Q1 2022 Masimo Corp Earnings Call
Good afternoon, ladies and gentlemen, and welcome to Massimo is first quarter 2022 earnings conference call.
The company's press release is available at Www Dot Massimo Dot com.
At this time all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
I'm pleased to introduce you like cameraman Massimo <unk>, Vice President of business development and Investor Relations. Please go ahead.
Thank you and good afternoon, everyone. Joining me today are chairman and CEO , Joe Kiani, and executive Vice President and Chief Financial Officer Micah Young this call will contain forward looking statements, which reflect management's current judgment, including certain of our expectations regarding fiscal year 2022 financial performance. 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 SEC.
You will find these in the Investor Relations section of our website also this call will include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. In addition to GAAP results. These non-GAAP financial measures are intended to provide <unk>.
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 and measure the company's performance and sees 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 reflect the underlying financial performance of the business reconciliation of these measures to the most directly comparable.
GAAP financial measures are included within the earnings release and supplementary financial information on our website.
Investors should consider all of our statements today together with our reports filed with the SEC, including our most recent Form 10-K, and 10-Q in order to 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 to Joe Kiani. Thank you Elaine.
Good afternoon, and thank you for joining us for Massimo <unk> first quarter 2022 earnings call.
This quarter was an anomaly.
From the perspective of reported revenue and earnings due to supply chain problems.
I'm happy to report that as of today, we have manufactured almost all of the back order products from the first quarter and barring any shipment delays that are out of our control. We are on track to meet the second quarter revenue expectations.
We believe we have addressed the supply chain challenges, we saw in the first quarter related to component shortages and limited labor availability at our manufacturing facilities.
In addition, we have significantly increased our manufacturing output, which should allow us to not only meet our expected revenues, but simultaneously build up a sufficient level of safety stock.
I'm happy to report that hospitals are steadily returning to normal practices and procedure volumes.
With hospitalization concerns about the pandemic easing.
Seeing a rebound in elective surgeries and seeing better access for our sales force within hospitals.
Our installed base grew by 7% in the past 12 months due to strong and consistent customer demand for our technologies.
There's been no slowdown in demand as we continued to win new contracts at a fast pace, while maintaining the strong renewal rate with our existing customers.
While our revenues rose only modestly in the first quarter due to the supply chain issues, we still expect to deliver double digit constant currency revenue growth for our health care business. This year.
Okay.
2022 will be an exciting year for Massimo as we extend our reach into some very large new markets in consumer health and wellness as well as into telehealth and telemedicine.
In April we closed a southern United transaction ahead of schedule the team at southern United will be invaluable for enabling successful launches of our upcoming products over the next 12 months and beyond.
The company also brings US a group of highly regarded brands and technologies that we can leverage to create some very innovative products that combine mass similar technologies with theirs.
Sound United has built a broad network of global distribution channels that will serve us well as we introduced products such as our bio sensing watch and augmented hearing devices. Among many other planned innovations.
We are excited about the potential of our combined businesses to capitalize on the growing trend of moving care from hospital to home.
I will discuss more about our outlook and strategic plans later in the call now I'll ask Micah to review our first quarter results in more detail and provide you with an update on our 2022 financial guidance. Thank you Joe and good afternoon, everyone before I get started I want to direct you to the earnings.
<unk> on the <unk> website, which covers much of the detail that we will be discussing today.
Our first quarter results illustrate our ability to increase earnings even in the face of supply chain issues that limited our shipments and sales growth.
The strength in the demand from our customers can be seen in our driver shipments, which met our expectations by reaching 75700.
As we had our third consecutive quarter of driver shipments of approximately 75000 units.
Increased demand for patient monitoring and hospitals has been durable as these results demonstrate.
We have now shipped over $2 3 million technology boards and instruments over the last 10 years for.
For the first quarter of 2022, we reported revenue of $304 million, representing 2% reported growth and 3% constant currency growth.
Our results were adversely affected by certain supply chain issues, which we have addressed.
Had this not occurred we would have exceeded our revenue and earnings expectations for the quarter due to our continued strong customer demand.
Moving down the P&L, our first quarter 2022, non-GAAP gross margin increased 140 basis points to 67, 5% compared to 66, 1% in the prior year period, our gross margin improvement was driven by favorable product mix as we derived a higher proportion of our revenues from adhesive sensor.
Compared to equipment.
Our first quarter 2022, non-GAAP operating profit was $70 million or an operating margin of 22, 9% in comparison first quarter 2021, non-GAAP operating profit was $68 million or an operating margin of 22, 9%.
Our first quarter 2022, non-GAAP net income was $53 million or <unk> 93 per diluted share in comparison first quarter 2021, non-GAAP net income was $52 million or <unk> 90 per diluted share.
Overall for the first quarter, we achieved earnings growth that was in line with sales growth in the face of supply chain challenges that affected production volume and our driver shipments have held steady at roughly 75000.
Illustrating the strength of our core business.
Now I'd like to provide you with an update on our two.
Our 2002 or 2022 financial guidance.
Including expectations for the recently acquired sound, United business, which closed three weeks ago.
Due to the acquisition and timing of revenues stemming from supply chain challenges in the first quarter, we are providing consolidated guidance ranges for the second quarter and for the full year.
Okay.
Our guidance incorporates increased foreign currency headwinds from the strengthening of the U S dollar against most major currencies.
For the second quarter of 2022.
We are projecting consolidated revenue of $525 million to $555 million, which includes $180 million to $190 million of revenue for sound United from the closing of the transaction on April 11th through the end of the quarter.
For our healthcare business, we are projecting $345 million to $365 million of revenue, which includes $4 million year over year currency headwinds.
For the first half of the year. This implies a revenue range of $649 million to $669 million for our healthcare business, which reflects 9% to 12% constant currency growth <unk>.
Consistent with what Joe mentioned earlier in the call. This outlook illustrates our confidence in recapturing a large portion of the delayed revenues in the second quarter, while being thoughtful about the broader supply chain environment and logistics challenges.
Going back to our second quarter guidance, we are projecting consolidated non-GAAP gross margins of 56% operating margins of 18% and earnings per share ranging from $1 13 to $1 25.
Now moving onto our full year 2020 to financial guidance.
For the full year, we are projecting consolidated revenue of $2 billion to two 2.06 billion, which includes $660 million to $700 million of revenue for sound United from the closing of the transaction on April 11th through the end of the year.
For our healthcare business, we are projecting revenue of.
134 to $1 36 billion.
Which includes $17 million a year over year currency headwinds. This implies constant currency revenue range of 1357 to $1 $3 77 billion compared to our prior constant currency guidance of 135 7 billion.
This update reflects nine 5% to 11% constant currency growth for our health care business.
We're also projecting shipments of at least 300000 technology boards and instruments this year.
On a non-GAAP basis, we are projecting gross margin of 56% for our consolidated business, which assumes gross margins of 36% to 37% percent and United and 66, 5% for our health care business and.
Incorporated in our guidance for the remainder of the year of higher freight and product cost, which we believe will be partially offset by increased manufacturing efficiencies and cost reduction efforts.
On a non-GAAP basis, we are projecting an operating margin of 18% to 19% for our consolidated business, which assumes operating margins of 5% to 7% percent and United and 24, 8% for our health care business.
It is important to note that Sunday night at the operating margin guidance includes co development and co commercialization investments that will drive the expected benefits of this acquisition.
These initiatives will allow us to enter and expand into large and growing markets that are in order of magnitude larger than the markets. We serve today.
These investments represent roughly 2% of Sandy United's revenue.
Furthermore, this guidance includes depreciation and amortization and noncash noncash share based compensation expenses, which represent approximately 4% of Saturday night as revenue.
Lastly, the continued strengthening of the U S dollar against most major currencies has negative negatively impacted Saturday night at the operating margins by a magnitude of two percentage points.
Moving further down the P&L.
Our non-GAAP non operating expense for the consolidated business is expected to be $18 million in 2022.
This is primarily comprised of interest expense associated with the roughly $600 million drawdown against the new credit facility used to finance. The acquisition. We are also projecting a non-GAAP tax rate of 25, 3% and weighted average shares outstanding of $58 2 million for the consolidated business.
Based on these assumptions, we are projecting a non-GAAP EPS range of $4 46 to $4 73 on a consolidated basis.
To summarize our core health care business is on track to meet or exceed expectations. This year and we are steadfast in our commitment to achieving long term revenue growth of 8% to 10% for this business.
I've never been more excited about our long term financial future for additional details on our 2022 financial guidance. Please refer to today's earnings presentation within the Investor Relations section of our website at <unk> Dot com with that I'll turn the call back to Joe. Thank you Micah.
Back in February we announced our plans to acquire some United as part of our strategy to be a leader in the growing trend of moving healthcare from hospital to home as.
As well as to deploy <unk> technology in all settings, where it can be useful.
With the acquisition, we announced our intent to launch some high potential products in the consumer health and wellness area, including our bio sensing watch and to create enhanced hearing and bio sensing earbuds.
Selling United has a healthy and growing presence, but its premium brands. In addition to the brands. We saw at least four very valuable assets and sound United that influenced our decision to acquire the company.
One a well established network of global distribution channels with over 20000 distribution points, we can access for our upcoming consumer health and wellness product launches.
Two our connectivity software platform call heels that can connect any type of digital device to flow data through our network and into the cloud, which can be useful for telehealth and telemedicine systems.
Three premium brand wearable sound devices, such as denim and Bowers <unk> Wilkins ear buds that can serve as a foundation for creating augmented hearing devices that incorporate mattson was advanced signal processing and bio sensing technologies.
And for a strong leadership team and accomplished professionals with sales marketing and advertising expertise, who can facilitate a successful launch of our consumer health and wellness products over the next 12 months and beyond.
In 2021 sound United saw strong demand for its home theater products as consumer stream more content at home than ever before.
United has reinvested into Bowers <unk> Wilkins brand with numerous product launches such as the 800 Diamond series loud speakers, <unk> and <unk> wireless headphones and iconic Zeppelin wireless speaker.
Looking at 2022 sound United should continue to benefit from the growth of high resolution audio streams that should drive adoption of premium home entertainment systems, which can process. It.
The company also has new products from the Bowers <unk> Wilkins brand, such as Panorama sound bar and new headphone models the.
The brand will also be growing as partnership with renowned automotive brands, such as BMW Mclaren and bold.
Launch plans for 2020 to include new industrial design and connected functionality across the suite of <unk> products as well as denim expanding its reach with an enhanced offering of home wireless surround sound speakers and home theater solutions and pulp extending a slide.
Up with several Dolby Atmos sound bars.
As you can see from the earnings presentation on our website to some United acquisition increases our total market potential from $12 billion annually to over $180 billion.
As we expand into new large and growing consumer health and wellness markets.
While we expect brands like Bowers, <unk>, Wilkins, Dennen, Miranda and pulp consumer products to achieve strong growth on their own.
We do believe our health care business, including hospitals and home will help with help from our entire organization.
Will grow more rapidly and eventually constitute the vast majority of our revenues.
Some of the markets I'm truly excited about are the opportunities for combined products, we will be introducing such as bio sensing watches and augmented hearing devices.
Just imagine the incredible audio engineering of Bowers <unk> Wilkins morass in denim in combination, but Massimo has advanced digital signal processing and <unk> sensing engineering.
Dave pioneered innovations for the incredible sound, we experience with those top tier brands and we pioneered the use of advanced signal processing, such as adaptive filters systems theory, and AI in the bio sensing arena.
We believe we will pioneer incredible new solutions together all for the betterment of light.
Yeah.
The strategic work of Massimo and consumer health and wellness and into the home with Telehealth technologies began many years ago with a focused research and development efforts to capitalize on emerging use cases for our technologies.
Examples of these products include the launch of <unk> in 2012, the radius PPG for safety net in 2019 and sleep in 2020.
As well as radius for temperature monitoring in 2020 and just yesterday.
The 30 <unk> anniversary of our incorporation, we announced a limited market release of Massimo W won our first bio sensing watch offering continuous and accurate pulse oximetry and other measurements.
Our ability to help lives can go beyond the confines of hospitals and long term care facilities.
We are very excited by what we can do to help improve lives in other settings, especially the home.
We will have more to say at our upcoming Investor day in September here in Irvine.
Hope you will all be able to join us to learn more about the future of Massimo and what it will mean to the lives of many.
We've expanded our mission to improve life and we remain committed to our mission of improving patient outcomes, reducing the cost of care and taking noninvasive monitoring to new sites and applications.
With that we'll open the call to questions operator.
If you would like to ask a question. Please press star followed by the number one on your telephone keypad to withdraw your question. Please press star one again.
Our first question comes from Rick Wise from Stifel. Please go ahead. Your line is open.
Okay.
Joe Micah.
Yes.
So let me ask one on the base business and one on Saturday United.
The base business.
Really came in the middle of your range.
Help us think Mike, perhaps I'll start with you.
About the setup for the second quarter for the core business clearly the full year is on track you reiterated your guidance.
<unk>.
Maybe quantify for us what the revenues would have been do you think in the first quarter and do we layer that on top of what second quarter might have been how do we think about the cadence now as you play catch up on that side of things.
Yes, I think Rick I think the best way to look at it is we're providing a guidance range of $3 $45 million to $365 million for the second quarter for Massimo.
That basically implies.
That were.
Recovering a large portion of those revenues in the second quarter because we're we're.
We're seeing more confidence in our ability to recover the shortfall in Q1.
We're also being thoughtful about supply chain challenges, just like shipping and logistics that we experienced at the end of quarters.
But if you look at the year to date I think an important point I made in my prepared remarks is that for the first half of the year our revenue range in the second quarter implies first half revenue of $649 million to $669 million.
For our health care business, which reflects a 9% to 12% revenue growth on a constant currency basis, I think thats. The way you should look at it.
Okay got you.
Joe maybe.
Let me turn to you and talking about sound United Obviously.
I mean I think that.
People have been.
Right word confused concerned about this deal you're laying it out very clearly.
Your vision about the future maybe help us understand from several angles.
It needs to be done to integrate.
The acquisition now when do we start to see this vision unfold.
We're talking about.
And.
And maybe talk about the combined pipeline, both the Massimo pipeline and <unk> pipeline.
How and when we're going to see that truly contribute to growth.
I don't know how to say it clearer.
Youre correct Joel grade Rick so.
One <unk>.
Everything that I have seen and the feedback I've gotten.
Both teams Massimo and selling United teams are really excited about this acquisition.
Yeah.
Everyone is working really well together.
Engineering team is sound United is excited about the combined projects.
That we are doing and so as the Massimo team.
And we've already kicked off a few product.
Roadmaps and product development.
Development.
Together, which we hope to begin seeing coming to the market in 2023.
In addition, we are working on a very long term.
Path of.
Ensuring the vision that we have ultimately comes to fruition for the combined companies in both the telehealth.
Monitoring consumer health care as well as.
The home side of things.
As far as.
When you will see the revenue impact of this combination beyond what they each are doing on their own I think it will be 2023.
But already we're getting the benefit of.
The team Assam, United to think through the launch of <unk>, one and other products that are coming that are derivatives of there'll be one in the future. So.
So far.
Comes up all around then.
This was the honeymoon stage I hope I can tell you the same thing.
Six months in a year from now, but it feels it feels really good.
Okay. Thank you very much thank.
Thank you Rick.
Our next question comes from Jayson Bedford from Raymond James. Please go ahead. Your line is open.
Hi, good afternoon.
Congrats on both managing <unk> in the close of the deal. So just a couple of questions.
<unk> United.
What's the growth rate assumed in the Sandy United revenue guide of $6 60 to 700.
Yes.
Yes, Jason this is Mike.
Whats implied in our guidance and we can't really give the pro forma numbers, yet we're hoping to provide those very soon.
As far as what last year's results were.
The team at something that is still working through their year end audit and they closed their financial year on a different fiscal year than us. They closed in March 31, as opposed to our fiscal year ending in December . So they just recently closed the financials for the year. They are working through the audit. We're also working through the stub period because.
We closed the transition transaction on April 11th so keep that in mind that the revenue, we're guiding to for sound, United the $6 $60 million to $700 million as from April 11 through the end of the year.
What it implies though in our full year guidance.
Is that there are about a high single digit revenue growth rate on a on an organic revenue growth looking at a pro forma as well as constant currency keeping.
Keep in mind, there's a lot of currency headwinds.
But both businesses are experiencing but if you back that out we're assuming high single digit growth for the full year.
Okay, great and I hate to ask another boring financial question, but Mike.
The assumed op margin percent United at five to seven is a bit lower than we thought coming off.
The fourth quarter call.
We're thinking mid teens EBIT.
He did a good job of bridging the two but are there temporary cost weighing down margin here in the near term and I guess I'm wondering is kind of sub 10% op margin the right way to think about the business.
Yes, no I think.
I think we've definitely got room to improve the operating margins they've done a good job of actually managing margins over time.
But I think the way to think about it is.
One thing that's kind of transitory and depending on where currency goes but theyre getting about two percentage points of headwinds due to currency. This year that they didn't have in there and their financials last year. So that's one piece the other pieces, we are including about 2% of their revenue.
For investment in co development projects and co commercialization projects.
As we as we try to drive the strategic initiatives of the business together.
And then the other 4% if you were trying to walk back to that.
You are probably assuming kind of a 13% to 14% EBIT number.
As they have about 4% of depreciation amortization and now share based compensation in that number as well.
So that shouldnt wont get that kind of bridge.
The cap rate.
Yes. Thank you.
Youre welcome.
Yes.
Our next question comes from Jason Bednar from Piper Sandler. Please go ahead. Your line is open.
Hey, good afternoon, thanks for taking the questions here.
I wanted to start with coming back to a couple of the topical issues here at hand.
Supply chain dynamics, and then sandy United for my follow up but starting with the supply chain.
The hiccups.
Reason here for a lot of a lot of manufacturers here. The last several months both in terms of sourcing product needed and then getting finished goods to where they need to be.
So I appreciate the updated views here at the outset of today's call, but wondering what's the level of risk, we should be considering and running into a similar situation you have supply chain challenge going forward.
Be it from Massimo or sound, United and then is there any color you can talk about.
Confidence you can give here to ensure that the issues that hit here in the first quarter don't repeat.
Well, we thought we were immune to it as many many companies over the past couple of years.
Complain about supply chain, we had always been able to mitigate them.
So I guess once bitten twice shy.
Can't guarantee you we won't have a problem again.
Since we had one that we couldn't have predicted before.
What I can tell you is.
There was a myriad of issues.
From a labor shortage component shortage too.
Last minute Shanghai Lockdown.
<unk>.
Shipment problems. So we believe at this point as I said earlier in our prepared remarks.
We have all the components we need to.
To not only fulfill.
What we Couldnt ship at the end of Q1, but what we expect to do in Q2 with the range that Michael provided.
So really the only thing that can go wrong now as shipments shipment delays, we are reaching out to our customers that normally.
The shipments towards the end of the quarter to see if they'll take it earlier, so that we hopefully don't end the quarter with any potential problems.
But we're doing everything we can to one thing I will tell you on the labor shortage, we have gone a little overboard not only are we making everything we need as I said earlier, we're pretty much caught up with all of the.
Purchase orders that we had.
We had but we're not shipping.
Safety.
Making excuse me safety stock and much more than we had previously planned to just to make sure we can weather.
Any hiccups.
No.
All I can tell you, we really have a wonderful team and they've done everything that theyre doing everything but.
Unfortunately, there is no guarantee.
Okay, Alright, that's helpful and maybe just for the follow up here on Sunday Night had Joe or Mike just.
Bigger picture thinking about the go forward strategy here I know, we'll hear more at the Investor day minute in September but wondering if there's anything you can discuss but rather than having us all wait for four months just like what's the what are the near to intermediate term plans in consumer.
And the recent W. One announcement.
Here I would really just be curious how you plan to move forward with establishing a consumer brand what other infrastructure investments might be necessary to have a proper platform to build from and then anything you'd be willing to share on additional pipeline items beyond the watching the hearing AIDS that you've highlighted already thank you.
Well I think micra, both can take this one.
Bottom line is when you.
Bought some United for several reasons I think I articulated during our prepared remarks, one of them is their management team and their ability to think through.
Consumer sales advertisement.
<unk>.
Secondly, there very strong distribution channel, which is over 20000 distribution points with strong relationships that have been built over decades.
So we expect to use that we're also discussing additional novel approaches to add to what they've been doing which we will share with you later as we are.
Announce them.
So.
A big reason for this acquisition is our.
Our.
Conclusion that we have some really incredible products coming out without our incredible.
The distribution channel and team and as we tried over the last few years as we were preparing for the launch of <unk> and other products, we try to build that up.
Organically.
We had not succeeded to the level that we thought would.
Fulfill our plans.
<unk>.
So they are our plan.
And we have additional things, we're brainstorming with them, but that's really the plan.
Okay.
Alright, thank you.
Q.
Our next question comes from Michael <unk> from Wolfe Research. Please go ahead. Your line is open.
Good afternoon. Thanks for taking the question I'm going to ask another one on the strategic direction and frame it maybe a little bit differently. The question is this did the investment community's response to this sound United transaction surprise, you and in the context of a $1 billion investment to purchase the asset.
The market has voted by reducing your enterprise.
Enterprise value by six or $7 billion.
Okay.
Arming the high spread and so.
I just wonder did that surprise, you and if it did.
Catalyzed perhaps.
A rethink of maybe the best way forward.
With the consumer strategy and if there might be a different way to to prosecute this vision.
Yeah, It definitely surprised me.
I couldnt have imagined away.
Some of the industrials reacted.
Because.
I don't know why people want to invest and Massimo or why they don't.
But if people have got up because of the sudden United.
That was really a bad decision because some United help our plans for the future.
And.
And we Didnt mortgage.
<unk> to gain.
At that assurance for our future.
So.
No no the investor reaction.
Surprise, but it doesn't at all.
Not at all change our.
Thinking about.
The reason, we did it and our.
Conclusion that this was a great acquisition as of this point, we told you before if things don't work out you make you make decisions as we go forward, but sometimes it can be wrong. If it doesn't work out we'll let you know, but this is really at this point what we think is the best thing we could have done.
And.
And I got to tell you, maybe I'm old fashion, but I thought.
Businesses job was to try to figure out what your customers want and products and services.
And provide that to them in an ethical fashion.
Improved cash flow and improve your chances of survival in the future. That's what the sound United acquisition does for us and people, who don't see that.
Im not one to judge them, but.
I hope will prove them wrong.
Okay Fair and full response I appreciate that.
Could drill into the weeds of the quarter.
With one or two follow ups I appreciate it.
Michael perhaps for you that the board and monitor shipment number look to be solid and up sequentially and in the zone of expectations, but the revenue.
Miss and so I just.
Maybe it's just me and everyone else, but I am just trying to bridge the variance there how does the shipment number get there, but the revenue fall short.
Yes, Michael.
The answer there is really.
Our our overall driver shipments were strong.
As you see from the number and that's really driven by the amount of technology boards that we were able to get out due to the strong demand.
We.
As far as our Massimo branded equipment that was kind of tied up with some of those supply chain and logistics challenges. We had in the quarter. So are our driver shipments would have been stronger in the first quarter had we been able to ship all of those Massimo branded.
Drivers, so I think that Thats, where youre going to see and we've got.
More and more confidence of that 300000 at least is shipping 300000 this year for.
For the rest of the year so.
I think that's the floor now and that's what we're driving to and I think youll see strong shipments each quarter for the rest of the year as we start to recover on some of that Massimo branded equipment.
Got it so the shipments would have been higher that's a good good good good color. Thank you and then last one.
I need to do work on the consumer Wearables marketplace clearly.
I was walking around best buy last weekend, and then had it been there seven years. So it was.
Had oriented.
Well W. One fall in the U S market from a selling price perspective is there any color you can provide I saw the release yesterday that the pilot users get access to the device for half off and that will be coming up here in the next quarter or two but as you as you roll this out in full or commercial launch, perhaps next year, how will the <unk>.
Point compare to some of the other products on the market.
Adobe one will probably be in the market at $500 with services that people can sign up for.
<unk> monthly or annual.
Agreements.
And as far as where it lands in the market. It is the only continuous.
And accurate.
Pulse oximetry with many other features that will come that will announce after the limited market release date.
So we think it's.
Right.
Thanks for taking the questions. Thank.
Thank you.
As a reminder, if you'd like to ask a question. Please press star followed by the number one on your telephone keypad.
Our next question comes from Marie Thibault from BTG. Please go ahead. Your line is open.
Hi, Good evening I did want to hear a little bit more about the augmented hearing device can you tell me if we need to wait till September but love.
Love to hear a little bit more about what that will be capable of is this a hearing aid or is this something more that you're in.
Okay.
Well, we have to be.
First of all.
We believe it will have the ability to help people.
Various sound better.
There might be an Rx version of for us for over the counter that'll get FDA clearance that will be mark for hearing enhancement and there might be ones that are marketed as best possible for individuals.
That will not be making claims about hearing improvement.
Okay.
Okay.
Fair enough I will look forward to hearing some timelines on that I'll ask my follow up's here away from sand United.
I'd love to hear an update on the litigation front. The patent front I don't know how much you can call me, but we've been certainly following the inter parties review in terms of the back and forth on.
The lawsuit so we'd love to hear the latest aren't just any factual you can tell us on the lawsuit as well as the national Craig.
Well on the International Trade Commission case, we're going to trial.
In June .
Expect to have a decision in September .
With the final resolution in January of next year.
The patents that we have in that case, we believe our.
Great patents AD spot on so we feel really good about our ITC case.
And then on the.
On the district court, which as opposed to going to trial in March.
We have a trade secret case as you know the patent case, Scott stayed when Apple filed to enter party reexam.
Our patents.
A couple of the key patents in that case has been allowed by the IPR. So they may get added to the trade secret case, where they may go through a third.
Case third trial, but so far we feel really good about our.
Our cases.
Hopefully some good news to share in the future.
Alright very helpful. Joe Thank you.
I appreciate taking the question.
Thank you. Thanks, Mike I think we're done for the day. We appreciate you all attending and being on the call.
Our analysts are welcome to take part in a limited market release of <unk> as long as you agree to our rules.
So that you can hopefully more about what we're doing so thank you all and we look forward to our next call.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Please wait the conference will begin shortly.
Sure.
Okay.
Okay.
Yes.
Yes.
<unk>.
Okay.
Yes.
Okay.
Yes.
Yes.
Okay.
[music].
No.
[music].
No.
Okay.
Yeah.
Yes.
Yes.
[music].
Yes.
[music].
Okay.
Thank you.
No.
Yes.
Thanks.
[music].
Yes.
Yeah.
Okay.
Yes.
Yes.
Yes.
Okay.
Sure.