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#I'll comment.
It may not be further color.
I will just say it is work in progress.
We're a little further along with the planning for Inova labs and how we integrate that.
Brightree will continue to be a separate subsidiary.
But, you can imagine, we really just closed both of those acquisitions so we are working on that plan right now.
Thanks for the question.
We really do not want to drill down through the whole P&L with regard to that.
We will have an SEC document that we will provide before the end of the fiscal year, so this quarter, that will outline the Brightree business in quite some detail so you'll see that in the coming months, but we really do not want to get into a quarterly reporting where we break down all the way through the P&L for these three acquisitions.
But we are happy to provide that color at the top line that it is around 2% of global growth, so 9% total growth, 7% organic and 2% acquisition driven.
Yes, I'll hand to <UNK> <UNK> who is closest to the US business line.
Yes, we have been having those conversations for months with customers.
I think this year is a little different from FY14 when CB2 hit the first time.
So the vast majority of our customers have anticipated what is coming and we have been having pricing conversations with them for months.
So, this does hit their business and we are continuing to have the normal pricing conversations in that context.
Thank you, <UNK>.
Thank you for the question, <UNK>.
The Brightree acquisition is really, when you think about it, the huge investment that ResMed made, around 10% of our market cap, we invested $800 million in our HME customers.
In software that is purely focused on having cloud-based software applications that take laborious tasks like revenue cycle management, like inventory management, like clinical protocol management and physician signature management and automate those.
So, we think that instead of being owned by a venture capital firm, being owned by a player who has a long-term 27 year history in this industry and plans to invest for the next 27 years in providing home medical equipment, that it's a really positive sign for our customers, that it has got strong financial backing and someone who really carries about it.
We are excited about the hospice.
And we're excited about home health because those other new channels that the Brightree acquisition brings have a lot of sleep disorder breathing and a lot of COPD and neuromuscular disease patients that we can roll back into our HME customers.
But look I have to tell you, I haven't been in as many conversation with <UNK>, but I have over these last 2.5-plus months since we announced this acquisition been in a number of dinners and conversations with customers where I express what our goals are and what our plans are with Brightree and how we are going to invest to not only improve good quality to great quality, but ensure that we have even more efficiencies for them as a whole channel.
And that our investment is to make sure more and more sleep apnea patients are able to be served by them, has been received very positively.
<UNK>, do want to talk a little more to the specifics of <UNK>'s questions.
Sure.
It's a great question.
And we have had that question from customers.
I'll just say as a blanket statement to start, we are absolutely committed to putting in place appropriate protection for our customers business-sensitive information.
It is very important to us that we do that.
That is how we work with our customers in general and that is how we are as a Company, and so we are completely committed to that.
If I go broader and just say that the reaction of customers in the market, it has been more than two months since we announced that acquisition, and generally speaking, I think that the response from our customers has been very positive.
I think you can see in the Q3 results that, if anything, it has impacted the business positively.
Yes, good question, <UNK>.
I will hand to Rob <UNK> our President and Chief Operating Officer.
In all of our other countries around the world we view them as a portfolio.
They're all running on different dynamics.
And some are growing strongly at various times and other ones have challenging periods.
Across the board, we are seeing ---+ we talk about the mid-single market growth, mid-single digits market growth, and we believe that we are very much holding our own in the market growth and going well.
The Air Solutions dynamic is quite different in different countries.
And every country has own major drivers.
Some things are always the same, patients are always interested in their information and anything we can provide to them that helps them use the equipment and stay on using equipment that improves their outcome is useful.
And we're seeing that in all of those markets.
In other markets we have to deal with specific issues.
Specific privacy concerns in Europe.
Language concerns in Japan, for example, and all of those things we have got going well and we are on a ---+ I guess it's slower than the US, but a very solid implementation plan through all of those countries to roll Air Solutions out.
It's an ongoing program for us.
Thank you, <UNK>.
Don't judge the outperformance of our flow generators to make our masks look bad.
I mean, the Americas flow generator performance at 16% year on year, as <UNK> provided on constant currency basis, was just incredible and driven by, as Rob said, a very fast take up of Air Solutions these last 18 months, it is a longer haul for some of those other 99 countries we do business in.
The 10% year on year constant currency growth in masks and accessories, I think, is exceptional.
Certainly, keeping share and probably taking share in some categories.
Now look ---+ having said that, we are in a competitive game and the competitive game is across the board.
We change the basis of competition in flow generators, which has allowed us to outperform in that category.
<UNK> we and can we continue to change the game and bring increasing and great innovation to our mask platform.
Well, we have been doing it for 27 years and we plan to do it for the next 27 years.
So the answer to that is yes.
We put 7% of our revenues, approximately, into research and development, a very good chunk of that goes into mask innovation, plastic science, anthropometrics, understanding what patients need now and in the future.
I've got to tell you, I am really excited about the pipeline of masks and I think the team did well in that in Q3, but we can always do better.
You know, I really don't like to throw mud or get involved in a competitor back and forth on these conference calls.
All I'll say is that look ---+ our device, and it's really our solution, the Air Solutions platform has incredible advantages.
We take great costs out of the system, we provide such value for our customers and customers I use in a broad sense, the customer is the patient, obviously, but it's also the provider, the DME, it's also payers and other folks beyond.
And the value we're able to do by linking up with EMR HER systems in a closed payer provider network or a government run insurance and Western Europe network, or ---+ the data we're able to provide patients means there's strong demand for our product.
So I do think we have a winning value proposition.
I think it is a very sustainable competitive advantage, but having said that, we believe in productive paranoia and as I was saying earlier, we innovate our cloud-based systems on a regular basis.
There are weekly and monthly upgrades to these to make sure we keep as a finely oiled machine here, and that is our goal in this space.
Look - there is always competition.
We love competition.
What we love doing is really providing value to customers and customers choosing our products and solutions because of that.
Thank you <UNK>.
Thank you for the questions, <UNK>.
Yes, well I mean I was talking about the healthcare informatics lifecycle of being every couple of months with an upgrade.
Masks systems, it depends on the full face, the nasal, the pillows, and the technologies you are using.
The AirFit range has been incredibly successful.
The P10 mask, which is a nasal pillows mask, which I personally use, is the best mask on the planet for nasal pillows and our F10, for me, is clearly a world leading mask.
On the N10, I think it's a very good mask.
I think look, we can always do better.
Every time we release a product we are looking to do better.
You know, <UNK>, that we do not go into the specifics of our roadmap, but if you are asking me, are there other exciting mask on the horizon.
Of course there are.
How far is that horizon out.
Well, I cannot go into details on that.
It just doesn't make sense to from a competitive dynamic front given the public nature of this call.
Yes, thank you, <UNK>.
Cash flow has been very strong for the business and has been quite sustained over those three quarters as you noted.
So we're really pleased with that.
If you look at ---+ probably the big one there is probably around inventory where we have managed to reduce that over time.
There's a lot with the AirSense growth being so strong over the period.
I think, now we have had time to stabilize that and adjust somewhat.
So we really started to turn inventory levels, and I think that sort of ---+ the strong underlying earnings have played a part for sure and then really turning the inventory has underpinned and delivered some stronger cash flow through those quarters.
That's probably been the biggest impact.
Well, thanks for the question, <UNK>.
Clearly, the revenue and EBITDA is an immediate integration.
So we get a nice addition of $113 million growing at strong levels on the top line and north of $43 million of EBITDA growing strong double-digits as well.
So those integrate immediately.
In terms of the operating integration, as <UNK> said earlier, we'll run Brightree as a subsidiary that has clearly some separation of some data to make sure that our teams perform everything appropriately.
The synergies with customers are that clearly we have customers who purchase our products and will also purchase Brightree solutions, so there will be clear coordination between our sales force.
But, as <UNK> said, we closed the acquisition on April 4, it is now April 26, we have not fully integrated our go-to-market in the first 22 days, but we do have a 90, 180, 360 plan here and we will be able to provide, probably on this call in the coming four quarters, further and further integrations.
Including, obviously, financial integration starting Q4 with those numbers rolling in, but then the go-to-market integration over the coming four quarters.
Yes, <UNK>.
It will be immediately gross margin accretive.
I think, <UNK>, in his prepared remarks talked about 70 to 100 basis points of positive contribution that is likely in Q4 from including of the Brightree financials.
So it is a really good ---+ immediately accretive on top line and on GM.
Thank you, <UNK>, I will hand to Rob to address the European and ASV ---+.
When we made the announcement last year we sort of gave some indications of what we thought the impact would be.
We were pretty accurate in those predictions and so we roughly stand by those predictions.
The impact has been more significant in Europe where we had an indication for cardiology patients versus in the US where we did not.
Our team is working hard on some of the other applications for ASV.
<UNK> mentioned them earlier on.
Particularly talking about complex sleep apnea.
You know as well ---+ if you have patients who are on pain medication.
So we see a lot of opportunities there.
And those market development opportunities are underway, not only emphasize in the US, but also in our other markets around the world, and we should start to see some benefit from those activities showing through.
And as <UNK> also said earlier, we will anniversary the announcement on the 13th May.
And the impact that we---+ the short-term impact that we had after that came on fairly quickly, so we should see development activities even up from there on in.
<UNK>, we are not going to go into the details of it, but you're right, that is what we said at the time, we said its ---+ASV is roughly 7% of the revenues and we thought a quarter of that might be at risk.
And roughly on the global numbers, that's roughly in line.
As a Rob said it was a bit ahead of that in Europe and Americas was not as badly affected as Europe.
Thanks for your question, <UNK>.
Yes, <UNK>.
As I said earlier, and Rob just said now, from May 13 we will hit the anniversary of the date of the announcement and from then the activity went pretty quickly as Rob said, so we should expect to ramp to strong positive ASV growth from that date.
But really, as I said in my prepared remarks, FY17 is where we are going to see the benefits of complex sleep apnea, pain management medication, post traumatic stress disorder and also some other applications on CSA that are interesting in the stroke patients and others, so we will see those going forward.
Thank you, <UNK>.
<UNK>.
Yes, <UNK>, it's <UNK>.
Yes it does.
I am not sure that you can conclude that, <UNK>.
At the end of the day we said 57% to 60%.
Obviously, Brightree will have a quite significant positive impact for us going into Q4.
And any ---+ all the other factors play out on it as well to come up with that guidance range.
I don't think you can form a conclusion either way on what the guidance would have been.
Certainly, Brightree will have a positive impact on that.
No, there is nothing new in the reimbursement environment globally.
Frankly, everything that has been talked about in the US has been projected ---+ it is a government run process, so it's usually projected 12, 24, even 36 months in advance, so there's really no news on the reimbursement front.
Good follow-up, <UNK>, but we do not want to provide that level of detail.
Rob, I don't know if you can provide any color to help address <UNK>'s question that we want to share.
No, we really do not want to break that out, <UNK>.
Obviously, with the ASV not helping some of the other underlying parts of the business would look better if the ASV was not included in it.
But it's just too commercially sensitive to break all that out.
The one bit of color we can provide is that ASV ---+ and this is important as it starts to come back in FY17, it is a very margin accretive product.
It's a very margin accretive product.
So as it starts to come back it will really benefit us, and clearly, just hitting the 12 month mark of a headwind that has been a tough 11 months on the GM front as you have seen in the numbers with that as a headwind.
As it starts to turn neutral and then become a tailwind in 2017, it can really help us.
Clearly we are executing on ASV.
We've got some really exciting applications for it and you will hear more from us on this front in the future.
So that seven-part multi-question is a perfect one for <UNK>.
I'll have a crack at that one.
The most significant one has definitely been product mix.
And that has been the biggest one.
That's multiple really, obviously, ASV is playing out there a little bit, Inova is playing out there as well.
And just a really strong outperformance in flow generators.
So ---+ with ASV that starts to dissipate certainly through Q4 and then into Q1 so that will certainly help.
And then obviously Brightree comes on board in Q4 as well.
Then as I mentioned earlier, it just depends on trends for product mix and also geographic mix.
So even the really strong outperformance in the Americas, which is positive, does have an impact on gross margin.
Though a number of factors playing out.
Some of those moderate and some of them kind of disappear into FY17, so I think that is good.
The important thing on that European ASV headwind is it does go away.
And if you strip that out, the device number internationally would be better, but that's something to look at.
I think that actually headwind is really detracting from international, and that is definitely something that is going to go away into FY17.
Thank you, <UNK>.
Well, the revenues from Brightree come from the customers who are the HME providers.
And HME providers have a portfolio of products that they use.
So our customers, who are the HME providers are buying from ResMed and some of our competitors that you named there.
So my presumption is our customers will continue to want to buy from them and would want them to use the software program that our customers are using.
It is as simple as that.
It is not our decision or our competitors decision.
It's the customers decision.
The customer has to make the right decision in their best economic interests, the longer term interest of, primarily their patients, and growing the business efficiently.
We think that will play out.
We've had two to three months of this being out there and playing out just fine as far as we see it.
We're pretty excited, frankly, two months after the announcement and really only 22 days after the close and we're revving up to move forward.
Yes.
I think <UNK> referred to it earlier in terms of us getting drawn too much into the detail on that.
I think the overall number was 2%.
Inova would be skewed to devices, obviously, and then Curative is more spread.
So I think that ---+ I've probably given you enough to have some fair estimates on what the impacts would be through the categories without starting into too much detail on it.
Thank you, <UNK>, and in closing I want to welcome the Inova and Brightree teams to global ResMed team.
And to thank the now almost 5,000 strong team here at ResMed from around the world for their commitment to changing lives of millions of patients with every breath.
I'm very proud of what this team has accomplished, not just here in Q3, but beyond in creating the world's leading tech-driven medical device Company.
We remain laser focused on our long-term goal of improving 20 million lives by 2020 by literally giving products and the gift of breath to those folks.
Thank you for your time and we will talk to you again in 90 days.
