Masimo Corporation (MASI) Earnings Call Transcript & Summary

Good morning. I'm Eli Kammerman, VP of Investor Relations here at Masimo. I'd like to welcome you all to our 2022 Investor Day today. We've got a really full action-packed and information-rich day planned for you. We think you'll get a lot out of it. and it will definitely will have been worth your while to come out here to see things that people have not seen before and that they won't see on the webcast. Before we begin, let me cover a couple of important things. Firstly, the restrooms. The restrooms are through that exit door on the right and just follow the wall around to the right. Secondly, you probably saw that we have breakfast right outside these doors and coffee is in the back. Here's our agenda for today. As you can see, we're going to have some presentations to start. We've got a coffee break at 9 o'clock. You'll come back for some more presentations as well as a physician panel, and then we'll break for a combination of lunch and rotations through demonstrations. We think you'll really get a lot out of that. You'll see many of the new products we've been talking about for a long time, and you'll be able to ask questions of our subject matter experts about the products. Then we'll come back for some more presentations and a wrap up with open floor Q&A. For today, we will be discussing forecasts and projections along the lines of what are described in our safe harbor statement. Please keep in mind that these forecasts and projections involve risks and uncertainties, and these are further described in our SEC filings. In addition, we will also be discussing non-GAAP financial figures, the definitions for these non-GAAP figures are also contained in our filings with the SEC. Now I would like to introduce our founder, Chairman and CEO, Joe Kiani.

Good morning. Thank you all for coming. Really appreciate you making the time to come here. We're excited to have to stay with you I know it's been a long time coming, especially since we announced the acquisition of Sound United. But I hope you believe it was worthwhile. I have one thing we're doing differently here that I want to tell you about today, we're going to show you a little bit about some future stuff. Things within the next year, we're not going to go beyond that, but still, it's not our style. We'd rather just introduce the product, then talk about it. But I think given that there was some nervousness about where we're going, we decided maybe it was the right thing to do to kind of change how we do things a bit. I started Masimo, gosh, February, 1989, almost 34 years ago. And our mission really from almost the very beginning, was to improve patient outcome and reduce cost of care by taking noninvasive monitoring to new sites and applications. It's about to come to full circle. It's about to be totally envisioned. I know some of you are very clever. You saw some of our filings for trademarks like STORK and you saw some of the videos we just showed you today, and you put some of it together. But there's a lot more there's a lot more. But that mission we have accomplished to a great degree, but we've saved numerous lives. We've improved numerous lives. I don't know, probably tens of thousands of babies no longer a blind because of SET pulse oximetry. And with hemoglobin, we've done so much already and so much more to go. But the stuff we're about to do now, it's really going to help us just take things to a new level, the degree of lives will touch. The amount of hopefully lives will save, it will be tremendous. And we couldn't have done it without a decade ago putting into motion the products you're going to be seeing today and in the next 12 months and beyond. And we couldn't have done it, as you'll see, without bringing in the Sound United team to help us. We have -- we were engineers at the time when we started Masimo. We were good at math, we were good at adaptive filters and signal processing. But we've immersed ourselves now. We are immersed engineers, and we understand the problems of our customers, whether it was overburdened clinicians, whether it was poor handoff communication, whether it's recognizing that opioid-induced respiratory depression is just not something that happens in hospitals. it happens at homes. These are the things we began recognizing and we wanted to create solutions for. Now today, we've got a lot to show you. Blair will come up here and we'll talk about first about Masimo Consumer Health. With that, we'll show you some new products, some you've already seen like the W1 and Freedom that will be coming out. We're going to show you STORK which is a new baby monitor that should be incredible. We're going to show you our new adaptive acoustic technology for creating earbuds that not only help people hear music better, but eventually hear their environment better. And we're going to talk about the Masimo audio brand, this iconic set of products that have been around some for 50, some for over 100 years that people keep going back to because they are the audio company for high fidelity we're going to take some of the things they created like HEOS, and we're going to turn it on to turn them into health hubs. In the past couple of years, we put about maybe 1,000, 2,000 health hubs out there as we rolled out safety net for COVID. Today, 20,000 devices have been turned out to become health hubs. And in 2023, about 4 million devices will become home health hubs, Bilal will come out and talk to you about our core technologies, SET, AAT, and we'll talk to you about what we're doing for hospitals, some of the new products we've developed. In the last few days, we've announced some incredible products, technologies we've been working on for a decade like sepsis index, more people die of sepsis than anything else, and early detection of sepsis can save lives. And there's never been a good tool, a tool good enough to have the sensitivity and specificity you need to be able to react to the onset of sepsis. Hydration index, we began showing athletes our pulse oximetry over a decade ago, and many of them told us they use it for training, knowing when to stop, do a massage day as they would say, and when to push, but every one of them said, if you could only let me know about my hydration. Well, we did a full market release of hydration index a few days ago. I am truly excited about that. I spent a little time in hospital recently. And there's a lot of learn from that. I never had the patient's perspective. And first cf all, the one product that became my favorite product was the W1. It was easy to wear. It didn't tater me. It didn't pull on me. And I had at the time HI, and it let me know about my hydration. And I used it to titrate myself. But I'll tell you, I also learned there's so much more we need to do for hospitals, especially in the ICUs, especially in the neuro ICU, and not just getting the current products we have like SedLine and O3 to become ubiquitous there because it did help me and it should help more people. But the tools they really need that they're using corollary adjacent products to try to get some insight with. You know what else, I got out that experience, how I was able to complete my health care at home. The step-down unit became my bedroom. Why? Because I had the W1, I had the radius T for my temperature. And importantly, I had a service team here that watched over me. One day at 04 00 in the morning, they rushed into my bedroom because they had seen by deterioration, fortunately, it was fine. They were a little over [indiscernible]. But look, hospitals are great. In fact, I used to say, the last place I want to be in the world is in a hospital. Well, as you see Irvine where I was, I was happy to be there. They gave me excellent care, protocolized patient safety in their head, ICU doctors that collaborated together to give me the best care nurses that care with empathy. But I'll tell you, going home was important. At the hospital, you have the risk of hospital-acquired conditions like infections, MRSA, and you've got that sinking feeling when you're in a hospital, a home along -- around your loved ones, around your environment with the right technologies, you can get better. And I noticed my doctors worried about my pulse rate, my perfusion because they didn't know my baseline. Now imagine when W1 becomes ubiquitous or freedom, whichever. When someone walks into the hospital, their historical data will transfer to our devices. So people will know what my baseline is. And they'll know whether I'm doing is good or bad, and these are the things we don't have right now, and these are the circles we need to complete. Now after Bilal talks to you about that. We've got an amazing physician panel. These are incredible doctors with great reputation that have transformed health care. They're going to talk to you about telemonitoring and why Masimo is an essential piece of that. Because if you can't rely on the technology remotely, why would you put it out there? When I started Massimo, monitors needed someone to monitor. Really nurses and doctors are monitoring the monitor, not the patient. And by solving the false alarm problems with patient motion, low-perfusion which, by the way, also solved the problem with pigmentation, which you've heard a lot about. But by solving those, we make monitoring reliable. We did what people didn't think was possible to make monitors work good enough to save lives. Some of you invested in our company and told me that you don't invest in health care unless those products can save lives, and you were surprised that a monitoring company had saved lives, and you've come to us for that reason. Yes, we did. And you know what? By making it so good, clinicians revolutionize care. They learn -- they've invented things we did not dream of, like using it to reduce eye damage in the neonatal ICU, using it to monitor healthy newborns for congenital heart defect, which before they would miss and sometimes babies would go home and they would die because the parents would mistake their heart defect for fever or a flu, using it to save lives in the postsurgical wards from opioid-induced respiratory depression. And I remember the call I got from one of the physicians here 2 weeks into Covid, he calls me we've got to take your devices into the field because we have too many patients coming into ICUs. We can't handle them, but we can trust your product to let us know when to bring those patients back in. And literally, within a month, we stood up that technology, FDA cleared it, and you'll hear more about the statistics of that. You'll do the tour, which I hope you'll take the chance to really go through it all, I think some phenomenal takeaways from that. And you'll come back for the, I guess, the punchline. Micah will walk you through the financials. And it's good. We have an amazing trajectory. Just Masimo Healthcare on its own has a path of growing small double digits with revenue and earnings faster than that. Masimo consumer audio has a similar trajectory. But Masimo Consumer Healthcare gives us a chance to grow in order of magnitude, if not more our revenue and our earnings. It is not like it's going to be easy. We're not saying it's a straight line. But look, we've overcome bigger obstacles when we started Masimo. And now we have this incredible team, the best team I've ever had, nearly 10,000 amazing people, from people working down on the factory floor to people running the company day in and day out. We have a reputation that's been hard fought and hard won.and we've got some revolutionary products. We've announced some of them already. We're going to see some more today. So I'm confident we're going to get there. We accomplished more than, I promised you all 20 years ago and 30 years ago, and I hope once again will accomplish more than what I'm telling you today we're going to do. Now at the end of Micah's presentation, he'll tell you why we acquired Sound United. We've talked about it before, but we put it on a slide. So you'll see why we acquired Sound United. Look, we've told you about a 20,000 distribution channel. We told you about the engineers, nearly 400 engineers, but they have about 500 sales and marketing professionals that would have taken us maybe 5 years to a decade to hire even if we could. These people love what they do. And we're going to take what they've done and take it to a new level. Why? Because they're all excited about saving lives and going beyond just improving lives, but saving lives. What we're about to do with the launch of W1 and E1 we would have had to invest a lot in sales and marketing .But now it's part of what we own. And it has a positive EBITDA. It's got -- we don't have to take a hit in our earnings to go and take a risk of what's about to come. And yes, it is risky. I will never tell you anything we do is not risky, but I've learned when you take risk, you actually improve your chance of survival, if not the ability to thrive. So these are calculated risks. We did not buy Sound United for 10x revenue or 20x revenue. We bought them for onetime revenue, 8x EBITDA, with practically our own cash. We did not leverage this company. And we looked at over 200 companies before we bought Sound United. Many in the consumer side but none of them had the iconic brands that they have. What we have in our hands right now is rice krispies and corn flakes. People keep buying them. And we just can't screw it up and we don't intend to. We intend to actually take it to a new level. But we couldn't have gotten that with some of the new companies that have emerged that could be gone tomorrow. And by buying Sound United, we now have another $1 billion business that on its own will do well despite God forbid could ever happen to Masimo health care. We're in a regulated industry. I could say something here today an upset someone and they could come shut down my company. That happens. So I won't say anything. But I got to say, I have I've never felt better. I am ready to commit another 5 to 10 years of my life to this because I just don't think because we should, because we could, because if we don't do it, I don't think some of the stuff we're going to do will ever come out. So many people put up poise, put out things that don't really work. We won't do that. We don't do that. So I'm going to come back later, I'll have a chance to hear everything I care hearing and respond to your questions, but I just want to tell you, we wouldn't have made it a few years ago, people that shouldn't have believed in our vision, didn't believe in it. And when we went public, some of you helped us become a public company and supported us. So this relationship is critical. Your belief in what we're doing is critical I'm one of the largest shareholders, if not the single largest shareholder in this company. And the only difference between me and some of you is that I just don't look to what's going to be best in one year. but what's going to be best in 10 years. And that 10-year window that I have, if you take it with me like you did at the beginning when you invested in us, you're going to be happy you did. We had people that build on us. We have people that stay with us, those who stay with us. They did well. They either became wealthier or they became wealthy. And what we're about to do, where we're about to go will hopefully make an incredibly valuable company. I guess to our investors, which without we wouldn't get the chance to do what we do but to people. You're going to maybe tell me I'm crazy, but we want to usher in 22nd health care. We want to complete the circle from home to hospital to home. And we want to get care to be more efficient, more effective, more precise, easier, thank you all for coming. I'm so happy that you're here. And I hope the rest of the day, you'll find worth your while. Thank you. Thank you.

Good morning. My name is Blair Tripodi, and I'm the Chief Operating Officer for Masimo Consumer. Thrilled to be here in front of you all today. And thank you, Joe, for that great tea up, we are going to go through a lot in the next hour, take you through a lot of our thinking in the early days since the acquisition and bringing it full circle back to how we're going to continue to drive our messaging into the home, Joe's vision of bringing health care to the home and of course, continue to dominate our own audio business as well within the home. Over the past decade, I've been fortunate enough to work with some of the greatest audio brands in the world, from Bowers & Wilkins to Polk Audio, to Marantz and Denon. These brands represent over 200 years of audio history and have been standing for something in consumers' lives with a differentiated market positioning, a premium and luxury market positioning and have provided a point of excellence for our consumers for a long time, generations. Today, we're going to talk about the connective lines from that story to our new story and our new challenge with Masimo Consumer Health. We're going to build the bridge for you on how we're going to connect this brand from the hospital into the home. We're going to talk about the muscles that we bring to this equation with the Sound United team integrating into the Masimo team. And all of the resource that, that will be deployed against our strategy. We'll talk about our qualitative and quantitative research to date and the market segmentation and points of differentiation, we feel we have the opportunity to win. We'll dive into some great product launches, and we'll share more detail, which will be supplemented later in your demonstrations in the vignettes out front in the lobby and in the back in the audio rooms to give you more insight into the operation that we are bringing to bear here today between STORK, Freedom, B1, W1, et cetera. And then we'll close with how we -- and this is very important, as Joe mentioned, how we'll maintain our position in the home within the audio space because we do believe that there are many green shoots there to come for our brand, and our business overall. So what does Masimo stand for in the consumer health space. or said differently, the answer is, I don't think consumers really know who we are yet. This brand has been curated for decades in the hospital, and it stands for innovation, unparalleled ethics and product excellence. Three amazing pillars to stand on as we begin our journey into the consumer space, that DNA is there for us to bring forward into our own Masimo consumer journey. So what will Masimo stand for in the minds of consumers? Or said another way, what difference will we make in their lives. Answering this question is critical. As we enter a crowded consumer health space with the likes of Samsung and Apple and Garmin, coming forward to the consumer with the messaging of what we represent, why we are built on a legacy of quality and unrivaled innovation. And most important, why these consumers can trust our brand is critical to our success. Since Joe started the company over 3 decades ago, we have been known for improving lives and the outcomes for patients. This has made us quite formidable within the hospitals and clinicians around the world. And importantly, it has built that foundation of quality, which we'll springboard off of within our consumer health messaging. This is an image from just after the pandemic began. This is a fellow named Leonardo Fraser, and he appeared on CNN in April of 2020, stating to the world that this right here saved my life, and that's why I'm here today. He's talking about the Masimo SafetyNet and our technology. You have to admit this is a priceless way to begin our consumer health journey. We improve lives for patients and their loved ones every day. We empower athletes with the right information and data to optimize their training, and to compete and complete their -- I'm sorry, I think I'm going to skip the slide, excuse me. Yes. Sorry. Sorry, the copy looks like it might be missed up. We improvised for patients and they'll have ones every day. We empower athletes with data and analytics to help optimize their training and performance every day. And we make people feel safe. In a world where people are feeling more responsible than ever, for their own health care, we can help them live healthier and happier lives. So how do we take this heritage, our DNA and create a differentiated position. We lean into what we're already known for. We lean into our story. We make it bigger. We make it more emotional and we connect to consumers. We have an opportunity to take our engineering prowess and combine it with our ability to make a huge impact on the health and happiness of people, not patients, people, people like you, people like me, people all around us, our family and friends. This is what we do. Massimo is engineered for a beautiful life. This positioning draws directly from our heritage in technology and innovation. Our ability to invent the uninventable and our passion for improving lives. It connects the practical side of our company with the beauty that we are all looking for in life. There is no problem we cannot solve and no person we cannot positively affect through our unique products, you can trust Masimo. This strategic foundation will guide everything that we do. It will help the Masimo Consumer Health brand in ways that no other competitor can. I'd like to share with you a short positioning video that will demonstrate the type of content and messaging that the strategic North Star will guide us in starting to inspire our consumers. [ video presentation ] Through that positioning video I hope you connect with a little bit more of the DNA of what we're trying and aspiring for from a storytelling aspect with our company. This sets up our brand architecture, which you can see here with Masimo Hospital and all of the products we build for our medical and practitioner-based products. And then our home side of the business, which includes our new health care business as well as our audio business. These worlds are already starting to come together in amazing ways, which I'll be showing you in the following slides. Achieving this position will require some important perceptual shifts from where we are as a brand today to where we are heading in the future. Our foundation of innovation, product excellence and our carrying ethos will not change, but it will become clear that we are a brand built to help people get the best out of life, not just the medical brand for patients and care providers. People will see our vision, come to life beyond the medical arena, showing life, not as it is, but showing your life as it could be. Shifting into our next fundamental to building this brand. I want to share with you a little bit about, as Joe alluded to, the Sound United overlay and input into the organization. We have 4 scaled platforms that we'll talk about here in a minute that we think add a lot of expertise and knowledge and know-how, especially as we go to attack a consumer marketplace. The first is our scaled engineering platform. Together with Masimo, we now have an engineering team of over 800 staff members, skilled in building and developing the most innovative and consumer-friendly products imaginable. In addition, that group represents over 1,700 worldwide patents in both audio and health care, operating through 7 dedicated factories. We are armed to develop the most innovative and creative products imaginable in this space. Our second pillar connected software ecosystem. Complementing our hardware platform is our connected software ecosystem, which allows Masimo Health and 3.4 million devices in the field today to connect to the cloud and connect consumer health care information to the people that matter, enabling a worldwide connectivity of both entertainment and telecare services. Masimo and Sound United bring to the table a formidable software platform, which will be merged. Will ultimately create the home software platform for the future. As Joe mentioned, in 2020, Masimo launched the home, the Masimo SafetyNet hub with a little less than 1,000 devices in the field. Today, as Joe also mentioned, we're proud to announce the activation and a significant integration milestone 6 months post merger, where we will turn on over 23,000 Denon Heos units, which will behave as an extension to your Masimo Health Cloud and connect your data through your W1 device or other Masimo creative devices to the cloud. By the end of 2023, we will turn on a grand total of 4 million devices worldwide. Again, connecting all of your Masimo connected systems to the cloud, to your clinicians or your loved ones. An amazing feat by the end of next year. Our third pillar is our global marketing and brand framework. Sound United was operated as a brand-led portfolio with independent teams of staffers dedicated to curating the product plans the global marketing strategies, the go-to-market strategies and the channel and distribution strategies for those brands. Those teams are dedicated at our global center to help us maintain a differentiated position to our consumers while taking advantage of our shared platforms in region. We are implementing the same strategy here with Masimo Consumer Health. We have stood up a Masimo Consumer Health organization. That team is working diligently between the two organizations to build the best products to create the go-to-market strategies and the consumer demographics to drive us with our product road map and our marketing strategies. All of that will be handed over to our regional teams who will localize that content, create local strategies globally for us to execute and make the most and biggest bang for our dollar. As Joe mentioned, we have over 500 individuals in region around the world dedicated to this portfolio approach, and it's a true weapon as we head forward in our consumer health plan. This is already paying off today. What you're seeing here is our first effort to integrate our creative services organization into the W1 program. These are advertisements, digital ads, trade marketing, which we have assisted the Masimo team in rolling out to already begin to overlay that specific consumer appeal to the W1 product launch. Very excited for this and very excited for the future within consumer health. And our last platform advantage, as also Joe alluded to, is our omnichannel go-to-market. At Masimo Consumer, we operate in over 20,000 points of distribution worldwide. Over 60% of our global revenues in the Audio space come from the international landscape. There is no consumer electronics channel partner we do not work with today. This also includes the world of [ custom ] installation which I think will be very important as we consider the ramifications of home health rollout and integration into home automation platforms in the future. Our third area and third, fundamental to building the consumer health strategy is understanding our market movements and segmentation. Since the acquisition, we've spent a ton of time breaking down who this consumer is and where they want to shop, what's important to them, breaking down their demographics and psychographics to help build our personas as we go and try to attack this market. Aspirational brands understand and embrace the fact that health and well-being have become the new luxury. Luxury is no longer about selfish, tangible possessions and actions. It's about the intangible values that define us as people like authenticity, transparency and connectivity. People who live a sense -- a balance in their lives are healthier and happier and more fulfilled. And as we studied this group, through our qualitative and quantitative research, six key brand tenets became evident for our implementation. The first, consumers view health as an extension of their lifestyles and their values. The second piece is they believe knowledge is power and they are not shy about stating it. Third, of course, they care about what a product does. But they also care about how it makes them feel. They do the research, not just on what the product features are but on the brand themselves and what they stand for. They're curious about that brand story. And finally, quality and design, go hand in hand. And you'll see later in the audio vignettes we prepared for you, how important design is and you'll see in the wearables vignettes, how important design is for health care as well. We believe we are positioned well to hit all of those points. Taking a step back, however, and looking at the landscape, the competition -- some very interesting insights came from the study and what's in the market today. Our view is that many consumer tech brands today are offering information and guidance they are not qualified to offer. Consumers told us that they will trust information provided to them continuously and accurately from a company born in a hospital before they will trust a company that makes their washing machine or their laptop. This void is the consumer health space that we feel our team can fill. We're going to approach this market in four segments. These segments cover a very large cross-section of adults and children across the world who will be looking for products to address very specific needs, around accurate and continuous health care monitoring. From daily life to athletics and sleep, we are focused on providing accurate and continuous monitoring that allows humans to live and more fulfilling a happy life in the category of vulnerability, recovery, health and wellness and sport. We're going to attack this through three category segments. In Wearables, which includes hearables, sensors that will combine with consumer products to enable monitoring and flexibility through our connected [ light ] platform, products that follow us through life, enabling monitoring and seamless access and telemonitoring, allowing the ability to share data with your professional caregivers or your loved ones. Now let's get into some of the fun stuff and some of our product launches happening in 2023. As Joe mentioned, as many of you have already seen, I have introduced you to STORK, hospital quality in baby monitoring at home. Parents just want to know that their baby is safe and sleeping well. The existence of SIDs or a variety of other newborn health conditions make the first year of life for any parent very troubling. Given the need for a solution, that helps provide peace of mind throughout the night, we feel that STORK can address many more than the $1.5 billion baby market monitoring market today and eventually attack the over 130 million babies a year born around the world. This is an opportunity for us to innovate in a category by providing unparalleled accuracy and insights from a trusted player, leveraging our go-to-market expertise and capability to attack a category that is concentrated in a handful of retailers and a handful of channels worldwide. Let's take a look at how the scaled platforms I mentioned earlier can support our STORK launch going forward. From a scaled engineering perspective, the STORK product delivers best-in-class vitals monitoring while monitoring -- while providing an alert system that parents can trust. As you can see, we've focused all of our feature sets on true consumer insights and what parents actually want in a baby monitor. Through its continuous and accurate monitoring, STORK will give babies a voice by providing actionable data to family and parents and healthcare professionals alike. Alongside the STORK booty and the camera and the hub, which you'll see later in the vignette in the lobby is a robust application experience, which will work within our broader Masimo Software Healthcare Solution. The STORK app will allow parents to have universal access to their baby's videos, sound, vitals. The Stork gap is geared to not only serve as a health hub itself, but also to empower parents through positive reinforcement, a video and a knowledge library and through its connected software ecosystem allow parents to share the greatest and cutest memories on social media. We've created this positioning video for STORK to give you a little bit of insight on how we will bring the product to market. This is not a commercial. This is a positioning video. This is all about creating peace of mind and bringing hospital quality monitoring to the home. [Presentation]

I hope that gives you a little taste of where we're taking some of this messaging with the consumer. And I hope it gives you an idea of how we plan to win in that space and take the hospital into the home. Our third pillar -- sorry our fourth pillar is our omnichannel go-to-market. From telling that great compelling brand story, which we started to see some initial concepts on there now to targeting the very specific channel base that these types of products represent, we have a very focused approach and opportunity to win in the baby monitor market. We will also make sure that we are using and leveraging one of our strongest muscles, which is our D2C business. We have a robust D2C team within Masimo Consumer and we will do our utmost to drive consumers for education, but to also compel them to buy online through our own channels. And then there's winning on the shop floor. We take Masimo to the shop floor for the first time in this case and training, empowering and educating through our team of global brand activation team members and providing best-in-class merchandising solutions, winning at the baby registry are keys to our success as we roll out Masimo's first consumer healthcare product in the baby monitor market. Super exciting day for us today to be sharing this product with you all. Pivoting to our next tranche of launches. We're going to provide here a brief look into our wearables and hearables outlook, again, with many of these products launching in FY '23. We recently entered the wearables category with our first health watch, the W1. In this segment, we will continue to leverage our best-in-class sensing capabilities across a variety of form factors to provide incredible insights through continuous and accurate monitoring. This foray into wearables is an important step in our consumer health journey as we -- as the data we track from these wearables will be invaluable going forward in our connected software ecosystem at home. We are also excited to discuss the opportunity in hearables, $85 billion market, combining the traditional over-ear, in-ear, ear buds and headphones from today, along with our hearing enhancement products and opportunity. Here, we will leverage our heritage in providing great sound through our branded portfolio of premium and luxury products together with our Masimo Adaptive Acoustic Technology, which we'll be talking about here in a minute. All of this to create a world-class listening experience for our consumers. Our best-in-class health sensor for wearables currently being deployed in the W1 is launching in the premium consumer watch segment format with Freedom and B1. While the smart watch market is crowded, we feel that the watch with its health and wellness focus will open doors to new consumers. Rather than health as an afterthought, the fidelity of the monitoring will allow us to generate new insights, alerts and indexes the market has yet to see. Our wearables will set a new standard for accurate and continuous monitoring as showcased in the W1. While adding feature sets that modern day consumers expect, such as LTE connectivity, premium design, form factors for sleep and innovative features, as Joe alluded to, with hydration index, which are made possible by the incredible technology in our sensors. And finally, although we are still too early to share marketing concepts, we've identified key consumer segments that rely on the utmost accuracy in their continued health data. As we think about the target audience for Freedom, it's important that we start close to our DNA by targeting the hospital ecosystem via the W1 and expanding our scope towards health and wellness gatekeepers, fitness coaches, influencers, partners like managed care facilities. With this approach, we can provide the right hardware and subscription solution to each of the key mass market demographics. These groups represent a large subset of the U.S. population. It also represents a large subset of the global population, whose needs are not met by current offerings today. For these groups, accurate and continuous monitoring matters. And when it comes to improving performance, we're just maintaining an accurate representation of their health any given day. And finally, a little bit on our audio trade . As we begin to launch these exciting products in consumer health, it is imperative that we maintain our leadership position in Audio to maintain our strategic advantage and gateway into the home. Our audio brands have been relevant in consumers' lives for over 200 years. Our portfolio of brands are positioned from the mass premium with Polk Audio to the ultra luxury and performance in Bowers & Wilkins and Denon. Our business in Audio is global with over 60% of our turnover coming from outside the United States, providing us access to international markets for the healthcare. We are also constantly innovating our product offering, not standing still and not changing. We are leveraging our brand heritage to open up new gateways into categories and products that are the future. The value of our brands as strategic assets cannot be underestimated. And I hope you enjoy experiencing these later on in the demos this afternoon. Historically, our brands have been predominantly focused on the home. However, we have the right to play in this $85 billion hearable marketplace where we combine our brand legacy, our strength in building world-class audio with the likes of the new Masimo Adaptive Acoustic Technology, providing hearing solutions for every consumer. To accelerate our approach into this category, we are launching at the conference today, our Masimo AAT. This technology allows us to map an individual's hearing by sending pulses into the ear and upon receipt of the return signal, it allows us to profile a consumer's specific hearing, which we then, in turn, optimize through the device to whatever content they're listening to. This will allow every consumer to enjoy their favorite music with the same rigor as the artists originally intended. And in the future, it will allow us to build a suite of products to enable optimal hearing for all consumers worldwide, no matter what application. In addition to our growth in hearables, we will continue to focus on the over $6 billion premium and luxury segment of the home. This segment is our bread and butter. We leverage our incredible network of engineers and innovators of our factories and our worldwide sales and marketing and brand efforts to drive and develop this space. Our focus is to maintain each brand's unique position in the market and to create new distribution models, where we can bring the most exciting global audio programs into the home. And finally, this omnichannel go-to-market capability allows us to sell and market our products across all relevant channels online, over 20,000 points of retail distribution locations around the world, custom installation, third-party distributors, owned websites and selective partnerships. Given the scale of our commercial operation, we're able to implement portfolio selling while offering our retail partners incredible efficiencies in the operating process. Thank you for the time this morning. Thrilled to be able to present and share some of these insights with you, look forward to your questions later. Speak to you soon. Thank you.

All right, everybody. We're finishing that presentation a little bit earlier than expected. So consequently, we will take our coffee break a little bit earlier as well. Please take your time out there, enjoy our food selection. And please be back here at 9:00 -- all right 8:45 will be the resumption of our activities here. And for those of you on the webcast, please note we are continuing at 8:45 Pacific. Thank you. [Break]

All right. Welcome back, everybody, if you can find your seat, please. Thank you.

All right. Good morning, and welcome to Masimo. My name is Bilal Muhsin. I'm the Chief Operating Officer, and I'll be covering our professional healthcare segment today. Let's start by talking about a large and expanding installed base. It's truly amazing what we've done. We would have shipped by the end of the year 2.5 million of our monitors and technology boards over the last 10 years. This is truly a huge accomplishment as it continues to grow year after year even after the 2020 COVID year that took a big bump. We do this by providing technology in our own monitors that we distribute into hospitals directly or with one of our 124 partners that build devices and incorporate our technologies within their devices, whether they'd be monitors, ventilators, defibrillators, that go across the continuum of care. Let's start by talking about pulse oximetry, our biggest segment with Masimo SET, Signal Extraction Technology. This is a $2 billion market growing at 3% to 4% annually, where at Masimo, we have a long-term annual growth of 68%, 2x over category. Let's see why. Today, over 200 million patients are monitored by Masimo SET today in hospitals and at home. It's in 9 out of the top 10 hospitals reported by U.S. News & World Reports use [ house wide], all 10 of them use Masimo in their hospitals today. And we have over 100 independent published studies showing the power of Masimo SET Technology versus any other competitor. It starts with the clinical evidence and its ability to read through motion and low perfusion. That is truly the most difficult condition for optical technology like pulse oximetry. In a study by a Journal of Clinical anesthesia, it showed the power of Masimo SET not only to reduce false alarms, 5% against the Nellcor N 600, their latest technology at 28%, but it also did not miss any true alarms, only 3% compared to 43%. So it's actually picking up the alarms and not just masking it by increasing averaging time. In anesthesia and analgesia, it was compared against 20 other technologies and showed the power of its accuracy during motion conditions. The evidence continues with the latest studies coming out on skin pigmentation, we recently released our Journal of Clinical Monitoring and Computing, our own study, showing that Masimo SET showed no significant clinical bias between black patients and white patients, that's dark pigmentation and light pigmentation. Also in an earlier study out of the Journal of Pediatrics, it showed that it only had a 0.8%, remember, oximetry as shown at full digit on a monitor. This was at 0.8% on -- in terms of a bias between black and white patient versus the competitor of Nellcor at 3.9%. It is the only pulse oximetry technology out there that has been shown to show these positive outcomes. Joe and Blair alluded to what it was able to do with retinopathy of prematurity, ROP rates. This is in the NICU on these babies that are born prematurely in terms of how they titrate that oxygen to make sure they don't go blind at 80% reduction in ROP rates. For critical congenital heart defect in the labor and delivery, screening these babies pre-ductal, post ductal measuring the different limbs and making sure there's not a 3% delta in the oxygenation or below 93%, it's able to screen at 93%. We have over 6 published studies with CCHD screening, one of them over 200,000 patients showing this outcome. On the Med-Surg floor, this is a 10-year study now out of Dartmouth-Hitchcock showing 0 preventable death or brain damage over 10 years, 60% reduction in rapid response team activations, 50% reduction in ICU transfers and saving over $7 million annually as they deploy this against all of their Med-Surg units. More recently, at home with Dr. Pronovost in UH, using our technology at home showed 77% fewer deaths, 87% fewer hospitalizations and saved over $11,000 per patient cost. The power of all of that technology we talked about has been improved with what we talked about last time with our RD sensor taking that accuracy from 2% and 3% down to 1.5% and now with Radius PPG being in a tetherless wearable format for patients, allowing them to be comfortable, untethered helping clinicians and nurses reduce false alarms. A lot of the alarms that come in are due to technical alarms. Simply [ forgetting ] to plug in that patient cable is a big deal in hospitals. This helps with all of that and allowing patients to be mobile in hospitals doing their 6-minute walks and everything else they need to do, which improves their health over time. This has been a very powerful tool during COVID at home and on the general care floor. Now the addressable market we talked about was a $2 billion market. Post COVID, all hospitals have realized that they need every bed to be monitored. This might not happen tomorrow, but over the next couple of years, this is for sure going to happen where every bed will be monitoring. That takes our market from a $2 billion market space, to a $3 billion market by adding over 1 million beds on the general care floor. What gives Masimo SET the right to win and continue to win not only by expanding with our installed base, but continuing to win customers from our competitors. It is those outcomes that we've talked about clinically. That give it the right to win, best-in-class accuracy, the introduction of the tetherless Radius PPG Technology, and one of the most important things is our platform provides a pathway to not limit it to a 2 LED solution, which were pulse oximetry is today, but allows them to expand into further noninvasive monitoring technologies on the rainbow platform. That combined package solution makes Masimo SET Technology, a leader in hospitals today and will continue to be so looking forward. Moving to our rainbow platform. You guys are all familiar with our SpHb, our continuous noninvasive hemoglobin; ORi for oxygenation; and now the addition of LiDCO. LiDCO is a minimally invasive technology that connects to the A line and that allows for continuous monitoring of cardiac output on the Root platform before the end of the year. This market is a $2 billion market opportunity with our long-term annual growth rate at 10% for Masimo. Let's look at some outcomes from SpHb. 41% reduction in RBC units transfused for high blood loss cases. That means when they're trying to transfuse, they can look at that real-time trend of hemoglobin and clinicians can decide instead of sending something to the lab and waiting for 15, 20 minutes. During surgery, they can see the stabilization of hemoglobin and decide how much blood to actually give or how much does the patient actually need. Low blood loss cases, it had an 87% reduction in transfusion rate, meaning most of these patients did not require transfusion. By having that real-time information at their fingertips that allow clinicians to make the right decisions of not having to really put an organ, which is blood into that body. Most importantly, as well out of [indiscernible], this is during ERAS protocols. They use hemoglobin and PVi with their protocol and they reduce 30-day mortality by 33% and 90-day mortality by 29%. Now what was unique about this [indiscernible] is that the administration decided not to deploy even after seeing these results. They removed the technology, the rates went right back up. Very smartly, they reimplemented and the rates came right back down, showing the power of what the technology was able to do with their protocol. SAPBM, which is the Society of Advanced Patient Blood Management in 2021 released a white paper. It's almost like a guideline telling clinicians the power of continuous hemoglobin, the power of that real-time trend in making timely decisions for their patients. How that it's not just a number, but how to improve outcomes using real-time information from hemoglobin. This is a powerful tool when we walk into hospitals today talking about the importance of SpHb. And you guys know what Masimo Innovation never stops We've just announced our 12 [ Lambda], 12 LED RD super sensor. This now allows all of the rainbow parameters to be on a single sensor. Everything from the SET parameters that you see up there in gray bubbles; the rainbow parameters, including SpHb, SpCO, SpMet all in a single -- single patient use sensor, allowing this sensor now a single center to be used across the continuum for hospitals. What -- our rainbow pulse oximetry has is unrivaled clinical outcomes, continuous innovations as we introduce new sensors. And now with the power of adding LiDCO, you have the continuous cardiac output of the patient plus the oxygenation information of the patient, giving clinicians for the first time in real time a view into the oxygenation state of the patient -- of the oxygen delivery state of the patient. Moving to our brain monitoring with our SedLine and O3. This is a $300 million addressable market growing at 5% to 7% annually, where at Masimo, our long-term growth rates at 20%, 3x over category. What SedLine has brought to the table is an ability for clinicians to provide anesthesia to patients and monitor the depth of sedation, not to oversedate or understate the patient hopefully with this technology. Now we have a unique way of displaying it. It provides the most complete view of the brain. A lot of the technologies out there can provide a number, as you can see with our SI but also provides the raw for EEGs on the front there and our DSA, our density spectral array at the bottom. You see with those black lines that you see vertically that are there, that immediately tells the clinician that, that patient has inversed suppression, meaning they've gone too deep. And what it allows them to do is to pull back on the amount of anesthesia given, which lights them up a bit, yet securely, hopefully and safely has them exit. What this has been able to show is really great outcomes in Montreal recently published a paper showing length of stay reduction, not only in the OR, but also in the ICU when they sedate these patients because they don't take them too deep. So they wake up earlier. They feel better. We've recently received FDA clearance for now the pediatric population as well, which is really important for this platform. Looking at our regional oximetry with 03. This is the ability to monitor not only the oxygenation of the brain but also now hemoglobin as well on the brain, it's delta hemoglobin. Really, if the brain is stable -- or I'm sorry, the other situation is stable in the patient, it's an indication of what's happening from a perfusion to the brain, which is really important for clinicians not only during cardiac surgeries, but now applied to many more surgeries. We've also now have absolute accuracy, not just in monitoring the brain, but we call it regional oximetry because now we can also monitor the gut or the kidneys or any tissue CAF on the patient as well. The combination of both of them on the Root platform with everything else we do, including the rainbow technology, makes the platform superior for our brain monitoring perspective by all means. The combination of the 2 sensors, allowing them both to work on the patient forehead. It's the only platform that allows that, allowing them to not only monitor depth of disation, but also the oxygenation state. And the clearance now that we have across the patient population gives us the right to win in this space. Our NomoLine and Capnography gas monitoring. This is a $1 billion addressable market with a growth rate of 10% annually or our long-term growth rate is at 20%, 2x over category. What makes our technology differentiated here is -- we have our NomoLine, which is our moisture wicking capability, our patent and moisture working capability that allows these cannulas to be used for longer periods of time and including in high moisture areas as well. So it wicks away that moisture continuously, allowing them to use it for a longer period of time. We've also improved our patient comfort and completed the portfolio to launch next year. And now we also have our third-party compatible cannula. So all the improvements we've done, not only work on the Masimo technology, but also can work on other technologies in hospital, allowing hospitals to standardize on our cannulas solutions. Hospital automation and wearables. This is a $2.5 billion market opportunity, and we're growing at greater than 20% for our long-term growth rate. What we've done in wearables that you'll see out there as well as -- and in the discovery lab from the tour, truly is differentiated in all aspects, starting with the core of the technologies and the way they measure. This is our radius VSM, what's worn on the patient here. It has the Masimo SET technology. It has our own noninvasive blood pressure measurement that has a 2-pump solution that measures very quietly and measures on the way up, allowing more comfort for patients when they wear it. That patch on the test does a few things. It has a Masimo ECG, right, that does all the arrhythmia detections that a multiparameter monitor can. It also has continuous temperature and our positioning sensor Centroid built into it as well. Today, in hospitals, clinicians have to walk in on the general care floor every 4 to 6 hours. They drag in a monitor on wheels. They have to take a part NIB cuff, strap it around some of these arm, pull out thermometer, put in somebody's mouth or ear, put on a probe on their finger and wait to get those measurements, probably write them down on a piece of paper, then go back to a nurse station and document it down to the electronic medical record. With a solution like this, it automates the entire thing. You set up the patient 1x. Now throughout time, it is continuously aggregating that data. The pump will go on a pariosity that the clinician set the SpO2 and all the Masimo SET oximetry data will be flowing as well as all the respiratory rate ECG data temperature data, and that will all flow into the electronic medical record continuously now. Truly automating clinician workflow. Next pack, we have Centroid, Centroid is a body positioning sensor that sits right there on the chest. It's a gyroid-solerometer based technology, but it's combined with a unique algorithm that we've built that tracks that patient position at every angle. Clinicians can set up zones for where they need patients to be and not be how often they need to be turned and when. The smart thing about it, it monitors all of that, it triggers a notification to the right turn team or clinician to do that so they can adhere to their protocols, hopefully preventing any gut ulcers that can be produced from that. Now our suite of hospital automation solution. We say that, and I'm going to describe it to you today. We talk about aggregation of data. At Masimo, we don't just aggregate 1 hertz parameter data every second. That's easy to take that electronic medical record. A few companies do that out there. But what we're doing, we're actually collecting from all devices that are in the room. So everything you have in the OR, in the ICU, on the general care floor, all devices that are there, you'll see this demo, the discovery lab, we pull data from all of them. We don't just pull parameter data. We pull alarm data. We pull true waveform data. And we're able to do a lot with that. We're able to visualize that data for clinicians inside room and out, and we'll talk more about that. We're able to notify on clinician platforms, be it an iOS or Android device. With our Replica solution, we will run analytics on that data, and we will provide decision support. This is UniView and UniView: 60. So all that information we're aggregating from what's happening in the room can be customized to be displayed in different ways depending on the patient procedure, depending on what the clinician likes to see or what the surgeon likes to see most of the time. but they're able to customize this to be patient-specific and be able to see all the things. So that's the ventilator on the top left, our anesthesia machine. That's the multiparameter monitor. That's the pump, all synchronized on a single display. The UniView: 60 takes that data and is able to display it also outside the room. Not only when they walk up to see, hey, do I need to be gowned before walking in? Is this patient at fall risk. But with a click of a button, they'll be able to take a peak about what's happening clinically with that patient, not only in a live format but also to review, it's called 60 because within 60 seconds, you can actually review patient data that's happened over time, helping tremendously with clinician handoff, which is a big problem in hospitals. You saw the launch of sepsis Index. This is extremely exciting. This is the decision support tool that we were discussing earlier. Joe talked about some of the statistics. So 1.7 million adults in the U.S. developed sepsis, 350 sepsis-related deaths in the U.S. and 1 in 3 patients who die in hospitals today have sepsis -- have had sepsis. Now there are solutions out there that tell you when a patient has sepsis, but most of them tell you that they've had subsystem clinicians already know the patient has sepsis. So it's not very helpful. What we're doing with this index today is we're showing you the capability of having an earlier detection of sepsis and warning clinicians before it fully develops. So you can see there, it gives a percentage of the likelihood of sepsis for clinicians and notifies them when a triggered event can occur. Let's see what this looks like for clinicians. So you can see there, it will present a percentage of likelihood. And as that starts to change for the patient condition, the likelihood of sepsis can change, and this is happening here a little bit accelerated to show you the impact. Hopefully, nobody is getting septic shock that fast. And then most importantly, clinician clicks they can see the reason why the algorithm is getting there from a decision support perspective and guide them with their own clinical guidelines in hospitals on what they need to do next, making it hopefully a very powerful tool for hospitals. I'm also very pleased to introduce our vCAM product, which you'll be able to see a demo of today as well, which is our visual clinical activity monitoring. This is video powered AI. This watches clinicians as they walk in the room to make sure before they approach the patient that they've cleaned their hands, either by a soap dispense or alcohol dispenser or washing their hands in a sink. It will actually monitor the activity, mark a clinician clean after they've determined that they've completed the activity appropriately. And once they start to the approach the patient, it will allow them to go through. If they miss any of those steps, the device will alarm, reminding them to go adhere to the hand hygiene protocol. So we gave you guys a glimpse of some of the wearable technologies we're introducing, the largest third-party integration platform out there today with our hospital automation solution and what we've done from a workflow enhancement in terms of improving care everything from vCAM to sepsis Index. The most exciting part of my talk is our telemonitoring and telehealth. This is something that we're really proud of at Masimo. Let's look at what the market opportunity is. It's a $20 billion-plus market opportunity, and we'll grow we're growing at 20% plus from the Masimo standpoint. Let me tell you why. Over the last few years, Masimo is the largest continuous monitoring cloud in the world. It spans the globe, everything but South America today. I said continuous monitoring cloud. That means it's not about managing chronic care conditions where patients with these different conditions are stepping up on a scale or taking a once-a-day reading with their blood pressure cuff or oximeter. This allows for second by second data to be transmitted, monitored, clinicians can view it, notify based on it. We deployed this initially during COVID with our hospital to home. And now this is becoming the largest growing opportunity for us because hospitals today cannot manage the amount of patients they have. You'll hear clinicians come up and talk soon about their experience and impact the technology has had. But most importantly, think of what it can do for what we call hospital to home. Think of pre-op, post-op, length of staying hospitals, do patients need to stay in hospitals for that long? Or can they be safely monitored at home like Joe's case that he talked about. And then all the way to hospital at home, managing those cases of long-term or episodic care where you need to be able to do that. This platform allows for all of that to happen on the cloud infrastructure that's already built, or on the app that is provided with the largest amount of care pathways for patients. So once they get this app, it is white labeled with the hospital's name. It has a welcoming message from the clinician and it walks them with all the activities they need to do day in and day out, including questionnaires, education, training material, but most importantly, monitoring all their vitals and even allowing for video visits to happen with their clinicians, all on the same platform. So this also provides a dashboard to clinicians that they can watch all of these patients remotely and communicate with them. And we'll talk a lot more about the ecosystem with the services that we're providing here. It all starts with the technology. I want to pause at this first one, that moved a little bit too fast. This is 1991. This is somebody by the name of, and we're going to go back one more time, Joe Kiani, envisioning our first wrist-worn pulse oximeter back in 1991. And -- now we continue to innovate and try to develop. These are different engineering and clinical products that have been tested on our wearable device over time. Landing with our Radius PPG that you guys all saw earlier and now on to W1. This is a breakthrough product. This has the Masimo health module on the back that I'll discuss a lot more, but it provides clinical great technology with continuous accurate monitoring of pulse oximetry, your SpO2, your pulse rate, your respiratory rate. It comes in combination with an application that we talked about earlier. It has an entire ecosystem of services where clinicians can help support, provide triage or review of data on or off-line and even allows for video visits to your clinicians through the platform. Now this is extremely unique. Today, we all use smartwatches or most of us do, and we're used to the type of technology it provides from the health care standpoint, which is extremely limited, right? For us to take any of these measurements that we really need, we need to think about it, so, I think I'm feeling something or I don't feel well. I pause. I have to stop breathing, hold my hand very steady, try to get a measurement to see what's going on. So it's you thinking that you need something in order to trigger. Imagine if that automatically why you are driving, while you're walking, continuous accurate measurement of all of these parameters. So SpO2, pulse rate, pulse rate variability, breadth variability, perfusion index ECG, we have a 1-lead ECG there that gives you the heart rate and also has arrhythmia detection capability, heart rate variability, continuous respiratory rate monitoring, expiration rate monitoring and activity steps and fall. And now introducing hydration index. That's that HI parameter on the bottom there, allowing people to monitor their hydration on a daily basis. This is a measure of the amount of fluid in the body. You wake up in the morning, you go for a run, you sweat it all out. This index will start to drop and tell you need to rehydrate. Very powerful. We know how powerful it is for athletes. We know how powerful as you can -- we talk to singers, we've talked to a lot of people that see tremendous value in index. And also on the health care side. You guys saw the press release and saw with chronic care management conditions, depending on their medication, different things, this becomes a very powerful tool also for clinicians to be able to monitor that for their patients remotely. Truly a game changer in its ability. Now I talked about the W1 and that Masimo health module at the back and the importance of that accuracy and what does it really mean? Here's a comparative analysis for you. Now this is also available in a white paper on our website, so feel free to access that. And I think we have a few copies in the back. But I'm going to walk through this slowly just to give you the impact of this means. So in the first step here, we had 7 subjects. We had 2 watches, the Masimo watch, always in continuous mode and then the Apple sleep monitoring mode, right? The Apple Watch in sleep monitoring mode. There was generated 49 events. That's 49 desaturations where they cross the threshold, meaning that there's a critical condition that the user should be notified on. The Masimo device caught 100% of them, 49 out of 49. While the Apple Watch cut 3 out of 49, only 6.1%. Now let's look at it in the sleep position here. Masimo continuously triggering. Now because the Apple Watch was in the sleep monitoring mode, here, we tried to force it to get a reading, meaning we say, "Give me a reading, you tough to click a button, just give me a reading at that time. That's all the Xs that you see up here in this graph. So even though we tried to force the Apple Watch to give readings, here, we had 8 subjects, 60 events of desaturations where Massimo caught all 60 of them at 100%, the Apple Watch cut 4 of them, 6.7%. And -- now if you needed this for anything for a loved one or for yourself, you needed to monitor these conditions, you definitely want to know where you're at on a continuous basis on an accurate basis. Here's what it looks like. We plot these graphs all the time to show clinicians and everybody kind of the accuracy. So on the bottom is the reference, which is a blood draw that gets compared against the gold standard, which is a co-oximeter or an ABL machine in the lab. And on the left-hand side is the Masimo W1 and on the Apple Watch is on the right-hand side here. So you can see the accuracy in iRMS terms. That's the one on the left. Masimo is at 1.5%. While Apple Watch is at 4.4% iRMS when it worked. So when it was able to capture a measurement. Again, going back to the impact that our technology in terms of outcomes and why, it's because of its capability to continuously accurately monitor on these patients and people. This is the ecosystem that we were talking about. So everything from periodic and on-demand reports generated, the team will be able to show you those. And if you purchase the W1, more recently, you will see an upgrade come through on the app side that will enable all of these features. If you have an Android that's available today and very soon on the iOS platform. You have family and clinical sharing capability. This is the new app base that you'll see here with our Masimo Health app, advanced detection of AFib and I'm here standing here today, introducing a new partnership that we've just concluded last night with iRhythm, so iRhythm does the Zio Patch, if you guys know that product very well. Now they have an FDA-cleared optical or from the PPG continuous ability to detect AFib. So instead of you having to push and hold from the ECG to see whether you have Afib or not, they have an FDA-approved algorithm to be able to continuously do that from the PPG signal, so from the optical signal all time. We're going to be deploying this on the W1 and the Freedom platform. And once that is detected by the way, it will go back into the clinical services, providing additional clinical services back to these people and patients. All right. We also have the ability for virtual doctor visits. We'll show you that demonstration outside as well, health coaches. Alert triage. This is the ability to have a monitoring center look over these patients and people and trigger nurses to make health calls based on what they see and then data review offline by clinicians as well, specifically for cardiac reasons. Now we talked about the cloud platform. We talked about our wireless sensors capability, and we also do this with some of the most advanced partners. We've recently signed an agreement with the Cleveland Clinic, becoming our AI partner in analytics for cardiac. From the device and analytics side, we have Omron on our blood pressure and wait scale Bitium on the continuous and Ascensia on our SPOT Check blue commentry. And then our cloud and telecom providers are -- we work in partnership with Samsung. TODA is our embedded video processing capability that we have on our own cloud, able to manage a much more advanced video conference call, allowing about 50 people to come online and share images in real time and communicate. Taleo is also our communication partner for texting and messaging. This platform that we've built on the telemonitoring and telehealth space really does not have a competitor out there today and everything it can do. Starting with the largest monitoring cloud in the world, the broadest set of pathways and scalable pathways on our platform, industry-leading clinical partners, best-in-class medical-grade technology and now, most importantly, the most advanced continuous bio-tracking wearable device in the W1. Now here's what Masimo does best. We develop these core technologies and then we're able to deploy them on different platforms. So what you see today, you can only imagine what we can do more with. That's our health module that's in the back of the W1 today. Now that will go into different products. We talked about the B1, which is the ban on the right-hand side, the Freedom device and the W1 you see today and future products as well. We took the technology that we've developed over 2 or 3 decades of our Masimo SET oximetry that we've learned so well on how to monitor on those neonates and newborn babies. And now you see that in the store product. So you'll get to touch, feel outside today. Masimo's ATT technology right, which is that ability to send a signal into the ear and measure that response to be able to create that customized profile for that individual, now deployed into the denim product that you'll see out there. but that will expand further, not only in the in-ear products but also in the over-ear products in the future and the other brands as well. And then that concept of having a hub, a medical hub at home to be able to monitor your loved ones when they're sick or if they have chronic care or for any type of data collection you need, now expanding it from that small hub that we've accessed in the thousands in homes today to now being on the heels platform and allowing that to go from 23,000 devices as of this morning, going up to 4 million by end of next year and beyond. But truly attaching that. So this is very important. This is taking a consumer cloud and giving it access to the medical cloud, right? So what you get for in the package, you get a lot more for it. And we'll be able to retarget these customers, tell them what they can have here from a medical-grade technology in their home. A few regulatory and reimbursement updates. In 2022, I'm sure you guys have heard the news, but the FDA has created a pathway for OTC now, right? They bifurcated it into 2, depending if it's a self-fitting or not, self-fitting, meaning if it needs 510(k) clearance or not, but now they have an off-the-shelf OTC indication for hearing aids, which is extremely exciting. We look forward to further to continue as we also develop products heading towards this area. Telehealth and telemonitoring, there's been a lot of changes. During COVID, the FDA, CMS, everybody rushed when they saw technologies, when they met clinicians, you'll hear Dr. Tripodi come up a little bit later. But when they saw the need for the ability to accurately monitor patients at home, they rush to create these opportunities and to allow technology to really show its capability. Now CMS has pulled back on a few of their kind of what they've loosened up during COVID. But from the FDA's perspective and from CMS's perspective, they see this nobody is going backwards. They're going to continue to allow companies and encourage companies to push this forward as they've seen the positive impact these technologies have had during COVID. I'll touch on a little bit what we have in the pipeline with the FDA today. So everything you see up here is with the FDA, starting with Masimo SafetyNet Alert. This is our ability to monitor opioid-induced respiratory depression at home. We're seeking OTC indication for this, and we would love this product to be deployed where it allows these people at home once they do have an episode of opioid-induced respiratory depression to either try to wake them up. Notify a loved one, or their emergency contacts, they try to come provide an rcan and if not, auto trigger a 911 call on a health call to save their lives. ORI Oxygen Reserve Index, this is the ability to monitor oxygenation beyond what SpO2 can do. So when they over oxygenate patient or they provide supplemental oxygen to patients, it goes above 100%. This index is able to monitor that. Think of situations in the OR, where they're trying to do a difficult integration. They want to make sure that they have sufficient oxygen so they don't DSAT the patients a safety mechanism or in the ICU now in Europe, it's used heavily in the ICU, where they tried not to over oxygenate patients because that is also shown to be extremely dangerous. Eve, which is an automated way of doing that congenital heart defect screening that we talked about. Today, it is a little bit of a cumbersome process where they're wrapping sensors and they're trying to do calculations and they had this automates that entire process for nurses and clinicians. A newer generation of our soft flow with enhanced features of 60-liter at home and a smaller adapter as well. Rad-G, our handheld platform now with a temperature screening tool in the back. Masimo SET for over-the-counter, Masimo W1, Radius VSM that we talked about, that Vital Signs monitor and now STORK. All of these products are with the FDA and we hope to get clearance in a timely manner. I'll remind you of the different health care segments we talked about and the growth rates that we've talked about from Masimo. Pulse oximetry now for us is a $3 billion addressable market after adding the general care floor. The segment is growing at 3% to 4% annually. We're at Masimo, we plan to grow 2x that at 6% to 8%. We are the market leader in pulse oximetry today. On the rainbow pulse oximetry side, it's a $2 billion market opportunity. No competitor here, our growth -- long-term growth rate is at 10%, and we are the market leader here. SedLine Euro 3, our brain monitoring combination is a $300 million addressable market. We are second here from a market standpoint, the market is growing at 5% to 7% and we are growing at 3x that at 20%. NomoLine or Capnography is a $1 billion addressable market, growing at 10% annually, where our long-term growth rate is at 20% and we are second here from that perspective. Our Masimo hospital automation platform is a $2.5 billion market opportunity. No real competitor here that we can look at just because of how our solution is put tether across the continuum, and we have over a 20% long-term growth rate. Last but not least, our telehealth and telemonitoring capability, where a $20-plus billion market opportunity with our growth rate at over 20%. Now when you look at how this segments in terms of revenue, our pulse oximetry makes up 79% of our revenue. Rainbow is now at 10% of our revenue and 11% comes from these small but very fast-growing opportunities that we have in front of us. Thank you. Okay. I spoke about telehealth and telemonitoring. And we have a few clinicians that are going to come up here that are going to talk to you about their experiences and what they've done at their different facilities. But I'd like to introduce Dr. Bill Wilson. Dr. Bill Wilson, our Chief Medical Officer at Masimo. But his experience in this space has truly been -- his experience is tremendous here. He spent 10 years at UCI leading the telehealth and telemonitoring program there. He was also the leader for all the UC schools when it came to the EICU programs there. So his experience here is vast and he's partnered with Dan Cantillon and Dr. Peter Pronovost. So please welcome Dr. Bill on the stage.

Great. Thank you very much, Bilal, and thank you, everyone. It's my pleasure to moderate this section on telehealth and telemonitoring. And just a little bit more about myself. Thank you. We'll use those in a moment. So just a little bit more about myself. Adult and pediatric cardiac anesthesiologists, 2 decades that you see San Diego doing that work and running intensive care units. We recruited up to use Irvine about 10 years ago to run all the intensive care units. And then, yes, as Bob mentioned, the telehealth champion for the University of California, Irvine and [indiscernible], some of that work was very important for us during the COVID pandemic. One of the aspects that is very important with telehealth and telemonitoring is that you have the best-in-class and you're going to hear from myself and my colleagues. Let me introduce my colleagues, first, and then I'm going to give you a little bit of an update on the current state of the art of where we are with health care in general and then telehealth. In order of their appearance, I'll be introducing Dr. Dan Cantillon from the Cleveland Clinic and Peter Pronovost from University Hospital Health Systems. Dr. Cantillon is the Associate Section Head of electrophysiology at Cleveland Clinic and he also is the Medical Director of the ECMU, the Cleveland Clinics version of the central monitoring unit, monitoring 10 hospitals, you'll hear more about that. And Dr. Cantillon has a number of really impressive credentials under him. He is the first position at the Cleveland Clinic to insert a totally leadless-implantable pacemaker but was also the first in the entire United States to put in a leadless pacemaker in conjunction with an AICD. So those are really important distinctions. At the same time, he runs the central monitoring unit. Dr. Cantillon has published more than scientific papers and really important peer-reviewed journals like JAMA, the New England Journal, the Journal of Clinical Cardiology. And he was noted as the Health Information Technology Innovator of the Year for his work in the ECMU. Now after we hear from Dr. Cantillon, we'll hear from Dr. Peter Pronovost. Peter Pronovost is the Chief Quality and Clinical Transformation Officer at the University Hospital Health System, and he is a world-renowned leader in patient safety and quality. His outstanding achievements are really too numerous to account, but I would to provide a little summary of some of them. The first is that he created the CLABSI prevention checklist. Now CLABSI stands for central line associated bloodstream infection. And prior to others talking about checklist, Dr. Pronovost showed that if you if you do 5 things with fidelity, you can eliminate central line associated bloodstream infections. He did that at Hopkins, where he was at the time when he invented it. And he then brought it up to all the hospitals in Michigan on a special project and then to hospitals in Texas, and pretty soon around the world, we were all using this. And this was markedly decreased. So I can tell you in my work in the ICU at UC Irvine in our [indiscernible] unit, using his checklist, we were able to go 3 years without a centralized associated blood stream infection. He's had over 1,000 peer-reviewed journal articles. He is an adviser to the World Health Organization's World Alliance on Patient Safety. He regularly addresses the U.S. Congress on matters of patient safety and quality. He's a member of the President's Council of Advisors on Science and Technology, PCAST. And in this role, he helped decrease the cost for Medicaid by 30% while improving outcomes. He's now dedicated to expanding care delivery from hospital into the home. And he actually helped lead our transition here by partnering with Masimo with the Masimo SafetyNet. And you'll hear more of the story from him when he comes up to help with this journey. Now before inviting the first speaker to the stage, I would like to just set the story about where we really are in health care currently and then where we will be going with [indiscernible]. So currently, our health care, as you all know is very expensive. It's fragmented. So that variability is problematic, wasteful and it's not as safe as it needs to be, and we have an aging population. The United States spends about 20% of GDP, upwards now of $4.6 trillion, on health care alone. Of that, which is more than any other industrialized country, any country in the world, we don't get as much as we should for that money. If you look at our infant mortality rates, they are higher than they should be. In fact, they're nearly 3x higher than what you -- what they experience in Japan and some of the Scandinavian countries. And they pay half as much on a per capita basis for health care than we do. If you look at our health care spend, over -- and you go year by year, it's about the same as the industrialized countries until you get to about 55 or 60 years of age, and then there's a divergence where we spend way more. And that elevation of money that we pay, that increased burden in the elderly, is partly related to their disproportionate increase in chronic disease like congestive heart failure, but also due to waste that is often care that is delivered in a hospital that could be delivered in the home. There's the 2012 JAMA article by Don Berwick, that demonstrated that 50% of the health care spend was on waste at that time. And it was about $2.4 trillion, and now we're at $4.6 trillion. And there's now a new paper by one of our speakers and I think maybe Dr. Pronovost may allude to this when he speaks that he now looked and currently we still have 50% at least of health care waste and a lot of that is due to care provided in the hospital that could be provided in the home. The financial stresses and reduced workforce that was brought upon us with the COVID pandemic has exacerbated the problem and the solution to all these problems or this technology. But not just any technology, it has to be best-in-class sensing and monitoring to improve safety. And Masimo is the one company that has demonstrated with Masimo SET, actual significant tangible benefits, improvement in outcomes here. You've heard already, and I'll enumerate again, a decrease in the retinopathy prematurity [indiscernible] and increased ability to diagnose critical congenital heart disease and a decrease in those patients that are unrecognized to have cardiac arrest in hospitals. If you're not at hospital with Masimo Patient SafetyNet with continuous monitoring on the care ward, which is still a problem for a number of hospitals -- we have the solution. If you're in a hospital on the floor, the chance that you could be found dead in bed is significant. It's a problem, and it happens in hospitals all around the country. We need to stop it. We have a solution. And so it's remote patient monitoring in the hospital that we need to expand and remote patient monitoring in the home but it cannot be just any remote patient monitoring. It has to have the sensing technology that is continuous and hospital grade, and that's what Masimo brings to the market. Now what -- to help discuss this problem in greater detail, my colleagues will talk about some of these problems and solutions in greater detail. And first up will be Dr. Dan Cantillon. Now what I would like to do without any further ado is invite him up to the stage -- and remember Dr. Cantillon is the Director of the eCMU amongst many [indiscernible]. Please join me in welcoming Dr. Cantillon.

Good morning. Thanks very much, Bill. And it really is a privilege for me to be here with all of you and to kick off this session that we're going to be getting into. As Bill mentioned, I am a cardiologist at the Cleveland Clinic, and I am the Medical Director of our inpatient RPM Program and I'm going to be speaking today about getting beyond the brick and mortar of the hospital. And what we are doing at the Cleveland Clinic to get from the hospital into the home so that we can render the most effective care at a distance for our patients to improve their outcomes, but also to promote health within the community and well-being. And so I'll be getting into that as we go along. And I know this is a fairly sophisticated audience, and I can't imagine that anybody has been living under a rock for the last 6 months. But for those, just to be reminded of the extreme duress that the health care system is under right now. You've heard a lot about the tripledemic, which is this overlapping surge in cases related to influenza, RSV and COVID. And certainly, that has placed a strain on the resources of our hospitals and our health care systems in terms of debt allocation and resources and things that matter. But I'm going to be describing a much bigger problem in the world of chronic disease and chronic disease management, particularly when you consider the fact that the Census Bureau indicates that by 2030, more than 1/5 of the U.S. population is going to be over the age of 65, that's Medicare age. And we are facing critical shortages for physicians and nurses. A McKinsey study has indicated that we are going to be down somewhere between 200,000 and 450,000 nurses by 2025. And so we have staffing shortages as a major problem, length of stay, which is a little bit counterintuitive for non-health care people because we think, okay, well, if I'm in the hospital, the longer I'm in the hospital, the better the doctors and nurses can take care of me and the better off I'm going to be, where it actually goes the other way. And the longer that we're in the hospital, the more apt we are to see hospital-related complications that can reduce the quality of care delivered to our patients, lower the outcomes across many different disease states and also drive up the cost of care. And thirdly, readmissions, which is a huge problem in my area of cardiology, where up to 1/4 of patients that are admitted with congestive heart failure and treated can be readmitted within the first 30 days. That's bad for the patients, that's bad for the hospital systems, and it's bad for the payers. So it's a lose, lose, lose. And I want to further expand upon the chronic disease issues that we are facing in the United States. So pre-pandemic, the top 3 causes of death in the United States were fairly consistent, heart disease, #1; cancer, #2; accidents and unintentional injuries, #3. But in 2020, as we know, the world turned upside down, and we were confronted with the COVID pandemic. And overnight, out of nowhere, this was vaulted to the third leading cause of death in the United States with over 350,000 lives lost in the calendar year of 2020 due to this devastating disease. But if you look at the data that I have up here on the screen, you can see that there was an even bigger problem than just that. If you look at cardiovascular disease, which was still the leading cause of death by quite a big margin, between 2019 and 2020, the per capita mortality actually increased during the pandemic. If you look at the blue shaded per capital mortality for 2019 and the gray for 2020, it actually increased. And why is that? Bill alluded to, we've got all these great new innovations. We've got these nano wireless pacemakers and all these really cool things that we're doing in cardiovascular disease. So why did the mortality go up? Well, as some of you know, hospital systems, including ours, were forced to restrict elective services, many of which provides care for conditions that feed into cardiovascular disease, such as hypertension and diabetes. But as a practicing physician, I can tell you that my patients were scared out of their minds to come into the hospital during a time of the global pandemic where they were worried not about -- not only about their own health and well-being but the possibility of transmitting the virus to a family member, a loved one, and putting them in harm's way. And so there was a lot of deferred care. And what it forced us to do at that time was to begin to imagine and begin to better refine our technology-enabled solutions to render care at a distance, more effectively in the home and within the community. Now Bilal spoke at length about these technology-enabled solutions. And I couldn't have possibly covered the sensors and all of the magnificent engineering that goes into these products better than what Bilal has already said. But I want to say as somebody who's had the opportunity to collaborate with Masimo on the ECG platform, the VSM, which is shown here on your right of the screen, this is really phenomenal engineering. When I first began to work with Masimo in 2019, I really began to understand Joe Kiani's vision of building not just an ECG monitor but building top-in-class cardiovascular solutions. And so it's been extraordinary to work with Masimo on this product. And now to see this in the hands of my friends and my colleagues, my physician and nursing colleagues at the Cleveland Clinic as part of our IRB-approved studies, they're seeing all of this amazing technology for the first time, and that's really rewarding for me. And it's so rewarding, even more rewarding, to see this on my patients, and to imagine what kind of outcomes, changes we're going to see with these types of solutions. And so as we consider these types of platforms, we have to think not just about the devices and the sensors, but we have to think about how we are going to use these for our solutions. And I want you to think about 3 ways. The first has been mentioned already, which is clinical decision support, giving our clinicians insight into what's happening with patients, which opens a lot of doors for hospital automation. The second is situational awareness, and we'll dive a little bit deeper on that one. Telling us who are the sickest patients and who requires our attention first, second and third and so on and so forth. And thirdly, precision analytics. And what does that term even really mean? I would put forward to all of you that it's getting away from this idea, this doctrine of a heart rate or a vital sign value going out of range is just alarming, that in a future state, we are going to provide clinicians like myself insight into what's happening with our patients so that we can get information and we can very quickly deduce what's going on with the patient and we can get towards those solutions and corral the resources that are necessary to get them better in a more efficient way. And so I want to dig in a little bit and talk about the unmet needs and how we can identify those gaps and use the technology to better enable the solutions. And so take something very simple, monitoring patients in the hospital. We detect cardiac arrhythmias. We notify nursing personnel and then we corral the response that is necessary to care for the clinically deteriorating patient. So what could possibly go wrong? Well, it turns out that for patients admitted to the hospital with chest pains, nominal telemetry equipment generates 5 alarms per patient per hour, more than which 99% are inactionable. Does that sound familiar? Joe Kiani spoke this morning about the work that he has done over the last 3 decades in pulse oximetry to get away from those false alarms and to identify the true signal of those patients that require our attention. Well, here it is. This is what we're facing in the world of cardiac monitoring right now. So similarly, studies have shown that up to 44% of cardiac arrests are not detected appropriately. And that is the true signal of the patient that requires our attention. And what does it mean? According to statistics from the American Heart Association, a little bit less than 1/4 of patients survive a cardiac arrest in the hospital in a non-ICU environment. So that's 1 in 4. And to contextualize that number, if anyone was to have a cardiac arrest on the sidewalk, your survival rate is about 10%. So we don't consider a survival rate of 25% in the hospital acceptable. And so what have we done at the Cleveland Clinic as part of the solution? So let me introduce what has been discussed, which is our bunker, our command center, our central monitoring unit, that's my unit. It's about 20 minutes outside of downtown Cleveland, located in the suburbs, away from the noise and the distractions of all the normal hospital activities. And we provide continuous monitoring for the main campus plus 10 additional facilities that I show here, including our Florida facility [indiscernible] we are growing to expand to add more of our Florida hospitals. And as you know, we are an international organization with facilities in Abu Dhabi and London. We have 24/7 coverage for over 2,000 monitored beds of non-ICU patients, both adults and children, and we provide prompt bedside nursing notification -- and we uniquely have the ability to be integrated with our rapid-response team so we can communicate directly with our rapid-response teams, and we can selectively deploy those resources to the bedside. And I'm going to show you what those outcomes look like when we do that. So this was our landmark paper, which we published back in 2016, and we've had subsequent publications since that time. But in this study, we showed that this model works. This model improves the outcomes of our patients. We increased the notification of lethal arrhythmias. We numerically decreased the number of cardiac arrests and we were able to, on a discretionary basis, deploy the rapid-response teams directly to the bedside. And when we did that, we saw that we had a 93% resuscitation rate, return of spontaneous circulation, which you can compare with that historical rate of 25% that I mentioned earlier. That is a game changer. And so our solution has had fewer misses. It has used a team approach to monitoring patients. We have increased the efficiency. We have doubled the capacity of the number of patients that a human technician can monitor and, most importantly, we have improved the quality of care for our patients. And as I mentioned, we're getting beyond the brick-and-mortar. It doesn't stop with what we're doing inside the hospital. We need to get outside the hospital. And you've heard a lot about the watch technologies. We showed in this study that the wearable ECG watch can be used effectively to detect atrial fibrillation similar to a board-certified human cardiologists like me. But again, that's not just the end of the story. We're not just about detecting. What we need to do is we need to build these technology solutions, and we need to weave them into the fabric of our health care ecosystem so that we can translate that into actual improvement in outcomes for patients because that's really what matters. The patient is at the center of the wheel. And so this is what we did with our AFib future clinic. And what we did is we took a pool of patients that underwent a procedural treatment for their atrial fibrillation, something called an ablation, which is what I and my colleagues perform. And we monitored them with smartphone-based technologies. And what we're able to do was we really integrated that into our electronic medical record system, and we were able to continually track who was in normal rhythm, which was the overwhelming majority of these patients, but we were able to identify the true signal of those patients that were experiencing arrhythmia recurrences that required our attention. And we were able to corral the resources that they needed to keep them at home, to keep them out of the hospital, to prevent them from needing to be readmitted and to improve the quality of care that they received. And so for us, this is the benchmark of how we are going to build into that future state with the collaborations that we have with Masimo. And so I'd like to conclude by talking about precision analytics and insight-oriented alarms as opposed to just flashing when things fall outside of a nominal range. And I know that I'm the cardiologist in the room, but you're going to have to take my word for it. That's a normal EKG that you're looking at. And with the power of artificial intelligence, not talking about future state, just things that we can do today with AI, we can look at that EKG and we can tell the patient's age, we can tell if that's a male or a female patient, we can find camouflaged evidence hidden in that signal that, that patient may be deteriorating from a heart failure perspective or may be vulnerable to certain metabolic arrangements. We can even make predictions about the concentration of certain drugs in the human body, all from that ECG tracing. So there's a lot of power in the analytics. And that's why this is going to be an important focus for the future. And so I just want to say that it's been an honor for me to collaborate with Masimo. And as Bilal mentioned, we have some exciting work plan for the future in the world of cardiac AI, and I'll conclude my remarks there and turn it over to my colleague, Dr. Pronovost.

Thanks for having me here. And Joe, it's great to see you again. What I want to do for a few minutes is just frame a little bit more of the national health care context and then share with you from my own experience, why I think Masimo's culture and capabilities are designed to solve some of these problems that we face. Now you've heard others highlight that the U.S. health system harms too often, it costs too much and it learns and improves too slowly. The harm is too often, medical errors or preventable death are easily the third leading cause of death. And if you add failure to prevent those chronic diseases that you've just seen, it's probably up to #1 and #2. We spend $4.6 trillion but at least 40%, 50% is wasted. And wasted on what we would call defects in value, that things that we do that just don't get people well. And we're struggling right now. Our health care costs have gone up 20%, about 18% for labor, 22% or supplies. And our revenues are up 2%. What does that mean? That means 60% of health systems have negative margins in this country. And just in the last quarter, I think it's 80 hospitals went bankrupt, and those numbers are exploding. And the bond ratings are all essentially uniformly downgrading health systems. And they provide a vital role. So what does that mean? That means people like me and my job, I'm a critical care doc but I run our health system, have essentially 2 major, major focuses. One is to get our hospital cost structure down so we could be profitable on Medicare level payments because that's the only payer that is going down. We all lose money on Medicare. And then second is reduce our per member per year spend so that we could win in value because whoever provides that high value of quality and cost is going to win. So in that context, I'd like to say, well, why haven't we innovated to get good value in health care? Why have we had brilliant innovation in drugs and devices and pathetic innovation in health delivery? And why do I say that? Because we have negative labor productivity. An average 1,000-bed hospital [indiscernible] 2,000 people, it's now run with 11,000. And probably the best example of, I would say, failed innovation is the ridiculous amount of money we spent for the EMR and the only national signal of what got better is billing and burnout. I mean, there's literally no signal that safety or cost is getting any better. So why is that? Well, I want to share with you a story of how Masimo innovates that I think will say why [indiscernible] because the innovation in health delivery failed because it's not focused on a clear defect in value. It's often a shiny object, contrast to drug and devices, which has been brilliant. They often have horrible design and poor usability. And if it doesn't fit into a clinician's workflow, it won't work. There's almost no independent evaluation if it works or not, unlike drugs and devices. So some widget gets invented and say, no, use me, I saved a ton of money, but okay, what's the control group? It's never published. And there weren't great incentives for health systems. So -- story, when March 2019, we were overrun in Northeast Ohio. We were talking about a building, these 1918 tenants that have no technology. And I called Joe, my friend, and said, Joe, did you ever build that pulse ox that could be used at home to integrate with the phone? Because most people have a bed, and we have infinite capacity to expand hospitals. So if we can do that -- Joe said, that we haven't. We're -- it's under review for a drug overdose, but let's see if we can get a cost set-up with the FDA to get emergency approval. Two days later, we're on a call, just the case is so indisputable, we're going to kill people because what was happening was people were monitoring at home with nonmedical-grade devices, trusting that they were accurate. But -- and many people were dying from unrecognized hypoxia. In other words, they weren't symptomatic, they just dropped dead, that those devices weren't good to approve. We got approval on the call. Next day, we started a literally every day, sometimes twice-a-day call, and this is how you innovate with the engineers from Masimo, Joe and Bilal were reading it with myself, and our clinical teams and we designed, okay, how do we use your technology to fit our workflow so we could hook people up in the [indiscernible] or from physicians' offices or from discharge, and get all the kinks out of how do you set it up, what's the display, what's the algorithms? And literally, our clinicians would say, this is a gap. Joe would say, engineering team fix it. Next day, we come up, I mean, it's that kind of iteration so that 5 days later, we launched our first patient. 30 days later, we hosted a webinar with the WHO with 80 countries and 8,000 health systems. And now we monitor over -- I think it's over 6,000 patients on there. And what have we achieved? We published this in JAMA, 77% fewer deaths, 87% fewer hospitalizations and each of these cost $11,500 less than being admitted. And that experience taught us a couple of key lessons. The first lesson is how to innovate in health delivery because it doesn't happen with technology alone. It really requires a trusted partnership with a provider that you do agile design and iterate because it never comes out of the box fixing your workflow. And unless you have that culture of humility and collaboration, it won't work, which is why we have the EMRs the way they are because they were too rigid. The second, and perhaps more profound though, is what COVID taught was the possibility of creating a web of well-being. What I mean is prior to COVID, monitoring was dictated by geography. If you're in the ICU, you got certain monitoring. If you're on the floor, you got monitoring. If you're home, you generally got nonmedical-grade monitoring. What COVID did was saying, we could monitor based on risks. We'll monitor you anywhere. You can get ICU-level monitoring at home if that's what your risks need because then we can couple those with therapies and treatments to allow us to care for many, many more people at home. And that web of wellbeing has been a profound transformation that allowed us to go from care that was reactive and transactional to care that is proactive and relational. So where are we going with this? Well, what's happening now? Well, we believe that about 50% of medical admissions could be cared for at home. Health systems lose money on medical admissions for the most part. A lot of money, right? So they can get better care if they're at home, but it's not just doing it wantonly, it's they're getting better care, it's safer because we've created this web that allows us to link risk prediction and monitoring with therapies and then real-time monitoring and insights to learn and to prove so that we can now deploy blood at home, we could do televisits. We have this web to essentially create a matching market, where it says, what does patient need for their risks, we can match that to services and therapies that they need and monitor how they do. Another example, the W1 is a transformative piece because it allows you to, with the Masimo platform, create that ecosystem. I mentioned 50% of medical patients, but as you probably know, 30% of Medicare patients get readmitted. And we think they're mostly medicine, but even the surgical readmissions are the same rate. Any guess what the #1 reason for surgical readmissions are? Dehydration. Really stupid, but you get a call that I'm dizzy, I have to come in. This watch could pretty easily be able to eliminate that and begin to create this transformation. So how do we make this real or what does it take? Well, as Bilal shared with you, luckily we had some [indiscernible] models that were put in place for COVID, most of which are still here that had allowed us to build -- because in the past, you used to have to monitor patients for 18 or 20 days because our mindset was it's only for chronic disease. CMS, to their credit [indiscernible] it and made it for 2 days. So we have some payment mechanisms. They pay a hospital rate DRG for the hospital at home. So we actually make more money on those. So there's a huge -- the payment models, and they're not going away because it's -- they've generally proved to be beneficial. You need a technology and a platform, and I think Masimo has that in spades because what we've seen before is we had all these little one-off teams building on, I want to monitor heart failure and I have my own little gizmo or I want to monitor readmissions, I have my gizmo. But as an executive, it's not sustainable. I can't stand up teams doing that. It's risky because it didn't have the compliance or the over -- insight for it. But what our clinicians used to say, but Peter, if I'm monitoring heart failure, I don't want continuous monitoring because there's too many false positives and it's just not feasible for me. I'm more bothered by it. And what we are doing is we are making a false trade-off because we assume that technology wasn't valuable to give patients substandard care. And what we saw in our COVID work was the exact same work Bilal showed you with the Apple Watch is that if you do spot checks, you will understandably miss people. So when we looked at our home continuous monitoring and said, what would have happened if we just did twice-a-day spot check? We would have had people dead because we would have missed those episodes of hypoxemia. But it was a false choice. The W1 says we don't need to make that trade-off. We have the technology to give you continuous monitoring when you need it without having to compromise on those false positives and importantly, fit these into a clinical workflow. I want to conclude -- because technology is important. But the secret to high-quality care and my friend, Joe, whom I've worked with for 20 years and respect immensely -- often I talk about the secret of great high-quality care is love. And love is an energy that uplifts and connects, and it's experienced in micro moments, right? What you've heard Joe and Bilal and the team describe is that energy, that uplifting [indiscernible] is this technology platform. But that alone won't do it. It needs to be partnered with health systems who could make sure that we make protocols, so you're not just predicting risks, you're prescribing actions because AI alone without action hasn't really been -- isn't going to do much. But health systems, given the financial [indiscernible] are going to struggle to set up systems like you heard the Cleveland Clinic has because they say, does this sit in emergency medicine, does it sit in hospitals? And I think the vision of Masimo growing clinical services to outsource or partner with health systems that they're part of this web and we need to offset resources is really the future. And I want to end with a case example of this power of love. We have a project funded by Robert Wood Johnson Foundation to look at the really expensive patients. The 1% in this case. We have some for a commercial insurer. In this case, it's a Medicaid insurer. They were spending somewhere around $3,000 per member per month in this cohort of patients. And they had medical and social complexity and often behavioral health complexity. They don't trust us and they have really low self-efficacy. So they're hard to engage with [indiscernible]. We did a model where we put intensive case management into these populations. So the case manager may have 30 patients, and they would meet them in the hospital if they got readmitted or at their home to understand what they do. And so we met this patient, Jim, who was in our emergency department literally every week for diuresis, every week. And he would show up and didn't trust us. He saw his life is like destined to be overweight and have substance abuse. And that case manager got to know Jim and went with him to his clinic and say, well, hey, we have a clinic that you can go to that you don't need to go to the ED, and so the case manager is sitting there talking to Jim, and his girlfriend brings in a McDonald's Big Mac and oversized fries and saying, okay, that when they get sick, she is self-caring for both of them by giving them a treat at McDonald's. And it was super well intentioned, but disastrous for Jim because it led to him [indiscernible]. And so we had some discussion with them about well care and what he should do and got them connected with primary care that focuses on wellness. And Jim now hasn't been admitted for 8 months. In that pilot, we took the average per member per month spend down by $1,200. But I can't scale it without this Masimo platform because I -- in our health system, we have -- we care for about 1.5 million people, about 650,000 are in our ACO where we have some risk for. And I probably have 50,000 people like Jim who need some kind of solution. And I can't hire a ton of FTEs to do this manually. So with those organizations like Masimo that are humble and curious and compassionate enough to put their culture and their capabilities, partnering with health systems to drive value that it's almost existential for us. If we don't get our costs down in health care and improve our value, there's going to be many more hospitals going bankrupt and it's not affordable for the country. And I think it's these private sector capabilities, like you heard Joe and Bilal talk about that are the solution. So thank you. And with that, I think we're ready to take your questions.

Excellent. Peter, thank you very much. So what we'll do is we'll extend the question-and-answer period to 10:30, that would give you a 30-minute addition to the time that was previously allotted. There's a lot to discover and explore outside so we want to make sure that you get the opportunity for that. So what we'll do is -- so what we'll do is, please start hammering away what questions do you have? Go ahead.

I think just a general question for both of you, you're early adopters of the technology and remote care and the your peers.

So both are early adopters, both of our clinician experts, what's keeping some of our peers from adopting this. Do you want to start with that?

Yes, sure. I think we could talk about some of the barriers on implementation on the regulatory side, on the reimbursement side. I think Peter touched on some of those things. But there's also a physician and nursing culture that exists. And I think reimagining that care takes some time to really demonstrate the value for our colleagues. But then once people see that and once people are alleviated from some of the burdens that are placed from them in their everyday jobs, they're able to move with the change and embrace this technology and even help us innovate and get better by providing feedback on what we need to do differently. Because as Peter mentioned in his remarks, we never get it right on the first time.

Great comments, I would just add to that. Like many organizations, health care is really siloed, right? And so I mentioned and these words are really carefully chosen health care is largely reactive and transactional. So someone shows up in the ED, I do my job to get them. And then when they leave, I don't think -- I don't care about anything else. My job is just -- or I'm a hospitalist, I'm a cardiologist. To solve these problems, we need to be proactive and relational. And it requires leadership to say, yes, I get you sitting there, but we're literally creating this web that's linking across the continuum of care, and we need to break those silos and pull people together. And in my organization, I mean, it was a very intentional strategic transformation effort where the model that we used was getting everyone to believe that we can get to zero defects and value creating structures where people belong to a peer learning community. So we just -- no reporting mechanisms, but just brought people together across the continuum to say what are we doing to drive value and then building good management systems because there's compelling evidence that good management matters and good management is almost entirely absent in health care.

Great. And I'll just add to that before we take the next question. also that there's a lack of vision, and there's also information that people don't know that they don't know. So when this first happened, Peter knew enough to call his friend and he knew that there was a device that might be ready, and they iterated back and forth. About a month after it was adopted by Peter, I got to call from Joe and his team from [indiscernible] that, hey, we've got this up and running now with you benefit? At that time, we had built a military field hospital in our parking lot, and Masimo helped us put devices out there to set technology. We also deployed 135 conference rooms and physicians' offices that now became clinical areas that we deployed with devices as well. But and -- so we heard that this Masimo safety was there. And so we then deployed it in our emergency department to avoid admitting patients that had COVID, but they weren't sick enough, but we weren't sure, so we could monitor them at home. And then we can earlier discharge patients from the work. So it's a vision and knowing that information was super helpful. There's a question here, please?

Rick Wise, Stifel. You're both speaking very eloquently, movingly about the challenge and the -- your response to -- so the challenges for taking care of patients. I won't speak for everybody else, be it for myself. I have the more mundane task of imagining how this translates into dollars and cents and adoption rates in sort of more concrete terms. And I'm going to ask this in the stupidest way I know how -- do I imagine now that every bed in Cleveland Clinic and every bed at University Health is as patient safety net. Is every patient that comes into the hospital or is discharged or is it coming to the emergency room now going to leave with a W1 watch because of the kind of capabilities. How do I think -- how do I translate what the open comments you're making into...

Yes. So I'll give you a [ guidance ] because I live it every day. And let me be very, very concrete from I own health system. I mentioned we have to get our cost structure down to be profile Medicare patients, right? Our current cost structure is 17,000 -- this is public, 17,500 Medicare reimburses us about 15,000. So I need $2,200 out per discharge, very, very concrete. Where does that waste come from? Labor productivity. Like nurses spent like 15% of the time documenting vital signs. So if I could automate every bed, automate that documentation saves them time, let alone with other people who walk around with machines taking vital signs all to that complications. About 30% of patients suffer a complication. Any single complication doubles your cost of care or triple some of it. So 15,000 to 30,000 to 45,000 and we do it for -- clinically, but financially, those costs are really expensive. And then finally, getting length of stay down. You heard all the great work that Dan shared with you, on average, every day in the hospital on the floor bed, it's much more in the ICU is about $6,000 we use at our cost, right, not what they see. ICU is probably more in the $4,000 or $5,000. So everything I can do to manage that flow or throughput or keep people moving. And then a final piece, and this is less the logistics, but it's where their work fits in. If you look at like logistics, think of us as FedEx or UPS a box moving along and what happens if it falls off the conveyor belt. In a hospitalized patient, we do work on them about two hours a day, maybe four hours. Everything else is waiting, right? And so the more we could get rid of that wait time and get people moving. So this kind of technology, which that's why I mentioned my opening point if we don't get our cost structure down in hospitals, we will be all out of business, Dr. [indiscernible] and I were talking about this earlier. And then the value payments are growing exponentially. It's -- right now, it's CMS will say 80% of their patients have a value payment. The total dollar is still relatively small. We're mostly fee-for-service, but that is growing hugely. And you don't just pivot a health system to say, okay, I've been feeding this fee-for-service piece for years and now all of a sudden, I'm going to put systems in place to manage total cost of care. I mean it takes many years to build those capabilities. And so this web of well-being or these monitoring is a huge capability that we have to keep patients like Jim from being out of our ED every week and costing $500,000. But I need technology to help do that and scalable technology.

Yes, I don't think I could have spoken better to the part of your question on the financial aspects. I'm grateful Peter took that. But let me take the second part of your question, which is sort of that spectrum of care going from the ICU to the non-ICU to the home. And why it's so important that we match the technology according to the patient's needs. And that's really where the data aggregation and the risk ratification comes into play because it's not that every single patient is going to have an extremely high-end monitor system that will then be continued into the home is that we will know which patients do. And we will know how to use that information intelligently to keep them at home safely and I'll just build upon a comment that I made earlier. There is a study that shows that up to 40% of patients that are admitted to the hospital for treatment of congestive heart failure are not decongested by the time they go home. So it shouldn't be any surprise to us that 1/4 of them are going to show back up again in the emergency room within 30 days, right? And so that's the opportunity there, where the technology really can give us those signals of the patients that are requiring our attention so that we call the resources that they need to keep them well and the long that arc of recovery because really what -- that's what it is. It's all part of the same continuum. ICU, non-ICU and home. And I just want to say one last thing because there was a threat of your question on the patient adoption side. And I can tell you, as a practice and cardiologist, my patients love their data. Almost whether I want to or not, they're going to bring it into the office, and they expect to comment on it. And so even though today's sessions have sort of segmented, the consumer piece with the health care piece in my world, they're very much blended together because patients bring it into the office and they say, "Doctor, this is what I'm getting on my device. Can you tell me what this means?" And it can't be a situation where it's garbage in, garbage out. We need medical-grade sensors and technology in the hands of our patients. That's going to be a key differentiator in the future.

Bill, I just want to go one other piece that I was missing in my remarks. Besides getting our cost structures down, one of the laser focuses that we and the clinic and others are building a well care system that is as robust as a secure. Because as we take risk for total cost of care, as you all know, our health behaviors are 80% of our health spend, at least the modify behavior. So environmental has a difference and no doubt people of lesser means have difficult time practicing those behaviors. But we know exactly what behaviors drive our spend. It's the dose of healthy food, the dose of exercise, the dose of sleep, the dose of social connection, dose of well care. So we have to have a way to drive those healthy behaviors because in the long run, that's by far the most cost-effective way to drive down the total cost of care and many of these technologies help do that.

So there's a number of factors there. The first is, if you can avoid being in a hospital because you don't need to be there, you're going to avoid exposure to risks like infectious risk. You're going to avoid problems like pressure ulcers. You're going to -- that are going to be a problem in the hospital. You're going to avoid centralized associated bloodstream infections, et cetera. The next is patient acceptance. If you ask -- if the surveys have been done, would they prefer to have the care in their home or they prefer it in the hospital. And all aspects with except or those who are homeless, prefer to be at home as long as -- the home sometimes we could do a hospital for refuge but everyone else would prefer to have it at home. The next is the affordability costs. And Bruce left at Hopkins has demonstrated now for two decades that care can be provided at home with less complications, at less cost and much greater patient satisfaction. Now we bring the Masimo solution, so we can look at other populations of patients that now can have real-time accurate medical-grade, hospital-grade technology that is provided continuously to monitor those patients that are increasingly sent home. It didn't used to be that we would send somebody with the total hip, home, the same day that's happening now. And they're going to have some discomfort. They may be on opioids. We need to watch them and continuous pulse oximetry is the technique for that. Next question, please.

Mike Polark, Wolfe Research. A similar thread, focused on hospital at home. I mean the discussion here, the economic discussion was very much about cost avoidance, keep that patient well at home, prevent them from coming back. I guess kind of what is the state of revenue generation for this model today? Is there a reimbursement to provide these services in the home? What does that look like? What might have look like in 5 to 10 years? And what's the pathway?

I'll let Peter start with that one because there is reimbursement you referenced, but...

Yes, sure. Yes. So there's a number of different models. CMS has a program called Hospital At Home. So these are literally people who are admitted or would qualify for admission, and we either refer them there from the ED or more likely when they're already on the floor and get them out early. We get paid the same DRG, we would get in a hospital, there's a number of requirements like you have to provide food, yet we use paramedics because they're much less like more cost effective. To give you an example, just the economics. In the hospital, we have a nurse might care for five or six patients, and there's data if they care for mortalities a lot higher. In these innovative models where we tend to deploy paramedics, we have one nurse who can care for 10 or 12 because we can scale paramedics, and we're now piloting those models in the hospital to say, do we get our cost out, but we can do it because they're all monitored with the Masimo technology. So that has a very accretive margin. We maybe like 35%, 40% of -- on the Medicare DRG payment, and our efficiency is growing monthly because we're learning how to deploy them more effectively. The remote monitoring, which they're not in a DRG, we could bill for that. So they're -- they cover the monitoring fee, we largely get the benefit of that from our ACO and we have risk -- and -- or now when we do a televisit, we can cover the physician fees. And so it's a combination of putting a program of covering the physician time like if Dan's overseeing it, covering the nurses or staff time for doing the monitoring and then getting the upside on the downstream.

Just to add one other thing. We are still very much trying to figure a lot of this out. And with that Afib future clinic that I alluded to in my presentation, we have figured out some creative ways for the patients to share some of that cost with us as well. For example, for that particular program, what we did was patients who had participated in it were offered a discount on the device, and they paid a subscription service at a nominal cost which covered the period of time of three months, where we had performed the procedure in the hospital, got them home the same day and then leverage the technology to make sure that they did well up until that standard 3-month follow-up. And so there are a lot of creative models there where in an affordable way, the patients are contributing to the cost of these programs.

Dan, just a great point. We're also working with payers and employers because and every commercial employer, they have the 2% of patients that are 40% or 50% of those costs like Jim and they do a horrible job and the same thing for the commercial insurers. The interventions vary by a Medicaid population versus commercial, but several innovative things where we're then taking a per member per month spend to say, could you manage these 1,000 patients for us like Jim that we would that we would deploy technologies.

Matt Taylor at Jefferies. So I just wanted to ask, you seem like you're piloting a lot of really interesting programs. There's a lot of opportunity here to scale these over time. So help us understand exactly where you are with current state in what the future state could look like in three or five years, and how many patients could you go for monitoring now to at scale? And which of the Masimo technologies would you be employing? Would you be using some of these new consumer things like the watches, the hearables how do you envision some of those playing into these telemonitoring programs?

Do you want to start with that one, Dan?

Sure. All of it. All the above. No, we -- these technologies are carefully crafted, designed and engineered, as I said, to be woven into the fabric of what we're doing. And so the use cases, which I don't want to say too much about all the things that we're doing for the future. But we have imagined a large number of use cases of a way of using things like the hydration index, which we spoke a lot about athletes remaining hydrated. Well, patients with congestive heart failure are over hydrated. They need to be diurese. They need to have that extra fluid weight taken off of them. And so you can imagine the way that we can put together these pieces and the data aggregation and the predictive analytics and use this intelligently to manage, as I showed you in my presentation, a very large and growing number of aging individuals with chronic diseases that require our care.

I would say super insightful question because there's a lot to that and some reflections. Right now in the hospital at home, we have capabilities about to do 20 to 25 patients a day at any time. Those are hospitalized admissions. The reason though is because we did it as a pilot. So what -- because you probably have seen hospitals across the country are now exploding with influenza-like illness. So we're ratcheting that up significantly. And that transition has been from funding it with like an ad hoc team of support some of the hospitalists, I have some nurses who are in our system operations center to now literally working on a business plan in the last couple of weeks to say we're deploying hospitalists, we're deploying nurses or ideally partnering with someone like Masimo who may have those staff, so you can do it at scale. The remote monitoring at home, we, on average, might have between 20 to 40 patients a day. The -- we had previously separated before the W1, the acute monitoring that needed continuous from the chronic disease like heart failure and COPD, who people thought they were happy with just doing once-a-day spot check. Now with the W1, we'll have one platform. As you can imagine, you can't scale like 5 different pilots. I mean you have to have one core technology that is a platform that you can plug in whatever devices that the need, but having three or four platforms just nonexistent. Where I would say we and other health systems is because these largely grew out of COVID, there was an enduring organizational structure that house them. They -- and so we've created that now. Really, we have a Vice President of this approach and reports up into me that now coordinates this work there'll still be plenty of innovation. But I think the capabilities of having a platform that could meet all your needs that has peripherals that you could plug and play from the ICU to the home, whatever the patient's risks are, has been a great accelerate.

And modularity as well. If you look at the VSM platform the modularity there, that if you want just the ECG, you can have just the ECG. If you want to add in the blood pressure cuff, if you want to add in the pulse oximetry, those other capabilities that the idea that we have, the opportunity as clinicians to exercise our judgment to decide which patient needs the different components of that platform.

Great. And I might just add to that, that some of the barriers really are waiting for regulatory oversight approval. We have a number of devices that are ready. You saw the VSM. Once that is deployed, we can use that universally. We have Radius PPG now, so it allows tetherless continuous real-time monitoring of patients in the hospital, but we would like to advance. So clearly, we have a number of devices, some of which we haven't even shown to you yet that are ready to come out there. So once we get those deployed, not only will we be able to use them in the hospital, but also in the home.

Bill, let me just add on the because you heard the similar thing to of all state to present. So most hospitals right now have tele on the floor and maybe intermittent pulse oxi like once a day, the nurse is worried about someone. And to Dan's physiology, this is his expertise. Most of the people we put on tele don't need tele. They need pulse oxi, like, by far, but we don't have it. So we put them on tele as that hopefully, it will pick up something bad happens, right? And what we're seeing now is that when you monitor every patient on the -- with pulse oxi not only do you automated since and get those labor savings, you get safety. But when VSM come, I want to have to move up a person to a different unit to be tele. I can just convert any high standing floor bed to also be tele because it's just another box that I plug in, and it would it would help productivity and efficiency so much by integrating these, as you say, in a modular way.

And I really hate to linger on this question too much, but it really was a very insightful question. Just you're talking about humbling learning experiences. When I took over telemetry program, I learned that a lot of our gastroenterologists were putting patients on cardiac telemetry because they were concerned about people that have been a bit on the hospital with GI bleeding and one of the most sensitive indicators of rebleeding was when their heart rate went up again. And if you think about that, to your point, Peter, there was a lot of misutilization of telemetry because we just didn't have the sophistication with our tools and with our sensors and with that data aggregation to really get the patients the level of monitoring and support that they truly need for their condition.

Okay. Well, great. I'm sure there's probably additional questions, but our time is up now. We'll be happy to take questions along the side. We really do appreciate everybody's attention. We had some really interesting insightful comments from both of these leaders. And so thank you very much. [Break]

All right, everybody. We are now ready to take an extended break, which will involve our group rotations. We're going to reconvene and here at 1:00, not 1:30 because we are running ahead of time. So we'll take a look at the rotations, and you'll see a colored sticker on your name badge that will correspond to this checkerboard on the screen here. We've got lunch as one of the rotations and then we've got three product-related stations that you'll rotate through to learn more about our technologies. When you go outside this room through the wooden doors, you'll see a person standing there with a colored flag that matches the dot on your badge. Please follow those people around. They will take you on schedule through each of the stations. And hopefully, you'll learn a lot of useful information that will help you appreciate the great potential we have ahead. Thank you. [Break]

All right, everybody. Can you all hear me okay? Testing. Hello? Can you hear me testing, testing. All right, testing. Are we on? Everyone, please take your seats. We're about to reconvene. All right. Here we go. Okay. Welcome back, everybody. We hope you enjoyed the product demonstrations as well as a nice hearty lunch. And now we're ready to go through the afternoon sessions. We'd like to start out with our President of Europe, Southeast Asia and Africa. This is Stacey Orsat. She'll come up and talk to you about sustainability and responsibility.

You guys had a very nice lunch and visits around the building. I hope you guys enjoyed yourself. It's great to see all the interaction, and we really enjoyed speaking with you. So thank you very much for coming back in. I know there's a lot you want to still see out in the lobby. So I'm a Stacey Orsat. I work with our teams overseas in Europe, New Zealand, and I'm really pleased to be here to speak to you about our sustainability and responsibility goals. I love talking about this subject. This area of Masimo is a great example of the fabric of Masimo. The sustainability and responsibility objectives we have are not because we have to or because the industry pushes us to, but it's part of who we are to always do better to lead by example and to find ways to improve life and everything that we do. Today, I'm going to talk about two areas we're working to make an impact with our products beyond patient care. So with our products and our packaging initiatives as well as in our facilities that you've had a chance to see some of today. Now when we look at our products, I'm going to talk about our sensors and our cables. I'm going to talk about our instruments and the packaging that goes along with our products. So let's start in the middle here, first of the instruments. So Bilal in his presentation as well as Dr. [ Cantlon ] talked about as well our instruments, having our pulse oximeters moving through to having even wearable devices. In the medical electronics world, just like in our electronics world, you guys have your phones, your iPads, your computers. So many things are obsolete from the day you have them. They end up in electronic waste around our world. From the very beginning of Masimo, Joe's first [ product ] invented was the radical. The radical device was a pulse oximeter, but it also allowed for it to be a portable pulse oximeter, is a table pulse oximeter. It had connections to share data. It could be reused, it could be repurposed for different uses. The Root Connectivity platform is an incredible example of looking in a sustainable way to have a device that is not a fixed architecture, but can be repurposed, can be reused in so many different ways. It can be a basic pulse exhibitor. With the open connectivity port, you can add in other medical technologies that are invented today or in the future. By changing the radical device on the front to Radius it becomes a fully wearable wireless monitor. It can even be upgraded to parameters to become a full hemodynamics platform, as Bilal talked about with LiDCO, with hemoglobin monitoring and a brain monitoring platform. It's an incredible, flexible device. It reduces environmental impact of electronic waste. It improves efficiency in the hospitals. And as I saw during COVID, they allowed for devices to be repurposed really quickly as opposed to buying new devices that then again become obsolete. It's had a phenomenal impact on transforming health care and leading by example, the medical devices can be flexible, can be innovative and do not belong in the landfill. Now let's look at sensors in cables. I brought a couple with me. These sensors are used on millions of people every day, millions. And we look at sustainability, we think about reuse, recycle. Those are our common phrases we look at it. What about refuse? Refuse, the status quo. This has been the status quo forever with pulse sensors. This long sensor goes in the when a patient is done their health care. Joe and Bilal challenge their engineers to look at our product to do better for the patient first. Can we improve the accuracy of this product? Can we improve the light weight or the weight on the patient? Can we improve the profile of the sensors, it doesn't impact on pressure wounds. And the engineering team did an amazing job of making the RD sensor line launched in 2016 that allowed for a low profile, highest accuracy sensor for patient care, but the other impact was an 84% reduction in materials. You think about this in the garbage and this. Now the health care world can say, we've always used this is what we need. This is what we must have. But the decision to refuse status quo to push the limits to improve quality, improve care and reduce dramatically the amount of plastics and copper has had a phenomenal impact on eliminating the use of materials. Now that elimination also has led to reduce the box size. So in looking at the boxes of this product versus this product is a 44% reduction in the carton that has to be used. 11 -- 1.1 million square meters of box service reduction is like covering half a city in boxes, reduced in the last five years of having the RD sensors shipping, a massive reduction in paper. That also pushed us to all of our sensor lines to eliminate the electronic instructions for use that go in the box. That paper was in every box has shipped out. We were able to reduce 11.5 million electronic instructions for you shipping around the world. It's not just the paper, it's the weight. Every bit of weight you ship around is fuel that has to be used to get it on a plane, on a train, on a truck and it impacts your environment at every stage. These types of initiatives are changing the health care landscape to not accept status quo and recognize that we can avoid using materials and we can avoid waste. Now our team never settles there. So the next step was there's still waste, right? So we went from this to this, now what? Up to 2021, the end of 2021, over 400 customers agreed to participate in recycling program. So they already sent to sort of being collected by hospitals. They put them in collection bins. And our team then looked at how can we aid landfill waste. So they partnered -- we partnered with a company who salvages the product. So the RD sensors come in. They're brought to a salvage company. And the question was, what can we do? How can we salvage this? The end answer was 100% of this can be salvaged. This is put into a shredder. It is shredded down to the plastics and copper components that are then separated and able to be used for other -- making other products in the world. So reduce the need for materials from this to this, but bring this back in and have zero, zero impact on the landfill with the sensor. We now have more customers around the world moving to our RD sensor. We anticipate that we'll have 25% more users of RD sensors at the end of 2022 versus 2021, and the impact on our waste is profound. So that activity, the RD sensor activity and the avoidance of this to this has resulted in 1,100 metric tons of material use avoidance. So complete avoidance of material use. With the recycling I talked about the salvage and other initiatives we have 100 metric tons of waste diverted from landfill and the time we've had the RD sensor line. What does that mean more practically as well when we look at some of these initiatives, when you look at the electronic instructions for use, reducing those or limiting those from our sensor boxes, 13,000 trees are saved. And the production of paper, of course, is not just the paper, it's the water. Most things we produce in the world use a lot of water, 35,000 cubic meters of water saves. When you think about a person, we use about 3 liters of water a day. And we use 5 or 10 trees a year for oxygen. That is a profound impact on thousands of people saving that water and saving those trees. Now if we go beyond our products to our facilities and where you are today, we're really excited to have you here and up until not long ago, I think it was the only funny place in North America here today. So we're able to enjoy and experience some of the important features of our facilities as well that contribute to the environment. 24 electric vehicle charging stations are here at our offices and our other offices around the world have electric charging stations as well that you may have experienced. Our roof is part of our environmental footprint. So some of you may have seen pictures of our roof. When we acquired this building, it had solar panels on the roof. We have upgraded those. There are 2,500 solar panels on the roof, 225-kilowatt panels that produce over 1 million kilowatts of energy that allow us to have 35% of our headquarters energy reduction coming from our roof. Our roof also can have a negative impact on the environment. Roofs are hot. So on our roof, we have a cool roof technology to reduce the heat impact on our neighborhood, ensuring that we're having a positive impact on our community around in the neighborhood as well. Also, water. There's recuperation of water salvaging of water for irrigation, for our pond, for our gardens to allow for water to be reused in our building and we have low water use toilets and other assets in engineering that allow for lower water use as well. That has allowed us to have the Water Star certified program here. And it's not about how of the certificate. It's about showing that this is possible, that it's easy to do if every company puts their mind to looking to initiatives to save water. Now as well on the paper side, a huge amount of effort to avoid paper. Even today, you received very little paper. But where we have paper, we continue to recycle that paper and reduce that impact as well. Now there are over 40 initiatives for sustainability around the world, and that list is growing all the time. These are only a few examples. They're in our sustainability report from 2021, and we look forward to sharing the results of our efforts at the other '22 as well. With these efforts, like I said, they don't come from corporate mandates, they come from our team. And I want to talk to you about our team are really excited about the team we have around the world who bring for these initiatives. We are very lucky at Masimo that our average retention is 5.5 years. And in fact, we have over 20% of our employees who've been with the company for over 10 years. In our employees, 34% of our employees are women, and 26% of our leaders at Masimo are women leaders. We also have 47% of our team and 34% of our team members are racially and culturally diverse backgrounds who make up our Masimo team. We're incredibly proud of this team and all they bring to us, to challenge us to do better every single day to make sure that our goals that come from our consumer business, the vision that you saw from Blair from [indiscernible], from the doctors who share the application that we take that one step further every day to improve lives in everything that we do. I want to thank you all for being here. If you have ideas for us and how we can improve the environment. We welcome those, and I want to thank our leaders for challenging us to improve life. And at this time, I want to invite Micah Young, our Chief Financial Officer, to come up and present the next part of our agenda. Thank you very much.

It's great to be here with you guys today. I appreciate you guys coming all the way out here. I know last investor day, I think back in 2019, it was a rainy day. Today, it's a bit cold, but glad you made the trip out. I also want to take a minute to say thank you to the whole Masimo team, the production team. There's a lot of workers behind this. So just a round of applause for the entire team. All right. So if you can't get excited about some of the things you're seeing today, then I don't know what you can get excited about. The product demonstrations, the presentations earlier, I hope you enjoyed all of those, and you're starting to see how everything is coming together, how it's weaving together and seeing the vision that we have here at Masimo. I'm going to jump into our financial overview and outlook. Before I get started, I want to just remind everyone that -- all the financial measures I'll discuss today are going to be on a non-GAAP basis as well as they will include financial -- pro forma financial information that includes financial data from -- prior to the acquisition of Sound United. So just remind everybody to go look at our GAAP to non-GAAP reconciliations. They'll be in the back of the presentation that we just posted with an 8-K this afternoon. All right. So jumping right into it. One thing we like to do is even before we get into our long-range outlook. I want to look at how we performed against the commitments we made 5 years ago. If you look at our back at even the Investor Day back in 2017, we set out goals to grow revenue by 8% to 10% on an annual basis. You can see here, we actually exceeded those goals. We delivered 14% average growth over that period from 2017 to 2011 and looking at really comparing the actual performance to the commitments we put out there. A lot of that growth was achieved through robust growth in the installed base. We saw a really rapidly growing installed base. COVID, we saw a strength where a lot of customers really turned to us during a time of need. And if you look at that, we had record levels of contracting. You've heard us talk about that here more recently in the past couple of years, we've seen a record number of customers convert over to Masimo. And that's really -- that really demonstrates the power of our innovation. And the innovation in this business, the ability to continually innovate and market set there's no devices today that can serve those markets even to drive that kind of innovation and be able to really invest in the R&D to drive growth in this business. You're seeing that play through in the last 4 years. Now turning to our earnings growth. We committed to or provided targets of about 12% to 15% earnings growth. Over the last -- if you look from 2017 to 2021, we saw earnings growth of 12% to 15%, and we saw very strong leverage in the business, and I'll show you that on a couple of more slides, but we delivered 23% growth over that time frame. There are some other things that we laid out. We laid out some growth targets by revenue category. If you look here, you can see SET, rainbow, hospital automation and other advanced parameters, and then you can see the total revenue targets that we laid out. In the green are our growth targets. So if you look at SET, 6% to 8%, we also had an upside case there, and we exceeded that for our SET pulse oximetry. Rainbow, we had a 10% growth target. We exceeded that growth as well, but fell short of the upside case. We -- as you know, we try to push ourselves internally, and these were some of the upside cases that we were putting out there for those products. Hospital automation and other parameters, we had a 20% or better growth rate for those products, and we delivered, as you can see here, well above 30% for those over that period of time, almost nearly 40%. But total revenue, as I mentioned before, we actually came in line with that upside case and delivered significantly higher than the 8% to 10% growth that we set out for. If you look at the next slide, turning to margins. We had a margin target of improving our gross margins by about 50 basis points per year. Over that period from the 4-year period there, you can see that we -- that target was about 200 basis points, and we fell a bit short of that. We felt we delivered about 160 basis points of improvement. As you know, during the last few years, we've seen supply chain challenges and also some of our product mix has even shifted more towards some of our equipment, and that's driven some pressures on our gross margins. But still very strong performance, but we fell a bit short there. Through balanced reinvestment but also just very disciplined management of expenses. We were able to still deliver on our goal for operating margins. Operating margins improved 520 basis points over that period, and we committed about 100 basis points per year. If you look at one of the most Important things is we've really been able to drive some improvements here. Like if you look at our SG&A spend as a percentage of revenue, we've taken that down from 36.8% to 30.9%. So about nearly 600 basis points of improvement in our SG&A. And that's allowed us to really reinvest that back into R&D and drive further innovation. And that's why I think you're seeing the results and the top line growth of this business because of the investments we've been making. And you're seeing the fruits of that labor come out and all the products that we're showing you today. And I think that's important to see that innovation live and go through some of these demos. We've been able to increase R&D from 8.8% to just over 11% increase of about 230 basis points and still deliver on our operating expense targets, which would have been about 50 basis points improvement per year, 200 total basis points, and we've dropped that by about 370 basis points. Now turning to what you've all been waiting for. So our consolidated revenue guidance range for 2023, we're looking at $2.330 billion to $2.4 billion for next year. And I'll break down more of the -- of those categories underneath it by segment. It includes -- now that we've worked through the planning process, we're estimating about $64 million of currency headwinds. And that represents on a constant currency growth basis, about 6% to 8% growth organically. Now turning to our health care revenue. Our Healthcare revenue guidance range is $1.420 billion to $1.450 billion. That includes about $22 million of currency headwinds. And we're guiding to about 9% to 10% constant currency growth. All right. Looking at the next -- turning to our nonhealth care revenue, $910 million to $950 million is the guidance. That guidance includes or incorporates about $42 million of currency headwinds, and that represents growth of about 2% to 5% next year. And we're -- as you know, we're being very thoughtful about the macro environment right now, and we feel like we're putting forth a more conservative view of the guidance as we look into next year. All right. 2023 operating profit guidance, $360 million to $375 million, and that includes about $32 million of foreign exchange headwinds for the year. 2023 EPS guidance, $4.25 to $4.45 per share with about $0.44 of foreign exchange headwinds, about 10% currency headwinds that we've got incorporated. All right. So now turning to our financial outlook. As we look beyond 2023. Consolidated revenue growth, high single digits, 7% to 9%, and I'm going to go through the segments here in a bit. Operating profit dollar growth, 10% to 12% and EPS growth of 10% to 12% for beyond 2023. All right. Looking at how we're going to drive the leverage earnings growth. If you look at the revenue growth, 7% to 9%, 10% to 12% earnings growth, we're going to drive through several initiatives. And a lot of these initiatives are ongoing, but there are some new initiatives that we have in place as well. If you look during the last several years with some of the supply chain challenges that many companies have faced where we face them is really being able to get a consistent flow of raw materials from vendors and also other supply chain bottlenecks throughout the process. If you think about it, getting that consistent flow allows us to really avoid expediting freight. We've seen a lot of higher freight costs as a result of that -- get the products inbound go through our manufacturing processes, which has created a lot of inefficiencies for us because it creates a bottleneck in the process as we're trying to work through that and get it to the customer. And then on the back end, we're having to expedite that to the customer. So there's a lot of different things that are impacting our margins today. We plan to continue to streamline and get after some of those supply chain inefficiencies. We also want to tie in and go after manufacturing scale, productivity and drive more efficiency throughout our manufacturing and supply chain. The team is continually focused on driving product cost reduction. This has been an ongoing initiative for the company. We design for manufacturability and trying to make things as streamlined as possible and reduce costs. Stacy showed you some of the product earlier that -- with the RD sensors, where we've taken a lot of the excess waste out of those sensors and been able to reduce some costs of those products over time. We also have procurement initiatives and going -- continuing to go direct in key markets with customers, and that helps us to drive additional margin improvement by getting that end customer pricing. Next one is sales force productivity. This is an ongoing initiative. Our team has done very well. And you've seen that through the leverage we've had in our SG&A spend over time is really as we put out more and more product and more and more innovation, we've got sales reps who have a lot more things to sell that are more in the portfolio, and that enables us to really drive more revenue per rep, and they've done a great job of really being efficient there. So we're continuing to do that. And then, of course, leveraging our back office and G&A spend. If you look at the next slide, as you think about the growth in the business, and you can see here in the black boxes, you can see our health care business going from $1.4 billion, $1.420 billion to $1.450 billion is where our estimated range is next year. That's growing 9% to 11% per year. And then you can see our non-health care business growing mid-single digits there out into -- over the next 5 years. And our consolidated revenue, you can see the critical mass we're starting to get into our revenue and our earnings. And here, growing consolidated growth rate of 7% to 9% per year. This next slide shows the cash-generating power of the business. If you look at our adjusted EBITDA. We're around $500 million is what we're estimating for next year, and that will be growing 10% to 12%. You can start to see the power of our ability to generate cash as we move forward. And this is on a very large scale if you think about how big this business is in that kind of growth. Next, we're going to turn to -- you can see the mix of our health care business here. This is the revenue mix. And you can see we're set just over 75%, as we're estimating into next year, Rainbow over 10%. And you can see the breakout of some of those other categories. If we look at the revenue growth contribution, we start to break down the 9% to 11%. And -- the first category, of course, being set. With that being 2/3 of the business growing 6% to 8%, that contributes about 4.5% to 6.5% to our growth rate over the long term. We also have rainbow, which is growing at 10% in our long-range plan. And that will contribute about just over 1 percentage point to the overall growth rate of 9% to 11%. Then you add in NomoLine Capnography, SedLine, O3 brain function monitoring. And then hospital automation, each of those are contributing nearly 1 percentage point each to our growth rate. And then the last piece is some of the new products. As we start to size up, you've seen the market sizing of some of these new products and where we're going. Telemonitoring, a very big market, over $30 billion -- over $20 billion market that Bilal mentioned earlier. You also have wearables. And wearables is over a $50 billion market that Blair mentioned earlier in his presentation. And then hearing enhancement. This is the cat where we put the hearing enhancement category. That's over a $30 billion market within the $85 billion hearables market. So we're entering into some massive new markets where we can take and really drive a lot of these new consumer health products. And it's pretty exciting to see the opportunity we have ahead. And that, we believe, is going to contribute at least 1 percentage point to our growth rate. That contribution is coming from mainly right now. We've got incorporated W1 in STORK. And as we launch new products, we'll start to bring those into our long-range forecast. Total revenue growth, 9% to 11% and the size of those markets, when you combine those over $110 billion when you start to bring in telemonitoring, wearables and hearing enhancement. Now I want to break down our nonhealth care segment. If you look at that, you start to look at the revenue mix on the left side here. 95% roughly is home audio. You can see there. About 5% of the business is headphones, which is in a very rapidly growing side of the market. And then you see the breakdown of different components of home audio. And you've seen a lot of those things in the demonstrations today. You got the experience, some of the home audio and those -- that type of equipment. If you look at home audio, Blair mentioned that being a -- over a $6 billion market for premium and luxury home audio. That's grown 3% to 4% with being a majority of the business that contributes 3% to 4% to the growth rate. Headphones. Headphones are part of that $85 billion hearables market that's growing rapidly. And that represents about $55 billion plus in terms of total market opportunity. And that's growing -- we have that growing at 25% -- over 25% and this will become a big growth driver for this business moving forward. That gets us to 4% to 6% growth. And this growth, we believe, represents market-leading growth in these categories. And we're excited to bring the team on. You can see the power that it's going to bring to the consumer channel, and that's what I'm going to talk about here shortly. If you look at the new product launches, we've talked a lot about these new products. You've seen the demos. We've got a lot in store for wearables, which is a massive market growing. It's a $50 billion market growing double digits. We're going to be launching STORK baby monitoring, the B1 bands as well as Masimo W1 and freedom in that category. We're also going to be launching more and more in the hearables. As I mentioned before, Sound United, with that acquisition, they brought forth a lot of experience in the hearables market with the headphones. And now we're going to take and combine the signal processing capabilities of both organizations and really leverage that engineering power and also leverage the adaptive acoustic audio or adaptive acoustic technology for hearing enhancement devices as well. The last one is telemonitoring. If you look at telemonitoring, as I mentioned before, over $20 billion total addressable market, Bilal mentioned some of the things that we're launching there with -- of course, we're in the process with W1. We have Radius PPG as another option as a wearable. And then we have our home health kits. And then there's all the things that we're doing from a software and data management capability as we move into the home. If you look at all these markets coming together, I mean, we have a tremendous opportunity here as we are expanding our total addressable markets by nearly 20x what they are in the traditional hospital space. You can see there with home audio premium luxury, hearables, being an $85 billion combined market there, wearables and then telemonitored. So now I just want to kind of recap through talking more about the acquisition, the power of this acquisition is it provides immediate critical mass for what we're doing today and all the things that we're showing you today with new products, all the things we're coming out with consumer health. And also it plays a key role with our future of telemonitoring and I'll talk to you about that in a minute. If you look at the consumer channel and infrastructure, Masimo is a stand-alone business. We had a very -- we had a limited consumer channel and infrastructure. It would have taken us multiple years and significant investment to be able to build out the capabilities that we have through this acquisition. If you look at the combination of the companies and bringing on the Sound United team, we've now have immediate access to over 20,000 points of retail distribution. We have a team of over 450 consumer sales and marketing members globally that have not only retail distribution experience, but also a direct-to-consumer marketing expertise. And that is a powerful thing, and that would have taken us a long time to build out. We also -- as you think about Masimo's brand, we're a trusted brand in the hospital. But we have limited consumer brand recognition today. This gives us immediate access to over 200 years of consumer brand heritage and it also gives us the ability to leverage those premium and audio brands. Think about where we showed earlier the Denon earbuds with the Masimo AAT technology. Being able to bring that brand name to great technology is going to give us a head start in these channels and really optimize the opportunity we have to win in this space. And it's a massive hearables market. It's over $85 billion market. And we had no products in hearables today. We had a lot of development in the works. We are developing technologies. We had our signal processing and, of course, bringing along adaptive acoustic technology. But Sound United has been in the space for a while. They've -- it's been a rapidly growing business for them. They've got the expertise in that market to be successful. And -- that gives us the ability to leverage our Masimo AAT technology. The next one is we also gain immediate access to a large network. If you think about it today, even during COVID, we -- if you look at the home health hubs we have with Masimo SafetyNet and being able to connect to clinicians, connect through the cloud back into the clinician's office, that's less than a 1,000 home health hubs today. With Sound United, as Blair mentioned, we have the ability now to connect that platform through HEOS. We have over 3.4 million connected devices, growing about 500,000, 600,000 a year. And those will soon be capable of acting as health hubs by the end of this year. So that gives us that rapid start for what we're wanting to do with creating telehealth systems in the home, being able to access through the cloud in a bigger way, connecting data and connecting patients back to their clinicians. The next one is engineering power. I think you probably saw a slide from Blair earlier that showed Masimo engineers today about over 450. Now we're adding 375 engineers from Sound United. So we have an engineering powerhouse with over 825 engineers combined. And that gives us the ability to leverage that engineering power for more products that we can roll out and continue to innovate both in the hospital as well as going after those large consumer health and telemonitoring markets. And last but not least is really the financial impact. When we looked at -- we evaluated a lot of things through the process, a lot of companies looked at partnerships. We looked at all of these different things. And what -- and you can see where this company, this acquisition checked the box on a lot of areas that were important for us. We absolutely needed to have immediate access to a large channel. We've been investing in all this innovation for years. Bilal showed earlier where the wearables, and Joe mentioned it that technology goes back a long time, and we've been developing that for many, many years. And to see that evolve and now we're ready. We have a product immediately today to go to market within the next year. So we needed that channel to really successfully launch these products that we think are going to be impactful to many out there as far as consumers and patients around the world. If you look at that, that would have taken a heavy multiyear investment for us to establish the infrastructure we needed to be successful. And that would have diluted our earnings for multiple years. But what we found was a company that had all the majority of the things we were looking for, and it was a reasonable valuation, 1x revenue, 8x EBITDA, and it gave us immediately accretive earnings. And the biggest thing here for us too is it provides significant upside optionality. We've made the investment in R&D. A lot of that's in our run rate today as far as all the things that we're doing. We've made the investment in the acquisition that gives us the channel, gives us the breadth and it also gives us access to those telehealth opportunities. And now we have huge opportunity. It's upside optionality to promote new products that we're rolling out, all the things you've seen today, and it's a lot of that upside optionality is something we couldn't capture if we wouldn't have done this acquisition. I'm going to turn to the next slide here and show you what you've probably all been waiting for is some of the time lines. So if you look at this acquisition, too, it accelerates our time to market by giving us that channel. We would have probably had to trickle out products over multiple years without being able to drive the success in those launches. So if you look at STORK and you can see here some of these timetables we're -- that really represents how we're finalizing the launch of those products. And within that range of time is when we expect to launch these products. So if you think about STORK by middle of next year, MightySat VSI, this is our next-generation MightySat. That will be middle of the year next year as well as Radius T [ disposable ]. And then we got hearables with AAT. That will be a second half of the year launch. B1 and Freedom will be second half to late next year. And that will be also combined, and we are going to ultimately launch W1 into that channel. And that will give us a multitier strategy as you think about pricing with Freedom being up more the luxury type premium luxury type pricing. You've got W1, and then you've got all the bands for sleep and fitness that would be more of a mass consumer -- it will reach more consumers in terms of pricing. So we're excited about all these product launches that are coming, and it's going to give us tremendous opportunity to drive upside. And these are not all the products we're launching, keep in mind, but we want to highlight some of the key products that are going to go -- that are -- that really are consumer health products that we'll be launching within the next 12 months. This next slide shows how we build up how you think about the buildup of the 7% to 9% growth. And you can see here where we're -- we've got the professional health care. We've got consumer non-healthcare and then consumer health. And that gets us to a buildup of 7% to 9% growth, high single-digit growth. But all these things we're doing, we have tremendous upside optionality to deliver significantly higher growth. This could change the trajectory of this business. And again, I'm not committing there. But the upside is tremendous. If you start to look at what this could do for the business. It could take us to a new growth trajectory if a lot of these things are successful. And that's pretty significant when you think about the size of the revenues in the business, and we talked about the size of the earnings together. The last piece, I just want to recap. Our goal is to deliver sustainable revenue growth. And if you look at our plan, high single-digit growth, 7% to 9% combined, and we're going to do that through market-leading performance of our core businesses. When you think about the consumer audio, the traditional health care business. And then we have a lot of upside optionality to capture. And we plan to make the right investments as we move forward and balance reinvestment within what the guidance we provided to really capture that upside optionality and hopefully drive significantly better results than what we're even targeting today. And then, of course, leveraged earnings growth. If you look at our long-term outlook, we're providing 10% to 12% earnings growth. We're going to do that through driving gross margin improvements, continue to leverage operating expenses and balancing reinvestment to support those new product initiatives and that will help us capture the upside as well as continue to deliver sustainable revenue and earnings growth as we move forward. And that's it. I'm going to wrap up there, and I'm going to have Joe come back on stage. So welcome back, Joe, our Chief Visionary Officer, our founder. Thank you.

Thank you, Micah. I hope you guys like the punchline. As I put it, Micah, I had the funds up to report. I hope you guys enjoyed the product demonstrations got a chance to stretch your legs. I appreciate you being here since 7:00 in the morning. So some show of hands, who enjoyed seeing the wearables the most, W1, Freedom, all right. Who enjoy seeing the baby monitor, STORK the most. Wow, okay. Baby is coming. Who enjoyed sepsis index, hydration index out of the business the most. All right. All right. And who's going to watch the great Showman when they get home. Great. All right. Well, I really, really want to just emphasize a few things. When we were developing W1, we got some signals that told us to go faster, go harder, take more risk. One of them was the market. The market used to be for electric cardiography at home. It changed the Photoplethysmography at home. It changed the pulse oximetry. Pulse oximetry became a whole name, a household name because of COVID. And you saw how we're about to do continuous arrhythmia analysis with this partnership with iRhythm because nobody else has continuous PPG like we do that can really bring out continuous arrhythmias instead of thinking you may have something you press a button to try to detect something. We also got the signal from everybody who's trying to help during COVID from major companies like, I don't know, Verizon, AT&T, they were calling us saying, "We want to work with you because you're the only real thing. Everything else was vaporware. And to date, they still are vaporware. And we got to see some of those things come out in haste. And when I got a chance to get a demonstration of W1, this is one of the other important signals. You saw the difference between Nellcor and Masimo. You saw the difference between Apple and Masimo. It is greater than I expected. I knew we're going to work well because of our core technology and our incredible team, but I didn't expect it to work so well. I've seen it help detect problems with loved ones in my life. And that told us something. And by the way, that extra improvement in accuracy and performance, the continuous accurate measurements matter. Think about how until Masimo set came to market despite pulse oximetry being ubiquitous. There was not one outcome study that showed pulse-ox made a clinical difference. Not one, yet post the delivery of Masimo SET. There are now 4, 5 areas where pulse-ox made a clinical difference, reduction of retinopathy of prematurity, detection of CCHD in newborns, helping save lives from people suffering from opioid-induced respiratory depression, helping save lives for people at home at COVID. So I really believe this extra accuracy, this continuous capability will matter. And if we didn't introduce it, a lot of stuff that's out there would look like, well, what does it do? It's not doing anything for me. So I'm really, really excited. I have to tell you, the future looks fantastic. We have this incredibly talented team, nearly 10,000 people now. We have this incredible revolutionary technologies from W1, E1, Sepsis Index, Hydration Index, SET, of course, Rainbow. We have Radius VSM. We have hemoglobin route. We've got an incredibly great hand. And we intend to do our best to make the most of it. We intend to usher in 22nd Century Healthcare. We have the critical mass already and there's a lot more. We showed you some stuff until the end of next year. There's more, more that we believe will complete this picture from hospital to home back to hospital back to home. That circle is critical. I mean you've heard Dr. Pronovost, Dr. [indiscernible], which I'm grateful for. These guys are iconic clinicians in the U.S., if not worldwide, come to you to tell you how important these things are, and what it will mean to not only survival of hospitals, but to survival of people and getting that care at the best place they could get the care for at home. So you stuck with us for so many years. Please stay with us longer. We've got a great, great future ahead of us, and we're going to see this through. So thank you so much. I hope you have a safe journey back home. Thanks for being with us. Thank you.