Q2 2020 Masimo Corp Earnings Call
Companies press release is available at Www Dot Massimo Dot com.
This time all lines have been placed a mute to prevent any background noise. After the speaker's remarks, there'd be a question and answer session I.
I'm pleased to introduce Eli Kammerman maximum vice President business development and Investor Relations.
Thank you Hello, everyone.
Joining me today, our chairman and CEO, Joe Kiani, an executive Vice President Finance and Chief Financial Officer, Mike a young this call will contain forward looking statements, which reflect mass most current judgment, including certain of our expectations regarding trends in 2020.
However, they are subject to risks and uncertainties that could cause actual results to differ materially risk factors that could cause our actual results to differ materially from our projections and forecasts are discussed in detail in our periodic filings with the FCC you will find these any investor relations section of our web site.
Also this call will include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles or gap.
We generally refer to these as non-GAAP financial measures. In addition to GAAP results. These non-GAAP financial measures are intended to provide additional information to enable investors to assess the company's operating results in the same way management assesses such results management uses non-GAAP measures to budget evaluate a measure of the company's performer.
And seize these results as an indicator of the company's ongoing business performance. The company believes that these non-GAAP financial measures increase transparency and better reflects the underlying financial performance of the business reconciliation of these measures for the most directly comparable GAAP financial measures are included within the earnings release and supplementary financial.
All information on our website investors should consider all of our statements today together with our reports filed with the FCC, including our most recent form 10-K in 10-Q in order to make informed investment decisions. In addition to the earnings release issued today, we have posted a quarterly earnings presentation within the Investor Relations section of our website.
To supplement the content, we will be covering this afternoon I'll now pass the call the Joe County, they feel like good afternoon, and thank you for joining us for Massimo second quarter 2020 earnings call.
Incredibly proud of a team on how we continue to advance from mission to improve patient outcomes, while reducing the cost of care, especially during this pandemic.
From the beginning of the Cobot 19 pandemic, we've done our best to support our customers as they have bravely Ben on the front lines of the worldwide response.
Our unique ability to meet the needs of clinicians wasn't full view again this quarter as we reliably monitored their patients as only we could with unmatched reliability accuracy and versatility and launched multiple new products, including central would bet sore and respiratory monitor.
Sure radius T. A wearable noninvasive continues thermometer and Uniview 60, which offers patient snapshots to help what handoff communication.
For the second quarter, a product revenues increased by over 30% to $301 million and we ship 165600 technology forward than instruments, excluding handheld and finger oximetry.
I will discuss more on the call today, but now I'll ask micro to review our second quarter results in more detail. Thank you Joe and good afternoon, everyone I.
I hope everyone is healthy and continues to remain safe during these challenging times.
As a reminder, the financial measures I'll be covering today will be primarily on a non-GAAP basis unless noted otherwise.
Our GAAP results and reconciliations to GAAP can be found in today's earnings release as well as the Investor Relations section of our web site.
For the second quarter, our product revenues were 301 million, reflecting growth of 31.1% were 32% growth on a constant currency basis.
Excluding handheld and finger exhibitors.
Worldwide seldom technology boards instruments were up 175% due to increased demand from both our direct and OEM customers.
In contrast, our worldwide cells of single patient use sensors were down 8% due to the reduction in elective procedures offset to some extent by increased demand related to covert.
Our worldwide direct and distribution business revenues grew 21%.
To reached 242 million for the quarter and our OEM business revenues grew 104% to reach 59 million, which represented 19% of our total product revenues in the quarter compared to 13% in the prior year quarter.
For the second quarter, we shipped 165600 technology boards and instruments and as a result, we have now shipped over 2 million technology boards and instruments over the last 10 10 years.
Moving onto the rest of the piano.
Our non-GAAP gross margin for the second quarter decreased 330 basis points to 63.9% compared to 67.2% in the prior year period.
The year over year decline was primarily due to a higher than usual proportion of revenue coming from our technology boards and instruments, which have lower margins in our sensors.
Our non-GAAP selling general and administrative expenses as a percentage of product revenue decreased 110 basis points to 32.5 per cent compared to 33.6% in the prior year quarter.
The year over year improvement was driven by our strong sales growth during the quarter, which enabled us to leverage our operating expenses, while at the same time, increasing our investments in marketing and advertising.
Our non-GAAP research and development expenses as a percentage of product revenue decreased 20 basis points to 310.3% compared to 10.5% in the same quarter last year.
As a result of the unfavorable mix impact on our gross margins are non-GAAP operating margin decreased 200 basis points to 21.1% compared to 23.1% in the prior year period.
Despite the gross margin headwinds our global organization delivered operating profit dollar growth of 20% in the second quarter.
Moving further down the piano.
Our non-GAAP non operating income, which is primarily comprised of interest income.
Decreased 60%.
To 1.4 million for the quarter compared to 3.5 million in the prior year period.
The decrease was driven by lower interest yields relies on our invested cash resulting from federal reserve reserve actions to cut interest rates during the pandemic.
Our non-GAAP tax expense in the second quarter was 15.7 million, resulting in a non-GAAP effective tax rate of 24.2% compared to non-GAAP effective tax rate of 23.8% in the prior year period.
Our weighted average shares outstanding for the quarter increased 2% to 58.2 million compared to 57.1 million in the prior year period.
For the second quarter, our non-GAAP net income was 49.3 million or 85 cents per diluted share in comparison second quarter 2019, non-GAAP net income was 43.1 million or 76 cents per diluted share. This reflects non-GAAP EPS growth of 12%.
Over the prior year quarter.
Turning to our GAAP results GAAP net income for the second quarter of 2020 was 55.8 million or 96 cents per diluted share.
In comparison second quarter 2019, GAAP net income was 44.9 million or 79 cents per diluted share.
Now I'd like to provide you with an update on our business as we move into the second half of the year.
Consistent with last quarter, we're not providing financial guidance due to many due to the mini uncertainty surrounding cobot 19, and its impact on our normal business patterns.
Because of this I want to share with you some details on what we're seeing so far in the first four weeks of the third quarter.
As of yesterday, our quarter to date worldwide sales orders, including backlogs are up 40% versus the same period last year, driven by strong demand for our technology boards and instruments, which are up 150%.
In fact, we already have orders for over 140000 technology boards and instruments for the third quarter, which has more than two times, our normal run rate.
Our worldwide adhesive sensor orders are up 1% versus the same period last year, Despite U.S. adhesive sensor orders being down 11%.
Based on the ordering patterns in July we are continuing to see a higher than usual proportion of revenue coming from our technology Borden instruments, which have lower margins than our sensors.
Unless things change in the next two months, we're expecting our gross margins to be inline with what we just reported for the second quarter.
Also it is important to note that we are continuing to invest in our business to develop new technologies and products with a long term view towards expanding our product portfolio and our addressable markets.
During the first half of the year, we increased our investment in R&D expanded our hospital automation business.
And invested in advertising and marketing programs in the second half of this year, we will continue invest more into the business to drive increased awareness and adoption of our technologies.
Given the continued uncertainties around cobot, please do not extrapolate our second quarter in July performance into your estimates for Q3, the second half of 2020 in fiscal year 2021.
To conclude Massimo is a valuable solutions provider for healthcare institutions that are facing considerable challenges and need to optimize and expand their operations. Our second quarter results reflect the success. We are realizing by working hand in hand, with our customers to rapidly address their needs under difficult conditions, we remain steadfast in our.
Commitment to achieving our long term objectives, and creating shareholder value with that I'll turn the call back to Joe.
Thank you Mike.
The coldest pandemic has put the spotlight on Massimo.
Taking care of patients the most effective way. The first time, there is no longer only on top of leading institutions lines.
But it's an imperative for every hospital.
Mattson with technologies are the best available and have been proven to make a positive difference in the care patients from neonates, two adults, while saving costs and maximizing hospitals precious resources.
The strong demand for technology was evident in our OEM business, doubling and direct sales growing rapidly as well for example, a root connectivity platform.
Unit sales increased more than five falls over the prior year quarter.
We also experienced increased demand for a patient safetynet in hospital monitoring system.
Patient Safetynet together with bedside devices like route a lot more patients to be continuously monitored on the postsurgical for and improve patient outcomes.
In fact multiple studies conducted at Dartmouth Hitchcock Medical Center showed that patient Safetynet helped eliminate preventable death or brain damage due to opioid induced respiratory depression, and Massimo monitor patients over a 10 year period, and helped and maintain a 50% reduction and unplanned I see you transfer.
And 60% reduction and rescue events, resulting at about a $7 million savings annually.
We're also seeing strong demand for hospitals deploying route with wearable untended radius PPG sensors to monitor covet and other patients arterial oxygen saturation pulse rate and respiration rate remotely.
Using our radius PPG wireless sensors hospitals are able to move patient monitoring equipment outside of a patient's room to ensure continuous monitoring from a distance, thereby reducing transmission risks and increasing both clinician and patient safety.
The reception to date from Astellas Safetynet, our cloud based remote patient management solution, which includes radius PPG smartphone App and the Central Command Council has been overwhelmingly positive.
As many hospitals strive to expand their capacity by taking patients outside of the hospital and into the home.
Using our mess illustrating the system for remote settings hospitals are now able to monitor patients not just at home, but many other places keeping hospital beds opened for more severely ill patients.
Our technology monitors blood oxygen saturation pulse rate and respiration rate to provide caregivers with inside into patient status and recovery progress.
Since the full market release in April 120 customers have deployed Massimo safetynet to deal with the covert 19 patients surge many of them remotely monitoring their patients and the patients home long term care facilities nursing homes, and even convention centers.
Yesterday, we announced a significant expansion to the Massimo Safetynet platform with the introduction of radius T. A wearable wireless sensor that provides continuous body temperature measurements.
By augmenting the already powerful Massimo Safetynet, which features radius PPG tethered less pulse oximetry with radius T. The remote patient management solution becomes capable of tracking for vital signs oxygen saturation respiration rate pulse rate and now temperature make.
In an ideal solution for assessing the status of patients with suspected or low acuity cobot Nike.
Among other remote patient management uses which we hope will continue expanding.
Unlike spot check to monitor solutions radius key measures body temperature continuously providing a remote notification when a patient temperatures outside a clinician specified range, giving peace of mind to caregiver and patients alike.
Applied to the skin radius T. uses proprietary algorithms to measure the patients body temperature not just external skin temperature.
With laboratory accuracy within plus or minus 0.1 degree Celsius.
Whereas other thermometer solutions typically have laboratory accuracy within plus or minus 0.2 degrees Celsius.
Each hour proof single patient use sensor last up to eight days and can be warrant throughout the day and night along patients to continue normal daily activities, while still being monitored.
We also received recently received FDA clearance for central it which is a wearable wireless sensor that monitors patient position to help clinicians reduce pressure ulcers or bedsores.
And to alert clinicians to sudden movements such as fall events.
In addition, centrally detect chess movement to continuously measure respiration rate.
Central appears with the root platform using Bluetooth.
The data transmitted by central it can be displayed in various formats on route giving clinicians multiple ways to assess adherence to protocols regarding tissue stress.
Taylor care to the specific needs of each patient.
Pressure sores affects nearly two and a half million patients per year in the U.S.
Hospitals along.
And approximately 60000 of those patients die as a direct result.
With Bedsores being defined as a never event by CMS, which can lead to penalties for Medicare reimbursements, we believe central it provide substantial value to hospitals by providing information to help to minimize these events.
We also recently announced our latest automation and connectivity solution Uniview 60.
Which uses the Massimo hospital automation platform to aggregate and display patient information on the digital display just outside each patient through allowing clinicians to familiarize themselves with the most relevant details of each patient's case at the door in 62nd.
These are less before they see the patient.
Uniview sixtys intended to improve clinical workflows by helping increase clinicians awareness of important.
Patient information and advisories, which can be optimally displayed based on hospital preferences.
Unlike paper records a notes Uniview 60 utilizes its connection to various hospital information systems to display the most appropriate up to date information directly outside the patients room and an effort to help increase clinical efficiency.
And improve handoff communication between Steph.
Studies have shown then inadequate communication related to patient handoff are often where patient safety sales first.
In fact, forehand off where a contributing factor.
Nearly 80% of adverse events reviewed and attend your study conductor by Dr., Peter Pronovost and published in 2016.
In addition, inadequate handoffs was shown to contribute to $1.7 billion and malpractice costs over a five year period and the study published by the Joint Commission in 2017.
The interview 60 is one of the many innovations we have developed to take advantage of the powerful connectivity and data handling architecture of the Massimo Hospital automation platform, which connect systems across the continuum of care from bedside monitors and connected third party devices to electronic medical.
Records.
Interview 60 takes advantage of this flow of data.
Optimizing the presentation of pertinent information about each patients case on an easy to interpret customizable display.
In closing, we're proud of our pace of innovation and ability to respond to crisis and partner with our clinical stakeholders to better care for their patients.
Our global organization remains focused on delivering on our commitments and responsibilities to our customers and ultimately the patients during this difficult time.
We have so many clinically significant products based on our pioneering inventions there are helping clinicians care for over 200 million patients a year.
And we have many more exciting solutions to come.
Our future looks bright as we dedicate ourselves to our mission of improving patient outcomes and reducing the cost of care.
With that we'll open the call to questions operator.
Thank you to ask a question you want me to press Star then one on your telephone to withdraw your question. Please press the pound or hash key please standby, we compile the Q and a roster.
Your first question comes from line as Larry Corash from Raymond James Your line is open.
Good afternoon, everyone.
Joe I'm wondering if you can talk a little bit about any sort of stocking or destocking.
Dynamics that you know they have occurred during the two Q or how we should be thinking about.
The third quarter second after the year just trying to.
Right, but arms around kind of what hospitals are doing as it relates to a sensors.
The best information I have Larry is that the stocking that happened in Q1 soft in Q1, I think Q2, it seems to be more of a faisel.
So what we saw with one major customer for example that create a three month inventory. They continued to maintain that inventory, while still buying sensors for their normal pace.
So I'm not aware stocking in Q2, one thing that did happen in Q2 some of the orders that we had four boards technology boards for ventilators did get reduced.
Thank you remember in Q1, we reported that we had about 100000 boards associated the ventilators and that number dropped by about 50000.
So we.
We are not seeing that demands of ventilators increase and in fact go down and on the sensors as I mentioned, we're no longer seeing stocking.
Okay, and just a clarification on that and then one other quick question. So.
Last quarter on the call you had been pointing towards 550000 or more.
Boards for 2020, you know obviously hundred thousand about was with ventilators now you're talking about 50000 last I suspect.
So so does that mean that you now thinking more towards 500000 is at the right way to think about it.
That's right Larry we're looking at 500000 and also I think.
Last quarter, we were.
Implying are saying that thus we could that we think the ventilators may not end up being utilized on a regular basis. So we thought Oh. The 550000 100000 of them may end up eventually getting stock for future need.
Now we think while we're down to 500000 for the year, which is still over two X our normal rate.
Only 50000 of them may get stock the rest might find themselves use Dana day out even post call. It 90.
Okay, Great and then the second question was.
Just again wanted to understand how you're thinking about your supply chain.
Hi.
And just demand over the last couple of quarters in the Twoq, where are you able to ship all your orders as sort of a normal course of business would would have it.
And you know again are you are you are you having any issues just meeting or demand given the rapid build up in sales.
Well I'll look ive to say that a couple of different ways to to be.
To answer your question precisely we did have a backlog going into Q3, historically big backlog. However, we've not disappointed any of our customers and not meeting the timeframe that they want to for the products.
So we're meeting the demand of our customers.
I'm just blown away by what our team has been able to do and making sure. Even when people are sent home because of coal, but we're protecting the rest of the cells and not seen it.
At this reduction in our production, but instead an increase in production dramatic increase in production in certain areas. So yes. So we did not shut everything that was in our ability to ship in Q2, but we also did not.
Disappoint any customers.
Okay and Joe.
I'll I'll get off now, but just any way you can quantify that that backlogs that we can think about it.
Larry I think just to give me some context, then the numbers that I mentioned.
All included backlog, so when I when I spoke about earlier, the you know where our worldwide cells orders are up by 40% in the quarter.
Driven by 150% increase in boards and monitors and ended he says are up 1% does those numbers are including our backlog. So that will give you. Some perspective on the first four weeks of these third quarter.
As we're looking at the month of July what we've seen so far okay terrific. Thanks, guys appreciate it.
Thank you Sir your next question comes from the line of Rick Wise from Stifel. Your line is open.
Hi, good afternoon.
Hi, My Gosh, maybe.
Maybe you could help us so.
I understand.
Sense or help us think through the sensor members as well.
And maybe break it down geographically clearly.
Oh you what.
Stronger U.S.U.S. declined 11% I guess, a couple of course and help us understand maybe.
Different trend are you seeing any recovery, particularly to us.
What's driving the U.S. sensor volumes.
How do we think about current trends on that.
[music].
Well, it's probably too early to draw any.
And the trend lines, but since you asked we're seeing a more demand for adhesive sensors than we did in last quarter in the first four weeks of this quarter, where in the past quarter. Just we were helped a lot by all U.S. sensor volume to make up a good very.
Low demand for U.S. sensor volume.
We are seeing an uptick in U.S sensor sales demand.
As well as a downtick in the over demands from all U.S., so, but so in general it's looking a bit more normal than it did.
In the past.
Great Thats exactly I was getting at so.
So when we seem to me.
Very rough normal times.
You said your revenue from our sensors.
And that business was up.
You know, 1% nothing you said, Mike and the first what we mean I assume we're thinking about worldwide total sensor numbers in positive territory and second half and I think you're saying Joel.
That you're seeing a recovery in the U.S.
May be returned to normal U.S. and again I'm, just trying to get to a.
Projected.
Understanding the trends.
That's correct.
In Q1, Oh, we sell hospitals go to stand still on elective surgeries focused only on covert 19, what we're seeing so far in Q2 is that hospitals are opened up again for elective surgeries, but still capable of handling handling.
Cobot 19 search up so we're kind of seeing both things happen at once now and I think the only reason there might be still a lower levels of elective surgeries isn't no longer because of the supply, but because of the demand I think people that might be reluctant to go in for elect.
Surgeries.
But hospitals can certainly handle them now.
Yes.
Maybe you could help us understand I suspect that one of the questions I'm going to get asked a lot.
All right after the call it two important is.
What about the board numbers I think you all did good job of breaking down in explaining it but.
Maybe better.
I'll help people understand I mean I'm not.
May freely confessed my numbers were too high this quarter, what what do you think the street didn't understand about their their board projections and should we be concerned I don't think we answer I can give no.
That were the board.
Numbers for your might be more in the 500 range I don't think that said anything about the health business or the growth of business, but.
If you think I'm wrong.
There's a good moment to correct my thinking.
Well I think that can't be any thing seem negative from the growth in the board business it's phenomenal.
What I, what I believe it's happening and we won't know till the dust settles close covert 19 is that low acuity beds are turning into critical care beds. The way hospitals are handling cobot 19 patients as well as elective is that pretty much every bed in the hospital now is becoming a monitored bed.
So.
I there is nothing negative that I can see about what is happening to our business.
The only thing potentially in the out years, there might be a reduction in capital sales by our Oems.
So there might be less demand for our boards in the after the dust settles, but I don't know I can't really predict at all I can tell you right now it all is very positive.
Yeah, no. It seems it seems clear and just sorry.
Two more if we.
And again, you aren't getting types of the second half as we contemplate maybe the question from Micron as we concentrate Mike.
Trying to think about normal growth.
We are gonna have to.
Think about.
Well for a 21.
How do we normalize for all this and are you still kind of bad.
I think the potential is there.
Even with a different comps to be yet.
Double digit low double digit grower in 21 beyond our core or no.
Given everything its.
Happening this year, it's just not going to be possible, how would you frame. It for Rick I think the best way to look at it is you always whatever you got so many swings and the business patterns were seeing right now the best way to look at it is on a two year growth basis. So I would I would look at it as kind of 29 team.
A growing a kind of our historical growth rate with our and what we've guided to in our long term plans, which we've been guiding more recently to the upper end of that growth range of 10%.
So you know growing it you know for 29 or 2020, and 2021, but look at it more on to your growth or to your average growth rate.
That where you can normalize the quarters.
And in kind I understand the full year, because there's a lot of still theres still lot of cross currents that are that are happening and.
It's still once the lot of uncertainty around.
What hospitals will do moving forward, especially as Joe mentioned with capital. So I think it's just way too early to get ahead of ourselves on on a on 2021 and just really look at it as a two year growth comp.
Yeah. Thanks.
Perhaps add to that.
Rick has said.
I'll start by saying something I think you all know I'm optimistic by nature, otherwise I wouldn't the start of the company [laughter]. So.
What I.
What I want to tell you said I still see a lot of people not getting elective surgeries.
Because they're afraid of getting Covance 19 from the process of visiting their doctor getting to know they have problems and then ultimately going to hospitals. So I think when covert nineteens over I think you're going to see a huge surge in a hospital.
Procedures and given that we've had historically high number of drivers not getting out there.
Where people are choosing our technology over others in.
In times, when they wouldn't have but as I mentioned in my prepared remarks.
We've come to a world where it all matters now and some of the.
Terrible excuses why people didnt use our technology.
Kind of gone away now so I think we're going to be in a world that we are doing better window. When the world opens up again. So you think about 2021, depending when you think.
Either would be normalize for corporate 19 through whatever means I see I see a strong demand for our sensor volumes.
Yeah, just last from me.
You can as you emphasized the steady expansion in the technology portfolio is incredibly impressive.
You know when you think about <unk> next few years.
Joe and you think that the products now.
Now that we understand that Barbara Ram.
Massimo Safetynet adoption that you highlighted exactly to be begun incremental driver.
Or pull or.
Through a mass on technology in the post Cobrand hopefully world, we're going to enter thanks, so much.
Yes, yes, but there's a lot more coming.
[laughter] well get a we're going to be we're going to be.
Executing on a really cool plan because of competitive reasons I cannot talk about it but but yeah. We have things in the pipeline that I think we'll be very exciting.
Thank you very much thank you.
Your next question comes from line I'm back Taylor from you via your line is open.
Hi, Thanks for taking my question.
So the first one I wanted to ask about was.
Joe You mentioned, there's sometimes that you're seeing hospitals.
Use monitoring more broadly and that's something that you've talked about for a long time just be big opportunity.
General floor I guess can you just talked about some of the.
The signs are the feedback that you're hearing to prove out that thesis and.
A durable do you think it'll be if you think it'll last post coated.
Yes, I do think it is going to be durable because the studies not just a dartmouth Hitchcock.
But every hospital, who is put monitoring in the post surgical awards has seen.
Dramatic improvement in patient care and safety and dramatic reduction in their costs. So now that they're forced to do it because of the surge they're gonna see that the difference. It makes it I think it will be sticky because the product really works.
Okay.
And we've talked about a lot of.
Interesting products, a massive amount wins over the last few months in quarter.
Could you give us any color I mean last quarter I think you gave some numbers around mattson with safety net and are you seeing continued momentum around.
Around that and anything you can quantify with that or some of the others.
Yeah, I think last.
Last quarter I mentioned, we had about 70, a installations of Massimo States and then what about 600 into Q right. Now we have about 120 installations with 1500 and acute.
So the demand is continuing to grow and it's allowing hospitals too.
Scale and within a hospital, let alone taking patients outside the hospital in a manner that they never expected. They always thought they had to go by capital and now they just get the sensors and and wireless he sends information to wherever they want information center.
And then lastly from me or are you still seeing momentum around noninvasive hemoglobin.
Yes, we are yes, we are a we saw basically I think on Q1 I mentioned the about 15 hospitals had taken advantage of the hemoglobin offer we've given because of.
Shortage of.
Blood.
Donations.
No I think by the end of Q2, we had over 130 hospitals were taking advantage of that.
Great. Thanks, a lot for the color.
Thank you.
Your next question comes from line of Mike Matson from Needham and company. Your line is open.
Thanks for taking my questions.
I guess I wanted to start with the gross margin I mean, I understand it was mainly an issue of mix just with a high volume of the boards that you were placing or selling in the quarter, but.
Were there any kind of inefficiencies in the the plants just due to the.
Aggressive volume ramp you had to go through or in other words like shipping things over night or anything like that as it relates to this your mix.
Yeah, that's a great great question there Mike.
Just to answer your question, we did see some some other things if you look overall, it's permanently almost entirely driven by the the unfavorable revenue mix.
If you were to adjust that back out.
We'd be closer to our original guidance for the year in kind of where we've been tracking of about 60%.
Gross margins, but we did see some some higher cost as we had to expedite some shipments of products and that drove some higher freight costs, but but nothing nothing material to the quarter.
[noise], okay, thanks, and just to be clear the.
I think I'm a last call you talked about that the kind of guidance you gave around the report number and I know, it's gone from 550000 out of 500000, because the decrease or done it later orders but.
I think there was potential for some portion of those to be cancelled. So I guess it based on what you're saying that there really weren't any meaningful cancellations or if they were if there were they were kind of canceled out by.
New orders.
And so can you just remind us out of that 500, how many of those at this point could could be art, you know kind of locked in.
Well, what I can say I think last time, we we can give you numbers that we thought we had for the quarter and and then mentioned roughly where we thought things Michael.
And we said you know everything past 90 days is cancelable.
So right now we've got the today, what a 370000.
It's already happened either shifted already or noncancelable, so really about 130000 to go over the next.
Five months.
Okay. So some portion of that her 30, though would be within the next 90 days. So that would be you know so maybe just rough numbers have factored some portion of that would wouldn't really be effectively able to cancel at this point, yeah, I I'm I want to caution you were not.
Promising 500000 were only saying to the what we know the orders are but there are cancelable oh. The only portion that we are telling you. We have right now I think in first month of.
Q3, we have 140000 boards that our end that are not cancelable, which with what we've shipped so far I guess, a 370000 and that excludes the finger pulse oximeter isn't the handheld pulse oximeter. So we're only talking about things that we think we'll be out there a consuming our consumables.
[music].
Okay, sorry, I got that computers.
Right. Thanks, Thank you.
Your next question comes from line of Murray's evolved from B T. I keep your line is open.
Hi, Thanks for taking my questions Tonight.
One on revenue associated with the hardware that's being shipped my understanding was that there's an ASP links to sort of these real time orders that are going out the door and I wondered if you could break that down from little bit more as we think of these will be bolus of near term.
[noise], Yeah, Murray I think you know what you're referring to is a lot of our drivers that we are technology boards, we ship out for for OEM business and and.
Relative to what we have in terms of our direct instruments.
You know as far as the mix.
I don't think we're going to get into those type of details on the call but.
You know overall.
That that margin percentage, if you look at on a margin basis, you know margins are about 50% on our technology boards and monitors and much significantly higher on our sensors. So.
That is I want to give you some perspective on a on the mix.
But we're seeing that is going through gross margins.
Okay. Okay got it and then thank you for those metrics on Safetynet I'm glad to see that it's I'm taking off so quickly would you mind breaking out for us any detail on how much is the revenue contribution that was in Q2 I recall some numbers given where there were 10000 can't ship said 100.
Yes, the apiece, what should be 1.5 million, but I don't know theres I'm much more material be on that that you can tell us about.
Yeah, I mean, all I can give you at this time Reis is north of 1.5 million for the quarter.
And as Joe mentioned earlier, you know the what we're seeing in terms of customers that are deploying.
No safety that we've got about 120 customers that are deploying now versus last quarter is about 76 customers.
Great. Thank you for long.
Thank you.
Your next question comes from line of Rafi Misra from Burnham Bird capital. Your line is open.
Hi, Good afternoon. This is Irish Alicia Robbie Thanks for taking the questions. So on safety not a couple of questions. Here. You mentioned that you know 120 customers that have deployed to solution I'm. Just curious have you seen any uptick more recently given that we're seeing a second Sir John Corbett cases, and then.
No that you have added the temperature measurements function has there been any change in pricing and reimbursement for the product.
Yeah, No to answer your first question.
We've seen steady level bordering we're seeing customers even reorder in terms of Massimo safety net so so making good progress there.
In terms of a your second question regarding to temperature. Please keep in mind that we just.
Release that within the last actually yesterday.
In terms of when we announced the release of that and it's still in a limited release so.
We're still you know navigating through some of the pricing and are preparing for broader market release, but well, we'll be able to update more on the next call.
Okay. Thanks for that and then just one more question on unit Joe's 60. So since you were launching that children can you speak about the demanded that you're seeing with this solution and do most of the demand comes from your existing customers.
Yes. So that's another technology that we really recently released as far as our digital charging solution, that's outside the ruminant and it really optimizing the display for customers.
Our clinicians and or the interim took patients room. That's a that's a new product again I'm still limited release, but we've we've had is deployed a with a some large customers. Here recently that are that are starting to a pilot that software and we're getting good feedback so far.
Okay. Thank you. Thank you.
I think that's our last question turn it back over to to the operator. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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