Good afternoon, ladies and gentlemen, and welcome to the Masimo's Fourth Quarter and Full Year 2017 Earnings Conference Call. The company's press release is available at www.masimo.com. At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I'm pleased to introduce Eli Kammerman, Masimo's Vice President of Business Development and Investor Relations.

Thank you. Hello, everyone. Joining me today are Chairman and CEO, Joe Kiani; and Executive Vice President of Finance and Chief Financial Officer, Micah Young. This call will contain forward-looking statements, which reflect Masimo's current judgment, including certain of our expectations regarding fiscal 2018 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. Also, the company has chosen to implement certain non-GAAP financial measures that will be incorporated into our financial guidance for 2018. In addition to GAAP results, these non-GAAP financial measures are intended to provide additional information to enable investors to assess the company's operations in the same way management assesses operations. Management uses non-GAAP measures to budget, evaluate and measure the company's performance and sees these results as an indicator of the company's ongoing business performance. The company believes that these non-GAAP financial measures increase transparency and better reflect the underlying financial performance of the business. Reconciliation of these measures to the most directly comparable GAAP financial measures are included within the earnings release and supplementary financial information on our website. In addition to the earnings release issued this afternoon, we have posted a quarterly presentation within the Investors' Section of our website to supplement the content we will be covering today. I'll now pass the call to Joe Kiani.

Thank you, Eli. Good afternoon, and thank you for joining us for Masimo's 2017 fourth quarter and year-end review. 2017 was a rewarding year for us, as we achieved significant new milestones in our business, while introducing a variety of groundbreaking new products. In addition, we ended the year on a high note, the financial results that once again exceeded expectations and point to another exciting year ahead for us in 2018. Now that we've completed our 10-year plan, we are embarking on a new journey to realize a set of larger objectives over the next seven years. In our Q4 results, we saw product revenues rise by 13% to $199 million, reflecting another strong quarter of double-digit growth. During Q4, we captured some significant renewals from incredible hospitals and hospital systems, while also winning important new hospitals and other significant care providing institutions due to the proven ability of our products to improve outcomes and reduce the cost of care, and not to mention excellent customer service. U.S. revenue growth re-accelerated compared to Q3 into double-digits and was complemented by similarly strong growth overseas. We were gratified to realize another sizable increase in worldwide SET and rainbow oximetry shipments in the fourth quarter which rose by 12% versus last year to reach 54,100 units producing an estimated installed base of 1,591,000 oximetries, excluding our handheld and finger pulse oximetries. For the third quarter in a row, our oximetry shipments were over 50,000 units, which we believe is a strong indication of our momentum. Our rainbow business performance was strong too in the fourth quarter as sales grew by over 40%, driven by strong growth across all geographic regions. We also realized solid growth for our new products, including NomoLine capnography, SedLine Brain Function Monitoring and O3 organ oximetry, with these three products generating also over 40% increase in revenues, year-over-year in the fourth quarter. For the full year, our product revenues increased by 12% to $741 million, which includes rainbow growth of 15%. We are proud and grateful for our performance in 2017 and the many new customers that adopted our SET and other technologies for patients and hospitals and alternate care settings. I'll discuss some additional business updates later in the call today. Now, I will ask Micah to view our Q4 results in more detail and provide you with our 2018 financial guidance. Micah?

Thank you, Joe, and good afternoon, everyone. For the fourth quarter of 2017, we reported total revenue, including royalty and other revenue, of $225.2 million, which reflects growth of 22.9% over the prior year period or 22.1% on a constant currency basis. Our product revenues were $199.2 million for the quarter, an increase of 13.4% over the prior year period or 12.5% on a constant currency basis. We saw solid growth in both our U.S. and international regions with broad-based strength across our product portfolio. For the full year of 2017, product revenues increased by 11.7% on both a reported and a constant currency basis to $741.3 million, which was even above our most recent guidance of $736 million. As Joe mentioned, our newer products such as NomoLine capnography, O3 organ oximetry, and SedLine Brain Function Monitoring delivered aggregate growth of 48% over the prior year period, 44% on a constant currency basis, which represents yet another quarter of strong growth for these product lines. rainbow product revenues grew 43% to reach $24 million in Q4 or 42% on a constant currency basis, which was driven by strong growth across the majority of our geographies and distribution channels. SpHb revenue grew 47% or 44% on a constant currency basis as we continue to see strong adoption of this breakthrough measurement with increasing amounts of positive clinical data to support usage. For the full year 2017, rainbow revenue increased by 15% to $76.6 million which is above our expectations of $74 million for the year. Our worldwide end user or direct business, which includes sales through just-in-time distributors, grew 14% to $173.4 million or 13% on a constant currency basis. Our direct business represented approximately 87% of total product revenue in the quarter which is in line with the prior year…

Thank you, Micah. For Masimo, 2017 was a milestone year, as we reached the 10 year anniversary of our IPO. We have completed our first long-term plan as a public company. And we're embarking on a slightly shorter long-term seven year plan with a goal of delivering annual revenue growth of 8% to 10% and a long-term goal of 30% operating profit margins. As you just heard from Micah, we expect to realize product revenue growth of 9% in 2018 in combination with product revenue earnings growth that is higher than that. We feel good about the great potential ahead for Masimo as our breakthrough technology are increasingly adopted by care providers who recognize the value of our technology for improving their patient care and outcomes. We're happy about our performance in 2017 as we started the year projecting our product sales of $717 million based upon growth of approximately 8%. And we achieved product sales growth that was more than 3 percentage points higher than that with sales reaching $741 million. Similarly, we're determined to exceed our forecast again this year, if possible by winning more new hospital and alternate care customers, and consistently securing renewals with our existing customers. Our presence in global markets is rising as we realized growth of 12% to 28% in various regions around the world last year facilitated by increased investment overseas. Our total OUS sales for 2017 rose by 18% with especially solid growth in Europe, the Middle East and Latin America. Our global sales efforts will strengthen further as we invest in staffing and various regions to educate clinicians about the benefit to patients of our unique products. We intend to expand our global infrastructure in a thoughtful process that should reduce the risk of any particular geographic weakness by having…

Your first question comes from the line of Rick Wise from Stifel. Your line is open. Rick Wise - Stifel, Nicolaus & Co., Inc.: Good afternoon, Joe. Thanks for the great finish to the year. Maybe just to start off, if I remember correctly, NRE revenue comes from reaching Philips project specific milestones. And hence it was so nicely ahead of schedule should we imagine – help us understand, should we imagine that the Philips inflection point could occur a little sooner than sort of the second half of 2018 that you've talked about? Am I reading too much into it? Maybe just generally remind us where you are in the Philips co-marketing agreement and any special activities we should be thinking about during 2018?

Certainly, Rick. And thanks for joining us. We have already seen our Philips partnership deliver better results than we had anticipated. We continue to think that trend will continue in 2018 and beyond. And yes, you're right with the work we were able to accelerate in 2017 we believe it will help us overachieve on our business objective with Philips in 2018. Rick Wise - Stifel, Nicolaus & Co., Inc.: And just again could you give us any more color on where you are in terms of co-marketing efforts or initiatives, and just again any highlight that we should be thinking about as the relationship matures and evolves?

Certainly. By the end of Q4 2017, Philips was hitting their stride in marketing of rainbow along with us. We have been enjoying a renewed sense of partnership from the sales channels from Europe to the U.S. to East Asia, and even parts around the world like India and other more places like Latin America. So what I can tell you is that there are a few elements with our Philips relationship. One is, of course, the SET oximetry, rainbow SET oximetry, Pulse CO-Oximetry. There's also the expansion of the availability of our technology into their full line of products, which is going to continue happening. And in fact the work we did towards the end of 2017 will expedite those. And then there's the integration of our new technologies like SedLine, NomoLine, and O3, which are going to be happening. And I hope with the work that we've been doing with Philips you're going to see two of those three products begin being available to our mutual customers in the first half, latest beginning of Q3 2018. Rick Wise - Stifel, Nicolaus & Co., Inc.: Yeah. And, Joe, you've highlighted on this call, I've heard you highlight several times probably recently your excitement about the new seven-year plan and their multiple drivers. But with the business performing so well, your clear optimism about 2018, 2019 and beyond, sort of a two part question related to M&A. Number one, to what extent as you're thinking about that optimism about the future is M&A still sort of critical to that thinking? What are your latest thoughts about M&A and what might happen in 2018? And I guess just again part of it all, if the base business is doing so well, when I say base meaning the entire portfolio and technology relationship doing so well, does that make you feel a greater sense of urgency about pursuing M&A as an incremental driver of growth or just how you're thinking about it all in that kind of context?

Well, a great question, Rick. We have the luxury with our own current products and products in the pipeline to grow our business the way we have been discussing and maybe even better than it without any acquisition. So the acquisitions that we're looking for are not to meet our business targets of tomorrow, but rather while we're shepherding Masimo as management of this company, we are looking for opportunities that might further diversify Masimo and establish its security for the very long-term. And that's why despite there being a lot of wonderful companies out there that we could go acquire, we are not going to allow our stock and our shares to be diluted with major acquisitions. What we're looking for are unique opportunities that we see a gem that we think we could go invest what we're good at investing in and make sure we're delivering ROIC accretion within five years. So because of the standard we have based on how good our business is going, we may never acquire anything. But I just wanted the shareholders to know a year ago, I talked about this, that while I'll always be looking to make sure we do our best deliver each quarter, each year to the best we can for our shareholders, as a management team, I want us to focus on making sure we deliver the utmost results within five years. So I'll just leave it at that that you are so right. We have so much going on that there is really – we could just easily say we're not in an acquisition mode, because of that, but I just think we have the bandwidth. We just brought in Tao Levy, who've joined us as Head of Business Development and we have an amazing breadth of management here that are very capable. So we're on the lookout for something special, which may or may not happen. Rick Wise - Stifel, Nicolaus & Co., Inc.: Great. And just one last one from me. Thank you for that thoughtful answer. Maybe I'll pick on you, Micah, a little bit. Just as we think about the quarters or the flow of the quarters this year, I know you're not giving any specific guidance, but is there anything you'd have us think about whether it's on the revenue side or the cost side beyond the expiration of the Medtronic Royalty, anything you'd have us think about as we try to figure out the models for 2018? Thank you both.

Sure. Sure.

Micah, do you want to answer that?

Yeah. Thank you, Rick. As you mentioned we're not going to give specific quarterly guidance, but you should think about you know throughout 2017, we had you know strong -- we have strong comps in the back half of the year. So you'll see growth rates a little higher especially with the flu season in Q1 and you'll see it more in Q1 and then you know normal seasonality for the out quarters probably heavier Q1 and then softer Q3 is kind of how we're thinking about it than historical averages. But you should be able to go look back to the last two or three years and get an idea of how to phase in that revenue.

Thank you. And then as far as the royalties are concerned, as you know we have been receiving those royalties for decades. When they began, they were about 80% of our income, today they're very small maybe about 20% of our income and going down to even lower. So, most investors from day one to even today did not put that royalty income in our PE ratio for earnings per share for the value of Masimo, instead they separated it and they put that royalty on a estimated cash value of it at the time on top of our market cap from our normal product business. So I don't expect something dramatic to happen with the value of Masimo, because of that approach. But as we have done, we'll continue to minimize the impact of the loss of those royalties. And, if we can in 2019, we'll do our best to have investors not even feel it. But again, I don't believe anyone who has been long-term shareholders of our company nor tracking our company has waived those royalties in a way that's going to cause some type of a Titanic shift. Rick Wise - Stifel, Nicolaus & Co., Inc.: Thanks, again.

Thank you.

Your next question comes from line of Bill Quirk from Piper Jaffray. Your line is open. William R. Quirk - Piper Jaffray & Co.: Great. Thanks, good afternoon everybody.

Hi, Bill.

Hi, Bill. William R. Quirk - Piper Jaffray & Co.: Hi, Joe. So, I guess the first question is a couple of years ago, back in the 2014, 2015 flu season, Masimo had a pretty nice benefit. I recall it is difficult to quantify because obviously it's somewhat of an indirect measurement, but you guys had a nice benefit in the fourth and the first quarter and I confess I would have thought that maybe we would have seen a little bit of a bigger impact on SET consumables in the fourth quarter. Joe, what – I guess what why am I steering in the wrong direction here and are you seeing any impact in the first quarter? Thanks.

I'm not sure what you're talking about Bill. So, I don't know how to respond to that. William R. Quirk - Piper Jaffray & Co.: Well, what I mean Joe is that when we have a bad flu season we do tend to see higher admissions and looking back to the transcripts from a few years ago, it certainly appeared as they had a nice benefit from that, albeit indirect because it's not as if you're selling a flu test or something like that, but nevertheless it helped with hospital census. So, I guess, that's the route I was directing the question?

Well, we had a really strong Q4 last year and yet, I think we said in the U.S. our Q4 revenues grew double digit over last year. So, I don't know, I mean beauty is in the eyes of the shareholder I guess, so you can look at it the way you like. William R. Quirk - Piper Jaffray & Co.: I certainly wasn't trying to suggest it was a negative quarter, Joe. So just to be clear. Secondly, just thinking about Joe, you mentioned a number of hospital renewals and could you comment a little bit about perhaps how smoothed out those are over the years? We're not looking at any big boluses or anything like that in terms of hospital renewals and then maybe just a comment on pricing, it certainly appears based on your results that it's pretty stable?

Well obviously Kaiser, which was part of our renewal last year is our biggest customer, so the renewal by definition would be a big bolus, but our renewal rate has been over 98% and despite some of the sizes of these renewals, there was nothing unusual about last year, except the fact that it was another strong year of our customers' re-signing up with us. William R. Quirk - Piper Jaffray & Co.: And then just on overall pricing?

I'm sorry, Bill, what was that question, overall, what? William R. Quirk - Piper Jaffray & Co.: Oh just pricing trends on the sensors themselves?

We've been very disciplined and our customers value our technology. So, while our competitor has been out there doing some predatory pricing, we've not had to yet, respond to it. William R. Quirk - Piper Jaffray & Co.: Got it. Thank you.

Thank you, Bill.

Your next question comes from the line of Brian Weinstein from William Blair. Your line is open. Andrew Brackmann - William Blair & Co. LLC: Hi, guys. This is actually Andrew Brackmann on for Brian this afternoon. How are you?

Hi, Andrew.

Hi, Andrew. Andrew Brackmann - William Blair & Co. LLC: Hi. So, I wanted to go back to the Philips agreement, just for a second. So, it's been in place for a couple of quarters. Can you talk a little bit about any impacts on the other partner relationships that you've seen as a result from the Philips agreement?

Well, we haven't seen anything change. I believe – I believe based on a long term agreement with Philips, and the fact that the industry generally doesn't want to have some – doesn't want to be left out, once Philips has something, it should, if anything bolster our ability to have more OEMs wanting to continue with us or expand with us. But, to answer your question, no change. Andrew Brackmann - William Blair & Co. LLC: Okay thanks. And then the other question I had. Joe, at a conference earlier this year, you had talked about the general ward expansion. Can you talk a little bit more about how far penetrated do you think you guys are into that right now? And then, how do you guys pivot here and kind of begin to take more share in that space? Thanks.

Certainly. It's hard to know the exact percentage but I'll try to give you some color. I would say right now, probably somewhere between 5% to 10% of our customers are doing monitoring in the general floor. But, I think the number of general floor beds that they're monitoring is even well below the 5% line. So, I think there's a huge opportunity, given that every one of these hospitals, which we now have several hundred hospitals who are doing continuous monitoring on the general floor, having similar results to the study that came out from Dartmouth-Hitchcock, which they saw a dramatic reduction in ICU transfers and rapid response team activation and no more dead in the bed over a 10-year period. So, given that it saves lives, it saves money and it keeps repeating itself at every place we go, I think one of these days, just like the way the Berlin Wall fell that wall is going to fall and should see continuous monitoring at every bed where patients are on opioids or they have a risk of apnea. So, it hasn't happened yet in a way that we expect, but it is definitely continuing to grow within our business. Andrew Brackmann - William Blair & Co. LLC: Got it. Thanks, guys.

Thank you so much. Thank you all for joining today. We look forward to getting back and reporting our Q1 results in a couple of months. So, we wish you a wonderful 2018. Thank you.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.