Welcome to the Q1 Fiscal Year 2020 ResMed Inc. Earnings Conference Call. My name is Chris, 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 Amy Wakeham, Vice President, Investor Relations and Corporate Communications. Amy, you may begin.

Great. Thank you, Chris. Good afternoon and good morning, everyone. Thanks for joining us, and welcome to ResMed's first quarter fiscal year 2020 earnings call. This call is being webcast live and the replay, along with a copy of the earnings press release and our updated investor presentation, will be available on the Investor Relations section of our corporate website later today. Joining me on the call today to discuss our quarterly results are CEO, Mick Farrell; and CFO, Brett Sandercock. Other members of management will be available during the Q&A portion of the call. During our call, we will discuss several non-GAAP measures. For a reconciliation of the non-GAAP measures, please review the notes to today's earnings release. As a reminder, our discussion today may include forward-looking statements, including, but not limited to, expectations about our future performance. We believe these statements are based on reasonable assumptions. However, our actual results may differ. You are encouraged to review our SEC filings for a discussion of the risk factors that could cause our actual results to differ materially from any forward-looking statements made today. With that, I'd like to now turn the call over to Mick.

Thanks, Amy, and thank you to all of our shareholders for joining us today as we review the results for ResMed’s first quarter of fiscal year 2020. On today's call, I will discuss our long-term strategy. I'll then review top level financial results, some business highlights from the quarter and a few key milestones. Then I'll hand the call over to Brett, who will walk you through our financials in further detail. We have started fiscal year 2020 right where we left off with 2019. Our team achieved another quarter of balanced growth across the portfolio, driven by continued strong performance in the mask category. We are taking share with recent new product introductions and our solutions are enabling increased therapy adherence as well as expansion of resupply programs to those who need it. Our dedicated team of more than 7,500 ResMedians around the world, have again delivered strong results. As the world's leading software-driven medical device company, we continue to use technology to advance our leadership position. We have sold more than 10 million 100% cloud connectable medical devices into the market. And our AirView, cloud-based ecosystem manages more than 11 million patient accounts. In the last 12 months, we changed over 15 million lives by providing a person with a ResMed device or a complete mask system, to help them breathe better and live better lives. In addition, our Brightree and MatrixCare branded out of hospital software systems are helping to manage 93 million more people. So during the last 12 months we improved more than 108 million lives with ResMed products, services and software solutions. We are well on our way to the ambitious goal to improve 250 million lives in 2025. Our connected solutions are providing us with valuable access to de-identified therapy data that we…

Great. Thanks, Mick. In my remarks today, I will provide an overview of our results for the first quarter of fiscal year 2020. As Mick noted, we had a strong quarter. Group revenue for the September quarter was $691 million, an increase of 16% over the prior year quarter. In constant currency terms, revenue increased by 17%. Excluding revenue from acquisitions, group revenue increased by 11% on a constant currency basis. Taking a closer look at our geographic distribution and excluding revenue from our Software-as-a-Service business, our sales in U.S., Canada and Latin American countries were $317 million, an increase of 13% over the prior year quarter. Sales in Europe, Asia and other markets totaled $224 million, an increase of 4% over the prior year quarter. However, in constant currency terms, sales in combined Europe, Asia and other markets increased by 8% over the prior year quarter. Breaking out revenue between product segments. U.S., Canada and Latin America device sales were $197 million, an increase of 8% over the prior year quarter. Masks and other sales were $193 million, an increase of 19% over the prior year quarter. The revenue in Europe, Asia and other markets device sales were $152 million, which is consistent with the prior year quarter, but in constant currency terms, a 4% increase. Masks and other sales in Europe, Asia and other markets was $72 million, an increase of 15% over the prior year quarter or in constant currency terms, a 19% increase. Globally, in constant currency terms, device sales increased by 6% while masks and other sales increased by 19% over the prior year quarter. Software-as-a-Service revenue for the first quarter was $87 million, an increase of 83% over the prior year quarter. During the rest of my commentary today, I will be referring to…

Great. Thanks. Brett. We will now going to turn the call over to the Q&A portion. I'd like to remind everyone to please limit yourself to one question. If you have additional questions, please do feel free to return to the call queue. Chris, we are now ready for the Q&A portion of the call.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Gretel Janu with Credit Suisse. Your line is open.

Thanks. Good morning. So just on the U.S. device growth continues to be very strong, just wondering what would be the growth in kind of new patient setups in the quarter, give us some detail on that?

Yes. Thanks for the question, Gretel. So we don't actually have full visibility even to the number. We sell to in the U.S. to home medical equipment companies that then sell to patients that are renewing in their five-year renewal or to new patient. So we don't have full visibility into that. But it is interesting with a reasonably sized patient pool in the United States it would be a good double-digit percentage or so of those that will be replenishment devices. But the 8% growth I think is really ahead of market. We think the market growth is in the sort of mid-single digits. And so to be at 8% growth in the U.S. shows that we were taking some share due to the value of Air Solutions, AirView and myAir and all the sort of digital health solutions that are there.

Thank you.

Thanks, Gretel.

Your next question is from Steve Wheen with Evans. Your line is open.

Yes. Hi guys. Just a question also on the devices, there seems to be certainly amongst the DME land a bit of a rush on COPD codes and the setting up of patients with ventilators. Just wondering if you're seeing any benefit from that, particularly around amongst your Astral – your ventilator range in particular, the Astral?

Steve, thanks for the question. We actually saw really solid growth in the core fleet business, as a sizeable chunk of that 8% growth in the U.S. Astral tends to be more of a player, ventilation in general tends to be more of a player in Europe and so some of that sort of 4% constant currency growth in Europe, Asia and rest of world will have been driven by the Astral in some sort of much smaller element of the 8% U.S. growth. But one thing that we've been really strong with our DME customers is to make sure that the right device goes on the right patient at the right time. And when you look at COPD, there were lots of solutions from our [indiscernible] as well as – so non-invasive ventilation, as well as even Stellar product in non-invasive ventilation all the way through to our Astral product, which is really a life support ventilator and should be used in very severe COPD and in life support needs. And so, yes, it really wasn't a huge contributor in the U.S. this quarter, probably slightly more significant in Europe. But it's really good solid balanced growth, if you like, from our sleep apnea side with some additions from respiratory care is how I'd position it.

Great. Thanks very much.

Thanks, Steve.

Your next question comes from Margaret Kaczor with William Blair. Your line is open.

Hey, good afternoon. And good afternoon to most people, good morning for others. But thanks for taking the question. Just kind of big picture, I know some people are going to focus on the device sleep apnea growth, but I know you guys ended up delivering 11% top line growth, excluding acquisitions and that's above market in almost every category and even as you're seeing a headwind in France. So I guess looking out whether it's this year or the next couple of years, what prohibits you guys from continuing that double-digit top line growth rate and what could drive it higher or lower from today's levels? Thanks.

Thanks for the question, Margaret. Certainly, we did have a very good quarter here in Q1. And as you said, we grew like sort of 11% constant currency globally in our sleep and respiratory care combined businesses. If you think about the global growth and we have enough data now to know that the growth really is in that mid- to high-single digits, so the devices growing in the mid-single digits and masks growing in the high-single digits. Clearly, we did take share in Q1 and a lot of that is driven by the digital health technology on the flow generator side to have some of the share taking on the device side, and then the new product introductions that I detailed in the prepared remarks, four new masks in addition to two strong flagship marks there, so NPI has been an incredible contributor to us. Just if you think through the year ahead, even during this quarter that we're currently in the second quarter, we're going to lap one of those four product launches on the mask side and we'll continue to lap those during the quarter. So look, I'm always very excited about our innovations; the smallest, the quietest, the most comfortable, the most connected, and I think that innovation drives. But you can't outgrow market forever, right? You've got to then focus on getting more patients into the funnel, which is our whole identify, engage and enroll people in. So I think a fantastic Q1, but as we look through the fiscal year, we think we can meet or beat market growth, but you're not going to beat it every single time.

Great. Thank you, guys.

Thanks, Margaret.

Your next question is from David Low with JPMorgan. Your line is open.

Thanks very much. During the period, we heard – we saw from your competitor Philips that they had issues with their connected care business. They talked about tariffs, et cetera. Just wondering sort of market landscape in the U.S., whether you saw any disruption from that? Do you think some of the – that ResMed may have been a beneficiary of the issues that they were working through?

Yes, I'll hand that – good questions, David. I'll hand that to Rob Douglas, our COO.

Sure, David. Just generally on the tariffs issue just to reiterate, as we've said before, the way our whole supply chain is configured, we're not really affected by the specific tariffs. We export very little into China from the U.S. and very little from China to the U.S. Our supply chain is more Southeast Asian focused. And we've got a great team in China doing local products for China. So that's pretty solid. Our AirView solutions on the other hand, mostly by the way developed by teams all around the world, but really a strong product offering, continues to deliver superior value to our customers. And we think – with day-in and day-out we'll fight competitions with those products and belief that we've got a better proposition to offer. So we – from our perspective, we didn't see any particular competitive issues that were sort of changing the normal competitive dynamics. We do have to sell and execute well. And our teams have been doing that.

Great. All right. Thanks very much.

Thanks, David.

Our next question is from Andrew Goodsall with MST Marquee. Your line is open.

Thanks very much, guys. Perhaps just thinking forward into competitive bidding and I guess the bids are in, so I guess by the next time we’ve got a sense where the clearing price land. I'm just wondering whether there’s any preliminary comments you've got and your thoughts there or any preliminary actions you're taking I guess to prepare for competitive bidding, and whether that involves new product launches or anything? Just say preliminary is your sort of doing or preparatory actions?

Yes, thanks for the question, Andrew. I'll hand that to David Pendarvis.

Thanks, Andrew. The – obviously we spent a lot of time along with others in the industry trying to educate the market participants so they would be able to bid effectively and bid smartly given the new rules. We remained encouraged with the changes that were put in place principally that clearing price is what's going to drive reimbursement as opposed to the median price under the old regime, and some of the other changes that were made, including requiring bonds to bid in particular areas. We hoping that together with the education that the industry did will lead to smart bids and that'll lead to a fair, more realistic reimbursement. We obviously didn't participate in the bidding process and haven't had direct conversations with customers about what they bid. So it's all conjecture at this point as to where the ultimate reimbursement will land. But no matter where it is, whether it's a private pay, reimbursement change or a Medicare U.S. change or something elsewhere in the world, we're continually working with our customers to help them be more efficient, help them take advantage of the opportunities that present themselves and to enable them to better serve patients under whatever the reimbursement schemes are. So we'll definitely continue to do that, and watch where the U.S. Medicare landscape evolves. But at the moment, that's still a year and a bit away. So we'll just keep doing what we're doing and obviously focus on it when the time comes.

Thank you.

Thanks, Andrew.

Your next question is from Lyanne Harrison with Bank of America Merrill Lynch. Your line is open.

Good morning, gentlemen. Thank you for taking my question. Solid mask growth outside of outside of America, and I just wanted to understand you've had one of your competitors launch a new full face mask outside of America. Have you seen any difference in your full face mask sales outside of the U.S. versus within the U.S.? And how are you positioning yourself now that they've got FDA approval to launch within the U.S.?

Yes. So thanks for the question, Lyanne. And look, we have multiple competitors in the 120 countries we sell into and we expect new product introduction from our competitors on a regular basis. Yes, as you noted, during the quarter, we had 19% constant currency growth in U.S., Canada, Latin America. We also had 19% constant currency growth of masks in Europe, Asia and rest of world, where some of those masks and new launches have already been in play during the quarter. So I think we've – I know we've got the most robust sleep apnea mask portfolio on the planet versus our competitors in all the 120 countries that we participate in. But there's no arrogance or hubris heated out. Our team of R&D engineers furiously working, not only on technology to address underserved needs, but to think differently about how to really achieve that ultimate goal, which is sort of the silent CPAP and the invisible mask. And if you look at the N30 that we just launched, this minimalist category mask, it's about as close to an invisible mask as you can get. It is small, it is quiet, it is comfortable. So, look, I love innovation coming to the market from our competitors and from us because it keeps us all honest. But during the quarter, we performed very well versus all the NPI from our competitors with our own NPI. And I expect us to be able to do that into the future. And competition is just a healthy part of making sure that tens of millions of people get the breathing night.

Thank you.

Your next question comes from John Deakin-Bell with Citi. Your line is open.

Well, good morning. I have a question for Brett. Just to deconstruct that gross margin expansion a little bit. I think previously you've given us the fee of what was from the MatrixCare. But can you just maybe elaborate a bit more in terms of strong mask growth, higher margin that would have impacted, and also whether there's a more benign processing environment in the U.S. which is helping as well?

Hi, John, it’s Brett. I think it's all of those things, probably the pricing environment is relatively been on at the moment, so the impacts there were pretty modest. In terms of acquisitions that contributed around 50 basis points. So if you think about that, still really a strong, let's call it organic expansion of the margin, which is really good. That's really around the manufacturing and procurement efficiencies. And then clearly some product mix benefit there as you saw the outperformance in the mask growth. So a combination of all of those factors I think led to that expansion.

Okay. Thanks, Brett.

And your next question comes from David Bailey with Macquarie. Your line is open.

Good morning, guys. Just in relation to U.S. mask and accessories, you've talked to adherence to resuppliers as key drivers of growth. Just wondering if you can comment on your views as to those factors being drivers of growth over the next two to three years?

Yes, it's a good question, David. I'll hand that to Rob.

Yes, thanks, David. Yes. The resupply program has definitely supported the mask portfolio. We've talked many times. You've got to understand the sort of the feedback of this. If we can get patients onto a good mask, they're more likely to stay on treatment, they'll do better and then they'll need a mask. And so we continue to see that dynamic happening. Our software solutions that support the resupply programs and enable our HME customers to manage resupply programs more efficiently and ensure that the patients have the treatment that they need when they need it. We’re also supporting it. These are long-term programs. We've been running resupply programs for many years now and our teams will continue to refine and focus it. And as Mick said earlier though, these markets are competitive. We do have competitors playing it. We have competition in resupply programs as well as in mask. And it really gets down to, we've got a really strong team executing broadly across all parts of the portfolio on this that will continue to make sure that we're providing the best solutions for patients and providers delivering the best outcomes. So I think it's really a steady as she goes progress. We love – we really like these resupply programs and they're providing us a very solid steady business.

Thanks very much.

Thanks, David.

Next question is from Sean Laaman with Morgan Stanley. Your line is open.

Good morning, everybody. Mick, I'm wondering if you can give a little bit more granularity on the Novartis study you mentioned in your preliminary comments and perhaps some timelines that would be really useful.

Yes, thanks for the question, Sean. I wasn't at ERS, but I'll hand over to David Pendarvis, who can give us some more detail on the Novartis clinical trial.

Terrific. Sean, we mentioned in the opening remarks, it goes by the name of magnify, and of course with trials these days you have to have a good acronym, and that stands for maximizing adherence and gaining new information for your COPD. And the trial is going to be obviously sponsored by Novartis. And what it's doing is taking patients within clinics and then within those clinics, randomizing the patients to either standard clinical practice or using Propeller. And then there'll be a comparison. And the endpoint is the time to failure of treatment. And then failure of treatment is defined in various ways such as needing an additional medication, having some particularly acute exacerbations, winding up in hospital, those kinds of things. And it'll look and see, whether or not adding the adherence benefits of Propeller linked since the time that patients stay in that good controlled state. It's beginning recruiting now and I believe it's supposed to run through the end of 2021. So it will take quite a while before it meets it’s – the end of that time period. But the important thing is a lot of the data that's been out now has been done in the asthma setting. Obviously, that's an important area and we want to take care of those patients. But the COPD strategy is very important to us because of the way it connects with our overall respiratory care strategy. So having someone like Novartis sponsor a study, looking at Propeller benefits to a COPD patient population, we think is a real important milestone and we'll look for good benefits to come out of that study in the future, but it will be a few years.

Fantastic. Thanks, Dave. Thanks, Mick.

Thanks, Sean.

Your next question comes from Anthony Petrone with Jefferies. Your line is open.

Thank you. Great. I'm just going to have a follow-up to the Novartis question and somewhat Mick, you mentioned a couple of weeks ago indications of interest from AstraZeneca, Glaxo and Novartis on Propeller health. I'm just wondering if you have an update there and anything you can share potentially on how that would be priced on a per user per month basis. Thanks.

Yes Thanks for the question, Anthony. Pharma companies – there are many respiratory pharmaceutical, pharma players in the field and the names you mentioned all have drugs in the market. One thing about pharma companies is they’re very competitive with each other and they don’t want information shared too much publicly. Certainly on our Investor deck we put the names of those where we have published clinical data and we are working with. And the reason we’re bringing Novartis in our prep remarks here is that’s a public clinical trial. One of the interesting things that’s happening here is there’s a lot of trials that aren’t public that are happening out there that obviously we cannot talk about. As we look forward, the important thing if you think about milestones, Anthony, to sort of to look at on this, sort of digital health option play if you like that we have in our strategy with the Propeller solution is when somebody goes from these pilot trials to a commercial trial and when they would allow us to talk about that publicly. And so, if and when that happens, that’s the milestone, I think that’s most important in a material element to our shareholders. As I said in the prep remarks, we got in early with Propeller and this is a long road. I think I used the analogy that it’s an ultra marathon. This is beyond just 26.2 mile. This is a huge journey. COPD number two cause for hospitalization and rehospitalization, the number three cause of death. It has such good runway for us in the future, but there’s nothing material in the quarter. And so, we’re just giving the update. We hit 100,000 patients. We think that’s fantastic. Right validation to have Novartis start its public study. It’s going to take a couple of years as Dave said. But I would expect that before those couple of years we will have some other milestones of going to some commercial trials that we can talk about in upcoming conference calls. But at the moment this quarter, Anthony, there’s nothing to report other than really good early data.

Thank you.

Your next question comes from Saul Hadassin with UBS. Your line is open.

Thanks. Good morning, Mick. Good morning or good afternoon, Mick and Brett. I want to talk about the SaaS business making the tie-up with Cerner, I mean it suggests that they’re effectively leaving that post-acute space to providers like yourself. I’m just interested to know the – how much work needs to be done to allow for the two architectures to talk to each other. If you have a new electronic medical record for example in the acute space offered by Cerner, what work has to be done in terms of your SaaS business to allow those two systems to talk to each other. When do you expect to see the ability of the benefits of that tie-up to come through? Thanks.

Yes. Thanks for the question, Saul. It allows us to talk to the area of interoperability, which is incredibly important for us here at ResMed. We have 100 API calls per second from integrators into our air solutions ecosystem. So every second 100 interactions with another EHR, EMR whether it’s an individual person or myAir app checking the therapy or a physician at Massachusetts pioneer looking over 20,000 patients to do some management by exception protocol. And so, the Cerner contract or deal is that they – Cerner are looking for ResMed and really truly through our MatrixCare managed team to take care of home health and hospice customers for them. So they have customers that have hospital systems, but for the out-of-hospital part where it goes to home health and hospice, they want ResMed to be their partner to take care of those. And we think it’s a really exciting opportunity for the MatrixCare sales team and for the Cerner sales team to partner up and have that move forward. And it was really interesting at the Cerner conference to have our MatrixCare and Brightree teams there and all the technology available from the iPad app and all the capabilities that we have for home health and hospice and to get some really good leads. It’s not going to be material in the next 90 days for us, this Cerner contract, but the reason we’re talking about it is that idea of interoperability with Cerner, with Epic, with Allscripts, with all the players in hospital healthcare, we think it’s going to be really important that ResMed is the best person that can provide that handshake that API from someone in acute care to what they call post-acute care, but what we call out-of-hospital healthcare and we think that partnership is going to be really strong. So we’ll give you updates as the quarters progress, not just to the Cerner home health and hospice partnership, but to other partnerships with hospital systems, hospital providers and EHR providers. We think it’s a good milestone to show that one of the top three leaders along with Epic and Allscripts there in hospital EHR has chosen ResMEd as their home health and hospice care provider with our MatrixCare managed solution and we’re really excited about that.

Thanks. Operator Your next question is from Thomas Yeo with Goldman Sachs. Your line is open.

Hi, there. It’s Chris Cooper on for Tom. And apologies if I missed it, but I didn’t hear much commentary on Mobi portable oxygen concentrator this morning and in your prepared remarks. Could you just give us an update there, please?

Yes. Thanks for the question, Chris. I’ll hand that to Rob.

Thanks, Mick. Yes, Thomas. We, as you recall, we launched Mobi very early this year and we’ve sort of been in a really still in a learning mode. It’s a great product. We’re actually learning a lot about the performance of the product and we’ve talked about and continue to validate the issue of the balance of the performance specifications and how the product works. And so, we’re in good shape there. What we’re also learning is that it is challenging through, particularly through the U.S. reimbursement model how to get the right patients on the right treatment and how to get that property funded and we have been trialing experiments in looking at ways to optimize and develop that. Really we’re learning a lot about what our sort of future pathways to market would be and how to – how can we make it best suitable for our HME customers to support patients and also what are the future needs of products further down the track and feeding learnings into our future roadmap. So with that all going on, the learning process is quite successful. We’re still not a major market share player with the product and that’s unlikely to change into the short-term future with the Mobi product that we’re currently investing and the way we’re heading at the moment.

Your next question is from Mike Matson with Needham & Company. Your line is open.

Hi. Thanks for taking my question. I guess I just wanted to ask about, there is a I guess a bill in Congress H.R. 2771 to kind of extend the relief from the bidding program that I think is set to expire into 2020. So just curious to get your thoughts on that and what that mean if that were not to be successful? Thanks.

I’ll hand that question to Dave Pendarvis.

Yes. Thanks, Mike. Yes, there is a lot of efforts under way in the U.S. Congress right now to try to provide relief, particularly the one you mentioned which is try to extend the relief that was given that was that sort of 50-50 blend between prior reimbursement and the new system reimbursement into those rural areas. We certainly support that legislation. We think it’s important that our customers who are operating particularly in extended areas where they’ve got to drive many miles to patients’ homes need to have reimbursement that reflects the operating cost that they’ve got and we would certainly hope that the champions that there in Congress will carry the day. Now as your question implies, there is a lot going on in the U.S. Congress these days. It’s very difficult to predict whether something like that will ultimately pass or whether CMS could respond on their own and provide that kind of relief. If it doesn’t, I think as I said before when talking about competitive bidding, we’ll obviously work with our customers to do what we can to support them. We think the remote capabilities of our devices are ideal for providing care to remote setting. You could do things like change some of the settings on a CPAP, you can certainly interrogate the CPAP for information about the quality of the therapy that has been provided, all without having to drive to someone’s home. So we think that those systems helping customers whether they are in rural areas or not to deploy them is probably the best thing we can do to help in that kind of a setting. But we’ll continue to support that legislation and other efforts with CMS to try to make sure that the Medicare policies and reimbursement is as favorable as it can be for the ultimate benefit of Medicare beneficiaries.

Great. Thank you.

Your next question is from Shane Storey with Wilson. Your line is open.

Good morning. Thanks for taking my question. It’s maybe a bit tangential, but it relates to the CMS reimbursement changes that hit skilled nursing providers this month. Sort of weighing up that as an incremental opportunity for Matrix, I mean do you have an estimate of the proportion of providers that are yet to adopt good solutions there? And just interested to know, just how much growth there is, a scope sort of toward available for Matrix there in the SaaS market?

Yes, Shane. Thanks for the question. It’s a good one. There are changes in reimbursement not just in HME as we just talked about, but also in skilled nursing facilities and within home health and hospice. These provide excellent opportunities for Software-as-a-Service providers to – if you’re ahead of the game as MatrixCare was for the skilled nursing facilities changes as we are for the home health and hospice changes to be able to support customers through that change and even grow share because you’ve got the best solution that deals with those changes well. One thing I can say is that the new CEO there at MatrixCare, Steve Pacicco has formed great relationships with the customers and he has a great sales team that know the skilled nursing facility teams really well. And we’ve not only helped them through these changes in this quarter, but also set them up for success that our systems are operating well under the new reimbursement approach within those verticals. So that’s – when you roll that all together, it’s part of sort of that 2020 execution plan I talked about earlier that we see a good pop even if the blended rate of growth across these seven out-of-hospital healthcare verticals is in those high single digits. We think there are areas where we can get better growth than that. And we plan to exit 2020 with a double digit growth trajectory in the segment of SaaS. And part of that is going to be doing just what your question asked about, which is every part of the vertical, whether it’s skilled nursing facilities, whether it’s our new play in home health and hospice, the hunting license with Cerner in addition to our ability to grow share through having solutions that are ahead of the curve on reimbursement changes, they’re all opportunities to be able to grow faster and form longer partnerships with our customers.

Thanks, Mick. Appreciate it.

Your next question is from Steve Wheen with Evans. Your line is open.

Hi, sorry. I just wanted to come back to Brett on the gross margin. You typically gave a bit of a range for that in terms of guidance. Are you able to do that again this quarter?

Yes. Sure, Steve. I mean there’s a lot of moving parts, but I would think it would be broadly consistent with where we were for Q1.

Perfect. Thank you.

Thanks, Steve.

And your next question is from Anthony Petrone with Jefferies. Your line is open.

Just a quick follow-ups on masks. I know you mentioned, Mick, a couple of launches. I’m just wondering how much stocking potentially there was in the quarter? And then just on lead item. Is there any – Dave, you mentioned, we spoke a couple of days ago, but is there any indication on how this is kind of coming in post the notification period? Thanks again.

Yes. So Anthony, I’ll take the first part of your question on masks and Dave will take the second part. Clearly we had excellent new product introduction over the last 12 months, but your question was around do people do stocking orders. Our U.S. distribution, and frankly, our global distribution partners are getting very intelligent about inventory management, not just those who use Brightree and have ResMed’s Brightree inventory management system, which will actually manage it for them, but many of them are getting really appropriate on that knowing when a new mask comes, watching how there r teasers setting it up and seeing the patient flow and making sure they don’t get too ahead of the curve or behind the curve. You don’t want a patient in the fitting room that wants the N30 and it’s not there, but on the other hand, you don’t want excess inventory because I have inventory carrying costs as everyone knows and our U.S. distributors are actually quite sophisticated on this. So I – obviously when some – you launch a brand new mask, people do need to make sure they got that mask on the shelf. But given the proportion of existing resupply patients, which is a very large portion, particularly the U.S. distributors patient flow, we don’t think there was material impact from stocking. Now, we don’t have full insight into our customers that aren’t using Brightree or other inventory management solutions, but we think it’s a pretty steady approach and we’ve done new product introductions over the 20, 30 years we’ve been in business. And I don’t – we haven’t seen that a significant rate before and I don’t think we saw any significant rate of that during the last quarter. Dave, the second part of the question for you.

Sure. Yes, thanks Anthony. I mentioned a little bit earlier that ResMed along with other industry participants put a lot of energy and resources behind trying to educate the market participants who are going to be bidding about various factors including lead item pricing and we developed a calculator that was put out. There were some stats that were just discussed in the Medtrade meeting just earlier this week in Atlanta that there were over 17,000 downloads of that calculator. And that’s just simply the one that was available to the participants here. CMS had their own calculator that folks downloaded. From the conversations that I’ve had, my understanding is that most DMEs have a pretty good understanding of lead item pricing and how it works. And hopefully they’ve avail themselves of the tools to be able to model out scenarios based on their own business and their own volume of products in different categories so that they can bid intelligently and in a way that’s going to ultimately derive a fair and reasonable reimbursement. So I’m confident that we got that message out that it was received. Obviously, we don’t know how people bid and we’ll work with customers as best we can to try to implement things when the day comes. But we are confident that we did what we could to try to educate.

Thanks again.

We are now at the one hour mark, so I will turn the call back over to Mick Farrell.

Thanks, Chris. And thanks again to all our shareholders for joining us on the call this quarter. I’d also like to thank the 7,500 ResMedians, many of whom are also shareholders for their dedication and hard work, helping people breathe better, sleep better and live better lives outside the hospital in a 120 countries worldwide. Thanks for all that you do today and every day. We will talk again with all of our shareholders in approximately 90 days. Talk to you all then.

Great. Thank you all again for joining us today. If you do have any additional questions, please don’t hesitate to reach out to Investor Relations or to me directly. As previously mentioned, all documents including the transcript and a replay of today’s call will be available on our website later today. Chris, you may now close the call.

Ladies and gentlemen, this does conclude today’s conference call. Thank you for your participation. And you may now disconnect.