RMD - Earnings call transcript Q2 2020

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Operator

Welcome to the Second Fiscal Year 2020 ResMed 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. Please note that this conference is being recorded.

to of call Communications. Investor like Wakeham, to now President Vice Relations would turn over the Amy I and Corporate you may Amy, begin.

Amy Wakeham

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

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

will several we discuss measures. non-GAAP During our call,

measures, reconciliation review earnings of to today's non-GAAP a notes the release. the please For

reminder, but including, performance. based As forward-looking today our not believe limited discussion on these a include future expectations statements are about assumptions. We may statements, our reasonable to,

actual our may differ. results However,

encouraged are from any risk actual materially filings differ to discussion cause to statements results a You made that SEC could factors today. forward-looking of our the review our for

I'd that, Mick. like over turn to call With the to now

Mick Farrell

for Amy, go I'll thanks, little prepared a Great, remarks. fast and my

despite Q&A, fiscal year today XXXX. And further shareholders through results, a Brett top review phone for to ResMed's quarter hand of So as in financial few walk call I'll for second then will some Then quarter will have highlights time milestones. the I'll strategy. joining who we to On financials level detail. all long-term our we you key from business still discuss the call, for difficulties. Amy. and our us you Thanks, the thank our review I results today's over

particularly portfolio where strong the the revenue countries another in XXX across the achieved US we category, driven mask quarter the solutions. provide team Our with market, performance performance superb in good by across growth of our

Customers resupply with are that our software take and adherence increased those voting who need wallets are to with share it enable with and therapy program their to market new providing our voting continue with products. solutions ResMed. support We for innovative they

world's As company. software driven device the leading medical

using transform industry. the technology digital are We health to

into We XXX% better AirView changed system by more have with last patients. have cloud-based providing In and and medical lives our solutions help than device devices sold ResMed XX XX manages live market mask months ecosystem person XX cloud million the complete or them connectable over million million nearly lives. a breathe a ResMed the XX to better we

and hospital. manage Brightree people are partners, does. and XX technology that Propeller outside complete physicians, to myAir, ResMed solutions to integrator and is customers across engage more healthcare systems. us allow MatrixCare systems with health In software our hoping portfolio better of everything patients, addition, providers, other AirView, digital a million payers, the our including Digital and health an

We and machine volume are that intelligence health investing learning ecosystem digital double a expanding our capabilities in we basis. can in advanced this analytics machine on at grow digits so and

for X.X the are to in of respiratory physicians, we data analyzing and now have the And systems. actionable ended these we XXX just products million as looking of XXX We ambitious goal million will XXXX. improving our lives in with and to XXXX from healthcare nights healthcare over billion cloud. derive medical over improved data solutions patients, insights of We providers our grow forward benefit lives

set innovation apart us relentless our on and competition. product continues Our to from focus software

the of where hospital. believe and ResMed We winning we healthcare outside lives, live better opportunities COPD, to quality help massive have ahead to well hospital in to in of Difficulty] and as apnea, management better that that's We today. is are competes achieve and future help healthcare the systems patients money patients help in save where outside as disease. That's [Technical chronic the software sleep today

place We leading and drive value right achieve customers. to financial provide we have strategy market elements to success the in as to our

achieved our double US, well results. across briefly continues financial top our as This another quarter as level to well constant our of as currency service product across portfolio. Let's domestic digit balanced our up growth from business. well our revenue review be global sales, a now We as XX% growth. in software as We're

We year-over-year $X.XX. of continue of diluted to operating profit XX% non-GAAP per deliver operating leverage share growth with non-GAAP and earnings

a respiratory good I'd businesses. improving of like America by core constant apnea device category, we X% sleep device on geographies, growth, globally Latin in Europe, rest growth device’s currency was Canada year-over-year of and our well now currency by and supported the which device the X% X% States, constant category. care as world in growth quarter and as Asia to United focus with the at strong In delivered

We continue growth device for to face in headwinds France.

result of digital a XXXX and XXXX As fleet related upgrades. the health

devices patient Underlying the sleep in over year expect market in we fiscal market suffering France million bite during people and to the worldwide headwinds strong we We that start XXXX. the undiagnosed European to healthy growth around begin globe, apnea. upcoming and with return to dynamics to will XXX continue summer, for from will untreated growth remains benefit and from

the the global category, market globally ahead with this significant growth the within rates, innovations. interface market our in in still accessories incredibly masks some are franchise patient mask and mid-teens. during Removing we of category this indicating the of constant software Growth growing was quarter. that we well impact share latest gained our in We business up currency were our XX% of strong category,

Our the continued NXX flagship markets. masks across growth AirFit and FXX global the their AirFit

launches. more good of uptake success our recent augmented by The these masks continued mask was of

over We innovation past have of mass XX launched months. steady the a rhythm

the segments. XX week for launch the we will NXX, of just quarter, during the lapped launched minimalist freedom of launch have the the We in and and the lap the and PXXi patients FXX months. in combining the the was successful the over FXXi ago just NXXi a needs The the December coming mask

ensuring have that we time. patient are the we right every solutions, for of portfolio our mask With every

options every night mask home with comprehensive providers, driving offer our the of for customer and to We care suffocates innovating who the that's portfolio for on specific customer to meet sleep and the apnea. innovation ultimate person and remain focused needs. underserved physicians needs We are expanding

We that and person's more smaller, more are to comfortable quieter, future each are needs. products customized creating

the sleep. we such digital technologies, patient are of Through myAir engagement driving better so enjoy as benefits app, can better the health without people breathing therapy, and that

we and feedback the as physicians, ensuring We its have myAir a well cost also In providers, can personalized chronic that better systems. using by and payers, of are leveraging sleep over X be coaching disease and million patients managed through parallel, algorithms. insights apnea healthcare

combined provided connectivity, experience. based cloud smartphones add outcomes own as to quality of and improvements the available devices on information value improvements both clinical improve in as with can with We all their as cost, well medical in leading to cloud life. patients combined well solutions world in end-to-end Digital patient Our are leading improvements outcomes and XXX% believe software healthcare significant as

solutions identify enroll and front, with the engage On our on people sleep partnership journey and creating a to apnea joint to venture breathing. better is help sleep Verily and software with better

awareness, pilots of cities to commenced health. with breathing to improve sleep the identification good in engagement have and overall a and of importance handful US We

knows seek consequences solutions. that person Our about the philosophy the more on of a suffocation overall every night, they this, their the outcomes, more and they how will is suffocate health much likely

and our on health longer simplest apnea, sleep core At level, growth a also incremental disease, this and diabetes, platform beyond. will term over deeper partnership to level. cardiovascular drive sleep will its mental in chronic disease business allow participate apnea the management a ResMed in partnership This broad covering

I'd from today are like to frequent now or in rooms focus business people emergency served hospital admissions respiratory patients COPD obstructive suffering chronic pulmonary disease systems and are on well are many don't worldwide. COPD readmissions. these visitors There We care. with and healthcare million frequent global our believe XXX by nearly to people

technology manage have the vision digital solutions. patients COPD We of to a end-to-end with through better use

to all both world can outcomes to a of technology helps combined the our patients solutions medical as progression. as equipment are after substantial We are communicated helps stages they plan how how an experience. clinical it and Technology patient value to, offer improve of individual such folks believe portfolio helps are looked medical with the through We COPD in how platform it that and person. add leading encouraged care Propeller

commence We will and X patients they Stage as managed COPD X therapy pharmaceutical by with inhaled Stage be there platform. Propeller the

and COPD as We X therapy with patients X Stage Stage add portable oxygen will to be there they their care.

therapy. will non-invasive life and they We X Stage and support be there ultimately Stage X also as with ventilation ventilation patients COPD therapy commence

digital manage right We costs outcomes. ones, that loved one helping providers right so on helping lowering improving and and patient, physicians helping as the the well end-to-end they information health COPD as the time, their the their will have and caregivers person at platform,

with progress systems. from as to trials the continues and pharmaceutical both pilot their healthcare partners commercial Propeller to team Our move along at partnerships we path business

will via we respiratory solution to time The digital digital only health health build was progress. in good opportunity chronic that with inhaled medicine adherence was take Scripts Walmart, are Aid. November, my directly within the Express from and from December app formulary disease for feature included In Propeller first services making smartphone from respiratory users for Rite from Kroger access solutions. pharmacy Propeller CVS, Propeller In pharmacy to expanded the application. and This from access was

throughout We we will pharma the both as with as systems in well for Propeller partners on milestones healthcare update you forward as move XXXX.

focus to like as a on software I'd business. service Finally, our

optimize the out of SAAS long-term portfolio and We growth. hospital continue integrate to for

home focused software equipment well on nursing as on competing are the leading competitive only facilities home as strategic leveraging solutions providers, We hospice skilled player focused with our providers. medical as and health advantage

last revenue November. this portfolio XX% quarter, we grew MatrixCare SAAS Our left benefiting the that year-on-year during from acquisition

sectors in benefit growth MatrixCare high estimate single pro the market the portfolio on that excluding rate is average market QX. digits, a the and the forma weighted compete basis, we SAAS our timing in grew line these with in in acquisition of of We

growth to the medium beat long-term. is plan Our to that rate market over

HME are our fourth As strong home achieving in medical acquisition team our Brightree we Difficulty] anniversary in we with Atlanta. the our or Brightree here in [Technical XXXX, equipment tree of sector reached

We're we there in we're the to without that focused our and Minneapolis. can that doing all Brightree is in do we grow have We place year that. new This in introduction on forward. team our investments facility ensure passed the are one elements in able just ResMed investment module the to platform, MatrixCare hard sectors as we and make anniversary And quarter in up as hospice our our so health as nursing as move portfolio. the acquisition increasing is successful MatrixCare MatrixCare share work in for the and home MatrixCare we as to skilled well

that and meet we can sustainable as or investments we quarter, Cerner's Last making. things We around announced a beat currently see returns our going from took think timeline is and our MatrixCare management software returns to team investments Cerner strong hospice are in R&D preferred our sustainable health strong that XX partner collaboration and new partnership well. It for from at Brightree. for and in It early we days home very with the for are that customers. months

health started We've migrate our to to customers solution. home and existing MatrixCare hospice

team, with learning benefits actively and home is engaged of team Cerner's sales Our the sales MatrixCare, software. our with health customers hospice of

We value are provide will rich Cerner this growth The and solutions ResMed between drive partnership. from residents. to interoperability their as patients and for well excited and as both customers our two

I process acquisition that are like in exciting to tuck-in moment announce to would the just technology take and a completing. of we

optimization patient Brightree contact to industry of logical technology services provides this technology SnapWorx SnapWorx. company called is sleep acquire and resupply management privately end-to-end creates held software week largest the with base automation. The workflow a this in an signed a agreement the apnea with resupply. SnapWorx and workflow new combination Brightree's that company for Just

Brightree increase of technologies the two customers, adherence patient and combination HME will efficiency. our and For these increase SnapWorx operational

initially. close expect earnings very expected neutral the ResMed to be acquisition transaction SnapWorx share The our of We to to non-GAAP is shortly. per

However, this fiscal earnings will to per acquisition be share accretive year non-GAAP we XXXX. during expect

with improved see the In to transfer and to a solutions future healthcare home software beyond We quality summary, high life seamlessly we a where skilled resulting reduced HME have system out well health patients hospital facilities to across transform sectors. vision hospital significantly nursing and as from the in increased providers efficiency outside outcomes of care. as to the person costs and hospice providers better in for of

over I me the turn let Before call Brett, this. with close to

and half the solid move new new through and well of in XXXX and of sleep gives along device health with beyond. pipeline digital was the half out of a we as COPD solutions apnea, positioned covering of and mask continued The growth we first The second to XXXX continued are through year strong, grow year. hospital and of fiscal us success portfolio our fiscal products software confidence

in and as We leader toward health have line execute positioned ResMed top XXXX our as for the driving we global strategy. growth bottom line digital long-term the

We third, reduce slow life focused to quality system the to on healthcare first, to second, aim; are overall patient. improve of the disease ultimate our customer, chronic triple progression; to costs and

his With Q&A. that all Sydney in Brett then Brett? remarks hands to go and for we'll over go to

Brett Sandercock

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

had was by currency revenue XX%. XXX the As In quarter. we XX% quarter Group prior terms noted strong a increase quarter. over the increased Mick revenue million, for year an December constant of

Excluding by constant currency increased XX% basis. revenue revenue acquisitions, from a group on

quarter. increase in year XX% our Canada a geographic excluding and revenue Taking a US, were business million, of software countries an and our closer from look the America distribution over our at Latin prior as sales service XXX

increase other year X% in Europe, and Asia million, totaled the over XXX prior Sales an of markets quarter.

currency Europe, quarter. markets by Asia the combined prior increased other constant and X% in in sales over terms However, year

segments; an XX% Breaking increase sales million, of and America Masks between prior were the other and X% over year of an of revenue quarter. XXX out XXX product Latin quarter. year million, Canada US, the prior was sales increase device

over markets, in in other X%. increase or terms an sales Europe, X% XXX quarter million, revenue and of device currency prior increase an of Asia year of constant The the

sales prior XX other currency in quarter XX%. was Europe, over Masks an and in terms and X% increase other of or million, Asia of markets constant increase an year the

increased terms by the over masks other currency year device prior quarter. XX% while Globally and increased in sales X%, by constant sales

as service second year of quarter XX% an quarter. for over million, increase the Software revenue the XX a prior was

expenses. my numbers. of of deferred referring settlement fair litigation rest impact the related to and The expenses be amortization intangibles, purchase During commentary adjustments I'll the today, to non-GAAP accounting acquisition measures non-GAAP acquired revenue, value adjusted MatrixCare

reflecting of the Note sale, second this to to in purposes expenses. are We technology have of press we guidance. GAAP earnings provided disclosure develop quarter along SEC of quarter our attributable a reconciliation non-GAAP intangibles made this now in cost full reporting operating to than portion numbers amortization change acquired of GAAP We've allocated rather with that release. being for our the

and both [ph] will mainly going non-GAAP GAAP This ratios disclose profit forward.

of both in and We non-GAAP and margin have gross reconciliation included GAAP press our profit release. gross

underline the will Going non-GAAP reference measure of forward gross I believe margin. is this best metric I because our it

in quarter to the December gross non-GAAP year. last Our improved the margin XX.X% in same quarter compared to XX.X%

and declines non-GAAP gross margin Compared by by this increased efficiencies to attributable our average partially basis to the typical points, prior predominantly XX year, selling was manufacturing viable in prices. product offset mix

expenses on Moving terms XXX million, constant prior by SG&A increase were our In year operating quarter. X%. over quarter to a currency X% the increased an expenses, second SG&A for the expenses

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

percentage in two the of of Looking remaining of as a quarters forward XX% currency XXXX. to the we acquisitions, account year to into revenue range and SG&A to expect for taking XX% subject fiscal recent movements be

R&D million, an currency XX% year over expenses XX the an increase for XX%. a quarter prior quarter or were increase of constant of on basis, the

by Excluding prior on were contains X.X% currency percentage R&D expenses R&D acquisitions, in a expenses a as basis. the of increased X% revenue constant year. a X.X%

in be to fiscal as revenue of currency to expenses Looking expect XXXX. we forward the to balance the percentage of a for X% X% of R&D subject movements range year

recent impact quarter an over based compensation of XX.X of million. the amortization expense prior from Total quarter, for the Stock XX.X the million XX% was was the for intangibles acquired year quarter, acquisitions. our reflecting increase

year for million, XX% of quarter over the Our increase prior an quarter. was the non-GAAP profit XXX.X operating

the XX% for increase income million, of net over prior was non-GAAP the quarter XXX.X quarter. an year While

GAAP the for our a rate XX.X%. non-GAAP rates with effective On basis on quarter for while quarter basis, a tax our December was tax XX.X%, the effective

the compensation tax performance tax a in of Our based million benefit impacted favorably in particular employee with vesting vesting executive rate the tax documents share by the of associated of November, was deduction with XX.X associated

have benefit, rate rate been And XX.X%. impact non-GAAP the the XX.X%. this would tax would our GAAP Excluding from tax been our effective effective have

we will XX% fiscal estimate range Looking for second bring the to half of rates of effective forward, XXXX our year tax XX%. the

earnings share were $X.XX. quarter, while prior GAAP year for per were over increase quarter per quarter earnings $X.XX, the of the Non-GAAP an the diluted share XX% diluted for

per earnings were text diluted discussed. impacted share Our also by favorably the benefit just I've that

Excluding the non-GAAP would impact this have of earnings guidance our $X.XX. per been share

offset second quarter. underlying quarter robust by partially timing from paid XX.X flow was for our operations in tax second the of earnings in XXX reflecting the payments Cash million with tax million

of US Additionally, XX.X the we quarter. million Department Justice the to our for of settlement made payment this

quarter the the XX.X for amortization December quarter for expenditure million. Capital and Depreciation million. XX.X was totaled

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

in losses associated Verily statement joint equity recorded million quarter venture. December the X.X our a We of with income in

million quarter of XXXX to associated in balance expect record We equity with approximately venture each losses X for the the fiscal operations. joint year

of quarterly debt billion we Board net today Directors billion and XX, had dividend December share. debt. declared At gross Our X.X of $X.XX in X.X per a in

assets were levels. remains sheet modest total our and Our debt strong balance X.X with billion

Finally, controlled. line our revenue Margin to costs and recap, strong was categories. Gross this growth all expanded top quarter our major with well remained operating across

drive As leverage year-on-year. operating a profit we QX operating up are to non-GAAP XX% with result, continuing

operating integrating strategic are ensuring SAAS continue driving long-term and our acquisitions our focused to on we results, opportunities. invest We in

And with that hand to the call back I'll Amy.

Amy Wakeham

Q&A We'll additional and yourself you to return for to Brett. the to I portion Christine. the ready portion now turn the have to queue. call call. to you of We're everyone feel if like would one remind Great, of limit question free the please call. now thank the to questions, Q&A

Operator

you. Thank

[Operator session. Margaret question-and-answer line from William Your of Instructions] comes the Kaczor from begin now will question Blair. We first

open. Your line is

Margaret Kaczor

and out guys to afternoon, Australia. in Good morning good Brett Hey,

Mick Farrell

Thank you.

Margaret Kaczor

growth, to well continued is has one first may very, be mask And the perspective. do on me obviously, from that for you very

can general little impact launches, So growth the new of those kind in and you do dynamics a strategy kind agreements that we look may relative that is XX moving Morgan, product give as resupply taking performance referenced, to your a you last the at how're of forward be the high? of and to of XX adjust especially how categories the spaces keep look share bit maybe sense you months, between weren't market the before, JP in Thanks. you us white and of we idea as

Mick Farrell

contributing our for this thanks and number of adherence, There's that adherence there's some mask had, hit basis Margaret. of the doctors on just health you that and mid-teens, Yeah, when myAir XX% of out AirView on when factors a digital patient all a strong constant mask growth growth. global very using is we software you the to as noted, the an through using them. pretty question, And we're XX% even currency drives driving the well that there up in and our up achieving we're digital text all much increased solutions that imply the the taking

Secondly, to, we And mask help. that old getting want ResMed, have the resupply becomes their of fresh partnering used. they when opportunity in to are acquisition patients and as and provide resupply with if will SnapWorx a to and mask Brightree, there's the participate connect with

go or larger flow category through these the move freedom some and the the to that the we And is innovations. different claustrophobia sleep new after customer in both of we of last thirdly positions during those. afraid then product, Interestingly, mask is people sleep or category of XX to but really of prone underserved the the who launched had in really under replace left category masks go where and people minimalist mask met right previous aren't a right steady small, four minimalist FXX want in to just exciting call needs. and mask heart innovations one And these importantly, months,

we strong So really still for innovation December to high this just plan it's really in resupply, is quarter, those took all and and to shift that the keep growth above digits we good masks. things is contributing growth. single all right do the driving during adherence think mask challenge to that. this our job We And market the

Margaret Kaczor

Thanks guys.

Mick Farrell

Thanks Margaret.

Operator

Matthew of Mishan line from KeyBanc. comes question from next Your

line open. Your is

Matthew Mishan

you market to on share higher getting the masks. to taking Great hi, market clip? questions, and up patients are in Or apnea switch? follow for you patients new thank convert at able and just share a from existing gains winning Are sleep them competitors the to you

Mick Farrell

I'll really to a Yeah, Hollingshead good of that. the Sleep President to Division walk Matthew, hand that that's Jim question. through

Jim Hollingshead

down I'm in Matthew. Australia. morning, Good

So I me hope you can hear as well. all

Matthew Mishan

I fine. can hear just you

Jim Hollingshead

very mask. the feel in it's last Yeah, and overall our a mask XX so launches had as had referenced, We We've position mask Mick several months. combination many confident we've launches of both. in with

the them It's of been very offering a market. the All have portfolio successful launches. now of widest portfolio. We mask on have wide

to take be data across categories. we're I'm to share we're taking we that market So competitors new confident on pretty there's but less patient switching three continue new all available also patient and dynamic, share very getting mask likely sure we're successfully.

Matthew Mishan

you. Thank

Operator

Your line next from Laaman Morgan of from Stanley. question comes Sean

open. is line Your

Sean Laaman

Hope an My might relates if Good and Novartis Propeller, update morning, give any is there there deal and question you're well. last how quarter can with how this Thanks. that to you on be Mick. you something update tracking? wonder announced

Mick Farrell

the in of the of are an remarks, but with public or there with data businesses Novartis last don't GSK our beauty people disease. with Sean. Well, obstructive along, inhaled us partners moving looking both Propeller platform help Thanks, was our of area talk the Look provides trials and until software Propeller it described care things work is pulmonary pharmaceutical business beauty in as sort medicines. customers – opening the a in and it at pilot quarter about individual our to take public new of core chronic we end-to-end or I from in

Propeller X X have they're with Stage COPD. – and patients X a Stage and ensure prescribed their of because care the and to the X, person going they're X but disease, also that progressive to they doctor Stage that going medicine Stage Stage them, from it's X engage move so take And with for to

them to pharma have help But to non-invasive helps a with it's help Propeller move or and there platform to IOB. progression disease to support engage where is whether through portable they of partnership we end-to-end with not or us pharmaceutical goal or a really our ventilator life create inhaler person just a be management their ventilator. they a company as move so And therapy therapy, adhere is will a as person that therapy, forward oxygen a that the concentrated with that is is that it

And our with these so that's goal partnerships.

on we during the we'll for side, trial hit that But milestones As Novartis. healthcare hit its milestones enrolling we we're on patients and the That's XXXX as yes, side magnified look, we system to pharma give the with updates on that. talk early still did days. in

So move also they through give partnerships data, for Thanks Sean. your will importantly commercial on the question, clinical XXXX. as we but forward updates

Sean Laaman

Yeah, thank Mick. you

Operator

Your Citigroup. next John of from the Deakin-Bell question line comes from

is line Your open.

John Deakin-Bell

question perhaps, a the – return think record might SG&A, Good low seems of the previously, leverage months X% of think it it from relates you. us maybe in forward should you've And that morning. and going we've how increase a got just digit for look numbers kind underlying six sense mid-single obviously, or back that to I the My just fantastic levels? that's give a the to next the but about talked I over and

Mick Farrell

Brett that hand I'll who's Sydney. down to So in

Brett Sandercock

did this lower quarter And this last benefit, was Yeah, a thanks. quarter. we certainly expenses litigation year. Hi, Yeah, related much it relative from low John. to

year my through for driver. at will biggest of which XX by And And in range In adjust half, of litigation certainly think growth rate. forward significant terms in given to growth XX to better the last rate. in will try the above So certainly single indicator, that be probably revert least helped a rates SG&A kind quarter costs going for range some a said, of coming revenue that motivated higher track I to I second the or in I percentage suggest to as reduction think. that of that back would this guidance, reduction that relative was growth that to the but certainly half, for back it moderate the did

John Deakin-Bell

That's helpful. Thanks Brett.

Operator

question next the of line Your Hadassin from Saul UBS. from comes

open. is line Your

Mick Farrell

Saul, you may be on mute.

Saul Hadassin

Can hear not. you I'm No, me?

Mick Farrell

We now. you can Yes. hear

Saul Hadassin

acquisition for I'm some what there Great, outlook a ex that for too? the gross contribution respiratory an and question on for if year color rest Brett just Thanks. the done color underlying can on well. give us thanks. provide you sleep usually to gross care you margin the give has Yeah, margin, just wondering just fiscal gross Brett, margin just and business Can some the as of

Brett Sandercock

I that. Yeah, half, moving going margin, parts we'll would our with consistent think mean, are, of I know, I gross estimate second we forward where as an lot a the the be you be would That on be think expectation. on

and really the out you product being seeing mix. around we year-on-year but through quarter, drivers quarter, impact that fairly If that's – driven gross margin, come continue what gross the manufacturing on minimal big the biggest we're see margins, growth and big you they're so in expansion the that on look kind at fairly mask efficiencies, that's this still And two high seeing impact. that's some by they well. through did logistics And of margin the the this [indiscernible] acquisitions, as performance it's halfway – would And quarter. or of typically on you're that to that then drivers so so devices around growth of

Saul Hadassin

you. Alright, thank

Operator

Your HTM Limited. of next line Shane Storey question from from comes Wilson

Your line is open.

Shane Storey

thanks. Yeah, hi,

observations kind another mask in you step in adherence mask number of spoke back Just measured business looking up the per have to But patient angle, year from I've the So months last that XX be any may the reference two be and last got patient year? Thanks. around over point per the might say, useful. is very that XX per a at the US per just resupply. the of tick about you under again,

Mick Farrell

Yeah, thanks for Shane your question.

whole customers the doing of think in different of portfolio a countries world. I levels resupply different around there's

to of you XXX out last strong. of two like X.X XXXX provide acquired. patient the talk the number If the of year. And about a the all that adoption Resupply, resupply, US of example government requirement in we that Connect, public per was the it's per patient you which And you ResMed different the in take broad didn't was on masks, and there's yes, mandated growth, Brightree. Yeah, US France, per technologies masks countries. masks that a there's Brightree just look per But we year. spectrum customers SnapWorx focused

mask – a do Hollingshead, want color you But you'd to you share to so further supply provide range. want metrics? as what And want any broad do there's to on to Jim Jim,

Jim Hollingshead

Yes. to add would Thanks thanks Shane. just Mick couple mix that and add to a things. just I a

don't US the the in that obviously, things we years. the about talk And the earlier one call. slowly, the talked to both has trend we in over about trend up number publicly we of don't several the is last steadily attribute been but Mick but is range The first steadily the of

So resupply tools we're and initially better better lead better customers. term and masks to our adherence the better also therefore adoption platforms, platforms our adherence of long providing that adherence HME by

steadily slowly so and is still trend the and a levels good parallel opportunity. So it's It's of up. lot below well and and commercial Medicare still trend a there's

Shane Storey

thanks. Okay,

Operator

from & Partners. line question next of Wheen comes Your Evans Steve from

open. line Your is

Steve Wheen

particularly you've of acquisitions. an as update you to since the us give as at us Brightree just the performing that reference guys. rate guess, I afternoon those My been [ph] of could specs good your growth between wondering question you there. was that provided businesses I how and growth perhaps the to is reconstruct part and rate, outlook are understanding acquired. of and on to Hey, MatrixCare help that, businesses if EPS time with

Mick Farrell

question, of and Thanks to our talk to for in SAAS That again investment this our quarter us the XX% SAAS was global revenue. allows Steve.

our you skilled is weighted quarter And the to ResMed's give The be private going you calling look we rate grew financials. I'm to the that weighted market single so market And and/or we those portfolio. said share, We – hyper so at average One out HME, and that in and during you average look each digit I'll sectors. December nursing really others HME and sectors health here care and high digit. our say within share we at What acquisition in XX% health Brightree high and growth competitive years. software, gave out that is see communities. home that that home growth. – nursing look you'll that hesitant thing true taking weighted we've facility April detailed rates duty those us the as facility, very sector software over across benefit we home average the at portfolio skilled it's four prepared I growth well a at a when revenue cost and hospice hospice, held hit you remarks as on the that in sector, software, if in look we're have It's in grew client XXXX, when on is at – single will of

journey. in long the some guys the as a new management Yeah, new two we first because in were years very MatrixCare in team sets followed now leaders you some our similar put CTO we stock investing. in and for things brought R&D. And time, Brightree skill remember, We're CEO, you with we new doing there

to more new is break customers, in got share, I'll we're the MatrixCare taking in to investments say growth in starting new today at that going across and back the those We've up. modules, our not obviously skills and qualitatively management looking capabilities that Brightree off. synergies we're making really put I'm And R&D, and more it picking we new into portfolio. so pay two those first but out investments years logos, in are And detail,

out So I and our MatrixCare getting think in or timing strong beat sustainable now investment. the of investments growth that can of we our and meet the that Brightree we're

Steve Wheen

Thanks Mick.

Operator

next line from comes of David JP Your the Morgan. from question Low

open. Your is line

David Low

much. very Thanks

a you included that contribution is and sales make that how will mask one from what you mentioned if software revenues, that could going just Just forward? quick much some wondering explain the me,

Mick Farrell

to there's I'll bit little Brett go financial details hand of a to it that. Yeah, that. the on through

Brett Sandercock

Sure. probably the software through Propeller bigger the there acquisition. platform the related The is the the – to – to related or just one

one. probably that's of there, but are the single things but – delta, So that's the biggest there few kind other that's biggest probably a

David Low

much. very thanks Great,

Operator

from of Andrew Your question MST Goodsall comes line from Marquee. next

Your line open. is

Andrew Goodsall

think China. much, you sales to and about sleep obviously levels [indiscernible] back looking million if very of issue we at go size, into Thanks of the just I coronavirus might $X current of

the coronavirus. follow Just affect if current to from yourself wondering any through there's

Rob Douglas

There's Rob dynamic situation Yeah. Thanks, moment in at going a pretty China. speaking. on Douglas It's Andrew. the

we but it's closely. difficult, tracking tracking, And are so very

busy respiratory. going our In terms on the to very of obviously China their be business, think we hospital's

China of scale a We local good same got our for really for it's demand chain see So relative we hard there'll ventilators good Remember, a expect be China of lot there. team increased on that. supply whether don't we've or in in working actually not, would focus the to ventilators, building to China. size yet. on know We're

that on disease. in of fact, Sun, ground in and staying team of heroes of in and this patients helping are working who been these of Head face the local some some really so, Jason they're has China terrible after there look hospitals And the

exactly what likely an be at looking impact patients So a will on the offset be I be predicting the an won't as overall there be will scale, well, sleep while. for wouldn't hospitals

some in material. all China, in be unlikely of but it's be may there So that asleep to

tier suppliers work problem, eye Most the terms supply one moment. their third configured some of to Just are on be to isn't China. them there times them. the point not a many closely in other in overall with second around we'll wouldn't keep close but but mentioned we've a and our way of at China, its chain expect this in have We business,

Andrew Goodsall

Thank much. you very

Operator

from Bank comes question next Your of Harrison line Lyanne from the America. of

Your open. line is

Lyanne Harrison

and Good taking my you question. thank morning, gentlemen for

expectations year specifically remainder financial six and talked the for previously what about how resupply your the apnea and Just we the of in, given to that business over sleep share you SaaS expansion are 'XX? continue probably is most months on the resupply and tracking outside program about of discussion can

Mick Farrell

went be and good capabilities, Thanks our so it's out their they that. say look of than I'd a like ResMed's supplies of sure able our and specifics love But that customers them part to going good – break and days to and at are Lyanne. good about material diabetics beyond and and to workflow of you're used sleep same the sector of Yeah, apnea we to them that other HME. of material those business. so sleep not work supplies. on expansion our they're overall ResMed's a live that business. through HME supplies a adopting and masks and early well it's both it's expansion sort not call capabilities But into overall use so with off we technology they're Brightree – and and apnea to areas overall app out very of urology to are expand optimization our on making break other capability It's just the the going orthotics I'm we become diabetic to a to combination were business ply some not the resupply to and material those those products they of talking sleep and and tech part of strategic

just our for get resupply requiring we're grow it so helping their authorization for And and appropriate and well. customers customers are when there as businesses

can't sorry, that, I So than Lyanne. get more specific

Lyanne Harrison

Thank you.

Mick Farrell

Thank you.

Operator

Your from Suisse. line Janu Credit next question Gretel from comes of

Your open. line is

Gretel Janu

morning. Good Thanks.

reimbursements, if are mask is competitive on So be responding? thinking in reimbursement changes is you ResMed potentially what bidding? would how for able terms decline of update outlook XXXX? a your an in about And there us So Thanks the in give to expectations

Mick Farrell

Dave that Pendarvis. hand question I'll So Dave? to

David Pendarvis

Yeah. Thanks Gretel.

last that be else were everyone are, are competitive at place continue the And same we in quarter. industry with the We we're results to that what in. along the the waiting is bids

end American summer. the at them of North expect the We

September and we'll are. So know sometime results around or where August the

we bidders, pleased of educate with item are mask we with now the the on made CPAP customers reimbursement. in pricing Medicare lead on portfolio portfolio reimbursement that our however, others and the that industry out efforts settles a and bidding basis. on nature the the business We're conduct they of the comfortable And reimbursement space. so impact to that made We understand in

We there'll our demand for that to customers business expect be strong part success. important will and patients' it'll be important part continue adherence to an resupply term for be mask of continue to long

see don't like wait forward. we come the be. So going significant amounts and just the everyone we actual to trajectory reimbursement out obviously, But to any changes else, see with what have in

Gretel Janu

Thanks much. very

Operator

from line next Bailey Macquarie. Your David of comes from question

Your line is open.

David Bailey

guys. Yeah, good morning,

Brett, looked a me for Just cash awake flow this bit quarter.

the called moving talk some you of out could if parts the You've litigation there? through settlement. wondering of Department Just Justice

normalized through like? payment what quarter Just then on will the basis look talk And a be cash tax cash for great. net us also interest would

Brett Sandercock

is it's so be that. a as –you're more like think And I to you those probably yeah, XX of tax look plenty well, pretty strong the Normalize quarter. the flow like of still probably QX, if at kind was on think actually Yeah, million I cash payments it by more into going impacted around going excluding underlying, front.

So Expect in was flow that's next the of and cash in interest, better one performance. that impacted terms QX much QX for the this quarter. And expense? interest to on be

David Bailey

income Managed expenses, about. it talking statement monitor is broadly the you're [ph]

Brett Sandercock

pretty close. Yeah,

that – wouldn't You a that's not different good It's that. proxy. to far

David Bailey

Yeah.

Okay. Thanks.

Operator

from comes Chris line Sachs. Cooper question of next Your from Goldman

is open. line Your

Chris Cooper

previous one up for question. was questions. follow Thanks taking going to the of to I the

in bidding, to competitive I I'm positive I is Would and you to bet discussion more speculate negative on guess there's where, just to just expect the there I were given one changes interested a how think than the passed more Or some DNA the here with outcome. bit manage that it's going yourselves. be decrease and increase particular partners know on So would agreement downside possible early you the the any expect you helpful. be an to you to upside some one? guess categories how around outcome a thoughts here you to

Mick Farrell

hand if and that color as customer then Jim, So Jim? for perspective, from add first you Dave well, I'll to David but want any the and you

David Pendarvis

with to customers. robust already they best we they we our anything and ongoing them competitive can. That or as want We bidding to that change them discussions as mean, make the get we view where serve prices and else. with would we have with won't like good partners discussions can best we I Sure, us have dynamic sure

calendar we So the environment have each and is the discussions been expect with X% Medicare year for the to year half them and balance reimbursement. last 'XX year increase about in there's the a that to and good for of a continue

that be time. of last to period environment decisions, our process been we're benign one didn't you good But want to fair able experiencing their hoping more they the on we've with obviously, bidding negotiations, individual customers up for bidding, for be their might that. to participate we and a obviously will will it'll that's that in overall of made Jim, customer a time, the process this own so end the that in confident But And be contributed comment with we're industry. pricing a terms

Jim Hollingshead

to with I very mean, add together. our that, and think we'll do good it work of Thank you, all relationships I'll that's very we our Dave. customers but I through have with just well, customers key

the is for service The remind everybody of market. other thing would I is the fee part minority a Medicare just

market. but an a important the percentage the it's it's part small of market, of So

Operator

Matson question And from your next Needham. comes line of from Mike

Your line is open.

Mike Matson

Hi, thanks my for taking questions.

Just have, competitive I guess question. one bidding more

with a the So non-invasive with I think fairly ventilation, steep that's first it's included, decline. see specifically could time – been

in your just sales is. So maybe are you but the on comment you could And how expect can know understand what coming if non-invasive also, you much of us to ventilation help don't what US, there? then I quantify exposure the from

Mick Farrell

Dave and again, Jim, you

David Pendarvis

as categories. support bidding. is been new going bidding, now Up what different to Mike. life the curve ventilation ranges obviously it's that in in competitive One would our Non-invasive have a the category we levels thanks, is be ventilation buy air competitive characterize again, two so previously

It's this. years on over that had been And there, past leading to the also few that side. newly reductions reimbursement they're more changing. not up that's life but in is the So support

so cost likely to is need that's So you reductions of ought of smaller to into two A benefit important device patients the reimbursement of do necessarily see the can and it's round device focused hands that particularly kind think same you'll not home it. of lot range appropriately, service. a it's actually certainly a that have be of requires a in you they're what COPD this a it's and to the are. patients the the lot we in group saw business, these sleep the devices, patients of who from for products. of are previously sure on serving It's their the kind real probably Nevertheless, working in and get case can strong they customers making that for that of kinds benefit those the people

that's again, our service they adequate are well we're appropriately, this particularly that an make area customers, so very they'll provide So in margin that to really, bid can that able to needed. optimistic sophisticated be customers

US So don't but break goes. anywhere we'll our thanks. in it the how otherwise, wait But we and out or support sales specifically see life of

Mike Matson

Okay, Brightree? just that Thanks. just didn't the table thanks then brings and with they would to already SnapWorx, maybe have on comment what

Mick Farrell

Yeah, the so SnapWorx is a technology to capabilities that to HME. partner with that has adds end-to-end Brightree SnapWorx

just this those well performing to live software technology So we with And further number and the of platform and customers ability that Brightree out customers. They call it really beyond goes reach a and capability. to to have customers. was with had observed provided partnering our

grow the and entrepreneurs the XX, really months looked the they're really importantly, technology into them had team we and there that Tennessee SnapWorx user HME good the this at over XX it. a technology Brightree by from the the that better the a in only Nashville, seen and we've and the excited really end has so with team engagement XX, relationship customer. which both talking in achieving really adherence better And with and And what with created tech we're created market, not last

is this and as that that clinical back other. the each add knots as And data some bring to increase it X.X what the show to presented patient, we billion resupply you adherence, data I with two some I that patient what and it the which bring of you from engage is the back data,

we last for released sleep, the quarter hour of by some for we total healthcare X%. reduce inpatient that just shows every And data costs

is tied together, all this right. So

is every lower now so resupply Brightree the plus seven resupply So Brightree, that through healthcare will of total after ResMed and the and those that really I will hour SnapWorx X% that combination resupply increased sleep for mask powerful increase hours of – adherence, and also drive adherence SnapWorx. by think increased system of costs

obviously integration this every that how XX but going. it's the to quarter the updates and next well literally acquisition, you days, Now, technology's give of through just XX, finals going we're over on that months as we'll early watch us

Operator

Kalia Your next Suraj Oppenheimer. question the line from comes from of

open. Your line is

Unidentified Analyst

the users Good of This treated. FDA to patients I'm variation submission oxygen adding thanks that for question. is on that for afternoon, helping OSA you longer the diagnosis an curious if select sleep Mike somewhere as number with We taking and near my term an Suraj. Fitbit read in for apnea here. is just recently see graph for term increase

Mick Farrell

and really Verily part interesting Mike look, partnership call Google that. it's are as their for that the I in they're really wellness Obviously, Yeah, identification, wellness and study I baseline companies we I'd health doing watch it. involved is a thanks have And of getting the question. field sleep of it have and part with of, some big tech call our the

You for I risk diagnosis; poor potentially sleep suffocation identification people call call or apnea. the at it of sleep

in the to perform. a further and need true to bring diagnostic trying the have I is the And any and there them but high issue, can is into has for the there. lines of breathing the look, identification, global to in sleep we're these oxygen, sleep them There's I of engagement those de-saturations an line It'll it then the a probably what is that potentially de-sat, medical will I likelihood then if more along see to of part screener Fitbit would there's of pathway. indicate get to patients? ability fleet that higher engage causes more there's a same other believe about capability there's maybe and think and call business, a in issue likelihood. think I apnea, that you hopefully capability a person terms them those add of, companies sort the so portfolio. identify of some I we a Google Jim now on have maybe what But and to they to they on enrollment tech identify you you try do, acquisition run detail Fitbit that

Jim Hollingshead

Mike, question. Sure yet, thanks the for

and the Fitbit they to on forever a and so million there's sleeping of that hand sleep I might to whether disorder. consumers objective help range putting one the are importantly. globally, that whole industry, the decide suffer like that companies in people the an now companies one other then space. been of us like unreserved are in they when XXX the the sleep put majority in from doing have Fitbit making – think and driving then out how And more companies and something for hand that on And and bottlenecks they're those It's vast place diagnosis, who when patients don't know easier like screening we awareness it's fantastic they When a consumers in understand for there's it. of hands. good technologies that know them apnea, has

Unidentified Analyst

Great, thanks Jim. Mick and

Operator

next question Jefferies. comes Petrone Your from of Anthony from the line

line Your open. is

Anthony Petrone

one then bushfires, any the just there Thanks. where one just is rural the to two local So update in legislation on that just and obviously areas, H.R.XXXX Australia, given in just maybe actually just ones, the update blended sits plant. US, gets to quick manufacturing on any so on it manufacturing And Congress XX-XX just likelihood rate that maintain year? in this on that

Mick Farrell

manufacturing the questions around Thanks ask second for and one answer answer Dave then to first Rob I'll Anthony. the one the around the H.R. to

Rob Douglas

Thanks, Yeah. Anthony.

full season configured capability we plant But The plants. full capability have As Singapore supply both newer At has stage Australia of we the products said and often is Sydney in come products. from in the we on ResMed chain manufactured does our in our complex focus most multiple that have around sources. but devastating. process more plant, fire this been

into that which would interference the wouldn't if any hasn't whole a of However, it actually of ability all. at haven't thing affect our seen interference overly we worse us today, gone was Sydney, outskirts there reconfigure. because make lot the with it But And that did. if actually to

Anthony Petrone

you. Thank

David Pendarvis

that we important as reimbursement that. receive bill. bill the difficult particularly rural appropriate it's in certainly support customers we areas. Again, to and to And and do our It's the that think

certainly we support XXXX. So

noticed it's lot in these on – days. have going a think you Congress there's may I

in in But to part through. when extenders an could think the be a get year, the the of place. some anything get for I up items come renewal, other the that to with of some middle supports push opportunity there this difficult little the there is of a it's industry along So Medicare

wait is a But that. the certainly support So at we'll support industry minimum, we have to Congress and see. positive. And their indicating

Anthony Petrone

Thanks.

Operator

the Your line David comes Macquarie. from of last question from Bailey

open. line Your is

David Bailey

of question I'm US like know that contribution the and up revenues America's just Saul's able helpful. masks You quarter you're for to quantify just actually, wondering would acquisitions on following if those to be the accessories or

Mick Farrell

US so something basis. US – remarks, mean Yeah, thanks for in software basis Propeller growth is question sort prepared David. Propeller all so on XX% in the or I take and maybe in out you you're of global. take be we're the growth, prepared rate mid-teens, it's was you I – on masks XXX I – the most a on of the global take you software, constant the said And said the that to points if growth if the of the mask going currency XX%, pretty

probably and basis around XX% and out around would David. you're US around about the take becomes points become you're XX you so software, growth Propeller XX XX XXX there, in XX If the territory,

due answers your appreciate all. for extra thanks we that to everyone there, an delayed phone both questions. since spending that And minutes to eight were the minutes think but I lines eight

Operator

this back no at Farrell. are questions call the time. Mick there further over to I And turn

Mick Farrell

the our call. to again on and the of hard of X,XXX us thanks whom And for take all Christine. joining also thank work. this are I'd for shareholders, Thanks, great. to many to opportunity Hey, their ResMedians, dedication shareholders also like

produce get report. we that to great You numbers these

the live to for again sleep you all pretty you better, Thanks we'll talk is XXX outside which better people today a amazing. help in hospital day XX do Amy? and around help lives of that and days. breathe people You countries, you every people help you better, in all

Amy Wakeham

through and Great, joining again, difficulties. audio echo bearing to thank for Mick, the with thanks us for all you us today

questions, any If have to out. additional hesitate please do you questions reach don't or

of all will available transcript mentioned, today's and along website. hopefully now the clean call can previously with replay a Christine, As close the you be the documents on our call.

Operator

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

now disconnect. may You

ResMed (RMD) 30 Jan 202020 Q2 Earnings call transcript