight. systematically tens the of deployed that WX millions be response be hospital deploy our them, will the by to dollars who to going of they're And size get

be lot XXXX? that hit are doing I try we're hoping impact I better, So did, more we lot how to why much But a Otherwise, don't did Masimo tell because started we after And what than a time. lot we I'd if humanity to of first with this I the take will it? bigger, Health guessing. a what you be know. Why going to risk? is the go

Jason Bednar

more offline, Fair in maybe enough. Okay. but I'll one more squeeze follow-up here.

whether any there's up is word with right that curious or investor have been discussions if that we Just now? had present activist coming are I'm the you the been talk on about just windows haven't nomination could opening.

Joe Kiani

and not And include our shareholders, to hopefully also is along few something with I'm months done. that. last new I it get rather activist with involved the will I'd Well, we've historically planning know this shareholder. meet our

public, knew So at took longer day end the baby, I it's Masimo our when baby. I my of the no it's

be I what's the single be long-term. Masimo. educated something have we the to own largest that Masimo, to an our of shareholder it's I all they'll While company, and something don't decide about shareholders majority for I'm And going in happy think the make that future best the and decision can hopefully

Jason Bednar

much. so Thanks Fair.

Joe Kiani

Thank you.

Operator

James. is question Bedford, Jayson Raymond next Our

Jayson Bedford

XX% just the cetera? few. quarter. about the Can of south Maybe margins gross fourth chain margin on of FX to XX%, it afternoon. good business ask be just in been you just gross Hi, I factors wanted Healthcare impacting in supply the has et kind XX%. quarter historically The comment a

Micah Young

question. Jayson, Yeah, great

margin XX%. gross So is Healthcare around

they're think capitalized softer I out more the we We inefficiencies. turns costs little inventory of we QX, Inventory to And costs, We there. but improving and steady over we spot some a as have stabilizing. those at in we're and but buys carry we'll most than inventory-related being higher. bit of starting the some those quarter. XX% had they fourth -- what we around them charges stabilize our significant, about quarters more a little little to some throughout to and margins expected. confident seeing we're that those some came in on quarter. where XXXX. throughout improving with the they -- higher where roll come and year. it our Still from did stabilizing getting looking are steadily in inefficiencies well want knew onetime supply in that's are did manufacturing also improvement just we see and chain in Nothing in the But things we're cost In are be, not bit still from QX prior did suppress freight a gross components based where related

Jayson Bedford

quarter XXXX? the comment this, floor, but gross on margin did And may you outside in missed the the of being Micah, I fourth XX.X% in have

Micah Young

Sorry in XXXX?

Jayson Bedford

Yeah.

Micah Young

Yeah. We've gross got our margins. gross margins out there. We did provide guidance for for XXXX

full For XX% the -- the on XX% at the company margin. about for gross still for we're year. somewhere about roughly. full year, Healthcare Non-Healthcare we're looking XX% between XX.X% combined

Jayson Bedford

on Okay. then And other just maybe the That's pricing. side helpful.

contracts renewed capture quarter. fourth You couple a of with handfuls some price handful in renewals? to these of maybe existing the a able you customers Were on mentioned you

Joe Kiani

yes. Yes,

on year, for our and permanent. used but cost prices. percentage For be to And temporary trying flat, because we were years those used every who last been us prices our to years, We points, recently, the held a stabilized stable, couple several we're they've we increases with have ago, the understand, to of raised that, go back down that. or whether

and of We -- hospitals were revenue. also struggling new surgery and patients with COVID lack

a things people So kind now XX%, but with not gross have we clear, it of those while, our more some helps doing probably a percentage continue XX% we'll us And points. normal of both catch our increased have, prices, until like margins. being that with few up for

Jayson Bedford

just Okay. competitively, pressure all? that eased the to at there, it has was any is there And extent pricing pressure you pricing believe out

Joe Kiani

has that SET something ox know, it's been cost ox the in think disciplined Yes, we benefit. the clinical thing outcomes, positive that say, but pulse back, it made a but dealing sell improving positive reducing a And prematurity, of difference is it would to or but patients in has it's has, care. because retrospectively, true. only looking in have. isn't Whether reducing and it's postsurgical clinical didn't happened. opioids, neonatal also the than I retinopathy whether to big it's difference a ward, value, the outcome it's with Masimo only with pulse that be of I have has made ICU, learned nothing we else happen,

lower over launched way, than price, sales the continue when our else ox where bundling. is pulse that reduction, has, Masimo when SET. sensor and we a not we the given force price used But that which, pricing be time, confidence had by to to our except first charge did So to competitor fair nothing XX% the toXX% do

sell yes, of our how So has our pressure technology. team reduced, and that so to I'd been knows value say, the

Jayson Bedford

Great. Thank you.

Joe Kiani

Thank you.

Operator

from have We Matt Taylor Jefferies.

Joe Kiani

Matt. Hello,

Matt Taylor

they or for Biden's the desk, and got wanted good because I was the on see Hey comments Joe. thoughts Thanks if any across LiDCO ITC there. to outcome you question. taking first a go had to it

You've least secrets And got that? you case. of and having there yours. shots think us goal here help trade on crosscurrents maybe through, the Is from that any of you two read think, with kind about the could at

Joe Kiani

commission recommended make best not Yes, see is to We of make efficient last an administration and innovation going in to to -- the case, an are and the way it. did It's sure the of in that reject course. the think to injunction about sure really injunction happy obviously, LiDCO when is we're any only don't that very Biden respected, ALJ patents not place and people go things. way the is that protected infringement way but

It's Apple ALJ that given in won't as hopefully, be that means injunction. far not will President our As case, a We enjoined. the intervene our also decision, did or commission. And Masimo's that of the found decision patent infringed I in the and he intervene ours hope XXX, in for forward think, either. the as LiDCO commission down know, did a front that Apple path find Biden enjoin you that not should page also in recommended

time, about make us very same yes, One, we leading LiDCO at for didn't that so thing going didn't. So things maybe going that one are happy in We two that. we're we for just pulse company consumers. for the have -- have the we oximetry hospitals. -- products And us

a LiDCO huge Apple's. product So thing similar performance that's probably where is to the

is Ours significantly better.

no product offering pulse the So not enjoin they're that there's it is. a ours serious to really isn't reason because ox

was decision IPR that that judge just by thing challenge. to the PTAB enjoin find on the and did upheld based recently the them patent her violated The also and is second

just something it they get didn't on Interparty that they reexaminations that one. seek they granted Well time taken is one. get for had Apple will this every

it we're all held really is by we good the we to valid that -- other this So and violated and is have end doing case. about was held say then as regretful. our And day in of things feel so But held violated at you the yes, patent secret I got that said, the trade ALJ. the

shouldn't working unfortunately just were or them we not XXXX, our happened have that of want Apple in but betterment no we had the with choice, our first would enjoy companies the that It's customers. for met just something but hoping defend do. we we When this. not like We innovation. with to This be to

Matt Taylor

weaker I in sneak as about the first hoping in year anything Sound. that throughout this that you remind Maybe Micah. that year? Could orders as forecast or it's should stronger we cadence year we full Micah, factor we more our just for seasonality was be special or thinking I could of of was year any one the models us would last

Micah Young

-- think a question. No, it's great I Yes. Matt,

in low with course giving in QX, and It's then point presentation there. earnings the in of there. you a out guidance for high the That's should QX, in QX point more improve we're details our business So that QX. it steadily

we're more looking forma looked at at you'll last are numbers trend in some earnings the year are above that now see probably QX in quarters. you XXXX, QX the pro presentation, of and that out QX, that If the was XXXX QX line. normalized those

it's in So comp first the very a quarter. very, tough

under of but those. growth to due lot eased a I which QX of looked us, was that that first pro -- some shift growth bottlenecks XXXX, not up at were chain quarter to was they you forma supply the and in through reported think in if able

trend in was that constant and XX% growth. line above was that of currency about QX So XXXX

on then quarter, facing for improve to going tough again. the business pro be fourth and in forma that basis in first see being those XXXX we're a but a the So quarter steadily highest the comp you'll revenues

Matt Taylor

Thank helpful. guys. Very you, Great.

Micah Young

you. Thank

Joe Kiani

earnings call. all you wonderful QX Thank a for forward to our you. of Thank your week. look us. rest joining We Have

Operator

everyone participation. that conference. Once your today's for Thank again, conclude you all does

disconnect. now may You

Masimo (MASI) 28 Feb 232022 Q4 Earnings call transcript