All right, thank you, everyone, for joining us today. I'm Drew Ranieri, a medical device analyst here at Morgan Stanley. It's my pleasure to have Micah Young, the CFO of Masimo Corporation, along with Eli Kammerman, Head of Investor Relations. So before we jump into Q&A, I just have to get this disclaimer out of the way first. For important disclosures, please see morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales rep. So Micah, Eli, thanks for joining us today. Micah, I'm going to hand it over to you for a brief overview of Masimo, and then we'll jump into Q&A. So the floor is all yours. Absolutely. Thanks, Drew. Yeah, so coming into this year, I think COVID brought a lot of uncertainties around the pace that we'd see hospital census and patient volumes recover throughout the year. And as you know, our sensors track very closely with hospital census and hospital admissions over time. And I think one thing that's been answered is we've seen a little bit faster recovery. In the second quarter, we saw we delivered strong revenue results that really were driven by sensor growth. If you look at our sensors, we grew 35% year over year. We're about 5% increased sequentially from Q1, which is very representative of the rebound that we're seeing in patient volumes in the hospitals. Number two, coming into the year, there's a lot of uncertainty around we had a very strong growth last year. We grew over 20% on our top-line revenues, which was really driven by the demand for pulse oximetry equipment, and even when sensors were down during the pandemic, as hospitals were delaying elective procedures, and also there wasn't the same level of volume coming in for COVID hospitalizations, we saw a lot of pressure on our sensor volumes last year, but that was more than offset by the strength of our capital sales and equipment that we put out there in terms of instruments and boards, so we grew our installed base 17% last year coming into the year, and I think there's a lot of concern around that we see a pull ahead of a lot of those drivers in last year, and what's encouraging is we saw very strong driver shipments in Q1 and Q2. Our installed base is up about 11% year over year. Still growing the installed base. We exceeded expectation on both top-line revenue as well as our driver shipments in the second quarter, which caused us to raise the full-year guidance for the year to $1,216 million for revenue. We raised our driver shipments about 270,000 from originally coming into the year, about 240,000. I think what we're seeing is a stable business, getting back to growth, strong growth in our sensors. That's going to be, with all the new customer wins we've had this year and last year, that's building a nice recurring revenue stream for the business in terms of sensor volumes. We're encouraged by where the business is heading as we move into 2022. Got it. Great. Thanks for the overview here. Just to probably jump into some questions on the procedure side, just given that Masimo touches so many hospitals, you're tracking close to census volumes. Can you offer up on kind of what you're seeing across the U.S. in terms of normalization or any impact from Delta? Are you seeing a step up from your second quarter results earlier, or are you progressing? And to layer something else in there, I mean, I know that you have a large NICU presence, a large market share. So is there a balanced impact across just the regular hospitals and the children's hospitals as well? Yeah. No, Drew, I think we're seeing very stable hospital census despite some pockets right now. If you look across the U.S., for example, there's some hospitals in Florida, there's some in Texas that have even publicly announced a delay of two to three weeks for elective procedures because they've had a temporary surge in COVID hospitalizations. And I think we're seeing that in pockets. But for Masimo, we look at more hospital census, not just electives. We are tied to elective procedures, and that does impact our volumes. But overall, we're really tied to hospital admissions and hospital census. And we're seeing pretty stable census numbers right now, which is very encouraging for us. Typically, the seasonality of our business steps back a little bit from Q2 to Q3, especially as you think about hospitals typically are not doing as many surgeries. There's more vacations in the third quarter, and then it steps back up. There's a nice step up in Q4 because people don't want to be down the summer months for surgery, and typically they schedule those surgeries in the winter months, so that's kind of what we've implied in our guidance is kind of a little bit of a step back and then normal seasonality in Q3 and then stepping up in Q4, and like I said, we're seeing stable and strong census volumes right now, and we're hoping to see that continue. Got it. And I was just looking over one of your last quarter's transcripts. And you or Joe mentioned just as you're talking to hospitals, they want to broaden their practice of continuous monitoring to more patients at their institution. So just to go in a little bit more detail there, you were talking about how last year there was the acceleration of installations or demand for your boards and monitoring equipment. Just is that being really utilized in the general floor? Are doctors or administrators using this throughout the hospital? And is this kind of including just pulse oximetry or your advanced parameters like capnography as well? Yeah, absolutely. So just to kind of give you some data points, we do track kind of our top 30 customers in the U.S., the ones who took or received the most equipment last year in terms of our monitoring equipment. And what we're seeing there is that those top 30 customers are growing at a faster rate in terms of sensor volume growth than the rest of our customer base. So we've also had conversations with those customers, and they are moving more of that equipment from a short-term fix was kind of the increasing bed capacity, especially for ICU bed capacity for COVID patients last year. And now what we've seen is they're moving those more to lower acuity settings like the general floor. And we're seeing good revenue and sensor volume growth in those accounts. So the utilization has been very strong. And I think the other thing that we're seeing now too is we shipped a lot of technology boards last year. And a lot of times those go into OEM multi-parameter monitors, and they get integrated in. And then they, of course, we go alongside as the OEM partner sells that monitoring equipment into a hospital, we go alongside with a longer-term sensor contract. And what we're seeing there as well is we're seeing the contracting happen because the first half of this year was a record first half in terms of winning new customers to Masimo technology. So that's something too we're tracking very closely is our contracting to see are those boards becoming active. And so far, we're seeing very good results there. Got it. So I've been away from the story for a bit, but just with your installed base now at like 2.2 million boards and instruments, or maybe that's just your shipments over the past 10 years. But I just recall that part of the story a couple of years ago was really potentially driving ASP increases on those boards. So maybe just help me better understand where you are there and then also just layering on or the potential to layer on the advanced parameters and even how we should be thinking about just ongoing Rainbow adoption and hemoglobin. Yeah, absolutely. So Drew, yeah, I think your first part of your question was on the ASP per driver, the revenue per driver. And what we're seeing right now, if you just did the pure math on the 2.2 million of installed base of drivers, our revenue per driver is about $550 per driver per year. If you kind of pull out the instruments and boards and our capital revenues and look more at our recurring revenue stream, we're about $450 per driver per year. So that is actually, when you pull that out, the instruments and boards, even this year and last year, we're seeing an increase in our revenues per driver when you pull that out because last year, again, was a big capital year. And if you go back to even 2019, we've seen a nice step up in revenue per Driver over the last two years to now be around, like I said, $450 per Driver per year. Where we have the opportunity is I think we do have a lot of opportunity to expand that revenue per Driver. There's a few key things. If you look at our advanced parameters and Rainbow, so think about Rainbow as we do total hemoglobin monitoring, continuous hemoglobin monitoring, that will give us the ability to upcharge to a higher-priced sensor than SET. And then there's also the ability to pull in the advanced parameters like capnography, SedLine, and O3. And if you look at those, they can range from three times to, call it 10 times the price per SET. When you're looking at Rainbow, that's going to be on the upper end of that range, so that's going to give us the ability to charge a premium price for the premium technologies that we offer. The other thing is hospital automation. As we continue to drive more adoption of hospital automation, right now we're playing more in the lower acuity settings of the hospital in the general floor where we have service revenue per bed, and that kind of starts around 800-1,000 per bed at the lower acuity settings, but that is a pull-through opportunity for us. Even $1,000 per bed could add to the $450 per Driver per year, so that's going to be another pull-through opportunity. Then beyond just that starting point as far as the service revenue of $1,000 per bed, we'll have opportunities to increase that as we provide advanced parameters or, sorry, advanced algorithms for decision support. We bring on Halo, which gives us advanced analytics, or UniView software where we can basically serve as a cockpit to monitor all the parameters inside the operating room. There's different upcharge capabilities there as well that could give us upside to the ASP per driver. Got it. Got it. And just from hearing the story a bit, I mean, it sounds like or it's clear that COVID really accelerated some of the penetration in the general floor, maybe if I'm reading that right. So where does the penetration stand today? And as you look at the non-converted opportunity at this point, I mean, what's it going to take to kind of move that market share higher? How quickly can you do it? And is it about just an inflection point with data or building critical mass at select hospitals? Just a little help there would be great. Yeah, great question. So today, Drew, we're approaching by our best estimate about 30% penetration on the general floor. If you go back to pre-COVID, back in 2019, we think we were around 10% penetrated on the general floor. So I think as we look at that opportunity, we believe that that will grow over time in terms of penetration. We believe it should be standard of care to monitor every patient on the general floor. But there's definitely a clinical need to monitor patients who are, if you think about those who just had surgery and they have opioids and they're taking opioids on the general floor, or a patient who has an illness that's a respiratory illness or a cardio illness. Those are the types of patients that need to be monitored continuously. I think what's really going to drive that adoption is going to be clinical data. I mean, if you look at the Dartmouth-Hitchcock study, and we talk about this a lot because it's a 10-year study that showed zero dead in bed from opioids. And they had deaths prior to implementing Masimo's SET technology along with Patient SafetyNet on the general floor. So if you look at that study, even over that 10-year period too, they reduced the rapid response team activations and ICU transfers by more than 50%. And it resulted in millions of dollars of savings, especially when they expanded that to over 250 beds in the hospital. So those are the type of studies that are going to be critical to drive adoption. The other piece is we've got hospital systems that we can use as reference sites, and that's going to be critical as well, so it's going to be a combination of clinical data to drive adoption as well as those reference sites to really show how they're improving patient care on the general floor. Got it. Got it. And with your shipment guidance raised to 270,000 for this year from 246,000 previously, you beat the second quarter, I think, by about 12,500 shipments or boards. Instruments. So can you just talk about the strength that you're expecting in the back half of the year? And kind of frankly, for this full year after such a great 2020, I mean, is this kind of Philips partnership driven? I mean, kind of just what's going on that's causing such an above-historical average increase in your demand? Yeah, it's a good question, Drew. If you look back at 2019, we shipped about 240,000. That nearly doubled last year because during the pandemic when they increased the number of beds, when hospitals increased beds. But this year, we're still above that pre-pandemic level of 240,000. What's driving it is there's a few things. I think number one, the conversion of new customers has really helped fuel the driver shipment number, especially this year. I think number two is just the expansion, continued expansion of continuous monitoring across the hospital system. So even existing customers are expanding the number of beds that they're monitoring. And then Philips, that partnership has also contributed. That's performing. We're performing well together as partners under that agreement. And that's helped us step up the shipments over time as well. So there's several things contributing to it. If you look at our 270,000 driver shipments this year, and we estimate we're probably replacing about 160,000 drivers right now, so about 40,000 a quarter. So that leaves about 110,000 that really represents new customer, new business, as well as expansion of beds within existing customers. So that's kind of what we're seeing as far as the demand this year. And that's why the confidence that we have right now with the contracting has given us that ability to raise that up to 270,000 this year. Got it. And then just that increase in new customers that you were just talking about, is that really weighted more towards the U.S. at this point? Or is there also some balance between the international opportunity? I feel like we've talked about before that international has kind of always been about 30% of sales. There's opportunities to move that higher. But maybe it might be a good time to just kind of touch on international too. Yeah. Drew, I'd say last year, we had a record contracting year for the full year last year as well. And I'd say that was probably more outweighed with the U.S. business on contracting. I think this year, the first half, what we're seeing is a lot of strength coming from OUS. And that's really driving a lot of new business there for us. Okay. And maybe just to shift gears to the competitive environment for a moment, but have you seen any changes in the competitive landscape in your core pulse oximetry technology? Has there been any more pricing pushback? I'll stop there for right now, but I have a couple of follow-ups there. Yeah. If you go back, let's say seven years ago, the leadership team here at Masimo, this is even before my time, set what they believed was the right price, a floor price, because there was a lot of competition on pricing. If you go back seven years ago, and we were probably declining on price in the mid-single digits, mid to low to mid-single digits. And what we've seen is since we set that floor pricing, and you have to have high volume to get to that floor pricing, but we've seen stable price now because it's taken five to seven years of contracting to work through those contracts to stabilize that price. But today, I'd say price is very stable despite our main competitor discounting at a substantial amount to us. And they've been discounting at these levels for the past seven years. So it hasn't really changed, but we've been able to stabilize price and, if anything, see some price increases due to CPI increases that we put into the contracts. Got it. And just on that competitor, just over the past few quarters, I think there's been more emphasis being placed on their ability to capture market share across a number of their industries. And even pulse oximetry and patient monitoring comes up, I think, pretty frequently. So I mean, it looks like your growth is still above kind of their trend. So I mean, who's winning share from who? Or are you kind of both seeing just an uplift in the market? Yeah. Well, I would say that we're still winning share at a very similar pace we've been over the last five years. But I'd say the overall market has also been uplifted. If you look at COVID and the pandemic last year, over the course of this last year, if anything, it's highlighted the need for pulse oximetry and the importance of pulse oximetry in the hospitals and even more broadly in the hospitals. And that's why you're seeing expansion of monitoring across the systems. But I think because of the expansion of continuous monitoring throughout the hospitals, I think that's expanding the market here for us. And I think all of us are benefiting from that. But like I said, we've seen some record new customer conversions, which tells me that we are taking share at a pretty substantial pace. Got it. Maybe one in kind of the competitive landscape, but with Baxter's announced acquisition of Hillrom, I mean, how could that acquisition maybe reshape the connectivity data landscape? I mean, do you have opportunity for some potential dislocations as the companies come together? And I know that even Welch Allyn, to some degree, was a partner in some board placements. But just any early thoughts or reactions to that for your business? Yeah. I think when we look at the competitive landscape, Philips, Hillrom, those are definitely viable competitors, and we think that they've got a very good position in the space. Where we differentiate ourselves is more a lot of these main competitors for us in the space are really connecting data. They're connecting to the EMR. They're trying to connect the devices, and they're also moving that information to the EMR. Where we differentiate ourselves more is we're managing real-time information, patient data throughout the hospital system, parameters, waveforms, audio-video, alarms, and events. And that's all, like I said, it's in real time, and we can distribute that data to any endpoint in the hospital, whether it's back in the OR where we have a UniView software where it serves as a central cockpit view up on a large monitor in the room where you can customize the display of all the parameters. Or if you want to manage that data through Replica, which is kind of our it's a two-way intelligent communication on a smartphone or a smart tablet that can help nursing staff escalate alarms and alerts and better manage care. We can also deploy that information into what's called a Halo scoring index, which is you could take up to 70 different parameters, and through those algorithms, it comes up with a patient score to tell you if the patient is improving, if they're deteriorating, or if they're stable. Those are some of the things that we can do: analytics, scoring that really differentiate ourselves there. I think it's more than just medical device connectivity and integration to EMR. I think it's where you're going to see the winners are going to be what they can do with that data to improve patient care and improve some of those complex workflows in the hospital. Interesting. I know we don't have much time left, but I want to hit on so many different topics here today. But just maybe switching to the pipeline for a moment, we talked about hospital automation a bit earlier and the opportunity there. But maybe if we can just hit on Masimo's SafetyNet for opioid and actually non-opioid. For the non-opioid side, I think Joe's talked about previously that there could be opportunities in other disease states like COPD and chronic heart failure. But as you kind of look longer term beyond opioid or respiratory depression or some of the respiratory depression disease states, I mean, what are you most excited for for a product like Masimo's SafetyNet? Yeah. I mean, I think the two that are right on the horizon right now are we're working with hospital systems, and they're piloting right now to evaluate the capabilities of the system because they've got a lot of interest in Masimo SafetyNet for COPD and CHF. That alone is a big market because there's over 22 million patients a year with CHF and COPD. If you look at that and look at how we kind of price those kits, it's a large market that could be over a $3 billion market for us that alone. That's going to be something that we're excited about right now because it's right in front of us. We launched the system last year, and we've got a lot of interest there. And it's something where we can take through our existing channel, which is through the hospital, and help them manage their patient populations. Opioid SafetyNet is another one, and that uses similar technology there. It just adds a hub that serves as a safety net to alert and alarm local EMS or caregivers. And we're hoping to get that approved in the U.S. through the FDA. But right now, we're launching in a handful of countries outside the U.S. And that's another one we're very excited about because it's a very large market. We believe that the OUS market could be just as large as what we've sized in the U.S. with 45 million prescriptions in the U.S. With the Opioid SafetyNet product, I think you switched to a de novo filing from a 510(k), maybe. Okay. Do we get approval for it in 2021? Just have you been able to have any very early reimbursement discussions or have a clearer sense of maybe what direction you could go upon commercialization? Yeah. So last year, if you go back during the pandemic, it delayed a lot of things. We pivoted and really focused on COVID patients both internally as well as the FDA. And I think now we definitely have the attention. I think we're working through it. We've submitted all the hospital data over a year ago. We've been collecting data outside the hospital as far as how this product can do as far as getting the patient to respond or providing that safety net feature. And we're hopeful that that'll get approved soon. We're still hopeful for this year, but we can't guarantee any timelines at this point. But we've been submitting data. The data has looked good to us, and we're encouraged by it. And it's just a matter of how much data is enough. And we don't know that answer yet. But we are having an ongoing dialogue, and we're hopeful it'll be soon. But I can't really put a timeline. On the reimbursement front, we're working with both CMS and private payers to understand what's the clinical data that's going to be needed to get reimbursement coverage here. MCIT could be an opportunity to get coverage for a breakthrough technology like Opioid SafetyNet. But we won't find out about MCIT. It's been delayed till, I think, December this year. We'll find out more about it. But that could give us coverage. And we just need to understand coding and payment because that was never really defined. But regardless, it will take probably three years for us to work through the clinical data, what's needed, and go after reimbursement if we can't get something earlier like MCIT. And reimbursement's critical here. Unlike managing long-term chronic disease states like CHF and COPD, that can be managed through a DRG code with the hospital system. Here, the consumer would be paying, and we need to have reimbursement to really drive that adoption. Got it. Just a couple of quick final questions as we're coming up to the top here. But the company's had a very successful history of defending its technology and IP. It seems like Joe has been maybe going on the offensive against a larger technology company. So I guess, can you give any sense of your belief in being successful in kind of defending your IP? Yeah. Absolutely. Yeah. I mean, you know the company very well, the history here. And we've had great success with defending our IP and with settling some of these patent infringement-type cases. I can't comment on where this one will go. But what I can tell you is we've put out there's three different areas that we're focused on right now. Number one, we've got a trade secret case with Apple that's moving forward. It's ongoing right now. The patent infringement case is really pending review of about 21 IPRs. So Apple has reviews of our patents. So they countered back with 21 IPRs. We're working through that. That'll probably take till mid to late next year as we work through that. And then the third leg of this stool, I'd say, is we also filed a complaint with the International Trade Commission, the ITC. I think it was in July this year. And it's really to stop the importation of the watches into the U.S. And we'll see where that goes. It's about an 18-month process, anywhere from 15-18 months. So we'll probably find out more about that later next year. So that's kind of where we stand right now. Can't comment on the outcome, where we think it'll go. But we definitely have three different areas that we're going after here. Good directional commentary. And I guess just closing out here, just anything with flu, have you kind of embedded that in your guidance? The past couple of years, it just seemed very funky with a typical flu season. But just your early thoughts here. Yeah. You go back to 2017 through 2019, and we had heavy flu seasons, right, in the winter months. Last year, there was hardly any flu season. So I think it's going to be. We're seeing a little bit of an uptick in flu even early right now. But I still think it's going to be below what it was in 2017 to 2019 as far as it's not going to be as heavy a flu season because there are people that are masking and social distancing. But I think it's going to be heavier than last year because I think that people have gotten a little bit worn out by the pandemic. And I think there will be people who'll let their guard down. And so I think we're going to be somewhere in between. Your guess is probably as good as mine at this point. So yeah. I don't know about that. You follow the census a little closer than I do. But Mike, Eli, it's been great having you at the session today. So thanks so much for the time. All right. Thank you, Drew. Thanks, everyone. Take care.