MASI - Earnings call transcript Q2 2024

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Operator

Good afternoon, ladies and gentlemen, and welcome to Masimo's Second Quarter 2021 Earnings Conference Call. The company's press release is available at www.masimo.com. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. I'm pleased to introduce Eli Kammerman, Masimo's Vice President of Business Development and Investor Relations.

Eli Kammerman

Thank you. everyone. Hello,

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

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

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

This call and separation. the our impact will a also separation business potential of a include financial a consumer the of potential discussion preliminary of estimate of

evaluating provided for potential purposes. determined, is any are and approved or any business estimate separation have of being the consideration its separation potential been However, of the still and solely terms structure under timing the and method, consumer such structure, of is illustrative currently and informational The finalized. company not

refer information to consider reviewing business. X and earnings our potential evaluating in factors of the for X additional to of presentation our to the separation consumer Please relating and Slides

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

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

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

these on on within supplementary we measures to today Therefore, included measures are financial website. otherwise. will a the the of Reconciliation be our primarily and financial earnings covering the basis information directly most GAAP unless financial comparable noted non-GAAP be will measures release

order together today, with of our investment Investors Form SEC, our including recent should with make statements most the in filed decisions. our consider all to XX-Q, informed reports and XX-K

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

to I'll pass call the Joe Kiani. now

Joe Kiani

Good Eli. sequentially for XXXX versus to Earnings Second afternoon, XX% and revenues joining for Thanks, and care report Masimo's grew rose us I'm thank our you Call. health last Quarter that year. happy

health by hospital care seeing our execution care is robust our Our team momentum census. business driven increasing and excellent by health

of hospital We past for post-COVID strong saw strong demand due the installations after and, conversions few hospital years, over Masimo normalization environment, the combination of tumultuous to sensors admissions. rising a

Not once very we year. of entire conversion sales year. team We again long hospital a last contracts million a a new point amounting true XX% to incremental of representing our in contracted hospital increase believe future. to contracts secured versus value record million $XXX for level $XXX quarter, multiyear the exceptional Our conversion ago, bright TI in too the

a key the to in be delivering. for team is of that a area margins. gross standout increase quarter We item this the committed for Another focus investors and was us would substantial

be Our recent Malaysia, of relocation schedule. health benefit ahead from care business initiatives of of our product sensor continues to manufacturing continues costs, including most which reduce to to and the extremely to well executed

updates product margins. team and of an have engineering we that each goods that cost reduce addition, increase our focuses In year on

with this talent benefits some team the have and currently We filled the through flowing skilled are P&L. highly

earnings. and gives installations revenues hospital increasing strong conversions, census increase care for the health to new equipment confidence us full year of significantly our combination The guidance and

to consumer committed is We well remain how business. of performing. proud particularly organization I'm global separating our our

their in extended exclusivity not transaction the control. needs. received completion JV We entirely shareholders partner, to previously this accommodate the could but and believe we a from August terms is As X, have preliminary of our option outcome, announced July we the potential XX offer on best until

In or or JV, with business. addition all of to the business, potential of spin-off the we health alone together either audio the the consumer including are strategic considering options, sale

on We will EPS X us for the option best double would the of act puts to that decisively our value on per and share, long-term which goal years. to effectively shareholders in execute maximizes path earning achieve our $X

provide With an review outlook. pass our our results XXXX more detail that, to over to second Micah update it I'll quarter in on and

Micah Young

Thank good afternoon, and you, everyone. Joe,

For year. XX% $XXX our represented guidance health the which of versus the second end revenues care were our top last growth quarter, and range million, were above

partially Our our consumables consumable revenues, Capnography SET XX%. grew and decline XX%, grew monitoring and consumables pulse brain in XX%. other grew capital X% service of consumables revenues Within grew expected service consumables oximetry and XX%, and offset an by revenues.

the Partially offsetting growth, outside revenues X% shipments consumable of timing this declined due rainbow to U.S. the

based We our outside on continued late FDA in rainbow for growth the U.S. year Index expect of to adoption and the of rainbow the following target the revenues year. consumable last U.S. clearance full sensors Reserve double-digit reach Oxygen growth

expanding a growth with second the half in customers foundation customers and of XXXX solid on existing new our beyond. for focus ongoing Our and winning footprint has built

this demonstrates increase hospital reached today, the As of our has last year market to sequentially. shown customers XX% quarter. Masimo's rising second unrecognized in in as through the which of clearly new billion strong quarter, This contributed share $X.X incremental contracts XX% end increasing a our XX% with revenues, slides contracting contract was value and of million gains the $XXX have and versus

the to installed our months. revenue be You'll as next X benefits from the to able X contracts see is over the new these equipment and growth

quarter the the note, second is rise conversions excellent We team steadily expectations. being above that shipments shipments for driver of that fueled of are a will XX,XXX our the believe related our by level the were achieving. and and over remainder On driver were year

the versus an luxury for prior as This affects consumer were and million, low by to end housing was slowness the upgrades. decline weakening in the business $XXX and year. well guidance environment of XX% revenues purchases care which market, range continues product Non-health which the as at be affected installations our represented

P&L. the down moving Now

margin second and consolidated was margins our gross for gross XX.X% basis included margins which of non-GAAP consumable quarter, attributable health improved efficiencies rose points which gross XX% care XX sensor relocation favorable combined For XXX to the operational mix the Health non-health points and care manufacturing care. basis for a is sequentially, higher and increased of year-over-year to benefit Malaysia, from sales. with XX%,

confidence long-term care Our business in the this us XX% front years. X progress margins on goal operating our of health for achieving gives in

operating For million. was our profit $XX business, non-GAAP consolidated

modestly of performance-based compensation sequentially first to normalized due return versus of margin operating the levels from the year XX% Our improved last XXXX. to but in quarter, declined

Even Excluding the of the delivered decreased to quarter. return we the prior per the earnings performance-based compensation, for X% compensation, to year of performance-based of impact share $X.XX our second due reduction growth achieve earnings expenses initiatives. period cost XX% operating non-GAAP with versus

generated We cash flow. $XX million cash improvements. due and to earnings Moving operating of to strong capital flow working

able As $XX a second to result, the outstanding to were in of quarter, debt our pay debt down $XXX bringing million we million.

succeeding the debt both Increasing cash reducing for flow are objectives. key organization, with and we and are priorities

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

to million are For to of to consolidated and $X.XX XX% $X.XX, projecting million growth. revenue share representing the XXXX, of quarter third non-GAAP X% earnings $XXX we earnings per of $XXX

first record-breaking new the Robust to For million, $XXX installations the revenue conversions, hospital achieving XX% our we $XXX we with saw exceeds projecting confidence and growth. our along representing care growth segment, X% revenue order X% in sales census, rate growth hospital strong Health are of half that million the backlog equipment year. to in increases revenue a of the

to million care of the million. For segment, non-health we projecting $XXX $XXX are revenues

Now turning full year XXXX to financial guidance. our

consolidated We are $X.XXX range now billion. projecting revenue of billion $X.XXX a to

billion, to and to revenue increase midpoint for XX% care Health $X.XXX we X% the an our revenues segment, of $XX representing now of For versus at the projecting year guidance are prior million growth the billion range. $X.XXX

expect we in shipments, than levels. representing see half to and a the from driver step-up to more both the regard XX,XXX to first quarters, shipments increase fourth third sequential With

segment, $XX the million, represents million care range. midpoint prior now projecting to at decrease we the versus $XXX non-health of are the of guidance million revenues $XXX which a For

year, gross full of are which margin we care XX%, of gross now margins gross projecting non-GAAP margins includes health XX.X% XX%. care non-health the For consolidated of and

projecting the commitment to strong now which at of per to $X.XX midpoint leverage $X represents increase and share, non-GAAP operating prior of range guidance versus range, sustainable are driving our we progress growth. Finally, $X.XX increasing demonstrating the an EPS and year-to-date our earnings

care combined with is summary, we even solidly our margins business track, back the In remainder over foresee growth year. growth faster health of potential the its the and expanding expected for on

the those months, have XX volumes drive next X hospital can past substantially the Our higher conversions contracts grown sensor years. over for and

from progress our care we Now with an I'd separation the update like on business you provide of making business. our are on consumer the to health

and we into to will returns for full our recognize the While the thriving stand-alone X value potential Masimo the we consumer separating continue business. see business, shareholders market of that ensure businesses can care long-term health maximize believe for

Joe the consumer regardless JV the the As JV the retaining to audio attractive for of solution options businesses upside, the uniquely considering the Board a is offers outcome some consumer while separating while separate mentioned, negotiations. all of business

business full from a committed audio statements. the de-consolidation We executing consumer our to are financial of on

by businesses. our Our increases thriving consumer to is X health the care separate obscured weaker the being business and desire market

alone a sell, combined or it the of committed goal, health. JV, this are spin-off We whether to is consumer through audio a audio with or

separation any that be on our value shareholders. will providing structure to the predicated on decisions Our maximum

an To consumer different Slide outlined, margins Notably, our by estimate to assuming a business that end, reach operating improve impact the points of non-GAAP we've audio just that XX%. would outright earnings is basis separation Masimo's of the financial XXX alternatives X X completed estimate a sale as of for preliminary we of on presentation. provided

in business. XXX that goal divested would points structure contemplated This in the of to Alternatively, further achieving long-term towards if would improve XX% for result non-GAAP the progress combination business basis we proposed significant healthcare Masimo's Consumer audio by the as JV, in XX%. estimate margins reach the business our with operating operating is Health margins

in and Masimo, pay amounts million in cash to guidance those proceeds year. to currently If to $XX reduce expense, interest this debt we to plan proceeds our which use a transaction results down

Either flow, the to our I'll we debt Joe. call retire to with to With way, that, strong back turn our expect cash X X years. within

Joe Kiani

Micah. you, Thank

that and go a is time to through our want to for effort team unprecedented. I we their disruptive Before focus thank unrelenting consistent Q&A,

Our are expectations. clearly post-COVID demonstrate last we the or meet that back disruptions behind us, to are on few track quarters exceed and

an reach professional our of to health next planned to and target driving customers and to We a pathway our Our main clear our objective XX% exceeding double revenue by years digits towards have the immediate business the innovations margins. separation care positive be X business growth finalized. with profitability that on the operating see expect relevant or clinically margin providing continues within impact achieving once

Our than we'll brighter call future our and to lives, and reduce monitoring patient Operator? questions. the new to improve to open we execute of ever improve applications. With outcomes noninvasive is cost sites as care mission that, taking and

Operator

Instructions] [Operator

from Our Jason first Bednar. question comes

Jason Bednar

Nice quarter quite or numbers. driver here. to feel installed Joe seeing We're We're and here. business the of the and But the in performance the Micah, core health the a see appears margin seeing productivity care bit. to franchise. base in improve respond gross free

regarding So there a year of out look, shareholder vote. there's understandably saw ahead last we of a the little repeat what skepticism investors from maybe

and half margin could around? to So pull the investment of of are the to this contribution? underlying offer different there improvements or visibility revenue year sustainable going you to really hoping back that comment kind of you confidence on forward the What what's just wasn't lend any community into maybe are that the time

Joe Kiani

Well, high off maybe I'll Jason. level, start

as very reported, is census hospitals from have strong. of some the that public seen First you've the all, of

business admissions, driven HCA think reported is our the by consumables, driven hospital and by admissions. lot which I increase. Tennant a is And X% in-hospital

So that's one.

year. and to in guidance census conversions rest a into directly and The The second successful backlog this the has one the quarters. of address And giving the made is for comfortable strong of we our updating hospitals that's saying, the feel guidance of not at a going extremely rate many, have strong. besides QX Masimo for such what of to us level the reasons many really rapid had you're backlog

Jason Bednar

have right. I just -- know helpful, and that All preannouncement, I since Very -- Joe. check And want to the there's but helpful. already that's double questions because surfaced that super

JV of And the JV you back And wanted maybe to us just come comments with to partner some the then help made. situation. situation, the I

partner. this You referenced you've that exclusivity to August XX the it period extended

ago. think that you I the that month that was X-K a in provided

interrelated vote. if shareholder inbound the if JV agreement But JV originally outlined. you received upcoming you is I'm that's that the not other things if have mentioned your was the are the interest beyond control. have also entered that with outside I'm control you're discussion sure or curious suggesting you've if or with original partner of what in definitive other may players partner that the

where of the the get just AGM. you update us really to if on trying we should So an give not a anything ahead or can whether things sense AGM of or after expect stand,

Joe Kiani

Well, thrown member JV the it some first do comments not it. of unless of the agreed to all, will clear and activist that were innuendos any given made we board out, that we

this of they to working on. X what Secondly, when we spin, know you going had do. do, they're what they're you -- control, to soon to in get the to our mentioned also And partner should wanted And not and this it's reported they're know, sale or as JV do. what one do August a the a is we other we before, them currently they unlike more give so we XX. X to requires in reasons it's think, a That's that's, going because us they to say what I or report asked -- will to they're partners they to JV going

the or to to But the proposal regardless does the think that proposal But partner the health come I business. true, shareholders. is is business compared what best the table, options. -- of off separating do separation, consumer JV will the if for still was option whether just it's and audio or other the reiterate, I and and still do, think believe if wanted JV whatever separating doesn't We'll -- we we nothing the a those do because best Micah we audio doesn't

Jason Bednar

follow-up, maybe should clarity have guess, Or as quick what like sit that Okay. XX? And than tight decides hear partner the that looks to shareholder more what after we definitive need path a a, a I expect August better just do to Joe, after like? we of maybe until we JV forward a vote on

Joe Kiani

the for we as have to soon it we Board the Board, it assuming As will have don't unanimously, needs that do, can we wait to done. it it then shareholder think can get we I something we If the take approved that. meeting.

get we're of regardless to before has do should which unanimous a with be we the going by vote, bought to it But the clearly, after it unanimous it. meeting. happy everyone mean then Board, is hopefully, or not But it's if it, shareholder don't whether

Operator

comes question Thibault. next from Our Marie

Marie Thibault

I I straightforward being guide. wanted and to and often sequentially similar being on health ask I'm quite Healthcare here revenue Masimo very QX the and one very QX a QX. pre-COVID, used QX the If between think back flat QX revenue similar, to to care very

at if to think takes look curious or you maybe guide? what and midpoint's we the there's anything the million how Just guide. puts below on QX? QX to about achieved so think when just that And in $X The about

Micah Young

Thanks, Yes. Marie.

Installations of contracting. the of we've So that We're strong the seeing course, normalize length not to thinking the we about in seen we're delays is that the seems past. to seeing, now. are way start

more as through we So that's that us positive strength revenues. to to QX should look -- and into QX, helping the come and

We of census are being a very saw also We QX. census. in mindful, strong though,

QX. I was companies, patient think Joe the large in out it some reported by in as mentioned, of X% growth public

I QX. think in growth following that was X%

-- the how we in that. being of we're terms there So also about cautious think

public a and hospitals growth full are So lot around X% also to think -- of of year I to a X%. those guiding

well. the I year So cautiously being optimistic of back they're guess, the half in cautiously, as

from strength contracting installations. So

down QX, go revenues pre-COVID, at back they've And -- QX years years a care the look had step and leading there. of to or kicked from up And X down historically, we have to the at you that our to QX XXXX, in if if down QX. kind where look business you really a slight step health averaged QX

revenue. So why we revenue the million of at sorry, $XXX put midpoint, -- that's of $XXX million or

which million, would end high QX. it is to flat the On $XXX keep

Okay.

Marie Thibault

that That's one few with it's products a come a care uplift. And years. of should Oxygen for newer health of I available a some I know Reserve maybe heard in countries of that's follow-up, And really quick a standard it. mention my where helpful, the in care revenue Micah. Index, then been

you any that? the U.S., feedback on us the in indeed can doing that? what revenue early tailwinds So tell seeing And you that's is how are from

Joe Kiani

Thanks, really Marie. gone Yes. That's well.

We are seeing the with an uptick U.S. of in the adoption rainbow.

output oxygen us think gets combination as measurement the with offering Index, rainbow cardiac the now as I of of Oxygen delivery. that Reserve well

the helping for believe tremendously. we double I but And rainbow, it's rainbow OUS to the think based U.S. I our mentioned grow We in great on half. why expect digits year see Micah and just business should that's conversions. second not results

Operator

from question Wise. Rick Next comes

Frederick Wise

you little was Obviously, was the environment. your separation. the softening help a better hoping there I could understand, just of concern softening bit talk But you're maybe more yesterday, of first outlook. lot rest talk or economic a more about implied consumer through going the of a about me obviously,

it in I thoughts implying correctly, us consumer sequentially unfolds? as year optimism if improvement your second increase your I'm your that understand the guidance the or consumer on Help confidence is sales doing in fact, will, sales think sequential half. the

Joe Kiani

PerLs. from Wilkins The our like Bowers growth and should year the over-the-air earbuds, are and inner Sure, headphones hearables. and ear earbuds the and headphones These the Rick. Denon this come

well. So remember, that before expect compared we as this grew we growth and -- see strong year as to you about business, last year XXX% to year

of shipped a products holiday gift, those It's kind are Christmas But thing. in typically QX.

of economic why pressures, half we're grow, think though and the high-end be will year. and a business audio of both the we about the headphone muted to that's second the earbuds the optimistic may think -- expect very the we So AVRs -- strong continuing even And speakers the and QX. because we be

Frederick Wise

expand Joe could your things therefore, -- And comments margins. X -- you related gross to maybe margins and could Micah, about on operating or

is correctly, it I'm that schedule guidance? into going it through X What that today? you ahead said to quarter, done? thinking? baking it is You are stand does where last said of was the Malaysia well. sensor if X/X those you When transition. And the you In How months, way manufacturing going remembering of be are

half -- the reduction on just better separately, the those out you about Maybe clearly related can us help helping initiatives. outlook in but the understand confidence what of what's some again, maybe far. cost are so And second your based are. And talked programs that you

Micah Young

Rick. Thank believe that basis to some step points year of provide guide, last XX back We and the was points to basis Well, up to kind and margins. XX another I the where into just about, health guidance gross Absolutely. you, care I for context. up XX.X% We took year basis came XX for year. we're the taking get XX -- for believe, to points our XX.X%

So so we're traction good seeing far.

sensors. and way mind we're on year is the the that with first going of Keep phase through we're runners early Last we end be Malaysia of the with between that of that volume manufacturing. some is there and The working to now about more of of a next parts and were up running parts. that quarter, now the more lot X/X complex lower high-volume in getting the

the quarter but to as take will a we it plan So little year. we fourth there exit this be time, by

margins gross up quarter. to first an starting the through We're flat incredible start We from an QX. in uptick margins to stepping closer Malaysia good to the in margins in fourth that That's efficiencies workforce. expecting We're to doing far. to already XX% out but so be P&L. seeing job the then They're gross roll coming in -- half, see QX relatively of should

So there. progressing well

engineers costs It's reductions our and seen dedicated your look we've year. that's of to question. trying fight each gained the we've cost offset point cost inflationary the second to over The continuously historically We take out margin where every also years. to that the good your of have and team expansion on

mix lower-cost that seeing very costs that out of well. progress Also, the technology they that -- And prior of anything cost with think seeing But some from to sensors. attach sensors its taking now did attachment from reduction we're reduce I to higher the cost They're we're now RD. from cables bring boards, benefits our of margins. we're XX% links moving from with think the to the to close the sensor probably -- our we're I efforts over

progressing that's So well.

to NomoLine. costs take of And as out some like well of and advanced the parameter we're Masimo-branded continuously our equipment trying lines

Frederick Wise

could if And I apologize. a ask I follow-up, quick

expect lot your You of in a confidence XX% goal. margin operating

terms, of the hand you simplest are to right have that the tools driven, sales -- Micah, that's the the driven? in goal this the you is in and confident are why make What that happen? it Just mix

Micah Young

Yes.

believe XX% that back and or I I that just with confidence past XX%, before maybe what's a down of of XX% that from is -- we over the a had think we're in margins a in can costs years, as get to X We've costs back do lot increases we labor up. to inflationary -- we're years, lot COVID high as assuming sprung lot cost gross we've given -- Mexico. XX%. of been to me even mean get inflationary X the the COVID get

seeing give reduction, efficiencies a workforce manufacturing now we're to we're improving labor moving much good only as that's and going that to but stable lower us more the on And also not cost benefits Malaysia, that turnover.

currency the direction there We've Malaysia, finally, currency again, head a with but the stable of although situation with headwinds had it's more in peso, well. right much lot as

reduction confidence top So initiatives cost of that's laid we've giving more us all the on out.

the mentioned. -- reductions those is just that product we've And pursuing aggressively I team cost

Revenue the up is we growth. revenue critical the drive doubling over in revenue, say, The EPS also doing with is company years. next well -- mean very other to to X% EPS several important really is continue on deliver the of the we're is that what drive we're to innovation next set let's XX% $X are that leverage And thing leverage to revenue grow, your going to important. and contracting after this years. I question to X

costs to margin, our in going leverage also us costs as then that's gross company the -- think for SG&A lot those and leverage fixed to R&D. I and installed leverage base our give leverage a of and fixed the So well

out at when that strength per is, line X $X performance of margin growth the XX% and on where XX%, share. earnings lot more year, getting years seeing and achieving a we look our confident the goal this the business So top towards the we're

Operator

next Our question from Michael comes Polark.

Michael Polark

The Is driver here record to expect in next say up the health the tick-up base growth care that get installed it is year-on-year. activity. X% to base also onboarded and year? about new reaccelerate seeing fair I'm in accounts you I'm over hearing X% installation contracting rate deck, a is the that as and

Micah Young

Yes.

into I up think year. especially throughout we're this on continued exit. expect is for as driver in as the shipments step going of going see year step-up strong next to rest year I'd the we a going to shipments exit be year, driver we next

X.X significant thing within we're that only million shipments today. other existing drivers A got existing drivers need we a there. the those we've The out is lot our we're about share installed a of We've to because drivers already gotten replacing oximetry. doing, market are base lot in pulse replacing half of are of the

So be the in field, new we that's XX,XXX-plus drivers kind seeing. really XX% to rate what need that going run out of and we're only of

a But to basis, year-to-date driver contracting our we're to revenue why continue of per that's because up consumable step revenue doing. starting XX%, it driver XX%. to is And to up year, going we're on the consumable XX% expand. is per We're seeing see this back

half about up XX% growth on delivering consumable base X%. the is the We're year. revenue of installed Our first in

the that that's So -- contracting we're the strong off installations coming the and business. seeing momentum just that's in

Michael Polark

this. If I on can ask a follow-up

of is level versus goal, XX% hope care health say, to At or share, to scale round driver of this the would you driver what growth kind of to in the and is year mix per revenue kind next numbers. Let's beyond? growth XX%, get say, between grow your core market in base

Micah Young

Yes.

coming our it maybe probably to of I or X% from somewhere growth being X% driver around and consumable installed to it, revenue the per X% other, call base think on X% driver.

Michael Polark

Yes.

the an can last on just If milestones then Could upcoming? update Apple. I Apple ask where what Okay. get stands, the be on we it litigation, might one

Joe Kiani

Certainly.

brought or We X them There broken hoping probably theft we court for X, but patent in in X secret X pieces. those them litigation we theft, being trade were have it a against X, trials the might to and is federal and left. have get

in then they'll November to and I'm secret a hoping We'll the patent later trial have the get trade we're now, Right looking still see. combined. at trial. schedule

Then go then Apple them, brought we that go trial next part October. a it of against should and And where litigation that to Delaware. against brought late case antitrust part, us And patent our first to in hopefully trial year. should

well injunction, trade we parameters as, U.S. beyond broadened to other and to court even federal just our to the here If case hopefully, rate able in not will related injunction win we our be photoplethysmography, as the with patent limited and trade broaden that's secret secret California, remaining in which should lawsuit SPOX pulse photoplethysmography, include

where at. that's we're So

There has for. give hear customs they if around some border hoping have the basically get that. ITC's try not is the Apple soon should what on activity We're and to we'll But and gone will make to where customs it back at We to injunction to was go injunction. to supposed ITC back to be about. what asking they're the them do, clear border back

we So where are. that's

done. I be X and another to we X should years think we probably left have

Operator

question from Matson. Mike Our comes

Michael Matson

fourth it the third EPS, at quarter. EPS what same for you on First, relative revenue the into back kind really growth. for the And for the raise and means just is you quarter the quarter that's quarter, third and guidance, least to -- like for both where did the where in revenue consensus guiding of you're for given seems the effectively can it where for falling was what

the fourth in, quarter me So guidance. of quarter looks in aggressive assuming line third the with the to kind comes

Micah, if quarter, don't part -- know, be there. I stronger explains so that about gross know comments maybe of maybe to you margins the did I say something it. you fourth So any in had being expecting them

Micah Young

absolutely. Yes,

couple of So things a there.

our prior versus that at pretty increasing guidance, and increase. distributed percentage $XX look It's for guidance million between evenly health you now if kind of at terms QX increase midpoint. the really top So in line, we're of care QX our

a If midpoint is the in you around for QX. growth look at XX% little just growth. over We're -- QX, about QX X%

view we've as -- that feel And put that we guide. on so I risk around it like I fourth the a for reasonable more range don't quarter. QX

at from coming share, $X.XX have look more quarter. And midpoint. our up the we about we're little do at If fourth you earnings the a -- per bit

though the and is quarter -- that in fourth of full Some rate year we're is better tax as seeing a well.

some driving there. the of earnings that's So

But the is points points. improvement about basis gross basis QX consolidated margin XX is in and last for guide business. QX from QX XXX up

So look I the we're QX the be with guidance, when and QX. I consistently pretty see both difference only -- more seeing fourth quarter. there that an the at can benefit think rate tax for increase would we're The and you expecting

Michael Matson

but been. a in And looking of is next and boards into know this think have one Malaysia and growth sensor then mix year, not the just to guidance, you're shift just giving been, you've I margin gross to more boards have has and where capitals talked year I addition things had that your

of So next would imagine reverses I that that, year. kind

out material -- a headwind that could margin of that So gross that 'XX, is play does in if sort that to way? be

Micah Young

Mike, don't be expect I headwind. big a Yes, that to

drivers digits I with and But this especially think down growth going in is starting from we environment up saw up, double stabilize rather than strong being low are we the was they're back capital revenues. that it we to stepping very consumable QX. our still expect point to do like pick year, in the believe

trying we're Malaysia as projects would year offset working well costs reduction benefit that then and taking as headwind of any cost -- that out on So the that with of we're on full be with products, mix, the to transition. of

there's and in to margin to some very that So there, be still next going puts going takes that be on good but track year. cadence of we'll we into feel expansion

margin we if despite did at comp. XX.X% year -- flat comp we of this at We're we about year-over-year. look year. operating the also actually guidance XX.X% don't XXX in year, are of headwinds we versus last have operating headwinds this performance-based margins, like year-over-year We points basis landed performance-based year, you our This

will a into should headwind expansion on be going cadence and that we no get back longer margin to good So there, XXXX.

Operator

comes Bedford. Jayson question next from Our

Jayson Bedford

couple. but drivers the, it, earlier quarter, sold Maybe new, to I have what, just may Micah, drivers? an of questioning you on XX,XXX are a implying that just were half line replacing legacy not and this maybe of meaning misheard them you drivers, of

Micah Young

Yes.

our of line drivers top that to what between what's half line, line, that those new grow the top seeing year. need XX,XXX top grow incremental drivers. somewhere required XX,XXX is growth that's to drivers deliver we're this are to to And we So

our So the the is existing of rest that's we base it installed replacing the in -- literally size are today. market due to

Jayson Bedford

capital side, little ordering been from late. I changes you any in Okay. of any sluggish a on Have patterns the seen that's know OEMs?

Micah Young

was question patterns The OEMs? ordering from

Jayson Bedford

Correct.

Micah Young

Yes.

our driver was believe OEMs next last trough year. a we should about think excess by they the ordering QX feel up, or of see be is normal through So back we we that down year, the Their a of like And in to in And talked before, patterns, back up the -- burn as a of XX,XXX early shipments. and stepping they which had lot QX, QX that that QX that back either -- above we year. quarter or half the they we of in inventory. we'll

Jayson Bedford

just for last me. one And

potential either of August that in in we expect and that disclosure the should way date? around just separation XX public the and date, terms around August announcement XX Just

Joe Kiani

exclusivity. the approve XX can or given is time final before they something come or we've will them after. have could Whether or August Board the not Well, the that not

they they no really before it August except would would do then ask come another think extension. to date you about want there's if or So for would something, XX, that magic

I So know if don't not, to announcement we'll see. have have or an we'll

Operator

Our next question from comes Chopra. Vik

Dino Weinstock

XXXX? You previously couple X% in X% a assumed you that What expecting in mentioned your public for made. growth? know now guidance of your I comments some noted you have a guidance hospitals that patient to are

Micah Young

question. Great Yes.

hearing in are in year. around we're in the X.X% consistent the with we're back QX growth the what in expectations and is now, reported well. QX And that's admission guidance And implied to what the market laid that's seeing with that for year. right out out for X% So as and implied somewhere we're with there the pretty

Dino Weinstock

Dino [inaudible] I Vik forgot on think and Oh, Weinstock Chopra. I for

versus a end the you guidance Just high the your follow-up to what the gets from of guidance, low range? me, on

Micah Young

already the We're lot year. hospital is We've of in rest the the with by modeled Well, a census. conversions. of new it in, also driven really kind of layering installations those timing the of through

surgeries. growth is of inpatient lot it around really a dependent inpatient the census So

We've on surgeries. positive inpatient trends seen

is outpatient hospitals whereas X% of couple past this those actually a were up down, about large think quarter, the public points. what of quoted I think, one was I

are I'd spread the the our say our expectations it's trends think going in I really around -- census. on the favor. inpatient So But -- on

-- seen much drop Capital, year-over-year. in we've pretty capital a we've

full to I the XX%, year, to think close around expecting on XX% down consumables up we're with down close it's XX%. --

where So the -- that's what's range. kind of guidance implied in

Joe Kiani

more have think we time question. I for one

Eli Kammerman

next Operator, please. question,

Operator

Taylor. Matt question And the next comes from

Matthew Taylor

in versus you I want the the of ask did the estimates that put presentation this about to separation you one. prior

clarification So really X questions.

that the without the is spending in the is consumer presentation? and of and health between Firstly, health, consumer projects difference new the with on really just profitability some

that I And to one. were any could have the assumptions are I representation any but other Micah, prior that. core other wanted take assumptions changed, help get the to provide obviously, to was If bridge us some then, different there new hoping from just comments on or of the you your

Micah Young

midpoint. mean around the consistent Yes, it's we what I with focused more showed. we're pretty

that. want want it. to to we're we kind simplify X the around some that's to show where Previously, reconciliation putting think in. we were scenarios. our best dialing I But between of estimate, ranges We simplify the

adjustments were kind care, lot a off the of professional for we've long-range of when our to of And is improvement XXX So the showing to out $XX which midpoint. about That's -- addition us consumer were showed if XX% points business. we to where the to in that's basis jumping at expecting midpoint separate health of million where get to plan, we expect about been about you that audio health we're we land.

much there. line So in everything is pretty

sold If spend goods that year $XX and overhead expenses an certain drive selling expenses, other of assumes for you improvement reduced expenses as some of operating that have marketing the corporate some million, and out number or But -- there. look into cost million carve health to this R&D loss. at we margin cost the that we $XX consumer

prior it's of expenses that's healthcare. margins the -- for but So consistent we end pretty what getting showed with tweaks operating still the point there us for right professional to previously, XX% just on the a few year,

Matthew Taylor

any get the just, tax is in to there And below these is consistent? to all Okay. new numbers? line Or or change that

Micah Young

No, the the below range this is the guidance -- really nothing and than line other raise.

as to opportunity that health a closer The continue we're for other tax business. XX%. an going we I XX% forward thing would rate a opposed there And care -- think tax rate and to to be the to is seeing see professional have

showing were about we Before XX%.

that confidence share or So give achieve in would us that upside $X more an per X years. to

Matthew Taylor

with you plan you I that separating with could more that you about what financially why do on just audio very get just just better does so the maybe think And or like you seem for keen you strategically articulate wouldn't ask consumer sorry, -- you the that seemingly versus Could audio? this plan separating separating much JV business.

Joe Kiani

we upside cash also, get we could we an the two, get for think into -- envisioned. I Well, the would probably that business but a we lot had future more than get alone, one, audio we

to consumer becoming really in hurting a potential our we successful. long short-term believe, due the investment While health is the that, it we're of understand term, making business we has EPS

a That's we from going can because to it tough we health that's and acquired and because success to very the business health sell on be if we add don't the to risk needed Sound care why, Watch, to health consumer team unfortunately sell to that we Freedom And business. hearables. care hearables wearables have company, care to the health a consumer team, business that to thought the the aid our hearing the do the United group with us, to of try also it's really out defocuses and delivering something make

so Thank you. reporting QX you you much, you a appreciate and We numbers We joining to our us end everyone. forward look today. summer. great your Thank of wish

Operator

now is concluded. meeting The

disconnect. now may You

Masimo (MASI) 6 Aug 242024 Q2 Earnings call transcript