Welcome to the Q4 Fiscal Year 2017 ResMed, Inc. Earnings Conference Call. My name is Mariama, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Agnes Lee, Vice President, Investor Relations and Corporate Communications. Agnes, you may begin.

Thank you, Mariama, and thank you for attending ResMed's live webcast. Joining me on the call today are Mick Farrell, our CEO; and Brett Sandercock, our CFO. Other members of the management team will also be available during the Q&A portion of the call. If you have not had a chance to review the earnings release, it can be found on our website at investor.resmed.com. I want to remind our listeners that our discussion today may include forward-looking statements, including, but not limited to, statements about future expectations, plans and prospects for the company, corporate strategy, integration of acquisitions and performance. We believe these statements are based on reasonable assumptions, but actual results may differ materially from those indicated. Important factors which could cause actual results to differ materially from the forward-looking statements are detailed in filings made by ResMed with the SEC. I will now hand the call over to Mick Farrell.

Thanks, Agnes, and thank you to all of our shareholders joining us today as we review financial results for the fourth quarter of fiscal year 2017. For the call today, I will review top level financial results. I will then review some geographic highlights and discuss a few key announcements this quarter. Finally, I will hand over to Brett who will walk you through our financial results in more detail. We achieved solid high single-digit global revenue growth this quarter, led by sales of our sleep devices, respiratory care devices, mask systems and software solutions. At the bottom line, on a non-GAAP basis, our diluted earnings per share was $0.77. We have passed the one-year mark since the closing of our Brightree acquisition. That acquisition has been a significant success for homecare customers, for patients and for shareholders. This quarter, we acquired new capabilities and technologies to add to our Brightree offering with two tuck-in acquisitions that I will go into further detail on later on in the call. We're making great progress with Brightree as we expand our connected care offering for all of our customers, lowering costs and freeing up cash flow that can be reinvested for even better patient care. I'll discuss more details of our digital health and connected care strategy later in my remarks. We have refined our operating model at ResMed to ensure a direct line from customer insights through upstream marketing through our product and solution development teams and also a direct line back down to the sales interface within each of our vertical businesses. You can think of this as a merging of what were regional sales structures into global business units. We now have a global sleep business vertical, a global respiratory care business vertical and a global Software-as-a-Service business vertical.…

Great. Thanks, Mick. In my remarks today, I'll provide an overview of our results for the fourth quarter of fiscal year 2017. As Mick noted, we had a solid quarter. Group revenue for the June quarter was $556.7 million, an increase of 7% over the prior-year quarter or in constant currency terms, revenue increased by 8%. Taking a closer look at our geographic distribution and excluding revenue from Brightree, our sales in the Americas were $314 million, an increase of 6% over the prior-year quarter. Sales in combined EMEA and Asia Pacific totaled $206.5 million, an increase of 6% over the prior-year quarter, or in constant currency terms, sales in combined EMEA and Asia Pacific increased by 9% over the prior-year quarter. Breaking out revenue between product segments, Americas device sales were $174.4 million, an increase of 8% over the prior-year quarter. Masks and other sales were $139.6 million, an increase of 4% over the prior-year quarter. The revenue in combined EMEA and Asia Pacific device sales were $145.4 million, an increase of 9% over the prior-year quarter, or in constant currency terms, an increase of 11%. Masks and other sales were $61.1 million, an increase of 1% over the prior-year quarter, or in constant currency terms, an increase of 4%. Globally in constant currency terms, device sales increased by 9% while masks and other increased by 4% over the prior-year quarter. Brightree revenue for the fourth quarter was $36.2 million, with growth on a prior-year comparable basis continuing to track in the low double-digits. During the rest of my commentary today, I'll be referring to non-GAAP numbers. The non-GAAP numbers in the current quarter adjust for the impact of amortization of acquired intangibles. In the prior-year comparables, they exclude amortization of acquired intangibles, acquisition-related expenses, Brightree onetime deferred revenue…

Thanks, Brett. We will now turn to Q&A and we ask everyone to limit themselves to one question and one follow-up question. If you have additional questions after that, please get back in the queue. Mariama, we are now ready for the Q&A portion of the call.

Thank you. Margaret Kaczor from William Blair is on the line with a question. Scott R. Schaper - William Blair & Co. LLC: Hi, guys. This is actually Scott on for Margaret. I wanted to start on the U.S. market growth for both devices and masks. Mick, should we look at device growth on a six-month basis or is underlying device growth accelerating in the U.S.? And then on masks, how do that underlying market growth compare to last quarter and Q4?

Thanks for the question, Scott. In terms of market growth, look, I think it's always good to look at a 6-month or even 12-month trailing period because there's lots of sort of fluctuations that could happen on a quarterly basis, seasonally adjusted and aspects of how the market might turn. In general, we look at the market as mid to high single-digits growth for the market and devices are at the low end of that range and masks are at the high end of that range. At ResMed, we like to not just meet, but beat market growth rates and I'd say if you look at this quarter completely we beat market growth rates with our device growth, and we're a little behind it on our mask growth rate given some of the supply constraints in the first half of the quarter. But the market growth rate I think it is good to look at a 6 or 12-month trailing period to sort of get a better picture of what the market growth is. Scott R. Schaper - William Blair & Co. LLC: Okay. Great. And then, Brett, I wanted to ask on gross margin in the quarter and then the puts and takes for that number in terms of currency and mix and pricing and you guys guided to a gross margin for the next fiscal year to be consistent with this quarter. The same kind of question in terms of headwinds and tailwinds concerning you guys have probably had a pretty strong mask growth rate throughout the year.

Yeah. Well, as you said, Scott, lots of puts and takes on that. But, I guess, the margins if you look at our last few quarters is relatively stable in that sense and we're seeing certainly sort of moderation and that product mix impact is still there, a little bit negative. We had really strong device growth. So, obviously, if device is growing more strongly than mask, then you have a slightly negative impact on margins. But to the extent we see some improvement in that mask growth for FY 2018 then that would certainly be supportive of product mix and supportive of the gross margin. Scott R. Schaper - William Blair & Co. LLC: Okay. And then lastly for Mick, kind of a bigger picture question on AirMini. Could this potentially be something you push as more of a mainstream product or something you would consider investing DTC advertising dollars towards or are you guys just going to rely on kind of your traditional customers to promote the product themselves? Thanks.

Yeah. Thanks for the question, Scott. Look, the AirMini is a really exciting product and it's the world's smallest CPAP, but it is designed to be a second-use, cash-pay, travel-friendly device, and that's sort of the niche segment, category, if you like, that it's creating and growing and leading. We've seen great initial demand in the U.S. through our home care channel, as they get the opportunity to enhance their cash sales and in markets around the world where there are other go-to-market models, patients are willing to pay out of pocket. And I think there was some good pent-up demand for a travel-friendly CPAP like this and we look forward to expanding that niche category to a larger niche and continuing to lead it and the AirMini technology is doing a great job now. Scott R. Schaper - William Blair & Co. LLC: Thanks.

Sean Laaman from Morgan Stanley is on line with a question.

Good morning, everybody, and thanks for taking my question. Just to re-ask the question, Brett, on gross margin. If the masks are as good as what the feedback suggests, I'm not really sure why we don't really see a meaningful tick up in mask growth and, therefore, why wouldn't we see some upward pressure on gross margin?

Well, really, in that sense, we (29:30) and, I guess, what I'm saying at the moment, it's broadly consistent. We're still seeing some pretty good device growth. Again, we expect to see better growth in masks than what we saw this quarter. And to the extent we see that coming through then I'll update gross margin guidance in a dynamic way. So we'll still continue to update as we go and it's the same story. If we get, say, acceleration in mask then you will see some improvement in gross margin. But we're still doing pretty well in devices also. And year-on-year, we had a few – if you look at that with the FX and things like that year-on-year, it was a little bit of headwind for us as well. So, there's few things playing out on that but the thesis still hold. If we get good mask growth then you'll see an improvement in product mix and improvement in gross margin.

Sure. Great, Brett, and thanks for taking my question. That's all I have. Appreciate it.

As a reminder, please limit yourself to one question and one follow-up. If you have further questions, feel free to re-enter the queue. David Low from JPMorgan is on line with a question.

Thanks very much. If we could just touch on the device growth. As you say, there is a good strong results there. Just wondering if you could give us some sense as the what sort of contribution you saw from the non-invasive ventilation line, if it was that growing strongly and was the AirMini device much of a contributor to that line, please?

Hi, David. It's Mick here. As you know, we don't split out respiratory care device growth versus sleep device growth at this point. But, look, what I can say qualitatively is that the vast majority of that growth was the sleep apnea device growth powered by the AirView software solution and uptake of the great value for physicians and providers from AirView. But that is as we move connected care to our respiratory care platform, that is starting to get some momentum there. I will say that AirMini coming out the gates was relatively minimal on its impact on the aggregate device growth because that niche is really just starting up, but there was some balance between sleep apnea and respiratory care growth, but heavily weighted towards sleep apnea device growth, particularly in the U.S. region in terms of the year-on-year growth rate.

Great. Thanks. And sorry, just a related question. The French change, the telemonitoring, was that meaningful in this quarter or is that something that's likely to become more of a contributor going forward?

Yeah, it's more of an ongoing contributor. It will have some influence on product selection by customers as they are looking to make purchases during those 90 days, but that changes – something that is actually changing the fundamental basis of competition, if you like, in the industry in France and it's an ongoing opportunity for us to drive AirSense, AirCurve, and really the whole Air Solutions ecosystem, particularly the software side of AirView and we're seeing the French physicians really embracing the technology and we're seeing French customers really liking the efficiencies that they can get from the technology. And we're looking forward to patients getting the ability in France to get access to myAir data and at the same levels that the patients throughout the U.S. have these last three or four years and we think the value across that whole ecosystem of customers will be strong. So the short answer is, it's an ongoing thing and it did impact a little bit in the quarter, but it'll be ongoing for FY 2018 and beyond.

Great. Thanks very much.

Thanks, David.

Saul Hadassin from Credit Suisse is on line with a question. Saul Hadassin - Credit Suisse (Australia) Ltd.: Thanks. Good morning, guys. I would check regarding just the Brightree commentary in terms of growth. If I go back to the 4Q 2016 period and just look at the revenues there, it looks like the implied growth was about 25% this quarter. Can you just clarify whether that was the case and was there any contribution from some of those tuck-in acquisitions you made? Thanks.

Yeah, Saul, that's rightly said. It was a little bit complicated last year with the fair value adjustments that we had from Brightree around the acquisition and on revenue side. And I see it like it was a slightly shorter quarter. So what I've done in – what I said for that is really an underlying prudent comparable growth rate. If you look at like-for-like just on the numbers that we've got in our filings, for example, you're exactly right, it's around that 25%. But if you look at it on a pure comparable basis so I would try to (34:20) strip out some of those sort of adjustments then we're looking at that pretty solid low double-digit growth. Saul Hadassin - Credit Suisse (Australia) Ltd.: Thanks, Brett. And can I just ask one additional question about the impact of currency for fiscal 2018 on gross margin in terms of the way currency stands at the moment, is there a net benefit coming through this fiscal year based on what the euro has done versus the USD, or is that effectively offset by the rise in the Aussie dollar on the COGS side? Thanks.

Yeah, you're right. If I have a look – just to give you a sense for it, if I look at – currencies are moving around a lot lately as you'd be aware. But if I look at it going into – sequentially going into Q1, then I think we get a benefit of some currency for that at the moment, I think we're looking to get a benefit of maybe sort of that 20 to 30 basis points. But then if I take it into Q2 where we then start to pick up some of the impact from the appreciating Aussie dollar, it basically reverses that, so basically roughly 40 basis point reversal. That's a little bit of a tailwind sequentially going in Q1 that then turns into a small headwind into Q2. And then going forward, that should then just sort of flatten out. But if you look at it sequentially that impact is better in Q1, but then a worse impact in Q2 for us. And that's really driven off that pretty sharp increase in the Aussie dollar, which just happened quite recently. And then we'll see where that heads. But at the moment, that's the impacts that we're looking at. Saul Hadassin - Credit Suisse (Australia) Ltd.: That's great. Thanks very much, Brett.

Joanne Wuensch from BMO Capital Markets is on line with a question.

Good evening. Can you hear me okay?

We can hear you fine, Joanne.

Terrific. Two questions. The first one is it's great to hear that you're out of supply constraint on the masks and the accessories or the two new mask items. Can you give us an idea of where do you go from here with full supply? What kind of demand that you're seeing for those products?

Yeah. Look, I think the demand is high and physicians like it because of its broad fit range. Technicians like it because – most importantly, patients like it. And it has a good first-time fit ratio and a very broad fit range of 97%, one of them 99% on the other. And the InfinitySeal comfort technology just having very light levels of plastic around the bridge of the nose is very comfortable for patients. So, yeah, we missed some perishable sales in the first half of the quarter due to supply constraints. That goes away in Q1, right. As we look forward to FY 2018, our sales force confidence will really be there and I think that's a product that you shouldn't underestimate that when salespeople are in short supply, they don't sell that product line. And when they aren't short-supplied, they can sell that product line. So, as we look forward to FY 2018, we think there will be some very good success of the N20 and F20 and really happy to let that sales team do what they do best, which is provide (37:38) customers in a way that they can help give it to their customers or (37:41) the patients.

Is there a way to quantify those lost perishable sales?

There are probably 20 different models that we have internally. But it's not something we talk about externally. It's certainly something that – as we said 90 days ago, we never like to be under supply constraints. With innovation, new technologies, new plastics, new ways of designing single cushion masks that revolutionize the market, we had some challenges with the technology there last quarter. But the good news is we are through that. As we look forward, we're looking to continue growth and particularly growth in masks.

Excellent. And then my second question really is, is operating margins. They compressed year-over-year on higher SG&A. Do you see sort of this new annual run rate as a steady state or should we start moving up from here with the higher mask margins?

Yeah. I mean, on operating margins, Joanne, yeah, I mean, we've guided to be broadly consistent on the gross margin. We set (38:46) that around how do we get through FY 2018 improving that mask growth and so on, that's going to be supportive for gross margin. Then on the operating margin side, we expect that we'll get some moderation in those SG&A growth rates. Things such as legal costs and so on have been hurting us through FY 2017. As we work through FY 2018, we're focused on driving some operating leverage and we expect to improve that over the course of FY 2018. And to the extent we do that then that will drop through to the bottom line.

What I'd add to that I think is, as we look to drive operating leverage on a longer-term basis and moderate SG&A as a percentage of revenue, I think we can get more aggressive in how we scale our business. And as I said in the prepared remarks, Joanne, we've refined our operating model with business verticals that include the sales force and downstream marketing teams in region and in countries. And I think there's a lot of opportunity for us to grow revenue significantly faster than we grow our SG&A as we look forward to 2020 and well beyond. So, short term, I agree with Brett, we got some refinements and great capability to drive operating leverage, but longer term it could be even better.

Terrific. Thank you so much.

Will Dunlop from Bank of America is on line with a question.

Well, thanks very much. Just again wanted to ask about the gross margin and perhaps why you didn't provide a range for the guidance, that guidance seems quite specific even that there is probably quite a bit of variability in the product mix that could occur – a geographic mix that could occur throughout fiscal 2018.

You're right, Will. There's always going to be variabilities. There're a number of factors that play out. Obviously, we mentioned a few of them but you've got the interplay of ASP, procurement/manufacturing improvements, FX, product mix, geographic mix, there's a bunch of factors that play out on that, so that is difficult to predict, I guess. But I think broadly consistent. That easily you can see that is being not – don't think of that as being like purely consistent. But I think you could argue that's a bit of a range anyway around where we're at. So it certainly can be – and we've talked about it already on improvement in mask and so on conveying that we can get some expansion in gross margin. So I didn't mean that to be a really precise measure of guidance. I think it could range around that 58.2% as well.

Okay, great. Thanks. And secondly, just on the SG&A as a percentage of sales guided to be declining through fiscal 2018. Is that because you expect litigation costs to roll off? And if not, are they going to be a material component of SG&A for fiscal 2018?

Well, we still have litigation costs and that will still be coming through FY 2018, but we didn't ramp up through FY 2017, I guess, and that was hurting our growth rate on SG&A. We do think – in terms of litigations, hard to predict exactly where that will end up, but I think it will be not sort of accelerating in terms of our growth from where we were in FY 2017. But we'll continue to be spending money on legal expenses around litigation. But it'll be – I think it's more broader than that in terms of moderating the SG&A growth rate, so it's not just about legal cost leveling out or going down or whatever that might be. It will be more broad-based than that. And I should say that guidance as well is notwithstanding pretty sharp appreciation in the Australian dollar, which – we got a lot of operating costs in Australian dollars, so we're going to deal with that as well. So, obviously, that's going to be a little bit of a headwind through FY 2018, but we remain confident that we can moderate the SG&A growth through FY 2018 notwithstanding currency impacts.

Great. Thank you very much.

Andrew Goodsall from UBS is on line with a question.

Thanks very much for taking my call. I'm just coming back to (43:10) across the quarter particularly with masks, I know you've belabored this a little bit or were belabored a bit. Just trying to sort of understand when the back order came off and when we look at that mask number, we're sort of looking at really a sort of one-month effect of kind of full availability and, I guess, just trying to understand the exit rate to give us some confidence around 2018?

Yeah, Andrew. So, as I said, we were supply constrained through well beyond halfway through the quarter. So you can sort of look at it as, yes, (43:38) four to five weeks of the supply constrains starting to go away SKU by SKU and us getting supply ahead of demand. I think the fact that I talked a little bit to earlier, Joanne's question with regard to sales force having full confidence that they're going to have supply, that's not binary. You don't just go Monday morning and say we got full supply and the sales force say it's fantastic, I'm going to go and sell a truckload of F20s. I think what it takes is some time and they make some small orders and make sure it comes through and then ramp up because intelligent sales people with very good relationships with their customers and they want to fulfill those relationships with when they make a sale that we can deliver the order. I think what we've shown in the last four-plus weeks in the quarter is that we were able to deliver on all those sales. And so I think the exit rate from Q4 was very strong from our team in terms of what we're able to provide to customers for N20 and F20. And I expect that to continue very strongly in Q1 and throughout FY 2018, as we are completely supplying non-constrained and the sales force can be really out there driving the full bag of products that ResMed has for our customers, which is a really strong portfolio right now.

All right. That's great to hear that exit rate. Then I guess maybe without answering my own question, I guess, just obviously the UltraSoft does have a pretty intense replenishment schedule or monthly (45:05) I guess it's fair to say no real effect of that in this quarter, I mean, that sounds like it's sort of a next quarter event?

Yeah, the AirTouch range with the foam masks does have a faster replacement cycle. It's incredibly comfortable. Heat and moisture can be removed, but air pressure stays high, but it does have a fast replacement cycle. Yeah, I mean, we've really started launching that mid-May and so you've got very little, if any, replacement cycles on the AirTouch. And that whole category of a foam mask with a different replacement cycle in terms of comfort is really a category that we're developing over time. I don't know, Jim, the Head of our Sleep business and running the Americas last quarter, you want to give any further insights to AirTouch?

Yeah, I think we're confident on all three masks. The F20 and the N20 are both on great trajectories and now that we're off supply constraint, we're very confident in forward growth and in Q1 and throughout the year. AirTouch would start later, launch later. It's getting fantastic reviews from both physicians and patients. And, again, you're absolutely right. We're not yet really into it didn't launch early enough for us to see any real impact of resupply on the cushions in the quarter.

That's great. Thank you very much.

Thanks, Andrew.

Steve Wheen from Evans & Partners is on line with a question. Steve Wheen - Evans & Partners Pty Ltd.: Yeah. Hi. Just a question on Brightree. We haven't had an update in the gross margin of that business since you first acquired it and I just wonder how that might look today particularly in light of some of the acquisitions that you've made.

Sure, Steve. It's Brett. Yeah, I mean, look, it's pretty consistent with those that we disclosed at the time we made the acquisition. So there's really no material difference on those margins. We got a couple – these are kind of like small tuck-in acquisitions, I guess. They're sort of not enough to move in any significant way the operating margins of Brightree so they've been pretty consistent through that period since acquisition. Steve Wheen - Evans & Partners Pty Ltd.: Yeah. Okay. And then just with the R&D guidance, that looks like it's stepping up a bit in 2018. Is there anything you can talk to on the R&D front that might be driving that other than currency?

Yeah. Well, currency is pretty big one. So, I mean, the two things is we'll continue to invest in R&D, so we're going to continue to do that. So we'll continue to grow our investment base. And the second one that's probably hurting us a bit on that, on the guidance or – basically I'm looking at 7% to 8% is really the uptick, I'm looking at this Aussie dollar, a lot of our R&D is still (48:06) in the Australian dollars. So that's (48:10) if I look at the forecast, that's hurt us a bit on the R&D – just in R&D in terms of the U.S. dollars. So those two factors have led us to guide around that 7% to 8% mark for FY 2018. Steve Wheen - Evans & Partners Pty Ltd.: Yeah. Okay. And then just one other. Could you just give a bit more color around the effective tax rate? It's just even without the change around the Accounting Standard, it looks a lot lower than what I was expecting. Yeah, if you could just address that, that will be great.

Yeah. Overall for the year, Steve – the quarter's a bit hard because anything you do in terms of the year-end calculation of tax, everything gets sort of trued up (48:55) gets concentrated into the last quarter. But if you look at full year, we're around 20%, and that was probably helped a little bit by the ASU 2016-09 Accounting Standard. So that sort of contributed a little bit there. Perhaps underlying it's more like 21% or something like that. So that's sort of where we landed at an underlying rate. If we look at it going forward, it's just I'd up-tick (49:18) that a little bit but just looking forward around the geographic distribution of taxable income is the fact our (49:26) stronger Australian dollar is going to be a factor on that, at least also contributing a little bit. And there're a few other things, such as the R&D tax concession in Australia, which is capped at $100 million, has reduced from 40% to 38.5%. So, a number of those factors that's sort of playing out on the tax rate and has led us to increase that just a little bit from where we were in FY 2017. Steve Wheen - Evans & Partners Pty Ltd.: Great. Well, can I just ask one more? Just the other income line that reverses from a profit to a loss. Was that just hedging, or was there anything else in there?

Yeah, that's predominantly FX losses through hedging. Steve Wheen - Evans & Partners Pty Ltd.: All right. Thank you.

Thanks, Steve.

Victor Windeyer from Citi is on line with a question.

Yeah. Thanks very much. Look, I just wanted to ask about the portable oxygen concentrator business. (50:28) is that hasn't sort of grown, been a little disappointing. But what's your take on where that business is going and how you can really drive growth there, little pockets of opportunity?

Yeah, Vic, I'll hand that to Rob Douglas to talk about POCs.

Yeah. Thanks, Victor. Victor, we've continued to work hard on the Activox product and we've actually made a number of improvements under the hood, so to say, of the device. And we've seen a lot of improved performance. And we think our teams have done a great job on that improved performance, and now we're just getting that through to the customer base. But we're not re-branding yet. We're still waiting for further improvements that we think and we're happy with the device as – when ResMed puts its brand on it. So today, we're still work in progress, we're making very good progress. The Activox unit remains a very good, very long battery life device, and our teams are promoting it appropriately to key customers. So we're in it for the long haul and we believe it's going to be a very good business.

Okay. And then do you think, in terms of a ResMed branded product, you're well down the path in terms of development of that, Rob, or is that something (51:54)?

Victor, one of the things we've learned over the years is we really can't forecast our R&D program, it's just too good for competitors and everyone like that, so we're really reluctant to give you a timeline and details on that.

Yeah. Okay. And does this form part of this new – it sounds like you're sort of doing a slight reorganization in terms of the operations with the new business verticals. Is this presumably this falls into the respiratory care part of that business, is that right?

Yeah. Victor, we've got a very strong respiratory care team that's able to focus on getting at and treating patients with respiratory insufficiency, the COPD is one of the main patient conditions that we're aiming to treat. We've got an improving and an emerging portfolio of treatment options there. We'll be building more of them. As Mick mentioned earlier, we've really generated lines of business where we've got much closer engagement between our sales organization and our customers back through to our R&D teams. We should, over time, see benefits on the R&D programs for that.

Yeah. Okay. All right. Thanks very much.

Matt Taylor from Barclays is on line with a question.

Hi. Thanks for taking the question. First one I wanted to ask was just about the acquisitions and other tuck-ins, but could you help us understand whether there was any contribution in the quarter and what you're expecting from those in terms of contribution in the next fiscal year?

Thanks for the question, Matt. No, there was de minimis contributions in Q4 from those tuck-in acquisitions. They were really about technologies that will enhance our ongoing future growth of the Brightree offering. So, to maintain and grow that double-digit growth of high-margin business in Software-as-a-Service, we're finding tuck-ins of some good technologies can really help enhance that growth and drive further value for our customers. So, AllCall Connect, I met the team, they're actually with me up in Halifax with our Healthcare Informatics team, straight after the acquisition already engaged with our software development teams and really starting to say, well, how do we link this tuck-in technology with all the great offerings we currently have on Brightree and continue to provide that value as we go forward. So, the short answer is no contribution Q4 2017. We'll expect great contributions as that capability of AllCall and Conduit Office roll into the offerings from Brightree, some particular modules that will expand over FY 2018, FY 2019 and beyond.

Okay. And just a question on leverage. If I look at the guidance quite literally, it would imply slight negative leverage in fiscal 2018. I know you have a headwind from foreign exchange, but what are the other headwinds that you have that maybe we're not thinking about and how can you get more leverage out of the business as you continue to grow the top line?

Yeah, Matt, look, it's a great question and clearly we are looking for operating leverage. And you can't control things like FX and those just have to be budgeted where they are now. Well, where they will be, who knows, but we will see as those move. But the things you can control, your SG&A growth, your R&D growth, your investments across your portfolio and how you go to market. As I said in the prepared remarks, establishing these new business verticals, rolling sales into global businesses, we think there is a lot of efficiency we can gain here in how we grow revenues significantly faster than growing SG&A while providing the same or even better value to customers. So it's something that we are laser-focused on in terms of operating leverage, getting SG&A leverage and driving that growth. We're not going to grind our R&D dollars and not invest in innovation, I mean, that's something we're going to continue to invest at a very strong rate. Brett put that sort of 7% plus guidance in there and FX might tick that up to 8%. But SG&A can come down from 27% to 26% and below, because there are great ways to scale marketing through social media and digital marketing. There are great ways to scale our sales force and how we go to market in different countries. And so we've got a lot of very exciting plans for the next fiscal year and beyond, in terms of driving our go-to-market strategy that I very strongly believe will drive better operating and SG&A particularly leverage as we grow forward.

Thank you.

Thanks, Matt.

Anthony Petrone from Jefferies is on line with a question.

Thanks. Two quick ones for me. Maybe just on masks, generally just an update on the pricing environment overall and as you get up to speed with some of the new offerings out of the supply issues, do you expect, perhaps, a little bit of premium pricing on the newer offerings? And then maybe, just an update on inventory cycles, receivables, cash, it looks like inventories ticked up a bit as well and just trying to reconcile that with the supply constraints? Thanks, again.

Yeah, thanks for the questions, Anthony. I'll hand the first part of the question to Jim Hollingshead to talk about pricing and the second part to Brett.

Hi. Thanks, Mick. Hey, Anthony, thanks for the question. What we're seeing is a pretty normal pricing environment relative to historical. And so, we're not seeing any unusual declines in pricing. We're seeing the same steady, moderate annual ASP declines that we generally see historically in the industry. All of our mask offerings are priced at a premium. We're the market leader. We're the strongest provider in the industry and we have premium pricing. The new mask themselves also are at a premium to the, well, with the existing portfolio.

That's helpful.

Yeah. And then, Anthony, just on the inventory, some uptick there, but we definitely rebuilding through the supply chain to support the new product introductions and to get us into that good strong supply position. So an element of that is building for that and you see that reflected at June 30 in the inventory balances.

Thank you.

Thanks for the questions, Anthony.

Suraj Kalia from Northland Securities is on line with a question.

Good afternoon, everyone. So, Mick, two questions from my side, first on Brightree, can you quantify the OUS or ex-U.S. opportunity for us?

Thanks for the question, Suraj. Yeah, Brightree has been laser-focused on the U.S. HME industry and has an emerging vertical that they're building in home health and hospice. And so, we think the value provided is incredible there. The skill sets, so none of the existing modules, if you like, from Brightree would be copied and pasted into our German business or to our French business. But the capabilities of running a Software-as-a-Service business, getting strong annually recurring revenue, monthly recurring revenue from customers, having them pay for the software per user per month is a very strong capability. So, we think that out of hospital Software-as-a-Service capability is an incredible strength that ResMed now has, and we are looking to, as I said in the prepared remarks, expanding home nursing and expanding home health and expanding hospice within the U.S. environment. We're also looking to expand our Software-as-a-Service offerings in France and Germany, and the UK, probably not with the direct copy and paste, it's more of a longer-term approach than that. Some things that we are looking to copy and paste and in fact have already started to do that are in the area of the Air Solutions ecosystem, including AirView and myAir. So the AirView software for physicians and for homecare providers has already been set up with service based in Europe, according to European law or with European security protocols and in line with the needs of our European customers, so AirView is going there. In addition, myAir, the patient app, that's universal, right. Humans are the same no matter where they are. And just translating it into French or into German or into Japanese is the pathway and making sure that we have all the right engagements around local law and security and so on. So, that's where the scale is in AirView and myAir and then the capability longer-term with regard to Brightree.

Fair enough. And, Mick, one last question, this might be a naïve question, Mick. So let's say I have to order a resupply or reorder a mask, whether a full face nasal or what may be and let's say that N20 and F20 is not available, what happens to that patient? I guess, I'm just trying to understand if there were supply issues, did those patients stick with their existing masks? Did they go to the N10 or F10 in the interim or if you can just help us reconcile because I'm looking at the 4% Americas mask number. Part of me is like, that the patients – are they waiting for these new masks to come online or did they switch to N10 and F10? Any color would be great. Thank you for taking my questions.

Yeah, Suraj, that's a really good question and one thing that we talked about internally when we saw supply constraints was focusing to make sure that we had resupply for customers versus going after a new patient sale. And so, as I said, there were some perishable sales lost in the first half of the quarter of some new patients that we wouldn't have got on to a ResMed mask and the customer will make a choice whether they went to an N10 or F10 or to a competitor's mask, and losing six weeks or eight weeks of first (01:02:15) is a bad thing to do. But what's worse is, to your point, not being able to resupply an existing customer. And so we've really worked with our homecare customers to make sure that any resupply needs from – and the mask had only been out there six to nine months and so it wasn't a huge population resupply but that the supply was focused on resupply of patients who had already loved the N20 and F20, so that we continue to have those patients. Really our homecare customers continue to have those patient supply with ResMed masks for their life and so that was a nuance during the quarter. I'd see we're just past the bottom of the hour and so we should probably end the Q&A there, Mariama.

Okay. Thank you. We are now at the one-hour mark. So, I will turn the call back over to Mick Farrell.

Great. Thanks. And I guess, I could handle this myself. But thanks Mariama. In closing, I want to thank the now more than 6,000 strong ResMed team, here at ResMed (01:03:14) diligently driving execution of N20, F20, AirTouch and many new launches as well as the future pipeline, and even more innovative products and software solutions that we will launch as we move ahead. Our team continues to demonstrate unwavering commitment to changing the lives of tens of millions of patients globally. And we remain laser-focused on our goal of improving 20 million lives by 2020. We'll talk to you again in 90 days with our Q1, FY 2018 results. Thank you for your time.

Thank you, again, for joining us today. If there are any additional questions, please feel free to contact me. The webcast replay will be available on our website on investor.resmed.com. Mariama, you may now close the call.

This concludes today's conference call. You may now disconnect.