Earnings call transcript Q2 2023

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Operator

Good afternoon, ladies and gentlemen, and welcome to Masimo's Second Quarter 2023 Earnings Conference Call. The company's press release is available at www.masimo.com. [Operator Instructions]. I'm pleased to introduce Eli Kammerman, Masimo's Vice President of Business Development and Investor Relations.

Eli Kammerman

Thank you. everyone. Hello,

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

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

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

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

financial assesses the results company's uses results. to results intended these to provide to results, sees and management information operating non-GAAP assess the to In evaluate addition these way enable such GAAP to same and measures are measure investors budget, company's Management performance measures the non-GAAP an Therefore, in will will ongoing primarily financial The of these on business. non-GAAP believes that noted the measures financial increase business financial today better performance of company's measures as company non-GAAP underlying transparency unless basis otherwise. the performance. be and the covering we the indicator reflect a be additional

of April to acquisition our information supplementary will our to informed consider of Investors non-healthcare our measures, should most today, make XX-Q all historical we our with including within directly most Reconciliation with these the comparable results include be included website. recent measures Form date referring GAAP and earnings on to in filed XX-K SEC, forma decisions. together XXXX. for order presentation which will prior the release investment as statements the we of this and reports financial financial referencing financial United to be measures our again Further, the pro also In segment. once Sound business today, XX, our are

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

now Kiani. Joe call pass I'll the to

Joseph Kiani

Eli. you, Earnings Second for thank Masimo's Good you Thank afternoon, XXXX for Call. us Quarter joining and

ago, How revenue discussed we our with for in and we disappointed outlook weeks second will X both of and of we quarter the earnings are have As provide achieved level are in guidance our to reduced business a XXXX. detailed the of segments them. review prevailing updated Micah sales of this our is and how environment Masimo we want markets. in share quarter the shortly, I trends view our and doing key our but to in responding

inpatient the orders inpatient we these not we second not in yet. see orders will levels. census the growth get of this not pre-COVID of in original was inpatient product those have hope our orders would lower In we come growth. offset in patient care, those forecast lower-than-expected we volumes XXXX did growth in to flat most giving census expected, large help Unfortunately, inpatient we The And return us relative also guidance. large will step-up half pipeline large our the not our orders provided year assumes the volumes would time exceed we today health are guidance, we and above XXXX, guidance and the you growth than if large close The census to that XXXX. believe a contemplated had while remain new

impact of million. improves. last in up equipment given We're If field then the In does year. not to wins exceed customer the we growth reduce revenues. does expenses this over in we rebound new will X our Notably, updated could our guidance return, the over growth hospital our as we're OEM return resources refocused our inpatient conversions $XXX the availability this years. and and inpatient then return, have growth year to shortfall mitigate also the our scheduling baseline to reset meantime, speed normal action XXXX, will we expect census If by our taking customer in census strong

consumer On the are Polk This Wilkins Hearables, the Denon, refocusing team HEOS, business the and grow consumer on focus audio side, despite and while the Marantz, Bowers us to support & in products. help Wearables, we continue challenges should we and Stork iconic, the markets. brands

more update with I financial ask an you provide new these review XXXX on quarter guidance. some Micah of will detail in updates now products, on I'll provide our but and second results to our

Micah Young

Joe, afternoon, you, and good Thank everyone.

For of revenue the non-GAAP of and million per second quarter, $X.XX. consolidated $XXX we earnings share achieved

were XXXX, our Healthcare to recall revenues segment, approximately decline. reflecting our XXXX quarter second XXXX the million, supply first the of difficult. of first due quarter shift $XXX into from the that chain more making revenues of Please of even -- comparison million year-over-year revenues benefited the $XX the from more XX% quarter second a For second million delays in quarter $XX quarter to

the and order as for for to orders managed slower-than-expected hospitals drivers XX,XXX budget and have which monitors replacement well pressures not approximately XX,XXX. demand hospitals missed roughly facing this delayed quarter the shortfall quarter, was had yet. of that slowed believe installations. the sensor our of We to expectations OEM shipments XXXX, to XX% from in been that For of The amount, OEMs to $XX to approximately remainder our large backlog for shipped orders, Of inventories. partners equipment second from orders below lower-than-expected weaker half over million. attributable their expected purchases, lower is that by closed we We was capital is as as related have related expectations our hospitals

quarter, XXXX. X% of As of installed quarter we the the estimate grew end of second our base installed end the by second our of that at the base over

of we this hospitals revenue felt in to contracts outlook are expect about for some abated to the future issues supply year to large However, will we equipment combination our reduce we backlog of level our telehealth. predictors as our customer like those chain Coming with cells new our strong Healthcare contracts, better into the point Masimo new due to sensor would good within as record-breaking with hospital contracting you and significantly OEM growth. bring with and hospital prior opportunities associated and Further, patient new new in partners. installation monitoring year,

well We to sensor improve rising volumes volumes with also projected substantially inpatient levels. pre-COVID XXXX above

limits in are still believe being from majority those are hospitals admissions on be showing the clear, as and patient where In ASCs flat to procedure serviced do with we over centers, therefore, versus to fact, and single To levels. data outpatient to levels, expected last The roughly ambulatory year, we we vast single-patient benefits of are there remained We ASCs from growth, educate today. those sensors shift Based of saw seen Masimo use use time we and believe consumable opportunities of even data improvements bulk to XXXX outpatient still them have But the procedures sensors. surgery that increased inpatient sensors inpatient the technology. surgeries though this move on have trends continue all admissions inpatient year. versus down customers, though patients from reusable XXXX we surgeries revenue even they occur use our predominantly we've sequential exiting feedback are XXXX. in

the quarter. second expected were lower most than in our of customers orders across Sensor

at have installations, annually re-base inpatient also Therefore, for revenue that still we sensor achievable, seen rate lining historical lead assuming in forward. low going long-term growth Healthcare see for We single which XXXX grow equipment volumes our times the affected level also and sales. extended is our are target levels digits

price discretionary on $XXX have into and were of revenues is the return decline being quarter reduced a audio XX% systems forma as cuts second aggressive they been market. currency and back million, with segment, of This Non-healthcare business constant representing competitors a our high-end now interruptions who get pro supply hampered chain on For by a previously basis. grappling spending with

Although we have to on into our sell and year, did are not level our had in prices place raise features reduce coming prices discipline based we put advantages. to and this planned we the unable to

models. headphones in the with spot earbuds and with X% headphone the Wilkins & PerL of of PIX, were we introduction revenues Bowers customization growth up automatic consumer and represented steady in of year. competitive this last PXX hampered a The was compared PXX by including XXXX realizing scaled the was the pressures, was the half to spectrum Denon earbuds, quarter June we Non-healthcare launch boosted segment While for category, the X% more and sound our second the behavior experience. in of by Hearables non-healthcare a revenues than of listening Hearables change bright which personalized

P&L. the down moving Now

XX% and includes This second fixed well gross as for the of lower environment Gross margin by XX% impact business. unfavorable as for quarter our non-GAAP non-healthcare of affected deleveraging the For for Healthcare we pricing negatively realized overhead difficult costs, the business of XX%. XXXX, were gross margins against our margins consolidated mix. products consumer a product audio sales of and segment an

which for And diluted share period in over compensation. $XXX expense offset related profit for and business, its prior year shortfall in XXXX. per million the $X.XX in interest of $XX the and debt versus For the the performance-based million prior our acquisition our consolidated share partially to non-GAAP expenses our revenue impact, million the were the incurred included operating reduction due crude was in by earnings to increase year non-GAAP buyback $X deleveraging a

disappointed consumer rebound by see team. by our Again, We businesses, we products Healthcare results, encouraged the the second buoyed business. health in potential our with underlying for the good in soon-to-be-launched our strength our are fundamentals but consumer consumer and quarter and of Hearables in a

We preserving control benefits that our variety provide third measures with profitability of earnings. a quarter are by expense committed should beginning to implementing

as include we measures. significant well and payroll down reductions control compensation reductions hiring in expense as in Our as performance activities costs other our measures slowed

audio Further, and those offset shortfall consumer help have business in within our revenues. we to promotional marketing reduced the expenses

on like to provide I'd XXXX update an guidance. financial our Now

full $X.XXX our in revenues range includes prior segment and segment. the billion to we our for reducing guidance for year our guidance change XXXX, of $X.XXX from range Non-healthcare billion down revenue to billion. Healthcare our For $X.X consolidated billion, to $X.X are reductions expected This

our $X.XXX billion second lower through billion. billion of introducing guidance continued press For we range in a guidance the guidance range new and guidance and seen the in $X.XXX our release segment, high-end month end to assumes as year. billion our the The stated of Healthcare last XXXX our of low of to maintaining $X.X admission remainder compared end capital range are trends our of sales inpatient this levels year, $X.XXX quarter original the at

higher large half. the the our the will guidance, of assuming end orders half the that some of first expected second in in be we For are realized

sensor increased the of installations the from half. conversions assuming improve, to pace second are equipment installations new hospital steadily customer we conversion equipment the Further, will from -- volumes in pace wins leading of

$XXX segment, our million, For the guidance maintaining of announcement we to $XXX July down to million. pre previously revenue our previous are range from of Non-healthcare million our stated guidance $XXX from $XXX million

Our the continued growth the by and the by new guidance in luxury new the continued premium range reflects category, introductions. year, remainder audio of product categories offset for partially our weakness in Hearables driven

lowering of measures. to guidance prior cost We to to by are $XXX XXXX as control million to million accordingly profit $XXX of our offset operating experienced variety our non-GAAP business, $XXX for $XXX deleveraging of partially million guidance we million a compared

a lower midpoint, roughly we impact from costs. guidance this a revenues, of gross from million by lower margins is operating million, profit increased comprised million million a the $XX $XXX and lowering impact impact from litigation At our $XX are $XX

with We million expect from performance-based $XX control million reductions, in $XXX these expense headwinds offset compensation. and of measures is expense from comprised partially $XX which to million

be to Lastly, we now non-GAAP our EPS to $X.XX $X.XX. prior down from guidance to are $X.XX $X.XX, of estimating XXXX

third our to briefly Turning quarter outlook.

revenue We million million million, to consolidated to $XX to projecting million non-GAAP $XXX Further, operating of of revenue Non-healthcare $X.XX million. of $XX to to And revenue projecting we $XXX $X.XX. of of EPS million are with Healthcare million. million $XXX and profit $XXX $XXX are $XXX non-GAAP

the in following fundamentals our year investor website our the customers to remains to has Healthcare year of for details. of although unrecognized the XX% in reference large to contract we end strong. rebalancing Masimo achieved record our share contributed our we business revenue second expansion of first closing, half quarter the contracting are XXXX, hospital since market, technology our Healthcare presentation our the and of XXXX. faster continue revenue than ever, earnings growth business In a Notably, the which the increasing in versus the of hospital new on this switch further Please

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

Joseph Kiani

mission-driven, company. Micah. Thank you, adaptive is Masimo and an resilient innovative,

focus already we've vitality. actions that key remain our innovation businesses growth discussed, adapt source short-term conditions from of market improve the changing across to addition a In to to to that lives on drive products all profitable

remains informs very Our our business us that data strong.

Denon's our consumer new and as technology during Starting These received very world-class acoustic and been it being marketplace. PerL forecast demand existing quarter, Health PerL We've Wellness, formulated Denon product been the acoustics. above positive launched the marketed Initial the for sales are well first the to leverage from on heritage XXX with Hearables and second adaptive based Pro since has next-generation has be are the we of and the in XXXX. press nearly June. strong Denon earlier retailers PerL earbuds very in initial our in on likely reports PerL seen launch for to products

inbound we received new by many addition, retailers In carry to requests PerL.

market Stork the mass retailers. The that displaying retailers the our with of locations. We carry very Stork well-recognized soon. baby shelves product prominent should monitor are the large, will on be in Stork some be nearing launch

addition, In online from of will registries. one be baby Stork available largest the

based stores. for and set as and have marquee as its product Our the the online expectations stores in superior to Stork are new will well visibility value upon feature high parents,

to sales time, segment point but our to at percentage Wellness ability guidance with we have increased adding Consumer reach of X changing not are in Health XXXX our and We revenues products. confidence target care health this our these for products our

for WX will have the the care. on hospital for to A including FDA WX us the baby clearance failure heart open patients home allow clearance our U.S. as current chronic watch will efforts home monitoring want as We our XXX(k) for preoperative our well The COPD, monitor Stork for promotion postoperative to outside and at of as in XXX(k) such similar with execute strategy U.S., product clearance. door to the Stork the and monitoring to diseases congestive and Health

VSM, for and QX, awaited Radius clearances and X for we Bioscience long Wearable received Halo In important Monitor Opioid FDA overdose. opioid detecting

these launched finally products in the U.S. have We

great seeing customer new We products. are excitement these for

system Lastly, contract with we multimillion pressure dollar Centroid care help for sensor saves patients. high reduce a our incidence of the that ulcers secured the body coccyx recently with a position their health of Centroid potential to large

around QX, a our with large we while our VSM earnings are we WX. Opioid PerL, to share disappointing business conclude, Radius excitement and report To happy and customer regret investors Halo, market gains in in revenue strong Healthcare message and

plan. our launch execute We Stork will to soon and begin consumer health business

to faced has and evolve a the always Masimo past has company. in into overcome stronger them challenges

for We we our shortfall as the life. are that we and patients, confident alike improve will move mission past clinicians shareholders recent to pursue and achieve continue to great results our

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

Operator

[Operator Instructions].

comes Your first Taylor the of line from Jefferies. Matt question with

Matthew Taylor

the pushed, year? in could back of how growth of Healthcare basically do actually to it be comments, transient normalized would in' to in are wanted get but growth issues getting X-part stronger of if normal I these some your sales I Or prepared related, ask rate think are XX. go And just you wanted you questions kind So why kind than to understand you referenced normalized and from ability I'm are? back a guess to to a a easy these wondering the rate? comps XXXX your

Joseph Kiani

see push also XXXX year Health. that We products for maybe our be of and very stronger the the of should the telehealth, a and because Well, some strong business. of new even than Consumer a promising into us, availability normal as

hospitals If know what to the we increase inpatient care? better it's assuming at get us. will have growth and a least, XXXX And But be beginning patients should normal then outpatient would year is it for believe not, we another what the Or and to be an ambulatory surgery is On of centers that that normal we is shift than well. here XXXX percentage we our nurses the surgeons census reason to census prefer. anomaly, surgeries couple an the shortages baseline. this next for at if in due do don't compared anomaly of side, whether are the pressures

use are and pulse sensors between to final them to have we reusable into the despite surgery carrying the clean best is sensors I point efforts surgeries reusable dangerous are in but want oximetry the centers, bulk that they And to ambulatory even make patients. unfortunate, monitoring bacterias of

So businesses surgery the in advantages concerted efforts to their we on more sensors. and by educating using to ambulatory plan the it make maybe centers patients single-patient-use

Matthew Taylor

Okay. just Could maybe I ask one follow-up.

you you much Just the of downward revision picture versus can ahead here. quarter the bridge, out volatility on would impacted a the better how estimate a is by you different normally, second want if and on -- and guidance. going have you help very the to stretch give number the OEM orders? Census little us us because stable, and factors of this you help to bit underneath hood? a components, delays Just your understand the caused business called Could us Maybe was what's and that

Joseph Kiani

percentage sure. give all incredible high in XXXX. And we expected came Sure, the I'll up more a level, will as XXXX push over those, We'll then of that into maybe Micah normal in contracts get business We we and the granular. new normal several momentum our we points. we try. finish XXXX with had by can our installations you

our of even We're occur. clinical gear to installations not did to despite the efforts specialists those not a best delayed, support going calling Some installation. our those higher all got of

ready it Given monitors. at like least and to looks them at do the OEMs deliver the the hospitals finally this are point, can

surgeries, those So sensor customers that was setting growth ordered But less. we to only but We revenue procedures the to went anticipated. probably pent-up of also a push only of anticipated the of They our shortfall outpatient pent-up lower procedures because returning up but due some not return-to-normal they because pent-up off we increased less the inpatient that. biggest demand to to of not the thought us. order because and by Census they're from factor ended of they was the down. not XXXX going purchase

So a we these dynamic situation could of the doing you're think things in hoped would when one especially always have projections, of anticipated that I that. because come And you're had I out COVID. wondering,

for got do large we of plan, as out had of pan control. least one case close. that don't most out You wonder our at all backup things of some of a unfortunately, plan backup them of assumptions and we anticipate several in business you And your delayed, what have would them our the

maybe from of of did at Masimo to making fear those But only I us is water large but down, because this to proxy of help I of at remarks, them that the worst not won't as that bad tightening save won't this year. like And like minimum a our these we'd factors of all would but we're happen assumptions point, our beginning due flow we're at had in shakeup orders materialize. kind think of either that expecting us war. the prepared the numbers out nonetheless, not the one hoped we return, Census said

hope want add you I anything that helps. So that? to Micah, to do

Micah Young

Yes.

large impact. prepared remainder the Matt, and I are installation about was the think, to in the due lower-than-expected orders orders capital remarks, the and sensor is I XX% due mentioned XX% miss, the to of then

question was, sensor the break you -- orders, If look the standpoint. your very from can that down lower-than-expected difficult it's at you

year levels. pre-COVID much number stepping expecting in well we Just came up volumes we the inpatient one, higher-than-expected above one, --

to hard in the So are and how good out from separate separately we into managing impact how that But it's it's census buckets. the those assumptions to the some ordering. levels, they're had customers don't break also, have difficult those We levels visibility inventory incorrect. inventory were

Joseph Kiani

companies. want I been around Matt, because thing I've emphasize just But to software one

any account in that situation. kind right. revenues with competitor. we companies have quarter software new for similar great contracting, hit our our had, of their record here, not is can but quarter Obviously, again, loss was to But what me and hospitals that doesn't that's they lack quite Sometimes of for another contracting

X perfect and the our gaining came factors slope again, storm, really we're larger terminology, together business growing, unfortunately unfortunately, was revenue target, because here, overuse are know an usual. is we it decline, was competition the So our than probably X, but it's out a and unfortunately, over blew I but by revenues strong it much

Micah Young

thing, are I monitoring we add order looking Matt, the Joe. one to closely Can competitor just customers. at

new see today. weeks, are X Over in guidance confidence gives give improve that us like we guidance out us in the first even to range have. more that further, range seeing just improve. that And We'd we we them but confidence the put

Operator

next Your with Thibault BTIG. Marie from question comes

Marie Thibault

the the step expecting expectations I understand continue revenue. and I'm you little margin more, about look guidance cuts up I'm well also and and out bit a in OpEx does more QX us if operating a to QX. that coming But cadence little be for both for throughout if going of most path your bit the as the sales like of kind a help cadence see could as here in figure can bit helpful. to try a that will along margins, assuming be we're year of would It

Joseph Kiani

that? want you do take to Micah,

Micah Young

Marie. Yes, Yes.

So kind improvement kind I lowering in the and walked a about year range guidance, assuming the sales and thinking the modest mentioned the we're there. we're continue with the of -- capital second through trends admissions inpatient I how seen quarter of that through guidance

the we're going to orders mix the the there. in got range, orders large be that on more of then half. And second of end we've these realized of the large on that portion some assuming expected high the a are in And we QX,

of QX. out end QX, X% QX the range those kind of in further orders if of probably forecast the about are look in assumed the So large are at you upper the contributing and and that

Marie Thibault

reductions how should expense and for cuts, Okay. think $XXX QX million QX? the and we asking was about over OpEx And think I I also about the expectations those in

Micah Young

Yes.

you'll to the on also QX business. bigger already taking the we're investments consumer of we audio impact into move those. you'll come see and And a making, are promotional of We're tied those action the through some all marketing some reductions in see as quarter. that with then So the third

are as those in heavier QX well. of Some

been out have the pulled to offset lower those revenues. So

we're third quarter, then you the right -- we've you model for given what guidance fourth so should So have to the full year, expecting able quarter. fourth the the and you be on into

Marie Thibault

Yes. Yes.

Understood. Okay. point? in place expense at those will cuts, you're rebound better reductions assuming even if the than revenues And this stay

Joseph Kiani

taking of the and the all all of them. big RSU the for Not bonuses of away executives people many that we're A stuff. is our portion of cuts and grants, kind

deliver don't, for some we we back. of those projected the they will we the be But gone. if So at had will assuming reason, what come beginning year,

Micah Young

But -- and to answer that question too, as with Marie, profile is we've expense taken well. some cuts our to this really size year our profile revenue

we So are trying business right actions making we investments to balance the to -- to still this revenues. the take but and offset make need that, right grow the lower we're

Marie Thibault

One understood. well if That's question, I could. Okay. last

sort next give What expect on of corporate us. can might high to we Any on you behind X in we level shareholder Board what can the what's steps for be of now that us members? have of sort next here. strategy, clarity expanding Just vote next the terms

Joseph Kiani

starting Yes. that. of scratch. due thoughtful Committee the expand the The our Committee, Nominee loss little Board and are Chairman we're on to Chairman bit working hopefully get people of the our eager kind of Unfortunately, prior yes, from we around But Nominating more a to table. is of

Operator

right. All

comes Stifel. Rick Our Wise from next question with

Frederick Wise

about remind if the fourth Stork just ahead you're it kind the you're thinking obviously, what just product, maybe about even as potential, on exciting do all we looking comments maybe you unfolds move I the us 'XX assuming? you incremental If what And to all hope? quarter, expand your if as a and sounding, very just revenue beyond could know. Joe, opportunity of Stork off, positive bit, could talk as especially Maybe little could start we into

Joseph Kiani

detect are developed countries and that problem, their temperature other in being saturation there given only thermometer taking measures amazing Stork and issues. going the think it. that cool are to not I Well, risk baby lots measure thermometer, spikes it's features to million baby's the XX over uncomfortable Sure. a and real-time feel of technology SIDS of with can oxygen camera births annually people fever but many and probably continuously has breathing keep for an added a got home

the it. to what that take shells conventions, immediately. in happening retailers some a mountains moved a have X.X And wanted X in matter of shown major would one many having So under to months. fact, online year, baby at retailers X of Normally, of and years get is them

that will major going to Target we're carrying Target. Stork. be to One on bring of proud our very retailers are

So that business that a might be I dollars we the know billion. of a potential let's a are could become be feeling Stork should million year. But couple see. hundred $X

Let's see we rest. -- the we plan $XXX now get for could the million, if once

will tech hoping things in too, historic, generated happen. the I lot demand clearance. this just the because has hands some getting I think because help parents, PerL consumers the So report hands sits has oxygen I the gets want of But those gotten the monitoring. is can't it FDA the in market consumers things a as we're huge been happen from said of to the feedback of it say strong, consumers once well in to how of help If of can't in as the has in can way positive and a who people the it. you, we for we U.S. U.S. U.S., now, element, it to Right on

have We time get we clearance, things. be we take be can go to really the covers we But all FDA its careful capability. about We really raise open and the can't off. once how to

Frederick Wise

the But you some of talked give Micah, us the margin in-depth about quickly of you to set significantly. And how maybe factors. going margins. we're beyond are? starting the it And for in and second of quantify perspective the a actions up could control see how talked there, operating and 'XX a half, third actions gross biggest these quarter of for bit about as and implementing Great. the some more in implications you what little expense a little some

Micah Young

Yes, Rick.

So I this our -- the year. for million mentioned had $XX $XXX were some mind, about of for things out keep million reductions was in performance comp

performance into -- that Some year's this that's of tied comp. all

that true expense the of would and come is perform So $XX expense as -- we we perform, back that the reduction, And reduction. million some better cash was other improve. if

year. then in the business. should about about those is And million, $XX next there's promotional that into reduction for So carry consumer and spend and $XX payroll majority costs. with of associated audio marketing the That's the million

Frederick Wise

just And one, if last Okay. could. in I sneaking one

want update perspectives maybe any new or just you at any the And time point? share with Just on litigation Apple. this lines to

Joseph Kiani

Yes, course. of

We soonest the hopefully should is have the have which cases. One ITC, we X results.

give October pushed injunction decision, were an out to paged with do he to should remember, the ability assuming to did hopefully injunction, XX. us so XX get And to commission it stick. the stop They you don't Biden's XXX-plus it, XX. supposed go which days those decision they will We They has that July we As think a to arms. ALJ's we borrowing the stop expect President not we Lifecore's get on so.

February, XX case patent case on secret next a then like California, And of. think, then is a competition, us, just XX until false been I trade patent responded brought will that you remember, patent faster antitrust I jury, unfortunately brought the claim. them, holding we unfair might and really on our has looks lot we On we to we Apple all will complaint with of year, that against but against and than we also an the think, next been hung going year they It trial against trade not and to judge. expected. secret an as Delaware go incredible had patents. case that that be again, unheard which case, in And trial March the with advertising And speed we fire. a frame. And and met The time had has judge patents, to a hopefully go the us,

So that's we're where at.

Operator

Okay.

Jayson comes Our with question James. Bedford from next Raymond

Jayson Bedford

just Maybe a couple.

Just processes around you've through maybe level inventory sales, $XX-plus lower the Can to you I dynamics. any in you levels answering back prepared around levels you your at better learned and inventory talk month going just forward? what implemented customer here inventory gauge the to last million getting quarter. remarks in the sensor hear the of to it kind in in the question, but alluded the much Micah, didn't

Micah Young

Yes.

Jayson, identify customers watching don't a bit closely I -- order our because patterns. but are inventory that levels very what on mentioned difficult what I earlier, customer But little just have it's it, to visibility. is with we So we touched

from The substantially have X those weeks, patterns so first July, order improved call QX. it,

They're heading that So be we completely but that range they today. support yet, put just not direction. in the to do out they're right want where guidance new we

closely. So patterns. is But monitor the to more We're try that's can. to put continuing we new -- to now order we're to get information -- focus just it and that's monitoring those more as right how continue some

Jayson Bedford

semi-related Okay. price. a Maybe on just topic

think started where discounting. I just discounting mentioned pricing and why month, are last you about talk then a Can standpoint? you the from we kind of

Joseph Kiani

And capital, strategy. is But tell understand intended Well, them trying that we contract, of discounting what given razor-razorblade a be that. to can the -- discounting our aware of of have stopped we're to And I part It's lot that. the I even away to our I our freedom time it -- the razorblade. capital, of sales at because is not of I pricing, we sensor never discounting part became disciplined were we're reduce reason the while it so startup on to contract. we is discount I wide force give need it, we and stopped still to you revenue deep once post the I censor

I've if be have hereon, I've to from ever it to my get they want asked asked stopped. our approval. sensors, anyone discount to So

this ever hopefully happen again. that So won't

and short for We've done done time. it wasn't free bottom it had discount They allowed happened. And to But margins we're these line, forward, been what should discounts too our not being capital because offering they thought it anyway, help think anymore. going is that to I a so positive that's were time. do long because cables for gross what's sometimes a and they

Jayson Bedford

Okay.

Okay. thought? opportunity of does way That's in the market hey, Or than opportunity any after is just market here. outlined reflection one there upon sense we your helpful. still here, December? that in XQ, view changed is Has back Maybe a more last the exist the you maybe penetrated to, meaning

Joseph Kiani

really it's in I Like no. the No, said, press.

is put our realities. One is market is of share tale our market under I a is increasing, think I increasing. X penetration reality that

decreased. slide revenues their out in I presentation earnings power that but your put time was -- think point the unfortunately, shows there's the in for that that call a

telemonitoring if been right Health it they into has tell people we hurts. set know I'll have we the change, telehealth, quarter, X But strategy we competitor you, of census as sensor down, and went know that, and getting past but right, may as our outpatient. announcement, and inpatient over I increase, said there's that. Consumer disputed thing patterns this one that. the first because when I we And and business of unbelievably believe that it's went were outpatient disputed kind a is from reliable decades, reduced, showing of couple wasn't. it And that out decreased we put did inpatient our to

So that what not numbers it intact. overall and QX, we no, the of we thought of the missed about our but future our I I Masimo in I the business. regret overall think indicative is is health market of apologize.

Operator

Okay.

comes Matson question Mike from next Company. Your & with Needham

Michael Matson

back So I by to sequencing of the quarterly guidance. implied wanted kind the go just to

I think third kind as it's fourth is in annual pretty and of big sequential range midpoint EPS something if up of the you the last the range, the it's the of $X.XX midpoint like step-up EPS well which quarter, quarter year-over-year as a take year. versus EPS of implying

believable, guess. the third pretty So that but number I tough number seems like seems a of reach, quarter

that you're I of explain make So how to going can you ramp? kind know maybe don't like

Micah Young

Yes.

out the forecast. re-baseline how more and year Plus we in look planned you QX expecting be going our if quarter. fourth Mike, stronger step of it's actions the cost based we're So taking, the a revenues at to up on we're in

of of coming expect expect is that combination some how the as get strength -- of in that large guidance. these that QX, to So we taking the some reductions we hold well expense in to in guidance revenues in, the having quarter reductions expense orders as range full large a and

Michael Matson

on get I retail some there's at like just retailers. second United the then about what's amount happened. given deal if here it And you example, for you're shelves Okay. the that tremendous billion-dollar Look, product convinced that strategy thoughts but Sound sounds of the All just right. there. any wondering way there's to in these I'm really the kind of company understand the Stork, talking need health of interest speaker not a consumer

They their own For example, speaker sold company. your [indiscernible] a don't products. competitor, billion-dollar

if exiting you'd consider business? just on So the that maybe Healthcare wondering business and focusing back

Joseph Kiani

and bought give this disagree, what not and United, a take move. out current we us minds we was lot we'll proven runs only said, parents us going have get If that is it business haven't make of When we that reasonable X different team "Hey, do it it." wanted we to thriving say healthcare years. Masimo Well, things. today I people to of a thing Not Sound the we to eyes views on understand has really I thought management changed, did off of, have And tells right secondly, sure everything optimally. want hasn't that our the I is,

it, done maybe that Stork, have we all a So team for could music call a in to just is it new doing contracts we the may have to these Sound team $XX Healthcare million team got lastly, and improve the distracted from for $XX That's or how And have the PerL, low that it's about moderate and all depending them hearing business. we level my the that, but million And focused level. done we lost for fact run by at has far you you're the that's Sound job, needed now working. health. people to Again, a voice hearing United optimally well, great done a a to And them. consumer business, which already, Hearables, opportunity. United huge have streaming whether on want you go into

still was decision, I rid not do don't, you we're out, But best wrong, it, if and get the should to like we're yet. we're to we we'll but So be of about, it but to it. feel prove right going no, still think we're done back going not I'm we sorry, our foolish

Thank you.

Masimo (MASI) 8 Aug 232023 Q2 Earnings call transcript