Good day, ladies and gentlemen, and welcome to Masimo Corporation's First Quarter 2015 Earnings Conference Call. The company's press release is available at www.masimo.com. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a Q and A session. As a reminder, this conference is being recorded. I would like to turn your call over to your host for today, Mr. Eli Kammerman, Masimo's Vice President of Business Development and Investor Relations. Sir, please go ahead. Eli Kammerman - VP-Business Development & Investor Relations: Thank you. Hello, everyone. Joining me today are Chairman and CEO, Joe Kiani; and Executive Vice President of Finance and CFO, Mark de Raad. This call will contain forward-looking statements which reflects Masimo's current judgment, including certain of our expectations regarding fiscal 2015 financial performance. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Risk factors that could cause our actual results to differ materially from our projections and forecasts are discussed in detail in our SEC filings, including our most recent Form 10-K and Form 10-Q. You will find these in the investors section of our website. I'll now pass the call to Joe Kiani. Joe E. Kiani - Chairman & Chief Executive Officer: Thank you, Eli. Good afternoon and thank you for joining us for Masimo's first quarter 2015 earnings call. I'm happy to report that we exceeded our performance targets for the quarter, with healthy gains from product revenues. We achieved GAAP earnings of $0.38 per share as a result of strong SET revenue growth, combined with higher product gross margins and our continued focus on operating expense control. Encouragingly, our product revenues rose by 11%, while on a constant currency basis, our product revenues rose by…

Thank you. Our first question comes from the line of Tao Levy with Wedbush. Your line is open. Please go ahead.

Great. Thanks. Joe E. Kiani - Chairman & Chief Executive Officer: Hi, Tao.

Hi. How are you doing? So, yeah, very nice quarter, guys. So, anyway, you've tried internally to dissect the impact of the flu season? Is it sort of like the increase in the product revenues in your guidance? Is that flu mainly? Joe E. Kiani - Chairman & Chief Executive Officer: Well, we did increase our guidance for the year by the amount of increase to what we had expected in Q1. Because our belief is that the census increase was flu based. However, we still feel good about the outlook of the year, short of some census drop that we're not anticipating, we believe we're in good shape. But, to answer your question specifically, do we believe all of that was due to the flu season? I don't believe so. I think that was predominantly it. But, we also believe our market share gain and other factors led to that sense, obviously the growth was only 4%, not 12% to 15% if you look at constant currency basis, that we did see.

And so I guess, the other thing is, when I look at some of the flu data. It doesn't even look like it's necessary over yet, which is surprising. And so, as we move through the second quarter, are you seeing any of that, are you hearing any of that from your customers? Especially it seems like elderly patients are unfortunately ending up in the hospital in an increasing number because of flu in the last few weeks. Joe E. Kiani - Chairman & Chief Executive Officer: Well, anecdotally, I was with the flu last week. So, I do agree with you, it feels like it's hanging around. But as far as the factors we see with the sensor volume, we don't see the same rate of purchase for our sensors as we saw in January, February and March.

Got you. And just to make sure, when hospitals and distributors, when they replenish product that's being used, how much insight do you have into that? And basically, I'm trying to make sure that you didn't get this mass purchasing because maybe some of the hospitals inventory has been used up and now as we move forward, we might hit like just a temporary wall while they work through some of that repurchasing activity? Joe E. Kiani - Chairman & Chief Executive Officer: Well, we report based on a sell-through model. So we actually work with our distributors at the end of each quarter to understand what is their inventory, and we take that inventory out of our revenues to make sure what we are reporting is what we believe our customers purchased, not what the distributors carried.

Okay, great. Thank you very much. Appreciate it. Joe E. Kiani - Chairman & Chief Executive Officer: Thank you, Tao.

Thank you. And our next question comes from the line of Chris Lewis with ROTH Capital. Your line is open. Please go ahead.

Hey, guys. Thanks for taking the questions. Joe E. Kiani - Chairman & Chief Executive Officer: Hi, Chris.

Wanted to start on the core SET business, obviously you pointed to the strong flu season. Understand that doesn't last to the magnitude going forward, but maybe you can provide some color on how we should think about the core SET growth going forward, as that strong flu season rolls off and kind of the growth expectations for that business going forward? Joe E. Kiani - Chairman & Chief Executive Officer: Well, I'm going to let Mark answer that question, but just maybe one big picture item, that the 44,000 devices that we shipped in Q1, which is about a 9% increase year-over-year from an installed base perspective, where we subtract out whatever is over 10 years old to come up with what we believe is our installed base, is to me a good indication of the kind of growth we expect volume-wise with sensors and our business. But maybe I'll let Mark answer specifically the percentage that you're asking about. Mark P. de Raad - Chief Financial Officer, Secretary & Executive VP: Yeah. Chris, I think in general, when we provided guidance for the entire year, that guidance assumed a SET product revenue growth rate in about the 5.5%, 6% range. Each quarter is a little bit different and then, of course, our rainbow revenue growth was a bit higher and that got us to the overall growth projections that we assume for the start of the year. So obviously, since we started this quarter and this year a bit stronger than expected, we're cautiously optimistic that maybe a little bit of that strength will carry over into the next couple of quarters. But fundamentally, I think the original guidance that we provided back in February for Q2, Q3 and Q4 are probably still the right ranges to be in and that would suggest, again, SET revenue growth rates probably in that 6%, 7% range.

Great. Appreciate the color there. And then rainbow came in a bit below where we were. Can you elaborate – I missed a portion of it – but can you elaborate on the prior year order and the dynamics that played during this quarter? And then, Joe, I think you talked about confidence in that accelerating throughout the course of this year. So what gives you that confidence? Thanks. Joe E. Kiani - Chairman & Chief Executive Officer: Well, we got a couple of big orders in Q4 2013 and Q1 2014 of last year from a large EMS provider from a country where they switched entirely to rainbow monitoring of their patient SpCO, SpMet combo. And while that's still the case and they've standardized on it, their reorder has been smaller both in volume, but also by going through one of our OEM partners instead of buying direct from us. So for that reason, so we discussed there was about $1.5 million less in rainbow revenues this year compared to last year. However, what keeps me still believing in the eventual explosive growth of rainbow is the fact that clinically, it's being evaluated and chosen to become standard of care at leading teaching hospitals and leading community hospitals around the world. Unfortunately, the budgeting cycle to buy new things that they were not buying previous to the financial crisis and then the Affordable Care Act is unprecedented. And so there's this long delay from the moment the request is put into administration to make the purchase to when we get the orders. But we do get the orders. And so we believe through the fact that we've gone since we put the blood management team together to maybe a dozen hospitals, wanting to standardize in many departments the use of rainbow to now nearly 100, also through their success that they're having, where they're talking about lives saved, they're talking about cost saved. I think it's not only going to get these hospitals to continue expanding their usage of rainbow. But the word of mouth we believe will help others as they're trying to get their budgeting done, get their budgeting approved and move forward. So we, unfortunately, we said from the beginning, we don't know when the inflection point is going to be to the s-curve adoption that we see. And obviously the x coordinates have increased a lot since we had anticipated it. But we still believe it will take off.

Great. And then if I could sneak one more in. I believe you had guided for GAAP product gross margins of 65% for the year with the expectation of them kind of sequentially improving throughout the year, first quarter came in above that number already. So, how should we think about gross margins trending going forward? Thanks. Mark P. de Raad - Chief Financial Officer, Secretary & Executive VP: Chris, I'm glad you asked. We did as you pointed out benefit a little bit more than we expected in the first quarter, partly of course, the top-line revenue contributes to a little bit of that improvement. We also generated a few more favorable variances throughout the quarter than we expected. Having said that, I do expect the margins in the second quarter to fall slightly below 65%, which is pretty consistent where I think most people had expected Q2 to be, and then we expect improved gross margins from Q2 into Q3, and then as usual, we expect a pretty nice increase to overall margins in the fourth quarter, again largely coming because of the significantly higher revenue expectations that we also expect in the fourth quarter.

Okay. So, safe to say that, that 65% for the years is probably a conservative at this point? Mark P. de Raad - Chief Financial Officer, Secretary & Executive VP: Yeah. I think, it's realistic at this point. I mean, as the first quarter proves out, if we get another couple of positive breaks in the next couple of quarters, yeah, then I think you could consider it to be conservative at this point, but it's still a little early in the year to be gauging that.

Okay, guys. Thanks for the time. Joe E. Kiani - Chairman & Chief Executive Officer: One thing, Chris, that will say, the value engineering work that we began a few years ago is really paying off and we were a little bit ahead of schedule of what we expected for the quarter. So, hopefully, like Mark said, it's realistic and we'll have to see if it continues the way it's been.

Thank you. Joe E. Kiani - Chairman & Chief Executive Officer: Thank you, Chris. Mark P. de Raad - Chief Financial Officer, Secretary & Executive VP: Thanks, Chris.

Thank you. And our next question comes from the line of Larry Keusch with Raymond James. Your line is open. Please go ahead. Lawrence S. Keusch - Raymond James & Associates, Inc.: Great. Good afternoon, everyone. Mark P. de Raad - Chief Financial Officer, Secretary & Executive VP: Hi, Larry. Lawrence S. Keusch - Raymond James & Associates, Inc.: Joe, I'm wondering if you might talk a little bit about the royalty and I guess what I'm curious about you guys obviously have baked that into your guidance for the year and couple of years out. But just curious if there is anything that you can share relative to if anything has been going on, whatsoever with Covidien or anything changing if you will now that they are owned by Medtronic? Joe E. Kiani - Chairman & Chief Executive Officer: Sure, Larry. First of all, there has been no communication that I'm aware of with Covidien/Medtronic. And while we can't be certain of A. the royalty is continuing or what Covidien/Medtronic is thinking, we do believe that the royalties should continue till October 2018, mainly because we have patents that go that long, particularly a patent that we had some interference practices with Covidien at the Patent Office that we ultimately won, and we won through the Court of Appeals, and that particular patent goes till October 2018, and to the best of our understanding, it is the core technology of the product they began selling after we won the patent trial and they were enjoying from selling the other devices. So it's the new device they've been selling since 2006, a product called N-600. So based on that we believe things should continue and that's why we have put the royalties in for the year. Lawrence S. Keusch -…

Thank you. And our next question comes from the line of Brian Weinstein with William Blair. Your line is open. Please go ahead. Brian D. Weinstein - William Blair & Co. LLC: Hey, guys. How are you? Joe E. Kiani - Chairman & Chief Executive Officer: Hey, Brian. How are you? Brian D. Weinstein - William Blair & Co. LLC: Good. Thanks. So, a couple of questions. I'll start on rainbow, you talked about 100 hospitals that you are working with and that have kind of signed contracts and are trying to get through. Can you help us understand what type of contribution would an average hospital kind of make in terms of revenue once these guys are starting to come on board, so we can have some idea as to how meaningful this can be? Joe E. Kiani - Chairman & Chief Executive Officer: Well, if all 100 hospitals came in at the level of sensor volume that we're being told that they would use per year, the dollars could be $60 million, $70 million a year. So, if my math is right, I got to make sure I'm doing math right, hold a minute, let me do the quick math. Okay. Did I get the digit wrong? Hold on. Forgive me, the number is about $7 million a year. Brian D. Weinstein - William Blair & Co. LLC: $7 million? I want to make sure, $7 million or $70 million? Joe E. Kiani - Chairman & Chief Executive Officer: $7 million per year. Brian D. Weinstein - William Blair & Co. LLC: Got it. Okay. That's helpful. And then, you had previously talked about last year, remember there was that large order that was in but then you took it out and it was sitting in the warehouse…

Thank you. And our next question comes from the line of Bill Quirk with Piper Jaffray. Your line is open. Please go ahead. William R. Quirk - Piper Jaffray & Co (Broker): Great. Thanks. Good afternoon, everybody. Mark P. de Raad - Chief Financial Officer, Secretary & Executive VP: Hi, Bill. Joe E. Kiani - Chairman & Chief Executive Officer: Hi, Bill. William R. Quirk - Piper Jaffray & Co (Broker): First question. Joe, you talked a little bit about the impact of flu and the positive impact that it was in the fourth quarter and the first quarter. Is there any way, you've talked about the ACA being potentially longer term driver for the business on a couple of different conference calls. Is there any way to take the pulse, no pun intended, on maybe what that's helping you out in terms of the SET business? Joe E. Kiani - Chairman & Chief Executive Officer: Well. Bill, I had actually thought the opposite. I thought ACA will be a drag on our business because we saw that when Massachusetts went through their ACA program. And last year at this time, where we saw the census reduction, you talk maybe we're seeing kind of the same thing we saw in Massachusetts when they did their thing several years earlier. So I still don't believe ACA helps, I know I've recently read that they are getting more emergency ER visits in hospitals due to limited number of primary physicians that the new patients who have access to insurance and healthcare are trying to get. But we always thought that when patients got so bad that they needed care, they got access to care through the ER. And therefore, given that our sensors are used procedurally it wasn't going to have a…