RMD - Earnings call transcript Q2 2018

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Operator

Welcome to the Q2 Fiscal Year 2018 ResMed Inc. Earnings Conference Call. My name is Christine and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. conference recorded. this that note is being Please I Lee, Corporate Vice turn the Communications. to Agnes call over President, will now Investor Relations and Agnes, begin. you may

Agnes Lee

live Christine, you, and you attending Thank thank ResMed's for webcast.

our are on me our Brett of be will the management today available Q&A CFO. Joining the Mick during call. members Other the call CEO; Farrell, and team also the Sandercock, portion of

I on release, want based the a ResMed including, reasonable those statements it to the the call not statements remind are include If statements had chance website corporate are assumptions, and over to materially plans at the actual differ may our in you in for future may about that investor.resmed.com. be cause can these by will but believe listeners strategy, Important materially filings the We Mick earnings to found indicated. with our actual results and to now Farrell. today from forward-looking our company, to hand SEC. detailed which on have tax review I differ factors litigation, could expectations, prospects results not those discussion but limited statements, forward-looking from performance. made outlook,

Mick Farrell

all to of as for the you fiscal thank shareholders our second year and financial Agnes, joining us today quarter our review Thanks, we results XXXX.

over and For financial the call call who you this Brett, announcements key highlights, Then in financial will quarter. will results review business today, detail. through the to I will results, further I hand top-level our walk

runway from our revenue excellence led starting for operating bottom ahead quarter achieved forward. to with devices. more team operating apnea systems, our XX%. grateful of see strong we're of performance. by software, and to net At We and as excellence move mask ongoing profit see line, double-digit we very operating sleep leverage double-digit profit growth initiatives, the are another solutions, growth, global sales of We We for

We're Brightree Brightree in basis. at year-on-year our continued this the top-line a execution to share Growth $X strong continues strong and performance per business Our diluted very were and pleased our proud bottom software-as-a-service on and by growth non-GAAP innovation we're team. team. with the earnings from ResMed XX% be line of Global

our we we health have X.X digital billion well global build data. of Turning and care continue to therapy leadership to medical businesses, now our nights medical sleep and respiratory over

for unlock value these significant to and for data, simplifying our providers, patients outcomes improving loved continue from caregivers for their We delivery creating ones. customers physicians, for workflow, and efficiencies and care and

Congress the artificial tax without to global quarter, a through U.S. to able system. has This constraints. territorial passed to Government moving reform cash invested tax During be our the assets be liberated

U.S. growing will three, one, footprint; free and based property research existing in assets. intellectual to U.S. upon invest building We be based upon growing three now capability; our ways: our existing manufacturing two, existing development and our strong new U.S. valuable

will provide these areas we We as move forward. updates all on

has on U.S., growth XX and growth for of efforts Canada, continues launched device and Latin Growth a devices we those continued quarter since a for Solutions the the software three-and-half for sales geographic our double-digit basis. volume platform. Air Canada, The channel to These strong XX% in of masks, fueled the as currency were constant been Now well marketing Sleep business was U.S., results and AirSense currency XX% apnea patient strong devices constant teams America our through cloud-based some on partners. revenue the achieved America grow It years steadily solid Latin by growth. of and and platform basis. as highlights. software

the accessories U.S., because providers health and our share of health and and The market choose and value physicians device America grew our sustainable connected solutions. Canada, grow XX% digital Latin proposition mask to continue markets the this homecare in quarter. ResMed, We as of category

have seen and respectively categories NXX AirFit nasal the the We are full FXX face In demand all AirFit categories. the and mask doing across good very well.

We the expand products. continue demand production growing to for these to meet

horizons with foam In XX%, receiving apnea update to other relative health by quarter at is which connected memory growth, creating growth focuses of advances France across value and the including as Device growth establishing has first high watch to and payers market other health the the hand unmet, strong initiatives, similar quietest, this Brett. market telemonitoring I'll of over most went grew Asia, mask the recognize in to of to in technology, writings and currency the and grew mask reimbursement under take patient period outcomes. NXX X% Revenue market of markets devices the significant country into at patients constant new XXXX our FXX devices, across efficiency least and high a to and increased markets change comfortable we're X, now on the each comfort drives the products. by a France adoption highlight of is sleep a non-cloud XXXX. the therapy, working enhanced on business Europe, continued catalyzed I'll this world capability, our patient smallest, to these FXX a We're governments to AirTouch across drive a first We're for of other products, at horizon on niche digital effect newest or a that quarter connected need. a sensitivity previously Europe, to the system Our space. strong solutions. strategy three connected a with and and and change basis. better new by grew making coming at minutes markets. our X% reflecting ResMed health in you then on sales over just January call excited reimbursement with few the sleep device which Mask Asia, sales very steadily solid met for

in to provide patient over the nights improved sleep respiratory that well leverage to clinical begun care medical and X.X actionable care delivery and of have efficiencies. studies billion insights health care We data and

over We XXX% in patients in million million system monitored have cloud AirView X devices patients and connected cloud-based homes. their medical over with X monitored our

grow also to engagement. We continue patient

over rise the across sign this portfolio. With continue that leading Engagement future revenue My have ongoing their NXX, seeing see continued of and adoption more provide for they We patient Air the see The a fit, enrolment Patient We Solutions, engage AirSense comfort. when AirMini, exponentially, they to new up My people Air their the global the Air every FXX, We with app the and XX, love engagement these X,XXX therapy solid world patients who is day. is masks bottom-line working. and data and more. seal, space growth in of do,

data patient's our verified with connectivity cloud-based This announced remote nightly to between platform. and here enables AirView providers The ResMed of patient the monitoring data quarter homecare AirMini see physicians AirMini AirView integration and need even therapy any possible be new gives spot physicians a their on travel patients educate that issues reach to the and device. to healthcare This best opportunity great engage brand outcomes addressed. to and

in show that of X,XXX published of in to apnea progress Medicine the Journal hospitalized an life these Undiagnosed the ensure sponsored survival sleep diagnosing efficiently therapy hospital including received The improved opportunity during diagnose ResMed apnea simply them hospital among post apnea. study patients. American patients' over that treating highly the and is continue We rates. there showed sleep a The to clinical treating patients they discharge. prevalent quarter study long-term and hospital and importance is sleep on changing the and

to increase lives. will only also Following the money only for the survival saving healthcare more rates have system, we not pathways saving like is it is that healthcare costs system, therapy of great are for for life It the proof reduce this our and quality will also not patient.

disease health or value ResMed are non-invasive horizon and payers, Mobi, ventilators excellent offers the weeks leading and XXX we therapeutic we great health who to to millions our capability chronic COPD providers, life of of quality XXXX the for of and and comfort, second worldwide leading oxygen. which cause rehospitalisation, and ventilators connected our million many data. third upon a that With patients strategy, patients the life and a form mobility, digital first cause being can provide ago and death and ResMed people building the we the from Mobi portable importantly, obstructive know for second balance we with few output growth physicians, concentrator. oxygen these the battery Moving rely for In support Francisco, over basis COPD of San the cloud COPD. branded most oxygen connected pulmonary on announced supplemental

connected non-invasive connected growth spectrum flow critical care we year ventilator the throughout like for for therapy, AirCurve, path concentrator respiratory the pipeline. this plans steady support our expect our called oxygen We cloud with continued POC have life along products, cloud category and of enhancements Mobi forms a in ResMed's of high ventilators and Astral.

a health opportunities chronic disease business opportunities. of third expansion management out-of-hospital Our software and including growth encompasses horizon portfolio sleep and of tools, wellness,

compliance. quarter team analytics Strategic announced data health This The home post-acute company improved allows continues an to Programs growth for Healthcare reporting care the ahead. strong hospice transfer with of to to Out-of-hospital Brightree data reports alerting exciting between integration seamless and area Brightree accurate home be agencies businesses. health help care our and growth long-term called software us, to improve potential for patient immediate and receive

for Williams-Sonoma Sleep Max and a Mattress its consumers respiratory latest is SleepScore be brick-and-mortar and wellness a a which SleepScore called analysis. Max. to sensor side, is Robin Las best-in-class SleepScore call and Williams-Sonoma by in This System Set. what CES the their the the with system Vegas, and stores stores. architecture announced greatest Conference will Labs non-wearable at online combination they powered partnership consumer On sleep product ResMed's the and of venture improvement for select Labs technology our non-contact At offer This SleepScore product sleep launched joint

seek For do million to every that they provides the sleep their to suffocate yet partnership but for treatment to inform XX a not who sleep know need pathway diagnosis night Americans and apnea. ResMed, this awareness XX

on to grow hear fiscal two we we XXXX revenues are continue forward. We've and year the of beyond. move throughout half more the second start fiscal quarters our had front positioned us will to You year awareness as to sleep well from strong and

We as our operating excellence ongoing are on our profit we grow also operating initiatives. to execute well positioned to continue

the Most AirTouch called We new ResMed branded seen and the and masks have portable we FXX, ResMed the AirFit including our Mobi. about AirMini. first the FXX, new are oxygen recently, AirFit with excited products NXX, device concentrator success

XXXX, as as positioning long-term digital to execute excellence the health and on for to lead line action, and unlock the Medtech field and we continue bottom connected health value strategy operating for well top implement with initiatives, are We growth company solutions. as our

healthcare market. we over well lives last and Over then we in his months We With XX for what patients; go improving system chronic reducing million turn aim the out-of-hospital quality two, One, XX call healthcare drive over have disease triple three, remarks the changed to call and the the our slowing over to we'll life Brett of to progression; Q&A. and overall costs. will I that, Brett. continue you, for to

Brett Sandercock

thanks, provide will of second Mick. I an quarter fiscal for my year remarks results XXXX. the today, overview of Great, In our

were prior As other XX% and geographic Asia, Canada, countries increase of Mick of increase over software-as-a-service Americas at sales $XXX.X year million, X% constant million, currency currency the for increased in in other distribution device in $XXX.X quarter prior U.S., prior and the prior between totaled million, Taking over increase year increase by were the revenue X%. markets increase Europe, second Europe, Masks quarter. Asia, from an segments. noted, Canada, the terms, and X%, business, quarter U.S., the XX% Group while $XXX.X or of an $XX.X over revenue Asia, million, over of a excluding quarter. year or were over prior over our and revenue December increased quarter increase. increase XX% or an sales for markets an the Latin $XXX.X Brightree $XXX.X by million, quarter we quarter sales the terms, had XX% our other an XX% was Sales the look an quarter other million, of increase out or in device very over an Globally, quarter. and year sales year million, our revenue XX%. sales strong an were XX% constant closer prior revenue quarter. was terms, quarter. increased in the of over XX% year year Masks terms, $XX.X increased revenue increase constant XX% and on over markets currency quarter. terms, year prior and and were the XX% prior year sales the by the in the sales constant a Latin XX% constant Brightree prior prior increase in Breaking other in and currency of of of $XXX.X quarter. device a an American product other The in by year Europe, million, masks currency

During the amortization of restructuring of The and of contingent of and associated measures with my comparable, referring impact associated Tax U.S. enacted In amortization commentary be recently non-GAAP expenses charges year rest intangibles, acquisition-related to I'll the the acquired acquired with expenses. exclude they for litigation consideration, numbers. expenses, the non-GAAP tax-related today, adjust intangibles prior reforms. settlement additional

release. the to reconciliation full We in will provide non-GAAP press second numbers GAAP of our earnings quarter a

the was year. in the gross December same during Our for quarter XX.X% XX.X% compared prior with the margin quarter

essentially the with a and offset and procurement margin prior was year our sequential manufacturing currency average by unfavorable typical basis negatively selling with on comments largely last QX foreign Our efficiencies. movements. Consistent was reflects impacted margin prices, gross in by consistent quarter, declines our in

gross Assuming of we to gross year FYXX the mix, rates, broadly consistent with be expect for geographic fiscal balance current and XXXX product and our trends in exchange likely margin QX margin.

last compared that onto to prior an SG&A constant percentage XX.X% over million, year for our of reported SG&A the $XXX.X we the increase quarter X%. expenses improved in currency increased as X% revenue Moving the year. SG&A or by operating expenses terms, quarter expenses, a of XX.X% were to expenses

in as in currency the of for and to subject XX% we percentage incremental X% increase the currency year reflects over were $XX.X an range prior to forward, percentage XX% X%. expect quarter X.X% increase as to This year. expenses compared R&D year the million, XXXX. of in be a for were of our SG&A movements, a expenses the of an increase portfolio. across balance revenue of Looking the of prior fiscal X.X% revenue a quarter basis or investments constant R&D to R&D

movements, profit Non-GAAP of intangibles R&D increase growth of an the the acquired per rate quarter the for earnings normalized XXXX. XX%, $X.XX, prior vicinity $XXX.X increase of non-GAAP was quarter. while this per prior to a partly the year of be and of been in over for the currency the million, million, non-GAAP lower was for to expenses quarter. revenue of to share diluted of year per the X% XX% quarter, diluted Achieving of fiscal was forward, we tax quarter. an for due XX% $XX.X a tax subject quarter, a $X, prior year share a $X.XX. rated X% earnings Looking expect Amortization XX% percentage would as earnings decrease our in prior the were Stock-based for have share income The quarter was quarter. balance share was $XXX.X over quarter GAAP compensation Non-GAAP the over net earnings the increase while the the prior an quarter quarter, quarter expense per non-GAAP million. the of for XX% over $XX operating for increase over million year year an was

tax in changes recorded accounting during to they million one-time quarter. additional Now laws. enacted. in I'd was for a reflecting recognize effect the of some our tax-related time tax spend tax we of change XX.X% the U.S. December December rules income a discussing matters. U.S. to which effective with expense Accordingly the are any quarter recent our associated require like us rate an tax charges GAAP On basis in law period $XXX.X have

includes two items. this Specifically amount

which income rate resulting of a the tax XX%. the in employee for million; additional second, of for income on quarter non-GAAP First, our $X.X the governs additional $XXX.X U.S. write-down for was carrying the ASU tax rate excludes our imposed which expense deferred our for expense of effective accounting stock-based and accumulated means Adjusting the foreign our deductions the tax one-time rate, net tax of payments, for in XXXX-XX the corporate effective impact the lower earnings value non-GAAP a tax On basis transition charges assets quarter million. discussed, I've tax tax just resulted from tax was X%. which

effective U.S. the U.S. in tax quarters forecasted was our U.S. because no to non-GAAP due quarter The recent rate this be tax longer previous fiscal Our attributable tax the reforms. the taxes repatriation because cash this have lower of of the year. will repatriation to in

our be that now range effective of same reason, we second will XX% of tax XXXX For rate the the year half to for fiscal in estimate non-GAAP XX%. the

XXXX on to our two are year consider. tax to effective turn I'll guidance factors There fiscal expected important Now rate.

taxation legislation be profit draft implement of likely our to resulting related businesses shifting, or and result mismatches higher accessible additional Australian a in year likely be and rest our calendar the designed tax year. effective the income to jurisdiction and XXXX erosion in XXXX certain of for will in tax enacted impact attributable initiatives Australian the our transactions to effective fiscal hybrid and First, Australia base to BEPS, global between rate. This

will Secondly, from treasury range U.S. XX%. of new and estimate financial no of changes the out fiscal be positive and reform legislative associated tax tax system both recent will our of XXXX a subsidiaries. to it's implications ResMed the estimates in from the our management round reduce we rate be changes on geographic the little important perspective foreign the perspective. tax note U.S. will attribution a of U.S. U.S. to U.S. the To legislative the their year income, the tax effective impacts our legislative predominately and for from allow territorial the that XX% changes, future with tax rate will account, or to Taking repatriated effective earnings tax into tax which for our Australian the changes,

will no flexibility We far cash back to have or the to little tax cost. at now repatriate more U.S.

utilize cash invest to We will more be in strong effectively growth flows management able activities. opportunities to global our undertake capital and

on tax-related reflecting the cash earnings. million $XX.X and strong during second for from the $XXX.X quarter from Moving for matters, million. was was million. flow underlying the December Capital expenditure totaled operations quarter quarter Depreciation amortization $XX

dividends million. $XX.X During we paid the quarter of

today Board declared of $X.XX dividend of per Directors Our quarterly share. a

$X December in we million. last during we quarter second quarter's XXX,XXX of $XXX gross net Additionally, share we XX, in call, have discussed the buyback debt consideration and At million as debt. recommenced and repurchased during shares our $X.X billion

sheet assets was debt modest December with Our remains net I'll strong At billion call equity $X.X levels. with balance billion. the XX, total that, hand and were Agnes. And to back $X

Agnes Lee

Thanks, Brett.

themselves We limit question to only. we follow-up Q&A and turn will and one everyone to to now ask one question

have get call. of are you for portion that queue. ready the please Q&A If the additional into back now questions the after Christine, we

Operator

you. Thank

a We question. will the Margaret line the is now question-and-answer William session. begin Blair from with Instructions]. [Operator Kaczor on

Margaret Kaczor

Everyone taking for the thanks question.

the had SG&A leverage But all margin multiple for taking what of operating of leverage First nice through driving level you SG&A that maybe walk operating down we gets assume to a long-term of out. terms and guys years here? the quarter us what could all SG&A recent be moving showing in results should leverage what's or the pieces really even in maybe it been and leverage, really

Mick Farrell

revenue to the SG&A because XX%, out-of-hospital revenue markets. we've XX% we the over around grow taken and and world apnea our most in software care as question, leverage had our recent respiratory scale Margaret. as five-plus-years and percentage able within you that ResMed now quarters we're leading down a And talked back and to sleep XX% in on about of previous calls, of Thanks if look for

leave our Brett beyond of in rate we that even remarks with We fiscal a at And as want around FYXX. expect said to his we year of to this that revenues and prepared XX% to look SG&A run as continue.

right and leader, a in in we And have lot leader grow think and there's scale so a we around leverage can global for runway win respiratory I to I to left think that software out-of-hospital leverage efficiently. and of We're sleep global a care, apnea SG&A. the

runway ahead there's So lot here, fiscal that over I'd years a of multiple Margaret. summarize

Margaret Kaczor

what follow-up the year fleet a outside on inning you relation today of Good. but And comps telemonitoring. remain you to are on internationally Thanks. guys upgrades. then and for ago are China just from a any had seems France it in with driving period, talks level likes focus you continues there guys I know national, ongoing some in international advanced in to regional telemonitoring as weird drive

Mick Farrell

use healthcare the connected Yes, devices. of data and that's the telemonitored health government sleep if talk the million, that the their they patients cloud United in a the But more question, a out just paid million day. keeps millions XXX% their about connected more. uses the that as medical better excellent published in progress the that had it's last country and and healthcare bill quality remarks have $X sleep device invest up. at rights we who knows Margaret; allows a apnea as go us hospital Security every to it stay literally three-and-a-half U.S. fact of they X to them the through have government have They fantastic to States. is an looking in and patients France in the We've years life telemonitored most great Social digital highlighted north health there showed space survival in the that prepared devices. of patient the devices system, AirView and like French here If more we growing ROI saying beyond and of where see we

countries do we So X, fantastic, to that with runway as in, outcomes, it's is United markets lowest States across across do having governments we a are Europe, have other And and that get follow will market and other Europe business telemonitoring, of out all across and and lot Western having lives. in and think and through our regular conversations health, improves team after Asia, France for-profit there. ahead that access message the players through change, them great save the and major there's costs, we look that will suit and the we payers the connected we French government making think January digital other the health in France and we

Operator

Morgan with Laaman Sean a Stanley from question. is online

Sean Laaman

morning FX Good a to give GM impact us you on my My on for Brett, question thanks Brett. in guide quarter. call. first and taking is could the the

Brett Sandercock

Yes.

Sean, this pretty meaningful mentioned quarter. was we it As

sequentially If of kind at XX order was you points in the it looked negative. of basis

it So the impact gross was quite big margins. a on

we have we if kind gross pretty up that yes, quite with we where big margins headwind So, know we're a because of with the pleased end on FX.

Sean Laaman

Okay, great, thanks Brett. Mobi has what the And Mick, features bit Activox? give of are us you versus able a to guide on a

Mick Farrell

Unfortunately out-of-home oxygen Sean a said oxygen call ready and fortunately working that that it we're we I really not the other blend of got the the and ready. release quality brand thanks at level that that are putting to and And on designing the and can time best announce really portable specific good what this question. life be. running been has it the our our all for commercial here, that's by is for the at What believe the the make earlier towards. brand for month, ResMed publicly got has We're repeat parameters battery to I'm and it's concentrators, yet product again but good features needed happy excellent output; conference and sales the it deserves when they team this capabilities. to long teams is this

Operator

a with online is Morgan J.P. from question. Low David

David Low

take change Perhaps wondering from Mick I the much January, again, saw new questions. talked the reimbursement in happening where France for mean the of to sleep we there, from seeing think about up my touch structure? the we're the you good ahead just very you buying on we do change just just you taking you're results Xst sort could terms seeing, what of of presumably to are replacement of Thanks advantage of and

Mick Farrell

the effect as French change and in number customers you the went but indicated into our ecosystem in this David, or quarters. months January of and X, for known colleagues France have reimbursement partners about a Yes,

see the devices importantly, is we ahead Peer upgrading data therefore think really data some, well from their And that change using based but staying quarter to getting been most months. devices hospital see there say this that more see patients last care, positive And the we connected for has press fleet of published so like, Reviewed masks, you connected countries this non-cloud the taken runway effect three, a of importantly, France. will We and being over And of. go. six the cloud the and more to using better where there if upon other real care here a right in at including is we domino this direction more

two out that in one we sell over discussions are or fiscal digital lot more are and other and well looking we countries get can a we into connected France just active and more and we So the coming across connectivity to the health our beyond cloud telemonitoring products or care message into, costs save XXX countries years. here improved countries lives. XXX sell But runway left and the in there

David Low

mean, to up U.S. much how how is is thanks perhaps I had the strong Great, other, if think very in market I sense really patient you which I get is talk market mean this to much you gaining in could replacement? one much. share perhaps very And as start a setups just and sales let's trying conditions, impressive. mask ResMed growth to But terms conditions this picking of

Mick Farrell

will Yes, Jim that's our good Global who Hollingshead runs question. hand a I Sleep Business. to that

Jim Hollingshead

Yes, thanks David.

mask increasing in in and the the growth deductibles, markets setup. underdiagnosed the continuing business in patient we U.S. is know, see a There as and especially way awareness think Globally, because to is apnea are of sleep continues the be always of to with patient by you some is strong. cyclicality of we increasing economy I so bit little and cyclicality, obviously the growth the overall year positive the been in stronger, awareness, calendar a driven little and market the of directions. pick end up masks, in a bit I think in but so underlying get patient both has little bit

Operator

Capital Wuensch from a question. Markets is online Joanne with BMO

Joanne Wuensch

that you is force? Mobi to spend quarter. nice current you into very the afternoon, going Will to out about How home? your you CPAP your separate? talking concentrator? something going a with that Good Are moment home portable sales combine Can be sold oxygen build

Mick Farrell

a That's Chief Rob Joanne. Officer. our that hand question, to I'm Douglas, to great Operating going

Rob Douglas

Yes, extension thanks, and business the Mick. of for that ResMed the the be we're around as we going coming customers to part license fairly very relevant brand, world it really very strong existing and Mobi, teams. really about have represents Joanne, excited discussion really we our our doing world. the are currently performance. are and an will we many that will of are player customers it's force just our forward a of and ship oxygen Activox looking and out, think and good existing and selling sales to Mobi the stronger for it, be around opportunity successfully sales portal throughout that a

Joanne Wuensch

anything selling to next extra to but able As a as on -- there anything particularly specific be also was think quarter project days, there quarter follow-up, year? were the factor we should of stocking, to this about note anything that in we in

Mick Farrell

the out nothing in No ordinary the of in of this channel. QX Joanne. thanks Yes, terms

And comfortable respiratory of bridge those incredibly have years value Solutions I of sleep FXX quietest, thinnest full the market. the and AirSense is of mask Air on traction FXX that's The is that category. These in seeing really fits devices plastic the on we're and the devices continue most the those that plastic most and for platform. care we've nose mask. the portfolio of the that an customers. NXX and They on nasal seeing on comfortable any and mask are the and can their fit to face AirView you smallest, think buy what had good three-and-a-half NXX we're

what's as those is share leading look I this that's gains to to there think quarter the think we some I got that So forward. share sustainability and gains we

Joanne Wuensch

in All helpful. right. get Very I'll you. back queue. Thank

Mick Farrell

Thanks Joanne.

Operator

Steve Wheen Evans Partners a with from is question. & online

Steve Wheen

Yes, good morning.

around for Just question gross margin Brett. a

What's strength the of the because those You've the compelling. headwind a what probably half that currency of runway expected efficiencies the headwind has and dollar year obviously obviously back back on quarter of got was of the the manufacturing large must might offset Aussie this are actually bigger into through the because and moving to gotten you through mainly given the even how manufacturing efficiencies recently? going I in the therefore currency Can come improve, the from pretty particularly year? for just like talk now parts look half sort

Brett Sandercock

Sure, logistics, have in in Steve. we manufacturing, to on they kind a matter pipeline number program initiatives keep and initiatives drop. on of of work and when around we're on I it's a procurement, both then a of executing kind mean those of pretty of full, that time track so the and really

manifest and to long-term half. will certainly it's and in keep that a continue program you the pipeline but granular second execute progressive initiatives that it's some just identify that's and time only we overly that on drop like a get not working you those be of out all the done. to on will the kind period there and got initiatives we’re let's take time of of and But team full expect to if you over what and So cost will

more it's sort So rather sudden it. jolt progressive, of to big I than guess Steve,

So all executing to cost we initiatives got that just COGS drive out the that will those of on keep area. continue and to

Steve Wheen

with And at still so you even maintain with levels at Aussie Dollar current to margin the $X.XX, and manufacturing side efficiencies? that gross ability the the procurement got

Brett Sandercock

mean broadly guiding to Yes, consistent be I right.

is keeps some clearly into if game a time a there Aussie the be of if on different that's you managed have tracking it headwind will $X.XX up into all quarter to mine QX a way from bit that then $X.XX. the of it's [ph] ball Aussie won't currencies a there with $X.XX. but look We so bad, I the kind we've but QX mean, I at clearly moment, at away, headwind so mean

to more around we But manufacturing decade got to think have just what just that. make will get -- we counteract on we our moving we've to that I live initiatives currencies with ago. broader and a mean in compared I also place I guess So sure were nowadays we to got much

it's example, had for that So we in the undertaking. are we in big, we some now U.S. pretty manufacturing Singapore, have

then try So some was or to the clearly sort of even and little material know of U.S. years balanced that. I dollars many more is essentially guess that as portfolio mitigate space looked over you side and really a on as it

and to it whichever but an try with just has impact way there things we've do is guess certainly we and it the to goes. mitigate So currency live got some I that a

Steve Wheen

is now one rank the this freely. sort with little Okay. to you'll talking that And Is the with repatriation you've do shift of you those you're to to and in actually cap that more off that changes the identified historically what a as can the just the barriers regards that be opportunity some now of the somewhat tax of of problems some that of around that's removed. sort have bit first, management cash initiatives able of been capital is

Brett Sandercock

I that's certainly want have guess us now. with sort preempt reviewing I mean, I of of the we but yet wouldn’t it Yes, kind just does anything flexibility give to the world to flexibility. could essentially cash might be acquisitions, undertake. we in opportunities, and able mean to utilize that The being clear around will anywhere that investments want growth that the where

and it's We And and we interest either/or, do or you've management do deductibility I there's to well. reform things the capital flexibility ability limits as mean, would necessarily think like got but some a have, have things that. caps more that. the not on to tax more far I in some few additionally

it for have our million planned us in But sort kicked I don't not you on or will, to great benefit just So the options example more modest but things us be at for annually. with to of flexibility buyback through example we offset we navigate is million have assessing certainly that $X I their the relatively And to few expect -- the share equity we have but it's had think we've so completely the around to moment stage off continue this before. for for flexibility a everything will than greater we're at we a because that just $X.X employees on. QX much just it grants and

Operator

you. [Operator Instructions]. Thank

Stanton CLSA. comes of David from the question next from Your line

David Stanton

wonder in and the taking and ResMed replenishment thanks I and morning you. going market. my particularly U.S. are for Thank question. increasing about Good in if Brightree you could mask explain how

Mick Farrell

and that. Yes, out been Jim to into maybe look I've add often can then

Brightree in Connect customers ReSupply end-to-end and ReSupply ResMed to provide put with together that our for programs want we've an some and service excellent programs. who enhanced some HME platforms have involved to get We

that voice go can We have our directly to interactive customers automatic, to email, their provide we response text, to patients.

programs We have want dropship we to programs to where their with care in patients clean know upgrade they or so think in offerings the my we underutilization know day applications. of are clean patients when require that ways is that directly our the patients with and can and available if We it's guiding every the a to if they looking companies in at don't many including ReSupply saying therefore. their that want an that a don't co-pay, mask don't there the mask they timing. because they options know need They dropship you like the get

that. every under we your educate one. regular this ignorance basis need that does on patients get mask night, their new to touches they an face that dirty So detail further a plastic for a to starts can Jim? it when there's is of to their turn And hours and/or into want a a piece mask met education to we to seven and think go and that start drive Any get replaced up needs be night,

Jim Hollingshead

the think customers those, two thousands Brightree the effectively usable is Connect that's market. for Brightree billing the there is In that really is don't by to HME cover designed it Brightree the HMEs to platform as platform. are of designed offers thing billing billing is that also who I as the add HMEs their who I entire thousands and platform many ResMed their billing reason is there will only really platform so because of using be since platforms be and agnostic would of Brightree use are are on ReSupply two there's the our way

David Stanton

Thank I And market on strong is indeed you XXXX. as them rates my an particular rates updated updated U.S. you. European wonder the you. in market Thank and numbers going growth your your you follow-up in see into given should -- thoughts us U.S. some perhaps give growth

Mick Farrell

more NXX well to they're masks Yes, launch in growing FXX. and now mid-to-high-single-digits market you a those their but new to has formed very thanks got are you three those look quarters clearly both and the mid-single-digits at growing We helped mask tell us patients not gain global nasal Yes, in they four apnea high-single-digits. -- niche growing with for this comfortable for can have little we face that the And in full after we AirView and AirTouch XX side foam device the Solutions, that in face sensitive categories systems David. the masks new the share quarter full and care a their and devices categories. the perfectly play to AirSenseXX nice themselves share these the at the now there. question, systems plastic with AirCurve Air of respiratory that the on who growing that took in at have sleep far the still or and I and FXX

mid-to-high-single-digits. is that I think in market the

have we're of mask bring But development the our the think research revenues to X%, last basis a into we the further capability with share have on upgrades. quarters. then X% the innovation sure and this as to upgrade we which software putting taking also make on took regular in we we cadence weekly share I quarter over and on four well front a to cloud of as front of six

Operator

is Macquarie question. from Bailey David a with line on

David Bailey

relative saw Yes, second good past you'd I if impact a wondered just to so the been few characterize quarter in the to price had years question this decline morning. the It's just an average I industry? willing on highlighted quarter. the decline selling you just over

Mick Farrell

we David ASPs. out don't, four haven't years Yes, given for

David Bailey

Thank provide share in to basis other quarters with relation previous per in just much. to basis the the fine. second you us per a an able very share a on for overall currency, on you've currency impact you're if just impact That’s And provided quarter. wondering of historically

Mick Farrell

you Brett question? want to Sure, that take

Brett Sandercock

for this us, really stronger quarter which euro. was for favorable is reflection Yes, $X.XX the of the

So it was $X.XX.

Operator

Taylor a with from question. online is Matt Barclays

Matt Taylor

Hi, thanks for taking the question.

comp us AirSense within businesses each a of was and question and vents. on and about components continues you was the that your And devices you It on to if strong mentioned kind you talked first know of So the Solutions I I give the tough about how pretty grow any curious you this doing? sub ask quarter platform could color device well. to the of Air growth. talk are around some wanted Can those different

Mick Farrell

for way in does a a can I question, on around the Yes, Asia, breakout the and the devices out around globally devices. sleep thanks and detail groups X% Europe, America by of Latin fleet fleet the the the sleep world with constant geography that to XX%. X% and devices In apnea devices about of they the solutions ecosystem Matt. is was at up and managing Canada, down by that in that costs care connected growth don't enables But We penetration grew respiratory setting their therapy health we to grew for labor the the rate between basis. break A think why combined relative at U.S., at to markets other by it the the of digital our platforms. a XX%. within value, device currency growth more patients their health products health data our use through labor we're digital to geography that platform The all go show managing see and customers able their of the them costs when ResMed a reduce up or

that a big to value compelling ResMed. you want buy So that's proposition

an But and like and in that to we that access doing the earlier in. if there. have Western side differential amazing I'd execution an to talking Europe some growth of of job are bring of will U.S. prepared to but some market driving during the see of also we and sort across S-curve geography in in faster for like would markets said but getting outside team Q&A continue French other that growth I out allows that during the look first success that's France remarks device also the government the France had and reimbursement firstly As we have digital of that participate that our say their of you in now the in and

Matt Taylor

for one had just I that. follow-up for Brett. Thanks

How sense for I wondering second for when line you're and think these there's was XXXX kind ranges. a should within lot move fiscal the us could of developing that or things moving of moving actually half is and tax give if could you that around what the much those and about the of ranges around of moving the factors I think on ranges some we are down still or XXXX? up

Brett Sandercock

are mean, all I about know and draft of lot these been mean U.S. if -- sure. reforms. the it like this there's recent a is estimates I Australian legislation we Yes, given tax all of is going activity, what very and so our you the forward best also

which out guidance that confident the operations. forward And they on I'm there, and put income estimates. So are recently -- impacts of just but around looking mix it'll be geographic

typically can geographies operations in impact evolve and over so as time. rates tax your that different Okay,

shorter-term but what be would see you think might kind our of know with to know on off hot longer-term on that which estimates press. the the legislation very impacts is that be we best you that's I going So

need if generally So the that will we clearly, we as refine go through quarters to. we

Operator

Citi from Windeyer on Vic with question. a is line

Vic Windeyer

brought tax Hi, to just I you $X.XX to from that non-GAAP be? just tell understand firstly what The lower just the back $X can wanted tax. quickly us would just

Brett Sandercock

new tax came some I typically forth attributed forecasting repatriation it the Yes terms the no down we U.S. into repatriation to is we would in were essentially -- longer in make of non which which to broke taxed U.S. any tax under have reforms

impact tax the having basis favorably tax to payback in rate in does So and has U.S. FY not that that on non-GAAP lowered 'XX is fact a our

Vic Windeyer

then some resonates how whether that I at of maybe back that slightly sort right, just the on through that given to just I of of we of So do then business inflection outline wondering And the see and of the out that? coming you that growth respiratory could I rate second suppose as of great, care through modest? of horizon growth large -- that that the you was that point guess been just higher follow-up, all that sort the a mark business being opportunity when we in thanks. of expect Okay, timing point end go on

Mick Farrell

we here. it’s patients oxygen and whether Vic, XXX somewhere XX% support portable of the type out and/or ventilation, ventilation. have therapy there are think there, will non-invasive Look them Yes should life it's around concentrator, Mick COPD million some of

a a it’s overnight opportunity it’s long-term not huge So and time. it long takes but

to healthcare XXX the huge. the emergency for we a These non-invasive healthcare XX%. that we study and think our really back back reduce can important incredibly I the they and a horizon days for high they that and saved system, our when products is can factor they system ventilator second million of HOT_HMV money patients back about get that us be come expensive for again re-hospitalized are is growth in together, XX they and very use frequency when room on and show use our within hospitalizations oxygen by concentrator and this use they the the

on with profit and payer full country insurance did we the like the telemonitoring we look are government payer data. by working the So French markets going by country, country investment, and with showing them showing on and in return these

in it’s in when the ASCO will of So ahead to there part another we overnight. see of market part that Mobi, is and the we market portfolio runway we portfolio brand not lot it’s add in there. of launched but ResMed have a another by the

of to our forward years, care out next good growth fiscal couple you some So respiratory as to start of will you look business. see

Vic Windeyer

the on doesn't that the in the there? And Aussie just for ’XX what particular Brett, if a follow-up, impact get Good. is then component the tax, What FY of legislation be was through? tax

Brett Sandercock

didn't through closer it the go it saying then unlikely pull in event second the to we so closer, that are back to Yes, half. would right, likely corner

are likelihood, happen be like go But or to I think parliament think that that's February I it $X.XX, a I to didn't something very if that passed. that's to low or So going that. $X.XX like expect and be delayed yes more $X.XX, in through

Operator

Northland is online Suraj Kalia with Securities from a question.

Suraj Kalia

taking my Thank everyone. Good questions. you afternoon for

whether depreciated mentioned impact was from to you the the look if revenue out bit the even against you Aussie want the the it happened U.S. the of the XXXX, working beginning Euro from net Brett Can So strengthened understand bps give so could because what I what impact. obviously at the know beeps from perspective on or we XXXX split XX of a beginning Dollar as they XX has has impact you you kind each of negative but dollar against a the FX is quite top-line. are us the FX impact and other dollar,

Brett Sandercock

was through if it Yes, the so top-line sequentially sequential kind one have benefit QX XX% basis XX% a up was flat to that's -- from at Euro the you if that was lag. we QX relatively the points year-on-year. mentioned kicking of grow then like that I of from strong has The grow all that kind and couple with percent been the of quarter XX you look but coming and to the impact euro

has seen for you've sequential that So that that us. appreciate over That time. impact driven

Suraj Kalia

of us the broad contours give can Congrats Mick strategy? you quarter. international question your one And terms it. you in Got of on nice for Brightree a

Mick Farrell

Yes, operated Brightree is thanks software. and Suraj. really U.S. a designed

teams amazing in we are a to on that that and homecare looking to and just good heavily want level Suraj the a some and experiments that XXX the with programmers U.S parts I they invested operate have trials to including the to globally However who is in. we think and but do we're brought focused double-digit pilot be business Having customers experiments at taking countries, team really one we're to the of our we that We will of like software ones technology I can UK Brightree, you don't in some so we wouldn't are want it that at other and the do strong we supplied growth greatest said distract question efficiency business. start country. where it's world, the so in from the geographies looking markets other that to Brightree some if of other limit

as of So about forward. you'll software three out-of-hospital Horizon we that strategy part that our expansion see us I that's go more talk guess

Operator

UBS is Tom question. online a Godfrey from with

Tom Godfrey

taking question. Good morning my guys. for Thanks

or one from of of for cushion replenishment the AirTouch to wondering increase me uplifting any increased comfort from to or funders it's day anything just regards new I'm your managing are your pushback you've lot. rate given memory just with sort customers run that Just if show a set got so heard schedule up customers around funders are compliance replacement. levels, enough foam the from XX that of to always happy replacement you Thanks sort

Mick Farrell

sleep I'll a Hollingshead it’s to from question. perspective. global Yes, that business our Jim good hand

Jim Hollingshead

Yes, thanks Tom.

our the the comfortable patient on situation the channel them it. about has replenishment really mask almost the impact partners what I understand we patient with receive perspective to feedback take for on working as we the patient feedback what remarkable insurance From incredibly it. think and is as or most it the that overwhelmingly what is we're cycle patient. them might have and mask an depending fully funding by positive patient is thing a It's on funding

or And there being given so out it’s market they're mask health whom probably feedback on patients heard appropriate from but of pocket real situation for put we who the feedback, in haven't paying any negative it's insurance either or whatever. particular the real about any

Mick Farrell

also tolerate that a mattresses to of to who like people schedule published a made product goes those object we're there markets. of and more mask could data it's we to and defense of if healthcare what a that are but the after one is think patient And their able is niche it as be that self interferes comfortable Foam reimbursement lot as market need doesn't it's like plastic it bedcovers that I'd they're out insurance who our and Jim the sleep. system, all versus such individual with that mean it’s incredibly you're are collecting it it access patient the the huge patient I not data great compliant selection. feels for LSR customers will in a difference into showed and so the a so economics we those a I said or their that while comfortable but health compliant depend depends obviously this on if a on face, Yes, get line launch evident sort touching second

Operator

at the are We hour one mark. now

So I Farrell. Mick over will call the turn to back

Mick Farrell

the thank execution want product operating their for initiatives. team Great thanks our launches Christine. ResMed commitment In to X,XXX on closing, their and our to I strong excellence

into that work translated leverage. market strong gains, quarter continued growth, This excellent share revenue operating and

patients' physicians, Our customers, you benefit team and you And for that patients, products and of your lives on payers, and time. our future pipeline providers. software Thank remains to again we solutions in XX will our focused change days. talk

Agnes Lee

additional Okay, webcast available today. any on thank the you you again website at now contact may call. for The joining our be close free to If are replay there please investors.resmed.com. feel questions us will me. Christine

Operator

webcast. This live concludes XXXX ResMed’s year fiscal second quarter of earnings

disconnect. You now may

ResMed (RMD) 22 Jan 182018 Q2 Earnings call transcript