I am here with management from Masimo. So I wanna welcome Micah Young, the CFO, and Eli Kammerman, who is running IR and business, involved with business development as well. So it's meant to be a Fireside Chat for about 25 minutes, so let's go. All right. All right. Thanks, Matt. To get started, you know, I think this is always a mixed bag of folks who are here, so maybe just give us a couple high-level comments and help us understand how Masimo has progressed from being kind of a parameters company with some of your key solutions like SET, expanding that portfolio, and now doing more solutions and consumer. Absolutely. Thanks, Matt. So Masimo was founded over 30 years ago. We started our flagship products are in pulse oximetry, and started really in the NICU. And you know, with our technology, we had the first indication of accuracy that was ±3%. At the time, pulse oximeters were generating tremendous false alarms, and nurses were shutting them off, and we were able to bring a solution that could measure through motion and low perfusion. And that really got us into a wedge in the NICU, where babies are moving and try to monitor them. So that's where we started. We've developed not only the pulse oximetry sensors, but since that time, after initiating a lot of the innovation into OEM devices, where we partner with large OEMs like Philips, GE, Dräger, and companies like that, we've also created our own Masimo-branded monitors as well. Over the years, we've built a very large installed base. Today we have about 2.5 million drivers in the field that are consuming sensors. We have a razor blade model with that. We've also extended that innovation, that Signal Extraction Technology, where it really removes, like I said, when you're moving or you have low perfusion, it can extract the right signal and provide the right measurement. That we took that innovation and moved that into some of our products we call Rainbow, and that we got into total hemoglobin monitoring, continuous hemoglobin measurement, Oxygen Reserve Index. We just got approved this past month to launch that in the U.S. with 510(k) approval. That's been a big product for us. And other parameters like CO, methemoglobin, carbon monoxide, being able to measure those as well. What we've done, though, is expand from those core parameters into other categories like capnography and gas monitoring, brain function monitoring. We've gotten more into hospital automation, where we're helping hospitals streamline their workflows, manage the data that's coming off the parameters, and today, we have one of the largest device libraries in the world, where we can connect over 1,000 devices in hospitals. So we can bring all that rich data, live data, and really move that through hospital systems to distribute the data to any endpoint in real time, whether it's parameters, alarms, and alerts, video streaming as well. So we've become a data management company as well, and we've been able to monetize that through subscription models, driving revenue per bed within hospitals, providing those type of services. Now, here recently, we've been going from the hospital and into the home, starting with telehealth. We have wearable wireless devices that we've been able to shrink down into that can monitor patients remotely, and whether they have chronic diseases like CHF, COPD, and partnering with government-sponsored organizations to manage the population health or large systems around the world that have their own chronic disease management programs. Great. So on this last call, you talked about c ontinued share gains and some record customer contracts. The healthcare business continues to do well. Can you talk about anything that's changing there in the competitive environment? A lot of people ask us, you know, why hasn't someone else caught up to you on especially the core SET? Yeah, absolutely. So, you know, we had some very strong years over the last three years. You know, we've been able to achieve record contracting levels of winning new customers to our core SET technology, as well as other platforms. You know, we've seen contracting pick up significantly from even back when, you know, pre-COVID levels, back in 2017 through 2019. It's a tale of two stories, though, right now. We're... You know, we saw some very large orders coming through during COVID. Hospitals were stocking up with sensors, and there was a lot of high-acuity COVID patients running through the systems, and that drove a lot of sensor utilization during the COVID years. Our installed base has grown significantly. It's grown from, you know, close to 1.8 million installed base back in 2019 to today, we're about 2.5 million. And even though utilization has. You know, it went up with the higher acuity patients running through the hospitals, we're settling back in to where we're still seeing good utilization per driver, even on a much larger installed base. If you look at our consumables today, they're, you know, we're generating revenue per driver that's very consistent with what we were doing back in 2019. So even though utilization's come down, you know, we've always been a very steady, high-single-digit growth company, even hitting low single-digit or low double-digit growth as well. And that's really, you know, the reason we still have that competitive advantage is, you know, we've created those relationships with the customers. Innovation has been key for us because as we start to innovate in areas like automation, telehealth, wearable devices, not only do customers come to us because of the accuracy of our core technology, but they also come to us with our innovation. And I think that's been a big driver of the gains that we've seen in market share. Great. So I wanna unpack a couple of those issues that you mentioned. So, you know, firstly, given the guide down on the 3Q call, and you talked about some differing ordering patterns, and we saw your baseline growth has been steady, but you have this COVID bolus that's now kind of reverted to the mean, if you will, right? That's right. So, help us understand a couple of things. One is, what are the key indicators that you've been looking at to understand how to forecast Q4 and next year in terms of maintaining that baseline? And how can investors have confidence that utilization will continue to be stable versus maybe going down off of a larger base? Yeah, so Matt, when we looked at the data—I mean, last quarter was the first quarter we've missed earnings number in a long time. We've had a lot of a good run. Whenever we look back at the quarter, you know, as we moved one more quarter forward, we saw utilization trends are coming back. We're seeing that move up sequentially. The challenge we had was understanding not only the inventory levels of customers, because they did carry much higher levels during COVID, and we think sometimes even 2x what they normally carry. Those have come down and leveled out. We've seen through the ordering patterns, utilizations coming back and customers are back to the ordering that we expected. We think the inventory, any de-stocking is the majority of that's behind us now. And we're seeing sequential improvements. From Q2 to Q3, we stepped up sequentially about 10% in revenue. And we saw a strong October, and I think even, you know, what we're hearing out there in census, census is up, even in inpatient, about 2%. And I think it was around 1% that we saw last quarter. So things are going in the right direction, and if we look at the guidance for Q4, after reviewing, you know, the utilization, customer ordering patterns, understanding where inventory levels were and where they are now, as well as the normal seasonal uptick to Q4, again, summer months, Q3 is always our lowest seasonal quarter, and Q4 is our highest seasonal quarter. So we typically see about an 8%-9% step up to Q4 v olumes as you know, more surgeries are scheduled, and you're seeing more higher acuity going through the hospitals. And maybe in that Q4 step up that you've seen so far, some of it's seasonal. We've also seen some signs of early flu. Maybe talk about how that impacts you, and underlying all this, what are the key things that you've actually imputed into Q4 versus what you might normally put into guidance? Because you're being a little bit more conservative, I think, than usual. Yeah, yeah. So we really looked at, you know, where utilization was trending all the way through October, and that informed the guide. We took out the large orders that you know—we still believe they'll come, but we removed those from the upper end of our guidance and really established a range of guidance around utilization. So to be at the low end, you know, utilization would have to get worse than we saw through October. The higher end assumes that we'll see some impact from flu and an uptick there if it's a stronger season. Data coming out of Australia, it was a strong flu season there. We're seeing, you know, if you look at the data that's out there on the CDC website, you'll see that flu is ticking up early. But we also, you know, don't wanna get ahead of ourselves and put that in the guide because we saw last year the flu season started really early in November, and it died off pretty quickly, and it didn't continue on through February like it has in past years. So we're trying to be mindful of that. But a strong flu season can add a point to growth in the two or three months that it covers in the fall or in the winter. Yeah, and on those large orders, just remind us. I think you had called out $26 million in large orders in Q2, skewed a little bit to telehealth. But remember, most of your business is consumable. So just remind us how much is usually capital, usually large orders, and how you expect that to trend on, not just this quarter, but the next year or two? Yeah. So, as far as consumables, consumables represent about 85% of our revenues. Fifteen percent comes from capital equipment. Again, we are-- we're a razor-blade model, so we place the equipment, in return under those contracts, we get a recurring revenue stream of sensors. And the large orders, I mean, you know, when you break that down, one's for telehealth, we're getting into that, and, you know, we've had pilot programs outside the U.S. We're looking for some large orders that could potentially be coming from that, from those programs, and turning into contracts there. We're also, you know, we have relationships with global health organizations as well that are more NGO type organizations that, you know, providing equipment and for the needs for global population health. So that's another opportunity for us, and we've always had a steady stream there, and, you know, we expect those to continue on. We're just not including some of the larger orders for this year. You know, how do we square the growth in the backlog and some of the indicators from your OEMs, whose monitoring growth has been relatively strong, but they're also struggling to convert some of that backlog into revenue? So what can you do to, I guess, accelerate that rev rec process, and how much friction are you seeing out there in your ability to install? Yeah. To your point, we've had very strong contracting. This year is another record through the first nine months. We'll see where we land with the full year. But the backlog or what I call our unrecognized contract revenue, that's up 16% year-over-year, about 4% sequentially. So we're still seeing strong installations in terms of what we've done historically. It's just not keeping pace with the conversions that we've had on contract. So we've got to get those installed. Some of the things we're doing are making sure we've got the resources internally reallocated to make sure that we're driving those installs and have the available staffing. So we put more resources to that. We're also looking at, you know, using some loaner equipment, and even if we have to go acquire some to help us speed up some of those installs, rather than wait on OEM partners to be able to release out of their backlog. And, you know, it's very dependent, though, on staffing at hospitals, being able to schedule the installation with the hospital, as well as getting the OEM equipment. So those are some of the things we're doing on our own to try to speed that up, but it's very dependent on the hospital availability. Just on the base business, one other theme I'd like to touch on is shift to outpatient- Mm-hmm. and ASC. I know you have a lot of presence in the ASCs, but there are more reusable sensors there. Help us understand, A, you know, how much of your growth is dependent on inpatient census growth, and what you can do to capitalize on the shift to ASCs? Can you convert them? Yeah. Can you convert them quickly? Yeah, our historical growth has always been dependent on about 1%-3% of inpatient admissions and volume growth, even surgical growth. So, you know, it's good to see things returning back to kind of a 2% growth in October, and hopefully things will continue to grow there. But there is also, you know, outsized growth in outpatient and ASC, ambulatory surgical centers. So, you know, we've got a pretty high share of that market with ASCs. I think, you know, it's well above our average share across the hospitals. And, you know, we're doing things to try to really drive improvements there, help those ASCs understand infection risk, convert them over to disposable sensors. And some of the ways we're doing that is, it's throughput in those settings are very important. You know, hospitals aren't making or those ASCs are not making as much money as some of the inpatient surgeries they're having in the hospitals. So there, it's important for them to drive volume and throughput. So, you know, we have opportunities to really come in and streamline some of their workflows by helping them remotely monitor patients more than. You know, you can monitor up to 200 on some of our platforms. So, being able to drive the automation, the workflows, and helping them get through those volumes quicker is something that we're trying to really position with those settings. You mentioned ORi, and I wanted to talk about some new products. You disclosed in Q3 some pretty healthy contributions from ORi internationally already in a pretty, pretty short time frame. Yeah. So maybe, A, tell everybody what ORi does, why it's important, and, B, talk about how that could contribute here in the U.S. as well. Yeah. So Oxygen Reserve Index is, if you have a procedure and you're intubating a patient, and you're raising—you know, providing supplemental oxygen, and you're raising their oxygen levels, and then you're trying to see where they are in terms of desaturation, that tells you whether or not you need to abandon the procedure because you know that they're coming down too fast, or you can continue with the intubation procedure. So that's what that does, and, you know, it also has our core five SET parameters. So think about pulse oximetry, oxygen, blood oxygen level, pulse rate, perfusion index, all those core parameters. So combining that with Oxygen Reserve Index gives us the ability to really drive that in the hospital setting, and we think that that could even become a standard of care. And it's a higher priced sensor. So, you know, on average, let's call a SET sensor, you know, $8-$9. You could upcharge to a $12-$14 sensor with moving from two LED to four LED and provide that additional measurement. So the adoption outside the U.S., we've seen it, you know, approach 20% now of our rainbow revenues, and our rainbow revenues are actually getting close to 15% of our overall revenue. So that's been a successful product, and we've only had it out there for, you know, a little over four or five years. And these things take time as far as early adoption, but once we saw that adoption take hold, it's climbed pretty well for us. So getting that 510(k) approval has been important for us because now we can monitor or market it in the U.S. Maybe just rounding out newer offerings on the healthcare side, could you talk a little bit about your hospital automation business, some of the components of that, and how that's been contributing as well? Yeah. So hospital automation, the components there is we do have a capital component sell. We sell Root devices, we sell Patient SafetyNet servers, so that becomes a capital component. That gives us all the connectivity, where we can go into a hospital, connect all the beds, tie that into whether it's a central nursing station or where they can remotely monitor multiple patients at a time. We're also getting into you know, advanced algorithms for decision support, so things like Halo ION or Halo Index, and that provides a score that really can combine all the different measurements coming from that patient, and combine it into one score that really can monitor whether or not a patient's deteriorating or not. So easier to do from a central nursing station. It provides that real-time feedback on the patient. And also, we're getting into things like Sepsis Index and being able to detect that as well. So, right now, we monetize more of kind of a subscription revenue per bed that we're shifting into that model over the past few years. You know, we've even acquired a company, connected care business from NantHealth. We've moved them from more of an annual model or a capital model to a subscription-based model. It's been some near-term pain points, but it's gonna benefit us long term. And, you know, that business is probably around 2% of revenues or so. But that's a great opportunity for us to really drive growth going forward. Let's pivot. You made a strategic pivot about two years ago now, almost, and moved into consumer with a vision to bring some of this hospital-grade technology into more consumer formats with the purchase of Sound. So maybe talk about that strategy as a high level. And then I wanna talk about some of the new product offerings that you have there, and how they could contribute as well. Yeah. So over the last five years or even the last decade, we've been working through, you know, taking some of the sensor capabilities and moving it into more wearable wireless, so untethering the patient. Now we have wearables. We've had wearable wireless sensors in the hospital. We've got things that can attach to the chest. They can provide core body temperature. We're getting into a lot of different areas with wearables. Most recently, we've developed what's called the W1. It's our first watch, and it's a wrist-worn device, has all the core sensing capabilities of SET pulse oximetry. It's not a smartwatch, but we are looking at a consumer version of that. That will be more of a smartwatch with cellular capabilities. We have the module that's used for the W1, where we've submitted for 510(k) approval of that. That's gonna be very important as we move into telehealth, telemedicine. And that becomes part of that platform, for those, you know, one-third of the population that has a chronic condition and really going after that market. For the consumer side, you know, we're launching our first, you know, baby monitoring system. It's called Stork. That's gonna compete with in the smart baby monitor market. It's about a $500 million market, part of the $1.5 billion broader baby monitoring market, but this is more the premium segment. And, you know, that's gonna be a great opportunity for us. The reason we moved and really went after a consumer organization that can. It was really for commercialization. So we had all the capabilities. We've made all the development, you know, spent all the investment on R&D. We're now ready to go to market, and we needed that team to really push that product and also to keep the focus on our healthcare business and allow that team to really go after driving us and driving penetration into the broader consumer health market. And let's touch on some of the goals for consumer over time, too. You talked about Stork. You've got the watch, the W1 that you talked about. You also have Freedom. Yeah P otentially getting approval here. Maybe give us a sense for how you think all these new products could contribute to, to growth next year at a high level. Yeah. You know, in our long-range plan, we've put a, a one percentage point contribution to growth, just really, really focused on. And that was really focused on Stork, because that was the one that we had you know, most ready to go to market. You know, we could see our, our goal is to really start to drive that as, you know, 1% contribution starting out, but ultimately, that becomes a much greater contribution as we start to roll out, Freedom and, and the band, the watch, as well as, as we're getting into over-the-counter hearing aids as well. So, so we, we expect those to be you know, become a significant material part of our business here in the next three years, and, even greater than what we've put in those long-range plans. So, you know, we expect to see about at least a percentage point of contribution next year. In a couple minutes, maybe we should talk a little bit about margins. It's been a big focus for you, I know, and I guess to unpack some of the different margin drivers. I know you've taken some pain from inflation and labor. Talk about some of your abilities to drive back gross margin with things like scale. Yeah. Next, some of the efficiency programs you're doing in Malaysia. Yeah. So over the past, you know, we had margins, gross margins that were up in the mid-60%. Those have been challenged with all the supply chain over the past few years. That's starting to subside, but what's really been impacting us is the inflation that we've seen and labor inflation in Mexico. So a lot of our operations, over 90% are down in Mexico, and not only has the currency impacted us, the peso against the dollar, that's probably contributed about 200 basis points of headwinds, and we've had another 200 basis points of headwinds coming from labor inflation. So one of the things that you just mentioned is we're trying to shift all of our high-volume sensors, the majority of those, over into Malaysia in the next two years. So by mid-2025, the goal is to be up to about 80% of production, and we'll still maintain production in Mexico, especially as we launch new products. It's very close to our engineering teams, where they can work hand-in-hand with that manufacturing plant. So that we expect to contribute at least 100 basis points. We've got a lot of. And that will continue to scale beyond that. We also have a lot of cost reduction projects we're focused on with taking costs out of existing products, especially that are less mature, like capnography and gas products, brain monitoring products, and even ORi sensors as well. Maybe the last one to wrap up, so just, in terms of operating margins, you know, you did take some costs out this year. Some of those are coming back next year, including stock-based comp. How are you able to offset some of those costs returning to be able to grow, let's say, your earnings in line with the top line? Yeah. So the goal is to. you know, we're still working through the budget process. We'll close that out next month. Our goal is to grow earnings in line with revenue. The ways we're doing that is really gross margins is gonna be key for us. We expect to have at least 50 basis points of improvement there. We're also taking cash expenses out to try to offset as much as we can of the headwinds of those non-cash equity coming back into our expenses, as well as you know, cash bonuses and different things like that for performance. It's gonna be a combination of gross margin improvement, as well as the costs we've been taking out this year in the second half that should start to benefit us throughout the next year. Great. I think we're out of time, but thanks so much for your time, and thanks for your interest in Masimo. All right. Thank you.