Q3 2025 Resmed Inc Earnings Call
Greetings and welcome to the Q3 fiscal year 2025 resume earnings conference call.
Kevin: My name is Kevin and I'll be your operator for today's call.
Kevin: At this time all participants are in a listen only mode and also please note. This conference call is being recorded.
Kevin: Later, we'll conduct a question and answer session.
Speaker Change: Let me hand, the call over to residential chairman and CEO Mick Farrell for a brief introduction of Sally Schwartz, who recently joined the company as Chief Investor Relations Officer. Please go ahead.
Speaker Change: Thank you Kevin I'm very excited to have Sally joined the <unk> team. Our newest risks median she joined US earlier this week and brings more than two decades of experience across capital markets Health care and technology, we look forward to Sally helping us to take Investor relations to the next level here at risk.
Speaker Change: But providing clarity transparency and long term alignment among.
Speaker Change: Current and future investors and all of that calls us. So Sally we're thrilled to have you on board.
Nick: Nick I'm happy to be here and I look forward to meeting our investors very soon but first I want to welcome our listeners to resume third quarter fiscal year 2025 earnings call. We are live webcasting this call and the replay will be available on the Investor Relations section of our corporate website later today our earnings press.
Speaker Change: Release and presentation are both available online now.
Speaker Change: During today's call we will discuss several non-GAAP measures that we believe provide useful information for investors. This information is not intended to be considered in isolation or as a substitute for GAAP financial information.
Speaker Change: We encourage you to review the supporting schedules in today's earnings press release to reconcile these non-GAAP measures with the GAAP reported numbers.
Speaker Change: In addition, our discussion today will include forward looking statements, including but not limited to expectations about our future financial and operating performance. We make these statements based on reasonable assumptions. However, our actual results could differ please review our SEC filings for a complete discussion.
Speaker Change: The risk factors that could cause our actual results to differ materially from any forward looking statements made today.
Speaker Change: Now I'll turn the call over to Mick Thank you Sally and good morning, Good afternoon, and good evening to folks from Asia here in North America and in Europe, as we welcome our shareholders around the World and review results for our third quarter of fiscal year 2025.
Mick Farrell: I am excited to report that <unk> delivered another strong quarter, achieving excellent topline and bottom line results. We delivered solid revenue growth gross margin expansion, both sequentially and year on year very strong free cash flow generation and maintained our disciplined approach to investments in both research and development.
Speaker Change: And SG&A.
Speaker Change: This performance reflects broad based momentum and disciplined execution to capture growing demand for our products.
Speaker Change: Our continued success is driven by our market leading value proposition with top quality hardware and top quality software products as well as our expansive digital health software ecosystem with.
Speaker Change: With cloud connected devices digital health platforms and investments in machine learning artificial intelligence as well as generative IR technology, Arizona also a testament to the work that we do to enhance sleep health breathing health and health care delivery in the home.
Speaker Change: Thanks to the over 10000 risk millions, who make that happen by delivering products and services to serve patients and over 140 countries worldwide.
Speaker Change: As the global leader in helping patients with chronic respiratory conditions. We are closely monitoring the evolving global trade environment, particularly in the area of tariffs.
Speaker Change: In my current role as a board member at ads amid the current chair of the International Committee on the <unk> Board, we will continue to urge countries around the world to exempt all medical devices from tariffs on a humanitarian basis.
Speaker Change: For us here at resume the news is even better I can report that because of the fact that our products are used to treat patients with chronic respiratory conditions that have been subject to global tariff relief for decades, we have reaffirmed that that is the case with federal authorities just this month.
Speaker Change: In the current setting.
Speaker Change: In short <unk> is very well positioned with exemptions in place for our products that are used to treat sleep apnea and respiratory insufficiency as well as other chronic respiratory conditions.
Speaker Change: In terms of resumes inherent strengths of outperforming our competitors with prior externalities, such as the Covid crisis, the supply chain crisis, and our our ability to ramp up to meet the needs when our competitive simply could not I will say that our exceptionally strong balance sheet and our net cash position.
Speaker Change: <unk>, our global scale, our accelerating operational efficiency as well as ongoing cost discipline gives us the confidence to not just survive but to thrive whatever the market may bring.
Speaker Change: <unk> is all about stability and balance in times like this ultimately we're committed to make sure that sleep therapy breathing therapy and health care technology. That's delivered in the horn is both accessible and affordable as well as ensuring that the delivery of our solutions is consistently available for our patients for our <unk>.
Speaker Change: <unk> and all of the health care partners in a global ecosystem.
Speaker Change: Our Sydney based in Singapore based facilities continue to be the core of our manufacturing leadership globally. In addition to that we will soon open our newest manufacturing location in Calabasas, California. This will double the size of our current manufacturing footprint in the United States of America.
Speaker Change: Serving as the hub of our research and development for our motor technology, increasing the manufacturing capacity of cool motor technology, even closer to our largest market here in the U S and expanding manufacturing of Silicon mask cautions leveraging advanced molding technology that resumes leaves.
Speaker Change: The world in.
Speaker Change: This facility is designed to scale over the coming years with multiple mask molding cells and more growth as mask manufacturing increases to meet growing U S and global demand and I can tell you. These factories are very automated and very high tech.
Speaker Change: We're getting and we're also investing in getting to our products to our homecare providers, even more efficiently here in the United States. Our largest distribution facility worldwide is our 522000 square foot campus in Atlanta, Georgia. We also have a west coast facility just up the road from Us here.
Speaker Change: In Moreno Valley, California.
Speaker Change: Over half of our global research and development investment is now U S based with 10 fold growth in American R&D over this last decade. These.
Speaker Change: These investments reflect our leadership.
Speaker Change: Our economic development focus and the healthcare impact that we have as resume right here in the U S, where we have our global headquarters and where we support our largest global market the U S domestic market.
Speaker Change: That is an innovation machine and our ongoing investments of over 6% to 7% of revenues into research and development is a key growth driver of our long term success.
Speaker Change: I'm proud that we have been recognized for these market leading efforts as we were named in the Lexisnexis list of the top 100 Global innovators. This award is given to market leading companies that are driving pioneering innovation in the global economy.
Speaker Change: We continued to introduce new technology to our customers in the third quarter because it is nice to get awards, but as my father, the founder of <unk> and it says innovation is when customers actually pay for it.
Speaker Change: This quarter marked the first full commercial rollout of notch al in the United States Knights Al is a fingertip sized hung sleep apnea test that is being used by physicians sleep labs, as well as independent diagnostic and testing facilities, none is odd to etfs to diagnose patients.
Speaker Change: Widespread adoption of our not our product will help more efficiently move patients through the screening and diagnostic funnel. So that physicians can then write prescriptions and homecare providers can then set up those patients on therapy and take care of them for life.
Speaker Change: In addition to the nationwide launch of night Al we're providing a sleep lab partners with even more new technology. This quarter on April 15, we launched the essence 11 version of Z Pep T X.
Speaker Change: T X is our sleep lab testing and titration platform built specifically for both hospital as well as outpatient sleep lab environments.
Speaker Change: T X is purpose built to support everything that a sleep physician needs in the sleep lab, including titration evaluation and set up across every therapy mode that Red Smith office, including CPAP iPad bi level S bi level S T.
Speaker Change: As well as adaptive servo ventilation also known as I S. The therapy.
Speaker Change: <unk>, TX gives physicians gives ah <unk> and respiratory therapists.
Speaker Change: Powerful new tool to personalize the gold standard positive airway pressure treatment decisions and ultimately to accelerate adoption of long term therapy for their patients through personalization of that therapy. The.
<unk> platform is built for flexibility for precision and for clinical confidence.
Speaker Change: When we pay it no <unk> and <unk>, TX with <unk>, our cloud based software for physicians and homecare providers. They become part of a complete connected pathway from diagnosis and titration to prescription and ultimately therapy adherence.
Speaker Change: Of course, we are working to incorporate diagnostic insights from not al into our my patient.
Speaker Change: Patient app and to incorporate diagnostic data from both not al NV Pep TX into some the way.
Speaker Change: So I wonder where our software for physicians in the sleep physicians practices continues to grow in its reach and has been adopted by one of the largest private healthcare systems in the United States as well as being further expanded within the U S Veterans administration or <unk>.
Speaker Change: Our investments in testing devices, and diagnostic tracking software, which benefits potential patient sleep labs, and our homecare providers demonstrate regiments depth of commitment to the entire sleep health and breathing health ecosystems that provides access to the market, leading sleep apnea therapy and that's from Ray Smith.
Speaker Change: We will continue to invest in our digital health ecosystem to help expand the diagnostic funnel to keep up with expanding new patient flow from both our own demand generation demand capture investments as well as capturing demand from two powerful macro trends one the.
Speaker Change: <unk> spread adoption of GOP, one medications, both in the U S and worldwide and to accelerate momentum in consumer Wearables.
Speaker Change: For consumers coming into the funnel from all of these areas resume will be known as the company answering their questions about sleep health I call. This concept of digital sleep health concierge capability, including screening protocols clinical tools seamless workflows and cloud connected care.
Speaker Change: <unk> <unk>.
<unk> is the leading global brand in the field of sleep health and breathing health, we want to expand the reach of that brand to help the more than two 3 billion people that need our help for their sleep apnea or as I call. It sleep suffocation their insomnia inability to get to sleep stay asleep well that risk.
Speaker Change: Victory insufficiency, due to chronic obstructive pulmonary disease or neuromuscular disease.
Speaker Change: During the quarter, we announced a comprehensive resume brand evolution strategy designed to unify our global brand portfolio until one across sleep health, creating health and health care technology that is delivered into the heart.
Speaker Change: We will continue to build risk Smith brand awareness and evolve our brand to be closer to each and every customer.
Speaker Change: However, I want to make it clear that our marketing team will make certain that there is a positive return on investment or ROI for every single demand generation demand capture and demand convergent project that we launch.
Speaker Change: As we move more and more people into the diagnostics and treatment from.
Speaker Change: When we talk about risk Smith brand development, please not that internally that means Ross med brand ROI as well.
Speaker Change: An example of our disciplined demand generation experimentation as shown in our latest effort to educate physicians. We have launched a targeted demand generation program through continual medical education also called CMA programs to help teach physicians the benefits of <unk>.
Speaker Change: GAAP iPad and via level therapies for their patients.
Speaker Change: These targeted education efforts are having an impact with measurably increased prescriptions from those physicians.
Speaker Change: In addition to physician education, we're also reaching out to consumers looking for what we call sleep health concerned consumers.
Speaker Change: On this front I am happy to say that our experiments on streaming advertising in select cities have resulted in significant increases in patient flow into the screening and diagnostic funnel.
Speaker Change: It remains early days with these first cities, but we are seeing an openness and consumers to messaging that helps them find relief from their sleep apnea sleep suffocation and the lack of good quality asleep that could be insomnia.
Speaker Change: We're also continuing to build long term value across our existing patient base to keep patients on therapy for their own personal health and for the good of the whole healthcare ecosystem.
Speaker Change: Research shows that patients who are enrolled in a compliant world class resupply program are more likely to stay adherent to our therapy over the long term and therefore to have better health outcomes.
Speaker Change: With the provision of just one additional item per patient per year achieved by more efficient outreach. We believe we can provide exceptional value to our homecare provider customers and make sure that our patients have access to new clean mosques and accessories for better care and better outcomes.
Speaker Change: For them and for their physicians, our focus is on driving increased patient adherence improving outcomes.
Speaker Change: Grams like bright tree connect resupply complete and resupply essentials that are available for HMA customers on any of the AI AI plays they might use combined with personalized engagement through my are delivering strong results with homecare providers right here in the United States, we have the opportunity.
Speaker Change: Unity to adapt and scale these types of resupply and adherence technologies globally to the 140 countries ultimately that resume is able to deliver care.
Speaker Change: Keeping patients on therapy is al moral imperative our obligation here at regimen and its firmly supported by scientific research.
Speaker Change: During the quarter, the lancet respiratory medicine Medical Journal published a landmark meta analysis and <unk>.
Speaker Change: Analysis has a higher clinical value that a randomized controlled trial or <unk> that many people have considered and looked at is the gold standard for clinical trials.
Speaker Change: So in short the lancet publication showed that CPAP therapy reduces all cause mortality by 37%.
Speaker Change: It reduces overall death rates by 37%.
Speaker Change: And further.
Speaker Change: That study went on to say that CPAP therapy reduces cardiovascular mortality by 55%. So CPAP reduces cardiovascular death rates by 55% and this study wasn't small this meta analysis included over 1 million participants.
Speaker Change: So here at rest of it we've known for decades that CPAP improves quality of life of sleep apnea patients. We've talked internally about these improvements in cardiovascular mortality health, but now we have proof that it helps people to ultimately live longer and to live better. These data show that CPAP is.
Speaker Change: Just another medical therapy, it's literally a case of life and death.
Speaker Change: So he might resume we make the smallest quietest most comfortable much cloud connected and most intelligent therapies for sleep apnea, insomnia and respiratory insufficiency.
Speaker Change: Also have the market leading software for healthcare technology that is delivered right where people want to be which is in their own home with home medical equipment home health home nursing and software that's beyond.
Speaker Change: To our shareholders around the World. We are building on our Richmond Foundation with our long term leadership in our global markets. We now serve approximately 151 million lives through our hardware and software platforms.
Speaker Change: And we remain on track toward our ambitious goal of <unk>.
Speaker Change: Proving 500 million People's lives in 2000 35 billion worldwide.
Speaker Change: This quarter's results show the strength of our strategy our investment in R&D, the clarity of our execution and the scale of our impact we launched a renewed and refreshed brand, we scaled digital diagnostics and Tor <unk> tools, we expanded intelligent therapy, we activated a new <unk>.
Speaker Change: Patients and really importantly, we replenish supplies for existing patients worldwide and while doing all of this we also delivered very strong financial results with top line growth and leverage down to the bottom line I'd say this we're just getting started.
Speaker Change: So thank you to every one of the 10000 risk millions around the world, who made that possible and will make it possible our future growth and with that I'll now hand, the call over to Brett who is in Sydney right.
Speaker Change: For a deeper dive into our financials and then we will open the floor up for questions Brett over to you.
Speaker Change: Right.
Brett: Great. Thanks, Nick.
Brett: My remarks today I'll provide an overview of our results for the third quarter of fiscal year 2025.
Speaker Change: <unk> noted all comparisons out of the prior year quarter and in constant currency terms where applicable.
Speaker Change: We had strong financial performance in Q3 revenue for the March quarter was $1 two 9 billion.
Speaker Change: An 8% headline increase and 9% in constant currency terms.
Speaker Change: Revenue growth reflects positive contributions across our product and re supply portfolio.
Speaker Change: Year over year movements in foreign currencies negatively impacted revenue by approximately $13 million during the March quarter.
Speaker Change: Looking at geographic revenue distribution and excluding revenue from our residential care software business.
Speaker Change: Sales in U S, Canada, and Latin America increased by 9%.
Speaker Change: Sales in Europe, Asia, and other regions increased by 8% on a constant currency basis.
Speaker Change: Well I believe on a constant currency basis, <unk> sales increased by 7%, while masks and other sales increased by 12%.
Speaker Change: Breaking it down by regional areas device sales in the U S, Canada, and Latin America increased by 6%.
Speaker Change: Masks and other sales increased by 13%, reflecting continued growth in re supply and new patient setups.
Speaker Change: In Europe Asia, and other regions device sales increased by 9% on a constant currency basis, while masks and other sales increased by 7% on a constant currency basis.
Speaker Change: Residential care software revenue increased by 10% on a constant currency basis in the March quarter.
Speaker Change: Underpinned by strong performance from our <unk> focused on software vertical.
During the rest of my commentary today, I will be referring to non-GAAP numbers. We have provided a full reconciliation of the non-GAAP to GAAP numbers in our third quarter earnings press release.
Speaker Change: Gross margin increased by 140 basis points to 59, 9% in the March quarter.
Speaker Change: Year over year increase was primarily driven by manufacturing and logistics efficiencies as well as favorable shifts in product mix, partially offset by unfavorable foreign currency movements.
Speaker Change: Sequential gross margin increased by 70 basis points, primarily driven by manufacturing and logistics efficiencies.
Speaker Change: We continue to make good progress on our gross margin expansion initiatives and we are focused on making sustained long term gross margin improvements.
Speaker Change: Looking forward and subject to currency movements, we expect our gross margin in Q4, FY 'twenty five to be broadly consistent with our third quarter gross margin.
Speaker Change: Moving onto operating expenses SG&A expenses for the third quarter increased by 7% on a headline basis and by 8% on a constant currency basis.
Speaker Change: The increase was predominantly due to increases in employee related expenses and increases in marketing expenses, including costs associated with our recent global brand launch and demand generation activities.
Speaker Change: SG&A expenses as a percentage of revenue improved to 19% compared to 19, 2% in the prior year period.
Speaker Change: Looking forward and subject to currency movements, we expect SG&A expenses as a percentage of revenue to be in the range of 18% to 20% for the reminder of fiscal year 2025.
Speaker Change: R&D expenses for the quarter increased by 9% on a headline basis and by 11% on a constant currency basis.
Speaker Change: The increase was predominantly attributable to increases in employee related expenses.
Speaker Change: R&D expenses as a percentage of revenue was six 5% compared to six 4% in the prior year period.
Speaker Change: Looking forward and subject to currency movements, we expect R&D expenses as a percentage of revenue to be in the range of 67% for the remainder of fiscal year 2025.
Speaker Change: Operating profit for the quarter increased by 13% underpinned by revenue growth and gross margin expansion.
Speaker Change: Our net interest income for the quarter was $1 million.
Speaker Change: Our effective tax rate for the March quarter was 21% compared to 23% in the prior year quarter.
Speaker Change: We estimate our effective tax rate for the full fiscal year 2025 will be in the range of 19% to 21%.
Speaker Change: Our GAAP effective tax rate for the March quarter was 12, 6% as we recorded a net income tax benefit of $30 million relating to interest on our tax refunds from the IRS. We have traded this tax benefit is a non-GAAP item in our third quarter financial results.
Speaker Change: Our net income for the March quarter increased by 11% and non-GAAP diluted earnings per share of $2 37 also increased by 11%.
Speaker Change: Excluding the impact of investment portfolio had write downs in Q3 totaling $6 million earnings per share for the March quarter was $2 41, an increase of 13% over the prior year period.
Speaker Change: I would like to comment on the expected impact of U S tariffs, particularly associated with the introduction of a 10% tariff on exports to the U S from Australia, and Singapore based locations away. We currently manufacture most of our devices and masks for the U S market.
Speaker Change: We have so many ethane importing our products under the chapter of the harmonized tariff schedule of the United States that governs the importation of certain medical devices, including equipment to treat sleep apnea and other chronic respiratory conditions.
Speaker Change: We've worked hard over the years to achieve that status and to maintain it for products, we sell in the United States.
As a result, we have historically paid negligible duties or tariffs on the importation of most of our products.
Speaker Change: On April five U S customs and border protection issued a notice of implementation confirming that current tariff treatment of our products like ALS continues accordingly, we do not expect the introduction of U S tariffs to have a material impact on our financial results.
Speaker Change: We also continue to improve the resilience of our global supply chain, while expanding our manufacturing footprint in the U S.
Speaker Change: We expect to open about $30 million advanced manufacturing facility in Calabasas, California in June 2025.
Speaker Change: These high Tech facility will almost double our manufacturing footprint compared to the existing footprint and our Chatsworth, California facility.
Speaker Change: Over time, it will significantly expand our production capacity in mask resupply for the United States.
Speaker Change: Cash flow from operations for the quarter was $579 million. This does include a refund of tax and interest from the IRS of $107 million.
Speaker Change: Excluding the impact of the tax refund operating cash flow was $472 million for the quarter.
Speaker Change: Reflecting strong operating results and lower working capital.
Speaker Change: Capital expenditures for the quarter was $21 million depreciation and amortization for the quarter totaled $44 million.
Speaker Change: We ended the third quarter with a cash balance of $933 million.
Speaker Change: March 31, we had $675 million in gross debt and $258 million in net cash and we have $1 5 billion available for drawdown under our revolver facility.
Speaker Change: We continue to maintain a solid liquidity position and with robust operating cash flows and a strong balance sheet, we are well positioned to weather the current global uncertainty and respond to geopolitical challenges.
Speaker Change: Today, our board of directors declared a quarterly dividend of <unk> 53 per share.
Speaker Change: During the March quarter, we purchased approximately 314000 shares under our previously authorized share buyback program for consideration of $75 million.
We plan to increase our ongoing share buyback program and purchased shares to the value of approximately 100 million per quarter commencing in Q4, FY 'twenty five.
Speaker Change: This will comfortably more than offset any dilution from the vesting of equity to employees during the year.
Speaker Change: Going forward, we plan to continue to reinvest in growth through R&D deploy further capital for tuck in acquisitions and continue our share buyback program.
Sally Schwartz: And with that I will hand, the call back to Sally.
Sally Schwartz: Thank you we will now begin the question and answer session I will turn the call over to our operator, Kevin to provide instruction.
Kevin: Thank you without conducting a question and answer session, if you'd like to be placed in the question queue. Please press star one on your telephone keypad. We ask you. Please ask one question and return to the queue, if you'd like to refer yourself from the queue. Please press star two once again Thats star one to be placed in the question queue and please ask one.
Speaker Change: And then return to the queue. Our first question is coming from Lyanne Harrison from Bank of America. Your line is now live.
Lyanne Harrison: Hey, good morning, Nick Congrats and welcome Sally can I start with gross margin, obviously very strong gross margin expansion there.
Lyanne Harrison: Talk us through in terms of each of the factors that attributed to the expansion how much of it was driven by each.
Lyanne Harrison: Yes.
Lyanne Harrison: Start off on that yes.
Lyanne Harrison: Yeah.
Lyanne Harrison: Yes Hello.
Speaker Change: Sort of said in the prepared remarks, the big driver is manufacturing and distribution efficiencies. So if you look through that.
Speaker Change: And these were all meaningful contributions it's not just one factor so we had.
Light manufacturing efficiencies will better recoveries through the factories.
Speaker Change: Distribution and freight we're seeing improvements there coming through.
Speaker Change: The <unk> 10 to <unk> 11 transition of that platform continues and we see some benefit with that as well.
Speaker Change: And then component costs as well actually.
Speaker Change: Starting to contribute to that gross margin expansion as well. So those factors are all meaningful in terms of manufacturing and distribution efficiencies.
Speaker Change: And the other one was product mix year on year as well.
Speaker Change: <unk> growth relative to the vast growth we saw some favorable positive product mix as well.
Speaker Change: Those with key drivers of the margin expansion.
Speaker Change: Thank you. Our next question today is coming from Margaret Kaczor from William Blair. Your line is now live.
Margaret Kaczor: Hey, good afternoon, and good morning, everyone shall I get to meet over over the phone.
Speaker Change: Yeah, maybe.
Speaker Change: Your picture question for a second.
Speaker Change: Certainly on the short term, we've heard that sleep labs are facing backlog of patients. So it would be curious, if that's gotten better or worse, but.
Speaker Change: As we connect that concept with a series of investments that you talked about pre and post diagnosis of sleep apnea I'm curious what metrics you guys are tracking for these investments from when they should start to show up in results more meaningfully.
Speaker Change: I'm just trying to compare it to other growth factors that you guys did do App for example, resupply services that you provided in the past is it better worse or slower faster do you think that you could provide.
Mick Farrell: Yes, Margaret it's a great question and it allows us to talk pretty broadly about demand generation demand capture demand curation and ultimately getting more of the 1 billion people worldwide, who suffer from obstructive sleep apnea onto therapy sleep suffocation onto therapy.
Speaker Change: Yes, as you mentioned as I.
Speaker Change: <unk> discussed in the prepared remarks, the launch of Nadal.
Speaker Change: Good tip sized huntsman apnea test Shouldnt spy the market and I encourage the other players in diagnostics to make smaller and more dynamic and capable because the sleep lab backlogs are at all time highs we track the metrics of how long a patient whites from a referral to a diagnostic and we've got really deep.
Speaker Change: <unk> metrics on that.
Speaker Change: Robots in lab and home sleep apnea testing I can say this that during that Covid emergency everyone embraced telehealth, everyone embrace digital health and we saw almost every sleep labs around the world.
Speaker Change: Embrace home sleep apnea testing as well so we think that combination of us, bringing not al and making it available to everyone sleep labs IDT FFS primary care physicians across the board.
Speaker Change: And empowering the sleep labs to take care of the toughest patients the patients with overlap syndrome, where you have gone right obstructive sleep apnea, plus chronic obstructive pulmonary disease.
Speaker Change: These lungs, and unobstructed upper airway and the gold standard therapy for that is a bottle of last or S T or even STI.
Speaker Change: And if you don't have the right titration equipment, you might not be able to get the patients through and if you have too many got variety OSA patients clogging up the beds, you don't get access to them. So that combination of not out for those who screened for likelihood of garden variety obstructive sleep apnea, and then making sure the sleep lab beds have been <unk>.
Speaker Change: I can get a CPAP neper by level.
Speaker Change: <unk> or if they have complex sleep apnea and adaptive server than lineup such as out our market, leading <unk> and so it's that combination so what metrics that we're tracking Margaret Atwood tracking that time to titration time to test GTT tracking time from that titration or test through too.
Speaker Change: Therapy onset and if theres any churn what is the churn in terms of patients dropping out from referral to diagnostic and from diagnostic to therapy and then from therapy setup to first 30 days versus 90 days first one year and then for life because as you know we don't have an acuity we have a treatment for life and residents GUL is laser focused on.
Speaker Change: That overlapping if you like ultra wisdom of the patient has a better outcome lower chance of death as we talked about through that landmark study in lancet.
Speaker Change: And our ecosystem does well, because obviously <unk> and resume.
Speaker Change: Are able to overlap that ultra is with some profit motive and be able to have that that re supply be profitable for the channel that allows us to then have revenue to reinvest into R&D, which we do at six 7% of them are.
Speaker Change: The revenue that we have so great question Margaret It's a complex one we're tracking many metrics, they're the ones that will go public with probably around the lines of I always think of bending that curve are we having less of the backlog are we getting more patients into the lab and always seeing an expansion of home sleep apnea testing from both pharma referrals in GOP one.
Speaker Change: Consumer tech as well as resumes on consumer demand generation. So we'll continue to update you as we go for forward here, It's a marathon not a sprint.
Speaker Change: Thank you. Your next question is coming from <unk> <unk> from Goldman Sachs. Your line is my life.
Speaker Change: Okay.
Speaker Change: Hi, Jim.
Speaker Change: I guess a question on <unk>.
Speaker Change: Share buybacks you has increased.
Speaker Change: The amount of debt to $100 million and you've done about $75 million.
Speaker Change: <unk> could you talk to the confidence in and doing that in light of the demand environment, you're seeing just given some uncertainty now with <unk>.
Speaker Change: With tariffs as an example, and then also just related to that the thought about capital allocation between buybacks and M&A given the.
Speaker Change: The valuation sort of reassessing and seeing in the public markets.
So I'll go first and then I'll hand over to Brett.
Speaker Change: Actually Brett why don't you go first on the increase in the share buyback because going from $300 million year to 400 million a year I think it's a good step up there is obviously no artificial limit our board My fellow board of directors and I are very supportive where it's accretive to give cash back to shareholders. You have seen that in our long running dividend program, it's been up.
Speaker Change: And share buybacks are an efficient way to give cash back to shareholders and we've shown that in the past and where it's accretive to us. So I think we will continue to do that you saw that in <unk> prepared remarks, So Brad why don't you address that first and then I'll talk a little bit about other uses for capital, particularly around M&A tuck ins and things like that.
Brad: Sure. Thanks, Thanks, Mike, Yes, and then I guess overall, we're looking to balance that it will be around dividends at all it'll be it'll be buyback.
Speaker Change: The tuck in acquisitions, and Nick will talk about that in a little wall.
Brad: So we want to get that balance right, but at the moment.
Speaker Change: How we say it is we've got very strong operating cash flows very robust business.
Speaker Change: We have net cash position on the balance sheet. So we've got an exceptionally strong balance sheet as well so.
Speaker Change: The board and board and management feel very confident of up ticking that bought back from 75 million to 100 million a quarter.
Speaker Change: It is accretive buyback and.
Speaker Change: I think overall, our fuel or exit against the balance what in terms of capital allocation.
Speaker Change: Buying back the stock there so we've uptick that.
Speaker Change: And we feel confident to do that.
Speaker Change: Yeah, and I'll just I'll just.
Speaker Change: Fully in line with Brett.
Speaker Change: Use of capital and dividends share buyback.
Speaker Change: Actually the best investment is investing back in the business, which we do at 67% back into R&D in 19.
Speaker Change: 20% there on SG&A.
Speaker Change: Yeah.
Speaker Change: The money is not burning a hole in our pocket, obviously, we generated incredible free cash flow of $558 million for the quarter $1 6 billion of free cash flow in the trailing 12 months, but we do look at M&A as an interesting.
Speaker Change: Right.
Speaker Change: Accelerate our growth towards our 2030 strategy. So as we look at M&A, we're looking at tuck ins sort of sub sub 10% sub 5% even of out of a market up some some 1% I would call a definite tuck in and there are a number on our radar screen nothing to announce here on this earnings call. It may not be too far before we announce something we are actively out.
Speaker Change: There, but I'll say this the acquisitions that we look at have to make three criteria number one they are in line with our 2030 strategy.
Speaker Change: Theyre going to possibly the world leader in sleep health breathing health and health care technology delivered at home to the financials have to be there that's being ROI has to get the ROIC C to the WAC of the appropriate period of time, we have to have free cash flow and we have to be the best owner of that asset we have to we have to be a better owner of the asset than the current owners in terms of expanding globally.
Speaker Change: Expanding around the U S and expanding to over 140 countries, we're in and thirdly, it's going to be cultural fit its going to be in line with resumes ethics integrity doing the right thing when no one's watching and beyond so what's this space and nothing to report, but I'm really excited to be upping the share buyback and watch this space for tuck in M&A over the coming six months.
Speaker Change: Months.
Speaker Change: Thank you. Your next question is coming from Anthony Petrone from Mizuho Group. Your line is now live.
Anthony Petrone: Alright. Thanks.
Anthony Petrone: For cognizant here this afternoon, and I hope everyone's doing well.
Anthony Petrone: Maybe.
A question Nick just on <unk>.
Anthony Petrone: Now.
Anthony Petrone: Into the fourth or fifth month here, where we.
Anthony Petrone: We are <unk> in the marketplace Lilly was out there sort of indicating that it was pushing at the primary care physician level. So just an update on kind of state of the state as it relates to where <unk> ones are at the moment.
Anthony Petrone: And if you can opine on will this out of the gate actually open up the new patient funnel.
Anthony Petrone: <unk> as we think it will based on our channel checks. Thanks again.
Mick Farrell: Yeah, Anthony Thanks for the question, it's a really good one is.
Mick Farrell: It's linked to that strategic question around demand generation, how do we get to the 1 billion worldwide. How do we get to the 70 plus million dollars in the U S who is suffocating, where GOP ones are rolling out the fastest as you said, yes look literally with Lilly direct in a lot of this sort of work that they do around the GOP ones in diabetes obesity and now with the new.
Mick Farrell: A few for sleep apnea or investing in this space.
Mick Farrell: We're not driving that sort of direct data see campaign, yet around sleep apnea, we believe they will probably stop at six months post somewhere between six and 12 months. So we'll watch the space on that but we're not waiting for them as you heard in my remarks, we're doing CME education.
Mick Farrell: And we're going directly to high volume GOP, one providers beginning to primary care physicians, who they will target. So that they are educated and they understand the gold standard treatment CPAP iPad violence that you can get 95% to 99% reduction IHI with the gold standard right. All the clinical data all the clinical literature is interesting it's not it's not even branded.
Mick Farrell: Isn't it seemingly comp, but we did those experiments because its right for those doctors to know and it's right to educate them on gold standard and how it can be used in combination with other therapies like pharmaceuticals in dental and other alternatives as well and so we're very open on that we tracked that education decided well did we see a change in referral rates and will proceed.
Mick Farrell: Right through to sleep labs, and <unk> and into the funnel and the answer is yes, we did see it and so as I said earlier, we will do brand development and demand generation, but it has to have an ROI. So early days, but regimens owned demand generation, capturing curation elements are working and they are working not just in our traditional channels and in consumer.
Mick Farrell: But they are working with primary care physicians, please see page and as we've said earlier, we're not going to target. The 300000, plus patient pays around we're going to look at the percent that are high volume GOP one.
Mick Farrell: Look at the portion of them that are already have existing relationships with ietf's or sleep labs and so we are working we are seeing some movement to your question of how materially we will open up the new patient funnel and how fast will that go will resume its got a lot of models, we're investing a lot and obviously thats pretty proprietary but I can tell you that as I said in the prep remarks.
Mick Farrell: There is an ROI here.
Mick Farrell: The calculus is the LTV works and so our goal is to scale it appropriately city by city region by region Doctor by Doctor and this is a very personal care patients take the sleep apnea kept very personally and having a really good relationship with both the primary care physician and the sleep physicians really important to resume with supporting all.
Mick Farrell: That channels and driving this demand Gen. So great question, Anthony and we will continue to update you every quarter as to how this is going with demand gen demand capture and demand curation.
Speaker Change: Thank you. Your next question is coming from David low from Jpmorgan. Your line is now live.
David Low: Thanks very much.
Speaker Change: I'm going to stay on the same topic I mean, I look at the device growth in this quarter on a quarter is a fairly short period, but we've seen a little bit of slowing I heard the commentary that sleep labs backlogs.
Speaker Change: Bigger than ever and then resume investing in not out and focusing on perhaps a little bit more attention on the diagnosis channel can I get you to talk a little bit as to.
Speaker Change: Where do you think market growth is how much of a headwind or how much of a challenge the backlog in sleep labs, and what resonates doing about it. Please.
Speaker Change: Yeah, absolutely David will look you've followed us for over a decade and so.
Speaker Change: At that time that was sort of back to that traditional seasonality that we saw here in terms of in terms of growth sequentially versus <unk>.
Speaker Change: Getting back to what we have always had in 25 years I've been at the company, which is highly likely to health plans health savings accounts run through December and then a bit of a reset in March but I can tell you U S device growth of plus 6%.
Speaker Change: U S masks growth of plus 14% pretty darn solid numbers.
Speaker Change: Yes, David look it's very consistent with where we were last quarter last five quarters. The last 10 quarters, where we said the actual market growth rate is mid single digits on devices high single digits on mosques and Thats resume just accept market growth sits back and let's just suffocating people then bedfast hearing him snoring pushed them into the channel, we're not going to see.
Speaker Change: Get back into that was not how we operate with going out there doing demand Gen doing these tests and getting things going and so that's how we're beating what market growth would be at mid single digits and high single digits on devices of mosques respectively.
Speaker Change: Going back to normal seasonality that means we get the benefits of of sprinting through to the December quarter to ride as we as we go forward through this calendar year and regiments looking at ways to do that to your point, yes. We are looking at that backlog. We're looking at patients wanting to come through the channel and we're looking at <unk> opportunities and resupply programs. So it's not just about new patients.
Speaker Change: Particularly on our masks and accessories side, it's really about driving broad tree re supply getting what we used to cold snap technology, but now calling resupply complete resupply essentials out to every <unk> that is that is adaptable to a cloud based tech like that I can tell you that there are opportunities are huge and that we've got good.
Speaker Change: Tests that shall we can get an ROI.
Speaker Change: As I've said before I think we can accelerate above market growth by by 50, 75, 100, maybe even 125 basis points over that mid single digit growth losses, and high single digit growth market as we get more and more effective at this demand gen demand capturing duration, we're not doing it alone we partner with the primary care physicians with hot.
Speaker Change: With the sleep physicians with partnering with doctors and.
And we partner with our HMA partners.
Speaker Change: One one note also I just final answer this question is.
Speaker Change: We did this sort of direct to consumer and empowerment and this last quarter and noting that on those sort of late night television and all that sort of stuff that sum about competing technologies are doing but really focus social media and streaming where we know and have already pre screen that this is a high probability candidate for being a sleep health.
Speaker Change: Concern consumer and somebody has a propensity with things in followed through and get referrals to primary care and the sleep physicians and so we are going to be able to move on all of these channels traditional sleep labs, Huntsville apnea testing that they use and patient pays us and moving consumers into the channel if we get any upside from the farmer and.
Speaker Change: Consumer wearable side it will be in addition to our efforts, but we had taken the bull by the horns here, where we're driving the demand Gen ourselves primarily thanks for the question David.
Speaker Change: Thank you. Your next question is coming from solid Dolphin from Baron Joe. Your line is now live.
Dolphin: Yes, thanks for taking my question.
Dolphin: Just one for Brent, but your comments on the gross margin into the fourth quarter things are fully consistent with this quarter.
Dolphin: Just based on where the Euro is now and also that the Aussie dollar and it was a bit softer in the third quarter. Just wondering why your gross margin is not going to actually pay.
Dolphin: Clearly higher in <unk>, just based on those FX rates. Thanks.
Dolphin: Yes, Thanks Paul.
Dolphin: Yes, I mean ophthalmic broadly consistent.
Speaker Change: If you look at that margin I guess that gives you a bit of room by the side and yet you are right I believe we'll get some FX benefit if the euro stays where it is going into Q4.
Speaker Change: I think probably the bias to that.
Speaker Change: <unk>.
Speaker Change: What we printed in Q3.
Speaker Change: Okay.
Speaker Change: Thank you next question is coming from Andrew <unk> from MST Marquee. Your line is now live.
Speaker Change: All right. Good I'll start then Jorge playing a role there are a good tool.
Speaker Change: If you've had problems.
Speaker Change: Once you get through with tariffs.
Speaker Change: Send that you've you've confirmed the exemption, but I was just wondering if.
Speaker Change: That exemption will apply or extend to all fee type of therapy coming into the U S. Because we had heard that one of your competitors sells reps selling at that point a couple of the Chinese made products on the back of this.
Speaker Change: Yes, Dan look really good question.
Speaker Change: This this tariffs.
Speaker Change: What we've been doing here at <unk> is going to come back a long way and if you look at the history of this that was 1992. This legislation was first put in place by the Reagan administration was reaffirmed in 1999 on the HW Bush and then in 2009 resumes actively worked with CBP, which is the customs and border protection to get official recommendations.
Speaker Change: <unk> for us to be with some types of that at the time than in 2008 <unk> that were looking at they can put in place and we've given the full tariff exemption. Then we went back at here in 2025, just as you heard from Brent just earlier this month and got reaffirmation that from customs and border protection that Altair exemption supply.
Speaker Change: Under this under this protocol, sometimes called the Nairobi protocol and we're fully there as our competitors, particularly coming from hotbed countries with pasture in the triple digits I would ask you to go talk to them to speculate on that I think it will be very very different for players were coming in from Australia and Singapore.
Speaker Change: Very friendly U S nations that have long standing relationships and very.
Speaker Change: Good approaches for.
Speaker Change: So those coming from China, or Mexico beyond I think you've got to ask them and see where they're at but yeah. We've been we've been at this for for decades, and we reaffirmed it just just days ago and we.
Speaker Change: We're running with it and it's going to stay that way I don't see anything changing on that and if it does become an incredibly strong balance sheet and all the other <unk>.
Speaker Change: Elements that we talked about earlier, but right now.
Speaker Change: We are running running through the type and doing what we do taking care of patients and we are a U S. Headquartered company. These reinvestments in Calabasas in our distribution center in Atlanta, Georgia, We're looking at expanding our distribution here. So really strong relationship with U S government really strong relationship with Australian government and the Singapore government and that's sort of public.
Speaker Change: Partnerships that were tested during Covid resident stepped up and I think we've got really good relationships I love being on the board of ads amid and having the chance to Washington D. C to Brussels to camera to Beijing and talk to these folks I'm actually the chair elect of abdomen, which means on January one 2026, I take over as chair of the <unk> group and so on.
Speaker Change: I'll be leading the industry actually asking for tariff exemptions for med Tech because I think it's the right thing to do on it need to be competitors with a short term advantage I beat them anyway and we.
Speaker Change: We'll fight to do those Thats the right thing on a humanitarian basis, but for right now we have.
Speaker Change: Tariff exemptions in place the ones we've had for decades reaffirmed just weeks ago. Thanks for the question Dan.
Matt Taylor: Thank you next question is coming from Matt Taylor from Jefferies. Your line is now live.
Speaker Change: Thank you for taking the question Nick I actually wanted to follow up on that you have this unique position with avnet.
Speaker Change: It is great to see the Nairobi protocol still in place for your product, but I guess I was wondering have you had any discussions or back and forth.
Speaker Change: With folks in the government about broader exemptions for Med Tech what do you what do you think the chances are for that.
Speaker Change: The broader than just the historical harmonized tariff schedule.
Speaker Change: Under the current regime.
Matt Taylor: Yes, Matt look it's a really good question.
Speaker Change: Zhang refer those specific country questions to my competitors. This one that actually exiting to defer to the CEO of <unk>, who Scott Whitaker, who is the one negotiating directly with the White House and obviously, we're all involved on the board to do that.
Speaker Change: As I said our goal at <unk> is a zero zero in our med Tech exemption.
Speaker Change: Haven't seen progress in that as yet.
Speaker Change: I've seen a number of my Med Tech peer Ceos reporting and some of them are talking about quantifying their specific tariff hit they're going to have and those are there for them. They are not there for us we've been able to have this and reaffirmed it I will still take the hydro for the whole industry and advocate for that the probability of success I'll leave that up to you.
Matt Taylor: Matt in your amazing sell side folks to run your models on that but here it resume without business, where we're looking very good right now and we just powering through this I think our experience of going through global financial crisis caused across the supply chain crosses our competitor out and we had to ramp up to the global manufacturing in Singapore, Sydney and Atlanta.
Matt Taylor: Where we are now has given us a lot of sort of stability and balance.
Matt Taylor: <unk>.
Matt Taylor: I would say.
Matt Taylor: In the boat.
Matt Taylor: Stomach nature for our company, we're going to get through this stronger and better than ever as I said earlier, not just survive, we're going to thrive and environment challenges challenges, but they bring opportunities for people who are ready.
Matt Taylor: Opportunities as the overlap of everyone says it's luck when you get opportunities and yes. There is return on luck, but opportunities the overlap of there's something there and the preparedness of the company and resume is very well prepared thanks for the question Matt.
Speaker Change: Thank you. Your next question is coming from Steve Wheen from Chardan. Your line is now live.
Steve Wheen: Yeah, Thanks very much.
Steve Wheen: A question for Brett just picking up again on the gross margin.
Steve Wheen: You've obviously got a lot of those factors that you've been talking to for some time.
Steve Wheen: Pulling in the right direction at the moment I'm just wondering.
Steve Wheen: What sort of runway you've got left to maybe be able to take that gross margin ignoring your comments on FX for the moment.
Steve Wheen: 60%, just trying to understand whether or not this.
Steve Wheen: Further shifts to.
Steve Wheen: To sea freight and if there's further manufacturing efficiencies or maybe even.
Steve Wheen: A procurement.
Steve Wheen: That is an opportunity in the future.
Steve Wheen: Yes sure Steve.
Steve Wheen: With 59, nine so were shy, we're almost at 60% now and we did see some pretty strong sequential.
Speaker Change: And that Jamie as well.
Steve Wheen: Two to Q3.
Steve Wheen: As I mentioned in my prepared remarks, we do we are working on a number of initiatives. What we're really what we're really focusing on is building a good pipeline.
Steve Wheen: Margin improvement initiatives that we can roll out not just for a quarter, but sustainably type.
Steve Wheen: <unk> six months 12 months 24 months view on what we're doing.
Steve Wheen: And if we can if we build that pipeline of opportunities and we execute on those and that should deliver those margin improvements year on year out so that the areas we focused on the areas I mentioned.
Steve Wheen: Moving and manufacturing efficiencies and recoveries distribution and freight and we've made a lot of progress. There. So we've got that that opportunity to I guess is less now than it was because a lot of progress, but there's still opportunity there to optimize on that.
Steve Wheen: We're still running the IL 10, and ICD 11 platform. We are transitioning so every quarter, we're moving more classroom clusters to iOS 11, predominantly although there will be a long time in some markets on Ias 10, it's still pretty pretty popular product in the market.
Steve Wheen: But that will help us and then on procurement components.
Steve Wheen: Design for manufacture for new products for example that come through.
Steve Wheen: Some of the work that we might do in terms of what.
Steve Wheen: <unk> engineering, and how we improve the products in market as well. So there's a number of opportunities. We're looking at is not just one and it's not kind of he has won in that season.
Steve Wheen: This margin improvement if you work on a number of items given our scale, we will get benefit and we'll get improvement in the gross margin that certainly what what our supply chain team is focused on delivering.
Steve Wheen: And how do you do that you do that by having a really solid long term pipeline of opportunities as long as you identifying them and executing on those.
Steve Wheen: I am confident we can continue to expand the gross margin.
Steve Wheen: Get that gross margin range.
Steve Wheen: Is that continuing to improve it and that would logically it has to has to end up in the sixties.
Steve Wheen: Thank you next.
Speaker Change: Next question is coming from David Bailey from Morgan Stanley. Your line is now live.
David Bailey: Yeah. Thanks, Amit just interested in your a lot of the latest thoughts on rates.
Speaker Change: So for people on our side.
David Bailey: Patients have initiated GOP one therapy.
David Bailey: Just wanted to test the thinking that patients who lose weight after being on a G. L. P. One.
David Bailey: So you said the CPAP therapy.
David Bailey: It sort of constant conversations but.
David Bailey: As to.
David Bailey: How do you think that might have all of it Tom and then maybe just sort of reflecting referencing some of the patient engagement initiatives you've got thanks.
David Bailey: Yes, David it's a really good question and.
David Bailey: As you know we don't just hypothesize on this we go and collect data right and so we're now tracking over 1 million patients and we see that.
David Bailey: Dot right on CPAP therapy for a GOP, one prescribed patient pluses Pat prescription, we see that high reimbursement rate at one year and we see a higher reimbursement rate at two years, plus plus three and plus five plus.
David Bailey: Plus 10, plus three plus and we're tracking that and its really consistent every quarter to put stuff into it and we're not really talking about it much because it's not changing that much in terms of these are very motivated patients and as they lose the white.
David Bailey: I've been asked qualitatively and I'll, even sleep physicians like give me. The reason why are they more adherent. What do you think it is and they talk about lifestyle. These people are aging.
David Bailey: <unk> better feeling better exercising more and therefore sleeping better are they also talk about the low white name for those on iPad bottles that are automated in terms of titration, maybe lowering their precious which can increase adherence as well and so lots of hypotheses out in literature, we're going to see lots of clinical literature in this space, but.
David Bailey: The biggest the big change I think this quarter.
David Bailey: And if you look at the clinical data.
David Bailey: Dental device might sort of 70% trader and implant or drug half treat sleep apnea. There was only one gold standard that fully treats.
David Bailey: Sleeping disorder. This sleep suffocation disorder, and that is positive airway pressure and it's incredibly effective completely noninvasive and completely reversible and so the risk for the patient and nothing it's not like going under the not for an implant or putting something into your body. They could have all sorts of side effects and so the propensity to start is long and we're tracking really carefully that adherence right.
David Bailey: And yes, we're getting good we're getting good results. There. So the real question is how fast will they bring people into the funnel and can we expand the funnel, but hopefully that new testing funnel with Nadal.
David Bailey: The sleep lab channel with better products like <unk> more integration into some newer into <unk> into my into areas. So we're sort of preparing the infrastructure. If you like David for the flow of new patients that will come from this so the anecdotal all people will lose a bit of white and stop it's just not happening talk to any pricing through the clinical research.
David Bailey: At the clinical data if you don't believe that 1 million patients in our study go interview adopters says no absolutely not I Wouldnt think about it they were actually doubling down on the use of it because they are feeling better across the board and half trading suffocation is not trading suffocation and the patients themselves now that certainly the the doctors know that there is always churn, but the churns lower.
David Bailey: And that group and our job is to drive up adherence programs resupply programs, which lead to better outcomes and now from our data leads to 37% lower death rates and the pricing sticking up there for P, 55% lower cardiovascular death rates.
David Bailey: This is a big deal. Thanks for the questions, David I think Kevin where we are right at time.
David Bailey: I believe we have time for one more question from Brent <unk> from Keybanc capital markets. Your line is now live.
Speaker Change: Hey, guys. Thanks.
Speaker Change: Thank you for fitting me in here at the end just ill ask one follow up on the gross margin trends.
Speaker Change: You called out manufacturing and logistics efficiencies as a primary driver of the sequential and year over year improvement just was hoping if you could maybe expand on what some of the key initiatives in those buckets have been and where youre seeing the most impact. Thank you.
Speaker Change: Yes sure Brett.
Speaker Change: On the distribution and freight we're really we're really seeing a strong improvement and now see freight to airfreight ratio side. That's improved a lot. So close to where we were pre COVID-19 actually said that's been a strong driver which has been they've probably for the last 12 18 months and that continues that's a big one.
Speaker Change: Manufacturing efficiencies, while it's about doing a bunch of small things really well.
Speaker Change: And driving that and improving the process improving routing times for example, so doing a bunch of things looking at overhead and so on you also get benefits of scale, obviously as we continue to grow.
Speaker Change: And the other thing on that is the <unk> 10, and even the IAC 11 platforms are quite mature now so as I'm sure you get just better and better at making those devices.
Speaker Change: Improve along the way.
Speaker Change: Since continuous improvement programs if you like.
Speaker Change: So that really drive that at our scale can have quite a significant impact.
Speaker Change: That hopefully gives you a little bit more color.
Speaker Change: Some of the drivers there.
Speaker Change: Thank you we've reached end of our question and answer session I would like to turn the floor back over to Mick for any further or closing comments.
Mick Farrell: Yes, thanks, Kevin and thanks to the over 10000 risk medians, providing these products and services that we talked about to patients in over 140 countries.
Mick Farrell: Worldwide. Thanks, what you do today and every day. Thank you also to what you do for our patients our physicians providers payers and health care communities and how you build value for our stakeholders, especially our shareholders who are listening to us today, which I know many of you risk medians are shareholders as well I will talk to all of our stakeholders here again in around 90.
Dice. Thank you.
Sally Schwartz: Over to you Sally.
Sally Schwartz: Great. Thank you Nick and thank you everyone for listening. We appreciate your time and interest if you have any additional questions. Please don't hesitate to reach out directly Kevin you may now close the call.
Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.