RMD - Earnings call transcript Q2 2019

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Operator

Welcome to the Q2 Fiscal Year 2019 ResMed Inc. Earnings Conference Call. My name is Chris and I will be your conference 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 Wakeham, Corporate Vice turn the Communications. to Amy call over President, will now Investor Relations and Amy, begin. you may

Amy Wakeham

on Thanks will and welcome earnings our Chris. Investor joining of call. fiscal of the The Thanks Good the being and press be along earnings morning Great. updated our webcast with is live copy afternoon year XXXX and us, replay section investor ResMed's to website. everyone. and available call second the presentation quarter release Relations good corporate for a

the prepared results the of during on Brett remarks. management our me Sandercock, call Mick and our available be Q&A Joining today portion to our CEO; members will are of discuss our the Other CFO. after Farrell, call

call, discuss today's we measures. non-GAAP some will During

measures, on may of as including, release. forward-looking press differ statements. now results are please the the cause Please actual SEC call to reconciliation to today's statements to these believe our today notes And that but financial future any limited a expectations these statements discussion to from include in our see discussion about may for the to For risk the assumptions; ResMed's to, actual performance. earnings a based refer filings could of Mick. results differ. I'd the however, like forward-looking We materially not statements, reasonable a factors reminder, non-GAAP over turn

Michael Farrell

hand will call the a through financial further year and shareholders financial walk On results, quarter. results all level over joining XXXX to the some we Then to Amy business our today will our ResMed quarter results who few for second I review today's and XXXX. key you thank highlights, fiscal milestones Thanks detail. for in our review us you Brett, call, from top the of I'll as strategy,

We X% XX% constant a non-GAAP quarter revenue currency achieved globally. the financial of basis on First, another strong up or level results. top growth, up

France on impact of operating sales and European completed delivered connected expected our customers the XX% cloud observed we Japan. growth the we as operating in year-over-year. device strong and as profit Even and Asian We programs non-GAAP upgrade achieved leverage device

maintain long-term. We discipline to for to fiscal grow and the business the continue invest

a across It me been and apnea a nearly software platform and and Solutions care Let years launched XX cloud-based highlights global respiratory platform. our few global the device sleep has half provide since Air we the businesses. AirSense four

software healthcare digital grow continue in this market features to and As with we've discussed solutions the to systems, quarter our we are we AirView two fact before, and business capability share our customer the myAir value, patient ResMed outcomes. every are as on health both device that Based weeks. the to these patients providers new choosing improved and due physicians and upgrading of including four

are We supporting the system, more with leading million million over X in our industry now than patients well technology, digital within patient AirView, XXX% management and health connectable the devices cloud market. X cloud-based

lives XX million products. improved delivering sleep the COPD and XX Over apnea of by people the well we past months, have treatment over

million than advanced lung patients, people digital COPD from people insights Using growth X.X over suffer who now XXX we that when patient the for optimal Everything who utilize healthcare analytics, turn nearly solutions needed. nights million every technology we and the night ambition it as worldwide to actionable help right health to the continues big to sleep billion are get forward with more worldwide focusing disease. chronic supports is our path the pioneering exponential. apnea developing of data We and data then have suffocate we to for sleep for do on apnea XXX are providers, into for beyond. and We and cloud in to payers, homecare physicians, treatment be

one platforms, apnea has within the health digital AirView and respiratory been vertical we to sleep our and had replicate our of expand business. within success with care our we take our myAir that have goals As

devices Propeller reduction demonstrated to and have the ventilators COPD with along hospital. use to cloud-based We connectable cloud inhaled wait medication The improvement has in people of for health medical well have to solutions and validated IV non-invasive combination automatically the tracks the III our sophisticated new patients Stage personalized made the We software treatment Stage options to we for platform the and for cost XX% this the medication to point, symptom-free of Propeller relations health we Propeller support XX% better cloud small asthma. in in life exact pharmaceutical devices. earlier very Stage and progression utilized as system our manage good ability to progress digital that Stage those attached app also acquisition closed ventilation. II COPD digital ago. their To inhalers needed suite with COPD. that people partners. that medical Astral cloud-based a and ventilation AirCurve solutions pharmaceutical health add individual. devices emergency the These and cloud of disease increase few with Propeller's scale room more are a leverages are in in pharmaceutical is these just powerful. with are solutions that devices connectable connectable for visits days, sensors adherence, support a for has COPD COPD stages and as digital insights with existing and quarter, doctors the weeks and deal during III that the of than the are was critically cannot and mobile to Propeller's feedback helps and astounding announced data Health a a that XX% complementary constitute the provides in

global they to-date chronic continue We and and COPD as progressive this been better leader are people to has to an operate incredibly company standalone successful the in a disease. important health now and we entity. digital become even help positioned manage for expensive Propeller as

company management Propeller XXXX and health expect the partnership operations. to with company and we be operate for the going as that has ResMed, providing can of to at long-term for retained This now a clear core digital across pharmaceutical scale piece momentum strategy, systems COPD. ResMed powerful financial portfolio partners their and ResMed the for together. countries. and our proven leadership have customers of puzzle an completes global digital to a health Switching stability continue. a team are we brings back in important extremely talk about itself roadmap We global dedicated

United growth of was On Japan, in the basis. devices side of health a The in States, and Latin America. upgrade systems and completion of global we X% on growth achieved digital the in X% impact our France Canada, business, currency the our Including constant devices

digital sales changes geographies, the in expect the they XXXX Japan in next in France health will be While quarters. we we been have adherence the and France have that great few impact long-term those during will increased thrilled mask reimbursement and Japan for and benefits with in of present

We full the new just earlier device we as these official strong will Last our that quarter in we portable devices month. forward. product third after within growth and growth and above a market we quarter, to this then two that. launch move our to launch our Outside move oxygen Mobi, sometime discussed in market during made concentrator would continue and was France expect we quarter that that Japan and of countries, within to growth return those geographies

product the expect features our the in as this and their Customers but category within are that to equipment active best want We We not this size, only this wallets such balances oxygen who POC ResMed grow meets that working enjoy category will needs will product to to grow, we key be that full more we home grow with homes. the users and medical of the partnership bring vote optimizes help their POC with excited also and customers will and output. market weight, of oxygen category. are to its lives mobile share healthy outside believe

our category accessories. Although quite core and Latin business for in U.S. it of business grew next our in while device accessory be masks at side global currency at to grew on XX% America masks a businesses. geographies material basis The apnea quarter. The the sleep take Canada ventilation constant a to in during and XX% will this a and

to nasal category. the of AirFit products the flagship our this in category, are NXX in AirFit great continuing FXX the two in see the traction with full-face We category and

we mask We AirFit strong the geographies two growth these incredibly are FXX, an customer seeing FXX full-face what is positive on Initial we launched all we what feedback of addition nasal calling and is lot broad availability the category. AirFit masks. across for Earlier mask a the to Last and the contact we this this also announced minimal This we just innovation product. are calling the exciting quarter, for mask, our important tube-up an that newest portfolio category. of our week, in NXXi. ahead have design runway are

portfolio further our of well underserved meet NXXi unmet these address therapy FXX we expanded mask powerful varying NXXi, even innovation needs. needs. ultimately to to to and uses. The form customer With FXX focused driving needs the portfolio providers more homecare the and We options as and to a individual remain for on and have offer customer the as NXX

the a business Let's ResMed MatrixCare and acquisition software healthcare out-of-hospital fast and new nursing turn the announced space, number now plan skilled is and MatrixCare quarter. verticals closed incredibly We life a business. an during profitable communities, million living Software-as-a-Service discussion facilities, within the beyond. to our of facilities, brings $XXX of of including into growing senior that

core trajectory We contribution with Brightree of continued HEALTHCAREfirst Apacheta. help acquisition will partial XX% growth year-on-year, completed of by in driven our up continues expansion business. with software the excellent contributions also MatrixCare portfolio along quarter quarter and which Apacheta, full and tuck-in Software-as-a-Service drive The called growth its from a from revenue technology increased Brightree

the to We so. have to and transform these position vision healthcare as have acquisitions player in established best a out-of-hospital a strategic ResMed do

and solutions offer health broader duty out-of-hospital SaaS-based and skilled home living have transforming have now three of our portfolio success private home facilities beyond. years. across of to experience even equipment Brightree we to healthcare with solutions to nursing an We hospice record to track and proven We to medical demonstrated market last senior software through from software these settings a and

providers. an services. a We life to be goal wherever low our help are setting, that can their person hospital quality move care our we quality serve and they're be they are care how individuals, efficient optimal care received, to customers the between of often solutions the with is physicians, optimal these ecosystem helping of out payers, in them care settings ultimately settings and their Together own to in have delivered of in people higher revolutionizing and keep home. for healthcare cost, help and and most we our customers leveraging can parallel of better superior outcomes partners, their is integrated will In that they to seamlessly and digital living. The ultimate drive and each

have ultimately, it's and our technology promise. our built workflows, integrate execute and now team deliver We to to a up business on to and this portfolio,

little business I'd a to about Now, time like our excellence spend programs. global talking

double-digit delivered is operating A leverage a in help that quarter invest as to long-term with leverage. dedicated key expanded a and ResMedians in of benefit sixth another in so the that is that driving can in disciplined from the of X,XXX team investments quarter it innovation SG&A flexibility XX% growth the have revenue quarter We into operations provides us this margin operating profit. income improved revenue growth. now R&D. back operating Non-GAAP teams over drive This of row money gross sustainable us as our net well combining they of

We the approach to thoughtful manage long-term. business for are a controlled taking and the

strong invest deliver to continue business growth. in We organic to our

like discuss Before I call to XXXX I'd strategy. the ResMed turn the to briefly Brett, over

increasing. As look macroeconomic the healthcare, disease burden the environment chronic in is we at of

almost We of will nearly population that And have to world's or an age XXXX, XX%. the XX double by older. population; aging X% is number

which At million XXXX solve. problems software, It's be at care the to of ResMed of believe So, billion healthcare. challenges our points growing be apnea, data can who these XX doctors availability. health health costs level, global right strategy cost mission digital to crisis. of around right the people healthcare to are we the over all and X.X within that out-of-hospital and today. to treated patient getting health out-of-hospital need will such the influence, people in for documentation, But sleep digital COPD, settings, issues care the data the the these in microeconomic healthcare lower with world. and are treat know that help ResMed there care the We lives right and age enough and a sphere for impact in is improve of side our highest interoperability, XXX time, delivering is on pain as Couple with the and aren't

Our live lives in to purpose is of own high-quality their and home. to the healthier, empower people happier, comfort

integrated from digital Our awareness, health and apnea our sleep management with ongoing comes then advantage to focus diagnosis, COPD and to care solutions. healthcare on therapy tech-driven treatment from and

an journey. Our apnea joint of is enrollment to their example of venture engagement, with identification, drive Verily sleep in patients early and partnering

help will the XXX as more million and night worldwide a suffocate We better sleep partnerships leveraging who more people pathway to therapy, and each of apnea such partners, to with this. find

Let me close with this.

out-of-hospital and and momentum digital solid with another continued our the give of continued traction in expanded for medical We're XXXX expanding and have success ResMed's products device solutions innovation quarter of enhanced and diseases along an business. out-of-hospital chronic mask software key and We markets of and portfolio our for well-positioned COPD, beyond. applying are we delivered innovation to health diversified as and throughout new and well The software pipeline in growing sleep the for confidence COPD, healthcare. sleep apnea in ongoing as us growth apnea, and

I'll then and Brett, Brett consumers we'll With remarks turn session. for for the around world. care, to the better and top disease, and long-term, growth that, are line we Q&A improving By up and company healthcare and We quality of the the into call lowering driving to over the for enabling reducing over costs open for chronic have XXXX bottom-line life, beyond. the of you. systems the his impact positioned

Brett Sandercock

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

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

in increased of million, and of a revenue the were in year quarter constant while X%. prior Masks sales over by other year currency quarter. terms, an X% quarter increased prior prior $XX.X terms, device over sales sales markets, in X%, device and were Globally, the $XXX.X masks increase XX% by sales of other other or constant and Europe, constant year decrease currency X% terms, a over in currency the Asia, X% an million, increase For decrease. or

revenue for prior increase This was XX, segment million, revenue $XX.X Software-as-a-Service an quarter businesses. the and quarter. of our Note that acquisition from MatrixCare includes second XX% MatrixCare HEALTHCAREfirst closed Brightree, on XXXX. November the over

this So, revenue MatrixCare in we date. QX recognized and FY from XXXX had expenses

The tax non-GAAP to acquisition-related acquired During to tax MatrixCare tax-related measures expenses intangibles, fair comparable, excludes expenses associated In with impact prior intangibles I purchase with reforms. be amortization and revenue, this adjustment the tax-related a the preferred of of value associated acquired U.S. reform. the rest and year will amortization numbers. for U.S. commentary today, referring non-GAAP accounting my of adjust expenses,

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

margin was gross December quarter Our XX.X%. for

manufacturing in purchase the value quarter deferred Excluding predominantly and December FY was gross XX.X% XX.X% the average efficiencies, QX to basis compared fair MatrixCare declines accounting adjusted revenue partially prices. prior attributable Compared quarter our by the for the points, year XX.X% in mix, the to MatrixCare in offset and adjustment, margin XXXX. selling with gross our prior margin increased XX by acquisition, favorable product year,

fair acquisition accretive basis the adjustment, margin revenue by deferred XX the Excluding our to MatrixCare points. approximately value was gross

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

Moving operating expenses. on to

the $XXX.X for over expenses were quarter increased In terms, SG&A Our X%. SG&A of an million, quarter. X% increase prior year constant the currency expenses by

percentage prior year expenses on SG&A of a improved Excluding reported constant SG&A a increased the expenses in XX.X% X% revenue to as that quarter. the basis. by compared acquisitions, XX.X% to we currency

we account for year for fiscal quarter R&D Looking of half basis, broadly expect the the currency a SG&A into were to X% currency our range revenue acquisitions, a increase XXXX. constant percentage and year of in be prior forward, the taking $XX.X increase XX% recent an over subject to or movements of on as of of quarter the expenses million, an second X%.

quarter acquisitions, lower decreased expenses compared the X.X% by clinical in trial X.X% prior in was the expenses R&D relative revenue current the R&D of X%, percentage reflecting a period. with year year prior as to Excluding quarter. expenses

the forward, as revenue quarter, expect XXXX. an our and profit of the per $X Looking GAAP into quarter Stock-based acquisitions. the diluted percentage increase our intangibles reflecting was of half share increase range quarter, earnings fiscal the to over quarter diluted recent currency the Non-GAAP prior year $XXX.X $XX.X year X% for we share quarter. for the per to an income were year $X.XX. subject prior was non-GAAP to compensation earnings Amortization year account be with the with recent second prior from while of consistent of were consistent quarter for million acquired R&D quarter; $XXX.X million year was was taking $XX.X the the impact expense the quarter, X% million, the prior of over for while expenses XX% XX% operating Non-GAAP in a movement of quarter million. acquisitions, for for net

Foreign for weaker exchange which euro. during effective and was was On movements share-based our non-GAAP our with usual per share, tax dollar, XX.X%. however, benefit by our million effective reflecting the non-GAAP from quarter benefited rate a weaker from $X.XX rates by substantially positively employee XX.X%, were, our December the rate impacted the favorable than $XX.X second higher the GAAP tax for a payments tax the on transactions quarter Australian Both impacts earnings GAAP tax basis, while effective offset associated basis; of the quarter. quarter

Excluding non-GAAP our this tax the XX.X%. have for benefit, rate effective quarter would been

We XX% million, to our for effective we that underlying estimate strong reflecting be year Capital million. million. range fiscal million. during the rate quarter Depreciation management. working the was of paid the amortization to flow quarter, expenditure will from $XXX.X in tax continue XXXX $XX.X quarter the earnings December for XX%. Cash totaled half second for dividends quarter second operations was of capital of for $XX and and the the $XX.X And

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

acquisition, December recent our we not buyback our quarter. program. repurchase any share the Consequently, shares did in have Given we suspended

approximately to the quarter, non-GAAP During we earnings is of accretive with FY an quarterly of of share of acquisition incremental consideration half $XXX benefit completed second to $X.XX XXXX. our per for initial share The the acquisition MatrixCare per million.

earnings expect for Additionally, of Health we X, $XXX range $X.XX million. second a per have in on half previously of the Health $X.XX XXXX. now diluted acquisition non-GAAP to closed impact our in of of quarter quarterly Propeller We FY share January Propeller our consideration the on per to announced XXXX, on

expenses December acquisition-related $X.X we quarter. Associated with incurred acquisitions, million these the in of also

operations initial the quarter Verily income joint with in the million an $X.X We cash with venture. quarter contributed of in recorded our statement during we losses the $XX venture million equity associated venture in December entity. joint the Our commenced joint to and

XXXX of We million equity FY joint quarter the expect to associated operations. record each the in approximately $X losses half second venture with of

increase update on interest expense. net would activity, in acquisition our expected you to recent the Given I like

December a interest debt. For debt our net the in XXXX, gross of $X.XX recent billion XX, quarter, position our result as acquisitions. At of to second of record we expect have million and per $XX half debt FY we increased billion $X.X approximately expense net in reflecting

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

Amy Wakeham

Brett. Thanks Great.

now to to question. I'd the like turn limit remind will of everyone yourself We call. to portion to Q&A one the

get of additional If please feel you have for are into to the back Chris, we free the call. ready now portion questions, queue. Q&A the

Operator

you. Thank

session. David Instructions] begin We now will CLSA. the [Operator question Your Stanton from is with first question-and-answer

open. is line Your

David Stanton

you Thank much the just and guess bit between of taking then wanted bit I I give and thanks the wonder just my to talk a outline you I business. you. base some and about you please. through that Propeller little know and for Health more more very talked could to a the synergies color, run to if question. extent, acquisition Thank Propeller little

Michael Farrell

it's David, Yes, a really good question.

as missing the in So, puzzle in Propeller the costs total of really COPD, think XX% of the cost and disease, in for for about devices prep lung is medical you pharmaceutical the XX% When total is piece. that about digital side. said I constitute health remarks,

time but cloud participate been health someone a the clearly, sends every pharmaceuticals, not has digital either is getting clicks Propeller ResMed that taken or distribution puff of we're manufacturing in sensor inhaler, data chronic a takes on what the medicine and to do for to Now, the acute patient. COPD allow to that does or into their that

the of that aim Stage portfolio way portfolio. be the keep covers you health all disease the home, gets whole Stage is especially across this building through portfolio disease. a here quality true we've a of that in as to -- to health digital build to improve need hospital, patient the talked life, and out digital lung to we lung us about IV to II And So, from

number worldwide scale and going health working with Health to we're and across and they GSK, them. have has things. of sleep forming digital a COPD just ResMed the digital all the Propeller health of to that brings hospital linked very many, here we're them pharmaceutical out care. we're business ResMed's excited. care. and worldwide, Ingelheim, to really to companies our do improving at are in of are countries relationships And have Propeller focused party is partnerships in operated And going in with keeping help which with supportive We've management and team. So, really operate on we're culture, XXX Boehringer respiratory on countries We the and patient, major with that. They many

So, a health going COPD three, as we And forward healthcare systems, to to the look -- and change particularly, to year, to we're for two the hospitals this themselves. to so start curve over going really and or you're Propeller part of team. the excited are coming digital cost for patients see ResMed solutions of bend and create have the that

David Stanton

Thank you.

Operator

Partners. with Your is next & Steve Evans question from Wheen

open. Your line is

Steve Wheen

This Brett. good morning. Yes, for is

margin to Obviously, the and a to trying wanted Just talk moving break gross parts about bit. down lots of here.

going forward quite And of efficiencies to any margin, that sort components? us And gave I the out have big different at and you be would previously look In what of the contribution, great. try manufacturing what contributing mentioned color look given to the so FX we are ships particular, MatrixCare wanted might quarter? recently? the there more take gross to able then You in the like

Brett Sandercock

the pretty product and small, kind other quarter points. favorable meaningful not basis to I mean the be probably contributed Steve. -- was the manufacturing mix. XX also range MatrixCare equally call Sure of year-on-year of was it's and efficiencies I'm will that in for FX going

come that particularly masks. with through see to performance starting we're So, our in

helping. So, that's certainly

volumes to some good of kind up are been of quarters. pharm and incremental also and volumes coming production the on, The manufacturing efficiencies, on think recoveries production efficiencies factors from that those think of efficiencies things and kind I few pretty are through things, side through the benefiting so hitting we're good good now manufacturing getting On the I have some over pretty and Singapore but well last over cycle-times think I as flowing benefits procurement, leading of time, there. we're to improving scale combination

Steve Wheen

And Okay. to into that periods, as then future likely driver FX be going is a well?

Brett Sandercock

point I probably The sequentially. terms estimate of it look where are basis it's to waiting only unless currently you sort still going they points So, now, probably we XX are at. to wherever at benefit; I a get we sequentially, just and mark would look if think XX basis currency obviously to in I euro, XX us from small wherever forward tailwind XX saw of for

Steve Wheen

the some it. And clarification quite catch just just wanted got those impact, particular And Could finally didn't where just equity equity? repeat future from? debt acquisition accounted quarter Okay, that on What losses. -- on driving is then the coming is you that?

Brett Sandercock

our Verily Yes. Sure. venture. That's joint

need in debt we So, to out equity. take associated with terms debt of accounting losses

QX, next quarter, quarter. $X $X.X it was would I be and the million will I this For and estimate quarters, QX for say, that few around million per

Steve Wheen

Okay. And does that turnaround or what's driving that loss?

Brett Sandercock

you about of a kind more startup like. The the of if phase thing is moment JV a at

be call coming patients it I that JV initially. quite it, high, expenses that pretty are in let's guess, do; terms was to, through it able can the particularly being million what of kind So, will Obviously, $XXX out there. of

with about therapy. patients, those many on able identify information is is it as to patients of those engaged think I those, with being

sure. of the as stage, JV like expect kind but exploring about is that obviously, Yes, for big that pretty think So, it at turnaround initially. ultimately, some opportunities they this those do there, to money that will to and we pay

Operator

is question William Kaczor Blair. Margaret Your next with from

Your line is open.

Margaret Kaczor

maybe of the my of afternoon I specifically, and some Americas of Hey, the on question. growth for and little taking outside folks. to wanted France Japan. bit good outside a follow-up Thanks

guys what above look at maybe outlook past or out that reported look below And any of of the can in we Thanks. if any So, guys it color kind drive growth for? then should could demand, that you potential as you underlying catalysts you that total? provide competitive any results this changes, going quarter kind forward,

Michael Farrell

good question. a that's Margaret, Thanks

I in at world our XXXX want continued during do growth and look been growth Japan rest So, forward front. countries and we FY strong the both very and throughout in in, just quarter market looking growth of has point business good other right to growth, up beyond. be this patient all expect make and this of terms we the France The in the as we

expect did growth of as in in So, call quarter that health well change health We we last then the and growth in in Q&A, and quarters impact And quarter on before really present is patient and as number that's to France the we Japan. last above and those upgrades and this strong. have we market connected the said had numbers. digital that

will devices back the and next an that we'll for get base few growth masks and So and there of to within the greater we're digital accessories market Japan have then of health that quarters, now be of Japan France use therefore for beyond. through ahead adherence market quarters of then greater couple and should drive saying growth and slow out and France we installed fact a and

other outside markets growth. So, in -- the Japan and the excellent during France the other terms of in we saw U.S. and and quarter Canada, growth

going masks but good device not Western and really go what underlying side. through on we Europe the saw countries growth in to and are on We Asia-Pacific, exactly in the individually saw we different

year. rather as growth So, very excited we are look in just we into not about global year, but look next fiscal fiscal devices forward our

Margaret Kaczor

tax growth specific any profiles that the or go next to growth accelerate commentary Thanks. it And whatever the two down? relates the as help excluding years, year, where in have can it the

Michael Farrell

market mid that. has to I mean know we look, high-single see digits. in don't we in the growth it's global the excited never Yes, is going down. really this ResMed

digital two, saw of fiscal you market, world great within market; last countries. rest the country-by-country or year those over the some growth we've seen we're driving As

chance Verily, drive get for and to multiple Verily. ways higher even But the we and working for grade, high change the curve platforms where accept to to real forward. future in partnerships Japan, higher that a health to other So, a just to the it. to it's that, Well, growth and that's and mid we Brett a Sleep drive single-digit people and to upgrade of to was countries governments because to payers, number bend just we we a we've what and a towards happen not investments that step to to investments, expect side happened the for with XXX Labs, that digital France identifying in finding continue ahead global got other of no growth are providers, explaining about but School ResMed industry. hope guidance

to is in our just the sleep to mid goal growth that of So, is drive high-single-digits, in Margaret within ahead but global that.

strategy As drive I and do we well as and growth, health prep in proven to above five COPD remarks. the our can XXXX the outlined last that add that add on absolutely, digital ResMed we the have that market then go years we'll and on you that we over plan towards Software-as-service-Side,

Operator

Bank next question of is from Lyanne with Your Merrill America Harrison Lynch.

Your line is open.

Lyanne Harrison

business for of Hi, understand Can I mentioned your And was you are thank growth going wanted question. what just quarters? you you bit on shed forward underlying sort my a know to color like XX% into expectations Software-as-a-Service about and Brightree business. overall just the taking little I something growth? some subsequent there

Michael Farrell

organic now included quarter businesses. the become growth segment the are become Software-as-a-Service That's a those XX% a Yes. towards the Yes, talk we're clearly, to enough going for that good going about big point to growth has forward. and where in inorganic moving we And question. Thanks.

to happy I'm it in a So, detail. little more talk about

with including growth MatrixCare, Brightree Apacheta. along So, the for XX% and quarter, yes, HEALTHCAREfirst,

of they Without looking six, and strong area growth. grew path throughout but They some low are innovative growth and medical levels some to businesses, and the this core allow really way call customers So, We that apps solutions. new obviously had Apacheta eight the sort these have Brightree share, very have had of Board they around incredible we next Within MedTrade their single-digits meeting benefit very, week each share of accounts only in our a home and business team. a Brightree Brightree high grow but lead four, the of the earlier, therefore into they technology, patients their of detail, for improvements of for very to conference those with equipment share. to double-digit that management within their also quarters different solid leveraging organic a business, to going back that lines with mid very growth the profiles. and not

an our coming basis of see as growth platform a profile double-digit look over fiscal forward really I Software-as-a-Service good organic So, we years. the across on

Operator

Your next Petrone is question with Jefferies. from Anthony

is line open. Your

Anthony Petrone

everyone. Software-as-a-Service, then Japan. France May afternoon questions on there good just and evening on be one and good staying and Thanks and just couple of

on But is is XX% the Brightree that on notable. and contribution versus kind to quarter? look year, I for So, give guess, Apacheta way mid-single-digit of any Software-as-a-Service, overall MatrixCare into core as the of we actually there in the the more importantly the obviously XXXX, remainder

color those more through a in I XXXX? give a can fiscal two And have we progress bit layer then to maybe as follow-up. So, little how on you

Michael Farrell

is businesses. organic. Yes. that don't detailed and XX% home our Sure. number Yes, across give inorganic we guidance Anthony, clearly,

you're that home benefits our portfolio. separate well are of and setting is who which be facilities to benefit we'll moving move the coming double-digit you going some great health quarters. forth. nursing high a that actually of at So, therefore, look solid it's then that detailed I And the new And are in sort people across care businesses customers thinking as can best care just very out going of to goal have come be that not and organically. they that as within from are MatrixCare, double-digit very we from to people entity and organic Software-as-a-Service from margin growth and managed four from of and basis and going and are get portfolio, But able in then the to growing an guidance back as growth strong to you to sector. get to give just are, whole But not very to throughout additions think growth out interoperability you entities these who solid like have model modeling hospice setting skilled

just something there. as portfolio. be entities And double-digit strategy towards that that I have the able so got high-margin to software our XXXX be expect we plans will growth, good biggest We've growth don't but grow out-of-hospital the to we across now strong to businesses, manage individual outlined of that portfolio really strategic, is these managing in ResMed global leader

Operator

question next Credit Janu with Your from is Suisse. Gretel

Your open. is line

Gretel Janu

much. very Thanks

that question if like, of forward previously, on have And if the that just was slightly it, cloud So for higher connected much of wondering can than I given improving spend? offering. you split how expect you and because data you is guidance spend. the is a data going that out R&D

Michael Farrell

to where a funds? the want at those do can up Brett, first I have cover that strategically of you investing our we're and go on -- maybe some in

Brett Sandercock

area that and Yes, flag bit in well And you we've there. a sure. of would the it's the obviously, push and acquisition the really reflects businesses but at quite Typically if guidance SaaS R&D the percentage a revenue, percentage mean, portfolio, I on as R&D where so, Yes, we as a of really as of it revenue. spend revenue. the up we, been I That more going whole the reflects Gretel, R&D across in a SaaS look wouldn't little percentage bit.

to did take I reflect that. So, guidance that to the

Operator

Your Capital Joanne next Markets. from is Wuensch with question BMO

Your line is open.

Joanne Wuensch

of and good return that A the questions. couple When then is of market headwind couple be Japan for growth? will what's Hi, afternoon. to continue a to next to growth, segment say quarters market France you going the and

Michael Farrell

we talk high the for that's a and growth, growth market devices a if the so sleep we patients out global for that towards side just doctor's these don't about masks do wait sleep clinic Joanne, of or apnea you single-digit sort lab. but show part mid-single-digits So, and And as towards the to side part. business split market to the single-digits, high at country-by-country, that up mid right, is

through following very driving heavily know, just in. we're for new Joanne, geographies programs for identification, number patients of but you us and you've in our awareness engagement, through partnerships, years; investing enrollment. and a our As been Not

to growth And for market plan is every patients to wait so to high but single-digits you the up. in we're we if beat in, that show just mid country in that

Operator

is question John Citigroup. from with next Deakin-Bell Your

is line Your open.

John Deakin-Bell

Good the XX% a quite morning. growth, plus just U.S. strong question My quarter. is on is mask

didn't growth? really launches you strong whether ReSupply last which -- have a that you U.S. there's put the in about You us on the quarter? in update such given that it's on an place, expansion just mask talk we give a last just of an Can a Or about quarter. been contract whether that on mask spoke

Michael Farrell

growth the President Yes, across look, great and about of the really growth it in Latin you America. our Do Canada, talk Canada, to U.S., was Latin hand and want Jim U.S., business. mask Hollingshead, America? Sleep I'll

Jim Hollingshead

launch is healthcare growth, new great strong, customers is for very One we're question. thanks And are a by getting John the provider our we HME and I driven patients. from product couple launches Mask and everywhere them. feedback globally, think, the things. from also doing very of both well

ReSupply about healthy doing but contracts, is clip. And a in we up launch then new very specific break the don't ReSupply. we're ongoing talk and well. at So, example, We both product new for very in ReSupply numbers don't happy and continued those

Operator

question from Goodsall with is next Andrew MST Your Marquee.

Your line is open.

Andrew Goodsall

for taking much very question. Thanks my

Just, obviously, Mobi. post-quarter you've launched

and options? understand Just you were go-to-market pilot that warranty the say the strategy, looking trying at to we finance earned you

Michael Farrell

Yes, Andrew.

our Mobi, a Rob, about about the little a -- launch, do talk product Rob, you to COO. full we want look, business. excited really So, launched

Rob Douglas

Yes.

So, end year. we Andrew, January market back launch. full we a ran the of bit announced for the at last controlled launch X, a fair product

market it's of full the So, early terms in launch. days

said, will contacts utilizing capabilities Our to to go-to-market equipment way existing market think with of with close providers our medical We're an patients market not be the closely said, with the approach. They're in the the access. home players strategy, those the And continue as we industry. the go think the and we ones we we we to as and work best in the partners, actually is that, performance will excellent that we with developed the be products on very But in through early call. the we reimbursement do as else's the product copying in relationships out well. market. ideas the anyone challenges summary, challenges funding these the around around have build we're there. market. and we're have the put But happy to with days and the happy That probably wouldn't and strategy We around them

Operator

is next Bank. with Wong-Pan Your Deutsche Craig from question

open. is line Your

Craig Wong-Pan

there still the Hi is you been of masks world was year, release the the there. or new last have to wondering, markets AirFit your mask NXXi, released those in is that the rest My those on released I world so mask rest of in? question market last not year launched all have it's mask.

Michael Farrell

at Yes, ecosystem. whole the patients, on and Craig. different which released question, the in thanks product and yes, is and to every geography approved passed distributors, speed presented the for the doctors, rate to And is

the U.S., be a it little so And tends to in faster.

So, launched went press a about NXXi. the you're this we talking think week. literally just out release That I product,

just U.S. we that So, within the launched

zero And traction in has the around out. had world. just so that other the It's countries

terms to that. start see so a coming on we'll And you'd the in quarters. early pick see, expect impact of But in up some the over ResMed time on to material over that payers U.S.,

at when And currency in masks also talked they at the Yes, full you constant those on They masks to to markets, they referring don't they to available FXX market. within and and I prep it's but have every the Latin growth NXX, on X% remarks. that doctors globally existing global NXX -- think you're my category and within contributed are country had we and as within was very strong driving in the you led FXX, about XX% mask; have that traction. markets, but America. scale introduced It and basis. maybe a to up they're that was the distributors, It in the said get and a the FXX I also other the to U.S., world launched to the yet. saw progressing as Canada, XX% speed

U.S., summarize there's there, in and geographies way also those and reasons runway for different Craig, a within it for look, Canada, ahead growth sort So, of, our markets I'd the America outside the different, speeds. a growth long flap that along is and Latin

Operator

with Cooper question Chris Goldman next is Your Sachs. from

open. Your line is

Chris Cooper

my Yes, good taking afternoon. Thanks questions. for

kind please? back pick sort down quarter. and that Brightree, to set new you'd you of to, Brightree functionality talked modules sequentially launched it of and slowed of, So, come you anything, mid like last correctly, second understood But quarter I high-single-digit expected up just to this you you've does can level in if I a the had to So, sound about. if

us So, basis in not from that proprietary you just on quarter. your comments what's way been last you Can an help organic clear developed the understand really that? talked today

Michael Farrell

Yes, Chris.

to showing -- were quarter the last what so we therapist. adopted we during modules, got for patients models to app and to show get to experience you last by the them. the They expected be so adopted be so at MedTrade respiratory with patients. think be for the by side, If GoScript doctors. And adopted have they've we on got this They've got that They've quarter by we it's were people. new so I

so not an effect. immediate it's And

recurring And this revenue, get an next bump so if you monthly revenue quarter. introduce This immediate a quarterly product you is quarter, a don't business. recurring

Once So, new it's product, you've to get adopt -- once easy it. have it's a got them. keep you you a to customer, have to customers to very take time

an adoption there's there. so And cycle

what business growth is I it products that'll has prep December have but it. strong the that, that And and to absolutely, plan. I get within to execute double-digit So, strong and and is put single-digits is be happen, remarks to think, going XXst, Core to not back see I earlier a in adopted we'll previous those something said that, start the of, a confidence team the there. XXst in day I'm March saying they're through in questions to Brightree from sort

which the number the isn't the XXX-day adopted and got with get But XX-day a of sales a sort cycle. of of is a the it that. user, increase users revenue cycle solution per products. the those things value you've it's more with and then in in reason these get speed the or cost along So, to it's the users, the at comes all And Software-as-a-Service there. long And comes increase you It's cycle. XXX you

prove to they You've the users customers to increase value share. number and grow of then got and have the to their

a XXX-day talking new So, product. turn thought more longer cycle were a we if XXX, than on XX-day you about it's for It's the maybe a term.

Operator

Suraj from is Securities. Your next Kalia question with Northland

Your line open. is

Suraj Kalia

in diminishing have on guess, digest that indicated. to that's -- do When you internally has rough approximately think, or impact the ask high-level margins, can decipher for $XXX spent the what your Good And some are is last the over essentially know a look Thanks to the we strategy? say, me we what everyone. question my afternoon is I gross in? impact on. give three question. How added what my return three-plus that. And math know so enough, you law disclosed, I does set take on of $X using have very packed we math have to you'll indicates you The close years I -- the growth on on metrics it. need question. acquisition numbers that Mick, taking been billion. years, topline let but million haven't quickly, been

that for my If sense a greatly question. you could give be appreciated. you would us that taking of Thank

Michael Farrell

in that. and into things. the Software-as-a-Service Yes, three strategy and invested, actually questions, apnea Yes, MatrixCare billion be Number by in all and to health our Brightree for digital in in is to the and we've about of our acquisition one $X.X driven health line, sleep COPD we're world The best out-of-hospital and is really leader digital software, at investment thanks those. for Suraj. excited the clearly, be including vertical

we said a strong of month at we've portfolio software about, strategy, out-of-hospital launch I earlier very assembled this assets. actually I JPMorgan as and to As think have talk our continued XXXX

provide so value And drive out-of-hospital great more in to that customers to interoperability grow plan integration, and to do leverage, business. space we to that

it's didn't COPD of in the but software that actually investment, Propeller What about the is in excited isn't really mention of side, health we're growth that side. the business. So, you which digital

CEO five the diseases you're of address. to one, is diseases, three in Minister you you COPD or If the looking top Health need are hospital two chronic at or number the your

that happen not with what of the revenue outcome those and absolutely a But could on models systems in pharmaceutical that immediate savings right is to I there, working companies those healthcare to dramatic. are And have the that adherence providing investment strategic terms the establishing we is revenue medications. think and driving global is so Propeller their could

at to the that's don't $X.X we it sleep We for have apnea? best a say, on world's okay, digital we enough. solution invested Yes. We'll just basis that. so And on billion, return financial get look we say, the health built

that. Yes. digital connected our best core ventilation COPD world's health we cloud the Can growing driving keep keep assets? and with solution Propeller that build in for Let's

system, the So, -- to going Richie can have able and best least is software on in side, his system Yes. software to care? execute now, that. is the team for out-of-hospital for at be And we, Software-as-a-Service world's the U.S.

so And that. growth on we're driving

are Brightree, Apacheta. return growth to add last those. to that you've we've a position done years. strong think we've We with three seen that from the financial grow well, going get a and over MatrixCare to and Core with on with going that got Propeller I back. and With And to We're even

Operator

question is from with next J.P. Your Low Morgan. David

Your is open. line

David Low

very much. Thanks

look, or lines, you for stage really you now? of but Thanks. little And same Apacheta talk is? really Just, the plans is about digestion are to question do what sort bigger picture a acquisitions along have could bit a then -- a my further you in perspective,

Michael Farrell

you the can maybe then, part of how So, of answer it -- the I'll Brightree hand drives Apacheta Brett, Rob about and to Core to talk within other David's growth. And functionality question.

Rob Douglas

part right getting just in support. Well, a has had and they environment of into so, how has they a solution, good closely Brightree they And had customers background. partner deliveries the bit long-time really really of working of people HME home, HME and a and real our just been the the manage logistics the Apacheta been a supporting the that and business together. of

could And a value whole it the we the that add the very R&D Brightree. development that Brightree having it able so offering. and other we in Brightree agenda modules, better good the of agenda with becomes module felt to that integrating And control in business, incrementally being Brightree to

Brightree. terms of an module, and So, if that's in scope you it? exciting like, for the of add-on Brett, size

Brett Sandercock

Yes, stage. business that on of a kind within the mean, it's a SaaS classic I

able think it's the So, the kind but really the attraction the and run module, moment, that deminimus to of customer real I and capability, enhancement potential for existing base through base. let's customer is Brightree's it Brightree capability at call pretty for offerings being us

than those standalone. hands it's much from classic worth assets, rather more think our I in So,

But So, of the acquisition good revenue think, really be it'd at for pretty type technology deminimus us. profit, terms yes, in a moment. of capability we

Operator

Our from last with Sean Morgan comes Laaman Stanley. question

is line Your open.

Sean Laaman

taking my thank question. and morning you Good for

new can around with bid new I and you the ultimately place? place, pricing a of in the know, the bit where With U.S. don't go color us give Thanks. you Fed rates rates in Mick, in if think rules market will

Michael Farrell

in thanks the in after Sean. had a they for our customers, really rates Yes, couple and yes, the Look, steady the for increase, percentage our of a new Price Index U.S. the for there actually of Consumer And number question of bid which environment. a customers and is relief good is It's pricing incredibly interactions environment U.S. stable CMS. different very with years steady. points

get environment two much And to U.S. We look a two to geography. time, and or delivery for decade, last Brightree with, this think regional, I large, slightly consumer within the have increases therapy as to their a mom-and-pop with first to better for we the or maybe pricing with of out take really, and are year continue small, deliver Having customers. even lot their patients, sleep to, able expect the industry, our working manage COPD forward, we've an year steadier the And solutions therefore, or like of and price working CMS a that we've on space. we before to within index our solutions been to apnea scalable than customers of as and cost price that. businesses, their been able in patients, contact

Operator

one-hour are now the back Farrell. turn over call Mick so to mark, I'll at the We

Michael Farrell

thanks, to ResMedians, our as Chris to global thanks Well, Great. listen this as team, call who investors. X,XXX and well our sometimes

and people helping that hand out-of-hospital in forward I'll to just talk you continuing look market that. COPD, XX have back we We'll healthcare solutions to been with has to apnea, and again guys Amy. the changed and digital You health for with days sleep do

Amy Wakeham

Sounds everyone, again, us good. for Thank Mick. Thanks joining today. you

to questions, feel have us do you directly. additional If contact free please

the webcast presentation will along As now the release, Chris, with website. replay, call, and the may Investor of be available the you earnings the investor close on at Relations call. mentioned beginning the

Operator

second ResMed's webcast. of fiscal year concludes live This you. Thank quarter XXXX earnings

You may now disconnect.

ResMed (RMD) 24 Jan 192019 Q2 Earnings call transcript