Thank you for standing by, and welcome to the Nanosonics Limited 2022 Full Year Results and Investor Call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Michael Kavanagh, Managing Director and CEO. Please go ahead. Thank you very much, Ashley, and a very good morning, and thank you all for joining the call. I'm joined by McGregor Grant, our CFO, here at our new corporate headquarters at Macquarie Park in Sydney. Well, this morning you will have seen the release of our FY 2022 full year financial results and operation review, which outline a year of significant progress, both financially and operationally, as the business continues to invest in and execute on our growth agenda. There is a lot of information covered across all the materials released. You've got the ASX release, the investor presentation, the annual report, and sustainability report. There's a lot of material to digest. If I was to summarize down into sort of three key messages or three key takeaways, they'd be the first really is that importantly, our growth momentum has returned to pre-COVID levels, especially in the second half of the year, and that bodes very well for our ongoing growth expectations. This growth was across revenue, new installed base upgrades, and consumables. The second key message or takeaway is that during the year, and again, particularly in the second half, the company increased our capability and capacity to support ongoing growth through the successful change to a largely direct sales model in North America. We did continue to invest in our European and Asia Pacific infrastructure as part of our geographical expansion plans. Of course, relocating to a new headquarters and manufacturing and R&D facility here in Macquarie Park, which gives us the capacity to develop, deliver, and support a broader product portfolio that we're planning to release internationally. Finally, the third takeaway centers around our R&D. In addition to the ongoing establishment of Trophon as standard of care, we certainly advanced our R&D program, in particular our new CORIS technology for endoscope reprocessing. It was very pleasing to have the CORIS technology accepted by the FDA into their Safer Technologies Program or STeP program, which I believe is a recognition by the FDA that CORIS technology could reasonably be expected to significantly improve the safety of patients over current available treatments, which is one of the criteria to qualify for this new program. A bit more on that later. If I take each one of those top-line messages and go into a little bit of detail, first, across the growth momentum. From a total revenue perspective, revenue for the year was AUD 120.3 million. That was up 17% on FY 2021. While this result was previously announced in July, it can now be looked at in the context of gross margin and OpEx for the year, both of which also came in favorably. Gross margin for the year was 76.4% ahead of our February 2022 guidance. This was mainly due to favorable pricing outcomes that we achieved in North America. Operating expenses for the year were AUD 90.5 million, and these were below the anticipated AUD 93 million discussed in February. Some of that savings was associated with a management of our operating expenses, but timing related to hiring of a number of headcount. Overall a good result, especially taking into consideration the foreshadowed one-off revenue impact in the second half that was associated with the transition to a larger direct sales model in North America, that back in February, as you'll remember, we estimated to be somewhere in the range of AUD 13 million-AUD 16 million. In that context, an excellent result. Just as a reminder, that AUD 13 -AUD 16 million, that impact, that was primarily associated with the fact that GE HealthCare in North America would run down their capital and consumable inventory as they transitioned to a non-stocking capital reseller, as they transferred all their existing Trophon customers to Nanosonics for ongoing provision of consumables, which they have now. Breaking that revenue down as we do traditionally to capital and consumables. Total capital revenue for the year was AUD 37.7 million. That was up 41% on prior corresponding period. This increase over PCP really reflects the growth in installed base as well as upgrades, but also the recovery from what was a significant reduction in capital sales to GE in the first half of FY 2021. Of course, that was related to the negative impacts of COVID-19 on new installed base growth at that point in time. Overall for capital revenue were good results. From the consumables and services revenue, that was AUD 82.6 million for the year. That was up 8% on prior corresponding period. The consumables and service revenue now represents approximately 70% of total revenue for the year. That really highlights the attractive annuity revenue nature of the business. What we did see on the consumable side is that as the COVID-19 restrictions eased during the year, again, especially in the second half, where hospital conditions improved, we did see ultrasound procedure volumes returning to near pre-COVID levels. If I break the revenue results down by region briefly, well, in North America, the total revenue for the year was AUD 106.9 million, so that was up 20% on prior corresponding period. Capital revenue in North America was AUD 33.6 million. That was up 58% on the prior corresponding period. That was, again, associated with growth in IP upgrades, but also reflects what I just mentioned earlier, with respect to the impact that COVID had on sales to GE of capital, in the first half of FY 2021. Overall, a good result for capital in North America. It is worth noting as you're going through the results, and there's a lot of detail for everybody in the investor presentation, that while the installed base and upgrades units sold in the second half of the year increased, indeed, the strongest half we've had in over six halves, capital revenue in the second half of AUD 16.3 million was down 6% compared with the first half. That is primarily due to the transition to the revised North American sales model and GE HealthCare destocking and becoming a non-stocking capital reseller. It's primarily associated with that. Very importantly, the installed base and upgrades did continue to grow very strongly in that second half. The consumables and service revenue in North America was AUD 73.3 million, again, up 8% on prior corresponding period. In the second half, the consumables and service revenue was AUD 36.3 million. Again, down 2% compared with the first half, but again, purely reflection of the impact of GE HealthCare's destocking as opposed to anything else happening in the market. Moving across the pond, in the Europe and Middle East region, total revenue for the year was AUD 7.5 million. That was up 4% on the last year, with improvements in the second half or compared to the first half, where revenue in the second half was AUD 4.1 million. That was up 21% compared with the first half. For capital revenue, again, when assessing capital revenue in EMEA, it's important to take into consideration that the majority of units that we place in the U.K., which is our largest market in the region, they're under the managed equipment service model, where no capital revenue is recognized. Overall for the region, capital revenue, taking those into considerations, was AUD 2.1 million, which was down on the prior corresponding period. Again, a lot of that due to the sales mix, with the U.K.. There were other elements, of course, in the European region, that have to be taken into consideration. There were delayed easing of COVID-19 related market restrictions compared to what we saw in North America, coupled with other factors, including the impact of sanctions on Russia, where we had been actively selling through distribution in Russia for a number of years. A number of the sales that we had forecasted, especially in the second half of the year in Russia, did not go ahead. Consumables and service revenue in EMEA, however, was AUD 5.4 million. That was up 20% compared with the last year. That reflects the ongoing growth in installed base as well as the ultrasound procedures volumes returning to near pre-COVID levels, again, with the second half stronger than the first half. In Asia Pacific, you remember that in the second half of FY 2021, we had a large upgrade order of 200 units with I-MED Radiology, which is the largest customer here in Australia. Now such an order was not replicated in FY 2022. As a result of this, despite ongoing growth in new installed base, total revenue for the year of AUD 5.9 million, just under AUD 6 million, was down approximately 10%-12% compared with the prior corresponding period. We did see the second half stronger than the first, because as we all know, here in Australia, in certain states in Australia, there were restrictions throughout the year. But the second half was stronger, overall revenue up at 3% versus the first half at AUD 3 million. Our consumables and service revenue of AUD 4 million, it was actually the same as the prior year, but most of that actually relates to timing of shipments to distributors. Actual sales of consumables to end customers actually did increase in FY 2022 compared with FY 2021. Moving on to the installed base. The global installed base increased 12% to 29,850 units at the end of June. That's an increase of 3,100 units for the year. As of today, the installed base is now over 30,000 units, which is a great milestone. Importantly, the installed base increased just under 1,700 units in the second half. That was up 20% with the first half. That second half installed base growth was the highest in over six halves, because of the impacts of COVID. Again, giving very positive indications we're back to pre-COVID growth momentum levels. Regionally in North America, during the year, we reached a milestone of 25,000 units installed across over 5,000 institutions, really consolidating Trophon's position as the standard of care. By the end of the financial year, there were 26,130 units installed in North America. That's an increase of 11% or 2,650 new units installed for the year in North America. We did see hospital access continue to improve throughout the year, and the installed base increased by just under 1,500 units. 1,450 units in the second half. That was up 21% compared with H1. Again, giving confidence of getting back to the run rates that we were getting in North America pre-COVID and we anticipate for the coming year. The North American installed base now represents approximately 45% of the estimated total addressable market of 60,000 units. Of course, the overall ultrasound market itself continues to grow with new ultrasound innovations coming into the market, such as wireless handheld probes being released. Our R&D team have developed an accessory to enable wireless probes to be decontaminated in Trophon with the first of such accessories due to launch sometime in the Q2 of this year. Plenty of opportunity for ongoing growth certainly in North America. In the EMEA region, the total installed base increased by 21% to 1,820 units. That was up 310 units for the year. As already mentioned, delays were experienced in the easing of COVID-19 related market restrictions over there, as well as the impact of staff shortages when the Omicron variant of COVID hit in particular in the first half. In the second half, market conditions did improve and new installed base across that region of 170 units was up over 20% over the first half. During the year, we did continue our investment in the EMEA region, in particular our direct markets in the U.K. and Germany. Now with market restrictions and hospital access, markedly improved, our expectations are that in FY 2023 we'll see the first full year since 2020 where the investments in this region can now be fully leveraged. In Asia Pacific, the installed base increased 140 units for the year, with the total installed base increasing 8% to 1,900 units. In Japan, we expanded our local team in medical affairs activities as we continue to work with local authorities on establishment of local guidelines. Now, progress is being made in this area, and it was pleasing to see that the JSUM or the Japan Society of Ultrasonics in Medicine publishing on their site a Japanese translation of the World Federation guidelines, which support high-level disinfection. This is not an official guideline of JSUM, but a good indication they're going in the right direction. Our other geographical expansion activities for Asia Pacific did also progress, where in China, the registration of our wholly owned foreign enterprise or WFOE, that was completed. After significant delays, as everybody knows, in Shanghai, there were lockdowns due to COVID-19. The required local testing of the Trophon device and consumables by the relevant state authorities, that has now commenced as part of our product registration plans. Moving over to upgrades briefly. As you know, upgrades represent a significant opportunity, and there are currently approximately 9,000 EPR or the original Trophon EPR devices that are seven years old or older. FY 2022 has really been the first year we have put a focus on upgrades considering the impact of COVID over the last two years, where we focused our efforts on new installed base with the limited hospital access in those periods. Pleasingly, there were 1,000 upgrade units were sold in the year. That's up 130, at 135% compared with FY 2021. Again, we saw good growth momentum in the second half with upgrade unit sales up 50% over the first half. This growth in the second half was not really anticipated as we were going through the GE transition in H2 and the majority of the upgrade opportunity in North America is with GE, of course, or I should say GE customers. What was very pleasing, however, was the upgrade sales in the Q4 of the year, which represented nearly 65% of the total upgrade sales in the second half. Of those sales, the Nanosonics direct team were responsible for nearly 90% of those sales. This result really demonstrates the opportunity for Nanosonics to further drive the upgrade strategy now that we have direct access to all Trophon customers. Really quite a pleasing result on upgrades. The second method I mentioned was related to our ongoing investments and our expanded capability and capacity that we've developed over the year. There still remains very significant opportunities for growth in what is a multi-billion dollar global infection prevention market. We do have a very purposeful strategy to continue to invest for our growth. Aligned with this, operating expenses for the year were AUD 90.5 million. That is up 28% on last year, but below the anticipated AUD 93 million that was anticipated when we discussed it in February. When thinking of the investment, I think it's important to appreciate that very attractive returns from these investments are expected over time, especially with the newly consumable business models, which of course, Trophon is, as you know, and, CORIS is intended to be. If you look at our North American business, it gives a very good indication being an established, more mature market for us. In that market, we're achieving operating margins have been in the range of 55%-60%. Very attractive returns can be achieved, and we're very confident in the directions that we're taking from an investment perspective. To give you a bit of a flavor of our OpEx breakdown, and you will find some details of this in the investor presentation. Importantly, the majority of our OpEx is focused on future growth activities. During FY 2022, 43% of the OpEx was actually associated with market development activities across the regions. The increase in these costs also included the additional investments we made in the second half, really in Q4, of approximately just under AUD 1.8 million to expand the company's North American operations. 25% of the total operating expenses were associated with the company's innovation program across the new Nanosonics CORIS technology, as well as ongoing programs across our other platforms in ultrasound reprocessing and cloud solutions. 32% of our total operating expenses relate to the company's infrastructure, including manufacturing and other headquarters support costs. As you know, we did move to new corporate headquarters, manufacturing and R&D facilities to support the ongoing growth. We did incur additional costs of approximately AUD 1.5 million as a result of this relocation. Another significant element of our capability advances was the successful transition to a largely direct model in North America. The transition to this new model has now been successfully implemented. The expanded North American team's in place, including the hiring of a number of members of the former GE high-level disinfection team. Shipping volumes through the Nanosonics logistics facility in Indianapolis are up well over 100% in the last three months, with no disruption in supply to customers and sufficient capacity in place to support expected future growth. The team has also executed numerous new enterprise agreements with strategic accounts, integrated delivery networks, with many more due to be completed in the coming months. We've also established the necessary partnerships to enable selling to U.S. federal and government accounts, where GE previously represented 80% of all sales to those accounts. So really our North American direct team is now well-positioned to manage the overall growth strategy associated with new installed base, upgrade adoption, and consumables usage. The business performance in Q4, in particular, saw many of these benefits start to come to fruition. In that quarter alone, the Nanosonics direct team were responsible for 91% of the new installed base, together with just under 90% of upgrade sales, so doing a great job. Of course, the resulting deeper customer relationships now that we will have with the majority of North American hospitals and corresponding infrastructure expansion that we have put into North America also supports our planned product expansion beyond Trophon. Then finally, the third method related to our R&D program and advances in the CORIS development. In the last year, we invested AUD 22.3 million in R&D, which is up 30% compared with FY 2021. Now, many of you will understand that this is still a relatively small amount in the context of medical device development, especially when you're looking at capital equipment coupled with chemistry and software developments all combined. Through the investments the company made this year, which are all expensed, the company, we have expanded our capacity and capabilities, with programs across our various platform groups, being the ultrasound reprocessing, endoscope reprocessing, and data through cloud solutions, as well as chemistry and our bioscience activities. While there are a number of R&D programs underway, the central near-term program is associated with our new CORIS platform. Which as previously discussed, aims to deliver a solution to one of the biggest unmet needs in instrument reprocessing, and that is reprocessing failures of flexible endoscopes due to current limitations of manual cleaning, which ultimately then results in an increased risk of cross-contamination. Now in the investor presentation, there are quite a few details about CORIS, but I'll highlight just a few here this morning. First of all, the CORIS technology recently was accepted into the FDA Safer Technologies Program or STeP program. Now, this is a relatively new program introduced by the FDA, and products are only accepted into this program if they're reasonably expected to significantly improve the safety for patients over currently available treatments. Based on the data that we provided and information we provided to the FDA all about CORIS, well, then we're very pleased that it was accepted into the STeP program. The ultimate goal of STeP is to provide patients and healthcare providers with timely access to these medical devices by expediting their development, assessment, and review, while of course preserving the statutory standards for approval. We see this as a great acknowledgment that the CORIS technology could indeed be transformational. While the regulatory approval process with the FDA would be a De Novo approval as expected because there is no predicate for this new technology, having been accepted into the STeP program should help facilitate a much smoother approval process through that De Novo process. The investor presentation also gives some indication as to the types of results the CORIS technology is designed to deliver. In particular, biofilm removal from small channels in endoscopes, which is a significant hurdle today. Essentially, current manual cleaning is totally ineffective in biofilm removal, whereas CORIS is highly effective, and you'll see some slides in there demonstrating that in the investor presentation. We also showed that the CORIS technology can far surpass the current cleaning benchmarks recognized by regulators, where it removes difficult soils to an order of magnitude better than industry-recognized cleaning benchmarks, including new alert levels that are defined by ISO standards. It really does deliver significant improvements over what is achievable today. Finally, the potential market opportunity for CORIS is significant. Strong fundamentals and standards already exist around the world for endoscope reprocessing. There are over 16 million procedures conducted annually, and that's growing at about 6% per annum, and that's across the U.S., the main European markets, and Australia, so not including China, Japan, et cetera. There are studies that have been published that demonstrate that the current costs associated with the cleaning step alone of a flexible endoscope can be anywhere between $11 and $37. CORIS aims to automate a significant proportion of that current manual cleaning, so the opportunity is large. As previously communicated, the company, we continue to target progressive market introductions aligned with regulatory approvals with the first introduction targeted for calendar 2023. First release is likely to be in Australia and/or Europe considering the De Novo application process. It is great we've got the STeP program acceptance, which should help facilitate through the De Novo approval process with the FDA as well. A few final comments then I'll hand over for questions. Briefly, it's worth noting on working capital that during the year the company increased its inventory holding to AUD 22.6 million. This increase was driven by the need to carry more safety stock in response to increased supply chain risks caused by the COVID-19 pandemic. Of course, the company's transition to a largely direct sales model in North America as well. Importantly, however, as a result of our current pandemic inventory policy, holding policy, there were no supply disruptions to customers. We expect to maintain inventory at a similar level throughout FY 2023, and that really reflects the ongoing complexities with the global supply chain and the move to the direct model in North America. Once the supply chain risks reduce, however, then we can reassess our holding requirements, which can likely be reduced. From a profit perspective, profit before tax for the year was AUD 1.6 million, and that reflects the increased investments that people were aware we were making in the growth agenda, as well as, of course, the foreshadowed impact in H2 on revenue in North America associated with the move to a largely direct sales model. Finally, from a business outlook perspective, you will see we are targeting good ongoing growth revenue in FY 2023, with expectations of growth between 20% and 25%. Our gross margin expectations are between 75%-76%, but the ultimate gross margin will reflect one, an increase in the proportion of capital revenue that we expect resulting from growth in sales of both new installed base around the world, but also now upgrade units. The other impact is freight costs, which currently remain high, but if they improve, then of course our gross margin would benefit. Of course, we do have to take into consideration the potential impact of inflation and supply constraints in general on component costs. We do plan to continue our investments for growth. However, our operating expenses will grow less than the revenue growth, with operating expenses expected to grow approximately between 15% and 18%. Again, the majority of that increase is expected to be weighted towards our ongoing market development as well as ongoing product innovation. It is important, I guess, to state that while we have entered FY 2023 quite optimistic, naturally all this guidance is subject to ongoing uncertainty in relation to variability in market access conditions should COVID-19 related measures change, in relevant markets and of course, the broader economic and geopolitical uncertainty that's out there at the moment. With that, I will now pause and hand over for any questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Lyanne Harrison with Bank of America. Please go ahead. Oh, hello, Michael and McGregor. Thank you for taking my questions. If I could start with the GE HealthCare arrangement. You know, I think it's great that the Nano team sold 91% of new units in the most recent quarter. I was under the impression from earlier announcements made, you know, around February at the time the reseller arrangement was announced, that GE would still play a more active role in selling the Trophon. Can you talk to that a little bit in terms of, you know, what might have changed? Obviously, we understand that arrangement is extended to the financial year or to June 2023, and what happens after that? Thanks for the question. GE have extended the contracts with Nanosonics now as a capital reseller, and for a further 12 months and have ongoing access to the capital equipment. Even prior to this change to the larger direct model, I think I have spoken in the past that our direct team were already generating probably upwards of 70% of the GE demand for installed base anyway, because we were much larger group out there. But the actual sales ended up being transacted through GE. Moving forward, what our expectations are, and quite frankly our desire, is that we continue to partner with GE HealthCare, where our expanded team now will provide support where necessary to their ultrasound sales team. If their ultrasound sales team need to throw access to Trophon to bundle with a sale of one of their ultrasounds, or indeed if they're even just talking with their existing ultrasound installed base and they require an infection prevention solution, well, then they will call in our team to provide the support that they used to get from the HLD team with GE. When we go in and do that support, what we expect is that the transaction will, even though it may have been generated by GE, the transaction will very likely still go through Nanosonics. The reason for that is that, A, Nanosonics will be responsible for the shipping of the device to the customer, the installation of the device to the customer and the ongoing sales of consumables to the customer. It's very likely that the transaction will go through GE. GE still have the option to go through Nanosonics, I should say. GE still very much have the option to have access to the capital and to be able to do the transaction directly. Can I just follow up on that? If the transaction goes through Nanosonics. Yeah. What incentive then is there for GE to, you know, to support the sales of a Trophon when they're making that ultrasound sale? It all comes down to what their customer requirements are. There's no financial, real financial incentive, unless they transact themselves and we sell to GE as a price where they could make a margin. Even though we'll be shipping it, et cetera. The ultimate driver will be their customer requirements. If the customer requires an infection prevention solution, then we'll be the company for them to call on. Okay. Thank you. If I could move then on to consumables. I'm trying to estimate what the consumables revenue exit growth rate was, you know, towards the end of financial year 2022. You know, understand that it was lower because of GE running down the inventory. Yeah. Can you give us a sense of what that might have been without that, I guess that GE blip? It's hard. I mean, year-over-year, there's growth. Obviously, the revenue that we get was impacted because of the transition, as you rightly point out, as where they didn't do any restocking. In terms of units going to market as in to end users, there was definitely growth year-over-year and even in the second half. I think moving forward, what you'll see now in consumables revenue, particularly in North America, will be much more tightly correlated with the actual market demand. You won't have those complications associated with inventory that you've been trying to navigate over the last number of years. Exactly, I don't have the exact growth figure at the top of my head, but it's certainly, you know, probably in the order of 7%-10%. Thank you very much. Your next question comes from Chris Cooper with Goldman Sachs. Please go ahead. Morning. Thanks very much. Just on the gross margin, Michael, if you don't mind. When you announced the new arrangement, you obviously indicated the gross margins were expected to go up from the end of fiscal 2022. You did also say you achieved better pricing outcomes this year than you expected, but you're now guiding to a further contraction in gross margin in 2023. Can I just understand the moving parts there and whether the expectation is that you get back to that sort of 77%, 78%, 79% level that you had been foreshadowing earlier in the year? Oh, I don't think I was ever foreshadowing us getting up to 79% early in the year, but the ultimate goal over time, Chris, is that we will get back to gross margins like that. The big driver will be on capital mix. And as we're going to be selling more upgrades and because the margin on the capital equipment is lower than the consumables, as well as selling more installed base, well, then that will have some impact on the mix. The other big impact though is still freight. I think, you know, like all companies, we're still being impacted on freight costs. That's why we're sort of guiding to that between 75%-76%. Once. If freight can be normalized, we certainly will benefit from that. Okay. On CORIS, first of all, can you just confirm the product design stage has finished here? The wording I found was a little unclear on the materials in the deck. Also just on your expectations for U.S. approval, I guess it sounds like this could be some way out now that De Novo has been confirmed. How are you thinking about the design of that trial? It sounds like you have been in discussions with the FDA. You provided them with some data. What endpoints do you think are gonna be needed, and what is your best guess for U.S. launch at this point? Yeah. Look, I'm not gonna try and put a specific date on a U.S. launch. It certainly will be De Novo. We'd like to think by virtue of the fact we've been accepted into the STeP program that it's almost like a concierge program, where normally with De Novos, you got stops and starts as they are asking questions, whereas with the STeP, being part of the STeP program that can help facilitate a much smoother process through the De Novo. In terms of clinical trials, we've not done the external clinical trials yet that are gonna be required for the De Novo, but they're in plan for the calendar year. Our expectations are because it is De Novo, can take a little bit longer than a 510(k). Remember, it's a De Novo, thus there is no predicate. Being no predicate means in one sense that it's a totally new technology where we will now set the benchmark. So it likely will be in Australia and/or Europe that may be first and then, you know. We wait and see based on the timings of the submission to the FDA with the De Novo and how smooth that process goes. Okay. To just clarify that, the product has been finished. It's no longer in design phase, and the clinical trials you said are planned for the calendar year. That's 2022 or 2023 calendar year? There's still I mean, you'd understand, you know, in finishing a product to have it ready to go to market, there are many dimensions to it. There's still some optimization that we're doing in parts of the design, to make sure from a manufacturability and serviceability perspective. There's elements associated with the manufacturing setup. There's all the tech systems that have to be designed and implemented in from manufacturing. There's the procurement and supply chain, which is all. Remember, this is not Trophon. These are all new components. There's still dimensions that have to be still completed. That's why, you know, we're still saying calendar 2023. There's still work to be done. In terms of product that we're comfortable, delivers the outcomes that it's designed to deliver, yes, we have that. I look forward to spending a bit of time with you and bringing you through some of the data that's in the investor presentation, which is quite impressive. Got it. Those optimization procedures will be completed, and you'll be moving into clinical trials, you said in calendar year 2022. In the calendar year between 2022 and 2023. I'm not gonna go into absolute details on the specifics. I think the best thing to do is just to, you know, as we've said in the past, we're still targeting calendar year 2023. That's still the goal. Okay, thanks. Just very final question. You guided to a sort of AUD 13 -AUD 16 million revenue hit in the second half of 2022. Can I just confirm, it's not a perfect science, but is that broadly where you think it came in? You know, by extension, do you think that GE still has any inventory left as of July 1? Yeah, no, clearly don't have any inventory left. Probably under AUD 13-AUD 16 million, probably on the lower end of that, so be favorable. Got it. Thank you for the help. Thanks, Chris. Your next question comes from David Low with JPM. Please go ahead. Thanks. Maybe if we could just stay on that topic. I mean, admittedly, I've used a bigger destocking impact, but I mean, when I ran the calculations, if we strip that destocking effect out of FY 2022, the revenue guidance for FY 2023 looks relatively light on, particularly given the momentum that we see in the install base and frankly, the opportunity in upgrade sales. Just sort of wondering whether there's anything else that I'm not thinking about there. No, I think 20%-25% growth is a pretty stellar. I mean, we're looking at. Remember, what we're trying to do is to get back in North America to the 2,800-3,000 new installs per annum over there. Based on the second half, we sort of should be back to that runway. Based on the upgrades, you know, we should obviously have growth in upgrades again in the United States, and obviously we're anticipating good growth in Europe as well, as long as the market conditions remain favorable. You know, I think if you look at 20%-25%, it's not insignificant. Remember, a lot of the consumables make up also 70% of the growth, so a lot of the consumables revenue that will come through from that will come through over the period, the full period of the 12 months. You won't get the 12 months effect of all of that growth in the installed base from day one. All up, when we did all our modeling, we thought somewhere between 20%-25% growth is a decent growth rate. No, no, I don't disagree. 20-25% is a good growth rate. Maybe my logic is flawed, but what I did is there is a starting point. There's AUD 13 million of destocking revenue in FY 2021, sorry, 2022. So if we add that back, it implies only a 10-ish% growth rate. Maybe I'm not thinking through it logically. Let me catch up. Yeah, we can talk a little later. Never mind. I'll move on. Catch up. Yeah. Perfect. Just on one other question then on the CORIS device. I mean, you've talked about the cost of cleaning today at $11-$37. I'm sure you're not gonna wanna give us full detail, but am I right in assuming that the cost with the CORIS device all going to plan would be comfortably below that level or below the low end of that range? Well, I think the message to take away from that $11-$37, you know, along with 60 million procedures, is that the market opportunity is significant. You know, bringing a transformational automated technology to market where the fundamentals out in those markets are quite different to what they are in Trophon. I mean, every major market around the world, you've got standards and requirements. People are already, you know, having to reprocess and clean and decontaminate endoscopes. Really that was to give an indication that the market is a significant market. Today we're not necessarily divulging what the cost per cycle with CORIS is going to be, but it will be beneficial for our customers. Okay. Thank you. Look, my only other point of question, just perhaps for McGregor. So OpEx came in a little short. I heard the commentary about something to do with some degree to do with timing of bringing in new staff. Should we assume that the OpEx guidance for this year is a bit front-end weighted as those staff come on, or is it more likely to be sort of equal through the periods? It's gonna be fairly even throughout the year. We do not, we're not adding significant headcount throughout FY 2023, so we expect that to be fairly evenly weighted throughout the year. Okay, great. Thank you very much. Your next question comes from Josh Kannourakis with Barrenjoey. Please go ahead. Morning. Morning, Mike and McGregor, can you hear me okay? Yes. Hi, Josh. Yeah. Good. Thanks very much for taking my question. Firstly, just on the CORIS, in terms of the go to market, I know you can't say too much, and thanks for the extra detail that you've provided. Have you been in consultation with some of the OEMs in the market in terms of the endoscope players? I'm just interested in how you sort of see us thinking about maybe distribution for that product. A good question, and your first statement was correct. We're not really going to go into the details around the commercialization strategy. As you can imagine, we anticipate that the channel strategy for CORIS, just like Trophon, will be a mix of direct partnerships, whether that's with OEMs or other relevant distributors, et cetera, will be determined. There will be a mix of models as we go around the world. Okay. Understand. Just with regard to in terms of pricing across, you know, consumables and the capital sales, could you give us a little bit more context just around what we saw across the different regions in period and how we should be thinking about that on a go-forward basis in terms of any other further annualization benefit or cost recoverability of inflation impact? Obviously now that we're more direct in or largely directing in North America, we've got favorable pricing moving forward, and that's part of the 20%-25% growth projections that we've put out. There has been some price increases. There's, you know, not wholesale price increases to offset all inflationary measures at this stage, and freight costs, et cetera. There will be some favorability in pricing, which is all built into that 20%-25%. Got it. Final one for me, just around North America. Thanks for noting the profitability there. I think you mentioned the sort of 55% operating margin. How should we be thinking about, I guess, some of the other regions that maturity, and should we be using that as an example? Well, I guess that's the intent why we put that in there is when you've got markets, especially in direct markets, where, you know, the fundamentals are strong and we're working towards all of that in all the major markets we're going into now, and, you know, you've got the sort of growth rates that we've seen in North America, well, then our expectations is that we can generate similar sort of operating margins. It's, you know. That's why those investments that we're making are really important because with the consumables business and the annuity stream revenue business that we have, the operating margins can be quite significant. Great. Thanks very much, guys. Appreciate it. Your next question comes from Martyn Jacobs with Canaccord Genuity. Please go ahead. Morning, guys. Congratulations on a pretty good result in tough circumstances. So just to start off with the new sales model, you're now at about 44% penetration in North America. How much scope do you think there is for optimization within existing customers? Does the upgrade cycle play much into that? I think certainly there's upgrades playing into it. In fact, a lot of the installed base. I mean, there's over 9,000 units now that are over seven years or older out there, and we'll now be able to have a focus on upgrades that we have. All customers are now Nanosonics customers. The other part I think over time is, you know, education continues to be a cornerstone of our marketing efforts. When you look at all the different types of ultrasound procedures that confer semi-critical status on a probe and therefore require high-level disinfection, there's still a lot of education to do there, which could ultimately result in an increase in consumables usage. There definitely is an opportunity to optimize usage, but optimize adoption of Trophon because, you know, when GE was selling into certain accounts, they may have just sold, you know, one or two units into a particular department associated with the sale of an ultrasound. Whereas when we go into an account, we're agnostic of the ultrasound type, but also we'll optimize based on reviewing that whole department as opposed with respect to their Trophon needs. If they originally had two, they probably needed seven or eight. There's an opportunity to grow installed base through the existing installed base as well. There's certainly the benefits of going direct. I think we'll start to see coming through even more in FY 2023, just like we saw that started to come through in the Q4. Would you expect accelerating growth in upgrade units in 2023? It's off a low base if you're looking at it on a relative. I mean, we certainly expect more than 1,000 units going out in North America next year. Right. In regard to Europe, what hurdles do you think are left to overcome to generate sort of material uplift? The good thing about North America is it's a large homogeneous market, whereas in Europe we're dealing with lots of individual markets that are at different stages. You know, some are doing well, U.K. and Germany coming online and others have more development to do in terms of education. It's throughout it's just a matter of time. I mean, a lot of the guidelines are in place. The automation is certainly favored. Wipes are certainly being discounted now in a number of markets where they're not being accepted as appropriate for high-level disinfection. The fundamentals are certainly improving. As I said, you know, the last two years we've been significantly impeded in market access to strengthen those. Whereas this year, assuming that the market conditions, you know, positive market conditions continue and, you know, with the caveat that they've still got to come into the Northern Hemisphere winter, who knows what's gonna happen. Assuming that they continue, this will be the first year that we'll be able to have the first full year of the field force out in the field, highly active, engaged in front of customers. We'd like to think that we'd get a good return this year on that. Just a couple more from me. You provided some detail on the feedback regarding AuditPro and ISO accreditation coming. Yeah. Can you see evidence that AuditPro is actually helping you sell Trophon and into the broader ultrasound market? Can you see that evidence yet? Not yet. A bit too early. No, certainly in the for AuditPro this year, we focused on a lot of initial accounts and some of those quite important luminary accounts. I would say the transition with GE did impact a little bit on what we were doing with AuditPro, but also the ISO 27001 accreditation is gonna help a lot in terms of you know answering all the necessary questions hospitals need before they implement new IT solutions or IT-based solutions into their networks. I could say early days, not seeing the impact on Trophon just yet, but we certainly believe moving forward that it will. Not only will, but could help on the consumable side as well. Right. Last one. With regards to the new facility which you've just moved into, what's your starting spare capacity with that place? Because you've Oh. The metrics around size impact or the size increase. We think that this facility will see us through for at least five years. You know, from a manufacturing capacity, plenty capacity in manufacturing to support ongoing growth, both Trophon capacity for CORIS and potentially other things as well. You know, from a headquarters head office perspective, there's certainly capacity for ongoing growth in staff. Now, we're not anticipating large growth in staff locally here in Australia headquarters, most of the headcount growth for FY 2023 will be out in the regions. Okay, great. Thanks very much. Okay. I've got time for one more question. Thank you. Your last question comes from Raymond Zhang with A Rich Life. Please go ahead. Thank you. In terms of, disruption risk, what do you see as the biggest threat to Trophon and traditional chemical-based high-level disinfection methods? Well, I think what Trophon has done from a chemical base is it moves the industry away from some of the toxic aldehyde chemistries to you know our hydrogen peroxide-based chemistry, but importantly, the mechanism of action being and the how the technology works being very environmentally friendly. You know, I think the hydrogen peroxide being broken down to oxygen and water in a cycle, and it's only a very small amount that's used per cycle. We don't see a major disruption to chemistry-based as opposed to a move towards more environmentally friendly chemistry-based, 'cause chemistry has certainly numerous benefits over alternative mechanisms. I mean, for example, you can't have heat-based with sterilization, 'cause a lot of these medical devices just would not survive the high temperatures and high pressure required, like in autoclaves, et cetera. We're not seeing any major disruptions, you know, associated with moves away from chemistry as long as that chemistry that's provided is environmentally sustainable. Thanks for that. Appreciate the answer. Okay. Well, thank you all very much for, again, attending this morning. As I say, there's a lot of information that has been posted, and I'm sure, and particularly in the investor presentation, there may be many of the questions if there were more questions may be answered by going through that. I look forward to catching up with a number of you as the week progresses. Thanks very much. That does conclude our conference call today. Thank you for participating. You may now disconnect.